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 FIRST QUARTER 2006 RESULTS
o Arby's(R) same-store sales increase
o Deerfield's assets under management continue to grow
New York, NY, May 12, 2006 - Triarc Companies, Inc. (NYSE: TRY; TRY.B)
announced today the results of operations for its first fiscal quarter ended
April 2, 2006.
Consolidated Highlights
o Consolidated revenues increased to $292.1 million in the 2006 first quarter
from $87.7 million in the 2005 first quarter 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.
o Consolidated revenues were also positively impacted by increases in the
asset management and related fees of Deerfield & Company LLC ("Deerfield").
Deerfield's revenues increased to $14.8 million in the 2006 first quarter
from $12.9 million in the 2005 first quarter. This increase principally
reflects asset management fees from increased assets under management in
the 2006 first quarter.
o Partially offsetting the above increases was the effect of $6.8 million of
royalties and franchise fees paid by RTM to Arby's, LLC recognized in the
2005 first quarter, which royalties and franchise fees are eliminated in
consolidation subsequent to the acquisition of RTM.
o Consolidated net income (loss) was a loss of $(12.9) million, or $(0.16)
per diluted Class A and Class B, Series 1, share in the 2006 first quarter,
compared with net income of $2.7 million, or $0.04 per diluted Class A and
Class B, Series 1 share in the 2005 first quarter. This change principally
reflects: (1) an $8.0 million after-tax loss from the early extinguishment
of debt related to the February 2006 effective conversion of the Company's
5% Convertible Notes due 2023 ("Convertible Notes"), and (2) a $4.7 million
after-tax decrease in gain on sale of unconsolidated business, as well as
the after-tax effect of other variances discussed below, namely, higher
general and administrative expenses (primarily related to stock
compensation charges and higher incentive compensation costs) and higher
interest expense reflecting the RTM acquisition.
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
$12.8 million in the 2006 first quarter, compared with $6.0 million in the
2005 first quarter. The attached table provides the calculation of EBITDA
and a reconciliation of EBITDA to our consolidated net income (loss).
o Consolidated operating profit (loss) was a loss of $(0.6) million in the
2006 first quarter, compared with a profit of $0.4 million in the 2005
first quarter, reflecting higher general and administrative expenses
(primarily related to stock compensation charges and higher incentive
compensation costs), which more than offset an increase in the operating
profit of our restaurant segment.
o Consolidated depreciation and amortization was $13.4 million in the 2006
first quarter versus $5.5 million in the 2005 first quarter. This increase
principally reflects the additional depreciation and amortization related
to the RTM acquisition.
o Consolidated interest expense was $27.4 million in the 2006 first quarter,
compared with $10.3 million in the 2005 first quarter. This increase
principally reflects 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, as well as higher average debt balances of the
restaurant business following a refinancing in connection with the RTM
acquisition.
o Loss on the early extinguishment of debt of $12.5 million in the 2006 first
quarter resulted from the February 2006 effective conversion of
$165,776,000 principal amount of the Company's Convertible Notes. The loss
reflected negotiated inducement premiums aggregating $8.7 million and the
write-off of $3.8 million in deferred financing costs.
o Both the 2006 first quarter and the 2005 first quarter included gains on
sales of unconsolidated business of $2.3 million and $9.6 million,
respectively, primarily related to sales of common stock of Encore Capital
Group, Inc. (NASDAQ: ECPG), an equity investment of the Company. The
Company owned approximately 4.3% of Encore's outstanding shares as of April
2, 2006.
o Consolidated net investment income increased to $20.9 million in the 2006
first quarter, compared with $9.1 million in the 2005 first quarter. This
increase primarily reflects an increase 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.
