SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to_________________
Commission file number: 1-2207
TRIARC COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 38-0471180
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 Third Avenue, New York, New York 10022
(Address of principal executive offices) (zip code)
(212) 230-3000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if it changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
There were 23,907,839 shares of the registrant's Class A Common Stock and
5,997,622 shares of the registrant's Class B Common Stock outstanding as of
July 31, 1995.
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30,
1994 1995
------------ -------
(In thousands)
ASSETS (A) (Unaudited)
Current assets:
Cash and cash equivalents $ 80,064 $64,936
Restricted cash and cash equivalents 6,804 10,882
Marketable securities 9,453 7,927
Receivables, net 141,377 150,070
Inventories 105,662 110,439
Deferred income tax benefit 6,023 5,176
Prepaid expenses and other current assets 9,766 9,888
--------- ---------
Total current assets 359,149 359,318
Properties, net 306,293 324,047
Unamortized costs in excess of net assets of
acquired companies 202,797 199,295
Deferred costs and other assets 53,928 64,233
--------- ---------
$ 922,167 $ 946,893
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt $52,061 $41,615
Accounts payable 59,152 54,677
Accrued facilities relocation and corporate
restructuring costs 22,773 6,706
Other accrued expenses 89,019 87,278
--------- ---------
Total current liabilities 223,005 190,276
--------- ---------
Long-term debt 612,118 649,903
Deferred income taxes 22,701 21,744
Deferred income and other liabilities 24,332 22,525
Redeemable preferred stock 71,794 --
Stockholders' equity (deficit):
Common stock 2,798 3,398
Additional paid-in capital 79,497 162,034
Accumulated deficit (60,929) (53,200)
Treasury stock (45,473) (46,030)
Other (7,676) (3,757)
--------- ---------
Total stockholders' equity (deficit) (31,783) 62,445
--------- ---------
$ 922,167 $ 946,893
========= =========
<FN>
(A) Derived from the audited consolidated financial statements as of
December 31, 1994.
See accompanying notes to condensed consolidated financial statements.
TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Six months ended
June 30, June 30,
---------------- ---------------
1994 1995 1994 1995
---- ---- ---- ----
(In thousands except per share amounts)
(Unaudited)
Revenues:
Net sales $ 254,736 $ 265,907 $513,429 $ 551,718
Royalties, franchise fees
and other revenues 12,693 13,374 24,059 25,556
-------- -------- -------- --------
267,429 279,281 537,488 577,274
-------- -------- -------- --------
Costs and expenses:
Cost of sales 191,831 203,725 378,227 416,672
Advertising, selling
and distribution 28,877 31,006 50,195 58,968
General and administrative 28,974 32,271 59,836 64,614
Facilities relocation
and corporate restructuring 1,300 -- 1,300 --
-------- -------- -------- --------
250,982 267,002 489,558 540,254
-------- -------- -------- --------
Operating profit 16,447 12,279 47,930 37,020
Interest expense (18,433) (20,374) (35,468) (39,131)
Other income, net 1,211 10,018 2,573 16,832
-------- -------- -------- --------
Income (loss) before income
taxes (775) 1,923 15,035 14,721
Provision for income taxes (812) (913) (7,837) (6,992)
-------- -------- -------- --------
Net income (loss) $(1,587) $ 1,010 $ 7,198 $ 7,729
======== ======== ======== ========
Income (loss) per share $ (.13) $ .03 $ .19 $ .26
======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements.
TRIARC COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended
June 30,
-------------------
1994 1995
---- ----
(In thousands)
(Unaudited)
Cash flows from operating activities:
Net income $ 7,198 $ 7,729
Adjustments to reconcile net income
to net cash and cash equivalents
used in operating activities:
Depreciation and amortization of
properties 16,759 18,488
Amortization of costs in excess of net
assets of acquired companies 3,303 3,510
Amortization of original issue discount,
deferred financing costs and unearned
compensation 5,645 6,445
Interest expense capitalized and not paid 1,610 1,778
Gain on sales of timberland -- (11,901)
Payments (net of provision in 1994) of
facilities relocation and corporate
restructuring (9,075) (3,104)
Provision for (benefit from) deferred
income taxes 3,289 (110)
Other, net (3,458) (210)
Changes in operating assets and
liabilities:
Decrease (increase) in:
Receivables (18,387) (9,637)
Inventories 4,032 (4,063)
Restricted cash and cash equivalents and
prepaid expenses and other current
assets 981 (4,867)
Decrease in:
Accounts payable and accrued expenses (27,919) (6,429)
-------- --------
Net cash and cash equivalents used in
operating activities (16,022) (2,371)
-------- ---------
Cash flows from investing activities:
Business acquisitions:
Net current assets -- (448)
Properties, net (10,254) (5,571)
Trademarks, favorable lease acquisition
costs, non-compete agreement and other
assets (1,407) (6,408)
Capitalized leases assumed and note
payable issued 5,629 2,591
Costs in excess of net assets acquired (5,058) (25)
-------- ---------
(11,090) (9,861)
Proceeds from sales of non-core businesses
and properties 1,580 17,178
Capital expenditures (22,570) (35,469)
Net proceeds from sales of marketable securities 2,369 1,748
Investment in preferred stock of affiliate -- (1,000)
-------- ---------
Net cash and cash equivalents used in
investing activities (29,711) (27,404)
-------- ---------
Cash flows from financing activities:
Proceeds from long-term debt 14,404 43,917
Repayments of long-term debt (26,841) (24,022)
Payment of deferred financing costs -- (3,370)
Payment of preferred dividends (2,916) --
Other (937) (545)
-------- ---------
Net cash and cash equivalents provided by
(used in) financing activities (16,290) 15,980
-------- ---------
Net cash used in continuing operations (62,023) (13,795)
Net cash provided by (used in) discontinued
operations 6,135 (1,333)
-------- ---------
Net decrease in cash and cash equivalents (55,888) (15,128)
Cash and cash equivalents at beginning of period 118,801 80,064
-------- ---------
Cash and cash equivalents at end of period $ 62,913 $ 64,936
======== =========
See accompanying notes to condensed consolidated financial statements.
TRIARC COMPANIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 1995
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
of Triarc Companies, Inc. ("Triarc" and, together with its subsidiaries, the
"Company") have been prepared in accordance with Rule 10-01 of Regulation S-
X promulgated by the Securities and Exchange Commission and, therefore, do
not include all information and footnotes necessary for a fair presentation
of financial position, results of operations and cash flows in conformity
with generally accepted accounting principles. In the opinion of the
Company, however, the accompanying condensed consolidated financial
statements contain all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the Company's financial position as
of December 31, 1994 and June 30, 1995 and its results of operations for the
three-month and six-month periods ended June 30, 1994 and 1995 and its cash
flows for the six-month periods ended June 30, 1994 and 1995. This
information should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1994 ("Form 10-K").
