<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 10, 1999
REGISTRATION NOS. 333-78625;
333-78625-01 THROUGH
333-78625-28
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
TRIARC CONSUMER PRODUCTS GROUP, LLC TRIARC BEVERAGE HOLDINGS CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (STATE OR OTHER JURISDICTION OF INCORPORATION OR
ORGANIZATION) ORGANIZATION)
6719 2086
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER) (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
38-0471180 65-0748978
(I.R.S. EMPLOYER (I.R.S. EMPLOYER
IDENTIFICATION NUMBER) IDENTIFICATION NUMBER)
280 PARK AVENUE 709 WESTCHESTER AVENUE
NEW YORK, NEW YORK 10017 WHITE PLAINS, NEW YORK 10604
(212) 451-3000 (914) 397-9200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
BRIAN L. SCHORR, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
TRIARC CONSUMER PRODUCTS GROUP, LLC
C/O TRIARC COMPANIES, INC.
280 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 451-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
WITH A COPY TO:
PAUL D. GINSBERG, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
(212) 373-3000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the Securities registered on this Form are to be offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering as
contemplated by Rule 462(b) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed under Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. [ ]
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE AS PROVIDED IN SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING UNDER
SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE>
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
EXACT NAME OF JURISDICTION PRIMARY STANDARD
GUARANTOR REGISTRANT AS OF I.R.S. EMPLOYEE INDUSTRIAL
SPECIFIED IN ITS CHARTER INCORPORATION IDENTIFICATION NO. CLASSIFICATION CODE NO.
------------------------ ------------- ------------------ -----------------------
<S> <C> <C> <C>
Mistic Brands, Inc........................... Delaware 13-3844011 2086
Snapple Beverage Corp........................ Delaware 04-3149065 2086
Snapple International Corp................... Delaware 11-3195302 2086
Snapple Caribbean Corp....................... Delaware 11-3213755 2086
Snapple Worldwide Corp....................... Delaware 11-3233634 2086
Snapple Finance Corp......................... Delaware 11-3207217 2086
Pacific Snapple Distributors, Inc............ California 33-0390611 2086
Mr. Natural, Inc............................. Delaware 11-3199405 2086
Kelrae, Inc.................................. Delaware 51-0380030 6719
Millrose Distributors, Inc................... New Jersey 22-2323048 2086
RC/Arby's Corporation........................ Delaware 59-2277791 6794
ARHC, LLC.................................... Delaware 59-2277791 6794
RCAC Asset Management, Inc................... Delaware 65-0564547 6794
Arby's, Inc.................................. Delaware 13-3760393 6794
Arby's Building and Construction Co.......... Georgia 58-1684596 6794
TJ Holding Company, Inc...................... Delaware 65-0663961 6794
Arby's Restaurant Construction Company....... Delaware 65-0573190 6794
Arby's Restaurants, Inc...................... Delaware 65-0558054 6794
RC-11, Inc................................... Mississippi 64-0500368 2087
RC Leasing, Inc.............................. Delaware 65-0464496 2087
Royal Crown Bottling Company of Texas........ Delaware 59-1722788 2087
Royal Crown Company, Inc..................... Delaware 58-1316061 2087
Retailer Concentrate Products, Inc........... Florida 65-0596569 2087
TriBev Corporation........................... Delaware 13-3787716 2087
Stewart's Beverages, Inc..................... Delaware 52-0880815 2086
Old San Francisco Seltzer, Inc............... Colorado 84-1069343 2086
Fountain Classics, Inc....................... Colorado 84-1270356 2086
</TABLE>
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED DECEMBER 10, 1999
PROSPECTUS
TRIARC CONSUMER PRODUCTS GROUP, LLC
AND
TRIARC BEVERAGE HOLDINGS CORP.
OFFER TO EXCHANGE $300,000,000 OF OUR 10 1/4% SENIOR SUBORDINATED NOTES DUE 2009
TERMS OF THE EXCHANGE OFFER
It expires at 5:00 p.m., New York City time, on , 2000, unless
extended.
All initial notes that are validly tendered and not withdrawn will be
exchanged.
Tenders of initial notes may be withdrawn at any time before the expiration of
the exchange offer.
The terms of the exchange notes we will issue in the exchange offer are
substantially identical to those of the initial notes, except that transfer
restrictions and registration rights relating to the initial notes will not
apply to the exchange notes.
The exchange notes are new securities and no established market for them
currently exists.
BEFORE PARTICIPATING IN THIS EXCHANGE OFFER PLEASE REFER TO THE SECTION OF THIS
PROSPECTUS ENTITLED 'RISK FACTORS' BEGINNING ON PAGE 14.
Neither the Securities and Exchange Commission nor any state commission has
approved the notes to be distributed in the exchange offer, nor have any of
these organizations determined that this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
------------------------
The date of this prospectus is December , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 3
Risk Factors................................................ 14
Use of Proceeds............................................. 22
Capitalization.............................................. 23
Unaudited Pro Forma Condensed Consolidated Statements of
Operations................................................ 24
Selected Consolidated Financial Data........................ 30
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 33
Business.................................................... 58
Management.................................................. 73
Certain Relationships and Related Transactions.............. 89
Principal Shareholders...................................... 92
Description of Indebtedness................................. 94
The Exchange Offer.......................................... 97
Description of the Exchange Notes........................... 107
Federal Income Tax Considerations........................... 148
Plan of Distribution........................................ 152
Legal Matters............................................... 153
Experts..................................................... 153
Where You Can Find More Information......................... 153
Index to Financial Statements............................... F-1
</TABLE>
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
Because it is a summary, it does not contain all of the information that you
should consider before investing. You should read this entire prospectus
carefully, including the section entitled 'Risk Factors' beginning on page 14
and the financial statements, including the notes to those statements, included
elsewhere in this prospectus.
Trademarks, copyrights and other intellectual property owned or licensed by
us appear in italics the first time that they are referred to in this
prospectus. All other trademarks appearing in this prospectus are the property
of their respective owners.
SUMMARY OF THE EXCHANGE OFFER
Triarc Consumer Products Group, LLC and Triarc Beverage Holdings Corp., the
issuers, are offering to exchange $300,000,000 aggregate principal amount of
their exchange notes for $300,000,000 aggregate principal amount of their
initial notes. To exchange your initial notes, you must properly tender them and
the issuers must accept your tender. The issuers will exchange all outstanding
initial notes that are validly tendered and not validly withdrawn.
EXPIRATION DATE
The exchange offer will expire at 5:00 p.m., New York City time, on
, 2000, unless the issuers decide to extend it.
CONDITIONS TO THE EXCHANGE OFFER
The exchange offer is subject to the following customary conditions:
the exchange offer does not violate applicable law or any applicable
interpretation of the staff of the Securities and Exchange Commission,
you tender your initial notes in the manner required by the exchange
offer, and
there is no injunction, order or decree by any court or governmental
authority which would prevent or otherwise materially impair our ability
to proceed with the exchange offer.
Please refer to the section of this prospectus entitled 'The Exchange
Offer -- Conditions to the Exchange Offer.'
PROCEDURES FOR TENDERING INITIAL NOTES
To participate in the exchange offer, you must complete, sign and date the
letter of transmittal, or a facsimile of the letter of transmittal, and transmit
it together with all other documents required by the letter of transmittal,
including the initial notes to be exchanged, to The Bank of New York, as
exchange agent, at the address indicated on the cover page of the letter of
transmittal before 5:00 p.m., New York City time, on the expiration date. You
can also tender your initial notes by following the procedures for book-entry
transfer described in this prospectus. For more information on tendering your
initial notes, please refer to the sections of this prospectus entitled 'The
Exchange Offer -- Procedures for Tendering Initial Notes -- Proper Execution and
Delivery of Letters of Transmittal' and ' -- Book-Entry Delivery Procedure.'
SPECIAL PROCEDURES FOR BENEFICIAL OWNERS
If your initial notes are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee, we urge you to contact that
person promptly to tender your initial notes in the exchange offer. For more
information on tendering your initial notes, please refer to the sections of
this prospectus entitled 'The Exchange Offer -- Procedures for Tendering Initial
3
<PAGE>
Notes -- Proper Execution and Delivery of Letters of Transmittal' and
' -- Book-Entry Delivery Procedure.'
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your initial notes and you cannot get your required
documents to the exchange agent on time, you may tender your initial notes
according to the guaranteed delivery procedures described under the section of
this prospectus entitled 'The Exchange Offer -- Procedures for Tendering Initial
Notes -- Guaranteed Delivery Procedure.'
WITHDRAWAL RIGHTS
You may withdraw the tender of your initial notes at any time before 5:00
p.m., New York City time, on the expiration date of the exchange offer. To
withdraw, you must send a written or facsimile transmission notice of withdrawal
to the exchange agent at its address shown in the section of this prospectus
entitled 'The Exchange Offer -- Exchange Agent' on or before 5:00 p.m., New York
City time, on the expiration date of the exchange offer. Please refer to the
section of this prospectus entitled 'The Exchange Offer -- Withdrawal of
Tenders.'
ACCEPTANCE OF INITIAL NOTES AND DELIVERY OF EXCHANGE NOTES
If all conditions required for proper acceptance of initial notes are
fulfilled, the issuers will accept any and all initial notes that are properly
tendered in the exchange offer on or before 5:00 p.m., New York City time, on
the expiration date. The issuers will return any initial note that they do not
accept for exchange to you without expense as promptly as practicable after the
expiration date. The issuers will deliver the exchange notes as promptly as
practicable after the expiration date and acceptance of the initial notes for
exchange. Please refer to the section in this prospectus entitled 'The Exchange
Offer -- Acceptance of Initial Notes for Exchange; Delivery of Exchange Notes.'
FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE EXCHANGE OFFER
Exchanging your initial notes for exchange notes will not be a taxable
event to you for United States federal income tax purposes. Please refer to the
section of this prospectus entitled 'Federal Income Tax Considerations.'
EXCHANGE AGENT
The Bank of New York is serving as exchange agent in the exchange offer.
FEES AND EXPENSES
We will bear all expenses related to the exchange offer. Please refer to
the section of this prospectus entitled 'The Exchange Offer -- Fees and
Expenses.'
USE OF PROCEEDS
We will not receive any proceeds from the issuance of the exchange notes.
We are making this exchange offer solely to satisfy our obligations under our
registration rights agreement. Please refer to the sections in this prospectus
entitled 'Use of Proceeds' and 'Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources' for a discussion of our use of the proceeds from the issuance of the
initial notes.
4
<PAGE>
CONSEQUENCES OF FAILURE TO EXCHANGE INITIAL NOTES
If you do not exchange your initial notes in this exchange offer, you will
no longer be able to require us to register your initial notes under the
Securities Act except in the limited circumstances provided under our
registration rights agreement. In addition, you will not be able to resell,
offer to resell or otherwise transfer the initial notes unless they are
registered under the Securities Act, or unless you resell, offer to resell or
otherwise transfer them under an exemption from the registration requirements
of, or in a transaction not governed by, the Securities Act. Please refer to the
section of this prospectus entitled 'Risk Factors -- Your failure to participate
in the exchange offer will have adverse consequences.'
ABOUT OUR BUSINESSES
GENERAL
We are a leading premium beverage company, a restaurant franchisor and a
soft drink concentrates producer. We own the Snapple, Mistic and Stewart's
premium beverage brands and the Royal Crown carbonated soft drink brand and are
the franchisor of the Arby's restaurant system.
PREMIUM BEVERAGES (SNAPPLE, MISTIC AND STEWART'S)
Through Snapple, Mistic and Stewart's, we are a leader in the wholesale
premium beverage market. According to A.C. Nielsen data, in 1998 our premium
beverage brands had the leading share (33%) of premium beverage sales volume in
grocery stores, mass merchandisers and convenience stores.
SNAPPLE
Snapple Beverage Corp. markets and distributes all-natural ready-to-drink
teas, juice drinks and juices. According to A.C. Nielsen data, in 1998 Snapple
had the leading share (26%) of premium beverage sales volume in grocery stores,
mass merchandisers and convenience stores. Since Triarc Beverage Holdings
acquired Snapple in May 1997, Snapple has introduced several new products and
flavors including Orange Tropic-Wendy's Tropical Inspiration, Snapple Farms,
Snapple Elements, Hydro and WhipperSnapple, which was named Convenience Store
News magazine's best new non-alcoholic beverage product of the year and won the
American Marketing Association's Edison award for best new beverage in 1998.
MISTIC
Mistic Brands, Inc. markets and distributes a wide variety of premium
beverages, including fruit drinks, ready-to-drink teas, juices and flavored
seltzers under the Mistic, Mistic Rain Forest Nectars and Mistic Fruit Blast
brand names. Since our parent, Triarc Companies, Inc., which we refer to as
Triarc Parent, acquired Mistic in August 1995, Mistic has introduced more than
35 new flavors, a line of 100% fruit juices, various new bottle sizes and shapes
and numerous new package designs. During 1999, Mistic introduced an orange
carrot juice drink, Mistic Italian Ice Smoothies and Sun Valley Squeeze.
STEWART'S
Stewart's Beverages, Inc., formerly known as Cable Car Beverage
Corporation, the exclusive soft-drink licensee of the Stewart's trademark,
markets and distributes Stewart's brand premium soft drinks, including Root
Beer, Orange N' Cream, Cream Ale, Ginger Beer, Creamy Style Draft Cola, Classic
Key Lime, Lemon Meringue, Cherries N' Cream and Grape. Through the third quarter
of 1999, Stewart's has experienced 28 consecutive quarters of double-digit
percentage case sales increases compared to the prior year's comparable quarter.
5
<PAGE>
SOFT DRINK CONCENTRATES (ROYAL CROWN)
Royal Crown Company, Inc. produces and sells concentrates used in the
production of carbonated soft drinks. Royal Crown's products include RC Cola,
which is the largest national brand cola available to bottlers who do not bottle
either Coca-Cola or Pepsi-Cola. Royal Crown is also the exclusive supplier of
cola concentrate and a primary supplier of flavor concentrates to Cott
Corporation, which, based on public disclosures by Cott, is the largest supplier
of premium retailer branded beverages in the United States, Canada and the
United Kingdom. Royal Crown also sells its products internationally. Royal
Crown's international export business has grown at an 18% compound annual growth
rate over the five years ended 1997, although growth slowed to 4% in 1998 due to
adverse economic conditions in some of its markets, especially Russia. During
1998, Royal Crown's soft drink brands had approximately a 1.6% share of national
supermarket volume according to Beverage Digest/A.C. Nielsen data.
FRANCHISE RESTAURANT SYSTEM
Through the Arby's franchise business, we participate in the approximately
$100 billion quick service restaurant segment of the domestic restaurant
industry. Arby's is the world's largest restaurant system specializing in
slow-roasted roast beef sandwiches. According to Nation's Restaurant News,
Arby's is the 10th largest quick service restaurant chain in the United States,
based on 1997 domestic system wide sales. Arby's offers franchisees the
opportunity to multi-brand with T.J. Cinnamons products, which are primarily
gourmet cinnamon rolls, gourmet coffees and other related products. In addition,
Arby's expects to offer franchisees the opportunity to multi-brand further with
Pasta Connection'TM' products, which are pasta dishes with a variety of
different sauces, after we complete the final stages of test marketing in 1999.
As of October 3, 1999, the Arby's restaurant system consisted of 3,178
franchised restaurants and Arby's had commitments from franchisees to open up to
1,098 Arby's restaurants over the next 12 years. From 1996 to 1998, Arby's
system-wide sales grew at a compound annual growth rate of 6.1% to $2.2 billion.
BUSINESS STRATEGY
Our strategy for each of our businesses is as follows:
PREMIUM BEVERAGES (SNAPPLE, MISTIC, STEWART'S):
Continue to develop new products and innovative packaging
Increase consumer awareness and brand imagery through innovative marketing
Continue to expand and enhance distributor relationships to increase
penetration of our brands
Continue to acquire distributors in key markets; we currently own
distributors in three of our largest premium beverage markets
Continue to control production costs through favorable supply agreements
Continue to minimize capital expenditures through the use of third-party
co-packers
Pursue acquisitions of additional beverage brands
SOFT DRINK CONCENTRATES (ROYAL CROWN):
Enhance Royal Crown's strategic relationship with Cott by assisting in the
development of new products and maintenance of quality control
Continue the expansion of Royal Crown's international export business
Focus marketing resources in markets where Royal Crown's market share is
strongest
6
<PAGE>
FRANCHISE RESTAURANT SYSTEM (ARBY'S):
Increase Arby's franchisees' annual unit volume by:
(1) promoting the perception of Arby's as a 'Cut Above' brand,
(2) driving consumer awareness and loyalty through marketing and new
products,
(3) expanding breakfast and dinner offerings through new menu items
and multi-branding opportunities, and
(4) promoting Arby's openings in high quality locations
Continue to strengthen franchisee relationships through initiatives like
third-party preferred financing arrangements Arby's established on behalf
of its franchisees during 1998
Expand brand distribution through well capitalized and experienced
franchisees and through alternative locations including airports, school
cafeterias and hospitals
Selectively acquire new brands to which we can apply our successful
franchising strategy
HISTORY OF TRIARC CONSUMER PRODUCTS GROUP
Triarc Consumer Products Group is a wholly owned subsidiary of Triarc
Parent. Triarc Consumer Products Group was organized on January 15, 1999. In
conjunction with the offering of the initial notes and the new credit facility,
on February 23, 1999, Triarc Parent contributed to Triarc Consumer Products
Group all of the outstanding capital stock of Triarc Beverage Holdings Corp.,
RC/Arby's Corporation and Stewart's Beverages, Inc. and on February 24, 1999
contributed by merger all of the outstanding shares of capital stock that it
owned in two subsidiaries of RC/Arby's Corporation.
The following chart summarizes the organizational structure of Triarc
Consumer Products Group and its domestic subsidiaries:
[Flow Chart]
7
<PAGE>
SUMMARY OF TERMS OF THE EXCHANGE NOTES
ISSUERS
Triarc Consumer Products Group, LLC and Triarc Beverage Holdings Corp. on a
joint and several baisis.
NOTES OFFERED
$300,000,000 aggregate principal amount of 10 1/4% senior subordinated
notes due 2009. The form and terms of the exchange notes are the same as the
form and terms of the initial notes, except that the exchange notes will be
registered under the Securities Act, will not bear legends restricting their
transfer and will not be entitled to registration rights under our registration
rights agreement. The exchange notes will evidence the same debt as the initial
notes and both the initial notes and the exchange notes will be governed by the
same indenture. The exchange notes, like the initial notes, will be unsecured,
joint and several, obligations of Triarc Consumer Products Group and Triarc
Beverage Holdings.
MATURITY DATE
February 15, 2009.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest at the rate of 10 1/4% per annum,
payable in cash on February 15 and August 15 of each year, beginning February
15, 2000.
SINKING FUND
None.
OPTIONAL REDEMPTION
The issuers may redeem any of the exchange notes beginning on February 15,
2004. The initial redemption price is 105.125% of their principal amount, plus
accrued interest. The redemption price will decline each year after 2004 and
will be 100% of their principal amount, plus accrued interest, beginning on
February 15, 2007.
In addition, before February 15, 2002, the issuers may redeem up to 35% of
the aggregate principal amount of the initial notes and exchange notes issued at
a redemption price equal to 110.25% of the principal amount of the initial notes
and exchange notes redeemed, plus accrued and unpaid interest, if any, through
the date of redemption, if:
the issuers use the proceeds of any public offerings of common stock by
(1) Triarc Parent, to the extent the proceeds are contributed to Triarc
Consumer Products Group, (2) Triarc Consumer Products Group, or (3) any of
their successors, and
at least 65% of the aggregate principal amount of the initial notes and
exchange notes originally issued remains outstanding immediately after
giving effect to the redemption.
Please refer to the section of this prospectus entitled 'Description of the
Exchange Notes -- Optional Redemption.'
CHANGE OF CONTROL
Upon a change of control you will have the right to require the issuers to
repurchase all of your exchange notes at a repurchase price equal to 101% of the
principal amount of the exchange notes plus accrued interest, if any, to the
date of the repurchase. However, the issuers cannot
8
<PAGE>
assure you that they will have sufficient funds to repurchase your exchange
notes when required upon a change of control. Please refer to the section of
this prospectus entitled 'Risk Factors -- We may be unable to purchase the
exchange notes upon a change of control.'
RANKING
The exchange notes will rank junior to:
all senior indebtedness of the issuers and the subsidiaries guaranteeing
the exchange notes,
all secured indebtedness of the issuers and the subsidiaries guaranteeing
the exchange notes, and
all liabilities of the issuers' non-guarantor subsidiaries.
At October 3, 1999, assuming this offering and the new credit facility had
been completed at that time, the exchange notes:
would have ranked junior to $479.8 million of consolidated senior
indebtedness of the issuers and the subsidiaries guaranteeing the notes,
would have ranked junior to $479.8 million of consolidated secured
indebtedness of the issuers and the subsidiaries guaranteeing the notes,
and
would have ranked junior to $4.7 million of liabilities of the issuers'
non-guarantor subsidiaries.
GUARANTEES
The exchange notes will be guaranteed on a senior subordinated basis by all
of Triarc Consumer Products Group's existing domestic subsidiaries, other than
Triarc Beverage Holdings Corp., a co-issuer of the exchange notes. The
guarantees will be full, unconditional, joint and several obligations of the
guarantors. The guarantees will rank junior to all senior indebtedness and
secured indebtedness of the guarantors.
RESTRICTIVE COVENANTS
The terms of the exchange notes restrict the issuers' ability and the
ability of some of the issuers' subsidiaries to:
incur additional indebtedness,
create liens,
engage in sale-leaseback transactions,
pay dividends or make distributions in respect of capital stock,
purchase or redeem capital stock,
make investments or restricted payments,
sell assets,
issue or sell stock of subsidiaries,
enter into transactions with stockholders or affiliates, or
effect a consolidation or merger.
Exceptions to these limitations exist, including exceptions that would
permit the payment of a dividend to Triarc Parent consisting of the capital
stock of our restaurant subsidiaries and the release of these subsidiaries from
their guarantees of the exchange notes and the restrictive covenants in the
indenture.
9
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ABSENCE OF A PUBLIC MARKET FOR THE EXCHANGE NOTES
The exchange notes are new securities and no established market for them
currently exists. We cannot assure you that a market for the exchange notes will
develop or be liquid. The initial notes are currently eligible for trading in
the Private Offerings, Resales and Trading through Automated Linkages market.
Following commencement of the exchange offer, you may continue to trade the
initial notes in the private offerings market. However, the exchange notes will
not be eligible for trading in this market.
FORM OF EXCHANGE NOTES
The exchange notes will be represented by one or more permanent global
securities in bearer form deposited with, or on behalf of, The Depository Trust
Company and registered in the name of The Depository Trust Company or its
nominee. You will not receive exchange notes in registered form unless one of
the events described in the section of this prospectus entitled 'Description of
the Exchange Notes -- Book Entry; Delivery and Form' occurs. Instead, beneficial
interests in the exchange notes will be shown on, and transfers of these will be
effected only through, records maintained in book-entry form by The Depository
Trust Company with respect to its participants.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER ALL OF THE INFORMATION CONTAINED IN THIS
PROSPECTUS AND, IN PARTICULAR, YOU SHOULD EVALUATE THE SPECIFIC FACTORS LISTED
UNDER 'RISK FACTORS' ON PAGE 14 FOR RISKS ASSOCIATED WITH THE EXCHANGE OFFER AND
THE FOLLOWING RISK FACTOR HEADINGS:
We have substantial debt which may adversely affect us by limiting future
sources of financing and subjecting us to additional risks,
We may not be able to service our debt obligations,
Restrictions imposed by the credit facility may limit our ability to
execute our business strategy and may increase the risk of default under
our debt obligations,
The exchange notes are junior in right of payment to the claims of other
creditors who would be entitled to payment before you which increases the
risk of a default under the exchange notes,
Our franchised restaurant business could be distributed to Triarc Parent
which would reduce our income generating assets,
We may not be able to continue to improve Snapple's operations which may
adversely affect our financial condition because of the importance of
Snapple to our success,
Arby's dependence on restaurant revenues and openings means it can be
adversely affected by matters not in its control,
Arby's dependence on RTM, Inc. and other significant franchisees may
adversely affect Arby's franchise royalties, and
Some stockholders of Triarc Parent can exert indirect control of us and
have the power to cause or prevent a change of control that might
otherwise be beneficial to you.
------------------------
Triarc Consumer Products Group, LLC's principal executive offices are
located at 280 Park Avenue, New York, New York 10017. Its telephone number is
(212) 451-3000.
Triarc Beverage Holdings Corp.'s principal executive offices are located at
709 Westchester Avenue, White Plains, New York 10604. Its telephone number is
(914) 397-9200.
10
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table presents our summary consolidated financial data. The
summary consolidated historical operating data for the years ended December 31,
1996, December 28, 1997 and January 3, 1999 are derived from the consolidated
financial statements audited by Deloitte & Touche LLP, independent auditors,
contained elsewhere in this prospectus and should be read with those financial
statements and the related notes. The summary historical operating data for the
nine-month periods ended September 27, 1998 and October 3, 1999 are derived from
unaudited condensed consolidated financial statements contained elsewhere in
this prospectus. The summary consolidated operating data in the column 'As
Adjusted for the Transactions' reflect adjustments for the offering of the
initial 10 1/4% notes, the new credit facility, the related use of proceeds and
other related transactions. The adjusted data are derived from the 'Unaudited
Pro Forma Condensed Consolidated Statements of Operations' contained elsewhere
in this prospectus and should be read with those pro forma statements of
operations and the related notes.
EBITDA and Adjusted EBITDA are presented in order to allow for greater
comparability between periods as well as an indication of our results on an
ongoing basis. We calculate EBITDA as operating profit (loss) plus depreciation
and amortization (excluding amortization of deferred financing costs). We
calculate Adjusted EBITDA as EBITDA before significant charges and credits
relating to our acquisitions, dispositions and related restructurings. Because
all companies do not calculate EBITDA or similarly titled financial measures in
the same manner, those disclosures may not be comparable with EBITDA or Adjusted
EBITDA as calculated by us. You should not think of EBITDA or Adjusted EBITDA as
an alternative to net income or loss (as an indicator of operating performance)
or as an alternative to cash flow (as a measure of liquidity or ability to
service debt obligations) and EBITDA and Adjusted EBITDA are not measures of
performance or financial condition under generally accepted accounting
principles. However, EBITDA and Adjusted EBITDA provide additional information
for evaluating our ability to meet our obligations. Cash flows in accordance
with generally accepted accounting principles consist of cash flows from (1)
operating, (2) investing and (3) financing activities. Cash flows from operating
activities reflect net income or loss (including charges for interest and income
taxes not reflected in EBITDA) adjusted for (1) all non-cash charges or credits
(including, but not limited to, depreciation and amortization) and (2) changes
in operating assets and liabilities (not reflected in EBITDA). Further, cash
flows from investing and financing activities are not included in EBITDA. Our
historical cash flows are presented in the table below.
The ratio of earnings to fixed charges was computed by dividing (1)
earnings (loss) before income taxes, extraordinary charges and fixed charges by
(2) fixed charges. Fixed charges consist of interest expense, amortization of
deferred financing costs and one-third of rental expense, which is deemed to be
representative of the interest factor.
<TABLE>
<CAPTION>
AS ADJUSTED
FOR THE
AS ADJUSTED HISTORICAL TRANSACTIONS(1)
FOR THE ------------------------- ---------------
HISTORICAL TRANSACTIONS(1) NINE MONTHS ENDED
----------------------------------------- --------------- -------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 3,
DECEMBER 31, DECEMBER 28, JANUARY 3, JANUARY 3, SEPTEMBER 27, ---------------------------
1996 1997 1999 1999 1998 1999 1999
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenues......... $597,435 $ 696,152 $815,036 $827,589 $651,975 $ 679,728 $681,402
Operating profit
(loss)......... (25,435)(2) 31,872(3) 105,192 106,047 74,984 88,472 (6) 88,381(7)
Income (loss)
before
extraordinary
charges........ (51,368)(2) (18,986)(3) 29,987(4) 18,057(4) 20,300(5) 17,514 (6) 14,777(7)
Extraordinary
charges........ -- (2,954)(3) -- -- (11,772)(6)
Net income
(loss)......... (51,368)(2) (21,940)(3) 29,987(4) 20,300(5) 5,742 (6)
Cash dividends... -- -- (23,556) -- (204,746)
</TABLE>
(table continued on next page)
11
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
AS ADJUSTED
FOR THE
AS ADJUSTED HISTORICAL TRANSACTIONS(1)
FOR THE ------------------------- ---------------
HISTORICAL TRANSACTIONS(1) NINE MONTHS ENDED
----------------------------------------- --------------- -------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 3,
DECEMBER 31, DECEMBER 28, JANUARY 3, JANUARY 3, SEPTEMBER 27, ---------------------------
1996 1997 1999 1999 1998 1999 1999
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER OPERATING DATA:
EBITDA
Premium
beverages...... $ 13,381 $ 7,561 $ 77,825 $ 79,882 $ 57,472 $ 62,059 $ 62,185
Soft drink
concentrates... 18,418 18,504 17,006 17,006 13,232 15,756 15,756
Restaurants...... 31,819 31,200 43,180 43,180 29,356 34,382 34,382
General
corporate...... (189) (149) (11) (11) (102) (76) (76)
-------- --------- -------- -------- -------- --------- --------
Consolidated... $ 63,429 $ 57,116 $138,000 $140,057 $ 99,958 $ 112,121 $112,247
-------- --------- -------- -------- -------- --------- --------
-------- --------- -------- -------- -------- --------- --------
Adjusted EBITDA
Premium
beverages...... $ 14,831 $ 40,430 $ 77,825 $ 79,882 $ 57,472 $ 65,267 $ 65,393
Soft drink
concentrates... 22,368 20,916 17,006 17,006 13,232 15,756 15,756
Restaurants...... 34,219 36,797 43,180 43,180 29,356 34,382 34,382
General
corporate...... (189) (149) (11) (11) (102) (76) (76)
-------- --------- -------- -------- -------- --------- --------
Consolidated... $ 71,229 $ 97,994 $138,000 $140,057 $ 99,958 $ 115,329 $115,455
-------- --------- -------- -------- -------- --------- --------
-------- --------- -------- -------- -------- --------- --------
Reconciliation of
EBITDA to Adjusted
EBITDA
EBITDA........... $ 63,429 $ 57,116 $138,000 $140,057 $ 99,958 $ 112,121 $112,247
Add back
significant
charges:
Facilities
relocation
and corporate
restructuring/
reorganization.. 7,800 7,063 -- -- -- 3,208 3,208
Charges related
to post-
acquisition
transition,
integration
and changes
to business
strategies... -- 33,815 -- -- -- -- --
-------- --------- -------- -------- -------- --------- --------
Adjusted
EBITDA..... $ 71,229 $ 97,994 $138,000 $140,057 $ 99,958 $ 115,329 $115,455
-------- --------- -------- -------- -------- --------- --------
-------- --------- -------- -------- -------- --------- --------
Ratio of Adjusted
EBITDA to interest
expense............ 1.8x 1.9x
Net cash provided by
(used in):
Operating
activities..... $ 11,325 $ 35,440 $ 59,104 $ 42,083 $ 15,429
Investing
activities..... (18,028) (305,629) 15,771 17,706 (22,803)
Financing
activities..... 4,388 296,861 (36,325) (32,593) (25,287)
Ratio of earnings to
fixed charges...... 1.9x 1.5x 1.8x 1.6x 1.5x
Deficiency of
earnings to cover
fixed charges...... $ 74,996 $ 24,128
BALANCE SHEET DATA
(AT END OF
PERIOD):
Total assets..... $790,970 $ 827,830
Long-term debt... 560,977 734,218
Redeemable
preferred
stock.......... 87,587 --
Member's
deficit........ (44,721) (173,615)
</TABLE>
- ------------
(1) The summary consolidated operating data reflect adjustments for (1) the
offering of the initial 10 1/4% notes, (2) the new credit facility,
(3) the related use of proceeds, including the acquisition of Millrose
Distributors, Inc., and (4) other related transactions. The adjusted data
are derived from the 'Unaudited Pro Forma Condensed Statements of
Operations' beginning on page 24 in this prospectus and should be read with
those pro forma statements of operations and the related notes.
(2) Reflects certain significant charges recorded during 1996 as follows:
$66,700,000 charged to operating loss representing a $58,900,000 charge for
impairment of company-owned restaurants and related exit costs and
$7,800,000 of facilities relocation and corporate restructuring; and
$40,843,000 charged to
(footnotes continued on next page)
12
<PAGE>
(footnotes continued from previous page)
loss before extraordinary charges and net loss representing the
aforementioned $66,700,000 charged to operating loss, less $25,857,000
of income tax benefit relating to the aggregate of the above charges.
(3) Reflects certain significant charges recorded during 1997 as follows:
$40,878,000 charged to operating profit representing $33,815,000 of charges
related to post-acquisition transition, integration and changes to business
strategies and $7,063,000 of facilities relocation and corporate
restructuring; $27,138,000 charged to loss before extraordinary charges
representing the aforementioned $40,878,000 charged to operating profit,
$3,513,000 of loss on sale of businesses, net, less $17,253,000 of income
tax benefit relating to the aggregate of the above net charges; and
$30,092,000 charged to net loss representing the aforementioned $27,138,000
charged to loss before extraordinary charges and a $2,954,000 extraordinary
charge from the early extinguishment of debt.
(4) Reflects a significant credit recorded during 1998 as follows: $3,067,000
credited to income before extraordinary charges and net income representing
$5,016,000 of gain on sale of businesses less $1,949,000 of related income
tax provision.
(5) Reflects a significant credit recorded during the nine months ended
September 27, 1998 as follows: $3,015,000 credited to income before
extraordinary charges and net income representing $4,934,000 of gain on
sale of businesses less $1,919,000 of related income tax provision.
(6) Reflects certain significant charges recorded during the nine months ended
October 3, 1999 as follows: $3,208,000 charged to operating profit
representing capital structure reorganization related charges; $1,957,000
charged to income before extraordinary charges representing the
aforementioned $3,208,000 less $1,251,000 of income tax benefit; and
$13,729,000 charged to net income representing the aforementioned
$1,957,000 charged to income before extraordinary charges and an
$11,772,000 extraordinary charge from the early extinguishment of debt.
(7) Reflects certain significant charges recorded during the nine months ended
October 3, 1999 as follows: $3,208,000 charged to operating profit
representing capital structure reorganization related charges; and
$1,957,000 charged to income before extraordinary charges representing the
aforementioned $3,208,000 less $1,251,000 of income tax benefit.
13
<PAGE>
RISK FACTORS
You should carefully consider the risks described below in addition to all
other information provided to you in this prospectus before tendering the
initial notes in the exchange offer, including information included in the
section of this prospectus entitled 'Management's Discussion and Analysis of
Financial Condition and Results of Operations.'
WE HAVE SUBSTANTIAL DEBT WHICH MAY ADVERSELY AFFECT US BY LIMITING FUTURE
SOURCES OF FINANCING AND SUBJECTING US TO ADDITIONAL RISKS
We have now and, after the exchange offer will continue to have, a
significant amount of debt. The following chart shows important credit
statistics. The ratio of earnings to fixed charges for the year ended January 3,
1999 and the nine months ended October 3, 1999 are presented on a pro forma
basis, assuming the initial offering and our credit facility had been completed
at the beginning of our 1998 fiscal year and that the proceeds had been applied
as described in this prospectus (in millions except ratio).
<TABLE>
<CAPTION>
AT OCTOBER 3,
1999
----
<S> <C>
Total indebtedness.......................................... $779.8
Member's deficit............................................ ($173.6)
</TABLE>
<TABLE>
<CAPTION>
FOR THE
FOR THE NINE MONTHS
YEAR ENDED ENDED
JANUARY 3, OCTOBER 3,
1999 1999
---- ----
<S> <C> <C>
Ratio of earnings to fixed charges................ 1.5x 1.5x
</TABLE>
------------------------
In addition to the above indebtedness, at October 3, 1999 Snapple, Mistic,
Stewart's, RC/Arby's and Royal Crown were able to borrow up to $59.9 million of
revolving credit loans under the credit facility, without the consent of the
holders of the notes. Except as prohibited by limitations contained in the
credit facility, the indenture and instruments governing our other debt, we may
also incur additional debt. If new debt is added to our current debt levels, the
related risks that we face could increase.
Below are many, but not all, of the consequences resulting from this
significant amount of debt:
we may be unable to obtain additional financing for working capital,
capital expenditures, acquisitions and general corporate purposes,
a significant portion of our cash flow from operations must be dedicated
to the repayment of indebtedness, which reduces the amount of cash we have
available for other purposes,
we may be disadvantaged as compared to our competitors because of the
significant amount of debt we owe,
our ability to adjust to changing market conditions and our ability to
withstand competition may be hampered by the amount of debt we owe. It may
also make us more vulnerable in a volatile market, and
we will be exposed to interest rate fluctuations because most of our
borrowings under our credit facility are and will continue to be at
variable rates of interest.
WE MAY NOT BE ABLE TO SERVICE OUR DEBT OBLIGATIONS
Our ability to meet payment obligations on our debt depends on our ability
to implement our business strategy successfully. We cannot assure you that we
will be successful in implementing our strategy or in realizing our anticipated
financial results. You should also be aware that our financial and operational
performance depends upon a number of factors, many of which are beyond our
control. These factors include:
14
<PAGE>
the current economic and competitive conditions in the beverage and
restaurant industries,
any operating difficulties, increased operating costs or pricing pressures
we may experience,
the passage of legislation or other regulatory developments that affect us
adversely, and
any delays in implementing any strategic projects we may have.
If we are unable to repay our debt, we may be forced to reduce or delay
expansion, sell some of our assets, obtain additional equity capital or
refinance or restructure our debt. We cannot assure you that our cash flow and
capital resources will be sufficient to repay our existing indebtedness or any
indebtedness we may incur in the future, or that we will be successful in
obtaining alternative financing. You should note that debt under the credit
facility will mature before the maturity of the notes. Please refer to the
sections in this prospectus entitled 'Description of Indebtedness,' 'Description
of the Exchange Notes,' 'Business -- Premium Beverages -- Business Strategy,'
' -- Soft Drink Concentrates -- Business Strategy' and ' -- Franchise Restaurant
System -- Business Strategy.'
RESTRICTIONS IMPOSED BY THE CREDIT FACILITY MAY LIMIT OUR ABILITY TO EXECUTE OUR
BUSINESS STRATEGY AND MAY INCREASE THE RISK OF DEFAULT UNDER OUR DEBT
OBLIGATIONS
The credit facility contains financial covenants that require us to
maintain specified financial ratios and restrict our ability to:
incur debt,
enter into some fundamental transactions, including mergers and
consolidations, and
create or permit liens.
If we are unable to generate sufficient cash flow or otherwise obtain the
funds necessary to make required payments of principal and interest under, or
are unable to comply with covenants of, the credit facility or the indenture, we
would be in default under the terms of the credit facility. This would permit
the lenders under the credit facility to accelerate the maturity of the balance
owing under the credit facility. If these circumstances were to occur, the
subordination provisions of the exchange notes would require the lenders under
the credit facility to receive payment in full before the holders of exchange
notes receive any payment of principal of, premium, if any, and interest on the
exchange notes. Please refer to the sections in this prospectus entitled
'Description of Indebtedness -- Credit Facility' and 'Description of the
Exchange Notes -- Ranking.'
THE EXCHANGE NOTES ARE JUNIOR IN RIGHT OF PAYMENT TO THE CLAIMS OF OTHER
CREDITORS WHO WOULD BE ENTITLED TO PAYMENT BEFORE YOU WHICH INCREASES THE RISK
OF A DEFAULT UNDER THE EXCHANGE NOTES
Senior Debt
Your right to receive payment of principal of, premium, if any, and
interest on, and any other amounts owing in respect of, the exchange notes will
be junior to the prior payment in full of all of existing and future senior
indebtedness of the issuers and the guarantors, including all debt under the
credit facility. At October 3, 1999, assuming the offering of the initial notes
and the credit facility had been completed at that time, the issuers and the
guarantors would have had approximately $479.8 million of consolidated senior
indebtedness outstanding, and approximately $59.9 million would have been
available for borrowing under our credit facility. The terms of the credit
facility and the indenture permit us to incur additional indebtedness, including
senior indebtedness. You should refer to the section of this prospectus entitled
'Description of the Exchange Notes -- Ranking.' If we were to undergo a
liquidation, dissolution, reorganization or any similar proceeding, our assets
would be available to pay obligations in respect of the exchange notes only
after all senior indebtedness has been paid in full, and there may not be
sufficient assets to pay amounts due on all or any of the exchange notes.
15
<PAGE>
In addition, the issuers cannot make any cash payments to you if they have
failed to make payments to holders of senior indebtedness. In addition, with
some exceptions, the issuers cannot make any payments to you for a period of up
to 179 days if they have otherwise defaulted on their senior indebtedness
covenants.
Secured Debt
The exchange notes and guarantees will effectively rank junior to all
secured debt of the issuers and the guarantors. The credit facility is secured
by substantially all of our assets, and the terms of the credit facility and the
indenture permit the issuers and the guarantors to incur additional secured
debt.
Subsidiary Liabilities
In addition, the exchange notes will effectively rank junior to all
existing and future liabilities of the issuers' subsidiaries that have not
co-issued or guaranteed the notes, including trade payables and guarantees. At
October 3, 1999, those subsidiaries had approximately $4.7 million of
outstanding liabilities.
RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS FROM THE ISSUERS' SUBSIDIARIES
COULD AFFECT THEIR ABILITY TO REPAY YOU
The issuers are holding companies with no direct operations and no
significant assets other than the stock of their subsidiaries. The issuers will
be dependent on the cash flows of their subsidiaries to meet their debt
obligations, including the payment of principal and interest on the exchange
notes. Restrictions on dividends and other distributions from these subsidiaries
could limit amounts payable to the issuers for payment to you. You should be
aware of the following:
The credit facility prohibits the payment of dividends to the issuers by
their subsidiaries except to pay interest on the initial notes and the
exchange notes,
Additional indebtedness incurred by the issuers' subsidiaries may restrict
the ability of these subsidiaries to pay dividends or make other similar
payments to the issuers and,
Under applicable state law, the issuers' subsidiaries may be limited in
amounts that they are permitted to pay as dividends on their capital
stock.
OUR FRANCHISED RESTAURANT BUSINESS COULD BE DISTRIBUTED TO TRIARC PARENT WHICH
WOULD REDUCE OUR INCOME GENERATING ASSETS
Under the terms of the indenture, Triarc Consumer Products Group is
permitted to pay a dividend of the capital stock of those subsidiaries that
conduct its franchised restaurant business to Triarc Parent, and guarantees of
the exchange notes by these subsidiaries will be released if the specific
conditions described under the section of this prospectus entitled 'Description
of the Exchange Notes -- Covenants -- Limitation on Restricted Payments' are
met. Because these subsidiaries comprised approximately 31% of our EBITDA for
1998, the payment of this dividend and the release of the guarantees would limit
cash flow and assets available to the issuers to make payments of principal and
interest on the exchange notes.
OUR SUBSIDIARIES MAY NOT REMAIN WHOLLY OWNED WHICH MEANS THAT WE MAY NOT ALWAYS
BE ENTITLED TO 100% OF THEIR CASH FLOW OR VALUE
Although the issuers currently own all the outstanding common stock of
their subsidiaries, they may not wholly own all of their subsidiaries in the
future. If this were to occur, the issuers would not be entitled to receive all
of the cash flow of those subsidiaries if those subsidiaries were to pay
dividends and would not be entitled to receive the entire value of those
subsidiaries if those subsidiaries were sold. In each case, the issuers would
only be entitled to an amount that is proportionate to their ownership interest.
Although we do not believe that this would have adverse
16
<PAGE>
effects on the subsidiary guarantees, this could result in the issuers not
having enough cash flow or assets to meet their debt obligations, including
payments on the exchange notes. For example, Triarc Beverage Holdings has issued
options for the purchase of up to approximately 15% of its common stock, some of
which became exercisable on July 1, 1999. Also, upon a permitted sale of a
subsidiary that guarantees the exchange notes, or a permitted sale of all or
substantially all of its assets, that subsidiary's guarantee of the exchange
notes will be released.
WE MAY NOT BE ABLE TO CONTINUE TO IMPROVE SNAPPLE'S OPERATIONS WHICH MAY
ADVERSELY AFFECT OUR FINANCIAL CONDITION BECAUSE OF THE IMPORTANCE OF SNAPPLE TO
OUR SUCCESS
Part of our success depends on Snapple's financial performance, which has
improved since Triarc Beverage Holdings acquired Snapple from The Quaker Oats
Company in May 1997. Although we believe that we have identified the primary
factors for Snapple's deteriorating results under Quaker Oats' ownership, our
belief as to these factors may be wrong and we cannot assure you that our
efforts to address these factors will continue to be successful.
WE MAY NOT BE ABLE TO DEVELOP SUCCESSFUL NEW BEVERAGE PRODUCTS WHICH ARE
IMPORTANT TO OUR GROWTH
Part of our strategy is to increase our sales through the development of
new beverage products. We cannot assure you that we will be able to develop,
market and distribute future beverage products that will enjoy market
acceptance. The failure to develop new beverage products that gain market
acceptance could have an adverse impact on our growth and materially adversely
affect our financial condition.
ARBY'S DEPENDENCE ON RESTAURANT REVENUES AND OPENINGS MEANS IT CAN BE ADVERSELY
AFFECTED BY MATTERS NOT IN ITS CONTROL
Because Arby's principal source of revenues are royalty fees received from
its franchisees, Arby's future revenues will be highly dependent on the gross
revenues of Arby's franchisees and the number of Arby's restaurants that its
franchisees operate.
The current level of gross revenues of Arby's restaurants may not continue
We cannot assure you that the level of gross revenues of Arby's
franchisees, upon which Arby's royalty fees are dependent, will continue.
Competition among national brand franchisors and smaller chains in the
restaurant industry to grow their franchise systems is intense. Arby's
franchisees are generally in competition for customers with franchisees of other
national and regional fast food chains and locally owned restaurants.
The number of new Arby's restaurants opening is beyond its control
Numerous factors beyond Arby's control affect restaurant openings. These
factors include the ability of a potential restaurant owner to obtain financing,
locate an appropriate site for a restaurant and obtain all necessary state and
local construction, occupancy or other permits and approvals. Although as of
October 3, 1999 franchisees have signed commitments to open approximately 1,098
Arby's restaurants and those commitments require the franchisee to pay Arby's a
non-refundable deposit of $10,000 per restaurant, Arby's has not yet received
non-refundable deposits for all 1,098 restaurants. In addition, we cannot assure
you that these commitments will result in open restaurants.
ARBY'S DEPENDENCE ON RTM, INC. AND OTHER SIGNIFICANT FRANCHISEES MAY ADVERSELY
AFFECT ARBY'S FRANCHISE ROYALTIES
During 1998, Arby's received approximately 27% of its royalties from RTM,
Inc. and its affiliates, which are franchisees of over 700 Arby's restaurants,
and received approximately 5% of its royalties from each of two other
franchisees. Arby's franchise royalties would suffer if any of these franchisees
experienced significant declines in their businesses.
17
<PAGE>
WE REMAIN CONTINGENTLY LIABLE ON OBLIGATIONS OF RTM, INC. WHICH SUBJECTS US TO
ADDITIONAL LIABILITIES
While RTM, Inc. has assumed most lease obligations and indebtedness in
connection with the restaurants that it acquired from Arby's, we remain
contingently liable if RTM fails to make payment on those leases and a portion
of that indebtedness. If this occurs, we would have to make payments on these
leases and indebtedness, which would decrease our cash flow and adversely affect
our ability to repay the exchange notes. Please refer to Notes 3, 6 and 16 to
our Consolidated Financial Statements appearing elsewhere in this prospectus.
ROYAL CROWN'S RELIANCE ON COTT CORPORATION AND OTHER CUSTOMERS AND BOTTLERS MAY
ADVERSELY AFFECT ROYAL CROWN'S REVENUES
Private Label Sales
Royal Crown relies to a significant extent upon sales of beverage
concentrates to Cott Corporation under a concentrate supply agreement signed in
1994. Royal Crown's revenues from sales to Cott were approximately 12.6% in
1996, 15.8% in 1997 and 17.2% in 1998. If Cott's business declines, or if Royal
Crown's supply agreement with Cott is terminated, Royal Crown might have
difficulty replacing these sales. As a result, Royal Crown's sales could be
adversely affected. Please refer to the section of this prospectus entitled
'Business -- Soft Drink Concentrates -- Private Label.'
Bottlers
Royal Crown relies upon its relationships with key bottlers. For example:
RC Chicago Bottling Group accounted for approximately 23% of Royal Crown's
domestic revenues from concentrate for branded products during 1998,
American Bottling Company accounted for approximately 18% of Royal Crown's
domestic revenues from concentrate for branded products during 1998, and
Royal Crown's ten largest bottler groups accounted in the aggregate for
approximately 79% of Royal Crown's domestic revenues from concentrate for
branded products during 1998.
Royal Crown's sales would decline from their present levels if any of these
major bottlers stopped selling RC Cola brand products unless and until Royal
Crown established a comparable relationship with one or more new bottlers. We
cannot assure you that new bottlers would provide Royal Crown with the level of
sales that these bottlers have. Please refer to the section of this prospectus
entitled 'Business -- Soft Drink Concentrates -- Royal Crown's Bottler Network.'
OUR BUSINESS DEPENDS ON A LIMITED NUMBER OF KEY PERSONNEL, THE LOSS OF WHOM
COULD ADVERSELY AFFECT US
Some of our senior executives are important to our success because they
have been instrumental in identifying business acquisitions, arranging necessary
financing and operating our businesses. Although we feel that there is a
significant pool of talented personnel in the consumer products, beverage and
restaurant industries, if these members of our senior management team become
unable or unwilling to continue in their present positions, we may be unable to
make successful acquisitions and obtain necessary financing. As a result, our
business and financial results could be materially adversely affected.
SOME STOCKHOLDERS OF TRIARC PARENT CAN EXERT INDIRECT CONTROL OVER US AND HAVE
THE POWER TO CAUSE OR PREVENT A CHANGE OF CONTROL THAT MIGHT OTHERWISE BE
BENEFICIAL TO YOU
Triarc Consumer Products Group is a wholly owned subsidiary of Triarc
Parent. As of August 11, 1999, Messrs. Peltz and May and their affiliates
beneficially owned approximately 37.6% of Triarc Parent's voting common stock.
Accordingly, Messrs. Peltz and May are able to control the boards of directors
of Triarc Parent and Triarc Consumer Products Group and its subsidiaries and
18
<PAGE>
may be able to determine the outcome of those corporate actions requiring Triarc
Parent stockholder approval, including mergers, consolidations and the sale of
all or substantially all of our assets. In addition, Messrs. Peltz and May may
also have the power to prevent or cause a change of control of Triarc Consumer
Products Group.
In addition, some decisions concerning our operation or financial structure
may present conflicts of interest between Triarc Parent and the holders of the
exchange notes. Triarc Parent may also have an interest in pursuing transactions
that, in its judgment, enhance the value of their equity investment, even though
these transactions may involve risks to the holders of the exchange notes.
COMPETITION FROM OTHER BEVERAGE AND RESTAURANT COMPANIES THAT HAVE GREATER
RESOURCES THAN US COULD ADVERSELY AFFECT US
The premium beverage, carbonated soft drink and restaurant industries are
highly competitive. Many of our competitors have substantially greater
financial, marketing, personnel and other resources than we do. Please refer to
the section of this prospectus entitled 'Business -- Competition.'
OUR FINANCIAL INFORMATION MAY HAVE LIMITED RELEVANCE TO YOU
The financial information that is included in this prospectus does not
reflect what our actual results of operations, financial position and cash flows
would have been had we existed in our current form during the periods presented,
nor is it necessarily indicative of our results of operations, financial
position and cash flows in the future. Please refer to the sections in this
prospectus entitled 'Unaudited Pro Forma Condensed Consolidated Statements of
Operations' and 'Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Presentation of Financial Information.'
SOME FAILURES TO ADDRESS THE YEAR 2000 PROBLEM MAY CAUSE DISRUPTIONS IN THE
OPERATION OF OUR NETWORKS AND OUR BUSINESS
Many computer systems and software products will not function properly in
the year 2000 and beyond due to the year 2000 problem, a once-common programming
standard that represents years using two digits. It is possible that our
currently installed computer systems, software products or other information
technology systems, including imbedded technology, or those of our suppliers,
contractors, or major systems developers working either alone or in conjunction
with other software or systems, will not properly function in the year 2000
because of the year 2000 problem. If we or our customers, suppliers,
contractors, and major systems developers are unable to address their year 2000
issues in a timely manner, a material adverse effect on our results of
operations and financial condition could result. The most reasonably likely
worst-case scenario from failure of internal systems is that we might experience
a delay in production and/or fulfilling and processing orders resulting in
either lost sales or delayed cash receipts. The most reasonably likely
worst-case scenario from failure of systems of our suppliers is an inability to
order and receive delivery of needed raw materials, packaging and/or other
production supplies which would result in an inability to meet orders causing
lost sales. The most reasonably likely worst-case scenario from failure of
systems of our banks would be an inability to transact normal banking business
such as deposits of collections, clearing cash disbursements and borrowing
needed revolving loan funds or investing excess funds. We are currently working
to evaluate and resolve the potential impact of the year 2000 on our processing
of date-sensitive information and network systems.
We cannot assure you that the year 2000 problem will only have a minimal
cost impact or that other companies will convert their systems on a timely basis
and that their failure will not have an adverse effect on our systems. Please
refer to the section of this prospectus entitled 'Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Year 2000.'
19
<PAGE>
WE MAY BE UNABLE TO PURCHASE THE EXCHANGE NOTES UPON A CHANGE OF CONTROL
Upon a change of control event, the issuers will be required to make an
offer to purchase the exchange notes at a price in cash equal to 101% of their
aggregate principal amount plus accrued and unpaid interest, if any. However,
the issuers may be unable to purchase the exchange notes because of the
following covenants and cross-default provisions in other debt agreements:
the credit facility generally prohibits the issuers from repurchasing any
exchange notes and also considers change of control events to be an event
of default under the credit facility which entitles the lenders to demand
payment in full before any repurchase of the exchange notes. Any future
senior indebtedness of the issuers may contain similar provisions,
the exercise by the holders of exchange notes of their right to require
the issuers to repurchase the exchange notes could cause a default under
our senior debt agreements, even if the change of control itself does not,
due to the financial effect of a repurchase of the exchange notes on the
issuers,
if there is an event of default under any senior indebtedness, the
subordination provisions in the indenture would restrict payments to the
holders of the exchange notes, and
if we do not repay or refinance the borrowings having these provisions or
otherwise obtain consent to purchase the exchange notes under these
agreements, any resulting failure to offer to purchase or to purchase
exchange notes would constitute an event of default under the indenture.
In addition, the issuers may not have the financial resources needed to
repurchase the exchange notes if so required upon a change of control. Please
refer to the sections in this prospectus entitled 'Description of the Exchange
Notes -- Covenants -- Repurchase of Notes Upon a Change of Control,'
' -- Ranking' and 'Description of Indebtedness -- Credit Facility.'
A COURT COULD DECLARE THE EXCHANGE NOTES JUNIOR IN RIGHT OF PAYMENT OR TAKE
OTHER ACTIONS UNDER FRAUDULENT TRANSFER STATUTES THAT ARE DETRIMENTAL TO YOU
Under federal or state fraudulent transfer laws, an unpaid creditor or
representative of creditors, including a trustee in bankruptcy, could file a
lawsuit claiming that the issuance of the exchange notes constituted a
fraudulent conveyance. If a court were to find that there has been a fraudulent
conveyance, it could:
avoid all or a portion of our obligations to you,
subordinate our obligations to you to our other existing and future
indebtedness, entitling other creditors to be paid in full before any
payment is made on the exchange notes, and
take other action detrimental to you, including, in some circumstances,
invalidating the exchange notes.
If a court were to take any of those actions, we cannot assure you that you
would ever be repaid.
YOU MAY FIND IT DIFFICULT TO SELL YOUR EXCHANGE NOTES BECAUSE NO PUBLIC TRADING
MARKET FOR THE EXCHANGE NOTES EXISTS
The exchange notes will be registered under the Securities Act but will not
be eligible for trading on the Private Offerings, Resales and Trading through
Automated Linkages Market. The exchange notes will constitute a new issue of
securities with no established trading market. We cannot assure you as to:
the development of any market for the exchange notes,
the liquidity of any market for the exchange notes that may develop,
your ability to sell your exchange notes, or
the price at which you would be able to sell your exchange notes.
The initial notes are designated for trading among qualified institutional
investors in the market. We have been advised by the initial purchasers of the
initial notes that they presently
20
<PAGE>
intend to make a market in the exchange notes. However, they are not obligated
to do so and may discontinue any market-making activity with respect to the
exchange notes at any time without notice. If a market for the exchange notes
were to exist, the exchange notes could trade at prices that may be higher or
lower than their principal amount or purchase price, depending on many factors,
including prevailing interest rates, the market for similar debentures and our
financial performance. Historically, the market for non-investment grade debt
has experienced disruptions that have caused substantial volatility in the
prices of securities similar to the exchange notes. We cannot assure you that
the market for the exchange notes, if any, will not experience similar
disruptions. Any disruptions that do occur may adversely affect you as a holder
of the exchange notes.
THE ISSUANCE OF THE EXCHANGE NOTES MAY ADVERSELY AFFECT THE MARKET FOR THE
INITIAL NOTES
Following commencement of the exchange offer, you may continue to trade the
initial notes in the Private Offerings, Resales and Trading through Automated
Linkages market. If initial notes are tendered for exchange and accepted in the
exchange offer, the trading market for the untendered and tendered but
unaccepted initial notes could be adversely affected. Please refer to the
section of this prospectus entitled 'The Exchange Offer -- Your Failure to
Participate in the Exchange Offer Will Have Adverse Consequences.'
YOUR FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE CONSEQUENCES
The initial notes were not registered under the Securities Act or under the
securities laws of any state and you may not resell them, offer them for resale
or otherwise transfer them unless they are subsequently registered or resold
under an exemption from the registration requirements of the Securities Act and
applicable state securities laws. If you do not exchange your initial notes for
exchange notes in the exchange offer or if you do not properly tender your
initial notes in the exchange offer, you will not be able to resell, offer to
resell or otherwise transfer the initial notes unless they are registered under
the Securities Act or unless you resell them, offer to resell or otherwise
transfer them under an exemption from the registration requirements of, or in a
transaction not governed by, the Securities Act. In addition, you will no longer
be able to obligate us to register the initial notes under the Securities Act,
except in the limited circumstances provided under our registration rights
agreement.
SOME PERSONS WHO PARTICIPATE IN THE EXCHANGE OFFER MUST DELIVER A PROSPECTUS IN
CONNECTION WITH RESALES OF THE EXCHANGE NOTES AND COULD INCUR LIABILITIES AS A
RESULT
Based on no-action letters issued by the staff of the Securities and
Exchange Commission, we believe that you may offer for resale, resell or
otherwise transfer the exchange notes without compliance with the registration
and prospectus delivery requirements of the Securities Act. However, in some
instances described in this prospectus under 'The Exchange Offer,' you remain
obligated to comply with the registration and prospectus delivery requirements
of the Securities Act to transfer your exchange notes. In these cases, if you
transfer any exchange note without delivering a prospectus meeting the
requirements of the Securities Act or without an exemption from registration of
your exchange notes under the Securities Act, you may incur liability under the
Securities Act. We do not and will not assume or indemnify you against any
liability which may result.
RISKS RELATING TO FORWARD-LOOKING STATEMENTS
Some of the statements we have made in this prospectus under the sections
entitled 'Summary,' 'Risk Factors,' 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' and 'Business' are
forward-looking. They include statements about our expectations, beliefs, plans,
objectives, assumptions or future events or performance. These forward-looking
statements are based on our expectations and are susceptible to a number of
risks and uncertainties. Some of these risks and uncertainties are beyond our
control. Our actual results may
21
<PAGE>
differ materially from those suggested by these forward-looking statements for
various reasons, including those discussed under 'Management's Discussion and
Analysis of Financial Condition and Results of Operations,' 'Business' and in
this 'Risk Factors' section.
Because of the preceding and other factors, we cannot give any assurance as
to future results, levels of activity and achievements. Neither we nor any other
person assumes responsibility for the accuracy and completeness of these
forward-looking statements. Any forward-looking statements in this prospectus
speak solely as of the date on which those statements are made. We undertake no
obligation to update any forward-looking statements to reflect events or
circumstances after the date on which those statements were made or to reflect
the occurrence of unanticipated events.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the exchange
notes in exchange for the outstanding initial notes. We are making this exchange
offer solely to satisfy obligations under our registration rights agreement. In
return for issuing the exchange notes, the issuers will receive initial notes in
like aggregate principal amount.
The proceeds to us from the offering of the initial notes together with the
proceeds from the credit facility have been used to:
pay the outstanding principal amount ($275.0 million), applicable premium
(approximately $7.7 million) and accrued interest (approximately $4.4
million) on the 9 3/4% RC/Arby's senior secured notes due 2000,
pay the outstanding principal amount ($284.3 million) and the accrued
interest ($1.5 million) on borrowings under our premium beverage
companies' outstanding credit facility,
fund the acquisition of Millrose Distributors, Inc. (approximately $17.3
million),
provide for the payment of fees and expenses related to the offering of
initial notes and the above transactions (approximately $29.6 million),
and
pay dividends and other distributions to Triarc Parent of the remaining
net proceeds plus all of our cash and cash equivalents in excess of $2.0
million.
22
<PAGE>
CAPITALIZATION
The following table presents our consolidated capitalization as of
October 3, 1999. You should read this capitalization table together with the
historical condensed consolidated financial statements and related notes
appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Current portion of long-term debt........................... $ 45.6
------
Long-term debt:
Term loans under new credit facility................... 430.4 (a)
10 1/4% senior subordinated notes due 2009............. 300.0
Other.................................................. 3.8
------
Total long-term debt.............................. 734.2
------
Member's deficit............................................ (173.6)
------
Total capitalization.............................. $606.2
------
------
</TABLE>
- ------------
(a) Does not include current portion of $41.4 million.
23
<PAGE>
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
The following unaudited pro forma condensed consolidated statements of
operations for the year ended January 3, 1999 and the nine months ended
October 3, 1999 have been prepared by adjusting these statements, as derived and
condensed, as applicable, from the consolidated statements of operations on
page F-4 and F-49 in this prospectus. For further information about the
preparation of these consolidated financial statements, please refer to Note 1
to each of these consolidated financial statements on pages F-8 and F-51.
The adjustments to the condensed consolidated statements of operations
assume the offering of the initial 10 1/4% notes with a principal amount of
$300,000,000, borrowings of $475,000,000 under the term loans of the new credit
facility and the related use of proceeds, which is described more fully below,
had occurred on December 29, 1997.
They also assume that the following uses of a portion of the net proceeds
of the borrowings under the initial 10 1/4% notes and the new credit facility
had occurred on December 29, 1997:
(1) our repayment on February 25, 1999 of the $284,333,000 principal
amount of the term loans under the previously existing beverage credit
facility and $1,503,000 of related accrued interest,
(2) the redemption on March 30, 1999 of the $275,000,000 principal
amount of the RC/Arby's 9 3/4% senior notes and payment of $4,395,000 of
related accrued interest and $7,662,000 of redemption premium,
(3) the acquisition on February 25, 1999 of Millrose Distributors,
Inc. and Mid-State Beverage, Inc., which we will refer to collectively as
Millrose, for $17,491,000, including estimated expenses of $241,000,
(4) the payment of fees and expenses of $29,600,000 relating to the
above borrowings and
(5) the payment of one-time distributions to Triarc Parent of the
remaining net proceeds from the above borrowings and all of our cash and
cash equivalents on hand in excess of approximately $2,000,000, which we
retained for working capital purposes. These one-time distributions
consisted of $91,420,000 paid on February 25, 1999 and $124,108,000 paid on
March 30, 1999 following the redemption of the RC/Arby's 9 3/4% senior
notes.
These pro forma adjustments are described in the accompanying notes to the
pro forma condensed consolidated statements of operations which you should read
together with these statements. In addition, you should refer to the section of
this prospectus entitled 'Use of Proceeds,' the consolidated financial
statements and management's discussion and analysis of financial condition and
results of operations appearing elsewhere in this prospectus.
The statement of operations information of Millrose included in the
unaudited pro forma condensed statements of operations have been derived from
unaudited statements of operations of Millrose not included herein. See
'Summary -- Use of Proceeds.'
The unaudited pro forma condensed consolidated financial statements may not
be indicative of our actual results of operations had these transactions, as
applicable, actually been completed on December 29, 1997 or of our future
results of operations.
24
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 3, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
FOR THE OFFERING, FOR THE OFFERING, ADJUSTMENTS
THE NEW CREDIT THE NEW CREDIT FOR THE
AS FACILITY, AND FACILITY, AND MILLROSE
REPORTED USE OF PROCEEDS USE OF PROCEEDS ACQUISITION PRO FORMA
-------- --------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales.............. $735,436 $ -- $735,436 $ 38,565 (c) $747,989
(26,012)(d)
Royalties, franchise
fees and other
revenues............. 79,600 -- 79,600 -- 79,600
-------- -------- -------- -------- --------
815,036 -- 815,036 12,553 827,589
-------- -------- -------- -------- --------
Cost and expenses:
Cost of sales,
excluding
depreciation and
amortization......... 390,883 -- 390,883 30,129 (c) 395,262
(25,750)(d)
Advertising, selling
and distribution..... 197,065 -- 197,065 3,619 (c) 200,684
General and
administrative....... 89,088 -- 89,088 3,437 (c) 91,586
(939)(e)
Depreciation and
amortization,
excluding
amortization of
deferred financing
costs................ 32,808 -- 32,808 312 (c) 34,010
890 (f)
-------- -------- -------- -------- --------
709,844 -- 709,844 11,698 721,542
-------- -------- -------- -------- --------
Operating
profit.......... 105,192 -- 105,192 855 106,047
Interest expense............ (60,235) (18,584)(a) (78,819) (116)(c) (78,935)
Gain on sale of businesses,
net....................... 5,016 -- 5,016 -- 5,016
Other income, net........... 5,298 -- 5,298 (32)(c) 5,266
-------- -------- -------- -------- --------
Income before
income taxes and
extraordinary
charges......... 55,271 (18,584) 36,687 707 37,394
Provision for income
taxes..................... (25,284) 6,600 (b) (18,684) 69 (c) (19,337)
(722)(g)
-------- -------- -------- -------- --------
Income before
extraordinary
charges......... $ 29,987 $(11,984) $ 18,003 $ 54 $ 18,057
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of earnings to fixed
charges(h)................ 1.9x 1.5x
--- ----
--- ----
</TABLE>
25
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 3, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
FOR THE OFFERING, FOR THE OFFERING, ADJUSTMENTS
THE NEW CREDIT THE NEW CREDIT FOR THE
AS FACILITY, AND FACILITY, AND MILLROSE
REPORTED USE OF PROCEEDS USE OF PROCEEDS ACQUISITION PRO FORMA
-------- --------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales.............. $619,630 $ -- $619,630 $ 4,597 (c) $621,304
(2,923)(d)
Royalties, franchise
fees and other
revenues............. 60,098 -- 60,098 -- 60,098
-------- ------- -------- ------- --------
679,728 -- 679,728 1,674 681,402
-------- ------- -------- ------- --------
Cost and expenses:
Cost of sales,
excluding
depreciation and
amortization related
to sales of $1,518... 329,740 -- 329,740 3,619 (c) 330,374
(2,985)(d)
Advertising, selling
and distribution..... 164,772 -- 164,772 832 (c) 165,604
General and
administrative....... 69,887 -- 69,887 239 (c) 69,969
(157)(e)
Depreciation and
amortization,
excluding
amortization of
deferred financing
costs................ 23,649 -- 23,649 66 (c) 23,866
151 (f)
Capital structure
reorganization
related.............. 3,208 -- 3,208 -- 3,208
-------- ------- -------- ------- --------
591,256 -- 591,256 1,765 593,021
-------- ------- -------- ------- --------
Operating profit....... 88,472 -- 88,472 (91) 88,381
Interest expense............ (56,931) (3,002)(a) (59,933) -- (59,933)
Investment income........... 2,692 (1,116)(i) 1,576 -- 1,576
Loss on sale of
businesses, net........... (627) -- (627) -- (627)
Other income, net........... 2,112 -- 2,112 -- 2,112
-------- ------- -------- ------- --------
Income before
income taxes and
extraordinary
charges......... 35,718 (4,118) 31,600 (91) 31,509
Provision for income
taxes..................... (18,204) 1,094 (b) (16,708) (24)(g) (16,732)
402 (j)
-------- ------- -------- ------- --------
Income before
extraordinary
charges......... $ 17,514 $(2,622) $ 14,892 $ (115) $ 14,777
-------- ------- -------- ------- --------
-------- ------- -------- ------- --------
Ratio of earnings to fixed
charges(h)................ 1.6x 1.5x
---- ----
---- ----
</TABLE>
26
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(a) Represents adjustments to 'Interest expense' as follows (in thousands):
<TABLE>
<CAPTION>
FOR THE
FOR THE NINE MONTHS
YEAR ENDED ENDED
JANUARY 3, OCTOBER 3,
1999 1999
---- ----
<S> <C> <C>
To record interest expense on the initial 10 1/4%
notes........................................... $(30,750) $(4,527)
To record interest expense at a weighted average
assumed interest rate of 8.65% on the assumed
term loan borrowings initially at $475,000 under
the $535,000 new credit facility(1)............. (40,852) (5,962)
To record amortization under the interest rate
method on the estimated $29,600 of deferred
financing costs associated with the initial
10 1/4% notes and the new credit facility(2).... (3,901) (566)
To reverse reported interest expense on the
RC/Arby's 9 3/4% senior notes and the term loans
under the previously existing beverage credit
agreement(3).................................... 52,884 7,223
To reverse reported amortization of deferred
financing costs associated with the RC/Arby's
9 3/4% senior notes and the previously existing
beverage credit agreement....................... 4,035 830
-------- -------
$(18,584) $(3,002)
-------- -------
-------- -------
</TABLE>
- ------------
(1) The weighted average assumed interest rate results from applying the
actual London Interbank Offered Rated-based interest rates initially
charged by our lenders on each of the term loans under the new credit
facility to the respective average outstanding balances of each of the
term loans. The average outstanding balances reflect scheduled
repayments under the term loans assuming the initial borrowings
occurred at the beginning of 1998 and were $472,544,000 for the year
ended January 3, 1999 and $468,450,000 for the period from January 4,
1999 through the February 25, 1999 date of the initial term loan
borrowings.
If the assumed weighted average interest rate on the term loan
borrowings under the new credit facility changed by .125%, the pro
forma interest expense would change by $591,000 for the year ended
January 3, 1999 and by $87,000 for the nine months ended October 3,
1999 which relates to the period through the February 25, 1999 date of
the actual term loan borrowings, respectively.
(2) The $29,600,000 of estimated deferred financing costs associated with
the initial 10 1/4% notes and the new credit facility (previously
estimated at $28,000,000) consist of approximately (a) $15,200,000 of
fees and expenses, including commitment fees, paid to the lenders under
the new credit facility, (b) $9,700,000 of fees paid to the
underwriters of the initial 10 1/4% notes, (c) $3,400,000 of legal,
auditing and accounting fees, (d) $700,000 of printing fees, and (e)
$600,000 of other fees.
(3) The principal amounts repaid were $275,000,000 under the RC/Arby's
9 3/4% senior notes and $284,333,000 under the term loans of the
previously existing beverage credit agreement. The weighted average
interest rate associated with the term loans repaid was 8.30% at
January 3, 1999 and 7.93% at the February 25, 1999 actual repayment
date.
27
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS -- CONTINUED
(b) Represents adjustments to 'Provision for income taxes' (in thousands):
<TABLE>
<CAPTION>
FOR THE
FOR THE NINE MONTHS
YEAR ENDED ENDED
JANUARY 3, OCTOBER 3,
1999 1999
---- ----
<S> <C> <C>
To reflect the income tax benefit related to the
interest expense, including amortization of
deferred financing costs, on the initial 10 1/4%
notes and the term loans at the weighted average
incremental Federal and state income tax rates
of 37.1% and 37.3%, respectively, based on the
allocation of this new debt by entity........... $ 28,012 $ 4,119
To reverse the income tax benefit related to the
reported interest expense, including
amortization of deferred financing costs, at the
weighted average incremental Federal and state
income tax rate of 37.6% based on the entities
to which this interest related.................. (21,412) (3,025)
-------- -------
$ 6,600 $ 1,094
-------- -------
-------- -------
</TABLE>
(c) To reflect the results of operations of Millrose.
(d) To reflect the elimination of sales and cost of sales between us and
Millrose.
(e) Represents a reduction of 'General and administrative' expenses to reflect
the estimated effect of (1) the terminations of two employees and (2) the
reductions in salaries of three employees of Millrose (if these employees
choose to remain with us after the acquisition of Millrose). These
terminations and reductions are in accordance with a signed agreement
between such employees and us.
(f) Represents an adjustment to 'Depreciation and amortization, excluding
amortization of deferred financing costs' as follows (in thousands):
<TABLE>
<CAPTION>
FOR THE
FOR THE NINE MONTHS
YEAR ENDED ENDED
JANUARY 3, OCTOBER 3,
1999 1999
---- ----
<S> <C> <C>
To record amortization of 'Unamortized costs in
excess of net assets of acquired companies'
('Goodwill') of $13,579 resulting from the
acquisition of Millrose over an estimated useful
life of 15 years(1)............................. $898 $151
To reverse reported amortization of intangibles of
Millrose before its acquisition................. (8) --
---- ----
$890 $151
---- ----
---- ----
</TABLE>
- ------------
(1) The estimated Goodwill of $13,579 represents the excess of the purchase
price for Millrose over the net assets we acquired, calculated as
follows:
<TABLE>
<S> <C> <C>
Purchase price, including estimated expenses.......... 17,491
Less net assets acquired:
Receivables...................................... 2,222
Inventories...................................... 1,548
Properties....................................... 1,000
Accounts payable................................. (858) 3,912
----- -------
$13,579
-------
-------
</TABLE>
The purchase price allocation reflected above is preliminary and is subject
to finalization.
28
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS -- CONTINUED
(g) Represents adjustments to 'Provision for income taxes' (in thousands):
<TABLE>
<CAPTION>
FOR THE
FOR THE NINE MONTHS
YEAR ENDED ENDED
JANUARY 3, OCTOBER 3,
1999 1999
---- ----
<S> <C> <C>
To reflect an income tax (provision) benefit on
Millrose's pretax income (loss) at Millrose's
incremental Federal and state income tax rate of 40.9%
and reverse an existing income tax benefit of $69 for
the year ended January 3, 1999 (none reported for the
pre-acquisition period through February 25, 1999). The
provision and benefit are not reflected in Millrose's
reported results of operations due to its Subchapter S
status effective January 1, 1998....................... $(445) $ 65
To reflect the income tax provision on the reduction in
general and administrative expenses in pro forma
adjustment (e) and an income tax (provision) benefit on
the net decrease (increase) in pretax income from the
intercompany eliminations in pro forma adjustment (d),
both at Millrose's incremental Federal and state income
tax rate of 40.9%...................................... (277) (89)
----- ----
$(722) $(24)
----- ----
----- ----
</TABLE>
(h) The ratio of earnings to fixed charges was computed by dividing (1) income
before income taxes, extraordinary charges and fixed charges by (2) fixed
charges. Fixed charges consist of interest expense, amortization of
deferred financing costs and one-third of rental expense, which is deemed
to be representative of the interest factor.
(i) To reverse interest income on the bond redemption escrow account. This
amount represents the actual interest income resulting from the investment
of the proceeds of the initial 10 1/4% notes prior to such proceeds being
used to redeem the RC/Arby's 9 3/4% senior notes.
(j) To reflect the income tax benefit related to the interest income of the
bond redemption escrow account at the appropriate incremental Federal and
state income tax rate of 36%.
29
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents our historical selected consolidated financial
data. This data is presented for Triarc Consumer Products Group and its
subsidiaries on an 'as-if' pooling basis. For further discussion of this basis
of presentation, you should refer to Note 1 to our audited consolidated
financial statements included in this prospectus on page F-8. The historical
consolidated operating data for the years ended December 31, 1996, December 28,
1997 and January 3, 1999 and the balance sheet data as of December 28, 1997 and
January 3, 1999 are derived from the consolidated financial statements audited
by Deloitte & Touche LLP, independent auditors, beginning on page F-2 in this
prospectus and should be read with those financial statements and the related
notes. The historical operating data for the nine-month periods ended
September 27, 1998 and October 3, 1999 and the balance sheet data as of
October 3, 1999 are derived from unaudited condensed consolidated financial
statements contained elsewhere in this prospectus. The historical consolidated
financial data as of and for the year ended December 31, 1994 are derived from
the audited consolidated financial statements of RC/Arby's Corporation contained
in its annual report on Form 10-K for the year ended December 31, 1994 not
included in this prospectus. The historical consolidated balance sheet data as
of December 31, 1995 are derived from combining the audited consolidated balance
sheet of RC/Arby's Corporation contained in its annual report on Form 10-K for
the year ended December 31, 1995 not included in this prospectus and the audited
balance sheet of Mistic not included in this prospectus. The historical
consolidated statement of operations data for the year ended December 31, 1995
and historical consolidated balance sheet data as of December 31, 1996 are
derived from our audited consolidated financial statements not included in this
prospectus.
Also presented are selected adjusted data for the year ended January 3,
1999 and the nine-month period ended October 3, 1999 reflecting the offering of
the initial 10 1/4% notes, the new credit facility and the related use of
proceeds assuming these transactions had occurred on December 29, 1997. The pro
forma consolidated operating data are derived from the 'Unaudited Pro Forma
Condensed Statements of Operations' contained elsewhere in this prospectus and
should be read with those statements of operations and the related notes.
We changed our fiscal year from a calendar year to a year consisting of 52
or 53 weeks ending on the Sunday closest to December 31 effective for the 1997
fiscal year.
The ratio of earnings to fixed charges was computed by dividing
(1) earnings (loss) before income taxes, extraordinary charges and fixed charges
by (2) fixed charges. Fixed charges consist of interest expense, amortization of
deferred financing costs and one-third of rental expense, which is deemed to be
representative of the interest factor.
<TABLE>
<CAPTION>
AS ADJUSTED
FOR THE
HISTORICAL TRANSACTIONS(1)
----------------------------------------------------------------- ---------------
YEAR ENDED DECEMBER 31, YEAR ENDED YEAR ENDED JANUARY 3,
------------------------------------ DECEMBER 28, ----------------------------
1994 1995 1996 1997 1999 1999
---- ---- ---- ---- ---- ----
(IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues............... $373,905 $487,326 $597,435 $696,152 $815,036 $827,589
Operating profit
(loss)............... 30,074 (2) (1,146)(3) (25,435)(4) 31,872 (5) 105,192 106,047
Income (loss) before
extraordinary
charges.............. (5,477)(2) (33,349)(3) (51,368)(4) (18,986)(5) 29,987 (7) 18,057(7)
Extraordinary
charges.............. -- -- -- (2,954)(5) --
Net income (loss)...... (5,477)(2) (33,349)(3) (51,368)(4) (21,940)(5) 29,987 (7)
Cash dividends......... -- -- -- -- (23,556)
Ratio of earnings to
fixed charges........ -- -- -- -- 1.9x 1.5x
Deficiency of earnings
to cover fixed
charges.............. 3,773 45,606 74,996 24,128
BALANCE SHEET DATA
(AT END OF PERIOD):
Total assets........... $346,403 $515,375 $480,592 $853,961 $790,970
Long-term debt and note
payable to Triarc
Companies, Inc....... 291,349 416,688 347,810 564,114 560,977
Redeemable preferred
stock................ -- -- -- 79,604 87,587
Member's deficit....... (38,625) (37,110) (86,978) (42,860)(6) (44,721)
</TABLE>
(table continued on next page)
30
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
AS ADJUSTED
FOR THE
HISTORICAL TRANSACTIONS(1)
------------------------------ ---------------
NINE MONTHS ENDED
--------------------------------------------------
OCTOBER 3,
SEPTEMBER 27, ----------------------------
1998 1999 1999
---- ---- ----
(IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................................... $651,975 $679,728 $681,402
Operating profit.............................. 74,984 88,472 (9) 88,381 (10)
Income before extraordinary charges........... 20,300(8) 17,514 (9) 14,777 (10)
Extraordinary charges......................... -- (11,772)(9)
Net income.................................... 20,300(8) 5,742 (9)
Cash dividends................................ -- (204,746)
Ratio of earnings to fixed charges............ 1.8x 1.6x 1.5x
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets.................................. $827,830
Long-term debt................................ 734,218
Redeemable preferred stock.................... --
Member's deficit.............................. (173,615)
</TABLE>
- ------------
(1) The selected adjusted operating data for the year ended January 3, 1999 and
the nine-month period ended October 3, 1999 reflect adjustments for the
offering of the initial 10 1/4% notes, the new credit facility and the
related use of proceeds, including the acquisition of Millrose
Distributors, Inc., assuming these transactions had occurred on
December 29, 1997. The pro forma consolidated operating data are derived
from the 'Unaudited Pro Forma Condensed Statements of Operations' contained
elsewhere in this prospectus and should be read with those statements of
operations and the related notes.
(2) Reflects certain significant charges recorded during 1994 as follows:
$1,172,000 charged to operating profit representing advertising production
costs that in prior years were deferred; and $1,689,000 charged to loss
before extraordinary charges and net loss representing the aforementioned
$1,172,000 charged to operating profit, $1,521,000 of costs of a proposed
acquisition not consummated, less $1,004,000 of income tax benefit relating
to the aggregate of the above charges.
(3) Reflects certain significant charges recorded during 1995 as follows:
$15,309,000 charged to operating loss representing a $14,647,000 reduction
in the carrying value of long-lived assets impaired or to be disposed and
$662,000 of accelerated vesting of Triarc Parent's restricted stock granted
to our employees, $11,511,000 charged to loss before extraordinary charges
and net loss representing the aforementioned $15,309,000 charged to
operating loss and $1,000,000 of write-off of an equity investment, less
$5,898,000 of income tax benefit relating to the aggregate of the above
charges plus a $1,100,000 provision for income tax contingencies.
(4) Reflects certain significant charges recorded during 1996 as follows:
$66,700,000 charged to operating loss representing a $58,900,000 charge for
impairment of company-owned restaurants and related exit costs and
$7,800,000 of facilities relocation and corporate restructuring charges;
and $40,843,000 charged to loss before extraordinary charges and net loss
representing the aforementioned $66,700,000 charged to operating loss, less
$25,857,000 of income tax benefit relating to the aggregate of the above
charges.
(5) Reflects certain significant charges recorded during 1997 as follows:
$40,878,000 charged to operating profit representing $33,815,000 of charges
related to post-acquisition transition, integration and changes to business
strategies and $7,063,000 of facilities relocation and corporate
restructuring; $27,138,000 charged to loss before extraordinary charges
representing the aforementioned $40,878,000 charged to operating profit,
$3,513,000 of loss on sale of businesses, net, less $17,253,000 of income
tax benefit relating to the aggregate of the above
(footnotes continued on next page)
31
<PAGE>
(footnotes continued from previous page)
net charges; and $30,092,000 charged to net loss representing the
aforementioned $27,138,000 charged to loss before extraordinary charges and
a $2,954,000 extraordinary charge from the early extinguishment of debt.
(6) Reflects a decrease in member's deficit principally resulting from (1) a
$29,390,000 capital contribution to Triarc Consumer Products Group by
Triarc Parent and (2) the 'push-down' of Triarc Parent's $40,847,000
(adjusted to $40,596,000 in 1998) acquisition basis in Cable Car to Triarc
Consumer Products Group.
(7) Reflects a significant credit recorded during 1998 as follows: $3,067,000
credited to income before extraordinary charges and net income representing
$5,016,000 of gain on sale of businesses less $1,949,000 of related income
tax provision.
(8) Reflects a significant credit recorded during the nine months ended
September 27, 1998 as follows: $3,015,000 credited to income before
extraordinary charges and net income representing $4,934,000 of gain on
sale of businesses less $1,919,000 of related income tax provision.
(9) Reflects certain significant charges recorded during the nine months ended
October 3, 1999 as follows: $3,208,000 charged to operating profit
representing capital structure reorganization related charges; $1,957,000
charged to income before extraordinary charges representing the
aforementioned $3,208,000 less $1,251,000 of income tax benefit; and
$13,729,000 charged to net income representing the aforementioned
$1,957,000 charged to income before extraordinary charges and an
$11,772,000 extraordinary charge from the early extinguishment of debt.
(10) Reflects certain significant charges recorded during the nine months ended
October 3, 1999 as follows: $3,208,000 charged to operating profit
representing capital structure reorganization related charges; and
$1,957,000 charged to income before extraordinary charges representing the
aforementioned $3,208,000 less $1,251,000 of income tax benefit.
32
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
We are a leading premium beverage company, a restaurant franchisor and a
soft drink concentrate producer. Since 1995 we have acquired the Mistic, Snapple
and Stewart's premium beverage brands and in 1997 we sold all our Arby's
company-owned restaurants to an existing franchisee and focused on building the
strength of our beverage and Arby's franchise businesses.
In our premium beverage business we derive revenues from the sale of our
premium beverage products to distributors. All of our premium beverage products
are produced by third-party co-packers that we supply with raw materials and
packaging. We also derive revenues from the distribution of products in two of
our key markets. By acting as our own distributor in key markets we are able to
drive sales and improve focus on current and new products.
In our soft drink concentrate business (Royal Crown) we currently derive
our revenues from the sale of our carbonated soft drink concentrate to bottlers
and private label customers. To a much lesser extent, before 1998 we also
derived revenues from the sale of finished product. Gross margins on concentrate
sales are generally higher than on finished product sales.
In our restaurant franchising business we currently derive all our revenues
from franchise royalties and franchise fees. While over 75% of our existing
royalty agreements and all of our new domestic royalty agreements are for 4% of
franchise revenues, our average rate was 3.2% in 1998. We incur selling, general
and administrative costs but no cost of goods sold in our franchising business.
None of our businesses requires significant capital expenditures because we
own no restaurants or manufacturing facilities, other than a Royal Crown
concentrate manufacturing facility. The amortization of goodwill and trademarks
results in significant non-cash charges.
In recent years our premium beverage business has experienced the following
trends:
Acquisition/consolidation of distributors
The development of proprietary packaging
Increased pressure by competitors to achieve account exclusivity
The increased use of plastic packaging
The proliferation of new products including premium beverages,
bottled water and beverages enhanced with herbal additives, for
example, ginseng and echinachea
Increased emphasis by distributors in placing refrigerated coolers
necessitating increased equipment purchases by these distributors
Increased use of multi-packs and variety packs in certain trade
channels
In recent years our soft drink concentrate business has experienced the
following trends:
Increased competition in the form of lower prices
Increased pressure by competitors to achieve account exclusivity
Acquisition/consolidation of bottlers
Increased emphasis by bottlers in placing refrigerated coolers
necessitating increased equipment purchases by such bottlers
Increased use of multi-packs in certain trade channels
Increased market share of private label beverages
In recent years our restaurant business has experienced the following
trends:
Consistent growth of the restaurant industry as a percentage of total
food-related spending, with the quick service restaurant, or fast
food segment, in which we operate, being the fastest growing segment
of the restaurant industry
33
<PAGE>
Increased price competition in the quick service restaurant industry,
particularly as evidenced by the value menu concept which offers
comparatively lower prices on some menu items, the combination meals
concept which offers a combination meal at an aggregate price lower
than the individual food and beverage items, couponing and other
price discounting
The addition of selected higher-priced premium quality items to
menus, which appeal more to adult tastes and recover some of the
margins lost in the discounting of other menu items
Following the sale of all of the 355 company-owned Arby's restaurants on
May 5, 1997 we experience the effects of these trends only to the extent they
affect our franchise fees and royalties.
PRESENTATION OF FINANCIAL INFORMATION
This 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' should be read in conjunction with our accompanying
consolidated financial statements. Triarc Consumer Products Group, LLC was
formed on January 15, 1999. Effective February 23, 1999, Triarc Consumer
Products Group acquired by way of capital contribution RC/Arby's Corporation,
Triarc Beverage Holdings Corp. and Stewart's Beverages, Inc., formerly Cable Car
Beverage Corporation, and their subsidiaries. These companies previously had
been held directly or indirectly by Triarc Companies, Inc., which we refer to as
Triarc Parent. RC/Arby's is the parent of Royal Crown Company, Inc. and Arby's,
Inc. Triarc Beverage Holdings is the parent of Snapple Beverage Corp. and Mistic
Brands, Inc. and, effective May 17, 1999, Stewart's.
Effective January 1, 1997 we changed our fiscal year from a calendar year
to a year consisting of 52 or 53 weeks ending on the Sunday closest to
December 31. Our 1997 fiscal year commenced January 1, 1997 and ended on
December 28, 1997 and our 1998 fiscal year commenced December 29, 1997 and ended
on January 3, 1999. Our first nine months of 1998 commenced on December 29, 1997
and ended on September 27, 1998 and our first nine months of 1999 commenced on
January 4, 1999 and ended on October 3, 1999. Therefore, when we refer to '1998'
we mean the period from December 29, 1997 to January 3, 1999; when we refer to
'1997' we mean the period from January 1, 1997 through December 28, 1997; and
when we refer to '1996' we mean the calendar year ended December 31, 1996. When
we refer to the 'nine months ended September 27, 1998,' or '1998 first nine
months,' we mean the period from December 29, 1997 to September 27, 1998; and
when we refer to the 'nine months ended October 3, 1999' or '1999 first nine
months,' we mean the period from January 4, 1999 to October 3, 1999.
The following table shows the relative significance of the contribution of
each of our segments to total revenues, gross profit, EBITDA and operating
profit for our most recent fiscal year ended January 3, 1999. We calculate gross
profit as total revenues less (1) cost of sales, excluding depreciation and
amortization and (2) depreciation and amortization related to sales. Due to the
seasonality of each of our businesses, the interim results of our segments are
not necessarily indicative of their full year results and, accordingly, the
interim results for the 1999 first nine months are not included in the table
below.
34
<PAGE>
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Revenues:
Premium beverages................................ $611,545 75.0%
Soft drink concentrates.......................... 124,868 15.3
Restaurants...................................... 78,623 9.7
-------- -----
Total....................................... $815,036 100.0%
-------- -----
-------- -----
Gross Profit:
Premium beverages................................ $248,267 58.8%
Soft drink concentrates.......................... 95,591 22.6
Restaurants...................................... 78,623 18.6
-------- -----
Total....................................... $422,481 100.0%
-------- -----
-------- -----
EBITDA:
Premium beverages................................ $ 77,825 56.4%
Soft drink concentrates.......................... 17,006 12.3
Restaurants...................................... 43,180 31.3
General corporate................................ (11) 0.0
-------- -----
Total....................................... $138,000 100.0%
-------- -----
-------- -----
Operating Profit:
Premium beverages................................ $ 56,160 53.4%
Soft drink concentrates.......................... 8,366 8.0
Restaurants...................................... 40,677 38.6
General corporate................................ (11) 0.0
-------- -----
Total....................................... $105,192 100.0%
-------- -----
-------- -----
</TABLE>
You should refer to Note 20 to our accompanying consolidated financial
statements and to Note 12 to our accompanying condensed consolidated financial
statements for the nine months ended October 3, 1999 for a reconciliation of
consolidated EBITDA to pre-tax income. We define EBITDA as operating profit plus
depreciation and amortization, excluding amortization of deferred financing
costs. Since all companies do not calculate EBITDA or similarly titled financial
measures in the same manner, these disclosures may not be comparable with EBITDA
as we define it. EBITDA should not be considered as an alternative to net income
or loss, as an indicator of our operating performance, or as an alternative to
cash flow, as a measure of liquidity or ability to repay our debt, and is not a
measure of performance or financial condition under generally accepted
accounting principles, but provides additional information for evaluating our
ability to meet our obligations.
Cash flows in accordance with generally accepted accounting principles
consist of cash flows from (1) operating, (2) investing and (3) financing
activities. Cash flows from operating activities reflect net income or loss,
including charges for interest and income taxes not reflected in EBITDA,
adjusted for (1) all non-cash charges or credits including, but not limited to,
depreciation and amortization, and (2) changes in operating assets and
liabilities, not reflected in EBITDA.
Further, cash flows from investing and financing activities are not
included in EBITDA. For information regarding our historical cash flows, please
refer to the consolidated statements of cash flows presented in our accompanying
consolidated financial statements. See below for a discussion of our historical
results of operations.
35
<PAGE>
RESULTS OF OPERATIONS
NINE MONTHS ENDED OCTOBER 3, 1999 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 27, 1998
Revenues
Our revenues increased $27.8 million to $679.7 million in the nine months
ended October 3, 1999 compared with the nine months ended September 27, 1998. A
discussion of the changes in revenues by segment is as follows:
Premium Beverages -- Our premium beverage revenues increased $29.9
million (6.0%) in the nine months ended October 3, 1999 compared with the
nine months ended September 27, 1998. The increase reflects higher volume
and, to a lesser extent, higher average selling prices in the first nine
months of 1999. The increase in volume principally reflects (1) 1999 sales
of Snapple ElementsTM, a new product platform of herbally enhanced drinks
introduced in April 1999, (2) increased cases sold to retailers through
Millrose Distributors, Inc. principally reflecting an increased focus on
our products as a result of our ownership of this New Jersey distributor,
which we refer to as Millrose, since February 25, 1999 (see further
discussion of the Millrose acquisition below under 'Liquidity and Capital
Resources'), (3) higher sales of diet teas and other diet beverages and
juice drinks and (4) higher sales of Stewart's products as a result of
increased distribution in existing and new markets and the December 1998
introduction of Stewart's grape soda. The higher average selling prices
principally reflect (1) the effect of the Millrose acquisition since
February 25, 1999 whereby we sell product at higher prices directly to
retailers compared with sales at lower prices to distributors such as
Millrose and (2) selective price increases.
Soft Drink Concentrates -- Our soft drink concentrate revenues
decreased $4.2 million (4.3%) in the nine months ended October 3, 1999
compared with the nine months ended September 27, 1998. This decrease is
attributable to lower Royal Crown sales of (1) concentrate of $2.8 million,
or 2.9%, and (2) finished goods of $1.4 million, or 100%, which the soft
drink concentrate segment no longer sells. The decrease in Royal Crown
sales of concentrate reflects a $7.2 million decline in branded sales,
primarily due to lower domestic volume reflecting continued competitive
pricing pressures experienced by our bottlers, and lower international
volume as a result of the continued depressed economic conditions
experienced in Russia which commenced in August of 1998, partially offset
by a $4.4 million volume increase in private label sales reflecting a
general business recovery being experienced by our private label customer.
Restaurants -- Our restaurant revenues increased $2.1 million (3.7%)
in the nine months ended October 3, 1999 compared with the nine months
ended September 27, 1998 as higher royalty revenue more than offset lower
franchise fee revenue. The increase in royalty revenue resulted from an
average net increase of 60, or 1.9%, franchised restaurants and a 2.2%
increase in same-store sales of franchised restaurants. The decrease in
franchise fee revenue, despite an increase in franchised restaurant
openings, was due to (1) a decrease in dual-branded T.J. Cinnamons openings
and (2) an increase in remodeling credits applied against franchise fees.
Gross Profit
We calculate gross profit as total revenues less (1) cost of sales,
excluding depreciation and amortization and (2) that portion of depreciation and
amortization related to sales. Our gross profit increased $14.1 million to
$348.5 million in the nine months ended October 3, 1999 compared with the nine
months ended September 27, 1998 principally due to the effect of higher sales
volumes as discussed above. Our aggregate gross margins, which we compute as
gross profit divided by total revenues, remained constant at 51.3%. A discussion
of the changes in gross margins by segment is as follows:
Premium Beverages -- Our gross margins increased to 41.2% during the
first nine months of 1999 from 40.8% during the first nine months of 1998.
The increase in gross margins was
36
<PAGE>
principally due to (1) the selective price increases noted above, (2) the
effect of the higher selling prices resulting from the Millrose
acquisition, (3) the effect of lower freight costs and (4) to a lesser
extent, the effect of the reduced costs of certain raw materials,
principally glass bottles and flavors, in the first nine months of 1999,
all partially offset by $3.8 million of higher inventory obsolescence
costs, principally recorded in the 1999 third quarter.
Soft Drink Concentrates -- Our gross margins increased to 76.9% during
the first nine months of 1999 from 75.8% during the first nine months of
1998. This increase was due to (1) lower costs of the raw material
aspartame and (2) the effects of changes in product mix whereby the
positive effect of our no longer selling the lowest-margin finished goods
in 1999 was partially offset by a shift in sales to private label
concentrate in 1999 which has a somewhat lower margin than branded
concentrate.
Restaurants -- Our gross margins during each period are 100% because
royalties and franchise fees constitute the total revenues of the segment
and these are with no associated cost of sales.
Advertising, Selling and Distribution Expenses
Advertising, selling and distribution expenses decreased $2.0 million to
$164.8 million in the first nine months of 1999. This decrease was principally
due to a decrease in the expenses of the soft drink concentrate segment
reflecting lower bottler promotional reimbursements and other promotional
spending resulting from the decline in branded concentrate sales volume,
partially offset by (1) higher employee compensation and related costs
reflecting an increase in the number of sales and marketing employees in the
premium beverage segment and (2) an overall increase in promotional spending by
the premium beverage segment principally reflecting new product introductions
and overall higher volume.
General and Administrative Expenses
General and administrative expenses increased $1.0 million to $69.9 million
in the first nine months of 1999. This increase principally reflects higher
employee benefit and incentive compensation costs partially offset by a decrease
in the expenses of the restaurant segment due to a non-recurring provision for
the then anticipated settlement of a lawsuit with Arby's Mexican master
franchise in the third quarter of 1998 which was ultimately settled in October
1999.
Depreciation and Amortization, Excluding Amortization of Deferred Financing
Costs
Depreciation and amortization, excluding amortization of deferred financing
costs, decreased $1.3 million to $23.6 million in 1999 principally reflecting
the effects of:
(1) vending machines of the soft drink concentrate segment, with an
aggregate cost of $4.6 million, becoming fully depreciated in November 1998
and
(2) the cost of a three-year non-compete agreement, with the seller of
the Mistic business to Triarc Parent, becoming fully amortized in August
1998, partially offset by
(3) an increase in amortization of costs in excess of net assets of
businesses acquired, which we refer to as goodwill, as a result of the
Millrose acquisition.
Capital Structure Reorganization Related Charge
The capital structure reorganization related charge of $3.2 million in the
first nine months of 1999 reflects equitable adjustments that were made to the
terms of outstanding options under a stock option plan of Triarc Beverage
Holdings to adjust for the effects of net distributions of $91.3 million made by
Triarc Beverage Holdings to Triarc Parent. These distributions principally
consisted of transfers of cash and deferred tax assets, from Triarc Beverage
Holdings to Triarc Parent, partially offset by the effect of the contribution of
Stewart's to Triarc Beverage Holdings. The option plan provides for an equitable
adjustment of options in the event of a recapitalization
37
<PAGE>
or similar event. As a result of these net distributions and the terms of the
option plan, the exercise prices of the options granted in 1997 and 1998 were
equitably adjusted from $147.30 and $191.00 per share, respectively, to $107.05
and $138.83 per share, respectively, and a cash payment of $51.34 and $39.40 per
share, respectively, is due from Triarc Beverage Holdings to the option holder
following the exercise of the stock options. Compensation expense is being
recognized for the cash to be paid upon the exercise of stock options by
employees of Triarc Beverage Holdings ratably over the vesting period of the
stock options. We expect to recognize additional pre-tax charges relating to
this adjustment of $1.0 million through fiscal 2001 as the affected stock
options continue to vest, of which $0.2 million relates to the fourth quarter of
1999. There was no similar charge in the first nine months of 1998. No
compensation expense will be recognized for other changes in the terms of the
outstanding options because the modifications to the options did not create a
new measurement date under generally accepted accounting principles.
Interest Expense
Interest expense increased $12.3 million to $56.9 million in the first nine
months of 1999 reflecting higher average levels of debt during the first nine
months of 1999 due to increases from a first quarter 1999 debt refinancing and,
to a lesser extent, higher average interest rates in the 1999 period. Such
refinancing consisted of (1) the issuance of $300.0 million of the initial
10 1/4% senior subordinated notes due 2000 and (2) $475.0 million borrowed under
a new senior bank credit facility and the repayment of (1) $284.3 million under
a former credit facility and (2) $275.0 million of 9 3/4% senior secured notes
due 2000.
Investment Income
Investment income increased $0.8 million to $2.7 million in the first nine
months of 1999 entirely due to an increase in interest income on cash and cash
equivalents and short-term investments resulting from the investment during the
first quarter of 1999 of excess proceeds from the first quarter 1999 debt
refinancing.
Gain (Loss) on Sale of Businesses, Net
Gain (loss) on sale of businesses, net decreased $5.6 million to a loss of
$0.6 million in the first nine months of 1999 primarily due to a $4.7 million
non-recurring gain in the first nine months of 1998 from the May 1998 sale of
our former 20% interest in Select Beverages, Inc. and a $0.9 million reduction
to the gain from the Select Beverages sale recognized during the first nine
months of 1999 resulting from a post-closing adjustment to the sales price.
Other Income, Net
Other income, net increased $0.3 million to $2.1 million in the first nine
months of 1999 due to the effect of the $1.3 million non-recurring equity in the
loss of Select Beverages, Inc. for the first nine months of 1998, significantly
offset by non-recurring other income in the 1998 period. We owned 20% of Select
Beverages until May 1998 when we sold our 20% interest.
Provision for Income Taxes
The provision for income taxes represented effective rates of 51% in the
first nine months of 1999 and 48% in the first nine months of 1998. The
effective rate is higher in the 1999 period principally due to:
(1) the greater impact on the 1999 effective income tax rate of the
non-deductible amortization of Goodwill and
(2) higher state taxes reflecting higher losses in certain states with
no tax benefit since we file state tax returns on an individual company
basis.
38
<PAGE>
The effect of Goodwill amortization is greater in the first nine months of
1999 due to the lower projected 1999 full-year pre-tax income principally as a
result of higher projected interest expense following the refinancings described
above, compared with the then projected 1998 full-year pre-tax income as of the
end of the first nine months of 1998.
Extraordinary Charges
The extraordinary charges in the first nine months of 1999 aggregating
$11.8 million resulted from the early extinguishment of borrowings under the
former credit facility of Triarc Beverage Holdings and the RC/Arby's 9 3/4%
notes and consisted of:
(1) the write-off of previously unamortized
(a) deferred financing costs of $10.8 million and
(b) interest rate cap agreement costs of $0.1 million and
(2) the payment of a $7.7 million redemption premium on the RC/Arby's
9 3/4% notes, less
(3) income tax benefit of $6.8 million.
1998 COMPARED WITH 1997
We completed three significant transactions during 1997.
On May 22, 1997 we acquired Snapple.
On November 25, 1997 we acquired Stewart's.
On May 5, 1997 we sold all of our company-owned Arby's restaurants.
As a result, our 1998 results reflect for the entire period the results of
operations of Snapple and Stewart's but no results of operations attributable to
the ownership of the sold restaurants. In contrast, 1997 results reflect the
results of operations of Snapple and Stewart's only from their dates of
acquisition and reflect the results of operations attributable to the ownership
of the sold restaurants through the date of sale.
Because of these transactions, 1998 results and 1997 results are not
comparable. In order to create a more meaningful comparison of our results of
operations between the two years, where applicable we have adjusted for the
effects of these transactions in the segment discussions below.
Revenues
Our revenues increased $118.9 million to $815.0 million in 1998 compared
with 1997. This increase primarily results from the inclusion of Snapple and
Stewart's sales for all of 1998, compared with inclusion for only a portion of
1997, which resulted in $191.9 million of additional revenues. These increases
were partially offset by the absence during 1998 of sales attributable to the
ownership of the sold restaurants. These sales were $74.2 million from January 1
to May 5, 1997, less the effect of royalties from those restaurants during the
same portion of the 1998 period ($3.2 million). Without the effects of the
acquisitions of Snapple and Stewart's and the sale of the company-owned
restaurants, our revenues declined in 1998 by $2.0 million from 1997. A
discussion of the changes in revenues by segment is as follows:
Premium Beverages -- We have adjusted our 1998 results by including
the results of Snapple and Stewart's only for the same calendar period they
were included during 1997. After giving effect to these adjustments, our
premium beverage revenues increased $10.8 million (2.6%) in 1998 compared
with 1997. The increase was due to an increase in sales of finished goods
($12.5 million) partially offset by a decrease in sales of concentrate
($1.7 million), which we sell to only one international customer. The
increase in sales of finished goods principally reflects net higher volume
($18.9 million) primarily due to new product introductions as well as
increases in sales of teas, diet teas and other diet beverages. This
increase was partially offset by lower average selling prices ($6.4
million). The lower average selling prices were principally due to a change
in Snapple's distribution in Canada from a
39
<PAGE>
company-owned operation with higher selling prices to an independent
distributor with lower selling prices.
Soft Drink Concentrates -- Our soft drink concentrate revenues
decreased $22.0 million (15.0%) in 1998 compared with 1997. This decrease
is attributable to lower Royal Crown sales of concentrate ($15.5 million,
or 11.2%) and finished goods ($6.5 million, or 81.7%). The decrease in
Royal Crown sales of concentrate reflects (1) a $13.7 million decline in
branded sales, primarily due to lower domestic volume reflecting
competitive pricing pressures experienced by our bottlers and (2) a $1.8
million volume decrease in private label sales due principally to inventory
reduction programs of the Company's private label customer. The domestic
volume decline in branded concentrate sales was partially offset by the
fact that as a result of the sale in July 1997 of the C&C beverage line, we
now sell concentrate to the purchaser of the C&C beverage line rather than
finished goods. The decrease in sales of Royal Crown's finished goods was
principally due to the sale of the C&C beverage line and therefore the
absence in 1998 of sales of C&C finished product.
Restaurants -- We have adjusted 1997 results to exclude net sales
attributable to the company-owned restaurants which were sold and results
for the same portion of 1998 to exclude royalties from those sold
restaurants. After giving effect to these adjustments, revenues increased
$9.2 million (13.8%) due to (1) a 4.6% increase in average royalty rates
due to the declining significance of older franchise agreements with lower
rates, (2) a 3.0% increase in same-store sales of franchised restaurants
and (3) a net increase of 47 (1.6%) franchised restaurants, which generally
experience higher than average restaurant volumes.
Gross Profit
We calculate gross profit as total revenues less (1) cost of sales,
excluding depreciation and amortization and (2) that portion of depreciation and
amortization related to sales. Our gross profit increased $59.6 million to
$422.5 million in 1998 compared with 1997. Gross profit increased $78.9 million
due to the inclusion of gross profit relating to Snapple and Stewart's sales for
all of 1998, compared with inclusion for only a portion of 1997. This increase
was partially offset by the absence during 1998 of gross profit attributable to
the ownership of the sold restaurants ($15.0 million in 1997) less the
incremental royalties from those sold restaurants during that portion of the
1998 period ($3.2 million). Giving effect to the adjustments described above
relating to the acquisitions of Snapple and Stewart's and the sale of the
company-owned restaurants, our gross profit decreased $7.5 million. This
decrease occurred despite the effect of higher sales volumes discussed above,
due to a slight decrease in our aggregate gross margins, which we compute as
gross profit divided by total revenues, to 55% from 56%. This decrease in gross
margins is principally due to an overall shift in revenue mix and lower gross
margins of the premium beverage and soft drink concentrate segments, both as
discussed in more detail below. A discussion of the changes in gross margins by
segment, adjusted for the effects of the adjustments noted above, is as follows:
Premium Beverages -- Giving effect to the adjustments described above
relating to the Snapple and Stewart's acquisitions, our gross margins
decreased to 40% during 1998 from 41% during 1997. The decrease in gross
margins was principally due to the effects of (1) changes in product mix,
(2) the aforementioned change in Snapple's Canadian distribution and (3)
$3.3 million of increased provisions for obsolete inventory during the
fourth quarter. The increased provisions for obsolete inventory principally
resulted from raw material and finished goods inventories that passed their
shelf lives during the fourth quarter of 1998 and that were not timely used
due to difficulties experienced as we transitioned to our new manufacturing
systems, our overstocking certain raw materials and overstocking certain
finished products in our attempt to minimize unfilled orders in order to
improve customer satisfaction. These decreases were substantially offset by
the effects of the reduced costs of certain raw materials, principally
glass bottles and flavors, and lower freight costs in 1998.
Soft Drink Concentrates -- Our gross margins were unchanged at 77%
during 1998 and 1997. The positive effect of the shift during 1998 to
higher-margin concentrate sales from
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lower-margin finished goods was fully offset by a 1997 nonrecurring $1.1
million reduction to cost of sales resulting from the guarantee to us of
certain minimum gross profit levels on sales to our private label customer
and lower private label gross margins. We had no similar guarantee of
minimum gross profit levels in 1998.
Restaurants -- After giving effect to the adjustments described above
relating to the restaurants sold, our gross margins during each year are
100% because royalties and franchise fees, with no associated cost of
sales, now constitute the total revenues of the segment.
Advertising, Selling and Distribution Expenses
Advertising, selling and distribution expenses increased $12.3 million to
$197.1 million in 1998 reflecting the inclusion of Snapple and Stewart's for the
full 1998 year. This increase was partially offset by:
(1) a decrease in the expenses of the premium beverage segment
excluding Snapple and Stewart's principally due to less costly promotional
programs,
(2) a decrease in expenses of the soft drink concentrate segment
principally due to lower bottler promotional reimbursements resulting from
the decline in branded dconcentrate sales volume and
(3) a decrease in the expenses of the restaurant segment principally
due to local restaurant advertising and marketing expenses no longer needed
for the sold restaurants.
