<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 3, 1999
REGISTRATION NOS. 333-78625;
333-78625-01 THROUGH
333-78625-28
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
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
Cable Car Beverage Corporation............... 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 AUGUST 3, 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 , 1999, 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 , 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........................ 29
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 32
Business.................................................... 55
Management.................................................. 70
Certain Relationships and Related Transactions.............. 84
Principal Shareholders...................................... 87
Description of Indebtedness................................. 89
The Exchange Offer.......................................... 92
Description of the Exchange Notes........................... 102
Federal Income Tax Considerations........................... 143
Plan of Distribution........................................ 147
Legal Matters............................................... 147
Experts..................................................... 148
Where You Can Find More Information......................... 148
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 or our subsidiaries 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
We are offering to exchange $300,000,000 aggregate principal amount of our
exchange notes for $300,000,000 aggregate principal amount of our initial notes.
To exchange your initial notes, you must properly tender them and we must accept
your tender. We 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
, 1999, unless we 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, we 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. We will return any initial note that we do not accept for
exchange to you without expense as promptly as practicable after the expiration
date. We 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 acquiring Snapple in May 1997,
we have 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 acquiring Mistic in August 1995, we have 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 Mistic Italian
Ice Smoothies and Sun Valley Squeeze.
STEWART'S
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 first quarter of 1999, Stewart's has experienced 26 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. We also sell our products internationally. Our 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 our 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 April 4, 1999, the Arby's restaurant system consisted of 3,147
franchised restaurants and Arby's had commitments from franchisees to open up to
1,011 Arby's restaurants over the next 12 years. In addition, in July 1999,
Arby's signed a development agreement with Sybra Restaurants (UK) Ltd., under
which Sybra is to open 102 restaurants in southern England over the next 10
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 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 our strategic relationship with Cott by assisting in the
development of new products and maintenance of quality control
Continue the expansion of our international export business
Focus marketing resources in markets where our market share is strongest
6
<PAGE>
FRANCHISE RESTAURANT SYSTEM (ARBY'S):
Increase our 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 we established on behalf of
our 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
OUR HISTORY
We are a wholly owned subsidiary of Triarc Parent that was organized on
January 15, 1999. In conjunction with the offering of the initial notes and our
new credit facility, on February 23, 1999, Triarc Parent contributed to us all
of the outstanding capital stock of Triarc Beverage Holdings Corp., RC/Arby's
Corporation and Cable Car Beverage Corporation 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, LLC and its domestic subsidiaries:
[ORGANIZATIONAL FLOW CHART]
7
<PAGE>
SUMMARY OF TERMS OF THE EXCHANGE NOTES
ISSUERS
Triarc Consumer Products Group, LLC and Triarc Beverage Holdings Corp.
NOTES OFFERED
$300,000,000 aggregate principal amount of our 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
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 August 15,
1999.
SINKING FUND
None.
OPTIONAL REDEMPTION
We 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, we 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:
we use the proceeds of any public offerings of common stock by Triarc
Parent to the extent the proceeds are contributed to us, Triarc Consumer
Products Group, or 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 us 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, we cannot assure you that we will have
sufficient funds to repurchase your exchange notes when required upon a change
8
<PAGE>
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 April 4, 1999, assuming this offering and our credit facility had been
completed at that time, the exchange notes:
would have ranked junior to $485.3 million of consolidated senior
indebtedness of the issuers and the subsidiaries guaranteeing the notes,
would have ranked junior to $485.3 million of consolidated secured
indebtedness of the issuers and the subsidiaries guaranteeing the notes,
and
would have ranked junior to $3.6 million of liabilities of the issuers'
non-guarantor subsidiaries.
GUARANTEES
The exchange notes will be guaranteed on a senior subordinated basis by all
of our existing domestic subsidiaries, other than Triarc Beverage Holdings Corp.
The guarantees will rank junior to all senior indebtedness and secured
indebtedness of the guarantors.
RESTRICTIVE COVENANTS
The terms of the exchange notes restrict our ability and the ability of
some of our 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.
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
9
<PAGE>
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 our 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 our 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
three-month periods ended March 29, 1998 and April 4, 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) THREE MONTHS ENDED
----------------------------------------- --------------- ---------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED APRIL 4,
DECEMBER 31, DECEMBER 28, JANUARY 3, JANUARY 3, MARCH 29, --------------------------
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 $172,053 $178,191 $179,865
Operating profit
(loss)........... (25,435)(2) 31,872(3) 105,192 106,047 14,865 15,910(5) 15,820(6)
Income (loss)
before
extraordinary
charges.......... (51,368)(2) (18,986)(3) 29,987(4) 18,057(4) 477 1,237(5) (1,499)(6)
Extraordinary
charges.......... -- (2,954)(3) -- -- (11,772)(5)
Net income
(loss)........... (51,368)(2) (21,940)(3) 29,987(4) 477 (10,535)(5)
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
HISTORICAL TRANSACTIONS(1)
----------------------------------------- ---------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 28, JANUARY 3, JANUARY 3,
1996 1997 1999 1999
---- ---- ---- ----
(IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C> <C>
OTHER OPERATING DATA:
EBITDA
Premium beverages......... $ 13,381 $ 7,561 $ 77,825 $ 79,882
Soft drink concentrates... 18,418 18,504 17,006 17,006
Restaurants............... 31,819 31,200 43,180 43,180
General corporate......... (189) (149) (11) (11)
-------- --------- -------- --------
Consolidated............ $ 63,429 $ 57,116 $138,000 $140,057
-------- --------- -------- --------
-------- --------- -------- --------
Adjusted EBITDA
Premium beverages......... $ 14,831 $ 40,430 $ 77,825 $ 79,882
Soft drink concentrates... 22,368 20,916 17,006 17,006
Restaurants............... 34,219 36,797 43,180 43,180
General corporate......... (189) (149) (11) (11)
-------- --------- -------- --------
Consolidated............ $ 71,229 $ 97,994 $138,000 $140,057
-------- --------- -------- --------
-------- --------- -------- --------
Reconciliation of EBITDA to
Adjusted EBITDA
EBITDA.................... $ 63,429 $ 57,116 $138,000 $140,057
Add back significant
charges:
Facilities relocation
and corporate
restructuring/
reorganization........ 7,800 7,063 -- --
Acquisition related
costs................. -- 33,815 -- --
-------- --------- -------- --------
Adjusted EBITDA....... $ 71,229 $ 97,994 $138,000 $140,057
-------- --------- -------- --------
-------- --------- -------- --------
Ratio of Adjusted EBITDA to
interest expense............ 1.8x
Net cash provided by
(used in):
Operating activities...... $ 11,325 $ 40,150 $ 59,061
Investing activities...... (18,028) (310,339) 15,814
Financing activities...... 4,388 296,861 (36,325)
Ratio of earnings to fixed
charges..................... 1.9x 1.5x
Deficiency of earnings to
cover fixed charges......... $ 74,996 $ 24,128
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets.............. $790,970
Long-term debt............ 560,977
Redeemable preferred
stock................... 87,587
Member's deficit.......... (44,721)
<CAPTION>
AS ADJUSTED
FOR THE
HISTORICAL TRANSACTIONS(1)
--------------------- ---------------
THREE MONTHS ENDED
---------------------------------------
APRIL 4,
MARCH 29, ---------------------------
1998 1999 1999
---- ---- ----
(IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C>
OTHER OPERATING DATA:
EBITDA
Premium beverages......... $ 8,554 $ 8,906 $ 9,032
Soft drink concentrates... 5,141 5,215 5,215
Restaurants............... 9,715 9,662 9,662
General corporate......... (27) (21) (21)
------- --------- --------
Consolidated............ $23,383 $ 23,762 $ 23,888
------- --------- --------
------- --------- --------
Adjusted EBITDA
Premium beverages......... $ 8,554 $ 11,156 $ 11,282
Soft drink concentrates... 5,141 5,215 5,215
Restaurants............... 9,715 9,662 9,662
General corporate......... (27) (21) (21)
------- --------- --------
Consolidated............ $23,383 $ 26,012 $ 26,138
------- --------- --------
------- --------- --------
Reconciliation of EBITDA to
Adjusted EBITDA
EBITDA.................... $23,383 $ 23,762 $ 23,888
Add back significant
charges:
Facilities relocation
and corporate
restructuring/
reorganization........ -- 2,250 2,250
Acquisition related
costs................. -- -- --
------- --------- --------
Adjusted EBITDA....... $23,383 $ 26,012 $ 26,138
------- --------- --------
------- --------- --------
Ratio of Adjusted EBITDA to
interest expense............ 1.3x
Net cash provided by
(used in):
Operating activities...... $(4,011) $ (29,608)
Investing activities...... (5,830) (18,775)
Financing activities...... (2,684) (18,037)
Ratio of earnings to fixed
charges..................... 1.1x 1.1x
Deficiency of earnings to
cover fixed charges......... $ 1,758
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets.............. $ 790,407
Long-term debt............ 754,153
Redeemable preferred
stock................... --
Member's deficit.......... (181,909)
</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 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
a reduction in the carrying value of long-lived assets to be disposed and
$7,800,000 of facilities relocation and corporate restructuring; 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.
(3) Reflects certain significant charges recorded during 1997 as follows:
$40,878,000 charged to operating profit representing a $33,815,000 charge
for acquisition related costs 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
(footnotes continued on next page)
12
<PAGE>
(footnotes continued from previous page)
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 certain significant charges recorded during the three months ended
April 4, 1999 as follows: $2,250,000 charged to operating profit
representing capital structure reorganization related charges; $1,373,000
charged to income before extraordinary charges representing the
aforementioned $2,250,000 less $877,000 of income tax benefit; and
$13,145,000 charged to net loss representing the aforementioned $1,373,000
charged to income before extraordinary charges and an $11,772,000
extraordinary charge from the early extinguishment of debt.
(6) Reflects certain significant charges recorded during the three months ended
April 4, 1999 as follows: $2,250,000 charged to operating profit
representing capital structure reorganization related charges; and
$1,373,000 charged to income before extraordinary charges representing the
aforementioned $2,250,000 less $877,000 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 deficiency of earnings to fixed charges for the quarter ended April 4,
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 APRIL 4,
1999
----
<S> <C>
Total indebtedness.......................................... $785.3
Member's deficit............................................ ($181.9)
</TABLE>
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED QUARTER ENDED
JANUARY 3, APRIL 4,
1999 1999
---- ----
<S> <C> <C>
Ratio of earnings to fixed charges............... 1.5x --
Deficiency of earnings to cover fixed charges.... -- $1.8
</TABLE>
------------------------
In addition to the above indebtedness, we may borrow up to $60.0 million of
revolving credit loans under our 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 OUR CREDIT FACILITY MAY LIMIT OUR ABILITY TO EXECUTE OUR
BUSINESS STRATEGY AND MAY INCREASE THE RISK OF DEFAULT UNDER OUR DEBT
OBLIGATIONS
Our 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, our credit facility or the indenture, we
would be in default under the terms of our credit facility. This would permit
the lenders under the credit facility to accelerate the maturity of the balance
owing under our credit facility. If these circumstances were to occur, the
subordination provisions of the exchange notes would require the lenders under
our 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 our
credit facility. At April 4, 1999, assuming the offering of the initial notes
and our credit facility had been completed at that time, the issuers and the
guarantors would have had approximately $485.3 million of consolidated senior
indebtedness outstanding, and approximately $59.9 million would have been
available for borrowing under our credit facility. The terms of our 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
and the assets of our subsidiaries 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, we cannot make any cash payments to you if we have failed to
make payments to holders of senior indebtedness. In addition, with some
exceptions, we cannot make any payments to you for a period of up to 179 days if
we have otherwise defaulted on our senior indebtedness covenants.
Secured Debt
The exchange notes and guarantees will effectively rank junior to all
secured debt of the issuers and the guarantors. Our credit facility is secured
by substantially all of our assets, and the terms of our 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 our subsidiaries that have not co-issued or
guaranteed the notes, including trade payables and guarantees. At April 4, 1999,
those subsidiaries had approximately $3.6 million of outstanding liabilities.
RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS FROM OUR SUBSIDIARIES COULD
AFFECT OUR ABILITY TO REPAY YOU
Because we are a holding company with no direct operations and no
significant assets other than the stock of our subsidiaries, we will be
dependent on the cash flows of our subsidiaries to meet our debt obligations,
including the payment of principal and interest on the exchange notes.
Restrictions on dividends and other distributions from our subsidiaries could
limit amounts payable to us for payment to you. You should be aware of the
following:
Our credit facility prohibits the payment of dividends to us by our
subsidiaries except to pay interest on the initial notes and the exchange
notes,
Additional indebtedness incurred by our subsidiaries may restrict the
ability of our subsidiaries to pay dividends or make other similar
payments to us and,
Under applicable state law, our 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 OUR PARENT WHICH
WOULD REDUCE OUR INCOME GENERATING ASSETS
Under the terms of the indenture, we are permitted to pay a dividend of the
capital stock of our subsidiaries that conduct our 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 us 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 we currently own all the outstanding common stock of our
subsidiaries, we may not wholly own all of our subsidiaries in the future. If
this were to occur, we 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, we would only be entitled to an amount that is
proportionate to our ownership interest. Although we do not believe that this
would have adverse effects on the subsidiary
16
<PAGE>
guarantees, this could result in us not having enough cash flow or assets to
meet our debt obligations, including payments on the exchange notes. For
example, our subsidiary 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 we 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 our 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 our control
Numerous factors beyond our 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
April 4, 1999 franchisees have signed commitments to open approximately 1,011
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 1,011 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, we 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
We are a wholly owned subsidiary of Triarc Parent. As of July 4, 1999,
Messrs. Peltz and May and their affiliates beneficially owned approximately
37.7% of Triarc Parent's voting common stock. Accordingly, Messrs. Peltz and May
are able to control the boards of directors of Triarc Parent, us and our
subsidiaries and may be able to determine the outcome of those corporate
18
<PAGE>
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, we 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, we may be
unable to purchase the exchange notes because of the following covenants and
cross-default provisions in other debt agreements:
our credit facility generally prohibits us 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 ours may contain similar provisions,
the exercise by the holders of exchange notes of their right to require us
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 us,
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, we 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, we 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 our 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
April 4, 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........................... $ 11.1
------
Long-term debt:
Term loans under new credit facility................... 468.4 (a)
10 1/4% senior subordinated notes due 2009............. 300.0 (b)
Other.................................................. 5.7
------
Total long-term debt.............................. 774.1
------
Member's deficit............................................ (181.9)
------
Total capitalization.............................. $603.3
------
------
</TABLE>
- ------------
(a) Does not include current portion of $6.6 million.
(b) Includes $20.0 million initially issued to our affiliates. We have been
advised by these affiliates that they no longer hold any of the 10 1/4%
notes.
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 three months ended April
4, 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-46 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-48.
The adjustments to the condensed consolidated statements of operations
assume the offering of the initial 10 1/4% notes, 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 $17,376,000, including estimated expenses of $126,000,
(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. 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
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
25
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 4, 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.............. $159,888 $-- $159,888 $ 4,597 (c) $161,562
(2,923)(d)
Royalties, franchise
fees and other
revenues............. 18,303 -- 18,303 -- 18,303
-------- ------- -------- ------- --------
178,191 -- 178,191 1,674 179,865
-------- ------- -------- ------- --------
Cost and expenses:
Cost of sales,
excluding
depreciation and
amortization......... 83,182 -- 83,182 3,619 (c) 83,816
(2,985)(d)
Advertising, selling
and distribution..... 46,714 -- 46,714 832 (c) 47,546
General and
administrative....... 22,283 -- 22,283 239 (c) 22,365
(157)(e)
Depreciation and
amortization,
excluding
amortization of
deferred financing
costs................ 7,852 -- 7,852 66 (c) 8,068
150 (f)
Capital structure
reorganization
related.............. 2,250 -- 2,250 -- 2,250
-------- ------- -------- ------- --------
162,281 -- 162,281 1,764 164,045
-------- ------- -------- ------- --------
Operating profit....... 15,910 -- 15,910 (90) 15,820
Interest expense............ (16,701) (3,002)(a) (19,703) -- (19,703)
Investment income 2,146 -- 2,146 -- 2,146
Other income, net........... 1,095 (1,116)(h) (21) -- (21)
-------- ------- -------- ------- --------
Income (loss)
before income
taxes and
extraordinary
charges......... 2,450 (4,118) (1,668) (90) (1,758)
(Provision for) benefit from
income taxes.............. (1,213) 1,094 (b) 283 (24)(g) 259
402 (i)
-------- ------- -------- ------- --------
Income (loss)
before
extraordinary
charges......... $ 1,237 $(2,622) $ (1,385) $ (114) $ (1,499)
-------- ------- -------- ------- --------
-------- ------- -------- ------- --------
</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 THREE MONTHS
YEAR ENDED ENDED
JANUARY 3, APRIL 4,
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 8.7% on the assumed
term loan borrowings initially at $475,000 under
the $535,000 new credit facility................ (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(1).... (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....................................... 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 $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.
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 and $87,000 for the year ended January 3,
1999 and the three months ended April 4, 1999, respectively.
(b) Represents adjustments to 'Provision for income taxes' (in thousands):
<TABLE>
<CAPTION>
FOR THE
FOR THE THREE MONTHS
YEAR ENDED ENDED
JANUARY 3, APRIL 4,
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
27
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS -- CONTINUED
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 THREE MONTHS
YEAR ENDED ENDED
JANUARY 3, APRIL 4,
1999 1999
---- ----
<S> <C> <C>
To record amortization of 'Unamortized costs in
excess of net assets of acquired companies'
('Goodwill') of $13,464 resulting from the
acquisition of Millrose over an estimated useful
life of 15 years(1)............................. $898 $150
To reverse reported amortization of intangibles of
Millrose before its acquisition................. (8) --
---- ----
$890 $150
---- ----
---- ----
</TABLE>
- ------------
(1) The estimated Goodwill of $13,464 represents the excess of the purchase
price for Millrose over the net assets we acquired, calculated as
follows:
<TABLE>
<CAPTION>
Purchase price, including estimated expenses. $17,376
<S> <C> <C>
Less net assets acquired:
Receivables...................................... 2,222
Inventories...................................... 1,548
Properties....................................... 1,000
Accounts payable................................. (858) 3,912
----- -------
$13,464
-------
-------
</TABLE>
The purchase price allocation reflected above is preliminary and is subject
to finalization.
(g) Represents adjustments to 'Provision for income taxes' (in thousands):
<TABLE>
<CAPTION>
FOR THE
FOR THE THREE
YEAR ENDED MONTHS ENDED
JANUARY 3, APRIL 4,
1999 1999
---- ----
<S> <C> <C>
To reflect an income tax provision on Millrose's pretax
income at Millrose's incremental Federal and state
incremental income tax rate of 40.9% and reverse an
existing income tax benefit of $69. This provision is
not reflected in Millrose's reported results of
operations due to its Subchapter S status effective
January 1, 1998....................................... $(445) $ 1
To reflect the income tax provision on the reduction in
general and administrative expenses in pro forma
adjustment (c) and an income tax benefit on the net
decrease in pretax income from the intercompany
eliminations in pro forma adjustment (b), both at
Millrose's incremental Federal and state income tax
rate of 40.9%......................................... (277) (25)
----- ----
$(722) $(24)
----- ----
----- ----
</TABLE>
(h) To reverse interest income on the bond redemption escrow account.
(i) To reflect the income tax benefit related to the interest income of the
bond redemption escrow account.
28
<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 three-month periods ended
March 29, 1998 and April 4, 1999 and the balance sheet data as of April 4, 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 three-month period ended April 4, 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)
29
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
AS ADJUSTED
FOR THE
HISTORICAL TRANSACTIONS(1)
-------------------- ---------------
THREE MONTHS ENDED
----------------------------------------
APRIL 4,
MARCH 29, ----------------------------
1998 1999 1999
---- ---- ----
(IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................................ $172,053 $178,191 $179,865
Operating profit.................................... 14,865 15,910 (8) 15,820(9)
Income (loss) before extraordinary charges.......... 477 1,237 (8) (1,499)(9)
Extraordinary charges............................... -- (11,772)(8)
Net income (loss)................................... 477 (10,535)(8)
Cash dividends...................................... -- (204,746)
Ratio of earnings to fixed charges.................. 1.1x 1.1x
Deficiency of earnings to cover fixed charges....... 1,758
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets........................................ $790,407
Long-term debt and note payable to Triarc
Companies, Inc.................................... 754,153
Redeemable preferred stock.......................... --
Member's deficit.................................... (181,909)
</TABLE>
- ------------
(1) The selected adjusted operating data for the year ended January 3, 1999 and
the three-month period ended April 4, 1999 reflect adjustments for 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.
(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
a reduction in the carrying value of long-lived assets to be disposed 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 a $33,815,000 charge
for acquisition related costs 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
(footnotes continued on next page)
30
<PAGE>
(footnotes continued from previous page)
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.
(6) Reflects a decrease in member's deficit principally resulting from (1) a
$29,390,000 capital contribution to us 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 us.
(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 certain significant charges recorded during the three months ended
April 4, 1999 as follows: $2,250,000 charged to operating profit
representing capital structure reorganization related charges; $1,373,000
charged to income before extraordinary charges representing the
aforementioned $2,250,000 less $877,000 of income tax benefit; and
$13,145,000 charged to net loss representing the aforementioned $1,373,000
charged to income before extraordinary charges and an $11,772,000
extraordinary charge from the early extinguishment of debt.
(9) Reflects certain significant charges recorded during the three months ended
April 4, 1999 as follows: $2,250,000 charged to operating profit
representing capital structure reorganization related charges; and
$1,373,000 charged to income before extraordinary charges representing the
aforementioned $2,250,000 less $877,000 of income tax benefit.
31
<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
32
<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 25, 1999, Triarc Consumer
Products Group acquired by way of capital contribution RC/Arby's, Triarc
Beverage Holdings and Cable Car and their subsidiaries, which previously had
been held directly or indirectly by Triarc Parent.
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 1998 first quarter commenced on December 29, 1997 and
ended on March 29, 1998 and our 1999 first quarter commenced on January 4, 1999
and ended on April 4, 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 'three months ended March 29, 1998,' or '1998 first quarter,' we mean the
period from December 29, 1997 to March 29, 1998; and when we refer to the 'three
months ended April 4, 1999' or '1999 first quarter,' we mean the period from
January 4, 1999 to April 4, 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 quarter are not included in the table below.
33
<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 11 to our accompanying condensed consolidated financial
statements for the three months ended April 4, 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.
34
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 4, 1999 COMPARED WITH THREE MONTHS ENDED MARCH 29, 1998
Revenues
Our revenues increased $6.1 million to $178.2 million in the three months
ended April 4, 1999 compared with the three months ended March 29, 1998. A
discussion of the changes in revenues by segment is as follows:
Premium Beverages -- Our premium beverage revenues increased $7.4
million, or 6.1%, in the three months ended April 4, 1999 compared with the
three months ended March 29, 1998. The increase was principally due to net
higher volume reflecting 1999 sales of WhipperSnapple'TM', which was not
introduced until April 1998, as well as increases in sales of diet teas and
other diet beverages, juice drinks and non-diet teas.
Soft Drink Concentrates -- Our soft drink concentrate revenues
decreased $1.3 million, or 3.9%, in the three months ended April 4, 1999
compared with the three months ended March 29, 1998. This decrease is
attributable to lower Royal Crown sales of (1) finished goods of $0.8
million, or 100%, which the soft drink concentrate segment no longer sells,
and (2) concentrate of $0.5 million, or 1.7%. The decrease in Royal Crown
sales of concentrate reflects a $2.6 million decline in branded sales,
primarily due to lower domestic volume reflecting continued competitive
pricing pressures experienced by our bottlers. This decrease was partially
offset by a $2.1 million volume increase in private label sales reflecting
a general business recovery being experienced by our private label customer
as well as an increase in its inventory levels.
Restaurants -- Revenues remained unchanged at $18.1 million in the
three months ended April 4, 1999 compared to the first quarter 1998 as
higher royalty revenue was offset by lower franchise fee revenue. The
increase in royalty revenue resulted from an average net increase of 49, or
1.6%, franchised restaurants and a 1.2% increase in same-store sales of
franchised restaurants. The decrease in franchise fee revenue, despite the
increase in franchised restaurants, was due to a decrease in dual-branded
T.J. Cinnamons openings and 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) depreciation and amortization
related to sales. Our gross profit increased $2.3 million to $94.6 million in
the three months ended April 4, 1999 compared with the three months ended
March 29, 1998. This increase was due to the effect of higher sales volumes
discussed above, partially offset by a slight decrease in our aggregate gross
margins, which we compute as gross profit divided by total revenues, to 53.1%
from 53.6%. A discussion of the changes in gross margins by segment is as
follows:
Premium Beverages -- Our gross margins decreased slightly to 41.0%
during the 1999 first quarter from 41.2% during the 1998 first quarter. The
decrease in gross margins was principally due (1) to the effects of changes
in product mix to lower-margin products in the 1999 quarter and (2) higher
provisions for obsolete inventory. These changes were both substantially
offset by (1) the effects of lower freight costs and (2) the reduced costs
of certain raw materials, principally glass bottles and flavors, in the
1999 quarter.
Soft Drink Concentrates -- Our gross margins increased to 75.9% during
the 1999 first quarter from 74.9% during the 1998 first quarter. This
increase was due to (1) lower costs of the raw material aspartame and (2)
the effects of changes in product mix. The positive effect of our no longer
selling the lowest margin finished goods in the 1999 quarter was partially
offset by a shift in sales to private label concentrate in the 1999 quarter
which have a somewhat lower margin than branded concentrate.
35
<PAGE>
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
$46.7 million in the 1999 quarter. 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.
General and Administrative Expenses
General and administrative expenses increased $1.7 million to $22.3 million
in the 1999 quarter. This increase principally reflects generally overall modest
cost increases in all of our business segments, the most significant of which
are higher incentive compensation expenses.
Depreciation and Amortization, Excluding Amortization of Deferred Financing
Costs
Depreciation and amortization, excluding amortization of deferred financing
costs, decreased $0.7 million to $7.9 million in the 1999 quarter 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 subsequent to
the 1998 first quarter 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.
Capital Structure Reorganization Related Charge
The capital structure reorganization related charge of $2.3 million in the
1999 first quarter 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 Cable Car
Beverage Corporation to Triarc Beverage Holdings. We expect to recognize
additional pre-tax charges relating to this adjustment of $1.9 million through
fiscal 2001 as the affected stock options continue to vest of which $1.2 million
will be recorded during the remainder of fiscal 1999. There was no similar
charge in the 1998 first quarter.