Restaurant Operations Highlights
o On July 25, 2005, Triarc completed the acquisition of RTM, Arby's largest
franchisee, which then owned and operated 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 $259.0 million in
the 2006 first quarter, compared with $51.2 million in the 2005 first
quarter. Royalties and franchise and related fees were $18.4 million in the
2006 first quarter, compared with $23.6 million in the 2005 first quarter.
o The 2006 first quarter increase in sales from company-owned restaurants of
$207.8 million principally reflects the $205.9 million effect of the
acquisition of RTM. Excluding the RTM stores, same-store sales for
company-owned restaurants increased 2% in the 2006 first quarter, compared
with a strong increase in the 2005 first quarter. The 2006 first quarter
increase primarily reflects the effect of recent marketing initiatives and
the March 2006 launch of Arby's Chicken Naturals(TM), a line of menu
offerings made with 100 percent all natural chicken breast. These positive
factors were partially offset by the continued underperformance 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 2006 first quarter. The RTM stores had
same-store performance for the 2006 first quarter relatively consistent
with, and driven by essentially the same factors as, the company-owned
restaurants other than RTM.
o Excluding the RTM stores, 2006 first quarter same-store sales for
franchised restaurants increased 5%, compared to 3% in the 2005 first
quarter. The increase in same-store sales of the franchised restaurants
reflects the positive impact of the recent marketing initiatives and the
launch of Arby's Chicken Naturals discussed above, partially offset by the
negative impact on sales of lower discretionary consumer spending due to
higher fuel costs in the 2006 first quarter.
o Royalties and franchise and related fees decreased to $18.4 million in the
2006 first quarter, compared with $23.6 million in the 2005 first quarter,
due to the elimination in consolidation of royalties and franchise and
related fees from RTM after the July 2005 acquisition partially offset by
the effects of the increase in same-store sales of franchised restaurants
and net openings of franchised restaurants.
o Systemwide same-store sales were up 4% in both the 2006 first quarter and
the 2005 first quarter. We currently expect systemwide same-store sales to
be positive for the 2006 fiscal year due to the anticipated performance of
the various marketing and new product initiatives described above.
o The gross margin for our company-owned restaurants increased to 26% of
sales in the 2006 first quarter from 23% in the 2005 first quarter. This
increase principally reflects the impact of the RTM stores, which had a
gross margin of 27% in the 2006 first quarter. We expect the gross margin
for our company-owned restaurants to continue to improve for the remainder
of 2006 reflecting both the inclusion of RTM and improving operational
efficiencies.
o Our restaurant business operating profit increased to $19.0 million in the
2006 first quarter versus $14.1 million in the 2005 first quarter
reflecting the higher revenues and the improved gross margins noted above,
partially offset by increases in advertising and selling and general and
administrative expenses.
o Depreciation and amortization for our restaurant operations was $10.8
million in the 2006 first quarter versus $2.9 million in the 2005 first
quarter. This increase reflects the additional depreciation and
amortization related to the restaurants acquired in the RTM acquisition.
o Restaurant business EBITDA was $29.8 million in the 2006 first quarter,
compared with $17.1 million in the 2005 first quarter. Restaurant EBITDA is
reconciled to consolidated EBITDA which, in turn, is reconciled to
consolidated net income (loss), in the attached table.
o In the 2006 first quarter, the Arby's system opened 3 new units and closed
4 generally underperforming units. We plan to open 41 new company-owned
units in 2006. As of April 2, 2006, Arby's had commitments from franchisees
to build 270 new units through 2011, which excludes prior commitments from
RTM to build 148 new units.
Asset Management Highlights
o Triarc accounts for Deerfield, its asset management business, as a
consolidated subsidiary with a minority interest. For the 2006 first
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, for the 2006 first quarter, compensation expense related
to equity interests granted in November 2005 in our asset management
segment holding company and before the effect of minority interests, were
$14.8 million, $0.6 million, $1.5 million and $2.1 million, respectively.
For the 2005 first quarter, those amounts were $12.9 million, $2.8 million,
$1.1 million and $3.9 million, respectively. The decreases in operating
profit and EBITDA reflected an increase in general and administrative
expenses due to the hiring of additional personnel to support the growth in
assets under management and the November 2005 grant of equity interests
noted above. Deerfield's EBITDA is reconciled to consolidated EBITDA which,
in turn, is reconciled to consolidated net income (loss), in the attached
table.
o Excluding the effects of purchase accounting associated with the Deerfield
acquisition in July 2004 and, for the 2006 first quarter, compensation
expense related to the equity interests noted above, Deerfield's asset
management and related fees, operating profit, depreciation and
amortization and EBITDA, before the effect of minority interests, were
$14.8 million, $2.6 million, $0.5 million and $3.1 million, respectively.
