Filed Pursuant to Rule 424(b)(3)
Registration No. 333-110719
$175,000,000
[TRIARC LOGO]
5% CONVERTIBLE NOTES DUE 2023 AND SHARES OF CLASS A
COMMON STOCK AND CLASS B COMMON STOCK, SERIES 1,
ISSUABLE UPON CONVERSION OF THE NOTES
-------------------
Interest payable on the Notes on May 15 and November 15
-------------------
This prospectus relates to the resale by various selling securityholders of
$175,000,000 aggregate principal amount of our convertible notes due 2023 and
shares of our Class A common stock and Class B common stock, Series 1 ('Class B
common stock'), into which the notes are convertible.
You may convert the notes into shares of our Class A common stock and Class B
common stock at a conversion rate of 25 shares of Class A common stock and 50
shares of Class B common stock per $1,000 principal amount of notes (equal to an
initial conversion price of $40 for every one share of Class A common stock and
two shares of Class B common stock), subject to adjustment, before the close of
business on May 15, 2023 under any of the following circumstances: (1) during
any fiscal quarter commencing after June 29, 2003, if the closing sale price of
our Class A common stock exceeds 120% of the conversion price for at least 20
trading days in the 30 consecutive trading days ending on the last trading day
of the preceding fiscal quarter; (2) during any fiscal quarter commencing after
June 29, 2003, if the combined closing sale price of one share of our Class A
common stock and two shares of Class B common stock exceeds 120% of the
conversion price for at least 20 trading days in the 30 consecutive trading days
ending on the last trading day of the preceding fiscal quarter; (3) subject to
certain exceptions, during the five business day period after any ten
consecutive trading day period in which the trading price per $1,000 principal
amount of notes for each day of the ten trading day period was less than 95% of
the product of the closing sale price of our Class A common stock and the number
of shares of Class A common stock issuable upon conversion of $1,000 principal
amount of the notes; (4) subject to certain exceptions, during the five business
day period after any ten consecutive trading day period in which the trading
price per $1,000 principal amount of notes for each day of the ten trading day
period was less than 95% of the product of the combined closing sale price of
one share of our Class A common stock and two shares of Class B common stock and
the number of shares of Class A common stock issuable upon conversion of $1,000
principal amount of the notes; (5) if the notes have been called for redemption;
or (6) upon the occurrence of certain corporate events.
Beginning May 20, 2010, we may redeem any of the notes at a redemption price of
100% of the principal amount of the notes, plus accrued interest. Holders may
require us to repurchase the notes on May 15 of 2010, 2015 and 2020 or upon a
fundamental change at a repurchase price of 100% of the principal amount of the
notes, plus accrued interest.
The notes are our general unsecured debt and will rank on a parity with all of
our other existing and future unsecured, unsubordinated debt and prior to all
subordinated debt.
For a more detailed description of the notes, see 'Description of the Notes'
beginning on page 31.
The notes are not listed on any securities exchange or approved for quotation
through any automated system.
Our Class A common stock trades on the New York Stock Exchange under the symbol
'TRY.' On December 1, 2003, the last reported sale price of our Class A common
stock was $11.38.
Our Class B common stock trades on the New York Stock Exchange under the symbol
'TRY.B.' On December 1, 2003, the last reported sale price of our Class B common
stock was $11.71.
INVESTING IN THE SECURITIES OFFERED BY THIS PROSPECTUS INVOLVES RISKS. SEE 'RISK
FACTORS' BEGINNING ON PAGE 12 OF THIS PROSPECTUS.
Neither the Securities and Exchange Commission, nor any state securities
commission, has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
-------------------
The date of this prospectus is December 2, 2003.
TABLE OF CONTENTS
PAGE
----
Where You Can Find More Information...................................... ii
Incorporation by Reference............................................... ii
Summary.................................................................. 1
Risk Factors............................................................. 12
Forward-Looking Statements............................................... 20
Ratio of Earnings to Fixed Charges....................................... 22
Use of Proceeds.......................................................... 22
Price Range of Common Stock.............................................. 23
Dividend Policy.......................................................... 23
Capitalization........................................................... 25
Unaudited Pro Forma Condensed Consolidated Financial Statements.......... 26
Description of the Notes................................................. 31
Description of Our Capital Stock......................................... 47
Arby's Franchise Trust Securitization Notes.............................. 54
United States Federal Income Tax Consequences............................ 55
Selling Securityholders.................................................. 62
Plan of Distribution..................................................... 67
Legal Matters............................................................ 68
Experts.................................................................. 68
-------------------
As used in this prospectus, 'Triarc,' 'company,' 'we,' 'our,' 'ours' and
'us' refer to Triarc Companies, Inc. and its subsidiaries, except where the
context otherwise requires or as otherwise indicated.
i
WHERE YOU CAN FIND MORE INFORMATION
We have filed a Registration Statement on Form S-3 with the Securities and
Exchange Commission regarding the offering of the securities offered by this
prospectus. This prospectus, which forms part of the registration statement,
does not contain all of the information included in the registration statement.
For further information about us and the securities offered by this prospectus,
you should refer to the registration statement and its exhibits.
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy materials that we have filed
with the Securities and Exchange Commission at the Securities and Exchange
Commission public reference room located at 450 Fifth Street, N. W., Room 1024,
Washington, D.C. 20549. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the public reference room.
Our Class A common stock is listed on New York Stock Exchange under the
symbol 'TRY' and our Class B common stock is listed on the New York Stock
Exchange under 'TRY.B.' Our Securities and Exchange Commission filings can also
be read at the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
Our Securities and Exchange Commission filings are also available to the
public on the Securities and Exchange Commission's Internet website at
http://www.sec.gov.
We incorporate by reference into this prospectus the documents listed below
and any future filings we make with the Securities and Exchange Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the
'Exchange Act'), as amended, including any filings after the date of this
prospectus, until all of the notes and common stock to which this prospectus
relates are sold or the offering is otherwise terminated, other than any
portions of any such documents that are not deemed 'filed' under the Exchange
Act in accordance with the Exchange Act and applicable SEC rules and
regulations. The information incorporated by reference is an important part of
this prospectus. Any statement in a document incorporated by reference into this
prospectus will be deemed to be modified or superseded to the extent a statement
contained in (1) this prospectus or (2) any other subsequently filed document
that is incorporated by reference into this prospectus modifies or supersedes
such statement.
INCORPORATION BY REFERENCE
We are incorporating by reference into this prospectus the following
documents filed by us with the SEC:
o Annual Report on Form 10-K for the fiscal year ended December 29,
2002, filed on March 28, 2003;
o Quarterly Report on Form 10-Q for the fiscal quarter ended March 30,
2003, filed on May 12, 2003;
o Quarterly Report on Form 10-Q for the fiscal quarter ended June 29,
2003, filed on August 13, 2003;
o Quarterly Report on Form 10-Q for the fiscal quarter ended September
28, 2003, filed on November 12, 2003;
o the description of the Class A common stock contained in the
Registration Statement on Form 8-A, filed pursuant to Section 12 of
the Exchange Act on November 4, 1993, and any amendment or report
filed for the purpose of updating such description;
o the description of the Class B common stock, Series 1, contained in
the Registration Statement on Form 8-A, filed pursuant to Section 12
of the Exchange Act on August 11, 2003, and any amendment or report
filed for the purpose of updating such description;
o Current Reports on Form 8-K, filed on January 21, 2003, March 27,
2003, May 14, 2003, May 19, 2003, June 3, 2003, August 11, 2003 and
November 25, 2003; and
ii
o all other documents filed pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and prior
to the termination of the offering other than any such documents or
portions thereof that are not deemed 'filed' under the Exchange Act in
accordance with the Exchange Act and applicable SEC rules and
regulations.
You should rely only on the information contained in this document or that
information to which we have referred you. We have not authorized anyone to
provide you with any additional information.
The documents incorporated by reference into this prospectus are available
from us upon request. We will provide a copy of any and all of the information
that is incorporated by reference in this prospectus to any person, without
charge, upon written or oral request. Requests for such copies should be
directed to the following:
Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Attention: Investor Relations
Telephone: (212) 451-3000
Except as expressly provided above, no other information, including information
on our web site, is incorporated by reference into this prospectus.
iii
SUMMARY
THIS SUMMARY CONTAINS BASIC INFORMATION ABOUT US AND THIS OFFERING. BECAUSE
IT IS A SUMMARY, IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD
CONSIDER BEFORE INVESTING. YOU SHOULD READ THIS ENTIRE PROSPECTUS AND ALL THE
INFORMATION THAT IT INCORPORATES BY REFERENCE CAREFULLY, INCLUDING THE SECTION
ENTITLED 'RISK FACTORS' AND OUR FINANCIAL STATEMENTS, THE RELATED NOTES AND THE
MANAGEMENT DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE PERIODS COVERED BY THOSE FINANCIAL STATEMENTS, ALL OF WHICH
ARE INCORPORATED BY REFERENCE INTO THIS PROSPECTUS, BEFORE MAKING AN INVESTMENT
DECISION.
THE COMPANY
We are a holding company and currently operate solely in the restaurant
business through Arby's, Inc. and its subsidiaries, the franchisor of the
Arby's'r' restaurant system, and through Sybra, Inc., an owner and operator of
approximately 240 Arby's restaurants located in the United States as of
September 28, 2003. As the franchisor of the Arby's restaurant system, we
license the owners and operators of independent businesses to use the Arby's
brand name and trademarks in the operation of Arby's restaurants. We provide
franchisees with services designed to increase both the revenue and
profitability of their Arby's restaurants. The more important of these services
are providing strategic leadership for the brand, quality control services,
operational training and counseling regarding, and approval of, site selection.
The key elements of our business strategy include (i) using our resources to
grow our restaurant franchising and operations business, (ii) evaluating and
making various acquisitions and business combinations, whether in the restaurant
industry or otherwise, (iii) building strong operating management teams for each
of our current and future businesses and (iv) providing strategic leadership and
financial resources to enable these management teams to develop and implement
specific, growth-oriented business plans. The implementation of this business
strategy may result in increases in expenditures for, among other things,
acquisitions and, over time, marketing and advertising.
Our cash, cash equivalents and short-term investments (including restricted
cash equivalents) at September 28, 2003 totaled approximately $776 million. At
September 28, 2003, our consolidated long term debt, including current portion,
was approximately $527 million. Of this amount, approximately $242 million is
debt issued by subsidiaries of Arby's, and $82 million is debt issued by Sybra.
We have guaranteed approximately $3 million of the debt issued by our restaurant
business subsidiaries. In addition, we have guaranteed obligations of third
parties as described more fully in our annual and quarterly reports which are
incorporated by reference into this prospectus. None of our cash, cash
equivalents and investments (other than approximately $30.5 million of
restricted cash) secure such debt. We are evaluating our options to deploy our
substantial liquidity through, among other things, acquisitions, share
repurchases and investments.
Our corporate predecessor was incorporated in Ohio in 1929. We
reincorporated in Delaware in June 1994. Our principal executive offices are
located at 280 Park Avenue, New York, New York 10017 and our telephone number is
(212) 451-3000. Our website address is: www.triarc.com. Information contained on
our website is not part of this prospectus.
RECENT DEVELOPMENTS
STOCK DIVIDEND
On August 11, 2003 our board of directors authorized the creation out of our
authorized but unissued shares of Class B common stock, par value $.10 per
share, of the Class B common stock and declared a stock dividend (the 'Stock
Dividend') on the existing Class A common stock consisting of two shares of
Class B common stock for each share of Class A common stock issued as of the
close of business on the August 21, 2003 record date. The Stock Dividend was
paid on
1
September 4, 2003 to holders of record of the Class A common stock at the close
of business on the record date.
As a result of the Stock Dividend, holders of the notes will be entitled to
receive upon conversion of the notes, in addition to shares of Class A common
stock, the number of shares of Class B common stock that the holder would have
been entitled to receive had the holder converted its notes immediately prior to
the declared record date for the Stock Dividend. We have reserved an aggregate
of 8,750,000 shares of Class B common stock for delivery to the holders of the
notes upon conversion thereof. See 'Description of the Notes -- Conversion of
Notes' in this prospectus.
CASH DIVIDEND
On August 11, 2003, our board of directors declared an initial regular
quarterly cash dividend of $0.065 per share on the Class A common stock and
$0.075 per share on the Class B common stock, which were paid on September 25,
2003 to stockholders of record at the close of business on September 15, 2003.
As a result, each stockholder holding one share of Class A common stock and two
shares of Class B common stock on September 15, 2003 received a combined cash
dividend of $0.215 on such shares on September 25, 2003. On November 20, 2003,
our board of directors declared a regular quarterly cash dividend of $0.065 per
share on the Class A common stock and $0.075 per share on the Class B common
stock, which are to be paid on December 16, 2003 to stockholders of record at
the close of business on December 2, 2003. While we currently expect that our
board of directors will continue to declare and pay quarterly cash dividends,
there can be no assurance that such dividends will be declared or paid in any
subsequent quarters, or of the amount or timing of such dividends, if any.
SYBRA ACQUISITION
On December 27, 2002, we completed the acquisition of all of the capital
stock of Sybra, the second largest franchisee of the Arby's brand, pursuant to a
plan of reorganization previously confirmed by the United States Bankruptcy
Court for the Southern District of New York on November 25, 2002. As of
June 29, 2003, Sybra owned and operated approximately 240 Arby's restaurants in
nine states, primarily in Michigan, Texas, Pennsylvania, Florida and New Jersey.
In fiscal years 2001 and 2002, Sybra had revenues of approximately $200 million
and $209 million, respectively.
We acquired Sybra for approximately $8.2 million paid to its parent's
creditors. In addition, we invested approximately $14.2 million in Sybra. Sybra
remains exclusively liable for its approximately $82 million of long-term debt
and capital lease obligations as of September 28, 2003. We have also made
available to Sybra a $5 million standby financing facility for each of three
years after the closing of the purchase on December 27, 2002 (up to $15 million
in the aggregate) to fund any operating shortfalls of Sybra. As of October 31,
2003, $700,000 was outstanding under this facility. In addition, we have loaned
to Sybra approximately $9.9 million to prepay existing indebtedness and
$3.2 million to fund principally capital expenditures and tax payments.
2
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth for the periods and as of the dates indicated
our summary historical consolidated financial data and our summary consolidated
pro forma financial data after giving effect, as applicable, to the acquisition
of Sybra, Inc. and the issuance of the notes and use of the related proceeds.
The summary consolidated financial data (i) as of December 29, 2002 and
December 30, 2001 and for each of the fiscal years in the three-year period
ended December 29, 2002 are derived, reclassified and retroactively adjusted
with respect to income or loss per share (see Note 4) from the audited
consolidated financial statements included in our Annual Report on Form 10-K for
our fiscal year ended December 29, 2002 incorporated by reference in this
prospectus and (ii) as of December 31, 2000, January 2, 2000 and January 3, 1999
and for each of the years in the two-year period ended January 2, 2000 are
derived, reclassified and retroactively adjusted with respect to income or loss
per share from our audited consolidated financial statements, which are not
included elsewhere in this prospectus or incorporated by reference. The summary
consolidated financial data presented as of September 28, 2003 and for the
fiscal nine-month periods ended September 28, 2003 and September 29, 2002 have
been derived and reclassified from our unaudited condensed consolidated
financial statements included in our Quarterly Report on Form 10-Q for the
quarter ended September 28, 2003 incorporated by reference in this prospectus.
In our opinion, the unaudited quarterly consolidated financial data contains all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of our results for those periods. Our results of operations
for the nine-month period ended September 28, 2003 are not necessarily
indicative of the results that may be expected for our entire fiscal year. The
summary consolidated financial data should be read together with our
consolidated financial statements and accompanying notes, as well as
management's discussion and analysis of financial condition and results of
operations, all of which can be found in publicly available documents, including
those incorporated by reference in this prospectus. Our summary consolidated pro
forma financial data are derived from the 'Unaudited Pro Forma Condensed
Consolidated Financial Statements' included elsewhere in this prospectus and
should be read together with those statements and accompanying notes. The ratio
of earnings to fixed charges was taken from the 'Ratio of Earnings to Fixed
Charges' included elsewhere in this prospectus and should be read together with
that disclosure.
3
HISTORICAL PRO FORMA
------------------------------------------------------------------ ---------
YEAR ENDED(1)
--------------------------------------------------------------------------------
DECEMBER 29,
JANUARY 3, JANUARY 2, DECEMBER 31, DECEMBER 30, ------------------------
1999(2) 2000(2) 2000(2) 2001 2002 2002
------- ------- ------- ---- ---- ----
(IN THOUSANDS EXCEPT RATIOS AND PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA(3):
Revenues:
Net sales........................... $ -- $ -- $ -- $ -- $ -- $208,260
Royalties and franchise and related
fees............................... 78,429 81,658 87,450 92,823 97,782 90,317
-------- --------- ---------- -------- -------- --------
78,429 81,658 87,450 92,823 97,782 298,577
-------- --------- ---------- -------- -------- --------
Costs and expenses:
Cost of sales, excluding
depreciation and amortization...... -- -- -- -- -- 149,970
Selling, general and
administrative..................... 62,998 68,498 80,212 (8) 77,355 (10) 75,893 118,644 (12)
Depreciation and amortization,
excluding amortization of deferred
financing costs.................... 4,916 5,423 5,313 6,506 6,550 13,705
Capital market transaction related
compensation....................... -- -- 26,010 (8) -- -- --
Capital structure reorganization
related charge..................... -- 2,126 (6) 306 -- -- --
-------- --------- ---------- -------- -------- --------
67,914 76,047 111,841 83,861 82,443 282,319
-------- --------- ---------- -------- -------- --------
Operating profit (loss).......... 10,515 5,611 (6) (24,391)(8) 8,962 15,339 16,258 (12)
Interest expense...................... (13,031) (1,260)(6) (4,804) (30,447) (26,210) (46,022)
Insurance expense related to long-term
debt................................ -- -- (550) (4,805) (4,516) (4,516)
Early extinguishment of debt.......... -- (2,351)(6) -- -- -- --
Investment income, net................ 9,863 16,904 30,715 33,632 851 550
Costs related to proposed business
acquisitions not consummated........ (900) (416) -- (623) (2,238) (2,238)
Gain (loss) on sale of businesses,
net................................. -- 1,188 -- 500 (1,218) (1,218)
Other income, net..................... 1,572 2,827 1,241 10,191 1,358 1,446
-------- --------- ---------- -------- -------- --------
Income (loss) from continuing
operations before income taxes
and minority interests......... 8,019 22,503 (6) 2,211 (8) 17,410 (10) (16,634) (35,740)(12)
(Provision for) benefit from income
taxes............................... (4,832) (6,328)(6) (12,368)(8) (8,696)(10) 3,329 9,609 (12)
Minority interests in loss of a
consolidated subsidiary............. -- -- -- 252 3,548 3,548
-------- --------- ---------- -------- -------- --------
Income (loss) from continuing
operations..................... 3,187 16,175 (6) (10,157)(8) 8,966 (10) (9,757) $(22,583)(12)
--------
--------
Income (loss) from discontinued
operations.......................... 11,449 (5) (6,051)(6) 451,398 (8) 43,450 (10) 11,100 (11)
-------- --------- ---------- -------- --------
Net income....................... $ 14,636 (5) $ 10,124 (6) $ 441,241 (8) $ 52,416 (10) $ 1,343 (11)
-------- --------- ---------- -------- --------
-------- --------- ---------- -------- --------
Basic income (loss) per share of
Class A common stock and Class B
common stock(4):
Continuing operations............ $ .03 $ .21 $ (.15) $ .14 $ (.16) $ (.40)
--------
--------
Discontinued operations.......... .13 (.08) 6.48 .67 .18
-------- --------- ---------- -------- --------
Net income....................... $ .16 $ .13 $ 6.33 $ .81 $ .02
-------- --------- ---------- -------- --------
-------- --------- ---------- -------- --------
Diluted income (loss) per share of
Class A common stock and Class B
common stock(4):
Continuing operations............ $ .03 $ .20 $ (.15) $ .13 $ (.16) $ (.40)
--------
--------
Discontinued operations.......... .12 (.07) 6.48 .64 .18
-------- --------- ---------- -------- --------
Net income....................... $ .15 $ .13 $ 6.33 $ .77 $ .02
-------- --------- ---------- -------- --------
-------- --------- ---------- -------- --------
Cash dividends declared per share:
Class A common stock................ $ -- $ -- $ -- $ -- $ -- $ --
Class B common stock................ $ -- $ -- $ -- $ -- $ -- $ --
Weighted-average shares outstanding:
Class A common stock................ 30,306 26,015 (7) 23,232 (7) 21,532 (7) 20,446 (7) 18,946
Class B common stock(4)............. 60,612 52,030 (7) 46,464 (7) 43,064 (7) 40,892 (7) 37,892
Ratio of earnings to fixed charges.... 1.51 7.09 1.78 1.55
Amount by which earnings were
insufficient to cover fixed
charges............................. $ 16,940 $ 36,046
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital....................... $180,739 $ 240,399 $ 596,319 $556,637 $509,541
Total assets.......................... 462,417 378,424 1,067,424 868,409 967,383
Long-term debt........................ 279,226 3,792 291,718 288,955 352,700
Stockholders' equity (deficit)........ 11,272 (166,726)(7) 282,310 (9) 332,397 332,742
4
HISTORICAL PRO FORMA
----------------------------- ----------
NINE MONTHS ENDED(1)
---------------------------------------------
SEPTEMBER 28,
SEPTEMBER 29, --------------------------
2002(13) 2003(13) 2003
-------- -------- ----
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA(3):
Revenues:
Net sales................................................ $ -- $ 150,988 $ 150,988
Royalties and franchise and related fees................. 72,889 68,181 68,181
-------- ---------- ----------
72,889 219,169 219,169
-------- ---------- ----------
Costs and expenses:
Cost of sales, excluding depreciation and amortization... -- 112,139 112,139
Selling, general and administrative...................... 58,987 82,236 82,236
Depreciation and amortization, excluding amortization of
deferred financing costs................................ 4,860 10,176 10,176
-------- ---------- ----------
63,847 204,551 204,551
-------- ---------- ----------
Operating profit...................................... 9,042 14,618 14,618
Interest expense........................................... (20,002) (27,857) (31,589)
Insurance expense related to long-term debt................ (3,414) (3,163) (3,163)
Investment income, net..................................... 706 10,884 10,884
Gain (costs) related to proposed business acquisitions not
consummated.............................................. (2,232) 2,064 2,064
Loss on sale of businesses................................. (1,218) -- --
Other income, net.......................................... 199 1,424 1,424
-------- ---------- ----------
Loss before income taxes and minority interests....... (16,919) (2,030) (5,762)
(Provision for) benefit from income taxes.................. 3,552 (985) 359
Minority interests in loss of a consolidated subsidiary.... 2,255 112 112
-------- ---------- ----------
Net loss.............................................. $(11,112) $ (2,903) $ (5,291)
-------- ---------- ----------
-------- ---------- ----------
Basic and diluted loss per share of Class A common stock
and Class B common stock(4).............................. $ (.18) $ (.05) $ (.09)
-------- ---------- ----------
-------- ---------- ----------
Cash dividends declared per common share:
Class A common stock..................................... $ -- $ .065 $ .065
Class B common stock..................................... $ -- $ .075 $ .075
Weighted-average shares outstanding:
Class A common stock..................................... 20,471 20,072 19,303
Class B common stock(4).................................. 40,942 40,144 38,606
Amount by which earnings were insufficient to cover fixed
charges.................................................. $ 16,294 $ 3,055 $ 6,787
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital............................................ $ 611,201
Total assets............................................... 1,081,313
Long-term debt............................................. 492,305
Stockholders' equity....................................... 294,037
5
NOTES TO SUMMARY FINANCIAL DATA
(1) We report on a fiscal year basis consisting of 52 or 53 weeks ending on the
Sunday closest to December 31. In accordance with this method, our 1998
fiscal year contained 53 weeks and each of our 1999, 2000, 2001 and 2002
fiscal years contained 52 weeks. Each of our fiscal nine-month periods
ended September 29, 2002 and September 28, 2003, which we refer to as the
'Nine-Month Periods' contained 39 weeks.
(2) Summary Consolidated Financial Data for the fiscal years ended on or prior
to the fiscal year ended December 31, 2000 reflect the discontinuance of
our beverage businesses sold in October 2000 and for the years ended on or
prior to the fiscal year ended January 2, 2000 reflect the discontinuance
of our propane business sold in July 1999.
