UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 6, 2004
TRIARC COMPANIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 1-2207 38-0471180
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(State or other (Commission (I.R.S. Employer
jurisdiction of File No.) Identification No.)
incorporation of
organization)
280 Park Avenue
New York, New York 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 451-3000
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(Former name or former address, if changed since last report)
Item 12. Results of Operations and Financial Condition
On May 6, 2004, Triarc Companies, Inc. (the "Company") issued a press
release announcing its results for the fiscal quarter ended March 28, 2004. A
copy of the press release is furnished as Exhibit 99.1 to this Current Report on
Form 8-K.
The information in this Current Report on Form 8-K, including the exhibits,
is furnished pursuant to Item 12 and shall not be deemed "filed" for the
purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise
subject to the liabilities under that Section. Furthermore, the information in
this Current Report on Form 8-K, including the exhibits, shall not be deemed to
be incorporated by reference into the filings of Triarc Companies, Inc. under
the Securities Act of 1933.
SIGNATURE
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 hereunto duly authorized.
TRIARC COMPANIES, INC.
By:
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Stuart I. Rosen
Senior Vice President
and Associate General Counsel
Dated: May 7, 2004
EXHIBIT INDEX
Exhibit Description
99.1 Press release of Triarc Companies, Inc. dated May 6, 2004
Exhibit 99.1
For Immediate Release
CONTACT: Anne A. Tarbell
(212) 451-3030
www.triarc.com
TRIARC REPORTS FIRST QUARTER 2004 RESULTS
New York, NY, May 6, 2004 - Triarc Companies, Inc. (NYSE: TRY; TRY.B)
announced today the results of operations for its first quarter ended March 28,
2004.
Highlights
o Consolidated revenues decreased slightly to $69.2 million in the 2004
first quarter from $69.7 million in the 2003 first quarter primarily reflecting
a decline in net sales from company-owned restaurants, partially offset by an
increase in royalties and franchise and related fees. Net sales from the
company-owned restaurants were $46.7 million in the 2004 first quarter, down
from $48.5 million in the 2003 first quarter. Royalties and franchise and
related fees were $22.5 million in the 2004 first quarter, up from $21.2 million
in the 2003 first quarter.
o Consolidated revenues were positively impacted by royalties from 126
franchised restaurants opened since March 30, 2003, with generally higher than
average sales volumes, replacing the royalties from 73 generally underperforming
franchised restaurants closed since March 30, 2003. 2004 first quarter same
store sales for franchised restaurants were flat compared to weak 2003 first
quarter same store sales.
o Revenues from company-owned restaurants reflect a 3% decline in same
store sales at company-owned restaurants as well as the closure of three
underperforming company-owned restaurants since March 30, 2003. Contributing to
the decline in the same-store sales of company-owned restaurants in the 2004
first quarter was a decrease in sales in the Michigan region, reflecting that
region's continuing high unemployment while same store sales elsewhere in the
United States, on an aggregate basis, were essentially flat. 2004 first quarter
same store sales at company-owned restaurants also reflect increased price
promotions compared with the 2003 first quarter.
o Consolidated operating profit decreased to approximately breakeven in the
2004 first quarter compared with a profit of $3.6 million in the 2003 first
quarter, principally reflecting the effect of lower net sales from company-owned
restaurants in the 2004 period discussed above. Also affecting the comparison
was an increase of $1.1 million in cost of goods sold, principally due to the
impact of higher beef costs in the 2004 first quarter, as well as a $1.1 million
increase in advertising and selling expenses, principally reflecting a
difference in timing of Arby's periodic contributions for national advertising
support for 2004, and a $0.9 million increase in general and administrative
expenses, principally due to severance charges.
o Our restaurant business posted an operating profit of $12.0 million in
the 2004 first quarter versus $16.1 million in the 2003 first quarter,
principally reflecting the factors discussed above.
o Consolidated depreciation and amortization was $3.4 million in both the
2004 first quarter and the 2003 first quarter. Consolidated depreciation and
amortization includes depreciation and amortization of our restaurant operations
of $2.0 million in both the 2004 first quarter and the 2003 first quarter.
o Consolidated interest expense increased to $9.6 million in the 2004 first
quarter from $8.5 million in the 2003 first quarter, reflecting the impact of
$175 million of Triarc 5% convertible notes due 2023 issued in May 2003, the
effects of which were partially offset by lower balances of the Arby's
securitization debt and the Sybra debt.
o Consolidated net investment income increased to $6.5 million in the 2004
first quarter from $3.1 million in the 2003 first quarter, due to higher
interest income primarily reflecting investment in higher-yielding debt
securities and, to a lesser extent, higher average balances on cash equivalents
and short-term debt instruments, as well as the recognition of higher net gains
from investments in the 2004 period.
o In the 2004 first quarter, we expensed $0.8 million of costs related to a
proposed business acquisition we did not pursue. There were no such costs in the
2003 first quarter.
o Consolidated net loss was $(3.2) million, or $(0.05) per Class A and
Class B share, in the 2004 first quarter compared to $(2.0) million, or $(0.03)
per Class A and Class B share, in the 2003 first quarter. This change reflects
the factors discussed above. The per share amounts discussed above give effect
to the Company's September 2003 stock distribution of two shares of Class B
Common Stock, Series 1, for each share of Class A Common Stock.
o Systemwide domestic same store sales were flat in the 2004 first quarter
versus a decline of (2.3)% in the 2003 first quarter. We currently expect
systemwide same store sales to be positive for the 2004 fiscal year, reflecting
the impact of new product introductions which began in April 2004 and other
factors.
o In the 2004 first quarter, the Arby's(R) system opened 22 new units and
closed 17 generally underperforming units. As of March 28, 2004, Arby's had
commitments from franchisees to build 455 new units through 2011.