Interest Expense
Interest expense increased $2.0 million to $16.7 million in the 1999 first
quarter reflecting higher average levels of debt. These higher average levels of
debt were due to increases from:
(1) the excess of $475.0 million of debt borrowed under a new senior
bank credit facility on February 25, 1999 over the $284.3 million of
refinanced borrowings under the former credit facility of Triarc Beverage
Holdings that were refinanced and
(2) the effect of the 33-day escrow period, prior to the March 30,
1999 redemption of RC/Arby's Corporation's $275.0 million of 9 3/4% senior
secured notes due 2000, during which both the RC/Arby's 9 3/4% notes and
the initial 10 1/4% notes issued on February 25, 1999 were outstanding.
The 9 3/4% notes were redeemed using the proceeds from the issuance of the
10 1/4% notes.
Investment Income
Investment income increased $1.8 million to $2.1 million in the 1999
quarter. This increase was entirely due to an increase in interest income on
cash equivalents reflecting the investment of:
(1) excess proceeds from the first quarter 1999 borrowings under the
new senior bank credit facility and
36
<PAGE>
(2) the escrowed funds for 33 days pending the redemption of the
RC/Arby's 9 3/4% notes.
Other Income, Net
Other income, net increased $0.7 million to $1.1 million in the 1999
quarter. This increase was entirely due to the effect of the $0.7 million
non-recurring equity in the loss of Select Beverages, Inc. for the 1998 first
quarter. 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 50% in the
1999 quarter and 47% in the 1998 first quarter. The effective rate is higher in
the 1999 first quarter principally due to: (1) higher state taxes reflecting
higher losses in certain states with no tax benefit since we file state tax
returns on an individual company basis and (2) the higher impact on the 1999
effective income tax rate of the non-deductible amortization of costs in excess
of net assets of acquired companies, known as Goodwill, due to the lower
projected pre-tax income as a result of higher projected interest expense
following the refinancings described above.
Extraordinary Charges
The first quarter 1999 extraordinary charges 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. Such
extraordinary charges 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 Cable Car.
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 Cable Car 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 Cable Car 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
Cable Car 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 Cable Car 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:
37
<PAGE>
Premium Beverages -- We have adjusted our 1998 results by including
the results of Snapple and Cable Car 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 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 Cable Car 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 Cable Car 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 (Cable Car) 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) $3.9 million of increased provisions for obsolete inventory. The
increased
38
<PAGE>
provisions for obsolete inventory principally resulted from dated
inventories that were not timely used due to difficulties experienced as we
transitioned to our new manufacturing systems and our overstocking certain
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 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 Cable Car 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 Cable Car 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 concentrate 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 Cable Car 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 Cable Car for all of 1998 and depreciation expense
on $4.6 million of vending machines purchased by Royal Crown in January 1998.
39
<PAGE>
Acquisition Related Costs
The nonrecurring acquisition related costs of $33.8 million in 1997 were
associated with the Snapple acquisition and, to a much lesser extent, the
Stewart's acquisition. Those costs consisted of:
(1) a $12.6 million write-down of glass front vending machines based
on our change in estimate of their value based on our plans for their
future use,
(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,
(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,
(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,
(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,
(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,
(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.
Facilities Relocation and Corporate Restructuring Charge
The nonrecurring facilities relocation and corporate restructuring charge
of $7.1 million in 1997 principally consisted of (1) 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 and (2) to a lesser extent, 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.
By disposing of the company-owned restaurants and focusing on solely being
a franchisor of restaurants, the Company anticipated that it would realize
operating profit improvements. The Company 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.
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
40
<PAGE>
(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, Inc. 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.
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.
41
<PAGE>
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 Cable Car.
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 Cable Car 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 Cable Car, 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 Cable Car 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 Cable Car. 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.
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.
42
<PAGE>
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 Cable Car ($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.
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
43
<PAGE>
(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.
Acquisition Related Costs
Acquisition related costs 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 on planned subleases, principally for the
write-off of nonrecoverable unamortized leasehold improvements and
furniture and fixtures, 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 associated with the relocation of the
Royal Crown headquarters,
(3) terminating Mistic distribution agreements and
(4) the shutdown of the soft drink concentrate segment's Ohio
production facility and other asset disposals.
By disposing of the company-owned restaurants and focusing solely on being
a franchisor of restaurants, the Company anticipated that it would realize
operating profit improvements. The Company 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, the Company anticipated it would realize cost savings
from such consolidation.
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
44
<PAGE>
(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
(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 as cash, of $59.1 million during 1998 and used cash of $29.6
million during the three months ended April 4, 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 used in operating activities during the three months ended
April 4, 1999 principally reflects cash used by changes in operating assets and
liabilities of $43.8 million and a net loss of $10.5 million. These uses were
partially offset by:
(1) net non-cash charges of $23.0 million, principally depreciation
and amortization of $9.1 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
(2) other of $1.7 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 $29.7 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,
45
<PAGE>
(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
(2) $3.4 million of reduced inventory levels of premium beverages
principally due to a provision for obsolete inventories.
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 $43.8
million during the three months ended April 4, 1999 principally reflects
increases in receivables of $24.0 million, inventories of $13.5 million and
prepaid expenses and other current assets of $3.3 million, and a decrease in due
to affiliates of $4.1 million.
The increase in receivables principally results from $21.8 million of
seasonally higher sales in February and March 1999 compared with November and
December 1998.
The increase in inventories was due to seasonal buildups in anticipation of
the peak selling season in our beverage businesses.
The related increase in accounts payable for the increased inventory
purchases was substantially offset by a decrease in accrued expenses principally
relating to:
(1) an $8.8 million reduction in accrued interest due to the payment
of accrued interest on refinanced debt and
(2) a $5.1 million reduction in accrued compensation and related
benefits principally due to the payment of incentive compensation
previously accrued.
The increase in prepaid expenses and other current assets results from
recording a tax benefit on first quarter 1999 pre-tax losses, principally the
extraordinary charges, which we were able to recognize because we are projecting
income for the full year.
The decrease in due to affiliates reflects the repayment of amounts due to
Triarc Parent in connection with the refinancing transactions described below.
Despite the $29.6 million of cash used in operating activities in the 1999 first
quarter, we expect positive cash flows from operations during the remainder of
1999 due to:
(1) the expectation of profitable operations for the remainder of the
year due to the seasonality of the beverage business with the summer months
as the peak season and
(2) the significant seasonal or non-recurring factors impacting the
cash used in the 1999 first quarter for operating assets and liabilities
which should not recur during the remainder of 1999 and should
substantially reverse.
Working Capital
Working capital, which equals current assets less current liabilities, was
$32.9 million at April 4, 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 $22.3 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.
46
<PAGE>
1999 Refinancing Transactions
Our capitalization as of April 4, 1999 was $603.4 million, consisting of
$785.3 million of long-term debt, including current portion, less $181.9 million
of member's deficit.
On February 25, 1999 we issued $300.0 million principal amount of the
initial 10 1/4% notes and concurrently entered into a new $535.0 million senior
bank credit facility. An aggregate $20 million principal amount of the initial
10 1/4% notes were issued to our affiliates. We have been advised by these
affiliates that, subsequent to April 4, 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 term loans on February 25, 1999, and a $60.0 million
revolving credit facility which provides for revolving credit loans by Snapple,
Mistic, Cable Car, 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. At April 4, 1999 there was $59.9 million of borrowing availability
under the revolving credit facility. There were no borrowings of revolving loans
as of February 25, 1999 or April 4, 1999.
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 beverage credit facility 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 notes and pay $4.4 million of related accrued
interest and $7.7 million of redemption premium,
(3) acquire Millrose Distributors and the assets of Mid-State
Beverage, two New Jersey distributors of our premium beverages, for $17.4
million, including expenses,
(4) provide for 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.
These one-time distributions consisted of $91.4 million paid on February 25,
1999 and, following the redemption of the RC/Arby's 9 3/4% senior notes, $124.1
million paid on March 30, 1999.
The initial 10 1/4% notes mature in 2009 and do not require any
amortization of principal prior to 2009. We have agreed to use our best efforts
to have this registration statement declared effective by the Securities and
Exchange Commission by August 24, 1999. If it is not, the annual interest rate
on the initial 10 1/4% notes will increase by 1/2% to 10 3/4% until the time
this registration statement is declared effective.
Scheduled maturities of the new term loans under the new credit facility
are $4.9 million during the remainder of 1999, representing three quarterly
installments commencing June 1999, increasing annually afterwards through 2006
with a final payment in 2007. Any revolving loans will be due in full in 2005.
We are also required, with some exceptions, to make mandatory prepayments in an
amount, if any, initially equal to 75% of excess cash flow as defined in the new
credit agreement.
Other Debt Agreements
We have a note payable to a beverage co-packer in an outstanding principal
amount of $5.9 million as of April 4, 1999, of which $2.5 million is due during
the remainder of 1999.
The scheduled maturities of our long-term debt during the remainder of 1999
are $7.9 million, including $4.9 million under the new term loans and $2.5
million under the note payable to a beverage co-packer discussed above.
47
<PAGE>
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, Cable Car and RC/Arby's and all of their domestic
subsidiaries. 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 all of the domestic subsidiaries of Snapple, Mistic,
Cable Car, RC/Arby's and Royal Crown. As collateral for the guarantees under the
new credit facility, all of the stock of Snapple, Mistic, Cable Car, RC/Arby's
and Royal Crown and all of their domestic subsidiaries and 65% of the stock of
their directly-owned foreign subsidiaries is pledged.
Arby's remains responsible for $117.0 million of operating and capitalized
lease payments, approximately $95.7 million outstanding as of April 4, 1999
assuming the purchaser of the Arby's restaurants has made all scheduled
repayments through such date, assumed by the purchaser in connection with the
Arby's restaurants sale. Further, Triarc Parent has guaranteed $54.7 million of
mortgage notes and equipment notes payable to FFCA Mortgage Corporation, $50.5
million outstanding as of April 4, 1999 assuming the purchaser of the Arby's
restaurants has made all scheduled repayments through such date, assumed by the
purchaser in connection with the restaurants sale.
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 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. Under the most
restrictive of these covenants, we cannot pay any dividends to Triarc
Parent other than:
(a) the one-time distributions, including dividends, paid to Triarc
Parent in connection with the 1999 refinancing transactions and
(b) defined amounts in the event of completing a securitization of
some of the assets of Arby's.
Capital Expenditures
Consolidated 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 $1.5 million during the three months ended April 4, 1999. We expect that
capital expenditures will approximate $6.5 million during the remainder of 1999
for which there were $0.9 million of outstanding commitments as of April 4,
1999. Our planned capital expenditures are principally for production equipment
and computer hardware in our premium beverage segment.
Acquisitions
In February 1999 we acquired Millrose and Mid-State for $17.4 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
48
<PAGE>
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.
Sale of Investment and Cash Dividends in 1998
On May 1, 1998, we sold our 20% non-current investment in Select Beverages
for cash of $28.3 million, subject to adjustment . As a result of such sale and
as permitted under an August 15, 1998 amendment to the former beverage credit
facility, a one-time dividend of $21.3 million was paid to Triarc Parent by
Triarc Beverage Holdings in 1998 from the proceeds of the sale of Select
Beverages. Additionally, a dividend of $2.3 million was paid to Triarc Parent by
Cable Car in 1998 before Cable Car became a borrower under the former beverage
credit facility.
Income Taxes
As of January 3, 1999, RC/Arby's, Triarc Beverage Holdings, including Cable
Car effective August 15, 1998, and Cable Car 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 Cable Car 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 we entered into a revised tax-sharing agreement with
Triarc Parent pursuant to which we would not receive any benefit for certain
deferred tax assets consisting of then existing Federal net operating loss
carryforwards and excess Federal income tax payments made in accordance with the
prior tax-sharing agreements. The revised tax-sharing agreement was amended on
April 23, 1999 to provide that we would be entitled to the benefits associated
with the net operating loss carryforwards and the Federal income tax prepayments
to the extent necessary to avoid non-compliance with a covenant under the new
credit agreement. In accordance with the amended agreement, during the three
months ended April 4, 1999 we recorded a charge to 'Accumulated deficit' and a
credit to 'Deferred income taxes' to transfer $14.7 million of these deferred
tax benefits to Triarc Parent as if this transfer were a distribution to Triarc
Parent. The remaining $31.2 million of these deferred tax benefits as of
April 4, 1999 will be transferred to Triarc Parent when, and to the extent that,
the transfer(s) will not cause a default under the applicable covenant of the
new credit agreement.
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 1989 through 1992. Triarc Parent has reached a tentative settlement
with the Internal Revenue Service regarding all remaining issues in connection
with such audit. We paid $4.6 million, including interest, during 1997, in
partial settlement of this audit, of which $2.4 million was the amount of tax
due and $2.2 million was interest thereon. Such amounts were charged to reserves
principally provided in prior years. The tentative settlement is subject to
review by the Congressional Joint Committee on Taxation. If the settlement is so
approved, we anticipate that we will not need to make any further payments. 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 eight-month transition period ended December 31, 1993. In connection
with this more recent examination, we have not received any notices of proposed
adjustments and do not expect to make any related payments during the remainder
of 1999.
49
<PAGE>
CASH REQUIREMENTS
As of April 4, 1999, our 1999 cash requirements, exclusive of operating
cash flow requirements, which include tax-sharing payments to Triarc Parent
discussed above, consist principally of:
(1) scheduled debt principal repayments aggregating $7.9 million,
(2) capital expenditures of approximately $6.5 million, and
(3) the cost of additional business acquisitions, if any.
We anticipate meeting all of these requirements through cash flows from
operations and availability under the $60.0 million revolving credit facility.
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
approximately $1.5 million as of April 4, 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
non-compliance, 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;
(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 the first quarter of 1999, 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
50
<PAGE>
Crown on a daily basis, this contingency plan would not cause any significant
disruption of business. As of April 4, 1999, we had incurred $0.9 million of
costs to become year 2000 compliant, including computer software and hardware
costs, and the current estimated cost to complete this remediation in 1999 is
$0.9 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
1999 first quarter.
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 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 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 ordered 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 business and the actions we must take, if any, in the event of
non-compliance by any of these third parties. We are in the process of
collecting additional information from those third parties which disclosed that
remediation is required and have begun detailed evaluations of those third
parties, as well as those that could not satisfactorily respond, in order to
develop our contingency plans. These contingency plans might 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 8% 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.
51
<PAGE>
INFLATION AND CHANGING PRICES
Management believes that inflation did not have a significant effect on
gross margins during 1996, 1997, 1998 and the three months ended April 4, 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'. Statement of Financial Accounting Standards 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 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 133 should
have no effect on our consolidated financial position or results of operations.
However, the provisions of Statement of Financial Accounting Standards 133 are
complex and we are just beginning our evaluation of the implementation
requirements of Statement of Financial Accounting Standards 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.
52
<PAGE>
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 April 4, 1999 we had one interest rate cap agreement relating to
interest on variable-rate debt under our current credit facility. Each of these
agreements provides for a cap which was approximately 3% higher than the
interest rate as of January 3, 1999 and April 4, 1999, respectively, 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 exposures relate to sales in Canada, Latin America, Europe, Asia and the
Caribbean. 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 operations. At the present time,
we do not hedge our 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 April 4, 1999, our excess cash was
primarily invested in commercial paper money market funds and/or United States
treasury bills with maturities of less than 90 days which, due to its 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 April 4, 1999 for which an immediate adverse market
movement represents a potential material impact on our financial position or
earnings. 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.
53
<PAGE>
<TABLE>
<CAPTION>
JANUARY 3, 1999 APRIL 4, 1999
-------------------- --------------------
CARRYING INTEREST CARRYING INTEREST
VALUE RATE RISK VALUE RATE RISK
----- --------- ----- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash equivalents........................... $ 66,422 $ -- (a) $ 3,628 $ -- (a)
Long-term debt............................. 570,655 (2,843) 785,260 (4,750)
</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 earnings.
------------------------
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 April 4, 1999, with all other variables held constant. The
change of one percentage point with respect to our long-term debt represents an
assumed average 11% decline as the weighted average interest rate of our
variable-rate debt at January 3, 1999 and April 4, 1999 approximated 9% and
relates to only our variable-rate debt since a change in interest rates on our
fixed-rate debt would not affect our earnings. The interest rate risk presented
for 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.
54
<PAGE>
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
55
<PAGE>
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 Cable Car 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 Cable Car Beverage
Corporation, 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 acquiring Snapple in May 1997, we have strengthened our 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, we have 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
acquiring Mistic in August 1995, we have 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 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.
56
<PAGE>
STEWART'S
Cable Car 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. Cable Car
holds the exclusive perpetual worldwide license to manufacture, distribute and
sell Stewart's brand beverages and owns the Fountain Classics trademark. Through
the first quarter of 1999, Stewart's has experienced 26 consecutive quarters of
double-digit percentage case sales increases compared to the prior year's
comparable quarter. We acquired Cable Car in November 1997 and have grown
Stewart's 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 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. We currently do not own any
packing facilities or other significant manufacturing facilities.
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.
57
<PAGE>
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 April 4, 1999, Snapple had reserves of approximately $3.7 million for
payments through 2000 under its long-term production contracts with co-packers.
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. Cable Car 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 Cable Car'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 in Canada, where Perrier Group of Canada Ltd. is Snapple's master
distributor and where we also
58
<PAGE>
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, we
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. Cable Car 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 Cable Car's sales force into two 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 271 as of April 4, 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 supplier of premium retailer branded
beverages in the United States, Canada and the United Kingdom.
59
<PAGE>
We also sell our products internationally. Our 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 our 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 OUR STRATEGIC RELATIONSHIP WITH COTT: We plan to expand our
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 OUR 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
our marketing resources in markets where our 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 65 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 April 4,
1999, Royal Crown products were packaged and/or distributed domestically by 148
licensees, covering 50 states and Puerto Rico. As of April 4, 1999, Royal
Crown's independent bottlers operated a total of 36 production centers under 107
production and distribution agreements and operated under 34 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:
Royal Crown is Cott's exclusive worldwide supplier of cola concentrates
for retailer-branded beverages in various containers;
60
<PAGE>
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 April 4, 1999, 105 bottlers and 14 distributors sold Royal
Crown branded products outside the United States in 65 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.
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.
61
<PAGE>
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/ / products, which are pasta dishes with a variety of
different sauces, after we complete the final stages of test marketing in 1999.
As of April 4, 1999, the Arby's restaurant system consisted of 3,147 franchised
restaurants, of which 2,974 operate within the United States and 173 operate
outside the United States. Of the domestic restaurants, approximately 317 are
multi-branded locations that sell T.J. Cinnamons products.
Currently all of the Arby's restaurants are owned and operated by
franchisees. Because we own no restaurants, we avoid the significant capital
costs and real estate and operating risks associated with restaurant operations.
As a franchisor we receive franchise royalties from all Arby's restaurants and
up-front franchise fees from our restaurant operators for each new unit opened.
Our 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 April 4, 1999, the Arby's system
has experienced nine 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, our
franchisees opened 199 multi-branded T.J. Cinnamons in Arby's units in 1998. As
of April 4, 1999, franchisees have committed to open up to 1,011 Arby's
restaurants over the next 12 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
April 4, 1999, franchisees operated Arby's restaurants in 49 states and 10
foreign countries. As of April 4, 1999, the six leading states by number of
operating units were: Ohio, with 242 restaurants; Texas, with 167 restaurants;
Michigan, with 160 restaurants; Indiana, with 157 restaurants; California, with
151 restaurants; and Florida, with 151 restaurants. Canada is the country
outside the United States with the most operating units, with 119 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.
The following table sets forth the number of Arby's restaurants at the
beginning and end of each year from 1995 to 1998:
62
<PAGE>
<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>
Since January 1, 1995, 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 April 4, 1999, 530 Arby's franchisees operated 3,147 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 April 4, 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.
(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 ConnectionTM and potentially through
additional complementary multi-branding opportunities.
(4) We will continue to promote Arby's openings in high quality locations.
63
<PAGE>
CONTINUE TO STRENGTHEN FRANCHISE RELATIONSHIPS: Since we sold all of our
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 our 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.
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.
64
<PAGE>
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. Cable Car 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.
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.
65
<PAGE>
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 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 is to last four quarters. Royal Crown has
completed the second quarter and performed a specific capacity test to identify
a spike in one
66
<PAGE>
tested material, with sampling on May 14, 1999. If Royal Crown completes the
final two quarters of monitoring/sampling without incident, it can expect a 'No
Further Action Letter' and an instruction to dismantle the remediation system.
Royal Crown incurred $4,500 of remediation costs in the first quarter of 1999.
Management estimates that total remediation costs in excess of amounts incurred
through April 4, 1999 will be approximately $23,000 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 $917,300, in the aggregate, through
April 4, 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 April 4, 1999, we had approximately 1,042 employees, including 814
salaried employees and 175 hourly employees. We believe that employee relations
are satisfactory. As of April 4, 1999, approximately 53 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.
67
<PAGE>
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 April 4, 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 1 53,600
White Plains, NY leased
Cable Car Headquarters 1 4,200
Denver, CO leased
Office/Warehouse Facilities 7 656,000*
(various locations) leased
Restaurants.................. Restaurant Group Headquarters 1 47,300**
Ft. Lauderdale, FL leased
</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.
Our 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, seeks, 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 have alleged various causes of action against Mistic,
Snapple and Triarc Beverage Holdings. These defendants seek 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 claim that they were induced to enter into the alleged oral
agreement by the false and negligent misrepresentations of Snapple and Mistic.
These defendants also seek to recover various amounts totaling approximately
$500,000 allegedly owed to Universal for co-packing and other services rendered.
Mistic, Snapple and Triarc Beverage Holdings vigorously deny and are defending
against the allegations contained in defendants' counterclaim. Discovery is
proceeding in this action. In July 1999, Mistic settled its claims against some
defendants who did not assert any counterclaims against Mistic for $45,000. The
trial is currently scheduled to commence in September 1999.
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 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
68
<PAGE>
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. Under the terms of the escrow agreement, the funds will
be released to the plaintiff if by September 30 a definitive settlement
agreement has been executed by the parties and, if necessary, approved by a
Mexican court presiding over the plaintiff's suspension of payments proceeding.
If the definitive settlement agreement has not been executed by September 30,
the escrowed funds will be returned to Arby's. During the pendency of the escrow
arrangement, the parties will stay all proceedings in the United States and, to
the extent possible, not pursue the proceedings in Mexico.
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.
69
<PAGE>
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.............................. 56 Manager; President and Chief Operating Officer
John L. Barnes, Jr. ...................... 52 Manager; Executive Vice President and Chief
Financial Officer
Eric D. Kogan............................. 35 Manager; Executive Vice President -- Corporate
Development
Brian L. Schorr........................... 40 Manager; Executive Vice President, General Counsel
and Assistant Secretary
Michael Weinstein......................... 50 Chief Executive Officer of the Triarc Beverage
Group
Ernest J. Cavallo......................... 65 President and Chief Operating Officer of the
Triarc Beverage Group
John L. Belsito........................... 38 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........................... 46 President and Chief Operating Officer of the
Triarc Restaurant Group
Francis T. McCarron....................... 42 Senior Vice President -- Taxes
Anne A. Tarbell........................... 40 Senior Vice President -- Corporate Communications
and Investor Relations
Stuart I. Rosen........................... 40 Vice President and Associate General Counsel, and
Secretary
Fred H. Schaefer.......................... 54 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
70
<PAGE>
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.
71
<PAGE>
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
72
<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>
- ------------
* 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 Triac 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)
73
<PAGE>
(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 has been
serving Triarc Parent as its Chairman and Chief Executive Officer and Peter W.
May has been serving Triarc Parent as President and Chief Operating Officer.
Under the terms of their original employment and compensation agreements, 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.
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 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
74
<PAGE>
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.
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.
75
<PAGE>
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. 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
76
<PAGE>
(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 our board of managers, the board of managers of our subsidiaries
and the board of directors of our subsidiaries 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 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
77
<PAGE>
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.
Triarc Parent also enters into indemnification agreements with its, and
some of its subsidiaries', directors and officers, some of whom are our
directors and officers, indemnifying them to the fullest extent permitted by law
against liability, including related expenses, they may incur in their capacity
as directors, officers, employees, trustees, agents or fiduciaries of Triarc
Parent and/or its subsidiaries or any liability relating to their service in any
such capacity, at the request of Triarc Parent for other corporations or
entities. The indemnification agreements are meant to provide specific
contractual assurance that the indemnification provided by Triarc Parent under
the certificate of incorporation, bylaws, or directors' and officers' liability
insurance of Triarc Parent will be available regardless of changes to Triarc
Parent's certificate of incorporation or by-laws or any acquisition transactions
relating to Triarc Parent. 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 Parent 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 Triarc Parent
under its certificate of incorporation, by-laws 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 of Triarc Parent, independent legal counsel selected by
the Triarc Parent's board of directors, a majority of
78
<PAGE>
disinterested stockholders of Triarc Parent or by a final adjudication of a
court of competent jurisdiction. If Triarc Parent 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
Parent, which approval may not be unreasonably withheld. Triarc Parent will pay
the reasonable fees and expenses of the special independent counsel. An
indemnitee may be able to require Triarc Parent 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 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.
79
<PAGE>
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 July 4, 1999, options to acquire a total of 8,409,514 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.
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 July 4, 1999, options to acquire 737,250 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 July 4, 1999, options to acquire 148,675 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
80
<PAGE>
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.
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, 4,000 stock options were granted under the Triarc Beverage
Holdings Option Plan and 3,750 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 Cable Car 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 $39.40 per share, if they
exercise their options or their right to resell their shares to Triarc Beverage
Holdings.
OPTIONS GRANTED IN FISCAL 1998
The following table provides information concerning individual grants of
stock options under the Triarc Beverage Holdings Option Plan made during Triarc
Beverage Holdings' fiscal year ended January 3, 1999 to the named executive
officers. No grants were made under Triarc Parent's stock option plans to any of
the named executive officers during Triarc Parent's fiscal year ended January 3,
1999, although grants were made in March 1999 for the fiscal year ended January
3, 1999 to each of the named executive officers, other than Messrs. Peltz and
May. No stock appreciation rights were granted to any named executive officers,
and no stock options were exercised by any named executive officer during the
fiscal year ended January 3, 1999.
81
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
--------------------------------------------------------- -------------
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS/ % OF TOTAL EXERCISE OR
SARS OPTIONS GRANTED BASE PRICE GRANT DATE
GRANTED TO EMPLOYEES IN ($ 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.
(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 Cable Car 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,
82
<PAGE>
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.
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
Cable Car 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 $39.40 per share, if they exercise their options or their
right to resell their shares to Triarc Beverage Holdings.
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL 1998
The following table shows specified information for awards made during the
fiscal year ended January 3, 1999 to Roland C. Smith under Triarc Restaurant
Group's mid-term incentive plan. No other named executive officer received
awards in 1998 under the mid-term incentive plan. For additional information
regarding the mid-term incentive plan, see ' -- Cash Incentive Plans.'
