-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SJCZiipX/umKlkC5byIlpAFdPKKcb2w8pH2yh5g9SpibIsKdeT/GtoNl5W9ZrZhL rmq0MuW68kX5kmWQaDZFoA== 0000950117-99-002559.txt : 19991213 0000950117-99-002559.hdr.sgml : 19991213 ACCESSION NUMBER: 0000950117-99-002559 CONFORMED SUBMISSION TYPE: S-4/A PUBLIC DOCUMENT COUNT: 24 FILED AS OF DATE: 19991210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIARC CONSUMER PRODUCTS GROUP LLC CENTRAL INDEX KEY: 0001086090 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 52214375 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625 FILM NUMBER: 99772834 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CABLE CAR BEVERAGE CORP CENTRAL INDEX KEY: 0000081057 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 520880815 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-01 FILM NUMBER: 99772835 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FORMER COMPANY: FORMER CONFORMED NAME: GREAT EASTERN INTERNATIONAL INC DATE OF NAME CHANGE: 19890810 FORMER COMPANY: FORMER CONFORMED NAME: GREAT EASTERN ENERGY CORP DATE OF NAME CHANGE: 19840815 FORMER COMPANY: FORMER CONFORMED NAME: PUBLISHING COMPUTER SERVICE INC DATE OF NAME CHANGE: 19810817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SNAPPLE BEVERAGE CORP CENTRAL INDEX KEY: 0000892563 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 043149065 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-02 FILM NUMBER: 99772836 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RC ARBYS CORP CENTRAL INDEX KEY: 0000904892 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 592277791 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-03 FILM NUMBER: 99772837 BUSINESS ADDRESS: STREET 1: TRIARC RESTAURANT GROUP STREET 2: 1000 CORPORATE DRIVE CITY: FT LAUDERDALE STATE: FL ZIP: 33334 MAIL ADDRESS: STREET 1: RC ARBYS CORP STREET 2: 1000 CORPORATE DRIVE CITY: FORT LAUDERDALE STATE: FL ZIP: 33334 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL CROWN CORP DATE OF NAME CHANGE: 19930514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RC LEASING INC CENTRAL INDEX KEY: 0001086083 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 650464496 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-04 FILM NUMBER: 99772838 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL CROWN BOTTLING CO OF TEXAS CENTRAL INDEX KEY: 0001086084 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 591722788 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-05 FILM NUMBER: 99772839 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RETAILER CONCENTRATE PRODUCTS INC CENTRAL INDEX KEY: 0001086085 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 650596569 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-06 FILM NUMBER: 99772840 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIBEV CORP CENTRAL INDEX KEY: 0001086087 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133787716 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-07 FILM NUMBER: 99772841 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL CROWN CO INC CENTRAL INDEX KEY: 0001086088 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 581316061 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-08 FILM NUMBER: 99772842 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLD SAN FRANCISCO SELTZER INC CENTRAL INDEX KEY: 0001086091 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 841069343 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-09 FILM NUMBER: 99772843 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOUNTAIN CLASSICS INC CENTRAL INDEX KEY: 0001086092 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 841270356 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-10 FILM NUMBER: 99772844 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIARC BEVERAGE HOLDINGS CORP CENTRAL INDEX KEY: 0001086093 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 650748978 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-11 FILM NUMBER: 99772845 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISTIC BRANDS INC CENTRAL INDEX KEY: 0001086094 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133844011 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-12 FILM NUMBER: 99772846 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SNAPPLE INTERNATIONAL CORP CENTRAL INDEX KEY: 0001086096 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 113195302 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-13 FILM NUMBER: 99772847 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SNAPPLE CARRIBEAN CORP CENTRAL INDEX KEY: 0001086097 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 113213755 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-14 FILM NUMBER: 99772848 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SNAPPLE WORLDWIDE CORP CENTRAL INDEX KEY: 0001086098 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 113233634 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-15 FILM NUMBER: 99772849 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SNAPPLE FINANCE CORP CENTRAL INDEX KEY: 0001086100 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 113207217 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-16 FILM NUMBER: 99772850 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACIFIC SNAPPLE DISTRIBUTORS INC CENTRAL INDEX KEY: 0001086101 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 330390611 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-17 FILM NUMBER: 99772851 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MR NATURAL INC CENTRAL INDEX KEY: 0001086102 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 113199405 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-18 FILM NUMBER: 99772852 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MILLROSE DISTRIBUTORS INC CENTRAL INDEX KEY: 0001086103 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-19 FILM NUMBER: 99772853 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KELRAE INC CENTRAL INDEX KEY: 0001086105 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 510380030 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-20 FILM NUMBER: 99772854 BUSINESS ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RC 11 INC CENTRAL INDEX KEY: 0001086106 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 640500368 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-21 FILM NUMBER: 99772855 BUSINESS ADDRESS: STREET 1: TRIARC RESTAURANT GROUP STREET 2: 1000 CORPORATE DRIVE CITY: FT LAUDERDALE STATE: FL ZIP: 33334 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARBYS RESTAURANTS INC CENTRAL INDEX KEY: 0001086107 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 650558054 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-22 FILM NUMBER: 99772856 BUSINESS ADDRESS: STREET 1: TRIARC RESTAURANT GROUP STREET 2: 1000 CORPORATE DRIVE CITY: FT LAUDERDALE STATE: FL ZIP: 33334 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARBYS RESTAURANT CONSTRUCTION CO CENTRAL INDEX KEY: 0001086108 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 650573190 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-23 FILM NUMBER: 99772857 BUSINESS ADDRESS: STREET 1: TRIARC RESTAURANT GROUP STREET 2: 1000 CORPORATE DRIVE CITY: FT LAUDERDALE STATE: FL ZIP: 33334 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TJ HOLDING CO INC CENTRAL INDEX KEY: 0001086110 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 650663961 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-24 FILM NUMBER: 99772858 BUSINESS ADDRESS: STREET 1: TRIARC RESTAURANT GROUP STREET 2: 1000 CORPORATE DRIVE CITY: FT LAUDERDALE STATE: FL ZIP: 33334 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARBYS BUILDING & CONSTRUCTION CO CENTRAL INDEX KEY: 0001086111 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 581684596 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-25 FILM NUMBER: 99772859 BUSINESS ADDRESS: STREET 1: TRIARC RESTAURANT GROUP STREET 2: 1000 CORPORATE DRIVE CITY: FT LAUDERDALE STATE: FL ZIP: 33334 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARBYS INC /DE CENTRAL INDEX KEY: 0001086112 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133760393 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-26 FILM NUMBER: 99772860 BUSINESS ADDRESS: STREET 1: TRIARC RESTAURANT GROUP STREET 2: 1000 CORPORATE DRIVE CITY: FT LAUDERDALE STATE: FL ZIP: 33334 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RCAC ASSET MANAGEMENT INC CENTRAL INDEX KEY: 0001086114 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 650564547 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-27 FILM NUMBER: 99772861 BUSINESS ADDRESS: STREET 1: TRIARC RESTAURANT GROUP STREET 2: 1000 CORPORATE DRIVE CITY: FT LAUDERDALE STATE: FL ZIP: 33334 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARHC LLC CENTRAL INDEX KEY: 0001086115 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-78625-28 FILM NUMBER: 99772862 BUSINESS ADDRESS: STREET 1: TRIARC RESTAURANT GROUP STREET 2: 1000 CORPORATE DRIVE CITY: FT LAUDERDALE STATE: FL ZIP: 33334 BUSINESS PHONE: 2124513140 MAIL ADDRESS: STREET 1: TRIARC BEVERAGE GROUP STREET 2: 709 WESTCHESTER AVENUE CITY: WHITE PLAINS STATE: NY ZIP: 10604 S-4/A 1 TRIARC CONSUMER PRODUCTS GROUP, LLC ET AL, S-4 AM#4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 10, 1999 REGISTRATION NOS. 333-78625; 333-78625-01 THROUGH 333-78625-28 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 4 TO FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ TRIARC CONSUMER PRODUCTS GROUP, LLC TRIARC BEVERAGE HOLDINGS CORP. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE DELAWARE (STATE OR OTHER JURISDICTION OF INCORPORATION OR (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) ORGANIZATION) 6719 2086 (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER) (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER) 38-0471180 65-0748978 (I.R.S. EMPLOYER (I.R.S. EMPLOYER IDENTIFICATION NUMBER) IDENTIFICATION NUMBER) 280 PARK AVENUE 709 WESTCHESTER AVENUE NEW YORK, NEW YORK 10017 WHITE PLAINS, NEW YORK 10604 (212) 451-3000 (914) 397-9200 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
BRIAN L. SCHORR, ESQ. EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL TRIARC CONSUMER PRODUCTS GROUP, LLC C/O TRIARC COMPANIES, INC. 280 PARK AVENUE NEW YORK, NEW YORK 10017 (212) 451-3000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ WITH A COPY TO: PAUL D. GINSBERG, ESQ. PAUL, WEISS, RIFKIND, WHARTON & GARRISON 1285 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019-6064 (212) 373-3000 ------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If the Securities registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] If this Form is filed to register additional securities for an offering as contemplated by Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed under Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ------------------------ THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE AS PROVIDED IN SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING UNDER SAID SECTION 8(a), MAY DETERMINE. ================================================================================ TABLE OF ADDITIONAL REGISTRANTS
EXACT NAME OF JURISDICTION PRIMARY STANDARD GUARANTOR REGISTRANT AS OF I.R.S. EMPLOYEE INDUSTRIAL SPECIFIED IN ITS CHARTER INCORPORATION IDENTIFICATION NO. CLASSIFICATION CODE NO. ------------------------ ------------- ------------------ ----------------------- Mistic Brands, Inc........................... Delaware 13-3844011 2086 Snapple Beverage Corp........................ Delaware 04-3149065 2086 Snapple International Corp................... Delaware 11-3195302 2086 Snapple Caribbean Corp....................... Delaware 11-3213755 2086 Snapple Worldwide Corp....................... Delaware 11-3233634 2086 Snapple Finance Corp......................... Delaware 11-3207217 2086 Pacific Snapple Distributors, Inc............ California 33-0390611 2086 Mr. Natural, Inc............................. Delaware 11-3199405 2086 Kelrae, Inc.................................. Delaware 51-0380030 6719 Millrose Distributors, Inc................... New Jersey 22-2323048 2086 RC/Arby's Corporation........................ Delaware 59-2277791 6794 ARHC, LLC.................................... Delaware 59-2277791 6794 RCAC Asset Management, Inc................... Delaware 65-0564547 6794 Arby's, Inc.................................. Delaware 13-3760393 6794 Arby's Building and Construction Co.......... Georgia 58-1684596 6794 TJ Holding Company, Inc...................... Delaware 65-0663961 6794 Arby's Restaurant Construction Company....... Delaware 65-0573190 6794 Arby's Restaurants, Inc...................... Delaware 65-0558054 6794 RC-11, Inc................................... Mississippi 64-0500368 2087 RC Leasing, Inc.............................. Delaware 65-0464496 2087 Royal Crown Bottling Company of Texas........ Delaware 59-1722788 2087 Royal Crown Company, Inc..................... Delaware 58-1316061 2087 Retailer Concentrate Products, Inc........... Florida 65-0596569 2087 TriBev Corporation........................... Delaware 13-3787716 2087 Stewart's Beverages, Inc..................... Delaware 52-0880815 2086 Old San Francisco Seltzer, Inc............... Colorado 84-1069343 2086 Fountain Classics, Inc....................... Colorado 84-1270356 2086
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION DATED DECEMBER 10, 1999 PROSPECTUS TRIARC CONSUMER PRODUCTS GROUP, LLC AND TRIARC BEVERAGE HOLDINGS CORP. OFFER TO EXCHANGE $300,000,000 OF OUR 10 1/4% SENIOR SUBORDINATED NOTES DUE 2009 TERMS OF THE EXCHANGE OFFER It expires at 5:00 p.m., New York City time, on , 2000, unless extended. All initial notes that are validly tendered and not withdrawn will be exchanged. Tenders of initial notes may be withdrawn at any time before the expiration of the exchange offer. The terms of the exchange notes we will issue in the exchange offer are substantially identical to those of the initial notes, except that transfer restrictions and registration rights relating to the initial notes will not apply to the exchange notes. The exchange notes are new securities and no established market for them currently exists. BEFORE PARTICIPATING IN THIS EXCHANGE OFFER PLEASE REFER TO THE SECTION OF THIS PROSPECTUS ENTITLED 'RISK FACTORS' BEGINNING ON PAGE 14. Neither the Securities and Exchange Commission nor any state commission has approved the notes to be distributed in the exchange offer, nor have any of these organizations determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ------------------------ The date of this prospectus is December , 1999. TABLE OF CONTENTS
PAGE ---- Prospectus Summary.......................................... 3 Risk Factors................................................ 14 Use of Proceeds............................................. 22 Capitalization.............................................. 23 Unaudited Pro Forma Condensed Consolidated Statements of Operations................................................ 24 Selected Consolidated Financial Data........................ 30 Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 33 Business.................................................... 58 Management.................................................. 73 Certain Relationships and Related Transactions.............. 89 Principal Shareholders...................................... 92 Description of Indebtedness................................. 94 The Exchange Offer.......................................... 97 Description of the Exchange Notes........................... 107 Federal Income Tax Considerations........................... 148 Plan of Distribution........................................ 152 Legal Matters............................................... 153 Experts..................................................... 153 Where You Can Find More Information......................... 153 Index to Financial Statements............................... F-1
PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. 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 carefully, including the section entitled 'Risk Factors' beginning on page 14 and the financial statements, including the notes to those statements, included elsewhere in this prospectus. Trademarks, copyrights and other intellectual property owned or licensed by us appear in italics the first time that they are referred to in this prospectus. All other trademarks appearing in this prospectus are the property of their respective owners. SUMMARY OF THE EXCHANGE OFFER Triarc Consumer Products Group, LLC and Triarc Beverage Holdings Corp., the issuers, are offering to exchange $300,000,000 aggregate principal amount of their exchange notes for $300,000,000 aggregate principal amount of their initial notes. To exchange your initial notes, you must properly tender them and the issuers must accept your tender. The issuers will exchange all outstanding initial notes that are validly tendered and not validly withdrawn. EXPIRATION DATE The exchange offer will expire at 5:00 p.m., New York City time, on , 2000, unless the issuers decide to extend it. CONDITIONS TO THE EXCHANGE OFFER The exchange offer is subject to the following customary conditions: the exchange offer does not violate applicable law or any applicable interpretation of the staff of the Securities and Exchange Commission, you tender your initial notes in the manner required by the exchange offer, and there is no injunction, order or decree by any court or governmental authority which would prevent or otherwise materially impair our ability to proceed with the exchange offer. Please refer to the section of this prospectus entitled 'The Exchange Offer -- Conditions to the Exchange Offer.' PROCEDURES FOR TENDERING INITIAL NOTES To participate in the exchange offer, you must complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal, and transmit it together with all other documents required by the letter of transmittal, including the initial notes to be exchanged, to The Bank of New York, as exchange agent, at the address indicated on the cover page of the letter of transmittal before 5:00 p.m., New York City time, on the expiration date. You can also tender your initial notes by following the procedures for book-entry transfer described in this prospectus. For more information on tendering your initial notes, please refer to the sections of this prospectus entitled 'The Exchange Offer -- Procedures for Tendering Initial Notes -- Proper Execution and Delivery of Letters of Transmittal' and ' -- Book-Entry Delivery Procedure.' SPECIAL PROCEDURES FOR BENEFICIAL OWNERS If your initial notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, we urge you to contact that person promptly to tender your initial notes in the exchange offer. For more information on tendering your initial notes, please refer to the sections of this prospectus entitled 'The Exchange Offer -- Procedures for Tendering Initial 3 Notes -- Proper Execution and Delivery of Letters of Transmittal' and ' -- Book-Entry Delivery Procedure.' GUARANTEED DELIVERY PROCEDURES If you wish to tender your initial notes and you cannot get your required documents to the exchange agent on time, you may tender your initial notes according to the guaranteed delivery procedures described under the section of this prospectus entitled 'The Exchange Offer -- Procedures for Tendering Initial Notes -- Guaranteed Delivery Procedure.' WITHDRAWAL RIGHTS You may withdraw the tender of your initial notes at any time before 5:00 p.m., New York City time, on the expiration date of the exchange offer. To withdraw, you must send a written or facsimile transmission notice of withdrawal to the exchange agent at its address shown in the section of this prospectus entitled 'The Exchange Offer -- Exchange Agent' on or before 5:00 p.m., New York City time, on the expiration date of the exchange offer. Please refer to the section of this prospectus entitled 'The Exchange Offer -- Withdrawal of Tenders.' ACCEPTANCE OF INITIAL NOTES AND DELIVERY OF EXCHANGE NOTES If all conditions required for proper acceptance of initial notes are fulfilled, the issuers will accept any and all initial notes that are properly tendered in the exchange offer on or before 5:00 p.m., New York City time, on the expiration date. The issuers will return any initial note that they do not accept for exchange to you without expense as promptly as practicable after the expiration date. The issuers will deliver the exchange notes as promptly as practicable after the expiration date and acceptance of the initial notes for exchange. Please refer to the section in this prospectus entitled 'The Exchange Offer -- Acceptance of Initial Notes for Exchange; Delivery of Exchange Notes.' FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE EXCHANGE OFFER Exchanging your initial notes for exchange notes will not be a taxable event to you for United States federal income tax purposes. Please refer to the section of this prospectus entitled 'Federal Income Tax Considerations.' EXCHANGE AGENT The Bank of New York is serving as exchange agent in the exchange offer. FEES AND EXPENSES We will bear all expenses related to the exchange offer. Please refer to the section of this prospectus entitled 'The Exchange Offer -- Fees and Expenses.' USE OF PROCEEDS We will not receive any proceeds from the issuance of the exchange notes. We are making this exchange offer solely to satisfy our obligations under our registration rights agreement. Please refer to the sections in this prospectus entitled 'Use of Proceeds' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources' for a discussion of our use of the proceeds from the issuance of the initial notes. 4 CONSEQUENCES OF FAILURE TO EXCHANGE INITIAL NOTES If you do not exchange your initial notes in this exchange offer, you will no longer be able to require us to register your initial notes under the Securities Act except in the limited circumstances provided under our registration rights agreement. In addition, you will not be able to resell, offer to resell or otherwise transfer the initial notes unless they are registered under the Securities Act, or unless you resell, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not governed by, the Securities Act. Please refer to the section of this prospectus entitled 'Risk Factors -- Your failure to participate in the exchange offer will have adverse consequences.' ABOUT OUR BUSINESSES GENERAL We are a leading premium beverage company, a restaurant franchisor and a soft drink concentrates producer. We own the Snapple, Mistic and Stewart's premium beverage brands and the Royal Crown carbonated soft drink brand and are the franchisor of the Arby's restaurant system. PREMIUM BEVERAGES (SNAPPLE, MISTIC AND STEWART'S) Through Snapple, Mistic and Stewart's, we are a leader in the wholesale premium beverage market. According to A.C. Nielsen data, in 1998 our premium beverage brands had the leading share (33%) of premium beverage sales volume in grocery stores, mass merchandisers and convenience stores. SNAPPLE Snapple Beverage Corp. markets and distributes all-natural ready-to-drink teas, juice drinks and juices. According to A.C. Nielsen data, in 1998 Snapple had the leading share (26%) of premium beverage sales volume in grocery stores, mass merchandisers and convenience stores. Since Triarc Beverage Holdings acquired Snapple in May 1997, Snapple has introduced several new products and flavors including Orange Tropic-Wendy's Tropical Inspiration, Snapple Farms, Snapple Elements, Hydro and WhipperSnapple, which was named Convenience Store News magazine's best new non-alcoholic beverage product of the year and won the American Marketing Association's Edison award for best new beverage in 1998. MISTIC Mistic Brands, Inc. markets and distributes a wide variety of premium beverages, including fruit drinks, ready-to-drink teas, juices and flavored seltzers under the Mistic, Mistic Rain Forest Nectars and Mistic Fruit Blast brand names. Since our parent, Triarc Companies, Inc., which we refer to as Triarc Parent, acquired Mistic in August 1995, Mistic has introduced more than 35 new flavors, a line of 100% fruit juices, various new bottle sizes and shapes and numerous new package designs. During 1999, Mistic introduced an orange carrot juice drink, Mistic Italian Ice Smoothies and Sun Valley Squeeze. STEWART'S Stewart's Beverages, Inc., formerly known as Cable Car Beverage Corporation, the exclusive soft-drink licensee of the Stewart's trademark, markets and distributes Stewart's brand premium soft drinks, including Root Beer, Orange N' Cream, Cream Ale, Ginger Beer, Creamy Style Draft Cola, Classic Key Lime, Lemon Meringue, Cherries N' Cream and Grape. Through the third quarter of 1999, Stewart's has experienced 28 consecutive quarters of double-digit percentage case sales increases compared to the prior year's comparable quarter. 5 SOFT DRINK CONCENTRATES (ROYAL CROWN) Royal Crown Company, Inc. produces and sells concentrates used in the production of carbonated soft drinks. Royal Crown's products include RC Cola, which is the largest national brand cola available to bottlers who do not bottle either Coca-Cola or Pepsi-Cola. Royal Crown is also the exclusive supplier of cola concentrate and a primary supplier of flavor concentrates to Cott Corporation, which, based on public disclosures by Cott, is the largest supplier of premium retailer branded beverages in the United States, Canada and the United Kingdom. Royal Crown also sells its products internationally. Royal Crown's international export business has grown at an 18% compound annual growth rate over the five years ended 1997, although growth slowed to 4% in 1998 due to adverse economic conditions in some of its markets, especially Russia. During 1998, Royal Crown's soft drink brands had approximately a 1.6% share of national supermarket volume according to Beverage Digest/A.C. Nielsen data. FRANCHISE RESTAURANT SYSTEM Through the Arby's franchise business, we participate in the approximately $100 billion quick service restaurant segment of the domestic restaurant industry. Arby's is the world's largest restaurant system specializing in slow-roasted roast beef sandwiches. According to Nation's Restaurant News, Arby's is the 10th largest quick service restaurant chain in the United States, based on 1997 domestic system wide sales. Arby's offers franchisees the opportunity to multi-brand with T.J. Cinnamons products, which are primarily gourmet cinnamon rolls, gourmet coffees and other related products. In addition, Arby's expects to offer franchisees the opportunity to multi-brand further with Pasta Connection'TM' products, which are pasta dishes with a variety of different sauces, after we complete the final stages of test marketing in 1999. As of October 3, 1999, the Arby's restaurant system consisted of 3,178 franchised restaurants and Arby's had commitments from franchisees to open up to 1,098 Arby's restaurants over the next 12 years. From 1996 to 1998, Arby's system-wide sales grew at a compound annual growth rate of 6.1% to $2.2 billion. BUSINESS STRATEGY Our strategy for each of our businesses is as follows: PREMIUM BEVERAGES (SNAPPLE, MISTIC, STEWART'S): Continue to develop new products and innovative packaging Increase consumer awareness and brand imagery through innovative marketing Continue to expand and enhance distributor relationships to increase penetration of our brands Continue to acquire distributors in key markets; we currently own distributors in three of our largest premium beverage markets Continue to control production costs through favorable supply agreements Continue to minimize capital expenditures through the use of third-party co-packers Pursue acquisitions of additional beverage brands SOFT DRINK CONCENTRATES (ROYAL CROWN): Enhance Royal Crown's strategic relationship with Cott by assisting in the development of new products and maintenance of quality control Continue the expansion of Royal Crown's international export business Focus marketing resources in markets where Royal Crown's market share is strongest 6 FRANCHISE RESTAURANT SYSTEM (ARBY'S): Increase Arby's franchisees' annual unit volume by: (1) promoting the perception of Arby's as a 'Cut Above' brand, (2) driving consumer awareness and loyalty through marketing and new products, (3) expanding breakfast and dinner offerings through new menu items and multi-branding opportunities, and (4) promoting Arby's openings in high quality locations Continue to strengthen franchisee relationships through initiatives like third-party preferred financing arrangements Arby's established on behalf of its franchisees during 1998 Expand brand distribution through well capitalized and experienced franchisees and through alternative locations including airports, school cafeterias and hospitals Selectively acquire new brands to which we can apply our successful franchising strategy HISTORY OF TRIARC CONSUMER PRODUCTS GROUP Triarc Consumer Products Group is a wholly owned subsidiary of Triarc Parent. Triarc Consumer Products Group was organized on January 15, 1999. In conjunction with the offering of the initial notes and the new credit facility, on February 23, 1999, Triarc Parent contributed to Triarc Consumer Products Group all of the outstanding capital stock of Triarc Beverage Holdings Corp., RC/Arby's Corporation and Stewart's Beverages, Inc. and on February 24, 1999 contributed by merger all of the outstanding shares of capital stock that it owned in two subsidiaries of RC/Arby's Corporation. The following chart summarizes the organizational structure of Triarc Consumer Products Group and its domestic subsidiaries: [Flow Chart] 7 SUMMARY OF TERMS OF THE EXCHANGE NOTES ISSUERS Triarc Consumer Products Group, LLC and Triarc Beverage Holdings Corp. on a joint and several baisis. NOTES OFFERED $300,000,000 aggregate principal amount of 10 1/4% senior subordinated notes due 2009. The form and terms of the exchange notes are the same as the form and terms of the initial notes, except that the exchange notes will be registered under the Securities Act, will not bear legends restricting their transfer and will not be entitled to registration rights under our registration rights agreement. The exchange notes will evidence the same debt as the initial notes and both the initial notes and the exchange notes will be governed by the same indenture. The exchange notes, like the initial notes, will be unsecured, joint and several, obligations of Triarc Consumer Products Group and Triarc Beverage Holdings. MATURITY DATE February 15, 2009. INTEREST ON THE EXCHANGE NOTES The exchange notes will bear interest at the rate of 10 1/4% per annum, payable in cash on February 15 and August 15 of each year, beginning February 15, 2000. SINKING FUND None. OPTIONAL REDEMPTION The issuers may redeem any of the exchange notes beginning on February 15, 2004. The initial redemption price is 105.125% of their principal amount, plus accrued interest. The redemption price will decline each year after 2004 and will be 100% of their principal amount, plus accrued interest, beginning on February 15, 2007. In addition, before February 15, 2002, the issuers may redeem up to 35% of the aggregate principal amount of the initial notes and exchange notes issued at a redemption price equal to 110.25% of the principal amount of the initial notes and exchange notes redeemed, plus accrued and unpaid interest, if any, through the date of redemption, if: the issuers use the proceeds of any public offerings of common stock by (1) Triarc Parent, to the extent the proceeds are contributed to Triarc Consumer Products Group, (2) Triarc Consumer Products Group, or (3) any of their successors, and at least 65% of the aggregate principal amount of the initial notes and exchange notes originally issued remains outstanding immediately after giving effect to the redemption. Please refer to the section of this prospectus entitled 'Description of the Exchange Notes -- Optional Redemption.' CHANGE OF CONTROL Upon a change of control you will have the right to require the issuers to repurchase all of your exchange notes at a repurchase price equal to 101% of the principal amount of the exchange notes plus accrued interest, if any, to the date of the repurchase. However, the issuers cannot 8 assure you that they will have sufficient funds to repurchase your exchange notes when required upon a change of control. Please refer to the section of this prospectus entitled 'Risk Factors -- We may be unable to purchase the exchange notes upon a change of control.' RANKING The exchange notes will rank junior to: all senior indebtedness of the issuers and the subsidiaries guaranteeing the exchange notes, all secured indebtedness of the issuers and the subsidiaries guaranteeing the exchange notes, and all liabilities of the issuers' non-guarantor subsidiaries. At October 3, 1999, assuming this offering and the new credit facility had been completed at that time, the exchange notes: would have ranked junior to $479.8 million of consolidated senior indebtedness of the issuers and the subsidiaries guaranteeing the notes, would have ranked junior to $479.8 million of consolidated secured indebtedness of the issuers and the subsidiaries guaranteeing the notes, and would have ranked junior to $4.7 million of liabilities of the issuers' non-guarantor subsidiaries. GUARANTEES The exchange notes will be guaranteed on a senior subordinated basis by all of Triarc Consumer Products Group's existing domestic subsidiaries, other than Triarc Beverage Holdings Corp., a co-issuer of the exchange notes. The guarantees will be full, unconditional, joint and several obligations of the guarantors. The guarantees will rank junior to all senior indebtedness and secured indebtedness of the guarantors. RESTRICTIVE COVENANTS The terms of the exchange notes restrict the issuers' ability and the ability of some of the issuers' subsidiaries to: incur additional indebtedness, create liens, engage in sale-leaseback transactions, pay dividends or make distributions in respect of capital stock, purchase or redeem capital stock, make investments or restricted payments, sell assets, issue or sell stock of subsidiaries, enter into transactions with stockholders or affiliates, or effect a consolidation or merger. Exceptions to these limitations exist, including exceptions that would permit the payment of a dividend to Triarc Parent consisting of the capital stock of our restaurant subsidiaries and the release of these subsidiaries from their guarantees of the exchange notes and the restrictive covenants in the indenture. 9 ABSENCE OF A PUBLIC MARKET FOR THE EXCHANGE NOTES The exchange notes are new securities and no established market for them currently exists. We cannot assure you that a market for the exchange notes will develop or be liquid. The initial notes are currently eligible for trading in the Private Offerings, Resales and Trading through Automated Linkages market. Following commencement of the exchange offer, you may continue to trade the initial notes in the private offerings market. However, the exchange notes will not be eligible for trading in this market. FORM OF EXCHANGE NOTES The exchange notes will be represented by one or more permanent global securities in bearer form deposited with, or on behalf of, The Depository Trust Company and registered in the name of The Depository Trust Company or its nominee. You will not receive exchange notes in registered form unless one of the events described in the section of this prospectus entitled 'Description of the Exchange Notes -- Book Entry; Delivery and Form' occurs. Instead, beneficial interests in the exchange notes will be shown on, and transfers of these will be effected only through, records maintained in book-entry form by The Depository Trust Company with respect to its participants. RISK FACTORS YOU SHOULD CAREFULLY CONSIDER ALL OF THE INFORMATION CONTAINED IN THIS PROSPECTUS AND, IN PARTICULAR, YOU SHOULD EVALUATE THE SPECIFIC FACTORS LISTED UNDER 'RISK FACTORS' ON PAGE 14 FOR RISKS ASSOCIATED WITH THE EXCHANGE OFFER AND THE FOLLOWING RISK FACTOR HEADINGS: We have substantial debt which may adversely affect us by limiting future sources of financing and subjecting us to additional risks, We may not be able to service our debt obligations, Restrictions imposed by the credit facility may limit our ability to execute our business strategy and may increase the risk of default under our debt obligations, The exchange notes are junior in right of payment to the claims of other creditors who would be entitled to payment before you which increases the risk of a default under the exchange notes, Our franchised restaurant business could be distributed to Triarc Parent which would reduce our income generating assets, We may not be able to continue to improve Snapple's operations which may adversely affect our financial condition because of the importance of Snapple to our success, Arby's dependence on restaurant revenues and openings means it can be adversely affected by matters not in its control, Arby's dependence on RTM, Inc. and other significant franchisees may adversely affect Arby's franchise royalties, and Some stockholders of Triarc Parent can exert indirect control of us and have the power to cause or prevent a change of control that might otherwise be beneficial to you. ------------------------ Triarc Consumer Products Group, LLC's principal executive offices are located at 280 Park Avenue, New York, New York 10017. Its telephone number is (212) 451-3000. Triarc Beverage Holdings Corp.'s principal executive offices are located at 709 Westchester Avenue, White Plains, New York 10604. Its telephone number is (914) 397-9200. 10 SUMMARY CONSOLIDATED FINANCIAL DATA The following table presents our summary consolidated financial data. The summary consolidated historical operating data for the years ended December 31, 1996, December 28, 1997 and January 3, 1999 are derived from the consolidated financial statements audited by Deloitte & Touche LLP, independent auditors, contained elsewhere in this prospectus and should be read with those financial statements and the related notes. The summary historical operating data for the nine-month periods ended September 27, 1998 and October 3, 1999 are derived from unaudited condensed consolidated financial statements contained elsewhere in this prospectus. The summary consolidated operating data in the column 'As Adjusted for the Transactions' reflect adjustments for the offering of the initial 10 1/4% notes, the new credit facility, the related use of proceeds and other related transactions. The adjusted data are derived from the 'Unaudited Pro Forma Condensed Consolidated Statements of Operations' contained elsewhere in this prospectus and should be read with those pro forma statements of operations and the related notes. EBITDA and Adjusted EBITDA are presented in order to allow for greater comparability between periods as well as an indication of our results on an ongoing basis. We calculate EBITDA as operating profit (loss) plus depreciation and amortization (excluding amortization of deferred financing costs). We calculate Adjusted EBITDA as EBITDA before significant charges and credits relating to our acquisitions, dispositions and related restructurings. Because all companies do not calculate EBITDA or similarly titled financial measures in the same manner, those disclosures may not be comparable with EBITDA or Adjusted EBITDA as calculated by us. You should not think of EBITDA or Adjusted EBITDA as an alternative to net income or loss (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations) and EBITDA and Adjusted EBITDA are not measures of performance or financial condition under generally accepted accounting principles. However, EBITDA and Adjusted EBITDA provide additional information for evaluating our ability to meet our obligations. Cash flows in accordance with generally accepted accounting principles consist of cash flows from (1) operating, (2) investing and (3) financing activities. Cash flows from operating activities reflect net income or loss (including charges for interest and income taxes not reflected in EBITDA) adjusted for (1) all non-cash charges or credits (including, but not limited to, depreciation and amortization) and (2) changes in operating assets and liabilities (not reflected in EBITDA). Further, cash flows from investing and financing activities are not included in EBITDA. Our historical cash flows are presented in the table below. The ratio of earnings to fixed charges was computed by dividing (1) earnings (loss) before income taxes, extraordinary charges and fixed charges by (2) fixed charges. Fixed charges consist of interest expense, amortization of deferred financing costs and one-third of rental expense, which is deemed to be representative of the interest factor.