Commenting on corporate developments, Nelson Peltz, Triarc's Chairman and
Chief Executive Officer, said: "We recently reported that we are in preliminary
discussions with certain owners of Deerfield & Company LLC, which through its
subsidiary Deerfield Capital Management LLC is a Chicago-based investment
manager, concerning the possible acquisition by Triarc of a controlling interest
in Deerfield and an additional capital commitment by Triarc. Together, the
purchase price and the capital commitment are currently expected to be in the
aggregate amount of approximately $185 million. We also reported that we intend
to form jointly with Deerfield an investment advisor to manage the assets of
Triarc Deerfield Investment Corporation, a newly-formed business development
company that filed a registration statement with the Securities and Exchange
Commission on April 19, 2004 relating to a proposed $750 million initial public
offering of its common stock."
Peltz added: "As we look ahead, we continue to review our options to deploy
our substantial liquidity through acquisitions, additional share repurchases and
investments, with the goal of further increasing stockholder value."
Commenting on restaurant operations, Peter May, Triarc's President and
Chief Operating Officer, said: "Industry discounting and increasing competition
combined to depress Arby's results in 2003. Towards the end of the 2004 first
quarter, systemwide results began to stabilize despite a challenging
environment. As we look ahead, we believe that the Arby's system is implementing
the appropriate plans to return Arby's to its historical growth."
May added: "The Arby's leadership has developed a new line of customized
and nutritionally balanced Market Fresh(R) salads, which were introduced on a
nationwide basis beginning in April. In response to the recent trend toward
offering menu choices low in carbohydrates, Arby's has also introduced a line of
Market Fresh(R) Low Carbys(TM) wraps. In addition, our Arby's management team is
focused on expanding Arby's unit development pipeline, improving its advertising
effectiveness and continuing to work with franchisees in growing the Arby's
brand in an increasingly competitive industry."
Triarc is a holding company and, through its subsidiaries, the franchisor
of the Arby's restaurant system and the operator of approximately 235
restaurants located in the United States.
# # #
Notes and Table To Follow
NOTES TO PRESS RELEASE
1. Systemwide same store sales represent sales at all company-owned and all
franchised stores. We believe that reviewing the increase or decrease in
systemwide same store sales compared with the same period in the prior year is
useful to investors in analyzing the growth of the Arby's brand and assessing
trends in our restaurant operations.
2. There can be no assurance that the owners of Deerfield will enter into a
definitive agreement with Triarc to sell a controlling interest in Deerfield or
that such an acquisition will be completed. Triarc does not anticipate making
any further announcement concerning the possible acquisition until a definitive
agreement is reached or negotiations are terminated.
3. There can be no assurance that the initial public offering of common
stock of Triarc Deerfield will be completed.
4. A registration statement relating to the securities to be issued by
Triarc Deerfield Investment Corporation has been filed with the Securities and
Exchange Commission but has not yet become effective. These securities may not
be sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This press release is not an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Investors should consider the investment objectives, risks, charges and expenses
of Triarc Deerfield carefully before investing. This and other information about
Triarc Deerfield will be contained in a preliminary prospectus, which may be
obtained, once available, from Triarc Deerfield. The preliminary prospectus
should be read carefully before investing. The information in the registration
statement filed with the Securities and Exchange Commission, in any preliminary
prospectus and in this press release is not complete and may be changed.
5. There can be no assurance that we will be able to identify appropriate
acquisition targets or that we will be able to successfully integrate any future
acquisitions into our existing operations. In addition, there can be no
assurance that any share repurchases will be made in the future or that any such
repurchases or acquisitions will result in additional stockholder value.