Certain amounts included in the prior periods' condensed consolidated
financial statements have been reclassified to conform with the current
periods' presentation.
(2) Accounting Policies
A summary of the Company's significant accounting policies is set
forth in Note 1 to the consolidated financial statements in the Form 10-K.
The accounting policy for its derivative financial instrument, however, as
set forth in the Form 10-K is being clarified as follows:
Derivative Financial Instrument
The Company has an interest rate swap agreement entered into in order
to synthetically alter the interest rate of certain of the Company's fixed-
rate debt. The Company calculates the estimated remaining amount to be paid
or received under the interest rate swap agreement for the period from the
last payment date to the end of the agreement based on the interest rate
applicable at the financial statement date and recognizes such amount which
applies to the period from the last payment date through the financial
statement date as a component of interest expense. The recognition of gain
or loss from the interest rate swap agreement is effectively correlated with
the stated interest on the underlying debt. The payment received at the
inception of the agreement, which was deemed to be a fee to induce the
Company to enter into the agreement, is being amortized over the full life
of the agreement since the Company was not at risk for any gain or loss on
such payment.
(3) Inventories
The following is a summary of the components of inventories:
December 31, June 30,
1994 1995
---- ----
(In thousands)
Raw materials $ 26,490 $ 28,882
Work in process 7,803 8,396
Finished goods 71,369 73,161
--------- ---------
$105,662 $110,439
========= =========
(4) Properties
The following is a summary of the components of properties, net:
December 31, June 30,
1994 1995
---- ----
(In thousands)
Properties, at cost $515,109 $544,342
Less accumulated depreciation
and amortization 208,816 220,295
--------- ---------
$306,293 $324,047
========= =========
(5) Posner Settlement
On January 9, 1995 the Company entered into a settlement agreement
(the "Settlement Agreement") with Victor Posner and certain entities
controlled by him (collectively, the "Posner Entities"). Pursuant to the
Settlement Agreement all of the 5,982,866 shares of redeemable preferred
stock, with an aggregate book value of $71,794,000 and which were owned by
the Posner Entities, were converted into 4,985,722 shares of the Company's
Class B Common Stock (the "Conversion"). Further, an additional 1,011,900
shares of Class B Common Stock (valued at an aggregate $12,016,000) were
issued to the Posner Entities (the "Issuance") in consideration for, among
other matters, (i) the settlement of all amounts due to the Posner Entities
in connection with termination of the lease for the Company's former
headquarters ($12,326,000) and (ii) an indemnification by certain of the
Posner Entities of any claims or expenses incurred after December 1, 1994
involving certain litigation and potential litigation relating to the
Company and certain former affiliates. As a result of the Conversion and
the Issuance, "Common stock" and "Additional paid-in capital" increased by
$600,000 and $83,211,000, respectively, during the first six months of 1995.
The settlement of the lease termination resulted in a pretax gain to
the Company of $310,000. In addition, the Company released accruals for (i)
litigation expenses of $773,000 and (ii) interest on the lease termination
obligation of $638,000. Further, pursuant to the Settlement Agreement,
Posner paid the Company $6,000,000 in January 1995 in exchange for, among
other things, the release by the Company of the Posner Entities from certain
claims that it may have and, in accordance with a court order issued on
February 7, 1995, utilized a portion of such funds to make payments
aggregating $3,150,000, all as detailed in Note 34 to the consolidated
financial statements in the Form 10-K. Additionally, a special committee of
the Company's Board of Directors which was established in 1991 in accordance
with certain court proceedings and related settlements (the "Special
Committee") was disbanded and the three court-appointed members of the
Special Committee decided not to stand for re-election as directors of the
Company at the 1995 annual shareholders meeting. In connection therewith,
the vesting of such directors' restricted stock was accelerated resulting in
the recognition of previously unamortized deferred compensation of
$1,690,000 during the first quarter of 1995 included in "General and
administrative". As a result of all of the above, the Company recorded
pretax income of $2,881,000 relating to the Settlement Agreement, consisting
of charges, net, to "General and administrative" of $69,000 and credits to
"Other income, net" of $2,312,000 and to "Interest expense" of $638,000,
during the first six months of 1995.
(6) Other Income, Net
Other income, net for the three-month and six-month periods ended June
30, 1995 consists of the following components:
Three months Six months
ended ended
June 30, 1995 June 30, 1995
------------- -------------
(In thousands)
Gain on sale of excess timberland $ 10,738 $ 11,901
Posner Settlement (Note 5) -- 2,312
Insurance settlement for fire-
damaged equipment -- 1,875
Other, net (720) 744
------- -------
$ 10,018 $ 16,832
======= =======
(7) FFCA Financing
Effective as of May 1, 1995 two newly-formed wholly-owned subsidiaries
(the "New Subsidiaries") of RC/Arby's Corporation ("RCAC" - a wholly-owned
subsidiary of the Company), borrowed an aggregate of $37,294,000 from a
commercial lender pursuant to a mortgage and equipment loan agreement (the
"Mortgage Loan Agreement"). Outstanding borrowings under the Mortgage Loan
Agreement as of June 30, 1995, net of repayments of $60,000, consisted of
$34,347,000 of mortgage loans (the "Mortgage Loans") and $2,887,000 of
equipment loans (the "Equipment Loans"), the proceeds of which are being or
have been used (i) to fund capital expenditures, principally in the
restaurant segment, (ii) for general corporate purposes and (iii) to pay
related fees and expenses. The Mortgage Loans and Equipment Loans (the
"Loans") bear interest at 11 1/2% plus, with respect to the Mortgage Loans,
participating interest to the extent gross sales of the financed restaurants
exceed certain defined levels which are in excess of current levels. The
Mortgage Loans and Equipment Loans are repayable in equal monthly
installments, including interest, over twenty years and seven years,
respectively. The Loans are secured by restaurants and equipment with a net
book value of approximately $32,000,000 as of June 30, 1995. In connection
therewith, all of the equipment securing the Equipment Loans, with a net
book value of $2,747,000 as of May 1, 1995, has been released as security
for the payment of RCAC's 9 3/4% senior notes due 2000. The assets of
Arby's Restaurant Development Corporation, one of the New Subsidiaries, will
not be available to pay creditors of Triarc, RCAC or RCAC's wholly-owned
subsidiary, Arby's, Inc., until the Loans to it have been repaid in full.
Triarc, the New Subsidiaries and the commercial lender also entered into a
commitment letter whereby the New Subsidiaries will be able to borrow up to
an additional $50,000,000 through April 30, 1996, on substantially the same
terms as described above (the "Mortgage Loan Commitment") to finance new
restaurants. There were no borrowings made by the New Subsidiaries under
the Mortgage Loan Commitment as of June 30, 1995.