For the 2005 first quarter, those amounts were $13.5 million, $4.3 million,
$0.1 million and $4.4 million, respectively. The decreases in operating
profit and EBITDA reflected an increase in general and administrative
expenses due to the hiring of additional personnel as noted above. 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 and the
grant of equity interests in Triarc Deerfield Holdings, LLC, majority owner
of Deerfield.
o As of April 2, 2006, Deerfield had approximately $12.4 billion of assets
under management ("AUM"), of which approximately $123.0 million was
attributable to investments by Triarc. Deerfield's AUM at May 1, 2006
consisted of approximately $10.4 billion in 22 CDOs and a structured loan
fund, approximately $969.4 million in five hedge funds, approximately
$763.9 million in a real estate investment trust and approximately $241.1
million in several managed accounts.
o Deerfield Triarc Capital Corp. ("Deerfield Triarc," NYSE: DFR), the
publicly traded real estate investment trust managed by Deerfield that
invests in real estate-related securities and various other asset classes,
had $763.9 million in assets under management as of April 2, 2006. 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 Deerfield's continued
strong performance. Since we acquired our controlling interest in Deerfield in
July 2004, their assets under management have grown from just over $8 billion to
$12.4 billion today. It has been a highly fruitful relationship with Greg Sachs
and the entire Deerfield team."
Commenting on Arby's 2006 first quarter results, Peter May, Triarc's
President and Chief Operating Officer, said: "Arby's posted a solid first
quarter in 2006. We are excited about Arby's opportunities for future growth. We
are pleased to welcome back Roland Smith as Arby's newly appointed President and
CEO. As we finalize the integration of RTM, begin to implement various growth
initiatives, collaborate with our franchisees to refine operational practices
and work toward effecting the Triarc corporate restructuring, we believe that
the entire Arby's system will be very well served by Roland's exceptional
leadership skills."
Commenting on Triarc's possible corporate restructuring, Peltz said: "As we
look ahead, we see a number of opportunities for Arby's and Deerfield.
Nevertheless, Arby's and Deerfield have inherently different growth
characteristics and investment attributes, and given our present corporate
structure, we believe that their full value and growth prospects may not be
fully recognized. In keeping with our goal of enhancing stockholder value, and
in order to unlock the potential value of both of our independently managed
businesses, we are continuing to explore a possible corporate restructuring that
may involve the spin-off to Triarc's stockholders or other disposition of
Triarc's interest in Deerfield."
Peltz added: "Earlier this year, in connection with the possible corporate
restructuring, in addition to our regular quarterly dividends, our Board
announced its intention to declare and pay during 2006 special cash dividends
aggregating $0.45 per share on each outstanding share of our Class A and Class B
Common Stocks, the first installment of which, in the amount of $0.15 per share,
was paid on March 1, 2006. The second installment, in the amount of $0.15 per
share, will be paid on July 14, 2006 to stockholders of record on June 30, 2006.
We currently intend to pay the third $0.15 per share installment during the
fourth quarter of 2006. In addition, we recently completed the effective
conversion of substantially all of our 5% Convertible Notes due 2023. This had
the effect of reducing consolidated debt by approximately $165 million as well
as reducing potential future dilution for our stockholders."
Triarc is a holding company and, through its subsidiaries, the franchisor
of the Arby's(R) 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, a
profits interest of at least 52% and approximately 94% of the voting interests,
in Deerfield & Company LLC, a Chicago-based alternative asset manager offering a
diverse range of fixed income and credit-related strategies to institutional
investors with approximately $12.4 billion under management as of April 2, 2006.
# # #
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 and the grant of equity interests in our asset management
segment holding company. 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
on a stand-alone basis 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. References in this press release to "company-owned" restaurants
include owned and leased restaurants as well as two restaurants
managed pursuant to management agreements.
5. We define gross margin as the difference between net sales and cost of
sales divided by net sales.
6. The description of the RTM acquisition contained in this press release
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.
7. There can be no assurance RTM will be successfully integrated into our
existing operations.
8. There can be no assurance that we will build 44 new company-owned
units in 2006.
9. There can be no assurance that the corporate restructuring will occur
or the form, terms or timing of such restructuring if it does occur.
As of the date hereof, the Board of Directors has not reached any
definitive conclusion concerning the scope, benefits or timing of the
corporate restructuring.