(3) Certain amounts included in the prior periods' Statement of Operations Data
have been reclassified to (a) retroactively reflect the adoption on
December 30, 2002 of Statement of Financial Accounting Standards No. 145
which we refer to as 'SFAS 145' and (b) otherwise conform with the current
period's presentation. The adoption of SFAS 145 resulted in the
reclassification of charges for early extinguishment of debt in fiscal 2000
and 2001 previously reported as extraordinary charges to either early
extinguishment of debt on a pre-tax basis or income (loss) from
discontinued operations.
(4) Basic and diluted income (loss) per share amounts and the weighted average
shares outstanding, have been retroactively adjusted for the effect of a
stock distribution on September 4, 2003, which we refer to as the 'Stock
Distribution,' of two shares of a newly designated series of our previously
authorized Class B common stock for each issued share of our Class A common
stock issued as of August 21, 2003, as if such stock distribution had
occurred at the beginning of our 1999 fiscal year. Net income for a period
is allocated between the Class A common shares and Class B common shares
based on the actual dividend payment ratio to the extent of any dividends
paid during the period with any excess allocated giving effect to the
minimum stated dividend participation rate of 110% for the Class B common
shares compared with the Class A common shares. Net loss for a period is
allocated equally among each share of Class A and Class B common stock,
resulting in the same loss per share for each class. Accordingly, the
income (loss) per share is the same for each of the two classes of common
stock during the periods presented since there were no dividends declared
or contractually payable during the periods presented prior to the nine-
months ended September 28, 2003 and we had a net loss for that nine-month
period. Basic and diluted income (loss) per share are the same for the
fiscal years 2000 and 2002 and for the Nine-Month Periods since all
potentially dilutive securities would have had an antidilutive effect based
on the loss from continuing operations for each of those periods. The
number of shares used in the calculation of diluted income (loss) per share
of Class A common stock for the fiscal years 1998, 1999 and 2001 are
31,527,000, 26,943,000 and 22,692,000, respectively. The number of shares
used in the calculation of diluted income (loss) per share of Class B
common stock for the fiscal years 1998, 1999 and 2001 are 63,054,000,
53,886,000 and 45,384,000, respectively. These shares used for the
calculation of diluted income (loss) per share for the fiscal years 1998,
1999 and 2001 consist of the weighted average common shares outstanding for
each class of common stock and potential common shares reflecting the
effect of dilutive stock options of 1,221,000, 818,000 and 1,160,000,
respectively, for Class A common stock and 2,442,000, 1,636,000 and
2,320,000, respectively, for Class B common stock, and for the fiscal year
1999 the effect of a dilutive forward purchase obligation for common stock
of 110,000 shares of Class A common stock and 220,000 shares of Class B
common stock. The shares of Class A common stock for the fiscal years 1999,
2000 and 2001 as reported herein include shares of a former Class B common
stock since the former Class B common stock participated in income or
losses equally per share with the Class A common stock. See Note 7 for
further disclosure of this former Class B common stock.
6
(5) Reflects certain significant credits recorded during fiscal 1998 as
follows: $7,074,000 credited to net income representing (1) $3,067,000
included in the income from operations of the discontinued businesses
consisting of $5,016,000 of gain on sale of businesses less $1,949,000 of
related income taxes and (2) $4,007,000 of gain on disposal of discontinued
operations.
(6) Reflects certain significant charges and credits recorded during fiscal
1999 as follows: $2,126,000 charged to operating profit representing a
capital structure reorganization related charge related to equitable
adjustments made to the terms of outstanding stock options for stock of a
former subsidiary held by corporate employees; $1,425,000 charged to income
from continuing operations before income taxes and minority interests
representing (1) the aforementioned $2,126,000 charged to operating profit
and (2) a $2,351,000 charge from the early extinguishment of debt, both
less $3,052,000 of reversal of excess interest expense accruals for
interest due the Internal Revenue Service, which we refer to as the 'IRS,'
in connection with the completion of their examinations of our Federal
income tax returns for prior years; $4,262,000 credited to income from
continuing operations representing $5,127,000 of release of excess reserves
for income taxes in connection with the completion of IRS examinations of
our Federal income tax returns less the aforementioned $1,425,000 charged
to income from continuing operations before income taxes and minority
interests plus $560,000 of related income tax benefit; and $3,897,000
credited to net income representing (1) the aforementioned $4,262,000
credited to income from continuing operations and (2) $15,102,000 of gain
on disposal of discontinued operations, both less $15,467,000 of charges
reported in loss from operations of the discontinued businesses consisting
of (a) a $16,757,000 charge from the early extinguishment of debt, (b) a
$3,348,000 capital structure reorganization related charge, similar to the
charge in continuing operations, relating to option holders who were
employees of the sold businesses, (c) $411,000 of provision for interest
due the IRS in connection with the completion of their examination of our
Federal income tax returns, all less $7,651,000 of related income tax
benefit and (d) $2,602,000 of provision for income taxes in connection with
the completion of IRS examinations of our Federal income tax returns.
(7) In fiscal 1999 we repurchased for treasury 3,805,015 shares of our Class A
common stock and 1,999,208 shares of our formerly outstanding Class B
common stock for an aggregate $117,160,000 and recorded a forward purchase
obligation for two future purchases of the former Class B common stock that
occurred on August 10, 2000 and on August 10, 2001 for $42,343,000 and
$43,843,000, respectively. The 3,805,015 shares of Class A common stock are
before a stock distribution on September 4, 2003 of two shares of a
newly-issued series of the Company's previously authorized Class B common
stock for each issued share of the Company's Class A common stock. These
transactions resulted in a $203,346,000 reduction to stockholders' equity
in fiscal 1999 resulting in a stockholders' deficit as of January 2, 2000
and reductions of 3,376,000, 2,038,000, 1,994,000 and 1,214,000 shares in
the reported weighted-average Class A common shares outstanding,
respectively, in fiscal years 1999, 2000, 2001 and 2002 and 6,752,000,
4,076,000, 3,988,000 and 2,428,000 shares in the reported weighted-average
Class B common shares outstanding, respectively, in fiscal years 1999,
2000, 2001 and 2002.
(8) Reflects certain significant charges and credits recorded during fiscal
2000 as follows: $36,432,000 charged to operating loss and income from
continuing operations before income taxes and minority interests
representing (1) a $26,010,000 charge for capital market transaction
related compensation and (2) a $10,422,000 charge resulting from our
repurchase of 1,045,834 shares of our Class A common stock from certain of
our officers and a director within six months after exercise of the related
stock options by the officers and director included in selling, general and
administrative; $32,914,000 charged to loss from continuing operations
representing the aforementioned $36,432,000 less $3,518,000 of related
income tax benefit; and $427,352,000 credited to net income representing
$460,266,000 of the then estimated gain on disposal of our former beverage
businesses credited to income from discontinued operations, net of a
$20,680,000 after tax charge from the early extinguishment of debt, less
the aforementioned $32,914,000 charged to loss from continuing operations.
7
(9) The increase in stockholders' equity during fiscal 2000 principally
reflects net income of $441,241,000 which includes a gain on disposal of
discontinued operations of $460,266,000.
(10) Reflects certain significant credits recorded during fiscal 2001 as
follows: $5,000,000 credited to selling, general and administrative,
operating profit and income from continuing operations before income taxes
and minority interests representing the receipt of a $5,000,000 note
receivable from our Chairman and Chief Executive Officer and our President
and Chief Operating Officer received in connection with the settlement of a
class action lawsuit involving certain awards of compensation to those
executives; $3,200,000 credited to income from continuing operations
representing the aforementioned $5,000,000 less $1,800,000 of related
income tax expense; and $46,650,000 credited to net income representing the
aforementioned $3,200,000 credited to income from continuing operations and
$43,450,000 of additional gain on disposal of our beverage businesses.
(11) Reflects a significant credit recorded during fiscal 2002 as follows:
$11,100,000 credited to net income representing adjustments to the
previously recognized gain on disposal of our beverage businesses due to
the release of reserves for income taxes associated with the discontinued
beverage operations in connection with the receipt of related income tax
refunds.
(12) Reflects a significant charge in the fiscal 2002 pro forma data as follows:
$6,403,000 charged to selling, general and administrative, operating profit
and loss from continuing operations before income taxes and minority
interests representing expenses incurred by Sybra, Inc., which we acquired
on December 27, 2002, directly relating to its bankruptcy proceedings,
principally for legal fees and, to a much lesser extent, for other
professional fees; and $3,931,000 charged to loss from continuing
operations representing the aforementioned $6,403,000 less $2,472,000 of
related income tax benefit.
(13) Our consolidated results of operations for the nine-month period ended
September 28, 2003 include the results of Sybra, but our consolidated
results for the nine-month period ended September 29, 2002 do not include
the results of Sybra. Our consolidated results of operations for the
nine-month period ended September 29, 2002 include royalties from Sybra of
$5,470,000, whereas the royalties from Sybra of $5,226,000 for the
nine-month period ended September 28, 2003 were eliminated in
consolidation.
8
THE NOTES
Aggregate Principal Amount
Offered.............................. $175,000,000 aggregate principal amount of 5% Convertible
Notes due 2023.
Maturity Date........................ May 15, 2023.
Interest............................. 5% per annum on the principal amount, payable semi-annually
in arrears in cash on May 15 and November 15 of each year,
beginning November 15, 2003.
Ranking.............................. The notes are our general unsecured and unsubordinated
obligations and rank equally in right of payment with all of
our existing and future unsecured and unsubordinated
indebtedness. The notes rank junior to all of our existing
and future secured obligations to the extent of the value of
the collateral securing such obligations. As of September 28,
2003 we had total secured indebtedness of approximately
$16 million. The notes are also effectively subordinated to
all liabilities of our subsidiaries. As of September 28, 2003
our subsidiaries had total liabilities of approximately
$422 million, not including contingent liabilities and
intercompany indebtedness.
Conversion........................... You may convert the notes into shares of our Class A common
stock and Class B common stock at a conversion rate of 25
shares of Class A common stock and 50 shares of Class B
common stock per $1,000 principal amount of notes (equal to
an initial conversion price of $40 for every one share of
Class A common stock and two shares of Class B common
stock), subject to adjustment, prior to the close of business
on the final maturity date, under any of the following
circumstances:
o during any fiscal quarter commencing after June 29,
2003, if the closing sale price of our Class A common
stock exceeds 120% of the conversion price for at least
20 trading days in the 30 consecutive trading days
ending on the last trading day of the preceding fiscal
quarter; or
o during any fiscal quarter commencing after June 29,
2003, if the combined closing sale price of one share of
our Class A common stock and two shares of our Class B
common stock exceeds 120% of the conversion price for at
least 20 trading days in the 30 consecutive trading days
ending on the last trading day of the preceding fiscal
quarter; or
o during the five business day period after any ten
consecutive trading day period in which the trading
price per $1,000 principal amount of notes for each day
of that period was less than 95% of the product of the
closing sale price of our Class A common stock and the
number of shares of Class A common stock issuable upon
conversion of $1,000 principal amount of notes; or
9
o during the five business day period after any ten
consecutive trading day period in which the trading
price per $1,000 principal amount of notes for each day
of that period was less than 95% of the product of the
combined closing sale price of one share of our Class A
common stock and two shares of our Class B common stock
and the number of shares of Class A common stock
issuable upon conversion of $1,000 principal amount of
notes; or
o if the notes have been called for redemption; or
o upon the occurrence of specified corporate events
described under 'Description of the Notes.'
Upon conversion, we will have the right to deliver, in lieu
of shares of our Class A common stock, cash or a combination
of cash and Class A common stock. We will have no such right
to deliver cash in lieu of shares of our Class B common
stock. If we elect to pay holders cash for their notes, the
payment will be based on the applicable stock price (as
defined in this prospectus).
Redemption........................... We may redeem any of the notes beginning May 20, 2010, by
giving you at least 30 days' but not more than 60 days'
notice. We may redeem the notes either in whole or in part at
a redemption price of 100% of their principal amount, plus
accrued and unpaid interest.
Fundamental Change................... If a fundamental change (as described under 'Description of
the Notes -- Redemption at Option of the Holder Upon a
Fundamental Change') occurs prior to maturity, you may
require us to purchase all or part of your notes at a
redemption price equal to 100% of their principal amount,
plus accrued and unpaid interest. We may elect to pay all or
a portion of the purchase price in Class A common stock
instead of cash, subject to certain conditions.
Repurchase at Option of the Holder... You may require us to repurchase the notes on May 15 of 2010,
2015 and 2020 at a repurchase price equal to 100% of their
principal amount, plus accrued and unpaid interest. We may
also add additional dates on which you may require us to
repurchase all or a portion of your notes, however we are not
obligated to do so. See 'Description of the
Notes -- Repurchase at Option of the Holder.'
Use of Proceeds...................... The selling securityholders will receive all of the net
proceeds from the sale of the notes and our Class A common
stock and Class B common stock. We will not receive any of
the proceeds from the sale of any of these securities.
Registration Rights.................. Pursuant to a registration rights agreement, we have agreed
to use reasonable efforts to keep the shelf registration
statement, of which this prospectus is a part, effective
until either of the following has occurred:
o all of the notes and the underlying Class A common stock
and Class B common stock issuable upon conversion of
such
10
notes covered by the registration statement have been
sold; or
o the expiration of the applicable holding period with
respect to the notes and the underlying Class A common
stock and Class B common stock issuable upon conversion
of such notes under Rule 144(k) under the Securities
Act, or any successor provision.
See 'Description of the Notes -- Registration Rights of the
Noteholders.'
New York Stock Exchange Symbol for
the Class A Common Stock........... TRY
New York Stock Exchange Symbol for
the Class B Common Stock........... TRY.B
11
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN
INVESTMENT DECISION. THE RISKS DESCRIBED BELOW ARE NOT THE ONLY ONES WE FACE.
ADDITIONAL RISKS NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL
MAY ALSO IMPAIR OUR BUSINESS OPERATIONS.
OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE
MATERIALLY ADVERSELY AFFECTED BY ANY OF THESE RISKS. THE TRADING PRICE OF THE
NOTES, OUR CLASS A COMMON STOCK AND OUR CLASS B COMMON STOCK COULD DECLINE DUE
TO ANY OF THESE RISKS, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
THIS PROSPECTUS ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THE RISKS FACED BY US DESCRIBED BELOW AND ELSEWHERE IN THIS
PROSPECTUS.
RISKS RELATED TO OUR COMPANY
A SUBSTANTIAL AMOUNT OF OUR SHARES OF CLASS A COMMON STOCK AND CLASS B
COMMON STOCK ARE CONCENTRATED IN THE HANDS OF CERTAIN STOCKHOLDERS.
DWG Acquisition Group, L.P. owns directly or indirectly approximately 27.1%
of our outstanding Class A common stock, 27.1% of our Class B common stock and
27.1% of our voting power as of November 20, 2003. Messrs. Peltz and May, as the
sole general partners of DWG Acquisition, beneficially own all of the Class A
common stock and Class B common stock owned by DWG Acquisition. In addition,
Messrs. Peltz and May each individually beneficially own certain additional
shares of Class A common stock and Class B common stock which, when combined
with the shares owned through DWG Acquisition, collectively constituted
approximately 45.3% of our Class A common stock, 45.3% of our Class B common
stock and 45.3% of our voting power as of November 20, 2003.
As a result of their beneficial ownership, Messrs. Peltz and May are able to
exercise substantial influence over the election of members of our board of
directors and the outcome of corporate actions requiring majority stockholder
approval, including mergers, consolidations and the sale of all or substantially
all of our assets, and may be in a position to prevent or cause a change in
control of us. In addition, to the extent we issue additional Class B common
stock for acquisitions, financings or compensation purposes, such issuances
would not proportionally dilute the voting power of existing stockholders,
including Messrs. Peltz and May.
OUR SUCCESS DEPENDS SUBSTANTIALLY UPON THE CONTINUED RETENTION OF CERTAIN
KEY PERSONNEL.
We believe that our success has been and will continue to be dependent to a
significant extent upon the efforts and abilities of our senior management team.
The failure by us to retain members of our senior management team could
adversely affect our ability to build on the efforts undertaken by its current
management to increase the efficiency and profitability of its businesses.
Specifically, the loss of Nelson Peltz, our Chairman and Chief Executive
Officer, or Peter May, our President and Chief Operating Officer, other senior
members of our senior management or the senior management of our subsidiaries
could adversely affect us.
WE HAVE BROAD DISCRETION IN THE USE OF OUR SIGNIFICANT CASH, CASH
EQUIVALENTS AND INVESTMENT POSITION.
At September 28, 2003 we had approximately $776 million of cash, cash
equivalents and short-term investments, including restricted cash equivalents.
We have not designated any specific use for our significant cash, cash
equivalents and investment position. We are evaluating our options to deploy our
substantial liquidity through, among other things, acquisitions, additional
share repurchases and investments.
12
Acquisitions are a key element of our business strategy, but we cannot
assure you that we will be able to identify appropriate acquisition targets in
the future and that we will be able to successfully integrate any future
acquisitions into our existing operations.
Acquisitions involve numerous risks, including difficulties assimilating new
operations and products. In addition, acquisitions may require significant
management time and capital resources. We cannot assure you that we will have
access to the capital required to finance potential acquisitions on satisfactory
terms, that any acquisition would result in long-term benefits to us or that
management would be able to manage effectively the resulting business. Future
acquisitions are likely to result in the incurrence of additional indebtedness
or the issuance of additional equity securities.
WE MAY HAVE TO TAKE ACTIONS THAT WE WOULD NOT OTHERWISE TAKE SO AS NOT TO BE
DEEMED AN 'INVESTMENT COMPANY.'
The Investment Company Act of 1940, as amended (the '1940 Act'), requires
the registration of, and imposes various restrictions on, companies that do not
meet certain financial tests regarding the composition of their assets and
source of income. A company may be deemed to be an investment company if it owns
'investment securities' with a value exceeding 40% of its total assets
(excluding government securities and cash items) on an unconsolidated basis or
if more than 45% of the value of its total assets consists of, or more than 45%
of its net after-tax income/loss is derived from, securities of companies it
does not control. Our acquisition strategy may require us to take actions that
we would not otherwise take so as not to be deemed an 'investment company' under
the 1940 Act. Investment companies are subject to registration under, and
compliance with, the 1940 Act unless a particular exclusion or safe harbor
provision applies. Presently, the total amount of investment securities that we
hold is substantially less than 40% of our total assets and substantially less
than 45% of our total assets consist of, and substantially less than 45% of our
net after-tax income/loss is derived from, securities of companies we do not
control. If in the future we were to be deemed an investment company, we would
become subject to the requirements of the 1940 Act. We intend to make
acquisitions and other investments in a manner so as not to be deemed an
investment company. As a result, we may forego investments that we might
otherwise make or retain or dispose of investments or assets that we might
otherwise sell or hold.
IN THE FUTURE WE MAY HAVE TO TAKE ACTIONS THAT WE WOULD NOT OTHERWISE TAKE
SO AS NOT TO BE SUBJECT TO TAX AS A 'PERSONAL HOLDING COMPANY.'
If at any time during the last half of our taxable year, five or fewer
individuals own or are deemed to own more than 50% of the total value of our
shares and if during such taxable year we receive 60% or more of our gross
income from specified passive sources, we would be classified as a 'personal
holding company' for the U.S. federal income tax purposes. If this were the
case, we would be subject to additional taxes at the rate of 15% on a portion of
our income, to the extent this income is not distributed to shareholders. We do
not currently expect to have any liability for tax under the personal holding
company rules in 2003. However, we cannot assure you that we will not become
liable for such tax in the future. Because we do not wish to be classified as a
personal holding company or to incur any personal holding company tax, we may be
required in the future to take actions that we would not otherwise take. These
actions may influence our strategic and business decisions, including causing us
to conduct our business and acquire or dispose of investments differently than
we otherwise would.
OUR SUBSIDIARIES ARE SUBJECT TO VARIOUS RESTRICTIONS, AND SUBSTANTIALLY ALL
OF THEIR ASSETS ARE PLEDGED UNDER CERTAIN DEBT AGREEMENTS.
Under our subsidiaries' debt agreements, substantially all of our
subsidiaries' assets, other than cash, cash equivalents and short-term
investments, are pledged as collateral security. The indenture relating to the
notes issued in the Arby's securitization and the agreements relating to debt
issued
13
by Sybra contain financial covenants that, among other things, require Arby's
Franchise Trust (the borrower in the Arby's securitization) and Sybra, as
applicable, to maintain certain financial ratios and restrict their ability to
incur debt, enter into certain fundamental transactions (including sales of all
or substantially all of their assets and certain mergers and consolidations) and
create or permit liens. If either Arby's Franchise Trust or Sybra is unable to
generate sufficient cash flow or otherwise obtain the funds necessary to make
required payments of interest or principal under, or is unable to comply with
covenants of, its respective debt agreements, it would be in default under the
terms of such agreements which would, under certain circumstances, permit the
insurer of the notes issued in the Arby's securitization or the lenders to
Sybra, as applicable, to accelerate the maturity of the balance of its
indebtedness.
ARBY'S IS DEPENDENT ON RESTAURANT REVENUES AND OPENINGS.
Franchise royalties and fees comprise a significant portion of our revenues
and earnings and the results of our restaurant business are highly dependent on
the gross revenues of Arby's franchisees' restaurants. Additionally, as a result
of the acquisition of Sybra, we derive revenues and earnings from restaurant
operations. Accordingly, the number of Arby's restaurants that we and Arby's
franchisees operate is important to us. It is possible that interruptions in the
distribution of supplies to Arby's restaurants could adversely affect sales at
company-owned restaurants and result in a decline in royalty fees that we
receive from Arby's franchisees.
THE NUMBER OF ARBY'S RESTAURANTS THAT OPEN MAY NOT MEET EXPECTATIONS.
Numerous factors beyond our control affect restaurant openings. These
factors include the ability of potential restaurant owners to obtain financing,
locate appropriate sites for restaurants and obtain all necessary state and
local construction, occupancy and other permits and approvals. Although as of
September 28, 2003, franchisees had signed commitments to open approximately 524
Arby's restaurants and have made or are required to make non-refundable deposits
of $10,000 per restaurant, we cannot assure you that these commitments will
result in open restaurants. In addition, we cannot assure you that our
franchisees will successfully develop and operate their restaurants in a manner
consistent with our standards.
ARBY'S FRANCHISE REVENUES DEPEND, TO A SIGNIFICANT EXTENT, ON ITS LARGEST
FRANCHISEE AND A DECLINE IN ITS REVENUE MAY INDIRECTLY ADVERSELY AFFECT US.
During 2002, Arby's received approximately 27% of its royalties and
franchise and related fees from RTM Restaurant Group, Inc. ('RTM') (which as of
September 28, 2003, operated 787 Arby's restaurants). Arby's revenues could
materially decline from their present levels if RTM suffered a significant
decline in its business.
COMPETITION FROM RESTAURANT COMPANIES COULD ADVERSELY AFFECT US.
The business sectors in which owned and franchised Arby's restaurants
compete are highly competitive with respect to, among other things, price, food
quality and presentation, service, location, and the nature and condition of the
financed business unit/location, and are affected by changes in tastes and
eating habits, local, regional and national economic conditions and population
and traffic patterns. Arby's restaurants compete with a variety of locally-owned
restaurants, as well as competitive regional and national chains and franchises.
Moreover, new companies may enter our market areas and target our sales
audience. Such competition may have, among other things, lower operating costs,
lower debt service requirements, better locations, better facilities, better
management, more effective marketing and more efficient operations. All such
competition may adversely affect our revenues and profits and those of our owned
and franchised restaurants and could adversely affect the ability of our
franchisees to make franchise payments to us. Furthermore, we and our
franchisees face competition for competent employees and high levels of employee
turnover, which also can have an adverse effect on our operations and revenues
and those of our franchisees as well as on our franchisees' abilities to make
franchise payments to us.
14
Many of Arby's competitors have substantially greater financial, marketing,
personnel and other resources than Arby's which may give them a competitive
advantage. Accordingly, we cannot assure you that the level of gross revenues of
company-owned restaurants and of restaurants owned by Arby's franchisees, upon
which our royalty fees are dependent, will continue.
CHANGES IN CONSUMER TASTES AND PREFERENCES AND IN SPENDING AND DEMOGRAPHIC
PATTERNS, AS WELL AS HEALTH AND SAFETY CONCERNS ABOUT FOOD QUALITY, COULD RESULT
IN A LOSS OF CUSTOMERS AND REDUCE THE ROYALTIES THAT WE RECEIVE.