(8) Income (Loss) Per Share
The common shares used in the calculations of income (loss) per share
were as follows:
Three months ended Six months ended
June 30, June 30,
--------------- ----------------
1994 1995 1994 1995
----- ------ ------ ------
(In thousands)
Weighted average number of
common shares outstanding 23,678 29,913 22,517 29,617
Common equivalent shares -
effect of dilutive stock
options -- 335 162 242
-------- -------- ------- -------
Common and common equivalent
shares 23,678 30,248 22,679 29,859
======== ======= ======= =======
The income (loss) per share has been computed by dividing the net
income (loss) applicable to common stockholders (net income (loss) less
preferred stock dividend requirements of $1,458,000 and $2,916,000 for the
three and six-month periods ended June 30, 1994, respectively) by the number
of common and common equivalent shares above. Fully diluted income (loss)
per share is not presented for any period since contingent issuances of
common shares would have been antidilutive or had no effect on the income
(loss) per share.
(9) Transactions with Related Parties
The Company continues to have related party transactions of the same
nature and general magnitude as those described in Note 28 to the
consolidated financial statements contained in the Form 10-K.
(10) Contingencies
The Company continues to have legal and environmental contingencies of
the same nature and general magnitude as those described in Note 25 to the
consolidated financial statements contained in the Form 10-K. In connection
with the Settlement Agreement (see Note 5) and as described in the Form 10-
K, the Company received an indemnification from the Posner Entities of any
claims or expenses incurred after December 1, 1994 involving certain
litigation relating to the Company and certain of its former affiliates.
After considering amounts provided in previous periods, the Company
does not believe that the contingencies referred to above, as well as
ordinary routine litigation, will have a material adverse effect on its
consolidated financial position or results of operations.
(11) Subsequent Events
Graniteville Credit Facility Amendment
Graniteville Company ("Graniteville"), a wholly-owned subsidiary of
the Company, and C.H. Patrick & Co., Inc., a wholly-owned subsidiary of
Graniteville, have a senior secured credit facility with Graniteville's
commercial lender, the terms of which are disclosed in Note 13 to the
Company's consolidated financial statements in the Form 10-K. On August 3,
1995 such credit facility was amended (the "Amended Credit Facility")
thereby (i) increasing the maximum credit to $130,000,000 of revolving
credit loans (the "Revolving Loan") and $86,000,000 of term loans (the "Term
Loan"), (ii) extending maturities, (iii) lowering interest rates by
approximately 1/4%, (iv) modifying the related financial covenant
requirements and (v) modifying and extending Graniteville's factoring
arrangement. The amended Revolving Loan does not require any amortization
of principal prior to its expiration in 2000. The amended Term Loan is
repayable in installments of $800,000 in 1995, $11,600,000 in 1996,
$12,400,000 in 1997 through 1999 and $36,400,000 in 2000. On August 4, 1995
Graniteville borrowed $36,000,000 under the Amended Credit Facility which it
loaned to Triarc. Triarc used $25,000,000 of such proceeds to make a
capital contribution to Mistic Brands Inc. to partially fund the Mistic
Acquisition described below.
Mistic Acquisition
On August 9, 1995 a wholly-owned subsidiary of Triarc, Mistic Brands,
Inc. ("Mistic"), acquired (the "Acquisition") substantially all of the
assets and operations, subject to general operating liabilities, as defined,
of certain companies (the "Acquired Business") which develop, market and
sell carbonated and non-carbonated fruit drinks, ready-to-drink brewed iced
teas and naturally flavored sparkling waters under various trademarks and
tradenames including "Mistic" and "Royal Mistic". The purchase price for
the Acquisition, aggregating $97,000,000, subject to a post-closing
adjustment, consisted of (i) $93,000,000 in cash, (ii) $1,000,000 of
deferred purchase price to be paid in eight equal quarterly installments
commencing in November 1995 and (iii) non-compete agreement payments
aggregating $3,000,000 payable through December 1998 with payments
commencing upon the later of August 1996 or a final settlement or judgement
in the distributor litigation referred to below.
The cash portion of the Acquisition purchase price was financed
through (i) the aforementioned $25,000,000 capital contribution to Mistic
from Triarc and (ii) borrowings under a new $80,000,000 senior debt
financing with a bank which is expected to syndicate the financing (the
"Mistic Bank Facility"). The Mistic Bank Facility consists of a $20,000,000
revolving credit facility (the "Revolver Facility") and a $60,000,000 term
facility (the "Term Facility"), of which $11,500,000 and $60,000,000,
respectively, were borrowed to fund the cash purchase price and $3,500,000
of fees and expenses related to the financing. Borrowings under the Mistic
Bank Facility bear interest at the prime rate for a syndication period of up
to sixty days and thereafter, at the Company's option, at varying LIBOR
rates plus 2 3/4% or a base rate (the "Base Rate") (the higher of the
Federal funds rate plus 1/2% or the prime rate) plus 1 1/2%. Borrowings
under the Revolving Facility are due in full in August 1999. However, the
Company must reduce the borrowings under the Revolving Facility for a period
of thirty consecutive days between October 1 and March 31 each year to less
than (a) $7,000,000 in the first year and (b) $5,000,000 in the second year
and to $0 thereafter. Mistic must also make mandatory prepayments in an
amount equal to 75% (for the years ended December 31, 1996 and 1997) and 50%
(thereafter) of excess cash flow, as defined. Borrowings under the Term
Facility are due $1,250,000 in 1995, $5,000,000 in 1996, $6,250,000 in 1997,
$10,000,000 in 1998, $11,250,000 in 1999, $15,000,000 in 2000 and
$11,250,000 in 2001. The borrowing base for the Revolving Facility is the
sum of 80% of eligible accounts receivable and 50% of eligible inventory.
The Mistic Bank Facility agreement contains various covenants which, among
other things, require meeting certain financial amount and ratio tests and
prohibit dividends. Substantially all of Mistic's assets are pledged as
security for obligations under the Mistic Bank Facility and Triarc has
guaranteed the payment of such obligations. The common stock of Mistic
owned by the Company has been pledged as collateral for such guarantee.
In connection with the Mistic Bank Facility agreement, the Company
granted the lending bank 30 stock appreciation rights for the equivalent of
3% of Mistic's outstanding common stock plus the equivalent shares
represented by the stock appreciation rights discussed herein. In addition,
two senior officers of Mistic were granted stock appreciation rights for the
equivalent of 9.7% of the Mistic common stock owned by Triarc, of which one-
third vest over time and two-thirds vest depending on the performance of
Mistic. The stock appreciation rights provide for appreciation above a base
price of $28,273 per share, which is equal to the Company's per share
capital contribution to Mistic in connection with the Acquisition.
