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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 5, 1997
RC/ARBY'S CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
0-20286 59-2277791
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(Commission (IRS Employer
File Number) Identification No.)
1000 Corporate Drive
Fort Lauderdale, Florida 33334
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (954) 351-5600
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(Former Name or Former Address, if
Changed Since Last Report)
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<PAGE>
This Form 8-K/A of RC/Arby's Corporation ("RCAC") constitutes Amendment No.
1 ("Amendment No. 1") to RCAC's Current Report on Form 8-K which was filed with
the Securities and Exchange Commission on May 20, 1997 (the "Form 8-K"). This
Amendment No. 1 contains the information required by Items 2 and 7 included in
the Form 8-K and reflects an adjustment to the pro forma condensed consolidated
financial statements (principally the adjustment to "Facilities relocation and
corporate restructuring" included in the adjustment denoted as (a) in the notes
to the Pro Forma Condensed Consolidated Statements of Operations contained
herein) which was inadvertently omitted from the Form 8-K.
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 5, 1997, subsidiaries of the Registrant (the "Sellers")
completed the sale of their 355 company-owned Arby's restaurants to RTM
Restaurant Group ("RTM"), the largest franchisee in the Arby's system, for
approximately $71 million, consisting primarily of the assumption of
approximately $69 million in mortgage indebtedness and capitalized lease
obligations, subject to certain post-closing adjustments.
As part of the transaction, the Sellers received options to purchase an
aggregate 20% interest in each of the RTM affiliates that own the restaurants.
Arby's, Inc., a subsidiary of the Registrant, will continue as the franchisor of
the 3,030-store Arby's restaurant system.
A copy of the Stock Purchase Agreement dated February 13, 1997 and a
press release relating to the transaction were previously filed by the
Registrant as Exhibits 10.1 and 99.1, respectively, to the Current Report on
Form 8-K dated February 20, 1997 filed by the Registrant (SEC File No. 0-20286).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated balance sheet of
RC/Arby's Corporation and subsidiaries (the "Company") as of March 30, 1997 and
condensed consolidated statements of operations of the Company for the year
ended December 31, 1996 and for the three months ended March 30, 1997 have been
prepared by adjusting such financial statements, as derived and condensed, as
applicable, from (i) the audited consolidated financial statements in its Form
10-K for the year ended December 31, 1996 (the "Form 10-K") and (ii) the
unaudited condensed consolidated financial statements in its Form 10-Q for the
three months ended March 30, 1997 (the "Form 10-Q"), to reflect the sale of the
Company's restaurants and related transactions on May 5, 1997, as if such
transactions had occurred as of March 30, 1997 for the pro forma condensed
consolidated balance sheet and as of January 1, 1996 for the pro forma condensed
consolidated statements of operations. Such pro forma adjustments are described
in the accompanying notes to the pro forma condensed consolidated balance sheet
and statements of operations which should be read in conjunction with such
statements. Such pro forma condensed consolidated financial statements should
also be read in conjunction with the Company's audited consolidated financial
statements appearing in the Form 10-K and the Company's unaudited condensed
consolidated financial statements appearing in the Form 10-Q. The pro forma
condensed consolidated financial statements do not purport to be indicative of
the actual financial position or results of operations of the Company had such
transactions actually been consummated on March 30, 1997 and January 1, 1996,
respectively, or of the future financial position or results of operations of
the Company.