This decrease in the expenses of the restaurant segment commenced in 1997 with
the May 1997 sale of the restaurants and increased to its full effect in 1998.
General and Administrative Expenses
General and administrative expenses increased $7.9 million to $89.1 million
for 1998. This increase principally reflects:
(1) the inclusion of Snapple and Stewart's operations for all of 1998
and
(2) nonrecurring provisions in 1998 for (a) the settlement of a
lawsuit with ZuZu, Inc. ($0.8 million) and the anticipated settlement of a
lawsuit with Arby's Mexican master franchisee ($1.7 million) and (b) a
severance arrangement under the last of our 1993 executive employment
agreements ($1.5 million).
These increases were partially offset by the following:
(1) nonrecurring costs in 1997 in connection with the integration of
the Snapple business following its acquisition and
(2) reduced restaurant segment costs for administrative support,
principally payroll, no longer required for the sold restaurants and other
cost reduction measures.
This decrease in the expenses of the restaurant segment commenced in 1997 with
the May 1997 sale of the restaurants and increased to its full effect in 1998.
Depreciation and Amortization, Excluding Amortization of Deferred Financing
Costs
Depreciation and amortization, excluding amortization of deferred financing
costs, increased $7.6 million to $32.8 million for 1998 principally reflecting
the inclusion of Snapple and Stewart's for all of 1998 and depreciation expense
on $4.6 million of vending machines purchased by Royal Crown in January 1998.
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Charges Related to Post-Acquisition Transition, Integration and Changes to
Business Strategies
The nonrecurring charges related to post-acquisition transition,
integration and changes to business strategies of $33.8 million in 1997 were
associated with the Snapple acquisition and, to a much lesser extent, the
Stewart's acquisition. Those charges consisted of:
(1) a $12.6 million write-down of glass front vending machines based
on the reduction in our estimate of their value to scrap value based on our
plans for their future use, resulting from our decision to no longer sell
the machines to our distributors but to allow them to use the machines at
locations chosen by them,
(2) a $6.7 million provision for additional reserves for legal matters
based on our change in The Quaker Oats Company's estimate of the amounts
required reflecting our plans and estimates of costs to resolve these
matters, because we had decided to attempt to quickly settle these matters
in order to improve relationships with customers,
(3) a $3.2 million provision for additional reserves for doubtful
accounts of Snapple and the effect of the Snapple acquisition on the
collectibility of a receivable from our affiliate, MetBev, Inc., based on
our change in estimate of the related write-off to be incurred, because we
had decided not to actively seek to collect certain balances in order to
improve relationships with customers,
(4) a $2.8 million provision for fees paid to Quaker Oats under a
transition services agreement whereby Quaker Oats provided certain
operating and accounting services for Snapple through the end of our 1997
second quarter while we transitioned the records, operations and management
to our systems,
(5) the $2.5 million portion of the post-acquisition period
promotional expenses we estimated was related to the pre-acquisition period
as a result of our then current operating expectations, because we had
decided not to pursue many questionable claimed promotional credits in
order to improve relationships with customers,
(6) a $4.0 million provision for certain costs in connection with the
successful completion of the acquisition of Snapple and the Mistic
refinancing in connection with entering into a credit facility at the time
of the Snapple acquisition, because we had paid a fee to Triarc Parent in
order to compensate Triarc Parent for its recurring indirect costs incurred
while providing assistance in consummating these transactions,
(7) a $1.6 million provision for costs, principally for independent
consultants, incurred in connection with the data processing implementation
of the accounting systems for Snapple, under Quaker Oats, Snapple did not
have its own independent data processing accounting systems, including
costs incurred relating to an alternative system that was not implemented
and
(8) a $0.4 million acquisition related sign-on bonus.
You should read Note 11 to the audited consolidated financial statements of
Triarc Consumer Products Group appearing elsewhere in this prospectus where
additional disclosures relative to the charges related to post-acquisition
transition, integration and changes to business strategies are provided.
Facilities Relocation and Corporate Restructuring Charge
The nonrecurring facilities relocation and corporate restructuring charge
of $7.1 million in 1997 principally consisted of (1) $5.6 million of employee
severance and related termination costs and employee relocation costs associated
with restructuring the restaurant segment in connection with the sale of
company-owned restaurants, (2) $1.2 million of costs associated with the
relocation of Royal Crown's Florida headquarters, which was centralized with the
White Plains, New York headquarters of Triarc Beverage Holdings and (3) to a
much lesser extent, $0.3 million for the write-off of the remaining unamortized
costs of certain beverage distribution rights reacquired in prior years and no
longer being utilized by us.
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By disposing of the company-owned restaurants and focusing on solely being
a franchisor of restaurants, we anticipated that we would realize operating
profit improvements. We anticipated that the relocation of Royal Crown would
result in (1) improved operating results through cost savings by combining
certain corporate functions with those of Triarc Beverage Holdings and
(2) improved operations by sharing the experienced senior management team of
Triarc Beverage Holdings.
You should read Note 12 to the audited consolidated financial statements of
Triarc Consumer Products Group appearing elsewhere in this prospectus where
additional disclosures relative to the 1997 facilities relocation and corporate
restructuring charge are provided.
Interest Expense
Interest expense increased $2.2 million to $60.2 million for 1998. This
increase reflects the effect of higher average levels of debt due to the
inclusion of borrowings by Snapple in connection with its acquisition ($213.3
million outstanding as of January 3, 1999) for all of 1998, compared with
inclusion for only a portion of 1997. This increase was partially offset by:
(1) the elimination of $69.6 million of mortgage and equipment notes
payable and capitalized lease obligations assumed by the purchaser of the
sold restaurants for all of 1998, compared to the elimination for only a
portion of 1997 and
(2) to a lesser extent, the reduction of outstanding principal
balances aggregating $29.7 million under notes payable to Triarc Parent for
all of 1998, compared with the elimination for only a portion of 1997,
forgiven or repaid in connection with the sale of the restaurants.
Gain (Loss) on Sale of Businesses, Net
Gain on sale of businesses of $5.0 million in 1998 consists of:
(1) a pre-tax $4.7 million gain from the May 1998 sale of our 20%
interest in Select Beverages and
(2) the recognition of $0.3 million of deferred gain from the sale of
C&C. Loss on sale of businesses, net, of $3.5 million in 1997 consisted of
a $4.1 million loss on the sale of restaurants partially offset by a $0.6
million gain recognized from the C&C sale.
Other Income, Net
Other income, net decreased $0.2 million to $5.3 million in 1998. This
decrease was principally due to:
(1) $1.2 million of equity in the losses of Select Beverages recorded
in 1998 compared with $0.9 million of equity in income in 1997 and
(2) a nonrecurring $0.9 million gain in 1997 on lease termination.
We terminated a lease for a portion of the space no longer required in the
current headquarters of the restaurant group and former headquarters of Royal
Crown in Ft. Lauderdale, Florida due to staff reductions as a result of the
restaurants sale and the relocation of the Royal Crown headquarters. These
decreases were partially offset by:
(1) $1.6 million of increased interest income on invested cash, a
substantial portion of which is not expected to recur in fiscal 1999 as a
result of cash distributed to Triarc Parent in the first quarter of 1999,
and
(2) $0.4 million of the full period effect of Snapple, other than from
interest income and equity in income (loss) of Select Beverages, consisting
principally of increased rental income.
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Income Taxes
The provision for income taxes in 1998 represented an effective rate of 46%
and the benefit from income taxes in 1997 represented an effective rate of 21%.
The effective rate is higher in the 1998 period principally due to:
(1) the differing impact on the respective effective income tax rates
of the non-deductible amortization of Goodwill, in a period with pre-tax
income (1998) compared with a period with a pre-tax loss (1997) and
(2) the differing impact of the mix of pre-tax loss or income among
the consolidated entities since we file state tax returns on an individual
company basis.
Extraordinary Charges
The 1997 nonrecurring extraordinary charges aggregating $3.0 million
resulted from the assumption and early extinguishment of:
(1) mortgage and equipment notes payable assumed by the buyer in the
restaurants sale and
(2) obligations under Mistic's former credit facility refinanced in
connection with the financing of the Snapple acquisition.
These extraordinary charges were comprised of the write-off of $4.9 million of
previously unamortized deferred financing costs less the related income tax
benefit of $1.9 million.
1997 COMPARED WITH 1996
As discussed above, we completed three significant transactions during
1997.
On May 22, 1997 we acquired Snapple.
On November 25, 1997 we acquired Stewart's.
On May 5, 1997 we sold all of our company-owned Arby's restaurants.
As a result of these transactions, our 1997 results reflect the results of
operations for Snapple and Stewart's from their dates of acquisition and do not
reflect results of operations attributable to the ownership of the sold
restaurants after the date of their disposition. In contrast, our 1996 results
do not reflect results of operations of Snapple or Stewart's, because they were
acquired subsequent to 1996, and reflect results of operations attributable to
the ownership of the sold restaurants for the full year, because they were sold
subsequent to 1996.
Because of these transactions, our 1997 results and 1996 results are not
comparable. In order to provide a more meaningful comparison of our results of
operations during the two years, we have adjusted for the effects of these
transactions in the segment discussions below.
Revenues
Our revenues increased $98.7 million to $696.2 million for 1997. This
increase principally reflects the inclusion in 1997 of $285.5 million of Snapple
and Stewart's sales. The increase was partially offset by a $154.4 million
decrease due to the elimination during a portion of 1997 of sales attributable
to the sold restaurants less $6.2 million of franchise royalties from those
restaurants for the period after the restaurant sale. Aside from the effects of
these transactions, revenues decreased $38.6 million. A discussion of the change
in revenues by segment is as follows:
Premium Beverages -- We have adjusted our 1997 results by excluding
the results of operations of Snapple and Stewart's. After giving effect to
these adjustments, revenues decreased $7.8 million (5.9%) in 1997 due to
decreases in sales of finished goods ($9.7 million) partially offset by an
increase in sales of concentrate ($1.9 million), which we sell to only one
international customer. The decrease in sales of finished goods principally
reflects lower sales volume exclusive of Snapple.
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Soft Drink Concentrates -- Revenues decreased $31.1 million (17.5%) in
1997 due to decreases in sales of finished goods ($21.6 million) and
concentrate ($9.5 million). The decrease in sales of finished goods
principally reflects (1) the absence in the 1997 period of sales to MetBev
and a volume decrease in sales of branded finished products of Royal Crown
in areas other than those serviced by MetBev, where in both instances we
now sell concentrate rather than finished goods, (2) a volume decrease in
sales of the C&C beverage line, where we now sell concentrate to the
purchaser of the C&C beverage line rather than finished goods, as a result
of the C&C sale and (3) a volume reduction in the sales of finished Royal
Crown Premium Draft Cola which we ceased selling in late 1996. Sales of
Royal Crown concentrate decreased, despite the shift in sales of C&C and
Royal Crown products to concentrate from finished goods noted above,
principally reflecting (1) a decrease in branded sales due to volume
declines, which were adversely affected by lower bottler case sales and
(2) an overall lower average concentrate selling price.
Restaurants -- We have adjusted for the sale of the restaurants by
including in 1996 results of restaurant operations for the same period that
was included in 1997 before the restaurant sale and excluding from 1997
results franchise royalties on the sold restaurants for the period after
the restaurant sale. After giving effect to these adjustments, revenues
increased $0.3 million (less than 1%) during 1997. This increase was due to
a $2.8 million (4.9%) increase in royalties and franchise fees partially
offset by a $2.5 million (3.2%) decrease in net sales of the company-owned
restaurants. The increase in royalties and franchise fees is due to a net
increase of 69 (2.6%) franchised restaurants and a 1.7% increase in
same-store sales of franchised restaurants.
Gross Profit
We calculate gross profit as total revenues less (1) cost of sales,
excluding depreciation and amortization and (2) that portion of depreciation and
amortization related to sales. Depreciation and amortization included in cost of
sales was $1.0 million in 1997 and $13.5 million in 1996, including depreciation
and amortization in 1996 but not in 1997 on all long-lived assets of the sold
restaurants which had been written down to their estimated fair values as of
December 31, 1996 and were no longer depreciated or amortized through the date
of their sale. Our gross profit increased $93.7 million to $362.9 million in
1997. The increase is attributable in part to gross profit in 1997 associated
with Snapple ($119.9 million) and Stewart's ($0.4 million). The increase was
partially offset by the gross profit associated with the sold restaurants which
were included in 1996 results for the entire period but only a portion of 1997
($28.5 million) less the effect of royalties from those restaurants during that
same portion of 1997 ($6.2 million). Excluding the effects of these
transactions, gross profit decreased $4.3 million due to the lower overall sales
volumes discussed above. This decrease was partially offset by higher overall
gross margins of 58% in 1997 compared with 54% in 1996. A discussion of the
changes in gross margins by segment is as follows:
Premium Beverages -- Giving effect to the adjustments described above
relating to the Snapple and Stewart's acquisitions in 1997, margins
remained unchanged in 1997 at 39%.
Soft Drink Concentrates -- Margins increased in 1997 to 77% from 68%
principally due to the shift discussed above in product mix to
higher-margin concentrate sales compared with finished product sales and
reduced cost of the raw material aspartame in 1997.
Restaurants -- Giving effect to the adjustments described above with
respect to the sale of the restaurants, margins increased in 1997 to 56%
from 51% primarily due to (1) the absence in 1997 of depreciation and
amortization on all long-lived assets of the sold restaurants discussed
above and (2) the higher percentage of royalties and franchise fees, with
no associated cost of sales, to total revenues in 1997.
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Advertising, Selling and Distribution Expenses
Advertising, selling and distribution expenses increased $48.9 million to
$184.7 million in 1997. The increase reflects:
(1) the expenses of Snapple,
(2) higher promotional costs related to Mistic Rain Forest Nectars, a
then recently introduced product line and
(3) other increased advertising and promotional costs for the premium
beverage segment other than Snapple.
These increases were partially offset by:
(1) a decrease in the expenses of the restaurant segment principally
due to local restaurant advertising and marketing expenses no longer
required for the sold restaurants after their sale in May 1997,
(2) a decrease in the expenses of the soft drink concentrate segment
principally due to:
(a) lower bottler promotional reimbursements resulting from the
decline in sales volume,
(b) the elimination of advertising expenses for Draft Cola and
(c) planned reductions in connection with the aforementioned
decreases in sales of other Royal Crown and C&C branded finished
products.
General and Administrative Expenses
General and administrative expenses increased $5.5 million to $81.2 million
in 1997 due to the expenses of Snapple partially offset by:
(1) reduced spending levels related to administrative support,
principally payroll, no longer required for the sold restaurants and
(2) reduced travel activity in the restaurant segment before the
restaurants sale.
Depreciation and Amortization, Excluding Amortization of Deferred Financing
Costs
Depreciation and amortization, excluding amortization of deferred financing
costs, decreased $4.7 million to $25.2 million in 1997 due to a decrease in
depreciation and amortization relating to the sold restaurants partially offset
by the depreciation and amortization in 1997 of Snapple.
Charges Related to Post-Acquisition Transition, Integration and Changes to
Business Strategies
The nonrecurring charges related to post-acquisition transition,
integration and changes to business strategies of $33.8 million in 1997 are
discussed above in connection with the comparison of 1998 with 1997.
Facilities Relocation and Corporate Restructuring Charge
The facilities relocation and corporate restructuring charge of $7.1
million in 1997 is discussed above in connection with the comparison of 1998
with 1997. The facilities relocation and corporate restructuring charge of $7.8
million in 1996 resulted from:
(1) estimated losses of $3.7 million on planned subleases, principally
for the write-off of nonrecoverable unamortized leasehold improvements and
furniture and fixtures and rent payments for the period we estimated the
space would remain unoccupied pending finding a subtenant or negotiating an
early lease termination, of surplus office space as a result of the then
planned sale of company-owned restaurants and the relocation of the Royal
Crown headquarters,
(2) employee severance costs of $2.0 million associated with the
relocation of the Royal Crown headquarters,
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(3) settlement costs of $1.3 million for terminating Mistic
distribution agreements, including both cash payments and the write-off of
receivables from such distributions in lieu of cash payments,
(4) estimated losses of $0.6 million for the shutdown of the soft
drink concentrate segment's Ohio production facility principally for the
write-off of obsolete steel drums used to send concentrate to bottlers and
estimated costs to refurbish the plant and
(5) the estimated losses of $0.2 million for Mistic information
systems to be abandoned.
By disposing of the company-owned restaurants and focusing solely on being
a franchisor of restaurants, we anticipated that we would realize operating
profit improvements. We anticipated that the relocation of Royal Crown would
result in improved operating results through (1) cost savings by combining
certain corporate functions with those of Triarc Beverage Holdings and
(2) improved operations by sharing the experienced senior management team of
Triarc Beverage Holdings. The consolidation and realignment of Mistic's
distribution network, including the termination of existing Mistic distribution
agreements, strengthened Mistic's distribution. By consolidating all of the soft
drink concentrate production in one plant including the related shutdown of the
Ohio production facility, we anticipated we would realize cost savings from such
consolidation.
You should read Note 12 to the audited consolidated financial statements of
Triarc Consumer Products Group appearing elsewhere in this prospectus where
additional disclosures relative to the facilities relocation and corporate
restructuring charges are provided.
Reduction in Carrying Value
The reduction in carrying value of long-lived assets to be disposed in 1996
of $58.9 million reflects the estimated loss on the anticipated disposal of
long-lived assets in connection with the sale of all company-owned restaurants
as then planned. This provision represents the reduction in the carrying value
of certain long-lived assets and certain identifiable intangibles to estimated
fair value and the accrual of certain equipment operating lease obligations
which would not be assumed by the purchaser. There was no provision for
reduction in carrying value of long-lived assets in 1997.
Interest Expense
Interest expense increased $8.0 million to $58.0 million in 1997
principally due to the effect of borrowings by Snapple in connection with the
Snapple acquisition ($222.4 million outstanding as of December 28, 1997)
partially offset by:
(1) the 1997 assumption by the purchaser of the sold restaurants of
$69.6 million of mortgage and equipment notes payable and capitalized lease
obligations and
(2) the reduction of outstanding principal balances on May 5, 1997
aggregating $29.7 million under notes payable to Triarc Parent forgiven or
repaid in connection with the restaurants sale.
Loss on Sale of Businesses, Net
Loss on sale of businesses, net, of $3.5 million in 1997 is discussed above
in connection with the comparison of 1998 with 1997.
Other Income, Net
Other income, net improved $5.1 million to $5.5 million in 1997 principally
due to:
(1) $2.1 million of other income, net of Snapple since its acquisition
in May 1997 consisting principally of equity in the earnings of investees,
rental income and interest income,
(2) $1.4 million of increased gains on asset sales,
(3) $0.9 million of gain on a Florida lease termination and
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(4) $0.6 million of increased interest income on invested cash.
Income Tax Benefit
Our benefit from income taxes represented effective rates of 21% in 1997
and 32% in 1996. The rate is lower in 1997 due to the increased effect in 1997
of the amortization of non-deductible Goodwill as a result of the significantly
lower 1997 pre-tax loss.
Extraordinary Charges
The extraordinary charges in 1997 are discussed above in connection with
the comparison of 1998 with 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows From Operations
Our consolidated operating activities provided cash and cash equivalents,
which we refer to in this discussion as cash, of $59.1 million during 1998 and
$15.4 million during the nine months ended October 3, 1999. The net cash
provided by operating activities in 1998 principally reflects net income of
$30.0 million and net non-cash charges of $43.6 million, principally
depreciation and amortization of $36.9 million. These sources were partially
offset by:
(1) the reclassification of gain on sale of businesses of $5.0 million
to cash flows from investing activities and
(2) cash used by changes in operating assets and liabilities of $9.5
million.
The net cash provided by operating activities during the nine months ended
October 3, 1999 principally reflects:
(1) net income of $5.7 million,
(2) net non-cash charges of $55.2 million, principally depreciation
and amortization of $26.9 million, a provision for deferred income taxes of
$12.1 million and the write-off of unamortized deferred financing costs and
interest rate cap agreement costs of $10.9 million relating to the
refinancing transactions described below and
(3) other of $1.6 million.
These sources were partially offset by cash used by changes in operating
assets and liabilities of $47.1 million.
The cash used by changes in operating assets and liabilities of $9.5
million in 1998 principally reflects a decrease in accounts payable and accrued
expenses of $29.6 million partially offset by a $10.6 million decrease in
inventories, a $7.0 million decrease in receivables and a $3.5 million increase
in due to affiliates.
The decrease in accounts payable and accrued expenses was principally due
to:
(1) payments by Snapple of accrued losses on pre-acquisition
production contracts and legal settlements,
(2) decreases at Royal Crown due to the reduced aspartame inventory
levels described below and the lower bottler promotional reimbursements
discussed above and
(3) reduced purchases from third party vendors since we have
correspondingly increased the purchases of certain raw materials from
Triarc Parent.
The decrease in inventories was due to:
(1) a $7.2 million decrease in Royal Crown inventories reflecting a
reduction of higher than normal 1997 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
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(2) $3.4 million of reduced inventory levels of premium beverages
principally due to a planned reduction of Mistic inventory levels.
The decrease in receivables was due to a $7.6 million decrease at Royal
Crown reflecting the absence in 1998 of a 1997 promotional rebate receivable for
aspartame purchases and lower fourth quarter private label sales in 1998
compared with 1997. The $3.5 million increase in due to affiliates resulted from
the increased purchases of certain raw materials from Triarc Parent.
The cash used by changes in operating assets and liabilities of $47.1
million during the nine months ended October 3, 1999 reflects increases in
receivables of $39.0 million and inventories of $19.0 million. These effects
were partially offset by:
(1) an increase in due to Triarc Parent and other affiliates of $6.6
million,
(2) an increase in accounts payable and accrued expenses of $2.8
million and
(3) a decrease in prepaid expenses and other current assets of $1.5
million.
The increase in receivables principally results from seasonally higher
sales in August and September 1999 compared with November and December 1998.
The increase in inventories was principally due to the residual effect of
the seasonal buildup in our premium beverage business.
The increase in due to Triarc Parent and other affiliates reflects the
increased inventory purchases, a portion of which are purchased through Triarc
Parent, partially offset by the repayment of amounts due to Triarc Parent in
connection with the refinancing transactions described below.
The increase in accounts payable and accrued expenses was principally due
to seasonally higher accruals for bottler and distributor promotional
allowances.
We expect continued positive cash flows from operations for the remainder
of 1999 which should reflect the reversal following the peak summer season of
seasonal increases in receivables and inventories experienced during the first
nine months of 1999.
Working Capital and Capitalization
Working capital, which equals current assets less current liabilities, was
$33.2 million at October 3, 1999, reflecting a current ratio, which equals
current assets divided by current liabilities, of 1.2:1. This amount represents
a decrease in working capital of $22.0 million from January 3, 1999 principally
reflecting the net effects of the refinancing and related transactions discussed
below, most significantly the portion of amounts distributed to Triarc Parent
which came from our cash and cash equivalents on hand.
Our capitalization at October 3, 1999 aggregated $606.2 million consisting
of $779.8 million of long-term debt, including current portion, less $173.6
million of member's deficit. Our total capitalization decreased $7.4 million
from January 3, 1999 reflecting an increase in our member's deficit of $128.9
million and the effect of the February 23, 1999 contribution to us by Triarc
Parent of the redeemable preferred stock of Triarc Beverage Holdings with
carrying values of $87.6 million as of January 3, 1999 and $88.8 million as of
the contribution date, whereby the redeemable preferred stock of Triarc Beverage
Holdings now eliminates in consolidation, both partially offset by a $209.1
million increase in our long-term debt. The increase in member's deficit
primarily reflects the net effects of the refinancing and related transactions
discussed below and was due to:
(1) dividends of $209.7 million paid to Triarc Parent, including a
non-cash dividend of $5.0 million and
(2) the non-cash transfer of $22.7 million of our deferred tax assets
to Triarc Parent as discussed below.
These factors were partially offset by:
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(1) capital contributions to us by Triarc Parent of:
(a) the redeemable preferred stock of Triarc Beverage Holdings,
(b) $7.8 million of certain amounts otherwise due to Triarc Parent
and
(c) $2.4 million of Triarc Parent's minority interests in two of
our restaurant subsidiaries and
(2) net income of $5.7 million.
The increase in our long-term debt is discussed immediately below.
Refinancing Transactions
On February 25, 1999 Triarc Consumer Products Group and Triarc Beverage
Holdings issued $300.0 million principal amount of the initial 10 1/4% notes and
concurrently Snapple, Mistic, Stewarts', RC/Arby's and Royal Crown entered into
a new $535.0 million senior bank credit facility. An aggregate $20.0 million
principal amount of the initial 10 1/4% notes were initially purchased by our
Chairman and Chief Executive Officer and President and Chief Operating Officer.
We have been advised by these executives that, as of April 23, 1999, they no
longer hold any of the initial 10 1/4% notes.
The new credit facility consists of a $475.0 million term facility, all of
which was borrowed as three classes of term loans on February 25, 1999, and a
$60.0 million revolving credit facility which provides for revolving credit
loans by Snapple, Mistic, Stewart's, RC/Arby's or Royal Crown. They may make
revolving loan borrowings of up to 80% of eligible accounts receivable plus 50%
of eligible inventories. There have been no borrowings of revolving loans
through October 3, 1999. At October 3, 1999 there was $59.9 million of borrowing
availability under the revolving credit facility.
We used the proceeds of the borrowings under the initial 10 1/4% notes and
the new credit facility to:
(1) repay on February 25, 1999 the $284.3 million outstanding
principal amount of term loans under a former credit facility entered into
by Snapple, Mistic, Triarc Beverage Holdings and Stewart's and $1.5 million
of related accrued interest,
(2) redeem on March 30, 1999 the $275.0 million of borrowings under
the RC/Arby's 9 3/4% senior secured notes due 2000 and pay $4.4 million of
related accrued interest and $7.7 million of redemption premium,
(3) acquire Millrose and the assets of Mid-State Beverage, Inc., two
New Jersey distributors of our premium beverages, for $17.5 million,
including expenses of $0.2 million,
(4) pay estimated fees and expenses of $29.6 million relating to the
issuance of the initial 10 1/4% notes and the completion of the new credit
facility and
(5) pay one-time distributions to Triarc Parent of $215.5 million,
including cash dividends of $204.7 million, of the remaining net proceeds
from the above borrowings and all of our cash and cash equivalents on hand
in excess of $2.0 million, which we retained for working capital purposes.
The initial 10 1/4% notes mature in 2009 and do not require any
amortization of principal prior to 2009. In accordance with the indenture
pursuant to which the initial 10 1/4% notes were issued, the annual interest
rate on the initial 10 1/4% notes increased by 1/2% to 10 3/4% on August 24,
1999 and will remain at 10 3/4% until the registration statement of which this
prospectus is a part is declared effective by the Securities and Exchange
Commission, at which time the annual rate would revert back to 10 1/4%.
Scheduled maturities of the term loans under the new credit facility are
$1.6 million during the remainder of 1999, representing one quarterly
installment, increasing annually through 2006 with a final payment in 2007. Any
revolving loans will be due in full in 2005. We are also required to make
mandatory prepayments in an annual amount, if any, initially equal to 75% of
excess cash
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flow as defined in the new credit agreement. We currently expect that a
prepayment will be required to be made in the second quarter of 2000 in respect
of the year ending January 2, 2000, the amount of which is currently estimated
at $34.0 million. The $1.6 million quarterly installment referred to above would
not be affected by the excess cash flow prepayment, however, all subsequent
quarterly scheduled installments would be reduced. Pursuant to the new credit
agreement, we can make voluntary prepayments of two classes of the term loans.
However, if we make voluntary prepayments of two classes of the term loans,
which have $124.4 million and $303.5 million outstanding as of October 3, 1999,
we will incur prepayment penalties of 2.0% and 3.0% of the amounts prepaid
through February 25, 2000, respectively, and from February 26, 2000 through
February 25, 2001 we will incur prepayment penalties of 1.0% and 1.5% of the
amounts prepaid, respectively.
Other Debt
We have a note payable to a beverage co-packer in an outstanding principal
amount of $4.2 million as of October 3, 1999, of which $0.8 million is due
during the remainder of 1999.
Our scheduled maturities of long-term debt during the remainder of 1999 are
$2.6 million, including $1.6 million under the term loans and $0.8 million under
the note payable to a beverage co-packer discussed above.
Debt Agreement Guarantees and Restrictions
Under our debt agreements substantially all of our assets, other than cash
and cash equivalents, are pledged as security. Our obligations relating to the
initial 10 1/4% notes are, and upon the issuance of the exchange notes will be,
guaranteed by Snapple, Mistic, Stewart's and RC/Arby's and all of their domestic
subsidiaries, all of which, effective February 23, 1999, are wholly-owned by
Triarc Consumer Products Group or Triarc Beverage Holdings. These guarantees are
full and unconditional, are on a joint and several basis and are unsecured. Our
obligations relating to the new credit facility are guaranteed by Triarc
Consumer Products Group, Triarc Beverage Holdings and all of the domestic
subsidiaries of Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown. As
collateral for the guarantees under the new credit facility, all of the stock of
Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown and all of their domestic
subsidiaries and 65% of the stock of each of their directly-owned foreign
subsidiaries is pledged.
Arby's remains responsible for operating and capitalized lease payments
assumed by the purchaser in connection with the restaurants sale of
approximately $117.0 million as of May 1997 when the Arby's restaurants were
sold and $91.4 million as of October 3, 1999, assuming the purchaser of the
Arby's restaurants has made all scheduled repayments through such date. Further,
Triarc Parent has guaranteed mortgage notes and equipment notes payable to FFCA
Mortgage Corporation assumed by the purchaser in connection with the restaurants
sale of $54.7 million as of May 1997 and $49.5 million as of October 3, 1999,
assuming the purchaser of the Arby's restaurants has made all scheduled
repayments through such date.
The indenture under which the initial 10 1/4% notes were issued, and the
exchange notes will be issued, and the new credit agreement contain various
covenants which:
(1) require meeting financial amount and ratio tests,
(2) limit, among other matters,
(a) the incurrence of indebtedness,
(b) the retirement of debt before maturity, with exceptions,
(c) investments,
(d) asset dispositions and
(e) affiliate transactions other than in the normal course of
business, and
(3) restrict the payment of dividends to Triarc Parent.
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Under the most restrictive of these covenants, we cannot pay any dividends
to Triarc Parent other than the one-time distributions, including dividends,
paid to Triarc Parent in connection with the 1999 refinancing transactions.
Capital Expenditures
Capital expenditures amounted to $11.1 million in 1998, including $4.6
million which RC/Arby's was required to reinvest in core business assets under
the indenture relating to the RC/Arby's 9 3/4% senior notes as a result of the
sale of the C&C Beverage line and other asset disposals in 1997, and $5.8
million during the nine months ended October 3, 1999. We expect that capital
expenditures will approximate $4.0 million during the remainder of 1999 for
which there were $1.0 million of outstanding commitments as of October 3, 1999.
Our planned capital expenditures are principally for production equipment in our
beverage segments.
Acquisitions
In February 1999 we acquired Millrose and Mid-State for $17.5 million as
discussed above. On August 27, 1998 we completed the T.J. Cinnamons acquisition
by acquiring from Paramark Enterprises, Inc., formerly known as T.J. Cinnamons,
Inc., all of Paramark's franchise agreements for T.J. Cinnamons full concept
bakeries and Paramark's wholesale distribution rights for T.J. Cinnamons
products. In 1996, we had acquired the T.J. Cinnamons trademarks, service marks,
recipes and proprietary formulae. The 1998 acquisition also included settlement
of remaining contingent payments from the 1996 acquisition, which were based
upon achieving specific sales targets over a seven-year period. The aggregate
consideration in 1998 consisted of cash of $3.0 million and a $1.0 million,
discounted value of $0.9 million, non-interest bearing obligation payable in
equal monthly installments through August 2000. To further our growth strategy,
we will consider additional selective business acquisitions, as appropriate, to
grow strategically and explore other alternatives to the extent we have
available resources to do so.
Income Taxes
We are included in the consolidated Federal income tax return of Triarc
Parent. As of January 3, 1999, RC/Arby's, Triarc Beverage Holdings, including
Stewart's effective August 15, 1998, and Stewart's through August 15, 1998 were
each parties to separate tax-sharing agreements with Triarc Parent whereby each
was required to pay amounts relating to taxes based on their taxable income and
the taxable income of their eligible subsidiaries on a stand-alone basis. Under
these agreements, in 1998 Triarc Beverage Holdings made tax-sharing payments to
Triarc Parent of $10.5 million and Stewart's made tax-sharing payments of $0.9
million. RC/Arby's was not required to make any tax-sharing payments in 1998 as
a result of net operating losses in prior periods in excess of pre-tax income
for 1998.
On February 25, 1999 a revised tax-sharing agreement was entered into with
Triarc Parent which, as amended effective February 25, 1999, provides that we
would continue to receive benefit for deferred tax assets associated with
existing Federal net operating loss carryforwards and excess Federal income tax
payments made in accordance with the prior tax-sharing agreement except that
Triarc Parent has the right to cause the effective transfer of any unutilized
benefits from us to Triarc Parant, but only to the extent any such transfer
would not result in non-compliance with a credit agreement covenant. In
accordance therewith, during the nine months ended October 3, 1999 we recorded a
charge to 'Accumulated deficit' and a credit to 'Deferred income taxes' to
transfer $22.7 million of these deferred tax benefits to Triarc Parent as if
this transfer were a distribution to Triarc Parent. As of October 3, 1999, we
have $8.6 million remaining of these unutilized benefits.
The Federal income tax returns of Triarc Parent and its subsidiaries,
including RC/Arby's, have been examined by the Internal Revenue Service for the
tax years from 1989 through 1992. Prior to 1999 Triarc Parent resolved and
settled certain issues with the Internal Revenue Service regarding such audit
and in July 1999 Triarc Parent resolved all remaining issues. In connection
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therewith, we paid $4.6 million during 1997, of which $2.4 million was the
amount of tax due and $2.2 million was interest thereon, and no further payments
are required. The Internal Revenue Service is examining the Federal income tax
returns of Triarc Parent and its subsidiaries, including RC/Arby's, for the year
ended April 30, 1993 and transition period ended December 31, 1993. In
connection with this most recent examination, Triarc Parent has received to date
notices of proposed adjustments, of which $722,000 would increase the taxable
income relating to RC/Arby's, the tax effect of which has not yet been
determined. Triarc Parent does not expect to receive any additional proposed
adjustments relating to RC/Arby's from this more recent examination. We have
adequate Federal net operating loss carryforwards and excess income tax payments
under the tax sharing agreements described above to provide for any tax
liabilities that may result from the resolution of this examination.
Accordingly, we do not expect to be required to make any related payments to
Triarc Parent.
CASH REQUIREMENTS
As of October 3, 1999, our consolidated cash requirements for the remainder
of 1999, exclusive of operating cash flow requirements, which include
tax-sharing payments to Triarc Parent as discussed above, consist principally
of:
(1) capital expenditures of approximately $4.0 million,
(2) scheduled debt principal repayments aggregating $2.6 million and
(3) the cost of additional business acquisitions, if any.
We anticipate meeting all of these requirements through:
(1) existing cash and cash equivalents of $40.1 million as of
October 3, 1999,
(2) cash flows from operations and/or
(3) the $59.9 million of availability as of October 3, 1999 under our
$60.0 million revolving credit facility.
FACILITIES RELOCATION AND CORPORATE RESTRUCTURING
As of October 3, 1999 we have a $0.6 million remaining accrual from our
1996 and 1997 provisions for facilities relocation and corporate restructuring
which aggregated $14.9 million. The remaining accrual principally relates to
employee severance and related termination costs for employees terminated in
1997. Scheduled payments in the fourth quarter of 1999 are currently estimated
to be $0.1 million. The remaining accrual as of January 2, 2000, currently
estimated to be $0.5 million, will be reversed to income as a credit to
facilities relocation and corporate restructuring in our fourth quarter ending
January 2, 2000.
LEGAL AND ENVIRONMENTAL MATTERS
We are involved in litigation, claims and environmental matters incidental
to our businesses. We have reserves for legal and environmental matters of $1.5
million as of October 3, 1999. Although the outcome of these matters cannot be
predicted with certainty and some of these matters may be disposed of
unfavorably to us, based on currently available information and given our
reserves, we do not believe that these legal and environmental matters will have
a material adverse effect on our consolidated financial position or results of
operations.
YEAR 2000
We have undertaken a study of our functional application systems to
determine their compliance with year 2000 issues and, to the extent of
noncompliance, the required remediation. Our study consisted of an eight-step
methodology to:
(1) obtain an awareness of the issues;
(2) perform an inventory of our software and hardware systems;
(3) identify our systems and computer programs with year 2000
exposure;
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(4) assess the impact on our operations by each mission critical
application;
(5) consider solution alternatives;
(6) initiate remediation;
(7) perform validation and confirmation testing and
(8) implement.
Through October 3, 1999, we had completed all eight steps in our restaurant
segment and, in our beverage segments, we had completed steps one through six
and expect to complete step seven and the final implementation before
January 1, 2000. Step seven requires that we develop testing and review
methodology on a risk prioritization basis and implement such protocols to test
year 2000 compliance of both internal software and hardware systems. Step eight
requires that we implement needed corrections to existing and/or new hardware
and software applications to cause systems to become and remain year 2000
compliant.
This study addressed both information technology and non-information
technology systems, including imbedded technology such as micro controllers in
our telephone systems, production processes and delivery systems. Some
significant systems in our soft drink concentrate segment, principally Royal
Crown's order processing, inventory control and production scheduling system,
required remediation which was completed in the first quarter of 1999.
As a result of this study and subsequent remediation, we have no reason to
believe that any of our mission critical systems are not year 2000 compliant.
Accordingly, we do not currently anticipate that internal systems failures will
result in any material adverse effect to our operations. However, should the
final testing and implementation steps reveal any year 2000 compliance problems
which cannot be corrected before January 1, 2000, the most reasonably likely
worst-case scenario is that we might experience a delay in production and/or
fulfilling and processing orders resulting in either lost sales or delayed cash
receipts, although we do not believe that this delay would be material. In this
case, our contingency plan would be to revert to a manual system in order to
perform the required functions. Due to the limited number of orders received by
Royal Crown on a daily basis, this contingency plan would not cause any
significant disruption of business. As of October 3, 1999, we had incurred $1.3
million of costs in order to become year 2000 compliant, including computer
software and hardware costs, and the current estimated cost to complete this
remediation during the remainder of 1999 is not more than $0.5 million. These
costs incurred through January 3, 1999 were expensed as incurred, except for the
direct purchase costs of software and hardware, which were capitalized. The
software-related costs incurred on or after January 4, 1999 are being
capitalized in accordance with the provisions of Statement of Position 98-1,
'Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use', of the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants, which we adopted in the first quarter
of 1999.
An assessment of the readiness of year 2000 compliance of third party
entities with which we have relationships, such as our suppliers, banking
institutions, customers, payroll processors and others is ongoing. We have
inquired, or are in the process of inquiring, of the significant aforementioned
third parties about their readiness relating to year 2000 compliance and to date
have received indications that many of them are in the process of remediation
and/or will be year 2000 compliant. We are, however, subject to risks relating
to these third parties' potential year 2000 non-compliance. We believe that
these risks are primarily associated with our banks and major suppliers,
including our beverage co-packers and bottlers and the food suppliers and
distributors to our restaurant franchisees. At present, we cannot determine the
impact on our results of operations in the event of year 2000 non-compliance by
these third parties. In the most reasonably likely worst-case scenario, the year
2000 non-compliance might result in a disruption of business and loss of
revenues, including the effects of any lost customers, in any or all of our
business segments. The most reasonably likely worst-case scenario from failure
of systems of our suppliers is an inability to order and receive delivery of
needed raw materials, packaging and/or other production supplies which would
result in an inability to meet orders causing lost sales. The most likely
worst-case scenario from failure of systems of our banks would be an inability
to
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transact normal banking business such as deposits of collections, clearing cash
disbursements and borrowing needed revolving loan funds or investing excess
funds.
We determined that the possible failure of these third party systems
represents the most significant risk to our ability to operate our businesses in
the normal course as we could not manufacture our products without the ability
to order and receive materials when and where we need them and as we could not
manage our monetary responsibilities without the ability to interact with the
banking system.
We will continue to monitor these third parties to determine the impact on
our businesses and the actions we must take, if any, in the event of
non-compliance by any of these third parties. Our contingency plans presently
include the build-up of our beverage inventories just before the year 2000 in
order to mitigate the effects of temporary supply disruptions. We believe there
are multiple vendors of the goods and services we receive from our suppliers and
thus the risk of non-compliance with year 2000 by any of our suppliers is
mitigated by this factor. Also, no single customer accounts for more than 3% of
our consolidated revenues, thus mitigating the adverse risk to our business if
some customers are not year 2000 compliant.
We have engaged consultants to advise us regarding the compliance efforts
of each of our operating businesses. The consultants are assisting us in
completing inventories of critical applications and in completing formal
documentation of year 2000 compliance of hardware and software as well as
mission critical customers, vendors and service providers. The costs of the
project and the date on which we believe we will complete the year 2000
modifications are based on management's best estimates, which were derived using
numerous assumptions of future events. However, we cannot assure you that these
estimates will be achieved and actual results could differ materially from those
anticipated.
INFLATION AND CHANGING PRICES
Management believes that inflation did not have a significant effect on
gross margins during 1996, 1997, 1998 and the nine months ended October 3, 1999,
since inflation rates generally remained at relatively low levels. Historically,
we have been successful in dealing with the impact of inflation to varying
degrees within the limitations of the competitive environment of each segment of
our business. In the restaurant segment in particular, the impact of any future
inflation should be limited since our restaurant operations are exclusively
franchising following the 1997 sale of all company-owned restaurants.
SEASONALITY
Our beverage and restaurant businesses are seasonal. In the beverage
businesses, the highest revenues occur during the spring and summer (April
through September) and, accordingly, our second and third quarters reflect the
highest revenues. Our first and fourth quarters have lower revenues from the
beverage businesses. The royalty revenues of our restaurant business are
somewhat higher in our fourth quarter and somewhat lower in our first quarter.
Accordingly, consolidated revenues will generally be highest during the second
and third fiscal quarters of each year. Our EBITDA and operating profit are also
highest during the second and third fiscal quarters of each year and lowest in
the first fiscal quarter. This principally results from the higher beverage
revenues in the second and third fiscal quarters while general and
administrative expenses and depreciation and amortization, excluding
amortization of deferred financing costs are generally recorded ratably in
interim periods either as incurred or allocated to interim periods based on time
expired. The first fiscal quarter is also lower due to advertising production
costs which typically are higher in the first quarter in anticipation of the
peak spring and summer beverage selling season and which are recorded the first
time the related advertising takes place.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 'Accounting for Derivative Instruments
and Hedging Activities'.
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Statement of Financial Accounting Standards No. 133 provides a comprehensive
standard for the recognition and measurement of derivatives and hedging
activities. The standard requires all derivatives be recorded on the balance
sheet at fair value and establishes special accounting for three types of
hedges. The accounting treatment for each of these three types of hedges is
unique but results in including the offsetting changes in fair values or cash
flows of both the hedge and hedged item in results of operations in the same
period. Changes in fair value of derivatives that do not meet the criteria of
one of the aforementioned categories of hedges are included in results of
operations. Statement of Financial Accounting Standards No. 133 is effective for
our fiscal year beginning January 1, 2001, as amended by Statement of Financial
Accounting Standards No. 137 which defers the effective date. We believe our
only significant derivative is an interest rate cap agreement on certain of our
long-term debt. We historically have not had transactions to which hedge
accounting applied and, accordingly, the more restrictive criteria for hedge
accounting in Statement of Financial Accounting Standards No. 133 should have no
effect on our consolidated financial position or results of operations. However,
the provisions of Statement of Financial Accounting Standards No. 133 are
complex and we are just beginning our evaluation of the implementation
requirements of Statement of Financial Accounting Standards No. 133 and,
accordingly, are unable to determine at this time the impact it will have on our
consolidated financial position and results of operations.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to the impact of interest rate changes and to a much lesser
extent, foreign currency fluctuations.
Policies and Procedures -- In the normal course of business, we employ
established policies and procedures to manage our exposure to changes in
interest rates and fluctuations in the value of foreign currencies using
financial instruments we deem applicable.
INTEREST RATE RISK
Our objective in managing our exposure to interest rate changes is to limit
the impact of interest rate changes on earnings and cash flows. To achieve our
objectives, we assess the relative proportions of our debt under fixed versus
variable rates. We generally use purchased interest rate caps on a portion of
our variable-rate debt to limit our exposure to increases in short-term interest
rates. These cap agreements usually are at significantly higher than market
interest rates prevailing at the time the cap agreements are entered into and
are intended to protect against very significant increases in short-term
interest rates. As of January 3, 1999 we had one interest rate cap agreement
related to interest on variable-rate debt under a then existing credit facility
and as of October 3, 1999 we had one interest rate cap agreement relating to
interest on one-half of our variable-rate term loans under our current $535.0
million senior bank credit facility. These agreements provided or provide for a
cap which was approximately 3% higher than the interest rate as of January 3,
1999 on the related debt and approximately 2% higher than the interest rate as
of October 3, 1999 on the related debt.
FOREIGN CURRENCY RISK
Our objective in managing our exposure to foreign currency fluctuations is
also to limit the impact of such fluctuations on earnings and cash flows. We
have a relatively limited amount of exposure to (1) export sales revenues and
related receivables denominated in foreign currencies and (2) investments in
foreign subsidiaries which are subject to foreign currency fluctuations. Our
primary export sales exposures relate to sales in Canada, the Caribbean and
Europe. We monitor these exposures and periodically determine our need for use
of strategies intended to lessen or limit our exposure to these fluctuations.
However, foreign export sales and foreign operations for our most recent full
fiscal year ended January 3, 1999 represented only 5.7% of our revenues and an
immediate 10% change in foreign currency exchange rates versus the U.S. dollar
from their levels at January 3, 1999 would not have a material effect on our
financial condition or results of
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operations. At the present time, we do not hedge our foreign currency exposures
as we do not believe this exposure to be material.
OVERALL MARKET RISK
With regard to overall market risk, we attempt to mitigate our exposure to
such risks by assessing the relative proportion of our investments in cash and
cash equivalents and the relatively stable and risk-minimized returns available
on such investments. At January 3, 1999 and October 3, 1999, our excess cash was
primarily invested in commercial paper and/or United States treasury bills with
maturities of less than 90 days and/or money market funds which, due to their
short-term nature, minimizes our overall market risk.
SENSITIVITY ANALYSIS
All of our market risk sensitive instruments are instruments entered into
for purposes other than trading. Our measure of market risk exposure represents
an estimate of the potential change in fair value of our financial instruments.
Market risk exposure is presented for each class of financial instruments held
by us at January 3, 1999 and October 3, 1999 for which an immediate adverse
market movement represents a potential material impact on our financial position
or results of operations. We believe that the rates of adverse market movements
described below represent the hypothetical loss to future earnings and do not
represent the maximum possible loss nor any expected actual loss, even under
adverse conditions, because actual adverse fluctuations would likely differ. The
following table reflects the estimated effects on the market value of our
financial instruments based upon assumed immediate adverse effects as noted
below.
<TABLE>
<CAPTION>
JANUARY 3, 1999 OCTOBER 3, 1999
-------------------- --------------------
CARRYING INTEREST CARRYING INTEREST
VALUE RATE RISK VALUE RATE RISK
----- --------- ----- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash equivalents.......................... $ 66,422 $ -- (a) $ 36,291 $ -- (a)
Long-term debt............................ 570,655 (2,843) 779,788 (4,717)
</TABLE>
- ------------
(a) Due to the short-term nature of the cash equivalents, a change in interest
rates of one percentage point would not have a material impact on our
financial position or results of operations.
------------------------
The sensitivity analysis of long-term debt assumes an instantaneous
increase in market interest rates of one percentage point from their levels at
January 3, 1999 and October 3, 1999, with all other variables held constant. The
change of one percentage point with respect to our long-term debt
(1) represents an assumed average 11% decline as the weighted average interest
rate of our variable-rate debt at January 3, 1999 and October 3, 1999
approximated 9% and (2) relates to only our variable-rate debt since a change in
interest rates on our fixed-rate debt would not affect interest expense on our
fixed-rate debt. The interest rate risk presented with respect to long-term debt
represents the potential impact the indicated change in interest rates would
have on our results of operations and not our financial position.
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BUSINESS
GENERAL
We are a leading premium beverage company, a restaurant franchisor and a
soft drink concentrates producer. We own the Snapple, Mistic and Stewart's
premium beverage brands and the Royal Crown carbonated soft drink brand and we
are the franchisor of the Arby's restaurant system. During the last several
years, we have focused our business on premium beverages by acquiring the
Snapple, Stewart's and Mistic brands and on franchising by selling all of our
company-owned Arby's restaurants to a franchisee. Snapple is a leading marketer
and distributor of premium beverages in the United States. Arby's is the world's
largest restaurant system specializing in slow-roasted roast beef sandwiches
and, according to Nation's Restaurant News, the 10th largest quick service
restaurant chain in the United States, based on 1997 domestic system wide sales.
INDUSTRY OVERVIEW
BEVERAGES
Our beverage business competes in two product categories in the
non-alcoholic beverage industry: alternative beverages, consisting of 'premium'
and 'non-premium' products, and carbonated soft drinks.
Alternative beverages consist of fruit beverages, a category that includes
both fruit juices and fruit drinks that are not 100% juice, sparkling and still
water, ready-to-drink teas, sports drinks and natural soda. From 1992 to 1997,
the alternative beverage market has experienced significant growth, with volumes
more than doubling to 1.12 billion cases. Nonetheless, alternative beverages
currently remain only a small portion of the beverage market, providing
significant opportunity for future growth.
The alternative beverage category consists of products classified as
'premium,' higher quality, more specialized goods, and to a lesser extent,
'non-premium,' lower-margin, generic or more mainstream products. Premium
beverage products typically command higher prices and higher margins for the
brand owner, the distributor and the retailer than non-premium beverages because
of the following:
Higher Quality Ingredients. Premium beverage ingredients are perceived to
be higher quality and most do not include preservatives.
Distribution. The primary distribution channels for premium beverages are
convenience stores and other small retail outlets. These locations usually
sell premium beverages in single refrigerated cold servings instead of at
room temperature in larger containers.
Packaging and Marketing. Packaging is a key differentiator in the
single-serve market and critical to building a premium image. Marketing
premium beverages relies heavily on product innovation, unique advertising
and availability.
Carbonated soft drinks were estimated to account for approximately 30% of
all drinks, including alcoholic beverages, consumed in the United States in
1997, up from approximately 23.8% in 1987. Annual per-capita soft drink
consumption continues to grow at a low single-digit pace. The carbonated soft
drink industry is concentrated, with the three largest franchise
companies -- Coca-Cola Co., PepsiCo Inc., and Dr. Pepper/Seven Up Inc., an
affiliate of Cadbury Schweppes Plc -- accounting for approximately 90% of U.S.
carbonated soft drink sales.
Beverage companies have used several various strategies to increase
sales -- acquiring other companies, expanding distribution channels and
international expansion.
QUICK SERVICE RESTAURANT INDUSTRY
According to data compiled by the National Restaurant Association, total
domestic restaurant industry sales were estimated to be approximately $215
billion in 1997, of which approximately $100 billion were estimated to be in the
quick service restaurant segment. Large chains are
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continuing to gain a greater share of industry sales. The 100 largest restaurant
chains accounted for approximately 49.7% of restaurant industry sales in 1997,
compared to approximately 39.7% in 1980. According to a study by Franchise
Finance Corporation of America, the quick service restaurant segment accounted
for approximately 70% of sales and 85% of restaurant units within the top 100
restaurant chains in 1997. According to Franchise Finance Corporation of
America, the quick service restaurant industry has grown from a total restaurant
sales market share of approximately 30% in 1970 to 47% in 1997.
BUSINESS SEGMENTS
Snapple, Mistic, and Stewart's conduct our premium beverage operations,
Royal Crown conducts our soft drink concentrate operations, and Arby's conducts
our franchise restaurant operations.
PREMIUM BEVERAGES (SNAPPLE, MISTIC AND STEWART'S)
Through Snapple Beverage Corp., Mistic Brands, Inc. and Stewart's
Beverages, Inc., we are a leader in the wholesale premium beverage market.
According to A.C. Nielsen data, in 1998 our premium beverage brands had the
leading share (33%) of premium beverage sales volume in grocery stores, mass
merchandisers and convenience stores.
SNAPPLE
Snapple markets and distributes all-natural ready-to-drink teas, juice
drinks and juices. During 1998, Snapple sales represented approximately 79% of
the case sales of our total premium beverage sales. According to A.C. Nielsen
data, in 1998 Snapple had the leading share (26%) of premium beverage sales
volume in grocery stores, mass merchandisers and convenience stores. Snapple has
a stable base of core products that are consistently Snapple's top sellers.
Snapple's current top twenty products have contributed approximately 70% of
Snapple's sales in each of the last three years.
Since Triarc Beverage Holdings acquired Snapple in May 1997, Snapple has
strengthened its distributor relationships, improved promotional initiatives and
significantly increased new product introductions and packaging innovations.
These activities have contributed to an increase in Snapple case sales of 8.4%
in 1998 over 1997. The most important product introduction in 1998 was
WhipperSnapple, a smoothie-like beverage which was named Convenience Store News
magazine's best new non-alcoholic beverage product of the year and won the
American Marketing Association's Edison award for best new beverage in 1998.
WhipperSnapple is a shelf stable product containing dairy ingredients and a
blend of fruit juices and purees. Since 1997, Snapple has introduced several new
products and flavors, including Orange Tropic-Wendy's Tropical Inspiration,
several herbal and green teas, and Snapple Farms, a line of 100% fruit juices
which is available in five flavors. In April 1999, Snapple introduced Snapple
Elements, a line of all natural juice drinks and teas enhanced with herbal
ingredients, and Hydro, a line of all natural thirst quenchers and two brewed
sun teas for consumers with active lifestyles.
MISTIC
Mistic markets and distributes a wide variety of premium beverages,
including fruit drinks, ready-to-drink teas, juices and flavored seltzers under
the Mistic, Mistic Rain Forest Nectars and Mistic Fruit Blast brand names. Since
Triarc Parent acquired Mistic in August 1995, Mistic has introduced more than
35 new flavors, a line of 100% fruit juices, various new bottle sizes and shapes
and numerous new package designs. In 1999, Mistic introduced an orange carrot
juice drink, Mistic Italian Ice Smoothies, a smoothie-like beverage using the
WhipperSnapple technology, and Sun Valley Squeeze, a line of fruit flavored
drinks packaged in a proprietary 20 ounce bottle with dramatic graphics.
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STEWART'S
Stewart's markets and distributes Stewart's brand premium soft drinks,
including Root Beer, Orange N' Cream, Cream Ale, Ginger Beer, Creamy Style Draft
Cola, Classic Key Lime, Lemon Meringue, Cherries N' Cream and Grape. Stewart's
holds the exclusive perpetual worldwide license to manufacture, distribute and
sell Stewart's brand beverages and owns the Fountain Classics trademark. Through
the third quarter of 1999, Stewart's has experienced 28 consecutive quarters of
double-digit percentage case sales increases compared to the prior year's
comparable quarter. Triarc Parent acquired Stewart's in November 1997 and
Stewart's has grown its case sales by 17% in 1998 over 1997 primarily by
increasing penetration in existing markets, entering new markets and continuing
product innovation.
PREMIUM BEVERAGE BUSINESS STRATEGY
Our business strategy for our premium beverage business is to:
DEVELOP NEW PRODUCTS AND INNOVATIVE PACKAGING: During 1998, we introduced
new platforms, such as WhipperSnapple, which is now available in eight
flavors. We also introduced new products and flavors, including Lemonade
Iced Tea and Diet Ruby Red. In April 1999, we introduced Snapple Elements
and Hydro. We also intend to continue to develop innovative packaging like
the 'swirl' bottle for WhipperSnapple and the carafe bottle for Mistic.
INCREASE CONSUMER AWARENESS AND BRAND IMAGERY: We intend to continue to
use innovative marketing and advertising to increase the visibility and
image of our well known brands.
CONTINUE TO EXPAND AND ENHANCE DISTRIBUTOR RELATIONSHIPS: We intend to
focus our sales force on continuing to improve relationships with
distributors. We intend to continue to assist our distributors in
developing local marketing promotion campaigns, training personnel and
participating in local customer visits.
EXPAND AND IMPROVE DISTRIBUTION: We plan to continue to expand in existing
and new geographic markets and channels of trade, including selected
international markets. We also plan to increase the rate at which we place
cold drink equipment such as visicoolers in stores and other outlets. We
currently own distributors in three of our largest premium beverage
markets and may explore the acquisition of distributors in other key
markets to drive sales and improve focus on existing and new products.
CONTROL PRODUCTION COSTS: We expect to continue to control production
costs through favorable supply agreements for raw materials, flavors, and
packaging. We have also introduced initiatives to further reduce costs and
improve freight management.
MINIMIZE CAPITAL EXPENDITURES: We plan to continue to minimize capital
expenditures primarily through the use of third party co-packers for
production of our premium beverage products. Although we currently do not
own any packing facilities or other significant manufacturing facilities,
we are in the process of establishing a packing line at one of our
company-operated distribution centers which we expect will result in
significant freight and production savings.
SELECTIVELY ACQUIRE BEVERAGE BRANDS: We may broaden our product offerings
through selective premium beverage acquisitions.
PRODUCTS
Our premium beverage products compete in a number of product categories,
including fruit flavored beverages, iced teas, lemonades, carbonated sodas, 100%
fruit juices, smoothies, nectars and flavored seltzers. These products are
generally available in the United States in some combination of 16 oz., 12 oz.
or 10 oz. glass bottles, 32 oz. or 20 oz. PET (plastic) bottles and 11.5 oz.
cans.
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CO-PACKING ARRANGEMENTS
More than 20 co-packers strategically located throughout the United States
produce our premium beverage products for us under formulation requirements and
quality control procedures that we specify. We select and monitor the producers
to ensure adherence to our production procedures. We regularly analyze samples
from production runs and conduct spot checks of production facilities. Triarc
Parent purchases most packaging and raw materials and arranges for their
shipment to our co-packers and bottlers. Our three largest co-packers accounted
for approximately 51% of our total case production of premium beverages in 1998.
Our contractual arrangements with our co-packers are typically for a fixed
term that is automatically renewable for successive one year periods. During the
term of the agreement, the co-packer generally commits a specified amount of its
monthly production capacity to us. Snapple has committed to order guaranteed
volumes under substantially all of its contracts. If the volume actually ordered
is less than the guaranteed volume, Snapple is typically required to pay the co-
packer the product of (1) an amount per case specified in the agreement and (2)
the difference between the volume actually ordered and the guaranteed volume.
At October 3, 1999, Snapple had reserves of approximately $3.3 million for
payments through 2000 under its long-term production contracts with co-packers,
known as take-or-pay agreements. We paid approximately $5.9 million under
Snapple's take-or-pay agreements during the seven months in 1997 that we owned
Snapple and $11.3 million in 1998, primarily related to obligations entered into
by the prior owners of Snapple. Mistic has committed to order a guaranteed
volume in two instances and a percentage of its products sold in a region in
another instance. If the guaranteed volume or percentage is not met, Mistic must
make payments to compensate for the difference. Stewart's has no agreements
requiring it to make minimum purchases. Because of these co-packing
arrangements, we have generally avoided significant capital expenditures or
investments for bottling facilities or equipment. Accordingly, our production
related fixed costs have been minimal.
We believe we have arranged for sufficient production capacity to meet our
1999 requirements and that, in general, the industry has excess production
capacity that we could use. We also expect that in 1999 we will meet
substantially all of our minimum production requirements under our co-packing
agreements.
RAW MATERIALS
Triarc Parent purchases raw materials used in the preparation and packaging
of our premium beverage products and supplies them to our co-packers. Triarc
Parent has chosen, for quality control and other purposes, to purchase some raw
materials, including aspartame, on an exclusive basis from single suppliers,
although we believe that adequate sources of these raw materials are available
from multiple suppliers. Substantially all of our flavor requirements are
purchased from six suppliers. Triarc Parent purchases a significant portion of
our flavor requirements from one supplier which has been designated as its
preferred supplier of flavors. Triarc Parent purchases all of our glass bottles
from three suppliers, although one supplier has the right to supply up to 75% of
our requirements for some types of packaging, and one supplier has the right to
supply up to 95% of some of Stewart's packaging requirements. In turn, Triarc
Parent sells to our beverage businesses, at cost, the raw materials, flavors and
glass bottles that it purchases from its suppliers. Since the acquisition of
Snapple, Triarc Parent has been negotiating and continues to negotiate, new
supply and pricing arrangements with its suppliers. We believe that, if
required, alternate sources of raw materials, flavors and glass bottles are
available.
DISTRIBUTION
We currently sell our premium beverages through a network of distributors
that include specialty beverage, carbonated soft drink and licensed
beer/wine/spirits distributors. In addition, Snapple uses brokers for
distribution of some Snapple products in Florida and Georgia. We distribute our
products internationally primarily through one distributor in each country,
other than
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in Canada, where Perrier Group of Canada Ltd. is Snapple's master distributor
and where we also use brokers and direct account selling. We typically grant
distributors exclusive rights to sell Snapple, Mistic and/or Stewart's products
within a defined territory. We have written agreements with distributors who
represent approximately 70% of our volume. The agreements are typically either
for a fixed term renewable upon mutual consent or are perpetual, and are
terminable by us for cause, upon specified defaults or failure to perform under
the agreement. The distributor, though, may generally terminate its agreement
upon specified prior notice.
Snapple owns two of its largest distributors, Mr. Natural Inc., which
distributes in the New York Metropolitan area, and Pacific Snapple Distributors,
Inc., which distributes in parts of Southern California. In February 1999,
Snapple acquired Millrose Distributors, Inc. and the assets of Mid-State
Beverage, Inc., two distributors that distribute Snapple and Stewart's products
in parts of New Jersey for approximately $17.3 million. Before the acquisition,
Millrose was the largest non-company owned Snapple distributor and Mid-State was
the second largest Stewart's distributor.
No non-company owned distributor accounted for more than 5% of total case
sales in 1996, 1997 or 1998. We believe that we could find alternative
distributors if our relationships with our largest distributors were terminated.
International sales accounted for less than 10% of our premium beverage
sales in each of 1996, 1997 and 1998. Since we acquired Snapple, Royal Crown's
international group has been responsible for the sales and marketing of our
premium beverages outside North America.
SALES AND MARKETING
Snapple and Mistic have a combined sales and marketing staff. Stewart's has
its own sales and marketing staff. The sales forces are responsible for
overseeing sales to distributors, monitoring retail account performance and
providing sales direction and trade spending support. Trade spending includes
price promotions, slotting fees and local consumer promotions. The sales force
handles most accounts on a regional basis with the exception of large national
accounts, which are handled by a national accounts group. We combined the
Snapple/Mistic sales forces by geographic zones under the direction of Zone
Sales Vice Presidents, Division Managers, Regional Sales Managers and Trade
Development Managers. We organized Stewart's sales force into three divisions.
Division Vice Presidents, Regional Sales Managers and District Sales Managers
manage each. We employed a sales and marketing staff, excluding that of
Snapple-owned distributors, of approximately 290 as of October 3, 1999.
We intend to maintain consistent advertising campaigns for our brands as an
integral part of our strategy to stimulate consumer demand and increase brand
loyalty. In 1999, we have employed a combination of network advertising
complemented with local spot advertising in our larger markets. In most markets,
we have used television as the primary advertising medium and radio as the
secondary medium, although Mistic has used radio as its primary advertising
medium. We also employ outdoor, newspaper and other print media advertising, as
well as in-store point of sale promotions.
SOFT DRINK CONCENTRATES (ROYAL CROWN)
Through Royal Crown Company, Inc., we participate in the approximately
$55.5 billion domestic retail carbonated soft drink market. Royal Crown produces
and sells concentrates used in the production of carbonated soft drinks. Royal
Crown sells these concentrates to independent, licensed bottlers who manufacture
and distribute finished beverage products domestically and internationally.
Royal Crown's products include: RC Cola, Diet RC Cola, Cherry RC Cola, RC Edge,
Diet Rite Cola, Diet Rite flavors, Nehi, Upper 10, and Kick. RC Cola is the
largest national brand cola available to the independent bottling system, which
consists of bottlers who do not bottle either Coca-Cola or Pepsi-Cola.
Royal Crown is the exclusive supplier of cola concentrate and a primary
supplier of flavor concentrates to Cott Corporation, which, based on public
disclosures by Cott, is the largest
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supplier of premium retailer branded beverages in the United States, Canada and
the United Kingdom.
Royal Crown also sells its products internationally. Royal Crown's
international export business has grown at an 18% compound annual growth rate
over the five years ended 1997, although growth slowed to 4% in 1998 due to
adverse economic conditions in some of its markets, especially Russia. During
1998, Royal Crown's soft drink brands had approximately a 1.6% share of national
supermarket volume according to Beverage Digest/A.C. Nielsen data.
SOFT DRINK CONCENTRATES BUSINESS STRATEGY
Our business strategy for Royal Crown is to:
ENHANCE ROYAL CROWN'S STRATEGIC RELATIONSHIP WITH COTT: We plan to expand
Royal Crown's relationship with Cott by assisting in the development of
new products and maintenance of quality control. Royal Crown is Cott's
exclusive worldwide supplier of cola concentrates for retailer-branded
beverages in various containers. Royal Crown also supplies Cott with non-
cola carbonated soft drink concentrates.
CONTINUE THE EXPANSION OF ROYAL CROWN'S INTERNATIONAL EXPORT BUSINESS: We
plan to continue to target international markets. Royal Crown's sales
outside the United States were approximately 11.3% of its total revenues
in 1998.
FOCUS MARKETING RESOURCES: We plan to improve profitability by focusing
Royal Crown's marketing resources in markets where its market share is
strongest.
ROYAL CROWN'S BOTTLER NETWORK
Royal Crown sells its flavoring concentrates for branded products to
independent licensed bottlers in the United States and 72 foreign countries,
including Canada. Consistent with industry practice, Royal Crown assigns each
bottler an exclusive territory for bottled and canned products within which no
other bottler may distribute Royal Crown branded soft drinks. As of October 3,
1999, Royal Crown products were packaged and/or distributed domestically by 165
licensees, covering 50 states and Puerto Rico. As of October 3, 1999, Royal
Crown's independent bottlers operated a total of 42 production centers under 127
production and distribution agreements and operated under 33 distribution-only
agreements.
Royal Crown enters into a license agreement with each of its bottlers which
it believes is comparable to those prevailing in the industry. The duration of
the license agreements varies, but Royal Crown may terminate any license
agreement if a bottler commits a material breach.
Royal Crown's ten largest bottler groups accounted for approximately 79% of
Royal Crown's domestic revenues from concentrate for branded products during
1998. RC Chicago Bottling Group accounted for approximately 23% of Royal Crown's
domestic revenues from concentrate for branded products during 1998 and American
Bottling Company accounted for approximately 18% of these revenues during 1998.
Although we believe that Royal Crown could find new bottlers to license the RC
Cola brand to, in the short term Royal Crown's sales would decline if these
major bottlers stopped selling RC Cola brand products.
PRIVATE LABEL
Royal Crown believes that private label sales through Cott represent an
opportunity to benefit from sales by retailers of store brands. Royal Crown's
private label sales began in late 1990. Unit sales of concentrate to Cott in
1998 decreased by 15% over sales in 1997 due primarily to inventory reduction
programs of Cott. Royal Crown's revenues from sales to Cott were approximately
12.6% of its total revenues in 1996, 15.8% in 1997 and 17.2% in 1998.
Royal Crown sells concentrate to Cott under a concentrate supply agreement
signed in 1994. Under the Cott agreement:
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Royal Crown is Cott's exclusive worldwide supplier of cola concentrates
for retailer-branded beverages in various containers;
Cott must purchase from Royal Crown at least 75% of its total worldwide
requirements for carbonated soft drink concentrates for beverages sold in
the containers for which Royal Crown is the exclusive supplier of
concentrates;
the initial term is 21 years and there are multiple six-year extensions;
and
as long as Cott purchases a specified minimum number of units of private
label concentrate in each year of the agreement, Royal Crown will not
manufacture and sell private label carbonated soft drink concentrates to
parties other than Cott anywhere in the world.
In addition, Royal Crown supplies Cott with non-cola carbonated soft drink
concentrates. Through its private label program, Royal Crown develops new
concentrates specifically for Cott's private label accounts. The proprietary
formulae Royal Crown uses for this private label program are customer-specific
and differ from those of Royal Crown's branded products. Royal Crown works with
Cott to develop flavors according to each trade customer's specifications. Royal
Crown retains ownership of the formulae for the concentrates developed after the
date of the Cott agreement, except, in most cases, upon termination of the Cott
agreement because of breach or non-renewal by Royal Crown.
DISTRIBUTION
Bottlers distribute finished soft drink products through the:
take home channel -- consisting of supermarkets;
convenience channel -- consisting of convenience stores and other small
retailers;
fountain/food service channel -- consisting of fountain syrup sales and
restaurant single drink sales; and
vending channel -- consisting of bottle and can sales through vending
machines.
Royal Crown's bottlers distribute their products primarily through the
take-home channel.
INTERNATIONAL
Royal Crown's sales outside the United States were approximately 8.7% of
its total revenues in 1996, 10.9% in 1997 and 11.3% in 1998. Sales outside the
United States of branded concentrates were approximately 12.3% of Royal Crown's
total branded concentrate sales in 1996, 13.9% in 1997 and 13.6% in 1998. The
decreases in percentages for 1998 are mainly attributable to economic conditions
in Russia. As of October 3, 1999, 106 bottlers and 13 distributors sold Royal
Crown branded products outside the United States in 70 countries, with
international export sales in 1998 distributed among Canada (7.4%), Latin
America and Mexico (33.4%), Europe (16.0%), the Middle East/Africa (23.6%) and
the Far East/Pacific Rim (19.6%). While the financial and managerial resources
of Royal Crown have been focused on the United States, we believe significant
opportunities exist for Royal Crown in international markets. New bottlers were
added in 1998 to the following markets: Russia, Ukraine, Croatia, Latvia,
Brazil, Spain and Syria.
PRODUCT DEVELOPMENT AND RAW MATERIALS
Royal Crown believes that it has a history as an industry leader in product
innovation. Royal Crown introduced the first national brand diet cola in 1961.
The Diet Rite flavors line was introduced in 1988 to complement the cola line
and to target the non-cola segment of the market, which has been growing faster
than the cola segment due to a consumer trend toward lighter beverages. In 1997,
Royal Crown introduced a new version of Diet Rite Cola and in 1998 Royal Crown
introduced two new Diet Rite flavors, Iced Mocha and Lemon Sorbet, and began to
use sucralose in Diet RC Cola. In April 1999, Royal Crown introduced RC Edge, a
cola specially formulated with herbal enhancements.
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Flavoring ingredients and sweeteners are generally available on the open
market from several sources, although as noted above, Triarc Parent has agreed
to purchase some raw materials on an exclusive or preferred basis from single
suppliers.
FRANCHISE RESTAURANT SYSTEM
Through the Arby's franchise business, we participate in the approximately
$100 billion quick service restaurant segment of the domestic restaurant
industry. Arby's, which celebrated its 35th anniversary this year, enjoys a high
level of brand recognition. In 1998, Arby's had an estimated market share of
approximately 73% of the roast beef sandwich segment of the quick service
restaurant category. In addition to various slow-roasted roast beef sandwiches,
Arby's also offers a selected menu of chicken, turkey, ham and submarine
sandwiches, side-dishes and salads. Arby's also currently offers franchisees the
opportunity to multi-brand at Arby's locations with T.J. Cinnamon's products,
which are primarily gourmet cinnamon rolls, gourmet coffees and other related
products. Arby's expects to offer franchisees the opportunity to multi-brand
with Pasta Connection'TM' products, which are pasta dishes with a variety of
different sauces, after we complete the final stages of test marketing in 1999.
As of October 3, 1999, the Arby's restaurant system consisted of 3,178
franchised restaurants, of which 3,021 operate within the United States and 157
operate outside the United States. Of the domestic restaurants, approximately
336 are multi-branded locations that sell T.J. Cinnamons products.
Currently all of the Arby's restaurants are owned and operated by
franchisees. Because Arby's owns no restaurants, it avoids the significant
capital costs and real estate and operating risks associated with restaurant
operations. As a franchisor Arby's receives franchise royalties from all Arby's
restaurants and up-front franchise fees from its restaurant operators for each
new unit opened. Arby's average franchise royalty rate in 1998 was 3.2% of
franchise revenues, which included royalties of 4% from most existing units and
all new domestic units opened.
From 1996 to 1998, Arby's system-wide sales grew at a compound annual
growth rate of 6.1% to $2.2 billion. Through October 3, 1999, the Arby's system
has experienced eleven consecutive quarters of domestic same store sales growth
compared to the prior year's comparable quarter. During 1998, our franchisees
opened 130 new Arby's and closed 87 underperforming Arby's. In addition, Arby's
franchisees opened 199 multi-branded T.J. Cinnamons in Arby's units in 1998. As
of October 3, 1999, franchisees have committed to open up to 1,098 Arby's
restaurants over the next 11 years. See 'Risk Factors -- Arby's dependence on
restaurant revenues and openings means it can be adversely affected by matters
not in its control.'
In May 1997, Arby's sold all of the stock of the two corporations owning
all of the 355 company-owned Arby's restaurants to RTM Inc., the largest
franchisee in the Arby's system. Arby's now derives its revenues from two
principal sources: (1) royalties from franchisees and (2) franchise fees. Before
this sale, Arby's primarily derived its revenues from sales at company-owned
restaurants.
ARBY'S RESTAURANTS
Arby's opened its first restaurant in Youngstown, Ohio in 1964. As of
October 3, 1999, franchisees operated Arby's restaurants in 48 states and 9
foreign countries. As of October 3, 1999, the six leading states by number of
operating units were: Ohio, with 244 restaurants; Texas, with 167 restaurants;
Michigan, with 165 restaurants; Indiana, with 161 restaurants; California, with
152 restaurants; and Florida, with 150 restaurants. Canada is the country
outside the United States with the most operating units, with 122 restaurants.
Arby's restaurants in the United States and Canada typically range in size
from 2,500 square feet to 3,000 square feet. Restaurants in other countries
typically are larger than U.S. and Canadian restaurants. Restaurants typically
have a manager, assistant manager and as many as 30 full and part-time
employees. Staffing levels, which vary during the day, tend to be heaviest
during the lunch hours.
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The following table sets forth the number of Arby's restaurants at the
beginning and end of each year from 1995 to 1998:
<TABLE>
<CAPTION>
1995 1996 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Restaurants open at beginning of period................. 2,790 2,955 3,030 3,092
Restaurants opened during period........................ 222 132 125 130
Restaurants closed during period........................ 57 57 63 87
----- ----- ----- -----
Restaurants open at end of period....................... 2,955 3,030 3,092 3,135
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
During the period from January 1, 1995 through January 3, 1999, 609 new Arby's
restaurants were opened and 264 underperforming Arby's restaurants have closed.
We believe that this has contributed to the average annual unit volume increase
of the Arby's system, as well as to an improvement of the overall brand image of
Arby's.
FRANCHISE NETWORK
At October 3, 1999, 530 Arby's franchisees operated 3,178 separate
restaurants. The initial term of the typical 'traditional' franchise agreement
is 20 years. Arby's does not offer any financing arrangements to its
franchisees.
Arby's franchisees opened 15 new restaurants outside of the United States
during 1998. Arby's also has territorial agreements with international
franchisees in five countries at October 3, 1999. Under the terms of these
territorial agreements, many of the international franchisees have the exclusive
right to open Arby's restaurants in specific regions or countries. Arby's
management expects that future international franchise agreements will more
narrowly limit the geographic exclusivity of the franchisees and prohibit
sub-franchise arrangements.
In July 1999, Arby's signed the largest overseas development agreement in
its history. The agreement was entered into with Sybra Restaurants (UK) Ltd.
Under the agreement, 102 new Arby's restaurants are to be developed in southern
England over the next 10 years. The first three restaurants are expected to open
by December 31, 2000.
Arby's offers franchises for the development of both single and multiple
'traditional' restaurant locations. All franchisees are required to execute
standard franchise agreements. Arby's standard U.S. franchise agreement
currently requires an initial $37,500 franchise fee for the first franchised
unit and $25,000 for each subsequent unit and a monthly royalty payment equal to
4.0% of restaurant sales for the term of the franchise agreement. Because of
lower royalty rates still in effect under earlier agreements, the average
royalty rate paid by franchisees was 3.2% during each of 1997 and 1998.
Franchisees typically pay a $10,000 commitment fee, credited against the
franchise fee referred to above, during the development process for a new
restaurant.
Franchised restaurants are required to be operated under uniform operating
standards and specifications relating to the selection, quality and preparation
of menu items, signage, decor, equipment, uniforms, suppliers, maintenance and
cleanliness of premises and customer service. Arby's continuously monitors
franchisee operations and inspects restaurants periodically to ensure that
company practices and procedures are being followed.
FRANCHISE RESTAURANT SYSTEM BUSINESS STRATEGY
Our business strategy for Arby's is to:
INCREASE ANNUAL UNIT VOLUME: We have four primary strategies to help
franchisees increase annual unit volumes.
(1) We will continue to support Arby's position as a 'Cut Above' brand
through programs focusing on quality food, customer service, and
facilities and building designs.
(2) We will drive consumer awareness and loyalty by facilitating quality
marketing.
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(3) Because lunch customers account for the majority of sales at Arby's
restaurants, we will continue to expand breakfast and dinner offerings
through T.J. Cinnamons and Pasta Connection'TM' and potentially through
additional complementary multi-branding opportunities.
(4) We will continue to promote Arby's openings in high quality locations.
CONTINUE TO STRENGTHEN FRANCHISE RELATIONSHIPS: Since Arby's sold all of
its restaurants in May 1997, we have focused on improving the Arby's
franchise system. For example, we have established third-party preferred
financing arrangements for Arby's franchisees during 1998. We have also
formed several franchisee advisory councils to obtain feedback from
franchisees about operations, technology, training, building and
equipment, finance, and public relations and have involved franchisees in
planning the strategic direction for Arby's.
EXPAND BRAND DISTRIBUTION: We will continue our efforts to expand the
Arby's system through well capitalized and experienced franchisees that
commit to open multiple Arby's. We will also continue to explore
alternative locations, including airports, school cafeterias and hospitals
and pursue selective international growth.
SELECTIVELY ACQUIRE NEW BRANDS: We plan to evaluate new brands to acquire
to which we could apply our successful franchising strategy.
ADVERTISING AND MARKETING
The Arby's system, through its franchisees, advertises primarily through
regional television, radio and newspapers. Payment for advertising time and
space is made by local advertising cooperatives in which owners of local
franchised restaurants participate. Franchisees have contributed .7% of net
sales to the Arby's Franchise Association, which produces advertising and
promotion materials for the system. Each franchisee is also required to spend a
reasonable amount, but not less than 3% of its monthly net sales, for local
advertising. This amount is divided between the franchisee's individual local
market advertising expense and the expenses of a cooperative area advertising
program with other franchisees who are operating Arby's restaurants in that
area. Contributions to the cooperative area advertising program are determined
by the participants in the program and are generally in the range of 3% to 5% of
monthly net sales. As a result of the sale of company-owned restaurants to RTM
in May 1997, Arby's no longer has any expenditures for advertising and marketing
in support of company-owned restaurants, as compared to approximately $9.0
million in 1997 and $25.8 million in 1996.
QUALITY ASSURANCE
Arby's has developed a quality assurance program designed to maintain
standards and uniformity of the menu selections at each of its franchised
restaurants. Arby's assigns a full-time quality assurance employee to each of
the five independent processing facilities that processes roast beef for Arby's
domestic restaurants. The quality assurance employee inspects the roast beef for
quality and uniformity. In addition, a laboratory at Arby's headquarters tests
samples of roast beef periodically from franchisees. Each year, Arby's
representatives conduct unannounced inspections of operations of a number of
franchisees to ensure that Arby's policies, practices and procedures are being
followed. Arby's field representatives also provide a variety of on-site
consultative services to franchisees. Arby's has the right to terminate
franchise agreements if franchisees fail to comply with quality standards.
PROVISIONS AND SUPPLIES
Five independent meat processors provide all of Arby's roast beef in the
United States. Franchise operators are required to obtain roast beef from one of
the five approved suppliers. ARCOP, Inc., a non-profit purchasing cooperative,
negotiates contracts with approved suppliers on behalf of Arby's franchisees.
Arby's believes that satisfactory arrangements could be made to replace any of
the current roast beef suppliers, if necessary, on a timely basis.
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Franchisees may obtain other products, including food, beverage,
ingredients, paper goods, equipment and signs, from any source that meets Arby's
specifications and approval. Through ARCOP, Arby's franchisees purchase food,
proprietary paper and operating supplies through national contracts employing
volume purchasing.
TRADEMARKS
We own numerous trademarks that are considered material to our business,
including Snapple, Made From The Best Stuff On Earth, WhipperSnapple, Snapple
Farms, Snapple Refreshers, Snapple Elements, Snapple Hydro, Mistic, Mistic Rain
Forest Nectars, Fountain Classics, Mistic Italian Ice Smoothies, Sun Valley
Squeeze, RC Cola, Diet RC, Cherry RC Cola, RC Edge, Royal Crown, Diet Rite,
Nehi, Upper 10, Kick, Arby's, and T.J. Cinnamons. Mistic licenses the Fruit
Blast trademark. Stewart's licenses the Stewart's trademark on an exclusive
perpetual basis for soft drinks and considers it to be material to its business.
In addition, we consider our finished product and concentrate formulae, which
are not the subject of any patents, to be trade secrets.
Many of our material trademarks are registered trademarks in the U.S.
Patent and Trademark Office and various foreign jurisdictions. Registrations for
trademarks in the United States will last indefinitely as long as the trademark
owners continue to use and police the trademarks and renew filings with the
applicable governmental offices. We have not been challenged in our right to use
any of our material trademarks in the United States.
COMPETITION
BEVERAGES
Our premium beverage products and soft drink concentrate products compete
generally with all liquid refreshments and in particular with numerous
nationally-known soft drinks, including Coca-Cola and Pepsi-Cola. We also
compete with ready to drink brewed iced tea competitors, including Nestea Iced
Tea, which is produced under a long-term license granted by Nestle S.A. to The
Coca-Cola Company, and Lipton Original Iced Tea, which is distributed by a joint
venture between PepsiCo, Inc. and Thomas J. Lipton Company, a subsidiary of
Unilever Plc. We compete with other beverage companies not only for consumer
acceptance but also for shelf space in retail outlets and for marketing focus by
distributors, most of which also distribute other beverage brands. The principal
methods of competition in the beverage industry include product quality and
taste, brand advertising, trade and consumer promotions, marketing agreements
including calendar marketing agreements, pricing, packaging and the development
of new products.
In recent years, the soft drink and restaurant businesses have experienced
increased price competition resulting in significant price discounting
throughout these industries. Price competition has been especially intense with
respect to sales of soft drink products in supermarkets. This is the result of
bottlers, in particular, competitive cola bottlers, granting significant
discounts and allowances off wholesale prices to, among other things, maintain
or increase market share in the supermarket segment. While the net impact of
price discounting in the soft drink and restaurant industries cannot be
quantified, these practices, if continued, could have an adverse impact on us.
The Coca-Cola Company and PepsiCo, Inc. are also making increased use of
exclusionary marketing agreements which prevent or limit the marketing and sale
of competitive beverage products at various locations, including colleges,
schools, and convenience and grocery store chains.
FRANCHISE RESTAURANT SYSTEM
Arby's faces direct and indirect competition from numerous well-established
competitors, including national and regional fast food chains, for example,
McDonald's, Burger King and Wendy's. In addition, Arby's competes with locally
owned restaurants, drive-ins, diners and other similar establishments. Key
competitive factors in the quick service restaurant industry are price, quality
of products, quality and speed of service, advertising, name identification,
restaurant location and attractiveness of facilities.
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Many of the leading restaurant chains have focused on new unit development
as one strategy to increase market share through increased consumer awareness
and convenience. This has led operators to employ other strategies, including
frequent use of price promotions and heavy advertising expenditures.
Additional competitive pressures for prepared food purchases have come more
recently from operators outside the restaurant industry. Several major grocery
chains have begun offering fully prepared food and meals to go as part of their
deli sections. Some of these chains also have added in-store cafes with service
counters and tables where consumers can order and consume a full menu of items
prepared especially for this portion of the operation.
Many of our competitors have substantially greater financial, marketing,
personnel and other resources than we do.
GOVERNMENTAL REGULATIONS
The production and marketing of our beverages are governed by the rules and
regulations of various federal, state and local agencies, including the United
States Food and Drug Administration. The Food and Drug Administration also
regulates the labeling of our products. In addition, our dealings with our
bottlers and/or distributors may, in some jurisdictions, be governed by state
laws governing licensor-licensee or distributor relationships.
Various state laws and the Federal Trade Commission regulate Arby's
franchising activities. The Federal Trade Commission requires that franchisors
make extensive disclosure to prospective franchisees before the execution of a
franchise agreement. Several states require registration and disclosure in
connection with franchise offers and sales and have 'franchise relationship
laws' that limit the ability of franchisors to terminate franchise agreements or
to withhold consent to the renewal or transfer of these agreements. In addition,
national, state and local laws affect Arby's ability to provide financing to
franchisees. In addition, Arby's franchisees must comply with the Fair Labor
Standards Act and the Americans with Disabilities Act, which requires that all
public accommodations and commercial facilities meet federal requirements
related to access and use by disabled persons, and various state laws governing
matters that include, for example, minimum wages, overtime and other working
conditions.
We are not aware of any pending legislation that is likely to have a
material adverse effect on our operations. We believe that the operations of our
subsidiaries comply substantially with all applicable governmental rules and
regulations.
ENVIRONMENTAL MATTERS
We are governed by federal, state and local environmental laws and
regulations concerning the discharge, storage, handling and disposal of
hazardous or toxic substances. These laws and regulations provide for
significant fines, penalties and liabilities, sometimes without regard to
whether the owner or operator of the property knew of, or was responsible for,
the release or presence of the hazardous or toxic substances. In addition, third
parties may make claims against owners or operators of properties for personal
injuries and property damage associated with releases of hazardous or toxic
substances. We cannot predict what environmental legislation or regulations will
be enacted in the future or how existing or future laws or regulations will be
administered or interpreted. We similarly cannot predict the amount of future
expenditures which may be required to comply with any environmental laws or
regulations or to satisfy any claims relating to environmental laws or
regulations. We believe that our operations comply substantially with all
applicable environmental laws and regulations. Based on currently available
information and the current reserve levels, we do not believe that the ultimate
outcome of any of the matters discussed below will have a material adverse
effect on our consolidated financial position or results of operations. Please
refer to the section of this prospectus entitled 'Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources.'
In 1993, Royal Crown became aware of possible contamination from
hydrocarbons in groundwater at two closed facilities. In 1994, hydrocarbons were
discovered in the groundwater at
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a former Royal Crown distribution site in Miami, Florida. Remediation occurred
at this site until September 23, 1998, at which point the remediation system was
shut down. Since then, Royal Crown has been in a monitor-only phase, which
lasted four quarters. Royal Crown has completed the monitor phase and performed
a specific capacity test to identify spikes in one tested material which
appeared i sampling during the second and third quarters. Royal Crown is
evaluating alternatives for this site's further remediation. Royal Crown
incurred $4,500 of remediation costs in the third quarter of 1999. Management
estimates that total remediation costs in excess of amounts incurred through
October 3, 1999 will be approximately $72,000 depending on the actual extent
of the contamination. Additionally, in 1994 the Texas Natural Resources
Conservation Commission approved the remediation of hydrocarbons in the
groundwater by Royal Crown at its former distribution site in San Antonio,
Texas. Remediation has been continuing at this site, and the March 26, 1999
quarterly ground water sampling indicated that all contaminants are below
detection limits. The State will agree to closure of this site after two
consecutive successful quarterly sampling events, with the system shut down.
Operation of the system was therefore terminated on April 9, 1999. Costs related
to quarterly sampling and decommissioning of the site are estimated at $24,400.
Royal Crown has incurred actual costs of $936,000, in the aggregate, through
October 3, 1999 for these matters.
SEASONALITY
Our beverage and restaurant businesses are seasonal. In our beverage
business, the highest revenues occur during the spring and summer, April through
September. Accordingly, our second and third quarters reflect the highest
revenues, and our first and fourth quarters have lower revenues, from our
beverage business. The royalty revenues of our restaurant business are somewhat
higher in our fourth quarter and somewhat lower in our first quarter.
Accordingly, consolidated revenues will generally be highest during the second
and third quarters of each year. Our EBITDA and operating profit are also
highest during the second and third fiscal quarters of each year and lowest in
the first fiscal quarter. This principally results from the higher beverage
revenues in the second and third fiscal quarters while general and
administrative expenses and depreciation and amortization, excluding
amortization of deferred financing costs are generally recorded ratably in
interim periods either as incurred or allocated to interim periods based on time
expired. The first fiscal quarter is also lower due to advertising production
costs which typically are higher in the first quarter in anticipation of the
peak spring and summer beverage selling season and which are recorded the first
time the related advertising takes place.
EMPLOYEES
As of October 3, 1999, we had approximately 1,133 employees, including 921
salaried employees and 212 hourly employees. We believe that employee relations
are satisfactory. As of October 3, 1999, approximately 49 of our employees were
covered by various collective bargaining agreements expiring from time to time
from the present through January 2002.
PROPERTIES
We believe that our properties, taken as a whole, are generally well
maintained and are adequate for our current and foreseeable business needs. We
lease a majority of our properties.
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The following table describes information about the major plants and
facilities of each of our business segments, as well as our corporate
headquarters, as of October 3, 1999:
<TABLE>
<CAPTION>
APPROXIMATE
SQ. FT.
LAND OF FLOOR
ACTIVE FACILITIES FACILITIES-LOCATION TITLE SPACE
----------------- ------------------- ----- -----
<S> <C> <C> <C>
Beverages.................... Concentrate Mfg: Columbus, GA 1 owned 216,000
(including office)
Beverage Group Headquarters 71,970
White Plains, NY 1 leased
Stewart's Headquarters 4,200
Denver, CO 1 leased
Office/Warehouse Facilities 656,000*
(various locations) 7 leased
Restaurants.................. Restaurant Group Headquarters 1 leased 47,300**
Ft. Lauderdale, FL
</TABLE>
- ------------
* Includes 180,000 square feet of warehouse space that is subleased to a third
party.
** Royal Crown subleases approximately 3,500 square feet of this space from
Arby's.
Arby's also owns three and leases nine properties which are leased or
sublet principally to franchisees and has leases for three inactive properties.
Triarc Consumer Products Group's other subsidiaries also own or lease a few
inactive facilities and undeveloped properties, none of which are material to
our financial condition or results of operations.
Substantially all of the properties used in the beverage business are
pledged as collateral under secured debt arrangements. One property that Arby's
owns is pledged to secure our credit facility. You should refer to the section
of this prospectus entitled 'Description of Indebtedness -- Credit Facility.'
LEGAL PROCEEDINGS
In October 1997, Mistic commenced an action against Universal Beverages
Inc., a former Mistic co-packer, Leesburg Bottling & Production, Inc., an
affiliate of Universal, and Jonathan O. Moore, an individual affiliated with the
defendants, in the Circuit Court for Duval County, Florida. The action, which
was subsequently amended to add additional defendants, sought, among other
things, damages relating to the unauthorized sale by the defendants of raw
materials, finished product and equipment that was owned by Mistic but in the
possession of the defendants. In their answer, counterclaim and third party
complaint, some defendants alleged various causes of action against Mistic,
Snapple and Triarc Beverage Holdings. These defendants sought damages of $6
million relating to a purported breach by Snapple and Mistic of an alleged oral
agreement to have Universal and/or Leesburg manufacture Snapple and Mistic
products. They claimed that they were induced to enter into the alleged oral
agreement by the false and negligent misrepresentations of Snapple and Mistic.
These defendants also sought to recover various amounts totaling approximately
$500,000 allegedly owed to Universal for co-packing and other services rendered.
In July 1999, Mistic settled its claims against some defendants who had not
asserted any counterclaims. In August, 1999, Mistic and the remaining defendants
entered into a comprehensive settlement agreement which, among other things,
provides for a dismissal with prejudice of all claims against Mistic, Snapple
and TBHC. No payments by Mistic, Snapple or Triarc Beverage Holdings are
required under the settlement agreement.
On February 19, 1996, Arby's Restaurants S.A. de C.V., the master
franchisee of Arby's in Mexico, commenced an action in the civil court of Mexico
against Arby's for breach of contract. The plaintiff alleged that a non-binding
letter of intent dated November 9, 1994 between the plaintiff and Arby's
constituted a binding contract under which Arby's had obligated itself to
repurchase the master franchise rights from the plaintiff for $2.85 million and
that Arby's had breached a master development agreement between the plaintiff
and Arby's. Arby's commenced an
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arbitration proceeding since the franchise and development agreements each
provided that all disputes arising under those agreements were to be resolved by
arbitration. In September 1997, the arbitrator ruled that the November 9, 1994
letter of intent was not a binding contract and the master development agreement
was properly terminated. The plaintiff challenged the arbitrator's decision and
in March 1998, the civil court of Mexico ruled that the November 9, 1994 letter
of intent was a binding contract and ordered Arby's to pay the plaintiff $2.85
million, plus interest and value added tax. In May 1997, the plaintiff commenced
an action against Arby's in the United States District Court for the Southern
District of Florida alleging that Arby's had engaged in fraudulent negotiations
with the plaintiff in 1994-1995 to force the plaintiff to sell the master
franchise rights for Mexico to Arby's cheaply and Arby's had tortiously
interfered with an alleged business opportunity that the plaintiff had with a
third party. Arby's has moved to dismiss that action. The parties have agreed to
settle all the litigation including the Mexican court case to avoid the expense
of continuing litigation and on December 4, 1998 entered into an agreement under
which Arby's deposited $1.65 million in escrow. The escrowed funds were released
to plaintiff on October 7, 1999 when the parties executed a settlement agreement
pursuant to which all proceedings were dismissed with prejudice. Pursuant to the
settlement, plaintiff will continue to be an Arby's franchise and, among other
things, will be entitled to $150,000 in credits against future royalties and
other fees as well as the right to open four additional stores without paying
initial franchise fees.
Other matters have arisen in the ordinary course of our business and it is
our opinion that the outcome of any of these matters will not have a material
adverse effect on our financial condition or results of operations.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Our executive officers and managers are as follows.
<TABLE>
<CAPTION>
NAME AGE OFFICE OR POSITION HELD
- ---- --- -----------------------
<S> <C> <C>
Nelson Peltz.............................. 57 Manager; Chairman and Chief Executive Officer
Peter W. May.............................. 57 Manager; President and Chief Operating Officer
John L. Barnes, Jr. ...................... 52 Manager; Executive Vice President and Chief
Financial Officer
Eric D. Kogan............................. 36 Manager; Executive Vice President -- Corporate
Development
Brian L. Schorr........................... 41 Manager; Executive Vice President, General Counsel
and Assistant Secretary
Michael Weinstein......................... 51 Chief Executive Officer of the Triarc Beverage
Group
Ernest J. Cavallo......................... 66 President and Chief Operating Officer of the
Triarc Beverage Group
John L. Belsito........................... 39 Senior Vice President of the Triarc Beverage Group
and President of Royal Crown Company, Inc.
Jonathan P. May........................... 33 Chief Executive Officer of the Triarc Restaurant
Group
Michael C. Howe........................... 47 President and Chief Operating Officer of the
Triarc Restaurant Group
Francis T. McCarron....................... 42 Senior Vice President -- Taxes
Anne A. Tarbell........................... 41 Senior Vice President -- Corporate Communications
and Investor Relations
Stuart I. Rosen........................... 40 Vice President and Associate General Counsel, and
Secretary
Fred H. Schaefer.......................... 55 Vice President and Chief Accounting Officer
</TABLE>
Nelson Peltz. Mr. Peltz has been a manager and Chairman and Chief Executive
Officer of Triarc Consumer Products Group since its formation. Mr. Peltz has
been a director and Chairman and Chief Executive Officer of Triarc Parent since
April 1993. Since then, he has also been a director and Chairman of the Board
and Chief Executive Officer of several of Triarc Parent's subsidiaries. He is
also a general partner of DWG Acquisition Group, L.P., whose principal business
is ownership of securities of Triarc Parent. From its formation in January 1989
to April 1993, Mr. Peltz was Chairman and Chief Executive Officer of Trian
Group, Limited Partnership, which provided investment banking and management
services for entities controlled by Mr. Peltz and Mr. May. From 1983 to December
1988, he was Chairman and Chief Executive Officer and a director of Triangle
Industries, Inc., which, through wholly owned subsidiaries, was, at that time, a
manufacturer of packaging products, copper electrical wire and cable and steel
conduit and currency and coin handling products. Mr. Peltz has also served as a
director of MCM Capital Group, Inc. since February 1998.
Peter W. May. Mr. May has been a manager and President and Chief Operating
Officer of Triarc Consumer Products Group since its formation. Mr. May has been
a director and President and Chief Operating Officer of Triarc Parent since
April 1993. Since then, he has also been a director and President and Chief
Operating Officer of several Triarc Parent's subsidiaries. He is also a general
partner of DWG Acquisition. From its formation in January 1989 to April 1993,
Mr. May was President and Chief Operating Officer of Trian Group. He was
President and Chief Operating Officer and a director of Triangle Industries from
1983 until December 1988. Mr. May has also served as a director of Ascent
Entertainment Group, Inc. since June 1999 and of MCM Capital Group, Inc. since
February 1998. Mr. May is the father of Jonathan P. May.
John L. Barnes, Jr. Mr. Barnes has been a manager and Executive Vice
President and Chief Financial Officer of Triarc Consumer Products Group since
its formation. Mr. Barnes has been Executive Vice President and Chief Financial
Officer of Triarc Parent since March 10, 1998 and previously was Senior Vice
President and Chief Financial Officer of Triarc Parent since August 1996. From
April 1996 to August 1996, Mr. Barnes was a Senior Vice President of Triarc
Parent. Before April 1996, Mr. Barnes had served as Executive Vice President and
Chief Financial Officer
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of Graniteville Company, which had been owned by Triarc Parent until April 1996,
for more than five years.
Eric D. Kogan. Mr. Kogan has been a manager and Executive Vice President
Corporate Development of Triarc Consumer Products Group since its formation. Mr.
Kogan has been Executive Vice President -- Corporate Development of Triarc
Parent since March 10, 1998 and previously was Senior Vice President --
Corporate Development of Triarc Parent since March 1995. Before March 1995,
Mr. Kogan was Vice President -- Corporate Development of Triarc Parent since
April 1993. Before joining Triarc Parent, Mr. Kogan was a Vice President of
Trian Group from September 1991 to April 1993 and an associate in the mergers
and acquisitions group of Farley Industries, an industrial holding company,
from 1989 to August 1991. Mr. Kogan has served as a director of MCM Capital
Group, Inc. since February 1998.
Brian L. Schorr. Mr. Schorr has been a manager and Executive Vice President
and General Counsel of Triarc Consumer Products Group since its formation. Mr.
Schorr has been Executive Vice President and General Counsel of Triarc Parent
and several of its subsidiaries since June 1994. Previously, Mr. Schorr was a
partner of Paul, Weiss, Rifkind, Wharton & Garrison, a law firm which he joined
in 1982 and from June 1994 through April 1995 he was Of Counsel to that firm in
connection with limited liability company and limited liability partnership
matters. That firm provides legal services to Triarc Parent and its
subsidiaries.
Michael Weinstein. Mr. Weinstein has been Chief Executive Officer of the
Triarc Beverage Group and Royal Crown since October 1996. Mr. Weinstein has also
served as Chief Executive Officer of Snapple since it was acquired by Triarc
Parent in May 1997 and of Mistic since it was acquired by Triarc Parent in
August 1995. Before August 1995, he was president of Liquid Logic, a private
beverage consulting business he founded in 1994. From 1981 until the end of
1993, he served in various executive capacities at A&W Brands, Inc., lastly as
President/Chief Operating Officer. From 1978 to 1981, he was a Vice President at
Kenyon & Eckhardt Advertising. He began his career at Pepsi-Cola Company, where
he held various sales and marketing positions from 1972 to 1978.
Ernest J. Cavallo. Mr. Cavallo has served as President and Chief Operating
Officer of the Triarc Beverage Group since April 1997 and of Snapple since May
1997. Mr. Cavallo has also served as President of Mistic since August 1995 and
as the Chief Operating Officer of Mistic since November 1996. From August 1995
to November 1996, Mr. Cavallo served as Chief Financial Officer of Mistic. From
June 1994 until August 1995, Mr. Cavallo was Senior Vice President and Chief
Financial Officer of Joseph Victori Wines, the predecessor company of Mistic.
From 1985 to 1994, Mr. Cavallo served in various positions with A&W Brands,
Inc., including three years as Executive Vice President and Chief Financial
Officer. From 1976 to 1985, Mr. Cavallo was an officer and Assistant Comptroller
with Exxon Corporation and from 1971 to 1976, Mr. Cavallo was a management
consultant with KPMG Peat Marwick.
John L. Belsito. Mr. Belsito has been Senior Vice President of the Triarc
Beverage Group and President of Royal Crown since August 1998. Before 1998, Mr.
Belsito served as Vice President -- Corporate Development of Cadbury Beverages
Inc. From 1995 to 1997, he served as Senior Vice President -- Franchising of Dr
Pepper/7-Up Inc. From 1994 to 1995, Mr. Belsito served as Vice
President -- Franchising of Cadbury Beverages, North America. From 1993 to 1994,
he served as Vice President -- Field Marketing at Schweppes USA.
Jonathan P. May. Mr. May has been Chief Executive Officer of the Triarc
Restaurant Group since July 1999. From 1996 to July 1999, Mr. May was Vice
President, Concept Development of the Triarc Restaurant Group. From 1995 to
1996, Mr. May was Vice President, Worldwide Planning of the Triarc Restaurant
Group. Previously, Mr. May was Director, Corporate Development of Trian Group
and Triarc Parent from 1993 to 1995. Mr. May is the son of Peter W. May.
Michael C. Howe. Mr. Howe has been President and Chief Operating Officer of
the Triarc Restaurant Group since July 1999. Mr. Howe was a member of the Office
of the Chief Executive of the Triarc Restaurant Group from April 1999 to
July 1999. Mr. Howe has also served as the Senior Vice President, Operations of
the Triarc Restaurant Group since 1997. From 1995 to 1997, Mr. Howe served in
various senior capacities for the Triarc Restaurant Group. From 1993 to 1995,
Mr. Howe served in various senior capacities at KFC International, including
Vice President, Restaurant Services and Support during 1995.
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Francis T. McCarron. Mr. McCarron has been Senior Vice President -- Taxes
of Triarc Consumer Products Group since its formation. Mr. McCarron has been
Senior Vice President -- Taxes of Triarc Parent since April 1993. He has also
been Senior Vice President -- Taxes of several of Triarc Parent's subsidiaries,
since April 1993. Previously, he was Vice President -- Taxes of Trian Group from
its formation in January 1989 to April 1993. He joined Triangle Industries in
February 1987 and served as Director of Tax Planning & Research until December
1988.
Anne A. Tarbell. Ms. Tarbell has been Senior Vice President -- Corporate
Communications and Investor Relations of Triarc Consumer Products Group since
its formation. Ms. Tarbell has been Senior Vice President -- Corporate
Communications of Triarc Parent since May 1998. From June 1995 to April 1998,
Ms. Tarbell was Vice President and Director -- Investor Relations of ITT
Corporation and served as Assistant Director -- Investor Relations of ITT
Corporation from August 1991 to May 1995. Ms. Tarbell also served as Vice
President and Director -- Investor Relations of Chemical Banking Corporation
from February 1988 to July 1991.
Stuart I. Rosen. Mr. Rosen has been Vice President and Associate General
Counsel, and Secretary of Triarc Consumer Products Group since its formation.
Mr. Rosen has been Vice President and Associate General Counsel, and Secretary
of Triarc Parent and several of its subsidiaries since August 1994. Previously,
he was associated with Paul, Weiss, Rifkind, Wharton & Garrison since 1985.
Fred H. Schaefer. Mr. Schaefer has been Vice President and Chief Accounting
Officer of Triarc Consumer Products Group since its formation. Mr. Schaefer has
been Vice President and Chief Accounting Officer of Triarc Parent since April
1993. He has also been Vice President and Chief Accounting Officer of several of
Triarc Parent's subsidiaries, since April 1993. Previously, he was Vice
President and Chief Accounting Officer of Trian Group from its formation in
January 1989 to April 1993. Mr. Schaefer joined Triangle Industries in 1980 and
served in various capacities in the accounting department, including Vice
President -- Financial Reporting, until December 1988.
The term of office of each manager is until his or her successor is elected
and qualified or until his or her prior death, resignation or removal. The term
of office of each executive officer is until the organizational meeting of the
board of managers next succeeding that officer's election and until his or her
successor is elected and qualified or until his or her prior death, resignation
or removal.
AGREEMENTS REGARDING BOARD OF DIRECTORS POSITIONS
The employment agreements for Michael Weinstein and Ernest Cavallo provide
that Snapple shall take steps so that Mr. Weinstein and Mr. Cavallo, as the case
may be, will be elected as a member of the board of directors of Triarc Beverage
Holdings as long as (1) Triarc Beverage Holdings, Snapple and Mistic remain
separate legal entities and (2) Mr. Weinstein and Mr. Cavallo, as the case may
be, remains an employee of Snapple and an officer of Triarc Beverage Holdings
and Mistic.
EXECUTIVE COMPENSATION
All of our executive officers and managers are compensated directly by us
or our subsidiaries under existing employment arrangements or agreements except
for Messrs. Peltz, May, Barnes, Kogan, Schorr, McCarron, Rosen and Schaefer and
Ms. Tarbell. These named persons will be compensated by Triarc Parent for
services provided to Triarc Parent under existing employment arrangements or
agreements with Triarc Parent and will receive no additional cash compensation
from us or any of our subsidiaries. Triarc Parent will provide the services of
those persons to us for a fee under two management services agreements that we
have entered into with it. See 'Certain Relationships and Related
Transactions -- Management Services Agreements.' In addition, some members of
our management and our subsidiaries' management, including the persons mentioned
above, are participants in the Triarc Beverage Holdings Corp. 1997 Stock Option
Plan in recognition of services performed by those persons for the Triarc
Beverage Group and may be eligible in the future to participate in plans
involving the equity of our subsidiaries.
The following table provides compensation information for our Chief
Executive Officer, our President and Chief Operating Officer and the five other
executive officers who were the most highly compensated for our fiscal year
ended January 3, 1999. These officers are referred to as
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<PAGE>
named executive officers. All of the information described in this table
reflects compensation earned by the named executive officers for services
rendered to Triarc Parent and its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------- -----------------------------------------
AWARDS PAYOUTS
------------ -----------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS/SARS LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) (#)(1) PAYMENTS($) ($)
--------------------------- ---- --------- -------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Nelson Peltz ................... 1998 1(2) -- 329,067(9) 26,000(13) -- --
Chairman and Chief Executive 1997 1(2) -- 429,872(9) 150,000 -- --
Officer 1996 1(2) 2,000,000(3) 339,490(9) 175,000 -- --
Peter W. May ................... 1998 1(2) -- 134,173(10) 13,000(13) -- --
President and Chief Operating 1997 1(2) -- 153,288(10) 100,000 -- --
Officer 1996 1(2) 1,000,000(3) 164,469(10) 125,000 -- --
Roland C. Smith* ............... 1998 381,250 360,000 (11) 50,000 335,000 4,000(14)
Former President and Chief 1997 317,552 270,000 (11) 50,000 -- 3,200(14)
Executive Officer of Triarc 1996 222,917 175,000 (11) 35,000 -- 1,500(14)
Restaurant Group
John L. Barnes, Jr. ............ 1998 300,000 585,000(4) (11) 50,000 -- 7,200(14)
Executive Vice President and 1997 300,000 650,000(4) (11) 6,600(13) -- 6,400(14)
Chief Financial Officer 1996 271,554 970,000(5) 269,893(12) 50,000 28,667 8,187(15)
150,000
Eric D. Kogan .................. 1998 289,583 595,417(4) (11) 50,000 -- 7,200(14)
Executive Vice President -- 1997 250,000 700,000(4) (11) 6,600(13) -- 6,400(14)
Corporate Development 1996 250,000 450,000(6) (11) 50,000 69,000 5,250(14)
150,000
Brian L. Schorr ................ 1998 312,500 585,000(4) (11) 50,000 -- 11,187(16)
Executive Vice President and 1997 312,500 650,000(4)(7) (11) 6,600(13) -- 10,387(16)
General Counsel 1996 312,500 450,000(6) (11) 50,000 57,500 7,115(16)
120,000
Michael Weinstein .............. 1998 500,000 225,000 (11) 10,000 -- 5,600(14)
Chief Executive Officer of 1997 458,333 2,250,000(8) (11) 21,000(13) -- 4,000(14)
Triarc Beverage Group 1996 275,000 125,000 (11) 25,000 -- 3,750(14)
</TABLE>
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* Mr. Smith resigned effective May 7, 1999 as President and Chief Executive
Officer of the Triarc Restaurant Group.
(1) Except as otherwise noted, all stock option grants were made under Triarc
Parent's 1993 Equity Participation Plan and Triarc Parent's 1998 Equity
Participation Plan.
(2) Reflects entire salary paid by Triarc Parent and its subsidiaries,
including Triarc Consumer Products Group.