The quick service restaurant industry is often affected by changes in
consumer tastes, national, regional and local economic conditions, discretionary
spending priorities, demographic trends, traffic patterns and the type, number
and location of competing restaurants. Consumer preferences could also be
affected by health or safety concerns with respect to the consumption of beef,
french fries or other foods or with respect to the effects of food borne
illnesses. As is generally the case in the restaurant franchise business, we and
our franchisees may, from time to time, be the subject of complaints or
litigation from customers alleging illness, injury or other food quality, health
or operational concerns. Adverse publicity resulting from these allegations may
harm the reputation of Arby's restaurants, even if the allegations are not
valid, we are not found liable or those concerns relate only to a single
restaurant or a limited number of restaurants. Moreover, complaints, litigation
or adverse publicity experienced by one or more of our franchisees could also
adversely affect our business as a whole. If our owned and franchised
restaurants are unable to adapt to changes in consumer preferences and trends,
or we have adverse publicity due to any of these concerns, we and our
franchisees may lose customers and the resulting revenues from company-owned
restaurants and the royalties that Arby's receives from its franchisees may
decline.
WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, WHICH
COULD HARM THE VALUE OF OUR BRANDS AND ADVERSELY AFFECT OUR BUSINESS.
Our intellectual property is material to the conduct of our business. We
rely on a combination of trademarks, copyrights, service marks, trade secrets
and similar intellectual property rights to protect our brands and other
intellectual property. The success of our business strategy depends, in part, on
our continued ability to use our existing trademarks and service marks in order
to increase brand awareness and further develop our branded products in both
domestic and international markets. If our efforts to protect our intellectual
property are not adequate, or if any third party misappropriates or infringes on
our intellectual property, either in print or on the Internet, the value of our
brands may be harmed, which could have a material adverse effect on our
business, including the failure of our brands to achieve and maintain market
acceptance.
We franchise our restaurant brands to various franchisees. While we try to
ensure that the quality of our brands is maintained by all of our franchisees,
we cannot assure you that these franchisees will not take actions that adversely
affect the value of our intellectual property or the reputation of the Arby's
restaurant system. We have registered certain trademarks and have other
trademark registrations pending in the U.S. and certain foreign jurisdictions.
The trademarks that we currently use have not been registered in all of the
countries outside of the United States in which we do business and may never be
registered in all of these countries.
We cannot assure you that all of the steps we have taken to protect our
intellectual property in the U.S. and foreign countries will be adequate. In
addition, the laws of some foreign countries do not protect intellectual
property rights to the same extent as the laws of the U.S.
WE, AND SOME OF OUR SUBSIDIARIES, REMAIN CONTINGENTLY LIABLE WITH RESPECT TO
CERTAIN OBLIGATIONS RELATING TO BUSINESSES THAT WE HAVE SOLD.
In 1997 we sold all of our then company-owned Arby's restaurants to
subsidiaries of RTM, Arby's largest franchisee. In connection with the sale, an
aggregate of approximately $55 million of mortgage and equipment notes were
assumed by subsidiaries of RTM, of which approximately $41 million remained
outstanding at September 28, 2003. RTM has guaranteed the payment of
15
these notes by its subsidiaries. Notwithstanding the assumption of this debt and
guaranty, we remain contingently liable as a guarantor of the notes. In
addition, the subsidiaries of RTM also assumed substantially all of the lease
obligations relating to the purchased restaurants (which aggregate a maximum of
approximately $60 million at September 28, 2003) and RTM has indemnified us for
any losses we might incur with respect to such leases. Notwithstanding such
assumption, Arby's and its subsidiaries remain contingently liable if RTM's
subsidiaries fail to make the required payments under those notes and leases.
In addition, in July 1999, we sold 41.7% of our then remaining 42.7%
interest in National Propane Partners, L.P. and a sub-partnership, National
Propane, L.P. to Columbia Energy Group, and retained less than a 1% special
limited partner interest in AmeriGas Eagle Propane, L.P. (formerly known as
National Propane, L.P. and as Columbia Propane, L.P.). As part of the
transaction, our subsidiary, National Propane Corporation, agreed that while it
remains a special limited partner of AmeriGas, it would indemnify the owner of
AmeriGas for any payments the owner makes under certain debt of AmeriGas
(aggregating approximately $138 million as of September 28, 2003), if AmeriGas
is unable to repay or refinance such debt, but only after recourse to the assets
of AmeriGas. Either National Propane Corporation or AmeriGas Propane, L.P., the
owner of AmeriGas, may require AmeriGas to repurchase the special limited
partner interest. However, we believe it is unlikely that either party would
require repurchase prior to 2009 as either AmeriGas Propane, L.P. would owe us
tax indemnification payments or we would accelerate payment of deferred taxes,
which amount to approximately $40 million as of September 28, 2003, associated
with our sale of the propane business.
Although we believe that it is unlikely that we will be called upon to make
any payments under the guaranty, leases or indemnification described above, if
we were required to make such payments it could have a material adverse effect
on our financial position and results of operations.
CHANGES IN GOVERNMENTAL REGULATION MAY ADVERSELY AFFECT OUR ABILITY TO OPEN
NEW RESTAURANTS OR OTHERWISE ADVERSELY AFFECT OUR EXISTING AND FUTURE OPERATIONS
AND RESULTS.
Each Arby's restaurant is subject to licensing and regulation by health,
sanitation, safety and other agencies in the state and/or municipality in which
the restaurant is located. There can be no assurance that we, or our
franchisees, will not experience material difficulties or failures in obtaining
the necessary licenses or approvals for new restaurants which could delay the
opening of such restaurants in the future. In addition, more stringent and
varied requirements of local and tax governmental bodies with respect to zoning,
land use and environmental factors could delay or prevent development of new
restaurants in particular locations. We, and our franchisees, are also subject
to the Fair Labor Standards Act which governs such matters as minimum wages,
overtime and other working conditions, along with the Americans with
Disabilities Act, family leave mandates and a variety of other laws enacted by
the states that govern these and other employment law matters. We cannot predict
the amount of future expenditures which may be required in order to permit our
company owned restaurants to comply with any changes in existing regulations or
to comply with any future regulations that may become applicable to our
business.
Certain of our current and past operations are or have been subject to
federal, state and local environmental laws and regulations concerning the
discharge, storage, handling and disposal of hazardous or toxic substances. Such
laws and regulations provide for significant fines, penalties and liabilities,
in certain cases without regard to whether the owner or operator of the property
knew of, or was responsible for, the release or presence of such hazardous or
toxic substances. In addition, third parties may make claims against owners or
operators of properties for personal injuries and property damage associated
with releases of hazardous or toxic substances. Although we believe that our
operations comply in all material respects with all applicable environmental
laws and regulations, we cannot predict what environmental legislation or
regulations will be enacted in the future or how existing or future laws or
regulations will be administered or
16
interpreted. We cannot predict the amount of future expenditures which may be
required in order to comply with any environmental laws or regulations or to
satisfy any such claims.
OUR CERTIFICATE OF INCORPORATION CONTAINS CERTAIN ANTI-TAKEOVER PROVISIONS
AND PERMITS OUR BOARD OF DIRECTORS TO ISSUE PREFERRED STOCK WITHOUT SHAREHOLDER
APPROVAL.
Certain provisions in our certificate of incorporation are intended to
discourage or delay a hostile takeover of control of us. These are summarized in
detail under the caption 'Description of Our Capital Stock -- Certain
Anti-Takeover Provisions.'
Our certificate of incorporation, authorizes the issuance of shares of
'blank check' preferred stock, which will have such designations, rights and
preferences as may be determined from time to time by our board of directors.
Accordingly, our board of directors is empowered, without stockholder approval,
to issue preferred stock with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power and other rights of the
holders of our Class A common stock and Class B common stock. The preferred
stock could be used to discourage, delay or prevent a change in control of us
which is determined by our board of directors to be undesirable. Although we
have no present intention to issue any shares of preferred stock, we cannot
assure you that we will not do so in the future.
RISKS RELATING TO THE NOTES, CLASS A COMMON STOCK AND CLASS B COMMON STOCK
WE ARE A HOLDING COMPANY AND DEPEND ON DIVIDENDS OF AND DISTRIBUTIONS FROM
OUR SUBSIDIARIES AND OUR CASH OR CASH EQUIVALENTS TO MEET OUR OBLIGATIONS,
INCLUDING OUR OBLIGATIONS UNDER THE NOTES.
Because we are a holding company, our ability to service debt, including the
notes, and pay dividends, including dividends on our Class A common stock and
Class B common stock, is dependent upon our cash, cash equivalents and
short-term investments on hand, cash flows from our subsidiaries, including
loans, cash dividends and reimbursement by subsidiaries to us in connection with
providing certain management services and payments by subsidiaries under certain
tax sharing agreements. Before giving effect to the initial issuance of the
notes, the cash flow from our subsidiaries is inadequate to cover all of the
expenses of our holding company. Accordingly, we will need to use our cash and
cash equivalents or income from other investments we may make to pay interest
and principal on the notes.
Under the terms of the indenture relating to the notes issued in the Arby's
securitization and the agreements relating to debt issued by Sybra, there are
restrictions on the ability of certain of our subsidiaries to pay dividends
and/or make loans or advances to us. The ability of any of our subsidiaries to
pay cash dividends and/or make loans or advances to us is also dependent upon
the respective abilities of such entities to achieve sufficient cash flows after
satisfying their respective cash requirements, including debt service, to enable
the payment of such dividends or the making of such loans or advances. In
addition, in connection with the December 2002 acquisition of Sybra, we agreed
that Sybra would not pay dividends to us for a period of two years from the
closing.
THE NOTES ARE STRUCTURALLY SUBORDINATED TO ALL EXISTING AND FUTURE
LIABILITIES OF OUR SUBSIDIARIES.
The notes are not obligations of our subsidiaries, and our subsidiaries have
no obligation to pay any amounts due on the notes. All amounts due on the notes
will be structurally subordinated to all obligations and liabilities of our
subsidiaries. As of September 28, 2003, our subsidiaries had total liabilities
of approximately $422 million, not including contingent liabilities or
intercompany indebtedness. The indenture relating to the notes does not limit
our ability or the ability of our subsidiaries to issue or incur additional debt
or preferred stock.
AN ACTIVE TRADING MARKET FOR THE NOTES MAY NOT DEVELOP.
There is currently no public market for the notes and no active trading
market might ever develop. The notes may trade at a discount from their
principal amount at maturity, depending on prevailing interest rates, the market
for similar securities, the price of our shares of Class A common stock and
Class B common stock, our performance and other factors.
17
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE
FUNDAMENTAL CHANGE REPURCHASE OPTION OR THE REPURCHASE AT THE OPTION OF THE
HOLDER PROVISION IN THE NOTES.
Upon the occurrence of specific kinds of fundamental change events and on
the May 15, 2010, 2015 and 2020 purchase dates, we may be required to repurchase
all outstanding notes. However, it is possible that we will not have sufficient
funds at such time to make the required repurchase of notes in cash or that
restrictions in our debt instruments will not allow such repurchases. Under the
notes, we may pay the purchase price described above in the case of a
fundamental change, in shares of Class A common stock or, under certain
circumstances, capital stock of our successor. Our Class A common stock no
longer being publicly traded would constitute a 'fundamental change' under the
indenture governing the notes.
THE HOLDERS OF OUR CLASS A COMMON STOCK AND CLASS B COMMON STOCK MAY
EXPERIENCE A DILUTION IN THE VALUE OF THEIR EQUITY INTEREST AS A RESULT OF THE
ISSUANCE AND SALE OF ADDITIONAL SHARES OF OUR CLASS A COMMON STOCK OR CLASS B
COMMON STOCK.
We may decide to raise additional funds through public or private debt or
equity financing to fund our operations. If we raise funds by issuing equity
securities, the percentage ownership of current securityholders will be reduced
and the new equity securities may have rights senior to those of the Class A
common stock and Class B common stock issuable upon conversion of the notes.
This dilution could be significant depending upon the type of financing obtained
and the terms of such financing.
SHARES OF OUR CLASS A COMMON STOCK OR CLASS B COMMON STOCK ELIGIBLE FOR
PUBLIC SALE COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR CLASS A COMMON STOCK
AND CLASS B COMMON STOCK.
The market price of our Class A common stock and Class B common stock could
decline as a result of sales of a large number of shares in the market in the
future or market perception that such sales could occur, including sales or
distributions of shares by one or more of our large stockholders or by our
controlling stockholder. These factors could also make it more difficult for us
to raise funds through offerings of equity securities in the future at a time
and at a price that we deem appropriate. As of October 31, 2003 there were
19,748,609 shares of our Class A common stock and 39,497,218 shares of our
Class B common stock outstanding. All of the shares of Class A common stock and
Class B common stock are freely transferable without restriction or further
registration under the federal securities laws, except for any shares held by
our affiliates, sales of which will be limited by Rule 144 under the Securities
Act absent registration under the Securities Act.
WE HAVE OUTSTANDING A SUBSTANTIAL AMOUNT OF STOCK OPTIONS EXERCISABLE INTO
OUR CLASS A COMMON STOCK AND CLASS B COMMON STOCK.
As of September 28, 2003 we had outstanding options to purchase 7,772,155
shares of our Class A common stock and 15,544,310 shares of Class B common stock
under our equity participation plans for our directors, officers, key employees
and consultants and had approximately 4,972,791 million shares of Class A common
stock and 9,945,582 shares of Class B common stock available for future grant.
The exercise of outstanding options or the future issuance of options (and the
exercise of such options) or restricted stock will dilute the beneficial
ownership of holders of our Class A common stock and Class B common stock.
18
THE PRICE OF OUR CLASS A COMMON STOCK AND CLASS B COMMON STOCK, AND
THEREFORE OF THE NOTES, MAY FLUCTUATE SIGNIFICANTLY, WHICH MAY MAKE IT DIFFICULT
FOR YOU TO RESELL THE NOTES, OR CLASS A COMMON STOCK AND CLASS B COMMON STOCK
ISSUABLE UPON CONVERSION OF THE NOTES, WHEN YOU WISH OR AT PRICES YOU FIND
ATTRACTIVE.
The price of our Class A common stock and Class B common stock on the New
York Stock Exchange constantly changes. We expect that the market price of our
Class A common stock and Class B common stock will continue to fluctuate.
Because the notes are convertible into our Class A common stock and Class B
common stock, volatility or depressed prices for our Class A common stock or
Class B common stock could have a similar effect on the trading price of the
notes. Holders who have received Class A common stock and Class B common stock
upon conversion will also be subject to the risk of volatility and depressed
prices.
Our stock prices can fluctuate as a result of a variety of factors, many of
which are beyond our control. These factors include:
o significant acquisitions or business combinations, strategic
partnerships, joint ventures or capital commitments by or
involving us or our competitors;
o failure to integrate our acquisitions or realize anticipated
benefits from our acquisitions;
o 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;
o market acceptance of new product offerings;
o new product and concept development by competitors;
o 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;
o the ability of franchisees to open new restaurants in
accordance with their development commitments, including the
ability of franchisees to finance restaurant development;
o delays in opening new restaurants or completing remodels;
o anticipated and unanticipated restaurant closures by us and
our franchisees;
o availability of qualified personnel to us and to our
franchisees;
o changes in government regulations;
o changes in applicable accounting policies and practices; and
o geopolitical conditions such as acts or threats of terrorism
or military conflicts.
General market fluctuations, industry factors and economic conditions, such
as economic slowdowns, recessions or interest rate changes, also could cause our
stock price to fluctuate. See 'Forward-Looking Statements.'
In addition, the stock market in general has experienced extreme volatility
that has often been unrelated to the operating performance of a particular
company. These broad market fluctuations may adversely affect the market price
of our Class A common stock and Class B common stock.
THE NOTES DO NOT RESTRICT OUR ABILITY TO INCUR ADDITIONAL DEBT OR TO TAKE
OTHER ACTIONS THAT COULD NEGATIVELY IMPACT HOLDERS OF THE NOTES.
We are not restricted under the terms of the notes from incurring additional
indebtedness, including secured debt. In addition, the limited covenants
applicable to the notes do not require us to achieve or maintain any minimum
financial results relating to our financial position or results of operations.
Our ability to recapitalize, incur additional debt and take a number of other
actions that are not limited by the terms of the notes could have the effect of
diminishing our ability to make payments on the notes when due.
19
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus or incorporated by
reference into this prospectus are 'forward-looking statements' that involve
risks, uncertainties and assumptions with respect to us, including some
statements concerning the transactions described in this prospectus, future
results, plans, goals and other events which have not yet occurred. These
statements are intended to qualify for the safe harbors from liability provided
by Section 27A of the Securities Act and Section 21E of the Exchange Act. You
can find many (but not all) of these statements by looking for words like
'will,' 'may,' 'believes,' 'expects,' 'anticipates,' 'forecast,' 'future,'
'intends,' 'plans' and 'estimates' and for similar expressions.
These forward-looking statements are based on our current expectations,
speak only as of the date of this prospectus 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 Securities Litigation Reform Act of 1995. 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 in this prospectus. Such factors include, but are not limited to, the
following:
o Competition, including pricing pressures, the potential
impact of competitors' new units on sales by Arby's
restaurants and consumers' perceptions of the relative
quality, variety and value of the food products offered;
o Success of operating initiatives;
o Development and operating costs;
o Advertising and promotional efforts;
o Brand awareness;
o The existence or absence of positive or adverse publicity;
o Market acceptance of new product offerings;
o New product and concept development by competitors;
o 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;
o The business and financial viability of key franchisees;
o Availability, location and terms of sites for restaurant
development by us and our franchisees;
o The ability of franchisees to open new restaurants in
accordance with their development commitments, including the
ability of franchisees to finance restaurant development;
o Delays in opening new restaurants or completing remodels;
o Anticipated and unanticipated restaurant closures by us and
our franchisees;
o The ability to identify, attract and retain potential
franchisees with sufficient experience and financial
resources to develop and operate Arby's restaurants;
o Changes in business strategy or development plans;
o Quality of our and our franchisees' management;
o Availability, terms and deployment of capital;
o Business abilities and judgment of our and our franchisees'
personnel;
o Availability of qualified personnel to us and to our
franchisees;
o Labor and employee benefit costs;
20
o Availability and cost of energy, raw materials, ingredients,
commodities (including beef) and supplies;
o The potential impact that interruptions in the distribution
of supplies of food and other products to Arby's restaurants
could have on sales at our restaurants and the royalties
that we receive from franchisees;
o Availability and cost of workers' compensation and general
liability premiums and claims experience;
o Changes in national, regional and local economic, business
or political conditions in the countries and other
territories in which we and our franchisees operate;
o Changes in government regulations, including franchising
laws, accounting standards, environmental laws, minimum wage
rates and taxation requirements;
o Changes in applicable accounting policies and practices;
o The costs, uncertainties and other effects of legal,
environmental and administrative proceedings;
o The impact of general economic conditions on consumer
spending, including a slower consumer economy, and the
effects of war or terrorist activities;
o Adverse weather conditions;
o Our ability to identify appropriate acquisition targets in
the future and to successfully integrate any future
acquisitions into our existing operations; and
o Other risks and uncertainties referred to in this prospectus
and in our other current and periodic filings with the SEC,
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 result 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.
21
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges or the
amounts by which our earnings were insufficient to cover fixed charges for the
periods indicated:
HISTORICAL PRO FORMA
--------------------------------------------------------------- ---------
YEAR ENDED
---------------------------------------------------------------------------
DECEMBER 29,
JANUARY 3, JANUARY 2, DECEMBER 31, DECEMBER 30, -------------------
1999 2000 2000 2001 2002 2002
---- ---- ---- ---- ---- ----
(IN THOUSANDS EXCEPT RATIOS)
Ratio of earnings to fixed
charges................... 1.51 7.09 1.78 1.55
---- ---- ---- ----
---- ---- ---- ----
Amount by which earnings
were insufficient to cover
fixed charges............. $16,940 $36,046
------- -------
------- -------
The following table sets forth the amounts by which our earnings were
insufficient to cover fixed charges for the periods indicated:
HISTORICAL PRO FORMA
------------------------------- ---------
NINE MONTHS ENDED
----------------------------------------------------
SEPTEMBER 28,
SEPTEMBER 29, ---------------------------
2002 2003 2003
---- ---- ----
(IN THOUSANDS)
$16,294 $3,055 $ 6,787
------- ------ -------
------- ------ -------
The ratio of earnings to fixed charges is computed by dividing fixed charges
into income (loss) from continuing operations before income taxes and minority
interests, as adjusted, plus fixed charges. Income (loss) from continuing
operations before income taxes and minority interests has been adjusted to
exclude equity in earnings (losses) of equity investees and to include any
distributions of earnings from equity investees. Fixed charges consist of
(i) interest on all indebtedness, including amortization of deferred financing
costs and original issue discount relating to outstanding long-term debt, and
(ii) the interest component of rental payments, which is deemed for this purpose
to be approximately one-third of rent expense.
USE OF PROCEEDS
The selling securityholders will receive all of the net proceeds from the
sale of the notes and our Class A common stock and Class B common stock issuable
upon conversion of the notes. We will not receive any of the proceeds from the
sale of any of these securities.
22
PRICE RANGE OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK
On August 11, 2003, our board of directors created out of our authorized but
unissued shares of Class B common stock, par value $.10 per share, the Class B
common stock and declared the Stock Dividend, consisting of two shares of
Class B common stock for each share of Class A common stock outstanding as of
the close of business on the August 21, 2003 record date. The Stock Dividend was
paid on September 4, 2003 to holders of record of the Class A common stock at
the close of business on the record date.
As a result of the Stock Dividend, holders of the notes will be entitled to
receive upon conversion of the notes, in addition to shares of Class A common
stock, the number of shares of Class B common stock that the holder would have
been entitled to receive had the holder converted its notes immediately prior to
the record date for the Stock Dividend. We have reserved an aggregate of
8,750,000 shares of Class B common stock for delivery to the holders of the
notes upon conversion thereof. See 'Description of the Notes -- Conversion of
Notes.'
Our Class A common stock is traded on the NYSE under the ticker symbol
'TRY.' The high and low of our Class A common stock sales prices for the periods
indicated, after giving effect to the Stock Dividend, were as follows:
HIGH LOW
------ ------
FISCAL 2003
First Quarter........................................... $ 8.28 $ 7.38
Second Quarter.......................................... $ 8.88 $ 7.72
Third Quarter........................................... $10.43 $ 8.35
Fourth Quarter (through December 1, 2003)............... $12.08 $ 9.60
FISCAL 2002
First Quarter........................................... $ 8.45 $ 7.07
Second Quarter.......................................... $ 8.46 $ 7.81
Third Quarter........................................... $ 8.12 $ 6.57
Fourth Quarter.......................................... $ 8.26 $ 6.48
FISCAL 2001
First Quarter........................................... $ 7.84 $ 6.90
Second Quarter.......................................... $ 7.78 $ 7.03
Third Quarter........................................... $ 7.81 $ 6.42
Fourth Quarter.......................................... $ 7.39 $ 6.60
As of November 20, 2003, there were approximately 3,524 holders of record of
our Class A common stock 3,477 and holders of record of our Class B common
stock, in each case including nominees for an indeterminate number of beneficial
owners.
Our Class B common stock began trading regular way on the NYSE on
September 4, 2003 under the ticker symbol 'TRY.B.' The high and low of our
Class B common stock sales prices for the periods indicated were as follows:
HIGH LOW
---- ---
FISCAL 2003
Third Quarter (beginning September 4, 2003)............. $11.50 $10.18
Fourth Quarter (through December 1, 2003)............... $12.28 $10.10
DIVIDEND POLICY
We did not pay any dividends on our Class A common stock in 2001 or 2002. On
August 11, 2003, our board of directors declared an initial regular quarterly
cash dividend of $0.065 per share on the Class A common stock and $0.075 per
share on the Class B common stock, which were paid on September 25, 2003 to
stockholders of record at the close of business on September 15, 2003. As a
result, each stockholder holding one share of Class A common stock and two
shares of Class B common stock on September 15, 2003 received a combined cash
dividend of $0.215 on
23
such shares on September 25, 2003. On November 20, 2003, our board of directors
declared a regular quarterly cash dividend of $0.065 per share on the Class A
common stock and $0.075 per share on the Class B common stock, which are to be
paid on December 16, 2003 to stockholders of record at the close of business on
December 2, 2003.