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<TABLE>
<CAPTION>
RC/ARBY'S CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 30, 1997
AS PRO FORMA
REPORTED ADJUSTMENTS PRO FORMA
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(IN THOUSANDS)
(UNAUDITED)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents...............................................$ 16,879 $ 50 (a) $ 12,444
6,211 (b)
(6,500) (c)
(4,196) (d)
Receivables, net........................................................ 37,849 2,977 (e) 40,826
Note receivable from affiliate ......................................... 2,000 -- 2,000
Inventories............................................................. 10,598 (2,592) (e) 8,006
Assets held for sale ................................................... 71,116 (71,116) (a) --
Deferred income tax benefit............................................. 8,568 -- 8,568
Prepaid expenses and other current assets............................... 6,142 -- 6,142
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Total current assets............................................... 153,152 (75,166) 77,986
Properties, net............................................................ 11,505 -- 11,505
Unamortized costs in excess of net assets of acquired companies............ 157,692 -- 157,692
Deferred income tax benefit................................................ 24,231 -- 24,231
Deferred costs and other assets............................................ 21,391 1,329 (a) 19,385
(385) (e)
(2,950) (f)
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$ 367,971 $ (77,172) $ 290,799
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LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Current portion of long-term debt.......................................$ 72,053 $ (69,517) (a) $ 2,536
Note payable to affiliate............................................... 32,600 (24,150) (b) 1,950
(6,500) (c)
Accounts payable........................................................ 18,344 -- 18,344
Accrued expenses........................................................ 64,111 (220) (a) 56,176
(2,369) (b)
(4,196) (d)
(1,150) (f)
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Total current liabilities.......................................... 187,108 (108,102) 79,006
Long-term debt............................................................. 280,764 -- 280,764
Deferred income and other liabilities...................................... 14,131 -- 14,131
Minority interest.......................................................... -- 5,434 (b) 5,434
Stockholder's equity (deficit):
Common stock............................................................ 1 -- 1
Additional paid-in capital.............................................. 44,300 27,296 (b) 71,596
Accumulated deficit..................................................... (158,333) (1,800) (f) (160,133)
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Total stockholder's deficit........................................ (114,032) 25,496 (88,536)
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$ 367,971 $ (77,172) $ 290,799
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<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
(a) To reflect the sale of restaurants to RTM for (i) the proceeds of
$50,000 in cash, a $1,950,000 note due 2000 with a discounted value of
$1,329,000 and the assumption by RTM of $54,642,000 of mortgage and
equipment notes and $14,875,000 of capitalized lease obligations, (ii)
the elimination of the assets held for sale of $71,116,000 and (iii)
the recording of the $220,000 net difference against amounts
previously accrued.
(b) To reflect the issuance, in connection with the sale of the
restaurants, of 950 common shares (approximately 49% of the common
stock after such issuances) of each of two restaurant subsidiaries
(the "Restaurant Subsidiaries") of the Company to Triarc Companies,
Inc. ("Triarc"), the indirect parent of the Company, in exchange for
cash of $6,211,000, a demand note payable to Triarc of $24,150,000 as
of March 30, 1997 and accrued interest payable on such note of
$2,369,000 as of March 30, 1997. Triarc's 49% interest in the equity
of the Restaurant Subsidiaries, after adjustments for the issuance of
the stock and the write-off of deferred financing costs, net of tax
effect (see (f) below), is reflected as "Minority interest". The
excess of the consideration for the stock issued to Triarc over such
minority interest is being accounted for as a capital contribution
since it resulted from a transaction among a controlled group of
companies and is reflected in "Additional paid-in capital".
(c) To reflect the repayment by the Company, in connection with the sale
of the restaurants, of $6,500,000 of an outstanding $6,700,000 note
payable to Triarc due February 1998.
(d) To reflect the payment of $3,252,000 of previously accrued transaction
costs, including real estate transfer taxes, mortgage recording costs,
fairness opinions and valuations, legal and accounting, and the
payment to RTM of $944,000 of reserves for employee benefits.
(e) To reflect a receivable from RTM for the value of inventories of
$2,592,000 and restaurant lease and utility deposits of $385,000
transferred to RTM with settlement due within 30 days.
(f) To reflect the write-off of previously unamortized deferred financing
costs of $2,950,000 less related tax benefit of $1,150,000 relating to
the debt assumed by RTM.