(3) Represents special bonuses paid to Messrs. Peltz and May in connection with
completed transactions. Mr. Peltz's bonus was paid one-half in August 1996
and one-half in March 1997.
(4) Includes special bonuses paid by Triarc Parent to each of Messrs. Barnes,
Kogan and Schorr in connection with completed transactions.
(5) Includes a one-time special payment of $890,000 paid in 1996 to Mr. Barnes
in his capacity as Executive Vice President and Chief Financial Officer of
Triarc Parent's textile business in connection with the sale of that
business in April 1996. In March 1997, Mr. Barnes received additional stock
options instead of a cash bonus that might otherwise have been granted to
him at the time with respect to fiscal 1996. Those stock options are
included under the heading 'Long Term Compensation -- Securities Underlying
Options/SARs.'
(6) Includes special bonuses paid to each of Messrs. Kogan and Schorr in 1996
in connection with completed transactions. In March 1997, each of Messrs.
Kogan and Schorr received additional stock options instead of a cash bonus
that might otherwise have been granted to them at that time with respect to
fiscal 1996. Those stock options are included under the heading 'Long Term
Compensation -- Securities Underlying Options/SARs.'
(7) This amount constitutes Mr. Schorr's aggregate bonus with respect to fiscal
1997, $600,000 of which was paid in January 1998 as an advance against the
bonus, with the balance being paid in March 1998.
(footnotes continued on next page)
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(footnotes continued from previous page)
(8) Includes, as consideration for Mr. Weinstein's added responsibilities in
connection with the reorganization of the Triarc Beverage Group, the
acquisition of Snapple and the cancellation of stock appreciation rights
relating to shares of Mistic common stock, a special payment of $2,000,000
that Mr. Weinstein is eligible to receive if this amount vests. Of this
amount, $1,000,000 vested as of July 1, 1997, $333,333 vested on each of
January 2, 1998 and 1999 and $333,333 will vest on January 2, 2000. For
additional information, please refer to the section of this prospectus
entitled 'Employment Agreements -- Michael Weinstein.'
(9) Includes imputed income of $266,837 in fiscal 1998, $233,856 in fiscal 1997
and $255,668 in fiscal 1996, each arising out of the use of corporate
aircraft.
(10) Includes imputed income of $77,138 in fiscal 1998, $85,841 in fiscal 1997,
and $98,729 in fiscal 1996, each arising out of the use of corporate
aircraft. Also included are fees of $40,000 paid by Triarc Parent on behalf
of Mr. May for tax and financial planning services in each of fiscal 1998,
1997 and 1996.
(11) Perquisites and other personal benefits did not exceed the lesser of either
$50,000 or 10% of the total annual salary and bonus reported under the
headings of 'Salary' and 'Bonus.'
(12) Includes a payment of $111,500 made to Mr. Barnes in his capacity as
Executive Vice President and Chief Financial Officer of Triarc Parent's
textile business in connection with the sale of that business in April
1996, and relocation related costs of $154,018.
(13) Represents grants of options made under the Triarc Beverage Holdings Corp.
1997 Stock Option Plan.
(14) Represents amounts contributed to 401(k) plan by Triarc Parent, Arby's, in
the case of Mr. Smith, and Mistic, in the case of Mr. Weinstein, on behalf
of the named executive officer.
(15) Represents amounts contributed to 401(k) plan by Triarc Parent of $5,250
for 1996 and by Graniteville Company of $2,937 in 1996.
(16) Includes $7,200 in fiscal 1998, $6,400 in fiscal 1997 and $3,128 in fiscal
1996 contributed to 401(k) plan by Triarc Parent on behalf of Mr. Schorr.
Also includes $3,987 in fiscal 1998, fiscal 1997 and fiscal 1996 of other
compensation paid by Triarc Parent in an amount equal to premiums for term
life insurance in each of those years.
EMPLOYMENT AGREEMENTS
The following are summaries of the material terms of employment agreements
with the named executive officers of Triarc Parent, other than Mr. Smith who
resigned effective May 7, 1999, to which we are parties. You should be aware
that these summaries are not a complete description of these agreements.
Nelson Peltz and Peter W. May. Since April 1993, Nelson Peltz and Peter W.
May have been serving Triarc Parent as its Chairman and Chief Executive Officer
and its President and Chief Operating Officer, respectively. Under the terms of
their original employment and compensation arrangements, which expired by their
terms in April 1999, each of them received an annual base salary of $1.00. In
addition, Messrs. Peltz and May participated in the incentive compensation and
welfare and benefit plans made available to Triarc Parent's corporate officers.
Triarc Parent is currently negotiating new long term employment and compensation
arrangements with Messrs. Peltz and May. Under the agreements, which will have 5
year terms, subject to automatic renewal, Messrs. Peltz and May will receive
annual base salaries of $1,400,000 and $1,200,000, respectively. In addition,
the new employment agreements will provide, among other things, that Mr. Peltz
and Mr. May are eligible to: participate in the 1999 Executive Bonus Plan;
receive discretionary bonuses, as may be awarded from time to time; participate
in equity based incentive plans of Triarc Parent and its subsidiaries; and
participate in the incentive compensation and welfare and benefit plans made
available to Triarc Parent corporate officers.
In April 1994, Messrs. Peltz and May were granted performance stock options
for an aggregate of 3,500,000 shares of Triarc Parent's class A common stock.
These options were granted instead of base salary, annual performance bonus and
long term compensation for a six-year period
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which expired in April 1999. The performance stock options have an exercise
price of $20.125 per share and vest and become exercisable as follows:
(1) if the closing price of a share of class A common stock is at
least $27.1875, approximately 135% of the exercise price, for 20 out of 30
consecutive trading days ending on or before March 30, 1999, each option
will vest and become exercisable for one third of the shares covered by the
option (the stock price required for such accelerated vesting was not met);
(2) if the closing price of a share of class A common stock is at
least $36.25, approximately 180% of the exercise price, for 20 out of 30
consecutive trading days ending on or before March 30, 2000, each option
will vest and become exercisable for one third of the shares covered by the
option; and
(3) if the closing price of a share of class A common stock is at
least $45.3125, approximately 225% of the exercise price, for 20 out of the
30 consecutive trading days ending on or before March 30, 2001, the option
will vest and become exercisable for one third of the shares covered by the
option.
In addition to early vesting if the above closing price levels are
attained, these options will vest on October 21, 2003, nine years and six months
from the date of grant, and expire on April 21, 2004, ten years from the date of
grant.
John L. Barnes, Jr. Triarc Parent entered into an employment agreement
dated as of April 29, 1996, as amended, with John L. Barnes, Jr. providing for
the employment of Mr. Barnes as Executive Vice President and Chief Financial
Officer of Triarc Parent for a term ending June 29, 2000, unless otherwise
terminated as provided in his employment agreement. Mr. Barnes was promoted to
Executive Vice President effective March 10, 1998. Under Mr. Barnes' employment
agreement, Mr. Barnes was named Chief Financial Officer of Triarc Parent in
August 1996. Mr. Barnes receives an annual base salary of $300,000 per year,
which may be increased but not decreased from time to time. In addition, Mr.
Barnes is eligible to receive annual cash bonuses and stock option awards on a
basis comparable to other senior executives of Triarc Parent.
If Mr. Barnes' employment with Triarc Parent is terminated before June 29,
2000 without good cause, Mr. Barnes' employment agreement provides that Triarc
Parent will pay Mr. Barnes:
(1) a lump sum within thirty days of the date of his termination equal
to one-half of his then current base salary that would otherwise have been
payable to him through June 29, 2000, and
(2) commencing six months after the date of his termination a sum
equal to one-half of his annual base salary in effect on the date of
termination that would otherwise have been paid to him from the date of
termination through June 29, 2000, this amount to be payable semi-monthly
through June 29, 2000.
Mr. Barnes will also be reimbursed for any loss on the sale of his home, up
to $150,000 and will be eligible for specified relocation expenses if his
employment is terminated without cause or Triarc Parent does not renew the
Barnes Employment Agreement at the end of its term. In addition, if Mr. Barnes'
employment is terminated without cause, each stock option granted to him which
had not vested as of the termination date will vest immediately as of that date
and each stock option which has vested before or as of the termination date may
be exercised by Mr. Barnes within the earlier of one year or on the date the
option expires.
Mr. Barnes' employment agreement further provides that if a change of
control under the agreement occurs, Triarc Parent is obligated to employ Mr.
Barnes as an Executive Vice President, and he is obligated to accept and
continue in the employment under his agreement until the first anniversary of
the change in control. Mr. Barnes has the right to resign as an officer and
employee of Triarc Parent effective as of the first anniversary of the change of
control by giving written notice to Triarc Parent not less than thirty days
before the date of his resignation. Mr. Barnes also has the right to receive
payments and other benefits as to which he would have been entitled had Triarc
Parent terminated his employment without good cause.
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Brian L. Schorr. On June 29, 1994, Triarc Parent entered into an employment
agreement with Brian L. Schorr providing for the employment of Mr. Schorr as
Executive Vice President and General Counsel of Triarc Parent. Mr. Schorr's
employment agreement expires on June 29, 2000. Mr. Schorr's employment agreement
provides for an annual base salary of $312,500, which may be increased but not
decreased. Mr. Schorr is also eligible to receive annual incentive bonuses. Mr.
Schorr's employment agreement also provides that if Mr. Schorr dies during the
term of the agreement, his legal representative will be entitled to receive a
base amount per year calculated at a rate equal to the sum of (1) Mr. Schorr's
then current base salary plus (2) $250,000, for the remaining term of the
agreement, if Triarc Parent is able to procure, at a reasonable rate, term
insurance on Mr. Schorr's life to pay this obligation, or if Triarc Parent is
not able to obtain satisfactory insurance, an amount calculated at the annual
rate of the amount described above for the three-month period following Mr.
Schorr's death. Triarc Parent obtained insurance to fund this obligation at an
annual premium of approximately $3,000. Triarc Parent has transferred ownership
of the insurance policy to a trust established by Mr. Schorr and Mr. Schorr has
given up certain rights to have Triarc Parent pay the base amount after his
death.
Under Mr. Schorr's employment agreement, if Mr. Schorr's employment
terminates for any reason other than cause under the agreement, options and
restricted stock awards previously granted to Mr. Schorr will immediately vest
in their entirety and remain exercisable for a period of one year following the
date of termination. Mr. Schorr's employment agreement also provides that if
Triarc Parent terminates Mr. Schorr's employment without cause, Mr. Schorr will
receive a lump sum payment, discounted to present value, in an amount equal to:
(1) all base salary amounts due for the year of termination and for
each remaining year of employment under his agreement plus
(2) an amount equal to the number of years of Mr. Schorr's employment
agreement multiplied by $250,000.
Mr. Schorr's employment agreement further provides that at the option of
Mr. Schorr, the agreement will be deemed to have been terminated by Triarc
Parent without cause following a change in control.
Michael Weinstein. Snapple and Mistic entered into an amended and restated
employment agreement, effective as of June 1, 1997, with Michael Weinstein,
providing for the employment of Mr. Weinstein as the Chief Executive Officer of
Triarc Beverage Holdings, Snapple, Mistic and Royal Crown. The term of
employment will continue until January 2, 2001, unless otherwise terminated as
provided in the agreement. Mr. Weinstein's employment agreement is automatically
renewed for additional one year periods unless either Mr. Weinstein or Snapple
elect, upon 180 days' notice, not to renew. Mr. Weinstein receives an annual
base salary of $500,000, and is eligible to receive an annual cash incentive
bonus and future grants of options to purchase shares of class A common stock of
Triarc Parent. Mr. Weinstein will also receive a special payment in the
aggregate amount of $2,000,000, if it vests, on January 2, 2000. One million
dollars of the special payment vested as of July 1, 1997, $333,333 vested on
each of January 2, 1998 and 1999, and $333,333 will vest on January 2, 2000. If
Mr. Weinstein voluntarily leaves the employment of Snapple during the term of
his employment agreement, or upon his death or termination of employment due to
disability, he will be entitled to receive on January 2, 2000 only that portion
of the special payment that has vested at the time of termination, death or
disability. If any of the events described in the immediately preceding sentence
occur, the stock option to purchase 15,000 shares of class A common stock of
Triarc Parent granted to Mr. Weinstein on August 9, 1995 will also terminate.
Mr. Weinstein is also entitled to participate in any insurance, including
life, disability, medical and dental, vacation, pension and retirement plans and
to receive any other employee benefits and perquisites made generally available
by Snapple to its senior officers. In addition, Mr. Weinstein is entitled to a
monthly automobile allowance in the amount of $900.
If Mr. Weinstein's employment is terminated by Snapple for good cause, the
special payment will be forfeited in its entirety, whether vested or not. In the
event Snapple terminates Mr.
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Weinstein's employment without good cause, Mr. Weinstein's employment agreement
provides that he will receive an amount equal to the sum of:
(1) the greater of:
(a) his base salary for one year, and
(b) the entire amount of base salary that would be payable to Mr.
Weinstein under his employment agreement through the last day of the
then current term, plus any earned but unpaid base salary, vacation or
annual bonus in respect of a prior year owing to Mr. Weinstein accrued
before the termination,
(2) Mr. Weinstein's annual bonus for the year in which the termination
occurs, and
(3) the full amount of the special payment.
In addition, Mr. Weinstein's option to purchase 15,000 shares of class A common
stock of Triarc Parent will vest immediately as of the date of his termination
and may be exercised by Mr. Weinstein within the earlier of one year from the
date of termination or on the date the option expires. Mr. Weinstein's
employment agreement also provides that in the event of a change in control, Mr.
Weinstein may terminate his employment with Snapple within 12 months following
the change in control, if he does so because of any substantial diminution of
his title, duties, or responsibilities, or any material reduction in
compensation, and will be entitled to receive the same payments that he would
have been entitled to receive had his employment been terminated without good
cause.
Mr. Weinstein's employment agreement also contains confidentiality
provisions that prohibit him from disclosing confidential information relating
to Snapple, its subsidiaries or its affiliated companies during the term of his
employment agreement and for a period of four years afterwards. In addition, the
agreement contains non-competition provisions that prohibit Mr. Weinstein from
competing in the premium or carbonated beverage business for a period of
18 months following the termination of his employment for cause or his voluntary
resignation before the last day of his term of employment.
COMPENSATION OF MANAGERS
Members of Triarc Consumer Products Group's board of managers, the board of
managers of subsidiaries of Triarc Consumer Products Group's and the board of
directors of subsidiaries of Triarc Consumer Products Group's who are officers
of Triarc Parent or its subsidiaries will not be additionally compensated for
their activities in these capacities.
INDEMNIFICATION OF OFFICERS, MANAGERS AND DIRECTORS
Triarc Consumer Products Group's limited liability company operating
agreement provides that the member will have no liability for the obligations or
liabilities of Triarc Consumer Products Group, unless otherwise provided in the
Delaware Limited Liability Company Act. The Delaware Limited Liability Company
Act provides that, with exceptions, the debts, obligations and liabilities of a
limited liability company shall be solely the debts, obligations and liabilities
of the limited liability company, and no member or manager of a limited
liability company shall be obligated personally for any debt, obligation or
liability solely by reason of being a member or acting as a manager.
Triarc Consumer Product Group's operating agreement also provides
protections against liabilities to a member, any manager or related parties, and
any officer, employee or expressly authorized agent of Triarc Consumer Products
Group or its affiliates. None of these persons will be liable to Triarc Consumer
Products Group or any other of these persons for any liability resulting from
any act or omission performed or omitted in good faith on behalf of Triarc
Consumer Products Group and in a manner reasonably believed to be within the
scope of authority conferred on that person by the operating agreement, unless
the loss, damage or claim resulted from that person's gross negligence or
willful misconduct. These persons will be fully protected in relying in good
faith on the records of Triarc Consumer Products Group and on
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information, opinions, reports or statements presented to Triarc Consumer
Products Group by others as to matters reasonably believed to be within the
professional or expert competence of the providing person or entity that has
been selected with reasonable care.
Triarc Beverage Holdings' certificate of incorporation and by-laws provide
that Triarc Beverage Holdings will, to the extent not prohibited by law,
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed action, suit or proceeding because that
person is or was a director or officer of Triarc Beverage Holdings, or is or was
serving in a capacity at the request of Triarc Beverage Holdings as a director
or officer of another corporation or other entity, against judgments, fines,
penalties, excise taxes, amounts paid in settlement and costs, charges and
expenses, including attorneys' fees and disbursements. Persons who are not
directors or officers of Triarc Beverage Holdings may be similarly indemnified
for service to Triarc Beverage Holdings or to another entity at the request of
Triarc Beverage Holdings to the extent the board of directors of Triarc Beverage
Holdings specifies that these persons are entitled to these benefits.
Triarc Beverage Holdings's certificate of incorporation limits the personal
liability of directors of Triarc Beverage Holdings to the fullest extent
permitted by paragraph (7) of subsection (b) of section 102 of the Delaware
General Corporation Law. Section 102(b)(7) of the Delaware General Corporation
Law permits the elimination or limitation of directors' personal liability to
the corporation or its stockholders for monetary damages for breach of fiduciary
duties as a director, except for:
(1) any breach of the director's duty of loyalty to the corporation or
its stockholders,
(2) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law,
(3) actions relating to unlawful payments of dividends or unlawful
stock repurchase or redemptions, and
(4) any transaction from which the director derived an improper
personal benefit.
The effect of these provisions is to eliminate the rights of Triarc
Consumer Products Group and Triarc Beverage Holdings, and their members and
stockholders, to recover monetary damages against a manager or director for
breach of the fiduciary duty of care as a manager or director, including
breaches resulting from negligent or grossly negligent behavior, except in the
situations described above.
Each of Triarc Consumer Products Group and Triarc Beverage Holdings also
enters into indemnification agreements with its, and some of its subsidiaries',
managers, directors and officers, as the case may be, indemnifying them to the
fullest extent permitted by law against liability, including related expenses,
they may incur in their capacity as directors, managers, officers, employees,
trustees, agents or fiduciaries of Triarc Consumer Products Group or Triarc
Beverage Holdings, as the case may be, and/or their subsidiaries or any
liability relating to their service in any such capacity, at the request of
Triarc Consumer Products Group or Triarc Beverage Holdings for other
corporations or entities. The indemnification agreements are meant to provide
specific contractual assurance that the indemnification provided by Triarc
Consumer Products Group or Triarc Beverage Holdings under their organizational
documents or directors' and officers' liability insurance will be available
regardless of changes to their organizational documents or any acquisition
transactions relating to their organizational documents. The indemnification
agreements do not provide indemnification:
(1) for the return by the indemnitee of any illegal remuneration paid
to him or her,
(2) for any profits payable by the indemnitee to Triarc Consumer
Products Group or Triarc Beverage Holdings under Section 16(b) of the
Securities Exchange Act,
(3) for any liability resulting from the indemnitee's knowingly
fraudulent, dishonest or willful misconduct,
(4) for any amount the payment of which is not permitted by applicable
law,
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(5) for any liability resulting from conduct producing unlawful
personal benefit,
(6) if a final court adjudication determines that indemnification is
not lawful, or
(7) to the extent indemnification has been provided by Triarc
Consumers Products Group or Triarc Beverage Holdings under their
organizational documents or directors and officers liability insurance.
Determination as to whether an indemnitee is entitled to be paid under the
indemnification agreements may be made by the majority vote of a quorum of
disinterested directors or managers, as the case may be, of Triarc Consumer
Products Group or Triarc Beverage Holdings, independent legal counsel selected
by the managers of Triarc Consumer Products Group or directors of Triarc
Beverage Holdings, as the case may be, a majority of disinterested members of
Triarc Consumer Products Group or stockholders of Triarc Beverage Holdings or by
a final adjudication of a court of competent jurisdiction. If Triarc Consumer
Products Group or Triarc Beverage Holdings undergo a change of control under the
indemnification agreements all such determinations are to be made by special
independent counsel selected by the indemnitee and approved by Triarc Consumer
Products Group or Triarc Beverage Holdings, as the case may be, which approval
may not be unreasonably withheld. Triarc Consumer Products Group or Triarc
Beverage Holdings will pay the reasonable fees and expenses of the special
independent counsel. An indemnitee may be able to require Triarc Consumer
Products Group or Triarc Beverage Holdings to establish a trust fund to assure
that funds will be available to pay any amounts which may be due to an
indemnitee under an indemnification agreement.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Triarc Consumer
Products Group and Triarc Beverage Holdings pursuant to the foregoing
provisions, Triarc Consumer Products Group and Triarc Beverage Holdings have
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
CASH INCENTIVE PLANS
The Triarc Beverage Group and the Triarc Restaurant Group have annual cash
incentive plans and the Triarc Restaurant Group has a mid-term cash incentive
plan for executive officers and key employees.
Each annual incentive plan is designed to provide annual incentive awards
to participants, with amounts payable being linked to whether the applicable
company has met specified pre-determined financial goals and the performance of
the participant during the preceding year. Under each annual incentive plan,
participants may receive awards of a specified percentage of their then current
base salaries, which percentage varies depending upon the level of seniority and
responsibility of the participant. The percentages are set by the company's
management in consultation with management of Triarc Parent. The board of
directors of each company, in consultation with management of Triarc Parent and
the compensation committee of Triarc Parent's board of directors, may elect to
adjust awards on a discretionary basis to reflect the relative individual
contribution of the executive or key employee, to evaluate the 'quality' of the
company's earnings or to take into account external factors that affect
performance results. The board of directors of each company may also decide that
multiple performance objectives related to the company's and/or the individual's
performance may be appropriate and in this event, these factors would be
weighted to determine the amount of the annual incentive awards. Each annual
incentive plan is administered by the respective company's board of directors
and Triarc Parent's management and may be amended or terminated at any time.
Under the Triarc Restaurant Group mid-term incentive plan, incentive awards
are granted to participants if the Triarc Restaurant Group achieves an agreed
upon profit over a three-year performance cycle. During each plan year, an
amount is accrued for each participant based upon the amount by which the
company's profit for that year exceeds a specified minimum return. A new
three-year performance cycle begins each year, so that after the third year the
annual cash
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amount paid to participants under the mid-term incentive plan should equal the
target award if the Triarc Restaurant Group's profit goals have been achieved
for the full three-year cycle. Except as may otherwise be specified in a
participant's employment agreement, the board of directors of the Triarc
Restaurant Group, together with Triarc Parent's management and the compensation
committee of Triarc Parent's board of directors, may adjust an individual's
award, upward or downward, based upon an assessment of the individual's relative
contribution to the company's longer-term profit performance. The mid-term
incentive plan may be amended or terminated at any time.
From time to time, the compensation committee of Triarc Parent's board of
directors may award discretionary bonuses based on performance to executive
officers. The amounts of these bonuses will be based on the compensation
committee's evaluation of each individual's contribution.
TRIARC PARENT'S 1999 EXECUTIVE BONUS PLAN
Triarc Parent's 1999 Executive Bonus Plan was approved by the stockholders
of Triarc Parent on September 23, 1999. The 1999 Executive Bonus Plan
establishes a program of incentive compensation for designated officers and key
employees of Triarc Parent and its subsidiaries that is directly related to the
financial performance of Triarc Parent. The 1999 Executive Bonus Plan provides
for formula bonus awards and performance goal bonus awards.
The participants eligible for formula bonus awards are Messrs. Peltz and
May. The amount of the award is determined as a percentage of (1) Triarc
Parent's earnings as calculated in accordance with a predetermined formula and
(2) the improvement in Triarc Parent's earnings as compared to the immediately
preceding fiscal year. No designation has been made as to the participants
eligible for performance goal bonus awards.
The 1999 Executive Bonus Plan is administered by the Performance
Compensation Subcommittee of the Triarc Parent board of directors. The committee
has the authority necessary or helpful to enable it to discharge its
responsibilities with respect to the 1999 Executive Bonus Plan. Within the
limitations imposed by law, the committee (1) has the power to make full and
binding decisions with respect to all aspects of the 1999 Executive Bonus Plan
and (2) may delegate some or all of its authority.
STOCK OPTION PLANS
Some of our named executive officers have received options to purchase
shares of Triarc Parent class A common stock as well as Triarc Beverage Holdings
common stock. The following are summaries of the material terms of the stock
option plans governing these options:
TRIARC PARENT'S 1993 EQUITY PARTICIPATION PLAN
Triarc Parent's 1993 Equity Participation Plan, which expired on April 24,
1998, provided for the grant of options to purchase Triarc Parent class A common
stock, par value $.10 per share of Triarc Parent, including performance stock
options, stock appreciation rights, restricted shares of Triarc Parent class A
common stock and, to non-employee directors of Triarc Parent, at their option,
shares of Triarc Parent class A common stock instead of annual retainer fees
otherwise to be payable in cash. Directors, selected officers and key employees
of, and key consultants to, Triarc Parent and its subsidiaries were eligible to
participate in the 1993 Equity Participation Plan. A maximum of 10,000,000
shares of Triarc Parent class A common stock, contingent on adjustments, were
authorized to be delivered by Triarc Parent under options, stock appreciation
rights and restricted shares granted under the 1993 Equity Participation Plan.
As of November 30, 1999, options to acquire a total of 8,147,184 shares of
Triarc Parent class A common stock were outstanding under the 1993 Equity
Participation Plan. The plan is administered by the Performance Compensation
Subcommittee of the Triarc Parent board of directors.
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TRIARC PARENT'S 1998 EQUITY PARTICIPATION PLAN
Triarc Parent's 1998 Equity Participation Plan was approved by Triarc
Parent's board of directors on March 10, 1998 and was approved by the
stockholders on May 6, 1998. The 1998 Equity Participation Plan provides for the
granting of stock options, stock appreciation rights, and restricted stock to
officers and key employees of, and consultants to, Triarc Parent and its
subsidiaries and affiliates. The 1998 Equity Participation Plan provides for
automatic awards of options to non-employee directors of Triarc Parent and
permits non-employee directors to elect to receive all or a portion of their
annual retainer fees and/or board of directors or committee meeting attendance
fees, if any, in shares of Triarc Parent class A common stock. The 1998 Equity
Participation Plan replaced the 1993 Equity Participation Plan which expired on
April 24, 1998.
As of November 30, 1999, options to acquire 838,750 shares of Triarc Parent
class A common stock were outstanding under the 1998 Equity Participation Plan.
Contingent on specified antidilution adjustments, a maximum of 5,000,000
aggregate shares of Triarc Parent class A common stock may be granted on the
exercise of options or stock appreciation rights or upon a director's election
to receive their fees in Triarc Parent shares under the 1998 Equity
Participation Plan. In addition, the maximum number of shares of class A common
stock that may be granted to any individual in a calendar year is 1,000,000
shares. The 1998 Equity Participation Plan is administered by the Performance
Compensation Subcommittee of Triarc Parent's board of directors. The term during
which awards may be granted under the 1998 Equity Participation Plan will expire
on April 30, 2003.
TRIARC BEVERAGE HOLDINGS OPTION PLAN
On August 19, 1997, Triarc Beverage Holdings' board of directors adopted
the Triarc Beverage Holdings Corp. 1997 Stock Option Plan. The Triarc Beverage
Holdings Option Plan was adopted for the purpose of attracting, retaining and
motivating key employees, officers, directors and consultants of Triarc Beverage
Holdings. The Triarc Beverage Holdings Option Plan provides for a maximum of
150,000 shares of Triarc Beverage Holdings common stock to be issued upon the
exercise of stock options. As of November 30, 1999, options to acquire 147,450
shares of Triarc Beverage Holdings common stock were outstanding under the
Triarc Beverage Holdings Option Plan. The Triarc Beverage Holdings Option Plan
is administered by the Performance Compensation Subcommittee of Triarc Parent's
board of directors. The term during which options may be granted under the
Triarc Beverage Holdings Option Plan expires on August 18, 2007.
Before completion of an initial public offering of Triarc Beverage Holdings
common stock, individuals who have exercised their options and held shares of
Triarc Beverage Holdings common stock for more than six months have rights to
sell a portion of the shares obtained under the Triarc Beverage Holdings Option
Plan to Triarc Beverage Holdings during a specified period each year, of not
more than two weeks, at a price equal to fair market value as determined by an
annual appraisal of the value of Triarc Beverage Holdings. If Triarc Beverage
Holdings is in default under any debt instrument or would be in default because
of any purchase of these shares, Triarc Beverage Holdings is permitted to defer
its obligation to purchase the shares until all debt instruments will permit the
purchase, and will pay interest at the prime rate from the date when the shares
were initially to be purchased by it until Triarc Beverage Holdings purchases
the shares. Before completion of an initial public offering, Triarc Beverage
Holdings can require individual option holders to sell all or any portion of
their shares held for more than six months on the termination of the individual
option holder's employment. The price per share will be the fair market value
unless the option holder was terminated for cause or violated any
non-competition restrictions, in which case the price per share will be the
lower of fair market value or the exercise price.
During 1997, 76,250 stock options were granted under the Triarc Beverage
Holdings Option Plan with an exercise price equal to fair market value ($147.30)
as determined by an independent appraisal. These stock options vest ratably on
July 1 of 1999, 2000 and 2001.
84
<PAGE>
During 1998, 72,175 stock options were granted under the Triarc Beverage
Holdings Option Plan with an exercise price equal to fair market value ($191.00)
as determined by an independent appraisal. These stock options vest ratably on
July 1 of 1999, 2000 and 2001.
During 1999, 4,850 stock options were granted under the Triarc Beverage
Holdings Option Plan and 4,950 stock options were canceled. The options granted
have an exercise price equal to fair market value ($311.99) as determined by an
independent appraisal. These stock options vest ratably on July 1, of 2000, 2001
and 2002.
Triarc Beverage Holdings made equitable adjustments to its outstanding
options during the first quarter of 1999 to reflect the effects of the transfer
of cash and deferred tax assets from Triarc Beverage Holdings to Triarc Parent
and Triarc Consumer Products Group and the contribution of Stewart's from Triarc
Consumer Products Group. Each option granted in 1997 at an exercise price of
$147.30 per share was adjusted to $107.05 per share and the exercise price of
each option granted in 1998 at an exercise price of $191.00 per share was
adjusted to $138.83 per share. In addition, holders of options granted in 1997
may be entitled to a cash payment of $51.34 per share, and holders of options
granted in 1998 may be entitled to a cash payment of $39.40 per share, if they
exercise their options or their right to resell their shares to Triarc Beverage
Holdings.
OPTIONS GRANTED IN FISCAL 1998
The following table provides information concerning individual grants of
stock options under the Triarc Beverage Holdings Option Plan made during Triarc
Beverage Holdings' fiscal year ended January 3, 1999 to the named executive
officers. No grants were made under Triarc Parent's stock option plans to any of
the named executive officers during Triarc Parent's fiscal year ended January 3,
1999, although grants were made in March 1999 for the fiscal year ended January
3, 1999 to each of the named executive officers, other than Messrs. Peltz and
May. No stock appreciation rights were granted to any named executive officers,
and no stock options were exercised by any named executive officer during the
fiscal year ended January 3, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
--------------------------------------------------------- -------------
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS/ % OF TOTAL EXERCISE OR
SARS OPTIONS GRANTED BASE PRICE GRANT DATE
GRANTED TO EMPLOYEES IN ($ PER EXPIRATION PRESENT VALUE
NAME (#)(1) FISCAL YEAR(2) SHARE)(3) DATE ($)(4)
- ---- ------ -------------- --------- ---- ------
<S> <C> <C> <C> <C> <C>
Nelson Peltz....................... 26,000 36% $191.00 06/10/08 $1,558,986
Peter W. May....................... 13,000 18 191.00 06/10/08 779,493
Roland C. Smith.................... 0 0 -- -- --
John L. Barnes, Jr................. 6,600 9 191.00 06/10/08 395,743
Eric D. Kogan...................... 6,600 9 191.00 06/10/08 395,743
Brian L. Schorr.................... 6,600 9 191.00 06/10/08 395,743
Michael Weinstein.................. 0 0 -- -- --
</TABLE>
- ------------
(1) These options consist of options to purchase shares of Triarc Beverage
Holdings common stock which were granted under the Triarc Beverage Holdings
Option Plan on June 10, 1998. One-third of the options will vest on each of
July 1, 1999, 2000, and 2001, and they will be exercisable at any time
between the date of vesting and the tenth anniversary of the date of grant.
(footnotes continued on next page)
85
<PAGE>
(footnotes continued from previous page)
(2) The percentages are based on the aggregate number of options granted in
Triarc Beverage Holdings' fiscal year ending January 3, 1999 to purchase
Triarc Beverage Holdings common stock.
(3) In May 1999, in accordance with the terms of the Triarc Beverage Holdings
Option Plan, equitable adjustments were made to the exercise price of all
outstanding options under the Triarc Beverage Holdings Option Plan to
reflect the effects of the transfer of cash and deferred tax assets from
Triarc Beverage Holdings to Triarc Parent and the transfer of Stewart's to
Triarc Beverage Holdings. As a result, the exercise price of each option
granted in 1997 was equitably adjusted from $147.30 per share to $107.05 per
share and the exercise price of each option granted in 1998 was equitably
adjusted from $191.00 per share to $138.83 per share. In addition, holders
of options granted in 1997 may be entitled to a cash payment of $51.34 per
share, and holders of options granted in 1998 may be entitled to a cash
payment of $39.40 per share, if they exercise their options or their right
to resell their shares to Triarc Beverage Holdings.
(4) These values were calculated using a Black-Scholes option pricing model. The
actual value, if any, that an executive may realize will depend on the
excess, if any, of the stock price over the exercise price on the date the
options are exercised, and no assurance exists that the value realized by an
executive will be at or near the value estimated by the Black-Scholes model.
The following assumptions were used to calculate the present value of the
option grants with respect to Triarc Beverage Holdings common stock:
(a) assumed option term of seven years;
(b) stock price volatility factor of .0001;
(c) annual discount rate of 5.5%; and
(d) no dividend payment.
No discount factor to the Black-Scholes ratio was used for each year an option
remains unvested. The exercise price reflects the fair market value of the
Triarc Beverage Holdings common stock on the date of grant as determined by an
independent third party appraiser, and the volatility factor reflects the fact
that, as a privately held subsidiary, the Triarc Beverage Holdings common stock
does not have a public trading market. These estimated option values, including
the underlying assumptions used in calculating them, constitute forward-looking
statements and involve risks, uncertainties and other factors which may cause
the actual value of the options to be materially different from those expressed
or implied above.
OPTION VALUES AT END OF FISCAL 1998
The following table provides information concerning the value of
unexercised Triarc Beverage Holdings options under the Triarc Beverage Holdings
Option Plan and unexercised Triarc Parent options under the Triarc Parent 1993
Equity Participation Plan held by the named executive officers as of January 3,
1999.
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<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-THE-
SHARES UNEXERCISED OPTIONS MONEY OPTIONS AT
ACQUIRED AT FISCAL YEAR END FISCAL YEAR-END
ON VALUE 1998(#) EXERCISABLE/ 1998($)(1) EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- -------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Nelson Peltz
Triarc Parent Options ............ -0- -0- 1,173,333/2,316,667 2,287,041/389,984
TBHC Options ..................... -0- -0- -0-/26,000 -0-/-0-
Peter W. May
Triarc Parent Options ............ -0- -0- 785,000/1,550,000 1,533,959/277,916
TBHC Options ..................... -0- -0- -0-/13,000 -0-/-0-
Roland C. Smith
Triarc Parent Options ............ -0- -0- 54,665/60,335 184,776/130,949
TBHC Options ..................... -0- -0- -0-/-0- -0-/-0-
John L. Barnes, Jr.
Triarc Parent Options ............ -0- -0- 136,667/123,333 382,775/295,550
TBHC Options ..................... -0- -0- -0-/6,600 -0-/-0-
Eric D. Kogan
Triarc Parent Options ............ -0- -0- 145,667/133,333 411,000/333,500
TBHC Options ..................... -0- -0- -0-/6,600 -0-/-0-
Brian L. Schorr
Triarc Parent Options ............ -0- -0- 181,667/113,333 417,775/266,800
TBHC Options ..................... -0- -0- -0-/6,600 -0-/-0-
Michael Weinstein
Triarc Parent Options ............ -0- -0- 18,333/26,667 68,416/79,334
TBHC Options ..................... -0- -0- -0-/21,000 -0-/917,700
</TABLE>
(1) On December 31, 1998, the last trading day during the fiscal year ended
January 3, 1999, the closing price of Triarc Parent's class A common stock
on the New York Stock Exchange was $15.875 per share. Triarc Beverage
Holdings common stock is not publicly traded. The per share value ($191.00)
as of January 3, 1999 is based on a June 10, 1998 valuation provided to
Triarc Beverage Holdings by an independent third party. Each of the grants
made to holders of Triarc Beverage Holdings options was made at the above
per share value. In May 1999, in accordance with the terms of the Triarc
Beverage Holdings Option Plan, equitable adjustments were made to the
exercise price of all outstanding options under the Triarc Beverage Holdings
Option Plan to reflect the effects of the transfer of cash and deferred tax
assets from Triarc Beverage Holdings to Triarc Parent and the transfer of
Stewart's to Triarc Beverage Holdings. As a result, the exercise price of
each option granted in 1997 was equitably adjusted from $147.30 per share to
$107.05 per share and the exercise price of each option granted in 1998 was
equitably adjusted from $191.00 per share to $138.83 per share. In addition,
holders of options granted in 1997 may be entitled to a cash payment of
$51.34 per share, and holders of options granted in 1998 may be entitled to
a cash payment of $39.40 per share, if they exercise their options or their
right to resell their shares to Triarc Beverage Holdings.
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL 1998
The following table shows specified information for awards made during the
fiscal year ended January 3, 1999 to Roland C. Smith under Triarc Restaurant
Group's mid-term incentive plan. No other named executive officer received
awards in 1998 under the mid-term incentive plan. For additional information
regarding the mid-term incentive plan, see ' -- Cash Incentive Plans.'
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE BASED PLANS(1)
PERFORMANCE OR -------------------------------------
OTHER PERIOD UNTIL
MATURATION OR THRESHOLD TARGET MAXIMUM
NAME PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- ------ -------- -------- --------
<S> <C> <C> <C> <C>
Roland C. Smith............................. 1998-2000 -0- $300,000 $450,000
</TABLE>
(footnote on next page)
87
<PAGE>
(footnote from previous page)
(1) Awards were made in fiscal 1998 under the mid-term incentive plan to
participants, including Mr. Smith, approved by the board of directors of
Triarc Restaurant Group for the three-year performance period 1998-2000.
Each participant's target incentive is set at a percentage of his or her
annual base salary and is based on meeting operating profit targets over the
three year performance cycle. Under Mr. Smith's employment agreement, his
target incentive was set at 75% of his annual base salary. No amount will be
payable if operating profits are less than 80% of the specified performance
objective for the three year cycle. If a participant is terminated without
cause, that participant will be entitled to amounts accrued under the plan
as of the date of termination. If a participant is not employed by the
Triarc Restaurant Group on the last day of the three-year performance cycle
for reasons other than death, an approved absence or excused transfers, the
participant is not entitled to any incentive compensation under the plan
unless the board of directors of Triarc Restaurant Group determines
otherwise. Mr. Smith resigned effective May 7, 1999 from his position at the
Triarc Restaurant Group and will not receive any further payments under the
mid-term incentive plan.
88
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following are summaries of the material terms of certain agreements and
arrangements to which we are a party. You should be aware that these summaries
are not a complete description of these agreements and arrangements.
OLD TAX SHARING AGREEMENT
RC/Arby's, Triarc Beverage Holdings, including Stewart's effective August
15, 1998, and Stewart's, through August 15, 1998, were each parties to separate
tax sharing agreements with Triarc Parent whereby each was required to pay
amounts relating to taxes based on their taxable income and the taxable income
of their eligible subsidiaries on a stand-alone basis. Because of net operating
losses in prior periods, including 1997, in excess of pre-tax income for the
first nine months of 1998 and/or prior period overpayments, no payments were
required for RC/Arby's, Triarc Beverage Holdings or Stewart's during 1997 or for
RC/Arby's during 1998. During 1998, Triarc Beverage Holdings made tax sharing
payments to Triarc Parent of $10.5 million. Stewart's made a $0.9 million tax
sharing payment during 1998.
TAX SHARING AGREEMENT
Triarc Consumer Products Group's principal subsidiaries are included in a
consolidated federal income tax return with Triarc Parent and combined state tax
returns in some states. In connection with the offering of initial notes, Triarc
Consumer Products Group's and some of its subsidiaries entered into a tax
sharing agreement with Triarc Parent, which was amended effective as of the
February 25, 1999 date of the agreement. Under this tax sharing agreement, for
each year for which any of Triarc Consumer Products Group's subsidiaries are
included in the Triarc Parent return, Triarc Consumer Products Group will pay,
or cause its subsidiaries to pay, to Triarc Parent an amount equal to the
federal income tax liability that would have been payable by Triarc Consumer
Products Group for that year, or portion of the amount payable, determined
generally as if Triarc Consumer Products Group had filed a separate,
consolidated federal income tax return for that year on behalf of itself and its
subsidiaries. The payment to Triarc Parent is based on current income less the
following tax benefits:
losses, credits and overpayments of any of our subsidiaries carried over
from 1998 or prior years,
deductions relating to the write-off of call premiums and debt issuance
expenses on indebtedness of any of our subsidiaries that was outstanding
before the effective date of this tax sharing agreement,
deductions relating to exercise or payment in cancellation of stock
options of Triarc Parent, and
any losses relating to any investment in Chesapeake Insurance Company
Limited by a subsidiary of Triarc Consumer Products Group.
Triarc Parent has the right to cause the effective transfer of any
unutilized portion of the above four items but only to the extent permitted
under the net worth covenant in the credit agreement. Also under this tax
sharing agreement, similar arrangements apply in some states where we or any of
our subsidiaries file on a combined basis with Triarc Parent or any of its other
subsidiaries. However, the liability of Triarc Consumer Products Group will not
be less than any increase in taxes resulting from the inclusions of Triarc
Consumer Products Group or any of its subsidiaries in the combined return.
SUPPLY ARRANGEMENTS
We purchase some raw materials, flavors and packaging from Triarc Parent at
Triarc Parent's purchase cost from unaffiliated third-party suppliers. We
purchased raw materials, flavors and packaging from Triarc Parent in the amount
of $17.2 million in 1997 and $123.0 million in 1998.
89
<PAGE>
MANAGEMENT SERVICES AGREEMENTS
Under two management services agreements with Triarc Parent, we receive
from Triarc Parent management services, including legal, accounting, tax,
insurance, financial and other management services under existing management
service agreements. The management fee payable to Triarc Parent is an aggregate
of $10.5 million per year, which may be increased but not decreased, based on
changes in an appropriate consumer price index. We are also required to
reimburse Triarc Parent for costs and expenses incurred by Triarc Parent in
connection with supply agreements that Triarc Parent has entered into relating
to items used in connection with the business of the Triarc Beverage Group. We
also reimburse Triarc Parent for costs and expenses incurred by Triarc Parent
relating to:
insurance maintained by Triarc Parent, including medical, general
liability and directors and officers liability insurance,
the management or operation of employee benefit plans and
the acquisition from third parties of goods and services and the use of
equipment purchased, arranged for or provided by Triarc Parent, to the
extent that any of the above are for the benefit of, or used by, us or any
of our subsidiaries.
Before we entered into the existing management services agreements, Triarc
Parent allocated $8.5 million of costs to us in 1996, $9.4 million in 1997 and
$10.5 million in 1998 for these services.
REPAYMENT OF INTERCOMPANY PROMISSORY NOTES
Before 1998, subsidiaries of Triarc Consumer Products Group borrowed cash
under promissory notes with Triarc Parent and two of its subsidiaries,
Southeastern Public Service Company and Chesapeake Insurance Company Ltd., and
made cash advances to Triarc Parent under a promissory note receivable upon
demand. We earned interest income on these notes of $261,000 in 1996, $230,000
in 1997 and $118,000 in 1998. We incurred interest expense on these notes of
$2.8 million in 1996, $1.4 million in 1997 and $39,000 in 1998. The $1.2 million
of promissory notes payable by us at December 28, 1997 and the $2.0 million of
promissory notes payable to us at December 28, 1998 were repaid during 1998.
ISSUANCE OF TRIARC BEVERAGE HOLDINGS PREFERRED STOCK
On May 22, 1997, Triarc Beverage Holdings issued 75,000 shares of
redeemable cumulative convertible preferred stock to Triarc Parent for
$75,000,000. Following a reverse stock split, there are currently 750 shares
issued and outstanding. The preferred stock bears a cumulative annual dividend
of 10% per annum that is payable in cash or in kind if declared by, and at the
option of, Triarc Beverage Holdings. Each share is convertible into a share of
common stock of Triarc Beverage Holdings. The preferred stock must be redeemed
on May 22, 2009 at $100,000 per share plus accrued and unpaid dividends. No cash
dividends were paid in 1997 or 1998, although we recorded cumulative dividends
of $4.6 million in 1997 and $8.0 million in 1998. Triarc Parent contributed the
preferred stock to Triarc Consumer Products Group in connection with the
offering of initial notes.
NOTE PURCHASES BY MESSRS. PELTZ AND MAY
On February 25, 1999, Messrs. Peltz and May purchased an aggregate $20.0
million of initial notes. We have been advised by Messrs. Peltz and May that
they no longer hold any of these initial notes.
OTHER TRANSACTIONS
Mr. May has an equity interest in a franchisee that owns an Arby's
restaurant in New Milford, Connecticut. That franchisee is a party to a standard
Arby's franchise license agreement and under
90
<PAGE>
that agreement pays to Arby's the same fees and royalty payments that
unaffiliated third-party franchisees pay.
In connection with the sale in May 1997 of all of the company-owned Arby's
restaurants, the three RC/Arby's subsidiaries that sold the restaurants received
promissory notes aggregating $1.95 million principal amount at maturity and
options to acquire an aggregate of up to 20% of the common stock of the two
entities that own the restaurants. In February 1999, the successor to the three
RC/Arby's subsidiaries sold to Triarc Parent the promissory notes and options
for an aggregate purchase price of $2.0 million. The $2.0 million purchase price
was equal to the amount that Triarc Parent realized upon disposition in
May 1999 of the promissory notes and options to an affiliate of the purchaser of
the Arby's restaurants.
We paid $32,000 in 1997 to Triarc Parent for the use of aircraft that
Triarc Parent leased from Triangle Aircraft Services Corporation, an affiliate
of Messrs. Peltz and May. We believe that this payment was on terms no less
favorable to us than if it was between unrelated parties.
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<PAGE>
PRINCIPAL SHAREHOLDERS
Triarc Consumer Products Group is a wholly owned subsidiary of Triarc
Parent. The following table sets forth the beneficial ownership of Triarc Parent
as of November 30, 1999, by:
(1) each person known by Triarc Parent to be the beneficial owner of
more than 5% of the outstanding shares of Triarc Parent class A common
stock,
(2) each director of Triarc Parent,
(3) each named executive officer of Triarc Parent and
(4) all directors and executive officers of Triarc Parent as a group.
Except as otherwise indicated, each person has sole voting and dispositive
power with respect to his, her or its shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------------------------ -------------------- ----------------
<S> <C> <C>
DWG Acquisition Group, L.P. 5,982,867 shares(1) 30.3%
1201 North Market Street
Wilmington, DE 19801
Nelson Peltz .......................................... 7,315,233 shares(1)(2)(3) 34.8%
280 Park Avenue
New York, NY 10017
Peter W. May .......................................... 6,889,667 shares(1)(2) 33.4%
280 Park Avenue
New York, NY 10017
William Ehrman ........................................ 2,279,022 shares(4) 11.5%
Frederick Ketcher
Jonas Gerstl
Frederic Greenberg
James McLaren
William D. Lautman
350 Park Avenue
New York, NY 10022
Hugh L. Carey.......................................... 37,622 shares *
Clive Chajet........................................... 33,300 shares(5) *
Joseph A. Levato....................................... 172,500 shares *
David E. Schwab II..................................... 30,000 shares *
Jeffrey S. Silverman................................... 37,691 shares *
Raymond S. Troubh...................................... 45,500 shares *
Gerald Tsai, Jr........................................ 42,070 shares *
John L. Barnes, Jr..................................... 207,334 shares 1.0%
Eric D. Kogan.......................................... 226,334 shares 1.1%
Brian L. Schorr........................................ 245,324 shares 1.2%
Directors and Executive Officers as a group (18 9,527,758 shares 41.4%
persons).............................................
</TABLE>
- ------------
* Less than 1%
(1) Triarc Parent has been informed that DWG Acquisition has pledged its shares
to a financial institution on behalf of Messrs. Peltz and May to secure
loans made to them.
(2) Includes 5,982,867 shares held by DWG Acquisition, of which Mr. Peltz and
Mr. May are the sole general partners.
(3) Includes 21,200 shares owned by a family trust of which Mr. Peltz is a
trustee and 2,600 shares owned by minor children of Mr. Peltz. Mr. Peltz
disclaims beneficial ownership.
(4) The information described in this document relating to Messrs. Ehrman,
Greenberg, Ketcher, Gerstl, McLaren and Lautman is based solely on
information contained in a Schedule 13G/A filed with the Securities
Exchange Commission on May 13, 1999 under the Securities Exchange Act. The
shares reflected include an aggregate of 2,147,045 shares of Triarc Parent
class A common stock that Messrs. Ehrman, Ketcher, Gerstl, Greenberg,
McLaren and Lautman may
(footnotes continued on next page)
92
<PAGE>
(footnotes continued from previous page)
be deemed to beneficially own as general partners of EGS Associates, L.P.,
a Delaware limited partnership, EGS Partners, L.L.C., a Delaware limited
liability company, Bev Partners, L.P., a Delaware limited partnership,
Jonas Partners, L.P., a Delaware limited partnership and FK Investments,
L.P., a Delaware limited partnership. The shares reflected also include
(1) 56,650 shares of Triarc Parent class A common stock owned directly by
Mr. Ehrman and 55,927 shares of Triarc Parent class A common stock owned by
members of Mr. Ehrman's immediate family and his sister-in-law; (2) 8,400
shares of Triarc Parent class A common stock owned directly by Mr. Ketcher;
(3) 1,500 shares of Triarc Parent class A common stock owned directly by
Mr. Gerstl and his wife and 4,500 shares of Triarc Parent class A common
stock owned by a member of Mr. Gerstl's immediate family; and (4) 2,000
shares of Triarc Parent class A common stock owned directly by Mr.
Greenberg and 3,000 shares of Triarc Parent class A common stock owned by a
member of Mr. Greenberg's immediate family.
(5) Includes 1,300 shares owned by Mr. Chajet's wife, as to which shares Mr.
Chajet disclaims beneficial ownership.
The above beneficial ownership table includes options to purchase shares of
Triarc Parent class A common stock which have vested or will vest within
60 days of November 30, 1999 as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER REPRESENTED BY OPTIONS
------------------------ ----------------------
<S> <C>
Nelson Peltz................................................ 1,281,666 shares
Peter W. May................................................ 860,000 shares
Hugh L. Carey............................................... 25,500 shares
Clive Chajet................................................ 25,500 shares
Joseph A. Levato............................................ 144,500 shares
David E. Schwab II.......................................... 25,500 shares
Jeffrey S. Silverman........................................ 0 shares
Raymond S. Troubh........................................... 25,500 shares
Gerald Tsai, Jr............................................. 28,500 shares
John L. Barnes, Jr.......................................... 203,334 shares
Eric D. Kogan............................................... 212,334 shares
Brian L. Schorr............................................. 238,334 shares
Directors and Executive Officers as a group (18 persons).... 3,291,167 shares
</TABLE>
The beneficial ownership table does not include 3,998,414 shares of Triarc
Parent's non-voting Triarc Parent class B common stock owned as of November 30,
1999 by entities controlled by Victor Posner. In August, 1999, Triarc Parent
entered into a definitive agreement with entities controlled by Mr. Posner
pursuant to which Triarc Parent will acquire all of the class B common stock
held by these entities. One-third of these shares were acquired by Triarc Parent
in August 1999. The agreement further provides that one-half of the remaining
shares of class B common stock will be acquired by Triarc Parent on or before
the first anniversary of the initial purchase and the balance of these shares
will be purchased on or before the second anniversary of the initial purchase.
Each of the purchase dates can be extended under limited circumstances. None of
the directors of Triarc Parent or the named executive officers beneficially
owned any Triarc Parent class B common stock as of November 30, 1999.
Except for the arrangements relating to the shares described in footnote
(1) to the above table, there are no arrangements known to Triarc Parent the
operation of which may at a later date result in a change in control of Triarc
Parent.
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<PAGE>
DESCRIPTION OF INDEBTEDNESS
CREDIT FACILITY
In connection with the offering of the initial notes, Snapple, Mistic,
Stewart's, RC/Arby's and Royal Crown entered into a credit facility. The credit
facility allows each of Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown to
borrow, on a joint and several basis, up to $535.0 million. DLJ Capital Funding,
Inc. serves as the syndication agent for the lenders, Morgan Stanley Senior
Funding, Inc. as the documentation agent for the lenders and The Bank of New
York as the administrative agent for the lenders. The following is a description
of the principal terms of the credit facility.
Structure. The credit facility consists of:
a revolving credit facility in the amount of $60.0 million, $25.0 million
of which is available for letters of credit,
a term A loan in the amount of $45.0 million,
a term B loan in the amount of $125.0 million, and
a term C loan in the amount of $305.0 million.
Security, Guaranty. Triarc Consumer Products Group and substantially all of
its domestic subsidiaries that are not borrowers unconditionally guarantee the
borrowers' obligations under the credit facility. In addition, the obligations
of the borrowers under the credit facility and the guarantors under the
guarantees are secured by substantially all of Triarc Consumer Products Group's
assets, each borrower's assets and each guarantor's assets, including:
a pledge of the capital stock of all of Triarc Consumer Products Group's
present and future direct and indirect domestic subsidiaries and 65% of
the capital stock of its first tier foreign subsidiaries, other than
special purpose subsidiaries,
a security interest in substantially all of Triarc Consumer Products
Group's property and assets and substantially all of the property and
assets of its present and future direct and indirect domestic
subsidiaries, other than special purpose subsidiaries, including accounts
receivables, inventory, equipment, general intangibles and real property,
and
a security interest in all intercompany indebtedness in favor of Triarc
Consumer Products Group and its direct or indirect domestic subsidiaries.
Availability. The borrowers may not reborrow amounts repaid or prepaid
under the term loans. The borrowers may borrow under the revolving credit
facility at any time before its final maturity. However, the maximum principal
amount of outstanding borrowings under the revolving credit facility may not
exceed the lesser of (1) $60 million and (2) a borrowing base comprised of a
percentage of the value of all eligible inventory and a percentage of the value
of all eligible accounts receivable of the borrowers and their domestic
subsidiaries that are not borrowers.
The following table indicates the amounts outstanding under the credit
facility as of October 3, 1999, all of which are joint and several obligations
of all of the borrowers:
<TABLE>
<CAPTION>
TERM A TERM B TERM C TOTAL
------ ------ ------ -----
<S> <C> <C> <C> <C>
Snapple........................ $26,735,119 $ 75,787,589 $184,921,717 $287,444,425
Mistic......................... 8,244,802 23,372,017 57,027,720 88,644,539
Royal Crown.................... 8,895,079 25,215,394 61,525,563 95,636,036
Total..................... $43,875,000 $124,375,000 $303,475,000 $471,725,000
</TABLE>
No borrowings were outstanding under the revolving credit facility as of
October 3, 1999.
Amortization. The borrowers must repay the principal amount that they
borrow as follows:
the revolving credit facility is a six-year facility that must be repaid
in full upon its final maturity,
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the term A loan must be repaid over a six-year period in quarterly
installments aggregating 5.0% in the first year, 10.0% in the second year,
15.0% in the third year, 20.0% in the fourth year and 25.0% per year
thereafter,
the term B loan must be repaid over a seven-year period in quarterly
principal payments of 1.0% per year for the first six years, with the
remaining balance payable in quarterly installments during the seventh
year, and
the term C loan must be repaid over an eight-year period in quarterly
principal payments of 1.0% per year for the first seven years with the
remaining balance payable in quarterly installments during the eighth
year.
Interest. The outstanding loans bear interest at an applicable margin plus,
at the borrowers' option, the administrative agent's base rate or a London
inter-bank offered rate ('LIBOR'). The applicable margins were initially as
follows:
<TABLE>
<CAPTION>
BASE RATE LOANS LIBOR LOANS
--------------- -----------
<S> <C> <C>
Revolving credit facility............................. 2.00% 3.00%
Term A loan........................................... 2.00% 3.00%
Term B loan........................................... 2.50% 3.50%
Term C loan........................................... 2.75% 3.75%
</TABLE>
Beginning August 25, 1999, the applicable margins for the revolving credit
facility and the term A loan may be reduced if the borrowers meet performance
criteria based on a leverage ratio.
If the borrowers do not make required payments of principal or other
monetary obligations when due, they must pay interest on the outstanding
principal amount of the monetary obligation at a default rate equal to 2.0%
above the otherwise applicable base rate.
Optional Prepayments. The borrowers may prepay loans under the revolving
credit facility and reduce the amounts available to them under the revolving
credit facility at any time, and may prepay term A loan at any time, in each
case, without premium or penalty. The borrowers may prepay the term B loan and
the term C loan at any time at the following percentages of the principal
amounts of loans prepaid:
<TABLE>
<CAPTION>
PERCENTAGE
---------------------------
PAYMENT DATE TERM B LOANS TERM C LOANS
------------ ------------ ------------
<S> <C> <C>
Year 1.................................................... 102.0% 103.0%
Year 2.................................................... 101.0% 101.5%
Year 3 and thereafter..................................... 100.0% 100.0%
</TABLE>
Mandatory Prepayments. Generally, although with some exceptions, the
borrowers must prepay the term loans and, after the term loans have been repaid,
prepay the revolving credit facility and, with exceptions, reduce the
commitments under the credit facility, in an amount equal to:
100% of the net after-tax cash proceeds of dispositions of assets by
Triarc Consumer Products Group or any of its subsidiaries, other than
dispositions or issuances occurring in the ordinary course of business,
including net after-tax cash proceeds from the first $350.0 million, which
may be increased by up to $10.0 million in some circumstances, of gross
proceeds received from the securitization of Arby's assets, as well as the
net after-tax cash proceeds from a permitted sale, if any, of Royal Crown,
with exceptions for reinvestment baskets,
100% of net cash proceeds received from debt issuances by Triarc Consumer
Products Group or its subsidiaries,
50% of the net cash proceeds of equity issuances by Triarc Consumer
Products Group or its subsidiaries, plus
100% of net after-tax insurance recoveries or net after-tax condemnation
awards, but minus exceptions for reinvestment baskets.
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In addition, each year the borrowers must repay the term loans in an amount
equal to 75% of the excess cash flow of the borrowers and their subsidiaries
that are not borrowers for the previous year, which percentage will be reduced
to 50% if the borrowers meet performance criteria based on a leverage ratio.
Fees. The borrowers are required to pay the following fees under the credit
facility:
an annual commitment fee of 0.75% of the daily average unused portion of
the unborrowed portion of the revolving credit facility; beginning six
months after the closing of the credit facility, the annual commitment fee
may be reduced if the borrowers meet performance criteria based on a
leverage ratio,
an annual fronting fee of 0.25% of the stated amount of letters of credit
to the lender that issues any letters of credit,
a letter of credit fee on the daily average undrawn amount of outstanding
letters of credit equal to the applicable margin on LIBOR loans under the
revolving credit facility,
annual administration fees, and
arrangement and other similar fees.
Covenants. The credit facility contains covenants that require Triarc
Consumer Products Group and its subsidiaries to comply with financial ratios and
tests, including a minimum interest coverage ratio, a maximum leverage ratio, a
minimum fixed charge coverage ratio and a minimum net worth test.
The credit facility also contains financial and operational covenants and
other restrictions that, among other things, with customary exceptions and
baskets described in the credit facility, restrict the ability of Triarc
Consumer Products Group and its subsidiaries to:
dispose of assets,
engage in mergers or make acquisitions,
make capital expenditures,
pay dividends and prepay other indebtedness,
incur additional indebtedness and guarantee obligations,
make investments and loans,
create liens on assets,
engage in transactions with affiliates, and
amend other debt instruments and make material changes to organizational
and other specified material documents.
In addition, the issuers are restricted in their business activities.
Events of Default. The credit facility contains the following customary
events of default:
payment defaults,
breach of representations and warranties,
breach of performance of covenants,
defaults under other contracts,
specified events of bankruptcy,
ERISA defaults,
the invalidity of any collateral or guarantees, and
change of ownership or control.
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LOANS MADE TO ARBY'S SUBSIDIARIES
In connection with the sale in May 1997 of all of the company-owned Arby's
restaurants the purchaser assumed all indebtedness of subsidiaries of RC/Arby's
that was secured by the assets of the sold restaurants. The subsidiaries of
RC/Arby's were released from their obligations for this indebtedness except that
a subsidiary of RC/Arby's, ARHC, LLC remains a co-obligor with the purchaser
under loans in an aggregate principal amount of approximately $3.2 million as of
January 3, 1999. These loans are secured by some of the purchaser's assets but
not by any of our assets or assets of our subsidiaries. In addition, these loans
are guaranteed by Triarc Parent and Arby's, Inc. The purchaser is entitled to
indemnification from ARHC, LLC and Triarc Parent in respect of any payments it
is required to make to the lender under these loans. These loans either bear
interest at 10.35% and are repayable in equal monthly installments through 2016
or bear interest at 10.5% and are repayable in equal monthly installments
through 2003.
In connection with the restaurants sale, the purchaser assumed an aggregate
of approximately $54.7 million principal amount of mortgage notes and equipment
notes with FFCA Mortgage Corporation or its affiliates and approximately $15.0
million of capitalized lease obligations associated with the restaurants sold.
We remain contingently liable with respect to the capital leases until the end
of their terms. The equipment notes bear interest at 10.5% and are repayable in
equal monthly installments through 2003.
In addition, ARHC, LLC and the purchaser are co-obligors under loans in an
aggregate principal amount of approximately $.6 million as of January 3, 1999
relating to an additional restaurant sold to the purchaser. ARHC, LLC will be
released from its obligations under the loans if and when it obtains the consent
of the restaurant's ground lessor to the assignment to the purchaser of the
restaurant's ground lease. This loan is also guaranteed by Triarc Parent. This
loan is secured by some of the purchaser's assets but not by any of our assets
or assets of our subsidiaries, other than the ground lease. ARHC, LLC is
entitled to indemnification from the purchaser for any payments it is required
to make under this loan.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
Our registration rights agreement requires us to file the registration
statement of which this prospectus is a part for a registered exchange offer
with respect to an issue of new notes in exchange for the initial notes. The
exchange notes will be substantially identical in all material respects to the
initial notes except that the exchange notes will be registered under the
Securities Act, will not bear legends restricting their transfer and will not be
entitled to registration rights under our registration rights agreement. This
summary of the terms of the registration rights agreement does not contain all
the information that you should consider and we refer you to the provisions of
the registration rights agreement, which has been filed as an exhibit to the
registration statement of which this prospectus is a part and a copy of which is
available as indicated in the section of this prospectus entitled 'Where You Can
Find More Information.'
We are required to:
cause the registration statement to be declared effective no later than
August 24, 1999, which is 180 days after the date the initial notes were
issued,
keep the exchange offer effective for not less than 20 business days, or
longer if required by applicable law, after the date that notice of the
exchange offer is mailed to holders of the initial notes, and
complete the exchange offer no later than the earlier to occur of (a) 30
business days after the date that the registration statement is declared
effective or (b) September 23, 1999, which is 30 days after the date we
are required to cause the registration statement to be declared effective.
In accordance with the registration rights agreement, because the
registration statement of which this prospectus is a part did not become
effective as of August 24, 1999, the interest
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payable on the initial notes increased by an annual rate of 0.5%. The increase
was effective as of August 24, 1999 and will remain in effect until the
registration statement is declared effective.
The exchange offer being made here, if completed within the time periods
described above, will satisfy those requirements under the registration rights
agreement.
This prospectus, together with the letter of transmittal, is being sent to
all record holders of initial notes as of , 1999.
Based on interpretations by the staff of the Securities and Exchange
Commission in no-action letters issued to third parties, we believe that the
exchange notes issued under the exchange offer may be offered for resale, resold
or otherwise transferred by each holder of exchange notes, other than (1) a
broker-dealer who acquired the initial notes directly from us for resale under
Rule 144A under the Securities Act or any other available exemption under the
Securities Act, and (2) any other holder that directly or indirectly through one
or more intermediaries, controls or is controlled by, or is under common control
with, us, without compliance with the registration and prospectus delivery
provisions of the Securities Act, so long as that holder:
is acquiring the exchange notes in the ordinary course of its business,
and
is not participating in, and does not intend to participate in, a
distribution of the exchange notes within the meaning of the Securities
Act and has no arrangement or understanding with any person to participate
in a distribution of the exchange notes within the meaning of the
Securities Act.
By tendering the initial notes in exchange for exchange notes, each holder,
other than a broker-dealer, will be required to make representations regarding
the above matters. If a holder of initial notes is participating in or intends
to participate in, a distribution of the exchange notes, or has any arrangement
or understanding with any person to participate in a distribution of the
exchange notes to be acquired in this exchange offer, this holder may be deemed
to have received restricted securities and may not rely on the applicable
interpretations of the staff of the Securities and Exchange Commission. Any such
holder will have to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction.
Each broker-dealer that receives exchange notes for its own account in
exchange for initial notes may be deemed to be an underwriter within the meaning
of the Securities Act and must acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
these exchange notes. The letter of transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an underwriter within the meaning of the Securities Act. This prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with offers to resell, resales and other transfers
of exchange notes received in exchange for initial notes which were acquired by
the broker-dealer through market-making or other trading activities. We have
agreed that we will make this prospectus available to any broker-dealer for a
period of time not to exceed 180 days after the completion of the exchange offer
for use in connection with any offer to resell, resale or other transfer by the
broker-dealer. Please refer to the section of this prospectus entitled 'Plan of
Distribution.'
Each broker-dealer who acquired the initial notes directly from the issuers
for resale under Rule 144A under the Securities Act or any other available
exemption under the Securities Act, and not through market-making or other
trading activities:
(1) may not rely on the applicable interpretations of the staff of the
Securities and Exchange Commission; and
(2) will have to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction.
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SHELF REGISTRATION STATEMENT
If:
we determine that the exchange offer is not available or may not be
completed on time because it would violate applicable law or its
interpretations by the staff of the Securities and Exchange Commission, or
for any other reason, the exchange offer is not completed before September
23, 1999, which is 180 days from the date the initial notes were issued,
or
in the opinion of counsel of the initial purchasers of the initial notes,
a registration statement must be filed and a prospectus must be delivered
by the initial purchasers in connection with any offering or sale of
initial notes,
then, we will be obligated, at our sole expense, to use our reasonable best
efforts:
as promptly as practicable to file with the Securities and Exchange
Commission a shelf registration statement covering resales of the initial
notes,
to cause the shelf registration statement to be declared effective under
the Securities Act, and
to keep the shelf registration statement continuously effective,
supplemented and amended as required by the Securities Act, to permit the
prospectus which is a part of the shelf registration statement to be
usable by holders for a period of two years after the shelf registration
statement is declared effective or any shorter period of time that will
terminate when all of the initial notes covered by the shelf registration
statement have been sold under the shelf registration statement or are no
longer are considered restricted securities under the Securities Act.
If we file a shelf registration statement, we will provide to each holder
of the initial notes being registered copies of the prospectus that is a part of
the shelf registration statement. We will also notify each of these holders when
the shelf registration statement has become effective and take other actions as
are required to permit unrestricted resales of the initial notes being
registered. A holder that sells initial notes under the shelf registration
statement will be
required to be named as a selling security holder in the related
prospectus and to deliver a prospectus to purchasers,
liable under some of the civil liability provisions under the Securities
Act in connection with those sales and
bound by the provisions of the registration rights agreement that are
applicable to the holder, including indemnification rights and
obligations.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The exchange offer will expire at 5:00 p.m., New York City time, on
, 2000, unless the issuers extend it in their reasonable discretion.
The expiration date of the exchange offer will be at least 20 business days
after the issuers mail notice of the exchange offer to holders as provided in
Rule 14e-1(a) under the Securities Exchange Act and the registration rights
agreement.
To extend the expiration date, the issuers will need to notify the exchange
agent of any extension by oral notice, promptly confirmed in writing, or written
notice. The issuers will also need to notify the holders of the initial notes by
mailing an announcement or by means of a press release or other public
announcement communicated, unless otherwise required by applicable law or
regulation, before 9:00 A.M., New York City time, on the next business day after
the previously scheduled expiration date.
The issuers expressly reserve the right:
to delay acceptance of any initial notes, to extend or to terminate the
exchange offer and not permit acceptance of initial notes not previously
accepted if any of the conditions described below under ' -- Conditions to
the Exchange Offer' have occurred and have not
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been waived by them, if permitted to be waived, by giving oral or written
notice of the delay, extension or termination to the exchange agent, or
to amend the terms of the exchange offer in any manner.
If the issuers amend the exchange offer in a manner determined by us to
constitute a material change, they will promptly disclose the amendment in a
manner reasonably calculated to inform the holders of the initial notes of the
amendment including providing public announcement or giving oral or written
notice to the holders of the initial notes. A material change in the terms of
the exchange offer could include a change in the timing of the exchange offer, a
change in the exchange agent and other similar changes in the terms of the
exchange offer. If any material change is made to terms of the exchange offer,
the issuers will disclose the change by means of a post-effective amendment to
the registration statement of which this prospectus is a part and will
distribute an amended or supplemented prospectus to each registered holder of
initial notes. In addition, the issuers will extend the exchange offer for an
additional five to ten business days as required by the Securities Exchange Act,
depending on the significance of the amendment, if the exchange offer would
otherwise expire during that period. Any delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral
notice, promptly confirmed in writing, or written notice to the exchange agent.
PROCEDURES FOR TENDERING INITIAL NOTES
PROPER EXECUTION AND DELIVERY OF LETTERS OF TRANSMITTAL
To tender your initial notes in this exchange offer, you must use one of
the three alternative procedures described below:
Regular delivery procedure: Complete, sign and date the letter of
transmittal, or a facsimile of the letter of transmittal. Have the
signatures on the letter of transmittal, guaranteed if required by the
letter of transmittal. Mail or otherwise deliver the letter of transmittal
or the facsimile, together with the certificates representing your initial
notes being tendered and any other required documents, to the exchange
agent on or before 5:00 p.m., New York City time, on the expiration date.
Book-entry delivery procedure: Send a timely confirmation of a book-entry
transfer of your initial notes, if this procedure is available, into the
exchange agent's account at The Depository Trust Company as contemplated
by the procedures for book-entry transfer described under ' -- Book-Entry
Delivery Procedure' below, on or before 5:00 p.m., New York City time, on
the expiration date.
Guaranteed delivery procedure: If time will not permit you to complete
your tender by using the procedures described above before the expiration
date, comply with the guaranteed delivery procedures described under
' -- Guaranteed Delivery Procedure' below.
The method of delivery of initial notes, the letter of transmittal and all
other required documents is at your election and risk. Instead of delivery by
mail, we recommend that you use an overnight or hand-delivery service. If you
choose the mail, we recommend that you use registered mail, properly insured,
with return receipt requested. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO
ASSURE TIMELY DELIVERY. You should not send any letters of transmittal or
initial notes to us. You must deliver all documents to the exchange agent at its
address provided below. You may also request your respective brokers, dealers,
commercial banks, trust companies or nominees to tender your initial notes on
your behalf.
Only a holder of initial notes may tender initial notes in this exchange
offer. For purposes of this exchange offer, a holder is any person in whose name
initial notes are registered on our books or any other person who has obtained a
properly completed bond power from the registered holder.
If you are the beneficial owner of initial notes that are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
you wish to tender your notes, you must contact this registered holder promptly
and instruct this registered holder to tender these
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notes on your behalf. If you wish to tender these initial notes on your own
behalf, you must, before completing and executing the letter of transmittal and
delivering your initial notes, either make appropriate arrangements to register
the ownership of these notes in your name or obtain a properly completed bond
power from the registered holder. The transfer of registered ownership may take
considerable time.
You must have any signatures on a letter of transmittal or a notice of
withdrawal guaranteed by an eligible institution. An eligible institution is:
(1) a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.,
(2) a commercial bank or trust company having an office or correspondent in
the United States, or
(3) an eligible guarantor institution within the meaning of Rule 17Ad-15
under the Securities Exchange Act.
However, signatures on a letter of transmittal do not have to be guaranteed
if initial notes are tendered:
by a registered holder, or by a participant in The Depository Trust
Company in the case of book-entry transfers, whose name appears on a
security position listing as the owner, who has not completed the box
entitled 'Special Issuance Instructions' or 'Special Delivery
Instructions' on the letter of transmittal and only if the exchange notes
are being issued directly to this registered holder, or deposited into
this participant's account at The Depository Trust Company in the case of
book-entry transfers, or
for the account of an eligible institution.
If the letter of transmittal or any bond powers are signed by:
The recordholder(s) of the initial notes tendered: The signature must
correspond with the name(s) written on the face of the initial notes
without alteration, enlargement or any change whatsoever.
A participant in The Depository Trust Company: The signature must
correspond with the name as it appears on the security position listing as
the holder of the initial notes.
A person other than the registered holder of any initial notes: These
initial notes must be endorsed or accompanied by bond powers and a proxy
that authorizes this person to tender the initial notes on behalf of the
registered holder, in satisfactory form to the issuers as determined in
their sole discretion, in each case, as the name of the registered holder
or holders appears on the initial notes.
Trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity: These persons should so indicate when signing. Unless waived by
the issuers, evidence satisfactory to them of their authority to so act
must also be submitted with the letter of transmittal.
BOOK-ENTRY DELIVERY PROCEDURE
Any financial institution that is a participant in The Depository Trust
Company's system may make book-entry deliveries of initial notes by causing The
Depository Trust Company to transfer these initial notes into the exchange
agent's account at The Depository Trust Company according to The Depository
Trust Company's procedures for transfer. To effectively tender notes through The
Depository Trust Company, the financial institution that is a participant in The
Depository Trust Company will electronically transmit its acceptance through the
Automatic Tender Offer Program. The Depository Trust Company will then edit and
verify the acceptance and send an agent's message to the exchange agent for its
acceptance. An agent's message is a message transmitted by The Depository Trust
Company to the exchange agent stating that The Depository Trust Company has
received an express acknowledgment from the participant in The Depository Trust
Company tendering the initial notes, that the participant has received and
agrees to be
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bound by the terms of the letter of transmittal, and that we may enforce this
agreement against this participant. The exchange agent will make a request to
establish an account for the initial notes at The Depository Trust Company for
purposes of the exchange offer within two business days after the date of this
prospectus.
A delivery of initial notes through a book-entry transfer into the exchange
agent's account at The Depository Trust Company will only be effective if an
agent's message or the letter of transmittal or a facsimile of the letter of
transmittal with any required signature guarantees and any other required
documents is transmitted to and received by the exchange agent at the address
indicated below under ' -- Exchange Agent' on or before the expiration date
unless the guaranteed delivery procedures described below are complied with.
DELIVERY OF DOCUMENTS TO THE DEPOSITORY TRUST COMPANY DOES NOT CONSTITUTE
DELIVERY TO THE EXCHANGE AGENT.
GUARANTEED DELIVERY PROCEDURE
If you are a registered holder of initial notes and desire to tender your
notes, and (1) these notes are not immediately available, (2) time will not
permit your notes or other required documents to reach the exchange agent before
the expiration date, or (3) the procedures for book-entry transfer cannot be
completed on a timely basis and an agent's message delivered, you may still
tender in this exchange offer if:
you tender through an eligible institution,
on or before the expiration date, the exchange agent receives a properly
completed and duly executed letter of transmittal or facsimile of the
letter of transmittal and a notice of guaranteed delivery, substantially
in the form provided by the issuers, with your name and address as holder
of the initial notes and the amount of notes tendered, stating that the
tender is being made by this letter and notice and guaranteeing that
within three New York Stock Exchange trading days after the expiration
date the certificates for all the initial notes tendered, in proper form
for transfer, or a book-entry confirmation with an agent's message, as the
case may be, and any other documents required by the letter of transmittal
will be deposited by the eligible institution with the exchange agent, and
the certificates for all your tendered initial notes in proper form for
transfer, or a book-entry confirmation, as the case may be, and all other
documents required by the letter of transmittal are received by the
exchange agent within three New York Stock Exchange trading days after the
expiration date.
ACCEPTANCE OF INITIAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Your tender of initial notes will constitute an agreement between you and
the issuers governed by the terms and conditions provided in this prospectus and
in the letter of transmittal.
The issuers will be deemed to have received your tender as of the date when
your duly signed letter of transmittal accompanied by your initial notes
tendered, or a timely confirmation of a book-entry transfer of these notes into
the exchange agent's account at The Depository Trust Company with an agent's
message, or a notice of guaranteed delivery from an eligible institution is
received by the exchange agent.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal tenders will be determined by the issuers in
their sole discretion. The issuers' determination will be final and binding.
The issuers reserve the absolute right to reject any and all initial notes
not properly tendered or any initial notes which, if accepted, would, in their
opinion or their counsel's opinion, be unlawful. The issuers also reserve the
absolute right to waive any conditions of this exchange offer or irregularities
or defects in tender as to particular notes. The issuers' interpretation of the
terms and conditions of this exchange offer, including the instructions in the
letter of transmittal, will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of initial notes must
be cured within the time that the issuers shall determine. Neither the
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issuers, the exchange agent nor any other person will be under any duty to give
notification of defects or irregularities with respect to tenders of initial
notes. Neither the issuers, the exchange agent nor any other person will incur
any liability for any failure to give notification of these defects or
irregularities. Tenders of initial notes will not be deemed to have been made
until the irregularities have been cured or waived. The exchange agent will
return without cost to their holders any initial notes that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived as promptly as practicable following the expiration date.
If all the conditions to the exchange offer are satisfied or waived on the
expiration date, the issuers will accept all initial notes properly tendered and
will issue the exchange notes promptly thereafter. Please refer to the section
of this prospectus entitled ' -- Conditions to the Exchange Offer' below. For
purposes of this exchange offer, initial notes will be deemed to have been
accepted as validly tendered for exchange when, as and if, the issuers give oral
or written notice of acceptance to the exchange agent.
The issuers will issue the exchange notes in exchange for the initial notes
tendered by a notice of guaranteed delivery by an eligible institution only
against delivery to the exchange agent of the letter of transmittal, the
tendered initial notes and any other required documents, or the receipt by the
exchange agent of a timely confirmation of a book-entry transfer of initial
notes into the exchange agent's account at The Depository Trust Company with an
agent's message, in each case, in form satisfactory to the issuers and the
exchange agent.
If any tendered initial notes are not accepted for any reason or if initial
notes are submitted for a greater principal amount than the holder desires to
exchange, the unaccepted or non-exchanged initial notes will be returned without
expense to the tendering holder, or, in the case of initial notes tendered by
book-entry transfer procedures described above, will be credited to an account
maintained with the book-entry transfer facility, as promptly as practicable
after withdrawal, rejection of tender or the expiration or termination of the
exchange offer.
In addition, the issuers reserve the right in their sole discretion, but in
compliance with the provisions of the indenture, to:
purchase or make offers for any initial notes that remain outstanding
after the expiration date, or, as described under ' -- Expiration Date;
Extensions; Amendments; Termination,' to terminate the exchange offer as
provided by the terms of our registration rights agreement, and
purchase initial notes in the open market, in privately negotiated
transactions or otherwise, to the extent permitted by applicable law.
The terms of any of the purchases or offers described above could differ
from the terms of the exchange offer.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw tenders
of initial notes at any time before 5:00 p.m., New York City time, on the
expiration date.
For a withdrawal to be effective, you must send a written or facsimile
transmission notice of withdrawal to the exchange agent before 5:00 p.m., New
York City time, on the expiration date at the address provided below under
' -- Exchange Agent' and before acceptance of your tendered initial notes for
exchange by us.
Any notice of withdrawal must:
specify the name of the person having tendered the initial notes to be
withdrawn,
identify the initial notes to be withdrawn, including, if applicable, the
registration number or numbers and total principal amount of these notes,
be signed by the person having tendered the initial notes to be withdrawn
in the same manner as the original signature on the letter of transmittal
by which these initial notes
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were tendered, including any required signature guarantees, or be
accompanied by documents of transfer sufficient to permit the trustee for
the initial notes to register the transfer of these notes into the name of
the person having made the original tender and withdrawing the tender, and
state that you are withdrawing your tender of initial notes.
The issuers will determine all questions as to the validity, form and
eligibility, including time of receipt, of all notices of withdrawal and their
determination will be final and binding on all parties. Initial notes that are
withdrawn will be deemed not to have been validly tendered for exchange in this
exchange offer.
You may retender properly withdrawn initial notes in this exchange offer by
following one of the procedures described under ' -- Procedures for Tendering
Initial Notes' above at any time before the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
With exceptions, the issuers will not be required to accept initial notes
for exchange, or issue exchange notes in exchange for any initial notes, and the
issuers may terminate or amend the exchange offer as provided in this prospectus
before the acceptance of the initial notes, if:
the exchange offer violates applicable law of any interpretation of the
staff of the Securities and Exchange Commission,
you do not tender your initial notes in the manner required by the
exchange offer, or
a court or governmental authority has issued an injunction, order or
decree that would prevent or impair the issuers' ability to proceed with
the exchange offer.
These conditions are for the issuers' sole benefit. The issuers may assert
any of these conditions regardless of the circumstances giving rise to any of
them. The issuers may also waive these conditions, in whole or in part, at any
time and from time to time, if we determine in their reasonable discretion, but
within the limits of applicable law, that any of the foregoing events or
conditions has occurred or exists or has not been satisfied. The issuers'
failure at any time to exercise any of rights will not be deemed a waiver of
these rights and these rights will be deemed ongoing rights which they may
assert at any time and from time to time.
If the issuers determine that they may terminate the exchange offer, as
provided above, they may:
refuse to accept any initial notes and return any initial notes that have
been tendered to their holders,
extend the exchange offer and retain all initial notes tendered before the
expiration date, allowing, however, the holders of tendered initial notes
to exercise their rights to withdraw their tendered initial notes, or
waive any termination event with respect to the exchange offer and accept
all properly tendered initial notes that have not been withdrawn or
otherwise amend the terms of the exchange offer in any respect as provided
under the section of this prospectus entitled ' -- Expiration Date;
Extensions; Amendments; Termination.'
If the issuers determine that they may terminate the exchange offer, they
may be required to file a shelf registration statement with the Securities and
Exchange Commission as described under ' -- Shelf Registration Statement.'
The exchange offer is not dependent upon any minimum principal amount of
initial notes being tendered for exchange.
The issuers have no obligation to, and will not knowingly, permit
acceptance of tenders of initial notes:
from persons who are considered affiliates under Rule 405 of the
Securities Act,
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from any other holder or holders who are not eligible to participate in
the exchange offer under the applicable law or its interpretations by the
Securities and Exchange Commission, or
if the exchange notes to be received by the holder or holders of initial
notes in the exchange offer, upon receipt, will not be tradable by these
holders without restriction under the Securities Act and the Securities
Exchange Act and without material restrictions under the blue sky or
securities laws of substantially all of the states of the United States.
ACCOUNTING TREATMENT
The issuers will record the exchange notes at the same carrying value as
the initial notes, as reflected in their accounting records on the date of the
exchange. Accordingly, the issuers will not recognize any gain or loss for
accounting purposes. The issuers will amortize the costs of the exchange offer
and the unamortized expenses related to the issuance of the exchange notes over
the term of the exchange notes.
EXCHANGE AGENT
The issuers have appointed The Bank of New York as exchange agent for the
exchange offer. You should direct all questions and requests for assistance or
additional copies of this prospectus or the letter of transmittal to the
exchange agent as follows:
<TABLE>
<S> <C> <C>
By Registered or Certified By Facsimile in New York: By Overnight Courier or Hand:
Mail: (for Eligible Institutions only) The Bank of New York
The Bank of New York (212) 815-6339 101 Barclay Street
101 Barclay Street-Floor 7E Corporate Trust Service Window
New York, New York 10286 Confirm by Telephone: Ground Floor
Attention: [ ] (212) 815- [ ] New York, New York 10286
Attention: [ ]
</TABLE>
FEES AND EXPENSES
The issuers will bear the expenses of soliciting tenders under the exchange
offer. The principal solicitation for tenders under the exchange offer is being
made by mail; however, the issuers' officers and other employees may make
additional solicitations by telegraph, telephone, telecopy or in person.
The issuers will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. However, the issuers will pay the
exchange agent reasonable and customary fees for its services and will reimburse
the exchange agent for its reasonable out-of-pocket expenses in connection with
the exchange offer. The issuers may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of the prospectus, letters of transmittal
and related documents to the beneficial owners of the initial notes, and in
handling or forwarding tenders for exchange.
The issuers will pay the expenses incurred in connection with the exchange
offer, including fees and expenses of the exchange agent and trustee and
accounting, legal, printing and related fees and expenses.
The issuers will generally pay all transfer taxes, if any, applicable to
the exchange of initial notes, under the exchange offer. However, tendering
holders will pay the amount of any transfer taxes, whether imposed on the
registered holder or any other person, if:
certificates representing exchange notes or initial notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or
are to be registered or issued in the name of, any person other than the
registered holder of the initial notes tendered,
tendered initial notes are registered in the name of any person other than
the person signing the letter of transmittal, or
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a transfer tax is imposed for any reason other than the exchange of
initial notes under the exchange offer.
If satisfactory evidence of payment of these taxes or exemption therefrom
is not submitted with the letter of transmittal, the amount of the transfer
taxes will be billed directly to the tendering holder.
YOUR FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE CONSEQUENCES
If you do not exchange your initial notes for exchange notes under the
exchange offer or if you do not properly tender your initial notes in the
exchange offer, your initial notes will remain outstanding and continue to
accrue interest. However, you will not be able to resell, offer to resell or
otherwise transfer the initial notes unless they are registered under the
Securities Act or unless you resell them, offer to resell or otherwise transfer
them under an exemption from the registration requirements of, or in a
transaction not governed by the Securities Act. In addition, you will no longer
be able to obligate us to register the initial notes under the Securities Act,
except in the limited circumstances provided under our registration rights
agreement. The restrictions on transfer of your initial notes arise because the
issuers issued the initial notes under exemptions from, or in transactions not
governed by, the registration requirements of the Securities Act and applicable
state securities laws. In addition, if you want to exchange your initial notes
in the exchange offer for the purpose of participating in a distribution of the
exchange notes, you may be deemed to have received restricted securities, and,
if so, will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. To
the extent the initial notes are tendered and accepted in the exchange offer,
the trading market, if any, for the initial notes would be adversely affected.
Please refer to the section of this prospectus entitled 'Risk Factors -- Your
failure to participate in the exchange offer will have adverse consequences.'
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DESCRIPTION OF THE EXCHANGE NOTES
The form and terms of the exchange notes are the same as the form and terms
of the initial notes, except that the exchange notes:
have been registered under the Securities Act,
will not bear legends restricting the transfer thereof and
will not be entitled to registration rights under our registration rights
agreement.
The issuers issued the initial notes and will issue the exchange notes
under the indenture, dated as of February 25, 1999, among the issuers, the
guarantors of the initial notes and The Bank of New York, as trustee. The terms
of the exchange notes will include those stated in the indenture and in the
provisions of the exchange notes themselves, as well as those made part of the
indenture by reference to the Trust Indenture Act. Except as stated above, the
exchange notes will be subject to all these terms, and we refer you to the
indenture, the exchange notes and the Trust Indenture Act for a statement of
such terms.
Except as otherwise indicated, the following description relates both to
the initial notes and the exchange notes and is a summary of the material
provisions of the indenture and the exchange notes. It does not restate those
items in their entirety. We urge you to read the indenture and the exchange
notes because they, and not this description, define your rights as holder of
the exchange notes. We have filed copies of the indenture and the form of
exchange notes as exhibits to the registration statement which includes this
prospectus. The definitions of certain terms used in the following summary are
indicated below under ' -- Certain Definitions.' For purposes of this summary,
the term 'Triarc Consumer Products Group' refers only to Triarc Consumer
Products Group, LLC and not to any of Triarc Consumer Products Group, LLC's
subsidiaries. Also, in this description 'initial notes' and 'exchange notes' are
collectively referred to as the 'notes.'
GENERAL
The exchange notes are unsecured senior subordinated obligations of the
issuers, initially limited to $300 million aggregate principal amount, and
mature on February 15, 2009. The exchange notes bear interest at 10 1/4% from
February 25, 1999, or from the most recent date to which interest has been paid
or provided for. Interest on the exchange notes is payable semiannually in
arrears to holders of record at the close of business on the February 1 or
August 1 immediately preceding the interest payment date on February 15 and
August 15 of each year, commencing February 15, 2000. The issuers will pay
interest on overdue principal at 1% per annum in excess of such rate, and they
will pay interest on overdue installments of interest at the higher rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
Triarc Consumer Products Group was informed that some prospective
purchasers of the notes may have been restricted in their ability to purchase
debt securities of limited liability companies, including Triarc Consumer
Products Group, unless the debt securities were jointly issued by a corporation.
Accordingly, Triarc Beverage Holdings, a wholly owned subsidiary of Triarc
Consumer Products Group, served as the co-issuer of the initial notes to
facilitate the offering of initial notes. Triarc Beverage Holdings is the
holding company for Triarc Consumer Products Group's premium beverage
businesses. As a co-issuer of the notes, Triarc Beverage Holdings is jointly and
severally liable, together with Triarc Consumer Products Group, for the
performance of the obligations under the notes. Accordingly, holders of the
notes can make claims directly against Triarc Consumer Products Group and/or
Triarc Beverage Holdings.
The exchange notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. No
service charge shall be made for any registration of transfer or exchange of the
initial notes. The issuers may, however, require payment of a sum sufficient to
cover any transfer tax or other similar governmental charge payable in
connection therewith.
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In accordance with the covenants described below, the issuers may issue
additional notes under the indenture. Any additional notes will have the same
terms in all respects as the exchange notes except that interest will accrue on
the additional notes from and including the date of issuance of the additional
notes. The exchange notes that the issuers are offering and any additional notes
would be treated as a single class for all purposes under the indenture and will
vote together as one class on all matters with respect to the notes.
OPTIONAL REDEMPTION
Except as set forth in the following paragraph, the notes will not be
redeemable at the option of the issuers prior to February 15, 2004. Following
that date, the notes will be redeemable, from time to time, at the option of the
issuers, in whole or in part. Any redemption requires not less than 30 nor more
than 60 days' prior notice mailed by first class mail to each holder's
registered address.
The applicable redemption prices, based on a redemption during the 12-month
period commencing on February 15 of the years set forth below, are as follows:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
- ------ -----
<S> <C>
2004........................................................ 105.1250%
2005........................................................ 103.4167
2006........................................................ 101.7083
2007 and thereafter......................................... 100.0000
</TABLE>
The above redemption prices are expressed as percentages of principal
amount on the redemption date, plus accrued and unpaid interest to the
redemption date. The redemption price is subject to the right of the holders of
record on the relevant record date to receive interest due on the relevant
interest payment date.
In addition, at any time and from time to time prior to February 15, 2002,
the issuers may redeem in the aggregate up to 35% of the original principal
amount of the notes with the proceeds of one or more qualified public offerings.
A qualified public offering is an underwritten primary public offering of common
stock of Triarc Consumer Products Group or Triarc Parent, to the extent the
proceeds are contributed to Triarc Consumer Products Group as equity, pursuant
to an effective registration statement under the Securities Act. If so redeemed,
the redemption price, expressed as a percentage of principal amount on the
redemption date, is 110.25% plus accrued and unpaid interest to the redemption
date, subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date.
In order to redeem the notes in this manner:
(1) at least 65% of the aggregate principal amount of the notes ever
issued under the indenture must remain outstanding and be held, directly or
indirectly, by persons other than Triarc Consumer Products Group and its
affiliates, immediately after each such redemption; and
(2) the redemption shall occur within 60 days of the applicable
qualified public equity offering.
In the case of any partial redemption, selection of the notes for
redemption will be made by the trustee on a pro rata basis. The selection will
be by lot or by any other method as the trustee in its sole discretion deems to
be fair and appropriate. In no event will a note of $1,000 in original principal
amount or less be redeemed in part. If any note is to be redeemed in part only,
the notice of redemption relating to that note shall state the portion of the
principal amount thereof to be redeemed. A new note in principal amount equal to
the unredeemed portion will be issued in the name of the holder upon
cancellation of the original note.
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SINKING FUND
There is no sinking fund payments for the notes.
GUARANTEES
The obligations of the issuers pursuant to the notes, including the
repurchase obligation resulting from a change of control, are unconditionally
guaranteed, jointly and severally, on an unsecured senior subordinated basis, by
each of the subsidiary guarantors. Each subsidiary guaranty is limited in amount
to an amount not to exceed the maximum amount that can be guaranteed by the
applicable subsidiary guarantor without rendering the subsidiary guaranty, as it
relates to the applicable subsidiary guarantor, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally. If a subsidiary guaranty were to be
rendered voidable, it could be subordinated by a court to all other
indebtedness, including guarantees and other contingent liabilities, of the
applicable subsidiary guarantor. Depending on the amount of the affected
indebtedness, a subsidiary guarantor's liability on its subsidiary guaranty
could be reduced by a court to zero. See 'Risk Factors -- A court could declare
the exchange notes junior in right of payment or take other actions under
fraudulent transfer statutes that are detrimental to you.'
Upon satisfaction of the conditions described in the definition of
'Permitted Arby's Dividend,' the indenture permits:
(1) the subsidiary guaranty of RC/Arby's and each of its direct and
indirect subsidiaries, other than Royal Crown Company, Inc. and its
subsidiaries, to be released and
(2) Triarc Consumer Products Group to distribute the capital stock of
RC/Arby's and those subsidiaries referred to in clause (1) above to Triarc
Parent, as a Permitted Arby's Dividend.
RANKING
The indebtedness evidenced by the notes and the subsidiary guarantees is
unsecured senior subordinated obligations of the issuers and the subsidiary
guarantors. The obligations of the issuers and the subsidiary guarantors with
respect to the indebtedness are subordinate in right of payment to the prior
payment in full of all Senior Indebtedness, whether outstanding on the closing
date, which occurred on February 25, 1999, or thereafter incurred. Those
obligations are also subordinate to the obligations of the issuers and
subsidiary guarantors under the credit agreement. For purposes of this section,
'payment in full,' as used with respect to Senior Indebtedness means the payment
of cash.
As of July 4, 1999, the Senior Indebtedness of the issuers and the
subsidiary guarantors, on a consolidated basis was approximately $484.2 million,
substantially all of which is secured indebtedness. Although the indenture
contains limitations on the amount of additional Indebtedness that the issuers
and the subsidiary guarantors may incur, there are circumstances where the
amount of Indebtedness could be substantial and, in any case, additional
Indebtedness may be Senior Indebtedness. See ' -- Certain Covenants --
Limitation on Indebtedness.'
All the operations of Triarc Consumer Products Group are conducted through
its subsidiaries. Triarc Consumer Products Group's foreign subsidiaries do not
guarantee the notes. The notes and each subsidiary guaranty will be effectively
subordinated to creditors, including trade creditors, and preferred
stockholders, if any, of subsidiaries of Triarc Consumer Products Group, other
than the subsidiary guarantors. As of July 4, 1999, the total liabilities of the
subsidiaries that were not subsidiary guarantors, was approximately $5.2
million, including trade payables.
Although the indenture limits the incurrence of Indebtedness and preferred
stock by some of Triarc Consumer Products Group's subsidiaries, the limitations
are subject to a number of significant qualifications. Moreover, the indenture
does not impose any limitation on the incurrence by those subsidiaries of
liabilities that are not considered Indebtedness under the indenture. See
' -- Certain Covenants -- Limitation on Indebtedness.'
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Only Indebtedness of an issuer or a subsidiary guarantor that is Senior
Indebtedness will rank senior to the notes and the relevant subsidiary guaranty
in accordance with the provisions of the indenture. The notes and each
subsidiary guaranty will rank equally with all other Senior Subordinated
Indebtedness of the relevant issuer or subsidiary guarantor, respectively. Each
issuer and each subsidiary guarantor has agreed in the indenture that it will
not incur, directly or indirectly, any Indebtedness that is subordinate or
junior in ranking in right of payment to its Senior Indebtedness unless the
Indebtedness incurred is:
(1) Senior Subordinated Indebtedness or,
(2) expressly subordinated in right of payment to Senior Subordinated
Indebtedness.
Unsecured Indebtedness is not deemed to be subordinated or junior to
Secured Indebtedness merely because it is unsecured.
No direct or indirect payment, deposit or distribution of any kind or
character, whether pursuant to the terms of the notes or upon acceleration, by
way of repurchase, redemption, defeasance or otherwise, may be made if any
Designated Senior Indebtedness of an issuer is not paid when due, whether at
maturity, on account of:
(1) mandatory redemption or
(2) prepayment, acceleration or otherwise.
A payment of the sort described above may be made, however, if the default
has been cured or waived and any resulting acceleration has been rescinded or
the applicable Designated Senior Indebtedness has been paid in full.
Further, the paying issuer may pay the notes without regard to the
foregoing if it and the trustee receive written notice approving the payment
from the representative of the Designated Senior Indebtedness.
During the continuance of any default on Designated Senior Indebtedness
that entitles the holders of such indebtedness to accelerate its maturity
immediately without further notice, other than a default described in the
preceding paragraph, that issuer may not pay the notes during the payment
blockage period, The payment blockage period commences upon the receipt by the
trustee of written notice, the blockage notice, of such default from the
representative of the holders of such Designated Senior Indebtedness specifying
an election to effect a payment blockage period and ends ending 179 days
thereafter, or earlier if the payment blockage period is terminated:
(a) by written notice to the trustee and the applicable issuer from
the person or persons who gave the blockage notice,
(b) because the default giving rise to the blockage notice is no
longer continuing or
(c) because such Designated Senior Indebtedness has been repaid in
full.
Despite the provisions described in the last sentence of the immediately
preceding paragraph, the applicable issuer may resume payments on the notes
after the end of the payment blockage period as long as a payment default on any
Designated Senior Indebtedness has not occurred and is continuing. The issuer
may not do so, however, if the holders of the Designated Senior Indebtedness
have, or the representative of the applicable holders has, accelerated the
maturity of the Designated Senior Indebtedness. There may not be more than one
payment blockage period in any consecutive 360-day period, irrespective of the
number of defaults with respect to Designated Senior Indebtedness during the
period.
Upon any payment or distribution of the assets of an issuer as a result of
a total or partial liquidation or dissolution or reorganization of or similar
proceeding relating to the issuer or its property, the holders of Senior
Indebtedness will be entitled to receive payment in full in cash of that Senior
Indebtedness before the noteholders are entitled to receive any payment.
Further, until the Senior Indebtedness is paid in full in cash, any payment or
distribution to which noteholders would otherwise be entitled to will be made to
holders of such Senior Indebtedness as their interests may appear. However, the
noteholders may receive:
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(a) shares of stock, other than any shares of stock which:
(1) by their terms or the terms of any security into which they are
convertible or for which they are exchangeable, or
(2) upon the happening of any event,
mature or are mandatorily redeemable or are redeemable at the option of the
holder thereof, in whole or in part, and
(b) any debt securities that are subordinated to the Senior
Indebtedness to at least the same extent as the notes.
The noteholders may receive the securities referred to in paragraphs (a)
and (b) above, only if the securities shall be provided for by a plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction in a reorganization proceeding under any applicable
bankruptcy, insolvency or other similar law. If a distribution is made to
noteholders that, due to the subordination provisions, should not have been made
to them, the recurring noteholders are required to hold it in trust for the
holders of Senior Indebtedness and pay it over to them as their interests may
appear.
If payment of the notes is accelerated because of an event of default, the
issuers or the trustee shall promptly notify the holders of Designated Senior
Indebtedness or the representative of these holders of the acceleration. If any
Designated Senior Indebtedness is outstanding, neither the issuers nor any
subsidiary guarantor may pay the notes until five business days after the
representatives of all the issues of Designated Senior Indebtedness receive
notice of the acceleration. Afterwards, they may pay the notes only if the
indenture otherwise permits payment at that time.
To the extent any payment of Senior Indebtedness is:
(1) declared to be fraudulent or preferential,
(2) set aside or
(3) required to be paid to any receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar person under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law,
then if it is recovered by, or paid over to that person, the Senior Indebtedness
or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if the payment had not occurred. To the extent the
obligation to repay any Senior Indebtedness is determined to be fraudulent,
invalid, or otherwise set aside under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then the obligation as so declared shall
be deemed to be reinstated and outstanding as Senior Indebtedness for all
purposes hereof as if the declaration, invalidity or setting aside had not
occurred.
If the issuers fail to make any payment on the notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provision referred to above, that failure would constitute an event of default
under the indenture and would enable the holders to accelerate the maturity of
the indenture. See ' -- Events of Default.'
The obligations of a subsidiary guarantor under its subsidiary guaranty are
unsecured senior subordinated obligations. Accordingly, the rights of
noteholders to receive payment by a subsidiary guarantor pursuant to its
subsidiary guaranty will be subordinated in right of payment to the rights of
holders of Senior Indebtedness of any subsidiary guarantor. The terms of the
subordination provisions described above with respect to the issuers'
obligations under the notes apply equally to a subsidiary guarantor and the
obligations of a subsidiary guarantor under its subsidiary guaranty.
BY REASON OF THE SUBORDINATION PROVISIONS CONTAINED IN THE INDENTURE, IN
THE EVENT OF INSOLVENCY, CREDITORS OF AN ISSUER OR A SUBSIDIARY GUARANTOR WHO
ARE HOLDERS OF SENIOR INDEBTEDNESS OF THE APPLICABLE ISSUER OR SUBSIDIARY
GUARANTOR, AS THE CASE MAY BE, MAY RECOVER MORE, RATABLY, THAN THE NOTEHOLDERS.
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The terms of the subordination provisions described above will not apply to
payments from money or the proceeds of U.S. Government obligations deposited in
trust prior to the occurrence of an event prohibiting payment of or on the notes
and held in trust by the trustee for the payment of principal of and interest on
the notes pursuant to the provisions described under ' -- Defeasance.'
CERTAIN COVENANTS
The indenture contains covenants including, among others, the following:
LIMITATION ON INDEBTEDNESS.
(a) Triarc Consumer Products Group shall not, and shall not permit any
Restricted Subsidiary to, incur, directly or indirectly, any Indebtedness;
provided, however, that any issuer or any subsidiary guarantor may incur
Indebtedness if, on the date of such incurrence and after giving effect thereto,
the Consolidated Coverage Ratio exceeds 2.0 to 1.
(b) Despite the foregoing paragraph (a), Triarc Consumer Products Group and
the Restricted Subsidiaries may incur any or all of the following Indebtedness:
(1) Indebtedness incurred pursuant to the Credit Agreement by an
issuer or a subsidiary guarantor. After giving effect to the incurrence,
the aggregate principal amount of Indebtedness then outstanding must not
exceed the greater of
(i) $545.0 million less the sum of all principal payments with
respect to Indebtedness pursuant to:
(A) the covenant described under ' -- Limitation on Sales of
Assets and Subsidiary Stock' and/or
(B) a Permitted Arby's Securitization. After a Permitted Arby's
IPO Dividend has been made, the aggregate principal amount of
Indebtedness then outstanding shall not exceed $425.0 million less
the sum of all principal payments with respect to Indebtedness
pursuant to the covenant described under ' -- Limitation on Sales of
Assets and Subsidiary Stock'; or
(ii) the sum of:
(x) 50.0% of the book value of the inventory of Triarc Consumer
Products Group and its Restricted Subsidiaries and
(y) 80.0% of the book value of the accounts receivable of Triarc
Consumer Products Group and its Restricted Subsidiaries, to the
extent inventory or accounts receivable are not encumbered by any
lien securing Indebtedness other than liens securing obligations
under the credit agreement,
The book value of the inventory and accounts receivable will be
determined as of the date of the most recent balance sheet of Triarc
Consumer Products Group filed or delivered to the trustee pursuant to
the 'SEC Reports' covenant, and on a pro forma basis after giving effect
to any Business Disposition, Business Acquisition or designation of a
Restricted Subsidiary as an Unrestricted Subsidiary occurring after the
date of such balance sheet.
(2) Indebtedness owed to and held by Triarc Consumer Products Group or
a Restricted Subsidiary. This exception is subject to the following
limitations:
(a) any subsequent issuance or transfer of any capital stock which
results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness, other than
to Triarc Consumer Products Group or a Restricted Subsidiary, shall be
deemed, in each case, to constitute the incurrence of such Indebtedness
by the obligor thereon not permitted by this clause (2) and
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(b) if an issuer or a subsidiary guarantor is the obligor on the
Indebtedness, the Indebtedness is expressly subordinated to the prior
payment in full in cash of all obligations with respect to the notes;
(3) the notes, but not any additional notes, and the subsidiary
guarantees;
(4) Indebtedness outstanding on the closing date, other than
Indebtedness described in clause (1), (2) or (3) of this covenant;
(5) Indebtedness of Foreign Restricted Subsidiaries in an aggregate
principal amount at any time outstanding under this clause (5) not to
exceed the greater of (x) $5.0 million or (y) 10% of Consolidated Total
Assets of Triarc Consumer Products Group's Foreign Restricted Subsidiaries;
(6) Refinancing Indebtedness in respect of Indebtedness incurred
pursuant to paragraph (a) or pursuant to clause (3), (4) or this clause
(6);
(7) hedging obligations under currency agreements and interest rate
agreements. This exception is subject to the following limitations:
(a) the currency agreements may not increase the Indebtedness of
the obligor outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder and
(b) the notional principal amount of Indebtedness with respect to
any interest rate agreement must not exceed the principal amount of the
Indebtedness to which the interest rate agreement relates;
(8) Indebtedness, in an aggregate principal amount at any time
outstanding under this clause (8) not to exceed $20.0 million, represented
by capital lease obligations or other purchase money Indebtedness of any
issuer or any subsidiary guarantor incurred for the purpose of leasing,
financing or refinancing all or any part of the purchase price or cost of
construction or improvements of any property, real or personal, or other
assets that are used or useful in a Related Business. This Indebtedness may
be incurred:
(a) as a result of the direct purchase of assets or the capital
stock of any person owning such assets or
(b) as Indebtedness owed to the seller or the person carrying out
any construction or improvement or to any third party;
In each case:
(x) such Indebtedness must not be secured by any property or assets
of Triarc Consumer Products Group and its Restricted Subsidiaries other
than the property or assets so leased, acquired, constructed or improved
and
(y) such Indebtedness must be created within 90 days of the
acquisition or completion of construction or improvement of the related
property or asset.
(9) Indebtedness arising from agreements of Triarc Consumer Products
Group or a Restricted Subsidiary providing for indemnification, adjustment
of purchase price or similar obligations, incurred or assumed in connection
with the disposition of any business, asset or subsidiary. This exception
excludes guarantees of Indebtedness incurred by any person acquiring all or
any portion of any business, assets or subsidiary for the purpose of
financing the acquisition. In addition:
(A) the maximum assumable liability in respect of the Indebtedness
must at no time exceed the gross proceeds, including non-cash proceeds
and
(B) the fair market value of any non-cash proceeds being measured
at the time received and without giving effect to any subsequent changes
in value, actually received by Triarc Consumer Products Group and/or the
applicable Restricted Subsidiary in connection with the disposition;
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(10) obligations in respect of performance and surety bonds and
completion guarantees provided by Triarc Consumer Products Group or any
Restricted Subsidiary in the ordinary course of business.
(11) Indebtedness of a subsidiary guarantor incurred and outstanding
on or prior to the date on which such person was acquired by Triarc
Consumer Products Group. This exception excludes Indebtedness incurred in
connection with, or to provide all or any portion of the funds or credit
support utilized to consummate, the transactions or series of related
transactions as a result of which the applicable person became a subsidiary
or was acquired by Triarc Consumer Products Group. The aggregate principal
amount of Indebtedness under this exception at any time outstanding, which
together with the principal amount of all other Indebtedness under this
clause (11) outstanding on the date of incurrence must not exceed $20.0
million.
(12) guarantees by any issuer or any subsidiary guarantor of any
Indebtedness permitted to be incurred pursuant to this covenant.
(13) Indebtedness of any issuer or any subsidiary guarantor in an
aggregate principal amount which, together with all other Indebtedness of
the issuers and the subsidiary guarantors outstanding on the date of
incurrence, other than Indebtedness permitted by clauses (1) through (12)
above or paragraph (a), after giving effect to the use of the proceeds of
the incurrence of Indebtedness, does not exceed $45.0 million.
(c) Depite the foregoing, the issuers and the subsidiary guarantors shall
not incur any Indebtedness pursuant to the foregoing paragraph (b) if the
proceeds are used, directly or indirectly, to refinance any Subordinated
Obligations. However, the Indebtedness may be incurred if it is subordinated to
the notes or the subsidiary guarantees, as the case may be, to at least the same
extent as such subordinated obligations.
(d) For purposes of determining compliance with the foregoing covenant:
(i) in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described above, Triarc Consumer
Products Group, in its sole discretion, will classify that item of
Indebtedness and only be required to include the amount and type of that
Indebtedness in one of the above clauses or the first paragraph hereof, and
(ii) an item of Indebtedness may be divided and classified in more
than one of the types of Indebtedness described above.
In addition, Triarc Consumer Products Group may, at any time, change the
classification of an item, or portion of an item, of Indebtedness to any other
clause or to the first paragraph hereof. Triarc Consumer Products Group may do
so, however, only if it would be permitted to incur such item of Indebtedness,
or portion thereof, pursuant to the proposed new clause or the first paragraph
hereof, as the case may be, at the time of reclassification.
LIMITATION ON RESTRICTED PAYMENTS.
