For Immediate Release
CONTACT: Anne A. Tarbell
(212) 451-3030
www.triarc.com
--------------
TRIARC COMPLETES ACQUISITION OF RTM RESTAURANT GROUP, ARBY'S
LARGEST FRANCHISEE
o Arby's Restaurant Group, Inc. enters into $720 million credit facility
New York, NY, July 25, 2005 - Triarc Companies, Inc. (NYSE: TRY; TRY.B)
announced today that it has completed its acquisition of RTM Restaurant Group
("RTM"). Triarc, through its subsidiaries, is the franchisor of the Arby's(R)
restaurant system, which consists of approximately 3,500 restaurants, and is the
owner and operator of 233 Arby's restaurants. RTM is Arby's largest franchisee,
with 775 Arby's restaurants in 22 states.
Total consideration consisted of $175 million in cash, subject to post
closing adjustment, plus approximately 9.7 million shares of Triarc's Class B
Common Stock, Series 1 (NYSE: TRY.B), and options to purchase approximately
775,000 shares of Triarc Class B Common Stock, Series 1 (weighted average
exercise price of $8.92), which were issued in replacement of existing RTM stock
options. The combined value of the Triarc shares and options issued in
connection with the RTM acquisition is approximately $152 million, based on a
closing price of $15.15 per share as of July 22, 2005. In connection with the
RTM acquisition, Arby's Restaurant Group, Inc. ("ARG"), a wholly owned
subsidiary of Triarc, also assumed approximately $400 million of RTM net debt,
including approximately $184 million of RTM capitalized lease and financing
obligations.
Triarc provided $135 million in cash to fund the acquisition. ARG funded
the remaining cash needed to complete the acquisition, including transaction
costs, and is refinancing substantially all of its and RTM's existing
indebtedness, with the proceeds from a new $720 million credit facility. This
refinancing will include the repayment of approximately $234 million of RTM
third-party debt and approximately $71 million of ARG third-party debt as well
as the defeasance of the Arby's Franchise Trust, 7.44% insured non-recourse
securitization notes (total principal amount of $198 million), which will be
redeemed in full on August 22, 2005, and the payment of related prepayment
penalties.
After giving effect to the closing of the RTM acquisition, ARG will have
$620 million outstanding under a seven-year senior secured term loan initially
priced at LIBOR plus 225 bps and approximately $175 million of capitalized lease
and financing obligations. ARG will also have $100 million of availability under
a six-year senior secured revolving credit facility initially priced at LIBOR
plus 200 bps (50 bps commitment fee on undrawn amount).
For the twelve months ended April 3, 2005, unaudited combined income from
continuing operations and unaudited consolidated pro forma adjusted EBITDA
(defined as combined operating profit plus the sum of (1) depreciation and
amortization, excluding amortization of deferred financing costs, (2)
normalizing adjustments, (3) estimated synergies, (4) Triarc's management fee
and (5) adjustments related to the RTM transaction, including the estimated
impact of purchase accounting and the refinancing) for ARG were approximately
$23.4 million and $180.7 million, respectively. Before giving effect to the
closing of the RTM acquisition, ARG had unaudited income from continuing
operations of $17.7 million for the twelve months ended April 3, 2005. See the
attached tables that provide a reconciliation to unaudited historical combined
income from continuing operations of ARG and RTM and a reconciliation to
unaudited pro forma adjusted EBITDA of the combined company, respectively. In
addition, ARG is expected to incur employee related restructuring charges in
connection with the acquisition of RTM, which would include severance, retention
and relocation costs. The amount of such charges has yet to be finalized but is
currently estimated at approximately $10 million.
Douglas N. Benham, President and Chief Executive Officer of Arby's since
January 2004, will lead ARG as its President and Chief Executive Officer. Prior
to joining Arby's, Mr. Benham was the Chief Financial Officer of RTM. Thomas A.
Garrett, currently President of RTM, will become ARG's Chief Operating Officer.
