Exhibit 99.1
Triarc Companies, Inc.
280 Park Avenue
New York, NY 10017
For Immediate Release
CONTACT: Anne A. Tarbell
(212) 451-3030
www.triarc.com
TRIARC REPORTS THIRD QUARTER 2005 RESULTS
o Arby's(R) revenues boosted by July 2005 acquisition of RTM
o Deerfield's assets under management continue to grow
New York, NY, November 11, 2005 - Triarc Companies, Inc. (NYSE: TRY; TRY.B)
announced today the results of operations for its third quarter and first nine
months ended October 2, 2005.
Consolidated Highlights
-----------------------
o Consolidated revenues increased to $240.4 million in the 2005 third quarter
($421.8 million in the 2005 first nine months) from $86.0 million in the
2004 third quarter ($232.6 million in the 2004 first nine months) primarily
reflecting the July 2005 acquisition of RTM Restaurant Group ("RTM"), the
owner of 775 Arby's(R) restaurants as of the date of the acquisition. RTM's
net sales since the acquisition were $153.5 million.
o Consolidated revenues were also positively impacted by increases in the
asset management and related fees of Deerfield & Company LLC ("Deerfield")
in which Triarc acquired an approximate 64% capital interest in July 2004.
Deerfield's revenues increased to $13.2 million in the 2005 third quarter
($37.9 million in the 2005 first nine months) from $6.9 million in the 2004
third quarter and 2004 first nine months. These increases reflect both the
full-period effect of Deerfield and asset management fees from new
investment vehicles in the 2005 periods.
o Partially offsetting the above increases was the elimination in
consolidation of $5.8 million of royalties and franchise fees paid by RTM
to Arby's, LLC in the 2005 periods since the acquisition of RTM.
o Consolidated net income (loss) was a loss of $(42.5) million, or $ (0.58)
per diluted Class A and Class B share, in the 2005 third quarter (net loss
of $(39.4) million, or $(0.58) per diluted Class A and Class B share, in
the 2005 first nine months), compared with net income of $22.0 million, or
$0.31 per diluted Class A and $0.34 per diluted Class B share in the 2004
third quarter (net income of $17.5 million, or $0.24 per diluted Class A
and $0.27 per diluted Class B share, in the 2004 first nine months). These
changes reflect the after-tax effects of losses on the early extinguishment
of debt and settlement of unfavorable franchise rights (i.e., the
acquisition of those franchise agreements with RTM that provided for a less
than 4% royalty rate, as further described below), both related to the July
2005 acquisition of RTM, as well as the effect of a $10.8 million gain from
discontinued operations in the 2004 periods.
o Consolidated earnings before interest, taxes, depreciation and amortization
("EBITDA") (which we define as operating profit plus depreciation and
amortization, other than amortization of deferred financing costs) was
$15.9 million in the 2005 third quarter ($30.1 million in the 2005 first
nine months), compared with $10.3 million in the 2004 third quarter ($20.4
million in the 2004 first nine months). The attached table provides the
calculation of EBITDA and a reconciliation of EBITDA to our consolidated
net income (loss).
o Consolidated operating profit increased to $5.9 million in the 2005 third
quarter ($9.0 million in the 2005 first nine months) compared with $5.5
million in the 2004 third quarter ($8.8 million in the 2004 first nine
months), due to the effect of the RTM acquisition and an increase in the
operating profit of Deerfield. These increases were substantially offset by
severance, retention and other expenses relating to the RTM acquisition and
the cost of the relocation of Arby's corporate headquarters to Atlanta, as
well as higher general and administrative expenses, principally reflecting
higher incentive compensation, increased headcount and provisions in the
2005 periods for stock-based compensation.
o Consolidated depreciation and amortization was $10.0 million in the 2005
third quarter ($21.1 million in the 2005 first nine months) versus $4.8
million in the 2004 third quarter ($11.6 million in the 2004 first nine
months). These increases principally reflect the additional depreciation
and amortization related to the RTM acquisition.
o Consolidated interest expense was $22.1 million in the 2005 third quarter
($44.8 million in the 2005 first nine months), compared with $5.0 million
in the 2004 third quarter ($23.7 million in the 2004 first nine months).