(a) Triarc Consumer Products Group shall not, and shall not permit any
Restricted Subsidiary, directly or indirectly, to make a restricted payment if
at the time Triarc Consumer Products Group or the applicable Restricted
Subsidiary makes the restricted payment:
(1) a default shall have occurred and be continuing, or would result
therefrom;
(2) Triarc Consumer Products Group is not able to incur an additional
$1.00 of Indebtedness pursuant to paragraph (a) of the covenant described
under ' -- Limitation on Indebtedness'; or
(3) the aggregate amount of the restricted payment and all other
restricted payments since the closing date, would exceed the sum of,
without duplication:
(A) 50% of the Consolidated Net Income accrued during the period,
treated as one accounting period, from the beginning of the fiscal
quarter immediately following the closing date to the end of the most
recent fiscal quarter ending prior to the date of the
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restricted payment for which reports have been filed or provided to the
trustee pursuant to the 'SEC Reports' covenant, or, in case the
Consolidated Net Income so determined shall be a deficit, minus 100% of
such deficit;
(B) the aggregate net cash proceeds received by Triarc Consumer
Products Group as a contribution to its capital or from the issuance or
sale of its capital stock, other than Disqualified Stock, after to the
closing date, including an issuance or sale permitted by the indenture
of Indebtedness of Triarc Consumer Products Group for cash subsequent to
the closing date upon the conversion of such Indebtedness into capital
stock, other than Disqualified Stock, of Triarc Consumer Products Group.
Issuances and sales of capital stock to a subsidiary of Triarc Consumer
Products Group, may not be included in this paragraph (B);
(C) an amount equal to the sum of:
(i) the net reduction in Investments in Unrestricted
Subsidiaries resulting from dividends, repayments of loans or
advances or other transfers of assets, in each case to Triarc
Consumer Products Group or any Restricted Subsidiary from
Unrestricted Subsidiaries, and
(ii) the portion, proportionate to Triarc Consumer Products
Group's equity interest in the applicable subsidiary, of the fair
market value of the net assets of an Unrestricted Subsidiary at the
time the Unrestricted Subsidiary is designated a Restricted
Subsidiary;
except that the foregoing sum must not exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously made, and
treated as a restricted payment, by Triarc Consumer Products Group or any
Restricted Subsidiary in the applicable Unrestricted Subsidiary; and
(D) to the extent that any Investment, other than a Permitted
Investment, that was made after the closing date is sold for cash or
otherwise liquidated, repaid or otherwise reduced, including by way of
dividend, for cash, an amount equal to the lesser of:
(i) the cash return of capital with respect to the Investment
less the cost of disposition, if any, and
(ii) the initial amount of the Investment.
For purposes of this provision, a restricted payment with respect to any person
means:
(i)(A) the declaration or payment of any dividends or any other
distributions of any sort in respect of its capital stock, including any
payment in connection with any merger or consolidation involving the
applicable person, or similar payment to the direct or indirect holders of
its capital stock in their capacity as holders, other than dividends or
distributions payable solely in its capital stock, other than Disqualified
Stock, and
(B) dividends or distributions payable solely to Triarc Consumer
Products Group or a Restricted Subsidiary,
(ii) the purchase, redemption or other acquisition or retirement for
value of any capital stock of:
(A) an issuer, any affiliate of Triarc Consumer Products Group or
any subsidiary guarantor held by any person, other than Triarc Consumer
Products Group or a wholly owned subsidiary, or
(B) a Restricted Subsidiary that is not a subsidiary guarantor or
an issuer held by any affiliate of Triarc Consumer Products Group, other
than a Restricted Subsidiary,
including, in respect of both clause (A) and (B) above, the exercise
of any option to exchange any capital stock, other than into capital
stock of Triarc Consumer Products Group that is not Disqualified
Stock,
(iii) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment
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of any Subordinated Obligations, other than the purchase, repurchase or
other acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of acquisition, or
(iv) the making of any Investment in any person, other than a
Permitted Investment.
So long as, other than with respect to clauses (iv), (viii), except for
payments of any management fees, (x) and (xii) below, no default or event of
default shall have occurred and be continuing or occur as a consequence of the
actions or payments set forth below, the provisions of paragraph (a) of this
covenant shall not prohibit:
(i) payment of the Closing Dividend to Triarc Parent, but the payment
must be excluded in the calculation of the amount of restricted payments
made under paragraph (a) above;
(ii) any restricted payment, other than a restricted payment described
in clause (i) of the definition of 'restricted payment' made out of the net
cash proceeds of a capital contribution to Triarc Consumer Products Group
or the substantially concurrent sale of, or made by exchange for, capital
stock of Triarc Consumer Products Group, other than Disqualified Stock;
except that:
(A) the capital contribution or sale must occur within 20 business
days of the date of the restricted payment,
(B) the restricted payment must be excluded in the calculation of
the amount of restricted payments made under paragraph (a) above and
(C) the net cash proceeds from the capital contribution or sale
must, to the extent used to make the applicable payment, be excluded
from the calculation of amounts under clause (3)(B) of paragraph (a)
above;
(iii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by
exchange for, or out of the sale of, Indebtedness of Triarc Consumer
Products Group which is permitted to be incurred pursuant to paragraph
(b)(6) of the covenant described under ' -- Limitation on Indebtedness';
except that:
(A) the sale must occur within 20 business days of the date of the
restricted payment and
(B) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value must be excluded in the calculation
of the amount of restricted payments made under paragraph (a) above;
(iv) dividends paid within 60 days after the date of declaration
thereof if at the date of its declaration the dividend would have complied
with this covenant; but that the dividend shall be included in the
calculation of the amount of restricted payments made under paragraph (a)
above;
(v) the repurchase or other acquisition of shares of, or options to
purchase shares of, common stock of Triarc Consumer Products Group or any
of its subsidiaries from employees, former employees, directors or former
directors of Triarc Consumer Products Group or any of its subsidiaries, or
permitted transferees of these persons, pursuant to the terms of the
agreements, including employment agreements, or plans or amendments
thereto, approved by the board of directors of Triarc Consumer Products
Group or the applicable subsidiary under which individuals purchase or sell
shares of common stock (collectively, 'plan participants'). The aggregate
price paid for all repurchased or acquired common stock must not exceed:
(a) $5 million in the twelve month period beginning on the closing date,
(b) $7.5 million in the twelve month period beginning on the first
anniversary of the closing date and (c) $10.0 million in each twelve month
period beginning on the second anniversary of the closing date and each
anniversary of the closing date thereafter.
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The aggregate price paid for all repurchased or acquired common stock
repurchased or acquired pursuant to this clause (v) on and after the
closing date shall not exceed $25.0 million plus an amount equal to the net
cash proceeds received by Triarc Consumer Products Group or any Restricted
Subsidiary after the closing date from the sale of capital stock, other
than Disqualified Stock, to plan participants.
In addition:
(A) the repurchases and other acquisitions shall be excluded in the
calculation of the amount of restricted payments made under paragraph
(a) above and
(B) the net cash proceeds from the sales shall, to the extent used
to make repurchases or other acquisitions, be excluded from the
calculation of amounts under clause (3)(B) of paragraph (a) above;
(vi) any Permitted Arby's Dividend; but any such payment shall be
excluded in the calculation of the amount of restricted payments made under
paragraph (a) above;
(vii) dividends or distributions by any Restricted Subsidiary payable
to all holders of a class of capital stock of the applicable Restricted
Subsidiary on a pro rata basis; provided that the payment shall be excluded
in the calculation of the amount of restricted payments made under
paragraph (a) above;
(viii) payments to Triarc Parent pursuant to the management agreement;
provided that the payment shall be excluded in the calculation of the
amount of restricted payments made under paragraph (a) above;
(ix) Investments by Arby's or any of its subsidiaries in the Arby's
Securitization Entity in an amount that, together with all other
Investments made pursuant to this clause (ix) on or after the closing date,
do not exceed $15.0 million; but the Investment shall be included in the
calculation of the amount of restricted payments made under paragraph (a)
above;
(x) payments or distributions to Triarc Parent pursuant to any tax
sharing agreement; but the payment shall, to the extent not deducted in
calculating Consolidated Net Income or recorded as deferred income taxes,
be included in the calculation of the amount of restricted payments made
under paragraph (a) above;
(xi) the declaration and payment of dividends to holders of any class
or series of Disqualified Stock issued on or after the closing date in
accordance with the covenant entitled ' -- Limitation on Indebtedness'; but
the payment shall be excluded in the calculation of restricted payments
made under paragraph (a) above;
(xii) repurchases of capital stock deemed to occur upon exercise of
stock options to the extent that the capital stock represents a portion of
the exercise price of such options; but the amount shall be excluded in the
calculation of the amount of restricted payments made pursuant to paragraph
(a) above;
(xiii) any other Investment made in a Related Business or a person
engaged in a Related Business which, together with all other Investments
made pursuant to this clause (xiii) on or after the closing date, does not
exceed $25.0 million. In each case, after giving effect to any subsequent
reduction in the amount of any Investments made pursuant to this clause
(xiii) as a result of the repayment or other disposition for cash as set
forth in clause 3(D) of paragraph (a) above, the amount of such reduction
shall not exceed the amount of any Investment previously made pursuant to
this clause (xiii); but the applicable Investment shall be included in the
calculation of restricted payments made under paragraph (a) above;
(xiv) any other restricted payment that, together with all other
restricted payments made pursuant to this clause (xiv) on or after the
closing date, does not exceed $10.0 million; provided that the amount shall
be included in the calculation of the amount of restricted payments made
pursuant to paragraph (a) above.
The amount of all restricted payments, other than cash, shall be the fair
market value on the date of the restricted payment of the assets or securities
proposed to be transferred or issued by
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Triarc Consumer Products Group or any relevant subsidiary, as the case may be,
pursuant to the restricted payment. The fair market value of any non-cash
restricted payment shall be determined in good faith by the board of directors
of Triarc Consumer Products Group, whose good faith determination shall be
conclusive.
LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS
The issuers and the subsidiary guarantors shall not incur any Indebtedness
that is subordinate in right of payment to any Senior Indebtedness unless such
Indebtedness ranks equal to, or is subordinated in right of payment to, the
notes or the subsidiary guarantees, as the case may be. This limitation shall
not apply to distinctions between categories of Senior Indebtedness of an issuer
or a subsidiary guarantor that exist by reason of any liens or guarantees
arising or created in respect of some but not all Senior Indebtedness.
LIMITATION ON LIENS
The issuers and the subsidiary guarantors shall not incur any Indebtedness
secured by a lien ('Secured Indebtedness') which is not Senior Indebtedness.
They may do so, however, if:
(1) contemporaneously therewith effective provision is made to secure
the notes, or the subsidiary guaranty, as the case may be, equally and
ratably with, or
(2) the Secured Indebtedness is subordinated in right of payment to
the notes or the subsidiary guaranty, prior to,
the Secured Indebtedness for so long as the Secured Indebtedness is secured by a
lien.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES
Triarc Consumer Products Group shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(a) pay dividends or make any other distributions on its capital stock
to Triarc Consumer Products Group or any other Restricted Subsidiary or pay
any Indebtedness owed to Triarc Consumer Products Group or any other
Restricted Subsidiary,
(b) make any loans or advances to Triarc Consumer Products Group or
any other Restricted Subsidiary or
(c) transfer any of its property or assets to Triarc Consumer Products
Group or any other Restricted Subsidiary.
The above restriction shall not apply to:
(i) any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the closing date, including the credit agreement as
in effect on the closing date;
(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness incurred
by that Restricted Subsidiary on or prior to the date on which the
Restricted Subsidiary was acquired by Triarc Consumer Products Group and
outstanding on the date of acquisition. However, Indebtedness incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which the Restricted Subsidiary became a
Restricted Subsidiary or was acquired by Triarc Consumer Products Group,
shall be excluded from this exception;
(iii) any encumbrance or restriction pursuant to an agreement
effecting a refinancing of Indebtedness incurred pursuant to an agreement
referred to in clause (i) or (ii) of this covenant or this clause (iii) or
contained in any amendment to an agreement referred to in clause (i) or
(ii) of this covenant or this clause (iii). The encumbrances and
restrictions with respect to such Restricted Subsidiary contained in any
applicable refinancing agreement or
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amendment, taken as a whole, shall not be materially more restrictive than
encumbrances and restrictions with respect to the applicable Restricted
Subsidiary contained in any predecessor agreements, as determined in good
faith by Triarc Consumer Products Group's board of directors;
(iv) any encumbrance or restriction consisting of customary
non-assignment provisions in leases governing leasehold interests to the
extent these provisions restrict:
(A) the transfer of the lease or the property leased thereunder or
other customary non-assignment provisions in agreements entered into in
the ordinary course of business and
(B) the assignment of those agreements;
(v) in the case of clause (c) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent the restrictions restrict the transfer of the
property subject to the security agreements or mortgages;
(vi) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the capital stock or assets of the Restricted Subsidiary
pending the closing of the sale or disposition;
(vii) encumbrances or restrictions contained in the terms of any
Indebtedness or any agreement pursuant to which the applicable Indebtedness
was issued if:
(A) the encumbrances or restrictions, taken as a whole, are not
materially more restrictive than is customary in comparable financings,
as determined in good faith by Triarc Consumer Products Group's board of
directors; and
(B) the encumbrances or restrictions will not materially adversely
affect Triarc Consumer Products Group's ability to make principal or
interest payments on the notes, as determined in good faith by Triarc
Consumer Products Group's board of directors; and
(viii) any applicable law, rule, regulation or order.
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK
Triarc Consumer Products Group will not, and will not permit any Restricted
Subsidiary to, consummate any asset disposition, unless:
(i) the consideration received by Triarc Consumer Products Group or
the applicable Restricted Subsidiary is at least equal to the fair market
value of the assets sold or disposed of and
(ii) at least 75% of the consideration received consists of cash,
Temporary Cash Investments, liquid securities or the assumption by the
purchaser of Indebtedness, other than Subordinated Obligations.
An asset disposition means any sale, lease, transfer or other disposition,
or series of related sales, leases, transfers or dispositions, by Triarc
Consumer Products Group or any Restricted Subsidiary, including any disposition
by means of a merger, consolidation or similar transaction, each referred to for
the purposes of this definition as a 'disposition,' of
(i) any shares of capital stock of a Restricted Subsidiary, other than
directors' qualifying shares or shares required by applicable law to be
held by a person other than Triarc Consumer Products Group or a Restricted
Subsidiary,
(ii) all or substantially all the assets of any division or line of
business of Triarc Consumer Products Group or any Restricted Subsidiary or
(iii) any other assets of Triarc Consumer Products Group or any
Restricted Subsidiary outside of the ordinary course of business of Triarc
Consumer Products Group or the applicable Restricted Subsidiary.
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An asset disposition does not include any of the following:
(A) a disposition to Triarc Consumer Products Group or a Restricted
Subsidiary,
(B) a disposition that constitutes a restricted payment permitted by
the covenant described under ' -- Certain Covenants -- Limitation on
Restricted Payments' or a Permitted Investment,
(C) sales or other dispositions for consideration at least equal to
the fair market value of the assets sold or disposed of as determined in
good faith by the board of directors of Triarc Consumer Products Group, but
only to the extent that the consideration received consists of property or
assets that are to be used in a Related Business or the capital stock of a
person engaged in a Related Business if that person becomes, or is merged
or consolidated into, a Restricted Subsidiary as a result of the receipt of
capital stock,
(D) a Permitted Arby's Securitization,
(E) a disposition covered by and permitted under ' -- Consolidation,
Merger and Sale of Assets,'
(F) the sale or discount of accounts receivable arising in the
ordinary course of business, but only in connection with the compromise or
collection thereof,
(G) a disposition of capital stock of an Unrestricted Subsidiary,
(H) a disposition of an Investment in any person made on or after the
closing date, that was not a Permitted Investment when made,
(I) disposals or replacements of obsolete or worn equipment in the
ordinary course of business,
(J) a disposition of assets, including capital stock, in a transaction
or series of related transactions with a fair market value of less than
$1,000,000 and
(K) the sale of capital stock of Triarc Consumer Products Group or any
of its Restricted Subsidiaries to employees, managers, directors and
consultants of Triarc Consumer Products Group and its Restricted
Subsidiaries pursuant to plans approved by the board of directors of Triarc
Consumer Products Group. However the net proceeds, if any, must be applied
pursuant to the provisions of this covenant ' -- Certain
Covenants -- Limitation on Sale of Assets and Subsidiary Stock.'
In the event and to the extent that the net available cash received by
Triarc Consumer Products Group or any Restricted Subsidiary from one or more
asset dispositions occurring on or after the closing date in any period of 12
consecutive months exceeds $10.0 million, then Triarc Consumer Products Group
shall:
(i) within 360 days after the date that the net available cash so
received exceeds $10.0 million and to the extent Triarc Consumer Products
Group elects, or is required by the terms of any Indebtedness,
(A) apply an amount equal to the excess net available cash to repay
Senior Indebtedness of an issuer or any subsidiary guarantor, in each
case owing to a person other than Triarc Consumer Products Group or any
affiliate of Triarc Consumer Products Group, and, in the case of
revolving credit indebtedness, correspondingly reduce any commitment
therefor or
(B) invest all or a portion of such amount, or the amount not so
applied pursuant to clause (A), in Additional Assets, and
(ii) apply the excess net available cash, to the extent not applied
pursuant to clause (i), as provided in the following paragraphs of the
covenant described hereunder.
The amount of excess net available cash required to be applied or
reinvested during the applicable period and not applied or reinvested as so
required by the end of the applicable period shall constitute 'excess proceeds.'
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If, as of the first day of any calendar month, the aggregate amount of
excess proceeds not previously covered by an excess proceeds offer discussed
below totals at least $10.0 million, Triarc Consumer Products Group must, not
later than the fifteenth business day of that month, make an offer (an 'excess
proceeds offer') to purchase outstanding Indebtedness on the following terms:
Triarc Consumer Products Group must purchase on a ratable basis from the
holders of the notes and, if an issuer or a subsidiary guarantor is
required to do so under the terms of any of its other Indebtedness that is
not subordinated to the notes, that other Indebtedness,
Triarc Consumer Products Group will be required to purchase an aggregate
principal amount of notes and applicable other Indebtedness equal to the
excess proceeds, rounded down to the nearest multiple of $1,000, and
the purchase price will equal 100% of the principal amount of the
applicable notes or other Indebtedness, as the case may be, plus, in each
case, accrued interest, if any, to the date of purchase (the 'excess
proceeds payment').
Upon completion of an excess proceeds offer, the amount of excess proceeds
shall be reset at zero.
Triarc Consumer Products Group will comply, to the extent applicable, with
the requirements of Section 14(e) of the Securities Exchange Act and any other
securities laws or regulations in the event that the excess proceeds are
received by Triarc Consumer Products Group under this covenant and Triarc
Consumer Products Group is required to repurchase notes as described above. To
the extent that the provisions of any securities laws or regulations conflict
with the provisions of the covenant described hereunder, Triarc Consumer
Products Group shall comply with the applicable securities laws and regulations
and shall not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.
LIMITATION ON AFFILIATE TRANSACTIONS
(a) Triarc Consumer Products Group shall not, and shall not permit any
Restricted Subsidiary to, enter into or permit to exist any transaction
including the purchase, sale, lease or exchange of any property, employee
compensation arrangements or the rendering of any service with any affiliate of
Triarc Consumer Products Group (an 'affiliate transaction') unless the terms
thereof:
(1) are no less favorable to Triarc Consumer Products Group or the
Restricted Subsidiary than those that could be obtained at the time of such
transaction in arm's-length dealings with a person who is not an affiliate,
(2) if the affiliate transaction involves an amount in excess of $2.5
million:
(i) are set forth in writing and
(ii) have been approved by a majority of the members of the board
of directors of Triarc Consumer Products Group having no personal stake
in the affiliate transaction and
(3) if the affiliate transaction involves as amount in excess of $10.0
million, the financial terms of which have been determined by a nationally
recognized investment banking firm to be fair, from a financial standpoint,
to Triarc Consumer Products Group and its Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) shall not prohibit:
(i) any Restricted Payment permitted to be paid pursuant to the
covenant described under ' -- Limitation on Restricted Payments,'
(ii) any issuance of securities, or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the board
of directors of Triarc Consumer Products Group,
(iii) the grant of stock options or similar rights to employees,
managers, directors and consultants of Triarc Consumer Products Group and
its subsidiaries pursuant to plans approved by the board of directors of
Triarc Consumer Products Group,
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(iv) loans or advances to employees in the ordinary course of business
in accordance with the past practices of Triarc Consumer Products Group or
its Restricted Subsidiaries, but in any event not to exceed $2.5 million in
the aggregate outstanding at any one time,
(v) the payment of reasonable fees to directors of Triarc Consumer
Products Group and its Restricted Subsidiaries who are not employees of
Triarc Consumer Products Group or its Restricted Subsidiaries,
(vi) any affiliate transaction between Triarc Consumer Products Group
and a Restated Subsidiary or between Restricted Subsidiaries,
(vii) the issuance or sale of any capital stock, other than
Disqualified Stock, of Triarc Consumer Products Group,
(viii) transactions pursuant to any contract or agreement in effect on
or entered into on the closing date, and any renewal, extension or
amendment thereof that is on terms no less favorable to Triarc Consumer
Products Group than the terms in effect on the closing date, as determined
in good faith by Triarc Consumer Products Group's board of directors,
(ix) the purchase by Triarc Consumer Products Group and its Restricted
Subsidiaries of raw materials, flavors and packaging materials from Triarc
Parent at Triarc Parent's cost,
(x) the transactions which consist of the issuance and sale of the
notes and the closing of the credit agreement and the borrowings thereunder
for the purpose of:
(A) repaying Triarc Beverage Holdings' existing credit agreement,
(B) redeeming the existing notes of RC/Arby's,
(C) paying the Closing Dividend and
(D) purchasing Millrose and Mid-State on or about the closing date,
and
(xi) any transactions constituting part of the Permitted Arby's
Securitization.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
(a) Upon the occurrence of a change of control, each holder shall have the
right to require that the issuers repurchase his, her or its notes at a purchase
price in cash equal to 101% of the principal amount thereof on the date of
purchase plus accrued and unpaid interest, if any, to the date of purchase. This
right is subject to the right of holders of record on the relevant record date
to receive interest on the relevant interest payment date, in accordance with
the terms contemplated in paragraph (b) below.
A change of control means the occurrence of any of the following events:
(i)(A) any 'person' or 'group,' within the meaning of Sections 13(d)
and 14(d) of the Securities Exchange Act, other than one or more permitted
holders, is or becomes the beneficial owner, as defined in Rules 13d-3 and
13d-5 under the Securities Exchange Act, directly or indirectly, of more
than 35% of the total voting power of the voting stock of Triarc Consumer
Products Group or Triarc Parent and
(B) the permitted holders beneficially own, directly or indirectly,
in the aggregate a lesser percentage of the total voting power of the
voting stock of Triarc Consumer Products Group or Triarc Parent than the
applicable other person or group and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of Triarc Consumer Products Group or of
Triarc Parent.
Permitted holders means, collectively, Nelson Peltz, Peter W. May, DWG
Acquisition Group, L.P., and/or their respective affiliates, including
members of their immediate families, and any trusts and estates of which
any of them are primary beneficiaries and any entities of which any of them
hold a majority of the equity securities;
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(ii) individuals who:
(A) on the closing date constituted the board of directors of
Triarc Parent, Triarc Consumer Products Group or Triarc Beverage
Holdings, together with
(B) any new directors whose election by any of these boards of
directors or whose nomination for election by the shareholders of the
same persons was approved by a vote of a majority of their directors
then still in office who were either directors as of the closing date,
or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the board of directors
then in office;
(iii) the adoption of a plan relating to the liquidation or
dissolution of Triarc Consumer Products Group;
(iv) (A) the merger or consolidation of Triarc Consumer Products Group
or Triarc Parent with or into another person,
(B) the merger of another person with or into Triarc Consumer
Products Group or Triarc Parent, or
(C) the sale of all or substantially all the assets of Triarc
Consumer Products Group or Triarc Parent to another person,
and, in the case of a merger or consolidation, the securities of Triarc
Consumer Products Group or Triarc Parent that are outstanding immediately
prior to such transaction are changed into or exchanged for cash, securities
or property. Mergers and consolidations where the outstanding securities of
Triarc Consumer Products Group or Triarc Parent are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving person or transferee that represent immediately after the
transaction, at least a majority of the aggregate voting power of the voting
stock of the surviving person or transferee are excluded from clause (iv).
Mergers, consolidations and sales to a person that is directly or indirectly
controlled by one or more permitted holders are also excluded from
clause (iv); or
(v) any 'person' or 'group,' within the meaning of Section 13(d) and
14(d) of the Securities Exchange Act, other than one or more permitted
holders, is or becomes the 'beneficial owner,' as defined in clause (i)
above, directly or indirectly, of both
(A) 25% or more of the total voting power of all classes of capital
stock then outstanding of Triarc Beverage Holdings normally entitled to
vote in elections of directors ('Triarc Beverage voting stock') or 40%
or more of the economic interest in Triarc Beverage Holdings held by
holders of capital stock thereof ('Triarc Beverage economic interest')
and
(B) a greater percentage of the Triarc Beverage voting stock or
Triarc Beverage economic interest than is then beneficially owned,
directly or indirectly, in the aggregate by Triarc Consumer Products
Group and the permitted holders.
(b) Within 30 days following any change of control, the issuers shall mail
a notice to each holder with a copy to the trustee (the 'change of control
offer') stating:
(1) that a change of control has occurred and that the holder has the
right to require the issuers to purchase his, her or its notes at a
purchase price in cash equal to 101% of the principal amount thereof on the
date of purchase plus accrued and unpaid interest, if any, to the date of
purchase. This right shall be subject to the right of holders of record on
the relevant record date to receive interest on the relevant interest
payment date;
(2) the circumstances and relevant facts regarding the change of
control, including, if applicable, information with respect to pro forma
historical income, cash flow and capitalization after giving effect to the
change of control;
(3) the repurchase date which shall be no earlier than 30 days nor
later than 60 days from the date the notice is mailed; and
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(4) the instructions determined by the issuer, consistent with the
covenant described hereunder, that a holder must follow in order to have
its notes purchased.
(c) The issuers will not be required to make a change of control offer
following a change of control if a third party makes the change of control offer
in the manner, at the times and otherwise in compliance with the requirements
set forth in the indenture applicable to a change of control offer made by the
issuers and purchases all notes validly tendered and not withdrawn under the
change of control offer.
(d) The issuers shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Securities Exchange Act and any other
securities laws or regulations in connection with the repurchase of notes
pursuant to this covenant. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this covenant, the issuers
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached their obligations under this covenant by virtue
thereof.
The credit agreement generally prohibits the issuers from purchasing any
notes in the event of a change of control and also provides that the occurrence
of some change of control events with respect to Triarc Consumer Products Group
would constitute a default thereunder. In the event a change of control occurs
at a time when the issuers are prohibited from purchasing notes, the issuers
could seek the consent of the credit agreement lenders to the purchase of notes
or could attempt to refinance the borrowings that contain a prohibition. If the
issuers do not obtain a consent or repay the borrowings, the issuers will remain
prohibited from purchasing the notes. In that case, the issuers' failure to
purchase tendered notes would constitute an event of default under the indenture
which would, in turn, constitute a default under the credit agreement. In those
circumstances, the subordination provisions in the indenture would restrict
payment to the holders of notes. See 'Risk Factors -- We may be unable to
purchase your notes upon a change of control.'
Future indebtedness of the issuers may contain prohibitions on the
occurrence of events that would constitute a change of control or require the
future indebtedness to be repurchased upon a change of control. Moreover, the
exercise by the holders of their right to require the issuers to repurchase the
notes could cause a default under any future indebtedness, even if the change of
control itself does not, due to the financial effect of any required repurchase
on the issuers. Finally, the issuers' ability to pay cash to the holders
following the occurrence of a change of control may be limited by the issuers'
then existing financial resources. There can be no assurance that sufficient
funds will be available when necessary to make any required repurchases.
The provisions under the indenture relative to the issuers' obligation to
make an offer to repurchase the notes as a result of a change of control may be
waived or modified with the written consent of the holders of a majority in
principal amount of the notes.
LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
Triarc Consumer Products Group shall not sell or otherwise dispose of any
capital stock of a Restricted Subsidiary, and shall not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any
of its capital stock except:
(i) to Triarc Consumer Products Group or a Restricted Subsidiary,
(ii) directors' qualifying shares,
(iii) if, immediately after giving effect to any issuance, sale or
other disposition, neither Triarc Consumer Products Group nor any of its
subsidiaries own any capital stock of the applicable Restricted Subsidiary,
(iv) if, immediately after giving effect to any issuance, sale or
other disposition, the applicable Restricted Subsidiary would no longer
constitute a Restricted Subsidiary and any Investment in the Restricted
Subsidiary remaining after giving effect thereto would have been permitted
to be made under the covenant described under ' -- Limitation on Restricted
Payments' if made on the date of the issuance, sale or other disposition,
or
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(v) the issuance or sale of common stock of a Restricted Subsidiary
that remains a Restricted Subsidiary after a transaction of the sort
described above and the issuance or sale of preferred stock of any
subsidiary guarantor or Triarc Beverage Holdings.
ADDITIONAL GUARANTEES
The indenture provides that if Triarc Consumer Products Group or any of its
Restricted Subsidiaries acquires or creates another Domestic Restricted
Subsidiary after the date of the indenture, then the newly acquired or created
Domestic Restricted Subsidiary shall execute a subsidiary guaranty and deliver
an opinion of counsel, in accordance with the terms of the indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Triarc Consumer Products Group shall not consolidate with or merge with or
into, or convey, transfer or lease, in one transaction or a series of related
transactions, all or substantially all its assets to, any person, unless:
(i) the resulting, surviving or transferee person (the 'successor
company'):
(A) shall be a person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia
and
(B) if not Triarc Consumer Products Group, shall expressly assume,
by an indenture supplemental thereto, executed and delivered to the
trustee, in form satisfactory to the trustee, all the obligations of
Triarc Consumer Products Group under the notes and the indenture;
(ii) immediately after giving effect to the transaction, and treating
any Indebtedness which becomes an obligation of the successor company or
any subsidiary as a result of the transaction as having been incurred by
the successor company or subsidiary at the time of the transaction, no
default shall have occurred and be continuing;
(iii) immediately after giving effect to the transaction, and treating
any Indebtedness which becomes an obligation of the successor company or
any subsidiary as a result of the transaction as having been incurred by
the successor company or subsidiary at the time of the transaction, the
successor company would be able to incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) of the covenant described under
' -- Limitation on Indebtedness'. This clause (iii) shall not apply to a
consolidation or merger with or into a wholly owned Restricted Subsidiary
that is an issuer or a subsidiary guarantor. Further, in connection with
any merger or consolidation of the sort described above, no consideration,
other than common stock in the surviving person or Triarc Consumer Products
Group, shall be issued or distributed to the stockholders of Triarc
Consumer Products Group; and
(iv) Triarc Consumer Products Group shall have delivered to the
trustee an Officers' Certificate and an opinion of counsel, each stating
that the consolidation, merger or transfer and any supplemental indenture,
if any, comply with the indenture.
Clause (iii) does not apply if, in the good faith determination of the
board of directors of Triarc Consumer Products Group, whose determination shall
be evidenced by a board resolution, the principal purpose of the transaction is
to change the state of organization of, or to incorporate, Triarc Consumer
Products Group. However, any such transaction may not have as one of its
purposes the evasion of the foregoing limitations.
The successor company shall be the successor to Triarc Consumer Products
Group and shall succeed to, and be substituted for, and may exercise every right
and power of, Triarc Consumer Products Group under the indenture. The
predecessor Triarc Consumer Products Group shall be released from the indenture,
but the predecessor Triarc Consumer Products Group in the case of a conveyance,
transfer or lease to an affiliate of Triarc Consumer Products Group shall not be
released from the indenture.
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The indenture provides that no Material Subsidiary Obligor shall:
(A) consolidate with or merge with or into, unless the Material
Subsidiary Obligor or an issuer or any wholly owned subsidiary that is or
becomes a subsidiary guarantor concurrently with the transaction is the
surviving person and a wholly owned subsidiary after giving effect to the
transaction or Triarc Consumer Products Group is the surviving person, or
(B) convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all its assets to, any person, other
than an issuer or any wholly owned subsidiary that is or becomes a
subsidiary guarantor concurrently with the transaction, unless:
(i) except as set forth in the next succeeding paragraph, the
resulting, surviving or transferee person shall expressly assume, by an
indenture supplemental thereto, executed and delivered to the trustee,
in form reasonably satisfactory to the trustee, all the obligations of
the Material Subsidiary Obligor under the notes or its subsidiary
guaranty, as the case may be, and the indenture;
(ii) immediately after giving effect to the transaction, no default
shall have occurred and be continuing; and
(iii) immediately after giving effect to the transaction, Triarc
Consumer Products Group would be able to incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) of the covenant described under
' -- Limitation on Indebtedness.'
No transaction made pursuant to this paragraph shall be permitted if it is not
made in compliance with the first paragraph of this section.
The requirements of clause (i) of the preceding paragraph will not apply in
the case of:
(A) a sale or other disposition, including by way of consolidation or
merger, of a Material Subsidiary Obligor or
(B) the sale or disposition of all or substantially all the assets of
a Material Subsidiary Obligor, in each case other than to Triarc Consumer
Products Group or an affiliate of Triarc Consumer Products Group, otherwise
permitted by the indenture, and in compliance with clauses (ii) and (iii)
of the preceding paragraph.
The Material Subsidiary Obligor described in (A) and (B) above will be
released and relieved from all its obligations under the notes or its subsidiary
guaranty, as the case may be, if these conditions are met. In addition, Triarc
Beverage Holdings shall not consolidate with or merge with or into, or convey,
transfer or lease, in a single transaction or a series of transactions, all or
substantially all of its assets to any person unless concurrently therewith, a
corporate Restricted Subsidiary of Triarc Consumer Products Group, which may be
the successor to Triarc Beverage Holdings as a result of the same transaction,
shall expressly assume, by an indenture supplemental thereto, executed and
delivered to the trustee, in form reasonably satisfactory to the trustee, all
the obligations of an issuer under the notes and the indenture.
This covenant shall not apply to a transfer of substantially all of the
capital stock of RC/Arby's or any of its subsidiaries to Triarc Parent as a
Permitted Arby's Dividend.
SEC REPORTS
Notwithstanding that Triarc Consumer Products Group may not be subject to
the reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act, Triarc Consumer Products Group shall provide the trustee and noteholders
with
(i) all quarterly and annual financial information that would be
required to be contained in a filing with the Securities and Exchange
Commission on Forms 10-Q and 10-K, if Triarc Consumer Products Group were
required to file such forms including a 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' and, with
respect to annual information only, a report thereon by Triarc Consumer
Products Group's certified independent accountants, and
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(ii) all current reports that would be required to be filed with the
Securities and Exchange Commission on Form 8-K, if Triarc Consumer Products
Group were required to file such reports.
Following the consummation of the exchange offer contemplated by the
registration rights agreement, whether or not required by the rules and
regulations of the Securities and Exchange Commission, Triarc Consumer Products
Group will:
(A) file a copy of all information and reports described above with
the Securities and Exchange Commission for public availability, unless the
Securities and Exchange Commission will not accept the filing, and
(B) make such information available to prospective investors upon
request.
In addition, Triarc Consumer Products Group has agreed that, for so long as
any of the notes remain outstanding and constitute 'restricted securities' under
Rule 144, it will furnish to the holders of the notes and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT
An event of default is defined in the indenture as:
(i) a default in the payment of interest or any additional amounts on
the notes when due, which has continued for 30 days, whether or not such
payment is prohibited by the provisions described above under
' -- Ranking,'
(ii) a default in the payment of principal of any note when due at its
stated maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, whether or not the payment is prohibited by the
provisions described above under ' -- Ranking,'
(iii) the failure by the issuers to comply with their obligations
under ' -- Consolidation, Merger and Sale of Assets' above and under
' -- Covenants' under ' -- Limitation on Sales of Assets and Subsidiary
Stock' and under ' -- Repurchase of Notes Upon a Change of Control,'
(iv) the failure by the issuers to comply for 60 days after written
notice with any other agreements contained in the indenture,
(v) Indebtedness of an issuer or any subsidiary that would be a
'significant subsidiary' of Triarc Consumer Products Group within the
meaning of Rule 1-02 under Regulation S-X promulgated by the Securities and
Exchange Commission, is not paid within any applicable grace period after
final maturity or is accelerated by the holders thereof because of a
default and the total amount of such Indebtedness unpaid or accelerated
exceeds $20.0 million,
(vi) certain events of bankruptcy, insolvency or reorganization of an
issuer or a significant subsidiary
(vii) any judgment or decree for the payment of money in excess of
$20.0 million is entered against an issuer or a significant subsidiary,
remains outstanding for a period of 60 consecutive days following such
judgment and is not discharged, waived or stayed, or
(viii) a subsidiary guaranty ceases to be in full force and effect,
other than in accordance with its terms, or a subsidiary guarantor denies
or disaffirms its obligations under its subsidiary guaranty.
However, a default under clause (iv) will not constitute an event of default
until the trustee or the holders of 25% in principal amount of the outstanding
notes notify the issuers of the default and the issuers do not cure such default
within the time specified after receipt of the notice.
If an event of default occurs and is continuing, the trustee or the holders
of at least 25% in principal amount of the outstanding notes may declare the
principal of, and accrued but unpaid interest on, all the notes to be due and
payable. Upon the declaration, the principal and interest shall be due and
payable immediately. If any Designated Senior Indebtedness is outstanding, the
principal and interest shall not become due and payable until five business days
after the
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representatives of all the issues of Designated Senior Indebtedness receive
notice of the acceleration. If an event of default relating to some events of
bankruptcy, insolvency or reorganization of the issuers occurs and is
continuing, the principal of and interest on all the notes will then become and
be immediately due and payable without any declaration or other act on the part
of the trustee or any holders of the notes. Under some circumstances, the
holders of a majority in principal amount of the outstanding notes may rescind
the acceleration with respect to the notes and its consequences. If the
provisions of the indenture relating to the duties of the trustee are complied
with, in case an event of default occurs and is continuing, the trustee will be
under no obligation to exercise any of the rights or powers under the indenture
at the request or direction of any of the holders of the notes unless the
holders have offered to the trustee reasonable indemnity or security against any
loss, liability or expense.
Except to enforce the right to receive payment of principal, premium, if
any, or interest when due, no holder of a note may pursue any remedy with
respect to the indenture or the notes unless:
(i) the holder has previously given the trustee notice that an event
of default is continuing,
(ii) holders of at least 25% in principal amount of the outstanding
notes have requested the trustee to pursue the remedy,
(iii) the holders have offered the trustee reasonable security or
indemnity against any loss, liability or expense,
(iv) the trustee has not complied with the holders' request within 60
days after the receipt thereof and the offer of security or indemnity and
(v) the holders of a majority in principal amount of the outstanding
notes have not given the trustee a direction inconsistent with their
request within the 60-day period.
With some exceptions, the holders of a majority in principal amount of the
outstanding notes are given the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee or of
exercising any trust or power conferred on the trustee. The trustee, however,
may refuse to follow any direction that conflicts with law or the indenture or
that the trustee determines is unduly prejudicial to the rights of any other
holder of a note or that would involve the trustee in personal liability.
The indenture provides that if a default occurs and is continuing and is
known to the trustee, the trustee must mail to each holder of the notes notice
of the default within 90 days after it occurs. Except in the case of a default
in the payment of principal of or interest on any note, the trustee may withhold
notice if and so long as a committee of its trust officers determines that
withholding notice is not opposed to the interest of the holders of the notes.
In addition, the issuers are required to deliver to the trustee, within 120 days
after the end of each fiscal year, a certificate indicating whether they know of
any default that occurred during the previous year. The issuers are also
required to deliver to the trustee, within 30 days after its occurrence, written
notice of any default, its status and what action the issuers are taking or
propose to take.
NO PERSONAL LIABILITY OF DIRECTORS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator, member or stockholder of any
issuer or subsidiary guarantor, in his or her capacity as one of the above,
shall have any liability for any obligations of an issuer or subsidiary
guarantor under the notes, subsidiary guarantees or the indenture or for any
claim based on, in respect of, or by reason of, any obligations or their
creation. Each holder of notes by accepting a note waives and releases all
liability. The waiver and release are part of the consideration for issuance of
the notes. The waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Securities and Exchange
Commission that the waiver is against public policy.
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AMENDMENTS AND WAIVERS
With some exceptions, the indenture may be amended with the consent of the
holders of a majority in principal amount of the notes then outstanding,
including consents obtained in connection with a tender offer or exchange offer
for the notes. Any past default or compliance with any provisions may also be
waived with the consent of the holders of a majority in principal amount of the
notes then outstanding, including consents obtained in connection with a tender
offer or exchange offer for the notes. However, without the consent of each
holder of an outstanding note affected thereby, no amendment, with respect to
any notes held by a non-consenting holder, may be made to, among other things:
(i) reduce the amount of notes whose holders must consent to an
amendment,
(ii) reduce the rate of or extend the time for payment of interest on
any note,
(iii) reduce the principal or extend the stated maturity of any note,
(iv) reduce the amount payable upon the redemption of any note or
change the time at which any note may be redeemed as described under
' -- Optional Redemption' above,
(v) make any note payable in money other than that stated in the note,
(vi) impair the right of any holder of the notes to receive payment of
principal of, and interest on, the applicable holder's notes, on or after
the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to the applicable holder's notes,
(vii) make any change in the amendment provisions which require each
holder's consent or in the waiver provisions,
(viii) make any change to the subordination provisions of the
indenture that would adversely affect the noteholders or
(ix) make any change in any subsidiary guaranty that would adversely
affect the noteholders.
Without the consent of any holder of the notes, the issuers and the trustee
may amend the indenture to:
cure any ambiguity, omission, defect or inconsistency,
provide for the assumption by a successor corporation of the obligations
of an issuer under the indenture,
provide for uncertificated notes in addition to or in place of
certificated notes, provided that the uncertificated notes are issued in
registered form for purposes of Section 163(f) of the Internal Revenue
Code, or in a manner such that the uncertificated notes are described in
Section 163(f)(2)(B) of the Internal Revenue Code,
add guarantees with respect to the notes,
secure the notes,
add to the covenants of the issuers for the benefit of the holders of the
notes,
surrender any right or power conferred upon the issuer,
make any change that does not adversely affect the rights of any holder of
the notes, or
comply with any requirement of the Securities and Exchange Commission in
connection with the qualification of the indenture under the Trust
Indenture Act.
However, no amendment may be made to the subordination provisions of the
indenture that adversely affects the rights of any holder of Senior Indebtedness
then outstanding unless the holders of such Senior Indebtedness, or their
representative consents to such change.
The consent of the holders of the notes is not necessary under the
indenture to approve the particular form of any proposed amendment. It is
sufficient if the consent approves the substance of the proposed amendment.
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After an amendment under the indenture becomes effective, the issuers are
required to mail to holders of the notes a notice briefly describing such
amendment. However, the failure to give notice to all holders of the notes, or
any defect therein, will not impair or affect the validity of the amendment.
TRANSFER
The notes will be issued in registered form and will be transferable only
upon the surrender of the notes being transferred for registration of transfer.
The issuers may require payment of a sum sufficient to cover any tax, assessment
or other governmental charge payable in connection with certain transfers and
exchanges.
DEFEASANCE
Each issuer at any time may terminate all of the issuers' and the
subsidiary guarantors' obligation under the notes, the subsidiary guarantees and
the indenture ('legal defeasance'). The right of termination does not extend to
some obligations, including those respecting the defeasance trust and
obligations to register the transfer or exchange of the notes, to replace
mutilated, destroyed, lost or stolen notes and to maintain a registrar and
paying agent in respect of the notes.
The issuers at any time may terminate the issuers' obligations under the
covenants described under ' -- Covenants' and ' -- SEC Reports,' the operation
of the cross acceleration provision, the bankruptcy provisions with respect to
subsidiaries, the judgment default provision or the guarantee provision
described under ' -- Events of Default' above and the limitations contained in
clause (iii) under ' -- Consolidation, Merger and Sale of Assets' above
('covenant defeasance').
The issuers may exercise the legal defeasance option notwithstanding a
prior exercise of the covenant defeasance option. If an issuer exercises the
legal defeasance option, payment of the notes may not be accelerated because of
an event of default with respect thereto. If an issuer exercises the covenant
defeasance option, payment of the notes may not be accelerated because of an
event of default specified in clause (iii), (iv), (v), (vii) or (viii) under
' -- Events of Default' above or because of the failure of Triarc Consumer
Products Group to comply with clause (iii) under ' -- Consolidation, Merger and
Sale of Assets' above. If an issuer exercises the legal defeasance option or the
covenant defeasance option, each subsidiary guarantor will be released from all
of its obligations with respect to its subsidiary guaranty.
In order to exercise either defeasance option, an issuer must irrevocably
deposit in trust (the 'defeasance trust') with the trustee money or U.S.
government obligations for the payment of principal and interest on the notes to
redemption or maturity, as the case may be. In addition, the trustee must comply
with other conditions, including:
(A) delivery to the trustee of an opinion of counsel to the effect
that holders of the notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance and
will be subject to Federal income tax on the same amounts and in the same
manner and at the same times as would have been the case if such deposit
and defeasance had not occurred, and
(B) in the case of legal defeasance only, the opinion of counsel must
be based on a ruling of the Internal Revenue Service or other change in
applicable Federal income tax law.
CONCERNING THE TRUSTEE
The Bank of New York is to be the trustee under the indenture and has been
appointed by the issuers as registrar and paying agent with regard to the notes.
The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of an issuer, to obtain payment of claims in some
cases, or to realize on some property received in respect of any applicable
claim as security or otherwise. The trustee will be permitted
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to engage in other transactions; provided, however, that if it acquires any
conflicting interest it must either:
(1) eliminate the conflict within 90 days,
(2) apply to the Securities and Exchange Commission for permission to
continue or
(3) resign.
With some exceptions, the holders of a majority in principal amount of the
outstanding notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the trustee.
The indenture provides that if an event of default occurs, and is not cured, the
trustee will be required, in the exercise of its power, to use the degree of
care of a prudent man in the conduct of his own affairs. With some exceptions,
the trustee will be under no obligation to exercise any of its rights or powers
under the indenture at the request of any holder of notes, unless the applicable
holder shall have offered to the trustee security and indemnity satisfactory to
it against any loss, liability or expense and then only to the extent required
by the terms of the indenture.
The Bank of New York is the trustee for Triarc Parent's subordinated
convertible debentures and is an agent and lender under the credit agreement.
BOOK-ENTRY; DELIVERY AND FORM
Except as described below, the certificates representing the exchange notes
will be issued in the form of one or more registered exchange notes in global
form without interest coupons. Each global note will be deposited on the closing
of the exchange offer with, or on behalf of, The Depository Trust Company and
registered in the name of The Depository Trust Company or its nominee.
Ownership of beneficial interests in a global note will be limited to
persons who have accounts with The Depository Trust Company ('participants') or
persons who hold interests through participants. Ownership of beneficial
interests in a global note will be shown on, and the transfer of that ownership
will be effected only through, records maintained by The Depository Trust
Company or its nominee, with respect to interests of participants, and the
records of participants, with respect to interests of persons other than
participants.
So long as The Depository Trust Company, or its nominee, is the registered
owner or holder of a global note, The Depository Trust Company or its nominee,
as the case may be, will be considered the sole owner or holder of the notes
represented by the global note for all purposes under the indenture and the
notes. No beneficial owner of an interest in a global note will be able to
transfer that interest except in accordance with The Depository Trust Company's
applicable procedures, in addition to those provided for under the indenture
and, if applicable, those of Euroclear and Cedel Bank.
Payments of the principal of, and interest on, a global note will be made
to The Depository Trust Company or its nominee, as the case may be, as the
registered owner thereof. Neither the issuer, the subsidiary guarantors, the
trustee nor any paying agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in a global note or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
The issuers expect that The Depository Trust Company or its nominee, upon
receipt of any payment of principal or interest in respect of a global note,
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of the global note
as shown on the records of The Depository Trust Company or its nominee. The
issuers also expect that payments by participants to owners of beneficial
interests in the global note held through those participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of the
participants.
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Transfers between participants in The Depository Trust Company will be
effected in the ordinary way in accordance with The Depository Trust Company
rules and will be settled in same-day funds. Transfers between participants in
Euroclear and Cedel Bank will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
The issuers expect that The Depository Trust Company will take any action
permitted to be taken by a holder of notes, including the presentation of notes
for exchange as described below, only at the direction of one or more
participants to whose account The Depository Trust Company interests in a global
note is credited and only in respect of that portion of the aggregate principal
amount of notes as to which the applicable participant or participants has or
have given the direction. However, if there is an event of default under the
notes, The Depository Trust Company will exchange the applicable global note for
certificated notes, which it will distribute to its participants.
The issuers understand that The Depository Trust Company is a limited
purpose trust company organized under the laws of the State of New York, a
'banking organization' within the meaning of New York Banking Law, a member of
the Federal Reserve System, a 'clearing corporation' within the meaning of the
Uniform Commercial Code and a 'Clearing Agency' registered pursuant to the
provisions of Section 17A of the Securities Exchange Act. The Depository Trust
Company was created to hold securities for its participants and facilitate the
clearance and settlement of securities transactions between participants through
electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and certain other organizations. Indirect access to The Depository Trust Company
system is available to others including banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly ('indirect participants').
Although The Depository Trust Company, Euroclear and Cedel Bank are
expected to follow the foregoing procedures in order to facilitate transfers of
interests in a global note among participants of The Depository Trust Company,
Euroclear and Cedel Bank, they are under no obligation to perform or continue to
perform these procedures, and the procedures may be discontinued at any time.
Neither the issuer, the guarantors nor the trustee will have any responsibility
for the performance by The Depository Trust Company, Euroclear or Cedel Bank or
their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
If The Depository Trust Company is at any time unwilling or unable to
continue as a depositary for the global notes and a successor depositary is not
appointed by Triarc Consumer Products Group within 90 days, the issuers will
issue certificated notes in exchange for the global notes. Holders of an
interest in a global note may receive certificated notes, at the option of
Triarc Consumer Products Group in accordance with The Depository Trust Company's
rules and procedures in addition to those provided for under the indenture.
GOVERNING LAW
The indenture provides that it, the notes and the subsidiary guarantees
will be governed by, and construed in accordance with, the laws of the State of
New York without giving effect to applicable principles of conflicts of law to
the extent that the application of the law of another jurisdiction would be
required thereby.
SAME DAY SETTLEMENT AND PAYMENT
The indenture requires that payments in respect of the notes represented by
the global notes including principal, premium, if any, interest and additional
amounts, if any, be made by wire transfer of immediately available funds to the
accounts specified by the global note holder. With respect to notes in
certificated form, the issuers will make all payments of principal, premium, if
any, interest and additional amounts, if any, by wire transfer of immediately
available funds to the
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accounts specified by the holders thereof or, if no such account is specified,
by mailing a check to each holder's registered address. The exchange notes
represented by the global notes are expected to be eligible to trade in The
Depository Trust Company's Same-Day Funds Settlement System, and any permitted
secondary market trading activity in the notes will, therefore, be required by
The Depository Trust Company to be settled in immediately available funds. We
expect that secondary trading in any certificated notes will also be settled in
immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a global note from a participant in
The Depository Trust Company will be credited. Any crediting will be reported to
the relevant Euroclear or Cedel participant, during the securities settlement
processing day, which must be a business day for Euroclear and Cedel,
immediately following the settlement date of The Depository Trust Company. The
Depository Trust Company has advised Triarc Consumer Products Group that cash
received in Euroclear or Cedel as a result of sales of interests in a global
note by or through a Euroclear or Cedel participant to a participant in The
Depository Trust Company will be received with value on the settlement date of
The Depository Trust Company but will be available in the relevant Euroclear or
Cedel cash account only as of the business day for Euroclear or Cedel following
The Depository Trust Company's settlement date.
CERTAIN DEFINITIONS
'Additional Assets' means:
(i) any property, plant or equipment, other tangible assets or
intangible assets, if such assets are trademarks or intellectual property
used in connection with a brand, in each case used in a Related Business;
(ii) the capital stock of a person that becomes a Restricted
Subsidiary as a result of the acquisition of such capital stock by Triarc
Consumer Products Group or another Restricted Subsidiary or
(iii) capital stock constituting a minority interest in any person
that at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clauses
(ii) or (iii) above is primarily engaged in a Related Business.
'Arby's Securitization Assets' means:
(i) all right, title and interest to the trademarks 'Arby's,' 'T.J.
Cinnamon's' and/or 'Pasta Connection' or any variations or successors
thereto and the goodwill related to such trademarks,
(ii) all existing and future franchise, licensing and other rights to
grant to any persons the right to use the names 'Arby's,' 'T.J. Cinnamon's'
and/or 'Pasta Connection' or operate restaurants identified with the names
'Arby's,' 'T.J. Cinnamon's' and/or 'Pasta Connection'
(iii) the right to enforce and take all other actions with respect to
such agreements and collect and receive all royalties, fees and other
amounts payable under such agreements, and
(iv) all other assets of Arby's and its subsidiaries reasonably
related to any of the foregoing.
'Arby's Securitization Entity' means any newly created Unrestricted
Subsidiary of Triarc Consumer Products Group formed for the sole purpose of
consummating the Permitted Arby's Securitization.
'Arby's Securitization Notes' means the notes, certificates, participation
interests or other securities to be issued by an Arby's Securitization Entity in
connection with the Permitted Arby's Securitization.
'Arby's Securitization Residual Note' means a subordinated promissory note
payable by an Arby's Securitization Entity to Arby's in connection with the
Permitted Arby's Securitization.
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'Attributable Debt' in respect of a sale/leaseback transaction means, as at
the time of determination, the present value, discounted at the interest rate
borne by the notes, compounded annually, of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such
sale/leaseback transaction, including any period for which such lease has been
extended.
'Average Life' means, as of the date of determination, with respect to any
Indebtedness or preferred stock, the quotient obtained by dividing (i) the sum
of the products of numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such preferred stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
'Bank Indebtedness' means all obligations, monetary or otherwise, pursuant
to the credit agreement, including, without limitation, all interest accruing on
or after, or which would accrue but for, the filing of any petition in
bankruptcy or for reorganization, whether or not allowed thereby.
'Business Acquisition' means:
(i) an Investment by Triarc Consumer Products Group or any of its
Restricted Subsidiaries in any other person pursuant to which that person
shall become a Restricted Subsidiary or shall be merged into or
consolidated with Triarc Consumer Products Group or any of its Restricted
Subsidiaries or
(ii) an acquisition by Triarc Consumer Products Group or any of its
Restricted Subsidiaries of the property and assets of any person other than
Triarc Consumer Products Group or any of its Restricted Subsidiaries that
constitute substantially all of the assets of such person or of any
division, brand or line of business of such person.
'Business Disposition' means any sale, transfer or other disposition,
including by way of merger or consolidation, in one transaction or a series of
related transactions by Triarc Consumer Products Group or any of its Restricted
Subsidiaries to any person other than Triarc Consumer Products Group or any of
its Restricted Subsidiaries of:
(i) all or substantially all of the capital stock of any Restricted
Subsidiary or
(ii) all or substantially all of the assets of any Restricted
Subsidiary or of any division, brand or line of business of Triarc Consumer
Products Group or any of its Restricted Subsidiaries.
'Closing Dividend' means a cash dividend by Triarc Consumer Products Group
to Triarc Parent on the closing date, and/or on a later date as provided in
clauses (i) and (iii) below, consisting of:
(i) the net proceeds from the offering of the notes and the borrowings
of term loans under the credit agreement made on the closing date, to the
extent such proceeds exceed the amount necessary to repay all amounts
outstanding under Triarc Beverage Holdings' existing credit agreement and
RC/Arby's existing notes, to fund the purchase price for the acquisition of
certain Snapple and Stewart's distributors and to pay related fees and
expenses; provided that all or a portion of the excess proceeds of term
loan borrowings may also be dividended to Triarc Parent within 35 days
after the closing date;
(ii) any amount contributed by Triarc Parent to fund the purchase
price for the acquisition of the Snapple distributor and the assets of the
Stewart's distributor, if such purchase occurred prior to the closing date;
and
(iii) all cash and cash equivalents of Triarc Consumer Products Group
and its subsidiaries, other than RC/Arby's and its subsidiaries, as of the
closing date, determined on a consolidated basis, to the extent such cash
and cash equivalents exceed $2 million in the aggregate; and
(iv) all cash and cash equivalents of RC/Arby's and its subsidiaries
as of the closing date, determined on a consolidated basis, to be paid on
the date of the redemption of RC/Arby's existing notes.
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'Consolidated Coverage Ratio' as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending prior to the date of such determination
for which reports have been filed or provided to the trustee pursuant to the
'SEC Reports' covenant to (ii) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that:
(1) if Triarc Consumer Products Group or any Restricted Subsidiary has
incurred any Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an incurrence of Indebtedness, or both,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis (A) to such
Indebtedness as if such Indebtedness had been incurred on the first day of
such period and (B) the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of such
period,
(2) if Triarc Consumer Products Group or any Restricted Subsidiary has
repaid, repurchased, defeased or otherwise discharged any Indebtedness
since the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged, in each case other than
Indebtedness incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced, on the
date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for
such period shall be calculated on a pro forma basis as if such discharge
had occurred on the first day of such period,
(3) (A) if since the beginning of such period Triarc Consumer Products
Group or any Restricted Subsidiary shall have made any Business
Disposition, the EBITDA for such period shall:
(x) be reduced by an amount equal to the EBITDA, if positive,
directly attributable to the assets which are the subject of such
Business Disposition for such period, or
(y) increased by an amount equal to the EBITDA, if negative,
directly attributable thereto for such period and
(B) Consolidated Interest Expense for such period shall be reduced by
an amount equal to:
(x) the Consolidated Interest Expense directly attributable to any
Indebtedness of Triarc Consumer Products Group or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to Triarc Consumer Products Group and its continuing Restricted
Subsidiaries in connection with such Business Disposition for such
period, or
(y) if the capital stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to
the Indebtedness of such Restricted Subsidiary to the extent Triarc
Consumer Products Group and its continuing Restricted Subsidiaries are
no longer liable for such Indebtedness after such sale,
(4) if since the beginning of such period Triarc Consumer Products
Group or any Restricted Subsidiary, by merger or otherwise, shall have made
a Business Acquisition, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto,
including:
(x) pro forma effect to the incurrence of any Indebtedness and
(y) pro forma effect to cost savings resulting from such Business
Acquisition, regardless of whether such cost savings could then be
reflected in pro forma financial statements under GAAP, Regulation S-X
promulgated by the Securities and Exchange Commission or any other
regulation or policy of the Securities and Exchange Commission, that
Triarc Consumer Products Group reasonably determines are probable based
upon specifically identified actions that it has determined to take, net
of any reduction in
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EBITDA as a result of such cost savings that Triarc Consumer Products
Group reasonably determines are probable;
provided that Triarc Consumer Products Group's chief financial officer
shall have certified in an officer's certificate delivered to the trustee:
(x) the specific actions to be taken,
(y) the cost savings to be achieved from each such action, that
such savings have reasonably been determined to be probable, and
(z) the amount, if any, of any reduction in EBITDA as a result
thereof reasonably determined to be probable,
provided further that such certificate shall be accompanied by a resolution
of the board of directors of Triarc Consumer Products Group specifically
approving such cost savings and authorizing such certification to be
delivered to the trustee, such cost savings, as certified to the trustee,
the 'net cost savings,' as if such Business Acquisition occurred on the
first day of such period,
(5) if since the beginning of such period any person, that
subsequently became a Restricted Subsidiary or was merged with or into
Triarc Consumer Products Group or any Restricted Subsidiary since the
beginning of such period, shall have made any Business Acquisition or
Business Disposition that would have required an adjustment pursuant to
clause (3) or (4) above if made by Triarc Consumer Products Group or a
Restricted Subsidiary during such period, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto, including any net cost savings in connection with any such
Business Acquisition, as if such Business Acquisition or Business
Disposition occurred on the first day of such period and
(6) if since the beginning of such period any person was designated as
an Unrestricted Subsidiary or redesignated as a Restricted Subsidiary,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such designation or
redesignation occurred on the first day of such period.
For purposes of this definition, to the extent that clause (3), (4) or (5)
require that pro forma effect be given to a Business Acquisition or Business
Disposition, such pro forma calculation shall be based upon the four full fiscal
quarters immediately preceding the date of determination of the person, or
division, brand or line of business of the person, that is acquired or disposed
for which financial information is available. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest of
such Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period, taking into
account any interest rate agreement applicable to such Indebtedness if such
interest rate agreement has a remaining term in excess of 12 months.
'Consolidated Interest Expense' means, for any period, the total interest
expense of Triarc Consumer Products Group and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such total interest expense,
and to the extent incurred by Triarc Consumer Products Group or its Restricted
Subsidiaries, without duplication:
(i) interest expense attributable to capital leases and the interest
expense attributable to leases constituting part of a sale/leaseback
transaction,
(ii) amortization of debt discount and debt issuance cost but
excluding amortization of deferred financing charges incurred in respect of
the notes and the credit agreement on or prior to the closing date,
(iii) capitalized interest,
(iv) non-cash interest expenses,
(v) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing,
(vi) net costs associated with hedging obligations, including
amortization of fees, and
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(vii) the product of:
(a) dividends in respect of all preferred stock of any Restricted
Subsidiary that is not a subsidiary guarantor or an issuer, and
dividends in respect of all Disqualified Stock of Triarc Consumer
Products Group or any Restricted Subsidiary, in each case held by
persons other than Triarc Consumer Products Group or a wholly owned
subsidiary, other than dividend payments paid in capital stock that is
not Disqualified Stock, times
(b) a fraction, the numerator of which is 1 and the denominator of
which is 1 minus the then current combined federal, state and local
statutory tax rate of such person expressed as a decimal.
Notwithstanding the foregoing, Consolidated Interest Expense shall exclude
any amount of such interest or dividends of any Restricted Subsidiary if the net
income of such Restricted Subsidiary is excluded in the calculation of
Consolidated Net Income pursuant to clause (iii) of the definition thereof, but
only in the same proportion as the net income of such Restricted Subsidiary is
excluded from the calculation of Consolidated Net Income pursuant to clause
(iii) of the definition thereof.
'Consolidated Leverage Ratio' as of any date of determination means the
ratio of:
(i) the aggregate amount of Indebtedness of Triarc Consumer Products
Group and its Restricted Subsidiaries, net of:
(x) net cash proceeds from the initial public offering of Triarc
Consumer Products Group, to the extent not otherwise used by Triarc
Consumer Products Group as of such date of determination other than to
invest in cash equivalents and
(y) cash and cash equivalents on hand as of such date in the
ordinary course of business, to
(ii) EBITDA for the most recent four consecutive fiscal quarters
ending prior to the date of such determination for which reports have been
filed pursuant to the 'SEC Reports' covenant (the 'reference period');
provided, however, that
(1) if Triarc Consumer Products Group or any Restricted Subsidiary has
incurred or will incur any Indebtedness or will repay, defease or discharge
any Indebtedness on the date of the transaction giving rise to the need to
calculate the Consolidated Leverage Ratio, the aggregate amount of
Indebtedness as of such date of determination shall be calculated on a pro
forma basis giving effect to such incurrence of Indebtedness and the
discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness or the
initial public offering of Triarc Consumer Products Group as if such
discharge had occurred on the first day of such period,
(2) if since the beginning of such period Triarc Consumer Products
Group or any Restricted Subsidiary shall have made any Business
Disposition, the EBITDA for such period shall be reduced by an amount equal
to the EBITDA, if positive, directly attributable to the assets which are
the subject of such Business Disposition for such period, or increased by
an amount equal to the EBITDA, if negative, directly attributable thereto
for such period,
(3) if since the beginning of such period Triarc Consumer Products
Group or any Restricted Subsidiary, by merger or otherwise, shall have made
a Business Acquisition, the aggregate amount of Indebtedness shall be
calculated on a pro forma basis giving effect to any incurrence of
Indebtedness as a result thereof and EBITDA for such period shall be
calculated after giving pro forma effect thereto, including pro forma
effect to:
(x) the incurrence of any Indebtedness and
(y) net cost savings, as if such Business Acquisition occurred on
the first day of such period,
(4) if since the beginning of such period any person, that
subsequently became a Restricted Subsidiary or was merged with or into
Triarc Consumer Products Group or any
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Restricted Subsidiary since the beginning of such period, shall have made
any Business Acquisition or Business Disposition that would have required
an adjustment pursuant to clause (2) or (3) above if made by Triarc
Consumer Products Group or a Restricted Subsidiary during such period,
EBITDA for such period shall be calculated after giving pro forma effect
thereto, including any net cost savings in connection with any such
Business Acquisition, as if such Business Acquisition or Business
Disposition occurred on the first day of such period and
(5) if since the beginning of such period any person was designated as
an Unrestricted Subsidiary or redesignated as a Restricted Subsidiary,
EBITDA for such period shall be calculated after giving pro forma effect
thereto as if such designation or redesignation occurred on the first day
of such period.
For purposes of this definition, to the extent that clause (2), (3) or (4)
require that pro forma effect be given to a Business Acquisition or Business
Disposition, such pro forma calculation shall be based upon the four full fiscal
quarters immediately preceding the date of determination of the person, or
division, brand or line of business of the person, that is acquired or disposed
for which financial information is available. The aggregate amount of
Indebtedness outstanding at such date of determination shall be deemed to
include the average amount of funds outstanding during such reference period
under any revolving credit or similar facilities of Triarc Consumer Products
Group or its Restricted Subsidiaries, in lieu of the actual amount outstanding
thereunder as of the date of determination.
'Consolidated Net Income' means, for any period, the net income of Triarc
Consumer Products Group and its consolidated Subsidiaries; provided, however,
that there shall not be included in such Consolidated Net Income:
(i) any net income of any person, other than Triarc Consumer Products
Group, if such person is not a Restricted Subsidiary, except that subject
to the exclusion contained in clause (iv) below, Triarc Consumer Products
Group's equity in the net income of any such person for such period shall
be included in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such person during such period to Triarc
Consumer Products Group or a Restricted Subsidiary as a dividend or other
distribution, subject, in the case of a dividend or other distribution paid
to a Restricted Subsidiary, to the limitations contained in clause (iii)
below;
(ii) any net income, or loss, of any person acquired by Triarc
Consumer Products Group or a subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition;
(iii) the net income, but not loss, of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such net income is not
permitted at such time of determination by its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Restricted Subsidiary, other than any
restriction under the credit agreement;
(iv) any gain or loss, on an after-tax basis, realized upon the sale
or other disposition of any assets of Triarc Consumer Products Group, its
consolidated Subsidiaries or any other person, including pursuant to any
sale-and-leaseback arrangement, which is not sold or otherwise disposed of
in the ordinary course of business and any gain or loss, on an after-tax
basis, realized upon the sale or other disposition of any capital stock of
any person;
(v) any net after-tax extraordinary gains or losses; and
(vi) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of the covenant described
under ' -- Certain Covenants -- Limitation on Restricted Payments' only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from Unrestricted Subsidiaries to
Triarc Consumer Products Group or a Restricted Subsidiary to the extent such
dividends, repayments or transfers increase the amount of Restricted Payments
permitted under such covenant pursuant to clause (a)(3)(C) or (D) thereof.
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'Consolidated Total Assets' means, as of any date of determination, the
total assets of the Foreign Restricted Subsidiaries of Triarc Consumer Products
Group, on a consolidated basis, included in the consolidated balance sheet of
Triarc Consumer Products Group and its Restricted Subsidiaries as of the most
recent date for which such a balance sheet has been filed or delivered to the
trustee pursuant to the 'SEC Reports' covenant above, and, in the case of any
determination relating to any incurrence of Indebtedness, on a pro forma basis
including any property or assets being acquired in connection therewith.
'Credit Agreement' means the Credit Agreement entered into on the closing
date by and among, Triarc Consumer Products Group and/or certain of its
subsidiaries, the financial institutions party thereto from time to time, the
Administrative Agent party thereto, DLJ Capital Funding, Inc., as Syndication
Agent, and Morgan Stanley Senior Funding, Inc., as Documentation Agent, together
with the related documents thereto, including, without limitation, the term
loans, revolving loans and swingline loans thereunder, the letters of credit
issued pursuant thereto and any guarantees and security documents, as amended,
extended, renewed, restated, supplemented or otherwise modified, in whole or in
part, and without limitation as to amount, terms, conditions, covenants and
other provisions, from time to time, and any agreement, and related document,
governing Indebtedness incurred to refinance, in whole or in part, the
borrowings, letters of credit, commitments and other obligations then
outstanding or permitted to be outstanding under such Credit Agreement or a
successor Credit Agreement, whether by the same or any other lender or group of
lenders.
'Designated Senior Indebtedness' means, with respect to any person:
(i) the Bank Indebtedness and
(ii) any other Senior Indebtedness of the referent person which, at
the date of determination, has an aggregate principal amount outstanding
of, or under which, at the date of determination, the holders thereof are
committed to lend up to, at least $25.0 million and is specifically
designated by the referent person in the instrument evidencing or governing
such Senior Indebtedness as 'Designated Senior Indebtedness' for purposes
of the indenture.
'Disqualified Stock' means, with respect to any person, any capital stock
which by its terms, or by the terms of any security into which it is convertible
or for which it is exchangeable at the option of the holder, or upon the
happening of any event:
(i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise,
(ii) is convertible or exchangeable at the option of the holder for
Indebtedness or Disqualified Stock or
(iii) is mandatorily redeemable or must be purchased, upon the
occurrence of certain events or otherwise, in whole or in part, in each
case on or prior to the stated maturity of the notes;
provided, however, that any capital stock that would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to require
such person to purchase or redeem such capital stock upon the occurrence of an
'asset sale' or 'change of control' occurring prior to the stated maturity of
the notes shall not constitute Disqualified Stock if:
(x) the 'asset sale' or 'change of control' provisions applicable to
such capital stock cannot become operative in any circumstance that does
not trigger the provisions applicable to the notes and described under
' -- Certain Covenants -- Limitation on Sales of Assets and Subsidiary
Stock' and ' -- Certain Covenants -- Repurchase of Notes upon a Change of
Control' and
(y) any such requirement only becomes operative after compliance with
such terms applicable to the notes, including the purchase of any notes
tendered pursuant thereto.
'Domestic Restricted Subsidiary' means, with respect to Triarc Consumer
Products Group, any Restricted Subsidiary of Triarc Consumer Products Group (x)
that was formed under the laws of the United States of America or any state,
district or territory thereof or the District of Columbia
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or (y) 50% or more of the assets of which are located in the United States or
any territory thereof.
'EBITDA' for any period means the sum of Consolidated Net Income, plus the
following to the extent deducted in calculating such Consolidated Net Income:
(a) all income tax expense of Triarc Consumer Products Group and its
consolidated Restricted Subsidiaries, other than income taxes, either
positive or negative, attributable to extraordinary gains or losses or
sales of assets that are excluded from the computation of Consolidated Net
Income,
(b) Consolidated Interest Expense,
(c) depreciation and amortization expense of Triarc Consumer Products
Group and its consolidated Restricted Subsidiaries, excluding amortization
expense attributable to a prepaid cash item that was paid in a prior
period,
(d) all other non-cash charges of Triarc Consumer Products Group and
its consolidated Restricted Subsidiaries, excluding any such non-cash
charge to the extent that it represents an accrual of or reserve for cash
expenditures in any future period or amortization of a prepaid cash expense
that was paid in a prior period,
(e) expenses and charges of Triarc Consumer Products Group relating to
the transactions which are paid, taken or otherwise accounted for within
180 days of the closing date, plus
(f) nonrecurring charges, cash or otherwise, incurred in connection
with any Business Acquisition, but not otherwise, in each case for such
period.
Notwithstanding the foregoing, the provision for taxes based on the income
or profits of, and the depreciation and amortization and non-cash charges of, a
Restricted Subsidiary shall be added to Consolidated Net Income to compute
EBITDA only to the extent, and in the same proportion, that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income,
provided, that it will be added only if a corresponding amount would be
permitted at the date of determination to be dividended to Triarc Consumer
Products Group by such Restricted Subsidiary without prior approval of a third
party, that has not been obtained, pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary, other than
pursuant to the credit agreement.
'Foreign Restricted Subsidiary' means any Restricted Subsidiary other than
a Domestic Restricted Subsidiary.
'Indebtedness' means, with respect to any person on any date of
determination, without duplication:
(i) the principal in respect of:
(A) indebtedness of such person for money borrowed and
(B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such person is responsible
or liable, including, in each case, any premium on such indebtedness to
the extent such premium has become due and payable;
(ii) all capital lease obligations of such person and all Attributable
Debt in respect of sale/leaseback transactions entered into by such person;
(iii) all obligations of such person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such person
and all obligations of such person under any title retention agreement, but
excluding take-or-pay agreements and trade accounts payable arising, in
each case, in the ordinary course of business;
(iv) all obligations of such person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction, other than obligations with respect to letters of credit
securing obligations, other than obligations described in clauses (i)
through (iii) above, entered into in the ordinary course of business of
such person, but only to the
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extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the tenth business day
following payment on the letter of credit;
(v) the amount of all obligations of such person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any subsidiary of such person that is not a subsidiary
guarantor or an issuer, the liquidation preference with respect to, any
preferred stock, but excluding, in each case, any accrued dividends;
(vi) all obligations of the type referred to in clauses (i) through
(v) of other persons and all dividends of other persons for the payment of
which, in either case, such person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
guarantee;
(vii) all obligations of the type referred to in clauses (i) through
(vi) of other persons secured by any lien on any property or asset of such
person, whether or not such obligation is assumed by such person, the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured; and
(viii) to the extent not otherwise included in this definition,
hedging obligations of such person.
Except as provided in clause (vii), the amount of indebtedness of any
person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations at such date. Notwithstanding the foregoing, capital stock issued or
issuable pursuant to:
(A) the Triarc Beverage Holdings 1997 Stock Option Plan as such plan
is in effect on the closing date, and as such plan may be amended, but not
to change the financial terms thereof in any way that is materially less
favorable to Triarc Consumer Products Group and its subsidiaries or the
holders of the notes, and
(B) any stock option plan of Arby's, provided that such plan, and any
amendment thereto, is not materially less favorable to Triarc Consumer
Products Group and its subsidiaries or to the holders of the notes,
including with respect to the percentage of shares of Arby's to be issued
thereunder, than the Triarc Beverage Holdings 1997 Stock Option Plan as
such plan is in effect on the closing date,
shall not be considered Indebtedness, unless, as of the date of determination,
Triarc Consumer Products Group is required to purchase such stock pursuant to
the put rights contained in such plan, is not prohibited by the terms of any
Indebtedness from purchasing such stock and has not purchased it. However, any
interest on capital stock issued or issuable under any stock option plans
referred to in clauses (A) and (B) above shall be included in the calculation of
Consolidated Interest Expense.
'Investment' in any person means any direct or indirect advance, loan,
other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender, or other
extensions of credit, including by way of guarantee or similar arrangement but
only when payment has been made thereunder or such arrangement would be
classified and accounted for as a liability on a balance sheet of the person
extending such credit prepared in accordance with GAAP, or capital contribution
to, by means of any transfer of cash or other property to others or any payment
for property or services for the account or use of others, or any purchase or
acquisition of capital stock, Indebtedness or other similar instruments issued
by such person and shall include:
(i) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary and
(ii) the fair market value of the capital stock, or any other
Investment held by Triarc Consumer Products Group or any of its Restricted
Subsidiaries of, or in, any person that has ceased to be a Restricted
Subsidiary, including without limitation by reason of a transaction
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permitted by clause (iv) of the 'Limitation on the Sale or Issuance of
Capital Stock of Restricted Subsidiaries' covenant.
For purposes of the definition of 'Unrestricted Subsidiary', the definition
of 'restricted payment' and the covenant described under ' -- Certain
Covenants -- Limitation on Restricted Payments,'
(i) 'Investment' shall include the portion, proportionate to Triarc
Consumer Products Group's equity interest in such subsidiary, of the fair
market value of the net assets of any subsidiary of Triarc Consumer
Products Group at the time that such subsidiary is designated an
Unrestricted Subsidiary and
(ii) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer, in
each case as determined in good faith by the board of directors of Triarc
Consumer Product Group.
'Material Subsidiary Obligor' means any subsidiary guarantor, Triarc
Beverage Holdings and any other subsidiary that is an issuer, other than, in
each case, any subsidiary principally engaged in Triarc Consumer Products
Group's soft drink concentrate business segment, which, together with its
consolidated subsidiaries, had EBITDA for the period of the most recent four
consecutive fiscal quarters of Triarc Consumer Products Group ending prior to
the date of such determination for which reports have been filed or provided to
the trustee pursuant to the 'SEC Reports' covenant equal to or more than 15% of
the EBITDA of Triarc Consumer Products Group and its Restricted Subsidiaries
including such issuer or subsidiary guarantor, for such four fiscal quarters. In
each case EBITDA shall be calculated on a pro forma basis giving effect to any
Business Disposition, other than the disposition of such subsidiary guarantor,
Business Acquisition, designation of a Restricted Subsidiary as an Unrestricted
Subsidiary or redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary occurring since the beginning of such period and on or prior to the
date of such determination.
'Non-Recourse Debt' means Indebtedness of any person:
(i) as to which neither Triarc Consumer Products Group nor any of its
subsidiaries:
(a) provides credit support of any kind, including, without
limitation, any undertaking, agreement or instrument that would
constitute Indebtedness, or
(b) is directly or indirectly liable, as a guarantor or otherwise;
and
(ii) no default with respect to which, including any rights that the
holders thereof may have to take enforcement action, would permit, upon
notice, lapse of time or both, any holder of any other Indebtedness of
Triarc Consumer Products Group or any of its subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
'Permitted Arby's Dividend' means (i) a Permitted Arby's Securitization
Residual Payment and (ii) a Permitted Arby's IPO Dividend; provided that, in
each case, immediately after giving effect to such dividend of capital stock:
(x) RC/Arby's and its subsidiaries:
(i) have no Indebtedness other than Non-Recourse Debt and
(ii) are not party to any arrangement with Triarc Consumer Products
Group or any of its subsidiaries, including without limitation any
arrangement to make payments in respect of service provided to RC/Arby's
and its subsidiaries under the management agreement, the tax sharing
agreement or any other agreement, unless the terms of such arrangement
are on an arms-length basis,
(y) neither Triarc Consumer Products Group nor any of its subsidiaries
has any direct or indirect contractual obligations:
(i) with respect to any obligation of RC/Arby's and its
subsidiaries, including without limitation, any guarantee thereof,
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(ii) to subscribe for additional capital stock of RC/Arby's or any
of its subsidiaries or
(iii) to maintain or preserve the financial condition of RC/Arby's
or any of its subsidiaries or to cause any of them to achieve any
specified levels of operating results and
(z) RC/Arby's and its subsidiaries shall jointly and severally
indemnify Triarc Consumer Products Group and its subsidiaries from and
against all losses, claims, damages and liabilities, including, without
limitation, any tax, ERISA or environmental losses (collectively, 'losses')
related to the actions or operations of RC/Arby's and its subsidiaries,
other than any losses related to the actions or operations of Royal Crown
Company, Inc. and each of its subsidiaries, the capital stock of which has
been conveyed to Triarc Consumer Products Group or any of its subsidiaries.
Triarc Consumer Products Group and its subsidiaries shall jointly and
severally indemnify RC/Arby's and its subsidiaries from and against all
losses related to the actions or operations of Triarc Consumer Products
Group and its subsidiaries, including Royal Crown Company, Inc. and each of
its subsidiaries, if the capital stock of such person has been conveyed to
Triarc Consumer Products Group or any of its subsidiaries.
'Permitted Arby's IPO Dividend' means a distribution by Triarc Consumer
Products Group to Triarc Parent of all of the capital stock, but not assets, of
RC/Arby's, and any of its subsidiaries, so long as each such person has no
assets other than Arby's Securitization Assets, the net cash proceeds of any
Permitted Arby's Securitization, any Arby's Securitization Residual Notes, the
capital stock of any Arby's Securitization Entity and businesses related thereto
and any other assets, other than cash and cash equivalents that do not
constitute net cash proceeds of a Permitted Arby's Securitization, used in
connection with any restaurant franchising business, and not used in connection
with the beverage business, of Triarc Consumer Products Group and its Restricted
Subsidiaries; provided that, as a condition to such distribution:
(i) no default shall have occurred and be continuing;
(ii) Triarc Consumer Products Group shall have consummated an
underwritten primary public offering of its common stock substantially
concurrently with, but no later than, the date of such distribution; and
(iii) immediately after giving effect to such transaction, including
the distribution of RC/Arby's capital stock, the public offering described
in clause (ii) and the use of proceeds therefrom, Triarc Consumer Products
Group would (A) be able to incur an additional $1.00 of Indebtedness
pursuant to paragraph (a) of the covenant described under 'Limitation on
Indebtedness'; and (B) have a Consolidated Leverage Ratio no greater than
5.0 to 1.
'Permitted Arby's Securitization' means the sale, transfer and assignment
by Arby's and/or one or more of its subsidiaries to one or more Arby's
Securitization Entities of Arby's Securitization Assets to occur within nine
months of the closing date, the issuance and sale by the Arby's Securitization
Entity of the Arby's Securitization Notes and the Arby's Securitization Residual
Note and the right and obligations of Arby's and/or one or more of its
subsidiaries to provide certain servicing and other services with respect to
such Arby's Securitization Assets and the Arby's Securitization Entity; provided
that:
(i) Triarc Consumer Products Group receives net cash proceeds from
such sale by Arby's and/or one or more of its subsidiaries of at least
$300.0 million;
(ii) the aggregate consideration received in such sale is at least
equal to the aggregate fair market value of the assets sold, as determined
by Triarc Consumer Products Group's board of directors in good faith;
(iii) Triarc Consumer Products Group applies the net cash proceeds
from the first $350.0 million of gross proceeds of such sale to repay
Senior Indebtedness of an issuer or any subsidiary guarantor, and to
correspondingly reduce any commitments therefor in the case of revolving
credit indebtedness, and if such proceeds exceed the amount of Senior
Indebtedness outstanding, to offer to purchase the notes and any other
equally ranking Indebtedness, on a pro rata basis, such offer to be on
substantially the same terms and at the same price as an
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offer to purchase pursuant to the 'Limitation on Sale of Assets and
Subsidiary Stock' covenant; and
(iv) (A) neither Triarc Consumer Products Group nor any Restricted
Subsidiary of Triarc Consumer Products Group retains any obligation,
contingent or otherwise:
(x) with respect to the assets so sold,
(y) for the indebtedness or other liabilities, contingent or
otherwise, of any Arby's Securitization Entity purchasing such assets or
(z) to subscribe for additional shares of capital stock or other
equity interests or make any additional capital contribution or similar
payment or transfer to any Arby's Securitization Entity or any other
person purchasing such assets or to maintain or preserve the solvency or
any balance sheet term, financial condition, level of income or results
of operations thereof and
(B) no property of Triarc Consumer Products Group or any Restricted
Subsidiary of Triarc Consumer Products Group is subject, directly or
indirectly, to the satisfaction therefor, other than any such obligations
or subjecting of property of Arby's or any subsidiary of Arby's pursuant to
customary representations, warranties and covenants made in connection with
the sale of such assets and other than obligations to service such assets.
'Permitted Arby's Securitization Residual Payment' means, in the event that
the gross proceeds received by Triarc Consumer Products Group from the Permitted
Arby's Securitization exceeds $350.0 million, a distribution by Triarc Consumer
Products Group to Triarc Parent of all of the capital stock of RC/Arby's and any
of its subsidiaries, so long as each such person has no assets other than Arby's
Securitization Assets, the net cash proceeds of the Permitted Arby's
Securitization, any Arby's Securitization Residual Notes, the capital stock of
any Arby's Securitization Entity and businesses related thereto (collectively,
'Arby's assets'); provided that the capital stock of any other subsidiary of
RC/Arby's, but not any assets of such person other than Arby's assets, that has
any obligations or liabilities, contingent or otherwise with respect to the
assets transferred pursuant to such securitization are also distributed to
Triarc Parent at such time.
'Permitted Investment' means an Investment by Triarc Consumer Products
Group or any Restricted Subsidiary in:
(i) Triarc Consumer Products Group, a Restricted Subsidiary or a
person that will, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business;
(ii) another person if as a result of such Investment such other
person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, Triarc Consumer Products Group or a
Restricted Subsidiary; provided, however, that such person's primary
business is a Related Business;
(iii) Temporary Cash Investments;
(iv) receivables owing to Triarc Consumer Products Group or any
Restricted Subsidiary if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade
terms; provided, however, that such trade terms may include such
concessionary trade terms as Triarc Consumer Products Group or any such
Restricted Subsidiary deems reasonable under the circumstances;
(v) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(vi) loans or advances to employees or directors made in the ordinary
course of business consistent with past practices of Triarc Consumer
Products Group or such Restricted Subsidiary;
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(vii) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to Triarc Consumer
Products Group or any Restricted Subsidiary or in satisfaction of
judgments;
(viii) any Arby's Securitization Residual Note and any contribution of
Arby's Securitization Assets to any Arby's Securitization Entity and
(ix) any person to the extent such Investment represents the non-cash
portion of the consideration received for an asset disposition as permitted
pursuant to the covenant described under ' -- Certain
Covenants -- Limitation on Sales of Assets and Subsidiary Stock.'
'Refinancing Indebtedness' means Indebtedness that refinances any
Indebtedness of Triarc Consumer Products Group or any Restricted Subsidiary
existing on the closing date or incurred in compliance with the indenture,
including Indebtedness that Refinances Refinancing Indebtedness; provided,
however, that:
(i) such Refinancing Indebtedness has a stated maturity no earlier
than the stated maturity of the Indebtedness being refinanced,
(ii) such Refinancing Indebtedness has an Average Life at the time
such Refinancing Indebtedness is incurred that is equal to or greater than
the Average Life of the Indebtedness being refinanced and
(iii) such Refinancing Indebtedness has an aggregate principal amount,
or if incurred with original issue discount, an aggregate issue price, that
is equal to or less than the aggregate principal amount, or if Incurred
with original issue discount, the aggregate accreted value, then
outstanding or committed, plus fees and expenses, including any premium and
defeasance costs, under the Indebtedness being refinanced;
provided, further, however, that Refinancing Indebtedness shall not include:
(x) Indebtedness of a subsidiary that is not a subsidiary guarantor or
an issuer that Refinances Indebtedness of an issuer or a subsidiary
guarantor or
(y) Indebtedness of Triarc Consumer Products Group or a Restricted
Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary.
'Related Business' means the business of Triarc Consumer Products Group and
its Restricted Subsidiaries on the closing date and any business related,
ancillary or complementary to the businesses of Triarc Consumer Products Group
and its Restricted Subsidiaries on the closing date.
'Restricted Subsidiary' means any subsidiary of Triarc Consumer Products
Group that is not an Unrestricted Subsidiary.
'Senior Indebtedness' means, with respect to any person on any date of
determination:
(i) the Bank Indebtedness,
(ii) all other Indebtedness of such person, whether outstanding on the
closing date or thereafter incurred, and
(iii) accrued and unpaid interest, including interest accruing on or
after, or which would accrue but for, the filing of any petition in
bankruptcy or for reorganization, whether or not allowed thereby in respect
of:
(A) indebtedness of such person for money borrowed and
(B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such person is responsible
or liable, unless, in each case, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
provided that such obligations are to rank equal to or subordinate in
right of payment to the notes;
provided, however, that Senior Indebtedness shall not include:
(1) any obligation of an issuer or subsidiary guarantor to any
affiliate of Triarc Consumer Products Group,
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(2) any liability for Federal, state, local or other taxes owed or
owing by such person,
(3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business, including guarantees thereof or
instruments evidencing such liabilities,
(4) any Indebtedness of such person, and any accrued and unpaid
interest in respect thereof, which is subordinate or junior in any respect
to any other Indebtedness or other obligation of such person or
(5) that portion of any Indebtedness which at the time of incurrence
is incurred in violation of the indenture; provided that Bank Indebtedness
shall be deemed not to have been incurred in violation of the indenture if
Triarc Consumer Products Group shall, or shall be deemed to, have
represented that the incurrence thereof does not violate the indenture.
'Senior Subordinated Indebtedness' means the notes and the subsidiary
guarantees and any other Indebtedness of the issuers or the subsidiary
guarantors that specifically provides that such Indebtedness is to rank equal to
the notes or the subsidiary guarantees, as applicable, in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the issuers or the subsidiary guarantors, as applicable,
which is not Senior Indebtedness.
'Subordinated Obligation' means any Indebtedness of an issuer or a
subsidiary guarantor, whether outstanding on the closing date or thereafter
incurred, which is subordinate or junior in right of payment to the notes
pursuant to a written agreement to that effect.
'Temporary Cash Investments' means any of the following:
(i) any investment in direct obligations of the United States of
America or any agency thereof or obligations guaranteed by the United
States of America or any agency thereof,
(ii) investments in demand deposit accounts, time deposit accounts,
certificates of deposit and money market deposits maturing within 365 days
of the date of acquisition thereof issued by a commercial banking
institution that is a lender under the credit agreement or a member of the
Federal Reserve System and has a combined capital and surplus and undivided
profits aggregating in excess of $500,000,000, or the foreign currency
equivalent thereof, or any money-market fund sponsored by a registered
broker dealer or mutual fund distributor,
(iii) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i), (ii) or (iv)
entered into with a bank meeting the qualifications described in clause
(ii) above,
(iv) investments in commercial paper, maturing not more than nine
months after the date of acquisition, issued by a corporation, other than
an affiliate of Triarc Consumer Products Group, organized and in existence
under the laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time as of
which any investment therein is made of 'P-l', or higher, according to
Moody's or 'A-1', or higher, according to Standard & Poors, and
(v) investments in securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least 'AA'
by Standard & Poors or 'Aa' by Moody's.
'Unrestricted Subsidiary' means:
(i) any subsidiary of Triarc Consumer Products Group that at the time
of determination shall be designated an Unrestricted Subsidiary by the
board of directors of Triarc Consumer Products Group in the manner provided
below and
(ii) any subsidiary of an Unrestricted Subsidiary.
The board of directors of Triarc Consumer Products Group may designate any
subsidiary of Triarc Consumer Products Group, including any newly acquired or
newly formed subsidiary, to be an Unrestricted Subsidiary, other than Triarc
Beverage Holdings, unless such subsidiary or any of its subsidiaries owns any
capital stock or Indebtedness of, or holds any lien on any property of,
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Triarc Consumer Products Group or any other subsidiary of Triarc Consumer
Products Group that is not a subsidiary of the subsidiary to be so designated;
provided that
(A) any guarantee by Triarc Consumer Products Group or any Restricted
Subsidiary of any Indebtedness of the subsidiary being so designated shall
be deemed an 'incurrence' of such Indebtedness and, if such guarantee is
called upon or would be required to be classified and accounted for as a
liability on a balance sheet of Triarc Consumer Products Group or any
Restricted Subsidiary prepared in accordance with GAAP, an 'Investment' by
Triarc Consumer Products Group or such Restricted Subsidiary, or both, if
applicable, at the time of such designation,
(B) either:
(i) the subsidiary to be so designated has total assets of $1,000
or less or
(ii) if such subsidiary has assets greater than $1,000, such
designation would be permitted under the covenant described under
' -- Certain Covenants -- Limitation on Restricted Payments' and
(C) if applicable, the incurrence of Indebtedness and the Investment
referred to in clause (A) of this proviso would be permitted under the
'Limitation on Indebtedness' and 'Limitation on Restricted Payments'
covenants described above. The board of directors of Triarc Consumer
Products Group may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided, however, that immediately after giving effect to such
designation:
(x) Triarc Consumer Products Group could incur $1.00 of additional
Indebtedness under paragraph (a) of the covenant described under
' -- Certain Covenants -- Limitation on Indebtedness' and
(y) no default shall have occurred and be continuing.
Any such designation by the board of directors of Triarc Consumer Products
Group shall be evidenced to the trustee by promptly filing with the trustee a
copy of the resolution of the board of directors giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
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FEDERAL INCOME TAX CONSIDERATIONS
The following presents the opinion of Paul, Weiss, Rifkind, Wharton &
Garrison, special United States tax counsel to Triarc Consumer Products Group,
Triarc Beverage Holdings, and certain other subsidiaries of Triarc Consumer
Products Group, regarding the material United States federal income tax
consequences to U.S. and non-U.S. holders of the consummation of the exchange
offer and the ownership and disposition of the exchange notes. The following
does not purport to be a complete analysis of all of the potential United States
federal income tax considerations relating to the purchase, ownership and
disposition of the exchange notes and generally does not address any other taxes
that might be applicable to a holder of the exchange notes. We cannot assure you
that the United States Internal Revenue Service will take a view similar to that
described below. Further, the following does not address all aspects of taxation
that may be relevant to
(1) particular holders of initial notes or exchange notes in light of their
individual circumstances, including the effect of any foreign, state or
local laws, or
(2) particular types of purchasers that receive special treatment under
United States federal income tax laws, including
(a) dealers in securities,
(b) insurance companies,
(c) financial institutions,
(d) persons that hold the initial notes or exchange notes that are a
hedge or that are hedged against currency risks or that are part
of a straddle or conversion transaction or a constructive sale,
(e) persons whose functional currency is not the U.S. dollar, and
(f) tax-exempt entities.
The following assumes that the initial notes or exchange notes are held as
capital assets within the meaning of section 1221 of the Internal Revenue Code
of 1986.
The following is based on currently existing provisions of the Code, the
applicable Treasury regulations promulgated and proposed thereunder, judicial
decisions, and administrative interpretations, all of which are subject to
change, possibly on a retroactive basis. Because individual circumstances may
differ, you are strongly urged to consult your tax advisor with respect to your
particular tax situation and the particular tax effects of any state, local,
non-United States or other tax laws and possible changes in the tax laws.
As used in this section, the term U.S. holder means a beneficial owner of
an exchange note who or which is for United States federal income tax purposes
(1) a citizen or resident of the United States,
(2) a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision
thereof,
(3) an estate the income of which is subject to United States federal
income taxation regardless of its source, or
(4) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions
of the trust.
The term also includes those former citizens of the United States whose income
and gain on the exchange notes will be subject to United States taxation. As
used herein, the term non-U.S. holder means a beneficial owner of an exchange
note that is not a U.S. holder.
FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of initial notes for exchange notes pursuant to the exchange
offer will not be treated as an exchange or otherwise as a taxable event to
holders. Consequently, (1) no gain or
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<PAGE>
loss will be realized by a holder upon receipt of an exchange note, (2) the
holding period of the exchange note will include the holding period of the
initial note exchanged therefor and (3) the adjusted tax basis of the exchange
note will be the same as the adjusted tax basis of the initial note exchanged
therefor immediately before the exchange.
Additional interest paid to a U.S. holder in connection with a default
under the registration rights agreement should be taxable as ordinary income at
the time it accrues or is received in accordance with the U.S. holder's regular
method of accounting. It is possible, however, that the Internal Revenue Service
may take a different position, in which case the timing and amount of income
inclusion may be different.
In the event any additional interest paid to a non-U.S. holder in
connection with a default under the registration rights agreement is treated as
interest, the tax treatment of the payments should be the same as that of other
interest payments received by the non-U.S. holder. However, the Internal Revenue
Service might not treat the payments as interest, in which case the payments
generally would be subject to United States federal income withholding tax at a
rate of 30%, unless
(1) the payments are effectively connected with the non-U.S. holder's
conduct of a trade or business in the United States, in which case the
tax treatment of the payments will be the same as that of other
effectively connected income earned by the non-U.S. holder, or
(2) the non-U.S. holder qualifies for a reduced rate of tax or an exemption
under a tax treaty.
TAX CONSIDERATIONS FOR U.S. HOLDERS
PAYMENTS OF INTEREST
Interest on an exchange note generally will be taxable to a U.S. holder as
ordinary interest income at the time it accrues or is received in accordance
with the U.S. holder's method of accounting for United States federal income tax
purposes.
MARKET DISCOUNT AND BOND PREMIUM
If a U.S. holder purchases an exchange note for an amount that is less than
its principal amount, the difference generally will be treated as market
discount. In that case, any partial principal payment on, or any gain realized
on the sale, exchange, retirement or other disposition of, including
dispositions which are nonrecognition transactions under certain provisions of
the Code, the exchange note will be included in gross income and characterized
as ordinary income to the extent of the market discount that (1) has not
previously been included in income and (2) is treated as having accrued on the
exchange note prior to the payment or disposition. Market discount generally
accrues on a straight-line basis over the remaining term of the exchange note.
Upon an irrevocable election, however, market discount will accrue on a constant
yield basis. A U.S. holder might be required to defer all or a portion of the
interest expense on any indebtedness incurred or continued to purchase or carry
an exchange note. A U.S. holder may elect to include market discount in gross
income currently as it accrues. If such an election is made, the preceding rules
relating to the recognition of market discount and deferral of interest expense
will not apply. An election made to include market discount in gross income as
it accrues will apply to all debt instruments acquired by the U.S. holder on or
after the first day of the taxable year to which the election applies and may be
revoked only with the consent of the Internal Revenue Service.
If a U.S. holder purchases an exchange note for an amount that is in excess
of all amounts payable on the exchange note after the purchase date, other than
payments of qualified stated interest, the excess will be treated as bond
premium. In general, a U.S. holder may elect to amortize bond premium over the
remaining term of the exchange note on a constant yield method. The amount of
bond premium allocable to any accrual period is offset against the qualified
stated interest allocable to the accrual period. If, following the offset
determination described in the immediately preceding sentence, there is any
excess allocable bond premium remaining, that excess may, in some circumstances,
be deducted. An election to amortize bond premium applies to all taxable debt
instruments held at the beginning of the first taxable year to
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<PAGE>
which the election applies and thereafter acquired by the U.S. holder and may be
revoked only with the consent of the Internal Revenue Service.
SALE, EXCHANGE OR RETIREMENT OF NOTES
Upon the sale, exchange or retirement of an exchange note, a U.S. holder
will recognize taxable gain or loss equal to the difference between the amount
of cash plus the fair market value of any property received, but not including
any amount attributable to accrued but unpaid interest, and the holder's
adjusted tax basis in the exchange note. A U.S. holder's adjusted tax basis in
an exchange note will be its cost, increased by any accrued market discount
included in gross income and reduced by any amortized bond premium and any
principal payment on the exchange note received by the holder.
Subject to the discussion of market discount above, gain or loss realized
on the sale, exchange or retirement of an exchange note by a U.S. holder
generally will be capital gain or loss if the exchange note is held as a capital
asset by the U.S. holder. Long-term capital gains of individuals will be subject
to a maximum federal income tax rate of 20%. There are limitations which apply
to the deductibility of capital losses.
TAX CONSIDERATIONS FOR NON-U.S. HOLDERS
Generally, payments of principal or interest on the exchange notes by
Triarc Consumer Products Group or any paying agent to a beneficial owner of an
exchange note that is a non-U.S. holder will not be subject to U.S. federal
income tax or income withholding tax, provided that, in the case of interest,
(1) the non-U.S. holder does not own, actually or constructively, 10% or
more of the combined voting power of all classes of stock of either
Triarc Parent or Triarc Beverage Holdings entitled to vote,
(2) the non-U.S. holder is not, for U.S. federal income tax purposes, a
controlled foreign corporation related to either Triarc Parent or
Triarc Beverage Holdings actually or constructively through stock
ownership,
(3) the non-U.S. holder is not a bank receiving interest described in
section 881(c)(3)(A) of the Code, and
(4) either
(a) the non-U.S. holder provides Triarc Consumer Products Group or its
agent with an Internal Revenue Service Form W-8, or a suitable
substitute form, signed under penalties of perjury that includes
its name and address and certifies as to its non-United States
status in compliance with applicable law and Treasury Regulations,
or
(b) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary
course of its trade or business holds the exchange note and
provides a statement to Triarc Consumer Products Group or its
agent signed under penalties of perjury in which the organization,
bank or financial institution certifies that a Form W-8, or a
suitable substitute form, has been received by it from the
non-U.S. holder or from another financial institution acting on
behalf of the non-U.S. holder and furnishes Triarc Consumer
Products Group or its agent with a copy thereof.
If these requirements cannot be met, a non-U.S. holder generally will be subject
to United States federal income withholding tax at a rate of 30%, or such lower
rate provided by an applicable treaty, with respect to payments of interest on
the exchange notes. The non-U.S. holder must inform Triarc Consumer Products
Group or its agent or the financial institution to which the non-U.S. holder
provided the Form W-8, or the suitable substitute form, within 30 days of any
change in the information provided in the form submitted.
Treasury Regulations generally effective for payments made after December
31, 2000 provide alternative methods for satisfying the certification
requirements described in clause (4) above. These new regulations also will
require, in the case of exchange notes held by a foreign
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<PAGE>
partnership, that (1) the certification be provided by the partners rather than
by the foreign partnership and (2) the partnership provide prescribed
information, including a U.S. taxpayer identification number.
A non-U.S. holder of an exchange note generally will not be subject to
United States federal income or income withholding tax on gain realized on the
sale, exchange, redemption, retirement or other disposition of his, her or its
exchange note, unless
(1) the non-U.S. holder is an individual who is present in the United
States for 183 days or more in the taxable year of the disposition, and
other conditions are met, or
(2) the gain is effectively connected with the conduct by the non-U.S.
holder of a trade or business in the United States.
Notwithstanding the above, if a non-U.S. holder of an exchange note is
engaged in a trade or business in the United States and if interest on the
exchange note, or gain realized on the disposition of the exchange note, is
effectively connected with the conduct of that trade or business, the non-U.S.
holder generally will be subject to regular United States federal income tax on
the interest or gain in the same manner as if it were a U.S. holder, unless an
applicable treaty provides otherwise. In addition, if the non-U.S. holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30%, or
such lower rate provided by an applicable treaty, of its effectively connected
earnings and profits for the taxable year, as adjusted. Even though effectively
connected income is subject to income tax and possibly also branch profits tax,
it generally is not subject to income withholding if the non-U.S. holder
delivers a properly executed Internal Revenue Service Form 4224, or other form
applicable under the new regulations, to the payor.
An exchange note held by an individual non-U.S. holder who at the time of
death is not a United States citizen or resident of the United States, as
defined for United States federal estate tax purposes, will not be subject to
United States federal estate taxation as a result of the individual's death
unless
(1) the individual owns, actually or constructively, 10% or more of the
combined voting power of all classes of stock of either Triarc Parent
or Triarc Beverage Holdings entitled to vote, or
(2) the interest on the exchange note is effectively connected with the
conduct by the individual of a trade or business in the United States.
TAX CONSIDERATIONS APPLICABLE TO BOTH U.S. HOLDERS AND NON-U.S. HOLDERS
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, a 31% backup
withholding tax might apply to some payments on, and the proceeds from a sale,
exchange or redemption of, the exchange notes, unless the holder of the exchange
note
(1) is a corporation or comes within other exempt categories and, when
required, demonstrates that fact, or
(2) provides a correct taxpayer identification number, certifies as to its
exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules.
Backup withholding and information reporting generally will not apply to
payments made by Triarc Consumer Products Group or a paying agent on an exchange
note to a non-U.S. holder if the certification described under 'Tax
Considerations for Non-U.S. Holders' is duly provided or the non-U.S. holder
otherwise establishes an exemption and the payor does not have actual knowledge
that the conditions of any other exemption are not, in fact, satisfied. The
payments of proceeds from the disposition of an exchange note to or through a
non-United States office of a broker that is
(1) a United States person,
(2) a controlled foreign corporation for United States federal income tax
purposes,
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<PAGE>
(3) a foreign person, 50% or more of whose gross income from all sources
for specified periods was effectively connected with the conduct of a
United States trade or business, or
(4) after December 31, 2000, a foreign partnership if either
(a) more than 50% of the income or capital interest is owned by U.S.
persons, or
(b) the partnership has the requisite connections to the United
States,
will be subject to information reporting requirements unless the broker has
documentary evidence in its files of the holder's non-U.S. holder status and has
no actual knowledge to the contrary or otherwise establishes an exemption.
Before January 1, 2001, backup withholding will not apply to any payment of the
proceeds from the sale of an exchange note made to or through a foreign office
of a broker. However, after December 31, 2000, backup withholding might apply if
the broker has actual knowledge that the payee is a U.S. holder. Payments of the
proceeds from the sale of an exchange note to or through the United States
office of a broker are subject to information reporting and possible backup
withholding unless the holder certifies, under penalties of perjury, that it is
not a U.S. holder and that other conditions are met or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. holder or that the conditions of any other exemption are not,
in fact, satisfied.
Holders of exchange notes should consult their tax advisors regarding the
application of backup withholding in their particular situations, the
availability of an exemption therefrom, and the procedure for obtaining an
exemption, if available. Any amounts withheld from payment under the backup
withholding rules will be allowed as a credit against the holder's United States
federal income tax liability and may entitle the holder to a refund if the
required information is furnished to the Internal Revenue Service.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX
ADVICE. ACCORDINGLY, YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR
TAX CONSEQUENCES TO YOU OF THE EXCHANGE OFFER AND OF PURCHASING, HOLDING AND
DISPOSING OF THE INITIAL NOTES OR THE EXCHANGE NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR NON-UNITED STATES TAX LAWS AND
ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS AND THE EFFECT OF THE
NEW REGULATIONS WITH RESPECT TO PAYMENTS MADE AFTER DECEMBER 31, 2000.
PLAN OF DISTRIBUTION
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
in the exchange offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions, through the writing
of options on the exchange notes or a combination of these methods of resale, at
market prices prevailing at the time of resale, at prices related to these
prevailing market prices or negotiated prices. These resales may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such exchange notes.
Any broker-dealer that receives exchange notes for its own account under
the exchange offer in exchange for initial notes acquired by it as a result of
market making or other trading activities or participates in a distribution of
these exchange notes may be deemed to be an underwriter within the meaning of
the Securities Act and, therefore, must deliver a prospectus meeting the
requirements of the Securities Act for any resales, offers to resell or other
transfers of the exchange notes received by it in the exchange offer.
Accordingly, each such broker-dealer must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of these exchange notes. The letter of transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an underwriter within the
meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchanges notes received in exchange for initial notes where
these initial notes were acquired through market-making activities or other
trading activities. We have agreed that, for a period of 180 days after the
completion of the exchange offer, we will
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<PAGE>
promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests these documents
in the letter of transmittal.
We have agreed to pay all expenses incident to the exchange offer,
including the expenses of one counsel for the holders of the initial notes,
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the initial notes, including any broker-dealers,
against specified liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York, will pass
upon certain legal matters, including some tax matters, on our behalf, regarding
exchange notes.
EXPERTS
The consolidated balance sheets of Triarc Consumer Products Group, LLC and
subsidiaries and the consolidated balance sheets of Triarc Beverage Holdings
Corp. as of December 28, 1997 and January 3, 1999, and the related statements of
operations, member's equity or stockholder's equity, and cash flows for the
three fiscal years ended January 3, 1999, included in this prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing on page F-2 and F-70 of this prospectus, and are included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
The combined statements of certain revenues and operating expenses of the
Snapple Beverage Business of The Quaker Oats Company for the year ended
December 31, 1996 and the four month and twenty-two day period ended May 22,
1997 included in this prospectus have been audited by Arthur Andersen LLP,
independent public accountants as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-4 with the Securities and
Exchange Commission covering the exchange notes, and this prospectus is part of
our registration statement. For further information on us and the exchange
notes, you should refer to our registration statement and its exhibits. This
prospectus summarizes material provisions of contracts and other documents that
we refer you to. Because the prospectus may not contain all the information that
you may find important, you should review the full text of these documents. We
have included copies of these documents as exhibits to our registration
statement.
When the exchange offer is completed, we will be subject to the information
requirements of the Securities Exchange Act and will be required to file reports
and other information with the Securities and Exchange Commission. You can
inspect and copy at prescribed rates the reports and other information that we
file with the Securities and Exchange Commission at the public reference
facilities maintained by the Securities and Exchange Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also at the
regional offices of the Securities and Exchange Commission located at 7 World
Trade Center, Suite 1300, New York, New York 10048 and the Citicorp Center at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may
obtain information on the operation of the public reference facilities by
calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities
and Exchange Commission also maintains an Internet web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information. You can also obtain copies of these materials from us upon
request.