83
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE BASED PLANS(1)
PERFORMANCE OR -------------------------------------
OTHER PERIOD UNTIL
MATURATION OR THRESHOLD TARGET MAXIMUM
NAME PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- ------ -------- -------- --------
<S> <C> <C> <C> <C>
Roland C. Smith............................. 1998-2000 -0- $300,000 $450,000
</TABLE>
- ------------
(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.
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 Cable Car effective August
15, 1998, and Cable Car, 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 Cable Car 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. Cable Car made a $0.9 million tax
sharing payment during 1998.
TAX SHARING AGREEMENT
Our 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, we and our subsidiaries entered
into a tax sharing agreement with Triarc Parent, which was amended for tax
sharing payments on or after April 23, 1999. Under this tax sharing agreement,
for each year for which any of our subsidiaries are included in the Triarc
Parent return, we will pay, or cause our subsidiaries to pay, to Triarc Parent
an amount equal to the federal income tax liability that would have been payable
by us for that year, or portion of the amount payable, determined generally as
if we had filed a separate, consolidated federal income tax return for that year
on behalf of ourselves and our subsidiaries. The payment to Triarc Parent is
based on current income without regard to:
losses, credits and overpayments of any of our subsidiaries carried over
from 1998 or prior years,
84
<PAGE>
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 ours.
Under the amendment to the tax sharing agreement, the above four items are
to be disregarded only to the extent permitted under the net worth covenant in
the credit agreement. If a tax payment is reduced by not disregarding any of
these items, the reduction will be paid to Triarc Parent when it would be
permitted under the net worth covenant. 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, our liability will not be less than any increase in taxes resulting
from the inclusions of ourselves or any of our 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.
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.
Some of the goods, services and equipment purchased, arranged for or
provided by Triarc Parent are purchased from an affiliate of Messrs. Peltz and
May. We believe that each of these transactions were on terms no less favorable
to us than if they were between unrelated parties. Please refer to Note 17 to
our Consolidated Financial Statements on page F-28.
REPAYMENT OF INTERCOMPANY PROMISSORY NOTES
Before 1998, we 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
85
<PAGE>
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 us 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 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.
86
<PAGE>
PRINCIPAL SHAREHOLDERS
We are a wholly owned subsidiary of Triarc Parent. The following table sets
forth the beneficial ownership of Triarc Parent as of July 4, 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) 30.7%
1201 North Market Street
Wilmington, DE 19801
Nelson Peltz .......................................... 7,265,033 shares(1)(2)(3) 35.0%
280 Park Avenue
New York, NY 10017
Peter W. May .......................................... 6,856,334 shares(1)(2) 33.7%
280 Park Avenue
New York, NY 10017
William Ehrman ........................................ 2,279,022 shares(4) 11.7%
Frederick Ketcher
Jonas Gerstl
Frederic Greenberg
James McLaren
William D. Lautman
350 Park Avenue
New York, NY 10022
Hugh L. Carey.......................................... 37,323 shares *
Clive Chajet........................................... 33,300 shares(5) *
Joseph A. Levato....................................... 172,500 shares *
David E. Schwab II..................................... 30,000 shares *
Jeffrey S. Silverman................................... 37,392 shares *
Raymond S. Troubh...................................... 45,500 shares *
Gerald Tsai, Jr........................................ 41,771 shares *
John L. Barnes, Jr..................................... 190,667 shares 1.0%
Eric D. Kogan.......................................... 209,667 shares 1.1%
Brian L. Schorr........................................ 228,657 shares 1.2%
Directors and Executive Officers as a group (19 9,393,694 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
(footnotes continued on next page)
87
<PAGE>
(footnotes continued from previous page)
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 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 July 4, 1999 as follows:
<TABLE>
<CAPTION>
Nelson Peltz. 1,231,666 shares
<S> <C>
Peter W. May................................................ 826,667 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.......................................... 186,667 shares
Eric D. Kogan............................................... 195,667 shares
Brian L. Schorr............................................. 221,667 shares
Directors and Executive Officers as a group (19 persons).... 3,157,999 shares
</TABLE>
The beneficial ownership table does not include 5,997,622 shares of Triarc
Parent's non-voting Triarc Parent class B common stock owned by Mr. Victor
Posner and an entity controlled by Mr. Posner. All of the shares of Triarc
Parent class B common stock controlled by Mr. Posner can be converted without
restriction into an equal number of shares of Triarc Parent class A common stock
if they are sold to a third party unaffiliated with Mr. Posner or the entity
controlled by him. Triarc Parent, or its designee, has rights of first refusal
if the shares controlled by Mr. Posner are sold to an unaffiliated third party.
If the 5,997,622 currently outstanding shares of the Triarc Parent class B
common stock were converted into shares of Triarc Parent class A common stock,
they would constitute approximately 23.5% of the then outstanding shares of
Triarc Parent class A common stock as of July 4, 1999. None of the directors of
Triarc Parent or the named executive officers beneficially owned any Triarc
Parent class B common stock as of July 4, 1999. Except for the arrangements
relating to the shares described in footnote (2) 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.
88
<PAGE>
DESCRIPTION OF INDEBTEDNESS
CREDIT FACILITY
In connection with the offering of the initial notes, Snapple, Mistic,
Cable Car, RC/Arby's and Royal Crown entered into a credit facility. The credit
facility allows each of Snapple, Mistic, Cable Car, 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. We and substantially all of our 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 our assets, each borrower's assets and each guarantor's
assets, including:
a pledge of the capital stock of all of our present and future direct and
indirect domestic subsidiaries and 65% of the capital stock of our first
tier foreign subsidiaries, other than special purpose subsidiaries,
a security interest in substantially all of our property and assets and
substantially all of the property and assets of our 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 us and
our 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 April 4, 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........................ $27,420,635 $ 76,168,431 $185,850,971 $289,440,038
Mistic......................... 8,456,207 23,489,464 57,314,292 89,259,962
Royal Crown.................... 9,123,158 25,342,105 61,834,737 96,300,000
Total..................... $45,000,000 $125,000,000 $305,000,000 $475,000,000
</TABLE>
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,
89
<PAGE>
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 us or
any of our 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 us or our
subsidiaries,
50% of the net cash proceeds of equity issuances by us or our
subsidiaries, plus
100% of net after-tax insurance recoveries or net after-tax condemnation
awards, but minus exceptions for reinvestment baskets.
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.
90
<PAGE>
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 us and our
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 our ability and the ability
of our 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.
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
91
<PAGE>
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 our 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.
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
92
<PAGE>
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 us 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.
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
we are notified that a holder of initial notes:
may not resell the exchange notes acquired by it in the exchange
offer to the public without delivering a prospectus and this
prospectus is not appropriate or available for that resale, or
93
<PAGE>
is a broker-dealer and holds notes acquired directly from us or any
of our affiliates,
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
, 1999, unless we extend it in our reasonable discretion. The
expiration date of the exchange offer will be at least 20 business days after we
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, we will need to notify the exchange agent of
any extension by oral notice, promptly confirmed in writing, or written notice.
We 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.
We 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 been waived by us, 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 we amend the exchange offer in a manner determined by us to constitute a
material change, we 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, we will disclose the
change by means of a post-
94
<PAGE>
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, we 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 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.,
95
<PAGE>
(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 us as determined in our 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
us, evidence satisfactory to us 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 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
96
<PAGE>
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 us, 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
us governed by the terms and conditions provided in this prospectus and in the
letter of transmittal.
We 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 us in our sole
discretion. Our determination will be final and binding.
We reserve the absolute right to reject any and all initial notes not
properly tendered or any initial notes which, if accepted, would, in our opinion
or our counsel's opinion, be unlawful. We also reserve the absolute right to
waive any conditions of this exchange offer or irregularities or defects in
tender as to particular notes. Our 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 we shall determine. Neither we, 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 we nor the exchange agent 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, we will accept all initial notes properly tendered and will
issue the exchange notes promptly thereafter.
97
<PAGE>
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, we give oral or written notice of acceptance to the exchange agent.
We 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 us 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, we reserve the right in our 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 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.
We will determine all questions as to the validity, form and eligibility,
including time of receipt, of all notices of withdrawal and our 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.
98
<PAGE>
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, we will not be required to accept initial notes for
exchange, or issue exchange notes in exchange for any initial notes, and we 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 our ability to proceed with the
exchange offer.
These conditions are for our sole benefit. We may assert any of these
conditions regardless of the circumstances giving rise to any of them. We may
also waive these conditions, in whole or in part, at any time and from time to
time, if we determine in our 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. Our 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 we may assert at any time and from time to time.
If we determine that we may terminate the exchange offer, as provided
above, we 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 we determine that we may terminate the exchange offer, we 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.
We 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,
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
We will record the exchange notes at the same carrying value as the initial
notes, as reflected in our accounting records on the date of the exchange.
Accordingly, we will not recognize any gain
99
<PAGE>
or loss for accounting purposes. We 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
We 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 The Bank of New York
The Bank of New York only) 101 Barclay Street
101 Barclay Street-Floor 7E (212) 815-6339 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
We 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, our officers and other employees may make additional
solicitations by telegraph, telephone, telecopy or in person.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. However, we 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. We 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.
We 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.
We 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
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
100
<PAGE>
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 we 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.'
101
<PAGE>
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.
We 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 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 August 15, 1999. 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.
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
102
<PAGE>
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
we 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.
103
<PAGE>
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 April 4, 1999, the Senior Indebtedness of the issuers and the
subsidiary guarantors, on a consolidated basis was approximately $485.3 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 April 4, 1999, the total liabilities of
the subsidiaries that were not subsidiary guarantors, was approximately $3.6
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.'
104
<PAGE>
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:
105
<PAGE>
(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.
106
<PAGE>
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
107
<PAGE>
(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;
108
<PAGE>
(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. and
(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
109
<PAGE>
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
110
<PAGE>
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.
111
<PAGE>
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
112
<PAGE>
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
113
<PAGE>
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.
114
<PAGE>
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.'
115
<PAGE>
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,
116
<PAGE>
(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;
117
<PAGE>
(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
118
<PAGE>
(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
119
<PAGE>
(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.
120
<PAGE>
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
121
<PAGE>
(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
122
<PAGE>
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.
123
<PAGE>
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.
124
<PAGE>
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
125
<PAGE>
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.
126
<PAGE>
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
127
<PAGE>
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.
128
<PAGE>
'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.
129
<PAGE>
'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
130
<PAGE>
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
131
<PAGE>
(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
132
<PAGE>
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.
133
<PAGE>
'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
134
<PAGE>
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
135
<PAGE>
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
136
<PAGE>
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,
137
<PAGE>
(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
138
<PAGE>
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;
139
<PAGE>
(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,
140
<PAGE>
(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,
141
<PAGE>
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.
142
<PAGE>
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of United States federal income and
estate tax considerations that may be relevant to the exchange of initial notes
for exchange notes pursuant to the exchange offer and to the purchase, ownership
and disposition of the exchange notes. This summary does not purport to be a
complete analysis of all of the potential United States federal income and
estate 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. The following discussion sets
forth 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. We cannot assure you that the United States
Internal Revenue Service will take a view similar to that described below.
Further, the discussion 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 discussion below 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 discussion of the United States federal income and estate tax
considerations below 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.
143
<PAGE>
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 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.
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 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.
144
<PAGE>
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 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.
145
<PAGE>
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,
(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
146
<PAGE>
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 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.
147
<PAGE>
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-62 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 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.
148
<PAGE>
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 April 4, 1999................................. F-45
Condensed Consolidated Statements of Operations for the
three months ended March 29, 1998 and April 4, 1999.... F-46
Condensed Consolidated Statements of Cash Flows for the
three months ended March 29, 1998 and April 4, 1999.... F-47
Notes to Condensed Consolidated Financial Statements...... F-48
SNAPPLE BEVERAGE BUSINESS OF THE QUAKER OATS COMPANY
Report of Independent Public Accountants.................. F-54
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-55
Notes to the Combined Statements of Certain Revenues and
Operating Expenses..................................... F-56
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
Independent Auditors' Report.............................. F-62
Consolidated Balance Sheets as of December 28, 1997 and
January 3, 1999........................................ F-63
Consolidated Statements of Operations for the year ended
December 31, 1996
and the fiscal years ended December 28, 1997 and
January 3, 1999........................................ F-64
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-65
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-66
Notes to Consolidated Financial Statements................ F-68
Condensed Consolidated Balance Sheets as of January 3,
1999 and April 4, 1999................................. F-88
Condensed Consolidated Statements of Operations for the
three months ended March 29, 1998 and April 4, 1999.... F-89
Condensed Consolidated Statements of Cash Flows for the
three months ended March 29, 1998 and April 4, 1999.... F-90
Notes to Condensed Consolidated Financial Statements...... F-91
</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
Acquisition related (Note 11)....................... -- 33,815 --
Facilities relocation and corporate restructuring
(Note 12)......................................... 7,800 7,063 --
Reduction in carrying value of long-lived assets to
be disposed (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 --
Reduction in carrying value of long-lived
assets.......................................... 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 acquisition related
costs........................................... -- 22,483 (6,025)
Net provision (payments) for facilities relocation
and corporate restructuring..................... 6,953 821 (1,914)
Other, net........................................ 398 (3,652) 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) (17,489) (29,658)
Increase in due to affiliates..................... 2,204 12,519 3,547
-------- --------- --------
Net cash provided by operating activities.... 11,325 40,150 59,061
-------- --------- --------
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................... -- (311,915) --
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) (310,339) 15,814
-------- --------- --------
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 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
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, a portion of which is utilized for
indirect advertising by such bottlers and distributors. 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. 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.
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),
F-10
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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.
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 $311,915,000 consisting of cash of
$300,126,000 (including $126,000 of post-closing adjustments), $9,260,000 of
fees and expenses and $2,529,000 of deferred purchase price. The purchase price
for the Snapple Acquisition was funded from (i) $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
F-11
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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
On May 5, 1997 certain subsidiaries of the Company sold to affiliates of
RTM, Inc. ('RTM'), the largest franchisee in the Arby's system, 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) which (i) includes 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) 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 $98,000,000 as of January 3, 1999
assuming RTM has made all scheduled payments to date 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 $51,000,000 outstanding as of January 3, 1999 assuming RTM has
made all scheduled repayments through such date), 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
($586,000 as of January 4, 1999 assuming RTM had made all scheduled repayments
through such date). This loan has been guaranteed by Triarc Parent.
In 1996 the Company recorded a $58,900,000 charge reported as 'Reduction in
carrying value of long-lived assets to be disposed' to (i) reduce the carrying
value of the long-lived assets to be sold by $46,000,000 to estimated fair value
consisting of adjustments to 'Properties' of $36,343,000,
F-12
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
'Unamortized costs in excess of net assets of acquired companies' of $5,214,000
and 'Deferred costs and other assets' of $4,443,000 and (ii) provide for
associated net liabilities of $12,900,000, principally reflecting the present
value of certain equipment operating lease obligations which would not be
assumed by the purchaser and estimated closing costs. The estimated fair value
was determined based on the terms of the February 1997 agreement for the RTM
Sale including the then anticipated sales price. During 1996 and 1997 the
operations of the restaurants to be disposed 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.
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 consisting of $3,623,000 relating to the
C&C Sale and $2,380,000 relating to future revenues. The $2,380,000 of deferred
revenues consists of (i) $2,096,000 relating to minimum take-or-pay commitments
for sales of concentrate for C&C products to Kelco subsequent to July 18, 1997
and (ii) $284,000 relating to technical services to be performed for Kelco by
the Company subsequent to July 18, 1997, both under the contract with Kelco. 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
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>
F-13
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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) (69,608) --
Long-term debt assumed including current portion.......... -- (686) --
Other liabilities......................................... (188) (66,001) --
------ -------- ------
3,722 350,353 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 $309,506 $3,000
------ -------- ------
------ -------- ------
</TABLE>
F-14
<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 charged to 'Acquisition related' costs.
<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-15
<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-16
<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................... 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>
(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) historical Snapple legal reserves as of the date of
the Snapple Acquisition and additional legal reserves provided in 'Acquisition
related' costs (see Note 11) and (ii) reserves for losses in long-term
production contracts established in the Snapple Acquisition purchase accounting
(see Note 3). Since at the date of the Snapple Acquisition the investment in RIB
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.
F-17
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(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 Note 21).
The Existing Beverage Credit Agreement consisted of a $300,000,000 term
facility of
(footnotes continued on next page)
F-18
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(footnotes continued from previous page)
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-19
<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>
F-20
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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 ($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-21
<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, included in 'Interest expense,'
relating to such examinations and other tax matters. Management of the Company
believes that adequate aggregate provisions have been made principally in years
prior to 1996 for any tax liabilities, including interest, 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 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.
F-22
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(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,
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;
F-23
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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) ACQUISITION RELATED COSTS
Acquisition related costs 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................................................... $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.................. 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............ 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........... 4,000
Provide for fees paid to Quaker pursuant to a
transition services agreement......................... 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................................ 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......................... 1,603
Sign-on bonus related to the Stewart's Acquisition..... 400
-------
$33,815
-------
-------
</TABLE>
As of December 28, 1997 and January 3, 1999 all cash obligations had been
liquidated other than $6,697,000 and $672,000, respectively, of the additional
reserves for legal matters.
F-24
<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.................................... $3,208 $-- $(3,208) $--
Costs of terminating Mistic distribution
agreements...................................... 453 -- (453) --
Estimated costs of asset disposals................ 150 -- (150) --
Cash obligations:
Employee severance and related termination
costs........................................... 2,200 -- -- 2,200
Estimated costs related to the sublease of excess
office space.................................... 492 -- -- 492
Costs of terminating Mistic distribution
agreements...................................... 847 (847) -- --
Estimated costs of a Royal Crown plant closing.... 450 -- -- 450
------ ----- ------- ------
$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:
Write-off of certain beverage
distribution rights......... $-- $ 300 $ -- $(300) $ -- $--
Cash obligations:
Employee severance and related
termination costs........... 2,200 5,426 (4,753) -- -- 2,873
Employee relocation costs..... -- 1,337 (1,221) -- -- 116
Estimated costs related to the
sublease of excess office
space....................... 492 -- (140) -- (87) 265
Estimated costs of a Royal
Crown plant closing......... 450 -- (128) -- (322) --
------ ------ ------- ----- ------ ------
$3,142 $7,063 $(6,242) $(300) $ (409) $3,254
------ ------ ------- ----- ------ ------
------ ------ ------- ----- ------ ------
</TABLE>
<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........................................... $2,873 $(1,837) $-- $1,036
Employee relocation costs......................... 116 (24) (65) 27
Estimated costs related to the sublease of excess
office space.................................... 265 (53) (102) 110
------ ------- ----- ------
$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
(principally for 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) of
surplus office space as a result of the then planned sale of company-owned
restaurants and the relocation (the 'Royal Crown Relocation') of Royal
Crown's headquarters which were centralized with Triarc Beverage Holdings'
offices in White Plains, New York, (ii) employee severance costs associated
with the
(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)
termination of 43 headquarters employees, principally in finance and
accounting, legal, marketing, operations and human resources, in connection
with the Royal Crown Relocation, (iii) the termination of Mistic
distribution agreements and (iv) the shutdown of Royal Crown's Ohio
production facility and other asset disposals.
(b) The 1997 facilities relocation and corporate restructuring charge
principally related to (i) employee severance and related termination costs
and employee relocation costs primarily associated with restructuring the
restaurant segment in connection with the RTM Sale (see Note 3) and, to a
much lesser extent, 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 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.
(c) 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 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
F-26
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(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 $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.
F-27
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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>
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).
F-28
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(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 $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, Inc.
('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
(footnotes continued on next page)
F-29
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(footnotes continued from previous page)
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 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.
F-30
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(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 reflects a
provision of $58,900,000 for the reduction in the carrying value of long-lived
assets to be disposed (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 acquisition related costs 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.
F-31
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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 -- --
-------- -------- --------
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 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
F-32
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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 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 intended Redemption, the Company expects to
recognize 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 initial public equity offering of its consumer products
subsidiaries, 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
F-33
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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 are wholly owned by
either 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 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.
F-34
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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, on April 23, 1999 the tax-sharing agreement was amended further to
provide that the Company would be entitled to the benefits associated with the
NOLs and the Federal income tax prepayments to the extent necessary to avoid
non-compliance with the Minimum Net Worth Covenant; however, any such benefit
would be due to Triarc Parent at such time as, and to the extent that, the
write-off of such deferred tax assets would not cause a default under the
Minimum Net Worth Covenant.
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 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-35
<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-36
<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-37
<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
Reduction in carrying value of
long-lived assets to be
disposed....................... -- 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-38
<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
Acquisition related.............. -- 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-39
<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-40
<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-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 CONSOLIDATED
--------- ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities............... $ -- $ 40,176 $ (26) $-- $ 40,150
-------- --------- ------ ------ ---------
Cash flows from investing activities:
Acquisition of Snapple Beverage
Corp.......................... (75,000) (236,915) -- -- (311,915)
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) (235,339) -- -- (310,339)
-------- --------- ------ ------ ---------
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-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>
Net cash provided by operating
activities.......................... $ -- $ 58,680 $ 381 $-- $ 59,061
------- -------- ------ ------ --------
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............................ -- 41 -- -- 41
------- -------- ------ ------ --------
Net cash provided by investing
activities.......................... -- 15,814 -- -- 15,814
------- -------- ------ ------ --------
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-43
<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 acquisition related costs of $33,815,000 for the year ended
December 28, 1997 (see Note 11).
* * * * *
F-44
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 3, APRIL 4,
1999(A) 1999
------- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 72,792 $ 6,372
Receivables............................................ 66,690 92,175
Inventories............................................ 46,761 61,826
Deferred income tax benefit............................ 18,934 18,901
Prepaid expenses and other current assets.............. 7,258 10,398
--------- ---------
Total current assets.............................. 212,435 189,672
Properties.................................................. 25,320 25,563
Unamortized costs in excess of net assets of acquired
companies................................................. 268,215 278,866
Trademarks.................................................. 261,906 259,186
Deferred costs and other assets............................. 23,094 37,120
--------- ---------
$ 790,970 $ 790,407
--------- ---------
--------- ---------
LIABILITIES AND MEMBER'S DEFICIT
Current liabilities:
Current portion of long-term debt...................... $ 9,678 $ 11,107
Accounts payable....................................... 36,993 45,269
Accrued expenses....................................... 81,448 77,780
Due to Parent and other affiliates..................... 29,082 22,215
--------- ---------
Total current liabilities......................... 157,201 156,371
Long-term debt.............................................. 560,977 754,153
Long-term debt due to affiliates............................ -- 20,000
Deferred income taxes....................................... 9,173 21,149
Deferred income and other liabilities....................... 20,753 20,643
Redeemable preferred stock.................................. 87,587 --
Member's equity (deficit):
Contributed capital.................................... 106,269 1
Accumulated deficit.................................... (150,732) (181,574)
Accumulated other comprehensive deficit................ (258) (336)
--------- ---------
Total member's deficit............................ (44,721) (181,909)
--------- ---------
$ 790,970 $ 790,407
--------- ---------
--------- ---------
</TABLE>
(A) Derived from the audited consolidated financial statements as of
January 3, 1999
F-45
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
MARCH 29, APRIL 4,
1998 1999
---- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Revenues:
Net sales.............................................. $153,881 $159,888
Royalties, franchise fees and other revenues........... 18,172 18,303
-------- --------
172,053 178,191
-------- --------
Costs and expenses:
Cost of sales, excluding depreciation and amortization
related to sales of $398,000 and $449,000............. 79,360 83,182
Advertising, selling and distribution.................. 48,759 46,714
General and administrative............................. 20,551 22,283
Depreciation and amortization, excluding amortization
of deferred financing costs........................... 8,518 7,852
Capital structure reorganization related............... -- 2,250
-------- --------
157,188 162,281
-------- --------
Operating profit.................................. 14,865 15,910
Interest expense............................................ (14,734) (16,701)
Investment income........................................... 393 2,146
Other income, net........................................... 376 1,095
-------- --------
Income before income taxes and extraordinary charges... 900 2,450
Provision for income taxes.................................. (423) (1,213)
-------- --------
Income before extraordinary charges.................... 477 1,237
Extraordinary charges....................................... -- (11,772)
-------- --------
Net income (loss)...................................... $ 477 $(10,535)
-------- --------
-------- --------
</TABLE>
F-46
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 29, APRIL 4,
1998 1999
---- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................... $ 477 $ (10,535)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization of costs in excess of net assets of
acquired companies, trademarks and certain other
items............................................... 5,958 5,604
Depreciation and amortization of properties.......... 2,560 2,248
Amortization of deferred financing costs............. 1,043 1,228
Write-off of unamortized deferred financing costs and
interest rate cap agreement costs................... -- 10,938
Capital structure reorganization related charge...... -- 2,250
Provision for doubtful accounts...................... 1,188 761
Payments for acquisition related costs............... (4,744) (43)
Other, net........................................... (1,325) 1,767
Changes in operating assets and liabilities:
Increase in receivables........................... (8,610) (24,024)
Decrease (increase) in inventories................ 5,923 (13,518)
Increase in prepaid expenses and other current
assets.......................................... (3,035) (3,286)
Increase (decrease) in accounts payable and
accrued expenses................................ (13,355) 1,100
Increase (decrease) in due to affiliates.......... 9,909 (4,098)
-------- ---------
Net cash used in operating activities........... (4,011) (29,608)
-------- ---------
Cash flows from investing activities:
Acquisition of Millrose Distributors, Inc.............. -- (17,296)
Capital expenditures................................... (6,065) (1,545)
Other.................................................. 235 66
-------- ---------
Net cash used in investing activities........... (5,830) (18,775)
-------- ---------
Cash flows from financing activities:
Proceeds from long-term debt........................... -- 775,000
Repayments of long-term debt........................... (2,434) (560,470)
Dividends.............................................. -- (204,746)
Deferred financing costs............................... -- (27,821)
Repayment on note payable to affiliate................. (250) --
-------- ---------
Net cash used in financing activities........... (2,684) (18,037)
-------- ---------
Net decrease in cash and cash equivalents................... (12,525) (66,420)
Cash and cash equivalents at beginning of period............ 34,242 72,792
-------- ---------
Cash and cash equivalents at end of period.................. $ 21,717 $ 6,372
-------- ---------
-------- ---------
</TABLE>
F-47
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 4, 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 25, 1999, acquired 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 Cable Car Beverage
Corporation ('Cable Car'). Triarc Beverage Holdings' principal wholly-owned
subsidiaries are Snapple Beverage Corp. ('Snapple') and Mistic Brands, Inc.
('Mistic'). RC/Arby's principal wholly-owned subsidiaries are Royal Crown
Company, Inc. ('Royal Crown') and Arby's, Inc. ('Arby's'). The accompanying
prior period 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 Cable Car and their subsidiaries have been consolidated since such
entities were under the common control of Triarc Parent during such period and,
accordingly, are presented on an 'as-if pooling' basis.