These increases principally reflect activity of the Deerfield Opportunities
Fund (the "Opportunities Fund"), a multi-strategy hedge fund managed by
Deerfield in which the Company has an investment and which employs leverage
in its investment strategies, higher average debt balances of the
restaurant business following a refinancing in connection with the RTM
acquisition and the release in the 2004 third quarter of $4.3 million of
interest accruals no longer required upon the finalization of certain
Internal Revenue Service examinations.
o Loss on the early extinguishment of debt totaled $35.8 million in the 2005
periods due to the July 2005 debt refinancing in connection with the RTM
acquisition. The loss principally consisted of prepayment penalties of
$27.4 million, the write-off of $4.8 million in deferred financing costs
and $3.5 million of insurance payments related to the extinguished debt.
o A loss on the settlement of unfavorable franchise rights of $17.0 million
was recognized in the 2005 third quarter. This charge was recognized in
accordance with certain generally accepted accounting principles that
require that any preexisting business relationship between the parties to a
business combination be evaluated and accounted for separately. Under this
accounting guidance, the franchise agreements held by RTM with royalty
rates below the current 4% royalty rate that Arby's receives on new
franchise agreements were required to be valued and recognized as an
expense and excluded from the purchase price paid for RTM.
o The 2005 first nine months included a $13.0 million gain ($0.3 million in
the 2005 third quarter) primarily related to sales of common stock of
Encore Capital Group, Inc. (NASDAQ: ECPG), an equity investment of the
Company. The Company owns approximately 5.3% of Encore's outstanding shares
as of October 2, 2005.
o Consolidated net investment income increased to income of $13.6 million in
the 2005 third quarter ($30.3 million in the 2005 first nine months) from a
loss of $(3.7) million in the 2004 third quarter (income of $7.4 million in
the 2004 first nine months). These increases primarily reflect (1)
increases in interest income principally due to the activity of the
Opportunities Fund and, to a lesser extent, an increase in average rates on
interest-bearing investments, (2) recognized net gains in the 2005 periods
and (3) charges in the 2004 periods for other than temporary unrealized
losses that did not recur to the same extent in the 2005 periods.
Restaurant Operations Highlights
--------------------------------
o On July 25, 2005, Triarc completed the acquisition of RTM, Arby's largest
franchisee, with 775 Arby's restaurants in 22 states. The financial results
of Triarc's restaurant operations following the acquisition reflect the
inclusion of RTM. As a result of the RTM acquisition, among other things,
our restaurant operations' net sales have increased while our royalties and
franchise and related fees have decreased due to the elimination in
consolidation of royalties and franchise and related fees from RTM.
o Net sales from the company-owned Arby's restaurants were $206.1 million in
the 2005 third quarter ($312.3 million in the 2005 first nine months),
compared with $52.3 million in the 2004 third quarter ($151.7 million in
the 2004 first nine months). Royalties and franchise and related fees were
$21.0 million in the 2005 third quarter ($71.5 million in the 2005 first
nine months), compared with $26.7 million in the 2004 third quarter ($74.0
million in the 2004 first nine months).
o The 2005 third quarter increase in sales from company-owned restaurants of
$153.8 million ($160.6 million for the 2005 first nine months) principally
reflects the $153.5 million effect of the acquisition of RTM. Excluding the
RTM stores, same-store sales increased 1% in the 2005 third quarter (5%
increase in the 2005 first nine months) compared with the 3% increase in
the 2004 third quarter (1% increase in the 2004 first nine months). The
increases in same-store sales for existing company-owned restaurants
primarily reflect new product introductions including Market Fresh(R) wraps
and sandwiches, improved marketing, advertising and promotional programs
and operational initiatives targeting continued improvement in customer
service levels and convenience, partially offset by the unfavorable
performance of company-owned stores in Michigan, where unemployment remains
high, as well as the negative impact on sales of lower discretionary
consumer spending due to higher fuel costs in the 2005 third quarter.
o Excluding the RTM stores, 2005 third quarter same-store sales for
franchised restaurants decreased (4)% (increase of 1% for the 2005 first
nine months) compared with an 8% increase in same-store sales in the 2004
third quarter (4% increase in the 2004 first nine months). The 2005 third
quarter decrease in same-store sales of franchised restaurants, excluding
the RTM stores, reflects new product performance in the 2005 third quarter
that was less successful than during the 2004 third quarter, as well as the
impact of the decrease in consumers' discretionary income, discussed above.