In addition, the indenture requires that, whether or not we are subject to
the reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act, we will provide the trustee and registered noteholders, and will, if
permitted, file with the Securities and Exchange Commission (1) all quarterly
and annual financial information that would be required to be contained in a
filing with the Securities and Exchange Commission on Forms 10-Q and 10-K if we
were required to file these forms, including a 'Management's Discussion and
Analysis of Financial
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<PAGE>
Condition and Results of Operations' and, with respect to the annual information
only, a report thereon by our certified independent accountants, and (2) all
reports that would be required to be filed with the Securities and Exchange
Commission on Form 8-K if we were required to file these reports. In addition,
for so long as any of the initial notes or the exchange notes remain outstanding
and constitute 'restricted securities' under Rule 144, we have agreed to make
available to any prospective purchaser of these notes or beneficial owner of
these notes in connection with any sale of these notes the information required
by Rule 144 under the Securities Act. Any requests should be directed to Triarc
Parent at 280 Park Avenue, New York, New York 10017, Attention: Investor
Relations; Telephone: (212) 451-3000. This information can also be obtained from
Triarc Parent's website at http://www.triarc.com.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND RELATED COMPANIES
Independent Auditors' Report.............................. F-2
Consolidated Balance Sheets as of December 28, 1997 and
January 3, 1999........................................ F-3
Consolidated Statements of Operations for the year ended
December 31, 1996 and the fiscal years ended
December 28, 1997 and January 3, 1999.................. F-4
Consolidated Statements of Member's Equity for the year
ended December 31, 1996 and the fiscal years ended
December 28, 1997 and January 3, 1999.................. F-5
Consolidated Statements of Cash Flows for the year ended
December 31, 1996 and the fiscal years ended
December 28, 1997 and January 3, 1999.................. F-6
Notes to Consolidated Financial Statements................ F-8
Condensed Consolidated Balance Sheets as of January 3,
1999 and October 3, 1999 (unaudited)................... F-48
Condensed Consolidated Statements of Operations for the
nine months ended September 27, 1998 and October 3,
1999 (unaudited)....................................... F-49
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 27, 1998 and October 3,
1999 (unaudited)....................................... F-50
Notes to Condensed Consolidated Financial Statements
(unaudited)............................................ F-51
SNAPPLE BEVERAGE BUSINESS OF THE QUAKER OATS COMPANY
Report of Independent Public Accountants.................. F-63
Combined Statements of Certain Revenues and Operating
Expenses for the twelve months ended December 31, 1996
and the four months and twenty-two days ended May 22,
1997................................................... F-64
Notes to the Combined Statements of Certain Revenues and
Operating Expenses..................................... F-65
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
Independent Auditors' Report.............................. F-71
Consolidated Balance Sheets as of December 28, 1997 and
January 3, 1999........................................ F-72
Consolidated Statements of Operations for the year ended
December 31, 1996 and the fiscal years ended December
28, 1997 and January 3, 1999........................... F-73
Consolidated Statements of Stockholder's Equity for the
year ended December 31, 1996 and the fiscal years ended
December 28, 1997 and January 3, 1999.................. F-74
Consolidated Statements of Cash Flows for the year ended
December 31, 1996 and the fiscal years ended December
28, 1997 and January 3, 1999........................... F-75
Notes to Consolidated Financial Statements................ F-77
Condensed Consolidated Balance Sheets as of January 3,
1999 and October 3, 1999 (unaudited)................... F-98
Condensed Consolidated Statements of Operations for the
nine months ended September 27, 1998 and October 3,
1999 (unaudited)....................................... F-99
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 27, 1998 and October 3,
1999 (unaudited)....................................... F-100
Notes to Condensed Consolidated Financial Statements
(unaudited)............................................ F-101
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Managers and Member of
Triarc Consumer Products Group, LLC
New York, New York
We have audited the accompanying consolidated balance sheets of Triarc
Consumer Products Group, LLC and subsidiaries as of January 3, 1999 and
December 28, 1997, and the related consolidated statements of operations,
member's equity and cash flows for each of the three fiscal years in the period
ended January 3, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the consolidated financial position of Triarc Consumer Products Group,
LLC and subsidiaries as of January 3, 1999 and December 28, 1997, and the
consolidated results of their operations and their consolidated cash flows for
each of the three fiscal years in the period ended January 3, 1999 in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
July 30, 1999
F-2
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1997 1999
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash (including cash equivalents of $26,974 and
$66,422).............................................. $ 34,242 $ 72,792
Receivables (Note 4)................................... 76,177 66,690
Inventories (Note 4)................................... 57,394 46,761
Deferred income tax benefit (Note 8)................... 47,992 18,934
Note receivable from Triarc Companies, Inc. (Note
18)................................................... 2,000 --
Prepaid expenses and other current assets.............. 6,398 7,258
--------- ---------
Total current assets.............................. 224,203 212,435
Investments in affiliates (Note 5).......................... 25,476 --
Properties (Note 4)......................................... 27,912 25,320
Unamortized costs in excess of net assets of acquired
companies (Note 4)........................................ 278,986 268,215
Trademarks (Note 4)......................................... 269,201 261,906
Deferred costs and other assets (Note 4).................... 28,183 23,094
--------- ---------
$ 853,961 $ 790,970
--------- ---------
--------- ---------
LIABILITIES AND MEMBER'S DEFICIT
Current liabilities:
Current portion of long-term debt (Notes 6, 7 and
21)................................................... $ 13,798 $ 9,678
Notes payable to affiliates (Note 18).................. 1,200 --
Accounts payable....................................... 45,126 36,993
Accrued expenses (Note 4).............................. 110,836 81,448
Due to affiliates (Note 18)............................ 22,710 29,082
--------- ---------
Total current liabilities......................... 193,670 157,201
Long-term debt (Notes 6, 7 and 21).......................... 564,114 560,977
Deferred income taxes (Note 8).............................. 27,764 9,173
Deferred income and other liabilities....................... 31,669 20,753
Redeemable preferred stock (Note 9)......................... 79,604 87,587
Commitments and contingencies (Notes 3, 8, 17 and 19)
Member's equity (deficit) (Notes 10 and 21):
Contributed capital.................................... 138,059 106,269
Accumulated deficit.................................... (180,719) (150,732)
Accumulated other comprehensive deficit................ (200) (258)
--------- ---------
Total member's deficit............................ (42,860) (44,721)
--------- ---------
$ 853,961 $ 790,970
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31, DECEMBER 28, JANUARY 3,
1996 1997 1999
---- ---- ----
<S> <C> <C> <C>
Revenues:
Net sales........................................... $540,106 $629,621 $735,436
Royalties, franchise fees and other revenues........ 57,329 66,531 79,600
-------- -------- --------
597,435 696,152 815,036
-------- -------- --------
Costs and expenses:
Cost of sales, excluding depreciation and
amortization related to sales of $13,545, $1,032
and $1,672........................................ 314,641 332,217 390,883
Advertising, selling and distribution (Note 1)...... 135,806 184,722 197,065
General and administrative.......................... 75,759 81,219 89,088
Depreciation and amortization, excluding
amortization of deferred financing costs.......... 29,964 25,244 32,808
Charges related to post-acquisition transition,
integration and changes to business strategies
(Note 11)......................................... -- 33,815 --
Facilities relocation and corporate restructuring
(Note 12)......................................... 7,800 7,063 --
Impairment of company-owned restaurants and related
exit costs (Note 3)............................... 58,900 -- --
-------- -------- --------
622,870 664,280 709,844
-------- -------- --------
Operating profit (loss)........................ (25,435) 31,872 105,192
Interest expense......................................... (50,031) (58,019) (60,235)
Gain (loss) on sale of businesses, net (Note 13)......... -- (3,513) 5,016
Other income, net (Note 14).............................. 470 5,532 5,298
-------- -------- --------
Income (loss) before income taxes and
extraordinary charges........................ (74,996) (24,128) 55,271
(Provision for) benefit from income taxes (Note 8)....... 23,628 5,142 (25,284)
-------- -------- --------
Income (loss) before extraordinary charges..... (51,368) (18,986) 29,987
Extraordinary charges (Note 15).......................... -- (2,954) --
-------- -------- --------
Net income (loss).............................. $(51,368) $(21,940) $ 29,987
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
CUMULATIVE OTHER
COMPREHENSIVE INCOME
(LOSS)
----------------------------
UNREALIZED
GAIN (LOSS) ON CURRENCY
CONTRIBUTED ACCUMULATED SHORT-TERM TRANSLATION
CAPITAL DEFICIT INVESTMENTS ADJUSTMENT TOTAL
------- ------- ----------- ---------- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31,
1995........................ $ 70,301 $(107,411) $ -- $ -- $(37,110)
Net loss and comprehensive
loss........................ -- (51,368) -- -- (51,368)
Capital contribution through
forgiveness of a liability
to Triarc Parent
(Note 18)................... 1,500 -- -- -- 1,500
-------- --------- ----- ----- --------
Balance at December 31,
1996........................ 71,801 (158,779) -- -- (86,978)
Comprehensive loss:
Net loss................. -- (21,940) -- -- (21,940)
Unrealized gain on
short-term
investment............. -- -- 42 -- 42
Net change in currency
translation
adjustment............. -- -- -- (242) (242)
--------
Comprehensive loss....... -- -- -- -- (22,140)
--------
Capital contribution through
forgiveness of a liability
to Triarc Parent
(Note 18)................... 625 -- -- -- 625
Issuance of Triarc Beverage
Holdings Corp. common
stock....................... 1 -- -- -- 1
Capital contribution
consisting of cash of $6,211
and forgiveness of a note
payable to Triarc Companies,
Inc. (Note 18).............. 29,390 -- -- -- 29,390
Issuance of shares of Cable
Car Beverage Corporation
common stock and pushdown of
Triarc Companies, Inc.'s
acquisition basis in Cable
Car Beverage Corporation
(Note 3).................... 40,847 -- -- -- 40,847
Dividend requirement on
redeemable preferred stock
(Note 9).................... (4,604) -- -- -- (4,604)
Other......................... (1) -- -- -- (1)
-------- --------- ----- ----- --------
Balance at December 28,
1997........................ 138,059 (180,719) 42 (242) (42,860)
Comprehensive income:
Net income............... -- 29,987 -- -- 29,987
Reclassification
adjustment for prior
year appreciation on
short-term investment
sold during the year... -- -- (42) -- (42)
Net change in currency
translation
adjustment............. -- -- -- (16) (16)
--------
Comprehensive income..... -- -- -- -- 29,929
--------
Adjustment to pushdown of
Triarc Companies, Inc.'s
acquisition basis in Cable
Car Beverage Corporation
(Note 3).................... (251) -- -- -- (251)
Cash dividends................ (23,556) -- -- -- (23,556)
Dividend requirement on
redeemable preferred stock
(Note 9).................... (7,983) -- -- -- (7,983)
-------- --------- ----- ----- --------
Balance at January 3, 1999.... $106,269 $(150,732) $-- $(258) $(44,721)
-------- --------- ----- ----- --------
-------- --------- ----- ----- --------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31, DECEMBER 28, JANUARY 3,
1996 1997 1999
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)...................................... $(51,368) $ (21,940) $ 29,987
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Amortization of costs in excess of net assets of
acquired companies, trademarks and certain other
items........................................... 15,388 18,879 23,151
Depreciation and amortization of properties....... 14,576 6,365 9,657
Amortization of deferred financing costs.......... 3,322 3,716 4,075
Write-off of unamortized deferred financing
costs........................................... -- 4,839 --
Impairment of company-owned restaurants and
related exit costs.............................. 58,900 -- --
Provision for (benefit from) deferred income
taxes........................................... (24,988) (10,644) 10,467
Provision for doubtful accounts................... 3,450 3,794 2,387
(Gain) loss on sale of businesses, net............ -- 3,513 (5,016)
Net provision (payments) for charges related to
post-acquisition transition, integration and
changes to business strategies.................. -- 22,483 (6,025)
Net provision (payments) for facilities relocation
and corporate restructuring..................... 6,953 821 (1,914)
Other, net........................................ 398 (4,072) 1,846
Changes in operating assets and liabilities:
Decrease (increase) in receivables................ (9,263) 8,289 6,994
Decrease (increase) in inventories................ (2,823) 3,993 10,607
Decrease (increase) in prepaid expenses and other
current assets.................................. (818) 4,664 (1,044)
Decrease in accounts payable and accrued
expenses........................................ (4,606) (21,779) (29,615)
Increase in due to affiliates..................... 2,204 12,519 3,547
-------- --------- --------
Net cash provided by operating activities.... 11,325 35,440 59,104
-------- --------- --------
Cash flows from investing activities:
Proceeds from sale of investment in Select Beverages,
Inc................................................... -- -- 28,342
Proceeds from sales of properties and business......... 1,413 3,529 1,538
Capital expenditures................................... (17,113) (4,204) (11,107)
Acquisition of Snapple Beverage Corp................... -- (307,205) (43)
Other business acquisitions, net of cash acquired of
$2,409 in 1997........................................ (1,972) 2,409 (3,000)
Other.................................................. (356) (158) 41
-------- --------- --------
Net cash provided by (used in) investing
activities................................. (18,028) (305,629) 15,771
-------- --------- --------
Cash flows from financing activities:
Dividends.............................................. -- -- (23,556)
Repayments of long-term debt........................... (11,453) (79,901) (14,158)
Proceeds from long-term debt........................... 12,476 303,400 --
Net borrowings from affiliates and, in 1998, increase
in due to affiliates.................................. 3,690 3,535 1,389
Proceeds from issuance of common stock................. -- 1 --
Proceeds from issuance of redeemable preferred stock... -- 75,000 --
Capital contributions.................................. -- 6,211 --
Deferred financing costs............................... (325) (11,385) --
-------- --------- --------
Net cash provided by (used in) financing
activities................................. 4,388 296,861 (36,325)
-------- --------- --------
Net increase (decrease) in cash and cash equivalents........ (2,315) 26,672 38,550
Cash and cash equivalents at beginning of year.............. 9,885 7,570 34,242
-------- --------- --------
Cash and cash equivalents at end of year.................... $ 7,570 $ 34,242 $ 72,792
-------- --------- --------
-------- --------- --------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest.......................................... $ 43,649 $ 55,047 $ 52,437
-------- --------- --------
-------- --------- --------
Income taxes, net of refunds...................... $ -- $ 3,450 $ 4,205
-------- --------- --------
-------- --------- --------
</TABLE>
F-6
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
Due to their non-cash nature, the following transactions are not reflected
in the respective consolidated statements of cash flows (expressed in whole
dollars):
On November 25, 1997 Triarc Companies, Inc. ('Triarc Parent'), parent
of the Company (see Note 1 for definition), acquired (the 'Stewart's
Acquisition') Cable Car Beverage Corporation ('Cable Car') for 1,566,858
shares of Triarc Parent common stock exchanged for all of the Cable Car
outstanding stock and 154,931 stock options of Triarc Parent exchanged for
all of the outstanding stock options of Cable Car. The Stewart's
Acquisition was accounted for by Triarc Parent in accordance with the
purchase method of accounting. Triarc Parent's basis in Cable Car was
'pushed down' to Cable Car and the excess of the purchase price over the
net assets acquired was allocated to the Cable Car assets and liabilities
as of November 25, 1997. See Note 3 to the consolidated financial
statements for further discussion of this transaction.
In May 1997 Triarc Beverage Holdings Corp., a subsidiary of the
Company, acquired Snapple Beverage Corp. The portion of the purchase price
that was not yet paid as of December 28, 1997, representing a portion of
the expenses related to the acquisition, was $2,181,000.
In May 1997 two subsidiaries of the Company issued common shares
representing approximately 49% of each of their common stock after such
issuances to Triarc Parent in consideration for, in addition to cash of
$6,211,000, forgiveness of the then outstanding principal and accrued
interest aggregating $25,788,000 under a note payable by the Company to
Triarc Parent. See Note 18 to the consolidated financial statements for a
further discussion of this transaction.
During 1996 and 1997 Triarc Parent made capital contributions to the
Company through the assumption or forgiveness of liabilities of Mistic
Brands, Inc. of $1,500,000 and $625,000, respectively. See Note 18 to the
consolidated financial statements for further discussion of these
transactions.
During 1997 and 1998 the Company recorded cumulative dividends not
declared or paid on its redeemable preferred stock of $4,604,000 and
$7,983,000, respectively, as increases in 'Redeemable preferred stock' with
offsetting charges to 'Contributed capital' since payment of the dividends
is not solely in the control of the Company.
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 3, 1999
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
Triarc Consumer Products Group, LLC ('TCPG'), a wholly-owned subsidiary of
Triarc Companies, Inc. ('Triarc Parent'), was formed on January 15, 1999 and,
effective February 25, 1999, acquired by way of capital contribution all of the
stock previously owned directly or indirectly by Triarc Parent of (i) RC/Arby's
Corporation ('RC/Arby's'), (ii) Triarc Beverage Holdings Corp. ('Triarc Beverage
Holdings' -- commenced operations on May 22, 1997 with the concurrent
acquisition by Triarc Beverage Holdings of Snapple Beverage Corp. ('Snapple')
and the concurrent contribution to Triarc Beverage Holdings by Triarc Parent of
Mistic Brands, Inc. ('Mistic' -- acquired by Triarc Parent on August 9, 1995))
and (iii) Cable Car Beverage Corporation ('Cable Car' -- acquired by Triarc
Parent on November 25, 1997). RC/Arby's principal direct wholly-owned
subsidiaries are Royal Crown Company, Inc. ('Royal Crown') and Arby's, Inc.
('Arby's'). Additionally, RC/Arby's had three subsidiaries which, prior to the
May 1997 sale of all company-owned restaurants, owned and/or operated Arby's
restaurants, consisting of Arby's Restaurant Development Corporation, Arby's
Restaurant Holding Company ('ARHC') and Arby's Restaurant Operations Company
('AROC'). See Note 3 for a discussion of the 1997 acquisitions and disposition
referred to above.
The accompanying consolidated financial statements present the consolidated
financial position, results of operations and cash flows of TCPG as if it had
been formed as of January 1, 1996. The consolidated financial position, results
of operations and cash flows of each of TCPG, RC/Arby's, Triarc Beverage
Holdings and Cable Car and their subsidiaries have been consolidated from their
respective formation dates or acquisition dates by Triarc Parent since such
entities were under the common control of Triarc Parent during such periods and,
accordingly, are presented on an 'as if pooling' basis. The aforementioned
capital contributions of subsidiaries by Triarc Parent to TCPG and to Triarc
Beverage Holdings have been recognized using carryover basis accounting since
all such entities were under common control. The entity representative of TCPG
and its subsidiaries or any one or more of such entities or their subsidiaries,
is referred to herein as the 'Company'.
All significant intercompany balances and transactions have been eliminated
in combination.
CHANGE IN FISCAL YEAR
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 1997 fiscal year
commenced January 1, 1997 and ended on December 28, 1997 and its 1998 fiscal
year commenced December 29, 1997 and ended on January 3, 1999. Such periods are
referred to herein as (i) 'the year ended December 28, 1997' or '1997' and
(ii) 'the year ended January 3, 1999' or '1998', respectively. December 28, 1997
and January 3, 1999 are referred to herein as 'Year-End 1997' and 'Year-End
1998', respectively.
CASH EQUIVALENTS
All highly liquid investments with a maturity of three months or less when
acquired are considered cash equivalents. The Company typically invests its
excess cash in commercial paper of high credit-quality entities and repurchase
agreements with high credit-quality financial institutions. Securities pledged
as collateral for repurchase agreements are segregated and held by the financial
institution until the maturity of each repurchase agreement. While the market
value of the collateral is sufficient in the event of default, realization
and/or retention of the collateral may be subject to legal proceedings in the
event of default or bankruptcy by the other party to the agreement.
INVENTORIES
The Company's inventories are stated at the lower of cost (determined on
the first-in, first-out basis) or market.
F-8
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
INVESTMENTS IN AFFILIATES
The Company's investments in affiliates in which it has significant
influence over the investee ('Equity Investments') are accounted for in
accordance with the equity method of accounting under which the consolidated
results include the Company's share of income or loss of such investees. The
excess, if any, of the carrying value of the Company's Equity Investments over
the underlying equity in net assets of each investee is being amortized to
'Other income, net' on a straight-line basis over 35 years. The Company's
investments in which it does not have significant influence over the investee
are accounted for at cost.
PROPERTIES AND DEPRECIATION AND AMORTIZATION
Properties are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization of properties is computed
principally on the straight-line basis using the estimated useful lives of the
related major classes of properties: 3 to 15 years for machinery and equipment
and 15 to 40 years for buildings. Leased assets capitalized and leasehold
improvements are amortized over the shorter of their estimated useful lives or
the terms of the respective leases.
AMORTIZATION OF INTANGIBLES
Costs in excess of net assets of acquired companies ('Goodwill') are being
amortized on the straight-line basis over 15 to 40 years. Trademarks are being
amortized on the straight-line basis over 15 to 35 years. Deferred financing
costs are being amortized as interest expense over the lives of the respective
debt using the interest rate method.
IMPAIRMENTS
Intangible Assets
The amount of impairment, if any, in unamortized Goodwill is measured based
on projected future operating performance. To the extent future operating
performance of those companies to which the Goodwill relates through the period
such Goodwill is being amortized are sufficient to absorb the related
amortization, the Company has deemed there to be no impairment of Goodwill.
Long-Lived Assets
The Company reviews its long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. If such review
indicates an asset may not be recoverable, an impairment loss is recognized for
the excess of the carrying value over the fair value of an asset to be held and
used or over the net realizable value of an asset to be disposed.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company enters into interest rate cap agreements in order to protect
against significant interest rate increases on certain of its floating-rate
debt. The costs of such agreements are amortized over the lives of the
respective agreements. The only cap agreement outstanding as of January 3, 1999
is approximately 3% higher than the interest rate on the related debt as of such
date.
The Company had an interest rate swap agreement (see Note 6) entered into
in order to synthetically alter the interest rate of certain of the Company's
fixed-rate debt until the agreement's maturity in 1996. Losses or gains were
recognized as incurred or earned as a component of interest expense, effectively
correlated with the fair value of the underlying debt. In addition, a payment
received at the inception of the agreement, which was deemed to be a fee to
induce the Company to enter into the agreement, was amortized over the full life
of the agreement since the Company was not at risk for any gain or loss on such
payment.
F-9
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
STOCK-BASED COMPENSATION
The Company measures compensation costs for its employee stock-based
compensation under the intrinsic value method. Accordingly, compensation cost
for the Company's stock options is measured as the excess, if any, of the market
price of the Company's stock at the date of grant over the amount an employee
must pay to acquire the stock.
FOREIGN CURRENCY TRANSLATION
Financial statements of foreign subsidiaries are prepared in their
respective local currencies and translated into United States dollars at the
current exchange rates for assets and liabilities and an average rate for the
year for revenues, costs and expenses. Net gains or losses resulting from the
translation of foreign financial statements are charged or credited directly to
the 'Currency translation adjustment' component of 'Accumulated other
comprehensive deficit' in 'Member's equity (deficit)'.
ADVERTISING COSTS AND PROMOTIONAL ALLOWANCES
The Company accounts for advertising production costs by expensing such
production costs the first time the related advertising takes place. Advertising
costs amounted to $37,882,000, $40,730,000 and $48,389,000 for 1996, 1997 and
1998, respectively. In addition the Company supports its beverage bottlers and
distributors with promotional allowances the most significant of which are for
(i) indirect advertising by such bottlers and distributors including in-store
displays and point-of-sale materials, (ii) cold drink equipment and (iii)
promotional merchandise. Promotional allowances are principally expensed when
the related promotion takes place. Estimates used to expense the costs of
certain promotions where the Company expects reporting delays by the bottlers or
distributors are adjusted quarterly based on actual amounts reported.
Promotional allowances amounted to $74,597,000, $106,687,000 and $100,861,000
for 1996, 1997 and 1998, respectively and are included in 'Advertising, selling
and distribution' in the accompanying consolidated statements of operations.
INCOME TAXES
The Company is included in the consolidated Federal income tax return of
Triarc Parent. Pursuant to tax-sharing agreements with Triarc Parent, the
Company provides for Federal income taxes on the same basis as if it filed a
separate consolidated return. Deferred income taxes are provided to recognize
the tax effect of temporary differences between the bases of assets and
liabilities for tax and financial statement purposes.
REVENUE RECOGNITION
The Company records sales when inventory is shipped or delivered. Sales
terms generally do not allow a right of return. Franchise fees are recognized as
income when a franchised restaurant is opened since all material services and
conditions related to the franchise fee have been substantially performed by the
Company upon the restaurant opening. Franchise fees for multiple area
development agreements represent the aggregate of the franchise fees for the
number of restaurants in the area development and are recognized as income when
each restaurant is opened in the same manner as franchise fees for individual
restaurants. Royalties are based on a percentage of restaurant sales of the
franchised outlet and are accrued as earned.
(2) SIGNIFICANT RISKS AND UNCERTAINTIES
NATURE OF OPERATIONS
The Company is a holding company which is engaged in three lines of
business: premium beverages, soft drink concentrates and restaurants. The
premium beverage segment represents approximately 75% of the Company's
consolidated revenues for the year ended January 3, 1999, the soft drink
concentrate segment represents approximately 15% of such revenues, and the
restaurant segment represents approximately 10% of such revenues.
F-10
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
The premium beverage segment markets and distributes, principally to
distributors and, to a lesser extent, directly to retailers, premium beverages
and/or ready-to-drink iced teas under the principal brand names Snapple'r',
Whipper Snapple'r', Snapple Farms'r', Mistic'r', Mistic Rain Forest Nectars'r',
Mistic Fruit Blast'TM' and Stewart's'r'. The soft drink concentrate segment
produces and sells, to bottlers, a broad selection of concentrates and, to a
much lesser extent in 1996 and 1997 (none in 1998), carbonated beverages to
distributors. These products are sold principally under the brand names RC
Cola'r', Diet RC Cola'r', Cherry RC Cola'r', Diet Rite Cola'r', Diet Rite'r'
flavors, Nehi'r', Upper 10'r' and Kick'r'. The restaurant segment franchises
Arby's quick service restaurants representing the largest franchise restaurant
system specializing in slow-roasted roast beef sandwiches. Prior to the May 1997
sale of all company-owned restaurants, the Company also operated Arby's
restaurants (see Note 3). The Company operates its businesses principally
throughout the United States. Information concerning the number of Arby's
restaurants is as follows:
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Franchised restaurants opened.......................... 129 125 130
Franchised restaurants closed.......................... 43 63 87
Restaurants transferred to franchisees................. 4 355 --
Restaurants open at end of period:
Company-owned..................................... 355 -- --
Franchised........................................ 2,675 3,092 3,135
----- ----- -----
Total........................................ 3,030 3,092 3,135
----- ----- -----
----- ----- -----
</TABLE>
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CERTAIN RISK CONCENTRATIONS
The Company believes that its vulnerability to risk concentrations related
to significant customers and vendors, products sold and sources of raw materials
is somewhat mitigated due to the diversification of its businesses. Although
premium beverages accounted for 75% of consolidated revenues in 1998, the
Company believes that the risks from concentrations within the premium beverage
segment are mitigated for several reasons. No customer of the premium beverage
segment accounted for more than 3% of consolidated revenues in 1998. While the
premium beverage segment has chosen to purchase certain raw materials (such as
aspartame) on an exclusive basis from single suppliers, the Company believes
that, if necessary, adequate raw materials can be obtained from alternate
sources. The beverage segments' product offerings are varied, including fruit
flavored beverages, iced teas, lemonades, carbonated sodas, 100% fruit juices,
nectars and flavored seltzers. Risk of geographical concentration for all of the
Company's businesses is also minimized since each of such businesses generally
operates throughout the United States with minimal foreign exposure.
(3) BUSINESS ACQUISITIONS AND DISPOSITIONS
1997 TRANSACTIONS
Acquisition of Snapple
On May 22, 1997 Triarc Beverage Holdings acquired (the 'Snapple
Acquisition') Snapple, a marketer and distributor of premium beverages, from The
Quaker Oats Company ('Quaker') for $309,386,000 consisting of cash of
$300,126,000 (including $126,000 of post-closing adjustments) and $9,260,000 of
fees and expenses. The purchase price for the Snapple Acquisition was funded
from
F-11
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(i) $250,000,000 of borrowings by Snapple on May 22, 1997 under a $380,000,000
credit agreement, as amended (the 'Existing Beverage Credit Agreement' -- see
Note 6), entered into by Snapple, Mistic, Triarc Beverage Holdings and, as
amended as of August 15, 1998, Cable Car and (ii) $75,000,000 from the issuance
of 75,000 shares of redeemable preferred stock (see Note 9) of Triarc Beverage
Holdings to Triarc Parent.
The Snapple Acquisition was accounted for in accordance with the purchase
method of accounting. The allocation of the purchase price of Snapple to the
assets acquired and liabilities assumed, along with allocations related to the
other 1997 acquisitions, is presented below under 'Purchase Price Allocations of
Acquisitions'.
The results of operations of Snapple have been included in the accompanying
consolidated statements of operations from the May 22, 1997 date of the Snapple
Acquisition. See below under 'Pro Forma Operating Data' for the unaudited
supplemental pro forma condensed consolidated summary operating data of the
Company (the 'Pro Forma Data') for the year ended December 28, 1997 giving
effect to the Snapple Acquisition and related transactions, the Stewart's
Acquisition (see below), the RTM Sale (see below) and the C&C Sale (see below).
Stewart's Acquisition
On November 25, 1997 Triarc Parent acquired (the 'Stewart's Acquisition')
Cable Car, a marketer and distributor of premium beverages in the United States
and Canada, primarily under the Stewart's'r' brand, for an aggregate purchase
price of $40,596,000, as adjusted in 1998. Such purchase price consisted of
(i) 1,566,858 shares of Triarc Parent common stock with a value of $37,409,000
as of November 25, 1997 (based on the closing price of such common stock on such
date of $23.875 per share) issued in exchange for all of the outstanding stock
of Cable Car, (ii) 154,931 options to acquire Triarc Parent common stock, with a
value of $2,788,000 (based on a calculation using the Black-Scholes option
pricing model) as of November 25, 1997 issued in exchange for all of the
outstanding stock options of Cable Car and (iii) $399,000 (originally estimated
at $650,000) of related expenses.
The Stewart's Acquisition was accounted for in accordance with the purchase
method of accounting. The allocation of the purchase price of Cable Car to the
assets acquired and liabilities assumed, along with allocations related to the
other 1997 acquisitions, is presented below under 'Purchase Price Allocations of
Acquisitions'. See below under 'Pro Forma Operating Data' for the Pro Forma Data
giving effect to, among other things, the Stewart's Acquisition.
Sale of Restaurants
In the fourth quarter of 1996, the Company decided to sell all of its
company-owned restaurants in order to place greater focus on the more profitable
franchise operations. Discussions commenced with RTM, Inc. in October 1996 which
led to an agreement in principle in December 1996 to sell all of our restaurants
to RTM, Inc. for an agreed-upon multiple of cash flow, the measurement of which
was to be negotiated, plus $7,000,000. It was also agreed that the primary
consideration would be the assumption of certain mortgage notes and equipment
notes payable to FFCA Mortgage Corporation. On May 5, 1997 certain subsidiaries
of the Company consummated the sale to affiliates of RTM, Inc. ('RTM'), the
largest franchisee in the Arby's system, of all of the 355 company-owned
restaurants (the 'RTM Sale'). The sales price consisted of cash and promissory
notes (discounted value) aggregating $3,471,000 (including $2,092,000 of
post-closing adjustments) and the assumption by RTM of an aggregate $54,682,000
in mortgage notes (the 'Mortgage Notes') and equipment notes (the 'Equipment
Notes') payable to FFCA Mortgage Corporation and $14,955,000 in capitalized
lease obligations. Effective May 5, 1997 RTM operates the 355 restaurants as a
franchisee and pays royalties to the Company at a rate of 4% of those
restaurants' net sales. In 1997 the Company recorded a $4,089,000 loss on the
sale included in 'Gain (loss) on sale of businesses, net' (see Note 13)
representing (i) a $1,457,000 provision for the fair value of the Company's
effective guarantee of future lease commitments and then effective guarantee of
debt repayments assumed by RTM (see below) and (ii) the adjustment of prior year
F-12
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
estimates resulting from reconciling actual amounts to prior estimates for
(a) remaining costs of previously closed restaurants, (b) transaction costs and
(c) interpretative issues between the Company and RTM regarding the measurement
of cash flow. Such 1997 loss is exclusive of an extraordinary charge in
connection with the early extinguishment of the Mortgage Notes and the Equipment
Notes (see Note 15). The results of operations of the sold restaurants have been
included in the accompanying consolidated statements of operations until the May
5, 1997 date of sale. Following the RTM Sale the Company continues as the
franchisor of the more than 3,000 Arby's restaurants. See below under 'Pro Forma
Operating Data' for the Pro Forma Data giving effect to, among other things, the
RTM Sale.
Obligations under (i) approximately $117,000,000 of operating and
capitalized lease payments (approximately $107,000,000 and $98,000,000 as of
December 28, 1997 and January 3, 1999, respectively, assuming RTM has made all
scheduled payments through such dates under such lease obligations) (see
Note 17) and (ii) an aggregate $54,682,000 of Mortgage Notes and Equipment Notes
which were assumed by RTM in connection with the RTM Sale (approximately
$53,000,000 and $51,000,000 outstanding as of December 28, 1997 and January 3,
1999, respectively, assuming RTM has made all scheduled repayments through such
dates), have been guaranteed by the Company and Triarc Parent, respectively. In
addition, a subsidiary of the Company is a co-obligor with RTM under a loan, the
repayments of which are being made by RTM, with an aggregate principal amount of
$626,000 as of May 5, 1997 ($612,000 and $586,000 as of December 28, 1997 and
January 3, 1999, respectively, assuming RTM had made all scheduled repayments
through such dates). This loan has been guaranteed by Triarc Parent.
In 1996 the Company recorded a $58,900,000 charge reported as 'Impairment
of company-owned restaurants and related exit costs' consisting of
(i) $46,000,000 for the reduction in carrying value of long lived assets to be
disposed, (ii) $2,191,000 of estimated transaction costs and (iii) $10,709,000
of liabilities for exit costs associated with selling the company-owned
restaurants. The $46,000,000 reduced the carrying value of the restaurant
segment's long-lived assets to be sold from $117,116,000 to estimated fair value
of $71,116,000 as of December 31, 1996, consisting of adjustments to
'Properties' of $36,343,000, 'Unamortized costs in excess of net assets of
acquired companies' of $5,214,000 and 'Deferred costs and other assets' of
$4,443,000. The $10,709,000 of liabilities for exit costs included $9,650,000
reflecting the present value of certain equipment operating lease obligations
which would not be assumed by the purchaser and $1,059,000 relating to vacation
and personal or medical absence entitlement costs principally paid to RTM for
approximately 6,500 employees associated with the sold restaurants who became
employees of RTM as a result of the RTM Sale. Although RTM was not assuming the
operating lease obligations, RTM acquired the use of the leased equipment. The
components of the liabilities for exit costs associated with selling the
company-owned restaurants and an analysis of related activity are as follows (in
thousands):
<TABLE>
<CAPTION>
1996
PROVISION
AND
BALANCE BALANCE BALANCE
DECEMBER 31, 1997 1997 DECEMBER 28, 1998 1998 JANUARY 3,
1996 PAYMENTS ADJUSTMENTS 1997 PAYMENTS ADJUSTMENTS 1999
---- -------- ----------- ---- -------- ----------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Equipment operating lease
obligations........................ $ 9,650 $(2,313) $(364)(a) $6,973 $(2,873) $150(a) $4,250(b)
Vacation and personal or medical
absence entitlement costs
principally paid to RTM for
employees who became employees of
RTM................................ 1,059 (1,059) -- -- -- -- --
------- ------- ----- ------ ------- ---- ------
$10,709 $(3,372) $(364) $6,973 $(2,873) $150 $4,250
------- ------- ----- ------ ------- ---- ------
------- ------- ----- ------ ------- ---- ------
</TABLE>
- ------------
(a) The adjustments represent changes in estimate of the remaining operating
lease obligations.
(b) The balance of equipment operating lease obligations as of January 3, 1999
represents lease payments extending to various dates through
November 2001.
F-13
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
The estimated fair value of the long-lived assets to be sold was determined
based on the terms of the February 1997 agreement for the RTM Sale, including
the sales price anticipated as of December 31, 1996 as discussed above. During
1996 and 1997 the operations of the restaurants to be disposed in the RTM Sale
had net sales of $228,031,000 and $74,195,000, respectively, and a pretax income
(loss) of $(2,602,000) and $848,000, respectively. Such loss during 1996 and
income during 1997 reflected $9,913,000 and $3,319,000, respectively, of
allocated general and administrative expenses and $8,421,000 and $2,756,000,
respectively, of interest expense related to the Mortgage Notes and Equipment
Notes and capitalized lease obligations directly related to the operations of
the restaurants sold to RTM. During 1996 and 1997 all the company-owned
restaurants, including units closed during 1996 prior to the RTM Sale, had net
sales of $231,041,000 and $74,195,000, respectively, and cost of sales of
$179,137,000 and $59,222,000, respectively, excluding depreciation and
amortization related to sales of $12,008,000 and none, respectively.
C&C Sale
On July 18, 1997 Royal Crown completed the sale (the 'C&C Sale' and,
collectively with the Snapple Acquisition, the Stewart's Acquisition and the RTM
Sale, the '1997 Significant Transactions') 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. ('Kelco') for $750,000 in cash and an $8,650,000 note (the 'Kelco Note')
with a discounted value of $6,003,000 of which $3,623,000 were allocated to the
C&C Sale resulting in aggregate proceeds relating to the C&C Sale of $4,373,000.
The Kelco Note included compensation both for the C&C Sale and future sales of
concentrate for C&C products to Kelco subsequent to July 18, 1997 (the 'Minimum
Sales Commitments') and technical services to be performed for Kelco by the
Company subsequent to July 18, 1997. The principal of the Kelco Note was
allocated first to the Minimum Sales Commitments based on the minimum Kelco
purchase commitments set forth in the C&C Sale agreement resulting in a
discounted value of $2,096,000, second to technical services to be performed for
Kelco, as requested by Kelco, for seven years with a discounted value of
$284,000 and the remainder was allocated to the C&C Sale. The Minimum Sales
Commitments were valued at the contracted sales price for any Kelco purchases in
excess of the minimums since the C&C Sale contract did not provide any price for
the Minimum Sales Commitments. The technical services to be performed were
valued based on the Company's estimated costs to provide such services based on
an estimate of the services to be requested by Kelco since the C&C Sale contract
did not provide any price for such technical services. The excess of the
proceeds of $4,373,000 over the carrying value of the C&C trademark of
$1,575,000 and the related equipment of $2,000 resulted in a pretax gain of
$2,796,000 which, commencing in the third quarter of 1997, is being recognized
pro rata between the gain on sale and the carrying value of the assets sold
based on the cash proceeds and collections under the Kelco Note since
realization of the Kelco Note was not at the date of sale, and is not yet, fully
assured. Accordingly, gains of $576,000 and $314,000 were recognized in 'Gain
(loss) on sale of businesses, net' (see Note 13) in the accompanying
consolidated statements of operations for the years ended December 28, 1997 and
January 3, 1999, respectively. See below under 'Pro Forma Operating Data' for
the Pro Forma Data giving effect to, among other things, the C&C Sale.
PRO FORMA OPERATING DATA (UNAUDITED)
As a result of the 1997 Significant Transactions, the results of operations
for the year ended January 3, 1999 are not comparable with such results for the
year ended December 28, 1997. Accordingly, the following Pro Forma Data of the
Company are set forth in order to present the 1997 results of operations on a
more consistent basis with 1998. The 1997 Pro Forma Data have been prepared by
adjusting the historical data as set forth in the accompanying 1997 consolidated
statement of operations to give effect to the 1997 Significant Transactions on a
consolidated basis, as if all of such transactions had been consummated on
January 1, 1997. Such Pro Forma Data are presented for comparative purposes only
and do not purport to be indicative of the Company's actual results of
F-14
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
operations had such transactions actually been consummated on January 1, 1997 or
of the Company's future results of operations and are as follows (in thousands):
<TABLE>
<CAPTION>
AS
REPORTED PRO FORMA
-------- ---------
<S> <C> <C>
Revenues.................................................... $696,152 $815,085
Operating profit............................................ 31,872 35,117
Loss before extraordinary charges........................... (18,986) (20,205)
</TABLE>
1996 AND 1998 TRANSACTIONS
Acquisition of T.J. Cinnamons
In August 1996 Arby's acquired (the '1996 T.J. Cinnamons Acquisition') from
Paramark Enterprises, Inc. ('Paramark', formerly known as T.J. Cinnamons, Inc.)
the trademarks, service marks, recipes and proprietary formulae of T.J.
Cinnamons, an operator and franchisor of retail bakeries specializing in gourmet
cinnamon rolls and related products for cash of $1,972,000, interest-bearing
notes payable of $1,750,000 paid through September 1998, non-interest bearing
obligations of $600,000 (discounted value of $546,000) paid through July 1998
resulting from non-compete agreements and stock sale restrictions and a
contingent payment dependent upon achieving certain specified sales targets over
a seven-year period. Further on August 27, 1998 the Company acquired (together
with the 1996 T.J. Cinnamons Acquisition, the 'T.J. Cinnamons Acquisition') from
Paramark all of Paramark's franchise agreements for T.J. Cinnamons full concept
bakeries and Paramark's wholesale distribution rights for T.J. Cinnamons
products, as well as settling remaining contingent payments for the 1996 T.J.
Cinnamons Acquisition. The aggregate consideration in 1998 of $3,910,000
consisted of cash of $3,000,000 and a $1,000,000 (discounted value of $910,000)
non-interest bearing obligation due in equal monthly installments through August
2000.
The T.J. Cinnamons Acquisition was accounted for in accordance with the
purchase method of accounting. The allocation of the purchase price of the T.J.
Cinnamons Acquisition to the assets acquired and liabilities assumed is
presented below under 'Purchase Price Allocations of Acquisitions'.
PURCHASE PRICE ALLOCATIONS OF ACQUISITIONS
The Snapple Acquisition, the Stewart's Acquisition and the T.J. Cinnamons
Acquisition discussed above, have been accounted for in accordance with the
purchase method of accounting. In accordance therewith, the following table sets
forth the allocation of the aggregate purchase prices and a reconciliation to
business acquisitions in the accompanying consolidated statements of cash flows
(in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Current assets............................................ $ -- $113,767 $ --
Properties................................................ -- 21,613 --
Goodwill (amortized over 15 to 35 years).................. -- 102,271 160
Trademarks................................................ 3,951 221,300 3,389
Other assets.............................................. 317 27,697 110
Current liabilities....................................... (358) (71,717) --
Long-term debt assumed including current portion.......... -- (686) --
Other liabilities......................................... (188) (66,421) --
------ -------- ------
3,722 347,824 3,659
Less (plus):
Long-term debt issued to sellers..................... 1,750 -- 910
Purchase price (adjustment in 1998) for Stewart's
Acquisition paid by Triarc Parent through the
issuance of its common stock and stock options and
'pushed down' to Cable Car......................... -- 40,847 (251)
------ -------- ------
$1,972 $306,977 $3,000
------ -------- ------
------ -------- ------
</TABLE>
F-15
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(4) BALANCE SHEET DETAIL
RECEIVABLES
The following is a summary of the components of receivables (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-----------------
1997 1998
---- ----
<S> <C> <C>
Receivables:
Trade.................................................. $71,133 $63,283
Affiliates............................................. 4,327 --
Other.................................................. 11,958 8,958
------- -------
87,418 72,241
Less allowance for doubtful accounts........................ 11,241 5,551
------- -------
$76,177 $66,690
------- -------
------- -------
</TABLE>
The following is an analysis of the allowance for doubtful accounts (in
thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Trade:
Balance at beginning of year........................ $1,696 $ 2,559 $ 7,971
Provision for doubtful accounts..................... 1,450 6,048(a) 2,861
Recoveries of accounts previously written off....... 195 725 32
Uncollectible accounts written off.................. (782) (1,361) (5,313)
------ ------- -------
Balance at end of year.............................. $2,559 $ 7,971 $ 5,551
------ ------- -------
------ ------- -------
</TABLE>
(a) Includes $3,229,000 included in 'Charges related to post-acquisition
transition, integration and changes to business strategies.'
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Affiliates:
Balance at beginning of year...................... $ 551 $2,551 $ 3,270
Provision for (reversal from) doubtful accounts
(subsequent recoveries of accounts previously
fully reserved) (Note 18)....................... 2,000 975 (474)
Recoveries of accounts previously written off..... -- -- 474
Uncollectible accounts written off................ -- (256) (3,270)
------ ------ -------
Balance at end of year............................ $2,551 $3,270 $ --
------ ------ -------
------ ------ -------
</TABLE>
Substantially all receivables are pledged as collateral for certain debt
(Notes 6 and 21).
INVENTORIES
The following is a summary of the components of inventories (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-----------------
1997 1998
---- ----
<S> <C> <C>
Raw materials............................................... $19,835 $20,268
Work in process............................................. 214 98
Finished goods.............................................. 37,345 26,395
------- -------
$57,394 $46,761
------- -------
------- -------
</TABLE>
Substantially all inventories are pledged as collateral for certain debt
(see Notes 6 and 21).
F-16
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
PROPERTIES
The following is a summary of the components of properties (in thousands):
<TABLE>
<CAPTION>
YEAR-END
---------------------
1997 1998
---- ----
<S> <C> <C>
Land...................................................... $ 2,351 $ 1,911
Buildings and improvements................................ 5,961 5,623
Leasehold improvements.................................... 5,349 6,628
Machinery and equipment................................... 29,763 35,329
Leased assets capitalized................................. 787 431
------- -------
44,211 49,922
Less accumulated depreciation and amortization............ 16,299 24,602
------- -------
$27,912 $25,320
------- -------
------- -------
</TABLE>
Substantially all properties are pledged as collateral for certain debt
(see Notes 6 and 21).
UNAMORTIZED COSTS IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES
The following is a summary of the components of unamortized costs in excess
of net assets of acquired companies (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-----------------------
1997 1998
---- ----
<S> <C> <C>
Costs in excess of net assets of acquired companies..... $355,321 $355,482
Less accumulated amortization........................... 76,335 87,267
-------- --------
$278,986 $268,215
-------- --------
-------- --------
</TABLE>
TRADEMARKS
The following is a summary of the components of trademarks (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-----------------------
1997 1998
---- ----
<S> <C> <C>
Trademarks.............................................. $282,701 $286,231
Less accumulated amortization........................... 13,500 24,325
-------- --------
$269,201 $261,906
-------- --------
-------- --------
</TABLE>
Substantially all trademarks are pledged as collateral for certain debt
(see Notes 6 and 21).
DEFERRED COSTS AND OTHER ASSETS
The following is a summary of the components of deferred costs and other
assets (in thousands):
<TABLE>
<CAPTION>
YEAR-END
---------------------
1997 1998
---- ----
<S> <C> <C>
Deferred financing costs.................................. $27,123 $26,948
Other..................................................... 12,229 11,354
------- -------
39,352 38,302
Less accumulated amortization of deferred financing
costs................................................... 11,169 15,208
------- -------
$28,183 $23,094
------- -------
------- -------
</TABLE>
F-17
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
ACCRUED EXPENSES
The following is a summary of the components of accrued expenses (in
thousands):
<TABLE>
<CAPTION>
YEAR-END
----------------------
1997 1998
---- ----
<S> <C> <C>
Accrued interest..................................... $ 17,345 $19,166
Accrued promotional allowances....................... 21,022 14,922
Accrued compensation and related benefits............ 12,785 13,328
Accrued production contract losses(a)................ 13,022 4,639
Accrued advertising.................................. 3,832 2,582
Accrued legal settlements and environmental matters
(Note 19).......................................... 10,274 1,534
Other................................................ 32,556 25,277
-------- -------
$110,836 $81,448
-------- -------
-------- -------
</TABLE>
- ------------
(a) Represents obligations related to the portion of those long-term production
contracts with copackers, assumed in connection with the Snapple
Acquisition, which the Company does not anticipate utilizing based on
projected future volumes. The decrease in this amount during 1998 was due to
obligations settled or repaid during such year.
(5) INVESTMENTS IN AFFILIATES
The following is a summary of the components of 'Investments in affiliates'
at December 28, 1997 (none at January 3, 1999) (in thousands):
<TABLE>
<S> <C>
Select Beverages........................................... $24,926
Rhode Island Beverages..................................... 550
-------
$25,476
-------
-------
</TABLE>
Snapple owned 20% of Select Beverages, Inc. ('Select Beverages') until its
sale on May 1, 1998. The Company's equity in the earnings (loss) of Select
Beverages of $862,000 and $(1,222,000) for 1997 and 1998 (prior to the sale of
Select Beverages), respectively, is included in 'Other income, net' (see
Note 14) in the accompanying consolidated statements of operations. The
Company's investment in Select Beverages exceeded the underlying equity in
Select Beverage's net assets. Amortization of such excess in 1998 of $341,000
was included in the Company's equity in the loss of Select Beverages during
1998. On May 1, 1998 the Company sold its interest in Select Beverages for
$28,342,000, subject to certain post-closing adjustments. The Company recognized
a pre-tax gain on the sale of Select Beverages during 1998 of $4,702,000,
included in 'Gain (loss) on sale of businesses, net' (see Note 13), representing
the excess of the net sales price over the Company's carrying value of the
investment in Select Beverages and related post-closing adjustments and
expenses.
Snapple owned 50% of the stock of Rhode Island Beverage Packing Company,
L.P. ('Rhode Island Beverages' or 'RIB') prior to its disposition in February
1998. Snapple and Quaker were defendants in a breach of contract case filed in
April 1997 by RIB, prior to the Snapple Acquisition (the 'RIB Matter'). The RIB
Matter was settled in February 1998 and in accordance therewith Snapple
surrendered (i) its 50% investment in RIB ($550,000) and (ii) certain properties
($1,202,000) and paid RIB $8,230,000. The settlement amounts were fully provided
for in a combination of (i) $6,530,000 of legal reserves provided in 'Charges
related to post-acquisition transition, integration and changes to business
strategies' (see Note 11), (ii) $3,321,000 of reserves for losses in long-term
production contracts established in the Snapple Acquisition purchase accounting
(see Note 3) and (iii) $131,000 of a current year accrual related to the RIB
long-term production contract included in historical liabilities at the date of
the Snapple Acquisition. Since at the date of the Snapple Acquisition the
investment in RIB
F-18
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
was expected to be surrendered in connection with the settlement of the RIB
Matter, the Company did not recognize any equity in the earnings of RIB prior to
such surrender in February 1998.
(6) LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-----------------------
1997 1998
---- ----
<S> <C> <C>
9 3/4% senior secured notes due 2000(a)................. $275,000 $275,000
Existing Beverage Credit Agreement(b)
Term loans bearing interest at a weighted average
rate of 8.99% at January 3, 1999................... 296,500 284,333
Mortgage Notes and Equipment Notes payable to FFCA
Mortgage Corporation, bearing interest at a
weighted average rate of 10.39% as of January 3,
1999, due through 2016............................. 4,297 3,733
Capitalized lease obligations........................... 719 158
Other................................................... 1,396 7,431
-------- --------
Total debt......................................... 577,912 570,655
Less amounts payable within one year............... 13,798 9,678(c)
-------- --------
$564,114 $560,977
-------- --------
-------- --------
</TABLE>
Aggregate annual maturities of long-term debt, including capitalized lease
obligations, were as follows as of January 3, 1999 (in thousands)(c):
<TABLE>
<S> <C>
1999.............................................. $ 9,678
2000.............................................. 11,794
2001.............................................. 10,662
2002.............................................. 12,929
2003.............................................. 15,126
Thereafter........................................ 510,466
--------
$570,655
--------
--------
</TABLE>
(a) On February 25, 1999 the 9 3/4% senior secured notes due 2000 (the '9 3/4%
Senior Notes') were called for redemption by the Company on March 30, 1999,
prior to their scheduled maturity of August 1, 2000, with the funding
thereof to come from a portion of the proceeds from the Refinancing
Transactions (see Note 21). Prior to 1996 the Company entered into a
three-year interest rate swap agreement (the 'Swap Agreement') in the
amount of $137,500,000. Under the Swap Agreement, interest on $137,500,000
was paid by the Company at a floating rate (the 'Floating Rate') based on
the 180-day London Interbank Offered Rate ('LIBOR') and the Company
received interest at a fixed rate of 4.72%. The Floating Rate was set at
the inception of the Swap Agreement through January 31, 1994 and thereafter
was retroactively reset at the end of each six-month calculation period
through July 31, 1996 and at the maturity of the Swap Agreement on
September 24, 1996. The transaction effectively changed the Company's
interest rate on $137,500,000 of the 9 3/4% Senior Notes from a fixed-rate
to a floating-rate basis through September 24, 1996. Under the Swap
Agreement during 1994 the Company received $614,000 which was determined at
the inception of the Swap Agreement. Subsequently, the Company paid
(i) $2,271,000 during 1995 in connection with such year's two six-month
reset periods and (ii) $1,631,000 during 1996 in connection with such
year's two six-month reset periods and the reset period ending with the
Swap Agreement's maturity on September 24, 1996.
(b) The $284,333,000 of outstanding term loans (there were no outstanding
revolving credit loans) under the Existing Beverage Credit Agreement as of
January 3, 1999 and February 25, 1999 was repaid on February 25, 1999 using
a portion of the proceeds from the Refinancing Transactions (see
(footnotes on next page)
F-19
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(footnotes from previous page)
Note 21). The Existing Beverage Credit Agreement consisted of a $300,000,000
term facility of which $225,000,000 and $75,000,000 of loans (the 'Existing
Term Loans') were borrowed by Snapple and Mistic, respectively, at the
Snapple Acquisition date ($213,250,000 and $71,083,000, respectively,
outstanding at January 3, 1999) and an $80,000,000 revolving credit
facility which provided for revolving credit loans (the 'Existing Revolving
Loans') by Snapple, Mistic, Triarc Beverage Holdings and, as amended as of
August 15, 1998, Cable Car of which $25,000,000 and $5,000,000 were
borrowed on the Snapple Acquisition date by Snapple and Mistic,
respectively. The Existing Revolving Loans were repaid prior to
December 28, 1997 and no Existing Revolving Loans were outstanding at
December 28, 1997 or January 3, 1999. The aggregate $250,000,000 originally
borrowed by Snapple was principally used to fund a portion of the purchase
price for Snapple (see Note 3). The aggregate $80,000,000 originally
borrowed by Mistic was principally used to repay all of the $70,850,000
then outstanding borrowings under Mistic's former bank credit facility (the
'Former Mistic Bank Facility') plus accrued interest thereon.
(c) The current portion of long-term debt as of January 3, 1999 reflects a
reclassification to long term of the portion ($9,419,000) of the amount
originally due in 1999 under the Existing Beverage Credit Agreement which
on February 25, 1999 was refinanced to long term (see Note 21). The annual
maturities of long-term debt in each of the five years from 1999 through
2003 are lower following such refinancing than under the Existing Beverage
Credit Agreement and the 9 3/4% Senior Notes. Accordingly, the annual
maturities of long-term debt set forth in the table above reflect such
refinancing.
The Company's debt agreements contain various covenants which (i) require
meeting certain financial amount and ratio tests; (ii) limit, among other
matters, (a) the incurrence of indebtedness, (b) the retirement of certain debt
prior to maturity, (c) investments, (d) asset dispositions, (e) capital
expenditures and (f) affiliate transactions other than in the normal course of
business; and (iii) restrict the payment of dividends to Triarc Parent (see
below). As of January 3, 1999 the Company was in compliance with all such
covenants. RC/Arby's, Triarc Beverage Holdings and Cable Car were unable to pay
any dividends or make any loans or advances to Triarc Parent as of January 3,
1999 under the terms of the Company's indenture and credit agreements. See
Note 21 for disclosure regarding one-time distributions paid to Triarc by
certain of its subsidiaries in connection with the Refinancing Transactions.
Under the Company's various debt agreements, substantially all of the
Company's assets other than cash and cash equivalents are pledged as security as
of January 3, 1999. In addition, (i) obligations under the 9 3/4% Senior Notes
have been guaranteed by Royal Crown and Arby's, (ii) obligations under the
Existing Beverage Credit Agreement were guaranteed by Snapple, Mistic, Triarc
Beverage Holdings and Cable Car prior to the repayment thereof and (iii) the
remaining obligations under the Mortgage Notes and Equipment Notes retained by
the Company (see Note 3 for disclosure regarding the guarantee of the Mortgage
Notes and Equipment Notes assumed by RTM) have been guaranteed by Triarc Parent.
As collateral for the guarantees of the obligations under the 9 3/4% Senior
Notes and the Existing Beverage Credit Agreement, all of the stock of Royal
Crown, Arby's, Snapple, Mistic, Triarc Beverage Holdings and Cable Car was
pledged. See Note 21 for the effect of the February 25, 1999 refinancing on the
pledging of assets and debt guarantees and related collateral.
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has the following financial instruments for which the
disclosure of fair values is required: cash and cash equivalents, accounts
receivable and payable, accrued expenses, due to affiliates, long-term debt and,
as of December 28, 1997, note receivable from Triarc and notes payable to
affiliates. The carrying amounts of cash and cash equivalents, accounts payable,
accrued expenses, due to affiliates, the note receivable from Triarc and notes
payable to affiliates approximated fair value due to the short-term maturities
of such assets and liabilities. The carrying amount of accounts receivable
approximated fair value due to the related allowance for doubtful accounts. The
carrying amounts and fair values of long-term debt (see Note 6) were as follows
(in thousands):
F-20
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
<TABLE>
<CAPTION>
YEAR-END
-----------------------------------------
1997 1998
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------ ----- ------ -----
<S> <C> <C> <C> <C>
9 3/4% Senior Notes......................... $275,000 $279,000 $275,000 $278,000
Existing Beverage Credit Agreement.......... 296,500 296,500 284,333 284,333
Mortgage Notes and Equipment Notes.......... 4,297 4,612 3,733 4,175
Other long-term debt........................ 2,115 2,115 7,589 7,589
-------- -------- -------- --------
$577,912 $582,227 $570,655 $574,097
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The fair values of the 9 3/4% Senior Notes are based on quoted market
prices. The fair values of the Existing Term Loans under the Existing Beverage
Credit Agreement approximated their carrying values due to the relatively
frequent resets of their floating interest rates. The fair values of the
Mortgage Notes and Equipment Notes were determined by discounting the future
scheduled payments using an interest rate assuming the same original issuance
spread over a current Treasury bond yield for securities with similar durations.
The fair values of all other long-term debt were assumed to reasonably
approximate their carrying amounts since (i) for capitalized lease obligations,
the weighted average implicit interest rate approximates current levels and
(ii) for all other debt, the remaining maturities are relatively short-term or
the carrying amounts of such debt are relatively insignificant.
(8) INCOME TAXES
As discussed in Note 1, the Company is included in the consolidated Federal
income tax return of Triarc Parent. Pursuant to tax-sharing agreements between
Triarc Parent and each of Triarc Beverage Holdings (including Cable Car
effective August 15, 1998), RC/Arby's and Cable Car (through August 15, 1998),
the Company provides for Federal income taxes on the same basis as if separate
consolidated returns for Triarc Beverage Holdings, RC/Arby's and Cable Car were
filed. As of December 28, 1997 and January 3, 1999, the Company was in a net
operating loss carryforward position and, as such, there were no taxes currently
payable.
The income (loss) before income taxes and extraordinary charges consisted
of the following components (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Domestic............................................... $(71,588) $(24,807) $55,050
Foreign................................................ (3,408) 679 221
-------- -------- -------
$(74,996) $(24,128) $55,271
-------- -------- -------
-------- -------- -------
</TABLE>
The (provision for) benefit from income taxes consisted of the following
components (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Current:
Federal............................................ $ (239) $(3,646) $(11,695)
State.............................................. (751) (1,051) (2,665)
Foreign............................................ (370) (805) (457)
------- ------- --------
(1,360) (5,502) (14,817)
------- ------- --------
Deferred:
Federal............................................ 22,570 9,722 (8,407)
State.............................................. 2,418 922 (2,060)
------- ------- --------
24,988 10,644 (10,467)
------- ------- --------
Total......................................... $23,628 $ 5,142 $(25,284)
------- ------- --------
------- ------- --------
</TABLE>
The current deferred income tax asset and the net non-current deferred
income tax (liability) resulted from the following components (in thousands):
F-21
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
<TABLE>
<CAPTION>
YEAR-END
-------------------
1997 1998
---- ----
<S> <C> <C>
Current deferred income tax assets:
Federal net operating loss carryforwards under
tax-sharing agreements with Triarc Parent ($17,058)
and state net operating loss carryforwards ($870).... $ 17,928 $ --
Accrued employee benefit costs......................... 3,491 3,363
Glass front vending machines written off............... 2,925 2,925
Allowance for doubtful accounts........................ 4,095 2,340
Closed facilities reserves............................. 1,919 1,371
Accrued production contract losses..................... 4,588 1,320
Inventory obsolescence reserves........................ 533 1,210
Accrued interest relating to income tax matters........ 773 1,123
Accrued lease payments for equipment transferred to RTM
(see Note 17)........................................ -- 1,082
Accrued advertising and promotions..................... 2,468 675
Facilities relocation and corporate restructuring...... 1,185 449
Accrued legal settlements and environmental matters.... 3,643 284
Other, net............................................. 4,444 2,792
-------- --------
47,992 18,934
-------- --------
Non-current deferred income tax assets (liabilities):
Trademarks basis differences........................... (53,929) (55,962)
Reserve for income tax contingencies and other tax
matters.............................................. (6,518) (9,379)
Federal net operating loss carryforwards and excess
income tax payments under tax-sharing agreements..... 20,650 39,518
State net operating loss carryforwards................. 3,716 5,158
Properties basis differences including depreciation.... (1,676) 3,978
Deferred franchise fees................................ 1,581 2,108
Accrued production contract losses..................... 3,471 --
Other, net............................................. 4,941 5,406
-------- --------
(27,764) (9,173)
-------- --------
$ 20,228 $ 9,761
-------- --------
-------- --------
</TABLE>
As of January 3, 1999 the Company had net operating loss carryforwards for
Federal income tax purposes (the 'NOLs') under tax-sharing agreements with
Triarc Parent of $84,476,000. Such carryforwards will expire $424,000,
$6,827,000, $13,575,000, $1,956,000 and $61,694,000 in each of the years 2008
through 2012, respectively. Subsequent to January 3, 1999 the Company entered
into a revised tax-sharing agreement and amendment thereto with Triarc Parent
limiting the benefit available to the Company for the NOLs (see Note 21).
F-22
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
The difference between the reported (provision for) benefit from income
taxes and the tax (provision) benefit that would result from applying the 35%
Federal statutory rate to the income (loss) before income taxes and
extraordinary charges is reconciled as follows (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Income tax (provision) benefit computed at Federal
statutory rate........................................ $26,249 $ 8,445 $(19,345)
Increase (decrease) in Federal tax benefit in 1996 and
1997 and (increase) decrease in Federal tax provision
in 1998 resulting from:
Amortization of non-deductible Goodwill............ (2,005) (2,471) (3,138)
State income tax (provision) benefit, net of
Federal income tax effect........................ 1,084 (84) (3,071)
Foreign tax rate in excess of United States Federal
statutory rate and foreign withholding taxes, net
of Federal income tax benefit.................... (241) (432) (247)
Effect of net operating losses of foreign
subsidiary for which no tax carryback benefit is
available (1,193) -- --
Other, net......................................... (266) (316) 517
------- ------- --------
$23,628 $ 5,142 $(25,284)
------- ------- --------
------- ------- --------
</TABLE>
The Federal income tax returns of Triarc Parent and its subsidiaries,
including RC/Arby's, have been examined by the Internal Revenue Service (the
'IRS') for the tax years 1989 through 1992. Triarc Parent has reached a
tentative settlement with the IRS, which is subject to review by the
Congressional Joint Committee on Taxation, regarding all remaining issues in
such audit. In connection therewith, the Company paid $4,576,000, including
interest, during 1997 of which $2,426,000 was the amount of tax due and
$2,150,000 was interest thereon. Such amounts were charged to reserves
principally provided in prior years. If the settlement is so approved, the
Company anticipates it would not have to make any further payments. The IRS is
examining the Federal income tax returns of Triarc Parent and its subsidiaries,
including RC/Arby's, for the year ended April 30, 1993 and eight-month
transition period ended December 31, 1993. In connection therewith, Triarc
Parent has not received any notices of proposed adjustments. In each of 1996,
1997 and 1998, the Company provided $1,000,000 for estimated interest, included
in 'Interest expense,' principally on the Company's reserve for income tax
contingencies relating to such examinations and anticipated subsequent
examinations through December 31, 1996, December 28, 1997 and January 3, 1999,
respectively. Management of the Company believes that adequate aggregate
provisions have been made principally in years prior to 1996 for any tax
liabilities, including interest thereon through January 3, 1999, that may result
from the resolution of these IRS examinations.
(9) REDEEMABLE PREFERRED STOCK
On May 22, 1997 Triarc Beverage Holdings issued 75,000 shares of its
redeemable cumulative convertible preferred stock, $1.00 par value (the
'Redeemable Preferred Stock') to Triarc Parent for $75,000,000. On August 21,
1997 each of the 75,000 outstanding shares of Redeemable Preferred Stock was
converted into 1/100 of a share as a result of a 1:100 reverse stock split,
resulting in 750 issued and outstanding shares of Redeemable Preferred Stock.
The Redeemable Preferred Stock (i) bears a cumulative annual dividend of 10% on
stated value compounded annually for any undeclared dividends, payable in cash
or additional shares of Redeemable Preferred Stock, if declared by, and at the
option of, the Company, (ii) is convertible into 750 shares of Triarc Beverage
Holdings' common stock (the 'Triarc Beverage Common Stock') at an adjusted
conversion price of $100,000 per share, (iii) requires mandatory redemption on
May 22, 2009 at $100,000 per share plus accrued and unpaid dividends and (iv)
has an aggregate liquidation value of $75,000,000 plus accrued and unpaid
dividends of $12,587,000
F-23
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
as of January 3, 1999. The cumulative dividends not declared or paid of
$4,604,000 and $7,983,000 for each of the years ended December 28, 1997 and
January 3, 1999, respectively, have been accounted for as increases in
'Redeemable preferred stock' with offsetting charges to 'Contributed capital'
since payment of the dividends is not solely in the control of the Company.
(10) MEMBER'S EQUITY
Triarc Beverage Holdings adopted the Triarc Beverage Holdings Corp. 1997
Stock Option Plan (the 'Triarc Beverage Plan') in 1997 which provides for the
grant of options to purchase shares of Triarc Beverage Common Stock to key
employees, officers, directors and consultants of Triarc Beverage Holdings,
Triarc Parent and their affiliates. Stock options under the Triarc Beverage Plan
have maximum terms of ten years and vest ratably over periods not exceeding four
years from the date of grant. The Triarc Beverage Plan provides for a maximum of
150,000 shares of Triarc Beverage Common Stock to be issued upon the exercise of
stock options and there remain 4,575 shares available for future grants under
the Triarc Beverage Plan as of January 3, 1999. A summary of changes in
outstanding stock options under the Triarc Beverage Plan is as follows:
<TABLE>
<CAPTION>
OPTION
OPTIONS PRICE
------- -----
<S> <C> <C>
Granted during 1997......................................... 76,250 $147.30
-------
Outstanding at December 28, 1997............................ 76,250 $147.30
Granted during 1998......................................... 72,175 $191.00
Terminated during 1998...................................... (3,000) $147.30
-------
Outstanding at January 3, 1999.............................. 145,425
-------
-------
</TABLE>
The option prices of the grants during 1997 and 1998 were equal to fair
value at the respective dates of grant as determined by independent appraisals.
The weighted average grant date fair value of the grants during 1997 and 1998
was $50.75 and $60.01, respectively. The weighted average option price of the
outstanding options at January 3, 1999 was $168.99. Such options (i) vest
ratably on July 1 of 1999, 2000 and 2001 and, accordingly, no options have been
exercised or are exercisable as of January 3, 1999 and (ii) have a remaining
weighted average term of 9.1 years at January 3, 1999.
As previously disclosed in Note 1, the Company accounts for stock options
in accordance with the intrinsic value method. Accordingly, the Company has not
recognized any compensation expense for the stock options granted in 1997 or
1998. Had compensation cost for such options been determined in accordance with
the fair value method, the Company's 1997 net loss would have been $22,264,000
and the Company's net income for 1998 would have been $28,277,000. The fair
values of stock options on the date of grant were estimated using the
Black-Scholes option pricing model with the following assumptions: (i) weighted
average risk-free interest rate of 6.22% and 5.54% for the 1997 and 1998 grants,
respectively, (ii) expected option life of 7 years and (iii) no dividends would
be paid. Since the stock of Triarc Beverage Holdings is not publicly traded,
volatility was not applicable. The above pro forma amounts are not likely to be
representative of the effects on net income in future periods because pro forma
compensation expense for grants under the Triarc Beverage Plan did not occur
prior to its adoption in 1997.
In 1995 the Company granted the syndicating lending bank in connection with
the Former Mistic Bank Facility and two senior officers of Mistic stock
appreciation rights (the 'Mistic Rights') for the equivalent of 3% and 9.7%
respectively, of Mistic's outstanding common stock plus the equivalent shares
represented by such stock appreciation rights. The Mistic Rights granted to the
syndicating lending bank were immediately vested and of those granted to the
senior officers, one-third vested over time and two-thirds vested depending on
Mistic's performance. The Mistic Rights provided for appreciation in the
per-share value of Mistic common stock above a base price of $28,637 per share,
F-24
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
which was equal to the price per share paid by Triarc Parent at the time of the
Mistic acquisition in 1995. The value of the Mistic Rights granted to the
syndicating lending bank was recorded as deferred financing costs. The Company
recognized periodically the estimated increase or decrease in the value of the
Mistic Rights; such amounts were not significant to the Company's consolidated
results of operations in 1996 or 1997. In connection with the refinancing of the
Former Mistic Bank Facility in May 1997, the Mistic Rights granted to the
syndicating lending bank were repurchased by the Company for $492,000; the
$177,000 excess of such cost over the then recorded value of such rights of
$315,000 was recorded as 'Interest expense' during 1997. In addition, the Mistic
Rights granted to the two senior officers were canceled in 1997 in consideration
for, among other things, their participation in the Triarc Beverage Plan. Since
the estimated per-share value of the Mistic common stock at the time of such
cancellation was lower than the base price of the Mistic Rights, no income or
expense was required to be recorded as a result of such cancellation.
(11) CHARGES RELATED TO POST-ACQUISITION TRANSITION, INTEGRATION AND CHANGES TO
BUSINESS STRATEGIES
Charges related to post-acquisition transition, integration and changes to
business strategies are attributed to the Snapple Acquisition and the Stewart's
Acquisition during 1997 and consisted of the following (in thousands):
<TABLE>
<S> <C>
Non-cash charges:
Write down glass front vending machines based on the
Company's change in estimate of their value
considering the Company's plans for their future
use(a)................................................ $12,557
Provide additional reserves for doubtful accounts
related to Snapple ($2,254) and the effect of the
Snapple Acquisition ($975) on collectibility of a
receivable from MetBev, Inc., an affiliate (see
Note 18) based on the Company's change in estimate of
the related write-off to be incurred(b)............... 3,229
Cash obligations:
Provide additional reserves for legal matters based on
the Company's change in Quaker's estimate of the
amounts required reflecting the Company's plans and
estimates of costs to resolve such matters(c)......... 6,697
Provide for certain costs in connection with the
successful consummation of the Snapple Acquisition and
the Mistic refinancing in connection with entering
into the Existing Beverage Credit Agreement(d)........ 4,000
Provide for fees paid to Quaker pursuant to a
transition services agreement(e)...................... 2,819
Provide for the portion of promotional expenses
relating to the period of 1997 prior to the Snapple
Acquisition as a result of the Company's then current
operating expectations(f)............................. 2,510
Provide for costs, principally for independent
consultants, incurred in connection with the
conversion of Snapple to the Company's operating and
financial information systems(g)...................... 1,603
Sign-on bonus related to the Stewart's Acquisition..... 400
-------
$33,815
-------
-------
</TABLE>
- ------------
(a) During Quaker's ownership of Snapple, the glass front vending machines were
held for sale to distributors and, accordingly, were carried at their
estimated net realizable value. During the business transition following
the Snapple Acquisition, the Company became aware that these machines were
frequently unreliable in the field. The Company made the decision to
correct the mechanical defects in the machines and to allow distributors to
use the machines at locations
(footnotes continued on next page)
F-25
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(footnotes continued from previous page)
chosen by them, without the cost of purchasing them. By deciding to no
longer sell the glass front vending machines, the Company will not recover
from its customers the value of the machines acquired in the Snapple
Acquisition. Accordingly, because the Company expects no specific
identifiable future cash flows, the Company wrote off an amount
representing the excess of the carrying value of the machines over their
estimated scrap value given the Company's decision described above.
(b) In the transition following the Snapple Acquisition, the Company decided
that, in order to improve relationships with customers, it would not
actively seek to collect certain past due balances, disputed amounts or
amounts that were not sufficiently supportable, and provided additional
reserves for doubtful accounts of $2,254,000.
The Company's soft drink concentrate segment sold finished products through
MetBev, Inc. ('MetBev'), a distributor in the New York metropolitan area.
Prior to the Snapple Acquisition, the MetBev business was sold to a
competitor of Snapple (see Note 18). When the Company acquired Snapple, it
recognized that its efforts to rebuild Snapple would have a severe
competitive effect on the acquiror of the MetBev business. The Company
acquired Snapple with the intent that Snapple would regain market share it
had lost in the New York metropolitan area. As a result of the Snapple
Acquisition and the Company's business strategy, the Company concluded that
the remaining $975,000 receivable from MetBev would more likely than not
become uncollectible.
(c) In the transition following the Snapple Acquisition, the Company decided
that, in order to improve relationships with customers and reverse
Snapple's sales decline, it would attempt to settle as many of the legal
matters pending at the time of the Snapple Acquisition, in particular the
RIB Matter (see Note 5), as quickly as possible. Accordingly, the Company
provided $6,697,000 representing the excess of the Company's estimate to
settle such claims over the existing reserves established by Quaker as of
the date of the Snapple Acquisition.
(d) In connection with the Snapple Acquisition and the related refinancing of
the debt of Mistic, Snapple and Mistic paid a $4,000,000 fee to Triarc
Parent on May 22, 1997 in order to compensate Triarc Parent for its
recurring indirect costs incurred while providing assistance in
consummating these transactions.
(e) During the transition following the Snapple Acquisition, the Company paid
$2,819,000 to Quaker in return for Quaker providing certain operating and
accounting services for Snapple for a six-week period in accordance with
the terms of a transition services agreement. Quaker performed these
services while the Company transitioned the records, operations and
management to the Company and its systems.
(f) In the transition following the Snapple Acquisition, the Company decided
that, in order to improve relationships with customers, the Company would
not pursue collection of the many questionable claimed promotional credits
and recognized within 'Charges related to post-acquisition transition,
integration and changes to business strategies' the $2,510,000 of
promotional costs in June 1997 which were in excess of the high end of the
range of the Company's expectations for promotional costs.
(g) In the transition following the Snapple Acquisition, the Company recognized
$1,603,000 of costs incurred to engage various consultants to help the
Company plan for the related systems and business procedure modifications
necessary in order to be able to manage the Snapple business.
As of December 28, 1997 all cash obligations had been liquidated other than
$6,697,000 of the additional reserves for legal matters, which were liquidated
during the year ended January 3, 1999.
F-26
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(12) FACILITIES RELOCATION AND CORPORATE RESTRUCTURING
The components of the facilities relocation and corporate restructuring
charge and an analysis of related activity are as follows (in thousands):
<TABLE>
<CAPTION>
1996
----------------------------------------------------
WRITE-OFF BALANCE
OF RELATED DECEMBER 31,
PROVISION (A) PAYMENTS ASSETS 1996
------------- -------- ------ ----
<S> <C> <C> <C> <C>
Non-cash charges:
Estimated costs related to the sublease of excess office
space associated with
The relocation of Royal Crown's corporate
headquarters....................................... $1,190 $-- $(1,190) $ --
The sale of all company-owned restaurants............. 2,018 -- (2,018) --
Costs of terminating Mistic distribution agreements....... 453 -- (453) --
Estimated costs of a Royal Crown plant closing............ 150 -- -- 150
Estimated cost of Mistic information systems to be
abandoned............................................... 150 -- (150) --
Cash obligations:
Employee severance and related termination costs
associated with
The relocation of Royal Crown's corporate
headquarters....................................... 2,028 -- -- 2,028
A Royal Crown plant closing........................... 172 -- -- 172
Estimated costs related to the sublease of excess office
space associated with
The relocation of Royal Crown's corporate
headquarters....................................... 110 -- -- 110
The sale of all company-owned restaurants............. 382 -- -- 382
Costs of terminating Mistic distribution agreements....... 847 (847) -- --
Estimated costs other than severance of a Royal Crown
plant closing........................................... 300 -- -- 300
------ ----- ------- ------
$7,800 $(847) $(3,811) $3,142
------ ----- ------- ------
------ ----- ------- ------
</TABLE>
<TABLE>
<CAPTION>
1997
---------------------------------------------------------------------------------
BALANCE WRITE-OFF BALANCE
JANUARY 1, OF RELATED DECEMBER 28,
1997 PROVISION (B) PAYMENTS ASSETS ADJUSTMENTS 1997
---- ------------- -------- ------ ----------- ----
<S> <C> <C> <C> <C> <C> <C>
Non-cash charges:
Estimated costs of a Royal Crown plant
closing............................. $ 150 $ -- $ -- $(143) $ (7) $ --
Write-off of certain beverage
distribution rights................. -- 300 -- (300) -- --
Cash obligations:
Employee severance and related
termination costs associated with
The relocation of Royal Crown's
corporate headquarters......... 2,028 500 (1,463) -- (1) 1,064
A Royal Crown plant closing....... 172 -- (173) -- 1 --
The sale of all company-owned
restaurants.................... -- 4,897 (3,088) -- -- 1,809
Other............................. -- 29 (29) -- -- --
Employee relocation costs associated
with
The relocation of Royal Crown's
corporate headquarters......... -- 637 (894) -- -- (257)
The sale of all company-owned
restaurants.................... -- 700 (327) -- -- 373
Estimated costs related to the
sublease of excess office space
associated with
The relocation of Royal Crown's
corporate headquarters......... 110 -- -- -- -- 110
The sale of all company-owned
restaurants.................... 382 -- (140) -- (87) 155
Estimated costs other than severance
of a Royal Crown plant closing...... 300 -- (128) -- (172) --
------ ------ ------- ----- ------ ------
$3,142 $7,063 $(6,242) $(443) $ (266) $3,254
------ ------ ------- ----- ------ ------
------ ------ ------- ----- ------ ------
</TABLE>
F-27
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
<TABLE>
<CAPTION>
1998
----------------------------------------------------
BALANCE BALANCE
DECEMBER 29, JANUARY 3,
1997 PAYMENTS ADJUSTMENTS 1999(C)
---- -------- ----------- -------
<S> <C> <C> <C> <C>
Cash obligations:
Employee severance and related termination costs
associated with
The relocation of Royal Crown's corporate
headquarters............................... $1,064 $ (601) $ -- $ 463
The sale of all company-owned restaurants.... 1,809 (1,236) -- 573
Employee relocation costs associated with
The relocation of Royal Crown's corporate
headquarters............................... (257) -- -- (257)
The sale of all company-owned restaurants.... 373 (24) (65) 284
Estimated costs related to the sublease of excess
office space associated with
The relocation of Royal Crown's corporate
headquarters............................... 110 -- -- 110
The sale of all company-owned restaurants.... 155 (53) (102) --
------ ------- ----- ------
$3,254 $(1,914) $(167) $1,173
------ ------- ----- ------
------ ------- ----- ------
</TABLE>
- ------------
(a) The 1996 facilities relocation and corporate restructuring charge
principally related to (i) estimated losses on planned subleases of surplus
office space (principally for (a) the write-off of nonrecoverable
unamortized leasehold improvements and employee work stations included in
furniture and fixtures which were abandoned and no longer depreciated after
December 31, 1996 and (b) rent and common area maintenance costs for the
estimated period the surplus space would remain unoccupied) as a result of
the then planned sale of company-owned restaurants and the relocation (the
'Royal Crown Relocation') of Royal Crown's corporate headquarters which
were centralized with Triarc Beverage Holdings' offices in White Plains,
New York, (ii) employee severance costs associated with the 1997
termination of 35 headquarters employees, principally in finance and
accounting, legal, marketing and human resources, in connection with the
Royal Crown Relocation and 5 operations employees at Royal Crown's Ohio
production facility which was shut down, (iii) the settlement costs of
terminating certain Mistic distribution agreements including cash payments
of $847,000 and the write-off of receivables from such distributors, in
lieu of additional cash payments, of $453,000, (iv) the shutdown of Royal
Crown's Ohio production facility (principally for (a) an estimated $150,000
write-off of obsolete steel drums used to send concentrate to bottlers and
(b) estimated cash obligations principally for an estimated $150,000 for
refurbishing the plant and $50,000 for the transfer of equipment to the
Company's other soft drink concentrate plant) and (v) a provision for the
write-off of the unamortized deferred cost of Mistic information systems as
a result of the planned merger of the Royal Crown and Mistic information
systems following the Royal Crown Relocation.
(b) The 1997 facilities relocation and corporate restructuring charge
principally related to (i) employee severance and related termination costs
associated with restructuring the restaurant segment in connection with the
RTM Sale (see Note 3) and, to a much lesser extent, employee severance and
related termination costs of three additional Royal Crown headquarters
employees terminated in 1997 and employee relocation costs, which are
expensed as incurred, associated with the RTM Sale and the Royal Crown
Relocation, (ii) costs associated with the Royal Crown Relocation and
(iii) the write-off of the remaining unamortized costs of certain beverage
distribution rights reacquired in prior years and no longer being utilized
by the Company as a result of the sale or liquidation of the assets and
liabilities of MetBev, Inc. (see Note 18). The severance and termination
costs in the restaurant segment were as a result of the termination in 1997
of 54 employees principally in finance and accounting, owned restaurant
operations, marketing and human resources as well as the president and
chief executive officer of Arby's. Adjustments to the
(footnotes continued on next page)
F-28
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(footnotes continued from previous page)
accrual for estimated costs related to the sublease of excess office space
associated with the sale of company-owned restaurants resulted from
subsequent favorable lease negotiations with the landlord for the
divisional office space. Adjustments to the accrual for estimated costs of
the Royal Crown plant closing resulted from certain costs associated with
the plant closing running less than expected, specifically estimated costs
for refurbishing the plant.
(c) Adjustments to the accrual for estimated costs principally relate to the
sublease of excess office space associated with the sale of company-owned
restaurants which resulted from subsequent favorable lease negotiations
with the landlord. The balance in the facilities relocation and corporate
restructuring accrual as of January 3, 1999 consists principally of
employee severance and related termination costs of $1,036,000 for
employees terminated in 1997 which are principally scheduled to be paid
during the fiscal year ending January 2, 2000.
(13) GAIN (LOSS) ON SALE OF BUSINESSES, NET
The 'Gain (loss) on sale of businesses, net' as reflected in the
accompanying consolidated statements of operations was $(3,513,000) and
$5,016,000 in 1997 and 1998, respectively. The loss in 1997 resulted from the
$4,089,000 loss from the RTM Sale (see Note 3) less the $576,000 recognized gain
on the C&C Sale (see Note 3). The gain in 1998 consisted of (i) the $4,702,000
gain from the sale of Select Beverages (see Note 5) and (ii) $314,000 additional
recognition of deferred gain from the C&C Sale.
(14) OTHER INCOME, NET
Other income, net consisted of the following components (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Equity in earnings (losses) of affiliates................... $ -- $ 862 $(1,222)
Interest income............................................. 503 1,671 3,754
Rental income............................................... 195 894 916
Gain (loss) on sale of fixed assets......................... (307) 1,008 502
Gain on lease termination................................... -- 892 --
Other, net.................................................. 79 205 1,348
----- ------ -------
$ 470 $5,532 $ 5,298
----- ------ -------
----- ------ -------
</TABLE>
(15) EXTRAORDINARY CHARGES
The 1997 extraordinary charges resulted from the assumption and the early
extinguishment, respectively, of (i) the Mortgage Notes and Equipment Notes
assumed by RTM in connection with the RTM Sale (see Note 3) and
(ii) obligations under the Former Mistic Bank Facility in May 1997 refinanced in
connection with entering into the Existing Beverage Credit Agreement (see
Note 6). Such extraordinary charges consisted of the write-off of $4,839,000 of
previously unamortized deferred financing costs less $1,885,000 of income tax
benefit.
(16) RETIREMENT AND OTHER BENEFIT PLANS
The Company maintains several 401(k) defined contribution plans and
participates in a Triarc Parent 401(k) defined contribution plan (collectively,
the 'Plans') covering all of the Company's employees who meet certain minimum
requirements and elect to participate including subsequent to (i) May 22, 1997
employees of Snapple and (ii) May 1, 1998 employees of Cable Car. Under the
provisions of the Plans, employees may contribute various percentages of their
compensation ranging up to a maximum of 15%, subject to certain limitations. The
Plans provide for Company matching contributions at either (i) 50% of employee
contributions up to the first 5% thereof or (ii) 100% of employee contributions
up to the first 3% thereof. In addition, the Plans also provide for annual
Company contributions of a discretionary aggregate amount to be determined by
the employer. In
F-29
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
connection with both of these employer contributions, the Company provided as
compensation expense $1,141,000, $1,181,000 and $1,470,000 in 1996, 1997 and
1998, respectively.
The Company maintains a defined benefit plan for eligible employees through
December 31, 1988 of certain subsidiaries, benefits under which were frozen in
1992. The net periodic pension cost for 1996, 1997 and 1998, as well as the
accrued pension cost as of December 28, 1997 and January 3, 1999, were
insignificant.
The Company maintains unfunded postretirement medical and death benefit
plans for a limited number of retired employees who have provided certain
minimum years of service. The medical benefits are principally contributory
while death benefits are non-contributory. The net postretirement benefit cost
for 1996, 1997 and 1998, as well as the accumulated postretirement benefit
obligation as of December 28, 1997 and January 3, 1999, were insignificant.
Triarc Parent has granted stock options to certain key employees of the
Company under Triarc Parent's 1993 Equity Participation Plan and 1997 Equity
Participation Plan. Included in such options are (i) 165,000 granted prior to
1996 at an option price of $20.00 per share which was below the $31.75 fair
market value of Triarc Parent's Class A Common Stock on the date of grant (based
on the closing price on such date) resulting in an aggregate difference of
$1,939,000 and (ii) 445,000 granted in 1997 at a weighted average option price
of $12.59 which was below the $14.46 weighted average fair market value of
Triarc Parent's Class A Common Stock on the respective dates of grant (based on
the closing price on such dates) resulting in an aggregate difference of
$832,000. Since the key employees provide services to the Company and not to
Triarc Parent, all of such differences are being charged to the Company as
compensation expense over the applicable vesting periods through 2002, net of
reversals of prior charges arising from the forfeiture of certain of those
options in connection with employee terminations (the 'Forfeiture Adjustments').
Compensation expense resulting from the below market stock options aggregated
$74,000 (net of $173,000 of Forfeiture Adjustments), $144,000 (net of $325,000
of Forfeiture Adjustments) and $287,000 (net of $14,000 of Forfeiture
Adjustments) during 1996, 1997 and 1998, respectively, and is included in
'General and administrative' in the accompanying consolidated statements of
operations.
(17) LEASE COMMITMENTS
The Company leases buildings and improvements and machinery and equipment.
Prior to the RTM Sale, some leases provided for contingent rentals based upon
sales volume. In connection with the RTM Sale in May 1997, substantially all
operating and capitalized lease obligations associated with the sold restaurants
were assumed by RTM, although the Company remains contingently liable if the
future lease payments (which could potentially aggregate a maximum of
approximately $98,000,000 as of January 3, 1999 assuming RTM has made all
scheduled payments to date under such lease obligations) are not made by RTM.
The Company provided $9,677,000 in 'Reduction in carrying value of long-lived
assets to be disposed' in 1996 representing the present value of future
operating lease payments relating to certain equipment transferred to RTM but
the obligations for which remain with the Company.
Rental expense under operating leases consisted of the following components
(in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Minimum rentals........................................... $23,489 $14,952 $7,463
Contingent rentals........................................ 794 204 --
------- ------- ------
24,283 15,156 7,463
Less sublease income...................................... 5,460 6,027 4,354
------- ------- ------
$18,823 $ 9,129 $3,109
------- ------- ------
------- ------- ------
</TABLE>
F-30
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
The Company's future minimum rental payments and sublease rental income for
leases having an initial lease term in excess of one year as of January 3, 1999,
excluding $4,586,000 as of January 3, 1999 of those remaining future operating
lease payments for which the Company has provided as set forth above, are as
follows (in thousands):
<TABLE>
<CAPTION>
RENTAL PAYMENTS SUBLEASE
----------------------- INCOME-
CAPITALIZED OPERATING OPERATING
LEASES LEASES LEASES
------ ------ ------
<S> <C> <C> <C>
1999.................................................. $ 41 $ 6,479 $ 2,953
2000.................................................. 35 6,080 2,909
2001.................................................. 35 6,130 2,711
2002.................................................. 35 4,899 636
2003.................................................. 26 4,823 400
Thereafter............................................ 39 20,640 1,665
---- ------- -------
Total minimum payments........................... 211 $49,051 $11,274
------- -------
------- -------
Less interest......................................... 53
----
Present value of minimum capitalized lease payments... $158
----
----
</TABLE>
The present value of minimum capitalized lease payments is included, as
applicable, with 'Long-term debt' or 'Current portion of long-term debt' in the
accompanying consolidated balance sheets (see Note 6).
(18) TRANSACTIONS WITH RELATED PARTIES
The following is a summary of transactions between the Company and its
related parties (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Purchases of raw materials from Triarc Parent(a)......... $ -- $17,159 $123,014
Costs allocated to the Company by Triarc Parent under
management services agreements(b)...................... 8,500 9,417 10,500
Cash dividends paid to Triarc............................ -- -- 23,556
Cumulative dividends on the Redeemable Preferred Stock
recorded but not declared or paid (Note 9)............. -- 4,604 7,983
Provision (reversal) for uncollectible receivables
(subsequent recoveries of accounts previously fully
reserved) from sales and advance to MetBev, Inc.(c).... 2,000 975 (474)
Compensation costs charged to the Company by Triarc
Parent for below market stock options (Note 16)........ 74 144 287
Interest income on notes receivable from Triarc
Parent(d).............................................. 261 230 118
Interest expense on notes payable to:
Chesapeake Insurance Company Limited(e)............. 208 130 27
Triarc Parent(e).................................... 2,588 1,278 12
Issuance of Redeemable Preferred Stock (Note 9).......... -- 75,000 --
Capital contributions(f)................................. 1,500 30,015 --
Repurchase of $720 principal amount of promissory notes
due from franchisees from Southeastern Public Service
Company, a subsidiary of Triarc Parent, at fair
value.................................................. -- 690 --
Net sales to MetBev, Inc. net of marketing support
credits(c)............................................. 8,985 -- --
Payments to Triarc Parent for usage of aircraft.......... -- 32 --
</TABLE>
- ------------
(a) The Company purchases certain raw materials from Triarc Parent at Triarc
Parent's purchase cost from unaffiliated third-party suppliers. At
December 28, 1997 and January 3, 1999, $14,576,000 and
(footnotes continued on next page)
F-31
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(footnotes continued from previous page)
$18,618,000, respectively, of amounts owed for such purchases were included
in 'Due to affiliates' in the accompanying consolidated balance sheets.
(b) The Company receives from Triarc Parent certain management services,
including legal, accounting, tax, insurance, financial and other management
services, under management services agreements. Such costs were allocated
to the Company by Triarc Parent based upon the pro rata share of the sum of
the greater of income before income taxes, depreciation and amortization
and 10% of revenues for each of the Company's principal operating
subsidiaries to the aggregate for all of Triarc Parent's principal
operating subsidiaries, except that such costs paid by Mistic through
May 22, 1997 were limited to amounts permitted under the Former Mistic Bank
Facility and such costs paid by Mistic and Snapple commencing May 22, 1997
and Cable Car commencing August 15, 1998 were limited to amounts permitted
under the subsequent Existing Beverage Credit Agreement (see Note 21 for
disclosure regarding amendments to the management services agreements with
Mistic, Snapple, Cable Car, Royal Crown and Arby's). Management of the
Company believes that such allocation method is reasonable. Further,
management of the Company believes that such allocation approximates the
costs that would have been incurred by the Company on a stand alone basis.
(c) Prior to 1996 the Company acquired preferred stock in MetBev representing a
37.5% voting interest and a warrant to acquire 37.5% of the common stock of
MetBev for $1,000,000 and a license for a five-year period for the Royal
Crown distribution rights for its products in New York City and certain
surrounding counties. Such investment was written off prior to 1996. In
December 1996 the distribution rights of MetBev were sold to a third party
(the 'MetBev Purchaser') for minimum payments over a three-year period
aggregating $1,050,000 and MetBev commenced the liquidation of its
remaining assets and liabilities. In connection therewith, the Company's
voting interest in MetBev increased to 44.7% principally due to the
cancellation of non-vested stock owned by third parties. The Company has
not received any payments on the $1,050,000 from the MetBev Purchaser and,
as of December 28, 1997, did not expect to collect any payments due to
financial difficulties of the MetBev Purchaser which the Company believes
were due to competitive pressures on the MetBev Purchaser following the
Snapple Acquisition and the Company's revitalization of Snapple. The MetBev
Purchaser has remained in business and during 1997 and 1998 continued to
purchase Royal Crown product. The Company has withheld a portion of
promotional allowances otherwise due to the MetBev Purchaser and offset
such amounts against the $1,050,000 purchase price. The Company sold (with
minimal gross profit) finished product to MetBev and, since MetBev had
incurred significant losses from its inception and had a stockholders'
deficit as of December 31, 1996 of $8,943,000, provided $2,000,000 in 1996
in 'Advertising, selling and distribution' for resulting uncollectible
receivables. In 1997 the Company provided a reserve for its remaining
receivables from MetBev, including $539,000 advanced in 1997 for costs
incurred to liquidate the remaining assets and liabilities and related
close-down costs, since MetBev's only source of funds to pay the Company
would be collection of the $1,050,000 purchase price. Such provision after
offsetting $384,000 principally reflecting amounts otherwise payable to the
MetBev Purchaser for promotional allowances, amounted to $975,000 and is
included in 'Acquisition related' costs (see Note 11). During the year
ended January 3, 1999, the Company reversed $474,000 in 'Advertising,
selling and distribution' of the reserve for uncollectible amounts due from
the MetBev Purchaser representing the offset of promotional allowances
otherwise owed to the MetBev Purchaser.
(d) The Company earned interest income at 11 7/8% on cash advances made to
Triarc Parent under a promissory note receivable.
(e) The Company incurred interest expense at 9 1/2% and 11 7/8% under
promissory notes payable to Chesapeake Insurance Company Limited
('Chesapeake Insurance'), a subsidiary of Triarc Parent
(footnotes continued on next page)
F-32
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(footnotes continued from previous page)
until its sale in December 1998, and Triarc Parent, respectively. The
balances of notes payable to Chesapeake Insurance and Triarc Parent at
December 28, 1997 (none at January 3, 1999) were $1,000,000 and $200,000,
respectively.
(f) In 1996 and 1997, Mistic was prohibited from paying $1,500,000 and
$625,000, respectively, of management services fees described in (b) above
under the terms of the Former Mistic Bank Facility prior to its repayment
and, accordingly, such amounts were accounted for as capital contributions
from Triarc Parent in such years. In May 1997, in connection with the RTM
Sale, ARHC and AROC issued 950 of each of their common shares
(approximately 49% of the common stock after such issuances) to Triarc
Parent in exchange for aggregate consideration of $31,999,000 consisting of
cash of $6,211,000 and forgiveness of the then outstanding principal amount
of $23,150,000, plus related accrued interest of $2,638,000, under a note
payable by the Company to Triarc Parent as of May 5, 1997. Triarc Parent's
49% interest in the equity of ARHC and AROC amounting to $2,570,000 and
$2,472,000 as of December 28, 1997 and January 3, 1999, respectively, is
included in 'Deferred income and other liabilities' in the accompanying
consolidated balance sheets. The excess of $29,390,000 of the consideration
for the stock issued to Triarc Parent of $31,999,000 over such minority
interest of $2,609,000 as of May 5, 1997 was accounted for as a capital
contribution and is reflected in 'Contributed capital.' The 49% minority
interest in the losses of ARHC and AROC for the years ended December 28,
1997 and January 3, 1999 aggregated $39,000 and $99,000, respectively, and
is included as income in 'Other income, net' in the accompanying
consolidated statements of operations.
Certain officers and directors of the Company are also officers and
directors of Triarc Parent. See also Notes 5, 9, 10 and 16 with respect to
other transactions with related parties.
(19) 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 $1,534,000 (see Note 4) as of
January 3, 1999. Although the outcome of such matters cannot be predicted with
certainty and some of these may be disposed of unfavorably to the Company, based
on currently available information and given the Company's aforementioned
reserves, the Company does not believe that such legal and environmental matters
will have a material adverse effect on its consolidated financial position or
results of operations.
(20) BUSINESS SEGMENTS
The Company has adopted Statement of Financial Accounting Standards
No. 131 ('SFAS 131') 'Disclosures about Segments of an Enterprise and Related
Information' which requires disclosure of financial and descriptive information
by operating segment in the Company's consolidated financial statements.
SFAS 131 utilizes a management approach to define operating segments along the
lines used by management internally for evaluating segment performance and
deciding resource allocations to segments. The Company manages and internally
reports its operations by business segments which, under the criteria of
SFAS 131, are: premium beverages, soft drink concentrates and restaurants (see
Note 2 for a description of each segment). The premium beverage segment consists
of Mistic and the operations acquired in (i) the Snapple Acquisition (see
Note 3) commencing May 22, 1997 and (ii) the Stewart's Acquisition (see Note 3)
commencing November 25, 1997.
The Company evaluates segment performance and allocates resources based on
each segment's earnings before interest, taxes, depreciation and amortization
and reduction in carrying value of long-lived assets to be disposed ('EBITDA').
Information concerning the segments in which the Company operates is shown in
the table below. EBITDA has been computed as operating profit (loss) plus (less)
depreciation and amortization. Operating profit (loss) has been computed as
revenues less operating expenses. In computing EBITDA and operating profit or
loss, interest expense and non-operating income and expenses have not been
considered. Operating loss for the restaurant segment for 1996
F-33
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
reflects a provision of $58,900,000 for the impairment of company-owned
restaurants and related exit costs (see Note 3). EBITDA and operating loss for
1996 reflect $7,800,000 of facilities relocation and corporate restructuring
charges (see Note 12), of which $1,450,000 relates to the premium beverage
segment, $3,950,000 relates to the soft drink concentrate segment and $2,400,000
relates to the restaurant segment. EBITDA and operating loss for 1997 reflect
(i) $33,815,000 of charges related to post-acquisition transition, integration
and changes to business strategies for the premium beverage segment (see
Note 11) and (ii) $7,063,000 of facilities relocation and corporate
restructuring charges (see Note 12), of which $29,000 relates to the premium
beverage segment, $1,437,000 relates to the soft drink concentrate segment and
$5,597,000 relates to the restaurant segment. Identifiable assets by segment are
those assets that are used in the Company's operations in each segment. General
corporate assets consist primarily of cash and cash equivalents, deferred income
tax benefit (principally resulting from net operating loss carryforwards of
RC/Arby's parent company) and deferred financing costs.
The products and services in each of the Company's segments are relatively
homogeneous and, as such, revenues by product and service have not been
reported. The Company's operations are principally in the United States with
foreign operations representing less than 3% of revenues in 1996, 1997 and 1998.
Accordingly, revenues and assets by geographical area have not been presented
since they are insignificant. In addition, no customer accounted for more than
10% of consolidated revenues in 1996, 1997 or 1998.
The following is a summary of the Company's segment information for the
years ended December 31, 1996, December 28, 1997 and January 3, 1999 or, in the
case of identifiable assets, as of the end of such periods in thousands:
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Revenues:
Premium beverages................................ $131,083 $408,841 $611,545
Soft drink concentrates.......................... 178,059 146,882 124,868
Restaurants...................................... 288,293 140,429 78,623
-------- -------- --------
Consolidated revenues....................... $597,435 $696,152 $815,036
-------- -------- --------
-------- -------- --------
EBITDA:
Premium beverages................................ $ 13,381 $ 7,561 $ 77,825
Soft drink concentrates.......................... 18,418 18,504 17,006
Restaurants...................................... 31,819 31,200 43,180
General corporate................................ (189) (149) (11)
-------- -------- --------
Consolidated EBITDA......................... 63,429 57,116 138,000
-------- -------- --------
Less depreciation and amortization:
Premium beverages................................ 7,233 16,236 21,665
Soft drink concentrates.......................... 6,471 6,340 8,640
Restaurants...................................... 16,260 2,668 2,503
-------- -------- --------
Consolidated depreciation and
amortization.............................. 29,964 25,244 32,808
-------- -------- --------
Less reduction in carrying value of long-lived assets
to be disposed:
Restaurants...................................... 58,900 -- --
-------- -------- --------
</TABLE>
(table continued on next page)
F-34
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(table continued from previous page)
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Operating profit (loss):
Premium beverages................................ $ 6,148 $ (8,675) $ 56,160
Soft drink concentrates.......................... 11,947 12,164 8,366
Restaurants...................................... (43,341) 28,532 40,677
General corporate................................ (189) (149) (11)
-------- -------- --------
Consolidated operating profit (loss)........ (25,435) 31,872 105,192
Interest expense...................................... (50,031) (58,019) (60,235)
Gain (loss) on sale of businesses, net................ -- (3,513) 5,016
Other income, net..................................... 470 5,532 5,298
-------- -------- --------
Consolidated income (loss) before income
taxes and extraordinary charges........... $(74,996) $(24,128) $ 55,271
-------- -------- --------
-------- -------- --------
Identifiable assets:
Premium beverages................................ $110,950 $586,731 $535,565
Soft drink concentrates.......................... 203,847 194,603 171,647
Restaurants...................................... 154,410 53,759 52,267
General corporate assets......................... 11,385 18,868 31,491
-------- -------- --------
Consolidated identifiable assets............ $480,592 $853,961 $790,970
-------- -------- --------
-------- -------- --------
</TABLE>
(21) SUBSEQUENT EVENTS
On February 25, 1999 TCPG and Triarc Beverage Holdings issued $300,000,000
(including $20,000,000 aggregate issued to the Chairman and Chief Executive
Officer and the President and Chief Operating Officer of the Company) principal
amount of 10 1/4% senior subordinated notes due 2009 (the 'Notes') and Snapple,
Mistic, Cable Car, RC/Arby's and Royal Crown concurrently entered into an
agreement (the 'Credit Agreement') for a new $535,000,000 senior bank credit
facility (the 'Credit Facility') consisting of a $475,000,000 term facility, all
of which was borrowed as term loans (the 'Term Loans') on February 25, 1999, and
a $60,000,000 revolving credit facility (the 'Revolving Credit Facility') which
provides for revolving credit loans (the 'Revolving Loans') by Snapple, Mistic
or Cable Car effective February 25, 1999 and RC/Arby's or Royal Crown effective
upon the redemption of the 9 3/4% Senior Notes (see below). There were no
borrowings of Revolving Loans on February 25, 1999. The Company utilized the
aggregate net proceeds of these borrowings to (i) repay on February 25, 1999 the
outstanding principal amount ($284,333,000 as of January 3, 1999 and February
25, 1999) of the Existing Term Loans under the Existing Beverage Credit
Agreement and related accrued interest ($2,231,000 and $1,503,000 as of January
3, 1999 and February 25, 1999, respectively), (ii) fund the redemption (the
'Redemption') on March 30, 1999 of the $275,000,000 of borrowings under the
9 3/4% Senior Notes including related accrued interest ($11,460,000 and
$4,395,000 as of January 3, 1999 and March 30, 1999, respectively) and
redemption premium ($7,662,000 as of January 3, 1999 and March 30, 1999),
(iii) acquire Millrose Distributors, Inc. and the assets of Mid-State Beverage,
Inc., two New Jersey distributors of the Company's premium beverages, for
$17,376,000, including expenses, (iv) provide for estimated fees and expenses of
$29,600,000 relating to the issuance of the Notes and the consummation of the
Credit Facility (the 'Refinancing Transactions') and (v) pay one-time
distributions, including dividends, to Triarc Parent of the remaining net
proceeds from the above borrowings and all the Company's cash and cash
equivalents on hand in excess of $2,000,000 retained by the Company for working
capital purposes. The currently estimated fees and expenses of $29,600,000
relating to the issuance of the Notes and the consummation of the Credit
Facility consist of approximately $15,200,000 of fees and expenses, including
commitment fees, paid to the lenders under the Credit Facility, approximately
$9,700,000 of fees paid to the underwriters of the Notes, approximately
$3,400,000 of legal, auditing and accounting fees, approximately $700,000 of
printing fees
F-35
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
and approximately $600,000 of other fees. Such one-time distributions consisted
of $91,420,000 paid on February 25, 1999 and approximately $124,000,000 expected
to be paid on March 30, 1999 following the Redemption. As a result of the
repayment prior to maturity of the Existing Term Loans and the Redemption, the
Company recognized an extraordinary charge during the first quarter of the year
ending January 2, 2000 of an estimated $11,772,000 for (i) the write-off of
previously unamortized (a) deferred financing costs ($11,622,000 and $10,792,000
as of January 3, 1999 and March 30, 1999, respectively) and (b) interest rate
cap agreement costs ($159,000 and $146,000 as of January 3, 1999 and
February 25, 1999, respectively) and (ii) the payment of the aforementioned
redemption premium, net of income tax benefit ($7,136,000 and $6,828,000 as of
January 3, 1999 and March 30, 1999, respectively).
Under the indenture (the 'Indenture') pursuant to which the Notes were
issued, the Notes are redeemable at the option of the Company at amounts
commencing at 105.125% of principal beginning February 2004 decreasing annually
to 100% in February 2007 through February 2009. In addition, should the Company
consummate a permitted public equity offering or receive proceeds from a public
equity offering by Triarc Parent, the Company may at any time prior to February
2002 redeem up to $105,000,000 of the Notes at 110.25% of principal amount with
the net proceeds of such public offering. The Company has agreed to use its best
efforts to have a registration statement (the 'Registration Statement') covering
resales by holders of the Notes declared effective by the SEC on or before
August 24, 1999. In the event the Notes are not registered for resale by such
date, the annual interest rate on the Notes will increase by 1/2% to 10 3/4%
until such time as the Registration Statement is declared effective.
Borrowings under the Credit Facility bear interest, at the Company's
option, at rates based on either the 30, 60, 90 or 180-day LIBOR (ranging from
5.06% to 5.07% at January 3, 1999) or an alternate base rate (the 'ABR'). The
ABR (7 3/4% at January 3, 1999) represents the higher of the prime rate or 1/2%
over the Federal funds rate. The interest rates on LIBOR-based loans are reset
at the end of the period corresponding with the duration of the LIBOR selected.
The interest rates on ABR-based loans are reset at the time of any change in the
ABR. Revolving Loans and one class of the Term Loans with an initial borrowing
of $45,000,000 bear interest at 3% over LIBOR or 2% over ABR until such time as
such margins may be subject to downward adjustment by up to 3/4% based on the
borrowers' leverage ratio, as defined. The other two classes of Term Loans with
initial borrowings of $125,000,000 and $305,000,000 bear interest at 3 1/2% and
3 3/4% over LIBOR, respectively, and 2 1/2% and 2 3/4%, respectively, over ABR.
The borrowing base for Revolving Loans is the sum of 80% of eligible accounts
receivable and 50% of eligible inventories. At January 31, 1999 there would have
been $39,423,000 (unaudited) (excluding $12,433,000 (unaudited) of availability
relating to RC/Arby's and Royal Crown which will not be available until the
Redemption) of borrowing availability under the Revolving Credit Facility in
accordance with limitations due to such borrowing base. The Term Loans are due
$4,912,000 in 1999, $8,238,000 in 2000, $10,488,000 in 2001, $12,738,000 in
2002, $14,987,000 in 2003, $15,550,000 in 2004, $94,299,000 in 2005,
$242,875,000 in 2006 and $70,913,000 in 2007 and any Revolving Loans would be
due in full in March 2005. The borrowers must also make mandatory prepayments in
an amount, if any, initially equal to 75% of excess cash flow, as defined in the
Credit Agreement.
Under the Credit Agreement substantially all of the assets, other than cash
and cash equivalents of Snapple, Mistic and Cable Car (and of RC/Arby's, Royal
Crown and Arby's upon the Redemption) and their subsidiaries, are pledged as
security. The Company's obligations with respect to the Notes are guaranteed by
Snapple, Mistic and Cable Car and all of their domestic subsidiaries and, upon
the Redemption, the Notes will be guaranteed by RC/Arby's and all of its
domestic subsidiaries. All of such subsidiary guarantors of the Notes effective
February 25, 1999 are directly or indirectly wholly-owned by TCPG or Triarc
Beverage Holdings. Such guarantees are or will be full and unconditional and on
a joint and several basis and are or will be unsecured. As a result of such
guarantees, condensed consolidating financial statements of the Company are
presented in Note 22 which depict, in separate
F-36
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
columns, the parent companies of each of the issuers of the Notes (TCPG, which
as previously indicated was formed January 15, 1999 and, as such, had no
balances or transactions during any of the years presented, and Triarc Beverage
Holdings), those subsidiaries which are or will be guarantors, those
subsidiaries which are or will be non-guarantors, elimination adjustments and
the consolidated total as if such guarantees were in effect as of January 1,
1996. Separate financial statements of the guarantor subsidiaries are not
presented because the Company's management has determined that they would not be
material to investors. The Company's obligations with respect to the Credit
Facility are guaranteed (the 'Guarantee') by substantially all of the domestic
subsidiaries of Snapple, Mistic and Cable Car (and those of RC/Arby's and Royal
Crown upon the Redemption). As collateral for such guarantees under the Credit
Facility, all of the stock of Snapple, Mistic and Cable Car and substantially
all of their domestic and 65% of the stock of their directly-owned foreign
subsidiaries are pledged and, upon the Redemption, all of the stock of RC/Arby's
and Royal Crown and substantially all of their domestic and 65% of the stock of
their directly-owned foreign subsidiaries, will be pledged.
The Indenture, the Credit Agreement and the Guarantee contain various
covenants which (i) require meeting certain financial amount and ratio tests,
(ii) limit, among other matters (a) the incurrence of indebtedness, (b) the
retirement of certain debt prior to maturity, (c) investments, (d) asset
dispositions and (e) affiliate transactions other than in the normal course of
business, and (iii) restrict the payment of dividends to Triarc Parent. Under
the most restrictive of such covenants, the borrowers would not be able to pay
any dividends to Triarc Parent other than (i) the aforementioned one-time
distributions, including dividends, paid to Triarc Parent in connection with the
Refinancing Transactions and (ii) certain defined amounts in the event of
consummation of a securitization of certain assets of Arby's.