Todd D. Weyhrich, currently Arby's Chief Financial Officer, Sharron L. Barton,
currently RTM's Chief Administrative Officer, and Jordan E. Krolick, currently
Arby's Chief Development Officer, will serve in similar capacities for the
combined company. It is also expected that Russell V. Umphenour, Jr., RTM's
Chief Executive Officer, will join the Triarc Board of Directors. The ARG
management team, which will consist of management from both Arby's and RTM, has
an average of 15 years of quick service restaurant experience and an average of
14 years with Arby's. The combined company, the franchisor of the Arby's
restaurant system and the owner and operator of over 1,000 Arby's restaurants
located in the United States, will be headquartered in Atlanta, GA.
Commenting on the RTM acquisition, Nelson Peltz, Triarc's Chairman and
Chief Executive Officer, said: "This accretive transaction presents a unique
opportunity to combine the ownership and management of our leading national
quick service restaurant brand with the operational excellence of its largest
franchisee. As a result of the transaction, the combined company should be
positioned to implement multiple growth initiatives, to benefit from scale
efficiencies and, working with franchisees, to refine operational practices
across the franchise system. We are also very pleased with the strong market
response to Arby's Restaurant Group's new financing. The credit facility gives
Arby's both flexibility and liquidity to fund future growth."
Commenting on the transaction, Russell V. Umphenour, Jr., RTM's Chief
Executive Officer, said: "The acquisition of RTM by Arby's is a natural and
logical next step in Arby's 40-year brand history. We are delighted to be on the
same team as our friends and long time business associates, Nelson Peltz and
Peter May and their team at Triarc and Arby's."
Douglas N. Benham, Arby's President and Chief Executive Officer, said:
"Arby's acquisition of RTM will create a large, fully integrated and growing
restaurant company. As a result of the RTM acquisition, we see many future
opportunities to continue to improve and accelerate unit development. We also
believe we should be well positioned to improve our brand equity and that
system-wide profitability should continue to increase. We look forward to
effecting these value-enhancing changes with our franchisees."
Triarc is a holding company and, through its subsidiaries, the franchisor
of the Arby's(R) restaurant system and, following the acquisition of RTM
Restaurant Group, the owner and operator of over 1,000 Arby's restaurants
located in the United States. Triarc also owns an approximate 64% capital
interest in Deerfield & Company LLC, a Chicago-based asset manager offering a
diverse range of fixed income and credit-related strategies to institutional
investors with $8.8 billion under management as of May 1, 2005.
# # #
Notes and Table To Follow
NOTES TO PRESS RELEASE
----------------------
1. The description of the RTM 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 will be filed by us with the Securities and Exchange
Commission as exhibits to our current and/or periodic filings
under the Securities Exchange Act of 1934, as amended.
2. There can be no assurance RTM will be successfully integrated
into our existing operations.
3. Combined income from continuing operations and pro forma adjusted
EBITDA are derived from the unaudited consolidated financial
statements of ARG and the preliminary unaudited combined
financial statements (which are subject to further change and/or
adjustment) of RTM. Triarc will file, among other things, pro
forma financial information following the completion of the RTM
acquisition as required by the relevant Form 8-K rules. The
combined income from continuing operations and pro forma adjusted
EBITDA that are being furnished herewith are subject to
adjustments and may differ from the information that will be
filed following completion of the RTM acquisition. The
adjustments used to determine the combined income from continuing
operations and pro forma adjusted EBITDA are based on preliminary
estimates and will likely differ from the adjustments that will
be included in the pro forma financial information that is
included in the subsequent Form 8-K. In addition, ARG is expected
to incur restructuring charges of approximately $10 million in
connection with the acquisition of RTM. The amount of such
charges included in this press release is only an estimate and
has yet to be finalized; the final amount of such charges could
vary materially from such estimate. When RTM is fully integrated
into ARG, actual results may vary materially from the
expectations contained herein.
