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) August 11, 2003
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, NY 10017
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (212) 451-3000
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(Former name or former address, (Zip Code)
if changed since last report)
Item 12. Results of Operations and Financial Condition
On August 11, 2003, Triarc Companies, Inc. (the "Company") issued a press
release announcing its financial results for the fiscal quarter ended June 29,
2003. A copy of the press release is furnished as Exhibit 99.1 to this report.
The information in this report, including the Exhibit, is being furnished
and shall not be deemed to be "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that Section. In addition, the information in this report,
including the Exhibit, shall not be incorporated by reference into the filings
of the Company under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except as shall be expressly set forth by
specific reference in such filing.
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:FRANCIS T. McCARRON
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Francis T. McCarron
Senior Vice President and
Chief Financial Officer
Dated: August 13, 2003
EXHIBIT INDEX
Exhibit Description
99.1 Press Release dated August 11, 2003
Exhibit 99.1
For Immediate Release
CONTACT: Anne A. Tarbell
(212) 451-3030
www.triarc.com
TRIARC REPORTS SECOND QUARTER 2003 RESULTS
New York, NY, August 11, 2003 - Triarc Companies, Inc. (NYSE: TRY)
announced today the results of operations for its second quarter and six months
ended June 29, 2003.
Highlights
o Consolidated revenues increased to $74.8 million in the 2003 second
quarter ($144.5 million in the 2003 first half) from $24.8 million in the 2002
second quarter ($47.2 million in the 2002 first half) primarily reflecting sales
from the company-owned restaurants acquired in the December 2002 purchase of
Sybra, Inc. ("Sybra"). Net sales from the acquired restaurants were $51.4
million in the 2003 second quarter ($99.9 million in the 2003 first half).
o Consolidated revenues in both periods were also positively impacted by
royalties from 124 franchised restaurants opened since June 30, 2002 with
generally higher sales volumes replacing the royalties from 63 generally
underperforming restaurants closed since June 30, 2002.
o Partially offsetting the above was the elimination upon consolidation of
royalties from restaurants acquired in the purchase of Sybra of $1.8 million in
the 2003 second quarter ($3.4 million in the 2003 first half) and a decline in
same store sales.
o Systemwide domestic same store sales declined (3.0)% in the second
quarter of 2003 ((2.7)% in the 2003 first half) versus a strong 3.9% increase in
the 2002 second quarter (4.0% in the 2002 first half), reflecting the adverse
effects in 2003 of restaurant industry discounting and sluggish economic
conditions and, in the 2003 first half, the severe weather experienced in the
2003 first quarter.
o Consolidated operating profit increased to $5.9 million in the 2003
second quarter ($9.5 million in the 2003 first half) from $3.8 million in the
2002 second quarter ($5.1 million in the 2002 first half). Consolidated
operating profit included operating profit of our restaurant operations which
increased to $18.3 million in the 2003 second quarter ($34.4 million in the 2003
first half) from $15.2 million in the 2002 second quarter ($28.8 million in the
2002 first half). These increases reflect a $2.5 million positive net impact on
operating profit in the 2003 second quarter ($4.8 million in the 2003 first
half) of the Sybra acquisition.
o Consolidated depreciation and amortization increased to $3.4 million in
the 2003 second quarter ($6.8 million in the 2003 first half) from $1.7 million
in the 2002 second quarter ($3.3 million in the 2002 first half). Consolidated
depreciation and amortization includes depreciation and amortization of our
restaurant operations which increased to $2.0 million in the 2003 second quarter
($4.1 million in the 2003 first half) from $0.3 million in the 2002 second
quarter ($0.5 million in the 2002 first half) as a result of the Sybra
acquisition.
o Consolidated interest expense increased to $(9.4) million in the 2003
second quarter ($(17.8) million in the 2003 first half) from $(6.8) million in
the 2002 second quarter ($(13.2) million in the 2002 first half) reflecting the
inclusion of approximately $98 million of Sybra debt as of the beginning of the
2003 first quarter and $175 million of Triarc 5% convertible notes due 2023
since their issuance in May 2003, the effects of which were partially offset by
lower balances of the Arby's securitization debt.
o Consolidated net investment income increased to $3.7 million in the 2003
second quarter ($6.9 million in the 2003 first half) from a loss of $(4.9)
million in the 2002 second quarter (and income of $1.1 million in the 2002 first
half) primarily due to the effect of several investment writedowns recorded in
the 2002 second quarter, reflecting then weak financing and stock market
conditions, partially offset by lower interest income in the 2003 periods
primarily reflecting lower available yields on cash equivalents and short-term
debt instruments. The comparison of the second quarters also reflects the
recognition of net gains from the sale of investments in the 2003 second quarter
that did not occur in the 2002 second quarter.
o Consolidated net loss was $(1.4) million, or $(0.07) per share in the
2003 second quarter ($(3.4) million, or $(0.17) per share in the 2003 first
half) compared to a net loss of $(7.5) million, or $(0.37) per share, in the
second quarter of 2002 ($(8.6) million, or $(0.42) per share, in the 2002 first
half). These changes primarily reflect the after tax effects of the increases in
operating profit and consolidated net investment income discussed above which
were partially offset by the effects of higher consolidated interest expense
also discussed above.
o In the second quarter of 2003, the Arby's system opened 33 new units (50
in the 2003 first half) and closed 18 generally underperforming units (33 in the
2003 first half). As of June 30, 2003, Arby's had commitments from franchisees
to build approximately 530 new units through 2011.
Commenting on corporate developments, Nelson Peltz, Triarc's Chairman and
Chief Executive Officer, said: "In May, we successfully completed the sale of
$175 million of convertible notes. In conjunction with this sale, we repurchased
1.5 million shares of our Class A common stock. Aside from purchasing our stock
at an attractive price, these transactions further increased our significant
cash and investment position, thus providing us with even greater flexibility to
pursue acquisitions and other opportunities to increase value at Triarc."
