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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
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>
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 relating to
the transaction was previously filed by the Registrant and is incorporated
herein by reference to Exhibit 10.1 to the Current Report on Form 8-K dated
February 20, 1997 filed by the Registrant (SEC File No. 0-20286). A copy of the
press release with respect to the closing of the transaction is being filed
herewith as an exhibit hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
Not Applicable.
(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.
<PAGE>
<TABLE>
<CAPTION>
RC/ARBY'S CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 30, 1997
AS PRO FORMA
REPORTED ADJUSTMENTS PRO FORMA
-------- ----------- ---------
(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
--------- --------- ---------
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)
--------- --------- ---------
$ 367,971 $ (77,172) $ 290,799
========= ========= =========
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)
--------- --------- --------
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)
--------- --------- ---------
Total stockholder's deficit.................................. (114,032) 25,496 (88,536)
--------- --------- ---------
$ 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, net of related tax benefit of $1,150,000, relating to the
debt assumed by RTM.
<PAGE>
<TABLE>
<CAPTION>
RC/ARBY'S CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
AS PRO FORMA
REPORTED ADJUSTMENTS PRO FORMA
-------- ----------- ---------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C>
Revenues:
Net sales........................................................$ 409,100 $(228,031)(a) $ 181,069
Royalties, franchise fees and other revenues..................... 57,252 9,121 (b) 66,373
--------- --------- ---------
466,352 (218,910) 247,442
--------- -------- ---------
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 -- 6,350
--------- -------- ---------
497,935 (281,112) 216,823
--------- -------- ---------
Operating profit (loss)....................................... (31,583) 62,202 30,619
Interest expense................................................... (42,883) 8,421 (c) (31,898)
2,564 (d)
Other income, net ................................................. 562 -- 562
--------- -------- ---------
Loss before income taxes...................................... (73,904) 73,187 (717)
Benefit from (provision for) income taxes.......................... 23,346 (28,470)(e) (5,124)
--------- -------- ---------
Loss before extraordinary charge..............................$ (50,558) $ 44,717 $ (5,841)
========= ======== =========
</TABLE>
<PAGE>
<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
-------- ----------- ---------
(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
--------- -------- ---------
102,787 (50,049) 52,738
--------- -------- ---------
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 -- 1,876
--------- -------- ---------
93,391 (48,925) 44,466
--------- -------- ---------
Operating profit................................................. 9,396 (1,124) 8,272
Interest expense...................................................... (10,391) 2,020 (c) (7,618)
753 (d)
Other income, net .................................................... 806 -- 806
--------- -------- ---------
Income (loss) before income taxes................................ (189) 1,649 1,460
Benefit from (provision for) income taxes............................. 125 (641)(e) (516)
--------- -------- ---------
Income (loss) before extraordinary charge........................$ (64) $ 1,008 $ 944
========= ======== =========
</TABLE>
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT 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 and, for the year ended December 31, 1996, the reduction in
carrying value of long-lived assets impaired or to be disposed of related
to the sold restaurants. 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 will no longer own Arby's restaurants but
will continue 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>
(c) Exhibits
99.1 Press release dated May 6, 1997
<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: May 20, 1997 By: /s/ JOHN L. BARNES, JR.
-----------------------
John L. Barnes, Jr.
Senior Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
99.1 Press release dated May 6, 1997
<PAGE>
EXHIBIT 99.1
PRESS RELEASE
CONTACT: MARTIN M. SHEA FOR IMMEDIATE RELEASE
TRIARC COMPANIES, INC.
212/451-3030
TRIARC SELLS ARBY'S(R) RESTAURANTS TO FRANCHISEE RTM
NEW YORK, New York -- May 6, 1997 -- Triarc Companies, Inc. (NYSE:TRY) announced
today that the Triarc Restaurant Group has completed the sale of its 355
company-owned Arby's stores to RTM Restaurant Group, the largest franchisee in
the Arby's system, for approximately $71 million, subject to certain
post-closing adjustments. A substantial portion of the consideration consists of
the assumption of existing mortgage and capitalized lease obligations.
As part of this transaction, Triarc stated it received an option to purchase a
20% interest in the RTM affiliates that purchased the stores. This option
reflects Triarc's continuing commitment to the Arby's brand. The Triarc
Restaurant Group will continue as the franchisor of the 3,030 Arby's store
system and will test and develop new concepts, products, menus, training
programs and other initiatives in selected Arby's restaurants operated by RTM,
and will also continue to develop new and existing concepts as dual-brands for
the Arby's system and as stand-alone brands.
"With the transfer of the company-owned units to RTM complete, the Triarc
Restaurant Group can focus on the development of business growth strategies for
the Arby's system and on the further development of our other restaurant
brands," said Nelson Peltz, chairman and chief executive officer of Triarc. "We
also expect that by being a franchisor rather than an operator, we can create
more value for our shareholders by creating profits at the bottom line."
<PAGE>
Atlanta-based RTM now operates 670 Arby's Restaurants in 47 markets and 20
states. RTM has signed agreements to build an additional 400 Arby's units over
the next 14 years.
Triarc Companies, Inc. is comprised of four business: beverages (Royal
Crown Company and Mistic), restaurants (Arby's), dyes and specialty chemicals
(C.H. Patrick) and liquefied petroleum gas (National Propane).
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