4. 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," "plans," "expects,"
"anticipates" or the negation thereof, or similar expressions,
constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 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 other factors. 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 those statements, 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:
o competition, including pricing pressures and the potential impact of
competitors' new units on sales by Arby's(R) restaurants;
o consumers' perceptions of the relative quality, variety and value of the
food products the Company offers;
o success of operating initiatives;
o development costs;
o advertising and promotional efforts;
o brand awareness;
o the existence or absence of positive or adverse publicity;
o new product and concept development by the Company and its competitors,
and market acceptance of such new product offerings and concepts;
o 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";
o changes in spending patterns and demographic trends;
o the business and financial viability of key franchisees;
o the timely payment of franchisee obligations due to the Company;
o availability, location and terms of sites for restaurant development by
the Company and its franchisees;
o the ability of the Company's franchisees to open new restaurants in
accordance with their development commitments, including the
ability of franchisees to finance restaurant development;
o delays in opening new restaurants or completing remodels;
o anticipated or unanticipated restaurant closures by the Company and its
franchisees;
o the Company's ability to identify, attract and retain potential
franchisees with sufficient experience and financial resources to
develop and operate Arby's restaurants;
o changes in business strategy or development plans, and the willingness of
the Company's franchisees to participate in its strategy;
o business abilities and judgment of the Company's and its franchisees'
management and other personnel;
o availability of qualified restaurant personnel to the Company and to its
franchisees;
o 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;
o changes in commodity (including beef), labor, supplies and other
operating costs and availability and cost of insurance;
o adverse weather conditions;
o changes in legal or self-regulatory requirements, including franchising
laws, accounting standards, environmental laws, overtime rules,
minimum wage rates and taxation rates;
o the costs, uncertainties and other effects of legal, environmental and
administrative proceedings;
o the impact of general economic conditions on consumer spending, including
a slower consumer economy and the effects of war or terrorist activities;
o the Company's ability to identify appropriate acquisition targets in the
future and to successfully integrate any future acquisitions into its
existing operations; and
o other risks and uncertainties affecting the Company referred to in its
Annual Report on Form 10-K for the fiscal year ended January 2,
2005 (see especially "Item 1. Business--Risk Factors" and "Item 7.
Management's Discussion and Analysis of Financial Condition and Results
of Operations") and in its 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 the
Company's control.
All future written and oral forward-looking statements attributable to us
or any person acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to above. New risks and
uncertainties arise from time to time, and it is impossible for us to predict
these events or how they may affect us. We assume no obligation to update any
forward-looking statements after the date of this press release as a result of
new information, future events or developments, except as required by federal
securities laws. 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.
Arby's Restaurant Group, Inc.
Reconciliation to Unaudited Historical ARG/RTM Combined
Twelve Months Ended April 3, 2005
(In Thousands)
Adjustments
for RTM
Reclassifications,
Eliminations Historical
ARG as RTM as and Excluded ARG/RTM
Reported Reported Items(a) Combined
-------- -------- -------------- ---------
Revenues:
Net sales $ 210,056 $ 795,522 $ -- $ 1,005,578
Royalties and franchise and related fees 102,040 -- (29,716) 72,324
------------- ----------- ----------- -----------
312,096 795,522 (29,716) 1,077,902
------------- ----------- ----------- -----------
Costs and expenses:
Cost of sales, excluding depreciation and amortization 164,401 642,109 (78,882) 727,628
Advertising and selling 17,003 -- 50,118 67,121
General and administrative, excluding depreciation
and amortization 55,544 84,339 (2,704) 137,179
Depreciation and amortization, excluding
amortization of deferred financing costs 10,451 28,421 (1,524) 37,348
Impairment of assets other than goodwill 3,382 1,100 -- 4,482
------------- ----------- ----------- -----------
250,781 755,969 (32,992) 973,758
------------- ----------- ----------- -----------
Operating profit 61,315 39,553 3,276 104,144
Interest expense (26,958) (35,651) (350) (62,959)
Insurance expense related to long-term debt (3,787) -- -- (3,787)
Interest and other income, net (931) 1,198 53 320
------------- ----------- ----------- -----------
Income from continuing operations before
income taxes 29,639 5,100 2,979 37,718
Provision for income taxes (11,978) (2,124) (252) (14,354)
------------- ----------- ----------- -----------
Income from continuing operations $ 17,661 $ 2,976 $ 2,727 $ 23,364
============= =========== =========== ===========
(Continued on following page)
Arby's Restaurant Group, Inc.
