Exhibit 99.1
For Immediate Release
CONTACT: Anne A. Tarbell
(212) 451-3030
www.triarc.com
TRIARC REPORTS SECOND QUARTER 2004 RESULTS
New York, NY, August 6, 2004 - Triarc Companies, Inc. (NYSE: TRY; TRY.B)
announced today the results of operations for its second quarter and six months
ended June 27, 2004.
Highlights
o Consolidated revenues increased to $77.5 million in the 2004 second quarter
($146.7 million in the 2004 first half) from $74.8 million in the 2003
second quarter ($144.5 million in the 2003 first half) reflecting increases
in royalties and franchise and related fees as well as an increase in net
sales from company-owned restaurants for the 2004 second quarter. Net sales
from the company-owned restaurants were $52.7 million in the 2004 second
quarter ($99.4 million in the 2004 first half), compared with $51.4 million
in the 2003 second quarter ($99.9 million in the 2003 first half).
Royalties and franchise and related fees were $24.8 million in the 2004
second quarter ($47.3 million in the 2004 first half), up from $23.4
million in the 2003 second quarter ($44.6 million in the 2003 first half).
o The 2004 second quarter increase in sales from company-owned restaurants
reflects a 3% increase (relatively flat in the 2004 first half) in same
store sales primarily as a result of new product introductions, notably
Market Fresh(R) salads and wraps, which began in April 2004, partially
offset by the impact of the closure of three underperforming company-owned
stores since June 29, 2003. The slight decline in revenues from
company-owned restaurants for the 2004 first half reflects the effect of
the three closed stores.
o Royalties and franchise fees were positively impacted by royalties from 114
franchised restaurants opened since June 29, 2003, with generally higher
than average sales volumes, replacing the royalties from 78 generally
underperforming franchised restaurants closed since June 29, 2003. 2004
second quarter same store sales for franchised restaurants also increased
4% (2% for the 2004 first half) compared with the weak same store sales
performance of the 2003 comparable periods, reflecting the impact of the
new product introductions discussed above.
o Consolidated operating profit decreased to $3.3 million in the 2004 second
quarter (also $3.3 million in the 2004 first half) compared with $5.9
million in the 2003 second quarter ($9.5 million in the 2003 first half).
The decline, partially offset by the revenue increases noted above,
principally reflects an increase in cost of goods sold of $4.0 million in
the 2004 second quarter ($5.1 million in the 2004 first half), as a result
of higher beef and other commodity costs and start-up costs related to new
product introductions.
o 2004 second quarter consolidated operating profit was also negatively
affected by a $0.6 million ($1.7 million in the 2004 first half) increase
in advertising and selling expenses, primarily reflecting increased
advertising related to 2004 new product introductions as well as the effect
of a recovery in the 2003 periods of a fully-reserved franchisee note
receivable. The comparisons are also affected by timing differences related
to Arby's periodic contributions for national advertising support for 2004,
which caused a decrease for the 2004 second quarter and an increase for the
2004 first half. In addition, 2004 second quarter general and
administrative expenses increased $0.6 million ($1.5 million in the 2004
first half), principally reflecting severance, recruiting and relocation
costs attributable to personnel changes.
o Our restaurant business posted an operating profit of $14.9 million in the
2004 second quarter ($26.9 million in the 2004 first half) versus $18.3
million in the 2003 second quarter ($34.4 million in the 2003 first half),
principally reflecting the factors discussed above.
o Consolidated depreciation and amortization was $3.5 million in the 2004
second quarter ($6.8 million in the 2004 first half) versus $3.4 million in
the 2003 second quarter ($6.8 million in the 2003 first half). Consolidated
depreciation and amortization includes depreciation and amortization of our
restaurant operations of $2.3 million in the 2004 second quarter ($4.3
million in the first half) versus $2.0 million in the 2003 second quarter
($4.1 million in the 2003 first half).