AS ADJUSTED FOR THE AS ADJUSTED HISTORICAL TRANSACTIONS(1) FOR THE ------------------------- --------------- HISTORICAL TRANSACTIONS(1) NINE MONTHS ENDED ----------------------------------------- --------------- ------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 3, DECEMBER 31, DECEMBER 28, JANUARY 3, JANUARY 3, SEPTEMBER 27, --------------------------- 1996 1997 1999 1999 1998 1999 1999 ---- ---- ---- ---- ---- ---- ---- (IN THOUSANDS EXCEPT RATIOS) STATEMENT OF OPERATIONS DATA: Revenues......... $597,435 $ 696,152 $815,036 $827,589 $651,975 $ 679,728 $681,402 Operating profit (loss)......... (25,435)(2) 31,872(3) 105,192 106,047 74,984 88,472 (6) 88,381(7) Income (loss) before extraordinary charges........ (51,368)(2) (18,986)(3) 29,987(4) 18,057(4) 20,300(5) 17,514 (6) 14,777(7) Extraordinary charges........ -- (2,954)(3) -- -- (11,772)(6) Net income (loss)......... (51,368)(2) (21,940)(3) 29,987(4) 20,300(5) 5,742 (6) Cash dividends... -- -- (23,556) -- (204,746)
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AS ADJUSTED FOR THE AS ADJUSTED HISTORICAL TRANSACTIONS(1) FOR THE ------------------------- --------------- HISTORICAL TRANSACTIONS(1) NINE MONTHS ENDED ----------------------------------------- --------------- ------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 3, DECEMBER 31, DECEMBER 28, JANUARY 3, JANUARY 3, SEPTEMBER 27, --------------------------- 1996 1997 1999 1999 1998 1999 1999 ---- ---- ---- ---- ---- ---- ---- (IN THOUSANDS EXCEPT RATIOS) OTHER OPERATING DATA: EBITDA Premium beverages...... $ 13,381 $ 7,561 $ 77,825 $ 79,882 $ 57,472 $ 62,059 $ 62,185 Soft drink concentrates... 18,418 18,504 17,006 17,006 13,232 15,756 15,756 Restaurants...... 31,819 31,200 43,180 43,180 29,356 34,382 34,382 General corporate...... (189) (149) (11) (11) (102) (76) (76) -------- --------- -------- -------- -------- --------- -------- Consolidated... $ 63,429 $ 57,116 $138,000 $140,057 $ 99,958 $ 112,121 $112,247 -------- --------- -------- -------- -------- --------- -------- -------- --------- -------- -------- -------- --------- -------- Adjusted EBITDA Premium beverages...... $ 14,831 $ 40,430 $ 77,825 $ 79,882 $ 57,472 $ 65,267 $ 65,393 Soft drink concentrates... 22,368 20,916 17,006 17,006 13,232 15,756 15,756 Restaurants...... 34,219 36,797 43,180 43,180 29,356 34,382 34,382 General corporate...... (189) (149) (11) (11) (102) (76) (76) -------- --------- -------- -------- -------- --------- -------- Consolidated... $ 71,229 $ 97,994 $138,000 $140,057 $ 99,958 $ 115,329 $115,455 -------- --------- -------- -------- -------- --------- -------- -------- --------- -------- -------- -------- --------- -------- Reconciliation of EBITDA to Adjusted EBITDA EBITDA........... $ 63,429 $ 57,116 $138,000 $140,057 $ 99,958 $ 112,121 $112,247 Add back significant charges: Facilities relocation and corporate restructuring/ reorganization.. 7,800 7,063 -- -- -- 3,208 3,208 Charges related to post- acquisition transition, integration and changes to business strategies... -- 33,815 -- -- -- -- -- -------- --------- -------- -------- -------- --------- -------- Adjusted EBITDA..... $ 71,229 $ 97,994 $138,000 $140,057 $ 99,958 $ 115,329 $115,455 -------- --------- -------- -------- -------- --------- -------- -------- --------- -------- -------- -------- --------- -------- Ratio of Adjusted EBITDA to interest expense............ 1.8x 1.9x Net cash provided by (used in): Operating activities..... $ 11,325 $ 35,440 $ 59,104 $ 42,083 $ 15,429 Investing activities..... (18,028) (305,629) 15,771 17,706 (22,803) Financing activities..... 4,388 296,861 (36,325) (32,593) (25,287) Ratio of earnings to fixed charges...... 1.9x 1.5x 1.8x 1.6x 1.5x Deficiency of earnings to cover fixed charges...... $ 74,996 $ 24,128 BALANCE SHEET DATA (AT END OF PERIOD): Total assets..... $790,970 $ 827,830 Long-term debt... 560,977 734,218 Redeemable preferred stock.......... 87,587 -- Member's deficit........ (44,721) (173,615)
- ------------ (1) The summary consolidated operating data reflect adjustments for (1) the offering of the initial 10 1/4% notes, (2) the new credit facility, (3) the related use of proceeds, including the acquisition of Millrose Distributors, Inc., and (4) other related transactions. The adjusted data are derived from the 'Unaudited Pro Forma Condensed Statements of Operations' beginning on page 24 in this prospectus and should be read with those pro forma statements of operations and the related notes. (2) Reflects certain significant charges recorded during 1996 as follows: $66,700,000 charged to operating loss representing a $58,900,000 charge for impairment of company-owned restaurants and related exit costs and $7,800,000 of facilities relocation and corporate restructuring; and $40,843,000 charged to (footnotes continued on next page) 12 (footnotes continued from previous page) loss before extraordinary charges and net loss representing the aforementioned $66,700,000 charged to operating loss, less $25,857,000 of income tax benefit relating to the aggregate of the above charges. (3) Reflects certain significant charges recorded during 1997 as follows: $40,878,000 charged to operating profit representing $33,815,000 of charges related to post-acquisition transition, integration and changes to business strategies and $7,063,000 of facilities relocation and corporate restructuring; $27,138,000 charged to loss before extraordinary charges representing the aforementioned $40,878,000 charged to operating profit, $3,513,000 of loss on sale of businesses, net, less $17,253,000 of income tax benefit relating to the aggregate of the above net charges; and $30,092,000 charged to net loss representing the aforementioned $27,138,000 charged to loss before extraordinary charges and a $2,954,000 extraordinary charge from the early extinguishment of debt. (4) Reflects a significant credit recorded during 1998 as follows: $3,067,000 credited to income before extraordinary charges and net income representing $5,016,000 of gain on sale of businesses less $1,949,000 of related income tax provision. (5) Reflects a significant credit recorded during the nine months ended September 27, 1998 as follows: $3,015,000 credited to income before extraordinary charges and net income representing $4,934,000 of gain on sale of businesses less $1,919,000 of related income tax provision. (6) Reflects certain significant charges recorded during the nine months ended October 3, 1999 as follows: $3,208,000 charged to operating profit representing capital structure reorganization related charges; $1,957,000 charged to income before extraordinary charges representing the aforementioned $3,208,000 less $1,251,000 of income tax benefit; and $13,729,000 charged to net income representing the aforementioned $1,957,000 charged to income before extraordinary charges and an $11,772,000 extraordinary charge from the early extinguishment of debt. (7) Reflects certain significant charges recorded during the nine months ended October 3, 1999 as follows: $3,208,000 charged to operating profit representing capital structure reorganization related charges; and $1,957,000 charged to income before extraordinary charges representing the aforementioned $3,208,000 less $1,251,000 of income tax benefit. 13 RISK FACTORS You should carefully consider the risks described below in addition to all other information provided to you in this prospectus before tendering the initial notes in the exchange offer, including information included in the section of this prospectus entitled 'Management's Discussion and Analysis of Financial Condition and Results of Operations.' WE HAVE SUBSTANTIAL DEBT WHICH MAY ADVERSELY AFFECT US BY LIMITING FUTURE SOURCES OF FINANCING AND SUBJECTING US TO ADDITIONAL RISKS We have now and, after the exchange offer will continue to have, a significant amount of debt. The following chart shows important credit statistics. The ratio of earnings to fixed charges for the year ended January 3, 1999 and the nine months ended October 3, 1999 are presented on a pro forma basis, assuming the initial offering and our credit facility had been completed at the beginning of our 1998 fiscal year and that the proceeds had been applied as described in this prospectus (in millions except ratio).
AT OCTOBER 3, 1999 ---- Total indebtedness.......................................... $779.8 Member's deficit............................................ ($173.6)
FOR THE FOR THE NINE MONTHS YEAR ENDED ENDED JANUARY 3, OCTOBER 3, 1999 1999 ---- ---- Ratio of earnings to fixed charges................ 1.5x 1.5x
------------------------ In addition to the above indebtedness, at October 3, 1999 Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown were able to borrow up to $59.9 million of revolving credit loans under the credit facility, without the consent of the holders of the notes. Except as prohibited by limitations contained in the credit facility, the indenture and instruments governing our other debt, we may also incur additional debt. If new debt is added to our current debt levels, the related risks that we face could increase. Below are many, but not all, of the consequences resulting from this significant amount of debt: we may be unable to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate purposes, a significant portion of our cash flow from operations must be dedicated to the repayment of indebtedness, which reduces the amount of cash we have available for other purposes, we may be disadvantaged as compared to our competitors because of the significant amount of debt we owe, our ability to adjust to changing market conditions and our ability to withstand competition may be hampered by the amount of debt we owe. It may also make us more vulnerable in a volatile market, and we will be exposed to interest rate fluctuations because most of our borrowings under our credit facility are and will continue to be at variable rates of interest. WE MAY NOT BE ABLE TO SERVICE OUR DEBT OBLIGATIONS Our ability to meet payment obligations on our debt depends on our ability to implement our business strategy successfully. We cannot assure you that we will be successful in implementing our strategy or in realizing our anticipated financial results. You should also be aware that our financial and operational performance depends upon a number of factors, many of which are beyond our control. These factors include: 14 the current economic and competitive conditions in the beverage and restaurant industries, any operating difficulties, increased operating costs or pricing pressures we may experience, the passage of legislation or other regulatory developments that affect us adversely, and any delays in implementing any strategic projects we may have. If we are unable to repay our debt, we may be forced to reduce or delay expansion, sell some of our assets, obtain additional equity capital or refinance or restructure our debt. We cannot assure you that our cash flow and capital resources will be sufficient to repay our existing indebtedness or any indebtedness we may incur in the future, or that we will be successful in obtaining alternative financing. You should note that debt under the credit facility will mature before the maturity of the notes. Please refer to the sections in this prospectus entitled 'Description of Indebtedness,' 'Description of the Exchange Notes,' 'Business -- Premium Beverages -- Business Strategy,' ' -- Soft Drink Concentrates -- Business Strategy' and ' -- Franchise Restaurant System -- Business Strategy.' RESTRICTIONS IMPOSED BY THE CREDIT FACILITY MAY LIMIT OUR ABILITY TO EXECUTE OUR BUSINESS STRATEGY AND MAY INCREASE THE RISK OF DEFAULT UNDER OUR DEBT OBLIGATIONS The credit facility contains financial covenants that require us to maintain specified financial ratios and restrict our ability to: incur debt, enter into some fundamental transactions, including mergers and consolidations, and create or permit liens. If we are unable to generate sufficient cash flow or otherwise obtain the funds necessary to make required payments of principal and interest under, or are unable to comply with covenants of, the credit facility or the indenture, we would be in default under the terms of the credit facility. This would permit the lenders under the credit facility to accelerate the maturity of the balance owing under the credit facility. If these circumstances were to occur, the subordination provisions of the exchange notes would require the lenders under the credit facility to receive payment in full before the holders of exchange notes receive any payment of principal of, premium, if any, and interest on the exchange notes. Please refer to the sections in this prospectus entitled 'Description of Indebtedness -- Credit Facility' and 'Description of the Exchange Notes -- Ranking.' THE EXCHANGE NOTES ARE JUNIOR IN RIGHT OF PAYMENT TO THE CLAIMS OF OTHER CREDITORS WHO WOULD BE ENTITLED TO PAYMENT BEFORE YOU WHICH INCREASES THE RISK OF A DEFAULT UNDER THE EXCHANGE NOTES Senior Debt Your right to receive payment of principal of, premium, if any, and interest on, and any other amounts owing in respect of, the exchange notes will be junior to the prior payment in full of all of existing and future senior indebtedness of the issuers and the guarantors, including all debt under the credit facility. At October 3, 1999, assuming the offering of the initial notes and the credit facility had been completed at that time, the issuers and the guarantors would have had approximately $479.8 million of consolidated senior indebtedness outstanding, and approximately $59.9 million would have been available for borrowing under our credit facility. The terms of the credit facility and the indenture permit us to incur additional indebtedness, including senior indebtedness. You should refer to the section of this prospectus entitled 'Description of the Exchange Notes -- Ranking.' If we were to undergo a liquidation, dissolution, reorganization or any similar proceeding, our assets would be available to pay obligations in respect of the exchange notes only after all senior indebtedness has been paid in full, and there may not be sufficient assets to pay amounts due on all or any of the exchange notes. 15 In addition, the issuers cannot make any cash payments to you if they have failed to make payments to holders of senior indebtedness. In addition, with some exceptions, the issuers cannot make any payments to you for a period of up to 179 days if they have otherwise defaulted on their senior indebtedness covenants. Secured Debt The exchange notes and guarantees will effectively rank junior to all secured debt of the issuers and the guarantors. The credit facility is secured by substantially all of our assets, and the terms of the credit facility and the indenture permit the issuers and the guarantors to incur additional secured debt. Subsidiary Liabilities In addition, the exchange notes will effectively rank junior to all existing and future liabilities of the issuers' subsidiaries that have not co-issued or guaranteed the notes, including trade payables and guarantees. At October 3, 1999, those subsidiaries had approximately $4.7 million of outstanding liabilities. RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS FROM THE ISSUERS' SUBSIDIARIES COULD AFFECT THEIR ABILITY TO REPAY YOU The issuers are holding companies with no direct operations and no significant assets other than the stock of their subsidiaries. The issuers will be dependent on the cash flows of their subsidiaries to meet their debt obligations, including the payment of principal and interest on the exchange notes. Restrictions on dividends and other distributions from these subsidiaries could limit amounts payable to the issuers for payment to you. You should be aware of the following: The credit facility prohibits the payment of dividends to the issuers by their subsidiaries except to pay interest on the initial notes and the exchange notes, Additional indebtedness incurred by the issuers' subsidiaries may restrict the ability of these subsidiaries to pay dividends or make other similar payments to the issuers and, Under applicable state law, the issuers' subsidiaries may be limited in amounts that they are permitted to pay as dividends on their capital stock. OUR FRANCHISED RESTAURANT BUSINESS COULD BE DISTRIBUTED TO TRIARC PARENT WHICH WOULD REDUCE OUR INCOME GENERATING ASSETS Under the terms of the indenture, Triarc Consumer Products Group is permitted to pay a dividend of the capital stock of those subsidiaries that conduct its franchised restaurant business to Triarc Parent, and guarantees of the exchange notes by these subsidiaries will be released if the specific conditions described under the section of this prospectus entitled 'Description of the Exchange Notes -- Covenants -- Limitation on Restricted Payments' are met. Because these subsidiaries comprised approximately 31% of our EBITDA for 1998, the payment of this dividend and the release of the guarantees would limit cash flow and assets available to the issuers to make payments of principal and interest on the exchange notes. OUR SUBSIDIARIES MAY NOT REMAIN WHOLLY OWNED WHICH MEANS THAT WE MAY NOT ALWAYS BE ENTITLED TO 100% OF THEIR CASH FLOW OR VALUE Although the issuers currently own all the outstanding common stock of their subsidiaries, they may not wholly own all of their subsidiaries in the future. If this were to occur, the issuers would not be entitled to receive all of the cash flow of those subsidiaries if those subsidiaries were to pay dividends and would not be entitled to receive the entire value of those subsidiaries if those subsidiaries were sold. In each case, the issuers would only be entitled to an amount that is proportionate to their ownership interest. Although we do not believe that this would have adverse 16 effects on the subsidiary guarantees, this could result in the issuers not having enough cash flow or assets to meet their debt obligations, including payments on the exchange notes. For example, Triarc Beverage Holdings has issued options for the purchase of up to approximately 15% of its common stock, some of which became exercisable on July 1, 1999. Also, upon a permitted sale of a subsidiary that guarantees the exchange notes, or a permitted sale of all or substantially all of its assets, that subsidiary's guarantee of the exchange notes will be released. WE MAY NOT BE ABLE TO CONTINUE TO IMPROVE SNAPPLE'S OPERATIONS WHICH MAY ADVERSELY AFFECT OUR FINANCIAL CONDITION BECAUSE OF THE IMPORTANCE OF SNAPPLE TO OUR SUCCESS Part of our success depends on Snapple's financial performance, which has improved since Triarc Beverage Holdings acquired Snapple from The Quaker Oats Company in May 1997. Although we believe that we have identified the primary factors for Snapple's deteriorating results under Quaker Oats' ownership, our belief as to these factors may be wrong and we cannot assure you that our efforts to address these factors will continue to be successful. WE MAY NOT BE ABLE TO DEVELOP SUCCESSFUL NEW BEVERAGE PRODUCTS WHICH ARE IMPORTANT TO OUR GROWTH Part of our strategy is to increase our sales through the development of new beverage products. We cannot assure you that we will be able to develop, market and distribute future beverage products that will enjoy market acceptance. The failure to develop new beverage products that gain market acceptance could have an adverse impact on our growth and materially adversely affect our financial condition. ARBY'S DEPENDENCE ON RESTAURANT REVENUES AND OPENINGS MEANS IT CAN BE ADVERSELY AFFECTED BY MATTERS NOT IN ITS CONTROL Because Arby's principal source of revenues are royalty fees received from its franchisees, Arby's future revenues will be highly dependent on the gross revenues of Arby's franchisees and the number of Arby's restaurants that its franchisees operate. The current level of gross revenues of Arby's restaurants may not continue We cannot assure you that the level of gross revenues of Arby's franchisees, upon which Arby's royalty fees are dependent, will continue. Competition among national brand franchisors and smaller chains in the restaurant industry to grow their franchise systems is intense. Arby's franchisees are generally in competition for customers with franchisees of other national and regional fast food chains and locally owned restaurants. The number of new Arby's restaurants opening is beyond its control Numerous factors beyond Arby's control affect restaurant openings. These factors include the ability of a potential restaurant owner to obtain financing, locate an appropriate site for a restaurant and obtain all necessary state and local construction, occupancy or other permits and approvals. Although as of October 3, 1999 franchisees have signed commitments to open approximately 1,098 Arby's restaurants and those commitments require the franchisee to pay Arby's a non-refundable deposit of $10,000 per restaurant, Arby's has not yet received non-refundable deposits for all 1,098 restaurants. In addition, we cannot assure you that these commitments will result in open restaurants. ARBY'S DEPENDENCE ON RTM, INC. AND OTHER SIGNIFICANT FRANCHISEES MAY ADVERSELY AFFECT ARBY'S FRANCHISE ROYALTIES During 1998, Arby's received approximately 27% of its royalties from RTM, Inc. and its affiliates, which are franchisees of over 700 Arby's restaurants, and received approximately 5% of its royalties from each of two other franchisees. Arby's franchise royalties would suffer if any of these franchisees experienced significant declines in their businesses. 17 WE REMAIN CONTINGENTLY LIABLE ON OBLIGATIONS OF RTM, INC. WHICH SUBJECTS US TO ADDITIONAL LIABILITIES While RTM, Inc. has assumed most lease obligations and indebtedness in connection with the restaurants that it acquired from Arby's, we remain contingently liable if RTM fails to make payment on those leases and a portion of that indebtedness. If this occurs, we would have to make payments on these leases and indebtedness, which would decrease our cash flow and adversely affect our ability to repay the exchange notes. Please refer to Notes 3, 6 and 16 to our Consolidated Financial Statements appearing elsewhere in this prospectus. ROYAL CROWN'S RELIANCE ON COTT CORPORATION AND OTHER CUSTOMERS AND BOTTLERS MAY ADVERSELY AFFECT ROYAL CROWN'S REVENUES Private Label Sales Royal Crown relies to a significant extent upon sales of beverage concentrates to Cott Corporation under a concentrate supply agreement signed in 1994. Royal Crown's revenues from sales to Cott were approximately 12.6% in 1996, 15.8% in 1997 and 17.2% in 1998. If Cott's business declines, or if Royal Crown's supply agreement with Cott is terminated, Royal Crown might have difficulty replacing these sales. As a result, Royal Crown's sales could be adversely affected. Please refer to the section of this prospectus entitled 'Business -- Soft Drink Concentrates -- Private Label.' Bottlers Royal Crown relies upon its relationships with key bottlers. For example: RC Chicago Bottling Group accounted for approximately 23% of Royal Crown's domestic revenues from concentrate for branded products during 1998, American Bottling Company accounted for approximately 18% of Royal Crown's domestic revenues from concentrate for branded products during 1998, and Royal Crown's ten largest bottler groups accounted in the aggregate for approximately 79% of Royal Crown's domestic revenues from concentrate for branded products during 1998. Royal Crown's sales would decline from their present levels if any of these major bottlers stopped selling RC Cola brand products unless and until Royal Crown established a comparable relationship with one or more new bottlers. We cannot assure you that new bottlers would provide Royal Crown with the level of sales that these bottlers have. Please refer to the section of this prospectus entitled 'Business -- Soft Drink Concentrates -- Royal Crown's Bottler Network.' OUR BUSINESS DEPENDS ON A LIMITED NUMBER OF KEY PERSONNEL, THE LOSS OF WHOM COULD ADVERSELY AFFECT US Some of our senior executives are important to our success because they have been instrumental in identifying business acquisitions, arranging necessary financing and operating our businesses. Although we feel that there is a significant pool of talented personnel in the consumer products, beverage and restaurant industries, if these members of our senior management team become unable or unwilling to continue in their present positions, we may be unable to make successful acquisitions and obtain necessary financing. As a result, our business and financial results could be materially adversely affected. SOME STOCKHOLDERS OF TRIARC PARENT CAN EXERT INDIRECT CONTROL OVER US AND HAVE THE POWER TO CAUSE OR PREVENT A CHANGE OF CONTROL THAT MIGHT OTHERWISE BE BENEFICIAL TO YOU Triarc Consumer Products Group is a wholly owned subsidiary of Triarc Parent. As of August 11, 1999, Messrs. Peltz and May and their affiliates beneficially owned approximately 37.6% of Triarc Parent's voting common stock. Accordingly, Messrs. Peltz and May are able to control the boards of directors of Triarc Parent and Triarc Consumer Products Group and its subsidiaries and 18 may be able to determine the outcome of those corporate actions requiring Triarc Parent stockholder approval, including mergers, consolidations and the sale of all or substantially all of our assets. In addition, Messrs. Peltz and May may also have the power to prevent or cause a change of control of Triarc Consumer Products Group. In addition, some decisions concerning our operation or financial structure may present conflicts of interest between Triarc Parent and the holders of the exchange notes. Triarc Parent may also have an interest in pursuing transactions that, in its judgment, enhance the value of their equity investment, even though these transactions may involve risks to the holders of the exchange notes. COMPETITION FROM OTHER BEVERAGE AND RESTAURANT COMPANIES THAT HAVE GREATER RESOURCES THAN US COULD ADVERSELY AFFECT US The premium beverage, carbonated soft drink and restaurant industries are highly competitive. Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do. Please refer to the section of this prospectus entitled 'Business -- Competition.' OUR FINANCIAL INFORMATION MAY HAVE LIMITED RELEVANCE TO YOU The financial information that is included in this prospectus does not reflect what our actual results of operations, financial position and cash flows would have been had we existed in our current form during the periods presented, nor is it necessarily indicative of our results of operations, financial position and cash flows in the future. Please refer to the sections in this prospectus entitled 'Unaudited Pro Forma Condensed Consolidated Statements of Operations' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations -- Presentation of Financial Information.' SOME FAILURES TO ADDRESS THE YEAR 2000 PROBLEM MAY CAUSE DISRUPTIONS IN THE OPERATION OF OUR NETWORKS AND OUR BUSINESS Many computer systems and software products will not function properly in the year 2000 and beyond due to the year 2000 problem, a once-common programming standard that represents years using two digits. It is possible that our currently installed computer systems, software products or other information technology systems, including imbedded technology, or those of our suppliers, contractors, or major systems developers working either alone or in conjunction with other software or systems, will not properly function in the year 2000 because of the year 2000 problem. If we or our customers, suppliers, contractors, and major systems developers are unable to address their year 2000 issues in a timely manner, a material adverse effect on our results of operations and financial condition could result. The most reasonably likely worst-case scenario from failure of internal systems is that we might experience a delay in production and/or fulfilling and processing orders resulting in either lost sales or delayed cash receipts. The most reasonably likely worst-case scenario from failure of systems of our suppliers is an inability to order and receive delivery of needed raw materials, packaging and/or other production supplies which would result in an inability to meet orders causing lost sales. The most reasonably likely worst-case scenario from failure of systems of our banks would be an inability to transact normal banking business such as deposits of collections, clearing cash disbursements and borrowing needed revolving loan funds or investing excess funds. We are currently working to evaluate and resolve the potential impact of the year 2000 on our processing of date-sensitive information and network systems. We cannot assure you that the year 2000 problem will only have a minimal cost impact or that other companies will convert their systems on a timely basis and that their failure will not have an adverse effect on our systems. Please refer to the section of this prospectus entitled 'Management's Discussion and Analysis of Financial Condition and Results of Operations -- Year 2000.' 19 WE MAY BE UNABLE TO PURCHASE THE EXCHANGE NOTES UPON A CHANGE OF CONTROL Upon a change of control event, the issuers will be required to make an offer to purchase the exchange notes at a price in cash equal to 101% of their aggregate principal amount plus accrued and unpaid interest, if any. However, the issuers may be unable to purchase the exchange notes because of the following covenants and cross-default provisions in other debt agreements: the credit facility generally prohibits the issuers from repurchasing any exchange notes and also considers change of control events to be an event of default under the credit facility which entitles the lenders to demand payment in full before any repurchase of the exchange notes. Any future senior indebtedness of the issuers may contain similar provisions, the exercise by the holders of exchange notes of their right to require the issuers to repurchase the exchange notes could cause a default under our senior debt agreements, even if the change of control itself does not, due to the financial effect of a repurchase of the exchange notes on the issuers, if there is an event of default under any senior indebtedness, the subordination provisions in the indenture would restrict payments to the holders of the exchange notes, and if we do not repay or refinance the borrowings having these provisions or otherwise obtain consent to purchase the exchange notes under these agreements, any resulting failure to offer to purchase or to purchase exchange notes would constitute an event of default under the indenture. In addition, the issuers may not have the financial resources needed to repurchase the exchange notes if so required upon a change of control. Please refer to the sections in this prospectus entitled 'Description of the Exchange Notes -- Covenants -- Repurchase of Notes Upon a Change of Control,' ' -- Ranking' and 'Description of Indebtedness -- Credit Facility.' A COURT COULD DECLARE THE EXCHANGE NOTES JUNIOR IN RIGHT OF PAYMENT OR TAKE OTHER ACTIONS UNDER FRAUDULENT TRANSFER STATUTES THAT ARE DETRIMENTAL TO YOU Under federal or state fraudulent transfer laws, an unpaid creditor or representative of creditors, including a trustee in bankruptcy, could file a lawsuit claiming that the issuance of the exchange notes constituted a fraudulent conveyance. If a court were to find that there has been a fraudulent conveyance, it could: avoid all or a portion of our obligations to you, subordinate our obligations to you to our other existing and future indebtedness, entitling other creditors to be paid in full before any payment is made on the exchange notes, and take other action detrimental to you, including, in some circumstances, invalidating the exchange notes. If a court were to take any of those actions, we cannot assure you that you would ever be repaid. YOU MAY FIND IT DIFFICULT TO SELL YOUR EXCHANGE NOTES BECAUSE NO PUBLIC TRADING MARKET FOR THE EXCHANGE NOTES EXISTS The exchange notes will be registered under the Securities Act but will not be eligible for trading on the Private Offerings, Resales and Trading through Automated Linkages Market. The exchange notes will constitute a new issue of securities with no established trading market. We cannot assure you as to: the development of any market for the exchange notes, the liquidity of any market for the exchange notes that may develop, your ability to sell your exchange notes, or the price at which you would be able to sell your exchange notes. The initial notes are designated for trading among qualified institutional investors in the market. We have been advised by the initial purchasers of the initial notes that they presently 20 intend to make a market in the exchange notes. However, they are not obligated to do so and may discontinue any market-making activity with respect to the exchange notes at any time without notice. If a market for the exchange notes were to exist, the exchange notes could trade at prices that may be higher or lower than their principal amount or purchase price, depending on many factors, including prevailing interest rates, the market for similar debentures and our financial performance. Historically, the market for non-investment grade debt has experienced disruptions that have caused substantial volatility in the prices of securities similar to the exchange notes. We cannot assure you that the market for the exchange notes, if any, will not experience similar disruptions. Any disruptions that do occur may adversely affect you as a holder of the exchange notes. THE ISSUANCE OF THE EXCHANGE NOTES MAY ADVERSELY AFFECT THE MARKET FOR THE INITIAL NOTES Following commencement of the exchange offer, you may continue to trade the initial notes in the Private Offerings, Resales and Trading through Automated Linkages market. If initial notes are tendered for exchange and accepted in the exchange offer, the trading market for the untendered and tendered but unaccepted initial notes could be adversely affected. Please refer to the section of this prospectus entitled 'The Exchange Offer -- Your Failure to Participate in the Exchange Offer Will Have Adverse Consequences.' YOUR FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE CONSEQUENCES The initial notes were not registered under the Securities Act or under the securities laws of any state and you may not resell them, offer them for resale or otherwise transfer them unless they are subsequently registered or resold under an exemption from the registration requirements of the Securities Act and applicable state securities laws. If you do not exchange your initial notes for exchange notes in the exchange offer or if you do not properly tender your initial notes in the exchange offer, you will not be able to resell, offer to resell or otherwise transfer the initial notes unless they are registered under the Securities Act or unless you resell them, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not governed by, the Securities Act. In addition, you will no longer be able to obligate us to register the initial notes under the Securities Act, except in the limited circumstances provided under our registration rights agreement. SOME PERSONS WHO PARTICIPATE IN THE EXCHANGE OFFER MUST DELIVER A PROSPECTUS IN CONNECTION WITH RESALES OF THE EXCHANGE NOTES AND COULD INCUR LIABILITIES AS A RESULT Based on no-action letters issued by the staff of the Securities and Exchange Commission, we believe that you may offer for resale, resell or otherwise transfer the exchange notes without compliance with the registration and prospectus delivery requirements of the Securities Act. However, in some instances described in this prospectus under 'The Exchange Offer,' you remain obligated to comply with the registration and prospectus delivery requirements of the Securities Act to transfer your exchange notes. In these cases, if you transfer any exchange note without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from registration of your exchange notes under the Securities Act, you may incur liability under the Securities Act. We do not and will not assume or indemnify you against any liability which may result. RISKS RELATING TO FORWARD-LOOKING STATEMENTS Some of the statements we have made in this prospectus under the sections entitled 'Summary,' 'Risk Factors,' 'Management's Discussion and Analysis of Financial Condition and Results of Operations' and 'Business' are forward-looking. They include statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance. These forward-looking statements are based on our expectations and are susceptible to a number of risks and uncertainties. Some of these risks and uncertainties are beyond our control. Our actual results may 21 differ materially from those suggested by these forward-looking statements for various reasons, including those discussed under 'Management's Discussion and Analysis of Financial Condition and Results of Operations,' 'Business' and in this 'Risk Factors' section. Because of the preceding and other factors, we cannot give any assurance as to future results, levels of activity and achievements. Neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. Any forward-looking statements in this prospectus speak solely as of the date on which those statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which those statements were made or to reflect the occurrence of unanticipated events. USE OF PROCEEDS We will not receive any cash proceeds from the issuance of the exchange notes in exchange for the outstanding initial notes. We are making this exchange offer solely to satisfy obligations under our registration rights agreement. In return for issuing the exchange notes, the issuers will receive initial notes in like aggregate principal amount. The proceeds to us from the offering of the initial notes together with the proceeds from the credit facility have been used to: pay the outstanding principal amount ($275.0 million), applicable premium (approximately $7.7 million) and accrued interest (approximately $4.4 million) on the 9 3/4% RC/Arby's senior secured notes due 2000, pay the outstanding principal amount ($284.3 million) and the accrued interest ($1.5 million) on borrowings under our premium beverage companies' outstanding credit facility, fund the acquisition of Millrose Distributors, Inc. (approximately $17.3 million), provide for the payment of fees and expenses related to the offering of initial notes and the above transactions (approximately $29.6 million), and pay dividends and other distributions to Triarc Parent of the remaining net proceeds plus all of our cash and cash equivalents in excess of $2.0 million. 22 CAPITALIZATION The following table presents our consolidated capitalization as of October 3, 1999. You should read this capitalization table together with the historical condensed consolidated financial statements and related notes appearing elsewhere in this prospectus.