The accompanying unaudited condensed consolidated financial statements of
TCPG have been prepared as if they were to to be filed in a Quarterly Report on
Form 10-Q. Accordingly, the accompanying condensed consolidated financial
statements 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 April 4, 1999 and its results of operations and cash flows for the
three-month periods ended March 29, 1998 and April 4, 1999 (see below). This
information should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended January 3, 1999.
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 quarter of 1998 commenced on December 29, 1997 and ended on
March 29, 1998 and the Company's first quarter of 1999 commenced on January 4,
1999 and ended on April 4, 1999. For the purposes of these consolidated
financial statements, such periods are referred to herein as the three-month
periods ended March 29, 1998 and April 4, 1999, respectively.
(2) INVENTORIES
The following is a summary of the components of inventories (in thousands):
<TABLE>
<CAPTION>
JANUARY 3, APRIL 4,
1999 1999
---- ----
<S> <C> <C>
Raw materials........................................... $20,268 $25,708
Work in process......................................... 98 360
Finished goods.......................................... 26,395 35,758
------- -------
$46,761 $61,826
------- -------
------- -------
</TABLE>
(3) LONG-TERM DEBT
On February 25, 1999 TCPG issued $300,000,000 principal amount of 10 1/4%
senior subordinated notes due 2009 (the 'Notes'), including an aggregate
$20,000,000 issued to the Chairman and Chief Executive Officer and President and
Chief Operating Officer (the 'Executives') of the Company. The Company has been
informed that, subsequent to April 4, 1999, the Executives no longer hold any of
the
F-48
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 4, 1999
(UNAUDITED)
Notes. Concurrently, Snapple, Mistic, Cable Car, 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 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 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 as of February 25, 1999 or April 4,
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 the former $380,000,000 credit agreement, as amended (the
'Former Beverage Credit Agreement') entered into by Snapple, Mistic, Triarc
Beverage Holdings and Cable Car and $1,503,000 of related accrued interest,
(2) redeem (the 'Redemption') on March 30, 1999 the $275,000,000 of borrowings
under 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 $17,296,000,
including expenses, (subsequently adjusted to $17,376,000), (4) provide for
estimated fees and expenses of $27,821,000 (subsequently adjusted to
$29,600,000) relating to the issuance of the Notes and the consummation of the
Credit Facility (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. See Note 7 for disclosure of the extraordinary charges
related to the aforementioned debt repayments recorded during the three months
ended April 4, 1999.
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 initial public equity offering of its consumer products
subsidiaries, 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 filed a registration statement (the
'Registration Statement') covering resales by holders of the Notes on May 17,
1999 with the SEC. If the Registration Statement is not declared effective by
the SEC on or before August 24, 1999, the annual interest rate on the Notes will
increase by 1/2% to 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 4.94% to 5.06% at April 4, 1999) or an
alternate base rate (the 'ABR'). The ABR (7 3/4% at April 4, 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 (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. The other two classes
of Term Loans (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 Company had outstanding Term A Loans, Term B Loans
and Term C Loans as of April 4, 1999 of $45,000,000, $125,000,000 and
$305,000,000 respectively. The borrowing base for Revolving Loans is the sum of
80% of eligible accounts receivable and 50% of eligible inventories. At
April 4, 1999 there was $59,951,000 of
F-49
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 4, 1999
(UNAUDITED)
borrowing availability under the Revolving Credit Facility in accordance with
limitations due to such borrowing base. The Term Loans are due $4,912,000 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 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. If the Company makes voluntary prepayments of
the Term B and Term C Loans on or prior to February 25, 2001, it will incur
prepayment penalties of 2.0% and 3.0% of the amounts prepaid, respectively,
through February 25, 2000 and 1.0% and 1.5% of the amounts prepaid,
respectively, through February 25, 2001.
Under the Credit Agreement substantially all of the assets, other than cash
and cash equivalents, of Snapple, Mistic, Cable Car, 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, Cable
Car and RC/Arby's and all of their domestic subsidiaries. Such guaranties are
full and unconditional, are on a joint and several basis and are unsecured.
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, Cable Car, RC/Arby's and Royal Crown. As
collateral for such guarantees under the Credit Facility, all of the stock of
Snapple, Mistic, Cable Car, RC/Arby's and Royal Crown and substantially 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 (1) the aforementioned one-time
distributions, including dividends, paid to Triarc Parent in connection with the
Refinancing Transactions and (2) certain defined amounts in the event of
consummation of a securitization of certain assets of Arby's.
The following pro forma data of the Company for the three months ended
April 4, 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 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................................................ $178,191 $179,865
Operating profit........................................ 15,910 15,820
Interest expense........................................ (16,701) (19,703)
Income before extraordinary charges..................... 1,237 (1,499)
</TABLE>
F-50
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 4, 1999
(UNAUDITED)
(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............................................. $ 3,769
Properties................................................. 1,000
Goodwill................................................... 13,385
Current liabilities........................................ (858)
-------
$17,296
-------
-------
</TABLE>
(5) CAPITAL STRUCTURE REORGANIZATION RELATED CHARGE
The capital structure reorganization related charge of $2,250,000
recognized during the three months ended April 4, 1999 resulted from equitable
adjustments to the terms of outstanding options under the stock option plan of
Triarc Beverage Holdings, 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 Cable Car to Triarc Beverage Holdings effective
May 17, 1999.
(6) INCOME TAXES AND MEMBER'S DEFICIT
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. 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. 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 tax 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. Management of the Company believes that
adequate aggregate provisions have been made principally in years prior to 1998
for any tax liabilities, including interest, that may result from the resolution
of these IRS examinations.
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. On February 25, 1999 the
Company entered into a revised tax-sharing agreement with Triarc Parent pursuant
to which the Company would not receive any benefit for certain deferred tax
assets consisting of then existing Federal net operating loss carryforwards (the
'NOLs') and excess Federal income tax payments made in accordance with the prior
tax-sharing agreement. The revised tax-sharing agreement was amended on
April 23, 1999 to provide that the Company would be entitled to the benefits
associated with the NOLs and the Federal income tax prepayments to the extent
necessary to avoid non-compliance with a Credit Agreement covenant. In
accordance therewith, during the three months ended April 4, 1999 the Company
recorded a charge to 'Accumulated deficit' and a credit to 'Deferred income
taxes' to transfer $14,676,000 of such deferred tax benefits to Triarc Parent as
if such transfer were a distribution from the Company to Triarc Parent.
F-51
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 4, 1999
(UNAUDITED)
(7) EXTRAORDINARY CHARGES
The extraordinary charges in the three months ended April 4, 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.
(8) COMPREHENSIVE INCOME (LOSS)
The following is a summary of the components of comprehensive loss (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 29, APRIL 4,
1998 1999
---- ----
<S> <C> <C>
Net income (loss)........................................... $477 $(10,535)
Net change in currency translation adjustment............... 5 (78)
Reclassification adjustment for prior year appreciation on
short-term investment sold during the period.............. (42) --
---- --------
Comprehensive income (loss)................................. $440 $(10,613)
---- --------
---- --------
</TABLE>
(9) 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, including the
cumulative unpaid dividends of $13,779,000 through February 23, 1999, has been
reclassified to 'Member's deficit' in the accompanying condensed consolidated
balance sheet as of April 4, 1999.
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 their sale to Triarc Parent. The
options to acquire up to 20% of the common stock of the companies which
purchased the restaurants had no carrying value. The Company is informed that in
May 1999, Triarc Parent sold those promissory notes and options to an affiliate
of the purchasers of the sold restaurants for the same $2,000,000 amount it had
paid the Company. The Company deferred recognition of the $307,000 gain on sale
of those assets until the May 1999 sale by Triarc to the unaffiliated entity.
The Company continues to have certain related party transactions with
Triarc Parent of the same nature and general magnitude as those described in
Note 17 to the consolidated financial statements for the year ended January 3,
1999. In addition, see Notes 3, 5 and 6 above for discussion of certain other
related party transactions for the three-month period ended April 4, 1999.
(10) 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 $1,450,000 as of April 4, 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
F-52
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 4, 1999
(UNAUDITED)
legal and environmental matters will have a material adverse effect on its
consolidated financial position or results of operations.
(11) BUSINESS SEGMENTS
The following is a summary of the Company's segment information (in
thousands):
<TABLE>
<CAPTION>
Revenues:
<S> <C> <C>
Premium beverages...................................... $121,769 $129,162
Soft drink concentrates................................ 32,195 30,940
Restaurants............................................ 18,089 18,089
-------- --------
Consolidated revenues............................. $172,053 $178,191
-------- --------
-------- --------
Earnings before interest, taxes, depreciation and
amortization:
Premium beverages...................................... $ 8,554 $ 8,906 (a)
Soft drink concentrates................................ 5,141 5,215
Restaurants............................................ 9,715 9,662
General corporate...................................... (27) (21)
-------- --------
Consolidated earnings before interest, taxes,
depreciation and amortization................... 23,383 23,762
-------- --------
Less depreciation and amortization:
Premium beverages...................................... 5,567 5,385
Soft drink concentrates................................ 2,281 1,918
Restaurants............................................ 670 549
-------- --------
Consolidated depreciation and amortization........ 8,518 7,852
-------- --------
Operating profit (loss):
Premium beverages...................................... 2,987 3,521 (a)
Soft drink concentrates................................ 2,860 3,297
Restaurants............................................ 9,045 9,113
General corporate...................................... (27) (21)
-------- --------
Consolidated operating profit..................... 14,865 15,910
Interest expense............................................ (14,734) (16,701)
Investment income........................................... 393 2,146
Other income, net........................................... 376 1,095
-------- --------
Consolidated income before income taxes and
extraordinary charges........................... $ 900 $ 2,450
-------- --------
-------- --------
</TABLE>
- ------------
(a) Reflects the $2,250,000 capital restructure reorganization related charge
discussed in Note 5.
F-53
<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-54
<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
--------- -----------
Total selling, general and administrative expenses..... 282,300 86,900
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-55
<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.
F-56
<PAGE>
SNAPPLE BEVERAGE BUSINESS OF
THE QUAKER OATS COMPANY
NOTES TO THE COMBINED STATEMENTS
OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED)
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 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 COSTS
In accordance with Statement of Position No. 93-7, 'Reporting on
Advertising Costs,' the Snapple Business expensed all advertising expenses as
incurred except for production costs which are deferred
F-57
<PAGE>
SNAPPLE BEVERAGE BUSINESS OF
THE QUAKER OATS COMPANY
NOTES TO THE COMBINED STATEMENTS
OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED)
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.
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.
(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
In September 1996, the Snapple Business recorded a restructuring charge of
$16.6 million related to a change in how Snapple beverages are sold 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............ $ 500 $ -- $ 500 $ 500 $--
Asset write-offs.............................. -- 13,700 13,700 13,700 --
Loss on lease and other....................... 2,400 -- 2,400 2,400 --
------- ------- ------- ------- ------
Total............................... $ 2,900 $13,700 $16,600 $16,600 $--
------- ------- ------- ------- ------
------- ------- ------- ------- ------
</TABLE>
F-58
<PAGE>
SNAPPLE BEVERAGE BUSINESS OF
THE QUAKER OATS COMPANY
NOTES TO THE COMBINED STATEMENTS
OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED)
(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.
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 on a basis that approximates actual
costs of services provided as determined by various measures. 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 on a basis that
approximates actual services provided as determined by various measures.
F-59
<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
F-60
<PAGE>
SNAPPLE BEVERAGE BUSINESS OF
THE QUAKER OATS COMPANY
NOTES TO THE COMBINED STATEMENTS
OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED)
up to 12 months. As of December 31, 1996, approximately 39 percent of hedgeable
production 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 was established
for fixed fees incurred in 1997. At December 31, 1996, an accrual of $6.4
million was established for fixed fees incurred in 1996. In conjunction with a
1995 restructuring charge, an accrual was established for fixed fees for certain
agreements where it was anticipated that production capacity would not be used
through the duration of the agreements. The accrual balance related to these
fixed fees at December 31, 1996, was $12.0 million. Based on forecasted volumes
and margins, no other minimum volume fees have been accrued as of December 31,
1996. 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-61
<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-62
<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-63
<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
Acquisition related (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-64
<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.............................. (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-65
<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 acquisition related
costs............................................... -- 21,509 (6,025)
Gain on sale of business............................. -- -- (4,702)
Write-off of unamortized deferred financing costs.... -- 1,886 --
Other, net........................................... 1,262 4,201 (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) (2,518) (14,240)
Increase (decrease) in due to parent and
affiliates...................................... (200) 13,903 2,404
------- --------- --------
Net cash provided by (used in) operating
activities................................ (2,380) 44,116 28,529
------- --------- --------
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................... -- (311,915) --
Cash acquired in the acquisition of Cable Car Beverage
Corporation........................................... -- 2,409 --
Other.................................................. (120) -- --
------- --------- --------
Net cash provided by (used in) investing
activities................................ (1,052) (311,876) 23,085
------- --------- --------
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-66
<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.
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-67
<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 since the
November 25, 1997 acquisition (the 'Stewart's Acquisition') of Cable Car by
Triarc, 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-68
<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-69
<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
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, a portion of which is utilized for
indirect advertising by such bottlers and distributors. 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.
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
F-70
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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 $311,915,000 consisting of cash of
$300,126,000 (including $126,000 of post-closing adjustments), $9,260,000 of
fees and expenses and $2,529,000 of deferred purchase price. The purchase price
for the Snapple Acquisition was funded from (i) $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').
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
F-71
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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......................................... (69,608) --
Long-term debt assumed including current portion............ (686) --
Other liabilities........................................... (66,001) --
-------- -----
350,353 (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)
-------- -----
$309,506 $--
-------- -----
-------- -----
</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):
<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>
F-72
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. 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.................................................. $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 charged to 'Acquisition related' costs.
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-73
<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-74
<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.......................... 13,022 4,639
Accrued legal settlements (Note 17)......................... 9,201 672
Other....................................................... 18,300 12,744
------- -------
$58,990 $35,260
------- -------
------- -------
</TABLE>
(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) historical
Snapple legal reserves as of the date of the Snapple Acquisition and additional
legal reserves provided in 'Acquisition related' costs (see Note 11) and (ii)
reserves for losses on long-term production contracts established in the Snapple
Acquisition purchase accounting (see Note 3). Since at the date of the Snapple
Acquisition the investment in RIB 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.
F-75
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(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 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
F-76
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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-77
<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-78
<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-79
<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-80
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(11) ACQUISITION RELATED COSTS
Acquisition related costs are attributed to the Snapple Acquisition and the
Stewart's Acquisition during 1997 and consisted of the following (in thousands):
<TABLE>
<CAPTION>
Non-cash charges:
<S> <C>
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................................................... $12,557
Provide additional reserves for doubtful accounts based
on the Company's change in estimate of the related
write-off to be incurred.............................. 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............ 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........... 4,000
Provide for fees paid to Quaker pursuant to a
transition services agreement......................... 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................................ 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......................... 1,603
Sign-on bonus related to the Stewart's Acquisition..... 400
-------
$32,840
-------
-------
</TABLE>
As of December 28, 1997 and January 3, 1999 all cash obligations had been
liquidated other than $6,697,000 and $672,000, respectively, of the additional
reserves for legal matters.
F-81
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. 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 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 costs of
asset disposals...... 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 termination of Mistic distribution agreements
and the estimated cost of Mistic asset disposals 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.
F-82
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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>
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).
F-83
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(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, 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
(footnotes continued on next page)
F-84
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
(footnotes continued from previous page)
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 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 expects to recognize an extraordinary charge during the first quarter of
the year ending January 2, 2000 of an estimated $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
F-85
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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. 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
F-86
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 3, 1999
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, on April 23, 1999 the tax-sharing agreement was amended
further to provide that TCPG (and the Company through informal arrangements with
TCPG) would be entitled to the benefits associated with the NOLs and the Federal
income tax prepayments to the extent necessary to avoid non-compliance with the
Minimum Net Worth Covenant; however, any such benefit would be due to Triarc
Parent at such time as, and to the extent that, the write-off of such deferred
tax assets would not cause a default under the Minimum Net Worth Covenant.
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 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-87
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 3, APRIL 4,
1999(A) 1999
------- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 39,578 $ 3,312
Receivables............................................ 37,710 58,408
Inventories............................................ 41,563 56,338
Deferred income tax benefit............................ 11,700 11,668
Due from affiliates.................................... 1,029 618
Prepaid expenses and other current assets.............. 3,344 5,347
-------- ---------
Total current assets.............................. 134,924 135,691
Properties.................................................. 15,998 16,766
Unamortized costs in excess of net assets of acquired
companies................................................. 120,145 132,236
Trademarks.................................................. 254,340 251,800
Deferred costs and other assets............................. 11,163 15,836
-------- ---------
$536,570 $ 552,329
-------- ---------
-------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt...................... $ 8,338 $ 8,663
Accounts payable....................................... 33,918 39,522
Accrued expenses....................................... 35,260 46,335
Due to Triarc Companies, Inc........................... 18,158 17,392
-------- ---------
Total current liabilities......................... 95,674 111,912
Long-term debt.............................................. 282,951 656,197
Long-term debt due to affiliates............................ -- 20,000
Deferred income taxes....................................... 35,500 47,477
Deferred income and other liabilities....................... 3,552 5,951
Redeemable preferred stock.................................. 87,587 89,673
Commitments and contingencies
Stockholder's equity (deficit):
Common stock, $1.00 par value; authorized 2,000,000
shares, issued and outstanding 850,000 shares......... 850 850
Additional paid-in capital............................. 35,761 --
Accumulated deficit.................................... (5,342) (76,490)
Accumulated other comprehensive income (deficit)....... 37 (31)
Receivable from Triarc Consumer Products Group, LLC.... -- (303,210)
-------- ---------
Total stockholder's equity (deficit).............. 31,306 (378,881)
-------- ---------
$536,570 $ 552,329
-------- ---------
-------- ---------
</TABLE>
- ------------
(A) Derived from the audited consolidated financial statements as of January 3,
1999
See accompanying notes to condensed consolidated financial statements.
F-88
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
MARCH 29, APRIL 4,
1998 1999
---- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Net revenues................................................ $121,770 $129,163
-------- --------
Costs and expenses:
Cost of sales, excluding depreciation and amortization
related to sales of $300,000 and $367,000............. 71,355 75,800
Advertising, selling and distribution.................. 32,580 32,521
General and administrative............................. 9,280 9,687
Depreciation and amortization, excluding amortization
of deferred financing costs........................... 5,568 5,384
Capital structure reorganization related............... -- 2,250
-------- --------
118,783 125,642
-------- --------
Operating profit....................................... 2,987 3,521
Interest expense............................................ (7,118) (7,757)
Other income (expense), net................................. (131) 398
-------- --------
Loss before income taxes and extraordinary charge...... (4,262) (3,838)
Benefit for income taxes.................................... 1,599 1,405
-------- --------
Loss before extraordinary charge....................... (2,663) (2,433)
Extraordinary charge........................................ -- (4,876)
-------- --------
Net loss............................................... $ (2,663) $ (7,309)
-------- --------
-------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-89
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
MARCH 29, APRIL 4,
1998 1999
---- ----
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................... $(2,663) $ (7,309)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization of costs in excess of net assets of
acquired companies, trademarks and certain other
items............................................ 4,144 3,899
Depreciation and amortization of properties....... 1,424 1,485
Amortization of deferred financing costs.......... 481 520
Write-off of unamortized deferred financing costs
and interest rate cap agreement costs............ -- 7,990
Capital structure reorganization related charge... -- 2,250
Provision for doubtful accounts................... 624 407
Benefit from deferred taxes....................... (2,191) (42)
Payments for acquisition related costs............ (4,744) (43)
Other, net........................................ (76) 43
Changes in operating assets and liabilities:
Increase in receivables...................... (9,643) (18,883)
Decrease (increase) in inventories........... 2,536 (13,228)
Increase in due from affiliates.............. -- 411
Increase in prepaid expenses and other
current assets.............................. (1,848) (2,149)
Increase in accounts payable and accrued
expenses.................................... 1,046 10,029
Increase (decrease) in due to Triarc
Companies, Inc. ............................ 6,006 (779)
------- --------
Net cash used in operating activities... (4,904) (15,399)
------- --------
Cash flows from investing activities:
Acquisition of Millrose Distributors, Inc.............. -- (17,296)
Capital expenditures................................... (1,150) (1,350)
Proceeds from sale of property......................... 69 71
------- --------
Net cash used in investing activities... (1,081) (18,575)
------- --------
Cash flows from financing activities:
Proceeds from long-term debt........................... -- 475,000
Repayments of long-term debt........................... (1,764) (285,203)
Transfer of long-term debt to affiliate................ -- (96,300)
Dividends.............................................. -- (82,837)
Deferred financing costs............................... -- (16,245)
Reimbursement of deferred financing costs from
affiliate............................................. -- 3,293
------- --------
Net cash used in financing activities... (1,764) (2,292)
------- --------
Net decrease in cash and cash equivalents................... (7,749) (36,266)
Cash and cash equivalents at beginning of period............ 23,779 39,578
------- --------
Cash and cash equivalents at end of period.................. $16,030 $ 3,312
------- --------
------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-90
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 4, 1999
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Triarc Beverage Holdings Corp. ('Triarc Beverage Holdings' and, together with
its subsidiaries, the 'Company'), a wholly-owned subsidiary of Triarc Consumer
Products Group, LLC ('TCPG') effective February 23, 1999 and of Triarc
Companies, Inc. ('Triarc') prior to February 23, 1999, have been prepared as if
they were to be filed in a Quarterly Report on Form 10-Q. Accordingly, the
accompanying condensed consolidated financial statements have been prepared in
accordance with Rule 10-01 of Regulation S-X promulgated by the Securities and
Exchange Commission and, therefore, do not include all information and footnotes
necessary for a fair presentation of financial position, results of operations
and cash flows in conformity with generally accepted accounting principles. In
the opinion of the Company, however, the accompanying condensed consolidated
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the Company's financial
position as of January 3, 1999 and April 4, 1999 and its results of operations
and cash flows for the three-month periods ended March 29, 1998 and April 4,
1999 (see below). This information should be read in conjunction with the
audited consolidated financial statements and notes thereto for the year ended
January 3, 1999.
Effective May 17, 1999 TCPG contributed the common 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 since
the November 25, 1997 acquisition of Cable Car by Triarc, the Cable Car
acquisition has been accounted for on an 'as if pooling' basis in the
accompanying condensed consolidated financial statements.
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 quarter of 1998 commenced on December 29, 1997 and ended on
March 29, 1998 and the Company's first quarter of 1999 commenced on January 4,
1999 and ended on April 4, 1999. For the purposes of these condensed
consolidated financial statements, such periods are referred to herein as the
three-month periods ended March 29, 1998 and April 4, 1999, respectively.
(2) INVENTORIES
The following is a summary of the components of inventories (in thousands):
<TABLE>
<CAPTION>
JANUARY 3, APRIL 4,
1999 1999
---- ----
<S> <C> <C>
Raw materials........................................... $16,662 $22,409
Finished goods.......................................... 24,901 33,929
------- -------
$41,563 $56,338
------- -------
------- -------
</TABLE>
(3) LONG-TERM DEBT
On February 25, 1999 Snapple Beverage Corp. ('Snapple'), Mistic Brands,
Inc. ('Mistic'), and Cable Car Beverage Corporation, 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 by the Company 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 and Royal Crown effective upon the redemption (the 'Redemption')
of the $275,000,000 of borrowings
F-91
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 4, 1999
(UNAUDITED)
under the RC/Arby's 9 3/4% senior secured notes due 2000 on March 30, 1999.
There were no borrowings of Revolving Loans as of February 25, 1999 or April 4,
1999. The Company utilized 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 the
former $380,000,000 credit agreement, as amended (the 'Former Beverage Credit
Agreement') entered into by Snapple, Mistic, Triarc Beverage Holdings and Cable
Car 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 then estimated deferred financing costs) of obligations under the
Term Loans to Royal Crown upon the Redemption, (3) acquire Millrose
Distributors, Inc. and the assets of Mid-State Beverage, Inc., two New Jersey
distributors of the Company's premium beverages, for $17,296,000, including
expenses, (subsequently adjusted to $17,376,000), (4) provide for allocated fees
and expenses of $16,245,000 (subsequently adjusted to $16,822,000), including
$3,293,000 of actual costs reimbursed by Royal Crown (subsequently adjusted to
$3,410,000) relating to the consummation of the Credit Facility (collectively,
the 'Refinancing Transactions'), and (5) pay one-time distributions, including
dividends, to Triarc of $87,220,000. See Note 7 for disclosure of the
extraordinary charge related to the aforementioned debt repayments recorded
during the three months ended April 4, 1999.
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 4.94% to 5.06% at April 4, 1999) or an
alternate base rate (the 'ABR'). The ABR (7 3/4% at April 4, 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 (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. The other two classes
of Term Loans (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 Company had outstanding Term A Loans, Term B Loans,
and Term C Loans as of April 4, 1999 of $35,877,000, $99,658,000 and
$243,165,000, respectively. The borrowing base for Revolving Loans is the sum of
80% of eligible accounts receivable and 50% of eligible inventories. At
April 4, 1999 there was an aggregate $59,951,000 of borrowing availability to
the Borrowers under the Revolving Credit Facility in accordance with limitations
due to such borrowing base. The Company's obligations under the Term Loans are
due $3,916,000 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. If the Company makes voluntary
prepayments of the Term B and Term C Loans on or prior to February 25, 2001, it
will incur prepayment penalties of 2.0% and 3.0% of the amounts prepaid,
respectively, through February 25, 2000 and 1.0% and 1.5% of the amounts
prepaid, respectively, through February 25, 2001.
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 Cable Car.
As collateral for such guarantees, all of the stock of Snapple, Mistic and Cable
Car, among other subsidiaries of TCPG, and substantially all of their domestic
subsidiaries and 65% of the stock of each of their directly-owned foreign
subsidiaries is pledged.
F-92
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 4, 1999
(UNAUDITED)
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 and
Mistic and all of their domestic subsidiaries. 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 April 4, 1999 such $300,000,000 principal amount as long-term debt
(including $20,000,000 of such debt classified as 'Long-term debt due to
affiliates' which was issued to the Chairman and Chief Executive Officer and the
President and Chief Operating Officer of TCPG) and $3,210,000 of 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, Guaranty and indenture pursuant to which the Notes
were issued 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 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.