The increase in same-store sales of the franchised restaurants for the 2005
first nine months reflects the positive impact of new product introductions
and advertising and marketing programs discussed above, partially offset by
the negative factors, also discussed above.
o Royalties and franchise and related fees decreased to $21.0 million in the
2005 third quarter ($71.5 million in the 2005 first nine months) compared
with $26.7 million in the 2004 third quarter ($74.0 million in the 2004
first nine months) due to the royalties and franchise and related fees from
RTM after the acquisition that eliminate in consolidation. Aside from the
effect of the RTM acquisition, royalties and franchise and related fees
were relatively unchanged. 86 franchised Arby's restaurants have opened
since September 26, 2004, with generally higher than average sales volumes,
replacing the royalties from 57 generally underperforming franchised
restaurants closed since September 26, 2004.
o Systemwide same-store sales were down (4)% in the 2005 third quarter (up 1%
in the 2005 first nine months) versus an increase of 8% in the 2004 third
quarter (up 4% in the 2004 first nine months), reflecting the factors
discussed above. We currently expect systemwide same-store sales to be
positive for the 2005 fourth quarter, although we are unable to estimate
the full impact on our business of Hurricane Wilma in October 2005, which
negatively affected the operations of approximately 17 company-owned
stores.
o The gross margin for our company-owned restaurants increased to 28% of
sales in the 2005 third quarter from 22% in the 2004 third quarter and to
27% in the 2005 first nine months from 21% in the 2004 first nine months.
These increases principally reflect the inclusion of the RTM restaurants,
which had gross margin of 30% for the post-acquisition period of 2005.
Aside from the effect of the RTM acquisition, the gross margin for existing
company-owned restaurants increased to 23% for the 2005 third quarter (24%
for the 2005 first nine months) from 22% for the 2004 third quarter (21%
for the 2004 first nine months) reflecting improved product mix, better
oversight and training of store management, improved operational reporting
made available by the new back office and point-of-sale restaurant systems
implemented in the latter part of 2004 that facilitated labor efficiencies
and reduced food waste and the impact of certain price increases for some
of our Arby's products. We expect the gross margin for our company-owned
restaurants to improve for the 2005 fourth quarter reflecting both the
inclusion of RTM and the improving operational efficiencies, discussed
above.
o Our restaurant business operating profit increased to $22.3 million in the
2005 third quarter ($56.3 million in the 2005 first nine months) versus
$18.2 million in the 2004 third quarter ($45.1 million in the 2004 first
nine months), reflecting the impact of the RTM acquisition and improved
gross margins noted above, partially offset by the severance, retention and
other expenses relating to the RTM acquisition and the cost of the
relocation of the Arby's corporate headquarters to Atlanta, also noted
above. We expect to incur additional severance, retention and other
expenses related to the RTM acquisition and the Arby's corporate
headquarters relocation of approximately $7.0 million in the 2005 fourth
quarter and approximately $2.0 million in 2006.
o Depreciation and amortization of our restaurant operations was $7.7 million
in the 2005 third quarter ($13.2 million in the 2005 first nine months)
versus $2.6 million in the 2004 third quarter ($7.0 million in the 2004
first nine months). These increases reflect the additional depreciation and
amortization related to the RTM acquisition.
o Restaurant business EBITDA was $29.9 million in the 2005 third quarter
($69.4 million in the 2005 first nine months), compared with $20.8 million
in the 2004 third quarter ($52.0 million in the 2004 first nine months).