(IN MILLIONS) Current portion of long-term debt........................... $ 45.6 ------ Long-term debt: Term loans under new credit facility................... 430.4 (a) 10 1/4% senior subordinated notes due 2009............. 300.0 Other.................................................. 3.8 ------ Total long-term debt.............................. 734.2 ------ Member's deficit............................................ (173.6) ------ Total capitalization.............................. $606.2 ------ ------
- ------------ (a) Does not include current portion of $41.4 million. 23 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS The following unaudited pro forma condensed consolidated statements of operations for the year ended January 3, 1999 and the nine months ended October 3, 1999 have been prepared by adjusting these statements, as derived and condensed, as applicable, from the consolidated statements of operations on page F-4 and F-49 in this prospectus. For further information about the preparation of these consolidated financial statements, please refer to Note 1 to each of these consolidated financial statements on pages F-8 and F-51. The adjustments to the condensed consolidated statements of operations assume the offering of the initial 10 1/4% notes with a principal amount of $300,000,000, borrowings of $475,000,000 under the term loans of the new credit facility and the related use of proceeds, which is described more fully below, had occurred on December 29, 1997. They also assume that the following uses of a portion of the net proceeds of the borrowings under the initial 10 1/4% notes and the new credit facility had occurred on December 29, 1997: (1) our repayment on February 25, 1999 of the $284,333,000 principal amount of the term loans under the previously existing beverage credit facility and $1,503,000 of related accrued interest, (2) the redemption on March 30, 1999 of the $275,000,000 principal amount of the RC/Arby's 9 3/4% senior notes and payment of $4,395,000 of related accrued interest and $7,662,000 of redemption premium, (3) the acquisition on February 25, 1999 of Millrose Distributors, Inc. and Mid-State Beverage, Inc., which we will refer to collectively as Millrose, for $17,491,000, including estimated expenses of $241,000, (4) the payment of fees and expenses of $29,600,000 relating to the above borrowings and (5) the payment of one-time distributions to Triarc Parent of the remaining net proceeds from the above borrowings and all of our cash and cash equivalents on hand in excess of approximately $2,000,000, which we retained for working capital purposes. These one-time distributions consisted of $91,420,000 paid on February 25, 1999 and $124,108,000 paid on March 30, 1999 following the redemption of the RC/Arby's 9 3/4% senior notes. These pro forma adjustments are described in the accompanying notes to the pro forma condensed consolidated statements of operations which you should read together with these statements. In addition, you should refer to the section of this prospectus entitled 'Use of Proceeds,' the consolidated financial statements and management's discussion and analysis of financial condition and results of operations appearing elsewhere in this prospectus. The statement of operations information of Millrose included in the unaudited pro forma condensed statements of operations have been derived from unaudited statements of operations of Millrose not included herein. See 'Summary -- Use of Proceeds.' The unaudited pro forma condensed consolidated financial statements may not be indicative of our actual results of operations had these transactions, as applicable, actually been completed on December 29, 1997 or of our future results of operations. 24 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JANUARY 3, 1999 (IN THOUSANDS)
ADJUSTMENTS PRO FORMA FOR THE OFFERING, FOR THE OFFERING, ADJUSTMENTS THE NEW CREDIT THE NEW CREDIT FOR THE AS FACILITY, AND FACILITY, AND MILLROSE REPORTED USE OF PROCEEDS USE OF PROCEEDS ACQUISITION PRO FORMA -------- --------------- --------------- ----------- --------- Revenues: Net sales.............. $735,436 $ -- $735,436 $ 38,565 (c) $747,989 (26,012)(d) Royalties, franchise fees and other revenues............. 79,600 -- 79,600 -- 79,600 -------- -------- -------- -------- -------- 815,036 -- 815,036 12,553 827,589 -------- -------- -------- -------- -------- Cost and expenses: Cost of sales, excluding depreciation and amortization......... 390,883 -- 390,883 30,129 (c) 395,262 (25,750)(d) Advertising, selling and distribution..... 197,065 -- 197,065 3,619 (c) 200,684 General and administrative....... 89,088 -- 89,088 3,437 (c) 91,586 (939)(e) Depreciation and amortization, excluding amortization of deferred financing costs................ 32,808 -- 32,808 312 (c) 34,010 890 (f) -------- -------- -------- -------- -------- 709,844 -- 709,844 11,698 721,542 -------- -------- -------- -------- -------- Operating profit.......... 105,192 -- 105,192 855 106,047 Interest expense............ (60,235) (18,584)(a) (78,819) (116)(c) (78,935) Gain on sale of businesses, net....................... 5,016 -- 5,016 -- 5,016 Other income, net........... 5,298 -- 5,298 (32)(c) 5,266 -------- -------- -------- -------- -------- Income before income taxes and extraordinary charges......... 55,271 (18,584) 36,687 707 37,394 Provision for income taxes..................... (25,284) 6,600 (b) (18,684) 69 (c) (19,337) (722)(g) -------- -------- -------- -------- -------- Income before extraordinary charges......... $ 29,987 $(11,984) $ 18,003 $ 54 $ 18,057 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Ratio of earnings to fixed charges(h)................ 1.9x 1.5x --- ---- --- ----
25 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED OCTOBER 3, 1999 (IN THOUSANDS)
ADJUSTMENTS PRO FORMA FOR THE OFFERING, FOR THE OFFERING, ADJUSTMENTS THE NEW CREDIT THE NEW CREDIT FOR THE AS FACILITY, AND FACILITY, AND MILLROSE REPORTED USE OF PROCEEDS USE OF PROCEEDS ACQUISITION PRO FORMA -------- --------------- --------------- ----------- --------- Revenues: Net sales.............. $619,630 $ -- $619,630 $ 4,597 (c) $621,304 (2,923)(d) Royalties, franchise fees and other revenues............. 60,098 -- 60,098 -- 60,098 -------- ------- -------- ------- -------- 679,728 -- 679,728 1,674 681,402 -------- ------- -------- ------- -------- Cost and expenses: Cost of sales, excluding depreciation and amortization related to sales of $1,518... 329,740 -- 329,740 3,619 (c) 330,374 (2,985)(d) Advertising, selling and distribution..... 164,772 -- 164,772 832 (c) 165,604 General and administrative....... 69,887 -- 69,887 239 (c) 69,969 (157)(e) Depreciation and amortization, excluding amortization of deferred financing costs................ 23,649 -- 23,649 66 (c) 23,866 151 (f) Capital structure reorganization related.............. 3,208 -- 3,208 -- 3,208 -------- ------- -------- ------- -------- 591,256 -- 591,256 1,765 593,021 -------- ------- -------- ------- -------- Operating profit....... 88,472 -- 88,472 (91) 88,381 Interest expense............ (56,931) (3,002)(a) (59,933) -- (59,933) Investment income........... 2,692 (1,116)(i) 1,576 -- 1,576 Loss on sale of businesses, net........... (627) -- (627) -- (627) Other income, net........... 2,112 -- 2,112 -- 2,112 -------- ------- -------- ------- -------- Income before income taxes and extraordinary charges......... 35,718 (4,118) 31,600 (91) 31,509 Provision for income taxes..................... (18,204) 1,094 (b) (16,708) (24)(g) (16,732) 402 (j) -------- ------- -------- ------- -------- Income before extraordinary charges......... $ 17,514 $(2,622) $ 14,892 $ (115) $ 14,777 -------- ------- -------- ------- -------- -------- ------- -------- ------- -------- Ratio of earnings to fixed charges(h)................ 1.6x 1.5x ---- ---- ---- ----
26 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a) Represents adjustments to 'Interest expense' as follows (in thousands):
FOR THE FOR THE NINE MONTHS YEAR ENDED ENDED JANUARY 3, OCTOBER 3, 1999 1999 ---- ---- To record interest expense on the initial 10 1/4% notes........................................... $(30,750) $(4,527) To record interest expense at a weighted average assumed interest rate of 8.65% on the assumed term loan borrowings initially at $475,000 under the $535,000 new credit facility(1)............. (40,852) (5,962) To record amortization under the interest rate method on the estimated $29,600 of deferred financing costs associated with the initial 10 1/4% notes and the new credit facility(2).... (3,901) (566) To reverse reported interest expense on the RC/Arby's 9 3/4% senior notes and the term loans under the previously existing beverage credit agreement(3).................................... 52,884 7,223 To reverse reported amortization of deferred financing costs associated with the RC/Arby's 9 3/4% senior notes and the previously existing beverage credit agreement....................... 4,035 830 -------- ------- $(18,584) $(3,002) -------- ------- -------- -------
- ------------ (1) The weighted average assumed interest rate results from applying the actual London Interbank Offered Rated-based interest rates initially charged by our lenders on each of the term loans under the new credit facility to the respective average outstanding balances of each of the term loans. The average outstanding balances reflect scheduled repayments under the term loans assuming the initial borrowings occurred at the beginning of 1998 and were $472,544,000 for the year ended January 3, 1999 and $468,450,000 for the period from January 4, 1999 through the February 25, 1999 date of the initial term loan borrowings. If the assumed weighted average interest rate on the term loan borrowings under the new credit facility changed by .125%, the pro forma interest expense would change by $591,000 for the year ended January 3, 1999 and by $87,000 for the nine months ended October 3, 1999 which relates to the period through the February 25, 1999 date of the actual term loan borrowings, respectively. (2) The $29,600,000 of estimated deferred financing costs associated with the initial 10 1/4% notes and the new credit facility (previously estimated at $28,000,000) consist of approximately (a) $15,200,000 of fees and expenses, including commitment fees, paid to the lenders under the new credit facility, (b) $9,700,000 of fees paid to the underwriters of the initial 10 1/4% notes, (c) $3,400,000 of legal, auditing and accounting fees, (d) $700,000 of printing fees, and (e) $600,000 of other fees. (3) The principal amounts repaid were $275,000,000 under the RC/Arby's 9 3/4% senior notes and $284,333,000 under the term loans of the previously existing beverage credit agreement. The weighted average interest rate associated with the term loans repaid was 8.30% at January 3, 1999 and 7.93% at the February 25, 1999 actual repayment date. 27 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -- CONTINUED (b) Represents adjustments to 'Provision for income taxes' (in thousands):
FOR THE FOR THE NINE MONTHS YEAR ENDED ENDED JANUARY 3, OCTOBER 3, 1999 1999 ---- ---- To reflect the income tax benefit related to the interest expense, including amortization of deferred financing costs, on the initial 10 1/4% notes and the term loans at the weighted average incremental Federal and state income tax rates of 37.1% and 37.3%, respectively, based on the allocation of this new debt by entity........... $ 28,012 $ 4,119 To reverse the income tax benefit related to the reported interest expense, including amortization of deferred financing costs, at the weighted average incremental Federal and state income tax rate of 37.6% based on the entities to which this interest related.................. (21,412) (3,025) -------- ------- $ 6,600 $ 1,094 -------- ------- -------- -------
(c) To reflect the results of operations of Millrose. (d) To reflect the elimination of sales and cost of sales between us and Millrose. (e) Represents a reduction of 'General and administrative' expenses to reflect the estimated effect of (1) the terminations of two employees and (2) the reductions in salaries of three employees of Millrose (if these employees choose to remain with us after the acquisition of Millrose). These terminations and reductions are in accordance with a signed agreement between such employees and us. (f) Represents an adjustment to 'Depreciation and amortization, excluding amortization of deferred financing costs' as follows (in thousands):
FOR THE FOR THE NINE MONTHS YEAR ENDED ENDED JANUARY 3, OCTOBER 3, 1999 1999 ---- ---- To record amortization of 'Unamortized costs in excess of net assets of acquired companies' ('Goodwill') of $13,579 resulting from the acquisition of Millrose over an estimated useful life of 15 years(1)............................. $898 $151 To reverse reported amortization of intangibles of Millrose before its acquisition................. (8) -- ---- ---- $890 $151 ---- ---- ---- ----
- ------------ (1) The estimated Goodwill of $13,579 represents the excess of the purchase price for Millrose over the net assets we acquired, calculated as follows: Purchase price, including estimated expenses.......... 17,491 Less net assets acquired: Receivables...................................... 2,222 Inventories...................................... 1,548 Properties....................................... 1,000 Accounts payable................................. (858) 3,912 ----- ------- $13,579 ------- -------
The purchase price allocation reflected above is preliminary and is subject to finalization. 28 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -- CONTINUED (g) Represents adjustments to 'Provision for income taxes' (in thousands):
FOR THE FOR THE NINE MONTHS YEAR ENDED ENDED JANUARY 3, OCTOBER 3, 1999 1999 ---- ---- To reflect an income tax (provision) benefit on Millrose's pretax income (loss) at Millrose's incremental Federal and state income tax rate of 40.9% and reverse an existing income tax benefit of $69 for the year ended January 3, 1999 (none reported for the pre-acquisition period through February 25, 1999). The provision and benefit are not reflected in Millrose's reported results of operations due to its Subchapter S status effective January 1, 1998....................... $(445) $ 65 To reflect the income tax provision on the reduction in general and administrative expenses in pro forma adjustment (e) and an income tax (provision) benefit on the net decrease (increase) in pretax income from the intercompany eliminations in pro forma adjustment (d), both at Millrose's incremental Federal and state income tax rate of 40.9%...................................... (277) (89) ----- ---- $(722) $(24) ----- ---- ----- ----
(h) The ratio of earnings to fixed charges was computed by dividing (1) income before income taxes, extraordinary charges and fixed charges by (2) fixed charges. Fixed charges consist of interest expense, amortization of deferred financing costs and one-third of rental expense, which is deemed to be representative of the interest factor. (i) To reverse interest income on the bond redemption escrow account. This amount represents the actual interest income resulting from the investment of the proceeds of the initial 10 1/4% notes prior to such proceeds being used to redeem the RC/Arby's 9 3/4% senior notes. (j) To reflect the income tax benefit related to the interest income of the bond redemption escrow account at the appropriate incremental Federal and state income tax rate of 36%. 29 SELECTED CONSOLIDATED FINANCIAL DATA The following table presents our historical selected consolidated financial data. This data is presented for Triarc Consumer Products Group and its subsidiaries on an 'as-if' pooling basis. For further discussion of this basis of presentation, you should refer to Note 1 to our audited consolidated financial statements included in this prospectus on page F-8. The historical consolidated operating data for the years ended December 31, 1996, December 28, 1997 and January 3, 1999 and the balance sheet data as of December 28, 1997 and January 3, 1999 are derived from the consolidated financial statements audited by Deloitte & Touche LLP, independent auditors, beginning on page F-2 in this prospectus and should be read with those financial statements and the related notes. The historical operating data for the nine-month periods ended September 27, 1998 and October 3, 1999 and the balance sheet data as of October 3, 1999 are derived from unaudited condensed consolidated financial statements contained elsewhere in this prospectus. The historical consolidated financial data as of and for the year ended December 31, 1994 are derived from the audited consolidated financial statements of RC/Arby's Corporation contained in its annual report on Form 10-K for the year ended December 31, 1994 not included in this prospectus. The historical consolidated balance sheet data as of December 31, 1995 are derived from combining the audited consolidated balance sheet of RC/Arby's Corporation contained in its annual report on Form 10-K for the year ended December 31, 1995 not included in this prospectus and the audited balance sheet of Mistic not included in this prospectus. The historical consolidated statement of operations data for the year ended December 31, 1995 and historical consolidated balance sheet data as of December 31, 1996 are derived from our audited consolidated financial statements not included in this prospectus. Also presented are selected adjusted data for the year ended January 3, 1999 and the nine-month period ended October 3, 1999 reflecting the offering of the initial 10 1/4% notes, the new credit facility and the related use of proceeds assuming these transactions had occurred on December 29, 1997. The pro forma consolidated operating data are derived from the 'Unaudited Pro Forma Condensed Statements of Operations' contained elsewhere in this prospectus and should be read with those statements of operations and the related notes. We changed our fiscal year from a calendar year to a year consisting of 52 or 53 weeks ending on the Sunday closest to December 31 effective for the 1997 fiscal year. The ratio of earnings to fixed charges was computed by dividing (1) earnings (loss) before income taxes, extraordinary charges and fixed charges by (2) fixed charges. Fixed charges consist of interest expense, amortization of deferred financing costs and one-third of rental expense, which is deemed to be representative of the interest factor.
AS ADJUSTED FOR THE HISTORICAL TRANSACTIONS(1) ----------------------------------------------------------------- --------------- YEAR ENDED DECEMBER 31, YEAR ENDED YEAR ENDED JANUARY 3, ------------------------------------ DECEMBER 28, ---------------------------- 1994 1995 1996 1997 1999 1999 ---- ---- ---- ---- ---- ---- (IN THOUSANDS EXCEPT RATIOS) STATEMENT OF OPERATIONS DATA: Revenues............... $373,905 $487,326 $597,435 $696,152 $815,036 $827,589 Operating profit (loss)............... 30,074 (2) (1,146)(3) (25,435)(4) 31,872 (5) 105,192 106,047 Income (loss) before extraordinary charges.............. (5,477)(2) (33,349)(3) (51,368)(4) (18,986)(5) 29,987 (7) 18,057(7) Extraordinary charges.............. -- -- -- (2,954)(5) -- Net income (loss)...... (5,477)(2) (33,349)(3) (51,368)(4) (21,940)(5) 29,987 (7) Cash dividends......... -- -- -- -- (23,556) Ratio of earnings to fixed charges........ -- -- -- -- 1.9x 1.5x Deficiency of earnings to cover fixed charges.............. 3,773 45,606 74,996 24,128 BALANCE SHEET DATA (AT END OF PERIOD): Total assets........... $346,403 $515,375 $480,592 $853,961 $790,970 Long-term debt and note payable to Triarc Companies, Inc....... 291,349 416,688 347,810 564,114 560,977 Redeemable preferred stock................ -- -- -- 79,604 87,587 Member's deficit....... (38,625) (37,110) (86,978) (42,860)(6) (44,721)
(table continued on next page) 30 (table continued from previous page)
AS ADJUSTED FOR THE HISTORICAL TRANSACTIONS(1) ------------------------------ --------------- NINE MONTHS ENDED -------------------------------------------------- OCTOBER 3, SEPTEMBER 27, ---------------------------- 1998 1999 1999 ---- ---- ---- (IN THOUSANDS EXCEPT RATIOS) STATEMENT OF OPERATIONS DATA: Revenues...................................... $651,975 $679,728 $681,402 Operating profit.............................. 74,984 88,472 (9) 88,381 (10) Income before extraordinary charges........... 20,300(8) 17,514 (9) 14,777 (10) Extraordinary charges......................... -- (11,772)(9) Net income.................................... 20,300(8) 5,742 (9) Cash dividends................................ -- (204,746) Ratio of earnings to fixed charges............ 1.8x 1.6x 1.5x BALANCE SHEET DATA (AT END OF PERIOD): Total assets.................................. $827,830 Long-term debt................................ 734,218 Redeemable preferred stock.................... -- Member's deficit.............................. (173,615)
- ------------ (1) The selected adjusted operating data for the year ended January 3, 1999 and the nine-month period ended October 3, 1999 reflect adjustments for the offering of the initial 10 1/4% notes, the new credit facility and the related use of proceeds, including the acquisition of Millrose Distributors, Inc., assuming these transactions had occurred on December 29, 1997. The pro forma consolidated operating data are derived from the 'Unaudited Pro Forma Condensed Statements of Operations' contained elsewhere in this prospectus and should be read with those statements of operations and the related notes. (2) Reflects certain significant charges recorded during 1994 as follows: $1,172,000 charged to operating profit representing advertising production costs that in prior years were deferred; and $1,689,000 charged to loss before extraordinary charges and net loss representing the aforementioned $1,172,000 charged to operating profit, $1,521,000 of costs of a proposed acquisition not consummated, less $1,004,000 of income tax benefit relating to the aggregate of the above charges. (3) Reflects certain significant charges recorded during 1995 as follows: $15,309,000 charged to operating loss representing a $14,647,000 reduction in the carrying value of long-lived assets impaired or to be disposed and $662,000 of accelerated vesting of Triarc Parent's restricted stock granted to our employees, $11,511,000 charged to loss before extraordinary charges and net loss representing the aforementioned $15,309,000 charged to operating loss and $1,000,000 of write-off of an equity investment, less $5,898,000 of income tax benefit relating to the aggregate of the above charges plus a $1,100,000 provision for income tax contingencies. (4) Reflects certain significant charges recorded during 1996 as follows: $66,700,000 charged to operating loss representing a $58,900,000 charge for impairment of company-owned restaurants and related exit costs and $7,800,000 of facilities relocation and corporate restructuring charges; and $40,843,000 charged to loss before extraordinary charges and net loss representing the aforementioned $66,700,000 charged to operating loss, less $25,857,000 of income tax benefit relating to the aggregate of the above charges. (5) Reflects certain significant charges recorded during 1997 as follows: $40,878,000 charged to operating profit representing $33,815,000 of charges related to post-acquisition transition, integration and changes to business strategies and $7,063,000 of facilities relocation and corporate restructuring; $27,138,000 charged to loss before extraordinary charges representing the aforementioned $40,878,000 charged to operating profit, $3,513,000 of loss on sale of businesses, net, less $17,253,000 of income tax benefit relating to the aggregate of the above (footnotes continued on next page) 31 (footnotes continued from previous page) net charges; and $30,092,000 charged to net loss representing the aforementioned $27,138,000 charged to loss before extraordinary charges and a $2,954,000 extraordinary charge from the early extinguishment of debt. (6) Reflects a decrease in member's deficit principally resulting from (1) a $29,390,000 capital contribution to Triarc Consumer Products Group by Triarc Parent and (2) the 'push-down' of Triarc Parent's $40,847,000 (adjusted to $40,596,000 in 1998) acquisition basis in Cable Car to Triarc Consumer Products Group. (7) Reflects a significant credit recorded during 1998 as follows: $3,067,000 credited to income before extraordinary charges and net income representing $5,016,000 of gain on sale of businesses less $1,949,000 of related income tax provision. (8) Reflects a significant credit recorded during the nine months ended September 27, 1998 as follows: $3,015,000 credited to income before extraordinary charges and net income representing $4,934,000 of gain on sale of businesses less $1,919,000 of related income tax provision. (9) Reflects certain significant charges recorded during the nine months ended October 3, 1999 as follows: $3,208,000 charged to operating profit representing capital structure reorganization related charges; $1,957,000 charged to income before extraordinary charges representing the aforementioned $3,208,000 less $1,251,000 of income tax benefit; and $13,729,000 charged to net income representing the aforementioned $1,957,000 charged to income before extraordinary charges and an $11,772,000 extraordinary charge from the early extinguishment of debt. (10) Reflects certain significant charges recorded during the nine months ended October 3, 1999 as follows: $3,208,000 charged to operating profit representing capital structure reorganization related charges; and $1,957,000 charged to income before extraordinary charges representing the aforementioned $3,208,000 less $1,251,000 of income tax benefit. 32 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION We are a leading premium beverage company, a restaurant franchisor and a soft drink concentrate producer. Since 1995 we have acquired the Mistic, Snapple and Stewart's premium beverage brands and in 1997 we sold all our Arby's company-owned restaurants to an existing franchisee and focused on building the strength of our beverage and Arby's franchise businesses. In our premium beverage business we derive revenues from the sale of our premium beverage products to distributors. All of our premium beverage products are produced by third-party co-packers that we supply with raw materials and packaging. We also derive revenues from the distribution of products in two of our key markets. By acting as our own distributor in key markets we are able to drive sales and improve focus on current and new products. In our soft drink concentrate business (Royal Crown) we currently derive our revenues from the sale of our carbonated soft drink concentrate to bottlers and private label customers. To a much lesser extent, before 1998 we also derived revenues from the sale of finished product. Gross margins on concentrate sales are generally higher than on finished product sales. In our restaurant franchising business we currently derive all our revenues from franchise royalties and franchise fees. While over 75% of our existing royalty agreements and all of our new domestic royalty agreements are for 4% of franchise revenues, our average rate was 3.2% in 1998. We incur selling, general and administrative costs but no cost of goods sold in our franchising business. None of our businesses requires significant capital expenditures because we own no restaurants or manufacturing facilities, other than a Royal Crown concentrate manufacturing facility. The amortization of goodwill and trademarks results in significant non-cash charges. In recent years our premium beverage business has experienced the following trends: Acquisition/consolidation of distributors The development of proprietary packaging Increased pressure by competitors to achieve account exclusivity The increased use of plastic packaging The proliferation of new products including premium beverages, bottled water and beverages enhanced with herbal additives, for example, ginseng and echinachea Increased emphasis by distributors in placing refrigerated coolers necessitating increased equipment purchases by these distributors Increased use of multi-packs and variety packs in certain trade channels In recent years our soft drink concentrate business has experienced the following trends: Increased competition in the form of lower prices Increased pressure by competitors to achieve account exclusivity Acquisition/consolidation of bottlers Increased emphasis by bottlers in placing refrigerated coolers necessitating increased equipment purchases by such bottlers Increased use of multi-packs in certain trade channels Increased market share of private label beverages In recent years our restaurant business has experienced the following trends: Consistent growth of the restaurant industry as a percentage of total food-related spending, with the quick service restaurant, or fast food segment, in which we operate, being the fastest growing segment of the restaurant industry 33 Increased price competition in the quick service restaurant industry, particularly as evidenced by the value menu concept which offers comparatively lower prices on some menu items, the combination meals concept which offers a combination meal at an aggregate price lower than the individual food and beverage items, couponing and other price discounting The addition of selected higher-priced premium quality items to menus, which appeal more to adult tastes and recover some of the margins lost in the discounting of other menu items Following the sale of all of the 355 company-owned Arby's restaurants on May 5, 1997 we experience the effects of these trends only to the extent they affect our franchise fees and royalties. PRESENTATION OF FINANCIAL INFORMATION This 'Management's Discussion and Analysis of Financial Condition and Results of Operations' should be read in conjunction with our accompanying consolidated financial statements. Triarc Consumer Products Group, LLC was formed on January 15, 1999. Effective February 23, 1999, Triarc Consumer Products Group acquired by way of capital contribution RC/Arby's Corporation, Triarc Beverage Holdings Corp. and Stewart's Beverages, Inc., formerly Cable Car Beverage Corporation, and their subsidiaries. These companies previously had been held directly or indirectly by Triarc Companies, Inc., which we refer to as Triarc Parent. RC/Arby's is the parent of Royal Crown Company, Inc. and Arby's, Inc. Triarc Beverage Holdings is the parent of Snapple Beverage Corp. and Mistic Brands, Inc. and, effective May 17, 1999, Stewart's. Effective January 1, 1997 we changed our fiscal year from a calendar year to a year consisting of 52 or 53 weeks ending on the Sunday closest to December 31. Our 1997 fiscal year commenced January 1, 1997 and ended on December 28, 1997 and our 1998 fiscal year commenced December 29, 1997 and ended on January 3, 1999. Our first nine months of 1998 commenced on December 29, 1997 and ended on September 27, 1998 and our first nine months of 1999 commenced on January 4, 1999 and ended on October 3, 1999. Therefore, when we refer to '1998' we mean the period from December 29, 1997 to January 3, 1999; when we refer to '1997' we mean the period from January 1, 1997 through December 28, 1997; and when we refer to '1996' we mean the calendar year ended December 31, 1996. When we refer to the 'nine months ended September 27, 1998,' or '1998 first nine months,' we mean the period from December 29, 1997 to September 27, 1998; and when we refer to the 'nine months ended October 3, 1999' or '1999 first nine months,' we mean the period from January 4, 1999 to October 3, 1999. The following table shows the relative significance of the contribution of each of our segments to total revenues, gross profit, EBITDA and operating profit for our most recent fiscal year ended January 3, 1999. We calculate gross profit as total revenues less (1) cost of sales, excluding depreciation and amortization and (2) depreciation and amortization related to sales. Due to the seasonality of each of our businesses, the interim results of our segments are not necessarily indicative of their full year results and, accordingly, the interim results for the 1999 first nine months are not included in the table below. 34
(IN THOUSANDS) Revenues: Premium beverages................................ $611,545 75.0% Soft drink concentrates.......................... 124,868 15.3 Restaurants...................................... 78,623 9.7 -------- ----- Total....................................... $815,036 100.0% -------- ----- -------- ----- Gross Profit: Premium beverages................................ $248,267 58.8% Soft drink concentrates.......................... 95,591 22.6 Restaurants...................................... 78,623 18.6 -------- ----- Total....................................... $422,481 100.0% -------- ----- -------- ----- EBITDA: Premium beverages................................ $ 77,825 56.4% Soft drink concentrates.......................... 17,006 12.3 Restaurants...................................... 43,180 31.3 General corporate................................ (11) 0.0 -------- ----- Total....................................... $138,000 100.0% -------- ----- -------- ----- Operating Profit: Premium beverages................................ $ 56,160 53.4% Soft drink concentrates.......................... 8,366 8.0 Restaurants...................................... 40,677 38.6 General corporate................................ (11) 0.0 -------- ----- Total....................................... $105,192 100.0% -------- ----- -------- -----