The declaration of future dividends is subject to the discretion of our
board of directors, which may from time to time review whether to declare
dividends in light of all of the then existing relevant facts and circumstances.
While we currently expect that our board of directors will continue to declare
and pay quarterly cash dividends, there can be no assurance that such dividends
will be declared or paid in any subsequent quarters, or of the amount or timing
of such dividends, if any.
In addition, under the terms of the indenture relating to the indebtedness
issued in the Arby's securitization and the agreements relating to debt issued
by Sybra, there are restrictions on the ability of certain of our subsidiaries
to pay dividends or advances to us. The ability of any of our subsidiaries to
pay cash dividends or advances to us is also dependent upon the respective
abilities of such entities to achieve sufficient cash flows after satisfying
their respective cash requirements, including debt service, to enable the
payment of such dividends or the making of such loans or advances. See 'Risk
Factors -- Risks Relating to the Notes, our Class A Common Stock and Class B
common stock -- We are a holding company and depend on dividends of and
distributions from our subsidiaries and our cash and cash equivalents to meet
our obligations, including our obligations under the notes.'
24
CAPITALIZATION
Our unaudited consolidated capitalization as of September 28, 2003 in the
following table is derived from our unaudited condensed consolidated financial
statements included in our Quarterly Report on Form 10-Q for the quarter ended
September 28, 2003, which is incorporated by reference in this prospectus. You
should read all of this information in conjunction with those condensed
consolidated financial statements and other financial information included in or
incorporated by reference in this prospectus.
SEPTEMBER 28,
2003
--------------
(IN THOUSANDS)
Current portion of long-term debt........................... $ 35,102
--------
Non-current portion of long-term debt:
7.44% insured securitization notes having expected
repayments through 2011, net of unamortized original
issue discount of $27,000............................. 217,576
5% Convertible Notes due 2023 redeemable at our option
commencing May 20, 2010 and at the option of the
holders on May 15, 2010, 2015 and 2020................ 175,000
Leasehold notes due through 2021........................ 65,981
Secured bank term loan due through 2008................. 12,640
8.95% secured promissory note due through 2006.......... 9,952
Equipment notes due through 2009........................ 4,031
Mortgage notes due through 2018......................... 3,106
Mortgage notes related to restaurants sold in 1997 due
through 2016.......................................... 2,386
Capitalized lease obligations........................... 1,242
Other................................................... 391
--------
Total non-current portion of long-term debt......... 492,305
--------
Stockholders' equity........................................ 294,037
--------
Total capitalization................................ $821,444
--------
--------
STOCK REPURCHASE PROGRAM
On January 18, 2001, our management was authorized, when and if market
conditions warrant, and to the extent legally permitted, to purchase from time
to time up to an aggregate of $50 million worth of our Class A common stock
pursuant to a $50 million stock repurchase program that was scheduled to end on
January 18, 2003. In January 2003, the term of the stock repurchase program was
extended until January 18, 2004 and the amount available under the stock
repurchase program was replenished to permit us to repurchase up to a total of
$50 million worth of our Class A common stock on or after January 18, 2003 (in
addition to the $10.5 million previously spent under the program). In connection
with the sale of the notes to the initial purchaser, we repurchased 1.5 million
shares of our Class A common stock under our stock repurchase program for an
aggregate purchase price of $41.7 million. On June 3, 2003, the term of the
stock repurchase program was extended until January 18, 2005 and the amount
available under the stock repurchase program was replenished to permit us to
repurchase up to a total of $50 million worth of our Class A common stock on or
after June 3, 2003. On August 11, 2003, the stock repurchase program was amended
to also permit us to use the $50 million to repurchase shares of our Class B
common stock following the issuance of the Class B common stock on September 4,
2003. We have not repurchased any shares of our Class A common stock or Class B
common stock pursuant to the stock repurchase program since June 3, 2003 through
November 20, 2003. We cannot assure you that we will repurchase any additional
shares pursuant to this stock repurchase program.
25
TRIARC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
The following unaudited pro forma condensed consolidated statements of
operations for the year ended December 29, 2002 and for the nine-month period
ended September 28, 2003 of Triarc Companies, Inc. ('Triarc' and, collectively
with its subsidiaries, the 'Company') have been prepared by adjusting those
financial statements, as derived, reclassified, condensed and retroactively
adjusted with respect to loss per share from the audited consolidated income
statement in the Company's Annual Report on Form 10-K (the 'Form 10-K') for the
year ended December 29, 2002 and from the unaudited condensed consolidated
statement of operations in the Company's Quarterly Report on Form 10-Q (the
'Form 10-Q') for the nine-month period ended September 28 2003, both
incorporated by reference in this prospectus. The adjustments to the unaudited
pro forma condensed consolidated statement of operations for the nine-month
period ended September 28, 2003 represent adjustments for the issuance (the
'Offering') on May 19, 2003 of $175,000,000 of 5% convertible notes due 2023
(the 'Notes') and the related use of proceeds. The adjustments to the unaudited
pro forma condensed consolidated statement of operations for the year ended
December 29, 2002 reflect first, the acquisition of Sybra, Inc. ('Sybra') for
$9,950,000, including estimated fees and expenses of $1,731,000, completed on
December 27, 2002 and second, the Offering and the related use of proceeds. The
use of proceeds consists of the repurchase on May 19, 2003 of 1,500,000 shares
of Class A common stock for treasury for $41,700,000 with the remainder of the
net proceeds held for general corporate purposes. The 1,500,000 shares of Class
A common stock are before a stock distribution (the 'Stock Distribution') on
September 4, 2003 of two shares of a newly-issued series of the Company's
previously authorized Class B common stock for each issued share of the
Company's Class A common stock. The condensed consolidated statement of
operations of Sybra for the period from December 30, 2001, the first day of
Sybra's 2002 fiscal year, to the December 27, 2002 date of the Sybra acquisition
included in the unaudited pro forma condensed consolidated statement of
operations for the year ended December 29, 2002 has been derived, reclassified
and condensed from audited financial statements of Sybra for that period, which
are not included or incorporated by reference herein.
The adjustments, as applicable, to the unaudited pro forma condensed
consolidated statements of operations for the year ended December 29, 2002 and
the nine-month period ended September 28, 2003 were determined as if the
acquisition of Sybra and the Offering and related use of proceeds had occurred
on December 31, 2001.
The unaudited pro forma condensed consolidated statements of operations
should be read in conjunction with the Company's consolidated financial
statements and management's discussion and analysis of financial condition and
results of operations contained in the Company's Form 10-K for the year ended
December 29, 2002 and the Company's Form 10-Q for the nine-month period ended
September 28, 2003.
The unaudited pro forma condensed consolidated statements of operations are
not indicative of the actual results of operations of the Company had the
transactions noted above, as applicable, occurred on December 31, 2001 or of the
future results of operations of the Company.
26
TRIARC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 29, 2002
PRO FORMA
FOR THE
PRE- ADJUSTMENTS PRO FORMA SYBRA
ACQUISITION FOR THE FOR THE ADJUSTMENTS ACQUISITION
AS PERIOD OF SYBRA SYBRA FOR THE AND THE
REPORTED SYBRA ACQUISITION ACQUISITION OFFERING OFFERING
-------- ----- ----------- ----------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Revenues:
Net sales................. $ -- $208,260 $ -- $208,260 $ -- $208,260
Royalties and franchise
and related fees........ 97,782 -- (7,465)(3) 90,317 -- 90,317
------- -------- -------- -------- ------- --------
97,782 208,260 (7,465) 298,577 -- 298,577
------- -------- -------- -------- ------- --------
Costs and expenses:
Cost of sales, excluding
depreciation and
amortization............ -- -- 158,812 (1) 149,970 -- 149,970
(7,465)(3)
(1,377)(4)
Restaurant costs and
expenses................ -- 172,721 (172,721)(1) -- -- --
Selling, general and
administrative.......... 75,893 27,870 13,909 (1) 118,644 -- 118,644
972 (2)
Depreciation and
amortization, excluding
amortization of deferred
financing costs......... 6,550 7,351 (7,351)(5) 13,705 -- 13,705
7,055 (6)
100 (7)
------- -------- -------- -------- ------- --------
82,443 207,942 (8,066) 282,319 -- 282,319
------- -------- -------- -------- ------- --------
Operating profit........ 15,339 318 601 16,258 -- 16,258
Interest expense............ (26,210) (10,676) 557 (8) (36,329) (8,750)(12) (46,022)
(943)(13)
Insurance expense related to
long-term debt............ (4,516) -- -- (4,516) -- (4,516)
Investment income, net...... 851 -- (301)(9) 550 -- 550
Costs related to proposed
business acquisitions not
consummated............... (2,238) -- -- (2,238) -- (2,238)
Loss on sale of business,
net....................... (1,218) -- -- (1,218) -- (1,218)
Other income, net........... 1,358 88 -- 1,446 -- 1,446
------- -------- -------- -------- ------- --------
Income (loss) from
continuing operations
before income taxes
and minority
interests............. (16,634) (10,270) 857 (26,047) (9,693) (35,740)
(Provision for) benefit from
income taxes.............. 3,329 (1,593) (714)(10) 6,120 3,489 (14) 9,609
972 (2)
4,126 (11)
Minority interests in loss
of a consolidated
subsidiary................ 3,548 -- -- 3,548 -- 3,548
------- -------- -------- -------- ------- --------
Income (loss) from
continuing
operations............ $(9,757) $(11,863) $ 5,241 $(16,379) $(6,204) $(22,583)
------- -------- -------- -------- ------- --------
------- -------- -------- -------- ------- --------
Basic and diluted loss from
continuing operations per
share of Class A common
stock and Class B common
stock(15)................. $ (.16) $ (.40)
------- --------
------- --------
27
TRIARC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 28, 2003
AS ADJUSTMENTS FOR PRO FORMA FOR
REPORTED THE OFFERING THE OFFERING
-------- ------------ ------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Revenues:
Net sales...................................... $150,988 $ -- $150,988
Royalties and franchise and related fees....... 68,181 -- 68,181
-------- -------- --------
219,169 -- 219,169
-------- -------- --------
Costs and expenses:
Cost of sales, excluding depreciation and
amortization................................. 112,139 -- 112,139
Selling, general and administrative............ 82,236 -- 82,236
Depreciation and amortization, excluding
amortization of deferred financing costs..... 10,176 -- 10,176
-------- -------- --------
204,551 -- 204,551
-------- -------- --------
Operating profit........................... 14,618 -- 14,618
Interest expense................................... (27,857) (3,366)(12) (31,589)
(366)(13)
Insurance expense related to long-term debt........ (3,163) -- (3,163)
Investment income, net............................. 10,884 -- 10,884
Gain related to proposed business acquisition not
consummated...................................... 2,064 -- 2,064
Other income, net.................................. 1,424 -- 1,424
-------- -------- --------
Loss before income taxes and minority
interests................................ (2,030) (3,732) (5,762)
(Provision for) benefit from income taxes.......... (985) 1,344 (14) 359
Minority interests in loss of a consolidated 112 -- 112
subsidiary.......................................
-------- -------- --------
Net loss................................... $ (2,903) $ (2,388) $ (5,291)
-------- -------- --------
-------- -------- --------
Basic and diluted loss per share of Class A common
stock and Class B common stock(15):.............. $ (.05) $ (.09)
-------- --------
-------- --------
28
TRIARC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
RECLASSIFICATION OF SYBRA PRE-ACQUISITION CONSOLIDATED INCOME STATEMENT
(1) Reclassify restaurant costs and expenses to 'Cost of sales' or 'Selling,
general and administrative,' as appropriate.
(2) Reclassify state income taxes relating to certain restructuring costs which
are reported net of state taxes to '(Provision for) benefit from income
taxes.'
ACQUISITION OF SYBRA PRO FORMA ADJUSTMENTS
(3) To reflect the elimination in consolidation of royalty revenues from Sybra
prior to the date of the Sybra Acquisition (the 'Acquisition Date').
(4) To reflect an adjustment to rent expense for the allocation of unfavorable
lease liabilities recorded in the Sybra Acquisition over the remaining
lives of the respective leases.
(5) To reverse Sybra's reported depreciation and amortization through the
Acquisition Date.
(6) To record depreciation and amortization of the tangible and intangible
assets recorded in the Sybra acquisition over the remaining respective
useful lives of the assets.
(7) To record additional amortization of Sybra computer software costs through
the Acquisition Date which had been amortized over 5 years to conform with
the estimated useful life of 3 years for amortization of computer software
costs used by the Company.
(8) To reverse interest expense associated with the $5,525,000 principal amount
of Sybra's long-term debt which was repaid on December 27, 2002 in
connection with the acquisition of Sybra.
(9) To reverse interest income on the $16,293,000 of cash and cash equivalents
used by Triarc in the Sybra acquisition consisting of the $9,950,000
purchase price and $6,343,000 of principal and accrued interest payments on
Sybra debt made on December 27, 2002.
(10) To reflect the income tax provision on the net effect of the above
adjustments at the incremental Federal and state income tax rates of Sybra
and Triarc, as applicable, of 38.6% and 36%, respectively.
(11) To reflect the Federal income tax benefit of Sybra's net loss. Sybra had
provided a valuation allowance for that benefit in the pre-acquisition
period since it was unlikely that Sybra could realize that benefit.
However, if Sybra had been acquired on December 31, 2001, the Company would
not have provided a valuation allowance for the Federal income tax benefit
of Sybra's net loss on a consolidated basis.
OFFERING AND RELATED USE OF PROCEEDS PRO FORMA ADJUSTMENTS
(12) To record interest expense on the Notes at 5%.
(13) To record amortization under the interest rate method of the $6,600,000 of
estimated deferred financing costs associated with the issuance of the
notes through the earliest date the holders of the Notes can require the
Company to repurchase them.
(14) To reflect the income tax benefit of the above adjustments at Triarc's
incremental Federal and state income tax rate of 36%.
(15) The number of shares used to calculate the as reported basic and diluted
loss per share of (a) Class A common stock were 20,446,000 for the year
ended December 29, 2002 and 20,072,000 for the nine-month period ended
September 28, 2003 and (b) Class B common stock were 40,892,000 for the
year ended December 29, 2002 and 40,144,000 for the nine-month period ended
September 28, 2003. The shares used on a pro forma basis for the Sybra
29
acquisition, as applicable, and the Offering to calculate the loss per
share of (a) Class A common stock were 18,946,000 for the year ended
December 29, 2002 and 19,303,000 for the nine-month period ended
September 28, 2003 and (b) Class B common stock were 37,892,000 for the
year ended December 29, 2002 and 38,606,000 for the nine-month period ended
September 28, 2003. These shares reflect the retroactive effect of the
Stock Distribution. The shares used to calculate pro forma loss per share
reflect the pro forma effect of the 1,500,000 shares of the Company's
Class A common stock and 3,000,000 shares of Class B common stock, as
retroactively adjusted for the Stock Distribution, acquired for treasury in
connection with the Offering as if such shares had been repurchased on
December 31, 2001. The as reported and pro forma diluted loss per share of
Class A and Class B common stock are the same as the respective basic loss
per share for the year ended December 29, 2002 and the nine-month period
ended September 28, 2003 since the effect of all potentially dilutive
securities, including the effect of potential common shares from an assumed
conversion of the Notes, would have been antidilutive.
30
DESCRIPTION OF THE NOTES
The notes were issued under an indenture, as amended, between us and
Wilmington Trust Company, as trustee. The notes and the shares issuable upon
conversion of the notes are covered by a registration rights agreement. The
notes, the indenture and the registration rights agreement are governed by the
law of the State of New York. Copies of the indenture and the registration
rights agreement have been filed with the SEC as exhibits to the registration
statement of which this prospectus is a part.
The following description is a summary of the material provisions of the
notes, the indenture and the registration rights agreement. It does not purport
to be complete. This summary is subject to and is qualified by reference to all
the provisions of the indenture and the registration rights agreement, including
the definitions of certain terms used in the indenture and the registration
rights agreement. Wherever particular provisions or defined terms of the
indenture or form of note are referred to, these provisions or defined terms are
incorporated in this prospectus by reference.
As used in this 'Description of the Notes' section, references to 'Triarc,'
'the company,' 'we,' 'our' or 'us' refer solely to Triarc Companies, Inc. and
not to our subsidiaries.
GENERAL
The notes are our unsecured and unsubordinated debt and rank on a parity
with all of our other existing and future unsecured and unsubordinated debt and
prior to all of our subordinated debt. The notes are convertible into Class A
common stock and Class B common stock as described under 'Conversion of Notes.'
We issued $175,000,000 aggregate principal amount of the notes on May 19,
2003. We issued the notes only in denominations of $1,000 and multiples of
$1,000. The notes will mature on May 15, 2023 unless earlier converted, redeemed
or repurchased.
Neither we nor any of our subsidiaries are subject to any financial
covenants under the indenture. In addition, neither we nor any of our
subsidiaries are restricted under the indenture from paying dividends, incurring
debt, or issuing or repurchasing our securities. You are not afforded protection
under the indenture in the event of a highly leveraged transaction or a change
in control of us except to the extent described below under 'Repurchase at
Option of the Holder Upon a Fundamental Change.'
The notes bear interest at an annual rate of 5%. We will pay interest on
May 15 and November 15 of each year, beginning November 15, 2003, to record
holders at the close of business on the preceding May 1 and November 1, as the
case may be, except interest payable upon redemption or repurchase will be paid
to the person to whom principal is payable, unless the redemption date or
repurchase date, as the case may be, is an interest payment date.
We will maintain an office for the payment of interest, which shall
initially be an office or agency of the trustee. We may pay interest either:
o by check mailed to your address as it appears in the note
register, provided that if you are a holder with an
aggregate principal amount in excess of $2 million, you
shall be paid, at your written election, by wire transfer in
immediately available funds; or
o by transfer to an account maintained by you in the United
States.
However, payments to The Depository Trust Company, New York, New York, which
we refer to as DTC, will be made by wire transfer of immediately available funds
to the account of DTC or its nominee. Interest will be computed on the basis of
a 360-day year composed of twelve 30-day months.
RANKING
The notes are our general unsecured and unsubordinated obligations and rank
equally in right of payment with all our existing and future unsecured and
unsubordinated obligations. The notes are unsecured and thus rank junior to all
our secured obligations to the extent of the value of the
31
collateral securing such secured obligation. As of September 28, 2003, we had
approximately $16 million of total secured obligations. The notes are also
effectively subordinated to all liabilities of our subsidiaries. As of
September 28, 2003, our subsidiaries had total liabilities of $422 million, not
including contingent liabilities or intercompany indebtedness.
CONVERSION OF NOTES
You may convert any of your notes, in whole or in part, into a combination
of our Class A common stock and Class B common stock prior to the close of
business on the final maturity date of the notes, subject to prior redemption or
repurchase of the notes, only under the following circumstances:
o upon satisfaction of one of two market price conditions;
o upon satisfaction of one of two trading price conditions;
o upon notice of redemption; or
o upon specified corporate transactions.
The number of shares of Class A common stock and Class B common stock you
will receive upon conversion of your notes will be determined by multiplying the
number of $1,000 principal amount notes you convert by the combined conversion
rate on the date of conversion. You may convert your notes in part so long as
such part is $1,000 principal amount or an integral multiple of $1,000. The
initial combined conversion rate is equal to 25 shares of our Class A common
stock and 50 shares of our Class B common stock per $1,000 principal amount of
notes, subject to adjustment as described below, which represents an initial
conversion price of $40 for every one share of Class A common stock and two
shares of Class B common stock.
If we call notes for redemption, you may convert the notes only until the
close of business on the business day immediately preceding the redemption date
unless we fail to pay the redemption price. If you have submitted your notes for
redemption upon a fundamental change, you may convert your notes only if you
withdraw your redemption election. Similarly, if you exercise your option to
require us to repurchase your notes other than upon a fundamental change, those
notes may be converted only if you withdraw your election to exercise your
option in accordance with the terms of the indenture.
Upon conversion of notes, a holder will not receive any cash payment of
interest (unless such conversion occurs between a regular record date and the
interest payment date to which it relates). Our delivery to the holder of the
full number of shares of our Class A common stock and Class B common stock into
which the note is convertible, together with any cash payment for such holder's
fractional shares of Class A common stock or Class B common stock, plus either
cash or a combination of cash and shares of Class A common stock in lieu of the
full number of shares of Class A common stock into which the note is
convertible, will be deemed to satisfy our obligation to:
o pay the principal amount of the note; and
o pay accrued but unpaid interest, attributable to the period
from the most recent interest payment date through the
conversion date.
Notwithstanding the above, if notes are converted after a record date but
prior to the next succeeding interest payment date, holders of such notes at the
close of business on the record date will receive the interest payable on such
notes on the corresponding interest payment date notwithstanding the conversion.
Such notes, upon surrender for conversion, must be accompanied by funds equal to
the amount of interest payable on the notes so converted; provided that no such
payment need be made if (1) we have specified a redemption date that is after a
record date and prior to the next interest payment date, (2) we have specified a
repurchase date following a fundamental change that is during such period or (3)
only to the extent of overdue interest, any overdue interest exists at the time
of conversion with respect to such note.
32
CONVERSION UPON SATISFACTION OF ONE OF TWO MARKET PRICE CONDITIONS
You may surrender your notes for conversion into our Class A common stock
and Class B common stock prior to close of business on the maturity date during
any fiscal quarter commencing after June 29, 2003 if the closing sale price of
our Class A common stock exceeds 120% of the conversion price for at least 20
trading days in the 30 consecutive trading days ending on the last trading day
of the preceding fiscal quarter.
You may also surrender your notes for conversion into our Class A common
stock and Class B common stock prior to close of business on the maturity date
during any fiscal quarter commencing after June 29, 2003 if the combined closing
sale price of one share of our Class A common stock and two shares of our
Class B common stock exceeds 120% of the conversion price for at least 20
trading days in the 30 consecutive trading days ending on the last trading day
of the preceding fiscal quarter.
The 'closing sale price' of our Class A common stock or Class B common stock
on any date means the closing per share sale price (or if no closing sale price
is reported, the average of the bid and ask prices or, if more than one in
either case, the average of the average bid and the average ask prices) of the
Class A common stock or Class B common stock, as applicable, on such date as
reported in composite transactions for the principal United States securities
exchange on which shares of our Class A common stock or Class B common stock, as
applicable, are traded or, if the shares of our Class A common stock or Class B
common stock, as the case may be, are not listed on a United States national or
regional securities exchange, as reported by the Nasdaq System or by the
National Quotation Bureau Incorporated.
CONVERSION UPON SATISFACTION OF ONE OF TWO TRADING PRICE CONDITIONS
You may surrender your notes for conversion into our Class A common stock
and Class B common stock prior to maturity during the five business day period
after any ten consecutive trading day period in which the 'trading price' per
$1,000 principal amount of notes, as determined following a request by a holder
of notes in accordance with the procedures described below, for each day of that
period was less than 95% of the product of the closing sale price of our Class A
common stock and the number of shares of Class A common stock issuable upon
conversion of $1,000 principal amount of notes. However, if on the date of any
conversion pursuant to this trading price condition that is on or after May 15,
2018, the closing sale price of our Class A common stock is greater than the
conversion price, then you will receive, in lieu of the Class A common stock
otherwise deliverable upon conversion, cash, Class A common stock or a
combination thereof, at our option, with a value equal to the principal amount
of your notes plus accrued and unpaid interest, as of the conversion date
('Principal Value Conversion'). If you surrender your notes for conversion and
it is a Principal Value Conversion, we will notify you by the second trading day
following the date of conversion whether we will pay you all or a portion of the
principal amount plus accrued and unpaid interest in cash, Class A common stock
or a combination thereof, and in what percentage. Any Class A common stock
delivered upon a Principal Value Conversion will be valued at the greater of the
conversion price on the conversion date and the applicable stock price as of the
conversion date. We will pay you any portion of the principal amount plus
accrued and unpaid interest to be paid in cash and deliver Class A common stock
no later than the third business day following the determination of the
applicable stock price.
You may also surrender your notes for conversion into our Class A common
stock and Class B common stock prior to maturity during the five business day
period after any ten consecutive trading day period in which the 'trading price'
per $1,000 principal amount of notes, as determined following a request by a
holder of notes in accordance with the procedures described below, for each day
of that period was less than 95% of the product of the combined closing sale
price of one share of our Class A common stock and two shares of our Class B
common stock and the number of shares of Class A common stock issuable upon
conversion of $1,000 principal amount of notes.