Restaurant EBITDA is reconciled to consolidated EBITDA, which is in turn
reconciled to consolidated net income (loss), in the attached table.
o In the 2005 third quarter, the Arby's system opened 25 new units (62 in the
2005 first nine months) and closed 11 generally underperforming units (35
in the 2005 first nine months). As of October 2, 2005, Arby's had
commitments from franchisees to build 253 new units through 2011, which
excludes prior commitments from RTM to build 165 new units.
Asset Management Highlights
---------------------------
o Triarc accounts for Deerfield, its asset management business, as a
consolidated subsidiary with a minority interest. For the 2005 third
quarter, Deerfield's reported asset management and related fees, operating
profit, depreciation and amortization and EBITDA, after the effects of
purchase accounting adjustments associated with the Deerfield acquisition
in July 2004 and before the effect of minority interests, were $13.2
million, $1.5 million, $1.1 million and $2.6 million, respectively. For the
2005 first nine months, those amounts were $37.9 million, $4.4 million,
$3.7 million and $8.1 million, respectively. For the 2004 periods, those
amounts were $6.9 million, $0.1 million, $0.8 million and $1.0 million,
respectively.
o Excluding the effects of purchase accounting adjustments associated with
the Deerfield acquisition in July 2004, for the 2005 third quarter,
Deerfield's asset management and related fees, operating profit,
depreciation and amortization and EBITDA, before the effect of minority
interests, were $13.2 million, $2.6 million, $0.1 million and $2.7 million,
respectively. For the 2005 first nine months, those amounts were $38.6
million, $8.5 million, $0.3 million and $8.8 million, respectively. For the
2004 periods, those amounts were $7.4 million, $1.3 million, $0.2 million
and $1.5 million, respectively. The attached table provides a
reconciliation of these measures to the corresponding measures without
exclusion of the effects of purchase accounting adjustments associated with
the Deerfield acquisition.
o As of November 1, 2005, Deerfield had approximately $10.5 billion of assets
under management ("AUM"), of which approximately $120.5 million was
attributable to investments by Triarc. Deerfield's AUM at November 1, 2005
consisted of approximately $8.6 billion in 19 CDOs and a structured loan
fund, approximately $931 million in five hedge funds, approximately $757
million in a real estate investment trust and approximately $226 million in
several managed accounts.
o On June 29, 2005, Deerfield Triarc Capital Corp. ("Deerfield Triarc")
completed the initial public offering of approximately 25 million shares of
its common stock and began trading on the New York Stock Exchange under the
ticker symbol "DFR." Formed in December 2004, Deerfield Triarc is a real
estate investment trust managed by Deerfield that invests in real
estate-related securities and various other asset classes, which currently
has approximately $757 million in assets under management. Triarc and its
subsidiaries beneficially own approximately 2.7% of Deerfield Triarc's
common stock.
Commenting on asset management operations, Nelson Peltz, Triarc's Chairman
and Chief Executive Officer, said: "We are pleased with both the growth of
Deerfield's assets under management and the continued expansion of its asset
management activities. Greg Sachs and his team have built a strong asset
management franchise with an exciting future."
Commenting on Arby's 2005 first nine months results, Peter May, Triarc's
President and Chief Operating Officer, said: "The RTM integration is proceeding
smoothly and we are excited about the growth opportunities for our company-owned
restaurants and for the system overall."
Commenting on Triarc's possible corporate restructuring, Peltz concluded:
"As we look ahead, we see a number of opportunities for growth at both Arby's
and Deerfield. Both businesses, led by strong management teams, have great
organizations capable of further expansion. The previously disclosed proposed
corporate restructuring has the potential to unlock the value of both
businesses. Our Board of Directors and senior management are continuing to
thoroughly review the feasibility, as well as the risks and opportunities, of a
possible corporate restructuring, with the goal of further enhancing Triarc
shareholder value."
Triarc is a holding company and, through its subsidiaries, the franchisor
of the Arby's restaurant system, which is comprised of approximately 3,500
restaurants. Of these restaurants, more than 1,000 are owned and operated by
subsidiaries of Triarc. 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
$10.5 billion under management as of November 1, 2005.