The following pro forma data of the Company for the three months ended
April 4, 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 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.................................................... $129,163 $130,837
Operating profit............................................ 3,521 3,431
Interest expense............................................ (7,757) (9,240)
Loss before extraordinary charge............................ (2,433) (3,451)
</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.............................................. $ 3,769
Properties.................................................. 1,000
Goodwill.................................................... 13,385
Current liabilities......................................... (858)
-------
$17,296
-------
-------
</TABLE>
(5) CAPITAL STRUCTURE REORGANIZATION RELATED CHARGE
The capital structure reorganization related charge of $2,250,000
recognized during the three months ended April 4, 1999 resulted from equitable
adjustments to the terms of outstanding options
F-93
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 4, 1999
(UNAUDITED)
under the stock option plan of Triarc Beverage Holdings, 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,
partially offset by the effect of the contribution of Cable Car to Triarc
Beverage Holdings effective May 17, 1999.
(6) INCOME TAXES AND STOCKHOLDER'S EQUITY (DEFICIT)
The Company is included in the consolidated Federal income tax return of
Triarc. 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. On February 25, 1999
TCPG entered into a revised tax-sharing agreement (including the Company) with
Triarc pursuant to which TCPG would not receive, and accordingly the Company
would not receive, any benefit for certain deferred tax assets consisting of
then existing Federal net operating loss carryforwards (the 'NOLs') and excess
Federal income tax payments made in accordance with the prior tax-sharing
agreement. The revised tax-sharing agreement was amended on April 23, 1999 to
provide that TCPG, and accordingly the Company, would be entitled to the
benefits associated with the NOLs and the Federal income tax prepayments to the
extent necessary to avoid non-compliance with a Credit Agreement covenant. In
accordance therewith, during the three months ended April 4, 1999 the Company
recorded a charge to 'Accumulated deficit' and a credit to 'Deferred income
taxes' to transfer $14,676,000 of such deferred tax benefits to Triarc as if
such transfer were a distribution from the Company to TCPG which, in turn, was a
distribution from TCPG to Triarc.
(7) EXTRAORDINARY CHARGE
The extraordinary charge in the three months ended April 4, 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 (a) deferred financing costs of $7,844,000 and (b)
interest rate cap agreement costs of $146,000, net of income tax benefit of
$3,114,000.
(8) COMPREHENSIVE LOSS
The following is a summary of the components of comprehensive loss (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 29, APRIL 4,
1998 1999
---- ----
<S> <C> <C>
Net loss.................................................... $(2,663) $(7,309)
Net change in currency translation adjustment............... 7 (68)
Reclassification adjustment for prior year appreciation on
short-term investment sold during the period.............. (42) --
------- -------
Comprehensive loss.......................................... $(2,698) $(7,377)
------- -------
------- -------
</TABLE>
(9) TRANSACTIONS WITH RELATED PARTIES
The Company continues to have certain related party transactions with
Triarc 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 1, 3 and 6 for discussion of
certain related party transactions for the three-month period ended April 4,
1999.
F-94
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 4, 1999
(UNAUDITED)
(10) LEGAL MATTERS
The Company is involved in litigation and claims incidental to its
business. The Company has reserves for such legal matters aggregating
approximately $629,000 as of April 4, 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-95
<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
------------------------
, 1999
UNTIL _______________, 1999 (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.
Triarc Companies, Inc ('Triarc Parent') also enters into indemnification
agreements with its, and some of its subsidiaries', directors and officers, some
of whom are our directors and officers, indemnifying them to the fullest extent
permitted by law against liability, including related expenses, they may incur
in their capacity as directors, officers, employees, trustees, agents or
fiduciaries of Triarc Parent and/or its subsidiaries or any liability relating
to their service in any such capacity, at the request of Triarc Parent for other
corporations or entities. The indemnification agreements are meant to provide
specific contractual assurance that the indemnification provided by Triarc
Parent under the certificate of incorporation, bylaws, or directors' and
officers' liability insurance of Triarc Parent will be available regardless of
changes to Triarc Parent's certificate of incorporation or by-laws or any
acquisition transactions relating to Triarc Parent. 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 Parent 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 Triarc Parent under its certificate of
incorporation, by-laws 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 of Triarc Parent, independent legal counsel selected by
the Triarc Parent's board of directors, a majority of disinterested stockholders
of Triarc Parent or by a final adjudication of a court of competent
jurisdiction. If Triarc Parent 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 Parent,
which approval may not be unreasonably withheld. Triarc Parent will pay the
reasonable fees and expenses of the special independent counsel. An indemnitee
may be able to require Triarc Parent 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.
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
II-2
<PAGE>
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
- ----------- ----------------------
<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 (replaces previously filed exhibit)
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
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
3.27* -- Certificate of Incorporation of Cable Car Beverage
Corporation
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 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'), Cable Car Beverage Corporation ('Cable Car'),
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.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
5.1* -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to
legality of the exchange notes.
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 Cable Car, 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 Cable Car, 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).
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
10.17 -- Triarc Companies, Inc.'s Stock Option Plan for Cable Car
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 request for 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,
Cable Car 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, Cable
Car, 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, Cable Car, 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 Cable Car.
10.33* -- Amendment to Tax Sharing Agreements, dated as of August
15, 1998, among Triarc Beverage Holdings, Snapple, Mistic
and Cable Car.
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.
12.1** -- Statement of Computation of Ratios of Earnings to Fixed
Charges.
21.1** -- Subsidiaries of Triarc Consumer Products Group, LLC
(replaces previously filed exhibit).
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.
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
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).
24.1* -- Powers of Attorney (contained on signature pages).
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 (replaces previously filed exhibit).
27.2** -- Financial Data Schedule of Triarc Beverage Holdings Corp.
(replaces previously filed exhibit).
99.1** -- Form of Letter of Transmittal (including Guidelines for
Certification of Taxpayer Identification Number of
Substitute Form W-9) (replaces previously filed exhibit).
99.2** -- Form of Notice of Guaranteed Delivery (replaces
previously filed exhibit).
</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
II-7
<PAGE>
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. 1 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 AUGUST 3, 1999.
TRIARC CONSUMER PRODUCTS GROUP, LLC
By: *
...
BRIAN L. SCHORR
EXECUTIVE VICE PRESIDENT AND GENERAL
COUNSEL
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 1999.
TRIARC BEVERAGE HOLDINGS CORP.
By: *
...
BRIAN L. SCHORR
EXECUTIVE VICE PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 1999.
MISTIC BRANDS, INC.
By: *
...
BRIAN L. SCHORR
EXECUTIVE VICE PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 1999.
SNAPPLE BEVERAGE CORP.
By: *
...
BRIAN L. SCHORR
EXECUTIVE VICE PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 1999.
KELRAE, INC.
By: *
...
JOHN L. BARNES, JR.
PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Member of the Office of the Chief Executive and Senior
......................................... Vice President and Director (Principal Executive
CURTIS S. GIMSON Officer)
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
MICHAEL C. HOWE
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
KENNETH L. JOHNSTON
* Member of the Office of the Chief Executive, Senior Vice
......................................... President, Treasurer and Chief Financial Officer and
KENNETH A. THOMAS Director (Principal Executive, Financial and
Accounting Officer)
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
JOHN T.A. VANDERSLICE
* Director
.........................................
ALEXANDER E. FISHER
*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. 1 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 AUGUST 3, 1999.
ARHC, LLC
By: *
...
BRIAN L. SCHORR
EXECUTIVE VICE PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
CURTIS S. GIMSON
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
MICHAEL C. HOWE
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
KENNETH L. JOHNSTON
* Member of the Office of the Chief Executive, Senior Vice
......................................... President and Chief Financial Officer and Director
KENNETH A. THOMAS (Principal Executive, Financial and Accounting
Officer)
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
JOHN T.A. VANDERSLICE
/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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
CURTIS S. GIMSON
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
MICHAEL C. HOWE
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
KENNETH L. JOHNSTON
* Member of the Office of the Chief Executive, Senior Vice
......................................... President and Chief Financial Officer (Principal
KENNETH A. THOMAS Executive, Financial and Accounting Officer)
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
JOHN T.A. VANDERSLICE
* 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
CURTIS S. GIMSON
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
MICHAEL C. HOWE
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
KENNETH L. JOHNSTON
* Member of the Office of the Chief Executive, Senior Vice
......................................... President and Chief Financial Officer (Principal
KENNETH A. THOMAS Executive, Financial and Accounting Officer)
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
JOHN T.A. VANDERSLICE
* 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
CURTIS S. GIMSON
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
MICHAEL C. HOWE
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
KENNETH L. JOHNSTON
* Member of the Office of the Chief Executive, Senior Vice
......................................... President and Chief Financial Officer (Principal
KENNETH A. THOMAS Executive, Financial and Accounting Officer)
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
JOHN T.A. VANDERSLICE
* 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
CURTIS S. GIMSON
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
MICHAEL C. HOWE
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
KENNETH L. JOHNSTON
* Member of the Office of the Chief Executive, Senior Vice
......................................... President and Chief Financial Officer (Principal
KENNETH A. THOMAS Executive, Financial and Accounting Officer)
* Member of the Office of the Chief Executive (Principal
......................................... Executive Officer)
JOHN T.A. VANDERSLICE
* 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 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 AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF DENVER, STATE OF COLORADO, ON AUGUST 3, 1999.
CABLE CAR BEVERAGE CORPORATION
By: *
...
SAMUEL M. SIMPSON
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF DENVER, STATE OF COLORADO, ON AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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. 1 TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF DENVER, STATE OF COLORADO, ON AUGUST 3, 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. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON AUGUST 3, 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
------ ----------- ----
<S> <C> <C>
3.1* -- Certificate of Formation of Triarc Consumer Products
Group, LLC................................................
3.2** -- Certificate of Incorporation of Triarc Beverage Holdings
Corp., as amended (replaces previously filed exhibit).....
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 Cable Car Beverage
Corporation...............................................
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 Cable Car Beverage Corporation................
3.57* -- By-laws of Old San Francisco Seltzer, Inc................
3.58* -- By-laws of Fountain Classics, Inc........................
</TABLE>
II-38
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C>
4.1 -- Credit Agreement dated as of February 25, 1999, among
Snapple Beverage Corp. ('Snapple'), Mistic Brands, Inc.
('Mistic'), Cable Car Beverage Corporation ('Cable Car'),
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......................................................
5.1* -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to
legality of the exchange notes............................
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)................
</TABLE>
II-39
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C>
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 Cable Car, 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 Cable Car, 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 Cable Car
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).....
</TABLE>
II-40
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C>
10.26 -- Triarc Restaurant Group Senior Executive Mid-term
Incentive Plan (Portions of this exhibit have been omitted
pursuant to a request for 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,
Cable Car 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, Cable
Car, 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, Cable Car, 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 Cable Car................
10.33* -- Amendment to Tax Sharing Agreements, dated as of August
15, 1998, among Triarc Beverage Holdings, Snapple, Mistic
and Cable Car.............................................
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.............
12.1** -- Statement of Computation of Ratios of Earnings to Fixed
Charges...................................................
21.1** -- Subsidiaries of Triarc Consumer Products Group, LLC.
(replaces previously filed exhibit).......................
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)...................................
24.1* -- Powers of Attorney (contained on signature pages)........
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 (replaces previously filed exhibit)............
27.2* -- Financial Data Schedule of Triarc Beverage Holdings Corp.
(replaces previously filed exhibit).......................
99.1** -- Form of Letter of Transmittal (including Guidelines for
Certification of Taxpayer Identification Number of
Substitute Form W-9) (replaces previously filed exhibit)..
99.2** -- Form of Notice of Guaranteed Delivery (replaces
previously filed exhibit).................................
</TABLE>
------------------------
* Previously filed.
** Filed herewith.
II-41
STATEMENT OF DIFFERENCES
------------------------
The trademark symbol shall be expressed as 'TM'
The registered trademark symbol shall be expressed as 'r'
<PAGE>
CERTIFICATE OF INCORPORATION
of
TRIARC BEVERAGE HOLDINGS CORP.
The undersigned incorporator, in order to form a corporation under the
General Corporation Law of the State of Delaware, certifies as follows:
1. Name. The name of the corporation is Triarc Beverage Holdings Corp.
(hereinafter called the "Corporation").
2. Address; Registered Agent. The address of the Corporation's
registered office is 1209 Orange Street, City of Wilmington, County of New
Castle, State of Delaware; and its registered agent at such address is The
Corporation Trust Company.
3. Purposes. The nature of the business and purposes to be conducted
or promoted by the Corporation are to engage in, carry on and conduct any lawful
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
4. Number of Shares. The total number of shares of capital stock of
all classifications which the Corporation shall have authority to issue is three
thousand (3,000) shares of Common Stock of the par value of one dollar ($1.00)
each.
5. Name and Address of Incorporator. The name and mailing address of
the incorporator are: Mary C. Wade, c/o Triarc Companies, Inc., 280 Park Avenue,
41st Floor, New York, New York 10017.
6. Adoption, Amendment and/or Repeal of By-Laws. The Board of
Directors may from time to time (after adoption by the undersigned of the
original by-laws of the
<PAGE>
Corporation) make, alter or repeal the by-laws of the Corporation (the
"By-Laws"); provided, however, that any By-Laws made, amended or repealed by the
Board of Directors may be amended or repealed, and any By-Laws may be made, by
the stockholders of the Corporation.
7. Limitation of Liability of Directors. No director of the
Corporation shall be held personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit. If
the General Corporation Law of the State of Delaware is amended after adoption
of this paragraph to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time or such repeal
or modification.
8. Indemnification.
8.1 To the extent not prohibited by law, the Corporation shall
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
2
<PAGE>
civil, criminal, administrative or investigative, including, without limitation,
an action by or in the right of the Corporation 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 the Corporation,
or is or was serving in any capacity at the request of the Corporation for any
other 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 the Corporation may be similarly indemnified in respect of service
to the Corporation or to an Other Entity at the request of the Corporation to
the extent the Board of Directors at any time specifies that such persons are
entitled to the benefits of this Section 8.
8.2 The Corporation shall, from time to time, reimburse or advance
to any Director or officer or other person entitled to indemnification hereunder
the funds necessary for payment of expenses, including attorneys' fees and
disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; provided, however, that, if required by
the General Corporation Law of the State of Delaware, such expenses incurred by
or on behalf of any Director or officer or other person may be paid in advance
of the final disposition of a Proceeding only upon receipt by the Corporation of
an undertaking, by or on behalf of such Director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right
3
<PAGE>
of appeal that such Director, officer or other person is not entitled to be
indemnified for such expenses.
8.3 The rights to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Section 8 shall not be
deemed exclusive of any other rights to which a person seeking indemnification
or reimbursement or advancement of expenses may have or hereafter be entitled
under any statute, this Certificate of Incorporation, the By-Laws, any
agreement, any vote of stockholders or disinterested Directors or otherwise,
both as to action in his or her official capacity and as to action in another
capacity while holding such office.
8.4 The rights to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Section 8 shall continue
as to a person who has ceased to be a Director or officer (or other person
indemnified hereunder) and shall inure to the benefit of the executors,
administrators, legatees and distributees of such person.
8.5 The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted against such person or incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Section 8, the By-Laws or under Section 145 of the
General Corporation Law of the State of Delaware or any other provision of law.
4
<PAGE>
8.6 The provisions of this Section 8 shall be a contract between
the Corporation, on the one hand, and each Director and officer who serves in
such capacity at any time while this Section 8 is in effect and any other person
indemnified hereunder, on the other hand, pursuant to which the Corporation and
each such Director, officer, or other person intends to be legally bound. No
repeal or modification of this Section 8 shall affect any rights or obligations
with respect to any state of facts then or theretofore existing or thereafter
arising or any proceeding theretofore or thereafter brought or threatened based
in whole or in part upon any such state of facts.
8.7 The rights to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Section 8 shall be
enforceable by any person entitled to such indemnification or reimbursement or
advancement of expenses in any court of competent jurisdiction. The burden of
proving that such indemnification or reimbursement or advancement of expenses is
not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, its independent legal counsel and
its stockholders) to have made a determination prior to the commencement of such
action that such indemnification or reimbursement or advancement of expenses is
proper in the circumstances nor an actual determination by the Corporation
(including its Board of Directors, its independent legal counsel and its
stockholders) that such person is not entitled to such indemnification or
reimbursement or advancement of expenses shall constitute a defense to the
action or create a presumption that such person is not so entitled. Such a
person shall also be indemnified for any expenses incurred in connection with
successfully establishing his or her right to
5
<PAGE>
such indemnification or reimbursement or advancement of expenses, in whole or in
part, in any such proceeding.
8.8 Any Director or officer of the Corporation serving in any
capacity (a) another corporation of which a majority of the shares entitled to
vote in the election of its directors is held, directly or indirectly, by the
Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.
8.9 Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Section 8 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; provided, however, that if no such notice is given, the right to
indemnification or reimbursement or advancement of expenses shall be determined
by the law in effect at the time indemnification or reimbursement or advancement
of expenses is sought.
6
<PAGE>
IN WITNESS WHEREOF, this Certificate has been signed on this
30th day of April, 1997.
/s/ MARY C. WADE
--------------------------------
Mary C. Wade
Incorporator
7
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
TRIARC BEVERAGE HOLDINGS CORPORATION
---------------------------------
(Pursuant to Section 242 of the
General Corporation Law of the State of Delaware)
Triarc Beverage Holdings Corp., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), does hereby certify
as follows:
1. The name of the Corporation is Triarc Beverage Holdings
Corp.
2. The date of filing of the Certificate of Incorporation of
the Corporation with the Secretary of State was April 30, 1997.
3. This Certificate or Amendment amends the Certificate of
Incorporation, as now in effect, to increase its authorized capital stock and to
create a new class of capital stock.
4. Article 4 of the Certificate of Incorporation is hereby
amended to read in its entirety as follows:
The total number of shares of capital stock which the
Corporation shall have authority to issue is eight hundred
thousand (800,000), of which four hundred thousand (400,000)
shall be Common Stock, par value $1.00 per share (the "Common
Stock") and four hundred thousand (400,000) shall be Preferred
Stock, par value $1.00 per share (the "Preferred Stock").
The shares of Preferred Stock may be issued from time
to time in one or more series of any number of shares,
provided that the aggregate
<PAGE>
number of shares issued and not cancelled of any and all such
series shall not exceed the total number of shares of
Preferred Stock hereinabove authorized, and with distinctive
serial designations, all as shall hereafter be stated and
expressed in the resolution or resolutions providing for the
issue of such shares of Preferred Stock from time to time
adopted by the Board of Directors pursuant to authority so to
do which is hereby vested in the Board of Directors. Each
series of shares of Preferred Stock may have such voting
powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating,
optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated in
said resolutions providing for the issue of such shares of
Preferred Stock.
5. Such amendment was duly adopted in accordance with of
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has authorized the
undersigned to execute this Certificate of Amendment of the Certificate of
Incorporation of the Corporation this 21st day of May, 1997.
TRIARC BEVERAGE HOLDINGS CORP.
By: /s/ STUART I. ROSEN
--------------------------------
Stuart I. Rosen
Vice President and Secretary
By: /s/ MARY C. WADE
--------------------------------
Mary C. Wade
Assistant Secretary
2
<PAGE>
TRIARC BEVERAGE HOLDINGS CORP.
CERTIFICATE OF DESIGNATION OF THE
10% CUMULATIVE CONVERTIBLE
PREFERRED STOCK, SETTING FORTH THE POWERS,
PREFERENCES, RIGHTS, QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS OF SUCH SERIES OF PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Triarc Beverage Holdings Corp., a Delaware corporation (the
"Company"), DOES HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of
Directors of the Company (the "Board of Directors") by the Certificate of
Incorporation of the Company (the "Certificate of Incorporation"), and pursuant
to the provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors, by unanimous written consent in lieu of
meeting by the directors of the Company, adopted the following resolution
designating one series of preferred stock, par value $1.00 per share, as shares
of 10% Cumulative Convertible Preferred Stock which resolution is as follows:
WHEREAS, the Board of Directors is authorized, within the
limitations and restrictions stated in the Certificate of Incorporation, to
provide by resolution or resolutions for the issuance of shares of preferred
stock, par value $1.00, of the Company (the "Preferred Stock"), in one or more
series with such voting powers, full
<PAGE>
or limited, or without voting powers, and such other rights, preferences,
privileges and restrictions as shall be stated and expressed in the resolution
or resolutions providing for the issuance thereof adopted by the Board of
Directors, and as are not stated and expressed in the Certificate of
Incorporation, or any amendment thereto, including (but without limiting the
generality of the foregoing) such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets and
such other subjects or matters as may be fixed by resolution or resolutions of
the Board of Directors under the General Corporation Law of the State of
Delaware; and
WHEREAS, it is the desire of the Board of Directors, pursuant
to its authority as aforesaid, to designate, authorize and fix the terms of one
series of Preferred Stock and the number of shares constituting each such series
and hereby fixes the voting powers, designation, preferences and relative
participating, optional or special rights, and the qualifications, limitations
or restrictions thereof, of the shares of such series;
NOW, THEREFORE, BE IT RESOLVED:
ARTICLE I.
10% Cumulative Convertible Preferred Stock
1. Designation and Number of Shares.
(a) There shall be hereby established a series of
Preferred Stock designated as "10% Cumulative Convertible Preferred Stock," to
consist of 300,000 shares, par value $1.00 per share.
2
<PAGE>
(b) Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in Article II below.
2. Rank. So long as 10% Cumulative Preferred Stock is
outstanding, no class or series of capital stock, whether currently issued and
outstanding or to be issued in the future, shall rank prior to, and no class or
series of capital stock, whether currently issued and outstanding or to be
issued in the future, shall rank on a parity with, the 10% Cumulative
Convertible Preferred Stock as to dividends or upon liquidation. For purposes of
this resolution, any capital stock of any class or series of the Company shall
be deemed to rank:
(a) prior to shares of the 10% Cumulative Convertible
Preferred Stock, either as to dividends or upon liquidation, if the holders of
such stock shall be entitled to the receipt of dividends, or of amounts
distributable upon dissolution, liquidation or winding up of the Company, as the
case may be, in preference or priority to the holders of shares of the 10%
Cumulative Convertible Preferred Stock;
(b) on a parity with shares of the 10% Cumulative
Convertible Preferred Stock, either as to dividends or upon liquidation, whether
or not the dividend rates, dividend payment dates or redemption or liquidation
prices per share, be different from those of the 10% Cumulative Convertible
Preferred Stock, if the holders of such capital stock shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Company, as the case may be, in proportion to their
respective dividend rates or liquidation prices, without preference or priority,
one over the other, as between the holders of such
3
<PAGE>
capital stock and the holders of shares of the 10% Cumulative Convertible
Preferred Stock; and
(c) junior to shares of the 10% Cumulative Convertible
Preferred Stock, either as to dividends or upon liquidation, if such capital
stock shall be Common Stock, or any other class or series of common stock or if
the holders of shares of the 10% Cumulative Convertible Preferred Stock shall be
entitled to receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Company, as the case may be, in preference or
priority to the holders of shares of such class or series.
3. Dividends.
(a) Beginning on the date of issuance of the 10%
Cumulative Convertible Preferred Stock, the Company shall pay, when, as and if
declared by the Board of Directors of the Company, out of funds legally
available therefor (the "Legally Available Funds"), dividends at the annual rate
of (x) $100 per share of 10% Cumulative Convertible Preferred Stock if paid in
cash or (y) 0.10 shares of 10% Cumulative Convertible Preferred Stock per share
of 10% Cumulative Convertible Preferred Stock, if paid in additional shares of
10% Cumulative Convertible Preferred Stock. The payment of dividends in cash or
by the issuance of additional shares of 10% Cumulative Convertible Preferred
Stock shall be at the option of the Company; provided, that, notwithstanding the
foregoing, if on any Dividend Payment Date the Company is not permitted to pay
all or a portion of such dividends in cash under the Senior Credit Agreement,
then, with respect to such Dividend Payment Date the Company shall, to the
extent permitted by the Senior Credit Agreement, pay such
4
<PAGE>
portion of such dividends in cash that it is permitted to pay and shall pay the
remainder of such dividends through the issuance of additional fully paid and
nonassessable shares of 10% Cumulative Convertible Preferred Stock at a rate of
0.10 of a share in respect of each $100 of such dividends not paid in cash. Such
dividends shall be payable in equal semi-annual payments (as nearly as
practicable) for such full semi-annual dividend period. Such dividends shall be
fully cumulative, to the extent not paid, and shall accrue (whether or not
earned or declared) on a daily basis and compounding annually until such time as
such dividends are declared by the Board of Directors of the Company and paid.
Dividends shall be payable from the date of original issuance of shares of 10%
Cumulative Convertible Preferred Stock and shall be payable out of Legally
Available Funds when, as and if declared by the Board of Directors on each
Dividend Payment Date with respect to the period ending on the day immediately
preceding such date. In computing the amount of dividends accrued in respect of
a fractional year, such amount shall be computed on the basis of a 360- day year
consisting of twelve 30-day months.
(b) The Company shall reserve and keep available out of
its authorized and unissued 10% Cumulative Convertible Preferred Stock solely
for the purpose of paying dividends thereon pursuant to Section 3(a), such
number of shares of 10% Cumulative Convertible Preferred Stock as shall from
time to time be sufficient for such purpose. The Board of Directors of the
Company shall, from time to time, if necessary, propose to the stockholders of
the Company amendments to the Company's Certificate of Incorporation to increase
its authorized capital stock and take such other actions as may be necessary to
permit the issuance from time to time
5
<PAGE>
of shares of 10% Cumulative Convertible Preferred Stock upon the declaration of
any dividend payable in additional shares of 10% Cumulative Convertible
Preferred Stock.
(c) Fractional shares of 10% Cumulative Convertible
Preferred Stock may be issued. Each fractional share of 10% Cumulative
Convertible Preferred Stock outstanding shall be entitled to a ratably
proportionate amount of all dividends accruing with respect to each outstanding
share of 10% Cumulative Convertible Preferred Stock and all of such dividends
with respect to such outstanding fractional shares of 10% Cumulative Convertible
Preferred Stock shall be fully cumulative and shall accrue (whether or not
earned or declared) and shall be payable in the same manner and at such times as
provided for in this Section 3 with respect to dividends on each outstanding
share of 10% Cumulative Convertible Preferred Stock.
(d) All dividends paid with respect to shares of 10%
Cumulative Convertible Preferred Stock pursuant to this Section 3 shall be paid
pro rata to the holders entitled thereto. In the event that the Legally
Available Funds available for the payment of dividends shall be insufficient for
the payment of the entire amount of dividends payable at any date fixed for
payment of dividends hereunder to the holders of 10% Cumulative Convertible
Preferred Stock, such Legally Available Funds shall be allocated for the payment
of dividends with respect to the 10% Cumulative Convertible Preferred Stock
ratably in proportion to the full amount to which they would otherwise be
respectively entitled.