10. There can be no assurance that any additional special cash dividends
will be declared or paid. The future installment of the special cash
dividend referred to in this press release (including the actual
amounts thereof) and any other future dividends are subject to
applicable law, will be made at the discretion of the Board and will
be based on such factors as Triarc's earnings, financial condition,
cash requirements and other factors, including whether such future
installments of the special dividends would result in a material
adjustment to the conversion price of Triarc's 5% Convertible Notes
due 2023.
11. 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, 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 we offer;
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 us and our 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 us;
o availability, location and terms of sites for restaurant development
by us and our franchisees;
o the ability of our 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 the timing and impact of acquisitions and dispositions of restaurants;
o our ability to successfully integrate acquired restaurant operations;
o anticipated or unanticipated restaurant closures by us and our
franchisees;
o our 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 our franchisees to participate in our strategy;
o business abilities and judgment of our and our franchisees' management
and other personnel;
o availability of qualified restaurant personnel to us and to our
franchisees;
o our 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 our client assets under management (which
would reduce our advisory fee revenue), due to such factors as weak
performance of our 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 we trade, loss of key portfolio management or other
personnel, reduced investor demand for the types of investment
products we offer, and loss of investor confidence due to adverse
publicity;
o increased competition from other asset managers offering similar types
of products to those we offer;
o pricing pressure on the advisory fees that we can charge for our
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 our removal as investment manager of one or more of the collateral
debt obligation vehicles (CDOs) or other accounts we manage, or the
reduction in our CDO management fees because of payment defaults by
issuers of the underlying collateral or the triggering of certain
structural protections built into CDOs;
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 and the
effects of war or terrorist activities; and
o other risks and uncertainties affecting us and our subsidiaries
referred to in referred to in our Annual Report on Form 10-K for the
fiscal year ended January 1, 2006 (see especially "Item 1. 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.
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 in this
section. 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
Quarters Ended April 3, 2005 and April 2, 2006 (a)
First Quarter Ended
-------------------
2005 2006
---- ----
(In thousands except per share amounts)
(Unaudited)
Revenues:
Net sales.....................................................................$ 51,190 $ 258,959
Royalties and franchise and related fees...................................... 23,579 18,388
Asset management and related fees............................................. 12,928 14,796
-------- ---------
87,697 292,143
-------- ---------
Costs and expenses:
Cost of sales, excluding depreciation and amortization........................ 39,189 192,574
Cost of services, excluding depreciation and amortization .................... 4,149 5,520
Advertising and selling....................................................... 4,583 20,102
General and administrative, excluding depreciation and amortization........... 33,814 60,367
Depreciation and amortization, excluding amortization
of deferred financing costs................................................ 5,526 13,381
Facilities relocation and corporate restructuring............................. -- 803
-------- ---------
87,261 292,747
-------- ---------
Operating profit (loss) .................................................. 436 (604)
Interest expense................................................................ (10,253) (27,376)
Insurance expense related to long-term debt..................................... (904) --
Loss on early extinguishment of debt............................................ -- (12,544)
Investment income, net.......................................................... 9,100 20,950
Gain on sale of unconsolidated business......................................... 9,608 2,256
Other income (expense), net..................................................... (370) 1,737
-------- ---------
Income (loss) before income taxes and minority interests.................. 7,617 (15,581)
Benefit from (provision for) income taxes....................................... (2,513) 5,766
Minority interests in income of consolidated subsidiaries....................... (2,425) (3,090)
-------- ---------
Net income (loss) ........................................................$ 2,679 $ (12,905)
======== =========
EBITDA (b) .....................................................................$ 5,962 $ 12,777
======== =========
Basic and diluted income (loss) per share of Class A common stock
and Class B common stock....................................................$ .04 $ (.16)
======== =========
Shares used to calculate income (loss) per share:
Class A common stock
Basic....................................................................... 23,709 25,968
======== =========
Diluted..................................................................... 24,851 25,968 (c)
======== =========
Class B common stock
Basic....................................................................... 41,844 56,344
======== =========
Diluted..................................................................... 44,375 56,344 (c)
======== =========
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) On July 25, 2005, the Company completed the acquisition of the 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 2006 first quarter 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 2005 first quarter, however, include
royalties and franchise and related fees from RTM but do not include RTM's
results.