The Acquisition will be accounted for in accordance with the purchase
method of accounting. Accordingly, the assets and liabilities acquired will
be recorded at their fair values and the excess of the purchase price over
such fair values will be recorded as "Costs in excess of net assets of
acquired companies".
The following table sets forth summarized financial information of the
Acquired Business as of and for the period ended December 31, 1994, the most
recent audited period:
Year ended
December 31, 1994
-----------------
(In thousands)
Balance Sheet Data:
Working capital $12,227
Total assets 23,801
Stockholders' equity 13,793
Operating Data:
Revenues $ 128,786
Operating income 15,508
Net income (a) 12,096
[FN]
(a) The Acquired Business elected S Corporation status for
Federal and certain state income tax purposes and, accordingly,
the Acquired Business does not provide for such income taxes.
[FN]
PAGE
TRIARC COMPANIES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
INTRODUCTION
The "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included herein should be read in conjunction with
"Item 7. - Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Annual Report on Form 10-K for the year ended
December 31, 1994 ("Form 10-K") of Triarc Companies, Inc. ("Triarc" or,
collectively with its subsidiaries, the "Company"). The recent trends
affecting the Company's four business segments are described therein.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1995 Compared with Six Months Ended June 30, 1994
Revenues Operating Profit
Six months ended Six months ended
June 30, June 30,
------------------ ---------------
1994 1995 1994 1995
---- ---- ---- ----
(In thousands)
Restaurants $ 104,038 $ 125,524 $9,357 $ 6,453
Soft Drinks 77,619 92,177 12,020 6,234
Textiles 273,673 282,848 16,366 16,688
Liquefied Petroleum Gas 82,158 76,725 14,245 9,184
Other -- -- (198) (96)
Unallocated general
corporate expenses -- -- (3,860) (1,443)
-------- -------- -------- --------
$ 537,488 $ 577,274 $ 47,930 $ 37,020
======== ======== ======== ========
Revenues - Revenues increased $39.8 million to $577.3 million in the
six months ended June 30, 1995.
Restaurants - Revenues increased $21.5 million (20.7%) due to
(i) a $20.0 million increase in net sales resulting from an
average net increase of 49 (18.7%) company-owned restaurants
partially offset by a $0.7 million (1.0%) decrease in company-
owned same-store sales due to a decline in customer traffic in
the first quarter and increased competitive discounting and (ii)
a $1.5 million (6.4%) increase in royalties and franchise fees
resulting primarily from an average net increase of 80 (3.3%)
franchised restaurants and a 2.3% increase in franchised same-
store sales.
Soft Drinks - Revenues increased $14.5 million (18.8%)
reflecting (i) $11.6 million of finished soft drink product
sales of C&C and the soft drink segment's branded products (as
opposed to concentrate) arising from the Company's January 1995
acquisition of the trademark and distribution rights for C&C
products and the distribution rights for the soft drink
segment's branded products in the New York metropolitan area
(the "TriBev Acquisition"), (ii) a $2.4 million volume increase
in private label concentrate sales resulting from continued
international expansion and modest domestic growth and (iii) a
$0.5 million volume increase in branded concentrate sales.
Textiles - Revenues increased $9.2 million (3.4%) reflecting
higher sales of indigo-dyed sportswear ($14.2 million), utility
wear ($7.3 million) and specialty products ($2.5 million)
significantly offset by lower sales of piece-dyed sportswear
($15.0 million). The sportswear and utility wear product lines
experienced higher selling prices reflecting the partial pass-
through of higher material costs. In addition to higher selling
prices, indigo-dyed sportswear was also positively impacted by
higher volume of $8.5 million due to improved market conditions
reflecting the continued turnaround in the denim market which
commenced in late 1994. The decrease in piece-dyed sportswear
resulted from weak demand due to a poor retail market.
Liquefied Petroleum Gas - Revenues decreased $5.3 million (6.6%)
due to lower volume resulting from the exceptionally warm winter
in virtually all markets where the liquefied petroleum gas
segment has operations, offset slightly by higher selling prices
reflecting higher costs.
Gross profit increased $1.3 million to $160.6 million in the six
months ended June 30, 1995 due to the increase in sales volume discussed
above significantly offset by lower gross margins which decreased overall to
27.8% compared with 29.6% for the comparable prior year period.
Restaurants - Margins decreased to 34.7% from 37.4% due
primarily to (i) reduced operating cost efficiencies as a result
of (a) start-up costs associated with the opening of new
restaurants and (b) the decline in company-owned same-store
sales volume noted above and (ii) the proportionately lower
royalties and franchise fees (with no associated cost of sales)
as a percentage of total revenues.
Soft Drinks - Margins decreased to 66.0% from 76.6% due to the
inclusion in the 1995 period of the lower margin finished
product sales associated with the TriBev Acquisition noted above
and, to a lesser extent, a shift in sales mix toward
international sales where selling prices are lower.
Textiles - Margins decreased to 12.5% from 13.2% principally due
to the higher raw material cost of cotton (which reached its
highest levels this century) and polyester and other
manufacturing costs in 1995 which could not be fully passed on
to customers in the form of higher selling prices.
Liquefied Petroleum Gas - Margins decreased to 27.2% from 30.0%
due to higher propane costs which could only be partially passed
on in the form of higher selling prices because of increased
competition induced by substantially warmer winter weather.
Advertising, selling and distribution expenses increased $8.8 million
to $59.0 million in the six months ended June 30, 1995. Such increase
reflected (i) $6.0 million of higher expenses in the soft drink segment
reflecting increased media and promotional activity supporting branded
products and increased domestic and international key market development
initiatives and (ii) $3.1 million of higher expenses in the restaurant
segment primarily attributable to the increased number of company-owned
restaurants and increased promotional food costs relating to competitive
discounting, both partially offset by cost savings of the textile segment
realized upon relocation of marketing functions from New York to
Graniteville, South Carolina.
General and administrative expenses increased $4.8 million to $64.6
million in the six months ended June 30, 1995 principally due to increasing
costs associated with building an infrastructure to facilitate expansion
plans primarily in the restaurant segment and, to a lesser extent, other
general inflationary increases partially offset by lower corporate expenses
resulting from the June 1994 closing of the Company's corporate office in
West Palm Beach, Florida.
The 1994 facilities relocation and corporate restructuring charges of
$1.3 million consisted of severance costs relating to terminated corporate
employees.
Interest expense increased $3.7 million to $39.1 million in the six
months ended June 30, 1995 due to higher average levels of debt partially
offset by the release of an accrual for $0.6 million of interest in
accordance with the settlement agreement with Victor Posner and lower
average interest rates on the Company's floating-rate debt.