(e) Subject to the next sentence hereof, so long as any
shares of 10% Cumulative Convertible Preferred Stock are outstanding and until
all dividends have been declared and paid to the holders of shares of 10%
Cumulative
6
<PAGE>
Convertible Preferred Stock in cash or all dividends that have been paid in-kind
on the 10% Cumulative Convertible Preferred Stock have been redeemed by the
Company, no dividend shall be declared, paid or set apart for payment, or other
distribution made on shares of Junior Stock of the Company, nor shall the
Company redeem, purchase or otherwise acquire or retire or make any payment on
account of, or permit any subsidiary of the Company to purchase or otherwise
acquire (or declare, pay or set aside for payment money for a sinking fund or
other similar fund for such redemption, purchase, acquisition or retirement) or
make any payment on account of, any shares of the Junior Stock of the Company
(including any warrants, rights, calls or options exercisable for or convertible
into any of such shares). The foregoing provisions of this Section 3(e) shall
not prohibit (i) the issuance of securities pursuant to any stock split, stock
dividend or other similar stock recapitalization, or (ii) the payment in-kind of
dividends declared on the 10% Cumulative Convertible Preferred Stock and any
other series or classes of Junior Stock or Parity Stock.
(f) The foregoing provisions of Section 3(a) shall not
prevent the payment of any dividends within 60 days after the date of
declaration thereof, if at such date of declaration such payment complied with
the provisions of this Section 3.
4. Liquidation.
(a) In the event of any voluntary or involuntary
liquidation, winding up or dissolution of the Company, the holders of shares of
10% Cumulative Convertible Preferred Stock then outstanding shall be entitled to
be paid for each share held, out of the assets of the Company legally available
for distribution to its
7
<PAGE>
stockholders, an amount in cash equal to the Liquidation Preference per share
(or a pro rata portion thereof with respect to fractional shares), and in
addition, the aggregate amount of all accrued but unpaid dividends thereon to
the date of such liquidation, winding up or dissolution, before any payment
shall be made or any assets distributed to the holders of any shares of the
Junior Stock of the Company. Except as provided in this Section 4(a), holders of
the 10% Cumulative Convertible Preferred Stock shall not be entitled to any
distribution in the event of any liquidation, winding up or dissolution of the
Company.
(b) If, upon any liquidation, winding up or dissolution of
the Company, the assets of the Company legally available for distribution to the
holders of the 10% Cumulative Convertible Preferred Stock shall be insufficient
to permit payment in full to such holders of the sums which such holders are
entitled to receive in such case, then all of the assets available for
distribution to the holders of the 10% Cumulative Convertible Preferred Stock
shall be distributed among and paid to the holders of 10% Cumulative Convertible
Preferred Stock ratably in proportion to the respective amounts that would be
payable to such holders if such assets were sufficient to permit payment in
full.
(c) For the purposes of this Section 4, neither the
voluntary sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all or part of the
property or assets of the Company nor the consolidation or merger of the Company
with one or more other corporations shall be deemed to be a liquidation, winding
up or dissolution, voluntary or involuntary, of the Company.
8
<PAGE>
5. Optional Redemption.
(a) The Company, at its option, may use (x) up to
$25,000,000 of the net proceeds of the issuance of Permitted Senior Subordinated
Debt or (y) the net proceeds from an Initial Public Offering, to the extent
permitted by the Senior Credit Agreement, to redeem, in the manner provided in
Section 5(b), shares of 10% Cumulative Convertible Preferred Stock, at the
Redemption Price, as of the date fixed by the Company for redemption thereof
(the "Optional Redemption Date").
(b) At least 10 days and not more than 60 days before an
Optional Redemption Date, the Company shall mail a notice of redemption (the
"Optional Redemption Notice") by first class mail, postage prepaid, to the
holders of record of shares so to be redeemed at each such holder's address as
it appears on the stock register of the Company; provided, that no failure to
give such notice nor any defect therein shall affect the validity of the
procedures for the redemption of any shares of 10% Cumulative Convertible
Preferred Stock to be redeemed except as to the holder or holders to whom the
Company has failed to give said notice or except as to the holder or holders
whose notice was defective. The Optional Redemption Notice shall state:
(i) that the Company is exercising its option to
redeem shares of 10% Cumulative Convertible Preferred Stock;
(ii) the Redemption Price;
(iii) the total number of shares of the 10%
Cumulative Convertible Preferred Stock being redeemed;
9
<PAGE>
(iv) the number of shares of 10% Cumulative
Convertible Preferred Stock held by such holder that the
Company intends to redeem;
(v) the Optional Redemption Date;
(vi) that the holder is to surrender to the Company,
at the place or places where certificates for shares of 10%
Cumulative Convertible Preferred Stock are to be surrendered
for redemption as provided in the Optional Redemption Notice,
in the manner and at the Redemption Price designated, such
holder's certificate or certificates representing the shares
of 10% Cumulative Convertible Preferred Stock to be redeemed;
and
(vii) that dividends on the shares of the 10%
Cumulative Convertible Preferred Stock to be redeemed shall
cease to accrue on such Optional Redemption Date unless the
Company defaults in making payment of the Redemption Price for
the shares called for redemption.
(c) The Company shall effect such redemption pro rata
according to the number of shares held by each holder of the 10% Cumulative
Convertible Preferred Stock.
(d) Each holder of shares of 10% Cumulative Convertible
Preferred Stock called for redemption shall surrender the certificate or
certificates representing such shares of 10% Cumulative Convertible Preferred
Stock to the Company, duly endorsed, in the manner and at the place designated
in the Optional Redemption Notice, and on the Optional Redemption Date the full
Redemption Price for such shares shall be payable in cash to the Person whose
name appears on such
10
<PAGE>
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued by the Company, at its expense, representing the unredeemed
shares.
(e) Unless the Company defaults in the payment of the
Redemption Price, dividends on the shares of 10% Cumulative Convertible
Preferred Stock called for redemption shall cease to accrue on the Optional
Redemption Date, and the holders of such redeemed shares shall cease to have any
further rights as stockholders of the Company on the Optional Redemption Date,
other than the right to receive the Redemption Price. If there is any such
default in payment, then such dividends shall continue to accrue and the holders
of such shares shall continue to have all rights as stockholders of the Company
(in each case as though no such redemption or attempted redemption had been
made).
6. Mandatory Redemption.
(a) Subject to Section 6(c), on May 22, 2009 (the
"Mandatory Redemption Date"), the Company shall redeem all of the shares of the
10% Cumulative Convertible Preferred Stock then outstanding at a price per share
equal to the Redemption Price. If the assets of the Company legally available
for the redemption of the shares of 10% Cumulative Convertible Preferred Stock
shall be insufficient to permit payment in full to such holders, then the shares
of the 10% Cumulative Convertible Preferred Stock shall be redeemed from, and
all of the assets available for the redemption shall be distributed among and
paid to, the holders of the 10% Cumulative Convertible Preferred Stock in each
case ratably in proportion to the
11
<PAGE>
respective numbers of shares and amounts that would be redeemed from and payable
to such holders if such amounts were sufficient or available to permit payment
in full, and as promptly as practicable after additional amounts or assets may
become available to the Company from time to time, the Company shall use such
additional amounts or assets to effect a redemption of as many additional shares
of the 10% Cumulative Convertible Preferred Stock as legally permitted, all in
accordance with this Section 6, until such time as all of the shares of the 10%
Cumulative Convertible Preferred Stock have been fully redeemed. If and so long
as any such mandatory redemption obligations with respect to the shares of the
10% Cumulative Convertible Preferred Stock shall not be fully discharged on or
after the date such obligations arise, no dividend shall be declared, paid or
set apart for payment or other distribution on the Junior Stock of the Company,
nor shall the Company redeem, purchase or otherwise acquire or retire, or permit
any subsidiary of the Company to purchase or otherwise acquire (or declare, pay
or set apart for payment money for a sinking fund for such redemption, purchase,
acquisition or retirement), any shares of the Junior Stock of the Company
(including any warrants, rights, calls or options exercisable for or convertible
into any of such shares). The foregoing provisions of this Section 6(a) shall
not prohibit (i) the issuance of securities pursuant to any stock split, stock
dividend or other similar stock recapitalization or (ii) the payment in-kind of
dividends declared on the 10% Cumulative Convertible Preferred Stock and any
other series or classes of Junior Stock or Parity Stock.
(b) At least 15 days before the Mandatory Redemption Date,
the Company shall mail a notice of redemption (the "Mandatory Redemption
Notice")
12
<PAGE>
by first class mail, postage prepaid, to each holder of record of shares of 10%
Cumulative Convertible Preferred Stock at such holder's address as it appears on
the stock register of the Company; provided, that no failure to give such notice
nor any defect therein shall affect the validity of the procedures for the
redemption of any shares of 10% Cumulative Convertible Preferred Stock to be
redeemed except as to the holder or holders to whom the Company has failed to
give said notice or except as to the holder or holders whose notice was
defective. The Mandatory Redemption Notice shall state:
(i) the Mandatory Redemption Date;
(ii) that the Company is redeeming the 10%
Cumulative Convertible Preferred Stock;
(iii) the Redemption Price;
(iv) the number of shares of 10% Cumulative
Convertible Preferred Stock held by such holder to be redeemed
by the Company;
(v) that the holder is to surrender to the Company,
at the place or places where certificates for shares of 10%
Cumulative Convertible Preferred Stock are to be surrendered
for redemption as provided in the Mandatory Redemption Notice,
in the manner and at the Redemption Price designated, such
holder's certificate or certificates representing the shares
of 10% Cumulative Convertible Preferred Stock held by such
holder; and
13
<PAGE>
(vi) that dividends on the shares of the 10%
Cumulative Convertible Preferred Stock to be redeemed shall
cease to accrue on such Mandatory Redemption Date unless the
Company defaults in making payment of the Redemption Price.
(c) Each holder of shares of 10% Cumulative Convertible
Preferred Stock called for redemption shall surrender the certificate or
certificates representing such shares of 10% Cumulative Convertible Preferred
Stock to the Company, duly endorsed, in the manner and at the place designated
in the Mandatory Redemption Notice, and on the Mandatory Redemption Date the
full Redemption Price for such shares shall be payable in cash to the Person
whose name appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled and retired. In the event that
less than all of the shares represented by any such certificate are redeemed, a
new certificate shall be issued by the Company, at its expense, representing the
unredeemed shares.
(d) Unless the Company defaults in the payment of the
Redemption Price, dividends on the shares of 10% Cumulative Convertible
Preferred Stock called for redemption shall cease to accrue on the Mandatory
Redemption Date, and the holders of such redeemed shares shall cease to have any
further rights as stockholders of the Company on the Mandatory Redemption Date,
other than the right to receive the Redemption Price. If there is any such
default in payment or failure to pay, then such dividends shall continue to
accrue and the holders of such shares shall continue to have all rights as
stockholders of the Company (in each case as though no such redemption or
attempted redemption had been made).
14
<PAGE>
7. Voting Rights. The holders of 10% Cumulative Convertible
Preferred Stock, except as otherwise required under Delaware law, shall not be
entitled or permitted to vote on any matter required or permitted to be voted
upon by the stockholders of the Company.
8. Reissuance of 10% Cumulative Convertible Preferred Stock.
Shares of 10% Cumulative Convertible Preferred Stock that have been redeemed or
otherwise acquired by the Company shall be retired and canceled and shall resume
the status of authorized and unissued shares of Preferred Stock undesignated as
to series and may be redesignated and reissued as part of any series of
Preferred Stock.
9. Conversion.
(a) Right To Convert. Each share of 10% Cumulative
Convertible Preferred Stock shall be convertible, at the option of the holder
thereof, into fully paid and nonassessable shares of Common at an initial
conversion price of $1,000 per share and subject to adjustment as set forth in
this Section 9 (the "Conversion Price").
(b) Number of shares of Common Stock Issuable upon
Conversion. The number of shares of Common Stock to be issued upon conversion of
shares of 10% Cumulative Convertible Preferred Stock shall be equal to the
product of (i) a fraction, the numerator of which is the Liquidation Preference
and the denominator of which is the Conversion Price and (ii) the number of
shares of 10% Cumulative Convertible Preferred Stock to be converted.
(c) Antidilution Adjustments. The Conversion Price shall
be adjusted from time to time in certain cases as follows:
15
<PAGE>
(i) Dividend, Subdivision, Combination or
Reclassification of Common Stock. If the Company shall, at any
time or from time to time, (1) declare a dividend on the
Common Stock payable in shares of its capital stock (including
Common Stock), (2) subdivide the outstanding Common Stock, (3)
combine the outstanding Common Stock into a smaller number of
shares, or (4) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing corporation), then in
each such case, the Conversion Price in effect at the time of
the record date for such dividend or of the effective date of
such subdivision, combination or reclassification shall be
adjusted to that price which will permit the number of shares
of Common Stock into which 10% Cumulative Convertible
Preferred Stock may be converted to be increased or reduced in
the same proportion as the number of shares of Common Stock
are increased or reduced in connection with such dividend,
subdivision, combination or reclassification. Any such
adjustment shall become effective immediately after the record
date of such dividend or the effective date of such
subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above
shall occur. In the event, if a dividend is declared, such
dividend is not paid, the Conversion Price shall be adjusted
to the Conversion Price in effect immediately prior to the
record date of such dividend.
16
<PAGE>
(ii) Issuance of Rights to Purchase Common Stock
Below Current Market Price or Dilution Price. If the Company
shall, at any time or from time to time, fix a record date for
the issuance of rights or warrants to all holders of its
Common Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or
purchase shares of Common Stock (or securities convertible
into Common Stock) at a price per share of Common Stock (or
having a conversion price per share of Common Stock, if a
security is convertible into Common Stock) lower than (1) the
Current Market Price of the Common Stock on such record date,
or (2) the Dilution Price, then the Conversion Price shall be
reduced to the price determined by multiplying the Conversion
Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares
of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock which the
aggregate offering price of the total number of shares of
Common Stock so to be offered (or the aggregate initial
conversion price of the convertible securities so to be
offered) would purchase at the Applicable Price, and the
denominator of which shall be the number of shares of Common
Stock outstanding on such record date plus the number of
additional shares of Common Stock to be offered for
subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). Any
such adjustment shall become effective immediately after the
record date for such rights or warrants. Such adjustment shall
be made successively when such a record date is fixed. If such
rights or
17
<PAGE>
warrants are not issued to the holders of Common Stock, the
Conversion Price shall be adjusted to the Conversion Price in
effect immediately prior to such record date.
(iii) Certain Distributions. If the Company shall fix
a record date for the distribution to all holders of Common
Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, assets
or other property (other than regularly scheduled cash
dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in capital
stock) or subscription rights or warrants (excluding those
referred to in paragraph (ii) of this Section 9(c)), then the
Conversion Price shall be reduced to the price determined by
multiplying the Conversion Price in effect immediately prior
to such record date by a fraction, the numerator of which
shall be the Current Market Price per share of Common Stock on
such record date (or, if an ex-dividend date has been
established for such record date, on the next day preceding
such ex-dividend date), less the fair market value (as
determined in good faith by the Board of Directors of the
Company) of the portion of the assets, evidences of
indebtedness or other property so to be distributed or of such
subscription rights or warrants applicable to one share of
Common Stock and the denominator of which shall be such
Current Market Price. Such adjustment shall be made
successively whenever such a record date is fixed. Any such
adjustment shall become effective immediately after the record
date for such
18
<PAGE>
distribution. In the event that such distribution is not so
made, the Conversion Price shall be adjusted to be the
Conversion Price in effect immediately prior to such record
date.
(iv) Issuance of Common Stock Below Current Market
Price or Dilution Price. If the Company shall, at any time or
from time to time, directly or indirectly, sell or issue
shares of Common Stock (regardless of whether originally
issued or from the Company's treasury), or rights, options,
warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock
(excluding shares issued (1) in any of the transactions
described in Section 9(c)(i), (ii) or (iii), (2) upon the
exercise or conversion of options or any other securities
convertible into or exchangeable for shares of Common Stock
outstanding on May 22, 1997 and (3) to the Company's employees
under bona fide employee benefit plans approved or adopted by
the Company's Board of Directors, if such shares would
otherwise be included in this Section 9(c)(iv)) at a price per
share of Common Stock (determined, in the case of rights,
options, warrants or convertible or exchangeable securities,
by dividing (x) the total amount received or receivable by the
Company in consideration of the sale or issuance of such
rights, options, warrants or convertible or exchangeable
securities, plus the total consideration payable to the
Company upon exercise or conversion or exchange thereof, by
(y) the total number of shares of Common Stock covered by such
rights, options, warrants or convertible or exchangeable
securities) lower than (A) the Current Market Price of the
Common Stock
19
<PAGE>
immediately prior to such sale or issuance, or (B) the
Dilution Price, then the Conversion Price shall be reduced to
a price determined by multiplying the Conversion Price in
effect immediately prior thereto by a fraction, the numerator
of which shall be the sum of the number of shares of Common
Stock outstanding immediately prior to such sale or issuance
plus the number of shares of Common Stock which the aggregate
consideration received (determined as provided below) for such
sale or issuance would purchase at the Applicable Price and
the denominator of which shall be the total number of shares
of Common Stock outstanding immediately after such sale or
issuance. Such adjustment shall be made successively whenever
such sale or issuance is made. For the purposes of such
adjustments, the shares of Common Stock which the holder of
any such rights, options, warrants, or convertible or
exchangeable securities shall be entitled to subscribe for or
purchase shall be deemed to be issued and outstanding as of
the date of such sale or issuance and the consideration
received by the Company therefor shall be deemed to be the
consideration received by the Company (plus any underwriting
discounts or commissions in connection therewith) for such
rights, options, warrants or convertible or exchangeable
securities, plus the consideration stated in such rights,
options, warrants or convertible or exchangeable securities to
be paid for the shares of Common Stock covered thereby. If the
Company shall sell or issue shares of Common Stock for a
consideration consisting, in whole or in part, of property
other than cash or its equivalent, then in determining the
"price per share of Common Stock" and the "consideration
received by the
20
<PAGE>
Company" for purposes of the first sentence and the
immediately preceding sentence of this Section 9(c)(iv), the
fair value of such property shall be determined in good faith
by the Board of Directors of the Company. The determination of
whether any adjustment is required under this Section
9(c)(iv), by reason of the sale and issuance of rights,
options, warrants or convertible or exchangeable securities
and the amount of such adjustment, if any, shall be made only
at the time of such issuance or sale and not at the subsequent
time of issuance or sale of Common Stock upon the exercise of
such rights to subscribe or purchase.
(v) Determination of Current Market Price. For the
purpose of any computation under clauses (ii), (iii) and (iv)
of this Section 9(c), the Current Market Price of the Common
Stock, on any date shall be deemed to be the average of the
daily Closing Prices per share of such Common Stock for the 10
consecutive trading days commencing 15 days before the day in
question. If on any such date the shares of such Common Stock
are not listed or admitted for trading on any national
securities exchange and not quoted on NASDAQ or any similar
service, the Current Market Price for such shares shall be the
fair market value as determined in good faith by the Board of
Directors of the Company.
(vi) De Minimus Adjustments. No adjustment of the
Conversion Price shall be made if the amount of such
adjustment would result in a change in the Conversion Price
per share of less than $.02, but in such case any adjustment
that would otherwise be required then to be made shall be
21
<PAGE>
carried forward and shall be made at the time of and together
with the next subsequent adjustment, which together with any
so carried forward, would result in a change in the Conversion
Price in excess of $.05 per share. If the Company shall, at
any time or from time to time, issue Common Stock by way of
dividends on any stock of the Company or subdivide or combine
the outstanding shares of the Common Stock, such amount of
$.02 (as theretofore increased or decreased, if such amount
shall have been adjusted in accordance with the provisions of
this clause) shall forthwith be proportionately increased in
the case of a combination or decreased in the case of a
subdivision or stock dividend so as appropriately to reflect
the same. Notwithstanding the provisions of the first sentence
of this Section 9(c)(vi), any adjustment postponed pursuant to
this Section 9(c)(vi) shall be made no later than three years
from the date of the transaction that would, but for the
provisions of the first sentence of this Section 9(c)(vi),
have required such adjustment.
(vii) Fractional Shares. No fractional shares of
Common Stock shall be issued on any conversion, but in lieu
thereof, the Company shall pay therefor cash in an amount
equal to the greater of the Current Market Price and the
Purchase Price of such fractional interest.
(d) Reorganization, Reclassification and Merger
Adjustment. If there occurs any capital reorganization or any reclassification
of the Common Stock of the Company, the consolidation or merger of the Company
with or into another corporation (other than a merger or consolidation of the
Company in which the Company is the continuing corporation and which does not
result in any
22
<PAGE>
reclassification or change of outstanding shares of its Common Stock) or the
sale or conveyance of all or substantially all of the assets of the Company to
another corporation, then each share of 10% Cumulative Convertible Preferred
Stock shall thereafter be convertible into the same kind and amounts of
securities (including shares of stock) or other assets, or both, which were
issuable or distributable to the holders of outstanding Common Stock of the
Company upon such reorganization, reclassification, consolidation, merger, sale
or conveyance, in respect of that number of shares of Common Stock into which
such share of 10% Cumulative Convertible Preferred Stock might have been
converted immediately prior to such reorganization, reclassification,
consolidation, merger, sale or conveyance; and, in any such case, appropriate
adjustments (as determined in good faith by the Board of Directors of the
Company) shall be made in the application of the provisions herein set forth
with respect to the rights and interests thereafter of the holders of the 10%
Cumulative Convertible Preferred Stock to the end that the provisions set forth
herein (including provisions with respect to changes in, and other adjustments
of, the Conversion Price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any securities or other assets thereafter
deliverable upon the conversion of the 10% Cumulative Convertible Preferred
Stock.
(e) Mechanics of Conversion. The option to convert shall
be exercised by surrendering for such purpose to the Company, at any place where
the Company shall maintain a transfer agent for its Common Stock and 10%
Cumulative Convertible Preferred Stock, certificates representing the shares to
be converted, duly endorsed in blank or accompanied by proper instruments of
transfer,
23
<PAGE>
and at the time of such surrender, the Person exercising such option to convert
shall be deemed to be the holder of record of the Common Stock, issuable on such
conversion, notwithstanding that the share register of the Company shall then be
closed or that the certificates representing such Common Stock shall not then be
actually delivered to such person.
(f) Statement of Adjustment. Whenever the Conversion Price
or the securities or other property deliverable upon the conversion of the 10%
Cumulative Convertible Preferred Stock shall be adjusted pursuant to the
provisions hereof, the Company shall forthwith file, at its principal executive
office and with any transfer agent or agents for the 10% Cumulative Convertible
Preferred Stock and the Common Stock, a statement, signed by the Chairman of the
Board, President or one of the Vice Presidents of the Company, and by its Chief
Financial Officer, its Treasurer or one of its Assistant Treasurers, stating the
adjusted Conversion Price or the securities or other property deliverable per
share of 10% Cumulative Convertible Preferred Stock calculated to the nearest
cent or to the nearest one one-hundredth of a share and setting forth in
reasonable detail the method of calculation and the facts requiring such
adjustment and upon which such calculation is based. Each adjustment shall
remain in effect until a subsequent adjustment hereunder is required.
(g) Reservation of Common Stock. The Company shall at all
times reserve and keep available for issuance upon the conversion of the shares
of 10% Cumulative Convertible Preferred Stock, the maximum number of its
authorized but unissued shares of Common Stock as is reasonably anticipated to
be sufficient to permit the conversion of all outstanding shares of 10%
Cumulative Convertible
24
<PAGE>
Preferred Stock, and shall take all action required to increase the authorized
number of shares of Common Stock if at any time there shall be insufficient
authorized but unissued shares of Common Stock to permit such reservation or to
permit the conversion of all outstanding shares of 10% Cumulative Convertible
Preferred Stock.
(h) No Conversion Charge or Tax. The issuance and
delivery of certificates for shares of Common Stock upon the conversion of
shares of 10% Cumulative Convertible Preferred Stock shall be made without
charge to the holder of shares of 10% Cumulative Convertible Preferred Stock for
such certificates or for any tax in respect of the issuance or delivery of such
certificates or the securities represented thereby.
10. Business Day. If any payment or redemption shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment or redemption shall be made on the immediately succeeding Business
Day.
ARTICLE II.
Definitions
As used in this Certificate of Designation, the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Applicable Price" means the higher of (a) the Current Market
Price per share of Common Stock on the applicable record or other relevant date
and (b) the Dilution Price.
25
<PAGE>
"Business Day" means any day except a Saturday, a Sunday or
any day on which banking institutions in New York, New York are required or
authorized by law or other governmental action to be closed.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting or non-voting) of, such Person's capital stock and
any and all rights, warrants or options exchangeable for or convertible into
such capital stock (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
"Closing Price" shall mean, with respect to each share of
Common Stock, for any day, (a) the last reported sale price regular way or, in
case no such sale takes place on such day, the average of the closing bid and
asking price regular way, in either case as reported on the principal national
securities exchange on which such Common Stock is listed or admitted for trading
(b) if such Common Stock is not listed or admitted for trading on any national
securities exchange, the last reported sale price or, in case no such sale takes
place on such day, the average of the highest reported bid and the lowest
reported asked quotation for such Common Stock, in either case as reported on
the Automatic Quotation System of NASDAQ or a similar service if NASDAQ is no
longer reporting such information or (c) if such Common Stock is not quoted on
NASDAQ or a similar service, the fair market value of the Common Stock as
determined in good faith by the Board of Directors of the Company.
26
<PAGE>
"Common Stock" means the common stock, par value $1.00 per
share, of the Company.
"Company" means Triarc Beverage Holdings Corp., a Delaware
corporation, and its successors.
"Conversion Price" has the meaning assigned to such term in
Section 9(a).
"Current Market Price" shall be determined in accordance with
Section 9(c)(v).
"Dilution Price" shall mean, with respect to each share of 10%
Cumulative Convertible Preferred Stock, $1,000, subject to appropriate
adjustment for events described in Section 9(c)(i).
"Dividend Payment Date" means May 31 and November 30 of each
year, commencing November 30, 1997.
"Initial Public Offering" has the meaning set forth in the
Senior Credit Agreement.
"Junior Stock" shall mean and include the Common Stock and any
other Capital Stock of the Company which, pursuant to the terms thereof in the
case of any Capital Stock that is not Common Stock, is junior to the 10%
Cumulative Convertible Preferred Stock as to the payment of dividends,
distributions upon dissolution, liquidation, winding up, and redemption.
"Liquidation Preference" means, with respect to a share of 10%
Cumulative Convertible Preferred Stock, the sum of $1,000.
27
<PAGE>
"NASDAQ" shall mean the National Association of Securities
Dealers, Inc.
"Parity Stock" shall mean and include any Capital Stock of the
Company which ranks on parity with 10% Cumulative Convertible Preferred Stock as
to the payment of dividends, distributions, upon dissolution, liquidation,
winding up and redemption.
"Permitted Senior Subordinated Debt" has the meaning set forth
in the Senior Credit Agreement.
"Person" means any individual, corporation, limited liability
company, partnership, firm, joint venture, association, joint-stock company,
trust, estate, unincorporated organization, governmental or regulatory body or
other entity.