# # #
Notes and Table To Follow
NOTES TO PRESS RELEASE
----------------------
1. In addition to the results provided in accordance with U.S. Generally
Accepted Accounting Principles ("GAAP") in this press release, we present
EBITDA because we believe it is a useful supplement to operating profit in
understanding and assessing our consolidated results as well as the results
of our segments. We also use EBITDA to evaluate our segment performance and
allocate resources. Because all companies do not calculate EBITDA or
similarly titled financial measures in the same way, those measures may not
be consistent with the way we calculate EBITDA. Our presentation of EBITDA
is not intended to replace the presentation of our financial results in
accordance with GAAP. EBITDA should not be considered as an alternative to
operating profit or net income (loss).
2. In addition to the results provided in accordance with GAAP in this press
release, we present Deerfield's asset management and related fees,
operating profit, depreciation and amortization and EBITDA before the
effect of minority interests, excluding the effects of purchase accounting
adjustments associated with the Deerfield acquisition. We believe these
non-GAAP financial measures enhance management's ability to compare
Deerfield's historical and future operating results and to compare
Deerfield's operating results to those of its competitors. We also believe
these non-GAAP financial measures are useful to investors in allowing for
greater transparency of supplemental information used by management in its
financial and operational decision-making. Our presentation of certain
non-GAAP performance measures of Deerfield is not intended to replace the
presentation of its financial results in accordance with GAAP.
3. 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.
4. We define gross margin as the difference between net sales and cost of
sales divided by net sales.
5. 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 have been 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.
6. There can be no assurance RTM will be successfully integrated into our
existing operations.
7. There can be no assurance that we will be able to identify appropriate
future acquisition targets or that we will be able to successfully
integrate any future acquisitions into our existing operations.
8. 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 adverse economic conditions, including high unemployment rates in
geographic regions that contain a high concentration of Arby's restaurants;
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 significant reductions in the Company's client assets under management
(which would reduce 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 our competitors or other investment
strategies), substantial illiquidity or price volatility in the fixed
income instruments that the Company trades, loss of key portfolio
management or other personnel, reduced investor demand for the types of
investment products the Company offers, and loss of investor confidence due
to adverse publicity;
o increased competition from other asset managers offering similar types of
products to those the Company offers;
o pricing pressure on the advisory fees that the Company can charge for its
investment advisory services;
o difficulty in increasing assets under management, or efficiently managing
existing assets, due to market-related constraints on trading capacity or
lack of potentially profitable trading opportunities;
o removal of the Company as investment manager of one or more of the
collateral debt obligation vehicles (CDOs) or other accounts it manages, or
the reduction in the Company's CDO management fees because of payment
defaults by issuers of the underlying collateral;
o availability, terms (including changes in interest rates) and deployment of
capital;
o changes in legal or self-regulatory requirements, including franchising
laws, investment management regulations, 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 or
securities investing, including a slower consumer economy, rising energy
and gasoline prices 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.