You should refer to Note 20 to our accompanying consolidated financial statements and to Note 12 to our accompanying condensed consolidated financial statements for the nine months ended October 3, 1999 for a reconciliation of consolidated EBITDA to pre-tax income. We define EBITDA as operating profit plus depreciation and amortization, excluding amortization of deferred financing costs. Since all companies do not calculate EBITDA or similarly titled financial measures in the same manner, these disclosures may not be comparable with EBITDA as we define it. EBITDA should not be considered as an alternative to net income or loss, as an indicator of our operating performance, or as an alternative to cash flow, as a measure of liquidity or ability to repay our debt, and is not a measure of performance or financial condition under generally accepted accounting principles, but provides additional information for evaluating our ability to meet our obligations. Cash flows in accordance with generally accepted accounting principles consist of cash flows from (1) operating, (2) investing and (3) financing activities. Cash flows from operating activities reflect net income or loss, including charges for interest and income taxes not reflected in EBITDA, adjusted for (1) all non-cash charges or credits including, but not limited to, depreciation and amortization, and (2) changes in operating assets and liabilities, not reflected in EBITDA. Further, cash flows from investing and financing activities are not included in EBITDA. For information regarding our historical cash flows, please refer to the consolidated statements of cash flows presented in our accompanying consolidated financial statements. See below for a discussion of our historical results of operations. 35 RESULTS OF OPERATIONS NINE MONTHS ENDED OCTOBER 3, 1999 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 27, 1998 Revenues Our revenues increased $27.8 million to $679.7 million in the nine months ended October 3, 1999 compared with the nine months ended September 27, 1998. A discussion of the changes in revenues by segment is as follows: Premium Beverages -- Our premium beverage revenues increased $29.9 million (6.0%) in the nine months ended October 3, 1999 compared with the nine months ended September 27, 1998. The increase reflects higher volume and, to a lesser extent, higher average selling prices in the first nine months of 1999. The increase in volume principally reflects (1) 1999 sales of Snapple ElementsTM, a new product platform of herbally enhanced drinks introduced in April 1999, (2) increased cases sold to retailers through Millrose Distributors, Inc. principally reflecting an increased focus on our products as a result of our ownership of this New Jersey distributor, which we refer to as Millrose, since February 25, 1999 (see further discussion of the Millrose acquisition below under 'Liquidity and Capital Resources'), (3) higher sales of diet teas and other diet beverages and juice drinks and (4) higher sales of Stewart's products as a result of increased distribution in existing and new markets and the December 1998 introduction of Stewart's grape soda. The higher average selling prices principally reflect (1) the effect of the Millrose acquisition since February 25, 1999 whereby we sell product at higher prices directly to retailers compared with sales at lower prices to distributors such as Millrose and (2) selective price increases. Soft Drink Concentrates -- Our soft drink concentrate revenues decreased $4.2 million (4.3%) in the nine months ended October 3, 1999 compared with the nine months ended September 27, 1998. This decrease is attributable to lower Royal Crown sales of (1) concentrate of $2.8 million, or 2.9%, and (2) finished goods of $1.4 million, or 100%, which the soft drink concentrate segment no longer sells. The decrease in Royal Crown sales of concentrate reflects a $7.2 million decline in branded sales, primarily due to lower domestic volume reflecting continued competitive pricing pressures experienced by our bottlers, and lower international volume as a result of the continued depressed economic conditions experienced in Russia which commenced in August of 1998, partially offset by a $4.4 million volume increase in private label sales reflecting a general business recovery being experienced by our private label customer. Restaurants -- Our restaurant revenues increased $2.1 million (3.7%) in the nine months ended October 3, 1999 compared with the nine months ended September 27, 1998 as higher royalty revenue more than offset lower franchise fee revenue. The increase in royalty revenue resulted from an average net increase of 60, or 1.9%, franchised restaurants and a 2.2% increase in same-store sales of franchised restaurants. The decrease in franchise fee revenue, despite an increase in franchised restaurant openings, was due to (1) a decrease in dual-branded T.J. Cinnamons openings and (2) an increase in remodeling credits applied against franchise fees. Gross Profit We calculate gross profit as total revenues less (1) cost of sales, excluding depreciation and amortization and (2) that portion of depreciation and amortization related to sales. Our gross profit increased $14.1 million to $348.5 million in the nine months ended October 3, 1999 compared with the nine months ended September 27, 1998 principally due to the effect of higher sales volumes as discussed above. Our aggregate gross margins, which we compute as gross profit divided by total revenues, remained constant at 51.3%. A discussion of the changes in gross margins by segment is as follows: Premium Beverages -- Our gross margins increased to 41.2% during the first nine months of 1999 from 40.8% during the first nine months of 1998. The increase in gross margins was 36 principally due to (1) the selective price increases noted above, (2) the effect of the higher selling prices resulting from the Millrose acquisition, (3) the effect of lower freight costs and (4) to a lesser extent, the effect of the reduced costs of certain raw materials, principally glass bottles and flavors, in the first nine months of 1999, all partially offset by $3.8 million of higher inventory obsolescence costs, principally recorded in the 1999 third quarter. Soft Drink Concentrates -- Our gross margins increased to 76.9% during the first nine months of 1999 from 75.8% during the first nine months of 1998. This increase was due to (1) lower costs of the raw material aspartame and (2) the effects of changes in product mix whereby the positive effect of our no longer selling the lowest-margin finished goods in 1999 was partially offset by a shift in sales to private label concentrate in 1999 which has a somewhat lower margin than branded concentrate. Restaurants -- Our gross margins during each period are 100% because royalties and franchise fees constitute the total revenues of the segment and these are with no associated cost of sales. Advertising, Selling and Distribution Expenses Advertising, selling and distribution expenses decreased $2.0 million to $164.8 million in the first nine months of 1999. This decrease was principally due to a decrease in the expenses of the soft drink concentrate segment reflecting lower bottler promotional reimbursements and other promotional spending resulting from the decline in branded concentrate sales volume, partially offset by (1) higher employee compensation and related costs reflecting an increase in the number of sales and marketing employees in the premium beverage segment and (2) an overall increase in promotional spending by the premium beverage segment principally reflecting new product introductions and overall higher volume. General and Administrative Expenses General and administrative expenses increased $1.0 million to $69.9 million in the first nine months of 1999. This increase principally reflects higher employee benefit and incentive compensation costs partially offset by a decrease in the expenses of the restaurant segment due to a non-recurring provision for the then anticipated settlement of a lawsuit with Arby's Mexican master franchise in the third quarter of 1998 which was ultimately settled in October 1999. Depreciation and Amortization, Excluding Amortization of Deferred Financing Costs Depreciation and amortization, excluding amortization of deferred financing costs, decreased $1.3 million to $23.6 million in 1999 principally reflecting the effects of: (1) vending machines of the soft drink concentrate segment, with an aggregate cost of $4.6 million, becoming fully depreciated in November 1998 and (2) the cost of a three-year non-compete agreement, with the seller of the Mistic business to Triarc Parent, becoming fully amortized in August 1998, partially offset by (3) an increase in amortization of costs in excess of net assets of businesses acquired, which we refer to as goodwill, as a result of the Millrose acquisition. Capital Structure Reorganization Related Charge The capital structure reorganization related charge of $3.2 million in the first nine months of 1999 reflects equitable adjustments that were made to the terms of outstanding options under a stock option plan of Triarc Beverage Holdings to adjust for the effects of net distributions of $91.3 million made by Triarc Beverage Holdings to Triarc Parent. These distributions principally consisted of transfers of cash and deferred tax assets, from Triarc Beverage Holdings to Triarc Parent, partially offset by the effect of the contribution of Stewart's to Triarc Beverage Holdings. The option plan provides for an equitable adjustment of options in the event of a recapitalization 37 or similar event. As a result of these net distributions and the terms of the option plan, the exercise prices of the options granted in 1997 and 1998 were equitably adjusted from $147.30 and $191.00 per share, respectively, to $107.05 and $138.83 per share, respectively, and a cash payment of $51.34 and $39.40 per share, respectively, is due from Triarc Beverage Holdings to the option holder following the exercise of the stock options. Compensation expense is being recognized for the cash to be paid upon the exercise of stock options by employees of Triarc Beverage Holdings ratably over the vesting period of the stock options. We expect to recognize additional pre-tax charges relating to this adjustment of $1.0 million through fiscal 2001 as the affected stock options continue to vest, of which $0.2 million relates to the fourth quarter of 1999. There was no similar charge in the first nine months of 1998. No compensation expense will be recognized for other changes in the terms of the outstanding options because the modifications to the options did not create a new measurement date under generally accepted accounting principles. Interest Expense Interest expense increased $12.3 million to $56.9 million in the first nine months of 1999 reflecting higher average levels of debt during the first nine months of 1999 due to increases from a first quarter 1999 debt refinancing and, to a lesser extent, higher average interest rates in the 1999 period. Such refinancing consisted of (1) the issuance of $300.0 million of the initial 10 1/4% senior subordinated notes due 2000 and (2) $475.0 million borrowed under a new senior bank credit facility and the repayment of (1) $284.3 million under a former credit facility and (2) $275.0 million of 9 3/4% senior secured notes due 2000. Investment Income Investment income increased $0.8 million to $2.7 million in the first nine months of 1999 entirely due to an increase in interest income on cash and cash equivalents and short-term investments resulting from the investment during the first quarter of 1999 of excess proceeds from the first quarter 1999 debt refinancing. Gain (Loss) on Sale of Businesses, Net Gain (loss) on sale of businesses, net decreased $5.6 million to a loss of $0.6 million in the first nine months of 1999 primarily due to a $4.7 million non-recurring gain in the first nine months of 1998 from the May 1998 sale of our former 20% interest in Select Beverages, Inc. and a $0.9 million reduction to the gain from the Select Beverages sale recognized during the first nine months of 1999 resulting from a post-closing adjustment to the sales price. Other Income, Net Other income, net increased $0.3 million to $2.1 million in the first nine months of 1999 due to the effect of the $1.3 million non-recurring equity in the loss of Select Beverages, Inc. for the first nine months of 1998, significantly offset by non-recurring other income in the 1998 period. We owned 20% of Select Beverages until May 1998 when we sold our 20% interest. Provision for Income Taxes The provision for income taxes represented effective rates of 51% in the first nine months of 1999 and 48% in the first nine months of 1998. The effective rate is higher in the 1999 period principally due to: (1) the greater impact on the 1999 effective income tax rate of the non-deductible amortization of Goodwill and (2) higher state taxes reflecting higher losses in certain states with no tax benefit since we file state tax returns on an individual company basis. 38 The effect of Goodwill amortization is greater in the first nine months of 1999 due to the lower projected 1999 full-year pre-tax income principally as a result of higher projected interest expense following the refinancings described above, compared with the then projected 1998 full-year pre-tax income as of the end of the first nine months of 1998. Extraordinary Charges The extraordinary charges in the first nine months of 1999 aggregating $11.8 million resulted from the early extinguishment of borrowings under the former credit facility of Triarc Beverage Holdings and the RC/Arby's 9 3/4% notes and consisted of: (1) the write-off of previously unamortized (a) deferred financing costs of $10.8 million and (b) interest rate cap agreement costs of $0.1 million and (2) the payment of a $7.7 million redemption premium on the RC/Arby's 9 3/4% notes, less (3) income tax benefit of $6.8 million. 1998 COMPARED WITH 1997 We completed three significant transactions during 1997. On May 22, 1997 we acquired Snapple. On November 25, 1997 we acquired Stewart's. On May 5, 1997 we sold all of our company-owned Arby's restaurants. As a result, our 1998 results reflect for the entire period the results of operations of Snapple and Stewart's but no results of operations attributable to the ownership of the sold restaurants. In contrast, 1997 results reflect the results of operations of Snapple and Stewart's only from their dates of acquisition and reflect the results of operations attributable to the ownership of the sold restaurants through the date of sale. Because of these transactions, 1998 results and 1997 results are not comparable. In order to create a more meaningful comparison of our results of operations between the two years, where applicable we have adjusted for the effects of these transactions in the segment discussions below. Revenues Our revenues increased $118.9 million to $815.0 million in 1998 compared with 1997. This increase primarily results from the inclusion of Snapple and Stewart's sales for all of 1998, compared with inclusion for only a portion of 1997, which resulted in $191.9 million of additional revenues. These increases were partially offset by the absence during 1998 of sales attributable to the ownership of the sold restaurants. These sales were $74.2 million from January 1 to May 5, 1997, less the effect of royalties from those restaurants during the same portion of the 1998 period ($3.2 million). Without the effects of the acquisitions of Snapple and Stewart's and the sale of the company-owned restaurants, our revenues declined in 1998 by $2.0 million from 1997. A discussion of the changes in revenues by segment is as follows: Premium Beverages -- We have adjusted our 1998 results by including the results of Snapple and Stewart's only for the same calendar period they were included during 1997. After giving effect to these adjustments, our premium beverage revenues increased $10.8 million (2.6%) in 1998 compared with 1997. The increase was due to an increase in sales of finished goods ($12.5 million) partially offset by a decrease in sales of concentrate ($1.7 million), which we sell to only one international customer. The increase in sales of finished goods principally reflects net higher volume ($18.9 million) primarily due to new product introductions as well as increases in sales of teas, diet teas and other diet beverages. This increase was partially offset by lower average selling prices ($6.4 million). The lower average selling prices were principally due to a change in Snapple's distribution in Canada from a 39 company-owned operation with higher selling prices to an independent distributor with lower selling prices. Soft Drink Concentrates -- Our soft drink concentrate revenues decreased $22.0 million (15.0%) in 1998 compared with 1997. This decrease is attributable to lower Royal Crown sales of concentrate ($15.5 million, or 11.2%) and finished goods ($6.5 million, or 81.7%). The decrease in Royal Crown sales of concentrate reflects (1) a $13.7 million decline in branded sales, primarily due to lower domestic volume reflecting competitive pricing pressures experienced by our bottlers and (2) a $1.8 million volume decrease in private label sales due principally to inventory reduction programs of the Company's private label customer. The domestic volume decline in branded concentrate sales was partially offset by the fact that as a result of the sale in July 1997 of the C&C beverage line, we now sell concentrate to the purchaser of the C&C beverage line rather than finished goods. The decrease in sales of Royal Crown's finished goods was principally due to the sale of the C&C beverage line and therefore the absence in 1998 of sales of C&C finished product. Restaurants -- We have adjusted 1997 results to exclude net sales attributable to the company-owned restaurants which were sold and results for the same portion of 1998 to exclude royalties from those sold restaurants. After giving effect to these adjustments, revenues increased $9.2 million (13.8%) due to (1) a 4.6% increase in average royalty rates due to the declining significance of older franchise agreements with lower rates, (2) a 3.0% increase in same-store sales of franchised restaurants and (3) a net increase of 47 (1.6%) franchised restaurants, which generally experience higher than average restaurant volumes. Gross Profit We calculate gross profit as total revenues less (1) cost of sales, excluding depreciation and amortization and (2) that portion of depreciation and amortization related to sales. Our gross profit increased $59.6 million to $422.5 million in 1998 compared with 1997. Gross profit increased $78.9 million due to the inclusion of gross profit relating to Snapple and Stewart's sales for all of 1998, compared with inclusion for only a portion of 1997. This increase was partially offset by the absence during 1998 of gross profit attributable to the ownership of the sold restaurants ($15.0 million in 1997) less the incremental royalties from those sold restaurants during that portion of the 1998 period ($3.2 million). Giving effect to the adjustments described above relating to the acquisitions of Snapple and Stewart's and the sale of the company-owned restaurants, our gross profit decreased $7.5 million. This decrease occurred despite the effect of higher sales volumes discussed above, due to a slight decrease in our aggregate gross margins, which we compute as gross profit divided by total revenues, to 55% from 56%. This decrease in gross margins is principally due to an overall shift in revenue mix and lower gross margins of the premium beverage and soft drink concentrate segments, both as discussed in more detail below. A discussion of the changes in gross margins by segment, adjusted for the effects of the adjustments noted above, is as follows: Premium Beverages -- Giving effect to the adjustments described above relating to the Snapple and Stewart's acquisitions, our gross margins decreased to 40% during 1998 from 41% during 1997. The decrease in gross margins was principally due to the effects of (1) changes in product mix, (2) the aforementioned change in Snapple's Canadian distribution and (3) $3.3 million of increased provisions for obsolete inventory during the fourth quarter. The increased provisions for obsolete inventory principally resulted from raw material and finished goods inventories that passed their shelf lives during the fourth quarter of 1998 and that were not timely used due to difficulties experienced as we transitioned to our new manufacturing systems, our overstocking certain raw materials and overstocking certain finished products in our attempt to minimize unfilled orders in order to improve customer satisfaction. These decreases were substantially offset by the effects of the reduced costs of certain raw materials, principally glass bottles and flavors, and lower freight costs in 1998. Soft Drink Concentrates -- Our gross margins were unchanged at 77% during 1998 and 1997. The positive effect of the shift during 1998 to higher-margin concentrate sales from 40 lower-margin finished goods was fully offset by a 1997 nonrecurring $1.1 million reduction to cost of sales resulting from the guarantee to us of certain minimum gross profit levels on sales to our private label customer and lower private label gross margins. We had no similar guarantee of minimum gross profit levels in 1998. Restaurants -- After giving effect to the adjustments described above relating to the restaurants sold, our gross margins during each year are 100% because royalties and franchise fees, with no associated cost of sales, now constitute the total revenues of the segment. Advertising, Selling and Distribution Expenses Advertising, selling and distribution expenses increased $12.3 million to $197.1 million in 1998 reflecting the inclusion of Snapple and Stewart's for the full 1998 year. This increase was partially offset by: (1) a decrease in the expenses of the premium beverage segment excluding Snapple and Stewart's principally due to less costly promotional programs, (2) a decrease in expenses of the soft drink concentrate segment principally due to lower bottler promotional reimbursements resulting from the decline in branded dconcentrate sales volume and (3) a decrease in the expenses of the restaurant segment principally due to local restaurant advertising and marketing expenses no longer needed for the sold restaurants. This decrease in the expenses of the restaurant segment commenced in 1997 with the May 1997 sale of the restaurants and increased to its full effect in 1998. General and Administrative Expenses General and administrative expenses increased $7.9 million to $89.1 million for 1998. This increase principally reflects: (1) the inclusion of Snapple and Stewart's operations for all of 1998 and (2) nonrecurring provisions in 1998 for (a) the settlement of a lawsuit with ZuZu, Inc. ($0.8 million) and the anticipated settlement of a lawsuit with Arby's Mexican master franchisee ($1.7 million) and (b) a severance arrangement under the last of our 1993 executive employment agreements ($1.5 million). These increases were partially offset by the following: (1) nonrecurring costs in 1997 in connection with the integration of the Snapple business following its acquisition and (2) reduced restaurant segment costs for administrative support, principally payroll, no longer required for the sold restaurants and other cost reduction measures. This decrease in the expenses of the restaurant segment commenced in 1997 with the May 1997 sale of the restaurants and increased to its full effect in 1998. Depreciation and Amortization, Excluding Amortization of Deferred Financing Costs Depreciation and amortization, excluding amortization of deferred financing costs, increased $7.6 million to $32.8 million for 1998 principally reflecting the inclusion of Snapple and Stewart's for all of 1998 and depreciation expense on $4.6 million of vending machines purchased by Royal Crown in January 1998. 41 Charges Related to Post-Acquisition Transition, Integration and Changes to Business Strategies The nonrecurring charges related to post-acquisition transition, integration and changes to business strategies of $33.8 million in 1997 were associated with the Snapple acquisition and, to a much lesser extent, the Stewart's acquisition. Those charges consisted of: (1) a $12.6 million write-down of glass front vending machines based on the reduction in our estimate of their value to scrap value based on our plans for their future use, resulting from our decision to no longer sell the machines to our distributors but to allow them to use the machines at locations chosen by them, (2) a $6.7 million provision for additional reserves for legal matters based on our change in The Quaker Oats Company's estimate of the amounts required reflecting our plans and estimates of costs to resolve these matters, because we had decided to attempt to quickly settle these matters in order to improve relationships with customers, (3) a $3.2 million provision for additional reserves for doubtful accounts of Snapple and the effect of the Snapple acquisition on the collectibility of a receivable from our affiliate, MetBev, Inc., based on our change in estimate of the related write-off to be incurred, because we had decided not to actively seek to collect certain balances in order to improve relationships with customers, (4) a $2.8 million provision for fees paid to Quaker Oats under a transition services agreement whereby Quaker Oats provided certain operating and accounting services for Snapple through the end of our 1997 second quarter while we transitioned the records, operations and management to our systems, (5) the $2.5 million portion of the post-acquisition period promotional expenses we estimated was related to the pre-acquisition period as a result of our then current operating expectations, because we had decided not to pursue many questionable claimed promotional credits in order to improve relationships with customers, (6) a $4.0 million provision for certain costs in connection with the successful completion of the acquisition of Snapple and the Mistic refinancing in connection with entering into a credit facility at the time of the Snapple acquisition, because we had paid a fee to Triarc Parent in order to compensate Triarc Parent for its recurring indirect costs incurred while providing assistance in consummating these transactions, (7) a $1.6 million provision for costs, principally for independent consultants, incurred in connection with the data processing implementation of the accounting systems for Snapple, under Quaker Oats, Snapple did not have its own independent data processing accounting systems, including costs incurred relating to an alternative system that was not implemented and (8) a $0.4 million acquisition related sign-on bonus. You should read Note 11 to the audited consolidated financial statements of Triarc Consumer Products Group appearing elsewhere in this prospectus where additional disclosures relative to the charges related to post-acquisition transition, integration and changes to business strategies are provided. Facilities Relocation and Corporate Restructuring Charge The nonrecurring facilities relocation and corporate restructuring charge of $7.1 million in 1997 principally consisted of (1) $5.6 million of employee severance and related termination costs and employee relocation costs associated with restructuring the restaurant segment in connection with the sale of company-owned restaurants, (2) $1.2 million of costs associated with the relocation of Royal Crown's Florida headquarters, which was centralized with the White Plains, New York headquarters of Triarc Beverage Holdings and (3) to a much lesser extent, $0.3 million for the write-off of the remaining unamortized costs of certain beverage distribution rights reacquired in prior years and no longer being utilized by us. 42 By disposing of the company-owned restaurants and focusing on solely being a franchisor of restaurants, we anticipated that we would realize operating profit improvements. We anticipated that the relocation of Royal Crown would result in (1) improved operating results through cost savings by combining certain corporate functions with those of Triarc Beverage Holdings and (2) improved operations by sharing the experienced senior management team of Triarc Beverage Holdings. You should read Note 12 to the audited consolidated financial statements of Triarc Consumer Products Group appearing elsewhere in this prospectus where additional disclosures relative to the 1997 facilities relocation and corporate restructuring charge are provided. Interest Expense Interest expense increased $2.2 million to $60.2 million for 1998. This increase reflects the effect of higher average levels of debt due to the inclusion of borrowings by Snapple in connection with its acquisition ($213.3 million outstanding as of January 3, 1999) for all of 1998, compared with inclusion for only a portion of 1997. This increase was partially offset by: (1) the elimination of $69.6 million of mortgage and equipment notes payable and capitalized lease obligations assumed by the purchaser of the sold restaurants for all of 1998, compared to the elimination for only a portion of 1997 and (2) to a lesser extent, the reduction of outstanding principal balances aggregating $29.7 million under notes payable to Triarc Parent for all of 1998, compared with the elimination for only a portion of 1997, forgiven or repaid in connection with the sale of the restaurants. Gain (Loss) on Sale of Businesses, Net Gain on sale of businesses of $5.0 million in 1998 consists of: (1) a pre-tax $4.7 million gain from the May 1998 sale of our 20% interest in Select Beverages and (2) the recognition of $0.3 million of deferred gain from the sale of C&C. Loss on sale of businesses, net, of $3.5 million in 1997 consisted of a $4.1 million loss on the sale of restaurants partially offset by a $0.6 million gain recognized from the C&C sale. Other Income, Net Other income, net decreased $0.2 million to $5.3 million in 1998. This decrease was principally due to: (1) $1.2 million of equity in the losses of Select Beverages recorded in 1998 compared with $0.9 million of equity in income in 1997 and (2) a nonrecurring $0.9 million gain in 1997 on lease termination. We terminated a lease for a portion of the space no longer required in the current headquarters of the restaurant group and former headquarters of Royal Crown in Ft. Lauderdale, Florida due to staff reductions as a result of the restaurants sale and the relocation of the Royal Crown headquarters. These decreases were partially offset by: (1) $1.6 million of increased interest income on invested cash, a substantial portion of which is not expected to recur in fiscal 1999 as a result of cash distributed to Triarc Parent in the first quarter of 1999, and (2) $0.4 million of the full period effect of Snapple, other than from interest income and equity in income (loss) of Select Beverages, consisting principally of increased rental income. 43 Income Taxes The provision for income taxes in 1998 represented an effective rate of 46% and the benefit from income taxes in 1997 represented an effective rate of 21%. The effective rate is higher in the 1998 period principally due to: (1) the differing impact on the respective effective income tax rates of the non-deductible amortization of Goodwill, in a period with pre-tax income (1998) compared with a period with a pre-tax loss (1997) and (2) the differing impact of the mix of pre-tax loss or income among the consolidated entities since we file state tax returns on an individual company basis. Extraordinary Charges The 1997 nonrecurring extraordinary charges aggregating $3.0 million resulted from the assumption and early extinguishment of: (1) mortgage and equipment notes payable assumed by the buyer in the restaurants sale and (2) obligations under Mistic's former credit facility refinanced in connection with the financing of the Snapple acquisition. These extraordinary charges were comprised of the write-off of $4.9 million of previously unamortized deferred financing costs less the related income tax benefit of $1.9 million. 1997 COMPARED WITH 1996 As discussed above, we completed three significant transactions during 1997. On May 22, 1997 we acquired Snapple. On November 25, 1997 we acquired Stewart's. On May 5, 1997 we sold all of our company-owned Arby's restaurants. As a result of these transactions, our 1997 results reflect the results of operations for Snapple and Stewart's from their dates of acquisition and do not reflect results of operations attributable to the ownership of the sold restaurants after the date of their disposition. In contrast, our 1996 results do not reflect results of operations of Snapple or Stewart's, because they were acquired subsequent to 1996, and reflect results of operations attributable to the ownership of the sold restaurants for the full year, because they were sold subsequent to 1996. Because of these transactions, our 1997 results and 1996 results are not comparable. In order to provide a more meaningful comparison of our results of operations during the two years, we have adjusted for the effects of these transactions in the segment discussions below. Revenues Our revenues increased $98.7 million to $696.2 million for 1997. This increase principally reflects the inclusion in 1997 of $285.5 million of Snapple and Stewart's sales. The increase was partially offset by a $154.4 million decrease due to the elimination during a portion of 1997 of sales attributable to the sold restaurants less $6.2 million of franchise royalties from those restaurants for the period after the restaurant sale. Aside from the effects of these transactions, revenues decreased $38.6 million. A discussion of the change in revenues by segment is as follows: Premium Beverages -- We have adjusted our 1997 results by excluding the results of operations of Snapple and Stewart's. After giving effect to these adjustments, revenues decreased $7.8 million (5.9%) in 1997 due to decreases in sales of finished goods ($9.7 million) partially offset by an increase in sales of concentrate ($1.9 million), which we sell to only one international customer. The decrease in sales of finished goods principally reflects lower sales volume exclusive of Snapple. 44 Soft Drink Concentrates -- Revenues decreased $31.1 million (17.5%) in 1997 due to decreases in sales of finished goods ($21.6 million) and concentrate ($9.5 million). The decrease in sales of finished goods principally reflects (1) the absence in the 1997 period of sales to MetBev and a volume decrease in sales of branded finished products of Royal Crown in areas other than those serviced by MetBev, where in both instances we now sell concentrate rather than finished goods, (2) a volume decrease in sales of the C&C beverage line, where we now sell concentrate to the purchaser of the C&C beverage line rather than finished goods, as a result of the C&C sale and (3) a volume reduction in the sales of finished Royal Crown Premium Draft Cola which we ceased selling in late 1996. Sales of Royal Crown concentrate decreased, despite the shift in sales of C&C and Royal Crown products to concentrate from finished goods noted above, principally reflecting (1) a decrease in branded sales due to volume declines, which were adversely affected by lower bottler case sales and (2) an overall lower average concentrate selling price. Restaurants -- We have adjusted for the sale of the restaurants by including in 1996 results of restaurant operations for the same period that was included in 1997 before the restaurant sale and excluding from 1997 results franchise royalties on the sold restaurants for the period after the restaurant sale. After giving effect to these adjustments, revenues increased $0.3 million (less than 1%) during 1997. This increase was due to a $2.8 million (4.9%) increase in royalties and franchise fees partially offset by a $2.5 million (3.2%) decrease in net sales of the company-owned restaurants. The increase in royalties and franchise fees is due to a net increase of 69 (2.6%) franchised restaurants and a 1.7% increase in same-store sales of franchised restaurants. Gross Profit We calculate gross profit as total revenues less (1) cost of sales, excluding depreciation and amortization and (2) that portion of depreciation and amortization related to sales. Depreciation and amortization included in cost of sales was $1.0 million in 1997 and $13.5 million in 1996, including depreciation and amortization in 1996 but not in 1997 on all long-lived assets of the sold restaurants which had been written down to their estimated fair values as of December 31, 1996 and were no longer depreciated or amortized through the date of their sale. Our gross profit increased $93.7 million to $362.9 million in 1997. The increase is attributable in part to gross profit in 1997 associated with Snapple ($119.9 million) and Stewart's ($0.4 million). The increase was partially offset by the gross profit associated with the sold restaurants which were included in 1996 results for the entire period but only a portion of 1997 ($28.5 million) less the effect of royalties from those restaurants during that same portion of 1997 ($6.2 million). Excluding the effects of these transactions, gross profit decreased $4.3 million due to the lower overall sales volumes discussed above. This decrease was partially offset by higher overall gross margins of 58% in 1997 compared with 54% in 1996. A discussion of the changes in gross margins by segment is as follows: Premium Beverages -- Giving effect to the adjustments described above relating to the Snapple and Stewart's acquisitions in 1997, margins remained unchanged in 1997 at 39%. Soft Drink Concentrates -- Margins increased in 1997 to 77% from 68% principally due to the shift discussed above in product mix to higher-margin concentrate sales compared with finished product sales and reduced cost of the raw material aspartame in 1997. Restaurants -- Giving effect to the adjustments described above with respect to the sale of the restaurants, margins increased in 1997 to 56% from 51% primarily due to (1) the absence in 1997 of depreciation and amortization on all long-lived assets of the sold restaurants discussed above and (2) the higher percentage of royalties and franchise fees, with no associated cost of sales, to total revenues in 1997. 