o Consolidated interest expense was $9.0 million in the 2004 second quarter
($18.6 million in the 2004 first half) compared with $9.4 million in the
2003 second quarter ($17.8 million in the 2003 first half). These changes
primarily reflect lower balances of the Arby's securitization debt and the
Sybra debt offset by the impact of $175 million of Triarc 5% convertible
notes due 2023 issued in May 2003.
o Consolidated net investment income increased to $4.6 million in the 2004
second quarter ($11.2 million in the 2004 first half) from $3.7 million in
the 2003 second quarter ($6.9 million in the 2003 first half), due to
higher interest income primarily reflecting investment in higher-yielding
debt securities partially offset by a decline in net gains (losses) from
investments in the 2004 periods.
o Consolidated net loss was $(1.3) million, or $(0.02) per Class A and Class
B share, in the 2004 second quarter (net loss of $(4.4) million, or $(0.07)
per Class A and Class B share in the 2004 first half) compared to a net
loss of $(1.4) million, or $(0.02) per Class A and Class B share, in the
2003 second quarter (net loss of $(3.4) million, or $(0.06) per Class A and
Class B share in the 2003 first half). These changes reflect the after-tax
effect of the factors discussed above. The per share amounts discussed
above give effect to the Company's September 2003 stock distribution of two
shares of Class B Common Stock, Series 1, for each share of Class A Common
Stock.
o Systemwide domestic same store sales were up 4% in the 2004 second quarter
(up 2% in the 2004 first half) versus a decline of (3)% in the 2003 second
quarter (down (3)% in the 2003 first half). We currently expect systemwide
same store sales to be positive for the remainder of the 2004 fiscal year,
primarily reflecting the impact of new product introductions which began in
April 2004.
o In the 2004 second quarter, the Arby's(R) system opened 21 new units (43 in
the 2004 first half) and closed 23 generally underperforming units (40 in
the 2004 first half). As of June 27, 2004, Arby's had commitments from
franchisees to build 450 new units through 2011.
o On July 22, 2004, Triarc completed the acquisition of an approximate 64%
economic interest (representing in excess of 90% of the outstanding voting
interests) of Deerfield & Company LLC ("Deerfield"), a Chicago-based
alternative asset manager, for an aggregate $94.5 million, including
expenses. The remainder of Deerfield is owned by senior management of
Deerfield. In connection with the acquisition, Triarc has also committed to
invest $100 million to seed a new multi-strategy hedge fund to be managed
by Deerfield.
o Commencing July 22, 2004, Triarc will account for Deerfield as a
consolidated subsidiary with a minority interest.
o As of July 1, 2004, Deerfield had over $8.1 billion in assets under
management composed of approximately $7.2 billion in collateralized debt
obligations ("CDOs"), approximately $700 million in fixed income arbitrage
hedge funds and approximately $250 million in separately managed accounts.
For the six months ended June 30, 2004, Deerfield had unaudited revenues of
$27.6 million and net income of $12.8 million (which does not reflect a
provision for Federal income taxes because Deerfield is a pass through
entity for tax purposes).
Triarc and Deerfield previously formed an investment adviser, TDM Advisors LLC
("TDM"), to manage the assets of Triarc Deerfield Investment Corporation
("Triarc Deerfield"), a newly-formed business development company that, as
previously announced, filed a registration statement with the Securities and
Exchange Commission relating to a proposed $500 million initial public offering
of its common stock. As a result of the Deerfield acquisition, TDM is now a
wholly-owned subsidiary of Deerfield and an indirect subsidiary of Triarc.
Commenting on corporate developments, Nelson Peltz, Triarc's Chairman
and Chief Executive Officer, said: "Immediately accretive to Triarc
stockholders, recently acquired Deerfield is a unique opportunity to establish a
platform in the asset management business, which we believe has significant
future growth potential. Deerfield has a strong management team, a scalable
operational structure, a history of successful innovation, a broad range of
fixed income management capabilities, a leading position in the growing CDO
market, a strong risk management culture and strong performance across market
cycles. We believe that, together with the Deerfield senior team, we can grow
Deerfield both organically and through extensions of its existing platform."