In connection with the Refinancing Transactions, on February 25, 1999 the
Company entered into a revised tax-sharing agreement with Triarc Parent pursuant
to which the Company would not receive credit for its existing NOLs and excess
Federal income tax payments as of the date of the new agreement. Under such
agreement, the Company would not receive any benefit for the deferred tax assets
associated with the NOLs and excess Federal income tax payments aggregating
$39,518,000. However, were such deferred tax assets to be written off, the
Company would have been in default under the minimum net worth covenant of the
Credit Agreement (the 'Minimum Net Worth Covenant'). Such Minimum Net Worth
Covenant inadvertently did not provide for the write-off of such deferred tax
assets. Accordingly, the tax-sharing agreement was amended effective
February 25, 1999 to provide that the Company would continue to receive benefit
for deferred tax assets associated with the NOLs and the Federal income tax
prepayments except that Triarc Parent has the right to cause the effective
transfer of any unutilized benefits from the Company to Triarc Parent, but only
to the extent any such transfer would not cause a default under the Minimum Net
Worth Covenant. Subsequent to January 3, 1999 and through July 4, 1999 the
Company utilized $6,355,000 of such benefits to offset income taxes otherwise
payable on its pre-tax income before extraordinary charges and generated an
additional $6,339,000 of such benefits as a result of the extraordinary charges
resulting from the repayment prior to maturity of the Existing Term Loans and
the Redemption and transferred $20,799,000 of such deferred tax benefits to
Triarc Parent as if such transfer were a distribution from the Company to Triarc
Parent. Accordingly, the Company has $18,703,000 of such deferred tax benefits
as of July 4, 1999. The Company has not established a valuation allowance
relating to such net operating loss carryforwards and excess Federal income tax
payments since as of July 4, 1999 it is more likely than not that the Company
can realize the related deferred tax benefit.
In connection with the Refinancing Transactions, on February 25, 1999 the
Company entered into two (one each with respect to the combined beverage
businesses of TCPG (the 'Triarc Beverage Group') and Arby's) amended management
services agreements (see Note 18 for disclosure concerning the previous
management services agreements) with Triarc Parent. The agreements provide for
annual fixed fees of $6,700,000 for Triarc Beverage Group and $3,800,000 for
Arby's plus, commencing January
F-37
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
1, 2000, annual cost of living adjustments. The fee to the Triarc Beverage Group
is to be allocated among the companies based upon each company's pro rata share
of the sum of the greater of EBITDA and 10% of revenues to the aggregate for the
Triarc Beverage Group.
The following unaudited pro forma data of the Company for 1998 have been
prepared by adjusting the historical data reflected in the accompanying
statement of operations for such year to reflect the effects of the Refinancing
Transactions as if such transactions had been consummated on December 29, 1997.
Such pro forma data are presented for information purposes only and do not
purport to be indicative of the Company's actual results of operations had such
transaction actually been consummated on December 29, 1997 or of the Company's
future results of operations and are as follows (in thousands):
<TABLE>
<CAPTION>
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
Revenues.................................................. $815,036 $827,589
Operating profit.......................................... 105,192 106,047
Interest expense.......................................... (60,235) (78,935)
Income from continuing operations......................... 29,987 18,057
</TABLE>
(22) CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The following consolidating financial statements of the Company depict, in
separate columns, the parent companies of each of the issuers of the Notes (TCPG
and Triarc Beverage Holdings -- collectively, the 'Parent Companies') on a
consolidated basis, those subsidiaries which are guarantors, those subsidiaries
which are non-guarantors, elimination adjustments and the consolidated total.
F-38
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
CONDENSED CONSOLIDATING BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 28, 1997
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....... $ 1 $ 33,294 $ 947 $ -- $ 34,242
Receivables..................... -- 74,985 1,192 -- 76,177
Inventories..................... -- 55,181 2,213 -- 57,394
Deferred income tax benefit..... -- 47,992 -- -- 47,992
Note receivable from Triarc
Companies, Inc. .............. -- 2,000 -- -- 2,000
Prepaid expenses and other
current assets................ -- 6,342 56 -- 6,398
--------- --------- ------- --------- ---------
Total current assets....... 1 219,794 4,408 -- 224,203
Investment in subsidiaries........... 36,743 6,472 -- (43,215) --
Investments in affiliates............ -- 25,476 -- -- 25,476
Intercompany receivables............. -- 2,494 1,961 (4,455) --
Properties........................... -- 24,085 3,827 -- 27,912
Unamortized costs in excess of net
assets of acquired companies....... -- 278,986 -- -- 278,986
Trademarks........................... -- 269,201 -- -- 269,201
Deferred costs and other assets...... -- 28,172 11 -- 28,183
--------- --------- ------- --------- ---------
$ 36,744 $ 854,680 $10,207 $ (47,670) $ 853,961
--------- --------- ------- --------- ---------
--------- --------- ------- --------- ---------
LIABILITIES AND
MEMBER'S DEFICIT
Current liabilities:
Current portion of long-term
debt.......................... $ -- $ 13,798 $ -- $ -- $ 13,798
Notes payable to affiliates..... -- 1,200 -- -- 1,200
Accounts payable................ -- 44,302 824 -- 45,126
Accrued expenses................ -- 110,459 377 -- 110,836
Due to affiliates............... -- 22,710 -- -- 22,710
--------- --------- ------- --------- ---------
Total current
liabilities.............. -- 192,469 1,201 -- 193,670
Long-term debt....................... -- 564,114 -- -- 564,114
Intercompany payables................ -- 1,961 2,494 (4,455) --
Deferred income taxes................ -- 27,724 40 -- 27,764
Deferred income and other
liabilities........................ -- 31,669 -- -- 31,669
Redeemable preferred stock........... 79,604 -- -- -- 79,604
Member's equity (deficit):
Common stock.................... -- 4 526 (530) --
Contributed capital............. 138,059 217,659 7,996 (225,655) 138,059
Accumulated deficit............. (180,719) (180,720) (1,786) 182,506 (180,719)
Accumulated other comprehensive
deficit....................... (200) (200) (264) 464 (200)
--------- --------- ------- --------- ---------
Total member's equity
(deficit)................ (42,860) 36,743 6,472 (43,215) (42,860)
--------- --------- ------- --------- ---------
$ 36,744 $ 854,680 $10,207 $ (47,670) $ 853,961
--------- --------- ------- --------- ---------
--------- --------- ------- --------- ---------
</TABLE>
F-39
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
<TABLE>
<CAPTION>
JANUARY 3, 1999
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....... $ 1 $ 71,335 $ 1,456 $ -- $ 72,792
Receivables..................... -- 66,078 612 -- 66,690
Inventories..................... -- 45,446 1,315 -- 46,761
Deferred income tax benefit..... -- 18,934 -- -- 18,934
Prepaid expenses and other
current assets................ -- 7,232 26 -- 7,258
--------- --------- ------- --------- ---------
Total current assets....... 1 209,025 3,409 -- 212,435
Investment in subsidiaries........... 42,865 9,901 -- (52,766) --
Intercompany receivables............. -- 1,077 6,067 (7,144) --
Properties........................... -- 21,543 3,777 -- 25,320
Unamortized costs in excess of net
assets of acquired companies....... -- 268,215 -- -- 268,215
Trademarks........................... -- 261,906 -- -- 261,906
Deferred costs and other assets...... -- 23,082 12 -- 23,094
--------- --------- ------- --------- ---------
$ 42,866 $ 794,749 $13,265 $ (59,910) $ 790,970
--------- --------- ------- --------- ---------
--------- --------- ------- --------- ---------
LIABILITIES AND
MEMBER'S DEFICIT
Current liabilities:
Current portion of long-term
debt.......................... $ -- $ 9,678 $ -- $ -- $ 9,678
Accounts payable................ -- 36,463 530 -- 36,993
Accrued expenses................ -- 79,724 1,724 -- 81,448
Due to affiliates............... -- 29,082 -- -- 29,082
--------- --------- ------- --------- ---------
Total current
liabilities.............. -- 154,947 2,254 -- 157,201
Long-term debt....................... -- 560,977 -- -- 560,977
Intercompany payables................ -- 6,067 1,077 (7,144) --
Deferred income taxes................ -- 9,140 33 -- 9,173
Deferred income and other
liabilities........................ -- 20,753 -- -- 20,753
Redeemable preferred stock........... 87,587 -- -- -- 87,587
Member's equity (deficit):
Common stock.................... -- 4 526 (530) --
Contributed capital............. 106,269 197,886 9,533 (207,419) 106,269
Accumulated deficit............. (150,732) (154,767) 168 154,599 (150,732)
Accumulated other comprehensive
deficit....................... (258) (258) (326) 584 (258)
--------- --------- ------- --------- ---------
Total member's equity
(deficit)................ (44,721) 42,865 9,901 (52,766) (44,721)
--------- --------- ------- --------- ---------
$ 42,866 $ 794,749 $13,265 $ (59,910) $ 790,970
--------- --------- ------- --------- ---------
--------- --------- ------- --------- ---------
</TABLE>
F-40
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales........................ $ -- $532,014 $ 8,092 $-- $540,106
Royalties, franchise fees and
other revenues................. -- 57,571 (242) -- 57,329
-------- -------- ------- ------- --------
-- 589,585 7,850 -- 597,435
-------- -------- ------- ------- --------
Costs and expenses:
Cost of sales, excluding
depreciation and
amortization................... -- 308,014 6,627 -- 314,641
Advertising, selling and
distribution................... -- 135,157 649 -- 135,806
General and administrative....... -- 73,940 1,819 -- 75,759
Depreciation and amortization,
excluding amortization of
deferred financing costs....... -- 29,453 511 -- 29,964
Facilities relocation and
corporate restructuring........ -- 7,800 -- -- 7,800
Impairment of company-owned
restaurants and related exit
costs.......................... -- 55,945 2,955 -- 58,900
-------- -------- ------- ------- --------
-- 610,309 12,561 -- 622,870
-------- -------- ------- ------- --------
Operating loss.............. -- (20,724) (4,711) -- (25,435)
Interest expense...................... -- (50,031) -- -- (50,031)
Other income (expense), net........... -- (823) 1,293 -- 470
Equity in net losses of
subsidiaries........................ (51,368) (3,423) -- 54,791 --
-------- -------- ------- ------- --------
Loss before income taxes.... (51,368) (75,001) (3,418) 54,791 (74,996)
(Provision for) benefit from income
taxes............................... -- 23,633 (5) -- 23,628
-------- -------- ------- ------- --------
Net loss.................... $(51,368) $(51,368) $(3,423) $54,791 $(51,368)
-------- -------- ------- ------- --------
-------- -------- ------- ------- --------
</TABLE>
F-41
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 28, 1997
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLDIATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales........................ $ -- $614,516 $15,105 $-- $629,621
Royalties, franchise fees and
other revenues................. -- 66,556 (25) -- 66,531
-------- -------- ------- ------- --------
-- 681,072 15,080 -- 696,152
-------- -------- ------- ------- --------
Costs and expenses:
Cost of sales, excluding
depreciation and
amortization................... -- 323,423 8,794 -- 332,217
Advertising, selling and
distribution................... -- 180,383 4,339 -- 184,722
General and administrative....... -- 78,733 2,486 -- 81,219
Depreciation and amortization,
excluding amortization of
deferred financing costs....... -- 25,219 25 -- 25,244
Charges related to
post-acquisition transition,
integration and changes to
business strategies............ -- 33,815 -- -- 33,815
Facilities relocation and
corporate restructuring........ -- 7,063 -- -- 7,063
-------- -------- ------- ------- --------
-- 648,636 15,644 -- 664,280
-------- -------- ------- ------- --------
Operating profit (loss)..... -- 32,436 (564) -- 31,872
Interest expense...................... -- (58,019) -- -- (58,019)
Gain on sale of businesses, net....... -- (3,493) (20) -- (3,513)
Other income, net..................... -- 4,244 1,288 -- 5,532
Equity in net earnings (losses) of
subsidiaries........................ (21,940) 292 -- 21,648 --
-------- -------- ------- ------- --------
Income (loss) before income
taxes and extraordinary
charge.................... (21,940) (24,540) 704 21,648 (24,128)
(Provision for) benefit from income
taxes............................... -- 5,554 (412) -- 5,142
-------- -------- ------- ------- --------
Income (loss) before
extraordinary charge...... (21,940) (18,986) 292 21,648 (18,986)
Extraordinary charge.................. -- (2,954) -- -- (2,954)
-------- -------- ------- ------- --------
Net income (loss)........... $(21,940) $(21,940) $ 292 $21,648 $(21,940)
-------- -------- ------- ------- --------
-------- -------- ------- ------- --------
</TABLE>
F-42
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 3, 1999
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales........................ $ -- $719,116 $16,320 $ -- $735,436
Royalties, franchise fees and
other revenues................. -- 79,599 1 -- 79,600
------- -------- ------- -------- --------
-- 798,715 16,321 -- 815,036
------- -------- ------- -------- --------
Costs and expenses:
Cost of sales, excluding
depreciation and
amortization................... -- 380,025 10,858 -- 390,883
Advertising, selling and
distribution................... -- 195,028 2,037 -- 197,065
General and administrative....... -- 87,876 1,212 -- 89,088
Depreciation and amortization,
excluding amortization of
deferred financing costs....... -- 32,765 43 -- 32,808
------- -------- ------- -------- --------
-- 695,694 14,150 -- 709,844
------- -------- ------- -------- --------
Operating profit............ -- 103,021 2,171 -- 105,192
Interest expense...................... -- (60,235) -- -- (60,235)
Gain on sale of businesses, net....... -- 5,016 -- -- 5,016
Other income, net..................... -- 4,244 1,054 -- 5,298
Equity in net earnings of
subsidiaries........................ 29,987 1,988 -- (31,975) --
------- -------- ------- -------- --------
Income before income
taxes..................... 29,987 54,034 3,225 (31,975) 55,271
Provision for income taxes............ -- (24,047) (1,237) -- (25,284)
------- -------- ------- -------- --------
Net income.................. $29,987 $ 29,987 $ 1,988 $(31,975) $ 29,987
------- -------- ------- -------- --------
------- -------- ------- -------- --------
</TABLE>
F-43
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities................ $-- $ 11,842 $ (517) $-- $ 11,325
------ -------- ------- ------ --------
Cash flows from investing activities:
Capital expenditures............. -- (17,104) (9) -- (17,113)
Business acquisitions............ -- (1,972) -- -- (1,972)
Proceeds from sales of
properties..................... -- 1,413 -- -- 1,413
Other............................ -- (356) -- -- (356)
------ -------- ------- ------ --------
Net cash used in investing
activities.......................... -- (18,019) (9) -- (18,028)
------ -------- ------- ------ --------
Cash flows from financing activities:
Proceeds from long-term debt..... -- 12,476 -- -- 12,476
Repayments of long-term debt..... -- (11,453) -- -- (11,453)
Capital contribution............. -- (3,981) 3,981 -- --
Net borrowings from (repayments
to) affiliates................. -- 6,593 (2,903) -- 3,690
Deferred financing costs......... -- (325) -- -- (325)
------ -------- ------- ------ --------
Net cash provided by financing
activities.......................... -- 3,310 1,078 -- 4,388
------ -------- ------- ------ --------
Net increase (decrease) in cash and
cash equivalents.................... -- (2,867) 552 -- (2,315)
Cash and cash equivalents at beginning
of year............................. -- 9,090 795 -- 9,885
------ -------- ------- ------ --------
Cash and cash equivalents at end of
year................................ $-- $ 6,223 $ 1,347 $-- $ 7,570
------ -------- ------- ------ --------
------ -------- ------- ------ --------
</TABLE>
F-44
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 28, 1997
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities............... $ -- $ 35,466 $ (26) $-- $ 35,440
-------- --------- ------ ------ ---------
Cash flows from investing activities:
Acquisition of Snapple Beverage
Corp.......................... (75,000) (232,205) -- -- (307,205)
Other business acquisitions, net
of cash acquired of
$2,409,000.................... -- 2,409 -- -- 2,409
Capital expenditures............ -- (4,204) -- -- (4,204)
Proceeds from sales of
properties and businesses..... -- 3,529 -- -- 3,529
Other........................... -- (158) -- -- (158)
-------- --------- ------ ------ ---------
Net cash used in investing
activities......................... (75,000) (230,629) -- -- (305,629)
-------- --------- ------ ------ ---------
Cash flows from financing activities:
Proceeds from long-term debt.... -- 303,400 -- -- 303,400
Repayments of long-term debt.... -- (79,901) -- -- (79,901)
Proceeds from issuance of common
stock......................... 1 -- -- -- 1
Proceeds from issuance of
redeemable preferred stock.... 75,000 -- -- -- 75,000
Capital contribution............ -- 6,211 -- -- 6,211
Net borrowings from (repayments
to) affiliates................ -- 3,909 (374) -- 3,535
Deferred financing costs........ -- (11,385) -- -- (11,385)
-------- --------- ------ ------ ---------
Net cash provided by (used in)
financing activities............... 75,001 222,234 (374) -- 296,861
-------- --------- ------ ------ ---------
Net increase (decrease) in cash and
cash equivalents................... 1 27,071 (400) -- 26,672
Cash and cash equivalents at
beginning of year.................. -- 6,223 1,347 -- 7,570
-------- --------- ------ ------ ---------
Cash and cash equivalents at end of
year............................... $ 1 $ 33,294 $ 947 $-- $ 34,242
-------- --------- ------ ------ ---------
-------- --------- ------ ------ ---------
</TABLE>
F-45
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 3, 1999
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by operating
activities.......................... $ -- $ 58,723 $ 381 $-- $ 59,104
------- -------- ------ ------ --------
Cash flows from investing activities:
Proceeds from sale of investment
in Select Beverages............ -- 28,342 -- -- 28,342
Proceeds from sales of
properties..................... -- 1,538 -- -- 1,538
Capital expenditures............. -- (11,107) -- -- (11,107)
Business acquisition............. -- (3,000) -- -- (3,000)
Other............................ -- (2) -- -- (2)
------- -------- ------ ------ --------
Net cash provided by investing
activities.......................... -- 15,771 -- -- 15,771
------- -------- ------ ------ --------
Cash flows from financing activities:
Dividends........................ -- (23,556) -- -- (23,556)
Repayments of long-term debt..... -- (14,158) -- -- (14,158)
Net borrowings from affiliates... -- 1,261 128 -- 1,389
------- -------- ------ ------ --------
Net cash provided by (used in)
financing activities................ -- (36,453) 128 -- (36,325)
------- -------- ------ ------ --------
Net increase in cash and cash
equivalents......................... -- 38,041 509 -- 38,550
Cash and cash equivalents at beginning
of year............................. 1 33,294 947 -- 34,242
------- -------- ------ ------ --------
Cash and cash equivalents at end of
year................................ $ 1 $ 71,335 $1,456 $-- $ 72,792
------- -------- ------ ------ --------
------- -------- ------ ------ --------
</TABLE>
(23) SUMMARIZED FINANCIAL INFORMATION OF CO-ISSUER OF THE NOTES
Summarized balance sheet information as of December 28, 1997 and January 3,
1999 and statement of operations information for the years ended December 31,
1996, December 28, 1997 and January 3, 1999 is being presented for the co-issuer
of the Notes, Triarc Beverage Holdings. As set forth in Note 1, Triarc Beverage
Holdings did not commence operations until May 22, 1997 when Triarc Parent
contributed Mistic to it and Triarc Beverage Holdings acquired Snapple. The
financial information from January 1, 1996 to May 22, 1997 is that of Mistic,
which Triarc Parent had acquired on August 9, 1995 as the predecessor company to
Triarc Beverage Holdings. The Mistic information has been derived and condensed,
as applicable, from the audited financial statements of Mistic not included
herein. Further, effective May 17, 1999 TCPG contributed the stock of Cable Car
to Triarc Beverage Holdings; accordingly the summarized financial information of
the co-issuer reflects the financial information of Cable Car from the
November 25, 1997 date of its acquisition by Triarc on an 'as if pooling' basis.
Such information for Triarc Beverage Holdings is as follows (in thousands):
F-46
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1997 1999
---- ----
<S> <C> <C>
BALANCE SHEET INFORMATION
Current assets......................................... $139,184 $134,924
Unamortized costs in excess of net assets of acquired
companies............................................ 125,590 120,145
Trademarks............................................. 264,498 254,340
Other assets........................................... 57,459 27,161
-------- --------
$586,731 $536,570
-------- --------
-------- --------
Current liabilities.................................... $117,424 $ 95,674
Long-term debt......................................... 284,507 282,951
Other liabilities...................................... 61,197 39,052
Redeemable preferred stock............................. 79,604 87,587
Stockholder's equity................................... 43,999 31,306
-------- --------
$586,731 $536,570
-------- --------
-------- --------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------
DECEMBER 31, DECEMBER 28, JANUARY 3,
1996 1997 1999
---- ---- ----
<S> <C> <C> <C>
STATEMENT OF OPERATIONS INFORMATION
Revenues.................................. $131,083 $408,841 $611,546
Operating profit (loss)................... 6,148 (8,676)(a) 56,160
Income (loss) before extraordinary
charge.................................. (810) (18,803) 19,158
Net income (loss)......................... (810) (19,957) 19,158
</TABLE>
- ------------
(a) Reflects charges related to post-acquisition transition, integration and
changes to business strategies of $32,840,000 for the year ended December
28, 1997 (see Note 11). The amount of the charges recognized by Triarc
Beverage Holdings differs from the $33,815,000 recognized by the Company by
$975,000, representing a charge relating to MetBev (see Note 18) which was
recorded by Royal Crown, a company which was not a subsidiary of Triarc
Beverage Holdings.
* * * * *
F-47
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 3, OCTOBER 3,
1999(A) 1999
------- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 72,792 $ 40,131
Receivables............................................ 66,690 105,814
Inventories............................................ 46,761 67,326
Deferred income tax benefit............................ 18,934 18,901
Prepaid expenses and other current assets.............. 7,258 5,568
--------- ---------
Total current assets.............................. 212,435 237,740
Properties.................................................. 25,320 25,118
Unamortized costs in excess of net assets of acquired
companies................................................. 268,215 273,065
Trademarks.................................................. 261,906 253,768
Deferred costs and other assets............................. 23,094 38,139
--------- ---------
$ 790,970 $ 827,830
--------- ---------
--------- ---------
LIABILITIES AND MEMBER'S DEFICIT
Current liabilities:
Current portion of long-term debt...................... $ 9,678 $ 45,570
Accounts payable....................................... 36,993 37,659
Accrued expenses....................................... 81,448 88,342
Due to Triarc Companies, Inc. and other affiliates..... 29,082 32,960
--------- ---------
Total current liabilities......................... 157,201 204,531
Long-term debt.............................................. 560,977 734,218
Deferred income taxes....................................... 9,173 41,329
Deferred income and other liabilities....................... 20,753 21,367
Redeemable preferred stock.................................. 87,587 --
Member's equity (deficit):
Contributed capital.................................... 106,269 --
Accumulated deficit.................................... (150,732) (173,311)
Accumulated other comprehensive deficit................ (258) (304)
--------- ---------
Total member's deficit............................ (44,721) (173,615)
--------- ---------
$ 790,970 $ 827,830
--------- ---------
--------- ---------
</TABLE>
(A) Derived from the audited consolidated financial statements as of
January 3, 1999
See accompanying notes to condensed consolidated financial statements.
F-48
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
SEPTEMBER 27, OCTOBER 3,
1998 1999
---- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Revenues:
Net sales.............................................. $594,439 $619,630
Royalties, franchise fees and other revenues........... 57,536 60,098
-------- --------
651,975 679,728
-------- --------
Costs and expenses:
Cost of sales, excluding depreciation and amortization
related to sales of $1,231,000 and $1,518,000......... 316,364 329,740
Advertising, selling and distribution.................. 166,811 164,772
General and administrative............................. 68,842 69,887
Depreciation and amortization, excluding amortization
of deferred financing costs........................... 24,974 23,649
Capital structure reorganization related............... -- 3,208
-------- --------
576,991 591,256
-------- --------
Operating profit.................................. 74,984 88,472
Interest expense............................................ (44,658) (56,931)
Investment income........................................... 1,864 2,692
Gain (loss) on sale of businesses, net...................... 4,934 (627)
Other income, net........................................... 1,839 2,112
-------- --------
Income before income taxes and extraordinary charges... 38,963 35,718
Provision for income taxes.................................. (18,663) (18,204)
-------- --------
Income before extraordinary charges.................... 20,300 17,514
Extraordinary charges....................................... -- (11,772)
-------- --------
Net income............................................. $ 20,300 $ 5,742
-------- --------
-------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-49
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
SEPTEMBER 27, OCTOBER 3,
1998 1999
---- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income............................................. $ 20,300 $ 5,742
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of costs in excess of net assets of
acquired companies, trademarks and certain other
items............................................... 17,394 17,234
Depreciation and amortization of properties.......... 7,580 6,415
Amortization of deferred financing costs............. 3,063 3,202
Write-off of unamortized deferred financing costs and
interest rate cap agreement costs................... -- 10,938
Provision for deferred income taxes.................. 12,973 12,123
Capital structure reorganization related charge...... -- 3,208
Provision for doubtful accounts...................... 2,368 2,112
(Gain) loss on sale of businesses, net............... (4,934) 627
Payments for charges related to post-acquisition
transition, integration and changes to business
strategies.......................................... (5,943) (204)
Other, net........................................... (1,150) 1,152
Changes in operating assets and liabilities:
Increase in receivables........................... (21,526) (39,014)
Increase in inventories........................... (13,946) (19,017)
Decrease (increase) in prepaid expenses and other
current assets.................................. (1,853) 1,544
Increase in accounts payable and accrued
expenses........................................ 14,803 2,759
Increase in due to Triarc Companies, Inc. and
other affiliates................................ 12,954 6,608
-------- ---------
Net cash provided by operating activities....... 42,083 15,429
-------- ---------
Cash flows from investing activities:
Acquisition of Millrose Distributors, Inc.............. -- (17,491)
Proceeds from sale of investment in Select Beverages,
Inc................................................... 28,342 --
Capital expenditures................................... (9,007) (5,764)
Other.................................................. (1,629) 452
-------- ---------
Net cash provided by (used in) investing
activities................................... 17,706 (22,803)
-------- ---------
Cash flows from financing activities:
Proceeds from long-term debt........................... -- 775,000
Repayments of long-term debt........................... (10,426) (565,941)
Dividends.............................................. (23,556) (204,746)
Deferred financing costs............................... -- (29,600)
Net borrowings from affiliates......................... 1,389 --
-------- ---------
Net cash used in financing activities........... (32,593) (25,287)
-------- ---------
Net increase (decrease) in cash and cash equivalents........ 27,196 (32,661)
Cash and cash equivalents at beginning of period............ 34,242 72,792
-------- ---------
Cash and cash equivalents at end of period.................. $ 61,438 $ 40,131
-------- ---------
-------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-50
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 3, 1999
(UNAUDITED)
(1) BASIS OF PRESENTATION
Triarc Consumer Products Group, LLC ('TCPG' and together with its
subsidiaries, the 'Company'), a wholly-owned subsidiary of Triarc Companies,
Inc. ('Triarc Parent'), was formed on January 15, 1999 and, effective February
23, 1999, acquired through a capital contribution all of the stock previously
owned directly or indirectly by Triarc Parent of RC/Arby's Corporation
('RC/Arby's'), Triarc Beverage Holdings Corp. ('Triarc Beverage Holdings') and
Stewart's Beverages, Inc. ('Stewart's'), formerly Cable Car Beverage
Corporation. Effective May 17, 1999 TCPG contributed the stock of Stewart's to
Triarc Beverage Holdings. Triarc Beverage Holdings' principal wholly-owned
subsidiaries are Snapple Beverage Corp. ('Snapple'), Mistic Brands, Inc.
('Mistic') and, effective May 17, 1999, Stewart's. RC/Arby's principal
wholly-owned subsidiaries are Royal Crown Company, Inc. ('Royal Crown') and
Arby's, Inc. ('Arby's'). The accompanying prior year consolidated financial
statements present the consolidated financial position, results of operations
and cash flows of TCPG as if it had been formed prior to December 29, 1997. The
consolidated financial position, results of operations and cash flows of each of
TCPG, RC/Arby's, Triarc Beverage Holdings and, prior to May 17, 1999, Stewart's
and their subsidiaries have been consolidated since such entities were under the
common control of Triarc Parent since December 29, 1997 and, accordingly, the
accompanying condensed consolidated financial statements are presented on an
'as-if pooling' basis.
The accompanying unaudited condensed consolidated financial statements of
TCPG have been prepared in accordance with Rule 10-01 of Regulation S-X
promulgated by the Securities and Exchange Commission (the 'SEC') and,
therefore, do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
conformity with generally accepted accounting principles. In the opinion of the
Company, however, the accompanying condensed consolidated financial statements
contain all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the Company's financial position as of January 3,
1999 and October 3, 1999 and its results of operations and cash flows for the
nine-month periods ended September 27, 1998 and October 3, 1999 (see below).
This information should be read in conjunction with the consolidated financial
statements and notes thereto for the fiscal year ended January 3, 1999 included
elsewhere herein.
The Company reports on a fiscal year basis consisting of 52 or 53 weeks
ending on the Sunday closest to December 31. In accordance therewith, the
Company's first nine months of 1998 commenced on December 29, 1997 and ended on
September 27, 1998 and the Company's first nine months of 1999 commenced on
January 4, 1999 and ended on October 3, 1999. For the purposes of these
condensed consolidated financial statements, the period from December 29, 1997
to September 27, 1998 is referred to below as the nine-month period ended
September 27, 1998 and the period from January 4, 1999 to October 3, 1999 is
referred to below as the nine-month period ended October 3, 1999.
(2) INVENTORIES
The following is a summary of the components of inventories (in thousands):
<TABLE>
<CAPTION>
JANUARY 3, OCTOBER 3,
1999 1999
---- ----
<S> <C> <C>
Raw materials.......................................... $20,268 $26,785
Work in process........................................ 98 283
Finished goods......................................... 26,395 40,258
------- -------
$46,761 $67,326
------- -------
------- -------
</TABLE>
(3) LONG-TERM DEBT
On February 25, 1999 TCPG and Triarc Beverage Holdings issued $300,000,000
principal amount of 10 1/4% senior subordinated notes due 2009 (the 'Notes'),
including an aggregate $20,000,000 issued
F-51
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
to the Chairman and Chief Executive Officer and President and Chief Operating
Officer (the 'Executives') of the Company. The Company has been informed that,
as of April 23, 1999, the Executives no longer hold any of the Notes.
Concurrently, Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown entered into
an agreement (the 'Credit Agreement') for a new $535,000,000 senior bank credit
facility (the 'Credit Facility') consisting of a $475,000,000 term facility, all
of which was borrowed as three classes of term loans (the 'Term Loans') on
February 25, 1999, and a $60,000,000 revolving credit facility (the 'Revolving
Credit Facility') which provides for revolving credit loans (the 'Revolving
Loans') by Snapple, Mistic, Stewart's, RC/Arby's or Royal Crown. There have been
no borrowings of Revolving Loans through October 3, 1999. The Company utilized
the aggregate net proceeds of these borrowings to (1) repay on February 25, 1999
the $284,333,000 outstanding principal amount of the term loans under a former
$380,000,000 credit agreement, as amended (the 'Former Beverage Credit
Agreement') entered into by Snapple, Mistic, Triarc Beverage Holdings and
Stewart's and $1,503,000 of related accrued interest, (2) redeem (the
'Redemption') on March 30, 1999 the $275,000,000 of borrowings under the
RC/Arby's 9 3/4% senior secured notes due 2000 (the '9 3/4% Senior Notes') and
pay $4,395,000 of related accrued interest and $7,662,000 of redemption premium,
(3) acquire Millrose Distributors, Inc. and the assets of Mid-State Beverage,
Inc. (collectively, 'Millrose'), two New Jersey distributors of the Company's
premium beverages, for $17,491,000, including expenses of $241,000, (4) pay
estimated fees and expenses of $29,600,000 relating to the issuance of the Notes
and the consummation of the Credit Facility (collectively, the 'Refinancing
Transactions') and (5) pay one-time distributions, including dividends, to
Triarc Parent of the remaining net proceeds from the above borrowings and all
the Company's cash and cash equivalents on hand in excess of approximately
$2,000,000, which was retained by the Company for working capital purposes. Such
one-time distributions consisted of $91,420,000 paid on February 25, 1999 and
$124,108,000 paid on March 30, 1999 following the Redemption, and included
aggregate dividends of $204,746,000. See Note 8 for disclosure of the
extraordinary charges related to the aforementioned debt repayments and recorded
during the first quarter of the year ending January 2, 2000.
The Notes mature in 2009 and do not require any amortization of principal
prior to 2009. However, under the indenture (the 'Indenture') pursuant to which
the Notes were issued, the Notes are redeemable at the option of the Company at
amounts commencing at 105.125% of principal beginning February 2004 decreasing
annually to 100% in February 2007 through February 2009. In addition, should the
Company consummate a permitted public equity offering or receive proceeds from a
public equity offering by Triarc Parent, the Company may at any time prior to
February 2002 redeem up to $105,000,000 of the Notes at 110.25% of principal
amount with the net proceeds of such public offering. On November 12, 1999, TCPG
and Triarc Beverage Holdings filed with the SEC amendment No. 3 to a
registration statement (the 'Registration Statement') covering resales by
holders of the Notes. The Registration Statement was not declared effective by
the SEC by August 24, 1999 and, in accordance with the Indenture, the annual
interest rate on the Notes increased by 1/2% to 10 3/4% and will remain at
10 3/4% until the Registration Statement is declared effective.
Borrowings under the Credit Facility bear interest, at the Company's
option, at rates based on either the 30, 60, 90 or 180-day London Interbank
Offered Rate ('LIBOR') (ranging from 5.40% to 6.08% at October 3, 1999) or an
alternate base rate (the 'ABR'). The ABR (8 1/4% at October 3, 1999) represents
the higher of the prime rate or 1/2% over the Federal funds rate. The interest
rates on LIBOR-based loans are reset at the end of the period corresponding with
the duration of the LIBOR selected. The interest rates on ABR-based loans are
reset at the time of any change in the ABR. Revolving Loans and one class of the
Term Loans with $43,875,000 outstanding as of October 3, 1999 (the 'Term A
Loans') bear interest at 3% over LIBOR or 2% over ABR until such time as such
margins may be subject to downward adjustment by up to 3/4% based on the
borrowers' leverage ratio, as defined. It is not expected that such interest
rate margins will be adjusted during the remainder of 1999. The other two
classes of Term Loans with $124,375,000 and $303,475,000 outstanding as of
F-52
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
October 3, 1999 (the 'Term B Loans' and 'Term C Loans,' respectively) bear
interest at 3 1/2% and 3 3/4% over LIBOR, respectively, and 2 1/2% and 2 3/4%,
respectively, over ABR. The borrowing base for Revolving Loans is the sum of 80%
of eligible accounts receivable and 50% of eligible inventories. At October 3,
1999 there was $59,951,000 of borrowing availability under the Revolving Credit
Facility in accordance with limitations due to such borrowing base. Before
consideration of the effect of an excess cash flow prepayment discussed below,
the Term Loans are due $1,637,000 during the remainder of 1999, $8,238,000 in
2000, $10,488,000 in 2001, $12,738,000 in 2002, $14,987,000 in 2003, $15,550,000
in 2004, $94,299,000 in 2005, $242,875,000 in 2006 and $70,913,000 in 2007 and
any Revolving Loans would be due in full in March 2005. The Company must also
make mandatory annual prepayments in an amount, if any, initially equal to 75%
of excess cash flow, as defined in the Credit Agreement. Such mandatory
prepayments would be applied on a pro rata basis to the remaining outstanding
balances of the Term Loans except that any lender that has Term B Loans or
Term C Loans outstanding may elect not to have its pro rata share of such loans
repaid. Any amount prepaid and not applied to Term B Loans or Term C Loans as a
result of such election would be applied first to the outstanding balance of the
Term A Loans and second to any outstanding balance of Revolving Loans, with any
remaining amount being returned to the Company. The Company currently expects
that a prepayment will be required to be made in the second quarter of 2000 in
respect of the year ending January 2, 2000, the amount of which is currently
estimated at $34,000,000. Accordingly, the estimated $34,000,000 the borrowers
will be required to prepay is included in 'Current portion of long-term debt' in
the accompanying condensed balance sheet as of October 3, 1999. After
consideration of the effect of this estimated prepayment and assuming that the
prepayment is applied on a pro rata basis to the remaining outstanding balances
of all outstanding Term Loans, the Term Loans would be due $1,637,000 during the
remainder of 1999, $41,765,000 in 2000 including the estimated excess cash flow
prepayment, $9,737,000 in 2001, $11,826,000 in 2002, $13,915,000 in 2003,
$14,437,000 in 2004, $87,389,000 in 2005, $225,401,000 in 2006 and $65,618,000
in 2007. Pursuant to the Credit Agreement the Company can make voluntary
prepayments of the Term Loans. However, if the Company makes voluntary
prepayments of the Term B and Term C Loans through February 25, 2000, it will
incur prepayment penalties of 2.0% and 3.0% of the amounts prepaid,
respectively, and from February 26, 2000 through February 25, 2001 it will incur
prepayment penalties of 1.0% and 1.5% of the amounts prepaid, respectively.
Under the Credit Agreement substantially all of the assets, other than cash
and cash equivalents, of Snapple, Mistic, Stewart's, RC/Arby's, Royal Crown and
Arby's and their subsidiaries are pledged as security. The Company's obligations
with respect to the Notes are guaranteed by Snapple, Mistic, Stewart's and
RC/Arby's and all of their domestic subsidiaries, all of which effective
February 23, 1999 are wholly-owned by TCPG or Triarc Beverage Holdings. Such
guarantees are full and unconditional, are on a joint and several basis and are
unsecured. The Company's obligations with respect to the Credit Facility are
guaranteed (the 'Guaranty') by TCPG, Triarc Beverage Holdings and substantially
all of the domestic subsidiaries of Snapple, Mistic, Stewart's, RC/Arby's and
Royal Crown. As collateral for the Guaranty, all of the stock of Snapple,
Mistic, Stewart's, RC/Arby's and Royal Crown and all of their domestic
subsidiaries and 65% of the stock of each of their directly-owned foreign
subsidiaries is pledged.
The Indenture, the Credit Agreement and the Guaranty contain various
covenants which (1) require meeting certain financial amount and ratio tests,
(2) limit, among other matters, (a) the incurrence of indebtedness, (b) the
retirement of certain debt prior to maturity, (c) investments, (d) asset
dispositions and (e) affiliate transactions other than in the normal course of
business, and (3) restrict the payment of dividends to Triarc Parent. Under the
most restrictive of such covenants, the Company would not be able to pay any
dividends to Triarc Parent other than the aforementioned one-time distributions,
including dividends, paid to Triarc Parent in connection with the Refinancing
Transactions.
F-53
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
The following pro forma data of the Company for the nine months ended
October 3, 1999 have been prepared by adjusting the historical data reflected in
the accompanying condensed consolidated statement of operations for such period
to reflect the effects of the Refinancing Transactions, including the
acquisition of Millrose, as if such transactions had been consummated on
January 4, 1999. Such pro forma data is presented for information 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 4, 1999 or
of the Company's future results of operations and are as follows (in thousands):
<TABLE>
<CAPTION>
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
Revenues.................................................... $679,728 $681,402
Operating profit............................................ 88,472 88,381
Interest expense............................................ (56,931) (59,933)
Income before extraordinary charges......................... 17,514 14,777
</TABLE>
(4) ACQUISITION
The acquisition of Millrose described in Note 3 has been accounted for in
accordance with the purchase method of accounting. In accordance therewith, the
following table sets forth the preliminary allocation of the aggregate purchase
price (in thousands):
<TABLE>
<S> <C>
Current assets.............................................. $ 3,770
Properties.................................................. 1,000
Unamortized costs in excess of net assets of acquired
companies (amortized over 15 years)....................... 13,579
Current liabilities......................................... (858)
-------
$17,491
-------
-------
</TABLE>
(5) CAPITAL STRUCTURE REORGANIZATION RELATED CHARGE
The capital structure reorganization related charge of $3,208,000
recognized during the nine months ended October 3, 1999, including $208,000
recognized during the three months ended October 3, 1999, resulted from
equitable adjustments to the terms of outstanding options under the Triarc
Beverage Holdings Stock Option Plan (the 'Option Plan'), to adjust for the
effects of net distributions of $91,342,000, principally consisting of transfers
of cash and deferred tax assets, from Triarc Beverage Holdings to Triarc Parent,
partially offset by the effect of the contribution of Stewart's to Triarc
Beverage Holdings effective May 17, 1999.
The Option Plan provides for an equitable adjustment of options in the
event of a recapitalization or similar event. As a result of these net
distributions and the terms of the Option Plan, the exercise prices of the
options granted in 1997 and 1998 were equitably adjusted from $147.30 and
$191.00 per share, respectively, to $107.05 and $138.83 per share, respectively,
and a cash payment of $51.34 and $39.40 per share, respectively, is due from
Triarc Beverage Holdings to the option holder following the exercise of the
stock options. Compensation expense is being recognized for the cash to be paid
upon the exercise of the stock options by employees of Triarc Beverage Holdings
ratably over the vesting period of the stock options. The charges to be
recognized over the vesting period aggregate $4,166,000. No compensation expense
will be recognized for other changes in the terms of the outstanding options
because the modifications to the options did not create a new measurement date
under generally accepted accounting principles.
(6) INCOME TAXES
The Company is included in the consolidated Federal income tax return of
Triarc Parent. As discussed more fully in the Company's consolidated financial
statements for the year ended January 3, 1999, the Company provides for Federal
income taxes on the same basis as if the Company filed separate consolidated
returns pursuant to tax-sharing agreements with Triarc Parent. On February 25,
F-54
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
1999 the Company entered into a revised tax-sharing agreement with Triarc Parent
which, as amended effective February 25, 1999, provides that the Company would
continue to receive benefit for deferred tax assets associated with existing
Federal net operating loss carryforwards and excess Federal income tax payments
made in accordance with the prior tax-sharing agreement aggregating $39,518,000
as of January 3, 1999 except that Triarc Parent has the right to cause the
effective transfer of any unutilized benefits from the Company to Triarc Parent,
but only to the extent any such transfer would not result in non-compliance with
a Credit Agreement covenant. In accordance therewith, during the nine months
ended October 3, 1999 the Company recorded a charge to 'Accumulated deficit' and
a credit to 'Deferred income taxes' to transfer $22,691,000 of such deferred tax
benefits to Triarc Parent as if such transfer were a distribution from the
Company to Triarc Parent. During the nine months ended October 3, 1999 the
Company utilized $14,542,000 of such benefits to offset income taxes otherwise
payable on its pre-tax income before extraordinary charges and generated an
additional $6,339,000 of such benefits as a result of the extraordinary charges
(see Note 8). Accordingly, the Company has $8,624,000 of such deferred tax
benefits as of October 3, 1999. The Company has not established a valuation
allowance relating to such net operating loss carryforwards and excess Federal
income tax payments since as of October 3, 1999 it is more likely than not that
the Company can realize the related deferred tax benefit.
The Federal income tax returns of Triarc Parent and its subsidiaries,
including RC/Arby's, have been examined by the Internal Revenue Service (the
'IRS') for the tax years from 1989 through 1992. Prior to 1999 Triarc Parent
resolved and settled certain issues with the IRS regarding such audit and in
July 1999 Triarc Parent resolved all remaining issues. In connection therewith,
the Company paid $4,576,000 during 1997, of which $2,426,000 was the amount of
tax due and $2,150,000 was interest thereon, and no further payments are
required. Such amounts were charged to reserves principally provided in prior
years. The IRS is examining the Federal income tax returns of Triarc Parent and
its subsidiaries, including RC/Arby's, for the year ended April 30, 1993 and
transition period ended December 31, 1993 (the '1993 Examination'). In
connection therewith, Triarc Parent has received to date notices of proposed
adjustments of which $722,000 would increase the taxable income relating to
RC/Arby's, the tax effect of which has not yet been determined. Triarc Parent
does not expect to receive any additional proposed adjustments relating to
RC/Arby's with respect to the 1993 Examination. The Company has adequate Federal
net operating loss carryforwards and excess income tax payments under tax
sharing agreements (see prior paragraph) to provide for any tax liabilities that
may result from the resolution of the 1993 Examination.
(7) MEMBER'S DEFICIT
The following is a summary of the changes in member's deficit for the nine
months ended October 3, 1999 (in thousands):
<TABLE>
<S> <C>
Balance at January 3, 1999.................................. $ (44,721)
Net income............................................. 5,742
Cash dividends paid to Triarc Parent (Note 3).......... (204,746)
Transfer of deferred income tax benefits (Note 6)...... (22,691)
Dividend requirement on redeemable preferred stock
through February 23, 1999 (Note 10)................... (1,192)
Contribution of redeemable preferred stock (Note 10)... 88,779
Contribution to the Company of amounts payable to
Triarc Parent (Note 10)............................... 7,766
Contribution to the Company of Triarc Parent's 49%
interests in two subsidiaries of the Company
(Note 10)............................................. 2,448
Dividend of amounts receivable from Triarc Parent
(Note 10)............................................. (4,954)
Net change in currency translation adjustment
(Note 9).............................................. (46)
---------
Balance at October 3, 1999.................................. $(173,615)
---------
---------
</TABLE>
F-55
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
(8) EXTRAORDINARY CHARGES
The extraordinary charges in the nine months ended October 3, 1999 resulted
from the early extinguishment of borrowings under the Former Beverage Credit
Agreement and the 9 3/4% Senior Notes (see Note 3). Such extraordinary charges
consisted of (1) the write-off of previously unamortized (a) deferred financing
costs of $10,792,000 and (b) interest rate cap agreement costs of $146,000 and
(2) the payment of the $7,662,000 redemption premium (see Note 3), less income
tax benefit of $6,828,000.
(9) COMPREHENSIVE INCOME
The following is a summary of the components of comprehensive income (in
thousands):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
SEPTEMBER 27, OCTOBER 3,
1998 1999
---- ----
<S> <C> <C>
Net income.................................................. $20,300 $ 5,742
Net change in currency translation adjustment............... 20 (46)
Reclassification adjustment for prior year appreciation on
short-term investment sold during the period.............. (42) --
------- -------
Comprehensive income........................................ $20,278 $ 5,696
------- -------
------- -------
</TABLE>
(10) TRANSACTIONS WITH RELATED PARTIES
On February 23, 1999 Triarc Parent contributed the redeemable preferred
stock which it held in Triarc Beverage Holdings to the capital of TCPG and
accordingly, the $88,779,000 carrying value of such stock, reflecting the
cumulative unpaid dividends of $13,779,000 through February 23, 1999 (including
$1,192,000 of dividends accrued in the first quarter of 1999 through
February 23, 1999), has been reclassified to 'Member's deficit' in the
accompanying condensed consolidated balance sheet as of October 3, 1999.
On February 24, 1999 Triarc Parent contributed $7,766,000 of amounts
payable to it by a subsidiary of the Company to the Company. Also on February
24, 1999 Triarc Parent contributed each of its 49% interests in two of the
Company's restaurant subsidiaries previously 51%-owned by the Company; such
contribution was valued at Triarc Parent's carrying value of such investments at
the date of the contribution of $2,448,000.
On March 30, 1999 the Company paid a non-cash dividend to Triarc Parent
represented by $4,954,000 of amounts previously receivable from Triarc Parent.
In February 1999 the Company sold to Triarc Parent for cash of $2,000,000
the promissory notes receivable and options it had received as a portion of the
proceeds of the May 5, 1997 sale of the 355 company-owned Arby's restaurants.
The $1,950,000 aggregate principal amount of the promissory notes had a
discounted carrying value of $1,693,000 as of the date of their sale to Triarc
Parent. The options which permitted the Company to acquire up to 20% of the
common stock of the companies which purchased the restaurants had no carrying
value. The Company understands that in May 1999 Triarc Parent sold those
promissory notes and options to an affiliate of the purchasers for the same
$2,000,000 amount it had paid the Company. The Company deferred recognition of
the $307,000 gain on the sale of those assets until the May 1999 sale by Triarc
Parent to the unaffiliated entity.
The Company continues to have certain related party transactions with
Triarc Parent and its subsidiaries of the same nature and general magnitude as
those described in Note 17 to the Company's consolidated financial statements
for the year ended January 3, 1999. In addition, see Notes 3 and 6 above for
discussion of certain other related party transactions for the nine-month period
ended October 3, 1999.
F-56
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
(11) 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 $1,537,000 as of October 3, 1999. Although the
outcome of such matters cannot be predicted with certainty and some of these
matters may be disposed of unfavorably to the Company, based on currently
available information and given the Company's aforementioned reserves, the
Company does not believe that such legal and environmental matters will have a
material adverse effect on its consolidated financial position or results of
operations.
(12) BUSINESS SEGMENTS
The following is a summary of the Company's segment information (in
thousands):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------
SEPTEMBER 27, OCTOBER 3,
1998 1999
---- ----
<S> <C> <C>
Revenues:
Premium beverages...................................... $495,817 $525,702
Soft drink concentrates................................ 99,166 94,934
Restaurants............................................ 56,992 59,092
-------- --------
Consolidated revenues............................. $651,975 $679,728
-------- --------
-------- --------
Earnings before interest, taxes, depreciation and
amortization:
Premium beverages...................................... $ 57,472 62,059 (a)
Soft drink concentrates................................ 13,232 15,756
Restaurants............................................ 29,356 34,382
General corporate...................................... (102) (76)
-------- --------
Consolidated earnings before interest, taxes,
depreciation and amortization................... 99,958 112,121
-------- --------
Less depreciation and amortization:
Premium beverages...................................... 16,385 16,612
Soft drink concentrates................................ 6,832 5,406
Restaurants............................................ 1,757 1,631
-------- --------
Consolidated depreciation and amortization........ 24,974 23,649
-------- --------
Operating profit:
Premium beverages...................................... 41,087 45,447 (a)
Soft drink concentrates................................ 6,400 10,350
Restaurants............................................ 27,599 32,751
General corporate...................................... (102) (76)
-------- --------
Consolidated operating profit..................... 74,984 88,472
Interest expense............................................ (44,658) (56,931)
Investment income........................................... 1,864 2,692
Gain (loss) on sale of businesses, net...................... 4,934 (627)
Other income, net........................................... 1,839 2,112
-------- --------
Consolidated income before income taxes and
extraordinary charges........................... $ 38,963 $ 35,718
-------- --------
-------- --------
</TABLE>
- ------------
(a) Reflects the capital structure reorganization related charge discussed in
Note 5 of $3,208,000 for the nine-month period ended October 3, 1999.
F-57
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
(13) CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The following consolidating financial statements of the Company depict, in
separate columns, the parent companies of each of the issuers of the Notes (TCPG
and Triarc Beverage Holdings -- collectively, the 'Parent Companies') on a
consolidated basis, those subsidiaries which are guarantors, those subsidiaries
which are non-guarantors, elimination adjustments and the consolidated total.
CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
OCTOBER 3, 1999
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....... $ 13 $ 39,388 $ 730 $ -- $ 40,131
Receivables..................... -- 103,430 2,384 -- 105,814
Inventories..................... -- 65,408 1,918 -- 67,326
Deferred income tax benefit..... -- 18,901 -- -- 18,901
Prepaid expenses and other
current assets................ -- 5,549 19 -- 5,568
--------- --------- ------- -------- ---------
Total current assets....... 13 232,676 5,051 -- 237,740
Investment in subsidiaries........... (184,381) 11,983 -- 172,398 --
Intercompany receivables............. -- 734 7,920 (8,654) --
Properties........................... -- 21,368 3,750 -- 25,118
Unamortized costs in excess of net
assets of acquired companies....... -- 273,065 -- -- 273,065
Trademarks........................... -- 253,768 -- -- 253,768
Deferred costs and other assets...... 11,958 26,169 12 -- 38,139
--------- --------- ------- -------- ---------
$(172,410) $ 819,763 $16,733 $163,744 $ 827,830
--------- --------- ------- -------- ---------
--------- --------- ------- -------- ---------
LIABILITIES AND MEMBER'S DEFICIT
Current liabilities:
Current portion of long-term
debt.......................... $ -- $ 45,570 $ -- $ -- $ 45,570
Accounts payable................ -- 36,029 1,630 -- 37,659
Accrued expenses................ 4,377 81,617 2,348 -- 88,342
Due to affiliates............... (3,197) 36,157 -- -- 32,960
--------- --------- ------- -------- ---------
Total current
liabilities.............. 1,180 199,373 3,978 -- 204,531
Note payable from RC/Arby's to TCPG.. (300,000) 300,000 -- -- --
Long-term debt....................... 300,000 434,218 -- -- 734,218
Intercompany payables................ -- 7,920 734 (8,654) --
Deferred income taxes................ 25 41,266 38 -- 41,329
Deferred income and other
liabilities........................ -- 21,367 -- -- 21,367
Member's equity (deficit):
Common stock.................... -- 4 526 (530) --
Contributed capital............. -- 43,744 9,533 (53,277) --
Accumulated deficit............. (173,311) (227,825) 2,243 225,582 (173,311)
Accumulated other comprehensive
deficit....................... (304) (304) (319) 623 (304)
--------- --------- ------- -------- ---------
Total members's equity
(deficit)................ (173,615) (184,381) 11,983 172,398 (173,615)
--------- --------- ------- -------- ---------
$(172,410) $ 819,763 $16,733 $163,744 $ 827,830
--------- --------- ------- -------- ---------
--------- --------- ------- -------- ---------
</TABLE>
F-58
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 27, 1998
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales....................... $ -- $579,003 $15,436 $ -- $594,439
Royalties, franchise fees and
other revenues................ -- 57,536 -- -- 57,536
------- -------- ------- -------- --------
-- 636,539 15,436 -- 651,975
------- -------- ------- -------- --------
Costs and expenses:
Cost of sales, excluding
depreciation and
amortization.................. -- 306,065 10,299 -- 316,364
Advertising, selling and
distribution.................. -- 164,947 1,864 -- 166,811
General and administrative...... -- 68,038 804 -- 68,842
Depreciation and amortization,
excluding amortization of
deferred financing costs...... -- 24,944 30 -- 24,974
------- -------- ------- -------- --------
-- 563,994 12,997 -- 576,991
------- -------- ------- -------- --------
Operating profit........... -- 72,545 2,439 -- 74,984
Interest expense..................... -- (44,658) -- -- (44,658)
Investment income.................... -- 1,864 -- -- 1,864
Gain on sale of businesses........... -- 4,934 -- -- 4,934
Other income, net.................... -- 1,144 695 -- 1,839
Equity in net earnings of
subsidiaries....................... 20,300 3,134 -- (23,434) --
------- -------- ------- -------- --------
Income before income
taxes.................... 20,300 38,963 3,134 (23,434) 38,963
Provision for income taxes........... -- (18,663) -- -- (18,663)
------- -------- ------- -------- --------
Net income................. $20,300 $ 20,300 $ 3,134 $(23,434) $ 20,300
------- -------- ------- -------- --------
------- -------- ------- -------- --------
</TABLE>
F-59
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED OCTOBER 3, 1999
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales....................... $ -- $608,755 $10,875 $ -- $619,630
Royalties, franchise fees and
other revenues................ -- 60,097 1 -- 60,098
------- -------- ------- -------- --------
-- 668,852 10,876 -- 679,728
------- -------- ------- -------- --------
Costs and expenses:
Cost of sales, excluding
depreciation and
amortization.................. -- 322,443 7,297 -- 329,740
Advertising, selling and
distribution.................. -- 163,419 1,353 -- 164,772
General and administrative...... 62 68,948 877 -- 69,887
Depreciation and amortization,
excluding amortization of
deferred financing costs...... -- 23,620 29 -- 23,649
Capital structure reorganization
related -- 3,208 -- -- 3,208
------- -------- ------- -------- --------
62 581,638 9,556 -- 591,256
------- -------- ------- -------- --------
Operating profit (loss).... (62) 87,214 1,320 -- 88,472
Interest expense..................... (19,670) (37,261) -- -- (56,931)
Investment income.................... 1,122 1,561 9 -- 2,692
Loss on sale of businesses, net...... -- (627) -- -- (627)
Other income (expense), net.......... 15,866 (14,538) 784 -- 2,112
Equity in earnings of subsidiaries
before extraordinary charges....... 20,284 2,113 -- (22,397) --
------- -------- ------- -------- --------
Income before income taxes
and extraordinary
charges.................. 17,540 38,462 2,113 (22,397) 35,718
Provision for income taxes........... (26) (18,178) -- -- (18,204)
------- -------- ------- -------- --------
Income before extraordinary
charges.................. 17,514 20,284 2,113 (22,397) 17,514
Extraordinary charges and equity in
extraordinary charges.............. (11,772) (11,772) -- 11,772 (11,772)
------- -------- ------- -------- --------
Net income................. $ 5,742 $ 8,512 $ 2,113 $(10,625) $ 5,742
------- -------- ------- -------- --------
------- -------- ------- -------- --------
</TABLE>
F-60
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 27, 1998
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities................ $ -- $ 42,204 $(121) $-- $ 42,083
--------- -------- ----- ------- --------
Cash flows from investing activities:
Proceeds from sale of investment
in Select Beverages, Inc....... -- 28,342 -- -- 28,342
Capital expenditures............. -- (9,007) -- -- (9,007)
Other............................ -- (1,629) -- -- (1,629)
--------- -------- ----- ------- --------
Net cash provided by investing
activities.......................... -- 17,706 -- -- 17,706
--------- -------- ----- ------- --------
Cash flows from financing activities:
Repayments of long-term debt..... -- (10,426) -- -- (10,426)
Dividends........................ -- (23,556) -- -- (23,556)
Net borrowings from affiliates... -- 1,389 -- -- 1,389
--------- -------- ----- ------- --------
Net cash used in financing
activities.......................... -- (32,593) -- -- (32,593)
--------- -------- ----- ------- --------
Net increase (decrease) in cash and
cash equivalents.................... -- 27,317 (121) -- 27,196
Cash and cash equivalents at beginning
of period........................... 1 33,294 947 -- 34,242
--------- -------- ----- ------- --------
Cash and cash equivalents at end of
period.............................. $ 1 $ 60,611 $ 826 $-- $ 61,438
--------- -------- ----- ------- --------
--------- -------- ----- ------- --------
</TABLE>
F-61
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED OCTOBER 3, 1999
-----------------------------------------------------------------
PARENT NON-
COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities............... $ 2,283 $ 13,564 $ (418) $ -- $ 15,429
--------- --------- ------ -------- ---------
Cash flows from investing activities:
Acquisition of Millrose
Distributors, Inc............. -- (17,491) -- -- (17,491)
Capital expenditures............ -- (5,762) (2) -- (5,764)
Dividends from subsidiaries..... 12,084 -- -- (12,084) --
Other........................... -- 452 -- -- 452
--------- --------- ------ -------- ---------
Net cash provided by (used in)
investing activities............... 12,084 (22,801) (2) (12,084) (22,803)
--------- --------- ------ -------- ---------
Cash flows from financing activities:
Proceeds from long-term debt.... 300,000 475,000 -- -- 775,000
Repayments of long-term debt.... -- (565,941) -- -- (565,941)
Dividends....................... (1,624) (215,206) -- 12,084 (204,746)
Deferred financing costs........ (12,731) (16,869) -- -- (29,600)
Transfer of cash from TCPG to
RC/Arby's..................... (300,000) 300,000 -- -- --
Intercompany advances and
repayments.................... -- 306 (306) -- --
--------- --------- ------ -------- ---------
Net cash used in financing
activities......................... (14,355) (22,710) (306) 12,084 (25,287)
--------- --------- ------ -------- ---------
Net increase (decrease) in cash and
cash equivalents................... 12 (31,947) (726) -- (32,661)
Cash and cash equivalents at
beginning of period................ 1 71,335 1,456 -- 72,792
--------- --------- ------ -------- ---------
Cash and cash equivalents at end of
period............................. $ 13 $ 39,388 $ 730 $ -- $ 40,131
--------- --------- ------ -------- ---------
--------- --------- ------ -------- ---------
</TABLE>
F-62
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
THE QUAKER OATS COMPANY:
We have audited the accompanying combined statements of certain revenues
and operating expenses (as described in Note 2) of the Snapple Beverage Business
(the 'Snapple Business' as described in Note 1) of The Quaker Oats Company for
the year ended December 31, 1996 and the four month and twenty-two day period
ended May 22, 1997. These statements are the responsibility of the Snapple
Business' management. Our responsibility is to express an opinion on these
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The statements have been prepared pursuant to the Stock Purchase Agreement
between The Quaker Oats Company and Triarc Companies, Inc. dated March 27, 1997,
as amended (described in Note 1), and are not intended to be a complete
presentation of the revenues and operating expenses on a stand-alone basis of
the Snapple Business of The Quaker Oats Company.
In our opinion, the statements referred to above present fairly, in all
material respects, certain revenues and operating expenses of the Snapple
Business for the year ended December 31, 1996 and the four month and twenty-two
day period ended May 22, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
September 11, 1997
F-63
<PAGE>
SNAPPLE BEVERAGE BUSINESS OF
THE QUAKER OATS COMPANY
COMBINED STATEMENTS OF CERTAIN REVENUES AND OPERATING EXPENSES
<TABLE>
<CAPTION>
TWELVE FOUR MONTHS
MONTHS AND TWENTY-TWO
ENDED DAYS ENDED
DECEMBER 31, MAY 22,
1996 1997
---- ----
(IN THOUSANDS)
<S> <C> <C>
Net sales................................................... $ 550,800 $ 172,500
Cost of goods sold.......................................... 352,900 100,700
--------- -----------
Gross profit........................................... 197,900 71,800
--------- -----------
Advertising and merchandising............................... 145,800 44,200
Marketing and selling....................................... 42,600 14,500
Amortization of intangibles................................. 54,200 13,500
Other general and administrative expenses................... 39,700 14,700
Loss on assets held for sale................................ -- 1,414,600
Restructuring charges....................................... 16,600 --
--------- -----------
Loss before interest and income taxes....................... $(101,000) $(1,429,700)
--------- -----------
--------- -----------
</TABLE>
The accompanying notes to the combined statements of certain revenues
and operating expenses are an integral part of these statements.
F-64
<PAGE>
SNAPPLE BEVERAGE BUSINESS OF
THE QUAKER OATS COMPANY
NOTES TO THE COMBINED STATEMENTS
OF CERTAIN REVENUES AND OPERATING EXPENSES
(1) PRINCIPLES OF COMBINATION
The combined statements reflect certain revenues and operating expenses of
the Snapple Beverage Business (Snapple Business) of The Quaker Oats Company. The
Snapple Business is engaged in the production, marketing and distribution of
beverages under the Snapple trademark and related trademarks and trade names
through Snapple Beverage Corp. (Snapple) and its subsidiaries, as well as
through The Quaker Oats Company (Quaker), a New Jersey corporation, and certain
affiliates of Quaker. Snapple, a Delaware corporation, is a wholly-owned
subsidiary of Quaker. Refer to Note 2, 'Basis of Presentation,' for further
discussion regarding the presentation of the financial statements. The Snapple
Business has U.S. and international operations. All significant intercompany
transactions have been eliminated.
On December 6, 1994, Quaker purchased Snapple for a tender-offer price of
$1.7 billion. The acquisition was accounted for as a purchase and the results of
the Snapple Business were included in Quaker's consolidated financial statements
from the acquisition date through the divestiture date.
On May 22, 1997, Quaker completed the sale of 100 percent of the shares of
Snapple to Triarc Companies, Inc. (Triarc), a Delaware corporation located in
New York, New York, for $300 million, subject to certain adjustments. In
addition, certain other assets and liabilities related to the Snapple Business
were transferred to Triarc or its affiliates.
(2) BASIS OF PRESENTATION
The financial statements have been prepared as of the close of business on
May 22, 1997, pursuant to the terms of the Stock Purchase Agreement (Agreement)
between Quaker and Triarc. These financial statements include certain revenues
and operating expenses for the twelve months ended December 31, 1996 and for the
four month and twenty-two day period ended May 22, 1997. In the opinion of
management, these financial statements include all adjustments necessary to
present fairly the combined statements of certain revenues and operating
expenses for the year ended December 31, 1996 and the four months and twenty-two
days ended May 22, 1997. All adjustments made have been of a normal recurring
nature. The statement of certain revenues and operating expenses for the four
months and twenty-two days ended May 22, 1997 is not indicative of operating
results for an entire year. In addition, the Snapple Business was not separately
accounted for as a business segment of Quaker as it was operated as a product
line of Quaker's beverages business. Line of business reporting for the Snapple
Business prepared for managerial purposes contained allocations of the expenses
of Quaker's beverages business including supply chain (procurement, production
and quality control), human resource, finance and accounting functions. In
addition, certain other expenses were allocated to the Snapple Business
including certain research and development, information services, human
resource, finance, legal and administrative functions that were performed on a
company-wide basis for the benefit of all operating businesses of Quaker,
including the beverages business. As a result, the distinct and separate
accounts necessary to present complete separate statements of operations of the
Snapple Business have not been maintained by Quaker since Snapple was acquired.
As a result of the relationship between Snapple and Quaker, the results of
operations are not indicative of the results of the Snapple Business had it been
a stand-alone entity. Additionally, these financial statements are not
indicative of the future results of operations of the Snapple Business. No
activity of the Snapple Business or decisions made by Triarc subsequent to May
22, 1997 have been reflected in these financial statements.
COMBINED STATEMENTS OF CERTAIN REVENUES AND OPERATING EXPENSES
The Combined Statements of Certain Revenues and Operating Expenses reflect
the sales and substantially all of the costs of operating the Snapple Business
in the normal and ordinary course. These costs include direct expenses and
certain shared expenses incurred by Quaker on behalf of the Snapple
F-65
<PAGE>
SNAPPLE BEVERAGE BUSINESS OF
THE QUAKER OATS COMPANY
NOTES TO THE COMBINED STATEMENTS
OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED)
Business. Management believes that the methods of allocating shared expenses to
the Snapple Business are reasonable and approximate the costs of actual services
provided. Refer to Note 6, 'Supplementary Expense Information,' for further
discussion. Interest and income taxes are excluded.
ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from these estimates.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMMODITY OPTIONS AND FUTURES
Commodity options and futures contracts were used in the management of
commodity price exposures. Realized and unrealized gains and losses on commodity
options and futures contracts that hedged commodity price exposures were
deferred and subsequently included in the cost of goods sold as the finished
goods inventory was sold.
INTANGIBLES
Intangible assets consist of goodwill, trademarks, proprietary formulas and
distribution network/rights. Intangible assets are amortized on a straight-line
basis over the amortization periods indicated in the following table:
<TABLE>
<CAPTION>
AMORTIZATION
PERIOD
(IN YEARS)
----------
<S> <C>
Goodwill.................................................... 30-40
Trademark -- Snapple........................................ 40
Trademark -- Made From The Best Stuff on Earth.............. 7
Proprietary formulas........................................ 15
Distribution network/rights................................. 10-30
</TABLE>
PROPERTY AND DEPRECIATION
Capital leases and leasehold improvements and machinery and equipment were
reported at cost and depreciated on a straight-line basis over the estimated
useful lives. Useful lives were 3 to 12 years for machinery and equipment.
Depreciation expense for the year ended December 31, 1996 and for the four
months and twenty-two days ended May 22, 1997 was $5.6 million and $2.4 million,
respectively.
ADVERTISING AND MERCHANDISING COSTS
Advertising and merchandising expenses are for amounts paid for media,
production activities, cooperative retailer advertising and in-store promotion.
Statement of Position No. 93-7, 'Reporting on Advertising Costs,' addresses the
accounting for these expenses. The Snapple Business expensed all of these
expenses as incurred except for production costs which are deferred and expensed
when advertisements air for the first time. The amounts of production costs
deferred at December 31, 1996 and May 22, 1997, were not significant.
F-66
<PAGE>
SNAPPLE BEVERAGE BUSINESS OF
THE QUAKER OATS COMPANY
NOTES TO THE COMBINED STATEMENTS
OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED)
FOREIGN CURRENCY TRANSLATION
Income and expenses of the international operations of the Snapple Business
were translated at average rates for the periods presented. Translation gains
and losses were not material for the periods presented.
REVENUE RECOGNITION
Sales are recorded when inventory is shipped or delivered.
(4) LOSS ON ASSETS HELD FOR SALE
On March 27, 1997, Quaker entered into an agreement to sell the Snapple
Business to Triarc. Under the provisions of FASB Statement No. 121, 'Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of,' the Snapple Business was then considered an asset held for sale and, as
such, the carrying value of Quaker's basis in the Snapple Business was reduced
to fair market value. The fair market value used in determining the impairment
loss was based on the sale price of $300 million. Accordingly, a pretax
impairment loss of $1.4 billion was recorded and a valuation reserve for the
write-down of the excess carrying value over fair market value was established
in the first quarter of 1997. Upon the Snapple sale completion on May 22, 1997,
an additional pretax loss of $10.6 million was realized and an additional
valuation reserve was established in the second quarter of 1997. This additional
loss, combined with the previously recorded impairment loss in the first quarter
of 1997, resulted in a total pretax loss of $1.41 billion.
Snapple long-lived assets, including intangible assets, were evaluated as
of December 31, 1996, pursuant to the provisions of Financial Accounting
Standards Board (FASB) Statement No. 121, 'Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.' Estimated
undiscounted future cash flows were compared to the carrying value of Snapple
long-lived assets, including intangible assets. As the estimated undiscounted
future cash flows exceeded the carrying value of long-lived assets, an
impairment loss was not required or permitted to be recognized at December 31,
1996.
(5) RESTRUCTURING CHARGES
The Snapple Business' wholly-owned distributor, Southwest Snapple, was
performing at less than acceptable levels. As a result, the Snapple Business
decided to shut down Southwest Snapple and recorded a restructuring charge of
$16.6 million in September 1996. Subsequent to the restructuring, Snapple
beverages are sold through third-party distributors in certain Texas markets.
Estimated savings from this restructuring action of about $2 million annually
beginning in 1997, of which approximately 90 percent in cash, were consistent
with expectations.
The restructuring charges and utilization to date are as follows (in
thousands):
<TABLE>
<CAPTION>
AS OF
AMOUNTS CHARGED MAY 22, 1997
--------------------------- --------------------
NON- AMOUNT REMAINING
CASH CASH TOTAL UTILIZED RESERVE
---- ---- ----- -------- -------
<S> <C> <C> <C> <C> <C>
Severance and termination benefits(a)......... $ 500 $ -- $ 500 $ 500 $--
Asset write-offs(b)........................... -- 13,700 13,700 13,700 --
Loss on lease and other(c).................... 2,400 -- 2,400 2,400 --
------- ------- ------- ------- ------
Total............................... $ 2,900 $13,700 $16,600 $16,600 $--
------- ------- ------- ------- ------
------- ------- ------- ------- ------
</TABLE>
- ------------
(a) These changes resulted in the elimination of 102 positions from all
departments of Southwest Snapple.
(footnotes continued on next page)
F-67
<PAGE>
SNAPPLE BEVERAGE BUSINESS OF
THE QUAKER OATS COMPANY
NOTES TO THE COMBINED STATEMENTS
OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED)
(footnotes continued from previous page)
(b) In accordance with SFAS 121, the assets written-off were for goodwill,
purchased intangibles, and equipment specifically associated with this
distribution business. The amounts included in the charge were for the net
book value of the intangibles and distribution rights at time of closure
and the net book value less estimated selling proceeds for the equipment.
(c) The 'loss on lease and other' component of the charge was for lease
payments that the Snapple Business was obligated to make for the period
after the closure of the facility.
(6) SUPPLEMENTARY EXPENSE INFORMATION
The Snapple Business conducted its operations as an integrated component of
Quaker's beverages business. Certain shared operating and general and
administrative expenses were allocated to the Snapple Business by Quaker.
Management believes that the methods used for allocating these expenses were
reasonable. It was not practicable to estimate what expenses would have been for
the Snapple Business on a stand-alone basis for the periods presented.
Selling, general and administrative expenses were as follows (in
thousands):
<TABLE>
<CAPTION>
TWELVE
MONTHS FOUR MONTHS
ENDED AND TWENTY-TWO
DECEMBER 31, DAYS ENDED
1996 MAY 22, 1997
---- ------------
<S> <C> <C>
Advertising and merchandising............................... $145,800 $44,200
Selling and marketing(a)(b)................................. 42,600 14,500
Amortization of intangibles................................. 54,200 13,500
Other general and administrative expenses(a)(b)(c).......... 39,700 14,700
-------- -------
Total selling, general and administrative
expenses........................................ $282,300 $86,900
-------- -------
-------- -------
</TABLE>
- ------------
(a) Shared Operating Expenses -- Quaker allocated a portion of shared operating
expenses including broker selling expenses, certain other marketing
expenses, certain other product research expenses, and certain other
general and administrative services to the Snapple Business. These expenses
were allocated to the Snapple Business based on measures such as
percentages of sales, headcounts, and estimates of time requirements to
support the business. We believe that this approximates the actual costs of
services provided. The Snapple Business also participated in Quaker's
consolidated insurance and risk management programs for property and
casualty insurance. The Snapple Business was directly charged for related
insurance costs.
(b) Employees -- Certain employees of the Snapple Business were employed by
Quaker and their compensation was paid by Quaker. These employees also
participated in certain Quaker employee benefit plans. The Snapple Business
was directly charged for actual salary costs and allocated fringe benefit
costs. The allocated fringe benefit costs were allocated based on actual
salary costs. Employees who were primarily employed in the Snapple Business
on May 22, 1997, other than certain nontransferred employees as provided in
the Agreement, were transferred to Triarc on the date of sale.
(c) Corporate Overhead Allocations -- Quaker provided certain corporate general
and administrative services to the Snapple Business including human
resources, legal, finance, facility management and utilities. These
expenses were allocated to the Snapple Business based on the underlying
costs of the expense. We believe that this approximates the actual costs of
services provided.
F-68
<PAGE>
SNAPPLE BEVERAGE BUSINESS OF
THE QUAKER OATS COMPANY
NOTES TO THE COMBINED STATEMENTS
OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED)
(7) SELECTED CASH FLOW INFORMATION
Due to the relationship between the Snapple Business and Quaker and the
basis of presentation of the financial statements contained herein (refer to
Note 2, 'Basis of Presentation'), the selected cash flow information presented
below is not indicative of what the cash flows of the Snapple Business would
have been if it had been a stand-alone entity or indicative of future cash flows
of the Snapple Business (in thousands).
<TABLE>
<CAPTION>
FOUR MONTHS
AND TWENTY-TWO
YEAR ENDED DAYS ENDED
DECEMBER 31, 1996 MAY 22, 1997
----------------- ------------
<S> <C> <C>
Cash used in operating activities(a)........................ $(29,000) $(25,900)
Cash used in investing activities(b)........................ (9,200) (1,900)
Cash provided by financing activities(c).................... 37,300 23,400
-------- --------
Net decrease in cash and cash equivalents................... $ (900) $ (4,400)
-------- --------
-------- --------
</TABLE>
- ------------
(a) Operating Activities -- Cash used in operating activities for the twelve
months ended December 31, 1996 was primarily comprised of the net loss
before interest and income taxes, adjusted for depreciation, amortization
and the restructuring charge, and a decrease in accrued liabilities, partly
offset by decreases in trade accounts receivable and inventory of
approximately $21 million and $11 million, respectively.
Cash used in operating activities for the four months and twenty-two days
ended May 22, 1997, was primarily comprised of increases in trade accounts
receivable and inventory of approximately $19 million and $8 million,
respectively, and a decrease in accrued liabilities of approximately $15
million, partly offset by an increase in trade accounts payable of
approximately $11 million.
(b) Investing Activities -- The principal component of cash used in investing
activities is capital expenditures related to machinery and equipment.
(c) Financing Activities -- Cash advances made by Quaker to cover operating
expenses and capital requirements of the Snapple Business are the principal
component of cash provided by financing activities.
(8) FINANCIAL INSTRUMENTS
Financial instruments were primarily used to reduce the impact of commodity
price fluctuations. The main financial instruments used were commodity options
and futures contracts.
The commodity hedge instruments were used to reduce the risk that raw
material purchases would be adversely affected as commodity prices changed.
While the hedge instruments were subject to the risk of loss from decreasing
commodity prices, any losses would be generally offset by reduced costs of the
purchases being hedged. Quaker, acting on behalf of the Snapple Business, did
not trade these instruments with the objective of earning financial gains on the
commodity price fluctuations, nor did it trade in commodities for which there
were no underlying exposures. Quaker's management believes that its use of
financial instruments to reduce the effects of commodity price fluctuations was
in the best interest of the Snapple Business.
Primarily purchases of corn sweetener were hedged for the Snapple Business.
For the twelve months ended December 31, 1996 and the four months and twenty-two
days ended May 22, 1997, approximately $21.0 million and $5.3 million,
respectively, of the cost of goods sold was in hedged corn sweetener. Quaker's
strategy is typically to hedge certain production requirements for various
periods up to 12 months. As of December 31, 1996, approximately 39 percent of
hedgeable production
F-69
<PAGE>
SNAPPLE BEVERAGE BUSINESS OF
THE QUAKER OATS COMPANY
NOTES TO THE COMBINED STATEMENTS
OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED)
requirements for the next 12 months were hedged. During 1997, Quaker, on behalf
of the Snapple Business, entered into an agreement with its corn sweetener
supplier that effectively hedged production requirements by establishing a
pricing cap for 1997 purchases. Subsequent to the agreement, Quaker closed out
of its positions in commodity hedge instruments. Deferred realized losses
related to commodity options and futures contracts were immaterial as of
May 22, 1997. No realized gains or losses related to commodity options and
futures contracts were deferred as of December 31, 1996. The realized (loss)
gain included in cost of goods sold for the twelve months ended December 31,
1996, and the four months and twenty-two days ended May 22, 1997, were $2.1
million and $(0.1) million, respectively. The unrealized loss on open commodity
instruments as of December 31, 1996, based on quotes from brokers, was $0.9
million. No open commodity instruments were outstanding as of May 22, 1997.
(9) COPACKER CONTRACT LIABILITIES
The Snapple Business has entered into long-term agreements with certain
copackers (contract manufacturers). These arrangements require the Snapple
Business to purchase minimum volumes over various determined time periods
through 2000. Inventory product costs under these arrangements include a
case-rate packing fee plus a fixed fee, if any, that is incurred if the minimum
volume is not met. At May 22, 1997, an accrual of $1.2 million had been recorded
for fixed fees incurred but not yet paid. At December 31, 1996, an accrual of
$6.4 million had been recorded for fixed fees incurred but not yet paid.
As Snapple volumes declined, the Snapple Business performed a manufacturing
capacity study. As a result of this study, management reconfigured Snapple's
manufacturing network and abandoned certain manufacturing arrangements. An
accrual was established for future guaranteed payments that were required to be
made to the contract manufacturers that were abandoned by Snapple. Because these
guaranteed payments had no future benefits to Snapple, a liability of $14.4
million was established. The amounts charged against the accrual during the
twelve months ended December 31, 1996 and the four months and twenty-two days
ended May 22, 1997 were $2.4 million and $5.3 million, respectively. The accrual
balance related to these fixed fees at December 31, 1996 and May 22, 1997 were
$12.0 million and $6.7 million, respectively. Changes in assumptions, as well as
actual experience, could cause these estimates to change.
(10) LITIGATION AND CLAIMS
The Snapple Business is a party to a number of lawsuits and claims, which
have been vigorously defended. Such matters arise out of the normal course of
business and other issues. Certain of these actions seek damages in large
amounts. While the results of litigation cannot be predicted with certainty, it
is believed that the final outcome of such litigation will not have a material
adverse effect on the consolidated financial position or results of operations
of the Snapple Business. Changes in assumptions, as well as actual experience,
could cause these estimates to change.
F-70
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of
Triarc Beverage Holdings Corp.
White Plains, New York
We have audited the accompanying consolidated balance sheets of Triarc
Beverage Holdings Corp. and subsidiaries (the 'Company') as of January 3, 1999
and December 28, 1997, and the related consolidated statements of operations,
stockholder's equity and cash flows for each of the three fiscal years in the
period ended January 3, 1999. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company at January 3, 1999
and December 28, 1997, and the results of their operations and their cash flows
for each of the three fiscal years in the period ended January 3, 1999 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
July 30, 1999
F-71
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1997 1999
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash (including cash equivalents of $19,899 and
$32,997).............................................. $ 23,779 $ 39,578
Receivables (Note 4)................................... 41,186 37,710
Inventories (Note 4)................................... 44,951 41,563
Deferred income tax benefit (Note 8)................... 26,455 11,700
Due from affiliates.................................... -- 1,029
Prepaid expenses and other current assets.............. 2,813 3,344
-------- --------
Total current assets.............................. 139,184 134,924
Investments in affiliates (Note 5).......................... 25,476 --
Properties (Note 4)......................................... 19,107 15,998
Unamortized costs in excess of net assets of acquired
companies (Note 4)........................................ 125,590 120,145
Trademarks (Note 4)......................................... 264,498 254,340
Deferred costs and other assets (Note 4).................... 12,876 11,163
-------- --------
$586,731 $536,570
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt (Notes 6, 7 and
18)................................................... $ 12,243 $ 8,338
Accounts payable....................................... 31,543 33,918
Accrued expenses (Note 4).............................. 58,990 35,260
Due to Triarc Companies, Inc. and afffiliates
(Note 16)............................................. 14,648 18,158
-------- --------
Total current liabilities......................... 117,424 95,674
Long-term debt (Notes 6, 7 and 18).......................... 284,507 282,951
Deferred income taxes (Note 8).............................. 48,010 35,500
Other liabilities........................................... 13,187 3,552
Redeemable preferred stock (Note 9)......................... 79,604 87,587
Commitments and contingencies (Notes 8, 15 and 17)
Stockholder's equity (Notes 10 and 18):
Common stock, $1.00 par value; authorized 2,000,000
shares, issued and outstanding 850,000 shares......... 850 850
Additional paid-in capital............................. 63,518 35,761
Accumulated deficit.................................... (20,467) (5,342)
Accumulated other comprehensive income................. 98 37
-------- --------
Total stockholder's equity........................ 43,999 31,306
-------- --------
$586,731 $536,570
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
F-72
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------
DECEMBER 31, DECEMBER 28, JANUARY 3,
1996 1997 1999
---- ---- ----
<S> <C> <C> <C>
Net revenues............................................. $131,083 $408,841 $611,546
-------- -------- --------
Costs and expenses:
Cost of sales, excluding depreciation and
amortization related to sales of $289, $790 and
$1,265............................................ 80,342 239,963 362,012
Advertising, selling and distribution (Note 1)...... 28,016 100,226 133,883
General and administrative.......................... 7,894 28,220 37,825
Depreciation and amortization, excluding
amortization of deferred financing costs.......... 7,233 16,239 21,666
Charges related to post-acquisition transition,
integration and changes to business strategies
(Note 11)......................................... -- 32,840 --
Facilities relocation and corporate restructuring
(Note 12)......................................... 1,450 29 --
-------- -------- --------
124,935 417,517 555,386
-------- -------- --------
Operating profit (loss)........................ 6,148 (8,676) 56,160
Interest expense......................................... (7,148) (22,270) (28,587)
Gain on sale of business (Note 5)........................ -- -- 4,702
Other income (expense), net.............................. (92) 2,071 1,510
-------- -------- --------
Income (loss) before income taxes and extraordinary
charge............................................ (1,092) (28,875) 33,785
(Provision for) benefit from income taxes (Note 8)....... 282 10,072 (14,627)
-------- -------- --------
Income (loss) before extraordinary charge........... (810) (18,803) 19,158
Extraordinary charge (Note 13)........................... -- (1,154) --
-------- -------- --------
Net income (loss)................................... $ (810) $(19,957) $ 19,158
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
F-73
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
CUMULATIVE OTHER
COMPREHENSIVE INCOME
(LOSS)
----------------------------
COMMON STOCK RETAINED UNREALIZED
----------------- ADDITIONAL EARNINGS/ GAIN (LOSS) ON CURRENCY
NUMBER PAR PAID-IN ACCUMULATED SHORT-TERM TRANSLATION
OF SHARES VALUE CAPITAL DEFICIT INVESTMENTS ADJUSTMENT TOTAL
--------- ----- ------- ------- ----------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995............. 873 $ 1 $ 25,999 $ 300 $ -- $ -- $ 26,300
Net loss and comprehensive loss..... -- -- -- (810) -- -- (810)
Capital contribution to Mistic
Brands, Inc. through forgiveness
of a liability (Note 16).......... -- -- 1,500 -- -- -- 1,500
------- ---- -------- -------- ------ ------ --------
Balance at December 31, 1996............. 873 1 27,499 (510) -- -- 26,990
Comprehensive loss:
Net loss.......................... -- -- -- (19,957) -- -- (19,957)
Unrealized gain on short-term
investment..................... -- -- -- -- 42 -- 42
Net change in currency translation
adjustment..................... -- -- -- -- -- 56 56
--------
Comprehensive loss.................. -- -- -- -- -- -- (19,859)
--------
Capital contribution to Mistic
Brands, Inc. through forgiveness
of a liability (Note 16).......... -- -- 625 -- -- -- 625
Issuance of 1,000 shares of Triarc
Beverage Holdings Corp. common
stock (Note 10)................... 1,000 1 -- -- -- -- 1
Contribution of 873 shares of the
Mistic Brands, Inc. common stock
to Triarc Beverage Holdings Corp.
(Note 10)......................... (873) (1) -- -- -- -- (1)
Triarc Beverage Holdings Corp.
common stock split (Note 10)...... 849,000 849 (849) -- -- -- --
Pushdown of Triarc Companies, Inc.'s
acquisition basis in Cable Car
Beverage Corporation (Notes 3
and 10)........................... -- -- 40,847 -- -- -- 40,847
Dividend requirement on redeemable
preferred stock (Note 9).......... -- -- (4,604) -- -- -- (4,604)
------- ---- -------- -------- ---- ---- --------
Balance at December 28, 1997............. 850,000 850 63,518 (20,467) 42 56 43,999
Comprehensive income:
Net income........................ -- -- -- 19,158 -- -- 19,158
Reclassification adjustment for
prior year appreciation on
short-term investment sold
during the year................ -- -- -- -- (42) -- (42)
Net change in currency translation
adjustment..................... -- -- -- -- -- (19) (19)
--------
Comprehensive income.............. -- -- -- -- -- -- 19,097
--------
Adjustment to pushdown of Triarc
Companies, Inc.'s acquisition
basis in Cable Car Beverage
Corporation (Note 3).............. -- -- (251) -- -- -- (251)
Cash dividends...................... -- -- (19,523) (4,033) -- -- (23,556)
Dividend requirement on redeemable
preferred stock (Note 9).......... -- -- (7,983) -- -- -- (7,983)
------- ---- -------- -------- ---- ---- --------
Balance at January 3, 1999............... 850,000 $850 $ 35,761 $ (5,342) $-- $ 37 $ 31,306
------- ---- -------- -------- ---- ---- --------
------- ---- -------- -------- ---- ---- --------
</TABLE>
See accompanying notes to consolidated financial statements.
F-74
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------
DECEMBER 31, DECEMBER 28, JANUARY 3,
1996 1997 1999
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)...................................... $ (810) $ (19,957) $ 19,158
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 certain other
items............................................... 6,752 11,677 16,170
Depreciation and amortization of properties.......... 481 4,562 5,496
Amortization of deferred financing costs............. 953 1,541 1,885
Provision for (benefit from) deferred income taxes... (610) (10,855) 2,245
Provision for doubtful accounts...................... 355 1,878 1,029
Net provision (payments) for charges related to
post-acquisition transition, integration and changes
to business strategies.............................. -- 21,509 (6,025)
Gain on sale of business............................. -- -- (4,702)
Write-off of unamortized deferred financing costs.... -- 1,886 --
Other, net........................................... 1,262 3,781 (195)
Changes in operating assets and liabilities:
Decrease (increase) in receivables................ (3,638) 7,478 2,447
Decrease (increase) in inventories................ (3,990) 6,854 3,388
Decrease (increase) in prepaid expenses and other
current assets.................................. (909) 1,957 (531)
Increase (decrease) in accounts payable and
accrued expenses................................ (2,026) (6,808) (14,197)
Increase (decrease) in due to parent and
affiliates...................................... (200) 13,903 2,404
------- --------- --------
Net cash provided by (used in) operating
activities................................ (2,380) 39,406 28,572
------- --------- --------
Cash flows from investing activities:
Proceeds from sale of investment in Select Beverages,
Inc................................................... -- -- 28,342
Proceeds from sales of properties...................... 5 354 542
Capital expenditures................................... (937) (2,724) (5,799)
Acquisition of Snapple Beverage Corp................... -- (307,205) (43)
Cash acquired in the acquisition of Cable Car Beverage
Corporation........................................... -- 2,409 --
Other.................................................. (120) -- --
------- --------- --------
Net cash provided by (used in) investing
activities................................ (1,052) (307,166) 23,042
------- --------- --------
Cash flows from financing activities:
Dividends.............................................. -- -- (23,556)
Repayments of long-term debt........................... (5,000) (75,636) (12,259)
Proceeds from long-term debt........................... 8,450 303,400 --
Proceeds from issuance of redeemable preferred stock... -- 75,000 --
Proceeds from issuance of common stock................. -- 1 --
Deferred financing costs............................... -- (11,385) --
------- --------- --------
Net cash provided by (used in) financing
activities................................ 3,450 291,380 (35,815)
------- --------- --------
Net increase in cash and cash equivalents................... 18 23,620 15,799
Cash and cash equivalents at beginning of year.............. 141 159 23,779
------- --------- --------
Cash and cash equivalents at end of year.................... $ 159 $ 23,779 $ 39,578
------- --------- --------
------- --------- --------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest............................................. $ 5,718 $ 18,413 $ 24,552
------- --------- --------
------- --------- --------
Income taxes......................................... $-- $ 391 $ 2,784
------- --------- --------
------- --------- --------
</TABLE>
F-75
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
Due to their non-cash nature, the following transactions are not reflected
in the consolidated statements of cash flows (expressed in whole dollars):
On November 25, 1997 Triarc Companies, Inc. ('Triarc Parent'),
indirect parent of the Company (see Note 1 for definition), acquired (the
'Stewart's Acquisition') Cable Car Beverage Corporation ('Cable Car') for
1,566,858 shares of Triarc Parent common stock exchanged for all of the
Cable Car outstanding stock and 154,931 stock options of Triarc Parent
exchanged for all of the outstanding stock options of Cable Car. The
Stewart's Acquisition was accounted for by Triarc Parent in accordance with
the purchase method of accounting. Triarc Parent's basis in Cable Car was
'pushed down' to Cable Car and the excess of the purchase price over the
net assets acquired was allocated to the Cable Car assets and liabilities
as of November 25, 1997. See Notes 1 and 3 to the consolidated financial
statements for further discussion of this transaction.
In May 1997 the Company acquired Snapple Beverage Corp. The portion of
the purchase price that was not yet paid as of December 28, 1997,
representing a portion of the expenses related to the acquisition, was
$2,181,000.
During 1996 and 1997 Triarc Parent made capital contributions to the
Company through the assumption or forgiveness of liabilities of Mistic
Brands, Inc. of $1,500,000 and $625,000, respectively. See Note 16 to the
consolidated financial statements for further discussion of these
transactions.
During 1997 and 1998 the Company recorded cumulative dividends not
declared or paid on its redeemable preferred stock of $4,604,000 and
$7,983,000, respectively, as increases in 'Redeemable preferred stock' with
offsetting charges to 'Additional paid-in-capital' since payment of the
dividends is not solely in the control of the Company.
See accompanying notes to consolidated financial statements.
F-76
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 3, 1999
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
Triarc Beverage Holdings Corp. ('Triarc Beverage Holdings'), a wholly-owned
subsidiary of Triarc Companies, Inc. ('Triarc Parent'), commenced operations on
May 22, 1997 with the concurrent acquisition by Triarc Beverage Holdings of
Snapple Beverage Corp. ('Snapple') and the concurrent contribution to Triarc
Beverage Holdings by Triarc Parent of Mistic Brands, Inc. ('Mistic' -- acquired
by Triarc Parent on August 9, 1995). On February 23, 1999, Triarc Consumer
Products Group, LLC ('TCPG'), a wholly-owned subsidiary of Triarc Parent,
acquired all of the stock of Triarc Beverage Holdings previously owned by Triarc
Parent. Effective May 17, 1999 TCPG contributed the stock of Cable Car Beverage
Corporation ('Cable Car') to Triarc Beverage Holdings. Since Triarc Beverage
Holdings and Cable Car were under the common control of Triarc Parent since the
November 25, 1997 acquisition (the 'Stewart's Acquisition') of Cable Car by
Triarc Parent, the Stewart's Acquisition has been accounted for on an 'as if
pooling' basis subsequent to November 25, 1997. See Note 3 for a discussion of
the 1997 Snapple and Stewart's acquisitions. The accompanying consolidated
financial statements represent the financial position, results of operations and
cash flows of Mistic from January 1, 1996 through May 22, 1997 and of Triarc
Beverage Holdings and its subsidiaries, Snapple, Mistic and, effective
November 25, 1997, Cable Car, from May 22, 1997 to January 3, 1999. The
financial statements for the period from January 1, 1996 through May 22, 1997
reflect the financial position, results of operations and cash flows of Mistic
since Mistic was under the common control of Triarc Parent during such period
and, accordingly, the financial statements are presented on an 'as if pooling'
basis. The entity representative of Mistic from January 1, 1996 to May 22, 1997
and Triarc Beverage Holdings and its subsidiaries from May 22, 1997 through
January 3, 1999, or any one or more of such entities or their subsidiaries, is
referred to herein as the 'Company'.
All significant intercompany balances and transactions have been eliminated
in consolidation.
CHANGE IN FISCAL YEAR
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 1997 fiscal year
commenced January 1, 1997 and ended on December 28, 1997 and its 1998 fiscal
year commenced December 29, 1997 and ended on January 3, 1999. Such periods are
referred to herein as (i) 'the year ended December 28, 1997' or '1997' and
(ii) 'the year ended January 3, 1999' or '1998', respectively. December 28, 1997
and January 3, 1999 are referred to herein as 'Year-End 1997' and 'Year-End
1998', respectively.
CASH EQUIVALENTS
All highly liquid investments with a maturity of three months or less when
acquired are considered cash equivalents. The Company typically invests its
excess cash in commercial paper of high credit-quality entities and repurchase
agreements with high credit-quality financial institutions. Securities pledged
as collateral for repurchase agreements are segregated and held by the financial
institution until the maturity of each repurchase agreement. While the market
value of the collateral is sufficient in the event of default, realization
and/or retention of the collateral may be subject to legal proceedings in the
event of default or bankruptcy by the other party to the agreement.
INVENTORIES
The Company's inventories are stated at the lower of cost (determined on
the first-in, first-out basis) or market.
F-77
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
INVESTMENTS IN AFFILIATES
The Company's investments in affiliates in which it has significant
influence over the investee ('Equity Investments') are accounted for in
accordance with the equity method of accounting under which the consolidated
results include the Company's share of income or loss of such investees. The
excess, if any, of the carrying value of the Company's Equity Investments over
the underlying equity in net assets of each investee is being amortized to
'Other income (expense), net' on a straight-line basis over 35 years.
PROPERTIES AND DEPRECIATION AND AMORTIZATION
Properties are stated at cost less accumulated depreciation and
amortization. Depreciation of machinery and equipment is computed principally on
the straight-line basis using the estimated useful lives of 3 to 5 years.
Leasehold improvements and leased assets capitalized are amortized over the
shorter of their estimated useful lives or the terms of the respective leases.
AMORTIZATION OF INTANGIBLES
Costs in excess of net assets of acquired companies ('Goodwill') and
trademarks are being amortized on the straight-line basis over 15 to 35 years.
Deferred financing costs are being amortized as interest expense over the lives
of the respective debt using the interest rate method.
IMPAIRMENTS
Intangible Assets
The amount of impairment, if any, in unamortized Goodwill is measured based
on projected future operating performance. To the extent future operating
performance of those companies to which the Goodwill relates through the period
such Goodwill is being amortized are sufficient to absorb the related
amortization, the Company has deemed there to be no impairment of Goodwill.
Long-Lived Assets
The Company reviews its long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. If such review
indicates an asset may not be recoverable, an impairment loss is recognized for
the excess of the carrying value over the fair value of an asset to be held and
used or over the net realizable value of an asset to be disposed.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company enters into interest rate cap agreements in order to protect
against significant interest rate increases on certain of its floating-rate
debt. The costs of such agreements are amortized over the lives of the
respective agreements. The only cap agreement outstanding as of January 3, 1999
is approximately 3% higher than the interest rate on the related debt as of such
date.
STOCK-BASED COMPENSATION
The Company measures compensation costs for its employee stock-based
compensation under the intrinsic value method. Accordingly, compensation cost
for the Company's stock options is measured as the excess, if any, of the market
price of the Company's stock at the date of grant over the amount an employee
must pay to acquire the stock.
F-78
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
FOREIGN CURRENCY TRANSLATION
Financial statements of foreign subsidiaries are prepared in their
respective local currencies and translated into United States dollars at the
current exchange rates for assets and liabilities and an average rate for the
year for revenues, costs and expenses. Net gains or losses resulting from the
translation of foreign financial statements are charged or credited directly to
the 'Currency translation adjustment' component of 'Accumulated other
comprehensive income' in 'Stockholder's equity.'
ADVERTISING COSTS AND PROMOTIONAL ALLOWANCE
The Company accounts for advertising production costs by expensing such
production costs the first time the related advertising takes place. Advertising
costs amounted to $6,826,000, $24,661,000 and $33,205,000 for 1996, 1997 and
1998, respectively. In addition the Company supports its beverage bottlers and
distributors with promotional allowances the most significant of which are for
(i) indirect advertising by such bottlers and distributors including in-store
displays and point-of-sale materials, (ii) cold drink equipment and (iii)
promotional merchandise. Promotional allowances are principally expensed when
the related promotion takes place. Estimates used to expense the costs of
certain promotions where the Company expects reporting delays by the bottlers or
distributors are adjusted quarterly based on actual amounts reported.
Promotional allowances amounted to $13,360,000, $50,185,000 and $63,071,000 for
1996, 1997 and 1998, respectively, and are included in 'Advertising, selling and
distribution' in the accompanying consolidated statements of operations.
INCOME TAXES
The Company is included in the consolidated Federal income tax return of
Triarc Parent. Pursuant to a tax-sharing agreement with Triarc Parent, the
Company provides for Federal income taxes on the same basis as if it filed a
separate consolidated return. Deferred income taxes are provided to recognize
the tax effect of temporary differences between the bases of assets and
liabilities for tax and financial statement purposes.
REVENUE RECOGNITION
The Company records sales when inventory is shipped or delivered. Sales
terms generally do not allow a right of return.
RECLASSIFICATIONS
Certain amounts included in the prior years' consolidated financial
statements have been reclassified to conform with the current year's
presentation.
(2) SIGNIFICANT RISKS AND UNCERTAINTIES
NATURE OF OPERATIONS
The Company markets and distributes, principally to distributors and, to a
lesser extent, directly to retailers, premium beverages and/or ready-to-drink
iced teas under the principal brand names Snapple'r', Whipper Snapple'r',
Snapple Farms'r', Mistic'r', Mistic Rain Forest Nectars'r', Mistic Fruit
Blast'TM' and Stewart's'r'. The Company manages and internally reports its
operations as one business segment in order to evaluate performance and in
determining resource allocation. The Company operates its businesses principally
throughout the United States.
F-79
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CERTAIN RISK CONCENTRATIONS
The Company believes that its vulnerability to risk concentrations related
to significant customers and vendors, products sold and sources of raw materials
is somewhat mitigated for several reasons. No customer accounted for more than
2% of consolidated revenues. While the Company has chosen to purchase certain
raw materials (such as aspartame) on an exclusive basis from single suppliers,
the Company believes that, if necessary, adequate raw materials can be obtained
from alternate sources. The Company's product offerings are varied, including
fruit flavored beverages, iced teas, lemonades, carbonated sodas, 100% fruit
juices, nectars and flavored seltzers. Risk of geographical concentration is
also minimized since the Company generally operates throughout the United States
with minimal foreign exposure.
Three co-packer facilities represented 27%, 14% and 10% of the Company's
total case production for the year ended January 3, 1999. One co-packer
maintains 13% of the Company's finished goods inventory as of January 3, 1999.
The Company believes, however, that sufficient replacement co-packer services
could be obtained if necessary.
(3) BUSINESS ACQUISITIONS
Acquisition of Snapple
On May 22, 1997 Triarc Beverage Holdings acquired (the 'Snapple
Acquisition') Snapple, a marketer and distributor of premium beverages, from The
Quaker Oats Company ('Quaker') for $309,386,000 consisting of cash of
$300,126,000 (including $126,000 of post-closing adjustments) and $9,260,000 of
fees and expenses. The purchase price for the Snapple Acquisition was funded
from (i) $250,000,000 of borrowings by Snapple on May 22, 1997 under a
$380,000,000 credit agreement, as amended (the 'Existing Beverage Credit
Agreement' -- see Note 6), entered into by Snapple, Mistic, Triarc Beverage
Holdings and, as amended as of August 15, 1998, Cable Car and (ii) $75,000,000
from the issuance of 75,000 shares of redeemable preferred stock (see Note 9) of
Triarc Beverage Holdings to Triarc Parent.
The Snapple Acquisition was accounted for in accordance with the purchase
method of accounting. The allocation of the purchase price of Snapple to the
assets acquired and liabilities assumed, along with allocations related to the
Stewart's Acquisition (see below), is presented below under 'Purchase Price
Allocations of Acquisitions'.
The results of operations of Snapple have been included in the accompanying
consolidated statements of operations from the May 22, 1997 date of the Snapple
Acquisition. See below under 'Pro Forma Operating Data' for the unaudited
supplemental pro forma condensed consolidated summary operating data of the
Company (the 'Pro Forma Data') for the year ended December 28, 1997 giving
effect to the Snapple Acquisition and related transactions and the Stewart's
Acquisition (collectively, the 'Acquisitions').
F-80
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
Stewart's Acquisition
On November 25, 1997 Triarc Parent acquired Cable Car, a marketer and
distributor of premium beverages in the United States and Canada, primarily
under the Stewart's'r' brand, for an aggregate purchase price of $40,596,000, as
adjusted in 1998. Such purchase price consisted of (i) 1,566,858 shares of
Triarc Parent common stock with a value of $37,409,000 as of November 25, 1997
(based on the closing price of such common stock on such date of $23.875 per
share) issued in exchange for all of the outstanding stock of Cable Car,
(ii) 154,931 options to acquire Triarc Parent common stock, with a value of
$2,788,000 (based on a calculation using the Black-Scholes option pricing model)
as of November 25, 1997 issued in exchange for all of the outstanding stock
options of Cable Car and (iii) $399,000 (originally estimated at $650,000) of
related expenses.
The Stewart's Acquisition was accounted for in accordance with the purchase
method of accounting. The allocation of the purchase price of Cable Car to the
assets acquired and liabilities assumed, along with allocations related to the
Snapple Acquisition, is presented below under 'Purchase Price Allocations of
Acquisitions'. See below under 'Pro Forma Operating Data' for the Pro Forma Data
giving effect to, among other things, the Stewart's Acquisition.
PURCHASE PRICE ALLOCATIONS OF ACQUISITIONS
The Acquisitions discussed above have been accounted for in accordance with
the purchase method of accounting. In accordance therewith, the following table
sets forth the allocation of the aggregate purchase prices and a reconciliation
to business acquisitions in the accompanying consolidated statements of cash
flows (in thousands):
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Current assets.............................................. $113,767 $--
Properties.................................................. 21,613 --
Goodwill (amortized over 35 years).......................... 102,271 (251)
Trademarks.................................................. 221,300 --
Other assets................................................ 27,697 --
Current liabilities......................................... (71,717) --
Long-term debt assumed including current portion............ (686) --
Other liabilities........................................... (66,421) --
-------- -----
347,824 (251)
Less (plus):
Purchase price (adjustment in 1998) for Stewart's
Acquisition paid by Triarc Parent through the issuance
of its common stock and stock options and 'pushed
down' to Cable Car.................................... 40,847 (251)
-------- -----
$306,977 $--
-------- -----
-------- -----
</TABLE>
PRO FORMA OPERATING DATA (UNAUDITED)
As a result of the Acquisitions, the results of operations for the year
ended January 3, 1999 are not comparable with such results for the year ended
December 28, 1997. Accordingly, the following Pro Forma Data of the Company are
set forth in order to present the 1997 results of operations on a more
consistent basis with 1998. The 1997 Pro Forma Data have been prepared by
adjusting the historical data as set forth in the accompanying 1997 consolidated
statement of operations to give effect to the Acquisitions as if they had been
consummated on January 1, 1997. Such Pro Forma Data are presented for
comparative purposes only and do not purport to be indicative of the Company's
actual results of operations had the Acquisitions actually been consummated on
January 1, 1997 or of the Company's future results of operations and are as
follows (in thousands):
F-81
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
<TABLE>
<CAPTION>
AS
REPORTED PRO FORMA
-------- ---------
<S> <C> <C>
Net revenues................................................ 408,841 605,844
Operating loss.............................................. (8,676) (10,559)
Loss before extraordinary charge............................ (18,803) (27,511)
</TABLE>
(4) BALANCE SHEET DETAIL
RECEIVABLES
The following is a summary of the components of receivables (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-----------------
1997 1998
---- ----
<S> <C> <C>
Receivables:
Trade.................................................. $41,617 $35,521
Other.................................................. 4,126 5,208
------- -------
45,743 40,729
Less allowance for doubtful accounts........................ 4,557 3,019
------- -------
$41,186 $37,710
------- -------
------- -------
</TABLE>
The following is an analysis of the allowance for doubtful accounts (in
thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Trade:
Balance at beginning of year......................... $ 336 $ 450 $4,557
Provision for doubtful accounts...................... 355 4,132(a) 1,029
Recoveries of accounts previously written off........ -- 595 --
Uncollectible accounts written off................... (241) (620) (2,567)
----- ------ ------
Balance at end of year............................... $ 450 $4,557 $3,019
----- ------ ------
----- ------ ------
</TABLE>
- ------------
(a) Includes $2,254,000 included in 'Charges related to post-acquisition
transition, integration and changes to business strategies.'
Substantially all receivables are pledged as collateral for certain debt
(see Notes 6 and 18).
INVENTORIES
The following is a summary of the components of inventories (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-----------------
1997 1998
---- ----
<S> <C> <C>
Raw materials............................................... $13,931 $16,662
Finished goods.............................................. 31,020 24,901
------- -------
$44,951 $41,563
------- -------
------- -------
</TABLE>
Substantially all inventories are pledged as collateral for certain debt
(see Notes 6 and 18).
F-82
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
PROPERTIES
The following is a summary of the components of properties (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-----------------
1997 1998
---- ----
<S> <C> <C>
Machinery and equipment..................................... $20,825 $21,648
Leasehold improvements...................................... 3,033 4,166
Leased assets capitalized................................... 294 294
------- -------
24,152 26,108
Less accumulated depreciation and amortization.............. 5,045 10,110
------- -------
$19,107 $15,998
------- -------
------- -------
</TABLE>
Substantially all properties are pledged as collateral for certain debt
(see Notes 6 and 18).
UNAMORTIZED COSTS IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES
The following is a summary of the components of unamortized costs in excess
of net assets of acquired companies (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-------------------
1997 1998
---- ----
<S> <C> <C>
Costs in excess of net assets of acquired companies......... $131,600 $131,349
Less accumulated amortization............................... 6,010 11,204
-------- --------
$125,590 $120,145
-------- --------
-------- --------
</TABLE>
TRADEMARKS
The following is a summary of the components of trademarks (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-------------------
1997 1998
---- ----
<S> <C> <C>
Trademarks.................................................. $276,900 $276,900
Less accumulated amortization............................... 12,402 22,560
-------- --------
$264,498 $254,340
-------- --------
-------- --------
</TABLE>
Substantially all trademarks are pledged as collateral for certain debt
(see Notes 6 and 18).
DEFERRED COSTS AND OTHER ASSETS
The following is a summary of the components of deferred costs and other
assets (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-----------------
1997 1998
---- ----
<S> <C> <C>
Deferred financing costs.................................... $11,385 $11,246
Other....................................................... 2,708 3,018
------- -------
14,093 14,264
Less accumulated amortization of deferred financing costs... 1,217 3,101
------- -------
$12,876 $11,163
------- -------
------- -------
</TABLE>
F-83
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
ACCRUED EXPENSES
The following is a summary of the components of accrued expenses (in
thousands):
<TABLE>
<CAPTION>
YEAR-END
-----------------
1997 1998
---- ----
<S> <C> <C>
Accrued promotional allowances.............................. $12,183 $10,587
Accrued compensation and related benefits................... 6,284 6,618
Accrued production contract losses(a)....................... 13,022 4,639
Accrued legal settlements (Note 17)......................... 9,201 672
Other....................................................... 18,300 12,744
------- -------
$58,990 $35,260
------- -------
------- -------
</TABLE>
- ------------
(a) Represents obligations related to the portion of those long-term production
contracts with copackers, assumed in connection with the Snapple
Acquisition, which the Company does not anticipate utilizing based on
projected future volumes. The decrease in this amount during 1998 was due to
obligations settled or repaid during such year.