45 Advertising, Selling and Distribution Expenses Advertising, selling and distribution expenses increased $48.9 million to $184.7 million in 1997. The increase reflects: (1) the expenses of Snapple, (2) higher promotional costs related to Mistic Rain Forest Nectars, a then recently introduced product line and (3) other increased advertising and promotional costs for the premium beverage segment other than Snapple. These increases were partially offset by: (1) a decrease in the expenses of the restaurant segment principally due to local restaurant advertising and marketing expenses no longer required for the sold restaurants after their sale in May 1997, (2) a decrease in the expenses of the soft drink concentrate segment principally due to: (a) lower bottler promotional reimbursements resulting from the decline in sales volume, (b) the elimination of advertising expenses for Draft Cola and (c) planned reductions in connection with the aforementioned decreases in sales of other Royal Crown and C&C branded finished products. General and Administrative Expenses General and administrative expenses increased $5.5 million to $81.2 million in 1997 due to the expenses of Snapple partially offset by: (1) reduced spending levels related to administrative support, principally payroll, no longer required for the sold restaurants and (2) reduced travel activity in the restaurant segment before the restaurants sale. Depreciation and Amortization, Excluding Amortization of Deferred Financing Costs Depreciation and amortization, excluding amortization of deferred financing costs, decreased $4.7 million to $25.2 million in 1997 due to a decrease in depreciation and amortization relating to the sold restaurants partially offset by the depreciation and amortization in 1997 of Snapple. Charges Related to Post-Acquisition Transition, Integration and Changes to Business Strategies The nonrecurring charges related to post-acquisition transition, integration and changes to business strategies of $33.8 million in 1997 are discussed above in connection with the comparison of 1998 with 1997. Facilities Relocation and Corporate Restructuring Charge The facilities relocation and corporate restructuring charge of $7.1 million in 1997 is discussed above in connection with the comparison of 1998 with 1997. The facilities relocation and corporate restructuring charge of $7.8 million in 1996 resulted from: (1) estimated losses of $3.7 million on planned subleases, principally for the write-off of nonrecoverable unamortized leasehold improvements and furniture and fixtures and rent payments for the period we estimated the space would remain unoccupied pending finding a subtenant or negotiating an early lease termination, of surplus office space as a result of the then planned sale of company-owned restaurants and the relocation of the Royal Crown headquarters, (2) employee severance costs of $2.0 million associated with the relocation of the Royal Crown headquarters, 46 (3) settlement costs of $1.3 million for terminating Mistic distribution agreements, including both cash payments and the write-off of receivables from such distributions in lieu of cash payments, (4) estimated losses of $0.6 million for the shutdown of the soft drink concentrate segment's Ohio production facility principally for the write-off of obsolete steel drums used to send concentrate to bottlers and estimated costs to refurbish the plant and (5) the estimated losses of $0.2 million for Mistic information systems to be abandoned. By disposing of the company-owned restaurants and focusing solely on being a franchisor of restaurants, we anticipated that we would realize operating profit improvements. We anticipated that the relocation of Royal Crown would result in improved operating results through (1) cost savings by combining certain corporate functions with those of Triarc Beverage Holdings and (2) improved operations by sharing the experienced senior management team of Triarc Beverage Holdings. The consolidation and realignment of Mistic's distribution network, including the termination of existing Mistic distribution agreements, strengthened Mistic's distribution. By consolidating all of the soft drink concentrate production in one plant including the related shutdown of the Ohio production facility, we anticipated we would realize cost savings from such consolidation. You should read Note 12 to the audited consolidated financial statements of Triarc Consumer Products Group appearing elsewhere in this prospectus where additional disclosures relative to the facilities relocation and corporate restructuring charges are provided. Reduction in Carrying Value The reduction in carrying value of long-lived assets to be disposed in 1996 of $58.9 million reflects the estimated loss on the anticipated disposal of long-lived assets in connection with the sale of all company-owned restaurants as then planned. This provision represents the reduction in the carrying value of certain long-lived assets and certain identifiable intangibles to estimated fair value and the accrual of certain equipment operating lease obligations which would not be assumed by the purchaser. There was no provision for reduction in carrying value of long-lived assets in 1997. Interest Expense Interest expense increased $8.0 million to $58.0 million in 1997 principally due to the effect of borrowings by Snapple in connection with the Snapple acquisition ($222.4 million outstanding as of December 28, 1997) partially offset by: (1) the 1997 assumption by the purchaser of the sold restaurants of $69.6 million of mortgage and equipment notes payable and capitalized lease obligations and (2) the reduction of outstanding principal balances on May 5, 1997 aggregating $29.7 million under notes payable to Triarc Parent forgiven or repaid in connection with the restaurants sale. Loss on Sale of Businesses, Net Loss on sale of businesses, net, of $3.5 million in 1997 is discussed above in connection with the comparison of 1998 with 1997. Other Income, Net Other income, net improved $5.1 million to $5.5 million in 1997 principally due to: (1) $2.1 million of other income, net of Snapple since its acquisition in May 1997 consisting principally of equity in the earnings of investees, rental income and interest income, (2) $1.4 million of increased gains on asset sales, (3) $0.9 million of gain on a Florida lease termination and 47 (4) $0.6 million of increased interest income on invested cash. Income Tax Benefit Our benefit from income taxes represented effective rates of 21% in 1997 and 32% in 1996. The rate is lower in 1997 due to the increased effect in 1997 of the amortization of non-deductible Goodwill as a result of the significantly lower 1997 pre-tax loss. Extraordinary Charges The extraordinary charges in 1997 are discussed above in connection with the comparison of 1998 with 1997. LIQUIDITY AND CAPITAL RESOURCES Cash Flows From Operations Our consolidated operating activities provided cash and cash equivalents, which we refer to in this discussion as cash, of $59.1 million during 1998 and $15.4 million during the nine months ended October 3, 1999. The net cash provided by operating activities in 1998 principally reflects net income of $30.0 million and net non-cash charges of $43.6 million, principally depreciation and amortization of $36.9 million. These sources were partially offset by: (1) the reclassification of gain on sale of businesses of $5.0 million to cash flows from investing activities and (2) cash used by changes in operating assets and liabilities of $9.5 million. The net cash provided by operating activities during the nine months ended October 3, 1999 principally reflects: (1) net income of $5.7 million, (2) net non-cash charges of $55.2 million, principally depreciation and amortization of $26.9 million, a provision for deferred income taxes of $12.1 million and the write-off of unamortized deferred financing costs and interest rate cap agreement costs of $10.9 million relating to the refinancing transactions described below and (3) other of $1.6 million. These sources were partially offset by cash used by changes in operating assets and liabilities of $47.1 million. The cash used by changes in operating assets and liabilities of $9.5 million in 1998 principally reflects a decrease in accounts payable and accrued expenses of $29.6 million partially offset by a $10.6 million decrease in inventories, a $7.0 million decrease in receivables and a $3.5 million increase in due to affiliates. The decrease in accounts payable and accrued expenses was principally due to: (1) payments by Snapple of accrued losses on pre-acquisition production contracts and legal settlements, (2) decreases at Royal Crown due to the reduced aspartame inventory levels described below and the lower bottler promotional reimbursements discussed above and (3) reduced purchases from third party vendors since we have correspondingly increased the purchases of certain raw materials from Triarc Parent. The decrease in inventories was due to: (1) a $7.2 million decrease in Royal Crown inventories reflecting a reduction of higher than normal 1997 year-end inventory levels of aspartame reflecting purchases, and resulting inventory build-ups, during the latter part of 1997 by Royal Crown in order to take advantage of a 1997 promotional incentive and 48 (2) $3.4 million of reduced inventory levels of premium beverages principally due to a planned reduction of Mistic inventory levels. The decrease in receivables was due to a $7.6 million decrease at Royal Crown reflecting the absence in 1998 of a 1997 promotional rebate receivable for aspartame purchases and lower fourth quarter private label sales in 1998 compared with 1997. The $3.5 million increase in due to affiliates resulted from the increased purchases of certain raw materials from Triarc Parent. The cash used by changes in operating assets and liabilities of $47.1 million during the nine months ended October 3, 1999 reflects increases in receivables of $39.0 million and inventories of $19.0 million. These effects were partially offset by: (1) an increase in due to Triarc Parent and other affiliates of $6.6 million, (2) an increase in accounts payable and accrued expenses of $2.8 million and (3) a decrease in prepaid expenses and other current assets of $1.5 million. The increase in receivables principally results from seasonally higher sales in August and September 1999 compared with November and December 1998. The increase in inventories was principally due to the residual effect of the seasonal buildup in our premium beverage business. The increase in due to Triarc Parent and other affiliates reflects the increased inventory purchases, a portion of which are purchased through Triarc Parent, partially offset by the repayment of amounts due to Triarc Parent in connection with the refinancing transactions described below. The increase in accounts payable and accrued expenses was principally due to seasonally higher accruals for bottler and distributor promotional allowances. We expect continued positive cash flows from operations for the remainder of 1999 which should reflect the reversal following the peak summer season of seasonal increases in receivables and inventories experienced during the first nine months of 1999. Working Capital and Capitalization Working capital, which equals current assets less current liabilities, was $33.2 million at October 3, 1999, reflecting a current ratio, which equals current assets divided by current liabilities, of 1.2:1. This amount represents a decrease in working capital of $22.0 million from January 3, 1999 principally reflecting the net effects of the refinancing and related transactions discussed below, most significantly the portion of amounts distributed to Triarc Parent which came from our cash and cash equivalents on hand. Our capitalization at October 3, 1999 aggregated $606.2 million consisting of $779.8 million of long-term debt, including current portion, less $173.6 million of member's deficit. Our total capitalization decreased $7.4 million from January 3, 1999 reflecting an increase in our member's deficit of $128.9 million and the effect of the February 23, 1999 contribution to us by Triarc Parent of the redeemable preferred stock of Triarc Beverage Holdings with carrying values of $87.6 million as of January 3, 1999 and $88.8 million as of the contribution date, whereby the redeemable preferred stock of Triarc Beverage Holdings now eliminates in consolidation, both partially offset by a $209.1 million increase in our long-term debt. The increase in member's deficit primarily reflects the net effects of the refinancing and related transactions discussed below and was due to: (1) dividends of $209.7 million paid to Triarc Parent, including a non-cash dividend of $5.0 million and (2) the non-cash transfer of $22.7 million of our deferred tax assets to Triarc Parent as discussed below. These factors were partially offset by: 49 (1) capital contributions to us by Triarc Parent of: (a) the redeemable preferred stock of Triarc Beverage Holdings, (b) $7.8 million of certain amounts otherwise due to Triarc Parent and (c) $2.4 million of Triarc Parent's minority interests in two of our restaurant subsidiaries and (2) net income of $5.7 million. The increase in our long-term debt is discussed immediately below. Refinancing Transactions On February 25, 1999 Triarc Consumer Products Group and Triarc Beverage Holdings issued $300.0 million principal amount of the initial 10 1/4% notes and concurrently Snapple, Mistic, Stewarts', RC/Arby's and Royal Crown entered into a new $535.0 million senior bank credit facility. An aggregate $20.0 million principal amount of the initial 10 1/4% notes were initially purchased by our Chairman and Chief Executive Officer and President and Chief Operating Officer. We have been advised by these executives that, as of April 23, 1999, they no longer hold any of the initial 10 1/4% notes. The new credit facility consists of a $475.0 million term facility, all of which was borrowed as three classes of term loans on February 25, 1999, and a $60.0 million revolving credit facility which provides for revolving credit loans by Snapple, Mistic, Stewart's, RC/Arby's or Royal Crown. They may make revolving loan borrowings of up to 80% of eligible accounts receivable plus 50% of eligible inventories. There have been no borrowings of revolving loans through October 3, 1999. At October 3, 1999 there was $59.9 million of borrowing availability under the revolving credit facility. We used the proceeds of the borrowings under the initial 10 1/4% notes and the new credit facility to: (1) repay on February 25, 1999 the $284.3 million outstanding principal amount of term loans under a former credit facility entered into by Snapple, Mistic, Triarc Beverage Holdings and Stewart's and $1.5 million of related accrued interest, (2) redeem on March 30, 1999 the $275.0 million of borrowings under the RC/Arby's 9 3/4% senior secured notes due 2000 and pay $4.4 million of related accrued interest and $7.7 million of redemption premium, (3) acquire Millrose and the assets of Mid-State Beverage, Inc., two New Jersey distributors of our premium beverages, for $17.5 million, including expenses of $0.2 million, (4) pay estimated fees and expenses of $29.6 million relating to the issuance of the initial 10 1/4% notes and the completion of the new credit facility and (5) pay one-time distributions to Triarc Parent of $215.5 million, including cash dividends of $204.7 million, of the remaining net proceeds from the above borrowings and all of our cash and cash equivalents on hand in excess of $2.0 million, which we retained for working capital purposes. The initial 10 1/4% notes mature in 2009 and do not require any amortization of principal prior to 2009. In accordance with the indenture pursuant to which the initial 10 1/4% notes were issued, the annual interest rate on the initial 10 1/4% notes increased by 1/2% to 10 3/4% on August 24, 1999 and will remain at 10 3/4% until the registration statement of which this prospectus is a part is declared effective by the Securities and Exchange Commission, at which time the annual rate would revert back to 10 1/4%. Scheduled maturities of the term loans under the new credit facility are $1.6 million during the remainder of 1999, representing one quarterly installment, increasing annually through 2006 with a final payment in 2007. Any revolving loans will be due in full in 2005. We are also required to make mandatory prepayments in an annual amount, if any, initially equal to 75% of excess cash 50 flow as defined in the new credit agreement. We currently expect that a prepayment will be required to be made in the second quarter of 2000 in respect of the year ending January 2, 2000, the amount of which is currently estimated at $34.0 million. The $1.6 million quarterly installment referred to above would not be affected by the excess cash flow prepayment, however, all subsequent quarterly scheduled installments would be reduced. Pursuant to the new credit agreement, we can make voluntary prepayments of two classes of the term loans. However, if we make voluntary prepayments of two classes of the term loans, which have $124.4 million and $303.5 million outstanding as of October 3, 1999, we will incur prepayment penalties of 2.0% and 3.0% of the amounts prepaid through February 25, 2000, respectively, and from February 26, 2000 through February 25, 2001 we will incur prepayment penalties of 1.0% and 1.5% of the amounts prepaid, respectively. Other Debt We have a note payable to a beverage co-packer in an outstanding principal amount of $4.2 million as of October 3, 1999, of which $0.8 million is due during the remainder of 1999. Our scheduled maturities of long-term debt during the remainder of 1999 are $2.6 million, including $1.6 million under the term loans and $0.8 million under the note payable to a beverage co-packer discussed above. Debt Agreement Guarantees and Restrictions Under our debt agreements substantially all of our assets, other than cash and cash equivalents, are pledged as security. Our obligations relating to the initial 10 1/4% notes are, and upon the issuance of the exchange notes will be, guaranteed by Snapple, Mistic, Stewart's and RC/Arby's and all of their domestic subsidiaries, all of which, effective February 23, 1999, are wholly-owned by Triarc Consumer Products Group or Triarc Beverage Holdings. These guarantees are full and unconditional, are on a joint and several basis and are unsecured. Our obligations relating to the new credit facility are guaranteed by Triarc Consumer Products Group, Triarc Beverage Holdings and all of the domestic subsidiaries of Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown. As collateral for the guarantees under the new credit facility, all of the stock of Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown and all of their domestic subsidiaries and 65% of the stock of each of their directly-owned foreign subsidiaries is pledged. Arby's remains responsible for operating and capitalized lease payments assumed by the purchaser in connection with the restaurants sale of approximately $117.0 million as of May 1997 when the Arby's restaurants were sold and $91.4 million as of October 3, 1999, assuming the purchaser of the Arby's restaurants has made all scheduled repayments through such date. Further, Triarc Parent has guaranteed mortgage notes and equipment notes payable to FFCA Mortgage Corporation assumed by the purchaser in connection with the restaurants sale of $54.7 million as of May 1997 and $49.5 million as of October 3, 1999, assuming the purchaser of the Arby's restaurants has made all scheduled repayments through such date. The indenture under which the initial 10 1/4% notes were issued, and the exchange notes will be issued, and the new credit agreement contain various covenants which: (1) require meeting financial amount and ratio tests, (2) limit, among other matters, (a) the incurrence of indebtedness, (b) the retirement of debt before maturity, with exceptions, (c) investments, (d) asset dispositions and (e) affiliate transactions other than in the normal course of business, and (3) restrict the payment of dividends to Triarc Parent. 51 Under the most restrictive of these covenants, we cannot pay any dividends to Triarc Parent other than the one-time distributions, including dividends, paid to Triarc Parent in connection with the 1999 refinancing transactions. Capital Expenditures Capital expenditures amounted to $11.1 million in 1998, including $4.6 million which RC/Arby's was required to reinvest in core business assets under the indenture relating to the RC/Arby's 9 3/4% senior notes as a result of the sale of the C&C Beverage line and other asset disposals in 1997, and $5.8 million during the nine months ended October 3, 1999. We expect that capital expenditures will approximate $4.0 million during the remainder of 1999 for which there were $1.0 million of outstanding commitments as of October 3, 1999. Our planned capital expenditures are principally for production equipment in our beverage segments. Acquisitions In February 1999 we acquired Millrose and Mid-State for $17.5 million as discussed above. On August 27, 1998 we completed the T.J. Cinnamons acquisition by acquiring from Paramark Enterprises, Inc., formerly known as T.J. Cinnamons, Inc., all of Paramark's franchise agreements for T.J. Cinnamons full concept bakeries and Paramark's wholesale distribution rights for T.J. Cinnamons products. In 1996, we had acquired the T.J. Cinnamons trademarks, service marks, recipes and proprietary formulae. The 1998 acquisition also included settlement of remaining contingent payments from the 1996 acquisition, which were based upon achieving specific sales targets over a seven-year period. The aggregate consideration in 1998 consisted of cash of $3.0 million and a $1.0 million, discounted value of $0.9 million, non-interest bearing obligation payable in equal monthly installments through August 2000. To further our growth strategy, we will consider additional selective business acquisitions, as appropriate, to grow strategically and explore other alternatives to the extent we have available resources to do so. Income Taxes We are included in the consolidated Federal income tax return of Triarc Parent. As of January 3, 1999, RC/Arby's, Triarc Beverage Holdings, including Stewart's effective August 15, 1998, and Stewart's through August 15, 1998 were each parties to separate tax-sharing agreements with Triarc Parent whereby each was required to pay amounts relating to taxes based on their taxable income and the taxable income of their eligible subsidiaries on a stand-alone basis. Under these agreements, in 1998 Triarc Beverage Holdings made tax-sharing payments to Triarc Parent of $10.5 million and Stewart's made tax-sharing payments of $0.9 million. RC/Arby's was not required to make any tax-sharing payments in 1998 as a result of net operating losses in prior periods in excess of pre-tax income for 1998. On February 25, 1999 a revised tax-sharing agreement was entered into with Triarc Parent which, as amended effective February 25, 1999, provides that we would continue to receive benefit for deferred tax assets associated with existing Federal net operating loss carryforwards and excess Federal income tax payments made in accordance with the prior tax-sharing agreement except that Triarc Parent has the right to cause the effective transfer of any unutilized benefits from us to Triarc Parant, but only to the extent any such transfer would not result in non-compliance with a credit agreement covenant. In accordance therewith, during the nine months ended October 3, 1999 we recorded a charge to 'Accumulated deficit' and a credit to 'Deferred income taxes' to transfer $22.7 million of these deferred tax benefits to Triarc Parent as if this transfer were a distribution to Triarc Parent. As of October 3, 1999, we have $8.6 million remaining of these unutilized benefits. The Federal income tax returns of Triarc Parent and its subsidiaries, including RC/Arby's, have been examined by the Internal Revenue Service for the tax years from 1989 through 1992. Prior to 1999 Triarc Parent resolved and settled certain issues with the Internal Revenue Service regarding such audit and in July 1999 Triarc Parent resolved all remaining issues. In connection 52 therewith, we paid $4.6 million during 1997, of which $2.4 million was the amount of tax due and $2.2 million was interest thereon, and no further payments are required. The Internal Revenue Service is examining the Federal income tax returns of Triarc Parent and its subsidiaries, including RC/Arby's, for the year ended April 30, 1993 and transition period ended December 31, 1993. In connection with this most recent examination, Triarc Parent has received to date notices of proposed adjustments, of which $722,000 would increase the taxable income relating to RC/Arby's, the tax effect of which has not yet been determined. Triarc Parent does not expect to receive any additional proposed adjustments relating to RC/Arby's from this more recent examination. We have adequate Federal net operating loss carryforwards and excess income tax payments under the tax sharing agreements described above to provide for any tax liabilities that may result from the resolution of this examination. Accordingly, we do not expect to be required to make any related payments to Triarc Parent. CASH REQUIREMENTS As of October 3, 1999, our consolidated cash requirements for the remainder of 1999, exclusive of operating cash flow requirements, which include tax-sharing payments to Triarc Parent as discussed above, consist principally of: (1) capital expenditures of approximately $4.0 million, (2) scheduled debt principal repayments aggregating $2.6 million and (3) the cost of additional business acquisitions, if any. We anticipate meeting all of these requirements through: (1) existing cash and cash equivalents of $40.1 million as of October 3, 1999, (2) cash flows from operations and/or (3) the $59.9 million of availability as of October 3, 1999 under our $60.0 million revolving credit facility. FACILITIES RELOCATION AND CORPORATE RESTRUCTURING As of October 3, 1999 we have a $0.6 million remaining accrual from our 1996 and 1997 provisions for facilities relocation and corporate restructuring which aggregated $14.9 million. The remaining accrual principally relates to employee severance and related termination costs for employees terminated in 1997. Scheduled payments in the fourth quarter of 1999 are currently estimated to be $0.1 million. The remaining accrual as of January 2, 2000, currently estimated to be $0.5 million, will be reversed to income as a credit to facilities relocation and corporate restructuring in our fourth quarter ending January 2, 2000. LEGAL AND ENVIRONMENTAL MATTERS We are involved in litigation, claims and environmental matters incidental to our businesses. We have reserves for legal and environmental matters of $1.5 million as of October 3, 1999. Although the outcome of these matters cannot be predicted with certainty and some of these matters may be disposed of unfavorably to us, based on currently available information and given our reserves, we do not believe that these legal and environmental matters will have a material adverse effect on our consolidated financial position or results of operations. YEAR 2000 We have undertaken a study of our functional application systems to determine their compliance with year 2000 issues and, to the extent of noncompliance, the required remediation. Our study consisted of an eight-step methodology to: (1) obtain an awareness of the issues; (2) perform an inventory of our software and hardware systems; (3) identify our systems and computer programs with year 2000 exposure; 53 (4) assess the impact on our operations by each mission critical application; (5) consider solution alternatives; (6) initiate remediation; (7) perform validation and confirmation testing and (8) implement. Through October 3, 1999, we had completed all eight steps in our restaurant segment and, in our beverage segments, we had completed steps one through six and expect to complete step seven and the final implementation before January 1, 2000. Step seven requires that we develop testing and review methodology on a risk prioritization basis and implement such protocols to test year 2000 compliance of both internal software and hardware systems. Step eight requires that we implement needed corrections to existing and/or new hardware and software applications to cause systems to become and remain year 2000 compliant. This study addressed both information technology and non-information technology systems, including imbedded technology such as micro controllers in our telephone systems, production processes and delivery systems. Some significant systems in our soft drink concentrate segment, principally Royal Crown's order processing, inventory control and production scheduling system, required remediation which was completed in the first quarter of 1999. As a result of this study and subsequent remediation, we have no reason to believe that any of our mission critical systems are not year 2000 compliant. Accordingly, we do not currently anticipate that internal systems failures will result in any material adverse effect to our operations. However, should the final testing and implementation steps reveal any year 2000 compliance problems which cannot be corrected before January 1, 2000, the most reasonably likely worst-case scenario is that we might experience a delay in production and/or fulfilling and processing orders resulting in either lost sales or delayed cash receipts, although we do not believe that this delay would be material. In this case, our contingency plan would be to revert to a manual system in order to perform the required functions. Due to the limited number of orders received by Royal Crown on a daily basis, this contingency plan would not cause any significant disruption of business. As of October 3, 1999, we had incurred $1.3 million of costs in order to become year 2000 compliant, including computer software and hardware costs, and the current estimated cost to complete this remediation during the remainder of 1999 is not more than $0.5 million. These costs incurred through January 3, 1999 were expensed as incurred, except for the direct purchase costs of software and hardware, which were capitalized. The software-related costs incurred on or after January 4, 1999 are being capitalized in accordance with the provisions of Statement of Position 98-1, 'Accounting for the Costs of Computer Software Developed or Obtained for Internal Use', of the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants, which we adopted in the first quarter of 1999. An assessment of the readiness of year 2000 compliance of third party entities with which we have relationships, such as our suppliers, banking institutions, customers, payroll processors and others is ongoing. We have inquired, or are in the process of inquiring, of the significant aforementioned third parties about their readiness relating to year 2000 compliance and to date have received indications that many of them are in the process of remediation and/or will be year 2000 compliant. We are, however, subject to risks relating to these third parties' potential year 2000 non-compliance. We believe that these risks are primarily associated with our banks and major suppliers, including our beverage co-packers and bottlers and the food suppliers and distributors to our restaurant franchisees. At present, we cannot determine the impact on our results of operations in the event of year 2000 non-compliance by these third parties. In the most reasonably likely worst-case scenario, the year 2000 non-compliance might result in a disruption of business and loss of revenues, including the effects of any lost customers, in any or all of our business segments. The most reasonably likely worst-case scenario from failure of systems of our suppliers is an inability to order and receive delivery of needed raw materials, packaging and/or other production supplies which would result in an inability to meet orders causing lost sales. The most likely worst-case scenario from failure of systems of our banks would be an inability to 54 transact normal banking business such as deposits of collections, clearing cash disbursements and borrowing needed revolving loan funds or investing excess funds. We determined that the possible failure of these third party systems represents the most significant risk to our ability to operate our businesses in the normal course as we could not manufacture our products without the ability to order and receive materials when and where we need them and as we could not manage our monetary responsibilities without the ability to interact with the banking system. We will continue to monitor these third parties to determine the impact on our businesses and the actions we must take, if any, in the event of non-compliance by any of these third parties. Our contingency plans presently include the build-up of our beverage inventories just before the year 2000 in order to mitigate the effects of temporary supply disruptions. We believe there are multiple vendors of the goods and services we receive from our suppliers and thus the risk of non-compliance with year 2000 by any of our suppliers is mitigated by this factor. Also, no single customer accounts for more than 3% of our consolidated revenues, thus mitigating the adverse risk to our business if some customers are not year 2000 compliant. We have engaged consultants to advise us regarding the compliance efforts of each of our operating businesses. The consultants are assisting us in completing inventories of critical applications and in completing formal documentation of year 2000 compliance of hardware and software as well as mission critical customers, vendors and service providers. The costs of the project and the date on which we believe we will complete the year 2000 modifications are based on management's best estimates, which were derived using numerous assumptions of future events. However, we cannot assure you that these estimates will be achieved and actual results could differ materially from those anticipated. INFLATION AND CHANGING PRICES Management believes that inflation did not have a significant effect on gross margins during 1996, 1997, 1998 and the nine months ended October 3, 1999, since inflation rates generally remained at relatively low levels. Historically, we have been successful in dealing with the impact of inflation to varying degrees within the limitations of the competitive environment of each segment of our business. In the restaurant segment in particular, the impact of any future inflation should be limited since our restaurant operations are exclusively franchising following the 1997 sale of all company-owned restaurants. SEASONALITY Our beverage and restaurant businesses are seasonal. In the beverage businesses, the highest revenues occur during the spring and summer (April through September) and, accordingly, our second and third quarters reflect the highest revenues. Our first and fourth quarters have lower revenues from the beverage businesses. The royalty revenues of our restaurant business are somewhat higher in our fourth quarter and somewhat lower in our first quarter. Accordingly, consolidated revenues will generally be highest during the second and third fiscal quarters of each year. Our EBITDA and operating profit are also highest during the second and third fiscal quarters of each year and lowest in the first fiscal quarter. This principally results from the higher beverage revenues in the second and third fiscal quarters while general and administrative expenses and depreciation and amortization, excluding amortization of deferred financing costs are generally recorded ratably in interim periods either as incurred or allocated to interim periods based on time expired. The first fiscal quarter is also lower due to advertising production costs which typically are higher in the first quarter in anticipation of the peak spring and summer beverage selling season and which are recorded the first time the related advertising takes place. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In June 1998 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 'Accounting for Derivative Instruments and Hedging Activities'. 55 Statement of Financial Accounting Standards No. 133 provides a comprehensive standard for the recognition and measurement of derivatives and hedging activities. The standard requires all derivatives be recorded on the balance sheet at fair value and establishes special accounting for three types of hedges. The accounting treatment for each of these three types of hedges is unique but results in including the offsetting changes in fair values or cash flows of both the hedge and hedged item in results of operations in the same period. Changes in fair value of derivatives that do not meet the criteria of one of the aforementioned categories of hedges are included in results of operations. Statement of Financial Accounting Standards No. 133 is effective for our fiscal year beginning January 1, 2001, as amended by Statement of Financial Accounting Standards No. 137 which defers the effective date. We believe our only significant derivative is an interest rate cap agreement on certain of our long-term debt. We historically have not had transactions to which hedge accounting applied and, accordingly, the more restrictive criteria for hedge accounting in Statement of Financial Accounting Standards No. 133 should have no effect on our consolidated financial position or results of operations. However, the provisions of Statement of Financial Accounting Standards No. 133 are complex and we are just beginning our evaluation of the implementation requirements of Statement of Financial Accounting Standards No. 133 and, accordingly, are unable to determine at this time the impact it will have on our consolidated financial position and results of operations. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to the impact of interest rate changes and to a much lesser extent, foreign currency fluctuations. Policies and Procedures -- In the normal course of business, we employ established policies and procedures to manage our exposure to changes in interest rates and fluctuations in the value of foreign currencies using financial instruments we deem applicable. INTEREST RATE RISK Our objective in managing our exposure to interest rate changes is to limit the impact of interest rate changes on earnings and cash flows. To achieve our objectives, we assess the relative proportions of our debt under fixed versus variable rates. We generally use purchased interest rate caps on a portion of our variable-rate debt to limit our exposure to increases in short-term interest rates. These cap agreements usually are at significantly higher than market interest rates prevailing at the time the cap agreements are entered into and are intended to protect against very significant increases in short-term interest rates. As of January 3, 1999 we had one interest rate cap agreement related to interest on variable-rate debt under a then existing credit facility and as of October 3, 1999 we had one interest rate cap agreement relating to interest on one-half of our variable-rate term loans under our current $535.0 million senior bank credit facility. These agreements provided or provide for a cap which was approximately 3% higher than the interest rate as of January 3, 1999 on the related debt and approximately 2% higher than the interest rate as of October 3, 1999 on the related debt. FOREIGN CURRENCY RISK Our objective in managing our exposure to foreign currency fluctuations is also to limit the impact of such fluctuations on earnings and cash flows. We have a relatively limited amount of exposure to (1) export sales revenues and related receivables denominated in foreign currencies and (2) investments in foreign subsidiaries which are subject to foreign currency fluctuations. Our primary export sales exposures relate to sales in Canada, the Caribbean and Europe. We monitor these exposures and periodically determine our need for use of strategies intended to lessen or limit our exposure to these fluctuations. However, foreign export sales and foreign operations for our most recent full fiscal year ended January 3, 1999 represented only 5.7% of our revenues and an immediate 10% change in foreign currency exchange rates versus the U.S. dollar from their levels at January 3, 1999 would not have a material effect on our financial condition or results of 56 operations. At the present time, we do not hedge our foreign currency exposures as we do not believe this exposure to be material. OVERALL MARKET RISK With regard to overall market risk, we attempt to mitigate our exposure to such risks by assessing the relative proportion of our investments in cash and cash equivalents and the relatively stable and risk-minimized returns available on such investments. At January 3, 1999 and October 3, 1999, our excess cash was primarily invested in commercial paper and/or United States treasury bills with maturities of less than 90 days and/or money market funds which, due to their short-term nature, minimizes our overall market risk. SENSITIVITY ANALYSIS All of our market risk sensitive instruments are instruments entered into for purposes other than trading. Our measure of market risk exposure represents an estimate of the potential change in fair value of our financial instruments. Market risk exposure is presented for each class of financial instruments held by us at January 3, 1999 and October 3, 1999 for which an immediate adverse market movement represents a potential material impact on our financial position or results of operations. We believe that the rates of adverse market movements described below represent the hypothetical loss to future earnings and do not represent the maximum possible loss nor any expected actual loss, even under adverse conditions, because actual adverse fluctuations would likely differ. The following table reflects the estimated effects on the market value of our financial instruments based upon assumed immediate adverse effects as noted below.