Peltz added: "As we look ahead, we continue to review our options to
deploy our substantial liquidity through acquisitions, additional share
repurchases and investments, with the goal of further increasing stockholder
value."
Commenting on restaurant operations, Peter May, Triarc's President and
Chief Operating Officer, said: "In the 2004 second quarter, same store sales
became increasingly positive, reflecting the impact of new product
introductions. Going forward, we expect to see continued growth in same store
sales. The Arby's system is also exploring options to minimize the impact of
rising commodity costs and our senior team is aggressively focused on improving
margins at company-owned stores."
May added: "The Market Fresh salads and wraps, which were introduced on
a nationwide basis beginning in April, and the more recently introduced Market
Fresh chicken salad sandwich, have been well received by our customers. More new
product introductions are planned for the remainder of 2004. In addition, the
Arby's leadership team is focused on expanding Arby's unit development pipeline
and improving its advertising effectiveness."
Triarc is a holding company and, through its subsidiaries, the
franchisor of the Arby's restaurant system and the operator of approximately 235
restaurants located in the United States. Triarc also owns an approximate 64%
economic interest in Deerfield & Company LLC, a Chicago-based alternative asset
manager, offering a diverse range of fixed income strategies to institutional
investors.
# # #
Notes and Table To Follow
NOTES TO PRESS RELEASE
1. Systemwide same store sales represent sales at all company-owned
and all franchised stores. We believe that reviewing the increase
or decrease in systemwide same store sales compared with the same
period in the prior year is useful to investors in analyzing the
growth of the Arby's brand and assessing trends in our restaurant
operations.
2. There can be no assurance that we will be able to successfully
integrate Deerfield into our existing operations. The description
of the acquisition contained herein is only a summary and is
qualified in its entirety by reference to the definitive
agreements relating to the acquisition, copies of which have been
filed by us with the Securities and Exchange Commission.
3. There can be no assurance that the initial public offering of
common stock of Triarc Deerfield will be completed or, if
completed, that the terms of such offering will not change from
those described in the registration statement previously filed
with the Securities and Exchange Commission.
4. A registration statement relating to the securities to be issued
by Triarc Deerfield Investment Corporation has been filed with
the Securities and Exchange Commission but has not yet become
effective. These securities may not be sold nor may offers to
buy be accepted prior to the time the registration statement
becomes effective. This press release is not an offer to sell
or the solicitation of an offer to buy nor shall there be any
sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such State.
Investors should consider the investment objectives, risks,
charges and expenses of Triarc Deerfield carefully before
investing. This and other information about Triarc Deerfield will
be contained in a preliminary prospectus, which may be
obtained, once available, from Triarc Deerfield. The preliminary
prospectus should be read carefully before investing. The
information in the registration statement filed with the
Securities and Exchange Commission, in any preliminary
prospectus and in this press release is not complete and may be
changed.
5. There can be no assurance that we or Deerfield will be able to
identify appropriate future acquisition targets or that we or
Deerfield will be able to successfully integrate any future
acquisitions into our or Deerfield's existing operations.
6. The statements in this press release that are not historical
facts, including, most importantly, information concerning
possible or assumed future results of operations of Triarc
Companies, Inc. and its subsidiaries (collectively,
"Triarc" or the "Company") and statements preceded by, followed
by, or that include the words "may," "believes," "expects,"
"anticipates" or the negation thereof, or similar expressions,
constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Actof 1995(the "Reform Act").