Other income, net increased $14.3 million to $16.8 million in the six
months ended June 30, 1995. The major components of this increase were (i)
an $11.9 million gain on the sale of timberland, (ii) $2.3 million related
to the January 1995 settlement agreement with Victor Posner, (iii) a $1.9
million gain on insurance recovery relating to fire-damaged equipment and
(iv) the minority interests in net income of consolidated subsidiary in the
1994 period of $1.3 million, all partially offset by a (i) $1.2 million loss
from an equity investment in a Taiwanese joint venture and (ii) a $1.0
million nonrecurring realized gain in the prior year period in connection
with the redemption of an investment previously written off.
The provisions for income taxes in the six months ended June 30, 1995
and 1994 represent effective tax rates of 47.5% and 48.0%, respectively,
which are higher than the Federal income tax statutory rate of 35%
principally due to the effects of state income taxes, net of Federal
benefit, and amortization of costs in excess of net assets of acquired
companies which is not deductible for income tax purposes.
Three Months Ended June 30, 1995 Compared with Three Months Ended June 30,
1994
Revenues Operating Profit
Three months ended Three months ended
June 30, June 30,
------------------ ---------------
1994 1995 1994 1995
---- ---- ---- ----
(In thousands)
Restaurants $55,202 $68,410 $5,732 $4,431
Soft Drinks 42,367 46,661 4,429 1,553
Textiles 143,682 137,792 8,705 7,756
Liquefied Petroleum Gas 26,178 26,418 (564) (1,337)
Other -- -- (198) (71)
Unallocated general
corporate expenses -- -- (1,657) (53)
-------- -------- -------- --------
$ 267,429 $ 279,281 $ 16,447 $12,279
======== ======== ======== ========
Revenues increased $11.9 million to $279.3 million in the three months
ended June 30, 1995.
Restaurants - Revenues increased $13.2 million (23.9%) due to
(i)a $12.5 million increase in net sales resulting from an
average net increase of 52 (19.2%) company-owned restaurants
which contributed $11.9 million to net sales and a $0.6 million
(1.7%) increase in company-owned same-store sales due to an
increase in customer traffic partially offset by increased
competitive discounting and (ii) a $0.7 million (5.4%) increase
in royalties and franchise fees resulting from an average net
increase of 85 (3.5%) franchised restaurants and a 2.8% increase
in franchised same-store sales.
Soft Drinks - Revenues increased $4.3 million (10.1%) reflecting
(i) $6.6 million of finished soft drink product sales of C&C and
the soft drink segment's branded products arising from the
TriBev Acquisition and (ii) a $0.3 million increase in private
label concentrate sales, both partially offset by a $2.6 million
volume decrease in branded concentrate sales reflecting lower
bottler concentrate requirements following first quarter
domestic forward buying in advance of an announced April 1 price
increase.
Textiles - Revenues decreased $5.9 million (4.1%) reflecting
lower sales of piece-dyed sportswear ($11.4 million) partially
offset by higher sales of indigo-dyed sportswear ($4.8 million).
The decrease in sales of piece-dyed sportswear principally
resulted from weak demand due to a poor retail market. The
increase in indigo-dyed sportswear resulted from higher selling
prices ($3.2 million) reflecting the partial pass-through of
higher cotton costs and greater volume ($1.6 millon) reflecting
the continued turnaround in the denim market.
Liquefied Petroleum Gas - Revenues increased $0.2 million (0.9%)
entirely due to higher volume.
Gross profit was essentially unchanged in the three months ended June
30, 1995 as the effect of the Company's net increased sales volume discussed
above was fully offset by a decrease in gross margin from 28.3% to 27.1%.
Restaurants - Margins declined to 35.4% from 37.6% due entirely
to the proportionately lower royalties and franchise fees (with
no associated cost of sales) as a percentage of total revenues,
partially offset by generally higher margins in recently opened
or acquired company stores.
Soft Drinks - Margins decreased to 64.8% from 74.9% due to the
inclusion in the 1995 period of the lower margin finished
product sales associated with the TriBev Acquisition noted above
and, to a lesser extent, a shift in sales mix toward
international sales where selling prices are lower.
Textiles - Margins decreased to 12.1% from 12.9% principally due
to higher raw material costs and other manufacturing costs in 1995
which could not be fully passed on to customers in the form of
higher selling prices.
Liquefied Petroleum Gas - Margins decreased to 16.8% from 17.6%
due to higher propane costs which could only be partially passed
on in the form of higher selling prices because of increased
competition induced by substantially warmer weather this past
winter.
Advertising, selling and distribution expenses increased $2.1 million
to $31.0 million in the three months ended June 30, 1995. Such increase
consisted of (i) $2.0 million of higher expenses in the restaurant segment
primarily attributable to the increased number of company-owned restaurants
and increased promotional food costs relating to competitive discounting and
(ii) $1.1 million of higher expenses in the soft drink segment reflecting
increased promotional activity supporting branded products and increased
domestic key market development initiatives, both partially offset by lower
expenses of the textile segment principally due to the cost savings realized
upon relocation of certain marketing functions.
General and administrative expenses increased $3.3 millon to $32.3
million in the three months ended June 30, 1995 due to increasing costs
associated with building an infrastructure to facilitate expansion plans
primarily in the restaurant segment and, to a lesser extent, other general
inflationary increases, partially offset by lower corporate expenses
resulting from the June 1994 closing of the Company's corporate office in
West Palm Beach.
The 1994 facilities relocation and corporate restructuring charges of
$1.3 million consisted of severance costs relating to terminated corporate
employees.
Interest expense increased $1.9 million to $20.4 million in the three
months ended June 30, 1995 due to higher average levels of debt slightly
offset by lower average interest rates on the Company's floating-rate debt.
Other income, net increased $8.8 million to $10.0 million in the three
months ended June 30, 1995 principally due to a $10.7 million gain on the
sale of timberland partially offset by a $0.9 million loss from an equity
investment in a Taiwanese joint venture and other losses on certain assets
sold or held for sale.
The Company had a provision for income taxes in the three months ended
June 30, 1995 which represents an effective tax rate of 47.5% which is
higher than the Federal income tax statutory rate and a provision for taxes
in the three months ended June 30, 1994 despite a pretax loss. Such
variances are principally due to the effects of state income taxes, net of
Federal benefit, and amortization of costs in excess of net assets of
acquired companies, and in the 1994 period, the effect of a year-to-date
increase in the estimated full year 1994 effective tax rate to 48% in the
second quarter of 1994.