JANUARY 3, 1999 OCTOBER 3, 1999 -------------------- -------------------- CARRYING INTEREST CARRYING INTEREST VALUE RATE RISK VALUE RATE RISK ----- --------- ----- --------- (IN THOUSANDS) Cash equivalents.......................... $ 66,422 $ -- (a) $ 36,291 $ -- (a) Long-term debt............................ 570,655 (2,843) 779,788 (4,717)
- ------------ (a) Due to the short-term nature of the cash equivalents, a change in interest rates of one percentage point would not have a material impact on our financial position or results of operations. ------------------------ The sensitivity analysis of long-term debt assumes an instantaneous increase in market interest rates of one percentage point from their levels at January 3, 1999 and October 3, 1999, with all other variables held constant. The change of one percentage point with respect to our long-term debt (1) represents an assumed average 11% decline as the weighted average interest rate of our variable-rate debt at January 3, 1999 and October 3, 1999 approximated 9% and (2) relates to only our variable-rate debt since a change in interest rates on our fixed-rate debt would not affect interest expense on our fixed-rate debt. The interest rate risk presented with respect to long-term debt represents the potential impact the indicated change in interest rates would have on our results of operations and not our financial position. 57 BUSINESS GENERAL We are a leading premium beverage company, a restaurant franchisor and a soft drink concentrates producer. We own the Snapple, Mistic and Stewart's premium beverage brands and the Royal Crown carbonated soft drink brand and we are the franchisor of the Arby's restaurant system. During the last several years, we have focused our business on premium beverages by acquiring the Snapple, Stewart's and Mistic brands and on franchising by selling all of our company-owned Arby's restaurants to a franchisee. Snapple is a leading marketer and distributor of premium beverages in the United States. Arby's is the world's largest restaurant system specializing in slow-roasted roast beef sandwiches and, according to Nation's Restaurant News, the 10th largest quick service restaurant chain in the United States, based on 1997 domestic system wide sales. INDUSTRY OVERVIEW BEVERAGES Our beverage business competes in two product categories in the non-alcoholic beverage industry: alternative beverages, consisting of 'premium' and 'non-premium' products, and carbonated soft drinks. Alternative beverages consist of fruit beverages, a category that includes both fruit juices and fruit drinks that are not 100% juice, sparkling and still water, ready-to-drink teas, sports drinks and natural soda. From 1992 to 1997, the alternative beverage market has experienced significant growth, with volumes more than doubling to 1.12 billion cases. Nonetheless, alternative beverages currently remain only a small portion of the beverage market, providing significant opportunity for future growth. The alternative beverage category consists of products classified as 'premium,' higher quality, more specialized goods, and to a lesser extent, 'non-premium,' lower-margin, generic or more mainstream products. Premium beverage products typically command higher prices and higher margins for the brand owner, the distributor and the retailer than non-premium beverages because of the following: Higher Quality Ingredients. Premium beverage ingredients are perceived to be higher quality and most do not include preservatives. Distribution. The primary distribution channels for premium beverages are convenience stores and other small retail outlets. These locations usually sell premium beverages in single refrigerated cold servings instead of at room temperature in larger containers. Packaging and Marketing. Packaging is a key differentiator in the single-serve market and critical to building a premium image. Marketing premium beverages relies heavily on product innovation, unique advertising and availability. Carbonated soft drinks were estimated to account for approximately 30% of all drinks, including alcoholic beverages, consumed in the United States in 1997, up from approximately 23.8% in 1987. Annual per-capita soft drink consumption continues to grow at a low single-digit pace. The carbonated soft drink industry is concentrated, with the three largest franchise companies -- Coca-Cola Co., PepsiCo Inc., and Dr. Pepper/Seven Up Inc., an affiliate of Cadbury Schweppes Plc -- accounting for approximately 90% of U.S. carbonated soft drink sales. Beverage companies have used several various strategies to increase sales -- acquiring other companies, expanding distribution channels and international expansion. QUICK SERVICE RESTAURANT INDUSTRY According to data compiled by the National Restaurant Association, total domestic restaurant industry sales were estimated to be approximately $215 billion in 1997, of which approximately $100 billion were estimated to be in the quick service restaurant segment. Large chains are 58 continuing to gain a greater share of industry sales. The 100 largest restaurant chains accounted for approximately 49.7% of restaurant industry sales in 1997, compared to approximately 39.7% in 1980. According to a study by Franchise Finance Corporation of America, the quick service restaurant segment accounted for approximately 70% of sales and 85% of restaurant units within the top 100 restaurant chains in 1997. According to Franchise Finance Corporation of America, the quick service restaurant industry has grown from a total restaurant sales market share of approximately 30% in 1970 to 47% in 1997. BUSINESS SEGMENTS Snapple, Mistic, and Stewart's conduct our premium beverage operations, Royal Crown conducts our soft drink concentrate operations, and Arby's conducts our franchise restaurant operations. PREMIUM BEVERAGES (SNAPPLE, MISTIC AND STEWART'S) Through Snapple Beverage Corp., Mistic Brands, Inc. and Stewart's Beverages, Inc., we are a leader in the wholesale premium beverage market. According to A.C. Nielsen data, in 1998 our premium beverage brands had the leading share (33%) of premium beverage sales volume in grocery stores, mass merchandisers and convenience stores. SNAPPLE Snapple markets and distributes all-natural ready-to-drink teas, juice drinks and juices. During 1998, Snapple sales represented approximately 79% of the case sales of our total premium beverage sales. According to A.C. Nielsen data, in 1998 Snapple had the leading share (26%) of premium beverage sales volume in grocery stores, mass merchandisers and convenience stores. Snapple has a stable base of core products that are consistently Snapple's top sellers. Snapple's current top twenty products have contributed approximately 70% of Snapple's sales in each of the last three years. Since Triarc Beverage Holdings acquired Snapple in May 1997, Snapple has strengthened its distributor relationships, improved promotional initiatives and significantly increased new product introductions and packaging innovations. These activities have contributed to an increase in Snapple case sales of 8.4% in 1998 over 1997. The most important product introduction in 1998 was WhipperSnapple, a smoothie-like beverage which was named Convenience Store News magazine's best new non-alcoholic beverage product of the year and won the American Marketing Association's Edison award for best new beverage in 1998. WhipperSnapple is a shelf stable product containing dairy ingredients and a blend of fruit juices and purees. Since 1997, Snapple has introduced several new products and flavors, including Orange Tropic-Wendy's Tropical Inspiration, several herbal and green teas, and Snapple Farms, a line of 100% fruit juices which is available in five flavors. In April 1999, Snapple introduced Snapple Elements, a line of all natural juice drinks and teas enhanced with herbal ingredients, and Hydro, a line of all natural thirst quenchers and two brewed sun teas for consumers with active lifestyles. MISTIC Mistic markets and distributes a wide variety of premium beverages, including fruit drinks, ready-to-drink teas, juices and flavored seltzers under the Mistic, Mistic Rain Forest Nectars and Mistic Fruit Blast brand names. Since Triarc Parent acquired Mistic in August 1995, Mistic has introduced more than 35 new flavors, a line of 100% fruit juices, various new bottle sizes and shapes and numerous new package designs. In 1999, Mistic introduced an orange carrot juice drink, Mistic Italian Ice Smoothies, a smoothie-like beverage using the WhipperSnapple technology, and Sun Valley Squeeze, a line of fruit flavored drinks packaged in a proprietary 20 ounce bottle with dramatic graphics. 59 STEWART'S Stewart's markets and distributes Stewart's brand premium soft drinks, including Root Beer, Orange N' Cream, Cream Ale, Ginger Beer, Creamy Style Draft Cola, Classic Key Lime, Lemon Meringue, Cherries N' Cream and Grape. Stewart's holds the exclusive perpetual worldwide license to manufacture, distribute and sell Stewart's brand beverages and owns the Fountain Classics trademark. Through the third quarter of 1999, Stewart's has experienced 28 consecutive quarters of double-digit percentage case sales increases compared to the prior year's comparable quarter. Triarc Parent acquired Stewart's in November 1997 and Stewart's has grown its case sales by 17% in 1998 over 1997 primarily by increasing penetration in existing markets, entering new markets and continuing product innovation. PREMIUM BEVERAGE BUSINESS STRATEGY Our business strategy for our premium beverage business is to: DEVELOP NEW PRODUCTS AND INNOVATIVE PACKAGING: During 1998, we introduced new platforms, such as WhipperSnapple, which is now available in eight flavors. We also introduced new products and flavors, including Lemonade Iced Tea and Diet Ruby Red. In April 1999, we introduced Snapple Elements and Hydro. We also intend to continue to develop innovative packaging like the 'swirl' bottle for WhipperSnapple and the carafe bottle for Mistic. INCREASE CONSUMER AWARENESS AND BRAND IMAGERY: We intend to continue to use innovative marketing and advertising to increase the visibility and image of our well known brands. CONTINUE TO EXPAND AND ENHANCE DISTRIBUTOR RELATIONSHIPS: We intend to focus our sales force on continuing to improve relationships with distributors. We intend to continue to assist our distributors in developing local marketing promotion campaigns, training personnel and participating in local customer visits. EXPAND AND IMPROVE DISTRIBUTION: We plan to continue to expand in existing and new geographic markets and channels of trade, including selected international markets. We also plan to increase the rate at which we place cold drink equipment such as visicoolers in stores and other outlets. We currently own distributors in three of our largest premium beverage markets and may explore the acquisition of distributors in other key markets to drive sales and improve focus on existing and new products. CONTROL PRODUCTION COSTS: We expect to continue to control production costs through favorable supply agreements for raw materials, flavors, and packaging. We have also introduced initiatives to further reduce costs and improve freight management. MINIMIZE CAPITAL EXPENDITURES: We plan to continue to minimize capital expenditures primarily through the use of third party co-packers for production of our premium beverage products. Although we currently do not own any packing facilities or other significant manufacturing facilities, we are in the process of establishing a packing line at one of our company-operated distribution centers which we expect will result in significant freight and production savings. SELECTIVELY ACQUIRE BEVERAGE BRANDS: We may broaden our product offerings through selective premium beverage acquisitions. PRODUCTS Our premium beverage products compete in a number of product categories, including fruit flavored beverages, iced teas, lemonades, carbonated sodas, 100% fruit juices, smoothies, nectars and flavored seltzers. These products are generally available in the United States in some combination of 16 oz., 12 oz. or 10 oz. glass bottles, 32 oz. or 20 oz. PET (plastic) bottles and 11.5 oz. cans. 60 CO-PACKING ARRANGEMENTS More than 20 co-packers strategically located throughout the United States produce our premium beverage products for us under formulation requirements and quality control procedures that we specify. We select and monitor the producers to ensure adherence to our production procedures. We regularly analyze samples from production runs and conduct spot checks of production facilities. Triarc Parent purchases most packaging and raw materials and arranges for their shipment to our co-packers and bottlers. Our three largest co-packers accounted for approximately 51% of our total case production of premium beverages in 1998. Our contractual arrangements with our co-packers are typically for a fixed term that is automatically renewable for successive one year periods. During the term of the agreement, the co-packer generally commits a specified amount of its monthly production capacity to us. Snapple has committed to order guaranteed volumes under substantially all of its contracts. If the volume actually ordered is less than the guaranteed volume, Snapple is typically required to pay the co- packer the product of (1) an amount per case specified in the agreement and (2) the difference between the volume actually ordered and the guaranteed volume. At October 3, 1999, Snapple had reserves of approximately $3.3 million for payments through 2000 under its long-term production contracts with co-packers, known as take-or-pay agreements. We paid approximately $5.9 million under Snapple's take-or-pay agreements during the seven months in 1997 that we owned Snapple and $11.3 million in 1998, primarily related to obligations entered into by the prior owners of Snapple. Mistic has committed to order a guaranteed volume in two instances and a percentage of its products sold in a region in another instance. If the guaranteed volume or percentage is not met, Mistic must make payments to compensate for the difference. Stewart's has no agreements requiring it to make minimum purchases. Because of these co-packing arrangements, we have generally avoided significant capital expenditures or investments for bottling facilities or equipment. Accordingly, our production related fixed costs have been minimal. We believe we have arranged for sufficient production capacity to meet our 1999 requirements and that, in general, the industry has excess production capacity that we could use. We also expect that in 1999 we will meet substantially all of our minimum production requirements under our co-packing agreements. RAW MATERIALS Triarc Parent purchases raw materials used in the preparation and packaging of our premium beverage products and supplies them to our co-packers. Triarc Parent has chosen, for quality control and other purposes, to purchase some raw materials, including aspartame, on an exclusive basis from single suppliers, although we believe that adequate sources of these raw materials are available from multiple suppliers. Substantially all of our flavor requirements are purchased from six suppliers. Triarc Parent purchases a significant portion of our flavor requirements from one supplier which has been designated as its preferred supplier of flavors. Triarc Parent purchases all of our glass bottles from three suppliers, although one supplier has the right to supply up to 75% of our requirements for some types of packaging, and one supplier has the right to supply up to 95% of some of Stewart's packaging requirements. In turn, Triarc Parent sells to our beverage businesses, at cost, the raw materials, flavors and glass bottles that it purchases from its suppliers. Since the acquisition of Snapple, Triarc Parent has been negotiating and continues to negotiate, new supply and pricing arrangements with its suppliers. We believe that, if required, alternate sources of raw materials, flavors and glass bottles are available. DISTRIBUTION We currently sell our premium beverages through a network of distributors that include specialty beverage, carbonated soft drink and licensed beer/wine/spirits distributors. In addition, Snapple uses brokers for distribution of some Snapple products in Florida and Georgia. We distribute our products internationally primarily through one distributor in each country, other than 61 in Canada, where Perrier Group of Canada Ltd. is Snapple's master distributor and where we also use brokers and direct account selling. We typically grant distributors exclusive rights to sell Snapple, Mistic and/or Stewart's products within a defined territory. We have written agreements with distributors who represent approximately 70% of our volume. The agreements are typically either for a fixed term renewable upon mutual consent or are perpetual, and are terminable by us for cause, upon specified defaults or failure to perform under the agreement. The distributor, though, may generally terminate its agreement upon specified prior notice. Snapple owns two of its largest distributors, Mr. Natural Inc., which distributes in the New York Metropolitan area, and Pacific Snapple Distributors, Inc., which distributes in parts of Southern California. In February 1999, Snapple acquired Millrose Distributors, Inc. and the assets of Mid-State Beverage, Inc., two distributors that distribute Snapple and Stewart's products in parts of New Jersey for approximately $17.3 million. Before the acquisition, Millrose was the largest non-company owned Snapple distributor and Mid-State was the second largest Stewart's distributor. No non-company owned distributor accounted for more than 5% of total case sales in 1996, 1997 or 1998. We believe that we could find alternative distributors if our relationships with our largest distributors were terminated. International sales accounted for less than 10% of our premium beverage sales in each of 1996, 1997 and 1998. Since we acquired Snapple, Royal Crown's international group has been responsible for the sales and marketing of our premium beverages outside North America. SALES AND MARKETING Snapple and Mistic have a combined sales and marketing staff. Stewart's has its own sales and marketing staff. The sales forces are responsible for overseeing sales to distributors, monitoring retail account performance and providing sales direction and trade spending support. Trade spending includes price promotions, slotting fees and local consumer promotions. The sales force handles most accounts on a regional basis with the exception of large national accounts, which are handled by a national accounts group. We combined the Snapple/Mistic sales forces by geographic zones under the direction of Zone Sales Vice Presidents, Division Managers, Regional Sales Managers and Trade Development Managers. We organized Stewart's sales force into three divisions. Division Vice Presidents, Regional Sales Managers and District Sales Managers manage each. We employed a sales and marketing staff, excluding that of Snapple-owned distributors, of approximately 290 as of October 3, 1999. We intend to maintain consistent advertising campaigns for our brands as an integral part of our strategy to stimulate consumer demand and increase brand loyalty. In 1999, we have employed a combination of network advertising complemented with local spot advertising in our larger markets. In most markets, we have used television as the primary advertising medium and radio as the secondary medium, although Mistic has used radio as its primary advertising medium. We also employ outdoor, newspaper and other print media advertising, as well as in-store point of sale promotions. SOFT DRINK CONCENTRATES (ROYAL CROWN) Through Royal Crown Company, Inc., we participate in the approximately $55.5 billion domestic retail carbonated soft drink market. Royal Crown produces and sells concentrates used in the production of carbonated soft drinks. Royal Crown sells these concentrates to independent, licensed bottlers who manufacture and distribute finished beverage products domestically and internationally. Royal Crown's products include: RC Cola, Diet RC Cola, Cherry RC Cola, RC Edge, Diet Rite Cola, Diet Rite flavors, Nehi, Upper 10, and Kick. RC Cola is the largest national brand cola available to the independent bottling system, which consists of bottlers who do not bottle either Coca-Cola or Pepsi-Cola. Royal Crown is the exclusive supplier of cola concentrate and a primary supplier of flavor concentrates to Cott Corporation, which, based on public disclosures by Cott, is the largest 62 supplier of premium retailer branded beverages in the United States, Canada and the United Kingdom. Royal Crown also sells its products internationally. Royal Crown's international export business has grown at an 18% compound annual growth rate over the five years ended 1997, although growth slowed to 4% in 1998 due to adverse economic conditions in some of its markets, especially Russia. During 1998, Royal Crown's soft drink brands had approximately a 1.6% share of national supermarket volume according to Beverage Digest/A.C. Nielsen data. SOFT DRINK CONCENTRATES BUSINESS STRATEGY Our business strategy for Royal Crown is to: ENHANCE ROYAL CROWN'S STRATEGIC RELATIONSHIP WITH COTT: We plan to expand Royal Crown's relationship with Cott by assisting in the development of new products and maintenance of quality control. Royal Crown is Cott's exclusive worldwide supplier of cola concentrates for retailer-branded beverages in various containers. Royal Crown also supplies Cott with non- cola carbonated soft drink concentrates. CONTINUE THE EXPANSION OF ROYAL CROWN'S INTERNATIONAL EXPORT BUSINESS: We plan to continue to target international markets. Royal Crown's sales outside the United States were approximately 11.3% of its total revenues in 1998. FOCUS MARKETING RESOURCES: We plan to improve profitability by focusing Royal Crown's marketing resources in markets where its market share is strongest. ROYAL CROWN'S BOTTLER NETWORK Royal Crown sells its flavoring concentrates for branded products to independent licensed bottlers in the United States and 72 foreign countries, including Canada. Consistent with industry practice, Royal Crown assigns each bottler an exclusive territory for bottled and canned products within which no other bottler may distribute Royal Crown branded soft drinks. As of October 3, 1999, Royal Crown products were packaged and/or distributed domestically by 165 licensees, covering 50 states and Puerto Rico. As of October 3, 1999, Royal Crown's independent bottlers operated a total of 42 production centers under 127 production and distribution agreements and operated under 33 distribution-only agreements. Royal Crown enters into a license agreement with each of its bottlers which it believes is comparable to those prevailing in the industry. The duration of the license agreements varies, but Royal Crown may terminate any license agreement if a bottler commits a material breach. Royal Crown's ten largest bottler groups accounted for approximately 79% of Royal Crown's domestic revenues from concentrate for branded products during 1998. RC Chicago Bottling Group accounted for approximately 23% of Royal Crown's domestic revenues from concentrate for branded products during 1998 and American Bottling Company accounted for approximately 18% of these revenues during 1998. Although we believe that Royal Crown could find new bottlers to license the RC Cola brand to, in the short term Royal Crown's sales would decline if these major bottlers stopped selling RC Cola brand products. PRIVATE LABEL Royal Crown believes that private label sales through Cott represent an opportunity to benefit from sales by retailers of store brands. Royal Crown's private label sales began in late 1990. Unit sales of concentrate to Cott in 1998 decreased by 15% over sales in 1997 due primarily to inventory reduction programs of Cott. Royal Crown's revenues from sales to Cott were approximately 12.6% of its total revenues in 1996, 15.8% in 1997 and 17.2% in 1998. Royal Crown sells concentrate to Cott under a concentrate supply agreement signed in 1994. Under the Cott agreement: 63 Royal Crown is Cott's exclusive worldwide supplier of cola concentrates for retailer-branded beverages in various containers; Cott must purchase from Royal Crown at least 75% of its total worldwide requirements for carbonated soft drink concentrates for beverages sold in the containers for which Royal Crown is the exclusive supplier of concentrates; the initial term is 21 years and there are multiple six-year extensions; and as long as Cott purchases a specified minimum number of units of private label concentrate in each year of the agreement, Royal Crown will not manufacture and sell private label carbonated soft drink concentrates to parties other than Cott anywhere in the world. In addition, Royal Crown supplies Cott with non-cola carbonated soft drink concentrates. Through its private label program, Royal Crown develops new concentrates specifically for Cott's private label accounts. The proprietary formulae Royal Crown uses for this private label program are customer-specific and differ from those of Royal Crown's branded products. Royal Crown works with Cott to develop flavors according to each trade customer's specifications. Royal Crown retains ownership of the formulae for the concentrates developed after the date of the Cott agreement, except, in most cases, upon termination of the Cott agreement because of breach or non-renewal by Royal Crown. DISTRIBUTION Bottlers distribute finished soft drink products through the: take home channel -- consisting of supermarkets; convenience channel -- consisting of convenience stores and other small retailers; fountain/food service channel -- consisting of fountain syrup sales and restaurant single drink sales; and vending channel -- consisting of bottle and can sales through vending machines. Royal Crown's bottlers distribute their products primarily through the take-home channel. INTERNATIONAL Royal Crown's sales outside the United States were approximately 8.7% of its total revenues in 1996, 10.9% in 1997 and 11.3% in 1998. Sales outside the United States of branded concentrates were approximately 12.3% of Royal Crown's total branded concentrate sales in 1996, 13.9% in 1997 and 13.6% in 1998. The decreases in percentages for 1998 are mainly attributable to economic conditions in Russia. As of October 3, 1999, 106 bottlers and 13 distributors sold Royal Crown branded products outside the United States in 70 countries, with international export sales in 1998 distributed among Canada (7.4%), Latin America and Mexico (33.4%), Europe (16.0%), the Middle East/Africa (23.6%) and the Far East/Pacific Rim (19.6%). While the financial and managerial resources of Royal Crown have been focused on the United States, we believe significant opportunities exist for Royal Crown in international markets. New bottlers were added in 1998 to the following markets: Russia, Ukraine, Croatia, Latvia, Brazil, Spain and Syria. PRODUCT DEVELOPMENT AND RAW MATERIALS Royal Crown believes that it has a history as an industry leader in product innovation. Royal Crown introduced the first national brand diet cola in 1961. The Diet Rite flavors line was introduced in 1988 to complement the cola line and to target the non-cola segment of the market, which has been growing faster than the cola segment due to a consumer trend toward lighter beverages. In 1997, Royal Crown introduced a new version of Diet Rite Cola and in 1998 Royal Crown introduced two new Diet Rite flavors, Iced Mocha and Lemon Sorbet, and began to use sucralose in Diet RC Cola. In April 1999, Royal Crown introduced RC Edge, a cola specially formulated with herbal enhancements. 64 Flavoring ingredients and sweeteners are generally available on the open market from several sources, although as noted above, Triarc Parent has agreed to purchase some raw materials on an exclusive or preferred basis from single suppliers. FRANCHISE RESTAURANT SYSTEM Through the Arby's franchise business, we participate in the approximately $100 billion quick service restaurant segment of the domestic restaurant industry. Arby's, which celebrated its 35th anniversary this year, enjoys a high level of brand recognition. In 1998, Arby's had an estimated market share of approximately 73% of the roast beef sandwich segment of the quick service restaurant category. In addition to various slow-roasted roast beef sandwiches, Arby's also offers a selected menu of chicken, turkey, ham and submarine sandwiches, side-dishes and salads. Arby's also currently offers franchisees the opportunity to multi-brand at Arby's locations with T.J. Cinnamon's products, which are primarily gourmet cinnamon rolls, gourmet coffees and other related products. Arby's expects to offer franchisees the opportunity to multi-brand with Pasta Connection'TM' products, which are pasta dishes with a variety of different sauces, after we complete the final stages of test marketing in 1999. As of October 3, 1999, the Arby's restaurant system consisted of 3,178 franchised restaurants, of which 3,021 operate within the United States and 157 operate outside the United States. Of the domestic restaurants, approximately 336 are multi-branded locations that sell T.J. Cinnamons products. Currently all of the Arby's restaurants are owned and operated by franchisees. Because Arby's owns no restaurants, it avoids the significant capital costs and real estate and operating risks associated with restaurant operations. As a franchisor Arby's receives franchise royalties from all Arby's restaurants and up-front franchise fees from its restaurant operators for each new unit opened. Arby's average franchise royalty rate in 1998 was 3.2% of franchise revenues, which included royalties of 4% from most existing units and all new domestic units opened. From 1996 to 1998, Arby's system-wide sales grew at a compound annual growth rate of 6.1% to $2.2 billion. Through October 3, 1999, the Arby's system has experienced eleven consecutive quarters of domestic same store sales growth compared to the prior year's comparable quarter. During 1998, our franchisees opened 130 new Arby's and closed 87 underperforming Arby's. In addition, Arby's franchisees opened 199 multi-branded T.J. Cinnamons in Arby's units in 1998. As of October 3, 1999, franchisees have committed to open up to 1,098 Arby's restaurants over the next 11 years. See 'Risk Factors -- Arby's dependence on restaurant revenues and openings means it can be adversely affected by matters not in its control.' In May 1997, Arby's sold all of the stock of the two corporations owning all of the 355 company-owned Arby's restaurants to RTM Inc., the largest franchisee in the Arby's system. Arby's now derives its revenues from two principal sources: (1) royalties from franchisees and (2) franchise fees. Before this sale, Arby's primarily derived its revenues from sales at company-owned restaurants. ARBY'S RESTAURANTS Arby's opened its first restaurant in Youngstown, Ohio in 1964. As of October 3, 1999, franchisees operated Arby's restaurants in 48 states and 9 foreign countries. As of October 3, 1999, the six leading states by number of operating units were: Ohio, with 244 restaurants; Texas, with 167 restaurants; Michigan, with 165 restaurants; Indiana, with 161 restaurants; California, with 152 restaurants; and Florida, with 150 restaurants. Canada is the country outside the United States with the most operating units, with 122 restaurants. Arby's restaurants in the United States and Canada typically range in size from 2,500 square feet to 3,000 square feet. Restaurants in other countries typically are larger than U.S. and Canadian restaurants. Restaurants typically have a manager, assistant manager and as many as 30 full and part-time employees. Staffing levels, which vary during the day, tend to be heaviest during the lunch hours. 65 The following table sets forth the number of Arby's restaurants at the beginning and end of each year from 1995 to 1998:
1995 1996 1997 1998 ---- ---- ---- ---- Restaurants open at beginning of period................. 2,790 2,955 3,030 3,092 Restaurants opened during period........................ 222 132 125 130 Restaurants closed during period........................ 57 57 63 87 ----- ----- ----- ----- Restaurants open at end of period....................... 2,955 3,030 3,092 3,135 ----- ----- ----- ----- ----- ----- ----- -----