"Redemption Price" means the Liquidation Preference of the 10%
Cumulative Convertible Preferred Stock, together with an amount in cash equal to
all accrued but unpaid dividends thereon.
"Senior Credit Agreement" means that certain Credit Agreement,
dated as of May 22, 1997, among the Company, Mistic Brands, Inc., Snapple
Beverage Corp., the Senior Creditors and DLJ Capital Funding, Inc. as
Syndication Agent, and Morgan Stanley Senior Funding, Inc., as the Documentation
Agent, as amended, modified, supplemented, renewed, and restated from time to
time, including any other agreement or agreements relating to any refunding or
refinancing of the indebtedness thereunder, whether or not with the same
lenders.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
28
<PAGE>
IN WITNESS WHEREOF, Triarc Beverage Holdings Corp. has caused
this Certificate to be duly executed by its duly authorized officers this 22 day
of May, 1997.
TRIARC BEVERAGE HOLDINGS CORP.
By: /s/ STUART I. ROSEN
--------------------------------
Name: Stuart I. Rosen
Secretary
ATTEST:
By: /s/ STUART I. ROSEN
- --------------------------------
Name: Mary C. Wade
Title: Assistant Secretary
29
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
TRIARC BEVERAGE HOLDINGS CORPORATION
---------------------------------
(Pursuant to Section 242 of the
General Corporation Law of the State of Delaware)
Triarc Beverage Holdings Corp., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), does hereby certify
as follows:
1. The name of the Corporation is Triarc Beverage Holdings
Corp.
2. The date of filing of the Certificate of Incorporation of
the Corporation with the Secretary of State was April 30, 1997.
3. This Certificate or Amendment amends the Certificate of
Incorporation, as now in effect, to increase its authorized capital stock.
4. Article 4 of the Certificate of Incorporation is hereby
amended to read in its entirety as follows:
The total number of shares of capital stock which the
Corporation shall have authority to issue is two million four
hundred thousand (2,400,000), of which two million (2,000,000)
shall be Common Stock, par value $1.00 per share (the "Common
Stock") and four hundred thousand (400,000) shall be Preferred
Stock, par value $1.00 per share (the "Preferred Stock").
The shares of Preferred Stock may be issued from time
to time in one or more series of any number of shares,
provided that the aggregate number of shares issued and not
cancelled of any and all such series shall not exceed the
total number of shares of Preferred Stock
<PAGE>
hereinabove authorized, and with distinctive serial
designations, all as shall hereafter be stated and expressed
in the resolution or resolutions providing for the issue of
such shares of Preferred Stock from time to time adopted by
the Board of Directors pursuant to authority so to do which is
hereby vested in the Board of Directors. Each series of shares
of Preferred Stock may have such voting powers, full or
limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other
special rights, and qualifications, limitations or
restrictions thereof, as shall be stated in said resolutions
providing for the issue of such shares of Preferred Stock.
5. Such amendment was duly adopted in accordance with of
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has authorized the
undersigned to execute this Certificate of Amendment of the Certificate of
Incorporation of the Corporation this 20th day of August, 1997.
TRIARC BEVERAGE HOLDINGS CORP.
By: /s/ FRANCIS T. MCCARRON
--------------------------------
Name: Francis T. McCarron
Title: Senior Vice President-Taxes
By: /s/ THOMAS E. SCHULTZ
--------------------------------
Name: Thomas E. Schultz
Title: Senior Vice President & Treasurer
2
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATION
OF THE
10% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
TRIARC BEVERAGE HOLDINGS CORP.
------------------------------------
(Pursuant to Section 242 of the
General Corporation Law of the State of Delaware)
Triarc Beverage Holdings Corp., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), does
hereby certify as follows:
1. The name of the Corporation is Triarc Beverage Holdings
Corp.
2. The date of filing of the Certificate of Incorporation of
the Corporation with the Secretary of State was April 30, 1997, and the date of
filing of the Certificate of Designation with the Secretary of State was May 22,
1997.
3. This Certificate of Amendment amends the Certificate of
Designation, as now in effect, to increase the annual dividend, and to change
each of the Conversion Price, Dilution Price and Liquidation Preference (each as
defined in the Certificate of Designation).
<PAGE>
4. Section 3(a) of Article I of the Certificate of Designation
is hereby amended to read in its entirety as follows:
Beginning on the date of issuance of the 10%
Cumulative Convertible Preferred Stock, the Company shall pay,
when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefor (the "Legally
Available Funds"), dividends at the annual rate of (x) $10,000
per share of 10% Cumulative Convertible Preferred Stock if
paid in cash or (y) 0.10 shares of 10% Cumulative Convertible
Preferred Stock per share of 10% Cumulative Convertible
Preferred Stock, if paid in additional shares of 10%
Cumulative Convertible Preferred Stock. The payment of
dividends in cash or by the issuance of additional shares of
10% Cumulative Convertible Preferred Stock shall be at the
option of the Company; provided, that, notwithstanding the
foregoing, if on any Dividend Payment Date the Company is not
permitted to pay all or a portion of such dividends in cash
under the Senior Credit Agreement, then, with respect to such
Dividend Payment Date the Company shall, to the extent
permitted by the Senior Credit Agreement, pay such portion of
such dividends in cash that it is permitted to pay and shall
pay the remainder of such dividends through the issuance of
additional fully paid and nonassessable shares of 10%
Cumulative Convertible Preferred Stock at a rate of 0.10 of a
share in respect of each $10,000 of such dividends not paid in
cash. Such dividends shall be payable in equal semi-annual
payments (as nearly as practicable) for such full semi-annual
dividend period. Such dividends shall be fully cumulative, to
the extent not paid, and shall accrue (whether or not earned
or declared) on a daily basis and compounding annually until
such time as such dividends are declared by the Board of
Directors of the Company and paid. Dividends shall be payable
from the date of original issuance of shares of 10% Cumulative
Convertible Preferred Stock and shall be payable out of
Legally Available Funds when, as and if declared by the Board
of Directors on each Dividend Payment Date with respect to the
period ending on the day immediately preceding such date. In
computing the amount of dividends accrued in respect of a
fractional year, such amount shall be computed on the basis of
a 360-day year consisting of twelve 30-day months.
5. Section 9(a) of Article I of the Certificate of Designation
is hereby amended to read in its entirety as follows:
2
<PAGE>
Right To Convert. Each share of 10% Cumulative
Convertible Preferred Stock shall be convertible, at the
option of the holder thereof, into fully paid and
nonassessable shares of Common Stock at an initial conversion
price of $100,000 per share and subject to adjustment as set
forth in this Section 9 (the "Conversion Price").
6. The definition of "Dilution Price" in Article II of the
Certificate of Designation is hereby amended to read in its entirety as follows:
"Dilution Price" shall mean, with respect to each
share of 10% Cumulative Convertible Preferred Stock, $100,000,
subject to appropriate adjustment for events described in
Section 9(c)(i).
7. The definition of "Liquidation Preference" in Article II of
the Certificate of Designation is hereby amended to read in its entirety as
follows:
"Liquidation Preference" means, with respect to a
share of 10% Cumulative Convertible Preferred Stock, the sum
of $100,000.
8. Such amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
3
<PAGE>
IN WITNESS WHEREOF, the Corporation has authorized the
undersigned to execute this Certificate of Amendment of the Certificate of
Incorporation of the Corporation this 20th day of August, 1997.
TRIARC BEVERAGE HOLDINGS CORP.
By: /s/ FRANCIS T. MCCARRON
------------------------------------------
Name: Francis T. McCarron
Title: Senior Vice President
By: /s/ THOMAS E. SCHULTZ
------------------------------------------
Name: Thomas E. Schultz
Title: Vice President & Treasurer
4
<PAGE>
AMENDMENT NO. 1 TO
TRIARC BEVERAGE HOLDINGS CORP.
1997 STOCK OPTION PLAN
Amendment No. 1, dated as of May 17, 1999 ("Amendment"), to
the Triarc Beverage Holdings Corp. 1997 Stock Option Plan (the "Plan").
1. Section 12 of the Plan is hereby amended by adding the
following at the end of such section:
"Notwithstanding the above, if an adjustment cannot be made pursuant to
the preceding sentence in a manner which completely preserves the
benefits of outstanding Options without, in the opinion of the
Committee, significantly adversely affecting the Company or its
stockholders (for example, by causing the Plan to be accounted for as a
variable plan or by substantially diluting the interests of holders of
Shares), then the Committee may (i) adjust outstanding Options pursuant
to the preceding sentence to the maximum extent practicable without, in
the opinion of the Committee, significantly adversely affecting the
Company or its stockholders and (ii) award Optionees other forms of
cash-based or other compensation to make up (but do no more than make
up) for any benefits lost pursuant to the adjustment described in
clause (i) of this sentence including, but not limited to, cash
payments based wholly or partially on the value of Shares. Any
cash-based compensation awarded pursuant to clause (ii) of the
preceding sentence shall provide Optionees with the right to receive a
specific cash payment with respect to, but separate from, such Option.
Such payment shall be made at the time of the sale to the Company of
the Shares received from the exercise of the Option, if such sale
occurs prior to the initial public offering of Shares (the "IPO"). If
the IPO occurs prior to such sale, then such payment shall be made (i)
at the IPO, with respect to an Option which was exercised prior to the
IPO, and (ii) at the time of exercise of an Option, if such exercise
occurs on or after the IPO. Notwithstanding the preceding three
sentences, the cash payment will be made only (A) to an optionee when
such payment would not be subject to the deduction limitations of
section 162(m) of the Code and (B) if (x) the price at which the Shares
are purchased by the Company, (y) the IPO price (with respect to Shares
acquired through the exercise of Options prior thereto and not
theretofore sold to the Company) or (z) the fair market value of the
Shares at the time of exercise of the Option subsequent to the IPO
(whichever event triggers the payment obligation) is greater than (a)
the exercise price of applicable Option less (b) the amount of the cash
payment."
<PAGE>
2
2. Except as amended above, the provisions of the Plan are
hereby confirmed and shall remain in full force and effect.
3. This Amendment shall have effect as and from May 17, 1999.
IN WITNESS WHEREOF, the Company has caused this Amendment No.
1 to be executed this 17th day of May, 1999.
TRIARC BEVERAGE HOLDINGS CORP.
By: /s/ John L. Barnes, Jr.
--------------------------------
Name: John L. Barnes, Jr.
Title: Executive Vice President
<PAGE>
T R I A R C
Triarc Companies, Inc.
280 Park Avenue
New York, NY 10017
Tel 212 451 3000
Dated as of July 28, 1999
Mr. John L. Barnes, Jr.
31 Old Redding Road
Weston, CT 06883
Dear Jack:
Reference is made to your Employment Agreement dated as of April 29,
1996, as amended as of April 28, 1999 (as so amended, the "Agreement"). This
letter confirms the following amendments to the Agreement.
1. The term of your employment shall continue through June 29, 2000 and all
references to "July 28, 1999" shall be deleted and amended to read "June
29, 2000". Similarly, references to a "three-year and three-month" term
shall be deleted and instead be amended to read a "four-year and
two-month" term.
Except as amended by the foregoing, the Agreement shall remain in full
force and effect.
This letter shall be governed by the laws of the State of New York
applicable to agreements made and to be performed entirely within such State.
If you agree with the terms outlined above, sign a copy of this letter
and return it to us.
Very truly yours,
/s/ Brian L. Schorr
----------------------------
Brian L. Schorr
Executive Vice President
and General Counsel
ACCEPTED TO AND AGREED
AS OF JULY 28, 1999:
/s/ John L. Barnes, Jr.
- ---------------------------
John L. Barnes, Jr.
<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 $(3,773) $(45,606) $(74,996) $(24,128) $ 55,271 $ 37,394
charges......................
------- -------- -------- -------- -------- --------
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)
-------------------- ---------
THREE MONTHS ENDED
---------------------------------
APRIL 4,
MARCH 29, --------------------
1998 1999 1999
---- ---- ----
(IN THOUSANDS EXCEPT RATIOS)
<S> <C> <C> <C>
Income (loss) before income taxes and extraordinary $ 900 $ 2,450 $(1,758)
charges...................................................
------- ------- -------
Fixed charges:
Interest expense....................................... 14,734 16,701 19,703
Interest portion of rent expense(b).................... 726 506 551
------- ------- -------
15,460 17,207 20,254
------- ------- -------
Adjusted earnings before income taxes and extraordinary
charges................................................... $16,360 $19,657 $18,496
------- ------- -------
------- ------- -------
Amount by which earnings were insufficient to cover fixed
charges................................................... $ 1,758
-------
-------
Ratio of earnings to fixed charges.......................... 1.1x 1.1x
------- -------
------- -------
</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 three
months ended April 4, 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>
TRIARC CONSUMER PRODUCTS GROUP, LLC
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
State or Jurisdiction
Under Which Organized
---------------------
<S> <C>
Triarc Beverage Holdings Corp. Delaware
Mistic Brands, Inc. Delaware
Snapple Beverage Corp. Delaware
Snapple International Corp. Delaware
Snapple Beverages de Mexico, S.A. de C.V. (1) Mexico
Snapple Caribbean Corp. Delaware
Snapple Europe Limited United Kingdom
Snapple Canada, Ltd. Canada
Snapple Worldwide Corp. Delaware
Snapple Finance Corp. Delaware
Pacific Snapple Distributors, Inc. California
Mr. Natural, Inc. Delaware
Kelrae, Inc. Delaware
Millrose Distributors, Inc. New Jersey
Cable Car Beverage Corporation Delaware
Old San Francisco Seltzer, Inc. Colorado
Fountain Classics, Inc. Colorado
RC/Arby's Corporation (formerly Royal Crown Corporation) Delaware
ARHC, LLC Delaware
RCAC Asset Management, Inc. Delaware
Arby's, Inc. Delaware
Arby's Building and Construction Co. Georgia
Arby's of Canada Inc. Ontario
Arby's (Hong Kong) Limited Hong Kong
Arby's De Mexico S.A. de C.V. Mexico
Arby's Immobiliara Mexico
Arby's Servicios Mexico
TJ Holding Company, Inc. Delaware
Arby's Restaurants, Limited United Kingdom
Arby's Limited United Kingdom
Arby's Restaurant Construction Company Delaware
Arby's Restaurants, Inc. Delaware
RC-11, Inc. (formerly National Picture & Frame Co.) Mississippi
</TABLE>
<PAGE>
2
<TABLE>
<S> <C>
Promociones Corona Real, S.A. de C.V. Mexico
RC Leasing, Inc. Delaware
Royal Crown Netherland B.V. Netherland
Royal Crown Bottling Company of Texas (formerly Royal Delaware
Crown Bottlers of Texas, Inc.)
Royal Crown Company, Inc. (formerly Royal Crown Cola Delaware
Co.)
RC Services Limited (2) Ireland
Retailer Concentrate Products, Inc. Florida
TriBev Corporation Delaware
</TABLE>
____________________
(1) 99% owned by Snapple International Corp. and 1% owned by Snapple Worldwide
Corp.
(2) 99% owned by Royal Crown Company, Inc. and 1% owned by RC/Arby's
Corporation.
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 1 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
AUGUST 2, 1999
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 1 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
AUGUST 2, 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
May 13, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE YEAR ENDED
JANUARY 3, 1999 (RESTATED) AND THE THREE-MONTH PERIOD ENDED APRIL 4, 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 THREE-MONTH
PERIOD ENDED APRIL 4, 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 3-MOS
<FISCAL-YEAR-END> JAN-03-1999 JAN-02-2000
<PERIOD-START> DEC-29-1997 JAN-04-1999
<PERIOD-END> JAN-03-1999 APR-04-1999
<EXCHANGE-RATE> 1 1
<CASH> 72,792 6,372
<SECURITIES> 0 0
<RECEIVABLES> 72,241 92,175
<ALLOWANCES> 5,551 0
<INVENTORY> 46,761 61,826
<CURRENT-ASSETS> 212,435 189,672
<PP&E> 49,922 25,563
<DEPRECIATION> 24,602 0
<TOTAL-ASSETS> 790,970 790,407
<CURRENT-LIABILITIES> 157,201 156,371
<BONDS> 560,977 774,153
87,587 0
0 0
<COMMON> 0 0
<OTHER-SE> (44,721) (181,909)
<TOTAL-LIABILITY-AND-EQUITY> 790,970 790,407
<SALES> 735,436 159,888
<TOTAL-REVENUES> 815,036 178,191
<CGS> 390,883 83,182
<TOTAL-COSTS> 390,883 83,182
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 2,387 761
<INTEREST-EXPENSE> 60,235 16,701
<INCOME-PRETAX> 55,271 2,450
<INCOME-TAX> (25,284) (1,213)
<INCOME-CONTINUING> 29,987 1,237
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 (11,772)
<CHANGES> 0 0
<NET-INCOME> 29,987 (10,535)
<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 THREE-MONTH PERIOD ENDED APRIL 4, 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 THREE-MONTH
PERIOD ENDED APRIL 4, 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 3-MOS
<FISCAL-YEAR-END> JAN-03-1999 JAN-02-2000
<PERIOD-START> DEC-29-1997 JAN-04-1999
<PERIOD-END> JAN-03-1999 APR-04-1999
<EXCHANGE-RATE> 1 1
<CASH> 39,578 3,312
<SECURITIES> 0 0
<RECEIVABLES> 40,729 58,408
<ALLOWANCES> 3,019 0
<INVENTORY> 41,563 56,338
<CURRENT-ASSETS> 134,924 135,691
<PP&E> 26,108 16,766
<DEPRECIATION> 10,110 0
<TOTAL-ASSETS> 536,570 552,329
<CURRENT-LIABILITIES> 95,674 111,912
<BONDS> 282,951 676,197
87,587 89,673
0 0
<COMMON> 850 850
<OTHER-SE> 30,456 (379,731)
<TOTAL-LIABILITY-AND-EQUITY> 536,570 552,329
<SALES> 611,546 129,163
<TOTAL-REVENUES> 611,546 129,163
<CGS> 362,012 75,800
<TOTAL-COSTS> 362,012 75,800
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 1,029 407
<INTEREST-EXPENSE> 28,587 7,757
<INCOME-PRETAX> 33,785 (3,838)
<INCOME-TAX> (14,627) 1,405
<INCOME-CONTINUING> 19,158 (2,433)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 (4,876)
<CHANGES> 0 0
<NET-INCOME> 19,158 (7,309)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC
TRIARC BEVERAGE HOLDINGS CORP.
LETTER OF TRANSMITTAL
To Tender for Exchange their
10 1/4% Senior Subordinated Notes due 2009
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY
TIME, ON , 1999, UNLESS EXTENDED (THE "EXPIRATION
DATE"). TENDERS OF INITIAL NOTES MAY BE WITHDRAWN PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Delivery to: The Bank of New York, Exchange Agent
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Facsimile in New York: By Overnight Courier or Hand:
The Bank of New York (for Eligible Institutions only) The Bank of New York
101 Barclay Street-Floor 7E (212) 815-6339 101 Barclay Street
New York, New York 10286 Corporate Trust Service Window
Attention: [_______] Confirm by Telephone: Ground Floor
(212) 815- [_______] New York, New York 10286
Attention: [_______]
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE
COMPLETING ANY BOX BELOW.
The undersigned acknowledges that he or she has received and reviewed
the Prospectus, dated , 1999 (the "Prospectus"), of Triarc Consumer
Products Group, LLC, a Delaware limited liability company (the "Company"), and
Triarc Beverage Holdings Corp. (together with the Company, the "Issuers"), and
this Letter of Transmittal (the "Letter"), which together constitute the
Issuers' offer (the "Exchange Offer") to exchange $300,000,000 in aggregate
principal amount of their 10 1/4% Senior Subordinated Notes due 2009 (the
"Exchange Notes"), for a like principal amount of their outstanding 10 1/4%
Senior Subordinated Notes due 2009 (the "Initial Notes") that were issued and
sold in reliance upon
<PAGE>
2
an exemption from registration under the Securities Act of 1933, as amended
(the "Securities Act").
For each Initial Note accepted for exchange, the holder of such Initial
Note will receive an Exchange Note having a principal amount equal to that of
the surrendered Initial Note.
This Letter is to be completed by a holder of Notes either if
certificates are to be forwarded herewith or if a tender of certificates for
Initial Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer-Procedures for Tendering Initial Notes-Book-Entry Delivery
Procedure" section of the Prospectus and an Agent's Message (as defined herein)
is not delivered. Delivery of this Letter and any other required documents
should be made to the Exchange Agent. Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Exchange Agent.
Holders of Initial Notes whose certificates are not immediately
available, or who are unable to deliver their certificates (or cannot obtain a
confirmation of the book-entry tender of their Initial Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") on a timely basis) and all other documents required by this
Letter to the Exchange Agent on or prior to the Expiration Date, must tender
their Initial Notes according to the guaranteed delivery procedures set forth in
"The Exchange Offer-Procedures for Tendering Initial Notes-Guaranteed Delivery
Procedure" section of the Prospectus. See Instruction 1.
The undersigned has completed the appropriate boxes below and signed
this Letter to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to exchange their Initial Notes must
complete this Letter in its entirety.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER MUST BE FOLLOWED. QUESTIONS
AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS
LETTER MAY BE DIRECTED TO THE EXCHANGE AGENT.
<PAGE>
3
List below the Initial Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Initial Notes should be listed on a separate signed schedule affixed to this
Letter.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF INITIAL NOTES
(SEE INSTRUCTION 2)
- ---------------------------------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL PRINCIPAL
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) AMOUNT AMOUNT
EXACTLY AS NAME(S) APPEAR(S) ON INITIAL NOTES CERTIFICATE REPRESENTED TENDERED (IF
(PLEASE FILL IN, IF BLANK) NUMBER(S)* BY CERTIFICATE LESS THAN ALL)**
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
TOTAL
- ---------------------------------------------------------------------------------------------------------------------------
* NEED NOT BE COMPLETED IF INITIAL NOTES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER.
** UNLESS OTHERWISE INDICATED IN THIS COLUMN, THE HOLDER WILL BE DEEMED TO HAVE
TENDERED THE FULL AGGREGATE PRINCIPAL AMOUNT REPRESENTED BY SUCH INITIAL
NOTES. SEE INSTRUCTION 2. INITIAL NOTES TENDERED HEREBY MUST BE IN INTEGRAL
MULTIPLES OF $1,000. SEE INSTRUCTION 1.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:_________________________________________
Account Number:____________________ Transaction Code Number:___________
By crediting Initial Notes to the Exchange Agent's Account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's Automated Tender Offer Program ("ATOP") and by complying with
applicable ATOP procedures with respect to the Exchange Offer, including
transmitting an Agent's Message to the Exchange Agent in which the holder of
Initial Notes acknowledges and agrees to be bound by the terms of this Letter,
the participant in ATOP confirms on behalf of itself and the beneficial owners
of such Initial Notes all provisions of this Letter applicable to it and such
beneficial owners as if it had completed the information required herein and
executed and transmitted this Letter to the Exchange Agent.
<PAGE>
4
[ ] CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): _____________________________________
Window Ticket Number (if any): _______________________________________
Date of Execution of Notice of Guaranteed Delivery:___________________
Name of Eligible Institution that Guaranteed Delivery:________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number:___________________ Transaction Code Number:__________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER.
[ ] CHECK HERE IF YOU WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE
PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ________________________________________________________________
Address:______________________________________________________________
______________________________________________________________
<PAGE>
5
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Issuers for exchange the aggregate principal
amount of Initial Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of the Initial Notes tendered hereby, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Issuers all
right, title and interest in and to such Initial Notes as are being tendered
hereby.
The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as the agent and attorney-in-fact of the undersigned (with
full knowledge that the Exchange Agent also acts as the agent of the Issuers in
connection with the Exchange Offer) with respect to the tendered Initial Notes
with full power of substitution to (i) deliver such Initial Notes, or transfer
ownership of such Initial Notes on the account books maintained by the
Book-Entry Transfer Facility, to the Issuers and deliver all accompanying
evidences of transfer and authenticity, and (ii) present such Initial Notes for
transfer on the books of the Issuers and receive all benefits and otherwise
exercise all rights of beneficial ownership of such Initial Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed to be irrevocable and coupled with an
interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Initial Notes
tendered hereby and to acquire Exchange Notes issuable upon the exchange of such
tendered Initial Notes, and that the Issuers will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim when the same are accepted by
the Issuers.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the Exchange Notes issued in exchange for the Initial Notes
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than (i) any such holder that is an
"affiliate" of the Issuers within the meaning of Rule 405 under the Securities
Act or (ii) any broker-dealer that purchases Initial Notes from the Issuers to
resell pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Exchange Notes are
acquired in the ordinary course of such holders' business and such holders have
no arrangement with any person to participate in the distribution of such
Exchange Notes and are not participating in, and do not intend to participate
in, the
<PAGE>
6
distribution of the Exchange Notes. The undersigned acknowledges that the
Issuers do not intend to request the SEC to consider, and the SEC has not
considered the Exchange Offer in the context of a no-action letter, and there
can be no assurance that the staff of the SEC would make a similar determination
with respect to the Exchange Offer as in other circumstances. The undersigned
acknowledges that any holder that is an affiliate of the Issuers, or is
participating in or intends to participate in or has any arrangement or
understanding with respect to the distribution of the Exchange Notes to be
acquired pursuant to the Exchange Offer, (i) cannot rely on the applicable
interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
The undersigned hereby further represents that (i) any Exchange Notes
acquired pursuant to the Exchange Offer are being acquired in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the holder; (ii) such holder or other person has no arrangement
or understanding with any person to participate in, a distribution of such
Exchange Notes within the meaning of the Securities Act and is not participating
in, and does not intend to participate in, the distribution of such Exchange
Notes within the meaning of the Securities Act and (iii) such holder or such
other person is not an "affiliate," as defined in Rule 405 under the Securities
Act, of the Issuers or, if such holder or such other person is an affiliate,
such holder or such other person will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaging in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Initial Notes, it represents that the
Initial Notes to be exchanged for the Exchange Notes were acquired by it as a
result of market-making or other trading activities and acknowledges that it
will deliver a prospectus in connection with any resale, offer to resell or
other transfer of such Exchange Notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The undersigned also warrants that acceptance of any tendered Initial
Notes by the Issuers and the issuance of Exchange Notes in exchange therefor
shall constitute performance in full by the Issuers of certain of their
obligations under the Registration Rights Agreement.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Issuers to be necessary or desirable to complete the
sale, assignment and transfer of the Initial Notes tendered hereby. All
authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and
shall survive, the death or
<PAGE>
7
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in this Letter.
The undersigned understands that tenders of the Initial Notes pursuant
to any one of the procedures described under "The Exchange Offer--Procedures for
Tendering Initial Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Issuers in
accordance with the terms and subject to the conditions of the Exchange Offer.