LIQUIDITY AND CAPITAL RESOURCES
Consolidated cash and cash equivalents (collectively, "cash")
decreased $15.1 million during the six months ended June 30, 1995 to $64.9
million at June 30, 1995. Such decrease reflects cash used in (i) operating
activities of $2.4 million, (ii) investing activities of $27.4 million (see
below) and (iii) discontinued operations of $1.3 million, all partially
offset by cash provided by financing activities of $16.0 million (see
below). The net cash used in operating activities reflects net income of
$7.7 million plus non-cash charges for depreciation and amortization of
$28.4 million offset by (i) changes in operating assets and liabilities of
$25.0 million, (ii) the reporting of the net gain on the sale of excess
timberland of $11.9 million within investing activities and (iii) other
items, net of $1.6 million. The change in operating assets and liabilities
consists of increases in (i) receivables of $9.6 million, (ii) inventories
of $4.1 million and (iii) restricted cash and prepaid expenses and other
current assets of $4.9 million and (iv) a decrease in accounts payable and
accrued expenses of $6.4 million. The Company expects that operations for
the remainder of 1995 will result in positive cash flows from operations.
The cash used in investing activities principally reflects (i) capital
expenditures of $35.5 million and (ii) cash paid for restaurant and soft
drink acquisitions of $9.9 million, partially offset by proceeds from sales
of non-core businesses and properties of $17.2 million, including $15.7
million of proceeds from the sale of timberland. The cash provided by
financing activities principally reflects borrowings of long-term debt of
$43.9 million partially offset by payments of related deferred financing
costs of $3.4 million and debt repayments of $24.0 million.
Total stockholders' equity improved to $62.4 million at June 30, 1995
from a deficit of $31.8 million at December 31, 1994. Such improvement was
due to (i) the $83.8 million effect of the Company's issuances of its Class
B Common Stock in connection with the settlement agreement described in Note
5 to the accompanying condensed consolidated financial statements, (ii) net
income of $7.7 million, (iii) the recognition of $1.7 million of previously
unamortized deferred compensation and (iv) $1.0 million of other net
increases.
Consolidated capital expenditures, excluding properties of business
acquisitions and including capital leases of $0.4 million, amounted to $35.9
million for the six months ended June 30, 1995. As of such date, there were
approximately $31.8 million of outstanding commitments for capital
expenditures. Such amount includes (i) $6.6 million of cash restricted for
the purchase of equipment and (ii) $15.1 million required to be reinvested
by RC/Arby's Corporation ("RCAC") in "core business assets" (most likely
capital expenditures or acquisitions) on or before October 31, 1995 as a
result of the sale of restaurants to subsidiaries of RCAC in accordance with
the indenture pursuant to which its 9 3/4% Senior Notes were issued. The
Company expects that capital expenditures during the remainder of 1995 will
approximate $49.5 million, including the $31.8 million of commitments as of
June 30, 1995, subject to the availability of cash and other financing
sources. These actual and anticipated expenditures reflect increased
spending levels principally in the restaurant segment in furtherance of its
business strategies, principally for construction of new company-owned
restaurants and remodeling of older restaurants (including the replacement
of equipment). RCAC anticipates financing its capital expenditures for new
restaurants (expected to approximate $27.2 million) with the proceeds
remaining from borrowings under the Mortgage Loan Agreement (see below),
which as of June 30, 1995 amounted to $7.3 million and new borrowings under
the $50.0 million Mortgage Loan Commitment (see below) which are restricted
to financing new restaurants. However, capital expenditures financed with
proceeds from borrowings under the Mortgage Loan Agreement or the Mortgage
Loan Commitment do not qualify as amounts required to be reinvested in core
business assets pursuant to the Senior Note indenture. RCAC intends to meet
a portion of its capital expenditure requirements with capitalized leases,
additions to which are limited to $15.0 million annually in accordance with
the Senior Note indenture (of which approximately $4.7 million has been used
through June 30, 1995 principally for business acquisitions and deferred
software costs). The Company anticipates that it will meet its remaining
capital expenditure requirements, including those required to be reinvested
in core business assets, through cash, cash restricted for capital
expenditures, cash flows from operations, if any, leasing arrangements and
other borrowings.
Cash paid for business acquisitions amounted to $9.9 million during
the six months ended June 30, 1995 almost entirely due to acquisitions in
the Company's restaurant and soft drink segments. In furtherance of the
Company's growth strategy, the Company will consider additional selective
acquisitions, as appropriate, to build and strengthen its existing
businesses. In connection therewith, in July 1995 the Company utilized cash
of $3.7 million to acquire 15 previously franchised restaurants. In
addition, Arby's Inc. ("Arby's", a wholly-owned subsidiary of RCAC) signed a
letter of intent with ZuZu, Inc. ("ZuZu"), a Dallas-based Mexican restaurant
chain, whereby the Company or an affiliate will acquire for $5.3 million in
cash, approximately 12.5% of ZuZu's common stock as well as options to
purchase up to an additional 37.5% of ZuZu's common stock within the next
three years. Arby's currently intends to assign its rights under the letter
of intent to the Company. The Company expects to close the initial 12.5%
purchase during the third quarter of 1995; however, such closing is
conditioned upon the satisfactory completion of due diligence procedures and
other customary closing conditions.
More significantly, on August 9, 1995 a wholly-owned subsidiary of
Triarc, Mistic Brands, Inc. ("Mistic"), acquired (the "Acquisition")
substantially all of the assets and operations, subject to general operating
liabilities, as defined, of certain companies which develop, market and sell
carbonated and non-carbonated fruit drinks, ready-to-drink brewed iced teas
and naturally flavored sparkling waters under various trademarks and
tradenames including "Mistic" and "Royal Mistic", for an aggregate purchase
price of $97.0 million, subject to a post-closing adjustment. The financing
of the Acquisition was obtained through capital contribution to Mistic from
Triarc from proceeds of a loan to Triarc from Graniteville Company
("Graniteville", a wholly-owned subsidiary of the Company) and (ii)
borrowings under a new senior debt financing (the "Mistic Bank Facility").
See Note 11 to the accompanying condensed consolidated financial statements
for further discussion of the Acquisition, the related financing and an
amendment to Graniteville's credit facility (as amended, the "Amended Credit
Facility") obtained in order to make the loan to Triarc noted above.
The Company's principal operating subsidiaries each have various
credit facilities, including term loans, or senior note issuances
outstanding which are described in detail in Note 13 to the consolidated
financial statements contained in the Form 10-K supplemented by the
disclosure in Note 11 to the accompanying condensed consolidated financial
statements of the Amended Credit Facility and the Mistic Bank Facility. At
June 30, 1995 Graniteville had $18.2 million of unused availability under
its credit facility (as of August 4, 1995 following a $36.0 million loan to
Triarc, Graniteville had $18.0 million of unused availability under its
Amended Credit Facility). National Propane Corporation ("National Propane")
effectively had $3.7 million of unused availability under its bank facility
for general purposes and $30.0 million available, to fund, in part, the
redemption, prior to December 31, 1995, of the $45.0 million outstanding
principal amount of the 11 7/8% senior subordinated debentures due February
1, 1998 (the "11 7/8% Debentures") of Southeastern Public Service Company
("SEPSCO"). After the consummation of the Acquisition, Mistic had $5.5
million available under the Mistic Bank Facility.