During the period from January 1, 1995 through January 3, 1999, 609 new Arby's restaurants were opened and 264 underperforming Arby's restaurants have closed. We believe that this has contributed to the average annual unit volume increase of the Arby's system, as well as to an improvement of the overall brand image of Arby's. FRANCHISE NETWORK At October 3, 1999, 530 Arby's franchisees operated 3,178 separate restaurants. The initial term of the typical 'traditional' franchise agreement is 20 years. Arby's does not offer any financing arrangements to its franchisees. Arby's franchisees opened 15 new restaurants outside of the United States during 1998. Arby's also has territorial agreements with international franchisees in five countries at October 3, 1999. Under the terms of these territorial agreements, many of the international franchisees have the exclusive right to open Arby's restaurants in specific regions or countries. Arby's management expects that future international franchise agreements will more narrowly limit the geographic exclusivity of the franchisees and prohibit sub-franchise arrangements. In July 1999, Arby's signed the largest overseas development agreement in its history. The agreement was entered into with Sybra Restaurants (UK) Ltd. Under the agreement, 102 new Arby's restaurants are to be developed in southern England over the next 10 years. The first three restaurants are expected to open by December 31, 2000. Arby's offers franchises for the development of both single and multiple 'traditional' restaurant locations. All franchisees are required to execute standard franchise agreements. Arby's standard U.S. franchise agreement currently requires an initial $37,500 franchise fee for the first franchised unit and $25,000 for each subsequent unit and a monthly royalty payment equal to 4.0% of restaurant sales for the term of the franchise agreement. Because of lower royalty rates still in effect under earlier agreements, the average royalty rate paid by franchisees was 3.2% during each of 1997 and 1998. Franchisees typically pay a $10,000 commitment fee, credited against the franchise fee referred to above, during the development process for a new restaurant. Franchised restaurants are required to be operated under uniform operating standards and specifications relating to the selection, quality and preparation of menu items, signage, decor, equipment, uniforms, suppliers, maintenance and cleanliness of premises and customer service. Arby's continuously monitors franchisee operations and inspects restaurants periodically to ensure that company practices and procedures are being followed. FRANCHISE RESTAURANT SYSTEM BUSINESS STRATEGY Our business strategy for Arby's is to: INCREASE ANNUAL UNIT VOLUME: We have four primary strategies to help franchisees increase annual unit volumes. (1) We will continue to support Arby's position as a 'Cut Above' brand through programs focusing on quality food, customer service, and facilities and building designs. (2) We will drive consumer awareness and loyalty by facilitating quality marketing. 66 (3) Because lunch customers account for the majority of sales at Arby's restaurants, we will continue to expand breakfast and dinner offerings through T.J. Cinnamons and Pasta Connection'TM' and potentially through additional complementary multi-branding opportunities. (4) We will continue to promote Arby's openings in high quality locations. CONTINUE TO STRENGTHEN FRANCHISE RELATIONSHIPS: Since Arby's sold all of its restaurants in May 1997, we have focused on improving the Arby's franchise system. For example, we have established third-party preferred financing arrangements for Arby's franchisees during 1998. We have also formed several franchisee advisory councils to obtain feedback from franchisees about operations, technology, training, building and equipment, finance, and public relations and have involved franchisees in planning the strategic direction for Arby's. EXPAND BRAND DISTRIBUTION: We will continue our efforts to expand the Arby's system through well capitalized and experienced franchisees that commit to open multiple Arby's. We will also continue to explore alternative locations, including airports, school cafeterias and hospitals and pursue selective international growth. SELECTIVELY ACQUIRE NEW BRANDS: We plan to evaluate new brands to acquire to which we could apply our successful franchising strategy. ADVERTISING AND MARKETING The Arby's system, through its franchisees, advertises primarily through regional television, radio and newspapers. Payment for advertising time and space is made by local advertising cooperatives in which owners of local franchised restaurants participate. Franchisees have contributed .7% of net sales to the Arby's Franchise Association, which produces advertising and promotion materials for the system. Each franchisee is also required to spend a reasonable amount, but not less than 3% of its monthly net sales, for local advertising. This amount is divided between the franchisee's individual local market advertising expense and the expenses of a cooperative area advertising program with other franchisees who are operating Arby's restaurants in that area. Contributions to the cooperative area advertising program are determined by the participants in the program and are generally in the range of 3% to 5% of monthly net sales. As a result of the sale of company-owned restaurants to RTM in May 1997, Arby's no longer has any expenditures for advertising and marketing in support of company-owned restaurants, as compared to approximately $9.0 million in 1997 and $25.8 million in 1996. QUALITY ASSURANCE Arby's has developed a quality assurance program designed to maintain standards and uniformity of the menu selections at each of its franchised restaurants. Arby's assigns a full-time quality assurance employee to each of the five independent processing facilities that processes roast beef for Arby's domestic restaurants. The quality assurance employee inspects the roast beef for quality and uniformity. In addition, a laboratory at Arby's headquarters tests samples of roast beef periodically from franchisees. Each year, Arby's representatives conduct unannounced inspections of operations of a number of franchisees to ensure that Arby's policies, practices and procedures are being followed. Arby's field representatives also provide a variety of on-site consultative services to franchisees. Arby's has the right to terminate franchise agreements if franchisees fail to comply with quality standards. PROVISIONS AND SUPPLIES Five independent meat processors provide all of Arby's roast beef in the United States. Franchise operators are required to obtain roast beef from one of the five approved suppliers. ARCOP, Inc., a non-profit purchasing cooperative, negotiates contracts with approved suppliers on behalf of Arby's franchisees. Arby's believes that satisfactory arrangements could be made to replace any of the current roast beef suppliers, if necessary, on a timely basis. 67 Franchisees may obtain other products, including food, beverage, ingredients, paper goods, equipment and signs, from any source that meets Arby's specifications and approval. Through ARCOP, Arby's franchisees purchase food, proprietary paper and operating supplies through national contracts employing volume purchasing. TRADEMARKS We own numerous trademarks that are considered material to our business, including Snapple, Made From The Best Stuff On Earth, WhipperSnapple, Snapple Farms, Snapple Refreshers, Snapple Elements, Snapple Hydro, Mistic, Mistic Rain Forest Nectars, Fountain Classics, Mistic Italian Ice Smoothies, Sun Valley Squeeze, RC Cola, Diet RC, Cherry RC Cola, RC Edge, Royal Crown, Diet Rite, Nehi, Upper 10, Kick, Arby's, and T.J. Cinnamons. Mistic licenses the Fruit Blast trademark. Stewart's licenses the Stewart's trademark on an exclusive perpetual basis for soft drinks and considers it to be material to its business. In addition, we consider our finished product and concentrate formulae, which are not the subject of any patents, to be trade secrets. Many of our material trademarks are registered trademarks in the U.S. Patent and Trademark Office and various foreign jurisdictions. Registrations for trademarks in the United States will last indefinitely as long as the trademark owners continue to use and police the trademarks and renew filings with the applicable governmental offices. We have not been challenged in our right to use any of our material trademarks in the United States. COMPETITION BEVERAGES Our premium beverage products and soft drink concentrate products compete generally with all liquid refreshments and in particular with numerous nationally-known soft drinks, including Coca-Cola and Pepsi-Cola. We also compete with ready to drink brewed iced tea competitors, including Nestea Iced Tea, which is produced under a long-term license granted by Nestle S.A. to The Coca-Cola Company, and Lipton Original Iced Tea, which is distributed by a joint venture between PepsiCo, Inc. and Thomas J. Lipton Company, a subsidiary of Unilever Plc. We compete with other beverage companies not only for consumer acceptance but also for shelf space in retail outlets and for marketing focus by distributors, most of which also distribute other beverage brands. The principal methods of competition in the beverage industry include product quality and taste, brand advertising, trade and consumer promotions, marketing agreements including calendar marketing agreements, pricing, packaging and the development of new products. In recent years, the soft drink and restaurant businesses have experienced increased price competition resulting in significant price discounting throughout these industries. Price competition has been especially intense with respect to sales of soft drink products in supermarkets. This is the result of bottlers, in particular, competitive cola bottlers, granting significant discounts and allowances off wholesale prices to, among other things, maintain or increase market share in the supermarket segment. While the net impact of price discounting in the soft drink and restaurant industries cannot be quantified, these practices, if continued, could have an adverse impact on us. The Coca-Cola Company and PepsiCo, Inc. are also making increased use of exclusionary marketing agreements which prevent or limit the marketing and sale of competitive beverage products at various locations, including colleges, schools, and convenience and grocery store chains. FRANCHISE RESTAURANT SYSTEM Arby's faces direct and indirect competition from numerous well-established competitors, including national and regional fast food chains, for example, McDonald's, Burger King and Wendy's. In addition, Arby's competes with locally owned restaurants, drive-ins, diners and other similar establishments. Key competitive factors in the quick service restaurant industry are price, quality of products, quality and speed of service, advertising, name identification, restaurant location and attractiveness of facilities. 68 Many of the leading restaurant chains have focused on new unit development as one strategy to increase market share through increased consumer awareness and convenience. This has led operators to employ other strategies, including frequent use of price promotions and heavy advertising expenditures. Additional competitive pressures for prepared food purchases have come more recently from operators outside the restaurant industry. Several major grocery chains have begun offering fully prepared food and meals to go as part of their deli sections. Some of these chains also have added in-store cafes with service counters and tables where consumers can order and consume a full menu of items prepared especially for this portion of the operation. Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do. GOVERNMENTAL REGULATIONS The production and marketing of our beverages are governed by the rules and regulations of various federal, state and local agencies, including the United States Food and Drug Administration. The Food and Drug Administration also regulates the labeling of our products. In addition, our dealings with our bottlers and/or distributors may, in some jurisdictions, be governed by state laws governing licensor-licensee or distributor relationships. Various state laws and the Federal Trade Commission regulate Arby's franchising activities. The Federal Trade Commission requires that franchisors make extensive disclosure to prospective franchisees before the execution of a franchise agreement. Several states require registration and disclosure in connection with franchise offers and sales and have 'franchise relationship laws' that limit the ability of franchisors to terminate franchise agreements or to withhold consent to the renewal or transfer of these agreements. In addition, national, state and local laws affect Arby's ability to provide financing to franchisees. In addition, Arby's franchisees must comply with the Fair Labor Standards Act and the Americans with Disabilities Act, which requires that all public accommodations and commercial facilities meet federal requirements related to access and use by disabled persons, and various state laws governing matters that include, for example, minimum wages, overtime and other working conditions. We are not aware of any pending legislation that is likely to have a material adverse effect on our operations. We believe that the operations of our subsidiaries comply substantially with all applicable governmental rules and regulations. ENVIRONMENTAL MATTERS We are governed by federal, state and local environmental laws and regulations concerning the discharge, storage, handling and disposal of hazardous or toxic substances. These laws and regulations provide for significant fines, penalties and liabilities, sometimes without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of the 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. 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 interpreted. We similarly cannot predict the amount of future expenditures which may be required to comply with any environmental laws or regulations or to satisfy any claims relating to environmental laws or regulations. We believe that our operations comply substantially with all applicable environmental laws and regulations. Based on currently available information and the current reserve levels, we do not believe that the ultimate outcome of any of the matters discussed below will have a material adverse effect on our consolidated financial position or results of operations. Please refer to the section of this prospectus entitled 'Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources.' In 1993, Royal Crown became aware of possible contamination from hydrocarbons in groundwater at two closed facilities. In 1994, hydrocarbons were discovered in the groundwater at 69 a former Royal Crown distribution site in Miami, Florida. Remediation occurred at this site until September 23, 1998, at which point the remediation system was shut down. Since then, Royal Crown has been in a monitor-only phase, which lasted four quarters. Royal Crown has completed the monitor phase and performed a specific capacity test to identify spikes in one tested material which appeared i sampling during the second and third quarters. Royal Crown is evaluating alternatives for this site's further remediation. Royal Crown incurred $4,500 of remediation costs in the third quarter of 1999. Management estimates that total remediation costs in excess of amounts incurred through October 3, 1999 will be approximately $72,000 depending on the actual extent of the contamination. Additionally, in 1994 the Texas Natural Resources Conservation Commission approved the remediation of hydrocarbons in the groundwater by Royal Crown at its former distribution site in San Antonio, Texas. Remediation has been continuing at this site, and the March 26, 1999 quarterly ground water sampling indicated that all contaminants are below detection limits. The State will agree to closure of this site after two consecutive successful quarterly sampling events, with the system shut down. Operation of the system was therefore terminated on April 9, 1999. Costs related to quarterly sampling and decommissioning of the site are estimated at $24,400. Royal Crown has incurred actual costs of $936,000, in the aggregate, through October 3, 1999 for these matters. SEASONALITY Our beverage and restaurant businesses are seasonal. In our beverage business, the highest revenues occur during the spring and summer, April through September. Accordingly, our second and third quarters reflect the highest revenues, and our first and fourth quarters have lower revenues, from our beverage business. The royalty revenues of our restaurant business are somewhat higher in our fourth quarter and somewhat lower in our first quarter. Accordingly, consolidated revenues will generally be highest during the second and third quarters of each year. Our EBITDA and operating profit are also highest during the second and third fiscal quarters of each year and lowest in the first fiscal quarter. This principally results from the higher beverage revenues in the second and third fiscal quarters while general and administrative expenses and depreciation and amortization, excluding amortization of deferred financing costs are generally recorded ratably in interim periods either as incurred or allocated to interim periods based on time expired. The first fiscal quarter is also lower due to advertising production costs which typically are higher in the first quarter in anticipation of the peak spring and summer beverage selling season and which are recorded the first time the related advertising takes place. EMPLOYEES As of October 3, 1999, we had approximately 1,133 employees, including 921 salaried employees and 212 hourly employees. We believe that employee relations are satisfactory. As of October 3, 1999, approximately 49 of our employees were covered by various collective bargaining agreements expiring from time to time from the present through January 2002. PROPERTIES We believe that our properties, taken as a whole, are generally well maintained and are adequate for our current and foreseeable business needs. We lease a majority of our properties. 70 The following table describes information about the major plants and facilities of each of our business segments, as well as our corporate headquarters, as of October 3, 1999:
APPROXIMATE SQ. FT. LAND OF FLOOR ACTIVE FACILITIES FACILITIES-LOCATION TITLE SPACE ----------------- ------------------- ----- ----- Beverages.................... Concentrate Mfg: Columbus, GA 1 owned 216,000 (including office) Beverage Group Headquarters 71,970 White Plains, NY 1 leased Stewart's Headquarters 4,200 Denver, CO 1 leased Office/Warehouse Facilities 656,000* (various locations) 7 leased Restaurants.................. Restaurant Group Headquarters 1 leased 47,300** Ft. Lauderdale, FL
- ------------ * Includes 180,000 square feet of warehouse space that is subleased to a third party. ** Royal Crown subleases approximately 3,500 square feet of this space from Arby's. Arby's also owns three and leases nine properties which are leased or sublet principally to franchisees and has leases for three inactive properties. Triarc Consumer Products Group's other subsidiaries also own or lease a few inactive facilities and undeveloped properties, none of which are material to our financial condition or results of operations. Substantially all of the properties used in the beverage business are pledged as collateral under secured debt arrangements. One property that Arby's owns is pledged to secure our credit facility. You should refer to the section of this prospectus entitled 'Description of Indebtedness -- Credit Facility.' LEGAL PROCEEDINGS In October 1997, Mistic commenced an action against Universal Beverages Inc., a former Mistic co-packer, Leesburg Bottling & Production, Inc., an affiliate of Universal, and Jonathan O. Moore, an individual affiliated with the defendants, in the Circuit Court for Duval County, Florida. The action, which was subsequently amended to add additional defendants, sought, among other things, damages relating to the unauthorized sale by the defendants of raw materials, finished product and equipment that was owned by Mistic but in the possession of the defendants. In their answer, counterclaim and third party complaint, some defendants alleged various causes of action against Mistic, Snapple and Triarc Beverage Holdings. These defendants sought damages of $6 million relating to a purported breach by Snapple and Mistic of an alleged oral agreement to have Universal and/or Leesburg manufacture Snapple and Mistic products. They claimed that they were induced to enter into the alleged oral agreement by the false and negligent misrepresentations of Snapple and Mistic. These defendants also sought to recover various amounts totaling approximately $500,000 allegedly owed to Universal for co-packing and other services rendered. In July 1999, Mistic settled its claims against some defendants who had not asserted any counterclaims. In August, 1999, Mistic and the remaining defendants entered into a comprehensive settlement agreement which, among other things, provides for a dismissal with prejudice of all claims against Mistic, Snapple and TBHC. No payments by Mistic, Snapple or Triarc Beverage Holdings are required under the settlement agreement. On February 19, 1996, Arby's Restaurants S.A. de C.V., the master franchisee of Arby's in Mexico, commenced an action in the civil court of Mexico against Arby's for breach of contract. The plaintiff alleged that a non-binding letter of intent dated November 9, 1994 between the plaintiff and Arby's constituted a binding contract under which Arby's had obligated itself to repurchase the master franchise rights from the plaintiff for $2.85 million and that Arby's had breached a master development agreement between the plaintiff and Arby's. Arby's commenced an 71 arbitration proceeding since the franchise and development agreements each provided that all disputes arising under those agreements were to be resolved by arbitration. In September 1997, the arbitrator ruled that the November 9, 1994 letter of intent was not a binding contract and the master development agreement was properly terminated. The plaintiff challenged the arbitrator's decision and in March 1998, the civil court of Mexico ruled that the November 9, 1994 letter of intent was a binding contract and ordered Arby's to pay the plaintiff $2.85 million, plus interest and value added tax. In May 1997, the plaintiff commenced an action against Arby's in the United States District Court for the Southern District of Florida alleging that Arby's had engaged in fraudulent negotiations with the plaintiff in 1994-1995 to force the plaintiff to sell the master franchise rights for Mexico to Arby's cheaply and Arby's had tortiously interfered with an alleged business opportunity that the plaintiff had with a third party. Arby's has moved to dismiss that action. The parties have agreed to settle all the litigation including the Mexican court case to avoid the expense of continuing litigation and on December 4, 1998 entered into an agreement under which Arby's deposited $1.65 million in escrow. The escrowed funds were released to plaintiff on October 7, 1999 when the parties executed a settlement agreement pursuant to which all proceedings were dismissed with prejudice. Pursuant to the settlement, plaintiff will continue to be an Arby's franchise and, among other things, will be entitled to $150,000 in credits against future royalties and other fees as well as the right to open four additional stores without paying initial franchise fees. Other matters have arisen in the ordinary course of our business and it is our opinion that the outcome of any of these matters will not have a material adverse effect on our financial condition or results of operations. 72 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS Our executive officers and managers are as follows.
NAME AGE OFFICE OR POSITION HELD - ---- --- ----------------------- Nelson Peltz.............................. 57 Manager; Chairman and Chief Executive Officer Peter W. May.............................. 57 Manager; President and Chief Operating Officer John L. Barnes, Jr. ...................... 52 Manager; Executive Vice President and Chief Financial Officer Eric D. Kogan............................. 36 Manager; Executive Vice President -- Corporate Development Brian L. Schorr........................... 41 Manager; Executive Vice President, General Counsel and Assistant Secretary Michael Weinstein......................... 51 Chief Executive Officer of the Triarc Beverage Group Ernest J. Cavallo......................... 66 President and Chief Operating Officer of the Triarc Beverage Group John L. Belsito........................... 39 Senior Vice President of the Triarc Beverage Group and President of Royal Crown Company, Inc. Jonathan P. May........................... 33 Chief Executive Officer of the Triarc Restaurant Group Michael C. Howe........................... 47 President and Chief Operating Officer of the Triarc Restaurant Group Francis T. McCarron....................... 42 Senior Vice President -- Taxes Anne A. Tarbell........................... 41 Senior Vice President -- Corporate Communications and Investor Relations Stuart I. Rosen........................... 40 Vice President and Associate General Counsel, and Secretary Fred H. Schaefer.......................... 55 Vice President and Chief Accounting Officer
Nelson Peltz. Mr. Peltz has been a manager and Chairman and Chief Executive Officer of Triarc Consumer Products Group since its formation. Mr. Peltz has been a director and Chairman and Chief Executive Officer of Triarc Parent since April 1993. Since then, he has also been a director and Chairman of the Board and Chief Executive Officer of several of Triarc Parent's subsidiaries. He is also a general partner of DWG Acquisition Group, L.P., whose principal business is ownership of securities of Triarc Parent. From its formation in January 1989 to April 1993, Mr. Peltz was Chairman and Chief Executive Officer of Trian Group, Limited Partnership, which provided investment banking and management services for entities controlled by Mr. Peltz and Mr. May. From 1983 to December 1988, he was Chairman and Chief Executive Officer and a director of Triangle Industries, Inc., which, through wholly owned subsidiaries, was, at that time, a manufacturer of packaging products, copper electrical wire and cable and steel conduit and currency and coin handling products. Mr. Peltz has also served as a director of MCM Capital Group, Inc. since February 1998. Peter W. May. Mr. May has been a manager and President and Chief Operating Officer of Triarc Consumer Products Group since its formation. Mr. May has been a director and President and Chief Operating Officer of Triarc Parent since April 1993. Since then, he has also been a director and President and Chief Operating Officer of several Triarc Parent's subsidiaries. He is also a general partner of DWG Acquisition. From its formation in January 1989 to April 1993, Mr. May was President and Chief Operating Officer of Trian Group. He was President and Chief Operating Officer and a director of Triangle Industries from 1983 until December 1988. Mr. May has also served as a director of Ascent Entertainment Group, Inc. since June 1999 and of MCM Capital Group, Inc. since February 1998. Mr. May is the father of Jonathan P. May. John L. Barnes, Jr. Mr. Barnes has been a manager and Executive Vice President and Chief Financial Officer of Triarc Consumer Products Group since its formation. Mr. Barnes has been Executive Vice President and Chief Financial Officer of Triarc Parent since March 10, 1998 and previously was Senior Vice President and Chief Financial Officer of Triarc Parent since August 1996. From April 1996 to August 1996, Mr. Barnes was a Senior Vice President of Triarc Parent. Before April 1996, Mr. Barnes had served as Executive Vice President and Chief Financial Officer 73 of Graniteville Company, which had been owned by Triarc Parent until April 1996, for more than five years. Eric D. Kogan. Mr. Kogan has been a manager and Executive Vice President Corporate Development of Triarc Consumer Products Group since its formation. Mr. Kogan has been Executive Vice President -- Corporate Development of Triarc Parent since March 10, 1998 and previously was Senior Vice President -- Corporate Development of Triarc Parent since March 1995. Before March 1995, Mr. Kogan was Vice President -- Corporate Development of Triarc Parent since April 1993. Before joining Triarc Parent, Mr. Kogan was a Vice President of Trian Group from September 1991 to April 1993 and an associate in the mergers and acquisitions group of Farley Industries, an industrial holding company, from 1989 to August 1991. Mr. Kogan has served as a director of MCM Capital Group, Inc. since February 1998. Brian L. Schorr. Mr. Schorr has been a manager and Executive Vice President and General Counsel of Triarc Consumer Products Group since its formation. Mr. Schorr has been Executive Vice President and General Counsel of Triarc Parent and several of its subsidiaries since June 1994. Previously, Mr. Schorr was a partner of Paul, Weiss, Rifkind, Wharton & Garrison, a law firm which he joined in 1982 and from June 1994 through April 1995 he was Of Counsel to that firm in connection with limited liability company and limited liability partnership matters. That firm provides legal services to Triarc Parent and its subsidiaries. Michael Weinstein. Mr. Weinstein has been Chief Executive Officer of the Triarc Beverage Group and Royal Crown since October 1996. Mr. Weinstein has also served as Chief Executive Officer of Snapple since it was acquired by Triarc Parent in May 1997 and of Mistic since it was acquired by Triarc Parent in August 1995. Before August 1995, he was president of Liquid Logic, a private beverage consulting business he founded in 1994. From 1981 until the end of 1993, he served in various executive capacities at A&W Brands, Inc., lastly as President/Chief Operating Officer. From 1978 to 1981, he was a Vice President at Kenyon & Eckhardt Advertising. He began his career at Pepsi-Cola Company, where he held various sales and marketing positions from 1972 to 1978. Ernest J. Cavallo. Mr. Cavallo has served as President and Chief Operating Officer of the Triarc Beverage Group since April 1997 and of Snapple since May 1997. Mr. Cavallo has also served as President of Mistic since August 1995 and as the Chief Operating Officer of Mistic since November 1996. From August 1995 to November 1996, Mr. Cavallo served as Chief Financial Officer of Mistic. From June 1994 until August 1995, Mr. Cavallo was Senior Vice President and Chief Financial Officer of Joseph Victori Wines, the predecessor company of Mistic. From 1985 to 1994, Mr. Cavallo served in various positions with A&W Brands, Inc., including three years as Executive Vice President and Chief Financial Officer. From 1976 to 1985, Mr. Cavallo was an officer and Assistant Comptroller with Exxon Corporation and from 1971 to 1976, Mr. Cavallo was a management consultant with KPMG Peat Marwick. John L. Belsito. Mr. Belsito has been Senior Vice President of the Triarc Beverage Group and President of Royal Crown since August 1998. Before 1998, Mr. Belsito served as Vice President -- Corporate Development of Cadbury Beverages Inc. From 1995 to 1997, he served as Senior Vice President -- Franchising of Dr Pepper/7-Up Inc. From 1994 to 1995, Mr. Belsito served as Vice President -- Franchising of Cadbury Beverages, North America. From 1993 to 1994, he served as Vice President -- Field Marketing at Schweppes USA. Jonathan P. May. Mr. May has been Chief Executive Officer of the Triarc Restaurant Group since July 1999. From 1996 to July 1999, Mr. May was Vice President, Concept Development of the Triarc Restaurant Group. From 1995 to 1996, Mr. May was Vice President, Worldwide Planning of the Triarc Restaurant Group. Previously, Mr. May was Director, Corporate Development of Trian Group and Triarc Parent from 1993 to 1995. Mr. May is the son of Peter W. May. Michael C. Howe. Mr. Howe has been President and Chief Operating Officer of the Triarc Restaurant Group since July 1999. Mr. Howe was a member of the Office of the Chief Executive of the Triarc Restaurant Group from April 1999 to July 1999. Mr. Howe has also served as the Senior Vice President, Operations of the Triarc Restaurant Group since 1997. From 1995 to 1997, Mr. Howe served in various senior capacities for the Triarc Restaurant Group. From 1993 to 1995, Mr. Howe served in various senior capacities at KFC International, including Vice President, Restaurant Services and Support during 1995. 74 Francis T. McCarron. Mr. McCarron has been Senior Vice President -- Taxes of Triarc Consumer Products Group since its formation. Mr. McCarron has been Senior Vice President -- Taxes of Triarc Parent since April 1993. He has also been Senior Vice President -- Taxes of several of Triarc Parent's subsidiaries, since April 1993. Previously, he was Vice President -- Taxes of Trian Group from its formation in January 1989 to April 1993. He joined Triangle Industries in February 1987 and served as Director of Tax Planning & Research until December 1988. Anne A. Tarbell. Ms. Tarbell has been Senior Vice President -- Corporate Communications and Investor Relations of Triarc Consumer Products Group since its formation. Ms. Tarbell has been Senior Vice President -- Corporate Communications of Triarc Parent since May 1998. From June 1995 to April 1998, Ms. Tarbell was Vice President and Director -- Investor Relations of ITT Corporation and served as Assistant Director -- Investor Relations of ITT Corporation from August 1991 to May 1995. Ms. Tarbell also served as Vice President and Director -- Investor Relations of Chemical Banking Corporation from February 1988 to July 1991. Stuart I. Rosen. Mr. Rosen has been Vice President and Associate General Counsel, and Secretary of Triarc Consumer Products Group since its formation. Mr. Rosen has been Vice President and Associate General Counsel, and Secretary of Triarc Parent and several of its subsidiaries since August 1994. Previously, he was associated with Paul, Weiss, Rifkind, Wharton & Garrison since 1985. Fred H. Schaefer. Mr. Schaefer has been Vice President and Chief Accounting Officer of Triarc Consumer Products Group since its formation. Mr. Schaefer has been Vice President and Chief Accounting Officer of Triarc Parent since April 1993. He has also been Vice President and Chief Accounting Officer of several of Triarc Parent's subsidiaries, since April 1993. Previously, he was Vice President and Chief Accounting Officer of Trian Group from its formation in January 1989 to April 1993. Mr. Schaefer joined Triangle Industries in 1980 and served in various capacities in the accounting department, including Vice President -- Financial Reporting, until December 1988. The term of office of each manager is until his or her successor is elected and qualified or until his or her prior death, resignation or removal. The term of office of each executive officer is until the organizational meeting of the board of managers next succeeding that officer's election and until his or her successor is elected and qualified or until his or her prior death, resignation or removal. AGREEMENTS REGARDING BOARD OF DIRECTORS POSITIONS The employment agreements for Michael Weinstein and Ernest Cavallo provide that Snapple shall take steps so that Mr. Weinstein and Mr. Cavallo, as the case may be, will be elected as a member of the board of directors of Triarc Beverage Holdings as long as (1) Triarc Beverage Holdings, Snapple and Mistic remain separate legal entities and (2) Mr. Weinstein and Mr. Cavallo, as the case may be, remains an employee of Snapple and an officer of Triarc Beverage Holdings and Mistic. EXECUTIVE COMPENSATION All of our executive officers and managers are compensated directly by us or our subsidiaries under existing employment arrangements or agreements except for Messrs. Peltz, May, Barnes, Kogan, Schorr, McCarron, Rosen and Schaefer and Ms. Tarbell. These named persons will be compensated by Triarc Parent for services provided to Triarc Parent under existing employment arrangements or agreements with Triarc Parent and will receive no additional cash compensation from us or any of our subsidiaries. Triarc Parent will provide the services of those persons to us for a fee under two management services agreements that we have entered into with it. See 'Certain Relationships and Related Transactions -- Management Services Agreements.' In addition, some members of our management and our subsidiaries' management, including the persons mentioned above, are participants in the Triarc Beverage Holdings Corp. 1997 Stock Option Plan in recognition of services performed by those persons for the Triarc Beverage Group and may be eligible in the future to participate in plans involving the equity of our subsidiaries. The following table provides compensation information for our Chief Executive Officer, our President and Chief Operating Officer and the five other executive officers who were the most highly compensated for our fiscal year ended January 3, 1999. These officers are referred to as 75 named executive officers. All of the information described in this table reflects compensation earned by the named executive officers for services rendered to Triarc Parent and its subsidiaries. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION ------------------------------------------- ----------------------------------------- AWARDS PAYOUTS ------------ ----------- SECURITIES OTHER ANNUAL UNDERLYING ALL OTHER COMPENSATION OPTIONS/SARS LTIP COMPENSATION NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) (#)(1) PAYMENTS($) ($) --------------------------- ---- --------- -------- ------------ ------------ ----------- ------------ Nelson Peltz ................... 1998 1(2) -- 329,067(9) 26,000(13) -- -- Chairman and Chief Executive 1997 1(2) -- 429,872(9) 150,000 -- -- Officer 1996 1(2) 2,000,000(3) 339,490(9) 175,000 -- -- Peter W. May ................... 1998 1(2) -- 134,173(10) 13,000(13) -- -- President and Chief Operating 1997 1(2) -- 153,288(10) 100,000 -- -- Officer 1996 1(2) 1,000,000(3) 164,469(10) 125,000 -- -- Roland C. Smith* ............... 1998 381,250 360,000 (11) 50,000 335,000 4,000(14) Former President and Chief 1997 317,552 270,000 (11) 50,000 -- 3,200(14) Executive Officer of Triarc 1996 222,917 175,000 (11) 35,000 -- 1,500(14) Restaurant Group John L. Barnes, Jr. ............ 1998 300,000 585,000(4) (11) 50,000 -- 7,200(14) Executive Vice President and 1997 300,000 650,000(4) (11) 6,600(13) -- 6,400(14) Chief Financial Officer 1996 271,554 970,000(5) 269,893(12) 50,000 28,667 8,187(15) 150,000 Eric D. Kogan .................. 1998 289,583 595,417(4) (11) 50,000 -- 7,200(14) Executive Vice President -- 1997 250,000 700,000(4) (11) 6,600(13) -- 6,400(14) Corporate Development 1996 250,000 450,000(6) (11) 50,000 69,000 5,250(14) 150,000 Brian L. Schorr ................ 1998 312,500 585,000(4) (11) 50,000 -- 11,187(16) Executive Vice President and 1997 312,500 650,000(4)(7) (11) 6,600(13) -- 10,387(16) General Counsel 1996 312,500 450,000(6) (11) 50,000 57,500 7,115(16) 120,000 Michael Weinstein .............. 1998 500,000 225,000 (11) 10,000 -- 5,600(14) Chief Executive Officer of 1997 458,333 2,250,000(8) (11) 21,000(13) -- 4,000(14) Triarc Beverage Group 1996 275,000 125,000 (11) 25,000 -- 3,750(14)