Triarc Companies, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Third Quarter and Nine Months Ended September 26, 2004 and October 2, 2005 (a)
Third Quarter Ended Nine Months Ended
-------------------- --------------------
2004 2005 2004 2005
---- ---- ---- ----
(In thousands except per share amounts)
(Unaudited)
Revenues:
Net sales............................................$ 52,324 $ 206,139 $ 151,709 $ 312,318
Royalties and franchise and related fees............. 26,721 21,020 73,992 71,546
Asset management and related fees (b)................ 6,915 13,197 6,915 37,912
--------- --------- --------- ---------
85,960 240,356 232,616 421,776
--------- --------- --------- ---------
Costs and expenses:
Cost of sales, excluding depreciation and
amortization....................................... 40,902 148,162 119,891 228,389
Cost of services, excluding depreciation and
amortization (b)................................... 2,042 4,610 2,042 13,373
Advertising and selling.............................. 3,971 15,150 12,767 24,160
General and administrative, excluding
depreciation and amortization...................... 28,713 56,527 77,495 125,715
Depreciation and amortization, excluding
amortization of deferred financing costs........... 4,804 10,043 11,619 21,110
--------- --------- --------- ---------
80,432 234,492 223,814 412,747
--------- --------- --------- ---------
Operating profit................................. 5,528 5,864 8,802 9,029
Interest expense....................................... (5,017) (22,081) (23,655) (44,818)
Insurance expense related to long-term debt............ (934) (531) (2,883) (2,294)
Loss on early extinguishment of debt................... -- (35,790) -- (35,790)
Investment income (loss), net.......................... (3,730) 13,600 7,439 30,276
Gain on sale of businesses............................. 35 325 57 12,989
Loss on settlement of unfavorable franchise rights..... -- (17,024) -- (17,024)
Other income, net...................................... 312 1,025 1,051 2,138
--------- --------- --------- ---------
Loss from continuing operations before
income taxes and minority interests ........... (3,806) (54,612) (9,189) (45,494)
Benefit from income taxes.............................. 15,618 14,657 16,559 11,647
Minority interests in income of consolidated
subsidiaries......................................... (663) (2,525) (653) (6,006)
--------- --------- --------- ---------
Income (loss) from continuing operations......... 11,149 (42,480) 6,717 (39,853)
Gain on disposal of discontinued operations............ 10,823 -- 10,823 471
--------- --------- --------- ---------
Net income (loss)................................$ 21,972 $ (42,480) $ 17,540 $ (39,382)
========= ========= ========= =========
EBITDA (c).............................................$ 10,332 $ 15,907 $ 20,421 $ 30,139
========= ========= ========= =========
Basic income (loss) per share: Class A common stock:
Continuing operations............................$ .16 $ (.58) $ .10 $ (.59)
Discontinued operations.......................... .16 -- .16 .01
--------- --------- --------- ---------
Net income (loss)................................$ .32 $ (.58) $ .26 $ (.58)
========= ======== ========= =========
Class B common stock:
Continuing operations............................$ .18 $ (.58) $ .11 $ (.59)
Discontinued operations.......................... .18 -- .18 .01
--------- --------- --------- ---------
Net income (loss)................................$ .36 $ (.58) $ .29 $ (.58)
========= ======== ========= =========
Diluted income (loss) per share: Class A common stock:
Continuing operations............................$ .15 $ (.58) $ .09 $ (.59)
Discontinued operations.......................... .13 -- .15 .01
--------- --------- --------- ---------
Net income (loss)................................$ .28 (d) $ (.58) (e) $ .24 (d) $ (.58) (e)
========= ======== ========= =========
Class B common stock:
Continuing operations............................$ .16 $ (.58) $ .10 $ (.59)
Discontinued operations.......................... .14 -- .17 .01
--------- --------- --------- ---------
Net income (loss)................................$ .30 (d) $ (.58) (e) $ .27 (d) $ (.58) (e)
========= ======== ========= =========
Shares used to calculate income (loss) per share:
Class A common stock
Basic.............................................. 23,144 23,786 21,818 23,748
========= ========= ========= =========
Diluted............................................ 28,370 (d) 23,786 (e) 23,058 (d) 23,748 (e)
========= ========= ========= =========
Class B common stock
Basic.............................................. 41,057 49,442 40,629 44,402
========= ========= ========= =========
Diluted............................................ 51,510 (d) 49,442 (e) 43,108 (d) 44,402 (e)
========= ========= ========= =========
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(a) On July 25, 2005, the Company completed the acquisition of RTM Restaurant
Group. As of July 25, 2005, RTM owned and operated 775 Arby's restaurants
in 22 states and, prior to the RTM Acquisition, was the largest franchisee
of Arby's restaurants. Following the RTM Acquisition, the consolidated
results of operations for the 2005 third quarter and first nine months
include RTM's results but do not include royalties and franchise and
related fees paid by RTM to Arby's LLC, which are eliminated in
consolidation. The consolidated results of operations for the 2004 third
quarter and first nine months and the pre-acquisition portion of the 2005
periods, however, include royalties and franchise and related fees from RTM
but do not include RTM's results.