(5) INVESTMENTS IN AFFILIATES
The following is a summary of the components of 'Investments in affiliates'
at December 28, 1997 (none at January 3, 1999) (in thousands):
<TABLE>
<S> <C>
Select Beverages............................................ $24,926
Rhode Island Beverages...................................... 550
-------
$25,476
-------
-------
</TABLE>
The Company owned 20% of Select Beverages, Inc. ('Select Beverages') until
its sale on May 1, 1998. The Company's equity in the earnings (loss) of Select
Beverages of $862,000 and $(1,222,000) for 1997 and 1998 (prior to the sale of
Select Beverages), respectively, is included in 'Other income (expense), net' in
the accompanying consolidated statements of operations. The Company's investment
in Select Beverages exceeded the underlying equity in Select Beverage's net
assets. Amortization of such excess in 1998 of $341,000 was included in the
Company's equity in the loss of Select Beverages during 1998. On May 1, 1998 the
Company sold its interest in Select Beverages for $28,342,000, subject to
certain post-closing adjustments. The Company recognized a pre-tax gain on the
sale of Select Beverages during 1998 of $4,702,000, reported as 'Gain on sale of
business', representing the excess of the net sales price over the Company's
carrying value of the investment in Select Beverages and related post-closing
adjustments and expenses.
The Company, through its ownership of Snapple, owned 50% of the stock of
Rhode Island Beverage Packing Company, L.P. ('Rhode Island Beverages' or 'RIB')
prior to its disposition in February 1998. Snapple and Quaker were defendants in
a breach of contract case filed in April 1997 by RIB prior to the Snapple
Acquisition (the 'RIB Matter'). The RIB Matter was settled in February 1998 and
in accordance therewith Snapple surrendered (i) its 50% investment in RIB
($550,000) and (ii) certain properties ($1,202,000) and paid RIB $8,230,000. The
settlement amounts were fully provided for in a combination of (i) $6,530,000 of
legal reserves provided in 'Charges related to post-acquisition transition,
integration and changes to business strategies' (see Note 11), (ii) $3,321,000
of reserves for losses on long-term production contracts established in the
Snapple Acquisition purchase accounting (see Note 3) and (iii) $131,000 of a
current year accrual related to the RIB long-term production contract included
in historical liabilities at the date of the Snapple Acquisition. Since at the
date of the Snapple Acquisition the investment in RIB was expected to be
surrendered in connection with the
F-84
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
settlement of the RIB Matter, the Company did not recognize any equity in the
earnings of RIB prior to such surrender in February 1998.
(6) LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-------------------
1997 1998
---- ----
<S> <C> <C>
Existing Beverage Credit Agreement (a)
Term loans bearing interest at a weighted average rate
of 8.99% at January 3, 1999.......................... $296,500 $284,333
Capitalized lease obligations............................... 250 158
Other....................................................... -- 6,798
-------- --------
Total debt............................................. 296,750 291,289
Less amounts payable within one year................... 12,243 8,338(b)
-------- --------
$284,507 $282,951
-------- --------
-------- --------
</TABLE>
Aggregate annual maturities of long-term debt, including capitalized lease
obligations, were as follows as of January 3, 1999 (in thousands) (b):
<TABLE>
<S> <C>
1999........................................................ $ 8,338
2000........................................................ 11,660
2001........................................................ 10,513
2002........................................................ 12,764
2003........................................................ 15,008
Thereafter.................................................. 233,006
--------
$291,289
--------
--------
</TABLE>
- ------------
(a) The $284,333,000 of outstanding term loans (there were no outstanding
revolving credit loans) under the Existing Beverage Credit Agreement as of
January 3, 1999 and February 25, 1999 was repaid on February 25, 1999 using
a portion of the proceeds from the Refinancing Transactions (see Note 18).
The Existing Beverage Credit Agreement consisted of a $300,000,000 term
facility of which $225,000,000 and $75,000,000 of loans (the 'Existing Term
Loans') were borrowed by Snapple and Mistic, respectively, at the Snapple
Acquisition date ($213,250,000 and $71,083,000, respectively, outstanding
at January 3, 1999) and an $80,000,000 revolving credit facility which
provided for revolving credit loans (the 'Existing Revolving Loans') by
Snapple, Mistic, Triarc Beverage Holdings and, as amended as of August 15,
1998, Cable Car, of which $25,000,000 and $5,000,000 were borrowed on the
Snapple Acquisition date by Snapple and Mistic, respectively. The Existing
Revolving Loans were repaid prior to December 28, 1997 and no Existing
Revolving Loans were outstanding at December 28, 1997 or January 3, 1999.
The aggregate $250,000,000 originally borrowed by Snapple was principally
used to fund a portion of the purchase price for Snapple (see Note 3). The
aggregate $80,000,000 originally borrowed by Mistic was principally used to
repay all of the $70,850,000 then outstanding borrowings under Mistic's
former bank credit facility (the 'Former Mistic Bank Facility') plus
accrued interest thereon.
(b) The current portion of long-term debt as of January 3, 1999 reflects a
reclassification to long term of the portion ($9,419,000) of the amount
originally due in 1999 under the Existing Beverage Credit Agreement which
on February 25, 1999 was refinanced to long term (see Note 18). The annual
maturities of long-term debt in each of the five years from 1999 through
2003 are lower following
(footnotes continued on next page)
F-85
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(footnotes continued from previous page)
such refinancing than under the Existing Beverage Credit Agreement.
Accordingly, the annual maturities of long-term debt set forth in the table
above reflect such refinancing.
The Existing Beverage Credit Agreement contains various covenants which (i)
require meeting certain financial amount and ratio tests; (ii) limit, among
other matters, (a) the incurrence of indebtedness, (b) the retirement of certain
debt prior to maturity, (c) investments, (d) asset dispositions, (e) capital
expenditures and (f) affiliate transactions other than in the normal course of
business; and (iii) restrict the payment of dividends to Triarc Parent (see
below). As of January 3, 1999 the Company was in compliance with all such
covenants. The Company was unable to pay any dividends or make any loans or
advances to Triarc Parent as of January 3, 1999 under the terms of the Existing
Beverage Credit Agreement then in effect. See Note 18 for disclosure regarding
one-time distributions paid to Triarc Parent by the Company in connection with
the February 25, 1999 refinancing.
Under the Existing Beverage Credit Agreement, substantially all of the
Company's assets other than cash and cash equivalents are pledged as security as
of January 3, 1999. In addition, obligations under the Existing Beverage Credit
Agreement were guaranteed by Snapple, Mistic, Triarc Beverage Holdings and Cable
Car prior to the repayment thereof. As collateral for such guarantees, all of
the stock of Snapple, Mistic, Triarc Beverage Holdings and Cable Car was
pledged. See Note 18 for the effect of the February 25, 1999 refinancing on the
pledging of assets and debt guarantees and related collateral.
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has the following financial instruments for which the
disclosure of fair values is required: cash and cash equivalents, accounts
receivable and payable, accrued expenses, due from affiliates, due to Triarc
Parent and affiliates and long-term debt. The carrying amounts of cash and cash
equivalents, accounts payable, accrued expenses, due from affiliates and due to
Triarc Parent and affiliates approximated fair value due to the short-term
maturities of such assets and liabilities. The carrying amount of accounts
receivable approximated fair value due to the related allowance for doubtful
accounts. The fair values of the Existing Term Loans under the Existing Beverage
Credit Agreement approximated their carrying values due to the relatively
frequent resets of their floating interest rates. The fair values of all other
long-term debt were assumed to reasonably approximate their carrying amounts
since (i) for capitalized lease obligations, the weighted average implicit
interest rate approximates current levels and (ii) for all other debt, the
remaining maturities are relatively short-term.
(8) INCOME TAXES
As discussed in Note 1, the Company is included in the consolidated Federal
income tax return of Triarc Parent. Pursuant to a tax-sharing agreement with
Triarc Parent, the Company provides for Federal income taxes on the same basis
as if separate consolidated returns for Triarc Beverage Holdings were filed. As
of December 28, 1997 and January 3, 1999, the Company was in a net operating
loss position and, as such, there were no taxes currently payable.
The income (loss) before income taxes and extraordinary charge consisted of
the following components (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Domestic................................................ $(1,092) $(29,340) $33,641
Foreign................................................. -- 465 144
------- -------- -------
$(1,092) $(28,875) $33,785
------- -------- -------
------- -------- -------
</TABLE>
F-86
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
The (provision for) benefit from income taxes consisted of the following
components (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Current:
Federal.............................................. $(278) $ (262) $(11,638)
State................................................ (50) (160) (699)
Foreign.............................................. -- (361) (45)
----- ------- --------
(328) (783) (12,382)
----- ------- --------
Deferred:
Federal.............................................. 606 9,518 (661)
State................................................ 4 1,337 (1,584)
----- ------- --------
610 10,855 (2,245)
----- ------- --------
Total................................................ $ 282 $10,072 $(14,627)
----- ------- --------
----- ------- --------
</TABLE>
The current deferred income tax asset and the net non-current deferred
income tax (liability) resulted from the following components (in thousands):
<TABLE>
<CAPTION>
YEAR-END
-------------------
1997 1998
---- ----
<S> <C> <C>
Current deferred income tax assets:
Federal net operating loss carryforwards under
tax-sharing agreements with Triarc Parent ($6,008) and
state net operating loss carryforwards ($111)......... $ 6,119 $ --
Glass front vending machines written off............... 2,925 2,925
Allowance for doubtful accounts........................ 1,617 1,320
Accrued production contract losses..................... 4,588 1,382
Accrued employee benefit costs......................... 1,697 1,402
Inventory obsolescence reserves........................ 625 1,298
Accrued advertising and promotional allowances......... 2,367 606
Accrued legal settlements.............................. 3,588 262
Other, net............................................. 2,929 2,505
-------- --------
26,455 11,700
-------- --------
Non-current deferred income tax assets (liabilities):
Trademarks basis differences........................... (53,929) (55,962)
Reserve for income tax contingencies and other tax
matters............................................... (130) (567)
Federal net operating loss carryforwards and excess
income tax payments under tax-sharing agreements...... -- 12,211
Properties basis differences including depreciation.... (1,362) 3,945
State net operating loss carryforwards................. 679 1,549
Accrued production contract losses..................... 3,471 --
Other, net............................................. 3,261 3,324
-------- --------
(48,010) (35,500)
-------- --------
$(21,555) $(23,800)
-------- --------
-------- --------
</TABLE>
As of January 3, 1999 the Company had net operating loss carryforwards for
Federal income tax purposes (the 'NOLs') under its tax-sharing agreement with
Triarc Parent of $2,904,000 expiring in 2012. Subsequent to January 3, 1999 TCPG
entered into a revised tax-sharing agreement and amendment thereto with Triarc
Parent limiting the benefit available to the Company for the NOLs (see
Note 18).
F-87
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
The difference between the reported (provision for) benefit from income
taxes and the tax (provision) benefit that would result from applying the 35%
Federal statutory rate to the income (loss) before income taxes and
extraordinary charge is reconciled as follows (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Income tax (provision) benefit computed at Federal
statutory rate........................................... $382 $10,106 $(11,825)
Increase (decrease) in Federal tax benefit in 1996 and 1997
and (increase) decrease in Federal tax provision in 1998
resulting from:
Amortization of non-deductible Goodwill............... -- (467) (1,134)
State income tax (provision) benefit, net of Federal
income tax effect................................... (30) 765 (1,484)
Foreign tax rate in excess of United States Federal
statutory rate...................................... -- (199) 5
Other, net............................................ (70) (133) (189)
---- ------- --------
$282 $10,072 $(14,627)
---- ------- --------
---- ------- --------
</TABLE>
(9) REDEEMABLE PREFERRED STOCK
On May 22, 1997 Triarc Beverage Holdings issued 75,000 shares of its
redeemable cumulative convertible preferred stock, $1.00 par value (the
'Redeemable Preferred Stock') to Triarc Parent for $75,000,000. On August 21,
1997 each of the 75,000 outstanding shares of Redeemable Preferred Stock was
converted into 1/100 of a share as a result of a 1:100 reverse stock split,
resulting in 750 issued and outstanding shares of Redeemable Preferred Stock.
The Redeemable Preferred Stock (i) bears a cumulative annual dividend of 10% on
stated value compounded annually for any undeclared dividends, payable in cash
or additional shares of Redeemable Preferred Stock, if declared by, and at the
option of, the Company, (ii) is convertible into 750 shares of Triarc Beverage
Holdings' common stock (the 'Triarc Beverage Common Stock') at an adjusted
conversion price of $100,000 per share, (iii) requires mandatory redemption on
May 22, 2009 at $100,000 per share plus accrued and unpaid dividends and (iv)
has an aggregate liquidation value of $75,000,000 plus accrued and unpaid
dividends of $12,587,000 as of January 3, 1999. The cumulative dividends not
declared or paid of $4,604,000 and $7,983,000 for each of the years ended
December 28, 1997 and January 3, 1999, respectively, have been accounted for as
increases in 'Redeemable preferred stock' with offsetting charges to 'Additional
paid-in capital' since payment of the dividends is not solely in the control of
the Company.
(10) STOCKHOLDER'S EQUITY
Through May 22, 1997 the common stock reflected in the accompanying
consolidated statements of stockholder's equity (deficit) was the 873 issued and
outstanding shares of Mistic common stock with a par value of $1.00 per share.
On May 22, 1997 the then outstanding 873 shares of Mistic common stock were
contributed to Triarc Beverage Holdings by Triarc Parent and Triarc Beverage
Holdings issued 1,000 shares of Triarc Beverage Common Stock to Triarc Parent
for $1,000. On August 21, 1997 each of the 1,000 issued and outstanding shares
of Triarc Beverage Common Stock was split into 850 shares, resulting in 850,000
issued and outstanding shares of Triarc Beverage Common Stock.
Triarc Beverage Holdings adopted the Triarc Beverage Holdings Corp. 1997
Stock Option Plan (the 'Triarc Beverage Plan') in 1997 which provides for the
grant of options to purchase shares of Triarc Beverage Common Stock to key
employees, officers, directors and consultants of Triarc Beverage Holdings,
Triarc Parent and their affiliates. Stock options under the Triarc Beverage Plan
have maximum terms of ten years and vest ratably over periods not exceeding four
years from the date of grant. The Triarc Beverage Plan provides for a maximum of
150,000 shares of Triarc Beverage Common
F-88
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
Stock to be issued upon the exercise of stock options and there remain 4,575
shares available for future grants under the Triarc Beverage Plan as of January
3, 1999. A summary of changes in outstanding stock options under the Triarc
Beverage Plan is as follows:
<TABLE>
<CAPTION>
OPTION
OPTIONS PRICE
------- -----
<S> <C> <C>
Granted during 1997......................................... 76,250 $147.30
-------
Outstanding at December 28, 1997............................ 76,250 $147.30
Granted during 1998......................................... 72,175 $191.00
Terminated during 1998...................................... (3,000) $147.30
-------
Outstanding at January 3, 1999.............................. 145,425
-------
-------
</TABLE>
The option prices of the grants during 1997 and 1998 were equal to fair
value at the respective dates of grant as determined by independent appraisals.
The weighted average grant date fair value of the grants during 1997 and 1998
was $50.75 and $60.01, respectively. The weighted average option price of the
outstanding options at January 3, 1999 was $168.99. Such options (i) vest
ratably on July 1 of 1999, 2000 and 2001 and, accordingly, no options have been
exercised or are exercisable as of January 3, 1999 and (ii) have a remaining
weighted average term of 9.1 years at January 3, 1999.
As previously disclosed in Note 1, the Company accounts for stock options
in accordance with the intrinsic value method. Accordingly, the Company has not
recognized any compensation expense for the stock options granted in 1997 or
1998. Had compensation cost for such options been determined in accordance with
the fair value method, the Company's 1997 net loss would have been $20,281,000
and the Company's net income for 1998 would have been $17,448,000. The fair
values of stock options on the date of grant were estimated using the
Black-Scholes option pricing model with the following assumptions: (i) weighted
average risk-free interest rate of 6.22% and 5.54% for the 1997 and 1998 grants,
respectively, (ii) expected option life of 7 years and (iii) no dividends would
be paid. Since Triarc Beverage Common Stock is not publicly traded, volatility
was not applicable. The above pro forma amounts are not likely to be
representative of the effects on net income in future periods because pro forma
compensation expense for grants under the Triarc Beverage Plan did not occur
prior to such plan's adoption in 1997.
In 1995 the Company granted the syndicating lending bank in connection with
the Former Mistic Bank Facility and two senior officers of Mistic stock
appreciation rights (the 'Mistic Rights') for the equivalent of 3% and 9.7%,
respectively, of Mistic's outstanding common stock plus the equivalent shares
represented by such stock appreciation rights. The Mistic Rights granted to the
syndicating lending bank were immediately vested and of those granted to the
senior officers, one-third vested over time and two-thirds vested depending on
Mistic's performance. The Mistic Rights provided for appreciation in the
per-share value of Mistic common stock above a base price of $28,637 per share,
which was equal to the price per share paid by Triarc Parent at the time of the
Mistic acquisition in 1995. The value of the Mistic Rights granted to the
syndicating lending bank was recorded as deferred financing costs. The Company
recognized periodically the estimated increase or decrease in the value of the
Mistic Rights; such amounts were not significant to the Company's consolidated
results of operations in 1996 or 1997. In connection with the refinancing of the
Former Mistic Bank Facility in May 1997, the Mistic Rights granted to the
syndicating lending bank were repurchased by the Company for $492,000; the
$177,000 excess of such cost over the then recorded value of such rights of
$315,000 was recorded as 'Interest expense' during 1997. In addition, the Mistic
Rights granted to the two senior officers were canceled in 1997 in consideration
for, among other things, their participation in the Triarc Beverage Plan. Since
the estimated per-share value of the Mistic common stock at the time of such
cancellation was lower than the base price of the Mistic Rights, no income or
expense was required to be recorded as a result of such cancellation.
F-89
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(11) CHARGES RELATED TO POST-ACQUISITION TRANSITION, INTEGRATION AND CHANGES TO
BUSINESS STRATEGIES
Charges related to post-acquisition transition, integration and changes to
business strategies are attributed to the Snapple Acquisition and the Stewart's
Acquisition during 1997 and consisted of the following (in thousands):
<TABLE>
<S> <C>
Non-cash charges:
Write down glass front vending machines based on the
Company's change in estimate of their value
considering the Company's plans for their future
use(a)................................................ $12,557
Provide additional reserves for doubtful accounts based
on the Company's change in estimate of the related
write-off to be incurred(b)........................... 2,254
Cash obligations:
Provide additional reserves for legal matters based on
the Company's change in Quaker's estimate of the
amounts required reflecting the Company's plans and
estimates of costs to resolve such matters(c)......... 6,697
Provide for certain costs in connection with the
successful consummation of the Snapple Acquisition and
the Mistic refinancing in connection with entering
into the Existing Beverage Credit Agreement(d)........ 4,000
Provide for fees paid to Quaker pursuant to a
transition services agreement(e)...................... 2,819
Provide for the portion of promotional expenses
relating to the period of 1997 prior to the Snapple
Acquisition as a result of the Company's then current
operating expectations(f)............................. 2,510
Provide for costs, principally for independent
consultants, incurred in connection with the
conversion of Snapple to the Company's operating and
financial information systems(g)...................... 1,603
Sign-on bonus related to the Stewart's Acquisition..... 400
-------
$32,840
-------
-------
</TABLE>
- ------------
(a) During Quaker's ownership of Snapple, the glass front vending machines were
held for sale to distributors and, accordingly, were carried at their
estimated net realizable value. During the business transition following
the Snapple Acquisition, the Company became aware that these machines were
frequently unreliable in the field. The Company made the decision to
correct the mechanical defects in the machines and to allow distributors to
use the machines at locations chosen by them, without the cost of
purchasing them. By deciding to no longer sell the glass front vending
machines, the Company will not recover from its customers the value of the
machines acquired in the Snapple Acquisition. Accordingly, because the
Company expects no specific identifiable future cash flows, the Company
wrote off an amount representing the excess of the carrying value of the
machines over their estimated scrap value given the Company's decision
described above.
(b) In the transition following the Snapple Acquisition, the Company decided
that, in order to improve relationships with customers, it would not
actively seek to collect certain past due balances, disputed amounts or
amounts that were not sufficiently supportable, and provided additional
reserves for doubtful accounts of $2,254,000.
(c) In the transition following the Snapple Acquisition, the Company decided
that, in order to improve relationships with customers and reverse
Snapple's sales decline, it would attempt to settle as many of the legal
matters pending at the time of the Snapple Acquisition, in particular the
RIB Matter (see Note 5), as quickly as possible. Accordingly, the Company
provided $6,697,000 representing the excess of the Company's estimate to
settle such claims over the existing reserves established by Quaker as of
the date of the Snapple Acquisition.
(footnotes continued on next page)
F-90
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(footnotes continued from previous page)
(d) In connection with the Snapple Acquisition and the related refinancing of
the debt of Mistic, Snapple and Mistic paid a $4,000,000 fee to Triarc
Parent on May 22, 1997 in order to compensate Triarc Parent for its
recurring indirect costs incurred while providing assistance in
consummating these transactions.
(e) During the transition following the Snapple Acquisition, the Company paid
$2,819,000 to Quaker in return for Quaker providing certain operating and
accounting services for Snapple for a six-week period in accordance with
the terms of a transition services agreement. Quaker performed these
services while the Company transitioned the records, operations and
management to the Company and its systems.
(f) In the transition following the Snapple Acquisition, the Company decided
that, in order to improve relationships with customers, the Company would
not pursue collection of the many questionable claimed promotional credits
and recognized within 'Charges related to post-acquisition transition,
integration and changes to business strategies' the $2,510,000 of
promotional costs in June 1997 which were in excess of the high end of the
range of the Company's expectations for promotional costs.
(g) In the transition following the Snapple Acquisition, the Company recognized
$1,603,000 of costs incurred to engage various consultants to help the
Company plan for the related systems and business procedure modifications
necessary in order to be able to manage the Snapple business.
As of December 28, 1997 all cash obligations had been liquidated other than
$6,697,000 of the additional reserves for legal matters, which were liquidated
during the year ended January 3, 1999.
(12) FACILITIES RELOCATION AND CORPORATE RESTRUCTURING
The components of the facilities relocation and corporate restructuring
charge and an analysis of related activity are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1997
--------------------------------------------------- -----------------------------------
BALANCE
DECEMBER 28,
WRITE-OFF BALANCE 1997 AND
OF RELATED DECEMBER 31, JANUARY 3,
PROVISION(A) PAYMENTS ASSETS 1996 PROVISION PAYMENTS 1999
------------ -------- ------ ---- --------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Non-cash charges:
Costs of terminating
Mistic distribution
agreements........... $ 453 $ -- $(453) $ -- $ -- $ -- $ --
Estimated cost of
Mistic information
systems to be
abandoned............ 150 -- (150) -- -- -- --
Cash obligations:
Employee severance and
related termination
costs................ -- -- -- -- 29 (29) --
Cost of terminating
Mistic distribution
agreements........... 847 (847) -- -- -- -- --
------ ----- ----- ------ ------ ------ ------
$1,450 $(847) $(603) $ -- $ 29 $ (29) $ --
------ ----- ----- ------ ------ ------ ------
------ ----- ----- ------ ------ ------ ------
</TABLE>
- ------------
(a) The 1996 facilities relocation and corporate restructuring charge
principally related to the settlement costs of terminating certain Mistic
distribution agreements including cash payments of $847,000 and the
write-off of receivables from such distributors, in lieu of additional cash
payments, of $453,000, and a provision for the write-off of the unamortized
deferred cost of Mistic information systems as a result of the planned
merger of the Royal Crown and Mistic information systems
F-91
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
related to the then planned relocation (the 'Royal Crown Relocation') of the
headquarters of Royal Crown Company Inc. ('Royal Crown'), a subsidiary of
Triarc Parent, which were centralized with the Company's offices in White
Plains, New York.
(13) EXTRAORDINARY CHARGE
The 1997 extraordinary charge resulted from the early extinguishment of
obligations under the Former Mistic Bank Facility in May 1997 refinanced in
connection with entering into the Existing Beverage Credit Agreement (see Note
6). Such extraordinary charge consisted of the write-off of $1,889,000 of
previously unamortized deferred financing costs less $735,000 of income tax
benefit.
(14) RETIREMENT AND OTHER BENEFIT PLANS
The Company maintains several 401(k) defined contribution plans and
participates in a Triarc Parent 401(k) defined contribution plan (collectively,
the 'Plans') covering all of the Company's employees who meet certain minimum
requirements and elect to participate including subsequent to (i) May 22, 1997
employees of Snapple and (ii) May 1, 1998 employees of Cable Car. Under the
provisions of the Plans, employees may contribute various percentages of their
compensation ranging up to a maximum of 15%, subject to certain limitations. The
Plans provide for Company matching contributions at either (i) 50% of employee
contributions up to the first 5% thereof or (ii) 100% of employee contributions
up to the first 3% thereof. In addition, the Plans also provide for annual
Company contributions of a discretionary aggregate amount to be determined by
the employer. In connection with both of these employer contributions, the
Company provided as compensation expense $137,000, $302,000 and $796,000 in
1996, 1997 and 1998, respectively.
Triarc Parent has granted stock options to certain key employees of the
Company under Triarc Parent's 1993 Equity Participation Plan and 1997 Equity
Participation Plan. Included in such options are 147,000 granted in 1997 at a
weighted average option price of $12.64 which was below the $14.10 weighted
average fair market value of Triarc Parent's Class A Common Stock on the
respective dates of grant (based on the closing price on such dates) resulting
in an aggregate difference of $214,000. Since the key employees provide services
to the Company and not to Triarc Parent, all of such difference is being charged
to the Company as compensation expense over the applicable vesting periods
through 2002, net of reversals of prior charges arising from the forfeiture of
certain of those options in connection with employee terminations (the
'Forfeiture Adjustments'). Compensation expense resulting from the below market
stock options aggregated $93,000 and $77,000 (net of $4,000 of Forfeiture
Adjustments) during 1997 and 1998, respectively, and is included in 'General and
administrative' in the accompanying consolidated statements of operations. There
was no such compensation expense for 1996 since no below market stock options
were granted to employees of the Company prior to 1997.
(15) LEASE COMMITMENTS
The Company leases office space and equipment. Rental expense under
operating leases consisted of the following components (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Minimum rentals............................................. $325 $2,302 $4,018
Less sublease income........................................ -- 518 865
---- ------ ------
$325 $1,784 $3,153
---- ------ ------
---- ------ ------
</TABLE>
F-92
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
The Company's future minimum rental payments and sublease rental income for
leases having an initial lease term in excess of one year as of January 3, 1999
are as follows (in thousands):
<TABLE>
<CAPTION>
RENTAL PAYMENTS SUBLEASE
----------------------- INCOME-
CAPITALIZED OPERATING OPERATING
LEASES LEASES LEASES
------ ------ ------
<S> <C> <C> <C>
1999...................................................... $ 41 $ 3,920 $ 867
2000...................................................... 35 3,582 893
2001...................................................... 35 3,240 920
2002...................................................... 35 3,162 --
2003...................................................... 26 3,215 --
Thereafter................................................ 39 18,054 --
---- ------- ------
Total minimum payments............................... 211 $35,173 $2,680
------- ------
------- ------
Less interest............................................. 53
----
Present value of minimum capitalized lease payments....... $158
----
----
</TABLE>
The present value of minimum capitalized lease payments is included, as
applicable, with 'Long-term debt' or 'Current portion of long-term debt' in the
accompanying consolidated balance sheets (see Note 6).
(16) TRANSACTIONS WITH RELATED PARTIES
The following is a summary of transactions between the Company and its
related parties (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Purchases of raw materials from Triarc Parent(a)......... $ -- $13,023 $112,489
Cash dividend paid to Triarc Parent...................... -- -- 23,556
Cumulative dividends on the Redeemable Preferred Stock
recorded but not declared or paid (Note 9)............. -- 4,604 7,983
Costs allocated to the Company by Triarc Parent under
management services agreements(b)...................... 1,500 3,042 3,500
Net costs allocated to Royal Crown by the Company for
joint services(c)...................................... -- 547 1,654
Compensation costs charged to the Company by Triarc
Parent for below market stock options (Note 14)........ -- 93 77
Issuance of Redeemable Preferred Stock (Note 9).......... -- 75,000 --
Capital contributions from Triarc Parent(b).............. 1,500 625 --
</TABLE>
- ------------
(a) The Company purchases certain raw materials from Triarc Parent at Triarc
Parent's purchase cost from unaffiliated third-party suppliers. At December
28, 1997 and January 3, 1999, $13,023,000 and $15,274,000, respectively, of
amounts owed for such purchases were included in 'Due to Triarc Companies,
Inc. and affiliates' in the accompanying consolidated balance sheets.
(b) The Company receives from Triarc Parent certain management services,
including legal, accounting, tax, insurance, financial and other management
services, under management services agreements. Under such agreements such
costs were to be allocated to the Company by Triarc Parent based upon the
pro rata share of the sum of the greater of income before income taxes,
depreciation and amortization ('EBITDA') and 10% of revenues for each of
the Company's principal operating subsidiaries to the aggregate for all of
Triarc Parent's principal operating subsidiaries. However,
(footnotes continued on next page)
F-93
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(footnotes continued from previous page)
such costs allocated to Mistic through May 22, 1997 were limited to amounts
permitted under the Former Mistic Bank Facility aggregating $1,500,000 and
$625,000 in 1996 and 1997, respectively. Mistic was prohibited from paying
such amounts to Triarc Parent under the terms of the Former Mistic Bank
Facility prior to its repayment and, accordingly, such amounts were
accounted for as capital contributions from Triarc Parent. Such costs
allocated to Mistic and Snapple commencing May 22, 1997 and Cable Car
commencing August 15, 1998 were limited to amounts permitted under the
subsequent Existing Beverage Credit Agreement aggregating $2,375,000 and
$3,000,000 in 1997 and 1998, respectively (see Note 18 for disclosure
regarding a new agreement for management services to the Company).
Management of the Company believes that such allocation method is
reasonable. Further, management of the Company believes that such
allocation approximates the costs that would have been incurred by the
Company on a stand alone basis.
(c) Commencing in July 1997 following the Royal Crown Relocation, the Company
commenced performing certain services for Royal Crown as well as Royal
Crown performing certain services for the Company. The Company provides
certain finance, administrative, operational and, commencing in 1998, legal
services for Royal Crown. In 1997 Royal Crown provided legal services to
the Company and in 1998 provided certain operational services to the
Company. The costs of all such services have been allocated based on
estimated time expended. The allocated charges by the Company to Royal
Crown net of the allocated charges to the Company by Royal Crown were
$547,000 and $1,654,000 for 1997 and 1998, respectively. Management of the
Company believes that such allocation method is reasonable. Further,
management of the Company believes that such allocation approximates the
net costs that would have been incurred by Royal Crown on a stand alone
basis.
Certain officers and directors of the Company are also officers and
directors of Triarc Parent. See also Notes 1, 5, 10 and 14 with respect to
other transactions with related parties.
(17) LEGAL MATTERS
The Company is involved in litigation and claims incidental to its
business. The Company has reserves for such legal matters aggregating
approximately $672,000 (see Note 4) as of January 3, 1999. Although the outcome
of such matters cannot be predicted with certainty and some of these 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 matters will have a material adverse effect on its consolidated
financial position or results of operations.
(18) SUBSEQUENT EVENTS
On February 25, 1999 Snapple, Mistic and Cable Car, as well as RC/Arby's
Corporation ('RC/Arby's'), an indirect wholly-owned subsidiary of Triarc Parent
until its contribution to TCPG in 1999, and Royal Crown (collectively, the
'Borrowers') entered into an agreement (the 'Credit Agreement') for a new
$535,000,000 senior bank credit facility (the 'Credit Facility') consisting of a
$475,000,000 term facility, all of which was borrowed as term loans (the 'Term
Loans') on February 25, 1999, and a $60,000,000 revolving credit facility (the
'Revolving Credit Facility') which provides for revolving credit loans (the
'Revolving Loans') by Snapple, Mistic and Cable Car effective February 25, 1999
and RC/Arby's and Royal Crown effective upon the redemption (the 'Redemption')
of the $275,000,000 of borrowings under the RC/Arby's 9 3/4% senior secured
notes due 2000 (the '9 3/4% Senior Notes') on March 30, 1999. There were no
borrowings of Revolving Loans on February 25, 1999. The Company utilized the
aggregate net proceeds of these borrowings together with available cash and cash
equivalents to (i) repay on February 25, 1999 the outstanding principal amount
($284,333,000 as of January 3, 1999 and February 25, 1999) of the Existing Term
Loans under the Existing Beverage Credit
F-94
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
Agreement and related accrued interest ($2,231,000 and $1,503,000 as of January
3, 1999 and February 25, 1999, respectively), (ii) transfer $92,500,000 of
proceeds in conjunction with the transfer of $96,300,000 (including $3,800,000
relating to estimated deferred financing costs) of obligations under the Term
Loans to Royal Crown upon the Redemption, (iii) acquire Millrose Distributors,
Inc. and the assets of Mid-State Beverage, Inc., two New Jersey distributors of
the Company's premium beverages, for $17,376,000 including expenses, (iv)
provide for allocated currently estimated fees and expenses of $13,400,000
relating to the consummation of the Credit Facility (the 'Refinancing
Transactions') and (v) pay one-time distributions, including dividends, to
Triarc Parent of $87,220,000. The estimated fees and expenses of $13,400,000
relating to the consummation of the Credit Facility consist of approximately
$12,100,000 of fees paid to the Company's lenders, including commitment fees,
approximately $1,200,000 of legal, auditing and accounting fees and
approximately $100,000 of other fees. As a result of the repayment prior to
maturity of the Existing Term Loans, the Company recognized an extraordinary
charge during the first quarter of the year ending January 2, 2000 of $4,876,000
for (i) the write-off of previously unamortized (a) deferred financing costs
($8,146,000 and $7,844,000 as of January 3, 1999 and February 25, 1999,
respectively) and (b) interest rate cap agreement costs ($159,000 and $146,000
as of January 3, 1999 and February 25, 1999, respectively), net of income tax
benefit ($3,237,000 and $3,114,000 as of January 3, 1999 and February 25, 1999,
respectively).
Borrowings under the Credit Facility bear interest, at the Borrowers'
option, at rates based on either the 30, 60, 90 or 180-day London Interbank
Offered Rate ('LIBOR') (ranging from 5.06% to 5.07% at January 3, 1999) or an
alternate base rate (the 'ABR'). The ABR (7 3/4% at January 3, 1999) represents
the higher of the prime rate or 1/2% over the Federal funds rate. The interest
rates on LIBOR-based loans are reset at the end of the period corresponding with
the duration of the LIBOR selected. The interest rates on ABR-based loans are
reset at the time of any change in the ABR. Revolving Loans and one class of the
Term Loans with an initial borrowing of $45,000,000 bear interest at 3% over
LIBOR or 2% over ABR until such time as such margins may be subject to downward
adjustment by up to 3/4% based on the Borrowers' leverage ratio, as defined. The
other two classes of Term Loans with initial borrowings of $125,000,000 and
$305,000,000 bear interest at 3 1/2% and 3 3/4% over LIBOR, respectively, and
2 1/2% and 2 3/4%, respectively, over ABR. The borrowing base for Revolving
Loans is the sum of 80% of eligible accounts receivable and 50% of eligible
inventories. At January 31, 1999 there would have been $39,423,000 (unaudited)
of borrowing availability to the Company under the Revolving Credit Facility in
accordance with limitations due to such borrowing base. The Term Loans are
initially due $4,912,000 in 1999, $8,238,000 in 2000, $10,488,000 in 2001,
$12,738,000 in 2002, $14,987,000 in 2003, $15,550,000 in 2004, $94,299,000 in
2005, $242,875,000 in 2006 and $70,913,000 in 2007 and any Revolving Loans would
be due in full in March 2005. Upon consummation of the Redemption and the
concurrent transfer of the $96,300,000 of Term Loans to Royal Crown, the
Company's annual maturities of the Term Loans decreased proportionately. The
Borrowers must also make mandatory prepayments in an amount, if any, initially
equal to 75% of excess cash flow, as defined in the Credit Agreement.
Under the Credit Agreement substantially all of the assets, other than cash
and cash equivalents of the Company, among other subsidiaries of TCPG, are
pledged as security. The Borrowers' obligations with respect to the Credit
Facility are guaranteed (the 'Guarantee') by, among other subsidiaries of TCPG,
substantially all of the domestic subsidiaries of Snapple, Mistic and Cable Car.
As collateral for such guarantees, all of the stock of Snapple, Mistic and Cable
Car and substantially all of their domestic, and 65% of the stock of their
directly-owned foreign, subsidiaries are pledged.
In addition, with respect to obligations of TCPG under $300,000,000
principal amount of 10 1/4% senior subordinated notes due 2009 (the 'Notes')
issued on February 25, 1999, Triarc Beverage Holdings is a co-issuer and the
obligations are guaranteed by, among other subsidiaries of TCPG, Snapple, Mistic
and Cable Car and all of their domestic subsidiaries, all of which effective
May 17, 1999
F-95
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
are wholly-owned by Triarc Beverage Holdings or TCPG. Such guarantees are full
and unconditional, are on a joint and several basis and are unsecured. Since
Triarc Beverage Holdings is a co-issuer, it will reflect on its consolidated
balance sheet such $300,000,000 principal amount as long-term debt and any
related accrued but unpaid interest as an accrued expense with corresponding
charges to a receivable from TCPG component of stockholder's equity (deficit).
Such amounts will be increased for interest accrued and reduced to the extent
that TCPG makes interest and principal payments on the Notes.
The Credit Agreement, Guarantee and indenture pursuant to which the Notes
were issued contain various covenants which (i) require meeting certain
financial amount and ratio tests, (ii) limit, among other matters (a) the
incurrence of indebtedness, (b) the retirement of certain debt prior to
maturity, (c) investments, (d) asset dispositions and (e) affiliate transactions
other than in the normal course of business, and (iii) restrict the payment of
dividends to TCPG. Under the most restrictive of such covenants, the Company
would not be able to pay any dividends to TCPG other than the aforementioned
one-time distributions, including dividends, paid to TCPG in connection with the
Refinancing Transactions.
In connection with the Refinancing Transactions, on February 25, 1999 TCPG
entered into a revised tax-sharing agreement (including the Company) with Triarc
Parent replacing Triarc Beverage Holdings' tax-sharing agreement with Triarc
Parent. Pursuant to such revised agreement, TCPG will not receive credit and,
accordingly, the Company will not receive credit for the existing NOLs and
excess Federal income tax payments of the Company as of the date of the new
agreement. Under such revised agreement, TCPG would not receive any benefit for
the deferred tax assets associated with the NOLs and excess Federal income tax
payments aggregating $39,518,000 of which the Company's portion aggregates
$12,211,000. However, were such aggregate TCPG deferred tax assets of
$39,518,000 to be written off, the borrowers, including the Company, would have
been in default under the minimum net worth covenant of the Credit Agreement
(the 'Minimum Net Worth Covenant'). Such Minimum Net Worth Covenant
inadvertently did not provide for the write-off of such deferred tax assets.
Accordingly, the tax-sharing agreement was amended effective February 25, 1999
to provide that TCPG (and the Company through informal arrangements with TCPG)
would continue to receive benefit from deferred tax assets associated with the
NOLs and the Federal income tax prepayments except that Triarc Parent has the
right to cause the effective transfer of any unutilized benefits from TCPG (and
the Company through informal arrangements with TCPG) to Triarc Parent, but only
to the extent any such transfer would not cause a default under the Minimum Net
Worth Covenant. Subsequent to January 3, 1999 and through July 4, 1999 the
Company generated an additional $2,626,000 of such benefits as a result of the
extraordinary charge resulting from the repayment prior to maturity of the
Existing Term Loans, utilized $161,000 of such benefits to offset income taxes
otherwise payable on its pre-tax income before extraordinary charge and
transferred the remaining $14,676,000 of such deferred tax benefits to Triarc
Parent as if such transfer were a distribution from the Company to TCPG and, in
turn, a distribution from TCPG to Triarc Parent.
In connection with the Refinancing Transactions, on February 25, 1999 the
Company together with Royal Crown (collectively, the 'Triarc Beverage Group')
entered into a new management services agreement (see Note 16 for disclosure
concerning the previous management services agreement) with Triarc Parent. The
new agreement provides for an annual fixed fee of $6,700,000 plus annual cost of
living adjustments to the Triarc Beverage Group as a whole commencing
January 1, 2000. The fee to the Triarc Beverage Group is to be allocated to the
Company based upon the Company's pro rata share of the sum of the greater of
EBITDA and 10% of revenues to the aggregate for the Triarc Beverage Group.
The following unaudited pro forma data of the Company for 1998 have been
prepared by adjusting the historical data reflected in the accompanying
statement of operations for such year to reflect the effects of the Refinancing
Transactions as if such transactions had been consummated on December 29, 1997.
Such pro forma data are presented for information purposes only and do not
purport to be
F-96
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
indicative of the Company's actual results of operations had such transactions
actually been consummated on December 29, 1997 or of the Company's future
results of operations and are as follows (in thousands):
<TABLE>
<CAPTION>
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
Net revenues................................................ $611,546 $624,099
Operating profit............................................ 56,160 57,015
Interest expense............................................ (28,587) (35,696)
Income before extraordinary charge.......................... 19,158 14,946
</TABLE>
* * * * *
F-97
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 3, OCTOBER 3,
1999(A) 1999
------- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 39,578 $ 15,126
Receivables............................................ 37,710 74,031
Inventories............................................ 41,563 61,254
Deferred income tax benefit............................ 11,700 11,668
Due from affiliates.................................... 1,029 --
Prepaid expenses and other current assets.............. 3,344 2,984
-------- ---------
Total current assets.............................. 134,924 165,063
Properties.................................................. 15,998 17,479
Unamortized costs in excess of net assets of acquired
companies................................................. 120,145 129,315
Trademarks.................................................. 254,340 246,721
Deferred costs and other assets............................. 11,163 14,790
-------- ---------
$536,570 $ 573,368
-------- ---------
-------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt...................... $ 8,338 $ 36,418
Accounts payable....................................... 33,918 34,415
Accrued expenses....................................... 35,260 48,744
Due to Triarc Companies, Inc. and other affiliates..... 18,158 23,370
-------- ---------
Total current liabilities......................... 95,674 142,947
Long-term debt.............................................. 282,951 644,052
Deferred income taxes....................................... 35,500 56,345
Other liabilities........................................... 3,552 7,776
Redeemable preferred stock.................................. 87,587 94,077
Stockholder's equity (deficit):
Common stock........................................... 850 850
Additional paid-in capital............................. 35,761 --
Accumulated deficit.................................... (5,342) (68,315)
Accumulated other comprehensive income (deficit)....... 37 13
Receivable from Triarc Companies, Inc.................. -- (304,377)
-------- ---------
Total stockholder's equity (deficit).............. 31,306 (371,829)
-------- ---------
$536,570 $ 573,368
-------- ---------
-------- ---------
</TABLE>
- ------------
(A) Derived from the audited consolidated financial statements as of
January 3, 1999
See accompanying notes to condensed consolidated financial statements.
F-98
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
SEPTEMBER 27, OCTOBER 3,
1998 1999
---- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Net revenues................................................ $495,817 $525,702
-------- --------
Costs and expenses:
Cost of sales, excluding depreciation and amortization
related to sales of $931,000 and $1,163,000........... 292,639 308,134
Advertising, selling and distribution.................. 116,752 120,391
General and administrative............................. 28,953 31,910
Depreciation and amortization, excluding amortization
of deferred financing costs........................... 16,385 16,612
Capital structure reorganization related............... -- 3,208
-------- --------
454,729 480,255
-------- --------
Operating profit....................................... 41,088 45,447
Interest expense............................................ (21,343) (25,827)
Investment income........................................... 1,341 446
Gain (loss) on sale of business............................. 4,702 (889)
Other income (loss), net.................................... (50) 333
-------- --------
Income before income taxes and extraordinary charge.... 25,738 19,510
Provision for income taxes.................................. (10,549) (9,365)
-------- --------
Income before extraordinary charge..................... 15,189 10,145
Extraordinary charge........................................ -- (4,876)
-------- --------
Net income............................................. $ 15,189 $ 5,269
-------- --------
-------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-99
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
SEPTEMBER 27, OCTOBER 3,
1998 1999
---- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income............................................. $15,189 $ 5,269
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of costs in excess of net assets of
acquired companies, trademarks and certain other
items........................................... 12,273 12,214
Depreciation and amortization of properties....... 4,112 4,398
Amortization of deferred financing costs.......... 1,442 1,573
Write-off of unamortized deferred financing costs
and interest rate cap agreement costs........... -- 7,990
Capital structure reorganization related charge... -- 3,208
(Gain) loss on sale of business................... (4,702) 889
Provision for deferred income taxes............... 5,956 8,826
Provision for doubtful accounts................... 1,406 637
Payments for charges related to post-acquisition
transition, integration and changes to business
strategies...................................... (5,943) (204)
Other, net........................................ 242 1,412
Changes in operating assets and liabilities:
Increase in receivables...................... (24,588) (34,736)
Increase in inventories...................... (20,130) (18,143)
Decrease (increase) in prepaid expenses and
other current assets....................... (2,372) 214
Increase in accounts payable and accrued
expenses................................... 31,527 5,303
Increase in due to Triarc Companies, Inc. and
other affiliates, net...................... 6,383 6,217
------- --------
Net cash provided by operating
activities............................ 20,795 5,067
------- --------
Cash flows from investing activities:
Proceeds from sale of investment in Select Beverages,
Inc. ................................................. 28,342 --
Acquisition of Millrose Distributors, Inc.............. -- (17,491)
Capital expenditures................................... (3,877) (5,008)
Other.................................................. 639 159
------- --------
Net cash provided by (used in) investing
activities............................ 25,104 (22,340)
------- --------
Cash flows from financing activities:
Proceeds from long-term debt........................... -- 475,000
Repayments of long-term debt........................... (9,265) (289,593)
Transfer of long-term debt to affiliate................ -- (96,300)
Dividends.............................................. (23,556) (82,837)
Deferred financing costs............................... -- (16,869)
Reimbursement of deferred financing costs from
affiliate............................................. -- 3,420
------- --------
Net cash used in financing activities... (32,821) (7,179)
------- --------
Net increase (decrease) in cash and cash equivalents........ 13,078 (24,452)
Cash and cash equivalents at beginning of period............ 23,779 39,578
------- --------
Cash and cash equivalents at end of period.................. $36,857 $ 15,126
------- --------
------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-100
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 3, 1999
(UNAUDITED)
(1) BASIS OF PRESENTATION
Triarc Beverage Holdings Corp. ('Triarc Beverage Holdings' and, together
with its subsidiaries, the 'Company'), is a wholly-owned subsidiary of Triarc
Consumer Products Group, LLC ('TCPG'), effective February 23, 1999, and of
Triarc Companies, Inc. ('Triarc Parent'), the parent of TCPG, prior to
February 23, 1999. Effective May 17, 1999, the common stock of Stewart's
Beverages, Inc. ('Stewarts'), formerly Cable Car Beverage Corporation, was
contributed by TCPG to Triarc Beverage Holdings. The consolidated financial
position, results of operations and cash flows of each of Triarc Beverage
Holdings and Stewart's and their subsidiaries have been consolidated since such
entities were under the common control of Triarc Parent since December 29, 1997
and, accordingly, the accompanying condensed consolidated financial statements
are presented on an 'as if pooling' basis.
The accompanying unaudited condensed consolidated financial statements of
Triarc Beverage Holdings have been prepared in accordance with Rule 10-01 of
Regulation S-X promulgated by the Securities and Exchange Commission (the 'SEC')
and, therefore, do not include all information and footnotes necessary for a
fair presentation of financial position, results of operations and cash flows in
conformity with generally accepted accounting principles. In the opinion of the
Company, however, the accompanying condensed consolidated financial statements
contain all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the Company's financial position as of January 3,
1999 and October 3, 1999 and its results of operations and cash flows for the
nine-month periods ended September 27, 1998 and October 3, 1999 (see below).
This information should be read in conjunction with the consolidated financial
statements and notes thereto for the fiscal year ended January 3, 1999 included
elsewhere herein.
The Company reports on a fiscal year basis consisting of 52 or 53 weeks
ending on the Sunday closest to December 31. In accordance therewith, the
Company's first nine months of 1998 commenced on December 29, 1997 and ended on
September 27, 1998 and the Company's first nine months of 1999 commenced on
January 4, 1999 and ended on October 3, 1999. For the purposes of these
condensed consolidated financial statements, the period from December 29, 1997
to September 27, 1998 is referred to herein as the nine-month period ended
September 27, 1998 and the period from January 4, 1999 to October 3, 1999 is
referred to below as the nine-month period ended October 3, 1999.
(2) INVENTORIES
The following is a summary of the components of inventories (in thousands):
<TABLE>
<CAPTION>
JANUARY 3, OCTOBER 3,
1999 1999
---- ----
<S> <C> <C>
Raw materials.......................................... $16,662 $23,071
Finished goods......................................... 24,901 38,183
------- -------
$41,563 $61,254
------- -------
------- -------
</TABLE>
(3) LONG-TERM DEBT
On February 25, 1999 Snapple Beverage Corp. ('Snapple'), Mistic Brands,
Inc. ('Mistic') and Stewart's, wholly-owned subsidiaries of Triarc Beverage
Holdings, as well as RC/Arby's Corporation ('RC/Arby's'), a wholly-owned
subsidiary of TCPG, and Royal Crown Company, Inc. ('Royal Crown'), a
wholly-owned subsidiary of RC/Arby's, (collectively, the 'Borrowers') entered
into an agreement (the 'Credit Agreement') for a new $535,000,000 senior bank
credit facility (the 'Credit Facility') consisting of a $475,000,000 term
facility, all of which was borrowed as three classes of term loans (the 'Term
Loans') on February 25, 1999, and a $60,000,000 revolving credit facility (the
'Revolving Credit Facility') which provides for revolving credit loans (the
'Revolving Loans') by Snapple, Mistic, Stewart's, RC/Arby's or Royal Crown.
There have been no borrowings of Revolving
F-101
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
Loans through October 3, 1999. The Company utilized a portion of the aggregate
net proceeds of these borrowings together with available cash and cash
equivalents to (1) repay on February 25, 1999 the $284,333,000 outstanding
principal amount of the term loans under a former $380,000,000 credit agreement,
as amended (the 'Former Beverage Credit Agreement') entered into by Snapple,
Mistic, Triarc Beverage Holdings and Stewart's and $1,503,000 of related accrued
interest, (2) transfer $92,500,000 of proceeds in conjunction with the transfer
of $96,300,000 (including $3,800,000 relating to estimated deferred financing
costs) of obligations under the Term Loans to Royal Crown, (3) acquire Millrose
Distributors, Inc. and the assets of Mid-State Beverage, Inc. (collectively,
'Millrose'), two New Jersey distributors of the Company's premium beverages, for
$17,491,000, including expenses of $241,000, (4) pay estimated allocated fees
and expenses of $16,869,000, including $3,420,000 of actual costs reimbursed by
Royal Crown, relating to the consummation of the Credit Facility (collectively,
the 'Refinancing Transactions'), and (5) pay one-time distributions to Triarc
Parent of $87,220,000, including dividends of $82,837,000. See Note 8 for
disclosure of the extraordinary charge related to the aforementioned debt
repayments recorded during the first quarter of the year ending January 2, 2000.
Borrowings under the Credit Facility bear interest, at the Borrowers'
option, at rates based on either the 30, 60, 90 or 180-day London Interbank
Offered Rate ('LIBOR') (ranging from 5.40% to 6.08% at October 3, 1999) or an
alternate base rate (the 'ABR'). The ABR (8 1/4% at October 3, 1999) represents
the higher of the prime rate or 1/2% over the Federal funds rate. The interest
rates on LIBOR-based loans are reset at the end of the period corresponding with
the duration of the LIBOR selected. The interest rates on ABR-based loans are
reset at the time of any change in the ABR. Revolving Loans and one class of the
Term Loans with $34,981,000 outstanding as of October 3, 1999 (the 'Term A
Loans') bear interest at 3% over LIBOR or 2% over ABR until such time as such
margins may be subject to downward adjustment by up to 3/4% based on the
borrowers' leverage ratio, as defined. It is not expected that such interest
rate margins will be adjusted during the remainder of 1999. The other two
classes of Term Loans with $99,160,000 and $241,950,000 outstanding as of
October 3, 1999 (the 'Term B Loans' and 'Term C Loans,' respectively) bear
interest at 3 1/2% and 3 3/4% over LIBOR, respectively, and 2 1/2% and 2 3/4%,
respectively, over ABR. The borrowing base for Revolving Loans is the sum of 80%
of eligible accounts receivable and 50% of eligible inventories. At October 3,
1999 there was $59,951,000 of borrowing availability to the Borrowers under the
Revolving Credit Facility in accordance with limitations due to such borrowing
base. Before consideration of the effect of an excess cash flow prepayment
discussed below, the Term Loans are due $1,307,000 during the remainder of 1999,
$6,568,000 in 2000, $8,362,000 in 2001, $10,156,000 in 2002, $11,949,000 in
2003, $12,397,000 in 2004, $75,181,000 in 2005, $193,635,000 in 2006 and
$56,536,000 in 2007 and any Revolving Loans would be due in full in March 2005.
The Borrowers must also make mandatory annual prepayments in an amount, if any,
initially equal to 75% of excess cash flow, as defined in the Credit Agreement.
Such mandatory prepayments would be applied on a pro rata basis to the remaining
outstanding balances of the Term Loans except that any lender that has Term B
Loans or Term C Loans outstanding may elect not to have its pro rata share of
such loans repaid. Any amount prepaid and not applied to Term B Loans or Term C
Loans as a result of such election would be applied first to the outstanding
balance of the Term A Loans and second to any outstanding balance of Revolving
Loans, with any remaining amount being returned to the Borrowers. The Borrowers
currently expect that a prepayment will be required to be made in the second
quarter of 2000 in respect of the year ended January 2, 2000, the Company's
portion of which is currently estimated at $26,856,000. Accordingly, the
estimated $26,856,000 the Company will be required to prepay is included in
'Current portion of long-term debt' in the accompanying condensed balance sheet
as of October 3, 1999. After consideration of the effect of this estimated
prepayment and assuming that the prepayment is applied on a pro rata basis to
the remaining outstanding balances of all outstanding Term Loans, the Term Loans
would be due $1,307,000 during the remainder of 1999, $33,298,000 in 2000
including the estimated excess cash flow prepayment, $7,763,000 in 2001,
$9,428,000 in 2002, $11,094,000 in 2003,
F-102
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
$11,510,000 in 2004, $69,672,000 in 2005, $179,704,000 in 2006 and $52,315,000
in 2007. Pursuant to the Credit Agreement the Company can make voluntary
prepayments of the Term Loans. However, if the Company makes voluntary
prepayments of the Term B and Term C Loans through February 25, 2000, it will
incur prepayment penalties of 2.0% and 3.0% of the amounts prepaid,
respectively, and from February 26, 2000 through February 25, 2001 it will incur
prepayment penalties of 1.0% and 1.5% of the amounts prepaid, respectively.
Under the Credit Agreement substantially all of the assets, other than cash
and cash equivalents, of the Company, among other subsidiaries of TCPG, are
pledged as security. The Borrowers' obligations with respect to the Credit
Facility are guaranteed (the 'Guaranty') by, among other subsidiaries of TCPG,
substantially all of the domestic subsidiaries of Snapple, Mistic and Stewart's,
all of which effective May 17, 1999 are wholly-owned by Triarc Beverage
Holdings. As collateral for the Guaranty, all of the stock of Snapple, Mistic
and Stewart's, among other subsidiaries of TCPG, and all of their domestic
subsidiaries and 65% of the stock of each of their directly-owned foreign
subsidiaries is pledged.
In addition, with respect to the obligations of TCPG under $300,000,000
principal amount of 10 1/4% senior subordinated notes due 2009 (the 'Notes')
issued on February 25, 1999, Triarc Beverage Holdings is a co-issuer and the
obligations are guaranteed by, among other subsidiaries of TCPG, Snapple, Mistic
and Stewart's and all of their domestic subsidiaries, all of which effective May
17, 1999 are wholly-owned by Triarc Beverage Holdings or TCPG. Such guarantees
are full and unconditional, are on a joint and several basis and are unsecured.
Since Triarc Beverage Holdings is a co-issuer, it has reflected on its
consolidated balance sheet as of October 3, 1999 such $300,000,000 principal
amount as long-term debt and $4,377,000 of related accrued but unpaid interest
in 'Accrued expenses' with a corresponding charge of $304,377,000 in 'Receivable
from Triarc Companies, Inc.' included as a component of stockholder's equity
(deficit). Such amounts will be increased for interest accrued and reduced to
the extent that TCPG makes interest and principal payments on the Notes. On the
date of issuance of the Notes, an aggregate $20,000,000 of Notes were issued to
the Chairman and Chief Executive Officer and President and Chief Operating
Officer (the 'Executives') of TCPG. The Company has been informed that, as of
April 23, 1999, the Executives no longer held any of the Notes. The Notes mature
in 2009 and do not require any amortization of principal prior to 2009. However,
under the indenture (the 'Indenture') pursuant to which the Notes were issued,
the Notes are redeemable at the option of the Company at amounts commencing at
105.125% of principal beginning February 2004 decreasing annually to 100% in
February 2007 through February 2009. In addition, should TCPG consummate a
permitted public equity offering or receive proceeds from a public equity
offering by Triarc Parent, TCPG and the Company may at any time prior to
February 2002 redeem up to an aggregate of $105,000,000 of the Notes at 110.25%
of principal amount with the net proceeds of such public offering. On
November 12, 1999 TCPG and the Company filed with the SEC amendment No. 3 to a
registration statement (the 'Registration Statement') covering resales by
holders of the Notes. The Registration Statement was not declared effective by
the SEC by August 24, 1999 and, in accordance with the Indenture, the annual
interest rate on the Notes increased by 1/2% to 10 3/4% and will remain at
10 3/4% until the Registration Statement is declared effective.
The Indenture, the Credit Agreement, and the Guaranty contain various
covenants which (1) require meeting certain financial amount and ratio tests,
(2) limit, among other matters, (a) the incurrence of indebtedness, (b) the
retirement of certain debt prior to maturity, (c) investments, (d) asset
dispositions and (e) affiliate transactions other than in the normal course of
business, and (3) restrict the payment of dividends to TCPG. Under the most
restrictive of such covenants, the Company would not be able to pay any
dividends to TCPG other than (1) the aforementioned one-time distributions,
including dividends, paid to TCPG in connection with the Refinancing
Transactions, (2) dividends paid to TCPG to the extent necessary to allow TCPG
to make scheduled interest
F-103
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
payments on the Notes, and (3) dividends paid to TCPG in an amount not to exceed
$250,000 in any fiscal year, to the extent necessary to allow TCPG to pay
certain expenses.
The following pro forma data of the Company for the nine months ended
October 3, 1999 have been prepared by adjusting the historical data reflected in
the accompanying condensed consolidated statement of operations for such period
to reflect the effects of the Refinancing Transactions, including the
acquisition of Millrose, as if such transactions had been consummated on
January 4, 1999. Such pro forma data is presented for information 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 4, 1999 or
of the Company's future results of operations and are as follows (in thousands):
<TABLE>
<CAPTION>
AS PRO
REPORTED FORMA
-------- -----
<S> <C> <C>
Revenues.................................................... $525,702 $527,376
Operating profit............................................ 45,447 45,356
Interest expense............................................ (25,827) (27,240)
Income before extraordinary charge.......................... 10,145 9,168
</TABLE>
(4) ACQUISITION
The acquisition of Millrose described in Note 3 has been accounted for in
accordance with the purchase method of accounting. In accordance therewith, the
following table sets forth the preliminary allocation of the aggregate purchase
price (in thousands):
<TABLE>
<S> <C>
Current assets.............................................. $ 3,770
Properties.................................................. 1,000
Unamortized costs in excess of net assets of acquired
companies (amortized over 15 years)....................... 13,579
Current liabilities......................................... (858)
-------
$17,491
-------
-------
</TABLE>
(5) CAPITAL STRUCTURE REORGANIZATION RELATED CHARGE
The capital structure reorganization related charge of $3,208,000
recognized during the nine months ended October 3, 1999, including $208,000
recognized during the three months ended October 3, 1999, resulted from
equitable adjustments to the terms of outstanding options under the Triarc
Beverage Holdings Stock Option Plan (the 'Option Plan'), to adjust for the
effects of net distributions of $91,342,000, principally consisting of transfers
of cash and deferred tax assets, from Triarc Beverage Holdings to Triarc Parent,
partially offset by the effect of the contribution of Stewart's to Triarc
Beverage Holdings effective May 17, 1999.
The Option Plan provides for an equitable adjustment of options in the
event of a recapitalization or similar event. As a result of these net
distributions and the terms of the Option Plan, the exercise prices of the
options granted in 1997 and 1998 were equitably adjusted from $147.30 and
$191.00 per share, respectively, to $107.05 and $138.83 per share, respectively,
and a cash payment of $51.34 and $39.40 per share, respectively, is due from
Triarc Beverage Holdings to the option holder following the exercise of the
stock options. Compensation expense is being recognized for the cash to be paid
upon the exercise of the stock options by employees of the Company ratably over
the vesting period of the stock options. The charges to be recognized over the
vesting period aggregate $4,166,000. No compensation expense will be recognized
for other changes in the terms of the outstanding options because the
modifications to the options did not create a new measurement date under
generally accepted accounting principles.
F-104
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
(6) INCOME TAXES
The Company is included in the consolidated Federal income tax return of
Triarc Parent. As discussed more fully in the Company's consolidated financial
statements for the year ended January 3, 1999, the Company provides for Federal
income taxes on the same basis as if the Company filed separate consolidated
returns pursuant to tax-sharing agreements with Triarc Parent. On February 25,
1999 TCPG entered into a revised tax-sharing agreement (including the Company)
with Triarc Parent which, as amended effective February 25, 1999, provides that
TCPG would continue to receive, and accordingly the Company would continue to
receive, benefit for deferred tax assets associated with existing Federal net
operating loss carryforwards and excess Federal income tax payments made in
accordance with the prior tax-sharing agreement aggregating $12,211,000 as of
January 3, 1999 except that Triarc Parent has the right to cause the effective
transfer of any unutilized benefits from TCPG, and accordingly the Company, to
Triarc Parent, but only to the extent any such transfer would not result in
non-compliance with a Credit Agreement covenant. In accordance therewith, during
the nine months ended October 3, 1999 the Company generated an additional
$2,626,000 of such benefits as a result of the extraordinary charge (see
Note 8), utilized $161,000 of such benefits to offset income taxes otherwise
payable on its pre-tax income before extraordinary charge and transferred the
remaining $14,676,000 of such deferred tax benefits to Triarc Parent as if such
transfer were a distribution from the Company to TCPG and, in turn, a
distribution from TCPG to Triarc Parent. Such transfer was recorded as a charge
to 'Accumulated deficit' and a credit to 'Deferred income taxes'.
(7) STOCKHOLDER'S EQUITY (DEFICIT)
The following is a summary of the changes in stockholder's equity (deficit)
for the nine months ended October 3, 1999 (in thousands):
<TABLE>
<S> <C>
Balance of stockholder's equity at January 3, 1999.......... $ 31,306
Net income............................................. 5,269
Cash dividends paid to Triarc Parent (Note 3).......... (82,837)
Charge to receivable from TCPG related to issuance of
the Notes (Note 3).................................... (300,000)
Increase to receivable from TCPG for accrued interest
on the Notes (Note 3)................................. (4,377)
Transfer of deferred tax benefits (Note 6)............. (14,676)
Dividend requirement on redeemable preferred stock..... (6,490)
Net change in currency translation adjustment
(Note 9).............................................. (24)
---------
Balance of stockholder's deficit at October 3, 1999......... $(371,829)
---------
---------
</TABLE>
(8) EXTRAORDINARY CHARGE
The extraordinary charge in the nine months ended October 3, 1999 resulted
from the early extinguishment of borrowings under the Former Beverage Credit
Agreement (see Note 3). Such extraordinary charge consisted of the write-off of
previously unamortized (1) deferred financing costs of $7,844,000 and
(2) interest rate cap agreement costs of $146,000, less income tax benefit of
$3,114,000.
F-105
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 3, 1999
(UNAUDITED)
(9) COMPREHENSIVE INCOME
The following is a summary of the components of comprehensive income (in
thousands):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
SEPTEMBER 27, OCTOBER 3,
1998 1999
---- ----
<S> <C> <C>
Net income.................................................. $15,189 $5,269
Net change in currency translation adjustment............... 21 (24)
Reclassification adjustment for prior year appreciation on
short-term investment sold during the period.............. (42) --
------- ------
Comprehensive income........................................ $15,168 $5,245
------- ------
------- ------
</TABLE>
(10) TRANSACTIONS WITH RELATED PARTIES
The Company continues to have certain related party transactions with
Triarc Parent and its subsidiaries of the same nature and general magnitude as
those described in Note 16 to the Company's consolidated financial statements
for the year ended January 3, 1999. In addition, see Notes 3 and 6 for
discussion of certain other related party transactions for the nine-month period
ended October 3, 1999.
(11) LEGAL MATTERS
The Company is involved in litigation and claims incidental to its
business. The Company has reserves for such legal matters aggregating $468,000
as of October 3, 1999. 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 matters
will have a material adverse effect on its consolidated financial position or
results of operations.
F-106
<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN, OR DEEMED TO BE CONSIDERED PART
OF, THIS DOCUMENT IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY TRIARC CONSUMER PRODUCTS OR TRIARC BEVERAGE
HOLDINGS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF TRIARC CONSUMER PRODUCTS OR TRIARC BEVERAGE HOLDINGS SINCE THE
DATE OF THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY, THE SECURITIES WE ARE OFFERING BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TRIARC CONSUMER PRODUCTS GROUP, LLC
TRIARC BEVERAGE HOLDINGS CORP.
OFFER TO EXCHANGE $300,000,000
10 1/4% SENIOR SUBORDINATED
NOTES DUE 2009
------------------------
PROSPECTUS
------------------------
DECEMBER , 1999
UNTIL MARCH , 2000 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENT.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 18-108 of the Delaware Limited Liability Company Act, as amended
(the 'Act'), grants a Delaware limited liability company the power, subject to
such standards and restrictions, if any, as are set forth in its limited
liability company agreement to indemnify and hold harmless any member or manager
or other person from and against any and all claims and demands whatsoever.
Article 19 of the Limited Liability Company Operating Agreement of Triarc
Consumer Products Group, LLC (the 'Operating Agreement') provides that the
member shall not have any liability for the obligations or liabilities of Triarc
Consumer Products Group, except to the extent provided in the Act. Section
18-303 provides that except as otherwise provided therein the debts, obligations
and liabilities of a limited liability company, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations and liabilities of the
limited liability company, and no member or manager of a limited liability
company shall be obligated personally for any such debt, obligation or liability
of the limited liability company solely by reason of being a member or acting as
a manager of the limited liability company.
Section 20.1 of the Operating Agreement provides that the member, any
manager, any affiliate of the member or any manager and any officers, directors,
shareholder, partners or employees of the member or any manager and their
respective affiliates, and any officer, employee or expressly authorized agent
of Triarc Consumer Products Group or its affiliates are each a 'Covered Person.'
No Covered Person shall be liable to Triarc Consumer Products Group or any other
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Covered Person in good faith on behalf of
Triarc Consumer Products Group and in a manner reasonably believed to be within
the scope of authority conferred on such Covered Person by the Operating
Agreement, except that a Covered Person shall be liable for any such loss,
damage or claim incurred by reason of such Covered Person's gross negligence or
willful misconduct. A Covered Person shall be fully protected in relying in good
faith upon the records of Triarc Consumer Products Group and upon such
information, opinions, reports or statements presented to Triarc Consumer
Products Group by any person as to matters the Covered Person reasonably
believes are within the professional or expert competence of such person or
entity and who or which has been selected with reasonable care by or on behalf
of Triarc Consumer Products Group, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to the member properly be paid.
Section 145 of the Delaware General Corporation Law (the 'DGCL') grants a
Delaware corporation the power to indemnify any director, officer, employee or
agent against reasonable expenses (including attorneys' fees) incurred by him in
connection with any proceeding brought by or on behalf of the corporation and
against judgments, fines, settlements and reasonable expenses (including
attorneys' fees) incurred by him in connection with any other proceeding, if (a)
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and (b) in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Except as ordered by a court, however, no indemnification is to be
made in connection with any proceeding brought by or in the right of the
corporation where the person involved is adjudged to be liable to the
corporation.
Article 8 of the Triarc Beverage Holdings Corp. certificate of
incorporation and Article 8 of Triarc Beverage Holdings' by-laws provide that
Triarc Beverage Holdings shall, to the extent not prohibited by law, indemnify
any person who is or was made, or threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding (a 'Proceeding'),
whether civil, criminal, administrative or investigative, including, without
limitation, an action by or in the right of Triarc Beverage Holdings to procure
a judgment in its favor, by reason of the fact that such person, or a person of
whom such person is the legal representative, is or was a director or officer of
Triarc Beverage Holdings, or is
II-1
<PAGE>
or was serving in a capacity at the request of Triarc Beverage Holdings as a
director or officer of any other corporation or for any corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise (an
'Other Entity'), against judgments, fines, penalties, excise taxes, amounts paid
in settlement and costs, charges and expenses (including attorneys' fees and
disbursements). Persons who are not directors or officers of Triarc Beverage
Holdings may be similarly indemnified in respect of service to Triarc Beverage
Holdings or to an Other Entity at the request of Triarc Beverage Holdings to the
extent the board of directors of Triarc Beverage Holdings at any time specifies
that such persons are entitled to the benefits of this Article 8.
Section 102(b)(7) of the DGCL permits the elimination or limitation of
directors' personal liability to the corporation or its stockholders for
monetary damages for breach of fiduciary duties as a director except for
(1) any breach of the director's duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (3) breaches under
section 174 of the DGCL, which relate to unlawful payments of dividends or
unlawful stock repurchase or redemptions, and (4) any transaction from which the
director derived an improper personal benefit.
Section 7 of Triarc Beverage Holdings's certificate of incorporation limits
the personal liability of directors of Triarc Beverage Holdings to the fullest
extent permitted by paragraph (7) of subsection (b) of section 102 of the DGCL.
Each of Triarc Consumer Products Group and Triarc Beverage Holdings also
enters into indemnification agreements with their, and some of their
subsidiaries', managers, directors and officers, as the case may be,
indemnifying them to the fullest extent permitted by law against liability,
including related expenses, they may incur in their capacity as directors,
managers, officers, employees, trustees, agents or fiduciaries of Triarc
Consumer Products Group or Triarc Beverage Holdings, as the case may be, and/or
any liability relating to their service in any such capacity, at the request of
Triarc Consumer Products Group or Triarc Beverage Holdings for other
corporations or entities. The indemnification agreements are meant to provide
specific contractual assurance that the indemnification provided by Triarc
Consumer Products Group and Triarc Beverage Holdings under their organizational
documents or directors' and officers' liability insurance will be available
regardless of changes to their organizational documents, or any acquisition
transactions relating to their organizational documents. The indemnification
agreements do not provide indemnification (1) for the return by the indemnitee
of any illegal remuneration paid to him or her, (2) for any profits payable by
the indemnitee to Triarc Consumer Products Group or Triarc Beverage Holdings
under Section 16(b) of the Securities Exchange Act, (3) for any liability
resulting from the indemnitee's knowingly fraudulent, dishonest or willful
misconduct, (4) for any amount the payment of which is not permitted by
applicable law, (5) for any liability resulting from conduct producing unlawful
personal benefit, (6) if a final court adjudication determines that
indemnification is not lawful, or (7) to the extent indemnification has been
provided by either Triarc Consumer Products Group or Triarc Beverage Holdings
under its Operating Agreement, certificate of incorporation, by-laws or
directors and officers liability insurance, as the case may be.
Determination as to whether an indemnitee is entitled to be paid under the
indemnification agreements may be made by the majority vote of a quorum of
disinterested directors or managers of Triarc Consumer Products Group or Triarc
Beverage Holdings, as the case may be, independent legal counsel selected by the
Managers of Triarc Consumer Products Group or directors of Triarc Berverage
Holdings, as the case may be, a majority of disinterested members of Triarc
Consumer Products Group or stockholders of Triarc Beverage Holdings or by a
final adjudication of a court of competent jurisdiction. If Triarc Consumer
Products Group or Triarc Beverage Holdings undergoes a change of control under
the indemnification agreements all such determinations are to be made by special
independent counsel selected by the indemnitee and approved by Triarc Consumer
Products Group or Triarc Beverage Holdings, as the case may be, which approval
may not be unreasonably withheld. Triarc Consumer Products Group or Triarc
Beverage Holdings will pay the reasonable fees and expenses of the special
independent counsel. An indemnitee may be able to require Triarc Consumer
Products Group or Triarc Beverage Holdings to establish a trust fund to assure
that funds will be available to pay any amounts which may be due to an
indemnitee under an indemnification agreement.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Triarc Consumer
Products Group and Triarc Beverage Holdings pursuant to the foregoing
provisions, Triarc Consumer Products Group and Triarc Beverage Holdings have
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Pursuant to Section 5(b) of the registration rights agreement dated
February 18, 1999, between Triarc Consumer Products Group, Morgan Stanley & Co.
Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation, Wasserstein
Perella Securities, Inc., and certain guarantors thereto, the holders of the
notes have agreed to indemnify the parties thereto and their directors, officers
and controlling persons against any losses, claims, damages, liabilities or
expenses that may arise out of an untrue statement or alleged untrue statement
of or omission to state a material fact, contained in the registration statement
or prospectus, but only (i) with reference to information relating to such
holder furnished in writing by such holders to Triarc Consumer Products Group
and Triarc Beverage Holdings for use in the registration statement and (ii) with
respect to any losses that may arise as a result of the disposition by such
holder of registerable notes to the person asserting the claim from which such
losses arise pursuant to a registration statement if such holder sent or
delivered, or was required by law to send or deliver, a prospectus in connection
with such disposition, such holder received a blockage notice with respect to
such prospectus in writing at least four business days prior to the date of such
disposition and the untrue statement or alleged untrue statement or omission or
alleged omission was the reason for the blockage notice.
Section 1.17 of the indenture dated as of February 25, 1999, by and among
Triarc Consumer Products Group, Triarc Beverage Holdings, the Subsidiary
Guarantors and The Bank of New York provides that the holders of the debentures
have agreed to waive all liability for any obligations incurred by Triarc
Consumer Products Group, Triarc Beverage Holdings or the Subsidiary Guarantors
under the notes, Subsidiary Guarantees or the indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation, against
any incorporator, member, director, manager, officer, employee or stockholder,
as such, of Triarc Consumer Products Group, Triarc Beverage Holdings or the
Subsidiary Guarantors, and have agreed to the release of such persons from any
such liability.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
3.1* -- Certificate of Formation of Triarc Consumer Products
Group, LLC
3.2* -- Certificate of Incorporation of Triarc Beverage Holdings
Corp., as amended
3.3* -- Certificate of Incorporation of Mistic Brands, Inc., as
amended
3.4* -- Restated Certificate of Incorporation of Snapple Beverage
Corp.
3.5* -- Certificate of Incorporation of Snapple International
Corp.
3.6* -- Certificate of Incorporation of Snapple Caribbean Corp.
3.7* -- Certificate of Incorporation of Snapple Worldwide Corp.
3.8* -- Certificate of Incorporation of Snapple Finance Corp.
3.9* -- Articles of Incorporation of Pacific Snapple
Distributors, Inc., as amended
3.10* -- Certificate of Incorporation of Mr. Natural, Inc., as
amended
3.11* -- Certificate of Incorporation of Kelrae, Inc.
3.12* -- Certificate of Incorporation of Millrose Distributors,
Inc.
3.13* -- Certificate of Incorporation of RC/Arby's Corporation
3.14* -- Certificate of Formation of ARHC, LLC
3.15* -- Certificate of Incorporation of RCAC Asset Management,
Inc.
3.16* -- Certificate of Incorporation of Arby's, Inc., as amended
3.17* -- Articles of Incorporation of Arby's Building and
Construction Co.
3.18* -- Certificate of Incorporation of TJ Holding Company, Inc.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
3.19* -- Certificate of Incorporation of Arby's Restaurant
Construction Company
3.20* -- Certificate of Incorporation of Arby's Restaurants, Inc.
3.21* -- Articles of Incorporation of RC-11, Inc., as amended
3.22* -- Certificate of Incorporation of RC Leasing, Inc.
3.23* -- Certificate of Incorporation of Royal Crown Bottling
Company of Texas, as amended
3.24* -- Certificate of Incorporation of Royal Crown Company,
Inc., as amended
3.25* -- Articles of Incorporation of Retailer Concentrate
Products, Inc.
3.26* -- Certificate of Incorporation of TriBev Corporation
3.27* -- Certificate of Incorporation of Stewart's Beverages,
Inc., as amended
3.28* -- Articles of Incorporation of Old San Francisco Seltzer,
Inc., as amended
3.29* -- Articles of Incorporation of Fountain Classics, Inc.
3.30* -- Limited Liability Company Operating Agreement of Triarc
Consumer Products Group, LLC
3.31* -- By-laws of Triarc Beverage Holdings Corp.
3.32* -- By-laws of Mistic Brands, Inc.
3.33* -- Amended and Restated By-laws of Snapple Beverage Corp.
3.34* -- By-laws of Snapple International Corp.
3.35* -- By-laws of Snapple Caribbean Corp.
3.36* -- By-laws of Snapple Worldwide Corp.
3.37* -- By-laws of Snapple Finance Corp.
3.38* -- By-laws of Pacific Snapple Distributors, Inc.
3.39* -- By-laws of Mr. Natural, Inc.
3.40* -- By-laws of Kelrae, Inc.
3.41* -- Amended and Restated By-laws of Millrose Distributors,
Inc.
3.42* -- By-laws of RC/Arby's Corporation
3.43* -- Limited Liability Company Operating Agreement of ARHC,
LLC
3.44* -- By-laws of RCAC Asset Management, Inc.
3.45* -- By-laws of Arby's, Inc.
3.46* -- By-laws of Arby's Building and Construction Co.
3.47* -- By-laws of TJ Holding Company, Inc.
3.48* -- By-laws of Arby's Restaurant Construction Company
3.49* -- By-laws of Arby's Restaurants, Inc.
3.50* -- By-laws of RC-11, Inc.
3.51* -- By-laws of RC Leasing, Inc.
3.52* -- By-laws of Royal Crown Bottling Company of Texas
3.53* -- By-laws of Royal Crown Company, Inc.
3.54* -- By-laws of Retailer Concentrate Products, Inc.
3.55* -- By-laws of TriBev Corporation
3.56* -- By-laws of Stewart's Beverages, Inc. (f/k/a Cable Car
Beverage Corporation)
3.57* -- By-laws of Old San Francisco Seltzer, Inc.
3.58* -- By-laws of Fountain Classics, Inc.
4.1 -- Credit Agreement dated as of February 25, 1999, among
Snapple Beverage Corp. ('Snapple'), Mistic Brands, Inc.
('Mistic'), Stewart's Beverages, Inc. (f/k/a Cable Car
Beverage Corporation) ('Stewart's Beverages'), RC/Arby's
Corporation and Royal Crown Company Inc. ('Royal Crown'),
as Borrowers, various financial institutions party
thereto, as Lenders, 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 Companies, Inc.'s Current Report on
Form 8-K dated March 11, 1999 (SEC file no. 1-2207).
4.2 -- Indenture dated of February 25, 1999 among Triarc
Consumer Products Group LLC ('Triarc Consumer Products
Group'), Triarc Beverage Holdings Corp. ('Triarc Beverage
Holdings'), as Issuers, the subsidiary guarantors party
thereto and The Bank of New York, as Trustee, incorporated
herein by reference to Exhibit 4.2 to Triarc Companies,
Inc.'s Current Report on Form 8-K dated March 11, 1999
(SEC file no. 1-2207).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
4.3 -- Registration Rights Agreement dated February 18, 1999
among Triarc Consumer Products Group, Triarc Beverage
Holdings, the Guarantors party thereto and Morgan Stanley
& Co. Incorporated, Donaldson, Lufkin & Jenrette
Securities Corporation and Wasserstein Perella Securities,
Inc., incorporated herein by reference to Exhibit 4.3 to
Triarc Companies, Inc.'s Current Report on Form 8-K dated
March 11, 1999 (SEC file no. 1-2207).
4.4 -- Registration Rights Agreement dated as of February 25,
1999 among Triarc Consumer Products Group, Triarc Beverage
Holdings, the Guarantors party thereto and Nelson Peltz
and Peter W. May, incorporated herein by reference to
Exhibit 4.1 to Triarc Companies, Inc.'s Current Report on
Form 8-K dated April 1, 1999 (SEC file no. 1-2207).
4.5* -- Form of 10 1/4% Senior Subordinated Note of Triarc
Consumer Products Group and Triarc Beverage Holdings due
2009.
4.6* -- Supplemental Indenture, dated as of February 26, 1999,
among Triarc Consumer Products Group, Triarc Beverage
Holdings, Millrose Distributors, Inc., and The Bank of New
York as Trustee.
4.7* -- Supplemental Indenture No. 2, dated as of September 8,
1999, among Triarc Consumer Products Group, Triarc
Beverage Holdilngs, the subsidiary guarantors party
thereto and The Bank of New York, as Trustee.
5.1** -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to
legality of the exchange notes (replaces previously filed
exhibit).
5.2** -- Opinion of Sonnenschein Nath & Rosenthal as to certain
legal matters relating to Pacific Snapple Distributors,
Inc.
5.3** -- Opinion of Schenck, Price, Smith & King, LLP as to
certain legal matters relating to Millrose Distributors,
Inc.
5.4** -- Opinion of Powell, Goldstein, Frazer & Murphy LLP as to
certain legal matters relating to Arby's Building and
Construction Company.
5.5** -- Opinion of Watkins Ludlam Winter & Stennis, P.A. as to
certain legal matters relating to RC-11, Inc.
5.6** -- Opinion of Hunton & Williams as to certain legal matters
relating to Retailer Concentrate Products, Inc.
5.7** -- Opinion of Holland & Hart LLP as to certain legal matters
relating to Old San Francisco Seltzers, Inc.
5.8** -- Opinion of Holland & Hart LLP as to certain legal matters
relating to Fountain Classics, Inc.
8.1* -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to
federal income tax matters.
10.1 -- Triarc Companies, Inc.'s 1993 Equity Participation Plan,
as amended, incorporated herein by reference to Exhibit
10.1 to Triarc Companies, Inc.'s Current Report on Form
8-K dated March 31, 1997 (SEC file no. 1-2207).
10.2 -- Form of Non-Incentive Stock Option Agreement under Triarc
Companies, Inc.'s 1993 Equity Participation Plan,
incorporated herein by reference to Exhibit 10.2 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated March
31, 1997 (SEC file no. 1-2207).
10.3 -- Form of Restricted Stock Agreement under Triarc
Companies, Inc.'s 1933 Equity Participation Plan,
incorporated herein by reference to Exhibit 13 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated
April 23, 1993 (SEC file no. 1-2207).
10.4 -- Concentrate Sales Agreement dated as of January 28, 1994
between Royal Crown Cola Co. and Cott -- Confidential
treatment has been granted for portions of the
agreement -- incorporated herein by reference to Exhibit
10.12 to Amendment No. 1 to Triarc Companies, Inc.'s
Registration Statement on Form S-4 dated March 11, 1994
(SEC file no. 1-2207).
10.5 -- Form of Indemnification Agreement, between Triarc
Companies, Inc. and certain officers, directors, and
employees of Triarc Companies, Inc., incorporated herein
by reference to Exhibit F to the 1994 Proxy (SEC file no.
1-2207).
10.6 -- Employment Agreement, dated as June 29, 1994, between
Brian L. Schorr and Triarc Companies, Inc., incorporated
herein by reference to Exhibit 10.2 to Triarc Companies,
Inc.'s Current Report on Form 8-K dated March 29, 1995
(SEC file no. 1-2207).
10.7 -- Amended and Restated Employment Agreement dated as of
June 1, 1997 by and between Snapple, Mistic and Michael
Weinstein, incorporated herein by reference to Exhibit
10.3 to Triarc Companies, Inc.'s Current Report on Form
8-K/A dated March 16, 1998 (SEC file no. 1-2207).
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
10.8 -- Amended and Restated Employment Agreement dated as of
June 1, 1997 by and between Snapple, Mistic and Ernest J.
Cavallo, incorporated herein by reference to Exhibit 10.4
to Triarc Companies, Inc.'s Current Report on Form 8-K/A
dated March 16, 1998 (SEC file no. 1-2207).
10.9 -- Employment Agreement dated as of April 29, 1996 between
Triarc Companies, Inc. and John L. Barnes, Jr.,
incorporated herein by reference to Exhibit 10.3 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated
March 31, 1997 (SEC file no. 1-2207).
10.10 -- Stock Purchase Agreement dated as of March 27, 1997
between The Quaker Oats Company and Triarc Companies,
Inc., incorporated herein by reference to Exhibit 2.1 to
Triarc Companies, Inc.'s Current Report on Form 8-K dated
March 31, 1997 (SEC file no. 1-2207).
10.11 -- Agreement and Plan of Merger dated as of June 24, 1997
between Stewart's Beverages, Triarc Companies, Inc. and
CCB Merger Corporation ('CCB'), incorporated herein by
reference to Exhibit 2.1 to Triarc Companies, Inc.'s
Current Report on Form 8-K dated June 24, 1997 (SEC file
no. 1-2207).
10.12 -- Amendment No. 1 to Agreement and Plan of Merger, dated as
of September 30, 1997, between Stewart's Beverages, Triarc
Companies, Inc. and CCB, incorporated herein by reference
to Appendix B-1 to the Proxy Statement/Prospectus filed
pursuant to Triarc Companies, Inc.'s Registration
Statement on Form S-4 dated October 22, 1997 (SEC file no.
1-2207).
10.13 -- Option granted by RTM Partners, Inc. ('RTM Partners') in
favor of Arby's Restaurants Holding Company, together with
a schedule identifying other documents omitted and the
material details in which such documents differ,
incorporated herein by reference to Exhibit 10.30 to
Triarc Companies, Inc.'s Registration Statement on Form
S-4 dated October 22, 1997 (SEC file no. 1-2207).
10.14 -- Guaranty dated as of May 5, 1997 by RTM, Inc., RTM
Parent, RTM Partners, RTM Management Co., LLC and RTM
Operating Company in favor of Arby's, Arby's Restaurant
Development Corporation, Arby's Restaurant Holding
Company, Arby's Restaurant Operations Company and Triarc
Companies, Inc., incorporated herein by reference to
Exhibit 10.31 to Triarc Companies, Inc.'s Registration
Statement on Form S-4 dated October 22, 1997 (SEC file no.
1-2007).
10.15 -- Triarc Companies, Inc.'s, Inc. 1997 Equity Participation
Plan (the '1997 Equity Plan'), incorporated herein by
reference to Exhibit 10.5 to Triarc Companies, Inc.'s
Current Report on Form 8-K dated March 16, 1998 (SEC file
no. 1-2207).
10.16 -- Form of Non-Incentive Stock Option Agreement under the
1997 Equity Plan, incorporated herein by reference to
Exhibit 10.6 to Triarc Companies, Inc.'s Current Report on
Form 8-K dated March 16, 1998 (SEC file no. 1-2207).
10.17 -- Triarc Companies, Inc.'s Stock Option Plan for Stewart's
Beverages Employees, incorporated herein by reference to
Exhibit 4.3 to Triarc Companies, Inc.'s Registration
Statement on Form S-8 dated January 22, 1998 (Registration
No. 333-44711).
10.18 -- Triarc Beverage Holdings Corp. 1997 Stock Option Plan
(the 'TBHC Option Plan'), incorporated herein by reference
to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report
on Form 8-K dated March 16, 1998 (SEC file no. 1-2207).
10.19 -- Form of Non-Qualified Stock Option Agreement under the
TBHC Option Plan, incorporated herein by reference to
Exhibit 10.2 to Triarc Companies, Inc.'s Current Report on
Form 8-K dated March 16, 1998 (SEC file no. 1-2207).
10.20 -- Triarc Companies, Inc.'s 1998 Equity Participation Plan,
as currently in effect, incorporated herein by reference
to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report
on Form 8-K dated May 13, 1998 (SEC file no. 1-2207).
10.21 -- Form of Non-Incentive Stock Option Agreement under Triarc
Companies, Inc.'s 1998 Equity Participation Plan,
incorporated herein by reference to Exhibit 10.2 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated May 13,
1998 (SEC file no. 1-2207).
10.22 -- Letter Agreement, dated as of March 10, 1998, between
Triarc Companies, Inc. and John L. Barnes, Jr.,
incorporated herein by reference to Exhibit 10.3 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated May 13,
1998 (SEC file no. 1-2207).
10.23 -- Letter Agreement dated July 23, 1998 between John L.
Belsito and Royal Crown, incorporated herein by reference
to Exhibit 10.1 to RC/Arby's Corporation's Current Report
on Form 8-K dated November 5, 1998 (SEC file no.
33-62778).
10.24 -- Letter Agreement dated August 27, 1998 among John C.
Carson, Triarc Companies, Inc. and Royal Crown,
incorporated herein by reference to Exhibit 10.2 to
RC/Arby's Corporation's Current Report on Form 8-K dated
November 5, 1998 (SEC file no. 33-62778).
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
10.25 -- Letter Agreement dated as of February 13, 1997 between
Arby's and Roland Smith, incorporated herein by reference
to Exhibit 10.1 to Triarc Companies Inc.'s Current Report
on Form 8-K dated April 1, 1999 (SEC file no. 1-2207).
10.26 -- Triarc Restaurant Group Senior Executive Mid-term
Incentive Plan (Portions of this exhibit have been omitted
pursuant to a grant of confidential treatment),
incorporated herein by reference to Exhibit 10.1 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated
April 30, 1999 (SEC file 1-2207).
10.27* -- Management Services Agreement, dated February 25, 1999,
by and between Triarc Companies, Inc. and Arby's, Inc.
10.28* -- Management Services Agreement, dated February 25, 1999,
by and between Triarc Companies, Inc., Snapple, Mistic,
Stewart's Beverages and Royal Crown.
10.29* -- Tax Sharing Agreement, dated February 25, 1999, by and
between Triarc Companies, Inc., Triarc Consumer Products
Group, Triarc Beverage Holdings, Snapple, Mistic,
Stewart's Beverages, RC/Arby's Corporation, Royal Crown,
Arby's, and ARHC, LLC.
10.30* -- Amendment No. 1 to the Tax Sharing Agreement, dated April
23, 1999, by and among Triarc Companies, Inc., Triarc
Consumer Products Group, Triarc Beverage Holdings,
Snapple, Mistic, Stewart's Beverages, RC/Arby's
Corporation, Royal Crown, Arby's and ARHC, LLC.
10.31* -- Tax Sharing Agreement, dated May 22, 1997, by and among
Triarc Companies Inc., Triarc Beverage Holdings, Snapple
and Mistic.
10.32* -- Tax Sharing Agreement, dated November 25, 1997, by and
among Triarc Companies, Inc. and Stewart's Beverages.
10.33* -- Amendment to Tax Sharing Agreements, dated as of August
15, 1998, among Triarc Beverage Holdings, Snapple, Mistic
and Stewart's Beverages.
10.34* -- Contribution Agreement, dated as of February 23, 1999,
between Triarc Companies, Inc. and Triarc Consumer
Products Group.
10.35* -- Letter Agreement dated as of April 28, 1999, between
Triarc Companies, Inc. and John L. Barnes, Jr.
10.36* -- Amendment No. 1 to Triarc Beverage Holdings Corp. 1997
Stock Option Plan.
10.37* -- Letter Agreement dated as of July 28, 1999, between
Triarc Companies, Inc. and John L. Barnes, Jr.
10.38* -- Amendment No. 2 to the Tax Sharing Agreement, dated as of
April 23, 1999, by and among Triarc Companies, Inc.,
Triarc Consumer Products Group, Triarc Beverage Holdings,
Snapple, Mistic, Stewart's Beverages, RC/Arby's
Corporation, Royal Crown, Arby's and ARHC, LLC.
10.39** -- Form of Indemnification Agreement of Triarc Consumer
Products Group, LLC.
10.40** -- Form of Indemnification Agreement fo Triarc Beverage
Holdings Corp.
12.1** -- Statement of Computation of Ratios of Earnings to Fixed
Charges.
21.1* -- Subsidiaries of Triarc Consumer Products Group, LLC.
23.1** -- Consent of Deloitte & Touche LLP relating to Triarc
Consumer Products Group, LLC.
23.2** -- Consent of Deloitte & Touche LLP relating to Triarc
Beverage Holdings Corp.
23.3** -- Consent of Arthur Andersen LLP.
23.4** -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in the opinion filed as Exhibit 5.1 of this
Registration Statement).
23.5* -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in the opinion filed as Exhibit 8.1 of this
Registration Statement).
23.6** -- Consent of Sonnenschein Nath & Rosenthal.
23.7** -- Consent of Schenck, Price, Smith & King, LLP.
23.8** -- Consent of Powell, Goldstein, Frazer & Murphy LLP.
23.9** -- Consent of Watkins Ludlam Winter & Stennis, P.A.
23.10** -- Consent of Hunton & Williams.
23.11** -- Consent of Holland & Hart LLP.
23.12** -- Consent of Holland & Hart LLP.
24.1* -- Powers of Attorney (contained on signature pages).
24.2* -- Power of Attorney, dated September 29, 1999, by Jonathan
P. May.
25.1* -- Form T-1 Statement of Eligibility of The Bank of New York
to act as trustee under the Indenture.
27.1** -- Financial Data Schedule of Triarc Consumer Products
Group, LLC.
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
27.2** -- Financial Data Schedule of Triarc Beverage Holdings Corp.
99.1* -- Form of Letter of Transmittal (including Guidelines for
Certification of Taxpayer Identification Number of
Substitute Form W-9).
99.2* -- Form of Notice of Guaranteed Delivery.
</TABLE>
- ------------------------
* Previously filed.
** Filed herewith.
(b) Financial Data Schedules
None
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 20, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. If a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officers or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrants hereby undertake:
To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11 or 13 of Form S-4, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed after the effective date of this Registration
Statement through the date of responding to the request;
To supply by means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved therein, that was not the
subject of and included in the Registration Statement when it became effective;
The undersigned registrants hereby undertake:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof which, individually or in the aggregate,
represent a fundamental change in the information described in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the 'Calculation of
Registration Fee' table in the effective Registration Statement;
(iii) to include any material information with respect to the not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement;
(2) that, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof;
(3) to remove from registration by means of post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999.
TRIARC CONSUMER PRODUCTS GROUP, LLC
By: *
.................................
JOHN L. BARNES, JR.
CHIEF FINANCIAL OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
/s/ NELSON PELTZ Chairman and Chief Executive Officer and Manager
......................................... (Principal Executive Officer)
NELSON PELTZ
* President and Chief Operating Officer and Manager
.........................................
PETER W. MAY
* Executive Vice President and Chief Financial Officer and
......................................... Manager (Principal Financial Officer)
JOHN L. BARNES, JR.
* Vice President and Chief Accounting Officer (Principal
......................................... Accounting Officer)
FRED H. SCHAEFER
* Executive Vice President and Manager
.........................................
ERIC D. KOGAN
* Executive Vice President and Manager
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999.
TRIARC BEVERAGE HOLDINGS CORP.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer and Director (Principal
......................................... Executive Officer)
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* President and Chief Operating Officer and Director
.........................................
ERNEST J. CAVALLO
/s/ NELSON PELTZ Chairman and Director
.........................................
NELSON PELTZ
* Vice Chairman and Director
.........................................
PETER W. MAY
* Executive Vice President and Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999.
MISTIC BRANDS, INC.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer and Director (Principal
......................................... Executive Officer)
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
President and Chief Operating Officer and Director
.........................................
ERNEST J. CAVALLO
/s/ NELSON PELTZ Director
.........................................
NELSON PELTZ
* Director
.........................................
PETER W. MAY
* Executive Vice President and Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999.
SNAPPLE BEVERAGE CORP.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer and Director (Principal
......................................... Executive Officer)
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* President and Chief Operating Officer and Director
.........................................
ERNEST J. CAVALLO
/s/ NELSON PELTZ Director
.........................................
NELSON PELTZ
* Director
.........................................
PETER W. MAY
* Executive Vice President and Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
SNAPPLE INTERNATIONAL CORP.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer (Principal Executive Officer)
.........................................
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
ERIC D. KOGAN
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
SNAPPLE CARIBBEAN CORP.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer (Principal Executive Officer)
.........................................
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
ERIC D. KOGAN
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
SNAPPLE WORLDWIDE CORP.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer (Principal Executive Officer)
.........................................
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
ERIC D. KOGAN
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-15
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
SNAPPLE FINANCE CORP.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer (Principal Executive Officer)
.........................................
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
ERIC D. KOGAN
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-16
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
PACIFIC SNAPPLE DISTRIBUTORS, INC.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer (Principal Executive Officer)
.........................................
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
ERIC D. KOGAN
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-17
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
MR. NATURAL, INC.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chairman and Chief Executive Officer and Director
......................................... (Principal Executive Officer)
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
ERIC D. KOGAN
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-18
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999.
KELRAE, INC.
By: *
.................................
JOHN L. BARNES, JR.
PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* President (Principal Executive, Financial and Accounting
......................................... Officer)
JOHN L. BARNES, JR.
* Director
.........................................
ANDREW M. JOHNSTON
* Director
.........................................
ANDREW PANACCIONE
* Director
.........................................
FRANCIS T. MCCARRON
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-19
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
MILLROSE DISTRIBUTORS, INC.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer (Principal Executive Officer)
.........................................
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
ERIC D. KOGAN
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-20
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999.
RC/ARBY'S CORPORATION
By: *
.................................
CURTIS S. GIMSON
SENIOR VICE PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer
.........................................
JONATHAN P. MAY
* Senior Vice President, Treasurer and Chief Financial
......................................... Officer and Director (Principal Financial and
KENNETH A. THOMAS Accounting Officer)
* Director
.........................................
ALEXANDER E. FISHER
* Director
.........................................
CURTIS S. GIMSON
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-21
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999.
ARHC, LLC
By: *
.................................
JOHN L. BARNES, JR.
EXECUTIVE VICE PRESIDENT AND CHIEF
EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Executive Vice President and Chief Executive Officer and
......................................... Manager (Principal Executive, Financial and Accounting
JOHN L. BARNES, JR. Officer)
* Executive Vice President and Manager
.........................................
ERIC D. KOGAN
* Executive Vice President and Manager
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-22
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
RCAC ASSET MANAGEMENT, INC.
By: *
.................................
MICHAEL F. WEINSTEIN
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* President and Chief Executive Officer and Director
......................................... (Principal Executive Officer)
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer and
......................................... Director (Principal Financial and Accounting Officer)
KENNETH A. THOMAS
* Senior Vice President and Director
.........................................
CURTIS S. GIMSON
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-23
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999.
ARBY'S, INC.
By: *
.................................
CURTIS S. GIMSON
SENIOR VICE PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer (Principal Executive Officer)
.........................................
JONATHAN P. MAY
* Senior Vice President and Chief Financial Officer and
......................................... Director (Principal Financial and Accounting Officer)
KENNETH A. THOMAS
/s/ NELSON PELTZ Director
.........................................
NELSON PELTZ
* Director
.........................................
PETER W. MAY
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-24
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999.
ARBY'S BUILDING AND CONSTRUCTION
COMPANY
By: *
.................................
CURTIS S. GIMSON
SENIOR VICE PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer
.........................................
JONATHAN P. MAY
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
KENNETH A. THOMAS
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-25
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999.
TJ HOLDING COMPANY, INC.
By: *
.................................
CURTIS S. GIMSON
SENIOR VICE PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer
.........................................
JONATHAN P. MAY
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
KENNETH A. THOMAS
* Director
.........................................
JOHN L. BARNES
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-26
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999.
ARBY'S RESTAURANT CONSTRUCTION COMPANY
By: *
.................................
CURTIS S. GIMSON
SENIOR VICE PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer
.........................................
JONATHAN P. MAY
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
KENNETH A. THOMAS
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-27
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999.
ARBY'S RESTAURANTS, INC.
By: *
.................................
CURTIS S. GIMSON
SENIOR VICE PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer
.........................................
JONATHAN P. MAY
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
KENNETH A. THOMAS
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
ERIC D. KOGAN
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-28
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
RC-11, INC.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer and Director (Principal
......................................... Executive Officer)
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-29
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
RC LEASING, INC.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer and Director (Principal
......................................... Executive Officer)
MICHAEL F. WEINSTEIN
* Vice President and Chief Financial Officer (Principal
......................................... Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-30
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
ROYAL CROWN BOTTLING COMPANY OF TEXAS
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer and Director (Principal
......................................... Executive Officer)
MICHAEL F. WEINSTEIN
* Vice President and Chief Financial Officer (Principal
......................................... Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-31
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
ROYAL CROWN COMPANY, INC.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer and Director (Principal
......................................... Executive Officer)
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
ERNEST J. CAVALLO
* Director
.........................................
PETER W. MAY
/s/ NELSON PELTZ Director
.........................................
NELSON PELTZ
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-32
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
RETAILER CONCENTRATE PRODUCTS, INC.
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer and Director (Principal
......................................... Executive Officer)
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-33
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999.
TRIBEV CORPORATION
By: *
.................................
MICHAEL F. WEINSTEIN
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Chief Executive Officer (Principal Executive Officer)
.........................................
MICHAEL F. WEINSTEIN
* Senior Vice President and Chief Financial Officer
......................................... (Principal Financial and Accounting Officer)
RICHARD ALLEN
* Director
.........................................
JOHN L. BARNES, JR.
* Director
.........................................
STUART I. ROSEN
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-34
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF DENVER, STATE OF COLORADO, ON DECEMBER 10, 1999.
STEWART'S BEVERAGES, INC.
By: *
.................................
SAMUEL M. SIMPSON
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* President and Chief Executive Officer and Director
......................................... (Principal Executive Officer)
SAMUEL M. SIMPSON
* Vice President and Chief Financial Officer (Principal
......................................... Financial and Accounting Officer)
MYRON D. STADLER
* Director
.........................................
ERNEST J. CAVALLO
/s/ NELSON PELTZ Chairman and Director
.........................................
NELSON PELTZ
* Vice Chairman and Director
.........................................
PETER W. MAY
* Director
.........................................
BRIAN L. SCHORR
* Director
.........................................
MICHAEL F. WEINSTEIN
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-35
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF DENVER, STATE OF COLORADO, ON DECEMBER 10, 1999.
OLD SAN FRANCISCO SELTZER, INC.
By: *
.................................
SAMUEL M. SIMPSON
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* President and Chief Executive Officer (Principal
......................................... Executive Officer)
SAMUEL M. SIMPSON
* Vice President and Chief Financial Officer (Principal
......................................... Financial and Accounting Officer)
MYRON D. STADLER
* Director
.........................................
JOHN L. BARNES
* Director
.........................................
ERIC D. KOGAN
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-36
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF DENVER, STATE OF COLORADO, ON DECEMBER 10, 1999.
FOUNTAIN CLASSICS, INC.
By: *
.................................
SAMUEL M. SIMPSON
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* President and Chief Executive Officer (Principal
......................................... Executive Officer)
SAMUEL M. SIMPSON
* Vice President and Chief Financial Officer (Principal
......................................... Financial and Accounting Officer)
MYRON D. STADLER
* Director
.........................................
JOHN L. BARNES
* Director
.........................................
ERIC D. KOGAN
* Director
.........................................
BRIAN L. SCHORR
*By /s/ NELSON PELTZ
.........................................
NELSON PELTZ
ATTORNEY-IN-FACT
</TABLE>
II-37
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
<C> <S> <C>
3.1* -- Certificate of Formation of Triarc Consumer Products
Group, LLC................................................
3.2* -- Certificate of Incorporation of Triarc Beverage Holdings
Corp., as amended.........................................
3.3* -- Certificate of Incorporation of Mistic Brands, Inc., as
amended...................................................
3.4* -- Restated Certificate of Incorporation of Snapple Beverage
Corp. ....................................................
3.5* -- Certificate of Incorporation of Snapple International
Corp......................................................
3.6* -- Certificate of Incorporation of Snapple Caribbean
Corp......................................................
3.7* -- Certificate of Incorporation of Snapple Worldwide
Corp......................................................
3.8* -- Certificate of Incorporation of Snapple Finance Corp......
3.9* -- Articles of Incorporation of Pacific Snapple
Distributors, Inc., as amended............................
3.10* -- Certificate of Incorporation of Mr. Natural, Inc., as
amended...................................................
3.11* -- Certificate of Incorporation of Kelrae, Inc...............
3.12* -- Certificate of Incorporation of Millrose Distributors,
Inc.......................................................
3.13* -- Certificate of Incorporation of RC/Arby's Corporation.....
3.14* -- Certificate of Formation of ARHC, LLC.....................
3.15* -- Certificate of Incorporation of RCAC Asset Management,
Inc.......................................................
3.16* -- Certificate of Incorporation of Arby's, Inc., as
amended...................................................
3.17* -- Articles of Incorporation of Arby's Building and
Construction Co...........................................
3.18* -- Certificate of Incorporation of TJ Holding Company,
Inc.......................................................
3.19* -- Certificate of Incorporation of Arby's Restaurant
Construction Company......................................
3.20* -- Certificate of Incorporation of Arby's Restaurants,
Inc.......................................................
3.21* -- Articles of Incorporation of RC-11, Inc., as amended......
3.22* -- Certificate of Incorporation of RC Leasing, Inc...........
3.23* -- Certificate of Incorporation of Royal Crown Bottling
Company of Texas, as amended..............................
3.24* -- Certificate of Incorporation of Royal Crown Company,
Inc., as amended..........................................
3.25* -- Articles of Incorporation of Retailer Concentrate
Products, Inc.............................................
3.26* -- Certificate of Incorporation of TriBev Corporation........
3.27* -- Certificate of Incorporation of Stewart's Beverages,
Inc., as amended..........................................
3.28* -- Articles of Incorporation of Old San Francisco Seltzer,
Inc., as amended..........................................
3.29* -- Articles of Incorporation of Fountain Classics, Inc.......
3.30* -- Limited Liability Company Operating Agreement of Triarc
Consumer Products Group, LLC..............................
3.31* -- By-laws of Triarc Beverage Holdings Corp..................
3.32* -- By-laws of Mistic Brands, Inc.............................
3.33* -- Amended and Restated By-laws of Snapple Beverage Corp.....
3.34* -- By-laws of Snapple International Corp.....................
3.35* -- By-laws of Snapple Caribbean Corp.........................
3.36* -- By-laws of Snapple Worldwide Corp.........................
3.37* -- By-laws of Snapple Finance Corp...........................
3.38* -- By-laws of Pacific Snapple Distributors, Inc..............
3.39* -- By-laws of Mr. Natural, Inc...............................
3.40* -- By-laws of Kelrae, Inc....................................
3.41* -- Amended and Restated By-laws of Millrose Distributors,
Inc.......................................................
3.42* -- By-laws of RC/Arby's Corporation..........................
3.43* -- Limited Liability Company Operating Agreement of ARHC,
LLC.......................................................
3.44* -- By-laws of RCAC Asset Management, Inc.....................
3.45* -- By-laws of Arby's, Inc....................................
3.46* -- By-laws of Arby's Building and Construction Co............
3.47* -- By-laws of TJ Holding Company, Inc........................
3.48* -- By-laws of Arby's Restaurant Construction Company.........
3.49* -- By-laws of Arby's Restaurants, Inc........................
3.50* -- By-laws of RC-11, Inc.....................................
</TABLE>
II-38
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
<C> <S> <C>
3.51* -- By-laws of RC Leasing, Inc................................
3.52* -- By-laws of Royal Crown Bottling Company of Texas..........
3.53* -- By-laws of Royal Crown Company, Inc.......................
3.54* -- By-laws of Retailer Concentrate Products, Inc.............
3.55* -- By-laws of TriBev Corporation.............................
3.56* -- By-laws of Cable Car Beverage Corporation.................
3.57* -- By-laws of Stewart's Beverages, Inc. (f/k/a Old San
Francisco Seltzer, Inc.)..................................
3.58* -- By-laws of Fountain Classics, Inc.........................
4.1 -- Credit Agreement dated as of February 25, 1999, among
Snapple Beverage Corp., ('Snapple'), Mistic Brands, Inc.
('Mistic'), Stewart's Beverages, Inc. (f/k/a Cable Car
Beverage Corporation, Stewart's Beverages), RC/Arby's
Corporation and Royal Crown Company Inc. ('Royal Crown'),
as Borrowers, various financial institutions party
thereto, as Lenders, 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 Companies, Inc.'s Current Report on
Form 8-K dated March 11, 1999 (SEC file no. 1-2207).......
4.2 -- Indenture dated of February 25, 1999 among Triarc
Consumer Products Group LLC ('Triarc Consumer Products
Group'), Triarc Beverage Holdings Corp. ('Triarc Beverage
Holdings'), as Issuers, the subsidiary guarantors party
thereto and The Bank of New York, as Trustee, incorporated
herein by reference to Exhibit 4.2 to Triarc Companies,
Inc.'s Current Report on Form 8-K dated March 11, 1999
(SEC file no. 1-2207).....................................
4.3 -- Registration Rights Agreement dated February 18, 1999
among Triarc Consumer Products Group, Triarc Beverage
Holdings, the Guarantors party thereto and Morgan Stanley
& Co. Incorporated, Donaldson, Lufkin & Jenrette
Securities Corporation and Wasserstein Perella Securities,
Inc., incorporated herein by reference to Exhibit 4.3 to
Triarc Companies, Inc.'s Current Report on Form 8-K dated
March 11, 1999 (SEC file no. 1-2207)......................
4.4 -- Registration Rights Agreement dated as of February 25,
1999 among Triarc Consumer Products Group, Triarc Beverage
Holdings, the Guarantors party thereto and Nelson Peltz
and Peter W. May, incorporated herein by reference to
Exhibit 4.1 to Triarc Companies, Inc.'s Current Report on
Form 8-K dated April 1, 1999 (SEC file no. 1-2207)........
4.5* -- Form of 10 1/4% Senior Subordinated Note of Triarc
Consumer Products Group and Triarc Beverage Holdings due
2009......................................................