All statements that address operating performance, events or
developments that are expected or anticipated to occur in the
future, including statements relating to revenue growth, earnings
per share growth or statements expressing general optimism about
future operating results, are forward-looking statements within
the meaning of the Reform Act. These forward-looking statements
are based on our current expectations, speak only as of the date
of this press release and are susceptible to a number of risks,
uncertainties and otherfactors. Our actual results, performance
and achievements may differ materially from any future results,
performance or achievements expressed or implied by such forward-
looking statements. For thosestatements, we claim the protection
of the safe harbor for forward-looking statements contained in the
Reform Act. Many important factors could affect our future results
and could cause those results to differ materially from those
expressed in the forward-looking statements contained herein. Such
factors include, but are not limited to, the following:
competition, including pricing pressures, the potential impact of
competitors' new units on sales by Arby's(R)restaurants and
consumers' perceptions of the relative quality, variety and value
of the food products offered; success of operating initiatives;
development costs; advertising and promotional efforts; brand
awareness; the existence or absence of positive or adverse
publicity; new product and concept development by the Company and
its competitors, and market acceptance of such new product
offerings and concepts; changes in consumer tastes and
preferences, including changes resulting from concerns over
nutritional or safety aspects of beef, poultry, french fries or
other foods or the effects of food-borne illnesses such as "mad
cow disease" and avian influenza or "bird flu"; changes in
spending patterns and demographic trends; the business and
financial viability of key franchisees; the timely payment of
franchisee obligations due to the Company; availability, location
and terms of sites for restaurant development by the Company and
its franchisees; the ability of franchisees to open new
restaurants in accordance with their development commitments,
including the ability of franchisees to finance restaurant
development; delays in opening new restaurants or completing
remodels; anticipated or unanticipated restaurant closures by the
Company and its franchisees; the ability to identify, attract
and retain potential franchisees with sufficient experience and
financial resources to develop and operate Arby's restaurants;
changes in business strategy or development plans, and the
willingness of franchisees to participate in the Company's
strategy; business abilities and judgment of the Company's and
franchisees' management and other personnel; availability of
qualified restaurant personnel to the Company and to franchisees;
the Company's ability, if necessary, to secure alternative
distribution of supplies of food, equipment and other products to
Arby's restaurants at competitive rates and in adequate amounts,
and the potential financial impact of any interruptions in such
distribution; adverse weather conditions; changes in commodity
(including beef), labor, supplies and other operating costs and
availability and cost of insurance; significant reductions in the
Company's client assets under management (and thus in the
Company's advisory fee revenue), due to such factors as weak
performance of the Company's investment products (either on an
absolute basis or relative to the Company's competitors),
substantial illiquidity or volatility in the fixed income
instruments that the Company trades, loss of key portfolio
management personnel, reduced investor demand for alternative
fixed income investment products, and loss of investor confidence
due to adverse publicity; increased competition from other
alternative fixed income investment managers; pricing pressure on
the advisory fees that the Company can charge for its investment
advisory services; difficulty in increasing assets under
management, or managing existing assets, due to market-related
constraints on trading capacity; the removal of the Company as
investment manager of one or more of the collateral debt
obligations (CDOs) it manages, or the reduction in the Company's
CDO management fees because of payment defaults by issuers of the
underlying collateral; availability, terms (including changes in
interest rates) and deployment of capital; changes in national,
regional and local economic, market, business or political
conditions in the countries and other territories in which the
Company and its franchisees operate; changes in government
regulations, including franchising laws, accounting standards,
environmental laws, minimum wage rates and taxation rates; the
costs, uncertainties and other effects of legal, environmental and
administrative proceedings; the impact of general economic
conditions on consumer spending, including a slower consumer
economy and the effects of war or terrorist activities; our
ability to identify appropriate acquisition targets in the future
and to successfully integrate any future acquisitions into our
existing operations; and other risks and uncertainties affecting
the Company and its subsidiaries referred to in our Annual Report
on Form 10-K for the fiscal year ended December 28, 2003 (see
especially "Item 1. Business--Risk Factors" and "Item 7.
Management's Discussion and Analysis of Financial Condition and
Results of Operations") and in our other current and periodic
filings with the Securities and Exchange Commission, all of which
are difficult or impossible to predict accurately and many of
which are beyond our control. We will not undertake and
specifically decline any obligation to publicly release the
results of any revisions that may be made to any forward-looking
statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or
unanticipated events. In addition, it is our policy generally not
to make any specific projections as to future earnings, and we do
not endorse any projections regarding future performance that may
be made by third parties.