33
The 'trading price' of the notes on any date of determination means the
average of the secondary market bid quotations obtained by the trustee for
$5,000,000 principal amount of the notes at approximately 3:30 p.m., New York
City time, on such determination date from three independent nationally
recognized securities dealers we select; provided that if three such bids cannot
reasonably be obtained by the trustee, but two such bids are obtained, then the
average of the two bids shall be used, and if only one such bid can reasonably
be obtained by the trustee, that one bid shall be used. If the trustee cannot
reasonably obtain at least one bid for $5,000,000 principal amount of the notes
from a nationally recognized securities dealer then the trading price per $1,000
principal amount of notes will be deemed to be less than 95% of the product of
the 'closing sale price' of our Class A common stock and the number of shares of
Class A common stock issuable upon conversion of $1,000 principal amount of
notes.
In connection with any conversion upon satisfaction of the above trading
price conditions, the trustee shall have no obligation to determine the trading
price of the notes unless we have requested such determination, and we shall
have no obligation to make such request unless you provide us with reasonable
evidence that the trading price per $1,000 principal amount of notes would be
less than 95% of the product of the closing sale price of our Class A common
stock and the number of shares of Class A common stock issuable upon conversion
of $1,000 principal amount of notes or less than 95% of the product of the
combined closing sale price of one share of our Class A common stock and two
shares of our Class B common stock and the number of shares of Class A common
stock issuable upon conversion of $1,000 principal amount of the notes. At such
time, we shall instruct the trustee to determine the trading price of the notes
beginning on the next trading day and on each successive trading day until the
trading price per $1,000 principal amount of notes is greater than or equal to
the 95% valuation criteria described above.
CONVERSION UPON NOTICE OF REDEMPTION
If we call notes for redemption, you may convert the notes until the close
of business on the business day immediately preceding the redemption date, after
which time your right to convert will expire unless we default in the payment of
the redemption price.
CONVERSION UPON SPECIFIED CORPORATE TRANSACTIONS
If we elect to:
o distribute to all holders of our Class A common stock
certain rights entitling them to purchase, for a period
expiring within 45 days, our Class A common stock at less
than the average closing sale price of our Class A common
stock for the 10 trading days immediately preceding the
declaration date for such distribution); or
o distribute to all holders of our Class A common stock,
assets (exclusive of cash dividends that would not cause an
adjustment to the conversion rate), debt securities or
certain rights to purchase our securities, which
distribution has a per share value exceeding 5% of the
closing sale price of our Class A common stock on the day
immediately preceding the declaration date for such
distribution;
we must notify you at least 20 days prior to the ex-dividend date for such
distribution. Once we have given such notice, you may surrender your notes for
conversion at any time until the earlier of close of business on the business
day immediately preceding the ex-dividend date or any announcement by us that
such distribution will not take place. No adjustment to your ability to convert
will be made if you will otherwise participate in the distribution without
conversion.
In addition, if we are a party to a consolidation, merger, binding share
exchange or sale of all or substantially all of our assets, in each case
pursuant to which our Class A common stock would be converted into cash,
securities or other property, you may surrender your notes for conversion at any
time from and after the date which is 15 days prior to the anticipated effective
date of the transaction until and including the date which is 15 days after the
actual date of such transaction. If we are a party to a consolidation, merger,
binding share exchange or sale of all or substantially all of our assets, in
each case pursuant to which our Class A common stock is converted into cash,
34
securities, or other property, then at the effective time of the transaction,
your right to convert a note into our Class A common stock will be changed into
a right to convert it into the kind and amount of cash, securities and other
property which you would have received if you had converted your notes
immediately prior to the transaction. If the transaction also constitutes a
fundamental change, you can require us to redeem all or a portion of your notes
as described under 'Redemption at Option of the Holder Upon a Fundamental
Change.'
CONVERSION PROCEDURES
The initial conversion rate for the notes is 25 shares of Class A common
stock and 50 shares of Class B common stock per $1,000 principal amount of notes
(equal to an initial conversion price of $40 for every one share of Class A
common stock and two shares of Class B common stock), subject to adjustment as
described below. We will not issue fractional shares of Class A common stock and
Class B common stock upon conversion of notes. Instead, we will pay cash equal
to the closing price of the Class A common stock or Class B common stock, as
applicable, on the trading day prior to the conversion date. Except as described
below, you will not receive any accrued interest or dividends upon conversion.
To convert your note into Class A common stock and Class B common stock you
must do the following (or comply with DTC procedures for doing so in respect of
your beneficial interest in notes evidenced by a global note held by DTC):
o complete and manually sign the conversion notice on the back
of the note or facsimile of the conversion notice and
deliver this notice to the conversion agent;
o surrender the note to the conversion agent;
o if required, furnish appropriate endorsements and transfer
documents;
o if required, pay all transfer or similar taxes; and
o if required, pay funds equal to interest payable on the next
interest payment date.
In lieu of delivery of shares of our Class A common stock upon conversion of
any notes, for all or any portion of the notes, we may elect to pay holders
surrendering notes an amount in cash per note (or a portion of a note) equal to
the applicable stock price multiplied by the number of shares of Class A common
stock in lieu of which cash is to be delivered. We have no such right to elect
to pay cash in lieu of delivering shares of Class B common stock. We will inform
the holders through the trustee no later than two business days following the
conversion date of our election to deliver shares of our Class A common stock or
to pay cash in lieu of delivery of the shares of Class A common stock. Shares of
our Class A common stock, Class B common stock and cash deliverable upon
conversion will be delivered through the conversion agent no later than the
third business day following the determination of the applicable stock price. If
an event of default, as described under ' -- Events of Default; Waiver and
Notice' below (other than a default in a cash payment upon conversion of the
notes), has occurred and is continuing, we may not pay cash upon conversion of
any notes or portion of the notes (other than cash for fractional shares).
The 'applicable stock price' means, in respect of a date of determination,
the average of the closing sale prices per share of Class A common stock over
the five-trading day period starting the third trading day following such date
of determination.
The date you comply with these requirements is the conversion date under the
indenture.
ADJUSTMENTS TO CONVERSION RATE -- ADJUSTMENTS TO CLASS A COMMON STOCK
We will adjust the conversion rate with respect to the number of shares of
Class A common stock issuable upon conversion of the notes if any of the
following events occurs:
o we issue common stock as a dividend or distribution on our
Class A common stock;
o we issue to all holders of Class A common stock certain
rights or warrants to purchase our Class A common stock at a
price per share that is less than the then current market
price of our Class A common stock, as defined in the
indenture;
35
o we subdivide or combine our Class A common stock;
o we distribute to all holders of our Class A common stock,
shares of our capital stock, evidences of indebtedness or
assets, including securities but excluding:
o rights or warrants specified above;
o dividends or distributions specified above; and
o cash distributions.
o If we distribute capital stock of, or similar equity interests in,
a subsidiary or other business unit of ours, the conversion rate
will be adjusted based on the market value of the securities so
distributed relative to the market value of our Class A common
stock, in each case based on the average closing sale prices of
those securities for the 10 trading days commencing on and
including the fifth trading day after the date on which
'ex-dividend trading' commences for such distribution on the New
York Stock Exchange or such other national or regional exchange or
market on which the securities are then listed or quoted;
o we distribute cash, excluding any dividend or distribution
in connection with our liquidation, dissolution or winding
up or any cash dividend on our Class A common stock to the
extent that the aggregate percentage (calculated as the sum
of the percentages that each dividend represents of the
average last reported sale price of our Class A common stock
during the ten trading days immediately prior to the
declaration date of such dividend) of all dividends declared
on the Class A common stock during the twelve month period
through and including the applicable date of declaration
does not exceed 5%; and
o we or one of our subsidiaries makes a payment in respect of
a tender offer or exchange offer for our Class A common
stock to the extent that the cash and value of any other
consideration included in the payment per share of Class A
common stock exceeds the current market price per share of
Class A common stock on the trading day next succeeding the
last date on which tenders or exchanges may be made pursuant
to such tender or exchange offer.
To the extent that we have a rights plan in effect, upon conversion of the
notes into Class A common stock you will receive, in addition to the Class A
common stock, the rights under the rights plan unless the rights have separated
from the Class A common stock at the time of conversion, in which case the
conversion rate will be adjusted as if we distributed to all holders of our
Class A common stock, shares of our capital stock, evidences of indebtedness or
assets as described under the fourth bullet above, subject to readjustment in
the event of the expiration, termination or redemption of such rights.
In the event of:
o any reclassification of our Class A common stock;
o a consolidation, merger or combination involving us; or
o a sale or conveyance to another person or entity of all or
substantially all of our property and assets;
in which holders of our Class A common stock would be entitled to receive stock,
other securities, other property, assets or cash for their Class A common stock,
upon conversion of your notes you will be entitled to receive the same type of
consideration which you would have been entitled to receive if you had converted
the notes into our Class A common stock immediately prior to any of these
events.
You may in certain situations be deemed to have received a distribution
subject to United States federal income tax as a dividend in the event of any
taxable distribution to holders of Class A common stock or in certain other
situations requiring a conversion rate adjustment. See 'United States Federal
Income Tax Consequences.'
We may, from time to time, increase the conversion rate if our board of
directors has made a determination that this increase would be in our best
interests. Any such determination by our board will be conclusive. We will give
holders notice of any increase in the conversion rate. In
36
addition, we may increase the conversion rate if our board of directors deems it
advisable to avoid or diminish any income tax to holders of Class A common stock
resulting from any stock or rights distribution. See 'United States Income
Federal Tax Consequences.'
We will not be required to make an adjustment in the conversion rate unless
the adjustment would require a change of at least 1% in the conversion rate.
However, we will carry forward any adjustments that are less than 1% of the
conversion rate. Except as described above in this section, we will not adjust
the conversion rate for any issuance of our Class A common stock or convertible
or exchangeable securities or rights to purchase our Class A common stock or
convertible or exchangeable securities.
ADJUSTMENTS TO CONVERSION RATE -- ADJUSTMENTS TO RESERVED CLASS B COMMON
STOCK
On August 11, 2003 our board of directors declared a stock dividend (the
'Stock Dividend') on the existing Class A common stock consisting of two shares
of Class B common stock for each share of Class A common stock outstanding as of
the close of business on the August 21, 2003 record date. The Stock Dividend was
paid on September 4, 2003 to holders of record of the Class A common stock at
the close of business on the record date. Pursuant to the indenture, in lieu of
effecting an adjustment to the conversion rate, we elected to reserve shares of
Class B common stock for distribution to you upon conversion of the notes so
that you will receive upon such conversion, in addition to the shares of Class A
common stock to which you are entitled, the number of shares of Class B common
stock which you would have received if you had converted your notes immediately
prior to the record date.
We will effect an adjustment to the number of shares of reserved Class B
common stock so as to, in the reasonable judgment of our board of directors,
approximate the adjustments provided for under the indenture with respect to the
Class A common stock in the event that we take any of the following actions with
respect to the Class B common stock that would have required an adjustment to
the conversion rate if such action had been taken with respect to the Class A
common stock:
o we issue common stock as a dividend or distribution on our
Class B common stock;
o we issue to all holders of Class B common stock certain
rights or warrants to purchase our Class B common stock at a
price per share that is less than the then current market
price of our Class B common stock, as defined in the
indenture;
o we subdivide or combine our Class B common stock;
o we or one of our subsidiaries makes a payment in respect of
a tender offer or exchange offer for our Class B common
stock to the extent that the cash and value of any other
consideration included in the payment per share of Class B
common stock exceeds the current market price per share of
Class B common stock on the trading day next succeeding the
last date on which tenders or exchanges may be made pursuant
to such tender or exchange offer; or
o we distribute to all holders of our Class B common stock,
shares of our capital stock, evidences of indebtedness or
assets, including securities but excluding:
o rights or warrants specified above;
o dividends or distributions specified above; and
o cash distributions.
If we distribute capital stock of, or similar equity interests in,
a subsidiary or other business unit of ours, the conversion rate
will be adjusted based on the market value of the securities so
distributed relative to the market value of our Class B common
stock, in each case based on the average closing sale prices of
those securities for the 10 trading days commencing on and
including the fifth trading day after the date on which
'ex-dividend trading' commences for such distribution on the New
York Stock Exchange or such other national or regional exchange or
market on which the securities are then listed or quoted.
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In addition, in case we shall distribute a cash dividend on our Class B
common stock and/or our Class A common stock (other than in connection with our
liquidation, dissolution or winding up) in an amount such that the aggregate
percentage of all such dividends declared during the twelve-month period through
and including the applicable date of declaration (calculated as the sum of the
percentages that (i) two times each such dividend on one share of Class B common
stock during the period and (ii) each such dividend on one share of Class A
common stock during the period represents of the average during the ten trading
days immediately prior to the declaration date of the applicable dividend of the
combined closing sale price of one share of Class A common stock and two shares
of Class B common stock) exceeds 5%, then we will effect an adjustment to the
number of shares of reserved Class B common stock (and, if appropriate in the
reasonable judgment of our board of directors, an adjustment to the conversion
rate of the Class A common stock) so as to, in the reasonable judgment of the
our board of directors, approximate the adjustment provided for under the
indenture if such action had been taken with respect to the Class A common
stock.
Similarly, in the event of:
o any reclassification of our Class B common stock;
o a consolidation, merger or combination involving us; or
o a sale or conveyance to another person or entity of all or
substantially all of our property and assets,
in which holders of our Class B common stock would be entitled to receive stock,
other securities, other property, assets or cash for their Class B common stock,
we will take such actions with respect to the reserved Class B common stock as,
in the reasonable judgment of our board of directors, is necessary to
approximate the results that would be obtained under the indenture if such
action had been taken with respect to the Class A common stock.
You may in certain situations be deemed to have received a distribution
subject to United States federal income tax as a dividend in the event of any
taxable distribution to holders of Class B common stock or in certain other
situations requiring a conversion rate adjustment. See 'United States Federal
Income Tax Consequences.'
We may, from time to time, increase the conversion rate if our board of
directors has made a determination that this increase would be in our best
interests. Any such determination by our board will be conclusive. We will give
holders notice of any increase in the conversion rate. In addition, we may
increase the conversion rate if our board of directors deems it advisable to
avoid or diminish any income tax to holders of Class B common stock resulting
from any stock or rights distribution. See 'United States Federal Income Tax
Consequences.'
OPTIONAL REDEMPTION BY TRIARC
Beginning May 20, 2010, we have the right to redeem the notes in whole or in
part for cash at a price of 100% of the principal amount plus accrued and unpaid
interest to, but excluding, the redemption date. If the redemption date is an
interest payment date, interest shall be paid to the record holder on the
relevant record date. We are required to give notice of redemption by mail to
holders not more than 60 but not less than 30 days prior to the redemption date.
If less than all of the outstanding notes are to be redeemed, the trustee
will select the notes to be redeemed in principal amounts of $1,000 or integral
multiples of $1,000 by lot, pro rata or by another method the trustee considers
fair and appropriate. If a portion of your notes is selected for partial
redemption and you convert a portion of your notes, the converted portion will
be deemed to be of the portion selected for redemption.
We may not redeem the notes pursuant to the optional redemption provisions
of the indenture if we have failed to pay any interest on the notes and such
failure to pay is continuing. We will notify the noteholders if we redeem the
notes.
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REPURCHASE AT OPTION OF THE HOLDER
You have the right to require us to repurchase the notes for cash on May 15
of 2010, 2015 and 2020. We may also add additional dates on which you may
require us to repurchase all or a portion of your notes, however we are not
obligated to do so. We will be required to repurchase any outstanding note for
which you deliver a written repurchase notice to the paying agent. This notice
must be delivered during the period beginning at any time from the opening of
business on the date that is 20 business days prior to the repurchase date until
the close of business on the repurchase date. If a repurchase notice is given
and withdrawn during that period, we will not be obligated to repurchase the
notes listed in the notice. Our repurchase obligation will be subject to certain
additional conditions.
The repurchase price payable for a note will be equal to the principal
amount plus accrued and unpaid interest to, but excluding, the repurchase date.
Your right to require us to repurchase notes is exercisable by delivering a
written repurchase notice to the paying agent within 20 business days of the
repurchase date. The paying agent initially is the trustee.
The repurchase notice must state:
(1) if certificated notes have been issued, the note certificate numbers
(or, if your notes are not certificated, your repurchase notice must comply
with appropriate DTC procedures);
(2) the portion of the principal amount of notes to be repurchased,
which must be in $1,000 multiples; and
(3) that the notes are to be repurchased by us pursuant to the
applicable provisions of the notes and the indenture.
You may withdraw any written repurchase notice by delivering a written
notice of withdrawal to the paying agent prior to the close of business of the
repurchase date. The withdrawal notice must state:
o the principal amount of the withdrawn notes;
o if certificated notes have been issued, the certificate
numbers of the withdrawn notes (or, if your notes are not
certificated, your withdrawal notice must comply with
appropriate DTC procedures); and
o the principal amount, if any, which remains subject to the
repurchase notice.
We must give notice of an upcoming repurchase date to all noteholders not
less than 20 business days prior to the repurchase date at their addresses shown
in the register of the registrar. We will also give notice to beneficial owners
as required by applicable law. This notice will state, among other things:
o the repurchase price; and
o the procedures that holders must follow to require us to
repurchase their notes.
Payment of the repurchase price for a note for which a repurchase notice has
been delivered and not withdrawn is conditioned upon book-entry transfer or
delivery of the note, together with necessary endorsements, to the paying agent
at its office, at any time after delivery of the repurchase notice. Payment of
the repurchase price for the note will be made promptly following the later of
the repurchase date and the time of book-entry transfer or delivery of the note.
If the paying agent holds money sufficient to pay the repurchase price of the
note on the business day following the repurchase date, then, on and after the
date:
o the note will cease to be outstanding;
o interest will cease to accrue; and
o all other rights of the holder will terminate.
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This will be the case whether or not book-entry transfer of the note has
been made or the note has been delivered to the paying agent, and all other
rights of the note holder will terminate, other than the right to receive the
repurchase price upon delivery of the note.
Our ability to repurchase notes with cash may be limited by the terms of our
then-existing borrowing agreements. Even though we become obligated to
repurchase any outstanding note on a repurchase date, we may not have sufficient
funds to pay the repurchase price on that repurchase date. See 'Risk
Factors -- We may not have the financial resources to repurchase the notes upon
the occurrence of a fundamental change or at the option of a holder.'
We will comply with the provisions of Rule 13e-4 and any other tender offer
rules under the Exchange Act that may be applicable in connection with any offer
by us to repurchase the notes.
REDEMPTION AT OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE
If a fundamental change of Triarc occurs at any time prior to the maturity
of the notes, you may require us to redeem your notes, in whole or in part, on a
repurchase date that is 30 days after the date of our notice of the fundamental
change. The notes will be redeemable in integral multiples of $1,000 principal
amount. We will redeem the notes at a price equal to 100% of the principal
amount to be redeemed, plus accrued interest to, but excluding, the repurchase
date. If the repurchase date is an interest payment date, we will pay interest
to the record holder on the relevant record date.
We may, at our option, elect to pay the redemption price in shares of our
Class A common stock or, in the case of a merger in which we are not the
surviving corporation, common stock or American Depositary Shares of the
surviving corporation or its direct or indirect parent corporation
(collectively, 'applicable stock'), cash or a combination of applicable stock
and cash. The number of shares of applicable stock a holder will receive will
equal the relevant amount of the repurchase price to be paid in applicable stock
divided by 95% of the closing sale price of the applicable stock for the five
trading days ending on the third business day prior to the applicable repurchase
date. We will not, however, deliver fractional shares in repurchases using
shares of applicable stock as consideration. Note holders who would otherwise be
entitled to receive fractional shares will instead receive cash in an amount
equal to the market price of a share of the applicable stock multiplied by such
fraction. We may not pay the repurchase price in applicable stock or a
combination of applicable stock and cash, unless we satisfy certain conditions
prior to the repurchase date as provided in the indenture, including:
o registration of the shares of applicable stock to be issued
upon repurchase under the Securities Act and the Exchange
Act, if required;
o qualification or registration of the shares of applicable
stock to be issued upon repurchase under applicable state
securities laws, if necessary, or the availability of an
exemption therefrom; and
o listing of the applicable stock on a United States national
securities exchange or quoted on an inter-dealer quotation
system of any registered United States national securities
association.
Within 10 days after the occurrence of a fundamental change, we are required
to give you notice of the fundamental change, the repurchase date, and whether
the redemption price will be paid in cash, applicable stock or a combination
thereof. We are also required to deliver to the trustee a copy of the
fundamental change notice.
To exercise the repurchase right, you must deliver prior to the close of
business on the second business day immediately preceding the repurchase date
written notice to the trustee of your exercise of your redemption right,
together with the notes with respect to which your right is being exercised. You
may withdraw this notice by delivering to the trustee a notice of withdrawal
prior to the close of business on the business day immediately preceding the
repurchase date. We will promptly pay the redemption price for notes surrendered
for redemption following the repurchase date.
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Because the market price of the applicable stock will be determined prior to
the applicable repurchase date, note holders bear the market risk that the
applicable stock will decline in value between the date the market price is
calculated and the repurchase date.
'Fundamental Change' is any transaction or event (whether by means of an
exchange offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise) in connection with which all or
substantially all of our Class A common stock is exchanged for, converted into,
acquired for or constitutes solely the right to receive, consideration which is
not all or substantially all common stock that:
o is listed on, or immediately after the transaction or event
will be listed on, a United States national securities
exchange, or
o is approved, or immediately after the transaction or event
will be approved, for quotation on the Nasdaq National
Market or any similar United States system of automated
dissemination of quotations of securities prices.
We will comply with any applicable provisions of Rule 13e-4 and any other
tender offer rules under the Exchange Act in the event of a fundamental change.
These fundamental change redemption rights could discourage a potential
acquirer. However, this fundamental change redemption feature is not the result
of management's knowledge of any specific effort to obtain control of us by
means of a merger, tender offer or solicitation, or part of a plan by management
to adopt a series of anti-takeover provisions. The term 'fundamental change' is
limited to specified transactions and may not include other events that might
adversely affect our financial condition or business operations. Our obligation
to offer to redeem the notes upon a fundamental change would not necessarily
afford you protection in the event of a highly leveraged transaction,
reorganization, merger or similar transaction involving us.
We may be unable to redeem the notes in the event of a fundamental change.
If a fundamental change were to occur, we may not have enough funds to pay the
redemption price in cash for all tendered notes. Our current debt instruments
contain, and any future credit agreements or other agreements relating to our
indebtedness may contain, provisions prohibiting redemption of the notes under
certain circumstances, or expressly prohibit our repurchase of the notes upon a
fundamental change or may provide that a fundamental change constitutes an event
of default under that agreement. If a fundamental change occurs at a time when
we are prohibited from purchasing or redeeming notes in cash, we could seek the
consent of our lenders to redeem the notes or attempt to refinance this debt or
pay in common stock if the conditions for paying in common stock are satisfied.
Our failure to redeem tendered notes for either cash or common stock would
constitute an event of default under the indenture, which might constitute a
default under the terms of our other indebtedness.
MERGER AND SALE OF ASSETS BY TRIARC
The indenture provides that we may not consolidate with or merge with or
into any other person or convey, transfer or lease its properties and assets
substantially as an entirety to another person, unless among other items:
o we are the surviving person, or the resulting, surviving or
transferee person, if other than us is organized and
existing under the laws of the United States, any state
thereof or the District of Columbia;
o the successor person assumes all of our obligations under
the notes and the indenture; and
o after giving affect to such transaction, there is no event
of default and no event which, after notice or passage of
time or both, would become an event of default.
The indenture provides that the transfer by us of all or substantially all
of our cash, cash equivalents and marketable securities of non-affiliates for
which we receive fair market value, as determined by our board of directors,
will not constitute a sale of all or substantially all of our assets.
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When such a person assumes our obligations in such circumstances, subject to
certain exceptions, we shall be discharged from all obligations under the notes
and the indenture.
EVENTS OF DEFAULT; NOTICE AND WAIVER
The following constitute events of default under the indenture:
o we fail to pay principal or premium, if any, when due upon
redemption or otherwise on the notes;
o we fail to pay any interest and liquidated damages, if any,
on the notes, when due and such failure continues for a
period of 30 days;
o we fail to provide notice of the occurrence of a fundamental
change on a timely basis;
o we fail to perform or observe any of the covenants in the
indenture for 60 days after notice; or
o certain events involving our bankruptcy, insolvency or
reorganization.