(b) On July 22, 2004, the Company completed the acquisition of a 63.6% capital
interest in Deerfield. Deerfield, through its wholly-owned subsidiary
Deerfield Capital Management LLC, is an asset manager offering a diverse
range of fixed income and credit-related strategies to institutional
investors. The 2004 periods include the results of Deerfield from the date
of acquisition.
(c) The calculation of EBITDA by segment and a reconciliation of consolidated
EBIDTA to net income or loss follow:
Third Quarter Ended Nine Months Ended
-------------------- --------------------
2004 2005 2004 2005
---- ---- ---- ----
(In thousands)
Operating profit (loss):
Restaurants................................................$ 18,197 $ 22,257 $ 45,059 $ 56,263
Asset management .......................................... 128 1,487 128 4,438
General corporate.......................................... (12,797) (17,880) (36,385) (51,672)
--------- --------- ---------- --------
Consolidated operating profit............................. 5,528 5,864 8,802 9,029
--------- --------- ---------- --------
Plus: depreciation and amortization, excluding amortization
of deferred financing costs:
Restaurants................................................ 2,640 7,686 6,988 13,175
Asset management........................................... 836 1,089 836 3,706
General corporate.......................................... 1,328 1,268 3,795 4,229
--------- --------- ---------- --------
Consolidated depreciation and amortization, excluding
amortization of deferred financing costs................ 4,804 10,043 11,619 21,110
--------- --------- ---------- --------
EBITDA:
Restaurants................................................ 20,837 29,943 52,047 69,438
Asset management........................................... 964 2,576 964 8,144
General corporate.......................................... (11,469) (16,612) (32,590) (47,443)
--------- --------- ---------- --------
Consolidated EBITDA....................................... 10,332 15,907 20,421 30,139
Depreciation and amortization, excluding amortization
of deferred financing costs................................ (4,804) (10,043) (11,619) (21,110)
Interest expense.............................................. (5,017) (22,081) (23,655) (44,818)
Insurance expense related to long-term debt................... (934) (531) (2,883) (2,294)
Loss on early extinguishment of debt.......................... -- (35,790) -- (35,790)
Investment income (loss), net................................. (3,730) 13,600 7,439 30,276
Gain on sale of businesses.................................... 35 325 57 12,989
Loss on settlement of unfavorable franchise rights............ -- (17,024) -- (17,024)
Other income, net............................................. 312 1,025 1,051 2,138
--------- --------- ---------- --------
Loss from continuing operations before income
taxes and minority interests............................ (3,806) (54,612) (9,189) (45,494)
Benefit from income taxes..................................... 15,618 14,657 16,559 11,647
Minority interests in income of consolidated subsidiaries..... (663) (2,525) (653) (6,006)
--------- --------- ---------- --------
Income (loss) from continuing operations.................. 11,149 (42,480) 6,717 (39,853)
Gain on disposal of discontinued operations................... 10,823 -- 10,823 471
--------- --------- ---------- --------
Net income (loss).........................................$ 21,972 $ (42,480) $ 17,540 $(39,382)
========= ========= ========== ========
(d) Diluted income per share for the three-month and nine-month periods ended
September 26, 2004 has been computed by dividing the allocated income for
the Class A Common Shares and Class B Common Shares by the weighted average
number of shares of each class plus the potential common share effect on
each class of dilutive stock options, computed using the treasury stock
method and, for the three-month period ended September 26, 2004, the share
effect on each class of the assumed conversion of 5% convertible notes (the
"Convertible Notes"). For income per share purposes, the income was
adjusted to add back the after-tax interest of the Convertible Notes ($1.0
million) to the allocated income for purposes of calculating diluted income
per share for the three-month period ended September 26, 2004. The diluted
income per share amounts for the three-month period ended September 26,
2004 have been retroactively restated in accordance with Issue No. 04-08
("EITF 04-08"), "The Effect of Contingently Convertible Debt on Diluted
Earnings per Share," of the Emerging Issues Task Force of the Financial
Accounting Standards Board. EITF 04-08 became applicable in the Company's
2005 fiscal year and requires that contingently convertible debt
instruments be included in diluted earnings per share computations, if
dilutive, regardless of whether the contingent conversion feature has been
met, with retroactive restatement of diluted earnings per share of all
comparable periods presented. The shares used to calculate diluted income
per share for the nine-month period ended September 26, 2004 exclude any
effect of the Company's Convertible Notes which would have been
antidilutive since the after-tax interest on the Convertible Notes per
share of Class A Common Stock and Class B Common Stock obtainable on
conversion exceeds the reported basic income from continuing operations per
share.