Triarc Companies, Inc.
Condensed Consolidated Statements of Operations
Second Quarter and Six Months Ended June 29, 2003 and June 27, 2004
Second Quarter Ended Six Months Ended
-------------------- ----------------
2003 2004 2003 2004
---- ---- ---- ----
(In thousands except per share amounts)
(Unaudited)
Revenues:
Net sales $ 51,398 $ 52,661 $ 99,895 $ 99,385
Royalties and franchise and related fees 23,402 24,804 44,639 47,271
--------- --------- --------- ---------
74,800 77,465 144,534 146,656
--------- --------- --------- ---------
Costs and expenses:
Cost of sales, excluding depreciation and amortization 37,589 41,604 73,844 78,989
Advertising and selling 4,043 4,629 7,143 8,796
General and administrative 23,899 24,472 47,279 48,782
Depreciation and amortization, excluding
amortization of deferred financing costs 3,414 3,464 6,797 6,815
--------- --------- --------- ---------
68,945 74,169 135,063 143,382
--------- --------- --------- ---------
Operating profit 5,855 3,296 9,471 3,274
Interest expense (9,367) (9,004) (17,825) (18,638)
Insurance expense related to long-term debt (1,046) (958) (2,138) (1,949)
Investment income, net 3,729 4,645 6,870 11,169
Costs related to proposed business acquisitions
not consummated (930) (14) (930) (767)
Other income, net 418 799 975 1,528
--------- --------- --------- ---------
Loss before income taxes and minority
interests (1,341) (1,236) (3,577) (5,383)
(Provision for) benefit from income taxes (195) (50) 67 941
Minority interests in loss of a consolidated subsidiary 112 10 112 10
--------- --------- --------- ---------
Net loss $ (1,424) $ (1,276) $ (3,398) $ (4,432)
========= ========= ========= =========
Basic and diluted loss per share:
Class A common stock $ (.02) $ (.02) $ (.06) $ (.07)
========= ======== ========= =========
Class B common stock $ (.02) $ (.02) $ (.06) $ (.07)
========= ======== ========= =========
Shares used to calculate loss per share (a):
Class A common stock 20,175 (b) 22,319 (b) 20,294 (b) 21,156 (b)
========= ========= ========= =========
Class B common stock 40,350 (b) 40,675 (b) 40,588 (b) 40,415 (b)
========= ========= ========= =========
(a) The calculations of loss per share reflect the effect of the Company's
September 2003 stock distribution of two shares of a newly designated
series of Class B common stock for each issued share of Class A common
stock.
(b) The shares used to calculate diluted loss per share are the same as those
used to calculate basic loss per share since the Company reported a net
loss in all periods presented and, therefore, the effect of all potentially
dilutive securities would have been antidilutive. Had the Company reported
net income for such periods, the shares used to calculate diluted income
per Class A common share would have been 21,549,000 and 23,399,000 for the
second quarters of 2003 and 2004, respectively, and 21,648,000 and
22,590,000 for the first six months of 2003 and 2004, respectively,
reflecting the effect of dilutive stock options. The shares used to
calculate diluted income per Class B common share would have been
43,097,000 and 42,836,000 for the second quarters of 2003 and 2004,
respectively, and 43,296,000 and 43,283,000 for the first six months of
2003 and 2004, respectively, also reflecting the effect of dilutive stock
options. The effects of dilutive stock options represented in such amounts
reflect the average price of the Company's stock during the indicated
periods. These dilutive effects may not be representative of the effects
that may occur in future periods. Accordingly, this information is
presented for informational purposes only. In addition to the effect of
dilutive stock options, the Company's 5% Convertible Notes are convertible
into 4,375,000 shares of the Company's Class A common stock and 8,750,000
shares of the Company's Class B common stock. Such additional shares were
not included in the diluted shares above due to the substantial income that
would be required before the Convertible Notes became dilutive.