The undersigned recognizes that, under certain circumstances set forth
in the Prospectus under "The Exchange Offer--Conditions to the Exchange Offer"
the Issuers may not be required to accept for exchange any of the Initial Notes
tendered. Initial Notes not accepted for exchange or withdrawn will be returned
to the undersigned at the address set forth below unless otherwise indicated
under "Special Delivery Instructions" below.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the Exchange Notes (and, if applicable,
substitute certificates representing Initial Notes for any Initial Notes not
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Initial Notes, please credit the account indicated above maintained
at the Book Entry Transfer Facility. Similarly, unless otherwise indicated under
the box entitled "Special Delivery Instructions" below, please send the Exchange
Notes (and, if applicable, substitute certificates representing Initial Notes
for any Initial Notes not exchanged) to the undersigned at the address shown
below the undersigned's signature(s). In the event that both "Special Issuance
Instructions" and "Special Delivery Instructions" are completed, please issue
the Exchange Notes issued in exchange for the Initial Notes accepted for
exchange (and, if applicable, substitute certificates representing Initial Notes
for any Initial Notes not exchanged) in the names of the person(s) so indicated.
The undersigned recognizes that the Issuers have no obligation pursuant to the
"Special Issuance Instructions" and "Special Delivery Instructions" to transfer
any Initial Notes from the name of the registered holder(s) thereof if the
Issuers do not accept for exchange any of the Initial Notes so tendered for
exchange.
THE BOOK-ENTRY TRANSFER FACILITY, AS THE HOLDER OF RECORD OF CERTAIN
INITIAL NOTES, HAS GRANTED AUTHORITY TO THE BOOK-ENTRY TRANSFER FACILITY
PARTICIPANTS WHOSE NAMES APPEAR ON A SECURITY POSITION LISTING WITH RESPECT TO
SUCH INITIAL NOTES AS OF THE DATE OF TENDER OF SUCH INITIAL NOTES TO EXECUTE AND
DELIVER THIS LETTER AS IF THEY WERE THE HOLDERS OF RECORD. ACCORDINGLY, FOR
PURPOSES OF THIS LETTER, THE TERM "HOLDER" SHALL BE DEEMED TO INCLUDE SUCH
BOOK-ENTRY TRANSFER FACILITY PARTICIPANTS.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF INITIAL
NOTES" ABOVE AND SIGNING THIS LETTER AND DELIVERING SUCH NOTES AND THIS LETTER
TO THE EXCHANGE AGENT, WILL BE DEEMED TO HAVE TENDERED THE INITIAL NOTES AS SET
FORTH IN SUCH BOX ABOVE.
<PAGE>
8
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3, 4 and 5)
To be completed ONLY if certificates for Initial Notes not tendered or
not accepted for Exchange Notes issued in exchange for Initial Notes accepted
for exchange, are to be issued in the name of and sent to someone other than the
undersigned, or if Initial Notes delivered by book-entry transfer which are not
accepted for exchange are to be returned by credit to an account maintained at
the Book-Entry Transfer Facility other than the account indicated above.
Issue (certificates) to:
Name(s):_______________________________________
(PLEASE TYPE OR PRINT)
- -----------------------------------------------
(PLEASE TYPE OR PRINT)
Address: _______________________________________
-----------------------------------------------
(INCLUDE ZIP CODE)
- -----------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged Initial Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
-------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3, 4 and 5)
To be completed ONLY if certificates for Initial Notes not exchange, or
tendered or not accepted for exchange, or Exchange Notes issued in exchange for
Initial Notes accepted for exchange, are to be sent to someone other than the
undersigned or to the undersigned at an address other than shown in the box
entitled "Description of Initial Notes" above.
Mail to:
Name(s):_______________________________________
(PLEASE TYPE OR PRINT)
- -----------------------------------------------
(PLEASE TYPE OR PRINT)
Address: _______________________________________
- ------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(COMPLETE SUBSTITUTE FORM W-9)
IMPORTANT: UNLESS GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH, THIS LETTER
OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU HEREOF (IN EACH CASE,
TOGETHER WITH THE CERTIFICATE(S) FOR INITIAL NOTES OR A CONFIRMATION OF BOOK-
ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE
EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
<PAGE>
9
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS WHETHER OR NOT
INITIAL NOTES ARE BEING PHYSICALLY TENDERED HEREBY)
(Please Also Complete and Return the Accompanying Substitute Form W-9)
x_____________________________________________ __________________________, 1999
x_____________________________________________ __________________________, 1999
Signature(s) of Owner(s) Date
AREA CODE AND TELEPHONE NUMBER:______________________________________________
IF A HOLDER IS TENDERING ANY INITIAL NOTES, THIS LETTER MUST BE SIGNED BY THE
REGISTERED HOLDER(S) EXACTLY AS THE NAME(S) APPEAR(S) ON THE CERTIFICATE(S) FOR
THE INITIAL NOTES OR ON A SECURITY POSITION LISTING AS THE OWNER OF INITIAL
NOTES BY PERSON(S) AUTHORIZED TO BECOME REGISTERED HOLDER(S) BY A PROPERLY
COMPLETED BOND POWER FROM THE REGISTERED HOLDER(S), A COPY OF WHICH MUST BE
TRANSMITTED WITH THIS LETTER. IF INITIAL NOTES TO WHICH THIS LETTER RELATES ARE
HELD OF RECORD BY TWO OR MORE JOINT HOLDERS, THEN ALL SUCH HOLDERS MUST SIGN
THIS LETTER. IF SIGNATURE IS BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN,
OFFICER OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, THEN
SUCH PERSON MUST (I) SET FORTH HIS OR HER FULL TITLE BELOW AND (II) UNLESS
WAIVED BY THE ISSUERS, SUBMIT EVIDENCE SATISFACTORY TO THE ISSUERS OF SUCH
PERSON'S AUTHORITY TO SO ACT. SEE INSTRUCTION 3.
NAME(S):________________________________________________________________________
(Please Type or Print)
- --------------------------------------------------------------------------------
(Please Type or Print)
CAPACITY: ______________________________________________________________________
ADDRESS: ______________________________________________________________________
- --------------------------------------------------------------------------------
(Including Zip Code)
SIGNATURE GUARANTEE BY AN ELIGIBLE INSTITUTION
(If required by Instruction 3)
SIGNATURE(S) GUARANTEED BY
AN ELIGIBLE INSTITUTION: ______________________________________________________
(Authorized Signature)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Name of Firm)
- --------------------------------------------------------------------------------
(Address, Include Zip Code)
- --------------------------------------------------------------------------------
(Area Code and Telephone Number)
DATED:_________________________, 1999
<PAGE>
10
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND INITIAL NOTES; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by noteholders either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Procedures for Tendering Initial Notes--Book-Entry Transfer" section of
the Prospectus and an Agent's Message is not delivered. Certificates for all
physically tendered Initial Notes, or Book-Entry Confirmation, as the case may
be, as well as a properly completed and duly executed Letter (or manually signed
facsimile hereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein on or prior to
5:00 p.m., New York City time, on the Expiration Date, or the tendering holder
must comply with the guaranteed delivery procedures set forth below. Initial
Notes tendered hereby must be in denominations of principal amount that are
integral multiples of $1,000. The term "Agent's Message" means a message,
transmitted by The Depository Trust Company and received by the Exchange Agent
and forming a part of the Book-Entry Confirmation, which states that the
Book-Entry Transfer Facility has received an express acknowledgment from a
participant tendering Initial Notes which are subject to the Book-Entry
Confirmation and that such participant has received and agrees to be bound by
this Letter and that the Issuers may enforce this Letter against such
participant.
Noteholders who wish to tender their Initial Notes and (a) whose
certificates for Initial Notes are not immediately available, or (b) who cannot
deliver their certificates and all other required documents to the Exchange
Agent on or prior to the Expiration Date, or (c) who cannot complete the
procedure for book-entry transfer on a timely basis, must tender their Initial
Notes pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer--Procedures for Tendering Initial Notes--Guaranteed Delivery Procedure"
section of the Prospectus. Pursuant to such procedures,
(i) such tender must be made through an Eligible Institution (as
defined in Instruction 3 below),
(ii) on or prior to the Expiration Date, the Exchange Agent must
receive from such Eligible Institution a properly completed and
duly executed Letter (or a facsimile thereof or an Agent's
Message in lieu hereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Issuers (by telegram,
telex, facsimile transmission, mail or hand delivery), setting
forth the name and address of the holder of Initial Notes and
the amount of Initial Notes tendered, stating that the tender is
being made thereby and guaranteeing
11
<PAGE>
that within three New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed
Delivery, the certificates for all physically tendered Initial
Notes, or a Book-Entry Confirmation, and any other documents
required by the Letter will be deposited by the Eligible
Institution with the Exchange Agent, and
(iii) the certificates for all physically tendered Initial Notes, in
proper form for transfer, or Book-Entry Confirmation, as the
case may be, and all other documents required by this Letter,
are received by the Exchange Agent within three NYSE trading
days after the date of execution of the Notice of Guaranteed
Delivery.
The method of delivery of this Letter, the Initial Notes and all other
required documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Initial Notes are sent by mail, it is suggested that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
Tenders of Initial Notes will be accepted only in integral multiples of
$1,000. If less than the entire principal amount of any Initial Notes is
tendered, the tendering holder(s) should fill in the principal amount of Initial
Notes to be tendered in the box above entitled "Description of Initial Notes."
The entire principal amount of the Initial Notes delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of Initial Notes is not tendered, then Initial Notes for the
principal amount of Initial Notes not tendered and Exchange Notes issued in
exchange for any Initial Notes accepted will be sent to the holder at his or her
registered address, unless otherwise provided in the appropriate box on this
Letter, promptly after the Initial Notes are accepted for exchange.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Initial Notes
tendered hereby, the signature must correspond with the name(s) as written on
the face of the certificates representing such Initial Notes without alteration,
enlargement or any change whatsoever.
<PAGE>
12
If this Letter is signed by a participant in the Book-Entry Transfer
Facility, the signature must correspond with the name as it appears on the
security position listing as the holder of the Initial Notes.
If any tendered Initial Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter.
If any tendered Initial Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder or holders of the
Initial Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the Exchange
Notes are to be issued, or any untendered Initial Notes are to be reissued, to a
person other than the registered holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificate(s) must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder
or holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Issuers,
evidence satisfactory to the Issuers of their authority to so act must be
submitted with the Letter.
Endorsements on certificates for Initial Notes or signatures on bond
powers required by this Instruction 3 must be guaranteed by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., or a commercial bank, a clearing
agency, insured credit union, a savings association or trust company having an
office or correspondent in the United States or an "eligible guarantor"
institution within the meaning of Rule 17Ad-15 under the Securities Exchange Act
of 1934, as amended (each an "Eligible Institution").
Signatures on this Letter need not be guaranteed by an Eligible
Institution if the Initial Notes are tendered: (i) by a registered holder of
Initial Notes (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder of such Initial Notes) who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter, or (ii) for the account of an Eligible
Institution.
<PAGE>
13
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Initial Notes should indicate, in the applicable
box or boxes, the name and address (or account at the Book-Entry Transfer
Facility) to which Exchange Notes issued pursuant to the Exchange Offer, or
substitute Initial Notes not tendered or accepted for exchange, are to be issued
or sent, if different from the name or address of the person signing this
Letter. In the case of issuance in a different name, the employer identification
or social security number of the person named must also be indicated. Holders
tendering Initial Notes by book-entry transfer may request that Initial Notes
not exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such noteholder may designate hereon. If no such instructions are
given, such Initial Notes not exchanged will be returned to the name or address
of the person signing this Letter.
5. TAX IDENTIFICATION NUMBER.
Under the federal income tax laws, payments that may be made by the
Issuers on account of Exchange Notes issued pursuant to the Exchange Offer may
be subject to backup withholding at the rate of 31%. In order to avoid such
backup withholding, each tendering holder should complete and sign the
Substitute Form W-9 included in this Letter and either (a) provide the correct
taxpayer identification number ("TIN") and certify, under penalties of perjury,
that the TIN provided is correct and that (i) the holder has not been notified
by the Internal Revenue Service (the "IRS") that the holder is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the IRS has notified the holder that the holder is no longer subject to backup
withholding; or (b) provide an adequate basis for exemption. If the tendering
holder has not been issued a TIN and has applied for one, or intends to apply
for one in the near future, such holder should write "Applied For" in the space
provided for the TIN in Part I of the Substitute Form W-9, sign and date the
Substitute Form W-9, and sign the Certificate of Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I, the Issuers (or
the Paying Agent under the Indenture governing the Exchange Notes) shall retain
31% of payments made to the tendering holder during the sixty (60) day period
following the date of the Substitute Form W-9. If the holder furnishes the
Exchange Agent or the Issuers with his or her TIN within sixty (60) days after
the date of the Substitute Form W-9, the Issuers (or the Paying Agent) shall
remit such amounts retained during the sixty (60) day period to the holder and
no further amounts shall be retained or withheld from payments made to the
holder thereafter. If, however, the holder has not provided the Exchange Agent
or the Issuers with his or her TIN within such sixty (60) day period, the
Issuers (or the Paying Agent) shall remit such previously retained amounts to
the IRS as backup withholding. In general, if a holder is an individual, the
taxpayer identification number is the Social Security number of such individual.
If the Exchange Agent or the Issuer is not provided with the correct taxpayer
identification number, the holder may be subject to a $50 penalty imposed by the
IRS. Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such holder must submit a statement (generally, IRS Form W-8), signed
under penalties of perjury,
<PAGE>
14
attesting to that individual's exempt status. Such statements can be obtained
from the Exchange Agent. For further information concerning backup withholding
and instructions for completing the Substitute Form W-9 (including how to obtain
a taxpayer identification number if you do not have one and how to complete the
Substitute Form W-9 if Initial Notes are registered in more than one name),
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 (the "W-9 Guidelines").
Failure to complete the Substitute Form W-9 will not, by itself, cause
Initial Notes to be deemed invalidly tendered, but may require the Issuers (or
the Paying Agent) to withhold 31% of the amount of any payments made on account
of the Exchange Notes. Backup withholding is not an additional federal income
tax. Rather, the federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
6. TRANSFER TAXES.
The Issuers will pay all transfer taxes, if any, applicable to the
transfer of Initial Notes to it or its order pursuant to the Exchange Offer. If,
however, Exchange Notes or substitute Initial Notes not exchanged 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 hereby, or if tendered
Initial Notes are registered in the name of any person other than the person
signing this Letter, or if a transfer tax is imposed for any reason other than
the transfer of Initial Notes to the Issuers or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with this Letter, the amount of such transfer taxes will be billed
directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Initial Notes specified in this Letter.
7. WAIVER OF CONDITIONS.
The Issuers reserve the absolute right to amend, waive or modify, in
whole or in part, any or all conditions to the Exchange Offer.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Initial Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Initial Notes
for exchange.
<PAGE>
15
Neither the Issuers, the Exchange Agent nor any other person is
obligated to give notice of any defect or irregularity with respect to any
tender of Initial Notes nor shall any of them incur any liability for failure to
give any such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED INITIAL NOTES.
Any holder whose Initial Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions. This Letter and related documents cannot be processed
until the Initial Notes have been replaced.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus, this Letter and the Notice of
Guaranteed Delivery, may be directed to the Exchange Agent, at the address and
telephone number indicated above.
11. INCORPORATION OF LETTER OF TRANSMITTAL.
This Letter shall be deemed to be incorporated in and acknowledged and
accepted by any tender through the Book-Entry Transfer Facility's ATOP
procedures by any participant on behalf of itself and the beneficial owners of
any Initial Notes so tendered.
12. WITHDRAWALS.
Tenders of Initial Notes may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer--Withdrawal of Tenders" in the Prospectus.
<PAGE>
16
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PLEASE CAREFULLY READ THE IMPORTANT TAX INFORMATION BELOW
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: TRIARC CONSUMER PRODUCTS GROUP, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- PLEASE PROVIDE YOUR
TAXPAYER IDENTIFICATION NUMBER IN
Form W-9 THE BOX AT RIGHT AND CERTIFY BY ___________________________________
Department of the Treasury SIGNING AND DATING BELOW. See the Social Security Number(s)
Internal Revenue Service enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute OR
Payer's Request for Taxpayer Form W-9" for instructions.
Identification Number (TIN) ___________________________________
Employer Identification Number(s)
- ------------------------------------------------------------------------------------------------------------------------------------
PART II -- For Payees Exempt from Backup Withholding (see enclosed Guidelines)
Please Fill in Your
Name and Address Below
-------------------------------------------------------------------------------------------
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Name:___________________________ (1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been notified
________________________________ by the Internal Revenue Service ("IRS") that I am as a result of a failure to
Address (Number and Street) report all interest or dividends or the IRS has notified me that I am no longer
subject to backup withholding.
________________________________
City, State and Zip Code
-------------------------------------------------------------------------------------------
Signature: _________________________________________ Date: ________________________________
- --------------------------------------- -------------------------------------------------------------------------------------------
CERTIFICATION GUIDELINES--You must cross out item (2) of the above certification if you have been notified by the IRS that you are
subject to backup withholding because of under reporting of interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you are
no longer subject to backup withholding, do not cross out item (2).
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number to the payer, 31 percent of
all payments made to me on account of the Exchange Notes shall be retained until
I provide a taxpayer identification number to the payer and that, if I do not
provide my taxpayer identification number within sixty (60) days, such retained
amounts shall be remitted to the Internal Revenue Service as backup withholding
and 31 percent of all reportable payments made to me thereafter will be withheld
and remitted to the Internal Revenue Service until I provide a taxpayer
identification number.
Signature: _____________________________ Date:______________________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU UNDER THE EXCHANGE
NOTES. PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL
DETAILS.
<PAGE>
17
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.--
Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the number
to give the payer.
<TABLE>
<CAPTION>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY NUMBER OF--
- -----------------------------------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the account or, if
account) combined funds, the first individual on
the account(l)
3. Husband and wife (joint The actual owner
account) of the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the only
contributor, the minor(1)
6. Account in the name of guardian, The ward, minor or incompetent person
or committee for a designated (3)
ward, minor or incompetent
person
7. a. The usual revocable The grantor-trustee (l)
savings trust account
(grantor is also trustee)
b. So-called trust account that The actual owner(l)
is not a legal or valid trust
under State law
8. Sole proprietorship account The owner (4)
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF--
- -----------------------------------------------------------------------------------
<S> <C> <C>
9. A valid trust, estate, or pension The legal entity (5)
trust
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
</TABLE>
<PAGE>
18
Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
<TABLE>
<S> <C> <C>
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments.
- -----------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
If only one person on a joint account has a Social Security number,
that person's number must be furnished.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. You may also enter your business or "doing
business as" name. You may use either your Social Security number or
employer identification number (if you have one).
(5) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the TIN of the personal representative or
trustee unless the legal entity itself is not designated in the account
title.)
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
</TABLE>
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know
your number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number at the local office
of the Social Security Administration or the Internal Revenue Service and apply
for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments
include the following:
A corporation.
A financial institution.
An organization exempt from tax under Section 501(a) of the
Internal Revenue Code, as amended (the "Code"), or an
individual retirement plan or a custodial account under
Section 403(b)(7) of the Code.
The United States, or any agency or instrumentality thereof.
<PAGE>
19
Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
A State, the District of Columbia, a possession of the United
States, or any subdivision or instrumentality thereof.
A foreign government, a political subdivision of a foreign
government, or any agency or instrumentality thereof.
An international organization or any agency, or
instrumentality thereof.
A registered dealer in securities or commodities registered
in the U.S., or a possession of the U.S.
A real estate investment trust.
A common trust fund operated by a bank under Section 584(a)
of the Code.
An entity registered at all times under the Investment
Company Act of 1940.
A foreign central bank of issue.
Payments of interest not generally subject to backup withholding
include the following:
Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
Payments of tax-exempt interest (including exempt-interest
dividends under Section 852 of the Code).
Payments described in section 6049(b)(5) of the Code to
non-resident aliens.
Payments on tax-free covenant bonds under Section 1451.
Payments made by certain foreign organizations.
Payments made to a nominee.
Exempt payees described above should file Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO
BACKUP WITHHOLDING, FILE A COMPLETED INTERNAL REVENUE SERVICE FORM W-8
(CERTIFICATE OF FOREIGN STATUS) WITH THE PAYER.
Certain payments other than interest not subject to information
reporting are also not subject to backup withholding. For details, see Sections
6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N of the Code, and the
regulations promulgated thereunder.
<PAGE>
20
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PRIVACY ACT NOTICE. -- Section 6109 of the Code requires you to give
your correct TIN to payers who must file information returns with the IRS to
report interest, dividends, and certain other income paid to you. The IRS uses
the numbers for identification purposes and to help verify the accuracy of your
tax return. The IRS may lso provide this information to the Department of
Justice for civil and criminal litigation and to cities, states, and the
District of Columbia to carrsy out their tax laws. You must provide your TIN
whether or not you are required to file a tax return. Payers must generally
withhold 31% of taxable interest, dividend and certain other payments to a payee
who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. --
If you fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. --
If you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully
falsifying certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE>
TRIARC CONSUMER PRODUCTS GROUP, LLC
TRIARC BEVERAGE HOLDINGS CORP.
NOTICE OF GUARANTEED DELIVERY
TO TENDER FOR EXCHANGE THEIR
10 1/4% SENIOR SUBORDINATED NOTES DUE 2009
As set forth in the Prospectus dated ____________, 1999 (the
"Prospectus"), of Triarc Consumer Products Group, LLC, (the "Company") and
Triarc Beverage Holdings Corp. (together with the Company, the "Issuers")
and the accompanying Letter of Transmittal and the instructions thereto,
registered holders of outstanding 10 1/4% Senior Subordinated Notes due 2009
of the Issuers (the "Initial Notes") who wish to tender their Initial Notes
for a like principal amount of 10 1/4% Senior Subordinated Notes due 2009 of the
Issuers (the "Exchange Notes") and whose Initial Notes are not immediately
available or who are unable to deliver their certificates (or obtain
confirmation of the procedure for book-entry transfer on a timely basis) and
all other required documents to reach The Bank of New York (the "Exchange
Agent") prior to 5:00 p.m., New York City time, on ____________, 1999
(the "Expiration Date") may use this form or one substantially equivalent
hereto. This Notice of Guaranteed Delivery may be delivered or transmitted by
telegram, telex, facsimile transmission, mail or hand delivery to the Exchange
Agent as set forth below. In addition, in order to utilize the guaranteed
delivery procedure to tender Initial Notes, a completed, signed and dated Letter
of Transmittal (or facsimile thereof) must also be received by the Exchange
Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
Capitalized terms not defined herein are defined in the Prospectus.
Delivery to: The Bank of New York, Exchange Agent
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Facsimile in New York: By Overnight Courier or Hand:
The Bank of New York (for Eligible Institutions only) The Bank of New York
101 Barclay Street-Floor 7E (212) 815-6339 101 Barclay Street
New York, New York 10286 Corporate Trust Service Window
Attention: [_________] Confirm by Telephone: Ground Floor
(212) [_________] New York, New York 10286
Attention: [_________]
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON
THE LETTER OF TRANSMITTAL TO BE USED TO TENDER INITIAL NOTES IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE LETTER
OF TRANSMITTAL.
<PAGE>
2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Issuers the principal amount of Initial Notes set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer--Procedures for
Tendering Initial Notes--Guaranteed Delivery Procedure" section of the
Prospectus, receipt of which is hereby acknowledged.
<TABLE>
<S> <C>
Principal Amount of Initial Notes Tendered Name of Record Holder:
(must be in integral multiples of $1,000):
------------------------------------------------------
$______________________________________ (PLEASE TYPE OR PRINT)
------------------------------------------------------
(PLEASE TYPE OR PRINT)
Certificate Nos. (if available): If Initial Notes will be delivered by book-entry
transfer to The Depository Trust Company:
- --------------------------------------- Name of Tendering Institution:________________________
- --------------------------------------- Account Number: ______________________________________
Total Principal Amount Represented by
Initial Notes Certificates(s):
$--------------------------------------
</TABLE>
ANY AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE
THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE
UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES,
SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED.
<PAGE>
3
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
<TABLE>
<S> <C>
x__________________________________________________ _______________________________
x__________________________________________________ _______________________________
Signature(s) of Owner(s) or Authorized Signatory Date
AREA CODE AND TELEPHONE NUMBER: __________________
</TABLE>
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Initial Notes exactly as their name(s) appear(s) on certificate(s)
for Initial Notes or on a security position listing as the owner of Initial
Notes, or by person(s) authorized to become registered holder(s) by a properly
completed bond power from the registered holder(s), a copy of which must be
transmitted with this Notice of Guaranteed Delivery. If Initial Notes to which
this Notice of Guaranteed Delivery relates are held of record by two or more
joint holders, then all such holders must sign this Notice or Guaranteed
Delivery. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must (i) set forth his or her full title
below and (ii) unless waived by the Issuers, submit evidence satisfactory to the
Issuers of such person's authority to so act.
NAME(S):________________________________________________________________________
(Please Type or Print)
- --------------------------------------------------------------------------------
(Please Type or Print)
CAPACITY:_______________________________________________________________________
ADDRESS: _______________________________________________________________________
- --------------------------------------------------------------------------------
(Including Zip Code)
<PAGE>
4
GUARANTEE
The undersigned, a member of a registered national securities exchange,
or a member of the National Association of Securities Dealers, Inc., or a
commercial bank, a clearing agency, insured credit union, a savings association
or, or trust company having an office or correspondent in the United States or
an "eligible guarantor" institution within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, hereby guarantees to deliver the
certificates representing the principal amount of Initial Notes tendered hereby
in proper form for transfer (or confirmation of the book-entry transfer of such
Initial Notes into the Exchange Agent's account at The Depository Trust Company
pursuant to the procedures for book-entry transfer set forth in the Prospectus),
together with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantee and
any other documents required by the Letter of Transmittal, to the Exchange Agent
at one of the addresses set forth above, no later than three New York Stock
Exchange trading days after the date of execution hereof.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF
TRANSMITTAL AND INITIAL NOTES TENDERED HEREBY TO THE EXCHANGE AGENT WITHIN THE
TIME PERIOD SET FORTH HEREIN AND THAT FAILURE TO DO SO COULD RESULT IN FINANCIAL
LOSS TO THE UNDERSIGNED.
Name of Firm: ___________________________________________________________
Address: ________________________________________________________________
----------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone Number: ________________________________________
Authorized Signature: ____________________________________________________
Name: __________________________________________________________________
(PLEASE TYPE OR PRINT)
Title: ___________________________________________________________________
Dated:_________________________, 1999
NOTE: DO NOT SEND CERTIFICATES FOR INITIAL NOTES WITH THIS FORM.
CERTIFICATES FOR INITIAL NOTES SHOULD ONLY BE SENT WITH
YOUR LETTER OF TRANSMITTAL.