The trustee may withhold notice to the holders of the notes of any default,
except defaults in payment of principal, premium, interest or liquidated
damages, if any, on the notes. However, the trustee must consider it to be in
the interest of the holders of the notes to withhold this notice.
If an event of default occurs and continues, the trustee or the holders of
at least 25% in principal amount of the outstanding notes may declare the
principal, premium, if any, and accrued interest and liquidated damages, if any,
on the outstanding notes to be immediately due and payable. In case of certain
events of bankruptcy or insolvency involving us, the principal, premium, if any,
and accrued interest and liquidated damages, if any, on the notes will
automatically become due and payable. However, if we cure all defaults, except
the nonpayment of principal, premium, if any, interest or liquidated damages, if
any, that became due as a result of the acceleration, and meet certain other
conditions, with certain exceptions, this declaration may be cancelled and the
holders of a majority of the principal amount of outstanding notes may waive
these past defaults.
Payments of principal, premium, if any, or interest on the notes that are
not made when due will accrue interest at the annual rate of 1% above the then
applicable interest rate from the required payment date.
The holders of a majority of outstanding notes will have the right to direct
the time, method and place of any proceedings for any remedy available to the
trustee, subject to limitations specified in the indenture.
No holder of the notes may pursue any remedy under the indenture, except in
the case of a default in the payment of principal, premium, if any, or interest
on the notes, unless:
o the holder has given the trustee written notice of an event
of default;
o the holders of at least 25% in principal amount of
outstanding notes make a written request, and offer
reasonable indemnity, to the trustee to pursue the remedy;
o the trustee does not receive an inconsistent direction from
the holders of a majority in principal amount of the notes;
and
o the trustee fails to comply with the request within 60 days
after receipt.
MODIFICATION AND WAIVER
The consent of the holders of a majority in principal amount of the
outstanding notes is required to modify or amend the indenture. However, a
modification or amendment requires the consent of the holder of each outstanding
note if it would:
o extend the fixed maturity of any note;
o reduce the rate or extend the time for payment of interest
or liquidated damages of any note;
o reduce the principal amount or premium, if any, of any note;
42
o reduce any amount payable upon redemption at the option of
the holder upon a fundamental change of any note;
o adversely change our obligation to redeem any note upon a
fundamental change;
o impair the right of a holder to institute suit for payment
on any note;
o change the currency in which any note is payable;
o impair the right of a holder to convert any note;
o reduce the quorum or voting requirements under the
indenture;
o change any obligation of ours to maintain an office or
agency in the places and for the purposes specified in the
indenture;
o subject to specified exceptions, modify certain of the
provisions of the indenture relating to modification or
waiver of provisions of the indenture; or
o reduce the percentage of notes required for consent to any
modification of the indenture.
We are permitted to modify certain provisions of the indenture without the
consent of the holders of the notes.
FORM, DENOMINATION AND REGISTRATION
We issued the notes:
o in fully registered form;
o without interest coupons; and
o in denominations of $1,000 principal amount and integral
multiples of $1,000.
GLOBAL NOTE, BOOK-ENTRY FORM
The notes are currently evidenced by a global note. We have deposited the
global note with DTC and registered the global note in the name of Cede & Co. as
DTC's nominee. Except as set forth below, a global note may be transferred, in
whole or in part, only to another nominee of DTC or to a successor of DTC or its
nominee.
Beneficial interests in a global note may be held through organizations that
are participants in DTC (called 'participants'). Transfers between participants
will be effected in the ordinary way in accordance with DTC rules and will be
settled in clearing house funds. The laws of some states require that certain
persons take physical delivery of securities in definitive form. As a result,
the ability to transfer beneficial interests in the global note to such persons
may be limited.
Beneficial interests in a global note held by DTC can only be held through
participants, or certain banks, brokers, dealers, trust companies and other
parties that clear through or maintain a custodial relationship with a
participant, either directly or indirectly (called 'indirect participants'). So
long as Cede & Co., as the nominee of DTC, is the registered owner of a global
note, Cede & Co. for all purposes will be considered the sole holder of such
global note. Except as provided below, owners of beneficial interests in a
global note will:
o not be entitled to have certificates registered in their
names;
o not receive physical delivery of certificates in definitive
registered form; and
o not be considered holders of the global note.
We will pay interest on and the redemption price of a global note to Cede &
Co., as the registered owner of the global note, by wire transfer of immediately
available funds on each interest payment date or the repurchase date. Neither
we, the trustee nor any paying agent will be responsible or liable for:
o the records relating to, or payments made on account of,
beneficial ownership interests in a global note; or
o maintaining, supervising or reviewing any records relating
to the beneficial ownership interests.
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We have been informed that DTC's practice is to credit participants'
accounts on that payment date with payments in amounts proportionate to their
respective beneficial interests in the principal amount represented by a global
note as shown in the records of DTC, unless DTC has reason to believe that it
will not receive payment on that payment date. Payments by participants to
owners of beneficial interests in the principal amount represented by a global
note held through participants will be the responsibility of the participants,
as is now the case with securities held for the accounts of customers registered
in 'street name.'
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge such
interest to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interest, may be affected by the lack
of a physical certificate evidencing its interest.
Neither we, the trustee, registrar, paying agent nor conversion agent will
have any responsibility for the performance by DTC or its participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations. DTC has advised us that it will take any
action permitted to be taken by a holder of notes, including the presentation of
notes for exchange, only at the direction of one or more participants to whose
account with DTC interests in the global note are credited, and only in respect
of the principal amount of the notes represented by the global note as to which
the participant or participants has or have given such direction.
DTC has advised us that it is:
o a limited purpose trust company organized under the laws of
the State of New York, and a member of the Federal Reserve
System;
o a 'clearing corporation' within the meaning of the Uniform
Commercial Code; and
o a 'clearing agency' registered pursuant to the provisions of
Section 17A of the Exchange Act.
DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions between participants
through electronic book-entry changes to the accounts of its participants.
Participants include securities brokers, dealers, banks, trust companies and
clearing corporations and other organizations. Some of the participants or their
representatives, together with other entities, own DTC. Indirect access to the
DTC system is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
DTC has agreed to the foregoing procedures to facilitate transfers of
interests in a global note among participants. However, DTC is under no
obligation to perform or continue to perform these procedures, and may
discontinue these procedures at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
us within 90 days, we will issue notes in certificated form in exchange for
global notes.
REGISTRATION RIGHTS OF THE NOTEHOLDERS
In connection with the sale of the notes to the initial purchaser, we
entered into a registration rights agreement with the initial purchaser.
Pursuant to our obligations under the registration rights agreement, we have
filed a shelf registration statement, of which this prospectus forms a part,
with the SEC covering resale of the registrable securities. We will use
reasonable efforts to keep the shelf registration statement effective until the
earlier of:
o all of the registrable securities have been sold pursuant to
the shelf registration statement; or
o the expiration of the holding period under Rule 144(k) under
the Securities Act, or any successor provision.
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When we use the term 'registrable securities' in this section, we are
referring to the notes and the Class A common stock and Class B common stock
issuable upon conversion of the notes until the earliest of:
o the effective registration under the Securities Act and the
resale of the securities in accordance with the registration
statement;
o the expiration of the holding period under Rule 144(k) under
the Securities Act; and
o the sale to the public pursuant to Rule 144 under the
Securities Act, or any similar provision then in force, but
not Rule 144A.
We may suspend the use of the prospectus under certain circumstances
relating to pending corporate developments, public filings with the SEC and
similar events. Any suspension period shall not:
o exceed 45 days in any three-month period; or
o an aggregate of 120 days for all periods in any 12-month
period.
Notwithstanding the foregoing, we will be permitted to suspend the use of
the prospectus for up to 60 days in any 3-month period under certain
circumstances, relating to possible acquisitions, financings or other similar
transactions.
We will pay predetermined liquidated damages if this prospectus is
unavailable for periods in excess of those permitted above:
o on the notes at an annual rate equal to 0.25% for the first
90 days and 0.50% thereafter of the aggregate principal
amount of the notes outstanding during the additional period
this prospectus is unavailable; and
o on the Class A common stock and Class B common stock that
has been received upon conversion of the notes, at an annual
rate equal to 0.25% for the first 90 days and 0.50%
thereafter of an amount equal to $1,000 divided by the
conversion rate during such periods.
A holder who elects to sell registrable securities pursuant to the shelf
registration statement will be required to:
o be named as a selling securityholder in the related
prospectus;
o deliver a prospectus to purchasers; and
o be subject to the provisions of the registration rights
agreement, including indemnification provisions.
Under the registration rights agreement we will:
o pay all expenses of the shelf registration statement;
o provide each registered holder copies of the prospectus;
o notify holders when the shelf registration statement has
become effective; and
o take other reasonable actions as are required to permit
unrestricted resales of the registrable securities in
accordance with the terms and conditions of the registration
rights agreement.
In order to sell registrable securities, a holder of registrable securities
must complete and deliver a questionnaire to us prior to its intended
distribution. Upon receipt of a completed questionnaire after that time,
together with any other information we may reasonably request following the
effectiveness, we will, within 5 business days, file any amendments to the shelf
registration statement or supplements to the related prospectus as are necessary
to permit holders to deliver this prospectus to purchasers of registrable
securities, subject to our right to suspend the use of the prospectus. We will
pay the predetermined liquidated damages described above to the holder if we
fail to make the filing in the time required or, if such filing is a
post-effective amendment to the shelf registration statement required to be
declared effective under the Securities Act, if such amendment is not declared
effective within 45 days of the filing. Holders who do not complete and deliver
a questionnaire or provide the other information we may request
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will not be named as a selling securityholder in this prospectus and will not be
permitted to sell their registrable securities pursuant to the shelf
registration statement.
INFORMATION CONCERNING THE TRUSTEE
We have appointed Wilmington Trust Company, the trustee under the indenture,
as paying agent, conversion agent, note registrar and custodian for the notes.
The trustee or its affiliates may provide banking and other services to us in
the ordinary course of their business.
The indenture contains certain limitations on the rights of the trustee, if
it or any of its affiliates is then our creditor, to obtain payment of claims in
certain cases or to realize on certain property received on any claim as
security or otherwise. The trustee and its affiliates will be permitted to
engage in other transactions with us. However, if the trustee or any affiliate
continues to have any conflicting interest and a default occurs with respect to
the notes, the trustee must eliminate such conflict or resign.
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DESCRIPTION OF OUR CAPITAL STOCK
GENERAL
The following is a description of the material terms of our capital stock.
Because it is a summary, the following description is not complete and is
subject to and qualified in its entirety by reference to our certificate of
incorporation (the 'certificate of incorporation') and our by-laws.
Our authorized capital stock consists of 300,000,000 shares, of which
100,000,000 are shares of Class A common stock, 100,000,000 shares are of Class
B common stock and 100,000,000 shares of preferred stock. As of October 31,
2003, there were 19,748,609 shares of Class A common stock issued and
outstanding, 39,497,218 shares of Class B common stock issued and outstanding
and no shares of the preferred stock outstanding.
Our Class A common stock is listed and trades on the NYSE under the ticker
symbol 'TRY.' Our Class B common stock is listed and trades on the NYSE under
the ticker symbol 'TRY.B.'
CLASS A COMMON STOCK
Holders of our Class A common stock are entitled to one vote for each share
held on record on all matters on which stockholders are entitled to vote,
including the election of directors. Generally, except as otherwise required by
law, holders of Class A common stock are not entitled to vote on any amendment
to our certificate of incorporation that relates solely to the terms of the
Class B common stock; provided, however, that the number of authorized shares of
Class B common stock may be increased or decreased (but not below the number of
shares then outstanding) by the affirmative majority vote of the holders of a
majority of the Class A common stock without a separate class vote of the
holders of the Class B common stock. Subject to the preferences that may be
applicable from time to time to any outstanding Class B common stock or
preferred stock, the holders of our shares of Class A common stock are entitled
to receive ratably any dividends lawfully declared from time to time by our
board of directors. The outstanding shares of Class A common stock are, and the
shares of Class A common stock when issued upon the conversion of the notes
offered hereby will be, fully paid and nonassessable. Additional authorized but
unissued Class A common stock may be issued by our board of directors without
the approval of our stockholders.
CLASS B COMMON STOCK
Holders of our Class B common stock are entitled to one tenth of one vote
for each share held on record on all matters on which stockholders are entitled
to vote, including the election of directors. Generally, except as otherwise
required by law, the holders of Class B common stock are not entitled to vote on
any amendment to our certificate of incorporation that relates solely to the
terms of the Class A common stock or any other outstanding series or class of
stock, where the holders of such affected class or series are entitled, either
separately or together as a class with the holders of one or more other said
class or series, to vote thereon by law or pursuant to our certificate of
incorporation (including any certificate of designation relating to any other
series or class of stock). Under our certificate of incorporation, the number of
authorized shares of Class B common stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the Class A common stock without a separate class
vote of the holders of the Class B common stock. The outstanding shares of Class
B common stock are, and the shares of Class B common stock when issued upon the
conversion of the notes offered hereby will be, fully paid and nonassessable.
Additional authorized but unissued Class B common stock may be issued by our
board of directors without the approval of our stockholders.
If and when dividends on our Class A common stock are declared payable from
time to time by our board of directors, whether payable in cash, in property or
in shares of our stock, the holders of our Class B common stock will be entitled
to share equally in such dividends with the holders of the Class A common stock,
on a per share basis, subject to the limitations described below; provided,
however, that with respect to a regular quarterly cash dividend declared as such
47
by our board of directors, paid by us on the Class A common stock on or prior to
September 4, 2006, the holders of the Class B common stock will be entitled to
receive a dividend in a per share amount (such amount to be subject to upward or
downward rounding at the discretion of our board of directors) equal to at least
110% of the dividends paid per share on the Class A common stock. If dividends
are declared at any time on the Class A common stock that are payable in shares
of Class A common stock, such dividends will be payable at the same rate on the
Class B common stock but will be payable to holders of Class B common stock in
shares of Class B common stock. If we subdivide or combine the outstanding
shares of Class A common stock in any manner, the outstanding shares of Class B
common stock will be proportionally subdivided or combined in the same manner
and on the same basis.
The approval of holders of a majority of the outstanding shares of Class B
common stock, voting separately as a class, will be required for any merger or
consolidation of us with another entity (whether or not we are the surviving
entity) unless the holders of shares of Class B common stock are entitled to
receive in such transaction in respect of each share of Class B common stock the
same consideration as the holders of shares of Class A common stock are entitled
to receive in respect of each share of Class A common stock; provided that, if
all or part of the consideration so received consists of common stock of the
surviving entity, the common stock so issued may differ as to voting rights,
liquidation preference and dividend rights to the same extent that the Class A
common stock and Class B common stock differ.
PRE-EMPTIVE RIGHTS
Under Delaware law, a shareholder is not entitled to pre-emptive rights to
subscribe for additional issuances of Class A common stock, Class B common stock
or any security convertible into such stock in proportion to the shares that are
owned unless there is a provision to the contrary in the certificate of
incorporation. Our certificate of incorporation does not provide that our
stockholders are entitled to pre-emptive rights.
LIQUIDATION
In the event that we liquidate, dissolve or are wound up, whether voluntary
or involuntary, to the extent assets remain after payment or provision for
payment of our debts and other liabilities and the preferential amounts to which
the holders of any stock ranking senior to our Class B common stock in the
distribution of assets will be entitled upon liquidation, the holders of Class B
common stock will be entitled to receive, prior to any payment being made to the
holders of Class A common stock and any other stock that ranks junior to the
Class B common stock in the event of liquidation, an amount per share equal to
$.01 (as adjusted for stock splits, combinations, reclassifications and the
like). Once the holders of Class A common stock will then have received an
amount per share equal to $.01 (as adjusted for stock splits, combinations,
reclassifications and the like), the Class A common stock and Class B common
stock will thereafter share pro rata, together with the holders of any other
stock ranking on parity therewith in the distribution of assets upon
liquidation, in our remaining assets according to their respective interests.
PREFERRED STOCK
Our board of directors has the authority, without further action by the
stockholders, to issue up to 100,000,000 shares of preferred stock in one or
more series and to fix the designations, powers, preferences privileges and
relative participation, optional or special rights and the qualifications,
limitations or restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption and liquidation preferences, any or
all of which may be greater than the rights of our Class A common stock or
Class B common stock.
CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions in our certificate of incorporation are intended to
discourage or delay a hostile takeover of control of us. These provisions, in
general terms, (i) provide that the number
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of directors shall not be less than seven nor more than 15, with the exact
number to be determined from time to time by a majority of the board of
directors then in office; (ii) provide that vacancies on the board of directors
resulting from an increase in size, removal of directors or otherwise may be
filled only by a majority of the remaining directors then in office; and
(iii) require the affirmative vote of the holders of shares representing at
least 75% of the voting power of the 'voting shares' (as defined below) in order
to enter into certain 'business combinations' (as defined below), unless (A)
such business combinations are approved by at least a majority of our entire
board or directors, but only if a majority of the directors acting favorably on
the matter are 'continuing directors' (as defined below), or (B) certain minimum
price, form of consideration and procedural requirements are met. The term
'voting shares' is defined as any issued and outstanding shares of our capital
stock entitled to vote generally in the election of directors. Each of the
provisions has particular anti-takeover effects associated with it, and these
effects together with a more detailed description of each provision are set
forth below. In addition, the anti-takeover provisions are interrelated and have
cumulative anti-takeover effects.
The principal purpose of these provisions is to provide a measure of
assurance that a stockholder or group of stockholders owning a controlling
interest in our stock do not exercise their voting power in a manner which our
board of directors believes would be to the detriment of the remaining
stockholders. The provisions are further intended to make it more difficult for
a hostile or unfriendly party to obtain control over us by replacing the board
of directors.
SIZE OF THE BOARD OF DIRECTORS AND FILLING VACANCIES ON THE BOARD OF
DIRECTORS.
Our certificate of incorporation states that our board of directors must
consist of not less than seven nor more than 15 members; provided, however, that
the maximum number may be increased to reflect the right of holders of preferred
stock to elect directors in certain circumstances. The exact number of directors
is to be fixed by a majority vote of the directors then in office and such
authority of our board of directors is exclusive. Under our certificate of
incorporation, vacancies that may occur between annual meetings, including
vacancies caused by an increase in the number of directors, may be filled only
by a majority of the remaining directors then in office, even if less than a
quorum, subject to the rights of holders of any class or series of preferred
stock to elect directors. In addition, our certificate of incorporation provides
that any new director elected to fill a vacancy on our board of directors will
serve for the remainder of the full term of the director for which the vacancy
occurred and no decrease in the number of directors shall shorten the term of
any incumbent. The purpose of including these provisions with respect to the
size of our board of directors and the filling of vacancies in our certificate
of incorporation is to prevent the elimination of such provisions through an
amendment of our by-laws by a stockholder or group owning or controlling a
substantial voting block that would permit stockholders directly to increase the
size of our board of directors and to fill vacancies resulting therefrom or
otherwise, and thereby enable such stockholder or group of stockholders to elect
its own nominees to the vacancies. Such an amendment to our by-laws would be
possible because, under Delaware law, stockholders may amend the by-laws without
prior approval of the board of directors, whereas our certificate of
incorporation may be amended only if our board of directors first approves and
recommends such action to stockholders.
BUSINESS COMBINATION PROVISION.
Our certificate of incorporation further provides that the approval of the
holders of shares representing at least 75% of the voting power of the voting
shares is required in order to approve certain business combinations if an
'interested stockholder' (as defined below) is a party to the transaction or its
percentage equity interest in us or any of our subsidiaries would be increased
by the transaction. The required 75% approval of any business combination must
include the affirmative vote of the holders of shares representing at least a
majority of the voting power of all of the then outstanding voting shares
exclusive of those shares beneficially owned by any interested stockholder.
The voting requirements outlined above will not apply, however, if:
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(i) immediately prior to the time the business combination is consummated,
we are the 'beneficial owner' (defined below) of a majority of each
class of the outstanding equity securities of the interested
stockholder;
(ii) the business combination was approved by at least a majority of our
board of directors (even though not the entire board of directors), but
only if a majority of the directors acting favorably upon such matter
are continuing directors; or
(iii) the consideration to be received by the holders of each class of our
outstanding voting shares acquired by the interested stockholder is at
least equal to the greater of the highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers' fees
and with approximate adjustments for recapitalizations, stock splits,
reverse stock splits and stock dividends) paid by the interested
stockholder for any shares of such class
(1) within the two-year period immediately prior to the first public
announcement of the proposal of the business combination or
(2) in the transaction in which it became an interested stockholder, and
is in cash or in the same form of consideration as the interested
stockholder paid to acquire the largest number of voting shares
previously acquired by it.
The pricing provision does not guarantee that a stockholder will receive the
highest market price paid for such shares, rather it ensures that a stockholder
will receive the highest price paid for such shares by an interested stockholder
during the prior two years. If either the ownership or form of consideration
requirements set forth in clauses (i) and (iii) above are satisfied, the
business combination will require the approval of the holders of at least
two-thirds of the votes entitled to be cast by the holders of all the then
outstanding voting shares (the 'ratification percentage') (and the additional
majority vote described in the previous paragraph).
If our board of directors approves a business combination in accordance with
the requirements set forth in clause (ii) above, the board of directors may,
again in accordance with the voting provisions of such clause (ii), determine to
require a vote of stockholders. If a stockholder vote is required for such
business combination under applicable law (such as, for example, in the case of
a merger or liquidation), our board of directors will require the affirmative
vote of the then outstanding voting shares equal to the higher of:
(i) the ratification percentage (such affirmative vote shall not require the
additional majority vote), and
(ii) such other percentage as is required by law.
If a stockholder vote is not required for such business combination under
law, our board may, in its discretion, either decide not to require a
stockholder vote to approve the business combination or require the affirmative
vote of the outstanding voting shares equal to (A) the ratification percentage
(such affirmative vote shall not require the additional majority vote) or
(B) such other percentage as it so determines.
An 'interested stockholder' generally is defined under our certificate of
incorporation as the beneficial owner of 10% or more of the voting power of the
outstanding voting shares (other than Triarc, its employee benefit plans, or its
majority owned subsidiaries) excluding, however, DWG Acquisition Group, LP or
any 'affiliate' or 'associate' (as each term is defined in our certificate of
incorporation). Our board of directors considers that a 10% holding, which
causes a person to be classified as an 'insider' under Section 16 of the
Exchange Act, and is double the percentage ownership required to trigger
reporting obligations under Section 13(d) of the Exchange Act, for stockholders
of public companies, is appropriate to define an interested stockholder. At the
present time, we are not aware of the existence of any stockholder or group of
stockholders that would be an interested stockholder.
A 'business combination' includes:
(i) a merger or consolidation involving us or any of our subsidiaries and
an interested stockholder or an affiliate or associate of an interested
stockholder, or an affiliate thereof,
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(ii) a sale, lease or other disposition (in one or a series of
transactions) of a 'substantial part' (as defined in our certificate
of incorporation) of our assets or the assets of any of our
subsidiaries to an interested stockholder or an affiliate or associate
of any interested stockholder, or an affiliate thereof;
(iii) any sale, lease or other disposition (in one or a series of
transactions) to us or any of our subsidiaries of any assets
(excluding any voting shares, but including without limitation any
securities whether outstanding, authorized but unissued or in
treasury, issued by an interested stockholder, or by an affiliate or
associate of an interested stockholder or by an affiliate thereof) of
(a) any interested stockholder or (b) an affiliate or associate of an
interested stockholder, or an affiliate thereof, if the amount paid
therefor constitutes a substantial part of the assets of Triarc or
any subsidiary; or
(iv) an issuance or transfer (or a related series of issuances or
transfers) of our securities or the securities of any of our
subsidiaries (except upon conversion of convertible securities as a
result of a pro rata stock dividend or stock split) to an interested
stockholder or an affiliate or associate of an interested stockholder
or an affiliate thereof, for consideration aggregating $5,000,000 or
more;
(v) a liquidation, dissolution, spinoff, split up or split off of us (if
as of the record date for the determination of stockholders entitled
to vote with respect thereto or, if no vote would otherwise be
required, the date the transaction is planned to be consummated, any
person is an interested stockholder);
(vi) a reclassification or recapitalization of securities (including,
without limitation, any combination of shares or reverse stock split)
of us or any of our subsidiaries or a reorganization, in any case
having the effect, directly or indirectly, of increasing the
percentage interest of an interested stockholder in any class of
equity securities of us or such subsidiary; and
(vii) any agreement, contract or other arrangement providing for any of the
transactions described in this definition of business combination.