(b) The calculation of EBITDA by segment and a reconciliation of consolidated
EBIDTA to net income or loss follow:
</FN>
First Quarter Ended
2005 2006
---- ----
(In thousands)
Operating profit (loss):
Restaurants...........................................................$ 14,127 $ 19,027
Asset management...................................................... 2,840 625
General corporate..................................................... (16,531) (20,256)
--------- ---------
Consolidated operating profit (loss) ................................ 436 (604)
--------- ---------
Plus: depreciation and amortization, excluding amortization
of deferred financing costs:
Restaurants........................................................... 2,936 10,813
Asset management...................................................... 1,083 1,483
General corporate..................................................... 1,507 1,085
--------- ---------
Consolidated depreciation and amortization, excluding
amortization of deferred financing costs........................... 5,526 13,381
--------- ---------
EBITDA:
Restaurants........................................................... 17,063 29,840
Asset management...................................................... 3,923 2,108
General corporate..................................................... (15,024) (19,171)
--------- ---------
Consolidated EBITDA.................................................. 5,962 12,777
Depreciation and amortization, excluding amortization
of deferred financing costs........................................... (5,526) (13,381)
Interest expense......................................................... (10,253) (27,376)
Insurance expense related to long-term debt.............................. (904) --
Loss on early extinguishment of debt..................................... -- (12,544)
Investment income, net................................................... 9,100 20,950
Gain on sale of unconsolidated businesses................................ 9,608 2,256
Other income (expense), net.............................................. (370) 1,737
---------- ---------
Loss from continuing operations before income
taxes and minority interests....................................... 7,617 (15,581)
Benefit from income taxes................................................ (2,513) 5,766
Minority interests in income of consolidated subsidiaries................ (2,425) (3,090)
--------- ---------
Net income (loss) ...................................................$ 2,679 $ (12,905)
========= =========
<FN>
(c) The shares used to calculate diluted loss per share are the same as those
used to calculate basic loss per share for the 2006 first quarter since
there was a loss from continuing operations and, therefore, the effects of
all potentially dilutive securities on the loss from continuing operations
per share would have been antidilutive.
(d) The reconciliation of certain operating measures of Deerfield before
adjustments for purchase accounting and compensation expense related to
equity interests granted in asset management segment holding company to
those measures after such adjustments for the 2006 first quarter and 2005
first quarter follows:
</FN>
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 April 2, 2006:
Before adjustments for purchase accounting and
compensation expense related to equity interests
granted in asset management segment holding
company (2) ................................... $14,770 $ 2,618 $ 461 $ 3,079
Expected asset management fees recorded as a
receivable in purchase accounting.............. 26 26 -- 26
Amortization of intangible assets recorded in
purchase accounting............................ -- (1,022) 1,022 --
Compensation expense related to equity interests
granted in asset management segment holding
company (4).................................... -- (997) -- (997)
------- --------- -------- --------
After adjustments for purchase accounting and
compensation expense related to equity interests
granted in asset management segment holding
company........................................$ 14,796 $ 625 $ 1,483 $ 2,108
======== ========= ======== ========
For the quarter ended April 3, 2005:
Before purchase accounting adjustments ............$ 13,505 $ 4,270 $ 84 $ 4,354
Expected asset management fees recorded as a
receivable in purchase accounting.............. (577) (577) -- (577)
Cost of services recorded as a liability in purchase
accounting (3) ................................ -- 146 -- 146
Amortization of intangible assets recorded in
purchase accounting............................ -- (999) 999 --
-------- --------- -------- --------
After purchase accounting adjustments..............$ 12,928 $ 2,840 $ 1,083 $ 3,923
======== ========= ======== ========
<FN>
- ---------------
(1) All amounts are before the effects of minority interests.
(2) The asset management and related fees, operating profit and EBITDA
before adjustments for purchase accounting and equity interests
granted in asset management segment holding company reflect the
elimination of asset management fees paid to Deerfield by Triarc of
$0.5 million for the 2006 first quarter and $0.4 million for the 2005
first quarter.
(3) Represents incentive compensation relating to the receivable recorded
in purchase accounting.
(4) On November 10, 2005, pursuant to an equity arrangement approved by
the compensation committee of our board of directors, certain members
of Triarc's management subscribed for equity interests in Deerfield,
each of which consists of a capital interest portion and a profits
interest portion. These interests have the effective result of
reducing our 61.5% interest in the profits of Deerfield to as low as
52.3%, depending on the level of Deerfield profits.
</FN>