Discussing restaurant operations, Peter May, Triarc's President and Chief
Operating Officer, said: "Over the last several quarters, Arby's, like many of
its restaurant peers, was impacted by several factors which adversely affected
financial results. Looking ahead, Arby's management, together with franchisees,
have developed a number of initiatives for 2003, including the reintroduction
this summer of two popular Market Fresh(R) deli sandwiches (the Ultimate BLT and
Roast Turkey Ranch and Bacon), a limited time offer of the new Market Fresh
Five-Star Club, and the test marketing of Arby's new Bistro gourmet sandwich
line. We believe that these and other initiatives can bridge the gap between
fast food and fast casual offerings, thus broadening Arby's consumer appeal."
Triarc is a holding company and through its subsidiaries, the franchisor of
the Arby's(R) restaurant system and, as of June 29, 2003, an operator of 238
Arby's restaurants located in the United States.
# # #
Notes and Table To Follow
NOTES TO PRESS RELEASE
1. Systemwide domestic same store sales include the results of
company-owned and franchised stores and only include restaurants that have been
open during the 12-month periods ended June 29, 2003 and June 30, 2002.
2. 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 which 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 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 and operating costs; advertising and promotional efforts; brand
awareness; the existence or absence of positive or adverse publicity; market
acceptance of new product offerings; new product and concept development by
competitors; changing trends in consumer tastes and preferences (including
changes resulting from health or safety concerns with respect to the consumption
of beef, french fries or other foods or the effects of food-borne illnesses) and
in spending and demographic patterns; the business and financial viability of
key franchisees; 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; quality of the Company's and franchisees'
management; availability, terms (including changes in interest rates) and
deployment of capital; business abilities and judgment of the Company's and
franchisees' personnel; availability of qualified personnel to the Company and
to franchisees; labor and employee benefit costs; availability and cost of
energy, raw materials, ingredients and supplies; the potential impact that
interruptions in the distribution of supplies of food and other products to
Arby's restaurants could have on sales at Company-owned restaurants and the
royalties that Arby's receives from franchisees; availability and cost of
workers' compensation and general liability premiums and claims experience;
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
requirements; 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; and other risks and
uncertainties affecting the Company and its subsidiaries detailed in the
Company's Form 10-K for the fiscal year ended December 29, 2002 (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 which 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 (a)
Second Quarter and Six Months Ended June 30, 2002 and June 29, 2003
Second Quarter Ended Six Months Ended
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2002 2003 2002 2003
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(In thousands except per share amounts)
(Unaudited)
Revenues:
Net sales $ -- $ 51,398 $ -- $ 99,895
Royalties and franchise and related fees (b) 24,837 23,402 47,218 44,639
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24,837 74,800 47,218 144,534
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Costs and expenses:
Cost of sales, excluding depreciation and amortization -- 37,589 -- 73,844
Advertising and selling 1,070 4,043 1,115 7,143
General and administrative 18,261 23,899 37,722 47,279
Depreciation and amortization, excluding
amortization of deferred financing costs 1,674 3,414 3,255 6,797
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21,005 68,945 42,092 135,063
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Operating profit 3,832 5,855 5,126 9,471
Interest expense (6,803) (9,367) (13,163) (17,825)
Insurance expense related to long-term debt (1,130) (1,046) (2,305) (2,138)
Investment income (loss), net (4,915) 3,729 1,147 6,870
Loss on sale of businesses (1,218) -- (1,218) --
Other income (expense), net 210 (512) (360) 45
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Loss before income taxes and minority interests (10,024) (1,341) (10,773) (3,577)
(Provision for) benefit from income taxes 1,267 (195) 970 67
Minority interest in loss of a consolidated subsidiary 1,246 112 1,246 112
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Net loss $ (7,511) $ (1,424) $ (8,557) $ (3,398)
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Basic and diluted loss per share $ (.37) $ (.07) $ (.42) $ (.17)
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Shares used to calculate loss per share:
Basic 20,486 20,175 20,454 20,294
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Diluted(c) 20,486 20,175 20,454 20,294
========= ========= ========= =========
(a) On December 27, 2002, the Company completed the acquisition of Sybra,
Inc. Prior to the acquisition, Sybra was the second largest franchisee of Arby's
restaurants. The consolidated results of operations for the 2003 first half
include the results of the company-owned restaurants (238 as of June 29, 2003)
acquired in the Sybra acquisition but no longer include royalties and franchise
and related fees from Sybra, which are eliminated in consolidation. The
consolidated results of operations for the 2002 first half, however, include
royalties and franchise fees from Sybra but do not include the results of the
acquired restaurants.
(b) Includes royalties from Sybra for the 2002 periods whereas the
royalties from Sybra for the 2003 periods were eliminated in consolidation. Such
royalties were approximately $1.9 million and $1.8 million for the 2002 and 2003
second quarters, respectively, and approximately $3.6 million and $3.4 million
for the 2002 and 2003 first halves, respectively.
(c) The shares used to calculate diluted loss per share are the same as
those used to calculate basic loss per share since the Company reported a net
loss in all periods presented and, therefore, the effect of all potentially
dilutive securities would have been antidilutive. Had the Company reported net
income for such periods, the shares used to calculate diluted income per share
would have been 22,027,000 and 21,549,000 for the 2002 and 2003 second quarters,
respectively, and 21,925,000 and 21,648,000 for the 2002 and 2003 first halves,
respectively, 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 common stock. Such additional
shares were not included in the diluted shares above due to the substantial
income from continuing operations (approximately $1.28 per share) that would be
required before the Convertible Notes became dilutive.