Effective as of May 1, 1995 two newly-formed wholly-owned subsidiaries
(the "New Subsidiaries") of RCAC borrowed an aggregate of $37.3 million from
a commercial lender pursuant to a mortgage and equipment loan agreement (the
"Mortgage Loan Agreement"). Outstanding borrowings under the Mortgage Loan
Agreement as of June 30, 1995, net of repayments of $0.1 million, were $37.2
million. See Note 7 to the accompanying condensed consolidated financial
statements for further discussion relating to borrowings under the Mortgage
Loan Agreement. Triarc, the New Subsidiaries and the commercial lender also
entered into a commitment letter whereby the New Subsidiaries will be able
to borrow up to an additional $50.0 million through April 30, 1996, on
substantially the same terms as described above (the "Mortgage Loan
Commitment"). Borrowings under both the Mortgage Loan Agreement and the
Mortgage Loan Commitment are restricted to the financing of new restaurants.
Principal repayments required under the Mortgage Loan Agreement aggregate
$0.4 million during the remainder of 1995. There were no borrowings under
the Mortgage Loan Commitment as of June 30, 1995.
Under the Company's various debt agreements, including the Mistic Bank
Facility entered into subsequent to June 30, 1995, substantially all of the
Company's assets are pledged as security. In addition, obligations under
(i) RCAC's 9 3/4% Senior Notes have been guaranteed by RCAC's wholly-owned
subsidiaries, Royal Crown Company, Inc. ("Royal Crown") and Arby's and (ii)
Graniteville's Amended Credit Facility, National Propane's bank facility,
the Mortgage Loan Agreement and the Mistic Bank Facility have been
guaranteed by Triarc. As collateral for such guarantees, all of the stock
of Royal Crown, Arby's, Graniteville (50% of such stock is subject to a pre-
existing pledge of such stock in connection with a Triarc intercompany note
payable to SEPSCO in the principal amount of $26.5 million), National
Propane, SEPSCO and Mistic owned by the Company is pledged.
The Company's debt instruments require aggregate principal payments of
$8.4 million during the remainder of 1995, exclusive of requirements for the
planned early repayment of the 11 7/8% Debentures. In connection with the
merger of Public Gas Company and National Propane which occurred in June
1995, the Company presently intends to cause SEPSCO to repay the $45.0
million principal amount of its 11 7/8% Debentures prior to maturity during
1995 with proceeds from a $30.0 million revolving loan (due 2000) under
National Propane's bank facility (as previously discussed) and from SEPSCO's
existing cash and marketable securities ($30.0 million as of June 30, 1995).
The Company's program, announced in late 1994, to repurchase up to
$20.0 million of its Class A Common Stock, expired in June 1995 following
the repurchase of 133,700 shares for an aggregate cost of $1.5 million.
As of June 30, 1995 the Company's principal cash requirements for the
remainder of 1995 consist principally of capital expenditures of
approximately $49.5 million to the extent not leased, debt principal
payments aggregating $53.4 million (including the intended repayment prior
to maturity of the 11 7/8% Debentures) and $8.0 million for the consummated
and proposed restaurant acquisitions noted above. The Company anticipates
meeting such requirements through existing cash and cash equivalents and
marketable securities, cash flows from operations, if any, $30.0 million of
restricted borrowings under National Propane's bank facility, borrowings
under the Mortgage Loan Agreement and the Mortgage Loan Commitment
(restricted to financing new company-owned restaurants), borrowings
available under Graniteville's and National Propane's credit facilities, and
financing a portion of its capital expenditures through capital leases and
operating lease arrangements.
Triarc
Triarc is a holding company whose ability to meet its cash
requirements is primarily dependent upon cash flows from its subsidiaries
including loans and cash dividends to Triarc by subsidiaries and
reimbursement by subsidiaries to Triarc in connection with the providing of
certain management services and payments under certain tax sharing
agreements with certain subsidiaries.
Under the terms of the various indentures and credit arrangements,
Triarc's principal subsidiaries are unable to pay any dividends or make any
loans or advances to Triarc for the remainder of 1995, except that SEPSCO
may make loans or advances to Triarc and its subsidiaries.
As of June 30, 1995, Triarc had outstanding external indebtedness
consisting of a $39.2 million 9 1/2% note (including interest capitalized as
additional principal of $5.0 million). In addition, Triarc owed
subsidiaries an aggregate principal amount of $247.6 million, consisting of
notes in the principal amounts of $51.6 million, $75.1 million, $32.7
million and $6.8 million to CFC Holdings, Graniteville, SEPSCO and
subsidiaries of RCAC, respectively (which bear interest at rates ranging
from 9 1/2% to 11 7/8%) and $81.4 million of non-interest bearing advances
owed to National Propane. In addition to the indebtedness detailed above,
as previously discussed, Triarc borrowed $36.0 million from Graniteville in
August 1995 under a note bearing interest at 9 1/2%. Of such indebtedness
to subsidiaries Triarc repaid $5.5 million to RCAC in August 1995. No other
principal payments are due during the second half of 1995 and only the notes
payable to Graniteville require the payment of cash interest (40% commencing
with the October 15, 1995 interest payment). As of June 30, 1995 Triarc had
notes receivable from RCAC and its subsidiaries in the aggregate amount of
$16.7 million which are due in 1998 and 2000 and which bear interest rate at
11 7/8%.
Triarc believes that its expected sources of cash, principally cash on
hand of $16.2 million as of June 30, 1995, reimbursement of general
corporate expenses from subsidiaries in connection with management services
agreements to the extent such subsidiaries are able to pay and net payments
received under tax sharing agreements with certain subsidiaries, which the
Company does not anticipate having to remit to the IRS due to the
availability of operating loss, depletion and tax credit carryforwards, will
be sufficient to enable it to meet its short-term cash needs.
RCAC
As of June 30, 1995, RCAC's principal cash requirements for the
remainder of 1995, exclusive of operating cash flows, consist principally of
capital expenditures of approximately $38.7 million to the extent not
leased, $3.7 million for the July 1995 restaurant acquisition noted above,
funding for additional acquisitions, if any, and debt (including borrowings
under the Mortgage Loan Agreement) and affiliated note principal repayments
of $2.0 million and $9.5 million of borrowings from a subsidiary of Triarc
subsequent to June 30, 1995 which matures in September 1995. RCAC
anticipates meeting such requirements through cash flows from operations,
$5.5 million of advances to Triarc collected subsequent to June 30, 1995 and
financing a portion of its capital expenditures through the $7.3 millon of
proceeds remaining from borrowings under the Mortgage Loan Agreement,
availability under the $50.0 million Mortgage Loan Commitment for new
restaurants, capital leases and operating lease arrangements. Should RCAC's
cash resources be insufficient to meet its cash requirements, RCAC would
seek to extend the maturity of the $9.5 million of borrowings due to a
subsidiary of Triarc in September 1995. The ability of RCAC to meet its
long-term cash requirements is dependent upon its ability to obtain and
sustain sufficient cash flows from operations supplemented as necessary by
potential financings to the extent obtainable.