Reconciliation of Unaudited Pro Forma Adjusted EBITDA
Twelve Months Ended April 3, 2005
(In Thousands)
ARG
and
Reversal of RTM
Historical Triarc Combined Adjustments
ARG/RTM Normalizing Management and for the RTM
Combined Adjustments(c) Synergies(d) Fee(e) Normalized Transaction Pro Forma
-------- ----------- ------------ ---------- ---------- ------------ ---------
Revenues:
Net sales $1,005,578 $ (18,300) $ -- $ -- $ 987,278 $ -- $ 987,278
Royalties and franchise
and related fees 72,324 (1,300) -- -- 71,024 -- 71,024
--------- --------- ------ ------- --------- ------- ---------
1,077,902 (19,600) -- -- 1,058,302 1,058,302
--------- --------- ------ ------- --------- ------- ----------
Costs and expenses:
Cost of sales, excluding
depreciation and
amortization 727,628 (15,500) -- -- 712,128 (1,083) 711,045
Advertising and selling 67,121 (200) -- -- 66,921 -- 66,921
General and administrative,
excluding depreciation
and amortization 137,179 (23,500) (9,000) (5,000) 99,679 -- 99,679
Depreciation and
amortization, excluding
amortization of deferred
financing costs 37,348 -- -- -- 37,348 4,641 41,989
Impairment of assets other
than goodwill 4,482 (4,482) -- -- -- -- --
--------- --------- ------ ------- --------- ------- ---------
973,758 (43,682) (9,000) (5,000) 916,076 3,558 919,634
--------- --------- ------ ------- --------- ------- ---------
Operating profit 104,144 24,082 9,000 5,000 142,226 (3,558) 138,668
Interest expense (62,959) -- -- -- (62,959) 8,032 (54,927)
Insurance expense related
to long-term debt (3,787) -- -- -- (3,787) 3,787 --
Interest and other
income, net 320 -- -- -- 320 -- 320
--------- --------- ------ ------- --------- ------- ---------
Income from continuing
operations before
income taxes 37,718 24,082 9,000 5,000 75,800 8,261 84,061
Provision for income taxes (14,354) (9,368) (3,501) (1,945) (29,168) (5,947) (35,115)
--------- --------- ------ ------- --------- ------- --------
Income from
continuing operations $ 23,364 $ 14,714 $ 5,499 $ 3,055 $ 46,632 $ 2,314 $ 48,946
========= ========= ======= ======= ======== =======
Reconciliation of income from continuing operations to Adjusted EBITDA:
Provision for income taxes 35,115
Interest and other income, net (320)
Interest expense 54,927
Depreciation and amortization,
excluding amortization of
deferred financing costs 41,989
---------
Adjusted EBITDA (b) $ 180,657
=========
Calculation of Adjusted EBITDA:
Pro forma operating profit, as adjusted $ 138,668
Pro forma depreciation and amortization,
excluding amortization of deferred financing costs, as adjusted 41,989
---------
Adjusted EBITDA $ 180,657
=========
<FN>
(a) Reflects reclassifications of RTM amounts for consistency with ARG,
elimination of intercompany income and expense items between ARG and RTM
and adjustments for certain operations of RTM not included in the
acquisition.
(b) EBITDA consists of operating profit plus depreciation and amortization.
Adjusted EBITDA represents operating profit plus the sum of (1)
depreciation and amortization, excluding amortization of deferred financing
costs, (2) normalizing adjustments, (3) estimated synergies, (4) Triarc's
management fee and (5) adjustments related to the RTM transaction,
including the estimated impact of purchase accounting and the refinancing.
We use EBITDA as an internal measurement of operating performance as well
as assisting investors in the understanding of our performance by using a
measure that is unaffected by changes in capital structure or capital
investment cycles. This term, as we define it, may not be comparable to a
similarly titled measure used by other companies and is not a measure of
performance or liquidity presented in accordance with GAAP. Adjusted EBITDA
should not be used as a substitute for income from continuing operations,
net cash provided by or used in operations or other financial data prepared
in accordance with GAAP.
(c) Normalizing adjustments include non-recurring adjustments, efficiency
improvements and adjustments to compensation expenses reflecting levels
consistent with public companies.
(d) Reflects the elimination of duplicate positions and offices net of
estimated additional costs.
(e) Reflects the add-back of fees charged to ARG as a wholly-owned subsidiary
of Triarc under a corporate services agreement.
</FN>