A 'continuing director' is defined as one serving as a director whose
election or appointment or recommendation by our board of directors for election
by our stockholders was approved by at least a majority of the continuing
directors then on our board of directors.
The business combination provision described above is intended to provide
safeguards to our stockholders by requiring a higher stockholder vote than
required under Delaware law in the event another person first obtains a
substantial interest in us and then wishes to accomplish a combination of such
person's business with ours, or otherwise eliminate the share holdings of the
other stockholders. The federal securities law and applicable regulations govern
the disclosure required to be made to minority stockholders in such transactions
but do not assure to stockholders the fairness of the terms of the business
combination. Moreover, the statutory right of the remaining stockholders to
dissent in connection with certain business combinations and receive the 'fair
value' of their shares in cash may involve significant expense, delay and
uncertainty to dissenting stockholders. Further, the 'fair value' of a
stockholder's shares, as determined under this standard, may not be equivalent
to the minimum price as determined pursuant to the provisions.
The business combination provision is to close partially these gaps in the
federal and state laws and to minimize certain of the potential inequities of
those business combinations that involve two or more steps by requiring that in
order to complete a business combination that is not approved by the continuing
directors, such interested stockholder must obtain the affirmative votes of at
least 75% of the voting power of the outstanding voting shares prior to
proposing the business combination (including the affirmative vote of the
holders of shares representing at least a majority of the voting power of the
outstanding voting shares exclusive of those shares beneficially owned by the
interested stockholder), or meet the minimum price and procedural requirements
of the provision and obtain the approval of at least two-thirds of the voting
power of the outstanding voting shares (and the additional majority vote). The
provision also is designed to protect those
51
stockholders who have not tendered or otherwise sold their shares to a purchaser
who is attempting to acquire control by ensuring that at least the same price
and form of consideration are paid to such stockholders in a business
combination as were paid to stockholders in the initial step of the acquisition.
In the absence of the provision, an interested stockholder who acquired control
of us could subsequently, by virtue of such control, force minority stockholders
to sell or exchange their shares at a price that would not reflect any premium
such purchaser may have paid in order to acquire its controlling interest, but
rather at a price set by such interested stockholder. Such a price might not
only be lower than the price paid by such purchaser in acquiring control, but
also could be in a less desirable form of consideration (e.g., equity or debt
securities of the purchaser).
In many situations, the minimum price, form of consideration and procedural
requirements of the provision would require that a purchaser pay stockholders a
higher price for their shares and/or structure the transaction differently from
what would be the case without the provision. Accordingly, to the extent a
business combination were involved as part of a plan to acquire control of us,
this provision would increase the likelihood that a purchaser would negotiate
directly with our board of directors.
We believe that our board of directors normally is in a better position than
the individual stockholders to negotiate effectively on behalf of all
stockholders in that our board of directors is likely to be more knowledgeable
than any individual stockholder in assessing our business and prospects.
Accordingly, we are of the view that negotiations between our board of directors
and the purchaser would increase the likelihood that stockholders ultimately
will receive a higher price for their shares from anyone desiring to obtain
control of us through a business combination or otherwise.
Although not all acquisitions of our capital stock are made with the
objective of acquiring control of us through a subsequent business combination,
a purchaser in many cases desires to have the option to consummate such a
business combination. Assuming that to be the case, the provision would tend to
discourage purchasers whose objective is to seek control of us at a relatively
low price, since acquiring the remaining equity interest may be difficult unless
the minimum price, form of consideration and procedural requirements were
satisfied or a majority of the continuing directors were to approve the
transaction. The provision also should discourage the accumulation of large
blocks of our capital stock, which we believe to be disruptive to our stability,
and which could precipitate a change of control of us on terms unfavorable to
our other stockholders.
AMENDMENT OF CERTIFICATE OF INCORPORATION
Our certificate of incorporation may be amended in accordance with the
Delaware law, except that it provides that the business combination provision
described above may not be repealed, altered, changed or amended in any respect
unless such action is approved by the affirmative vote of at least 75% of the
votes entitled to be cast (which 75% must include the affirmative vote of the
holders of shares representing at least a majority of the votes entitled to be
cast exclusive of those of which any interested stockholder is entitled to
cast), unless approved by a vote of a majority of our entire board of directors
(but only if a majority of the directors acting favorably on the matter are
continuing directors), in which case the business combination provision may be
amended by the affirmative vote of at least a majority of the votes entitled to
be cast (such affirmative vote does not require the additional majority vote);
and provided, further, that the ratification percentage may be amended, altered,
changed or repealed by the affirmative vote of the holders of at least
two-thirds of the voting power of the voting shares (such affirmative vote does
not require the additional majority vote). Our by-laws may be altered, amended
or repealed, or new by-laws adopted, by (i) in the case of by-laws made or
amended or repealed by the board of directors, by the affirmative vote of
stockholders holding not less than a majority of the shares entitled to vote on
the election of directors, or (ii) the affirmative vote of not less than
two-thirds of the entire board of directors that would then be in office if no
vacancies existed.
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INDEMNIFICATION OF DIRECTORS AND OFFICERS
We may indemnify any officer or director who is made a party to any suit or
proceeding on account of being a director, officer or employee of the
corporation against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement reasonably incurred by him/her in connection with the
action, through, among other things, a majority vote of a quorum consisting of
directors who were not parties to the suit or proceeding, if the officer or
director acted in good faith and in a manner he/she reasonably believed to be in
our best interests. In a criminal proceeding, the standard is that the director
or officer had no reasonable cause to believe his/her conduct was unlawful.
Our certificate of incorporation and by-laws provide that we will indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a director or an officer of ours against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding to the
fullest extent and in the manner set forth in and permitted by Delaware law, and
any other applicable law, as from time to time in effect. This right of
indemnification is not exclusive of any other rights to which a director or
officer may be entitled. Any repeal or modification of the applicable provisions
of Delaware law will not affect any rights or obligations then existing with
respect to any state of facts then or theretofore existing or any action, suit
or proceeding theretofore or thereafter brought or threatened based in whole or
in part on any such state of facts.
Our certificate of incorporation provides that each person who was or is a
party to or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, by reason of the fact that such person is
or was a director or an officer of ours or is or was serving at our request as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, shall be indemnified and held harmless by us against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding to the fullest extent and in the manner set forth in and permitted by
Delaware law, and any other applicable law, as from time to time in effect. We
have the power to purchase and maintain insurance in respect of our
indemnification obligations.
A member of our board of directors, or a member of any committee designated
by our board of directors, will, in the performance of his or her duties, be
fully protected in relying in good faith upon our records and upon such
information, opinions, reports or statements presented to us by any of our
officers or employees, or committees of our board of directors, or by any other
person as to matters the member reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by us or on our behalf. In discharging their duties, directors
and officers, when acting in good faith, may rely upon our financial statements
represented to them to be correct by the chief financial officer or the
controller or other of our officers having charge of our books or accounts, or
stated in a written report by an independent public or certified public
accountant or firm of such accountants fairly to reflect our financial
condition.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our Class A common stock and Class B
common stock is the American Stock Transfer & Trust Company.
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ARBY'S FRANCHISE TRUST SECURITIZATION NOTES
We, through Arby's Franchise Trust, issued $290,000,000 principal amount of
insured non-recourse securitization notes (the 'Securitization Notes'). The
remaining principal amount of the Securitization Notes of $239,450,000
(including current portion) as of September 28, 2003 is due no later than
December 2020. However, based on current projections and assuming the adequacy
of available funds, as defined under the indenture pursuant to which the
Securitization Notes were issued, we currently estimate we will repay $5,311,000
in 2003 with increasing annual payments to $37,377,000 in 2011 in accordance
with a targeted principal payment schedule. The Securitization Notes are
redeemable by Arby's Franchise Trust at an amount equal to the total of
remaining principal, accrued interest and the excess, if any, of the discounted
value of the remaining principal and interest payments over the outstanding
principal amount of the Securitization Notes.
Obligations under the Securitization Notes are insured by a financial
guarantee company and are collateralized by assets with an aggregate net book
value of $46,771,000 as of September 28, 2003, consisting of cash and cash
equivalents of $10,051,000, a cash equivalent reserve account of $30,524,000 and
royalty receivables of $6,196,000.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain United States federal income
tax consequences that may be relevant to an investment in the notes and the
shares of Class A common stock and Class B common stock into which the notes may
be converted but does not purport to be a complete analysis of the potential tax
considerations that you may need to consider before investing based on your
particular circumstances. This discussion is based on existing provisions of the
Internal Revenue Code ('Code'), Treasury Regulations promulgated thereunder,
judicial decisions and administrative rulings and practice, all of which are
subject to change with possible retroactive effect. This summary applies to you
only if you hold the notes and Class A common stock and Class B common stock as
capital assets within the meaning of the Code. This summary does not discuss any
estate, gift, state, local or foreign tax law considerations.
This summary does not address all of the tax consequences that may be
relevant to all categories of investors, some of which may be subject to special
rules, such as:
o insurance companies;
o banks or other financial institutions;
o dealers and certain traders in securities or currencies;
o tax-exempt organizations;
o regulated investment companies;
o partnerships or other entities classified as partnerships
for U.S. federal income tax purposes;
o real estate investment trusts;
o grantor trusts;
o certain former citizens or residents of the United States;
o persons whose 'functional currency' is not the U.S. dollar;
o persons who hold the notes or Class A common stock or
Class B common stock as part of a 'hedge,' 'straddle,'
'conversion' or similar transaction; and
o persons subject to the alternative minimum tax.
In addition, this summary deals only with notes acquired at their original
issue price within the meaning of Section 1273 of the Code and does not discuss
the tax considerations applicable to subsequent purchasers of the notes,
including application of the 'market discount' and 'acquisition premium' rules.
PERSONS CONSIDERING THE PURCHASE OF THE NOTES ARE URGED TO CONSULT THEIR TAX
ADVISORS WITH REGARD TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO
THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE
LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
TAX CONSEQUENCES TO U.S. HOLDERS
As used herein, the term 'U.S. Holder' means a beneficial owner of notes or
Class A common stock or Class B common stock that is for U.S. federal income tax
purposes:
o a citizen or individual resident of the United States;
o a corporation or other entity taxable as a corporation for
U.S. federal income tax purposes, created or organized in or
under the laws of the United States or any State thereof
(including the District of Columbia);
o an estate, the income of which is subject to U.S. federal
income taxation regardless of its source; and
o a trust if (a) a court within the United States is able to
exercise primary supervision over the administration of the
trust and (b) one or more United States persons have the
authority to control all substantial decisions of the trust;
or an electing trust in existence on August 20, 1996 to the
extent provided in Treasury Regulations.
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If a partnership holds notes or Class A common stock or Class B common
stock, the tax treatment of a partner will generally depend upon the status of
the partner and the activities of the partnership. If you are a partner in a
partnership, you should consult your own tax advisor.
INTEREST INCOME ON THE NOTES
U.S. Holders will be required to recognize as ordinary income any interest
paid or accrued on the notes, in accordance with their regular method of
accounting for U.S. federal income tax purposes. We may be required to make
additional payments to holders of notes as liquidated damages, as described
under 'Description of Notes -- Registration Rights of the Noteholders,' above.
Liquidated damages paid on the notes pursuant to the registration rights
agreement generally should be taxable to a U.S. Holder as ordinary income at the
time it is accrued or is received in accordance with the U.S. Holder's method of
accounting for U.S. federal income tax purposes. According to Treasury
Regulations, the possibility that any such payments in excess of stated interest
or principal will be made will not affect the amount of interest income you
recognize if there is only a remote chance as of the date the notes were issued
that such payments will be made. We believed that the likelihood that we would
be obligated to make any such payments was remote. We also believe that there is
no requirement under the applicable Treasury Regulations for a re-determination,
as of the date of this prospectus, of whether there is a remote chance that such
payments will be made. Therefore, we do not intend to treat the potential
payment of liquidated damages as part of the yield on the notes. Our
determination that this contingency was remote is binding on you unless you
disclose your contrary position in the manner required by applicable Treasury
Regulations. Our determination is not, however, binding on the Internal Revenue
Service ('IRS'), and if the IRS were to challenge this determination, or require
that we make a re-determination as of a date other than the date of issuance of
the notes, you might be required to accrue income on your notes in excess of
stated interest, and to treat as ordinary income rather than capital gain any
gain realized on the taxable disposition of a note before the resolution of the
contingency. If you are a U.S. Holder, you will be required to recognize
liquidated damages paid on the notes as income.
CONSTRUCTIVE DIVIDENDS ON THE NOTES
If at any time we increase the conversion rate, either at our discretion or
pursuant to the conversion rate adjustment provisions, the increase may be
deemed to be the payment of a taxable dividend to the U.S. Holders of the notes.
For example, an increase in the conversion rate in the event of distributions of
our debt instruments, or our assets, or an increase in the event of certain cash
dividends, generally will result in deemed dividend treatment to U.S. Holders of
the notes, but an increase in the event of stock dividends or the distribution
of rights to subscribe for Class A common stock or Class B common stock
generally will not.
SALE, EXCHANGE, OR OTHER DISPOSITION OF THE NOTES
Upon a sale, exchange or disposition of a note other than a conversion of
the note into Class A common stock and Class B common stock, a U.S. Holder will
generally recognize capital gain or loss in an amount equal to the difference
between the amount realized on the sale, exchange or disposition (not including
any amount attributable to accrued but unpaid interest not previously included
in income, which will be taxable as ordinary income) and such U.S. Holder's
adjusted tax basis in the note. The amount realized by the holder will include
the amount of cash and the fair market value of any other property received for
the note. A U.S. Holder's adjusted tax basis in a note will generally be equal
to the U.S. Holder's purchase price for the note. Such capital gain or loss will
be long-term capital gain or loss if the holder held the note for more than one
year. The deductibility of capital losses is subject to limitations.
56
CONVERSION OF THE NOTES FOR CLASS A COMMON STOCK AND CLASS B COMMON STOCK
A U.S. holder generally will not recognize any income, gain or loss on
converting a note into Class A common stock and Class B common stock, except
that the fair market value of Class A common stock and Class B common stock
received with respect to accrued interest will be taxed as a payment of interest
as described under 'Tax Consequences to U.S. Holders -- Interest Income on the
Notes,' above. If the holder receives cash in lieu of a fractional share of
Class A common stock or Class B common stock, however, the holder would be
treated as if he received the fractional share and then had the fractional share
redeemed for the cash. The holder would recognize capital gain or loss equal to
the difference between the cash received and that portion of his basis in the
Class A common stock or Class B common stock attributable to the fractional
share. The holder's aggregate basis in the Class A common stock and Class B
common stock will equal the holder's adjusted basis in the note, increased, for
a cash method holder, by the amount of income recognized with respect to accrued
interest. Such aggregate basis will generally be allocated between the Class A
common stock and Class B common stock received upon conversion of a note in
proportion to their relative fair market values on the date of conversion. U.S.
holders should consult their tax advisors as to the appropriate allocation of
basis between the Class A common stock and Class B common stock received upon
conversion of a note. The holder's holding period for the Class A common stock
and Class B common stock will include the period during which he held the note,
except that the holding period of any Class A common stock or Class B common
stock received with respect to accrued interest will commence on the date after
conversion.
CONVERSION OF THE NOTES FOR CLASS A COMMON STOCK, CLASS B COMMON STOCK AND CASH
If a U.S. Holder converts a note and we deliver a combination of Class A
common stock, Class B common stock and cash (and such cash is not merely
received in lieu of a fractional share of common stock) the tax treatment to the
holder is uncertain.
Assuming the notes are 'securities' for U.S. federal income tax purposes,
which we believe is likely, the holder may recognize capital gain (but not
capital loss), if any, on the note so converted in an amount equal to the lesser
of the gain realized (being the excess, if any, of the fair market value of the
Class A common stock and Class B common stock received plus cash received over
the adjusted tax basis in the note converted therefor), and the cash received.
Such gain would generally be long-term capital gain if the holder held the note
for more than one year. The holder's aggregate adjusted tax basis in the
Class A common stock and Class B common stock received should generally equal
the adjusted tax basis of the note converted, decreased by the cash received,
and increased by the amount of gain recognized. Such aggregate basis will
generally be allocated between the Class A common stock and Class B common stock
received upon conversion of a note in proportion to their relative fair market
values on the date of conversion. U.S. holders should consult their tax advisors
as to the appropriate allocation of basis between the Class A common stock and
Class B common stock received upon conversion of a note. The holder's holding
period in the Class A common stock and Class B common stock received upon
conversion of the notes would include the holding period of the note so
converted. Alternatively, the cash payment may be treated as proceeds from the
sale of a portion of the note, and taxed in the manner described under 'Tax
Consequences To U.S. Holders -- Sale, Exchange or Other Disposition of the
Notes,' above. In such case, the holder's basis in the note would be allocated
pro rata between the Class A common stock and Class B common stock received and
the portion of the note that is treated as sold for cash. The holding period for
any Class A common stock and Class B common stock received in the conversion
would include the holding period of the note. Holders should consult their own
tax advisors regarding the proper treatment to them of the receipt of a
combination of cash and Class A common stock and Class B common stock upon a
conversion.
57
TAXATION OF DISTRIBUTIONS ON OUR CLASS A COMMON STOCK OR CLASS B COMMON STOCK
Distributions paid on our Class A common stock or Class B common stock
received upon conversion of a note will be treated as a dividend to the extent
paid out of current or accumulated earnings and profits (as determined under
U.S. federal income tax principles) and will be includible in income by the U.S.
Holder and taxable when received or accrued, in accordance with such U.S.
Holder's method of accounting. If a distribution exceeds current and accumulated
earnings and profits, the excess will be first treated as a tax-free return of
the U.S. Holder's investment, up to the holder's tax basis in the Class A common
stock or Class B common stock, as applicable. Any remaining excess will be
treated as a capital gain. If a U.S. Holder is a U.S. corporation, it generally
would be able to claim a dividends received deduction equal to a portion of any
dividends received, subject to customary limitations and conditions.
SALE OR OTHER DISPOSITION OF OUR CLASS A COMMON STOCK OR CLASS B COMMON STOCK
Unless a nonrecognition provision applies, gain or loss realized by a U.S.
Holder on the sale or other disposition of our Class A common stock or Class B
common stock received upon a conversion of a note will be recognized as capital
gain or loss for U.S. federal income tax purposes, and will be long-term capital
gain or loss if the U.S. Holder held the Class A common stock or Class B common
stock for more than one year. The amount of the U.S. Holder's gain or loss will
be equal to the difference between the U.S. Holder's tax basis in the Class A
common stock or Class B common stock disposed of and the amount realized on the
disposition.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Information returns will be filed with the IRS and provided to U.S. Holders
in connection with the payments on the notes or our Class A common stock or
Class B common stock and the proceeds from a sale or other disposition of the
notes or our Class A common stock or Class B common stock, unless an exemption
is available. A U.S. Holder may be subject to United States backup withholding
on these payments at the rates specified in the Code if it fails to provide an
accurate taxpayer identification number and to comply with certain certification
procedures or otherwise establish an exemption from backup withholding. The
amount of any backup withholding from a payment will be allowed as a credit
against the U.S. Holder's U.S. federal income tax liability and may entitle the
U.S. Holder to a refund, provided the required information is furnished to the
IRS.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
As used herein, the term 'Non-U.S. Holder' means a beneficial owner of a
note or Class A common stock or Class B common stock that is not a U.S. Holder.
Special rules may apply to certain Non-U.S. Holders such as 'controlled foreign
corporations', 'passive foreign investment companies', 'foreign personal holding
companies', persons eligible for benefits under income tax treaties to which the
United States is a party and certain U.S. expatriates. Non-U.S. Holders should
consult their own tax advisors to determine the U.S. federal, state, local and
other tax consequences that may be relevant for them.
PAYMENT OF INTEREST ON THE NOTES
Payments of interest on the notes to any Non-U.S. Holder will be exempt from
U.S. federal income and withholding tax, provided that:
o the Non-U.S. Holder does not own, actually or
constructively, 10% or more of the total combined voting
power of all classes of our stock entitled to vote and is
not a controlled foreign corporation related, directly or
indirectly, to us through stock ownership and is not a bank
receiving certain types of interest,
o the certification requirement described below has been
fulfilled with respect to the Non-U.S. Holder, and
58
o such payments are not effectively connected with the conduct
by such Non-U.S. Holder of a trade or business in the United
States.
The certification requirement referred to in the preceding paragraph will be
fulfilled if the beneficial owner of a note certifies to us on IRS Form W-8BEN
under penalties of perjury, that it is not a U.S. person and provides its name
and address or otherwise satisfies applicable documentation requirements.
U.S. withholding tax at a rate of 30% will be withheld on any payment on the
notes to Non-U.S. Holders of liquidated damages pursuant to the registration
rights agreement, unless a treaty applies to reduce or eliminate such
withholding and the Non-U.S. Holder provides an IRS Form W-8BEN certifying that
it is entitled to claim such treaty benefits or upon the receipt of an IRS Form
W-8ECI for the Non-U.S. Holder claiming that such payments are effectively
connected with the conduct of a U.S. trade or business. If U.S. withholding tax
is withheld from any payment of liquidated damages to a Non-U.S. Holder and such
payment is determined not to be subject to U.S. federal income tax, a Non-U.S.
Holder would be entitled to a refund of any tax withheld. We may be required to
make additional payments to holders of notes as liquidated damages, as described
under 'Description of Notes -- Registration Rights of the Noteholders,' above.
We believed as of the date the notes were issued that the likelihood that we
would be obligated to make any such payments was remote. If any such payments
are made, we intend to treat such payments made to Non-U.S. Holders as subject
to U.S. federal withholding tax at a rate of 30% subject to reduction or
exemption (a) by an applicable treaty if the Non-U.S. Holder provides an IRS
Form W-8BEN certifying that it is entitled to such treaty benefits or (b) upon
the receipt of an IRS Form W-8ECI from a Non-U.S. Holder claiming that such
payments are effectively connected with the conduct of a U.S. trade or business.
SALE, EXCHANGE OR OTHER DISPOSITION OF THE NOTES
Non-U.S. Holders generally will not be subject to U.S. federal income tax on
any gain realized on the sale, exchange or other disposition of the notes,
unless:
o such holder is an individual who is present in the United
States for 183 days or more in the taxable year of
disposition and certain other conditions are met,
o the holder is subject to special rules applicable to certain
former citizens or former residents of the United States,
o the holder is engaged in a trade or business in the United
States and such gain is effectively connected with the
conduct of such trade or business, or
o the rules of the Foreign Investment in Real Property Tax Act
('FIRPTA') (described below) treat the gain as effectively
connected with a U.S. trade or business.
The FIRPTA rules may apply to a sale, exchange or other disposition of notes if
we are, or have been within the shorter of the five-year preceding such sale,
exchange or disposition and the period the Non-U.S. Holder held the notes, a
U.S. real property holding corporation ('USRPHC'). In general, we would be a
USRPHC if interests in U.S. real estate exceed 50% of our assets in U.S. and
foreign real estate, and any other of our assets used or held for use in a trade
or business. We do not believe that we are a USRPHC or that we will become one
in the future although no assurance can be given in this regard.
CONVERSION OF THE NOTES
A Non-U.S. Holder generally will not recognize any gain or loss on
converting a note into Class A common stock and Class B common stock. Any gain
recognized as a result of the holder's receipt of cash in lieu of a fractional
share of Class A common stock or Class B comon stock would also generally not be
subject to U.S. federal income tax. See 'Tax Consequences To Non-U.S.
Holders -- Sale or Exchange of Class A Common Stock,' below. A Non-U.S. Holder
also generally will not recognize gain or loss on converting a note into a
combination of Class A common stock and Class B common stock and cash unless:
59
o such holder is an individual who is present in the United
States for 183 days or more in the taxable year of
disposition and certain other conditions are met,
o the holder is subject to special rules applicable to certain
former citizens or former residents of the United States,
o the holder is engaged in a trade or business in the United
States and such gain is effectively connected with the
conduct of such trade or business, or
o the FIRPTA rules treat the gain as effectively connected
with a U.S. trade or business.
See 'Tax Consequences To U.S. Holders -- Conversion of the Notes for Class A
Common Stock and Class B common stock and Cash,' above, regarding the possible
treatment of such gain or loss.