National Propane
As of June 30, 1995, National Propane's principal cash requirements
for the remainder of 1995, exclusive of operating cash flows, consist
principally of capital expenditures of approximately $2.4 million, debt
principal repayments of $4.3 million and funding for acquisitions, if any.
National Propane anticipates meeting such requirements through continuing
positive cash flows from operations supplemented, as necessary, by available
borrowings of up to $3.7 million under its bank facility and capital lease
arrangements. Should National Propane's cash resources be insufficient to
meet its cash requirements, National Propane may need to reduce its capital
expenditures, negotiate relief under its bank facility or arrange for
alternative financing from Triarc.
Graniteville
The Company expects that the continuing positive operating cash flows
of Graniteville and available borrowings, if required, under the Amended
Credit Facility will be sufficient to enable Graniteville to meet its 1995
cash requirements.
SEPSCO
SEPSCO's principal cash requirement for the remainder of 1994 results
from the previously discussed intention to redeem the 11 7/8% Debentures by
December 31, 1995. The Company expects that SEPSCO's existing cash and cash
equivalents and marketable securities of $30.0 million at June 30, 1995 (of
which approximately $15.0 million is anticipated to be utilized in
connection with the repayment of the 11 7/8% Debentures) will be more than
adequate to meet its other cash requirements. Should such cash not be
adequate, SEPSCO has a note receivable from RCAC due September 30, 1995
which, if it is collected (see above), would supplement any cash
requirements.
Discontinued Operations
As of June 30, 1995 the Company has completed the sale of
substantially all of its discontinued operations but there remain certain
liabilities to be liquidated (the estimates of which have been accrued) as
well as certain contingent assets (principally two notes from the sale of
the refrigeration business) which may be collected, the benefits of which,
however, have not been recorded.
Contingencies
The Company continues to have legal and environmental contingencies of
the same nature and general magnitude as those described in "Item 7. -
Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained in the Form 10-K. In connection with the Settlement
Agreement (see Note 5 to the accompanying condensed consolidated financial
statements) and as described in the Form 10-K, the Company received an
indemnification from the Posner Entities of any claims or expenses incurred
after December 1, 1994 involving certain litigation relating to the Company
and certain of its former affiliates.
After considering amounts provided in previous periods, the Company
does not believe that the contingencies referred to above, as well as
ordinary routine litigation, will have a material adverse effect on its
consolidated financial position or results of operations.
PAGE
TRIARC COMPANIES, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
On June 8, 1995, the Company held its Annual Meeting of Stockholders.
At the Annual Meeting, Nelson Peltz, Peter W. May, Leon Kalvaria, Hugh
L. Carey, Clive Chajet, Stanley R. Jaffe, M.L. Lowenkron, David E.
Schwab II, Raymond S. Troubh and Gerald Tsai, Jr. were elected to
serve as Directors. At the Annual Meeting, the stockholders also
approved proposal 2, amending certain provisions of the Company's 1993
Equity Participation Plan, and proposal 3, ratifying the appointment
of Deloitte & Touche, LLP as the Company's independent certified
public accountants.
The voting on the above matters is set forth below:
Election of Directors
Nominee Votes For Votes Withheld
------- --------- ---------------
Nelson Peltz 21,156,475 130,983
Peter W. May 21,156,751 130,707
Leon Kalvaria 21,156,803 130,655
Hugh L. Carey 21,151,473 135,985
Clive Chajet 21,156,615 130,843
Stanley R. Jaffe 21,146,408 141,050
M.L. Lowenkron 21,147,815 139,643
David E. Schwab II 21,155,526 131,932
Raymond S. Troubh 21,142,508 144,950
Gerald Tsai, Jr. 21,149,608 137,850
Proposal 2 - There were 19,487,909 votes for, 1,614,250 votes against
and 185,299 abstentions.
Proposal 3 - There were 21,210,980 votes for, 36,808 votes against
and 39,670 abstentions.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 - Asset Purchase Agreement, among Mistic Brands, Inc., Joseph
Victori Wines, Inc., Best Flavors, Inc., Nature's Own Beverage
Company and Joseph Umbach, dated as of August 9, 1995,
incorporated herein by reference to Exhibit 2.1 to registrant's
Current Report on Form 8-K dated August 9, 1995 (SEC File No. 1-
2207).
10.1 - Credit Agreement, among Mistic Brands, Inc., The Chase Manhattan
Bank (National Association), as Agent, and other banks signatory
thereto, dated as of August 9, 1995, incorporated herein by
reference to Exhibit 10.1 to registrant's Current Report on Form
8-K dated August 9, 1995 (SEC File No. 1-2207).
10.2 - Amendment No. 6 to Revolving Credit, Term Loan and Security
Agreement, among Graniteville Company, C.H. Patrick & Co., Inc.,
The CIT Group/Commercial Services, Inc., as agent, and other
financial institutions party thereto, dated as of August 3,
1995, incorporated herein by reference to Exhibit 10.2 to
registrant's Current Report on Form 8-K dated August 9, 1995
(SEC File No. 1-2207).
27.1 - Financial Data Schedule for the six-month period ended June 30,
1995, submitted to the Securities and Exchange Commission in
electronic format.
99.1 - Press release dated August 9, 1995, incorporated herein by
reference to Exhibit 99.1 to registrant's Current Report on Form
8-K dated August 9, 1995 (SEC File No. 1-2207).
(b) Reports on Form 8-K
The registrant filed a report on Form 8-K dated June 28, 1995
with respect to the execution by the registrant of a letter of
intent to acquire substantially all of the assets of Joseph
Victori Wines, Inc., Best Flavors, Inc. and Nature's Own
Beverage Company.
The registrant filed a report on Form 8-K dated August 9, 1995
with respect to the closing of the acquisition by a wholly-owned
subsidiary of the registrant of substantially all of the assets
of Joseph Victori Wines, Inc., Best Flavors, Inc. and Nature's
Own Beverage Company.
TRIARC COMPANIES, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIARC COMPANIES, INC.
Date: August 14, 1995 By: /S/ JOSEPH A. LEVATO
----------------------------------
Joseph A. Levato
Executive Vice President and
Chief Financial Officer
(On behalf of the Company)
By: /S/ FRED H. SCHAEFER
-----------------------------------
Fred H. Schaefer
Vice President and
Chief Accounting Officer
(Principal accounting officer)
PAGE