(e) The shares used to calculate diluted loss per share are the same as those
used to calculate basic loss per share for the 2005 third quarter and the
first nine months of 2005 since there were losses from continuing
operations and, therefore, the effects of all potentially dilutive
securities on the loss from continuing operations per share would have been
antidilutive. Had the Company reported income from continuing operations
for the 2005 third quarter and the first nine months of 2005, the shares
used to calculate diluted income per Class A common share would have been
25,109,000 and 24,981,000 respectively, reflecting the effect of dilutive
stock options and contingently issuable restricted stock. The shares used
to calculate diluted income per Class B common share for those periods
would have been 52,921,000 and 47,427,000 respectively, also reflecting the
effect of dilutive stock options and contingently issuable restricted
stock. The effects of dilutive stock options represented in such amounts
reflect the average price of the Company's stock during that period. The
effects of contingently issuable restricted stock reflect the price of the
Company's Class B common stock at October 2, 2005. 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 Convertible Notes
are currently 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.
(f) The reconciliation of certain operating measures of Deerfield before
purchase accounting adjustments to such measures after purchase accounting
adjustments for the 2005 third quarter and first nine months, and 2004
third quarter and first nine months ended follows:
Depreciation and
Amortization,
Excluding
Asset Amortization
Management of Deferred
and Related Operating Financing
Fees(1) Profit(1) Costs(1) EBITDA(1)
----------- --------- -------- --------
(In thousands)
For the quarter ended October 2, 2005:
Before purchase accounting adjustments (2) ........ $13,171 $ 2,578 $ 96 $ 2,674
Expected asset management fees recorded as a
receivable in purchase accounting.............. 26 26 -- 26
Write-off of pre-acquisition receivable........... -- (124) -- (124)
Amortization of intangible assets recorded in
purchase accounting............................ -- (993) 993 --
-------- --------- -------- --------
After purchase accounting adjustments..............$ 13,197 $ 1,487 $ 1,089 $ 2,576
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For the nine months ended October 2, 2005:
Before purchase accounting adjustments (2) ........ $38,554 $ 8,487 $ 277 $ 8,764
Expected asset management fees recorded as a
receivable in purchase accounting.............. (642) (642) -- (642)
Cost of services recorded as a liability
in purchase accounting (3)..................... -- 146 -- 146
Write-off of pre-acquisition receivable........... -- (124) -- (124)
Amortization of intangible assets recorded in
purchase accounting............................ -- (3,429) 3,429 --
-------- --------- -------- --------
After purchase accounting adjustments..............$ 37,912 $ 4,438 $ 3,706 $ 8,144
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For the quarter and nine months ended September 26, 2004:
Before purchase accounting adjustments ............ $ 7,412 $ 1,278 $ 183 $ 1,461
Expected asset management fees recorded as a
receivable in purchase accounting.............. (497) (497) -- (497)
Amortization of intangible assets recorded in
purchase accounting............................ -- (653) 653 --
-------- --------- -------- --------
After purchase accounting adjustments..............$ 6,915 $ 128 $ 836 $ 964
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(1) All amounts are before the effects of minority interests.
(2) The asset management and related fees, operating profit and EBITDA
before purchase accounting adjustments reflect the elimination of
asset management fees paid to Deerfield by Triarc of $0.4 million for
the 2005 third quarter and $1.2 million for the nine months ended
October 2, 2005.
(3) Represents incentive compensation relating to the receivable recorded
in purchase accounting.