4.6* -- Supplemental Indenture, dated as of February 26, 1999,
among Triarc Consumer Products Group, Triarc Beverage
Holdings, Millrose Distributors, Inc., and The Bank of New
York as Trustee...........................................
4.7* -- Supplemental Indenture No. 2, dated as of September 8,
1999, among Triarc Consumer Products Group, Triarc
Beverage Holdilngs, the subsidiary guarantors party
thereto and The Bank of New York, as Trustee..............
5.1** -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to
legality of the exchange notes (replaces previously filed
exhibit)..................................................
5.2** -- Opinion of Sonnenschein Nath & Rosenthal as to certain
legal matters relating to Pacific Snapple Distributors,
Inc.......................................................
5.3** -- Opinion of Schenck, Price, Smith & King, LLP as to
certain legal matters relating to Millrose Distributors,
Inc.......................................................
5.4** -- Opinion of Powell, Goldstein, Frazer & Murphy LLP as to
certain legal matters relating to Arby's Building and
Construction Company......................................
5.5** -- Opinion of Watkins Ludlam Winter & Stennis, P.A. as to
certain legal matters relating to RC-11, Inc..............
5.6** -- Opinion of Hunton & Williams as to certain legal matters
relating to Retailer Concentrate Products, Inc............
5.7** -- Opinion of Holland & Hart LLP as to certain legal matters
relating to Old San Francisco Seltzers, Inc...............
5.8** -- Opinion of Holland & Hart LLP as to certain legal matters
relating to Fountain Classics, Inc........................
</TABLE>
II-39
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
<C> <S> <C>
8.1* -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to
federal income tax matters................................
10.1 -- Triarc Companies, Inc.'s 1993 Equity Participation Plan,
as amended, incorporated herein by reference to Exhibit
10.1 to Triarc Companies, Inc.'s Current Report on Form
8-K dated March 31, 1997 (SEC file no. 1-2207)............
10.2 -- Form of Non-Incentive Stock Option Agreement under Triarc
Companies, Inc.'s 1993 Equity Participation Plan,
incorporated herein by reference to Exhibit 10.2 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated March
31, 1997 (SEC file no. 1-2207)............................
10.3 -- Form of Restricted Stock Agreement under Triarc
Companies, Inc.'s 1933 Equity Participation Plan,
incorporated herein by reference to Exhibit 13 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated
April 23, 1993 (SEC file no. 1-2207)......................
10.4 -- Concentrate Sales Agreement dated as of January 28, 1994
between Royal Crown Cola Co. and Cott -- Confidential
treatment has been granted for portions of the
agreement -- incorporated herein by reference to Exhibit
10.12 to Amendment No. 1 to Triarc Companies, Inc.'s
Registration Statement on Form S-4 dated March 11, 1994
(SEC file no. 1-2207).....................................
10.5 -- Form of Indemnification Agreement, between Triarc
Companies, Inc. and certain officers, directors, and
employees of Triarc Companies, Inc., incorporated herein
by reference to Exhibit F to the 1994 Proxy (SEC file
no. 1-2207)...............................................
10.6 -- Employment Agreement, dated as June 29, 1994, between
Brian L. Schorr and Triarc Companies, Inc., incorporated
herein by reference to Exhibit 10.2 to Triarc Companies,
Inc.'s Current Report on Form 8-K dated March 29, 1995
(SEC file no. 1-2207).....................................
10.7 -- Amended and Restated Employment Agreement dated as of
June 1, 1997 by and between Snapple, Mistic and Michael
Weinstein, incorporated herein by reference to Exhibit
10.3 to Triarc Companies, Inc.'s Current Report on Form
8-K/A dated March 16, 1998 (SEC file no. 1-2207)..........
10.8 -- Amended and Restated Employment Agreement dated as of
June 1, 1997 by and between Snapple, Mistic and Ernest J.
Cavallo, incorporated herein by reference to Exhibit 10.4
to Triarc Companies, Inc.'s Current Report on Form 8-K/A
dated March 16, 1998 (SEC file no. 1-2207)................
10.9 -- Employment Agreement dated as of April 29, 1996 between
Triarc Companies, Inc. and John L. Barnes, Jr.,
incorporated herein by reference to Exhibit 10.3 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated
March 31, 1997 (SEC file no. 1-2207)......................
10.10 -- Stock Purchase Agreement dated as of March 27, 1997
between The Quaker Oats Company and Triarc Companies,
Inc., incorporated herein by reference to Exhibit 2.1 to
Triarc Companies, Inc.'s Current Report on Form 8-K dated
March 31, 1997 (SEC file no. 1-2207)......................
10.11 -- Agreement and Plan of Merger dated as of June 24, 1997
between Stewart's Beverages, Triarc Companies, Inc. and
CCB Merger Corporation ('CCB'), incorporated herein by
reference to Exhibit 2.1 to Triarc Companies, Inc.'s
Current Report on Form 8-K dated June 24, 1997 (SEC file
no. 1-2207)...............................................
10.12 -- Amendment No. 1 to Agreement and Plan of Merger, dated as
of September 30, 1997, between Stewart's Beverages, Triarc
Companies, Inc. and CCB, incorporated herein by reference
to Appendix B-1 to the Proxy Statement/Prospectus filed
pursuant to Triarc Companies, Inc.'s Registration
Statement on Form S-4 dated October 22, 1997 (SEC file no.
1-2207)...................................................
10.13 -- Option granted by RTM Partners, Inc. ('RTM Partners') in
favor of Arby's Restaurants Holding Company, together with
a schedule identifying other documents omitted and the
material details in which such documents differ,
incorporated herein by reference to Exhibit 10.30 to
Triarc Companies, Inc.'s Registration Statement on Form
S-4 dated October 22, 1997 (SEC file no. 1-2207)..........
10.14 -- Guaranty dated as of May 5, 1997 by RTM, Inc., RTM
Parent, RTM Partners, RTM Management Co., LLC and RTM
Operating Company in favor of Arby's, Arby's Restaurant
Development Corporation, Arby's Restaurant Holding
Company, Arby's Restaurant Operations Company and Triarc
Companies, Inc., incorporated herein by reference to
Exhibit 10.31 to Triarc Companies, Inc.'s Registration
Statement on Form S-4 dated October 22, 1997 (SEC file no.
1-2007)...................................................
</TABLE>
II-40
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
<C> <S> <C>
10.15 -- Triarc Companies, Inc.'s, Inc. 1997 Equity Participation
Plan (the '1997 Equity Plan'), incorporated herein by
reference to Exhibit 10.5 to Triarc Companies, Inc.'s
Current Report on Form 8-K dated March 16, 1998 (SEC file
no. 1-2207)...............................................
10.16 -- Form of Non-Incentive Stock Option Agreement under the
1997 Equity Plan, incorporated herein by reference to
Exhibit 10.6 to Triarc Companies, Inc.'s Current Report on
Form 8-K dated March 16, 1998 (SEC file no. 1-2207).......
10.17 -- Triarc Companies, Inc.'s Stock Option Plan for Stewart's
Beverages Employees, incorporated herein by reference to
Exhibit 4.3 to Triarc Companies, Inc.'s Registration
Statement on Form S-8 dated January 22, 1998 (Registration
No. 333-44711)............................................
10.18 -- Triarc Beverage Holdings Corp. 1997 Stock Option Plan
(the 'TBHC Option Plan'), incorporated herein by reference
to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report
on Form 8-K dated March 16, 1998 (SEC file no. 1-2207)....
10.19 -- Form of Non-Qualified Stock Option Agreement under the
TBHC Option Plan, incorporated herein by reference to
Exhibit 10.2 to Triarc Companies, Inc.'s Current Report on
Form 8-K dated March 16, 1998 (SEC file no. 1-2207).......
10.20 -- Triarc Companies, Inc.'s 1998 Equity Participation Plan,
as currently in effect, incorporated herein by reference
to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report
on Form 8-K dated May 13, 1998 (SEC file no. 1-2207)......
10.21 -- Form of Non-Incentive Stock Option Agreement under Triarc
Companies, Inc.'s 1998 Equity Participation Plan,
incorporated herein by reference to Exhibit 10.2 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated May 13,
1998 (SEC file no. 1-2207)................................
10.22 -- Letter Agreement, dated as of March 10, 1998, between
Triarc Companies, Inc. and John L. Barnes, Jr.,
incorporated herein by reference to Exhibit 10.3 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated May 13,
1998 (SEC file no. 1-2207)................................
10.23 -- Letter Agreement dated July 23, 1998 between John L.
Belsito and Royal Crown, incorporated herein by reference
to Exhibit 10.1 to RC/Arby's Corporation's Current Report
on Form 8-K dated November 5, 1998 (SEC file no.
33-62778).................................................
10.24 -- Letter Agreement dated August 27, 1998 among John C.
Carson, Triarc Companies, Inc. and Royal Crown,
incorporated herein by reference to Exhibit 10.2 to
RC/Arby's Corporation's Current Report on Form 8-K dated
November 5, 1998 (SEC file no. 33-62778)..................
10.25 -- Letter Agreement dated as of February 13, 1997 between
Arby's and Roland Smith, incorporated herein by reference
to Exhibit 10.1 to Triarc Companies Inc.'s Current Report
on Form 8-K dated April 1, 1999 (SEC file no. 1-2207).....
10.26 -- Triarc Restaurant Group Senior Executive Mid-term
Incentive Plan (Portions of this exhibit have been omitted
pursuant to a grant of confidential treatment),
incorporated herein by reference to Exhibit 10.1 to Triarc
Companies, Inc.'s Current Report on Form 8-K dated April
30, 1999 (SEC file 1-2207)................................
10.27* -- Management Services Agreement, dated February 25, 1999,
by and between Triarc Companies, Inc. and Arby's, Inc.....
10.28* -- Management Services Agreement, dated February 25, 1999,
by and between Triarc Companies, Inc., Snapple, Mistic,
Stewart's Beverages and Royal Crown.......................
10.29* -- Tax Sharing Agreement, dated February 25, 1999, by and
between Triarc Companies, Inc., Triarc Consumer Products
Group, Triarc Beverage Holdings, Snapple, Mistic,
Stewart's Beverages, RC/Arby's Corporation, Royal Crown,
Arby's, and ARHC, LLC.....................................
10.30* -- Amendment No. 1 to the Tax Sharing Agreement, dated April
23, 1999, by and among Triarc Companies, Inc., Triarc
Consumer Products Group, Triarc Beverage Holdings,
Snapple, Mistic, Stewart's Beverages, RC/Arby's
Corporation, Royal Crown, Arby's and ARHC, LLC............
10.31* -- Tax Sharing Agreement, dated May 22, 1997, by and among
Triarc Companies Inc., Triarc Beverage Holdings, Snapple
and Mistic................................................
10.32* -- Tax Sharing Agreement, dated November 25, 1997, by and
among Triarc Companies, Inc. and Stewart's Beverages......
10.33* -- Amendment to Tax Sharing Agreements, dated as of August
15, 1998, among Triarc Beverage Holdings, Snapple, Mistic
and Stewart's Beverages...................................
</TABLE>
II-41
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
<C> <S> <C>
10.34* -- Contribution Agreement, dated as of February 23, 1999,
between Triarc Companies, Inc. and Triarc Consumer
Products Group............................................
10.35* -- Letter Agreement dated as of April 28, 1999, between
Triarc Companies, Inc. and John L. Barnes, Jr.............
10.36* -- Amendment No. 1 to Triarc Beverage Holdings Corp. 1997
Stock Option Plan.........................................
10.37* -- Letter Agreement dated as of July 28, 1999, between
Triarc Companies, Inc. and John L. Barnes, Jr.............
10.38* -- Amendment No. 2 to the Tax Sharing Agreement, dated as of
April 23, 1999, by and among Triarc Consumer Products
Group, Triarc Beverage Holdings, Snapple, Mistic,
Stewart's Beverages, RC/Arby's Corporation, Royal Crown,
Arby's and ALIRC, LLC.....................................
10.39** -- Form of Indemnification Agreement of Triarc Consumer
Products Group, LLC.......................................
10.40** -- Form of Indemnification Agreement of Triarc Beverage
Holdings Corp.............................................
12.1** -- Statement of Computation of Ratios of Earnings to Fixed
Charges...................................................
21.1* -- Subsidiaries of Triarc Consumer Products Group, LLC......
23.1** -- Consent of Deloitte & Touche LLP relating to Triarc
Consumer Products Group, LLC..............................
23.2** -- Consent of Deloitte & Touche LLP relating to Triarc
Beverage Holdings Corp. ..................................
23.3** -- Consent of Arthur Andersen LLP...........................
23.4** -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in the opinion filed as Exhibit 5.1 of this
Registration Statement)...................................
23.5* -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in the opinion filed as Exhibit 8.1 of this
Registration Statement)...................................
23.6** -- Consent of Sonnenschein Nath & Rosenthal..................
23.7** -- Consent of Schenck, Price, Smith & King, LLP..............
23.8** -- Consent of Powell, Goldstein, Frazer & Murphy LLP.........
23.9** -- Consent of Watkins Ludlam Winter & Stennis, P.A...........
23.10** -- Consent of Hunton & Williams..............................
23.11** -- Consent of Holland & Hart LLP.............................
23.12** -- Consent of Holland & Hart LLP.............................
24.1* -- Powers of Attorney (contained on signature pages).........
24.2* -- Power of Attorney, dated September 29, 1999, by Jonathan
P. May....................................................
25.1* -- Form T-1 Statement of Eligibility of The Bank of New York
to act as trustee under the Indenture.....................
27.1** -- Financial Data Schedule of Triarc Consumer Products
Group, LLC................................................
27.2** -- Financial Data Schedule of Triarc Beverage Holdings
Corp. ....................................................
99.1* -- Form of Letter of Transmittal (including Guidelines for
Certification of Taxpayer Identification Number of
Substitute Form W-9)......................................
99.2* -- Form of Notice of Guaranteed Delivery.....................
</TABLE>
------------------------
* Previously filed.
** Filed herewith.
II-42
STATEMENT OF DIFFERENCES
------------------------
The trademark symbol shall be expressed as ............................ 'TM'
The registered trademark symbol shall be expressed as ................. 'r'
<PAGE>
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
212-373-3000
December 10, 1999
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
The Guarantor Subsidiaries (as defined)
c/o Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Registration Statement on Form S-4
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by Triarc Consumer Products Group, LLC, a
Delaware limited liability company (the "Company"), Triarc Beverage Holdings
Corp., a Delaware corporation (the "Co-Issuer" and, together with the Company,
the "Issuers"), and certain other subsidiaries of the Issuers (the "Guarantor
Subsidiaries" and, together with the Issuers, the "Co-Registrants") with the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Act"), and the rules and regulations under the Act, we have
been requested to render our opinion as to the legality of the securities being
registered under the Registration Statement. The Registration Statement relates
to the registration under the Act of the
<PAGE>
Triarc Consumer Products Group, LLC 2
Triarc Beverage Holdings Corp.
The Guarantor Subsidiaries
Issuers' $300,000,000 aggregate principal amount of 10 1/4 % Senior Subordinated
Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes
by the Guarantor Subsidiaries (the "Subsidiary Guaranties"). The Exchange Notes
are to be offered in. exchange for the Issuers' outstanding 10 1/4 % Senior
Subordinated Notes due 2009 (the "Existing Notes") issued and sold by the
Issuers on February 25, 1999 in an offering exempt from registration under the
Act. The Exchange Notes will be issued by the Issuers in accordance with the
terms of the Indenture, dated as of February 25, 1999 (the "Indenture"), among
the Issuers, the Guarantor Subsidiaries party to it and The Bank of New York, as
trustee (the "Trustee"). Capitalized terms used in this opinion and not
otherwise defined shall have the respective meanings ascribed to them in the
Registration Statement.
In connection with this opinion, we have examined originals, conformed
copies or photocopies, certified or otherwise identified to our satisfaction, of
the following documents (collectively, the "Documents"):
(i) the Registration Statement (including its exhibits);
(ii) the Indenture included as Exhibit 4.2 to the Registration
Statement;
(iii) the proposed form of the Exchange Notes included as Exhibit 4.5
to the Registration Statement; and
<PAGE>
Triarc Consumer Products Group, LLC 3
Triarc Beverage Holdings Corp.
The Guarantor Subsidiaries
(iv) the Registration Rights Agreement, dated as of February 18, 1999
(the "Registration Rights Agreement"), among the Issuers, the Guarantor
Subsidiaries party to it and Morgan Stanley & Co. Incorporated, Donaldson Lufkin
& Jenrette Securities Corporation and Wasserstein Perella Securities, Inc.,
included as Exhibit 4.3 to the Registration Statement.
In addition, we have examined: (i) those corporate and limited liability
company records of the Co-Registrants as we have considered appropriate,
including the certificate of incorporation, as amended, and by-laws, as amended,
of each Co-Registrant or, in the case of the Company and ARHC, LLC, the
certificate of formation and limited liability company operating agreement, as
in effect on the date of this letter (collectively, the "Organizational
Documents"), and copies of resolutions of the board of directors of the
Co-Registrants or, in the case of the Company and ARHC, LLC, the board of
managers, each certified by an officer of that Co-Registrant; and (ii) those
other certificates, agreements and other documents as we deemed relevant and
necessary as a basis for the opinions expressed below.
In our examination of the Documents and in rendering our opinions, we
have assumed, without independent investigation, (i) the enforceability of the
Documents against each party to them (other than the Co-Registrants), (ii) that
the Exchange Notes and the Subsidiary Guaranties will be issued in accordance
with the Indenture as described in the Registration Statement, duly
authenticated by the Trustee
<PAGE>
Triarc Consumer Products Group, LLC 4
Triarc Beverage Holdings Corp.
The Guarantor Subsidiaries
in accordance with the Indenture and in the form reviewed by us and that any
information omitted from the form will be properly added, (iii) the genuineness
of all signatures, (iv) the mental capacity (including, without limitation, the
ability of a person to act in a reasonable manner in relation to the
transaction) of all individuals who have executed any of the documents which we
examined, (v) the authenticity of all documents submitted to us as originals,
(vi) the conformity to the original documents of all documents submitted to us
as certified, photostatic, reproduced or conformed copies of validly existing
agreements or other documents, (vii) the authenticity of all the latter
documents and (viii) that the statements regarding matters of fact in the
certificates, records, agreements, instruments and documents that we examined
are accurate and complete.
In expressing our opinions, we have relied upon (i) the factual matters
contained in the representations and warranties of the Co-Registrants made in
the Documents and upon certificates of public officials and officers of the
Co-Registrants and (ii) in respect of the Subsidiary Guaranties provided by each
of Pacific Snapple Distributors, Inc., a California corporation, Millrose
Distributors, Inc., a New Jersey Corporation, Old San Francisco Seltzer, Inc., a
Colorado corporation, Fountain Classics, Inc., a Colorado corporation, Arby's
Building and Construction Co., a Georgia corporation, RC-11, Inc., a Mississippi
corporation, and Retailer Concentrate
<PAGE>
Triarc Consumer Products Group, LLC 5
Triarc Beverage Holdings Corp.
The Guarantor Subsidiaries
Products Inc., a Florida corporation, the legal opinions in respect thereof
rendered by appropriate local counsel.
Based upon the above, and subject to the stated assumptions, exceptions
and qualifications, we are of the opinion that, when issued, authenticated and
delivered in accordance with the terms of the Indenture and against exchange for
the Existing Notes in accordance with the terms set forth in the Registration
Rights Agreement, the Exchange Notes will be legal, valid and binding
obligations of the Issuers, enforceable against the Issuers in accordance with
their terms, and the Subsidiary Guaranties will be legal, valid and binding
obligations of the Guarantor Subsidiaries, enforceable against the Guarantor
Subsidiaries in accordance with their terms, except in each case as
enforceability may be limited by (i) bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization, moratorium and other similar laws
affecting creditors' rights generally and (ii) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
Our opinions expressed above are limited to the laws of the State of New
York, the Delaware General Corporation Law, the Limited Liability Company Act of
the State of Delaware, the federal laws of the United States of America, and the
judicial decisions interpreting the same. Our opinion is rendered only with
respect to the laws, and the rules, regulations and orders under them, that are
currently in effect. Please be advised that no member of this firm is admitted
to practice in the State of Delaware.
<PAGE>
Triarc Consumer Products Group, LLC 6
Triarc Beverage Holdings Corp.
The Guarantor Subsidiaries
We hereby consent to the use of our name in the Registration Statement
and in the prospectus contained in the Registration Statement as it appears
under the caption "Legal Matters" and to the use of this opinion as an exhibit
to the Registration Statement. In giving this consent, we do not admit that we
come within the category of persons whose consent is required by the Act or by
the rules and regulations promulgated under it.
Very truly yours,
/s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
[LETTERHEAD OF SONNENSCHEIN NATH & ROSENTHAL]
November 17, 1999
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Pacific Snapple Distributors, Inc.
c/o Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as special counsel in the State of California to Pacific
Snapple Distributors, Inc., a California corporation (the "Guarantor") in
connection with the Registration Statement on Form S-4 (the "Registration
Statement") filed by Triarc Consumer Products Group, LLC, a Delaware limited
liability company ("TCPG"), Triarc Beverage Holdings Corp., a Delaware
corporation (together with TCPG, the "Issuers"), the Guarantor and certain other
subsidiaries of the Issuers (the "Guarantor Subsidiaries") with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations under the Act. We have been informed by
Paul, Weiss, Rifkind, Wharton & Garrison that (a) the Registration Statement
relates to the Subordinated Notes due 2009 (the "Exchange Notes") and the
guaranties of the Exchange Notes by the Guarantor Subsidiaries, including the
guaranty by the Guarantor (the "Guarantee"), (b) the Exchange Notes are to be
offered in exchange for the Issuers' outstanding 10 1/4% Senior Subordinated
Notes due 2009 issued and sold by the Issuers on February 25, 1999 in an
offering exempt from registration under the Act, and (c) the Exchange Notes will
be issued by the Issuers in accordance with the terms of the Indenture, dated as
of February 25, 1999 (as amended, the "Indenture"), among the Issuers, the
Guarantor Subsidiaries party to it and The Bank of New York, as trustee. In
connection with the foregoing, we have been requested to render our opinion as
to certain legal matters relating to the Guarantor.
In connection with this opinion, we have examined originals, conformed
copies or photocopies, certified or otherwise identified to our satisfaction, of
the following documents (collectively, the "Documents"):
<PAGE>
SONNENSCHEIN NATH & ROSENTHAL
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Pacific Snapple Distributors, Inc.
November 17, 1999
Page 2
(i) the Indenture;
(ii) the Unanimous Written Consent in Lieu of Meeting of the Board of
Directors of the Guarantor dated as of February 18, 1999, which, among other
things, pertains to the authorization and execution by the Guarantor of the
Indenture, including the Guarantee;
(iii) the Articles of Incorporation, as amended, and by-laws, as amended,
of the Guarantor (collectively, the "Organizational Documents"), as certified by
the Secretary of the Guarantor as being in effect as of November 16, 1999.
In our examination of the Documents and in rendering our opinions, we have
assumed, without independent investigation, (i) the genuineness of all
signatures, (ii) the authenticity of all documents submitted to us as originals,
(iii) the conformity to the original documents of all documents submitted to us
as certified, photostatic, reproduced or conformed copies of validly existing
agreements or other documents, (iv) the authenticity of all the latter
documents, (v) the legal capacity of all natural persons executing the
Documents, and (vi) that the statements regarding matters of fact in the
certificates, records, agreements, instruments and documents that we examined
are accurate and complete.
Based upon the above, and subject to the stated assumptions, exceptions
and qualifications, we are of the opinion that:
1. The Indenture, including the Guarantee, has been duly authorized,
executed and delivered by the Guarantor.
2. The due authorization, execution and delivery by the Guarantor of the
Indenture, including the Guarantee, and the consummation by the Guarantor of the
transactions contemplated thereby do not violate or result in a breach of or
default under the Organizational Documents or the laws of the State of
California.
Our opinions expressed above are limited to the laws of the State of
California (excluding local laws), and the judicial decisions interpreting the
same. This opinion is rendered on the date hereof and we have no continuing
obligation hereunder to inform you of changes of law or fact subsequent to the
date hereof or facts of which we have become aware after the date hereof.
<PAGE>
SONNENSCHEIN NATH & ROSENTHAL
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Pacific Snapple Distributors, Inc.
November 17, 1999
Page 3
This opinion is solely for your benefit and may not be furnished to, or
relied upon by, any other person or entity without the express written consent
of the undersigned, except that this opinion may be relied upon by Paul, Weiss,
Rifkind, Wharton & Garrison in connection with the delivery of its legal opinion
concerning the validity of the Exchange Notes and the Subsidiary Guaranties.
This opinion is limited to the matters set forth herein; no opinion may be
inferred or implied beyond the matters expressly stated in this letter.
Very truly yours,
/s/ SONNENSCHEIN NATH & ROSENTHAL
SONNENSCHEIN NATH & ROSENTHAL
<PAGE>
[LETTERHEAD OF SCHENCK, PRICE, SMITH & KING, LLP]
November 16, 1999
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Millrose Distributors, Inc.
c/o Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Registration Statement on Form S-4
Ladies and Gentlemen;
This opinion is being delivered to you in connection with the Registration
Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer
Products Group, LLC, a Delaware limited liability company ("TCPG"), Triarc
Beverage Holdings Corp., a Delaware corporation (the "Co-Issuer" and, together
with TCPG, the "Issuers"), and certain other subsidiaries of the Issuers (the
"Guarantor Subsidiaries" and, together with the Issuers, the "Co-Registrants")
with the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations under the Act.
The Registration Statement relates to the registration under the Act of the
Issuers' $300,000,000 aggregate principal amount of 10 1/4% Senior Subordinated
Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes
by the Guarantor Subsidiaries (the "Subsidiary Guaranties"), including the
guaranty by the Guarantor (the "Guarantee"). The Exchange Notes are to be
offered in exchange for the Issuers' outstanding 10 1/4% Senior Subordinated
Notes due 2009 (the "Existing Notes") issued and sold by the Issuers on February
25, 1999 in an offering exempt from registration under the Act. The Exchange
Notes will be issued by the Issuers in
<PAGE>
SCHENCK, PRICE, SMITH & KING, LLP
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Millrose Distributors, Inc.
Page 2
accordance with the terms of the Indenture, dated as of February 25, 1999 (as
amended, the "Indenture"), among the Issuers, the Guarantor Subsidiaries party
to it and The Bank of New York, as trustee (the "Trustee"). In connection with
the foregoing, we have been requested to render our opinion as to certain legal
matters relating to Millrose Distributors, Inc., a New Jersey corporation (the
"Guarantor"). Capitalized terms used in this opinion and not otherwise defined
shall have the respective meanings ascribed to them in the Registration
Statement.
In connection with this opinion, we have examined originals, conformed
copies or photocopies, certified or otherwise identified to or satisfaction, of
the following documents (collectively, the "Documents"):
(i) the Indenture included as Exhibit 4.2 to the Registration Statement;
(ii) corporate minutes of Millrose Distributors, Inc., which, among other
things, pertain to the authorization and execution of the Indenture by Millrose
Distributors, Inc., including the Guarantee; and
(iii) Certificate of Good Standing of Millrose Distributors, Inc. issued
by the Treasurer of the State of New Jersey and dated November 15, 1999.
In addition, we have examined: (i) those corporate records of the
Guarantor as we have considered appropriate, including the certificate of
incorporation, as amended, and by-laws, as amended, of the Guarantor, as in
effect on the date of this letter (collectively, the "Organizational
Documents"); and (ii) those other certificates, agreements and other documents
as we deemed relevant and necessary as a basis for the opinions expressed below.
<PAGE>
SCHENCK, PRICE, SMITH & KING, LLP
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Millrose Distributors, Inc.
Page 3
In rendering our opinions, we have relied upon (i) factual representations
made by the Guarantor in the Documents and in response to our inquiries, and
(ii) the Certificate of Good Standing with respect to the Guarantor issued by
the New Jersey Secretary of State dated [Insert Date Of Certificate]. In our
examination of the Documents and in rendering our opinions, we have assumed,
without independent investigation, (i) the genuineness of all signatures, (ii)
the legal capacity of all natural persons who are involved in the transaction on
behalf of the Guarantor to carry out their respective roles in the transaction;
(iii) the accuracy and completeness of each document submitted to us for review;
(iv) the authenticity of all documents submitted to us as originals, (v) the
conformity to the original documents of all documents submitted to us as
certified, photostatic, reproduced or conformed copies of validly existing
agreements or other documents, (vi) the authenticity of all the latter documents
and (vii) that the statements regarding matters of fact in the certificates,
records, agreement, instruments and documents that we examined, such as the
certificate of corporate good standing issued by the New Jersey Secretary of
State, are accurate, complete and authentic, and all official public records
(including their proper indexing and filing) are accurate and complete.
Based upon the above, and subject to the stated assumptions, exceptions
and qualifications, we are of the opinion that:
1. The Indenture and the Guarantee have been duly authorized, executed and
delivered by the Guarantor.
2. The due authorization, execution and delivery by the Guarantor of each
Document to which it is a party and the consummation by the Guarantor of the
transactions contemplated by such
<PAGE>
SCHENCK, PRICE, SMITH & KING, LLP
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Millrose Distributors, Inc.
Page 4
Documents do not violate or result in a breach of or default under the
Organizational Documents thereof or the laws of the State of New Jersey.
Our opinions expressed above are limited to the internal laws of the State
of New Jersey (excluding laws regarding conflict of laws), and the judicial
decisions interpreting the same, and are subject to and may be limited by the
effect of any future legislation and case law. Our opinion is rendered only with
respect to the laws, and the rules, regulations and orders under them, that are
currently in effect. We express no opinion as to matters governed by any laws
other than the internal laws of the State of New Jersey nor do we express any
opinion as to any matter not expressly set forth herein. We have no obligation
to advise you (or any third party) of changes of law or fact that occur after
the date hereof, even though the change may affect the legal analysis, a legal
conclusion or an informational confirmation stated herein.
This opinion may be relied upon by Paul, Weiss, Rifkind, Wharton &
Garrison in connection with the delivery of its legal opinion concerning the
validity of the Exchange Notes and the Subsidiary Guaranties. It may not be
relied on by, in whole or in part, nor may copies be delivered to, any other
person or entity without our prior written consent.
Very truly yours,
/s/ SCHENCK, PRICE, SMITH & KING, LLP
SCHENCK, PRICE, SMITH & KING, LLP
<PAGE>
[LETTERHEAD OF POWELL, GOLDSTEIN, FRAZER & MURPHY LLP]
November 18, 1999
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Arby's Building and Construction Company
c/o Triarc Companies, Inc.
280 Park Avenue
New York, NY 10017
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by Triarc Consumer Products Group, LLC, a
Delaware limited liability company ("TCPG"), Triarc Beverage Holdings Corp., a
Delaware corporation (the "Co-Issuer" and, together with TCPG, the "Issuers"),
and certain other subsidiaries of the Issuers (the "Guarantor Subsidiaries" and,
together with the Issuers, the "Co-Registrants") with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations under the Act, we have been requested
to render our opinion as to certain legal matters relating to Arby's Building
and Construction Co., a Georgia corporation (the "Guarantor"). Capitalized terms
used in this opinion and not otherwise defined shall have the respective
meanings ascribed to them in the Registration Statement.
The Registration Statement relates to the registration under the Act of
the Issuer's $300,000,000 aggregate principal amount of 10 1/4% Senior
Subordinated Notes due 2009 (the "Exchange Notes") and the guaranties of the
Exchange Notes by the Guarantor Subsidiaries (the "Subsidiary Guaranties"),
including the guaranty as set forth in the Indenture (the "Guarantee") by the
Guarantor as set forth in the Indenture dated as of February 25, 1999 (as
amended , the "Indenture"), among the Issuers, the Guarantor Subsidiaries party
to it and The Bank of New York, as trustee (the "Trustee"). The Exchange Notes
are to be offered in exchange for the Issuers' outstanding 10 1/4 % Senior
Subordinated Notes due 2009 (the "Existing Notes") issued and sold by the
Issuers on February 25, 1999 in an offering exempt from registration under the
Act. The Exchange Notes will be issued by the Issuers in accordance with the
terms of the Indenture.
<PAGE>
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
November 18, 1999
Page 2
In connection with this opinion, we have examined originals, conformed
copies or photocopies, certified or otherwise identified to our satisfaction of
the following documents (collectively, the "Documents"):
(i) the Indenture included as Exhibit 4.2 to the Registration Statement;
and
(ii) corporate minutes of Guarantor dated February 18, 1999, which among
other things, pertain to the authorization and execution of the
Indenture, including the Guarantee, by the Guarantor.
In addition, we have examined: (i) those corporate records of the
Guarantor as we have considered appropriate, including the certificate of
incorporation, as amended, and by-laws, as amended, of the Guarantor, as in
effect on the date of this letter (collectively, the "Organizational
Documents"); and (ii) those other certificates, agreements and other documents
as we deemed relevant and necessary as a basis for the opinions expressed below.
In our examination of the Documents and in rendering our opinions, we have
assumed, without independent investigation and with your permission, (i) the
genuineness of all signatures, the legal capacity of all natural persons and the
incumbency of all directors and officers executing documents on behalf of
Guarantor, (ii) the authenticity of all documents submitted to us as originals,
(iii) the conformity to the original documents of all documents submitted to us
as certified, photostatic, reproduced or conformed copies of validly existing
agreements or other documents, (iv) the authenticity of all the latter
documents, (v) that all certifications of public officials regarding corporate
matters examined by us were properly issued, were true, complete and accurate at
the date of issuance and remain so at the date hereof, and (vi) that the
statements regarding matters of fact in the certificates, records, agreements,
instruments and documents that we examined are accurate and complete at the date
hereof and (vii) that the Guarantor does not conduct any business in the state
of Georgia of such a nature so as to cause it to be bound by laws, rules or
regulations not applicable to Georgia business corporations generally.
Based upon the above, and subject to the stated assumptions, exceptions
and qualifications, we are of the opinion that:
1. The Indenture and the Guarantee have been duly authorized, executed and
delivered by the Guarantor.
2. The due authorization, execution and delivery by the Guarantor of the
Indenture and the Guarantee and the consummation by the Guarantor of the
transactions contemplated by the Indenture and the Guarantee do not violate or
result in a breach of or default under the Organizational Documents or the laws
of the State of Georgia.
<PAGE>
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
November 18, 1999
Page 3
Our opinions expressed above are limited to the laws of the State of
Georgia, and the judicial decisions interpreting the same, however we express no
opinion regarding state securities or blue sky laws. Our opinion is rendered
only as of the date of this letter and is given with respect to the laws, and
the rules, regulations and orders under them, that are currently in effect. We
assume no obligation or responsibility to update or supplement this opinion to
reflect any facts or circumstances occurring after the date hereof that would
alter the opinions contained herein. This opinion may be relied upon only by you
and by your counsel, Paul, Weiss, Rifkind, Wharton & Garrison, in connection
with the delivery of its legal opinion concerning the validity of the Exchange
Notes and the Subsidiary Guaranties.
Very truly yours,
/s/ POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
<PAGE>
[LETTERHEAD OF WATKINS LUDLAM WINTER & STENNIS, P.A.]
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
RC-11, Inc.
c/o Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the Registration
Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer
Products Group, LLC, a Delaware limited liability company ("TCPG"), Triarc
Beverage Holdings Corp., a Delaware corporation (the "Co-Issuer" and, together
with TCPG, the "Issuers"), and certain other subsidiaries of the Issuers (the
"Guarantor Subsidiaries" and, together with the Issuers, the "Co-Registrants")
with the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations under the Act.
The Registration Statement relates to the registration under the Act of the
Issuers' $300,000,000 aggregate principal amount of 10 1/4% Senior Subordinated
Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes
by the Guarantor Subsidiaries (the "Subsidiary Guaranties"), including the
guaranty by the Guarantor (the "Guarantee"). The Exchange Notes are to be
offered in exchange for the Issuers' outstanding 10 1/4% Senior Subordinated
Notes due 2009 (the "Existing Notes") issued and sold by the Issuers on February
25, 1999 in an offering exempt from registration under the Act. The Exchange
Notes will be issued by the Issuers in accordance with the terms of the
Indenture, dated as of February 25, 1999 (as amended, the "Indenture"), among
the Issuers, the Guarantor Subsidiaries party to it and The Bank of New York, as
trustee (the "Trustee"). In connection with the foregoing, we have been
requested to render our opinion as to certain legal matters relating to RC-11,
Inc., a Mississippi corporation (the "Guarantor"). Capitalized terms used in
this opinion and not otherwise defined shall have the respective meanings
ascribed to them in the Registration Statement.
In connection with this opinion, we have examined originals, conformed
copies or
<PAGE>
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
RC-11, Inc.
November 19, 1999
Page 2
photocopies, certified or otherwise identified to our satisfaction, of the
following documents (collectively, the "Documents"):
(i) the Indenture included as Exhibit 4.2 to the Registration Statement;
and
(ii) corporate minutes of the Guarantor, which, among other things,
pertain to the authorization and execution of the Indenture by the Guarantor,
including the Guarantee (the "Resolutions").
In addition, we have examined: (i) the certificate of incorporation, as
amended, and by-laws, as amended, of the Guarantor, and the Resolutions as in
effect on the date of this letter as certified by an officer of the Guarantor to
be true, accurate and complete (collectively, the "Organizational Documents");
and (ii) such other certificates and considered such laws we deemed relevant and
necessary as a basis for the opinions expressed below.
In our examination of the Documents and in rendering our opinions, we have
assumed, without independent investigation, (i) the genuineness of all
signatures, (ii) the authenticity of all documents submitted to us as originals,
(iii) the conformity to the original documents of all documents submitted to us
as certified, photostatic, reproduced or conformed copies of validly existing
agreements or other documents, (iv) the authenticity of all the latter documents
and (v) that the statements regarding matters of fact in the certificates,
records, agreements, instruments and documents that we examined are accurate and
complete.
Based upon the above, and subject to the stated assumptions, exceptions
and qualifications, we are of the opinion that:
1. The Indenture and the Guarantee have been duly authorized, executed and
delivered by the Guarantor.
2. The due authorization, execution and delivery by the Guarantor of each
Document to which it is a party and the consummation by the Guarantor of the
transactions contemplated by such Documents do not violate or result in a breach
of or default under the Organizational Documents thereof or the laws of the
State of Mississippi.
Our opinions expressed above are limited to the laws of the State of
Mississippi, and the judicial decisions interpreting the same. Our opinion is
rendered only with respect to the laws, and
<PAGE>
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
RC-11, Inc.
November 19, 1999
Page 3
the rules, regulations and orders under them, that are currently in effect. This
opinion may be relied upon by Paul, Weiss, Rifkind, Wharton & Garrison in
connection with the delivery of its legal opinion concerning the validity of the
Exchange Notes and the Subsidiary Guaranties.
Very truly yours,
/s/ WATKINS LUDLAM WINTER & STENNIS, P.A.
WATKINS LUDLAM WINTER & STENNIS, P.A.
<PAGE>
[LETTERHEAD OF HUNTON & WILLIAMS]
November 16, 1999
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Retailer Concentrate Products, Inc.
c/o Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
We are special Florida counsel for Retailer Concentrate Products, Inc., a
Florida corporation (the "Guarantor") and this opinion is being delivered to you
in connection with the Registration Statement on Form S-4 (the "Registration
Statement") filed by Triarc Consumer Products Group, LLC, a Delaware limited
liability company ("TCPG"), Triarc Beverage Holdings Corp., a Delaware
corporation (the "Co-Issuer" and, together with TCPG, the "Issuers"), and
certain other subsidiaries of the Issuers (the "Guarantor Subsidiaries" and,
together with the Issuers, the "Co-Registrants") with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations under the Act. The Registration
Statement relates to the registration under the Act of the Issuers' $300,000,000
aggregate principal amount of 10 1/4% Senior Subordinated Notes due 2009 (the
"Exchange Notes") and the guaranties of the Exchange Notes by the Guarantor
Subsidiaries set forth in Article 13 of the Indenture (the "Subsidiary
Guaranties"), including the guaranty by the Guarantor set forth in Article 13 of
the Indenture (the "Guarantee"). The Exchange Notes are to be offered in
exchange for the Issuers' outstanding 10 1/4% Senior Subordinated Notes due 2009
(the "Existing Notes") issued and sold by the Issuers on February 25, 1999 in an
offering exempt from registration under the Act. The Exchange Notes will be
issued by the Issuers in accordance with the terms of the Indenture, dated as of
February 25, 1999 (as amended, the "Indenture"), among the Issuers, the
Guarantor Subsidiaries party to it (including the Guarantor) and The Bank of New
York, as trustee (the "Trustee"). In connection with the foregoing, we have been
<PAGE>
HUNTON & WILLIAMS
Addressees
November 16, 1999
Page 2
requested by you to render our opinion as to certain legal matters relating to
the Guarantor.
Capitalized terms which are used herein and not defined herein shall have
the meanings given such terms in the Indenture.
We have made such examinations of the law of the State of Florida as we
have deemed relevant for purposes of this opinion, and have not made any
independent review of the law of any other state or other jurisdiction. The
opinions expressed herein are limited solely to the laws of the State of
Florida.
In connection with this opinion, we have examined conformed copies or
photocopies, certified or otherwise identified to our satisfaction, of the
following documents (collectively, the "Documents"):
(i) the Indenture as delivered to us on November 12, 1999, by Paul, Weiss,
Rifkind, Wharton & Garrison; and
(ii) corporate minutes of the Guarantor attached to the officer's
certificate attached hereto as Exhibit A (the "Officer's Certificate"), which,
among other things, pertain to the authorization and execution of the Indenture
by the Guarantor, including the Guarantee; and
(iii) the articles of incorporation, as amended, and by-laws, as amended,
of the Guarantor as certified to us pursuant to the Officer's Certificate
(collectively, the "Organizational Documents").
We have reviewed only the Documents and have made no other investigation
or inquiry. We have relied, without additional investigation, upon the facts set
forth in the respective representations made by the parties in the Indenture and
in the Officer's Certificate.
We have acted as special Florida counsel to the Guarantor and our
engagement has been limited to such matters as to which we have been consulted.
Consequently, there may exist matters of a legal nature involving the Guarantor
in connection with which we have not been consulted and have not represented the
Guarantor. Consequently there may exist matters of a legal nature involving
these entities which would affect the opinions rendered herein.
In our examination of the foregoing, we have assumed without
investigation, (a) the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as
<PAGE>
HUNTON & WILLIAMS
Addressees
November 16,1999
Page 3
certified or photostatic copies and the authenticity of the originals of such
copies; (b) the legal capacity of all natural persons; (c) that each of the
Indenture and the other documents executed in connection with the Indenture
(collectively with the Indenture, the "Indenture Documents") constitutes the
legal, valid and binding obligation of each of the respective parties thereto
(other than the Guarantor) enforceable against each such party and the Guarantor
in accordance with its respective terms; (d) that sufficient consideration has
been received by the Guarantor and each of the other parties to the Indenture
Documents in respect of their respective obligations thereunder; and (e) the
constitutionality and validity of all relevant laws, regulations and agency
actions unless a reported case has otherwise held or widespread concern has been
expressed by commentators as reflected in materials which lawyers routinely
consult.
Based solely upon our examination and consideration of the Documents as
described above, and in reliance thereon, and in reliance upon the factual
representations contained in the Officer's Certificate, and our consideration of
such matters of law as we have considered necessary or appropriate for the
expression of the opinions contained herein, and subject to the limitations,
qualifications and assumptions expressed herein, we are of the opinion that:
1. The Indenture and the Guarantee have been duly authorized, executed and
delivered by the Guarantor.
2. The authorization, execution and delivery by the Guarantor of each of
the Indenture and Guarantee and the consummation by the Guarantor of the
transactions contemplated by such documents do not violate or result in a breach
of or default under the Organizational Documents or any applicable laws of the
State of Florida.
The foregoing opinions are subject to the following qualifications:
(A) We express no opinion as to whether any of the following would be a
violation of any laws of the State of Florida:
(i) any provisions (a) purporting to waive or affect any rights to
notice or the obligations of good faith, fair dealing, diligence and
reasonableness, (b) providing for specific performance or the appointment
of a receiver, (c) purporting to establish evidentiary standards for suits
or proceedings to enforce the Indenture Documents, (d) which, under
Florida law, could be deemed to be unconscionable, to be evidence of bad
faith or to be violative of public policy, or (e) releasing, exculpating
or exempting a party from, or requiring indemnification of a party for,
liability for its own actions or inactions, to the extent the action or
inaction involves gross negligence, recklessness, willful misconduct or
unlawful conduct; or
<PAGE>
HUNTON & WILLIAMS
Addressees
November 16, 1999
Page 4
(ii) the extent to which any party may charge or collect interest,
fees and other amounts payable pursuant to the Documents which are or
would be deemed to be interest or charges in the nature of interest which
in the aggregate exceed twenty-five percent (25%) per annum simple
interest.
We have not reviewed and express no opinion with respect to any document
or instrument (other than the Indenture) referred to in any of the Indenture
Documents with respect to which we opine.
We express no opinion as to matters which may be governed by any laws
other than the laws of the State of Florida and the opinions given herein are
only expressed as to those matters governed by Florida law.
This opinion is limited to the matters stated herein and no opinions may
be implied or inferred beyond the matters expressly stated herein. We have
assumed no obligation to advise you beyond the opinions specifically expressed
herein.
The opinions expressed herein are as of this date, and we assume no
obligation to update or supplement our opinions to reflect any facts or
circumstances which may come to our attention or any changes in law which may
occur.
This opinion is provided to you for your benefit and is provided only in
connection with this transaction and may not be relied upon in any respect by
any other person or for any other purpose, provided that, this opinion may be
relied upon by Paul, Weiss, Rifkind, Wharton & Garrison in connection with the
Registration Statement. Without our prior written consent, this opinion letter
may not be quoted in whole or in part or otherwise referred to in any document
or report and may not be furnished to any person or entity.
Very truly yours,
/s/ HUNTON & WILLIAMS
HUNTON & WILLIAMS
<PAGE>
[LETTERHEAD OF HOLLAND & HART LLP]
November 24, 1999
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Old San Francisco Seltzer, Inc.
c/o Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the Registration
Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer
Products Group, LLC, a Delaware limited liability company ("TCPG"), Triarc
Beverage Holdings Corp., a Delaware corporation (the "Co-Issuer" and, together
with TCPG, the "Issuers"), and certain other subsidiaries of the Issuers (the
"Guarantor Subsidiaries" and, together with the Issuers, the "Co-Registrants"),
with the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations under the Act.
The Registration Statement relates to the registration under the Act of the
Issuers' $300,000,000 aggregate principal amount of 10 1/4% Senior Subordinated
Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes
by the Guarantor Subsidiaries (the "Subsidiary Guaranties"), including the
guaranty by the Guarantor named below (the "Guarantee"). The Exchange Notes are
to be offered in exchange for the Issuers' outstanding 10 1/4% Senior
Subordinated Notes due 2009 (the "Existing Notes") issued and sold by the
Issuers on February 25, 1999 in an offering exempt from registration under the
Act. The Exchange Notes will be issued by the issuers in accordance with the
terms of the Indenture, dated as of February 25, 1999 (as amended, the
"Indenture"), among the Issuers, the Guarantor Subsidiaries party to it and The
Bank of New York, as trustee (the "Trustee"). In connection with the foregoing,
we have been requested to render our opinion
<PAGE>
[LETTERHEAD OF HOLLAND & HART LLP]
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Old San Francisco Seltzer, Inc.
November 24, 1999
Page 2
as to certain legal matters relating to Old San Francisco Seltzer, Inc. a
Colorado corporation (the "Guarantor").
In connection with this opinion, we examined originals, conformed copies
or photocopies, certified or otherwise identified to our satisfaction, of the
following documents (collectively, the "Documents"):
(i) the Indenture;
(ii) certain corporate minutes of Guarantor, which, among other things,
pertain to the authorization and execution of the Indenture by Guarantor,
including the Guarantee, and approval of the Guarantee by the sole shareholder
of the Guarantor.
In addition, we have examined: (i) those corporate records of the
Guarantor as we have considered appropriate, including the certificate of
incorporation, as amended, and by-laws, as amended, of the Guarantor, in the
form provided to us by Paul, Weiss, Rifkind, Wharton & Garrison (collectively,
the "Organizational Documents"); and (ii) those other certificates, agreements
and other documents as we deemed relevant and necessary as a basis for the
opinions expressed below.
In our examination of the Documents and in rendering our opinions, we have
assumed, without independent investigation, (i) the genuineness of all
signatures, (ii) the authenticity of all documents submitted to us as originals,
(iii) the conformity to the original documents of all documents submitted to us
as certified, photostatic, reproduced or conformed copies of validly existing
agreements or other documents, (iv) the authenticity of all the latter
documents, (v) that the statements regarding matters of fact in the
certificates, records, agreements, instruments and documents that we examined
are accurate and complete, (vi) that the Guarantor delivered physically to the
parties the fully executed Indenture, (vii) that the Guarantor is an indirect
wholly-owned subsidiary of the Issuers, (viii) that the Guarantee furthers the
corporate purposes of the Guarantor, and (ix) that the Guarantor has received
direct benefits for the Guarantee.
<PAGE>
[LETTERHEAD OF HOLLAND & HART LLP]
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Old San Francisco Seltzer, Inc.
November 24, 1999
Page 3
We express no opinion relating to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent conveyance, redemption,
reinstatement or other similar laws relating to or affecting the rights of
creditors generally.
Based upon the above, and subject to the stated assumptions, exceptions
and qualifications, we are of the opinion that:
1. The Indenture and Guarantee have been duly authorized, executed and
delivered by the Guarantor.
2. The due authorization, execution and delivery by the Guarantor of each
Document to which it is a party and the consummation by the Guarantor of the
transactions contemplated by such Documents do not violate or result in a breach
of or default under the Organizational Documents thereof or the laws of the
State of Colorado.
Our opinions expressed above are limited to the laws of the State of Colorado
and the judicial decisions interpreting the same. Our opinion is rendered only
with respect to the laws, and the rules, regulations and orders under them, that
are currently in effect. This opinion is provided as a legal opinion only,
effective as of the date of this letter, and not as a guaranty or warranty of
the matters discussed herein. This opinion may be relied upon only by the
addressees hereof and by Paul, Weiss, Rifkind, Wharton & Garrison in connection
with the delivery of its legal opinion concerning the validity of the Exchange
Notes and the Subsidiary Guaranties.
Very truly yours,
/s/ HOLLAND & HART LLP
HOLLAND & HART LLP
<PAGE>
[LETTERHEAD OF HOLLAND & HART LLP]
November 24, 1999
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Fountain Classics, Inc.
c/o Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the Registration
Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer
Products Group, LLC, a Delaware limited liability company ("TCPG"), Triarc
Beverage Holdings Corp., a Delaware corporation (the "Co-Issuer" and, together
with TCPG, the "Issuers"), and certain other subsidiaries of the Issuers (the
"Guarantor Subsidiaries" and, together with the Issuers, the "Co-Registrants"),
with the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations under the Act.
The Registration Statement relates to the registration under the Act of the
Issuers' $300,000,000 aggregate principal amount of 10 1/4% Senior Subordinated
Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes
by the Guarantor Subsidiaries (the "Subsidiary Guaranties"), including the
guaranty by the Guarantor named below (the "Guarantee"). The Exchange Notes are
to be offered in exchange for the Issuers' outstanding 10 1/4% Senior
Subordinated Notes due 2009 (the "Existing Notes") issued and sold by the
Issuers on February 25, 1999 in an offering exempt from registration under the
Act. The Exchange Notes will be issued by the Issuers in accordance with the
terms of the Indenture, dated as of February 25, 1999 (as amended, the
"Indenture"), among the Issuers, the Guarantor Subsidiaries party to it and The
Bank of New York, as trustee (the "Trustee"). In connection with the foregoing,
we have been requested to render our opinion
<PAGE>
HOLLAND & HART LLP
ATTORNEYS AT LAW
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Fountain Classics, Inc.
November 24, 1999
Page 2
as to certain legal matters relating to Fountain Classics, Inc. a Colorado
corporation (the "Guarantor").
In connection with this opinion, we examined originals, conformed copies
or photocopies, certified or otherwise identified to our satisfaction, of the
following documents (collectively, the "Documents"):
(i) the Indenture;
(ii) certain corporate minutes of Guarantor, which, among other things,
pertain to the authorization and execution of the Indenture by Guarantor,
including the Guarantee, and approval of the Guarantee by the sole shareholder
of the Guarantor.
In addition, we have examined: (i) those corporate records of the
Guarantor as we have considered appropriate, including the certificate of
incorporation, as amended, and by-laws, as amended, of the Guarantor, in the
form provided to us by Paul, Weiss, Rifkind, Wharton & Garrison (collectively,
the "Organizational Documents"); and (ii) those other certificates, agreements
and other documents as we deemed relevant and necessary as a basis for the
opinions expressed below.
In our examination of the Documents and in rendering our opinions, we have
assumed, without independent investigation, (i) the genuineness of all
signatures, (ii) the authenticity of all documents submitted to us as originals,
(iii) the conformity to the original documents of all documents submitted to us
as certified, photostatic, reproduced or conformed copies of validly existing
agreements or other documents, (iv) the authenticity of all the latter
documents, (v) that the statements regarding matters of fact in the
certificates, records, agreements, instruments and documents that we examined
are accurate and complete, (vi) that the Guarantor delivered physically to the
parties the fully executed Indenture, (vii) that the Guarantor is an indirect
wholly-owned subsidiary of the Issuers, (viii) that the Guarantee furthers the
corporate purposes of the Guarantor, and (ix) that the Guarantor has received
direct benefits for the Guarantee.
<PAGE>
HOLLAND & HART LLP
ATTORNEYS AT LAW
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Fountain Classics, Inc.
November 24, 1999
Page 3
We express no opinion relating to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent conveyance, redemption,
reinstatement or other similar laws relating to or affecting the rights of
creditors generally.
Based upon the above, and subject to the stated assumptions, exceptions
and qualifications, we are of the opinion that:
1. The Indenture and Guarantee have been duly authorized, executed and
delivered by the Guarantor.
2. The due authorization, execution and delivery by the Guarantor of each
Document to which it is a party and the consummation by the Guarantor of the
transactions contemplated by such Documents do not violate or result in a breach
of or default under the Organizational Documents thereof or the laws of the
State of Colorado.
Our opinions expressed above are limited to the laws of the State of Colorado
and the judicial decisions interpreting the same. Our opinion is rendered only
with respect to the laws, and the rules, regulations and orders under them, that
are currently in effect. This opinion is provided as a legal opinion only,
effective as of the date of this letter, and not as a guaranty or warranty of
the matters discussed herein. This opinion may be relied upon only by the
addressees hereof and by Paul, Weiss, Rifkind, Wharton & Garrison in connection
with the delivery of its legal opinion concerning the validity of the Exchange
Notes and the Subsidiary Guaranties.
Very truly yours,
/s/ HOLLAND & HART LLP
HOLLAND & HART LLP
<PAGE>
FORM OF
INDEMNIFICATION AGREEMENT
AGREEMENT, made effective as of the _____ day of ______, _____
between Triarc Consumer Products Group, LLC, a Delaware limited liability
company (the "Company") and _______________________ (the "Indemnitee").
WHEREAS, it is essential to the Company and its stockholders to
attract and retain qualified and capable directors, officers, employees,
trustees, agents and fiduciaries; and
WHEREAS, it has been the policy of the Company to indemnify its
directors and officers so as to provide them with the maximum possible
protection permitted by law; and
WHEREAS, in recognition of Indemnitee's need for protection against
personal liability in order to induce Indemnitee to serve or continue to serve
the Company in an effective manner, and, in the case of directors and officers,
to supplement or replace the Company's directors' and officers' liability
insurance coverage, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by the Company's corporate charter and/or
corporate by-laws or similar governing documents or the partnership agreements
or limited liability company agreements or similar governing documents of
partnerships and limited liability companies for which the Company serves or has
served as general partner or manager (together, the Company's "Governing
Documents") will be available to Indemnitee (regardless of, among other things,
any amendment to or revocation of the Governing Documents or any change in the
composition of the Company's Board of Directors or any acquisition transaction
relating to the Company), the Company, with the prior approval of the Company's
stockholders, wishes to provide the Indemnitee with the benefits contemplated by
this Agreement; and
<PAGE>
WHEREAS, as a result of the provision of such benefits Indemnitee
has agreed to serve or to continue to serve the Company;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following respective meanings:
(a) An Affiliate of a specified Person is a Person who directly,
or indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, the Person specified. The term Associate used
to indicate a relationship with any Person shall mean (i) any corporation or
organization (other than the Company or a Subsidiary) of which such Person is an
officer or partner or is, directly, or indirectly, the Beneficial Owner of ten
(10) percent or more of any class of Equity Securities, (ii) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity (other than an
Employee Plan Trustee), (iii) any Relative of such Person, or (iv) any officer
or director of any corporation controlling or controlled by such Person.
(b) Beneficial Ownership shall be determined, and a Person shall
be the Beneficial Owner of all securities which such Person is deemed to own
beneficially, pursuant to Rule 13d-3 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (or any successor rule or
statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall
be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3
as in effect on January 15, 1999; provided, however, that a Person shall, in any
event, also be deemed to be the Beneficial Owner of any Voting Shares: (A) of
which such Person or any of its Affiliates or Associates is, directly or
indirectly, the Beneficial Owner, or (B) of which such Person or any of its
Affiliates or Associates has (i) the right to acquire (whether such right is
2
<PAGE>
exercisable immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants, or options, or otherwise, or (ii) sole or
shared voting or investment power with respect thereto pursuant to any
agreement, arrangement, understanding, relationship or otherwise (but shall not
be deemed to be the Beneficial Owner of any Voting Shares solely by reason of a
revocable proxy granted for a particular meeting of stockholders, pursuant to a
public solicitation of proxies for such meeting, with respect to shares of which
neither such Person nor any such Affiliate or Associate is otherwise deemed the
Beneficial Owner), or (C) of which any other Person is, directly or indirectly,
the Beneficial Owner if such first mentioned Person or any of its Affiliates or
Associates acts with such other Person as a partnership, syndicate or other
group pursuant to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of capital stock of the
Company; and provided further, however, that (i) no director or officer of the
Company, nor any Associate or Affiliate of any such director or officer, shall,
solely by reason of any or all of such directors and officers acting in their
capacities as such, be deemed for any purposes hereof, to be the Beneficial
Owner of any Voting Shares of which any other such director or officer (or any
Associate or Affiliate thereof) is the Beneficial Owner and (ii) no trustee of
an employee stock ownership or similar plan of the Company or any Subsidiary
("Employee Plan Trustee") or any Associate or Affiliate of any such Trustee,
shall, solely by reason of being an Employee Plan Trustee or Associate or
Affiliate of an Employee Plan Trustee, be deemed for any purposes hereof to be
the Beneficial Owner of any Voting Shares held by or under any such plan.
(c) Change in Control shall be deemed to have occurred if (A) any
Person (other than (i) the Company or any Subsidiary, (ii) any pension, profit
sharing, employee
3
<PAGE>
stock ownership or other employee benefit plan of the Company or any Subsidiary
or any trustee of or fiduciary with respect to any such plan when acting in such
capacity, or (iii) DWG Acquisition Group, L.P. ("DWG Acquisition"), Nelson Peltz
("Peltz"), Peter W. May ("May") or any Affiliate or Associate of DWG Acquisition
or of Peltz or May) who is or becomes, after the date of this Agreement, the
Beneficial Owner of 20% or more of the total voting power of the Voting Shares,
(B) during any period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Company and any new
director whose election or appointment by the Board of Directors or nomination
or recommendation for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, (C) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the Voting Shares of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Shares of the surviving
entity) at least 80% of the total voting power represented by the Voting Shares
of the Company or such surviving entity outstanding, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets, or (D) a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14
promulgated under the Securities Exchange Act of 1934, as amended, as in effect
on January 15, 1999.
4
<PAGE>
(d) Claim means any threatened, pending or completed action,
suit, arbitration or proceeding, or any inquiry or investigation, whether
brought by or in the right of the Company or otherwise, that Indemnitee in good
faith believes might lead to the institution of any such action, suit,
arbitration or proceeding, whether civil, criminal, administrative,
investigative or other, or any appeal therefrom.
(e) D&O Insurance means any valid directors' and officers'
liability insurance policy maintained by the Company for the benefit of the
Indemnitee, if any.
(f) Determination means a determination, and Determined means a
matter which has been determined based on the facts known at the time, by: (i) a
majority vote of a quorum of disinterested directors, or (ii) if such a quorum
is not obtainable, or even if obtainable, if a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or, in the event
there has been a Change in Control, by the Special Independent Counsel (in a
written opinion) selected by Indemnitee as set forth in Section 6, or (iii) a
majority of the disinterested stockholders of the Company, or (iv) a final
adjudication by a court of competent jurisdiction.
(g) Equity Security shall have the meaning given to such term
under Rule 3a11-1 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, as in effect on January 15, 1999.
(h) Excluded Claim means any payment for Losses or Expenses in
connection with any Claim: (i) based upon or attributable to Indemnitee gaining
in fact any personal profit or advantage to which Indemnitee is not entitled; or
(ii) for the return by Indemnitee of any remuneration paid to Indemnitee without
the previous approval of the stockholders of the Company which is illegal; or
(iii) for an accounting of profits in fact made
5
<PAGE>
from the purchase or sale by Indemnitee of securities of the Company within the
meaning of Section 16 of the Securities Exchange Act of 1934, as amended, as in
effect on January 15, 1999, or similar provisions of any state law; or (iv)
resulting from Indemnitee's knowingly fraudulent, dishonest or willful
misconduct; or (v) the payment of which by the Company under this Agreement is
not permitted by applicable law.
(i) Expenses means any reasonable expenses incurred by Indemnitee
as a result of a Claim or Claims made against Indemnitee for Indemnifiable
Events including, without limitation, attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event.
(j) Fines means any fine, penalty or, with respect to an employee
benefit plan, any excise tax or penalty assessed with respect thereto.
(k) Indemnifiable Event means any event or occurrence, occurring
prior to or after the date of this Agreement, related to the fact that
Indemnitee is or was a director, officer, employee, trustee, agent or fiduciary
of the Company, or is or was serving at the request of the Company as a
director, officer, manager, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, limited liability company, employee
benefit plan, trust or other enterprise, or by reason of anything done or not
done by Indemnitee, including, but not limited to, any breach of duty, neglect,
error, misstatement, misleading statement, omission, or other act done or
wrongfully attempted by Indemnitee, or any of the foregoing alleged by any
claimant, in any such capacity.
6
<PAGE>
(l) Losses means any amounts or sums which Indemnitee is legally
obligated to pay as a result of a Claim or Claims made against Indemnitee for
Indemnifiable Events including, without limitation, damages, judgments and sums
or amounts paid in settlement of a Claim or Claims, and Fines.
(m) Person means any individual, partnership, corporation,
business trust, joint stock company, trust, limited liability company,
unincorporated association, joint venture, governmental authority or other
entity of whatever nature.
(n) Potential Change in Control shall be deemed to have occurred
if (A) the Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control; (B) any Person (including the
Company) publicly announces an intention to take or to consider taking actions
which if consummated would constitute a Change in Control; (C) any Person (other
than (i) the Company or any Subsidiary, (ii) any pension, profit sharing,
employee stock ownership or other employee benefit plan of the Company or any
Subsidiary or any trustee of or fiduciary with respect to any such plan when
acting in such capacity, or (iii) DWG Acquisition, Peltz, May, or any Affiliate
or Associate of DWG Acquisition or of Peltz or May) who is or becomes the
Beneficial Owner of 9.5% or more of the total voting power of the Voting Shares,
increases his Beneficial Ownership of such voting power by 5% or more over the
percentage so owned by such Person on the date hereof; or (D) the Board of
Directors adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.
(o) Relative means a Person's spouse, parents, children,
siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and
brothersand sisters-in-law.
(p) Reviewing Party means any appropriate person or body
consisting
7
<PAGE>
of a member or members of the Company's Board of Directors or any other person
or body appointed by the Board (including the Special Independent Counsel
referred to in Section 6) who is not a party to the particular Claim for which
Indemnitee is seeking indemnification.
(q) Subsidiary means any corporation of which a majority of any
class of Equity Security is owned, directly or indirectly, by the Company.
(r) Trust means the trust established pursuant to Section 7
hereof.
(s) Voting Shares means any issued and outstanding shares of
capital stock of the Company entitled to vote generally in the election of
directors.
2. Basic Indemnification Agreement. In consideration of, and as an
inducement to, the Indemnitee rendering valuable services to the Company, the
Company agrees that in the event Indemnitee is or becomes a party to or witness
or other participant in, or is threatened to be made a party to or witness or
other participant in, a Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company will indemnify Indemnitee to the fullest extent
authorized by law, against any and all Expenses and Losses (including all
interest, assessments and other charges paid or payable in connection with or in
respect of such Expenses and Losses) of such Claim, whether or not such Claim
proceeds to judgment or is settled or otherwise is brought to a final
disposition, subject in each case, to the further provisions of this Agreement.
3. Limitations on Indemnification. Notwithstanding the provisions of
Section 2, Indemnitee shall not be indemnified and held harmless from any Losses
or Expenses (a) which have been Determined, as provided herein, to constitute an
Excluded Claim; (b) to the extent Indemnitee is indemnified by the Company and
has actually received payment pursuant to the Company's Governing Documents, D&O
Insurance, or otherwise; or (c) other than pursuant
8
<PAGE>
to the last sentence of Section 4(d) or Section 14, in connection with any Claim
initiated by Indemnitee, unless the Company has joined in or the Board of
Directors has authorized such Claim.
4. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of any Claim,
Indemnitee shall, if indemnification with respect thereto may be sought from the
Company under this Agreement, notify the Company of the commencement thereof and
Indemnitee agrees further not to make any admission or effect any settlement
with respect to such Claim without the consent of the Company, except any Claim
with respect to which the Indemnitee has undertaken the defense in accordance
with the second to last sentence of Section 4(d).
(b) If, at the time of the receipt of such notice, the Company
has D&O Insurance in effect, the Company shall give prompt notice of the
commencement of Claim to the insurers in accordance with the procedures set
forth in the respective policies. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Losses and Expenses payable as a result of such Claim.
(c) To the extent the Company does not, at the time of the Claim
have applicable D&O Insurance, or if a Determination is made that any Expenses
arising out of such Claim will not be payable under the D&O Insurance then in
effect, the Company shall be obligated to pay the Expenses of any Claim in
advance of the final disposition thereof and the Company, if appropriate, shall
be entitled to assume the defense of such Claim, with counsel satisfactory to
Indemnitee, upon the delivery to Indemnitee of written notice of its election so
to do. After delivery of such notice, the Company will not be liable to
Indemnitee under this Agreement for any legal or other Expenses subsequently
incurred by the Indemnitee in
9
<PAGE>
connection with such defense other than reasonable Expenses of investigation;
provided that Indemnitee shall have the right to employ its counsel in such
Claim but the fees and expenses of such counsel incurred after delivery of
notice from the Company of its assumption of such defense shall be at the
Indemnitee's expense; provided further that if: (i) the employment of counsel by
Indemnitee has been previously authorized by the Company; (ii) Indemnitee shall
have reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense; or (iii) the Company
shall not, in fact, have employed counsel to assume the defense of such action,
the reasonable fees and expenses of counsel shall be at the expense of the
Company.
(d) All payments on account of the Company's indemnification
obligations under this Agreement shall be made within sixty (60) days of
Indemnitee's written request therefor unless a Determination is made that the
Claims giving rise to Indemnitee's request are Excluded Claims or otherwise not
payable under this Agreement, provided that all payments on account of the
Company's obligation to pay Expenses under Section 4(c) of this Agreement prior
to the final disposition of any Claim shall be made within 20 days of
Indemnitee's written request therefor and such obligation shall not be subject
to any such Determination but shall be subject to Section 4(e) of this
Agreement. In the event the Company takes the position that the Indemnitee is
not entitled to indemnification in connection with the proposed settlement of
any Claim, the Indemnitee shall have the right at its own expense to undertake
defense of any such Claim, insofar as such proceeding involves Claims against
the Indemnitee, by written notice given to the Company within 10 days after the
Company has notified the Indemnitee in writing of its contention that the
Indemnitee is not entitled to indemnification. If it is subsequently determined
in connection with such proceeding that the
10
<PAGE>
Indemnifiable Events are not Excluded Claims and that the Indemnitee, therefore,
is entitled to be indemnified under the provisions of Section 2 hereof, the
Company shall promptly indemnify the Indemnitee.
(e) Indemnitee hereby expressly undertakes and agrees to
reimburse the Company for all Losses and Expenses paid by the Company in
connection with any Claim against Indemnitee in the event and only to the extent
that a Determination shall have been made by a court of competent jurisdiction
in a decision from which there is no further right to appeal that Indemnitee is
not entitled to be indemnified by the Company for such Losses and Expenses
because the Claim is an Excluded Claim or because Indemnitee is otherwise not
entitled to payment under this Agreement.
5. Settlement. The Company shall have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any Claim
effected without the Company's prior written consent. The Company shall not
settle any Claim in which it takes the position that Indemnitee is not entitled
to indemnification in connection with such settlement without the consent of the
Indemnitee, nor shall the Company settle any Claim in any manner which would
impose any Fine or any obligation on Indemnitee, without Indemnitee's written
consent. Neither the Company nor Indemnitee shall unreasonably withhold their
consent to any proposed settlement.
6. Change in Control; Extraordinary Transactions. The Company and
Indemnitee agree that if there is a Change in Control of the Company (other than
a Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control)
then all Determinations thereafter with respect to the rights of Indemnitee to
be paid Losses and Expenses under this Agreement shall be
11
<PAGE>
made only by a special independent counsel (the "Special Independent Counsel")
selected by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld) or by a court of competent jurisdiction. The Company
shall pay the reasonable fees of such Special Independent Counsel and shall
indemnify such Special Independent Counsel against any and all reasonable
expenses (including reasonable attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.
The Company covenants and agrees that, in the event of a Change in
Control of the sort set forth in clause (C) of Section 1(c), the Company will
use its best efforts (a) to have the obligations of the Company under this
Agreement including, but not limited to those under Section 7, expressly assumed
by the surviving, purchasing or succeeding entity, or (b) otherwise to
adequately provide for the satisfaction of the Company's obligations under this
Agreement, in a manner reasonably acceptable to the Indemnitee.
7. Establishment of Trust. In the event of a Potential Change in
Control the Company shall, upon written request by Indemnitee, create a trust
(the "Trust") for the benefit of the Indemnitee and from time to time upon
written request of Indemnitee shall fund the Trust in an amount sufficient to
satisfy any and all Losses and Expenses which are actually paid or which
Indemnitee reasonably determines from time to time may be payable by the Company
under this Agreement. The amount or amounts to be deposited in the Trust
pursuant to the foregoing funding obligation shall be determined by the
Reviewing Party, in any case in which the Special Independent Counsel is
involved. The terms of the Trust shall provide that upon a Change in Control:
(i) the Trust shall not be revoked or the principal thereof invaded without the
written consent of the Indemnitee; (ii) the trustee of the Trust shall advance,
within twenty days of a request by the Indemnitee, any and all Expenses to the
Indemnitee (and the Indemnitee hereby
12
<PAGE>
agrees to reimburse the Trust under the circumstances under which the Indemnitee
would be required to reimburse the Company under Section 4(e) of this
Agreement); (iii) the Company shall continue to fund the Trust from time to time
in accordance with the funding obligations set forth above; (iv) the trustee of
the Trust shall promptly pay to the Indemnitee all Losses and Expenses for which
the Indemnitee shall be entitled to indemnification pursuant to this Agreement;
and (v) all unexpended funds in the Trust shall revert to the Company upon a
final determination by a court of competent jurisdiction in a final decision
from which there is no further right of appeal that the Indemnitee has been
fully indemnified under the terms of this Agreement. The Trustee of the Trust
shall be chosen by the Indemnitee.
8. No Presumption. For purposes of this Agreement, the termination
of any Claim by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
9. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall
be in addition to any other rights Indemnitee may have under the Company's
Governing Documents or under the laws, as in effect from time to time, of the
Company's state of incorporation (such laws being the "Applicable State Laws"),
any vote of stockholders or disinterested directors or otherwise, both as to
action in the Indemnitee's official capacity and as to action in any other
capacity by holding such office, and shall continue after the Indemnitee ceases
to serve the Company as a director, officer, employee, agent or fiduciary, for
so long as the Indemnitee shall be subject to any Claim by reason of (or arising
in part out of) an Indemnifiable Event. To the
13
<PAGE>
extent that a change in the Applicable State Laws (whether by statute or
judicial decision or by reincorporation of the Company in a different
jurisdiction) permits greater indemnification by agreement than would be
afforded currently under the Company's Governing Documents and this Agreement,
it is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits so afforded by such change.
10. Liability Insurance. To the extent the Company maintains D&O
Insurance, Indemnitee, if an officer or director of the Company, shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any director or officer of the
Company.
11. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
12. Partial Indemnity, Etc. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses and Losses of a Claim but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding
any other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims relating
in whole or in part to any Indemnifiable Event or in defense of any issue or
matter therein, including dismissal without prejudice, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith. In connection
with any Determination as to whether Indemnitee is entitled
14
<PAGE>
to be indemnified hereunder the burden of proof shall be on the Company to
establish that Indemnitee is not so entitled.
13. Liability of Company. The Indemnitee agrees that neither the
stockholders nor the directors nor any officer, employee, representative or
agent of the Company shall be personally liable for the satisfaction of the
Company's obligations under this Agreement and the Indemnitee shall look solely
to the assets of the Company for satisfaction of any claims hereunder.
14. Enforcement.
(a) Indemnitee's right to indemnification and other rights under
this Agreement shall be specifically enforceable by Indemnitee only in the state
or Federal courts of the State of New York or of the then current State of
incorporation of the Company and shall be enforceable notwithstanding any
adverse Determination by the Company's Board of Directors, independent legal
counsel, the Special Independent Counsel or the Company's stockholders and no
such Determination shall create a presumption that Indemnitee is not entitled to
be indemnified hereunder. In any such action the Company shall have the burden
of proving that indemnification is not required under this Agreement.
(b) In the event that any action is instituted by Indemnitee
under this Agreement, or to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be paid all court costs and
reasonable expenses, including reasonable counsel fees, incurred by Indemnitee
with respect to such action, unless the court determines that each of the
material assertions made by Indemnitee as a basis for such action were not made
in good faith or were frivolous.
15
<PAGE>
15. Severability. In the event that any provision of this Agreement
is determined by a court to require the Company to do or to fail to do an act
which is in violation of applicable law, such provision (including any provision
within a single section, paragraph or sentence) shall be limited or modified in
its application to the minimum extent necessary to avoid a violation of law,
and, as so limited or modified, such provision and the balance of this Agreement
shall be enforceable in accordance with their terms to the fullest extent
permitted by law.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the state in which the Company is incorporated at
the time any claim for indemnification is made hereunder applicable to
agreements made and to be performed entirely within such state.
17. Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of New
York and the State promulgating the Applicable State Laws at the time any claim
for indemnification hereunder is made for all purposes in connection with any
action or proceeding which arises out of or relates to this Agreement and agree
that any action instituted under this Agreement shall be brought only in the
state and Federal courts of the States indicated in this Section.
18. Notices. All notices, or other communications required or
permitted hereunder shall be sufficiently given for all purposes if in writing
and personally delivered, telegraphed, telexed, sent by facsimile transmission
or sent by registered or certified mail, return receipt requested, with postage
prepaid addressed as follows, or to such other address as the parties shall have
given notice of pursuant hereto:
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(a) If to the Company, to:
Triarc Consumer Products Group, LLC
709 Westchester Avenue
White Plains, New York 10604
Attention: Senior Vice President & General Counsel
Telecopier No.: 914-397-9368
with a copy to:
Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Attention: Executive Vice President & General Counsel
Telecopier No.: 212-451-3216
(b) If to the Indemnitee, to:
<<Name>>
<<Address>>
19. Counterparts. This Agreement may be signed in counterparts, each
of which shall be an original and all of which, when taken together, shall
constitute one and the same instrument.
20. Successors and Assigns. This Agreement shall be (i) binding upon
all successors and assigns of the Company, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, and (ii) shall
be binding upon and inure to the benefit of any successors and assigns, heirs,
and personal or legal representatives of Indemnitee.
17
<PAGE>
21. Amendment; Waiver. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in writing signed
by each of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement effective as of the day and year first above written.
TRIARC CONSUMER PRODUCTS GROUP, LLC
By:
-------------------------------------
Name:
Title:
ATTEST:
[Corporate Seal]
By:
--------------------------------
Title:
WITNESS:
- ------------------------------------ -------------------------------------
<<Name>>, Indemnitee
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<PAGE>
FORM OF
INDEMNIFICATION AGREEMENT
AGREEMENT, made effective as of the _____ day of ______, _____
between Triarc Beverage Holdings Corp., a Delaware corporation (the "Company")
and ________________________ (the "Indemnitee").
WHEREAS, it is essential to the Company and its stockholders to
attract and retain qualified and capable directors, officers, employees,
trustees, agents and fiduciaries; and
WHEREAS, it has been the policy of the Company to indemnify its
directors and officers so as to provide them with the maximum possible
protection permitted by law; and
WHEREAS, in recognition of Indemnitee's need for protection against
personal liability in order to induce Indemnitee to serve or continue to serve
the Company in an effective manner, and, in the case of directors and officers,
to supplement or replace the Company's directors' and officers' liability
insurance coverage, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by the Company's corporate charter and/or
corporate by-laws or similar governing documents or the partnership agreements
or limited liability company agreements or similar governing documents of
partnerships and limited liability companies for which the Company serves or has
served as general partner or manager (together, the Company's "Governing
Documents") will be available to Indemnitee (regardless of, among other things,
any amendment to or revocation of the Governing Documents or any change in the
composition of the Company's Board of Directors or any acquisition transaction
relating to the Company), the Company, with the prior approval of the Company's
stockholders, wishes to provide the Indemnitee with the benefits contemplated by
this Agreement; and
WHEREAS, as a result of the provision of such benefits Indemnitee
has agreed to
<PAGE>
serve or to continue to serve the Company;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following respective meanings:
(a) An Affiliate of a specified Person is a Person who directly,
or indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, the Person specified. The term Associate used
to indicate a relationship with any Person shall mean (i) any corporation or
organization (other than the Company or a Subsidiary) of which such Person is an
officer or partner or is, directly, or indirectly, the Beneficial Owner of ten
(10) percent or more of any class of Equity Securities, (ii) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity (other than an
Employee Plan Trustee), (iii) any Relative of such Person, or (iv) any officer
or director of any corporation controlling or controlled by such Person.
(b) Beneficial Ownership shall be determined, and a Person shall
be the Beneficial Owner of all securities which such Person is deemed to own
beneficially, pursuant to Rule 13d-3 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (or any successor rule or
statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall
be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3
as in effect on January 15, 1999; provided, however, that a Person shall, in any
event, also be deemed to be the Beneficial Owner of any Voting Shares: (A) of
which such Person or any of its Affiliates or Associates is, directly or
indirectly, the Beneficial Owner, or (B) of which such Person or any of its
Affiliates or Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time), pursuant to any
agreement,
2
<PAGE>
arrangement or understanding or upon the exercise of conversion rights, exchange
rights, warrants, or options, or otherwise, or (ii) sole or shared voting or
investment power with respect thereto pursuant to any agreement, arrangement,
understanding, relationship or otherwise (but shall not be deemed to be the
Beneficial Owner of any Voting Shares solely by reason of a revocable proxy
granted for a particular meeting of stockholders, pursuant to a public
solicitation of proxies for such meeting, with respect to shares of which
neither such Person nor any such Affiliate or Associate is otherwise deemed the
Beneficial Owner), or (C) of which any other Person is, directly or indirectly,
the Beneficial Owner if such first mentioned Person or any of its Affiliates or
Associates acts with such other Person as a partnership, syndicate or other
group pursuant to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of capital stock of the
Company; and provided further, however, that (i) no director or officer of the
Company, nor any Associate or Affiliate of any such director or officer, shall,
solely by reason of any or all of such directors and officers acting in their
capacities as such, be deemed for any purposes hereof, to be the Beneficial
Owner of any Voting Shares of which any other such director or officer (or any
Associate or Affiliate thereof) is the Beneficial Owner and (ii) no trustee of
an employee stock ownership or similar plan of the Company or any Subsidiary
("Employee Plan Trustee") or any Associate or Affiliate of any such Trustee,
shall, solely by reason of being an Employee Plan Trustee or Associate or
Affiliate of an Employee Plan Trustee, be deemed for any purposes hereof to be
the Beneficial Owner of any Voting Shares held by or under any such plan.
(c) Change in Control shall be deemed to have occurred if (A) any
Person (other than (i) the Company or any Subsidiary, (ii) any pension, profit
sharing, employee stock ownership or other employee benefit plan of the Company
or any Subsidiary or any trustee
3
<PAGE>
of or fiduciary with respect to any such plan when acting in such capacity, or
(iii) DWG Acquisition Group, L.P. ("DWG Acquisition"), Nelson Peltz ("Peltz"),
Peter W. May ("May") or any Affiliate or Associate of DWG Acquisition or of
Peltz or May) who is or becomes, after the date of this Agreement, the
Beneficial Owner of 20% or more of the total voting power of the Voting Shares,
(B) during any period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Company and any new
director whose election or appointment by the Board of Directors or nomination
or recommendation for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, (C) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the Voting Shares of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Shares of the surviving
entity) at least 80% of the total voting power represented by the Voting Shares
of the Company or such surviving entity outstanding, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets, or (D) a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14
promulgated under the Securities Exchange Act of 1934, as amended, as in effect
on January 1, 1999.
(d) Claim means any threatened, pending or completed action,
suit, arbitration or proceeding, or any inquiry or investigation, whether
brought by or in the right of
4
<PAGE>
the Company or otherwise, that Indemnitee in good faith believes might lead to
the institution of any such action, suit, arbitration or proceeding, whether
civil, criminal, administrative, investigative or other, or any appeal
therefrom.
(e) D&O Insurance means any valid directors' and officers'
liability insurance policy maintained by the Company for the benefit of the
Indemnitee, if any.
(f) Determination means a determination, and Determined means a
matter which has been determined based on the facts known at the time, by: (i) a
majority vote of a quorum of disinterested directors, or (ii) if such a quorum
is not obtainable, or even if obtainable, if a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or, in the event
there has been a Change in Control, by the Special Independent Counsel (in a
written opinion) selected by Indemnitee as set forth in Section 6, or (iii) a
majority of the disinterested stockholders of the Company, or (iv) a final
adjudication by a court of competent jurisdiction.
(g) Equity Security shall have the meaning given to such term
under Rule 3a11-1 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, as in effect on January 1, 1999.
(h) Excluded Claim means any payment for Losses or Expenses in
connection with any Claim: (i) based upon or attributable to Indemnitee gaining
in fact any personal profit or advantage to which Indemnitee is not entitled; or
(ii) for the return by Indemnitee of any remuneration paid to Indemnitee without
the previous approval of the stockholders of the Company which is illegal; or
(iii) for an accounting of profits in fact made from the purchase or sale by
Indemnitee of securities of the Company within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, as in effect on January 1, 1999,
5
<PAGE>
or similar provisions of any state law; or (iv) resulting from Indemnitee's
knowingly fraudulent, dishonest or willful misconduct; or (v) the payment of
which by the Company under this Agreement is not permitted by applicable law.
(i) Expenses means any reasonable expenses incurred by Indemnitee
as a result of a Claim or Claims made against Indemnitee for Indemnifiable
Events including, without limitation, attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event.
(j) Fines means any fine, penalty or, with respect to an employee
benefit plan, any excise tax or penalty assessed with respect thereto.
(k) Indemnifiable Event means any event or occurrence, occurring
prior to or after the date of this Agreement, related to the fact that
Indemnitee is or was a director, officer, employee, trustee, agent or fiduciary
of the Company, or is or was serving at the request of the Company as a
director, officer, manager, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, limited liability company, employee
benefit plan, trust or other enterprise, or by reason of anything done or not
done by Indemnitee, including, but not limited to, any breach of duty, neglect,
error, misstatement, misleading statement, omission, or other act done or
wrongfully attempted by Indemnitee, or any of the foregoing alleged by any
claimant, in any such capacity.
(l) Losses means any amounts or sums which Indemnitee is legally
obligated to pay as a result of a Claim or Claims made against Indemnitee for
Indemnifiable Events including, without limitation, damages, judgments and sums
or amounts paid in
6
<PAGE>
settlement of a Claim or Claims, and Fines.
(m) Person means any individual, partnership, corporation,
business trust, joint stock company, trust, limited liability company,
unincorporated association, joint venture, governmental authority or other
entity of whatever nature.
(n) Potential Change in Control shall be deemed to have occurred
if (A) the Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control; (B) any Person (including the
Company) publicly announces an intention to take or to consider taking actions
which if consummated would constitute a Change in Control; (C) any Person (other
than (i) the Company or any Subsidiary, (ii) any pension, profit sharing,
employee stock ownership or other employee benefit plan of the Company or any
Subsidiary or any trustee of or fiduciary with respect to any such plan when
acting in such capacity, or (iii) DWG Acquisition, Peltz, May, or any Affiliate
or Associate of DWG Acquisition or of Peltz or May) who is or becomes the
Beneficial Owner of 9.5% or more of the total voting power of the Voting Shares,
increases his Beneficial Ownership of such voting power by 5% or more over the
percentage so owned by such Person on the date hereof; or (D) the Board of
Directors adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.
(o) Relative means a Person's spouse, parents, children,
siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and
brothers and sisters-in-law.
(p) Reviewing Party means any appropriate person or body
consisting of a member or members of the Company's Board of Directors or any
other person or body appointed by the Board (including the Special Independent
Counsel referred to in Section 6) who is not a party to the particular Claim for
which Indemnitee is seeking indemnification.
7
<PAGE>
(q) Subsidiary means any corporation of which a majority of any
class of Equity Security is owned, directly or indirectly, by the Company.
(r) Trust means the trust established pursuant to Section 7
hereof.
(s) Voting Shares means any issued and outstanding shares of
capital stock of the Company entitled to vote generally in the election of
directors.
2. Basic Indemnification Agreement. In consideration of, and as an
inducement to, the Indemnitee rendering valuable services to the Company, the
Company agrees that in the event Indemnitee is or becomes a party to or witness
or other participant in, or is threatened to be made a party to or witness or
other participant in, a Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company will indemnify Indemnitee to the fullest extent
authorized by law, against any and all Expenses and Losses (including all
interest, assessments and other charges paid or payable in connection with or in
respect of such Expenses and Losses) of such Claim, whether or not such Claim
proceeds to judgment or is settled or otherwise is brought to a final
disposition, subject in each case, to the further provisions of this Agreement.
3. Limitations on Indemnification. Notwithstanding the provisions of
Section 2, Indemnitee shall not be indemnified and held harmless from any Losses
or Expenses (a) which have been Determined, as provided herein, to constitute an
Excluded Claim; (b) to the extent Indemnitee is indemnified by the Company and
has actually received payment pursuant to the Company's Governing Documents, D&O
Insurance, or otherwise; or (c) other than pursuant to the last sentence of
Section 4(d) or Section 14, in connection with any Claim initiated by
Indemnitee, unless the Company has joined in or the Board of Directors has
authorized such Claim.
8
<PAGE>
4. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of any Claim,
Indemnitee shall, if indemnification with respect thereto may be sought from the
Company under this Agreement, notify the Company of the commencement thereof and
Indemnitee agrees further not to make any admission or effect any settlement
with respect to such Claim without the consent of the Company, except any Claim
with respect to which the Indemnitee has undertaken the defense in accordance
with the second to last sentence of Section 4(d).
(b) If, at the time of the receipt of such notice, the Company
has D&O Insurance in effect, the Company shall give prompt notice of the
commencement of Claim to the insurers in accordance with the procedures set
forth in the respective policies. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Losses and Expenses payable as a result of such Claim.
(c) To the extent the Company does not, at the time of the Claim
have applicable D&O Insurance, or if a Determination is made that any Expenses
arising out of such Claim will not be payable under the D&O Insurance then in
effect, the Company shall be obligated to pay the Expenses of any Claim in
advance of the final disposition thereof and the Company, if appropriate, shall
be entitled to assume the defense of such Claim, with counsel satisfactory to
Indemnitee, upon the delivery to Indemnitee of written notice of its election so
to do. After delivery of such notice, the Company will not be liable to
Indemnitee under this Agreement for any legal or other Expenses subsequently
incurred by the Indemnitee in connection with such defense other than reasonable
Expenses of investigation; provided that Indemnitee shall have the right to
employ its counsel in such Claim but the fees and expenses of such counsel
incurred after delivery of notice from the Company of its assumption of such
9
<PAGE>
defense shall be at the Indemnitee's expense; provided further that if: (i) the
employment of counsel by Indemnitee has been previously authorized by the
Company; (ii) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense; or (iii) the Company shall not, in fact, have employed counsel to
assume the defense of such action, the reasonable fees and expenses of counsel
shall be at the expense of the Company.
(d) All payments on account of the Company's indemnification
obligations under this Agreement shall be made within sixty (60) days of
Indemnitee's written request therefor unless a Determination is made that the
Claims giving rise to Indemnitee's request are Excluded Claims or otherwise not
payable under this Agreement, provided that all payments on account of the
Company's obligation to pay Expenses under Section 4(c) of this Agreement prior
to the final disposition of any Claim shall be made within 20 days of
Indemnitee's written request therefor and such obligation shall not be subject
to any such Determination but shall be subject to Section 4(e) of this
Agreement. In the event the Company takes the position that the Indemnitee is
not entitled to indemnification in connection with the proposed settlement of
any Claim, the Indemnitee shall have the right at its own expense to undertake
defense of any such Claim, insofar as such proceeding involves Claims against
the Indemnitee, by written notice given to the Company within 10 days after the
Company has notified the Indemnitee in writing of its contention that the
Indemnitee is not entitled to indemnification. If it is subsequently determined
in connection with such proceeding that the Indemnifiable Events are not
Excluded Claims and that the Indemnitee, therefore, is entitled to be
indemnified under the provisions of Section 2 hereof, the Company shall promptly
indemnify the Indemnitee.
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<PAGE>
(e) Indemnitee hereby expressly undertakes and agrees to
reimburse the Company for all Losses and Expenses paid by the Company in
connection with any Claim against Indemnitee in the event and only to the extent
that a Determination shall have been made by a court of competent jurisdiction
in a decision from which there is no further right to appeal that Indemnitee is
not entitled to be indemnified by the Company for such Losses and Expenses
because the Claim is an Excluded Claim or because Indemnitee is otherwise not
entitled to payment under this Agreement.
5. Settlement. The Company shall have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any Claim
effected without the Company's prior written consent. The Company shall not
settle any Claim in which it takes the position that Indemnitee is not entitled
to indemnification in connection with such settlement without the consent of the
Indemnitee, nor shall the Company settle any Claim in any manner which would
impose any Fine or any obligation on Indemnitee, without Indemnitee's written
consent. Neither the Company nor Indemnitee shall unreasonably withhold their
consent to any proposed settlement.
6. Change in Control; Extraordinary Transactions. The Company and
Indemnitee agree that if there is a Change in Control of the Company (other than
a Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control)
then all Determinations thereafter with respect to the rights of Indemnitee to
be paid Losses and Expenses under this Agreement shall be made only by a special
independent counsel (the "Special Independent Counsel") selected by Indemnitee
and approved by the Company (which approval shall not be unreasonably withheld)
or by a court of competent jurisdiction. The Company shall pay the reasonable
fees of such
11
<PAGE>
Special Independent Counsel and shall indemnify such Special Independent Counsel
against any and all reasonable expenses (including reasonable attorneys' fees),
claims, liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto.
The Company covenants and agrees that, in the event of a Change in
Control of the sort set forth in clause (C) of Section 1(c), the Company will
use its best efforts (a) to have the obligations of the Company under this
Agreement including, but not limited to those under Section 7, expressly assumed
by the surviving, purchasing or succeeding entity, or (b) otherwise to
adequately provide for the satisfaction of the Company's obligations under this
Agreement, in a manner reasonably acceptable to the Indemnitee.
7. Establishment of Trust. In the event of a Potential Change in
Control the Company shall, upon written request by Indemnitee, create a trust
(the "Trust") for the benefit of the Indemnitee and from time to time upon
written request of Indemnitee shall fund the Trust in an amount sufficient to
satisfy any and all Losses and Expenses which are actually paid or which
Indemnitee reasonably determines from time to time may be payable by the Company
under this Agreement. The amount or amounts to be deposited in the Trust
pursuant to the foregoing funding obligation shall be determined by the
Reviewing Party, in any case in which the Special Independent Counsel is
involved. The terms of the Trust shall provide that upon a Change in Control:
(i) the Trust shall not be revoked or the principal thereof invaded without the
written consent of the Indemnitee; (ii) the trustee of the Trust shall advance,
within twenty days of a request by the Indemnitee, any and all Expenses to the
Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under the
circumstances under which the Indemnitee would be required to reimburse the
Company under Section 4(e) of this Agreement); (iii) the Company shall continue
to fund the Trust from time to time in accordance with the funding obligations
set
12
<PAGE>
forth above; (iv) the trustee of the Trust shall promptly pay to the Indemnitee
all Losses and Expenses for which the Indemnitee shall be entitled to
indemnification pursuant to this Agreement; and (v) all unexpended funds in the
Trust shall revert to the Company upon a final determination by a court of
competent jurisdiction in a final decision from which there is no further right
of appeal that the Indemnitee has been fully indemnified under the terms of this
Agreement. The Trustee of the Trust shall be chosen by the Indemnitee.
8. No Presumption. For purposes of this Agreement, the termination
of any Claim by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
9. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall
be in addition to any other rights Indemnitee may have under the Company's
Governing Documents or under the laws, as in effect from time to time, of the
Company's state of incorporation (such laws being the "Applicable State Laws"),
any vote of stockholders or disinterested directors or otherwise, both as to
action in the Indemnitee's official capacity and as to action in any other
capacity by holding such office, and shall continue after the Indemnitee ceases
to serve the Company as a director, officer, employee, agent or fiduciary, for
so long as the Indemnitee shall be subject to any Claim by reason of (or arising
in part out of) an Indemnifiable Event. To the extent that a change in the
Applicable State Laws (whether by statute or judicial decision or by
reincorporation of the Company in a different jurisdiction) permits greater
indemnification by agreement than would be afforded currently under the
Company's Governing Documents and this
13
<PAGE>
Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by
this Agreement the greater benefits so afforded by such change.
10. Liability Insurance. To the extent the Company maintains D&O
Insurance, Indemnitee, if an officer or director of the Company, shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any director or officer of the
Company.
11. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
12. Partial Indemnity, Etc. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses and Losses of a Claim but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding
any other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims relating
in whole or in part to any Indemnifiable Event or in defense of any issue or
matter therein, including dismissal without prejudice, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith. In connection
with any Determination as to whether Indemnitee is entitled to be indemnified
hereunder the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
13. Liability of Company. The Indemnitee agrees that neither the
14
<PAGE>
stockholders nor the directors nor any officer, employee, representative or
agent of the Company shall be personally liable for the satisfaction of the
Company's obligations under this Agreement and the Indemnitee shall look solely
to the assets of the Company for satisfaction of any claims hereunder.
14. Enforcement.
(a) Indemnitee's right to indemnification and other rights under
this Agreement shall be specifically enforceable by Indemnitee only in the state
or Federal courts of the State of New York or of the then current State of
incorporation of the Company and shall be enforceable notwithstanding any
adverse Determination by the Company's Board of Directors, independent legal
counsel, the Special Independent Counsel or the Company's stockholders and no
such Determination shall create a presumption that Indemnitee is not entitled to
be indemnified hereunder. In any such action the Company shall have the burden
of proving that indemnification is not required under this Agreement.
(b) In the event that any action is instituted by Indemnitee
under this Agreement, or to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be paid all court costs and
reasonable expenses, including reasonable counsel fees, incurred by Indemnitee
with respect to such action, unless the court determines that each of the
material assertions made by Indemnitee as a basis for such action were not made
in good faith or were frivolous.
15. Severability. In the event that any provision of this Agreement
is determined by a court to require the Company to do or to fail to do an act
which is in violation of applicable law, such provision (including any provision
within a single section, paragraph or sentence) shall be limited or modified in
its application to the minimum extent necessary to avoid
15
<PAGE>
a violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with their terms to
the fullest extent permitted by law.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the state in which the Company is incorporated at
the time any claim for indemnification is made hereunder applicable to
agreements made and to be performed entirely within such state.
17. Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of New
York and the State promulgating the Applicable State Laws at the time any claim
for indemnification hereunder is made for all purposes in connection with any
action or proceeding which arises out of or relates to this Agreement and agree
that any action instituted under this Agreement shall be brought only in the
state and Federal courts of the States indicated in this Section.
18. Notices. All notices, or other communications required or
permitted hereunder shall be sufficiently given for all purposes if in writing
and personally delivered, telegraphed, telexed, sent by facsimile transmission
or sent by registered or certified mail, return receipt requested, with postage
prepaid addressed as follows, or to such other address as the parties shall have
given notice of pursuant hereto:
16
<PAGE>
(a) If to the Company, to:
Triarc Beverage Holdings Corp.
709 Westchester Avenue
White Plains, New York 10604
Attention: Senior Vice President & General Counsel
Telecopier No.: 914-397-9368
with a copy to:
Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Attention: Executive Vice President & General Counsel
Telecopier No.: 212-451-3216
(b) If to the Indemnitee, to:
---------------------------
---------------------------
19. Counterparts. This Agreement may be signed in counterparts, each
of which shall be an original and all of which, when taken together, shall
constitute one and the same instrument.
20. Successors and Assigns. This Agreement shall be (i) binding upon
all successors and assigns of the Company, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, and (ii) shall
be binding upon and inure to the benefit of any successors and assigns, heirs,
and personal or legal representatives of Indemnitee.
17
<PAGE>
21. Amendment; Waiver. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in writing signed
by each of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement effective as of the day and year first above written.
TRIARC BEVERAGE HOLDINGS CORP.
By:
-------------------------------------
Name:
Title:
ATTEST:
[Corporate Seal]
By:
--------------------------------
Title:
WITNESS:
- ----------------------------------- -------------------------------------
, Indemnitee
18
<PAGE>
EXHIBIT 12.1
TRIARC CONSUMER PRODUCTS GROUP, LLC AND RELATED COMPANIES
UNAUDITED COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
PRO
HISTORICAL FORMA(a)
-------------------------------------------------------- ----------
YEAR ENDED DECEMBER 31, YEAR ENDED YEAR ENDED JANUARY 3,
----------------------------- DECEMBER 28, ----------------------
1994 1995 1996 1997 1999 1999
---- ---- ---- ---- ---- ----
(IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before income
taxes and extraordinary
charges...................... $(3,773) $(45,606) $(74,996) $(24,128) $ 55,271 $ 37,394
------- -------- -------- -------- -------- --------
Fixed charges:
Interest expense.......... 34,433 42,386 50,031 58,019 60,235 78,935
Interest portion of rent
expense(b).............. 4,538 6,884 8,094 5,052 2,488 2,594
------- -------- -------- -------- -------- --------
38,971 49,270 58,125 63,071 62,723 81,529
------- -------- -------- -------- -------- --------
Adjusted earnings (loss) before
income taxes and
extraordinary charges........ $35,198 $ 3,664 $(16,871) $ 38,943 $117,994 $118,923
------- -------- -------- -------- -------- --------
------- -------- -------- -------- -------- --------
Amount by which earnings were
insufficient to cover fixed
charges...................... $ 3,773 $ 45,606 $ 74,996 $ 24,128
------- -------- -------- --------
------- -------- -------- --------
Ratio of earnings to fixed
charges...................... 1.9x 1.5x
-------- --------
-------- --------
</TABLE>
<TABLE>
<CAPTION>
PRO
HISTORICAL FORMA(a)
------------------------------------------- ---------
NINE MONTHS ENDED
--------------------------------------------------------
OCTOBER 3,
SEPTEMBER 27, --------------------
1998 1999 1999
---- ---- ----
(IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C>
Income before income taxes and extraordinary charges..... $38,963 $35,718 $31,509
------- ------- -------
Fixed charges:
Interest expense.................................... 44,658 56,931 59,933
Interest portion of rent expense(b)................. 1,922 1,702 1,747
------- ------- -------
46,580 58,633 61,680
------- ------- -------
Adjusted earnings before income taxes and extraordinary
charges................................................ $85,543 $94,351 $93,189
------- ------- -------
------- ------- -------
Ratio of earnings to fixed charges....................... 1.8x 1.6x 1.5x
------- ------- -------
------- ------- -------
</TABLE>
- ------------
(a) The pro forma information has been determined by adjusting the results of
operations of the Company for the year ended January 3, 1999 and the nine
months ended October 3, 1999 to give effect to the offering, the new credit
facility and the related use of proceeds, including the acquisition of
Millrose. Such pro forma information is derived from the pro forma
condensed consolidated statements of operations contained elsewhere herein
and should be read in conjunction therewith and with the notes thereto.
(b) Represents one-third of rental expense deemed for this purpose to represent
the interest component of rental payments.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 4 to Registration Statements
Nos. 333-78625; 333-78625-01 through 333-78625-28 of Triarc Consumer Products
Group, LLC of our report dated July 30, 1999 appearing in the Prospectus, which
is part of such Registration Statements, and to the reference to us under the
headings 'Summary Consolidated Financial Data', 'Selected Consolidated Financial
Data' and 'Experts' in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
New York, New York
December 10, 1999
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 4 to Registration Statements
Nos. 333-78625; 333-78625-01 through 333-78625-28 of Triarc Beverage Holdings
Corp. of our report dated July 30, 1999 appearing in the Prospectus, which is
part of such Registration Statements, and to the reference to us under the
headings 'Summary Consolidated Financial Data', 'Selected Consolidated Financial
Data' and 'Experts' in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
New York, New York
December 10, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated September 11, 1997 (and to all references to our Firm) included in
or made part of this registration statement.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
December 10, 1999
<PAGE>
[LETTERHEAD OF SONNENSCHEIN NATH & ROSENTHAL]
CONSENT
We hereby consent to the use of the opinion, dated November 17, 1999, we
have provided to Triarc Consumer Products Group, LLC, Triarc Beverage Holdings
Corp. and Pacific Snapple Distributors, Inc., as an exhibit to the Registration
Statement on Form S-4 (Registration Nos. 333-78625; 333-78625-01 through
333-78625-28).
Very truly yours,
/s/ SONNENSCHEIN NATH & ROSENTHAL
SONNENSCHEIN NATH & ROSENTHAL
Dated: December 8, 1999
<PAGE>
CONSENT
We hereby consent to the use of the opinion, dated November 16, 1999, we
have provided to Triarc Consumer Products Group, LLC, Triarc Beverage Holdings
Corp. and Millrose Distributors, Inc., as an exhibit to the Registration
Statement of Form S-4 (Registration Nos. 333-78625; 333-78625-01 through
333-78625-28).
Very truly yours,
/s/ SCHENCK, PRICE, SMITH & KING, LLP
SCHENCK, PRICE, SMITH & KING, LLP
Dated: December 10, 1999
<PAGE>
[LETTERHEAD OF POWELL, GOLDSTEIN, FRAZER & MURPHY LLP]
Triarc Consumer Products Group, LLC
Triarc Beverage Holdings Corp.
Arby's Building and Construction Company
c/o Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
CONSENT
We hereby consent to the use of the opinion, dated November 18, 1999, we have
provided to Triarc Consumer Products Group, LLC, Triarc Beverage Holdings Corp.
and Arby's Building and Construction Co., as an exhibit to the Registration
Statement on Form S-4 (Registration Nos. 333-78625; 333-78625-01 through
333-78625-28).
Very truly yours,
/s/ POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
Dated: December 10, 1999
<PAGE>
CONSENT
We hereby consent to the use of the opinion, dated November 19, 1999,
we have provided to Triarc Consumer Products Group, LLC, Triarc Beverage
Holdings Corp. and RC-11, Inc., as an exhibit to the Registration Statement on
Form S-4 (Registration Nos. 333-78625; 333-78625-01 through 333-78625-28).
Very truly yours,
/s/ WATKINS, LUDLAM WINTER & STENNIS, P.A.
WATKINS, LUDLAM WINTER & STENNIS, P.A.
Dated: December 10, 1999
<PAGE>
CONSENT
We hereby consent to the use of the opinion of Hunton & Williams,
dated November 16, 1999, we have provided to Triarc Consumer Products
Group, LLC, Triarc Beverage Holdings Corp. and Retailer Concentrate Products,
Inc., as an exhibit to the Triarc Consumer Products Group LLC and Triarc
Beverage Holdings Corp. Registration Statement on Form S-4 (Registration
Nos. 333-78625; 333-78625-01 through 333-78625-28).
Very truly yours,
/s/ HUNTON & WILLIAMS
HUNTON & WILLIAMS
Dated: December 10, 1999
<PAGE>
CONSENT
We hereby consent to the use of the opinion, dated November 24, 1999,
we have provided to Triarc Consumer Products Group, LLC, Triarc Beverage
Holdings Corp. and Old San Francisco Seltzer, Inc., as an exhibit to the
Registration Statement on Form S-4 (Registration Nos. 333-78625; 333-78625-01
through 333-78625-28),
Very truly yours,
/s/ HOLLAND & HART LLP
HOLLAND & HART LLP
Dated: December 10, 1999
<PAGE>
CONSENT
We hereby consent to the use of the opinion, dated November 24, 1999, we
have provided to Triare Consumer Products Group, LLC, Triarc Beverage Holdings
Corp. and Fountain Classics, Inc., as an exhibit to the Registration Statement
on Form S-4 (Registration Nos 333-78625; 333-78625-01 through 333-78625-28).
Very truly yours,
/s/ HOLLAND & HART LLP
HOLLAND & HART LLP
Dated: December 10, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE YEAR ENDED
JANUARY 3, 1999 (RESTATED) AND THE NINE-MONTH PERIOD ENDED OCTOBER 3, 1999
EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF TRIARC CONSUMER
PRODUCTS GROUP, LLC INCLUDED IN THE ACCOMPANYING FORM S-4 OF TRIARC CONSUMER
PRODUCTS GROUP, LLC FOR THE YEAR ENDED JANUARY 3, 1999 AND THE NINE-MONTH
PERIOD ENDED OCTOBER 3, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FORM S-4.
</LEGEND>
<RESTATED>
<CIK> 0001086090
<NAME> TRIARC CONSUMER PRODUCTS GROUP, LLC
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> JAN-03-1999 JAN-02-2000
<PERIOD-START> DEC-29-1997 JAN-04-1999
<PERIOD-END> JAN-03-1999 OCT-03-1999
<EXCHANGE-RATE> 1 1
<CASH> 72,792 40,131
<SECURITIES> 0 0
<RECEIVABLES> 72,241 105,814
<ALLOWANCES> 5,551 0
<INVENTORY> 46,761 67,326
<CURRENT-ASSETS> 212,435 237,740
<PP&E> 49,922 25,118
<DEPRECIATION> 24,602 0
<TOTAL-ASSETS> 790,970 827,830
<CURRENT-LIABILITIES> 157,201 204,531
<BONDS> 560,977 734,218
87,587 0
0 0
<COMMON> 0 0
<OTHER-SE> (44,721) (173,615)
<TOTAL-LIABILITY-AND-EQUITY> 790,970 827,830
<SALES> 735,436 619,630
<TOTAL-REVENUES> 815,036 679,728
<CGS> 390,883 329,740
<TOTAL-COSTS> 390,883 329,740
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 2,387 2,112
<INTEREST-EXPENSE> 60,235 56,931
<INCOME-PRETAX> 55,271 35,718
<INCOME-TAX> (25,284) (18,204)
<INCOME-CONTINUING> 29,987 17,514
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 (11,772)
<CHANGES> 0 0
<NET-INCOME> 29,987 5,742
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE YEAR ENDED
JANUARY 3, 1999 (RESTATED) AND THE NINE-MONTH PERIOD ENDED OCTOBER 3, 1999
EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF TRIARC BEVERAGE
HOLDINGS CORP. INCLUDED IN THE ACCOMPANYING FORM S-4 OF TRIARC CONSUMER
PRODUCTS GROUP, LLC FOR THE YEAR ENDED JANUARY 3, 1999 AND THE NINE-MONTH
PERIOD ENDED OCTOBER 3, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FORM S-4.
</LEGEND>
<RESTATED>
<CIK> 0001086093
<NAME> TRIARC BEVERAGE HOLDINGS CORP.
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> JAN-03-1999 JAN-02-2000
<PERIOD-START> DEC-29-1997 JAN-04-1999
<PERIOD-END> JAN-03-1999 OCT-03-1999
<EXCHANGE-RATE> 1 1
<CASH> 39,578 15,126
<SECURITIES> 0 0
<RECEIVABLES> 40,729 74,031
<ALLOWANCES> 3,019 0
<INVENTORY> 41,563 61,254
<CURRENT-ASSETS> 134,924 165,063
<PP&E> 26,108 17,479
<DEPRECIATION> 10,110 0
<TOTAL-ASSETS> 536,570 573,368
<CURRENT-LIABILITIES> 95,674 142,947
<BONDS> 282,951 644,052
87,587 94,077
0 0
<COMMON> 850 850
<OTHER-SE> 30,456 (372,679)
<TOTAL-LIABILITY-AND-EQUITY> 536,570 573,368
<SALES> 611,546 525,702
<TOTAL-REVENUES> 611,546 525,702
<CGS> 362,012 308,134
<TOTAL-COSTS> 362,012 308,134
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 1,029 637
<INTEREST-EXPENSE> 28,587 25,827
<INCOME-PRETAX> 33,785 19,510
<INCOME-TAX> (14,627) (9,365)
<INCOME-CONTINUING> 19,158 10,145
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 (4,876)
<CHANGES> 0 0
<NET-INCOME> 19,158 5,269
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