6. The statements in this press release that are not historical facts,
including, most importantly, information concerning possible or assumed future
results of operations of Triarc Companies, Inc. and its subsidiaries
(collectively, "Triarc" or the "Company") and statements preceded by, followed
by, or that include the words "may," "believes," "expects," "anticipates" or the
negation thereof, or similar expressions, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform 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: competition, including pricing
pressures, the potential impact of competitors' new units on sales by Arby's
restaurants and consumers' perceptions of the relative quality, variety and
value of the food products offered; success of operating initiatives;
development costs; advertising and promotional efforts; brand awareness; the
existence or absence of positive or adverse publicity; new product and concept
development by the Company and its competitors, and market acceptance of such
new product offerings and concepts; changes in consumer tastes and preferences,
including changes resulting from concerns over nutritional or safety aspects of
beef, poultry, french fries or other foods or the effects of food-borne
illnesses such as "mad cow disease" and avian influenza or "bird flu"; changes
in spending patterns and demographic trends; the business and financial
viability of key franchisees; the timely payment of franchisee obligations due
to the Company; availability, location and terms of sites for restaurant
development by the Company and its franchisees; the ability of franchisees to
open new restaurants in accordance with their development commitments, including
the ability of franchisees to finance restaurant development; delays in opening
new restaurants or completing remodels; anticipated or unanticipated restaurant
closures by the Company and its franchisees; the ability to identify, attract
and retain potential franchisees with sufficient experience and financial
resources to develop and operate Arby's restaurants; changes in business
strategy or development plans, and the willingness of franchisees to participate
in the Company's strategy; business abilities and judgment of the Company's and
franchisees' management and other personnel; availability of qualified
restaurant personnel to the Company and to franchisees; availability, terms
(including changes in interest rates) and deployment of capital; changes in
commodity (including beef), labor, supplies and other operating costs and
availability and cost of insurance; the Company's ability, if necessary, to
secure alternative distribution of supplies of food, equipment and other
products to Arby's restaurants at competitive rates and in adequate amounts, and
the potential financial impact of any interruptions in such distribution;
changes in national, regional and local economic, market, business or political
conditions in the countries and other territories in which the Company and its
franchisees operate; changes in government regulations, including franchising
laws, accounting standards, environmental laws, minimum wage rates and taxation
rates; the costs, uncertainties and other effects of legal, environmental and
administrative proceedings; the impact of general economic conditions on
consumer spending, including a slower consumer economy and the effects of war or
terrorist activities; adverse weather conditions; our ability to identify
appropriate acquisition targets in the future and to successfully integrate any
future acquisitions into our existing operations; and other risks and
uncertainties affecting the Company detailed in the Company's Form 10-K for the
fiscal year ended December 28, 2003 (see especially "Item 1. Business-Risk
Factors" and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations") and in our other current and periodic
filings with the Securities and Exchange Commission, all of which are difficult
or impossible to predict accurately and many of which are beyond our control. We
will not undertake and specifically decline any obligation to publicly release
the results of any revisions that may be made to any forward-looking statements
to reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events. In addition, it
is our policy generally not to make any specific projections as to future
earnings, and we do not endorse any projections regarding future performance
that may be made by third parties.
Triarc Companies, Inc.
Condensed Consolidated Statements of Operations
Quarters Ended March 30, 2003 and March 28, 2004
2003 2004
(In thousands except per share amounts)
(Unaudited)
Revenues:
Net sales $ 48,497 $ 46,724
Royalties and franchise and related fees 21,237 22,467
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69,734 69,191
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Costs and expenses:
Cost of sales, excluding depreciation and amortization 36,255 37,385
Advertising and selling 3,100 4,167
General and administrative 23,380 24,310
Depreciation and amortization, excluding
amortization of deferred financing costs 3,383 3,351
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66,118 69,213
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Operating profit (loss) 3,616 (22)
Interest expense (8,458) (9,634)
Insurance expense related to long-term debt (1,092) (991)
Investment income, net 3,141 6,524
Costs related to proposed business acquisition not consummated -- (753)
Other income, net 557 729
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Loss before income taxes (2,236) (4,147)
Benefit from income taxes 262 991
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Net loss $ (1,974) $ (3,156)
========= =========
Basic and diluted loss per share:
Class A common stock $ (.03) $ (.05)
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Class B common stock $ (.03) $ (.05)
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Shares used to calculate loss per share (a):
Class A common stock 20,413 (b) 19,992 (b)
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Class B common stock 40,826 (b) 40,154 (b)
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(a) The calculations of loss per share reflect the effect of the Company's
September 2003 stock distribution of two shares of a newly designated series of
Class B common stock for each issued share of Class A common stock.
(b) The shares used to calculate diluted loss per share are the same as
those used to calculate basic loss per share in periods with losses and,
therefore, the effect of all potentially dilutive securities would have been
antidilutive. Had the Company reported income for such periods, the shares used
to calculate diluted income per Class A common share would have been 21,780,000
for the 2004 first quarter and 21,747,000 for the 2003 first quarter, reflecting
the effect of dilutive stock options. The shares used to calculate diluted
income per Class B common share would have been 43,729,000 for the 2004 first
quarter and 43,494,000 for the 2003 first quarter, also reflecting the effect of
dilutive stock options. The effects of dilutive stock options represented in
such amounts reflect the average price of the Company's stock during the
indicated periods. These dilutive effects may not be representative of the
effects that may occur in future periods. Accordingly, this information is
presented for informational purposes only. In addition to the effect of dilutive
stock options, the Company's 5% Convertible Notes are convertible into 4,375,000
shares of the Company's Class A common stock and 8,750,000 shares of the
Company's Class B common stock. Such additional shares were not included in the
diluted shares above due to the substantial income that would be required before
the Convertible Notes became dilutive.