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<TABLE>
<CAPTION>
RC/ARBY'S CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
AS PRO FORMA
REPORTED ADJUSTMENTS PRO FORMA
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(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C>
Revenues:
Net sales.................................................................$ 409,100 $ (228,031) (a) $ 181,069
Royalties, franchise fees and other revenues.............................. 57,252 9,121 (b) 66,373
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466,352 (218,910) 247,442
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Costs and expenses:
Cost of sales............................................................. 252,811 (187,535) (a) 65,276
Advertising, selling and distribution..................................... 102,535 (24,764) (a) 77,771
General and administrative................................................ 77,339 (9,913) (a) 67,426
Reduction in carrying value of long-lived assets impaired or
to be disposed of...................................................... 58,900 (58,900) (a) --
Facilities relocation and corporate restructuring ........................ 6,350 (2,400) (a) 3,950
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497,935 (283,512) 214,423
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Operating profit (loss).............................................. (31,583) 64,602 33,019
Interest expense............................................................. (42,883) 8,421 (c) (31,898)
2,564 (d)
Other income, net ........................................................... 562 -- 562
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Income (loss) before income taxes.................................... (73,904) 75,587 1,683
Benefit from (provision for) income taxes.................................... 23,346 (29,403) (e) (6,057)
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Loss before extraordinary charge.....................................$ (50,558) $ 46,184 $ (4,374)
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</TABLE>
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<TABLE>
<CAPTION>
RC/ARBY'S CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 30, 1997
AS PRO FORMA
REPORTED ADJUSTMENTS PRO FORMA
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(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C>
Revenues:
Net sales.................................................................$ 89,473 $ (52,134) (a) $ 37,339
Royalties, franchise fees and other revenues.............................. 13,314 2,085 (b) 15,399
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102,787 (50,049) 52,738
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Costs and expenses:
Cost of sales............................................................. 51,788 (40,962) (a) 10,826
Advertising, selling and distribution..................................... 22,165 (5,597) (a) 16,568
General and administrative................................................ 17,562 (2,366) (a) 15,196
Facilities relocation and corporate restructuring ........................ 1,876 (1,706) (a) 170
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93,391 (50,631) 42,760
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Operating profit..................................................... 9,396 582 9,978
Interest expense............................................................. (10,391) 2,020 (c) (7,618)
753 (d)
Other income, net ........................................................... 806 -- 806
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Income (loss) before income taxes.................................... (189) 3,355 3,166
Benefit from (provision for) income taxes.................................... 125 (1,305) (e) (1,180)
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Income (loss) before extraordinary charge............................$ (64) $ 2,050 $ 1,986
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</TABLE>
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(a) To reflect the elimination of the sales, cost of sales, advertising,
selling and distribution expenses and allocated general and administrative
expenses, the reduction in carrying value of long-lived assets impaired or
to be disposed of for the year ended December 31, 1996 related to the sold
restaurants and the portion of the facilities relocation and corporate
restructuring charge associated with restructuring the restaurant segment
in connection with the RTM sale. The allocated general and administrative
expenses reflect the portion of the Company's total general and
administrative expenses allocable to the operating results associated with
the restaurants sold as determined by management of the Company. Such
allocated amounts consist of (i) salaries, bonuses, travel and
entertainment expenses, supplies, training and other expenses related to
area managers who have responsibility for the day-to-day operation of the
sold restaurants and (ii) the portion of general corporate overhead (e.g.
accounting, human resources, marketing, etc.) estimated to be attributable
to the restaurants. Since the Company no longer owns Arby's restaurants but
continues to operate as an Arby's franchisor, it is undertaking a
reorganization of its restaurant segment eliminating approximately 60
positions in its corporate and field administrative offices and
significantly reducing leased office space. The effect of the elimination
of income and expenses of the sold restaurants is significantly greater in
the year ended December 31, 1996 as compared with the three months ended
March 30, 1997 principally due to two 1996 eliminations which did not recur
in the 1997 period for (i) the $58,900,000 reduction in carrying value of
long-lived assets associated with the restaurants sold and (ii)
depreciation and amortization on the long-lived restaurant assets sold,
which had been written down to their estimated fair values as of December
31, 1996 and were no longer depreciated or amortized while they were held
for sale.
(b) To reflect royalties from the sales of the sold restaurants at the rate of
4%.
(c) To reflect a reduction to interest expense relating to the debt assumed by
RTM.
(d) To reflect a reduction to interest expense representing the interest
expense recorded during each of the periods presented on the entire
outstanding balance of the demand note payable to Triarc by the Company
received from Triarc in exchange for the issuance of stock of the
Restaurant Subsidiaries and on $6,500,000 of a note payable to Triarc due
February 1998 repaid on May 5, 1997 (see adjustments (b) and (c) to the Pro
Forma Condensed Consolidated Balance Sheet).
(e) To reflect the income tax effects of the above at the incremental income
tax rate of 38.9%.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RC/ARBY'S CORPORATION
(Registrant)
Date: August 4, 1997 By: /s/ JOHN L. BARNES, JR.
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John L. Barnes, Jr.
Senior Vice President
and Chief Financial Officer