DIVIDENDS
Dividends (and any constructive dividends resulting from certain adjustments
to the conversion rate, see 'Tax Consequences To U.S. Holders -- Constructive
Dividends on the Notes,' above) paid to a Non-U.S. Holder of Class A common
stock or Class B common stock generally will be subject to U.S. withholding tax
at a 30% rate, subject to reduction or exemption under an applicable treaty,
unless such Non-U.S. Holder is engaged in trade or business in the United States
and such dividends are effectively connected with the conduct of such trade or
business. In order to obtain a reduced rate of withholding, a Non-U.S. Holder
will be required to provide a properly executed IRS Form W-8BEN certifying its
entitlement to benefits under a treaty.
SALE OR EXCHANGE OF CLASS A COMMON STOCK OR CLASS B COMMON STOCK
A Non-U.S. Holder generally will not be subject to U.S. federal income and
withholding tax on gain realized on a sale or other disposition of our Class A
common stock or Class B common stock received upon a conversion of a note,
unless:
o such holder is an individual who is present in the United
States for 183 days or more in the taxable year of
disposition and certain other conditions are met,
o the holder is subject to special rules applicable to certain
former citizens or former residents of the United States,
o the holder is engaged in a trade or business in the United
States and such gain is effectively connected with the
conduct of such trade or business, or
o the FIRPTA rules treat the gain as effectively connected
with a U.S. trade or business.
INCOME OR GAINS EFFECTIVELY CONNECTED WITH A U.S. TRADE OR BUSINESS
The preceding discussion of the tax consequences of the purchase, ownership
or disposition of notes or Class A common stock or Class B common stock by a
Non-U.S. Holder assumes that the holder is not engaged in a U.S. trade or
business. If any interest on notes, dividends on Class A common stock or
Class B common stock, or gain from the sale, exchange or other disposition of
notes (including from conversion of the notes into a combination of stock and
cash) or Class A common stock or Class B common stock is effectively connected
with a U.S. trade or business conducted by the Non-U.S. Holder, then the income
or gain will generally be subject to U.S. federal income tax in the same manner
as if earned by a U.S. Holder. If the Non-U.S. Holder is a corporation, that
portion of its earnings and profits that are effectively connected with its U.S.
trade or business generally would be subject to a branch profits tax. The branch
profits tax rate is generally 30%, although an applicable tax treaty might
provide for a reduced rate. Payments of interest or dividends that are
effectively connected with a U.S. trade or business, and therefore included in
the gross income of a Non-U.S. Holder, will not be subject to the 30%
withholding tax so long as the holder certifies its qualification for such
exemption by providing a properly executed IRS Form W-8ECI.
60
INFORMATION REPORTING AND BACKUP WITHHOLDING
Information returns will be filed with the IRS and provided to each Non-U.S.
Holder with respect to any payments on the notes or Class A common stock or
Class B common stock that are subject to withholding or that are exempt from
U.S. withholding tax pursuant to a tax treaty or other reason. Dividends or
interest paid to a Non-U.S. Holder of our Class A common stock or Class B common
stock or notes will generally be exempt from backup withholding if the Non-U.S.
Holder provides a properly executed IRS Form W-8BEN or otherwise establishes an
exemption from withholding.
The payment of proceeds from the disposition of the notes or our Class A
common stock or Class B common stock to or through the United States office of
any broker, United States or foreign, will be subject to information reporting
and possible backup withholding unless the owner certifies its non-United States
status under penalties of perjury or otherwise establishes an exemption. The
payment of the proceeds from the disposition of the notes or our Class A common
stock or Class B common stock to or through a foreign office of a foreign broker
will generally not be subject to information reporting or backup withholding.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a Non-U.S. Holder will be refunded or
credited against the Non-U.S. Holder's U.S. federal income tax liability, if
any, if the Non-U.S. Holder provides, on a timely basis, the required
information to the IRS.
DISCLOSURE AUTHORIZATION
Notwithstanding any provision in this prospectus or any agreement to the
contrary, the initial purchaser, each holder and offeree (and their respective
employees, representatives and other agents) may disclose to any and all
persons, without limitation of any kind, the U.S. federal income tax treatment
and tax structure of the notes and all materials of any kind (including opinions
or other tax analyses) that are provided by us or the initial purchaser relating
to such tax treatment and tax structure, except where confidentiality is
reasonably necessary to comply with securities laws.
61
SELLING SECURITYHOLDERS
The following table provides, as of November 20, 2003, information with
respect to each selling securityholder who is entitled to use this prospectus to
offer notes, the underlying shares of Class A common stock and Class B common
stock and additional shares of Class B common stock. This information has been
obtained from the selling securityholders.
NUMBER OF NUMBER OF
SHARES OF SHARES OF
PRINCIPAL AMOUNT CLASS A CLASS B PERCENTAGE OF PERCENTAGE OF
OF NOTES COMMON STOCK COMMON STOCK CLASS A COMMON CLASS B COMMON
BENEFICIALLY BENEFICIALLY BENEFICIALLY STOCK BENEFICIALLY STOCK BENEFICIALLY
OWNED AND OWNED AND OWNED AND OWNED AFTER OWNED AFTER
SELLING OFFERED HEREBY OFFERED OFFERED COMPLETION OF COMPLETION OF
SECURITYHOLDER ($) HEREBY(1) HEREBY(2) THE OFFERING(%) THE OFFERING(%)
-------------- ---------------- ------------ ------------ ------------------- -------------------
1976 Distribution Trust
FBO A.R.
Lauder/Zinterhofer... 5,000 125 250 -- --
2000 Revocable Trust
FBO A.R.
Lauder/Zinterhofer... 5,000 125 250 -- --
Advent Convertible
Master
Cayman L.P.......... 3,949,000 98,725 197,450 -- --
AIG DKR SoundShore
Holdings Ltd........ 3,444,000 86,100 172,200 -- --
AIG DKR SoundShore
Opportunity Holding
Fund Ltd............ 2,519,000 62,975 125,950 -- --
AIG DKR SoundShore
Strategic Holding
Fund Ltd............ 1,287,000 32,175 64,350 -- --
Alcon Laboratories.... 281,000 7,025 14,050 -- --
Allentown City
Firefighters Pension
Plan................ 18,000 450 900 -- --
Allentown City Officers
& Employees Pension
Fund................ 12,000 300 600 -- --
Allentown City Police
Pension Plan........ 24,000 600 1,200 -- --
Alpha US Sub
Fund 4, LLC......... 218,000 5,450 10,900 -- --
Alpine Associates..... 11,385,000 284,625 569,250 -- --
Alpine Partners,
L.P. ............... 1,615,000 40,375 80,750 -- --
Amaranth L.L.C........ 21,229,000 530,725 1,061,450 -- --
American Investors Life
Insurance Co........ 300,000 7,500 15,000 -- --
Araphoe County
Colorado............ 44,000 1,100 2,200 -- --
Argent Classic
Convertible
Fund L.P........... 1,000,000 25,000 50,000 -- --
Argent LowLev
Convertible Arbitrage
Fund LLC........... 1,100,000 27,500 55,000 -- --
Arlington County
Employees Retirement
System.............. 487,000 12,175 24,350 -- --
Asante Health Systems.. 63,000 1,575 3,150 -- --
(table continued on next page)
62
(table continued from previous page)
NUMBER OF NUMBER OF
SHARES OF SHARES OF
PRINCIPAL AMOUNT CLASS A CLASS B PERCENTAGE OF PERCENTAGE OF
OF NOTES COMMON STOCK COMMON STOCK CLASS A COMMON CLASS B COMMON
BENEFICIALLY BENEFICIALLY BENEFICIALLY STOCK BENEFICIALLY STOCK BENEFICIALLY
OWNED AND OWNED AND OWNED AND OWNED AFTER OWNED AFTER
SELLING OFFERED HEREBY OFFERED OFFERED COMPLETION OF COMPLETION OF
SECURITYHOLDER ($) HEREBY(1) HEREBY(2) THE OFFERING(%) THE OFFERING(%)
-------------- ---------------- ------------ ------------ ------------------- -------------------
BP Amoco PLC Master
Trust............... 791,000 19,775 39,550 -- --
BNP Paribas
Arbitrage........... 6,000,000 150,000 300,000 -- --
British Virgin Islands
Social Security
Board............... 64,000 1,600 3,200 -- --
Chrysler Corporation
Master Retirement
Trust............... 2,595,000 64,875 129,750 -- --
City and County of San
Francisco Retirement
System.............. 703,000 17,575 35,150 -- --
City University of New
York................ 109,000 2,725 5,450 -- --
City of New Orleans... 149,000 3,725 7,450 -- --
CQS Convertible &
Quantitative
Strategies Master
Fund Limited........ 2,500,000 62,500 125,000 -- --
DBAG -- London........ 4,865,000 121,625 243,250 -- --
Delaware Public
Employees Retirement
System.............. 1,129,000 28,225 56,450 -- --
Delta Air Lines Master
Trust -- CV......... 1,065,000 26,625 53,250 -- --
Delta Pilots
Disability &
Survivorship
Trust -- CV......... 515,000 12,875 25,750 -- --
Dodeca Fund, L.P...... 700,000 17,500 35,000 -- --
Grace Convertible
Arbitrage
Fund, Ltd........... 2,250,000 56,250 112,500 -- --
Grady Hospital
Foundation.......... 98,000 2,450 4,900 -- --
HFR CA Select Fund.... 700,000 17,500 35,000 -- --
HFR Convertible
Arbitrage Account... 232,000 5,800 11,600 -- --
HFR TQA Master Trust
c/o TQA Investors,
LLC................. 500,000 12,500 25,000 -- --
Hotel Union/Hotel
Industry of Hawaii
Pension Plan........ 307,000 7,675 15,350 -- --
Jeffries & Company
Inc. ............... 6,000 150 300 -- --
KD Convertible
Arbitrage Fund
L.P................. 1,000,000 25,000 50,000 -- --
LDG Limited........... 500,000 12,500 25,000 -- --
Lyxor................. 555,000 13,875 27,750 -- --
Lyxor Master Fund..... 1,400,000 35,000 70,000 -- --
(table continued on next page)
63
(table continued from previous page)
NUMBER OF NUMBER OF
SHARES OF SHARES OF
PRINCIPAL AMOUNT CLASS A CLASS B PERCENTAGE OF PERCENTAGE OF
OF NOTES COMMON STOCK COMMON STOCK CLASS A COMMON CLASS B COMMON
BENEFICIALLY BENEFICIALLY BENEFICIALLY STOCK BENEFICIALLY STOCK BENEFICIALLY
OWNED AND OWNED AND OWNED AND OWNED AFTER OWNED AFTER
SELLING OFFERED HEREBY OFFERED OFFERED COMPLETION OF COMPLETION OF
SECURITYHOLDER ($) HEREBY(1) HEREBY(2) THE OFFERING(%) THE OFFERING(%)
-------------- ---------------- ------------ ------------ ------------------- -------------------
Lyxor Master Fund
(reference
'Silverado')........ 400,000 10,000 20,000 -- --
Man Convertible Bond
Master
Fund, Ltd........... 6,379,000 159,475 318,950 -- --
McMahan Securities Co.
L.P................. 1,025,000 25,625 51,250 -- --
Microsoft
Corporation......... 1,935,000 48,375 96,750 -- --
Minnesota Power and
Light............... 1,077,000 26,925 53,850 -- --
Motion Picture
Industry Health
Plan -- Active
Member Fund......... 265,000 6,625 13,250 -- --
Motion Picture
Industry Health
Plan -- Retiree
Member Fund......... 165,000 4,125 8,250 -- --
Municipal Employees... 175,000 4,375 8,750 -- --
New Orleans
Firefighters
Pension/Relief
Fund................ 29,000 725 1,450 -- --
Newport Alternative
Income Fund......... 390,000 9,750 19,500 -- --
Occidental Petroleum
Corporation......... 194,000 4,850 9,700 -- --
OCM Convertible
Trust............... 2,875,000 71,875 143,750 -- --
Partner Reinsurance
Company Ltd......... 855,000 21,375 42,750 -- --
Policeman and Fireman
Retirement System of
the City of
Detroit............. 428,000 10,700 21,400 -- --
Pro-mutual............ 547,000 13,675 27,350 -- --
Qwest Occupational
Health Trust........ 340,000 8,500 17,000 -- --
Royal Bank of
Canada(3)........... 2,500,000 62,500 125,000 * *
Satellite Convertible
Arbitrage Master
Fund, LLC........... 4,500,000 112,500 225,000 -- --
Silverado Arbitrage
Trading, Ltd. ...... 600,000 15,000 30,000 -- --
Silverback Master,
Ltd................. 5,025,000 125,625 251,250 -- --
Silvercreek II
Limited............. 1,190,000 29,750 59,500 -- --
Silvercreek Limited
Partnership......... 2,420,000 60,500 121,000 -- --
Sphinx Convertible
Arbitrage Fund SPC.. 223,000 5,625 11,250 -- --
Sphinx Fund c/o TQA
Investors, LLC...... 100,000 2,500 5,000 -- --
St. Thomas
Trading, Ltd........ 11,746,000 293,650 587,300 -- --
(table continued on next page)
64
(table continued from previous page)
NUMBER OF NUMBER OF
SHARES OF SHARES OF
PRINCIPAL AMOUNT CLASS A CLASS B PERCENTAGE OF PERCENTAGE OF
OF NOTES COMMON STOCK COMMON STOCK CLASS A COMMON CLASS B COMMON
BENEFICIALLY BENEFICIALLY BENEFICIALLY STOCK BENEFICIALLY STOCK BENEFICIALLY
OWNED AND OWNED AND OWNED AND OWNED AFTER OWNED AFTER
SELLING OFFERED HEREBY OFFERED OFFERED COMPLETION OF COMPLETION OF
SECURITYHOLDER ($) HEREBY(1) HEREBY(2) THE OFFERING(%) THE OFFERING(%)
-------------- ---------------- ------------ ------------ ------------------- -------------------
State Employees'
Retirement Fund of
the State of
Delaware............ 1,130,000 28,250 56,500 -- --
State of Maryland
Retirement Agency... 2,337,000 58,425 116,850 -- --
Sturgeon Limited...... 819,000 20,475 40,950 -- --
Sunrise Partners
Limited
Partnership......... 2,410,000 60,250 120,500 -- --
Tag Associates........ 46,000 1,150 2,300 -- --
The Grable
Foundation.......... 65,000 1,625 3,250 -- --
TQA Master
Fund, Ltd........... 2,600,000 65,000 130,000 -- --
TQA Master Plus
Fund, Ltd........... 3,478,600 86,965 173,930 -- --
Trustmark Insurance... 248,000 6,200 12,400 -- --
UBS O'Connor LLC F/B/O
O'Connor Global
Convertible
Arbitrage Master
Ltd................. 250,000 6,250 12,500 -- --
Vanguard Convertible
Securities Fund,
Inc................. 10,710,000 267,750 535,500 -- --
Viacom Inc. Pension
Plan Master Trust... 26,000 650 1,300 -- --
Wilmington Trust Co.
as owner and trustee
for Forestal Funding
Master Trust........ 5,000,000 125,000 250,000 -- --
Xavex-Convertible
Arbitrage 7 Fund c/o
TQA Investors, LLC.. 1,000,000 25,000 50,000 -- --
Xavex Risk Arbitrage
Fund 2.............. 300,000 7,500 15,000 -- --
Zazove Convertible
Arbitrage Fund, L.P.
c/o Zazove
Associates, LLC..... 1,100,000 27,500 55,000 -- --
Zazove Hedged
Convertible Fund,
L.P. c/o Zazove
Associates, LLC..... 700,000 17,500 35,000 -- --
Zurich Institutional
Benchmark Master
Fund Ltd............ 400,000 10,000 20,000 -- --
Zurich Institutional
Benchmark Master
Fund, Ltd.
c/o TQA
Investors, LLC...... 500,000 12,500 25,000 -- --
(table continued on next page)
65
(table continued from previous page)
NUMBER OF NUMBER OF
SHARES OF SHARES OF
PRINCIPAL AMOUNT CLASS A CLASS B PERCENTAGE OF PERCENTAGE OF
OF NOTES COMMON STOCK COMMON STOCK CLASS A COMMON CLASS B COMMON
BENEFICIALLY BENEFICIALLY BENEFICIALLY STOCK BENEFICIALLY STOCK BENEFICIALLY
OWNED AND OWNED AND OWNED AND OWNED AFTER OWNED AFTER
SELLING OFFERED HEREBY OFFERED OFFERED COMPLETION OF COMPLETION OF
SECURITYHOLDER ($) HEREBY(1) HEREBY(2) THE OFFERING(%) THE OFFERING(%)
-------------- ---------------- ------------ ------------ ------------------- -------------------
Zurich Institutional
Benchmarks Master
Fund Ltd. c/o SSI
Investment
Management, Inc. ... 1,897,000 47,425 94,850 -- --
Zurich Institutional
Benchmarks Master
Fund Ltd. c/o Zazove
Associates, LLC..... 900,000 22,500 45,000 -- --
---------
* Less than one percent.
(1) Includes shares of Class A common stock issuable upon conversion of the
notes, and assumes a conversion rate of 25 shares per $1,000 principal
amount of notes, which conversion rate is subject to adjustment as
described under 'Description of the Notes-Conversion of Notes.'
Accordingly, the number of shares of Class A common stock issuable upon
conversion of the notes may increase or decrease from time to time. Under
the terms of the indenture, we are not required to issue fractional shares
of Class A common stock upon conversion of the notes and, in lieu thereof,
will pay cash.
(2) Includes shares of Class B common stock issuable upon conversion of the
notes, and assumes a conversion rate of 50 shares per $1,000 principal
amount of notes, which conversion rate is subject to adjustment as
described under 'Description of the Notes-Conversion of Notes.'
Accordingly, the number of shares of Class B common stock issuable upon
conversion of the notes may increase or decrease from time to time. Under
the terms of the indenture, we are not required to issue fractional shares
of Class B common stock upon conversion of the notes and, in lieu thereof,
will pay cash.
(3) Royal Bank of Canada benefically owns an additional 100 shares of Class A
common stock and 200 shares of Class B common stock that are not offered
hereby.
Except as described above, none of the selling securityholders listed above
has, or within the past three years had, any position, office or any material
relationship with us or any of our affiliates.
Because the selling securityholders may offer all or some portion of the
above-referenced securities under this prospectus or otherwise, no estimate can
be given as to the amount of percentage that will be held by the selling
securityholders upon termination of any sale. In addition, the selling
securityholders identified above may have sold, transferred or otherwise
disposed of all or a portion of such securities since the date on which
information in this table is provided, in transactions exempt from the
registration requirements of the Securities Act. Information about the selling
securityholders may change from time to time. Any changed information will be
set forth in prospectus supplements, if required.
Only selling securityholders identified in the above table who beneficially
own the securities set forth opposite their respective names in the second and
fourth columns may sell offered securities under the registration statement of
which this prospectus forms a part. Information about other selling
securityholders will be set forth in prospectus supplements, if required.
66
PLAN OF DISTRIBUTION
The securities offered by this prospectus are being registered to permit the
resale of such securities by the selling securityholders from time to time after
the date of this prospectus. We will not receive any of the proceeds from the
sale by the selling securityholders of these securities. We will bear the fees
and expenses incurred in connection with our obligation to register these
securities. These fees and expenses include registration and filing fees,
printing and duplication expenses, fee and disbursement of our counsel. However,
the selling securityholders will pay all underwriting discounts and selling
commissions, if any, and their own legal expenses.
The selling securityholders may sell the securities from time to time
directly or through underwriters (in accordance with the registration rights
agreement), broker-dealers or agents, in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at varying prices
determined at the time of sale, or at negotiated prices. Such sales may be
effected in transactions (which may involve block transactions):
o on any national securities exchange or quotation service on
which the securities may be listed or quoted at the time of
sale;
o in the over-the-counter market;
o in transactions otherwise than on such exchanges or services
or in over-the-counter market, including negotiated
transactions; or
o through the writing of options.
In connection with sales of the securities or otherwise, the securityholders
may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the securities and deliver securities to close out such
short positions, or loan or pledge securities to broker-dealers that in turn may
sell such securities.
If a material arrangement with any underwriter, broker, dealer or other
agent is entered into for the sale of any securities offered hereby through a
secondary distribution or a purchase by a broker or dealer, or if other material
changes are made in the plan of distribution of such securities, a prospectus
supplement will be filed, if necessary, under the Securities Act disclosing the
material terms and conditions of the arrangement. The underwriter or
underwriters with respect to an underwritten offering of such securities and the
other material terms and conditions of the underwriting will be set forth in a
prospectus supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover of the prospectus supplement. In connection with the sale of
securities using this prospectus, underwriters will receive compensation in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of offered securities for whom they may act as agent.
Underwriters may sell to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent.
There can be no assurance that any selling securityholder will sell any or
all of their notes, Class A common stock or Class B common stock pursuant to
this prospectus. In addition, any securities that can be sold under Rule 144 or
Rule 144A under the Securities Act may be sold under Rule 144 or Rule 144A,
respectively, rather than pursuant to this prospectus.
The selling securityholders and any underwriters, broker-dealers or agents
participating in the distribution of the securities may be deemed to be
'underwriters' within the meaning of the Securities Act, and any profit on the
sale of the securities offered hereby by the selling securityholders and any
commissions received by any such underwriters, broker-dealers or agents may be
deemed to be underwriting commissions under the Securities Act. If the selling
securityholders were deemed to be underwriters, the selling securityholders may
be subject to certain statutory liabilities, including, but not limited to,
Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 of the Exchange Act.
The selling securityholders and any other person participating in the
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations under the Exchange Act, including without limitation,
Regulation M, which may limit the timing of purchases
67
and sales of any of the securities offered hereby by the selling securityholders
and any other relevant person. Furthermore, Regulation M may restrict the
ability of any person engaged in the distribution of such securities to engage
in market-making activities with respect to the particular securities being
distributed. All of the above may affect the marketability of the securities
offered hereby and the ability of any person or entity to engage in
market-making activities with respect to such securities.
Under the securities law of various states, the securities offered hereby
may be sold in those states only through registered or licensed brokers or
dealers. In addition, in various states the securities offered hereby may not be
sold unless such securities have been registered or qualified for sale in the
state or an exemption from registration or qualification is available and is
complied with.
We have agreed to indemnify the selling securityholders against some civil
liabilities, including some liabilities arising under the Securities Act, and
the selling securityholders will be entitled to contribution from us in
connection with those liabilities. The selling securityholders will indemnify us
against some civil liabilities, including liabilities arising under the
Securities Act, and will be entitled to contribution from the selling
securityholders in connection with those liabilities.
We are permitted to suspend the use of this prospectus under some
circumstances relating to pending corporate developments, public filings with
the SEC and similar events for a period not to exceed 45 days in any three-month
period and not to exceed an aggregate of 120 days in any 12-month period.
Notwithstanding the foregoing, we will be permitted to suspend the use of the
prospectus for up to 60 days in any 3-month period under certain circumstances
relating to possible acquisitions, financings or other similar transactions. In
addition, if the duration of such suspension exceeds the periods
above-mentioned, we have agreed to pay liquidated damages. Please refer to the
section entitled 'Description of the Notes -- Registration Rights of the
Noteholders.'
The outstanding Class A common stock and Class B common stock trade on the
New York Stock Exchange under the symbols 'TRY' and 'TRY.B,' respectively. We do
not intend to apply for listing of the notes on any securities exchange or for
quotation through an automated quotation system. Accordingly, we cannot assure
you about the development of liquidity or any trading market for the notes.
LEGAL MATTERS
Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, New York has passed
upon the validity of the notes offered by this prospectus for us and upon the
validity of the shares of Class A common stock and Class B common stock issuable
upon conversion of the notes.
EXPERTS
The consolidated financial statements of Triarc incorporated by reference
into this prospectus from our Annual Report on Form 10-K for the year ended
December 29, 2002 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report incorporated herein by reference and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements of Encore Capital Group, Inc. (formerly, MCM Capital Group,
Inc.) included as an exhibit to our Annual Report on Form 10-K for the fiscal
year ended December 29, 2002, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. The financial statements of Encore Capital Group, Inc. for the year
ended December 31, 2000, are incorporated by reference in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.
The consolidated financial statements of Encore Capital Group, Inc.
incorporated by reference in this Prospectus have been audited by BDO
Seidman, LLP, independent auditors, to the extent and for the periods set forth
in their report incorporated herein by reference, and are incorporated herein in
reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
68
[TRIARC LOGO]
STATEMENT OF DIFFERENCES
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The registered trademark symbol shall be expressed as.................. 'r'