- ------------ * Mr. Smith resigned effective May 7, 1999 as President and Chief Executive Officer of the Triarc Restaurant Group. (1) Except as otherwise noted, all stock option grants were made under Triarc Parent's 1993 Equity Participation Plan and Triarc Parent's 1998 Equity Participation Plan. (2) Reflects entire salary paid by Triarc Parent and its subsidiaries, including Triarc Consumer Products Group. (3) Represents special bonuses paid to Messrs. Peltz and May in connection with completed transactions. Mr. Peltz's bonus was paid one-half in August 1996 and one-half in March 1997. (4) Includes special bonuses paid by Triarc Parent to each of Messrs. Barnes, Kogan and Schorr in connection with completed transactions. (5) Includes a one-time special payment of $890,000 paid in 1996 to Mr. Barnes in his capacity as Executive Vice President and Chief Financial Officer of Triarc Parent's textile business in connection with the sale of that business in April 1996. In March 1997, Mr. Barnes received additional stock options instead of a cash bonus that might otherwise have been granted to him at the time with respect to fiscal 1996. Those stock options are included under the heading 'Long Term Compensation -- Securities Underlying Options/SARs.' (6) Includes special bonuses paid to each of Messrs. Kogan and Schorr in 1996 in connection with completed transactions. In March 1997, each of Messrs. Kogan and Schorr received additional stock options instead of a cash bonus that might otherwise have been granted to them at that time with respect to fiscal 1996. Those stock options are included under the heading 'Long Term Compensation -- Securities Underlying Options/SARs.' (7) This amount constitutes Mr. Schorr's aggregate bonus with respect to fiscal 1997, $600,000 of which was paid in January 1998 as an advance against the bonus, with the balance being paid in March 1998. (footnotes continued on next page) 76 (footnotes continued from previous page) (8) Includes, as consideration for Mr. Weinstein's added responsibilities in connection with the reorganization of the Triarc Beverage Group, the acquisition of Snapple and the cancellation of stock appreciation rights relating to shares of Mistic common stock, a special payment of $2,000,000 that Mr. Weinstein is eligible to receive if this amount vests. Of this amount, $1,000,000 vested as of July 1, 1997, $333,333 vested on each of January 2, 1998 and 1999 and $333,333 will vest on January 2, 2000. For additional information, please refer to the section of this prospectus entitled 'Employment Agreements -- Michael Weinstein.' (9) Includes imputed income of $266,837 in fiscal 1998, $233,856 in fiscal 1997 and $255,668 in fiscal 1996, each arising out of the use of corporate aircraft. (10) Includes imputed income of $77,138 in fiscal 1998, $85,841 in fiscal 1997, and $98,729 in fiscal 1996, each arising out of the use of corporate aircraft. Also included are fees of $40,000 paid by Triarc Parent on behalf of Mr. May for tax and financial planning services in each of fiscal 1998, 1997 and 1996. (11) Perquisites and other personal benefits did not exceed the lesser of either $50,000 or 10% of the total annual salary and bonus reported under the headings of 'Salary' and 'Bonus.' (12) Includes a payment of $111,500 made to Mr. Barnes in his capacity as Executive Vice President and Chief Financial Officer of Triarc Parent's textile business in connection with the sale of that business in April 1996, and relocation related costs of $154,018. (13) Represents grants of options made under the Triarc Beverage Holdings Corp. 1997 Stock Option Plan. (14) Represents amounts contributed to 401(k) plan by Triarc Parent, Arby's, in the case of Mr. Smith, and Mistic, in the case of Mr. Weinstein, on behalf of the named executive officer. (15) Represents amounts contributed to 401(k) plan by Triarc Parent of $5,250 for 1996 and by Graniteville Company of $2,937 in 1996. (16) Includes $7,200 in fiscal 1998, $6,400 in fiscal 1997 and $3,128 in fiscal 1996 contributed to 401(k) plan by Triarc Parent on behalf of Mr. Schorr. Also includes $3,987 in fiscal 1998, fiscal 1997 and fiscal 1996 of other compensation paid by Triarc Parent in an amount equal to premiums for term life insurance in each of those years. EMPLOYMENT AGREEMENTS The following are summaries of the material terms of employment agreements with the named executive officers of Triarc Parent, other than Mr. Smith who resigned effective May 7, 1999, to which we are parties. You should be aware that these summaries are not a complete description of these agreements. Nelson Peltz and Peter W. May. Since April 1993, Nelson Peltz and Peter W. May have been serving Triarc Parent as its Chairman and Chief Executive Officer and its President and Chief Operating Officer, respectively. Under the terms of their original employment and compensation arrangements, which expired by their terms in April 1999, each of them received an annual base salary of $1.00. In addition, Messrs. Peltz and May participated in the incentive compensation and welfare and benefit plans made available to Triarc Parent's corporate officers. Triarc Parent is currently negotiating new long term employment and compensation arrangements with Messrs. Peltz and May. Under the agreements, which will have 5 year terms, subject to automatic renewal, Messrs. Peltz and May will receive annual base salaries of $1,400,000 and $1,200,000, respectively. In addition, the new employment agreements will provide, among other things, that Mr. Peltz and Mr. May are eligible to: participate in the 1999 Executive Bonus Plan; receive discretionary bonuses, as may be awarded from time to time; participate in equity based incentive plans of Triarc Parent and its subsidiaries; and participate in the incentive compensation and welfare and benefit plans made available to Triarc Parent corporate officers. In April 1994, Messrs. Peltz and May were granted performance stock options for an aggregate of 3,500,000 shares of Triarc Parent's class A common stock. These options were granted instead of base salary, annual performance bonus and long term compensation for a six-year period 77 which expired in April 1999. The performance stock options have an exercise price of $20.125 per share and vest and become exercisable as follows: (1) if the closing price of a share of class A common stock is at least $27.1875, approximately 135% of the exercise price, for 20 out of 30 consecutive trading days ending on or before March 30, 1999, each option will vest and become exercisable for one third of the shares covered by the option (the stock price required for such accelerated vesting was not met); (2) if the closing price of a share of class A common stock is at least $36.25, approximately 180% of the exercise price, for 20 out of 30 consecutive trading days ending on or before March 30, 2000, each option will vest and become exercisable for one third of the shares covered by the option; and (3) if the closing price of a share of class A common stock is at least $45.3125, approximately 225% of the exercise price, for 20 out of the 30 consecutive trading days ending on or before March 30, 2001, the option will vest and become exercisable for one third of the shares covered by the option. In addition to early vesting if the above closing price levels are attained, these options will vest on October 21, 2003, nine years and six months from the date of grant, and expire on April 21, 2004, ten years from the date of grant. John L. Barnes, Jr. Triarc Parent entered into an employment agreement dated as of April 29, 1996, as amended, with John L. Barnes, Jr. providing for the employment of Mr. Barnes as Executive Vice President and Chief Financial Officer of Triarc Parent for a term ending June 29, 2000, unless otherwise terminated as provided in his employment agreement. Mr. Barnes was promoted to Executive Vice President effective March 10, 1998. Under Mr. Barnes' employment agreement, Mr. Barnes was named Chief Financial Officer of Triarc Parent in August 1996. Mr. Barnes receives an annual base salary of $300,000 per year, which may be increased but not decreased from time to time. In addition, Mr. Barnes is eligible to receive annual cash bonuses and stock option awards on a basis comparable to other senior executives of Triarc Parent. If Mr. Barnes' employment with Triarc Parent is terminated before June 29, 2000 without good cause, Mr. Barnes' employment agreement provides that Triarc Parent will pay Mr. Barnes: (1) a lump sum within thirty days of the date of his termination equal to one-half of his then current base salary that would otherwise have been payable to him through June 29, 2000, and (2) commencing six months after the date of his termination a sum equal to one-half of his annual base salary in effect on the date of termination that would otherwise have been paid to him from the date of termination through June 29, 2000, this amount to be payable semi-monthly through June 29, 2000. Mr. Barnes will also be reimbursed for any loss on the sale of his home, up to $150,000 and will be eligible for specified relocation expenses if his employment is terminated without cause or Triarc Parent does not renew the Barnes Employment Agreement at the end of its term. In addition, if Mr. Barnes' employment is terminated without cause, each stock option granted to him which had not vested as of the termination date will vest immediately as of that date and each stock option which has vested before or as of the termination date may be exercised by Mr. Barnes within the earlier of one year or on the date the option expires. Mr. Barnes' employment agreement further provides that if a change of control under the agreement occurs, Triarc Parent is obligated to employ Mr. Barnes as an Executive Vice President, and he is obligated to accept and continue in the employment under his agreement until the first anniversary of the change in control. Mr. Barnes has the right to resign as an officer and employee of Triarc Parent effective as of the first anniversary of the change of control by giving written notice to Triarc Parent not less than thirty days before the date of his resignation. Mr. Barnes also has the right to receive payments and other benefits as to which he would have been entitled had Triarc Parent terminated his employment without good cause. 78 Brian L. Schorr. On June 29, 1994, Triarc Parent entered into an employment agreement with Brian L. Schorr providing for the employment of Mr. Schorr as Executive Vice President and General Counsel of Triarc Parent. Mr. Schorr's employment agreement expires on June 29, 2000. Mr. Schorr's employment agreement provides for an annual base salary of $312,500, which may be increased but not decreased. Mr. Schorr is also eligible to receive annual incentive bonuses. Mr. Schorr's employment agreement also provides that if Mr. Schorr dies during the term of the agreement, his legal representative will be entitled to receive a base amount per year calculated at a rate equal to the sum of (1) Mr. Schorr's then current base salary plus (2) $250,000, for the remaining term of the agreement, if Triarc Parent is able to procure, at a reasonable rate, term insurance on Mr. Schorr's life to pay this obligation, or if Triarc Parent is not able to obtain satisfactory insurance, an amount calculated at the annual rate of the amount described above for the three-month period following Mr. Schorr's death. Triarc Parent obtained insurance to fund this obligation at an annual premium of approximately $3,000. Triarc Parent has transferred ownership of the insurance policy to a trust established by Mr. Schorr and Mr. Schorr has given up certain rights to have Triarc Parent pay the base amount after his death. Under Mr. Schorr's employment agreement, if Mr. Schorr's employment terminates for any reason other than cause under the agreement, options and restricted stock awards previously granted to Mr. Schorr will immediately vest in their entirety and remain exercisable for a period of one year following the date of termination. Mr. Schorr's employment agreement also provides that if Triarc Parent terminates Mr. Schorr's employment without cause, Mr. Schorr will receive a lump sum payment, discounted to present value, in an amount equal to: (1) all base salary amounts due for the year of termination and for each remaining year of employment under his agreement plus (2) an amount equal to the number of years of Mr. Schorr's employment agreement multiplied by $250,000. Mr. Schorr's employment agreement further provides that at the option of Mr. Schorr, the agreement will be deemed to have been terminated by Triarc Parent without cause following a change in control. Michael Weinstein. Snapple and Mistic entered into an amended and restated employment agreement, effective as of June 1, 1997, with Michael Weinstein, providing for the employment of Mr. Weinstein as the Chief Executive Officer of Triarc Beverage Holdings, Snapple, Mistic and Royal Crown. The term of employment will continue until January 2, 2001, unless otherwise terminated as provided in the agreement. Mr. Weinstein's employment agreement is automatically renewed for additional one year periods unless either Mr. Weinstein or Snapple elect, upon 180 days' notice, not to renew. Mr. Weinstein receives an annual base salary of $500,000, and is eligible to receive an annual cash incentive bonus and future grants of options to purchase shares of class A common stock of Triarc Parent. Mr. Weinstein will also receive a special payment in the aggregate amount of $2,000,000, if it vests, on January 2, 2000. One million dollars of the special payment vested as of July 1, 1997, $333,333 vested on each of January 2, 1998 and 1999, and $333,333 will vest on January 2, 2000. If Mr. Weinstein voluntarily leaves the employment of Snapple during the term of his employment agreement, or upon his death or termination of employment due to disability, he will be entitled to receive on January 2, 2000 only that portion of the special payment that has vested at the time of termination, death or disability. If any of the events described in the immediately preceding sentence occur, the stock option to purchase 15,000 shares of class A common stock of Triarc Parent granted to Mr. Weinstein on August 9, 1995 will also terminate. Mr. Weinstein is also entitled to participate in any insurance, including life, disability, medical and dental, vacation, pension and retirement plans and to receive any other employee benefits and perquisites made generally available by Snapple to its senior officers. In addition, Mr. Weinstein is entitled to a monthly automobile allowance in the amount of $900. If Mr. Weinstein's employment is terminated by Snapple for good cause, the special payment will be forfeited in its entirety, whether vested or not. In the event Snapple terminates Mr. 79 Weinstein's employment without good cause, Mr. Weinstein's employment agreement provides that he will receive an amount equal to the sum of: (1) the greater of: (a) his base salary for one year, and (b) the entire amount of base salary that would be payable to Mr. Weinstein under his employment agreement through the last day of the then current term, plus any earned but unpaid base salary, vacation or annual bonus in respect of a prior year owing to Mr. Weinstein accrued before the termination, (2) Mr. Weinstein's annual bonus for the year in which the termination occurs, and (3) the full amount of the special payment. In addition, Mr. Weinstein's option to purchase 15,000 shares of class A common stock of Triarc Parent will vest immediately as of the date of his termination and may be exercised by Mr. Weinstein within the earlier of one year from the date of termination or on the date the option expires. Mr. Weinstein's employment agreement also provides that in the event of a change in control, Mr. Weinstein may terminate his employment with Snapple within 12 months following the change in control, if he does so because of any substantial diminution of his title, duties, or responsibilities, or any material reduction in compensation, and will be entitled to receive the same payments that he would have been entitled to receive had his employment been terminated without good cause. Mr. Weinstein's employment agreement also contains confidentiality provisions that prohibit him from disclosing confidential information relating to Snapple, its subsidiaries or its affiliated companies during the term of his employment agreement and for a period of four years afterwards. In addition, the agreement contains non-competition provisions that prohibit Mr. Weinstein from competing in the premium or carbonated beverage business for a period of 18 months following the termination of his employment for cause or his voluntary resignation before the last day of his term of employment. COMPENSATION OF MANAGERS Members of Triarc Consumer Products Group's board of managers, the board of managers of subsidiaries of Triarc Consumer Products Group's and the board of directors of subsidiaries of Triarc Consumer Products Group's who are officers of Triarc Parent or its subsidiaries will not be additionally compensated for their activities in these capacities. INDEMNIFICATION OF OFFICERS, MANAGERS AND DIRECTORS Triarc Consumer Products Group's limited liability company operating agreement provides that the member will have no liability for the obligations or liabilities of Triarc Consumer Products Group, unless otherwise provided in the Delaware Limited Liability Company Act. The Delaware Limited Liability Company Act provides that, with exceptions, the debts, obligations and liabilities of a limited liability company shall be solely the debts, obligations and liabilities of the limited liability company, and no member or manager of a limited liability company shall be obligated personally for any debt, obligation or liability solely by reason of being a member or acting as a manager. Triarc Consumer Product Group's operating agreement also provides protections against liabilities to a member, any manager or related parties, and any officer, employee or expressly authorized agent of Triarc Consumer Products Group or its affiliates. None of these persons will be liable to Triarc Consumer Products Group or any other of these persons for any liability resulting from any act or omission performed or omitted in good faith on behalf of Triarc Consumer Products Group and in a manner reasonably believed to be within the scope of authority conferred on that person by the operating agreement, unless the loss, damage or claim resulted from that person's gross negligence or willful misconduct. These persons will be fully protected in relying in good faith on the records of Triarc Consumer Products Group and on 80 information, opinions, reports or statements presented to Triarc Consumer Products Group by others as to matters reasonably believed to be within the professional or expert competence of the providing person or entity that has been selected with reasonable care. Triarc Beverage Holdings' certificate of incorporation and by-laws provide that Triarc Beverage Holdings will, to the extent not prohibited by law, indemnify any person who is or was made, or threatened to be made, a party to any threatened, pending or completed action, suit or proceeding because that person is or was a director or officer of Triarc Beverage Holdings, or is or was serving in a capacity at the request of Triarc Beverage Holdings as a director or officer of another corporation or other entity, against judgments, fines, penalties, excise taxes, amounts paid in settlement and costs, charges and expenses, including attorneys' fees and disbursements. Persons who are not directors or officers of Triarc Beverage Holdings may be similarly indemnified for service to Triarc Beverage Holdings or to another entity at the request of Triarc Beverage Holdings to the extent the board of directors of Triarc Beverage Holdings specifies that these persons are entitled to these benefits. Triarc Beverage Holdings's certificate of incorporation limits the personal liability of directors of Triarc Beverage Holdings to the fullest extent permitted by paragraph (7) of subsection (b) of section 102 of the Delaware General Corporation Law. Section 102(b)(7) of the Delaware General Corporation Law permits the elimination or limitation of directors' personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duties as a director, except for: (1) any breach of the director's duty of loyalty to the corporation or its stockholders, (2) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (3) actions relating to unlawful payments of dividends or unlawful stock repurchase or redemptions, and (4) any transaction from which the director derived an improper personal benefit. The effect of these provisions is to eliminate the rights of Triarc Consumer Products Group and Triarc Beverage Holdings, and their members and stockholders, to recover monetary damages against a manager or director for breach of the fiduciary duty of care as a manager or director, including breaches resulting from negligent or grossly negligent behavior, except in the situations described above. Each of Triarc Consumer Products Group and Triarc Beverage Holdings also enters into indemnification agreements with its, and some of its subsidiaries', managers, directors and officers, as the case may be, indemnifying them to the fullest extent permitted by law against liability, including related expenses, they may incur in their capacity as directors, managers, officers, employees, trustees, agents or fiduciaries of Triarc Consumer Products Group or Triarc Beverage Holdings, as the case may be, and/or their subsidiaries or any liability relating to their service in any such capacity, at the request of Triarc Consumer Products Group or Triarc Beverage Holdings for other corporations or entities. The indemnification agreements are meant to provide specific contractual assurance that the indemnification provided by Triarc Consumer Products Group or Triarc Beverage Holdings under their organizational documents or directors' and officers' liability insurance will be available regardless of changes to their organizational documents or any acquisition transactions relating to their organizational documents. The indemnification agreements do not provide indemnification: (1) for the return by the indemnitee of any illegal remuneration paid to him or her, (2) for any profits payable by the indemnitee to Triarc Consumer Products Group or Triarc Beverage Holdings under Section 16(b) of the Securities Exchange Act, (3) for any liability resulting from the indemnitee's knowingly fraudulent, dishonest or willful misconduct, (4) for any amount the payment of which is not permitted by applicable law, 81 (5) for any liability resulting from conduct producing unlawful personal benefit, (6) if a final court adjudication determines that indemnification is not lawful, or (7) to the extent indemnification has been provided by Triarc Consumers Products Group or Triarc Beverage Holdings under their organizational documents or directors and officers liability insurance. Determination as to whether an indemnitee is entitled to be paid under the indemnification agreements may be made by the majority vote of a quorum of disinterested directors or managers, as the case may be, of Triarc Consumer Products Group or Triarc Beverage Holdings, independent legal counsel selected by the managers of Triarc Consumer Products Group or directors of Triarc Beverage Holdings, as the case may be, a majority of disinterested members of Triarc Consumer Products Group or stockholders of Triarc Beverage Holdings or by a final adjudication of a court of competent jurisdiction. If Triarc Consumer Products Group or Triarc Beverage Holdings undergo a change of control under the indemnification agreements all such determinations are to be made by special independent counsel selected by the indemnitee and approved by Triarc Consumer Products Group or Triarc Beverage Holdings, as the case may be, which approval may not be unreasonably withheld. Triarc Consumer Products Group or Triarc Beverage Holdings will pay the reasonable fees and expenses of the special independent counsel. An indemnitee may be able to require Triarc Consumer Products Group or Triarc Beverage Holdings to establish a trust fund to assure that funds will be available to pay any amounts which may be due to an indemnitee under an indemnification agreement. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling Triarc Consumer Products Group and Triarc Beverage Holdings pursuant to the foregoing provisions, Triarc Consumer Products Group and Triarc Beverage Holdings have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. CASH INCENTIVE PLANS The Triarc Beverage Group and the Triarc Restaurant Group have annual cash incentive plans and the Triarc Restaurant Group has a mid-term cash incentive plan for executive officers and key employees. Each annual incentive plan is designed to provide annual incentive awards to participants, with amounts payable being linked to whether the applicable company has met specified pre-determined financial goals and the performance of the participant during the preceding year. Under each annual incentive plan, participants may receive awards of a specified percentage of their then current base salaries, which percentage varies depending upon the level of seniority and responsibility of the participant. The percentages are set by the company's management in consultation with management of Triarc Parent. The board of directors of each company, in consultation with management of Triarc Parent and the compensation committee of Triarc Parent's board of directors, may elect to adjust awards on a discretionary basis to reflect the relative individual contribution of the executive or key employee, to evaluate the 'quality' of the company's earnings or to take into account external factors that affect performance results. The board of directors of each company may also decide that multiple performance objectives related to the company's and/or the individual's performance may be appropriate and in this event, these factors would be weighted to determine the amount of the annual incentive awards. Each annual incentive plan is administered by the respective company's board of directors and Triarc Parent's management and may be amended or terminated at any time. Under the Triarc Restaurant Group mid-term incentive plan, incentive awards are granted to participants if the Triarc Restaurant Group achieves an agreed upon profit over a three-year performance cycle. During each plan year, an amount is accrued for each participant based upon the amount by which the company's profit for that year exceeds a specified minimum return. A new three-year performance cycle begins each year, so that after the third year the annual cash 82 amount paid to participants under the mid-term incentive plan should equal the target award if the Triarc Restaurant Group's profit goals have been achieved for the full three-year cycle. Except as may otherwise be specified in a participant's employment agreement, the board of directors of the Triarc Restaurant Group, together with Triarc Parent's management and the compensation committee of Triarc Parent's board of directors, may adjust an individual's award, upward or downward, based upon an assessment of the individual's relative contribution to the company's longer-term profit performance. The mid-term incentive plan may be amended or terminated at any time. From time to time, the compensation committee of Triarc Parent's board of directors may award discretionary bonuses based on performance to executive officers. The amounts of these bonuses will be based on the compensation committee's evaluation of each individual's contribution. TRIARC PARENT'S 1999 EXECUTIVE BONUS PLAN Triarc Parent's 1999 Executive Bonus Plan was approved by the stockholders of Triarc Parent on September 23, 1999. The 1999 Executive Bonus Plan establishes a program of incentive compensation for designated officers and key employees of Triarc Parent and its subsidiaries that is directly related to the financial performance of Triarc Parent. The 1999 Executive Bonus Plan provides for formula bonus awards and performance goal bonus awards. The participants eligible for formula bonus awards are Messrs. Peltz and May. The amount of the award is determined as a percentage of (1) Triarc Parent's earnings as calculated in accordance with a predetermined formula and (2) the improvement in Triarc Parent's earnings as compared to the immediately preceding fiscal year. No designation has been made as to the participants eligible for performance goal bonus awards. The 1999 Executive Bonus Plan is administered by the Performance Compensation Subcommittee of the Triarc Parent board of directors. The committee has the authority necessary or helpful to enable it to discharge its responsibilities with respect to the 1999 Executive Bonus Plan. Within the limitations imposed by law, the committee (1) has the power to make full and binding decisions with respect to all aspects of the 1999 Executive Bonus Plan and (2) may delegate some or all of its authority. STOCK OPTION PLANS Some of our named executive officers have received options to purchase shares of Triarc Parent class A common stock as well as Triarc Beverage Holdings common stock. The following are summaries of the material terms of the stock option plans governing these options: TRIARC PARENT'S 1993 EQUITY PARTICIPATION PLAN Triarc Parent's 1993 Equity Participation Plan, which expired on April 24, 1998, provided for the grant of options to purchase Triarc Parent class A common stock, par value $.10 per share of Triarc Parent, including performance stock options, stock appreciation rights, restricted shares of Triarc Parent class A common stock and, to non-employee directors of Triarc Parent, at their option, shares of Triarc Parent class A common stock instead of annual retainer fees otherwise to be payable in cash. Directors, selected officers and key employees of, and key consultants to, Triarc Parent and its subsidiaries were eligible to participate in the 1993 Equity Participation Plan. A maximum of 10,000,000 shares of Triarc Parent class A common stock, contingent on adjustments, were authorized to be delivered by Triarc Parent under options, stock appreciation rights and restricted shares granted under the 1993 Equity Participation Plan. As of November 30, 1999, options to acquire a total of 8,147,184 shares of Triarc Parent class A common stock were outstanding under the 1993 Equity Participation Plan. The plan is administered by the Performance Compensation Subcommittee of the Triarc Parent board of directors. 83 TRIARC PARENT'S 1998 EQUITY PARTICIPATION PLAN Triarc Parent's 1998 Equity Participation Plan was approved by Triarc Parent's board of directors on March 10, 1998 and was approved by the stockholders on May 6, 1998. The 1998 Equity Participation Plan provides for the granting of stock options, stock appreciation rights, and restricted stock to officers and key employees of, and consultants to, Triarc Parent and its subsidiaries and affiliates. The 1998 Equity Participation Plan provides for automatic awards of options to non-employee directors of Triarc Parent and permits non-employee directors to elect to receive all or a portion of their annual retainer fees and/or board of directors or committee meeting attendance fees, if any, in shares of Triarc Parent class A common stock. The 1998 Equity Participation Plan replaced the 1993 Equity Participation Plan which expired on April 24, 1998. As of November 30, 1999, options to acquire 838,750 shares of Triarc Parent class A common stock were outstanding under the 1998 Equity Participation Plan. Contingent on specified antidilution adjustments, a maximum of 5,000,000 aggregate shares of Triarc Parent class A common stock may be granted on the exercise of options or stock appreciation rights or upon a director's election to receive their fees in Triarc Parent shares under the 1998 Equity Participation Plan. In addition, the maximum number of shares of class A common stock that may be granted to any individual in a calendar year is 1,000,000 shares. The 1998 Equity Participation Plan is administered by the Performance Compensation Subcommittee of Triarc Parent's board of directors. The term during which awards may be granted under the 1998 Equity Participation Plan will expire on April 30, 2003. TRIARC BEVERAGE HOLDINGS OPTION PLAN On August 19, 1997, Triarc Beverage Holdings' board of directors adopted the Triarc Beverage Holdings Corp. 1997 Stock Option Plan. The Triarc Beverage Holdings Option Plan was adopted for the purpose of attracting, retaining and motivating key employees, officers, directors and consultants of Triarc Beverage Holdings. The Triarc Beverage Holdings Option Plan provides for a maximum of 150,000 shares of Triarc Beverage Holdings common stock to be issued upon the exercise of stock options. As of November 30, 1999, options to acquire 147,450 shares of Triarc Beverage Holdings common stock were outstanding under the Triarc Beverage Holdings Option Plan. The Triarc Beverage Holdings Option Plan is administered by the Performance Compensation Subcommittee of Triarc Parent's board of directors. The term during which options may be granted under the Triarc Beverage Holdings Option Plan expires on August 18, 2007. Before completion of an initial public offering of Triarc Beverage Holdings common stock, individuals who have exercised their options and held shares of Triarc Beverage Holdings common stock for more than six months have rights to sell a portion of the shares obtained under the Triarc Beverage Holdings Option Plan to Triarc Beverage Holdings during a specified period each year, of not more than two weeks, at a price equal to fair market value as determined by an annual appraisal of the value of Triarc Beverage Holdings. If Triarc Beverage Holdings is in default under any debt instrument or would be in default because of any purchase of these shares, Triarc Beverage Holdings is permitted to defer its obligation to purchase the shares until all debt instruments will permit the purchase, and will pay interest at the prime rate from the date when the shares were initially to be purchased by it until Triarc Beverage Holdings purchases the shares. Before completion of an initial public offering, Triarc Beverage Holdings can require individual option holders to sell all or any portion of their shares held for more than six months on the termination of the individual option holder's employment. The price per share will be the fair market value unless the option holder was terminated for cause or violated any non-competition restrictions, in which case the price per share will be the lower of fair market value or the exercise price. During 1997, 76,250 stock options were granted under the Triarc Beverage Holdings Option Plan with an exercise price equal to fair market value ($147.30) as determined by an independent appraisal. These stock options vest ratably on July 1 of 1999, 2000 and 2001. 84 During 1998, 72,175 stock options were granted under the Triarc Beverage Holdings Option Plan with an exercise price equal to fair market value ($191.00) as determined by an independent appraisal. These stock options vest ratably on July 1 of 1999, 2000 and 2001. During 1999, 4,850 stock options were granted under the Triarc Beverage Holdings Option Plan and 4,950 stock options were canceled. The options granted have an exercise price equal to fair market value ($311.99) as determined by an independent appraisal. These stock options vest ratably on July 1, of 2000, 2001 and 2002. Triarc Beverage Holdings made equitable adjustments to its outstanding options during the first quarter of 1999 to reflect the effects of the transfer of cash and deferred tax assets from Triarc Beverage Holdings to Triarc Parent and Triarc Consumer Products Group and the contribution of Stewart's from Triarc Consumer Products Group. Each option granted in 1997 at an exercise price of $147.30 per share was adjusted to $107.05 per share and the exercise price of each option granted in 1998 at an exercise price of $191.00 per share was adjusted to $138.83 per share. In addition, holders of options granted in 1997 may be entitled to a cash payment of $51.34 per share, and holders of options granted in 1998 may be entitled to a cash payment of $39.40 per share, if they exercise their options or their right to resell their shares to Triarc Beverage Holdings. OPTIONS GRANTED IN FISCAL 1998 The following table provides information concerning individual grants of stock options under the Triarc Beverage Holdings Option Plan made during Triarc Beverage Holdings' fiscal year ended January 3, 1999 to the named executive officers. No grants were made under Triarc Parent's stock option plans to any of the named executive officers during Triarc Parent's fiscal year ended January 3, 1999, although grants were made in March 1999 for the fiscal year ended January 3, 1999 to each of the named executive officers, other than Messrs. Peltz and May. No stock appreciation rights were granted to any named executive officers, and no stock options were exercised by any named executive officer during the fiscal year ended January 3, 1999. OPTION GRANTS IN LAST FISCAL YEAR
GRANT DATE INDIVIDUAL GRANTS VALUE --------------------------------------------------------- ------------- NUMBER OF SECURITIES UNDERLYING OPTIONS/ % OF TOTAL EXERCISE OR SARS OPTIONS GRANTED BASE PRICE GRANT DATE GRANTED TO EMPLOYEES IN ($ PER EXPIRATION PRESENT VALUE NAME (#)(1) FISCAL YEAR(2) SHARE)(3) DATE ($)(4) - ---- ------ -------------- --------- ---- ------ Nelson Peltz....................... 26,000 36% $191.00 06/10/08 $1,558,986 Peter W. May....................... 13,000 18 191.00 06/10/08 779,493 Roland C. Smith.................... 0 0 -- -- -- John L. Barnes, Jr................. 6,600 9 191.00 06/10/08 395,743 Eric D. Kogan...................... 6,600 9 191.00 06/10/08 395,743 Brian L. Schorr.................... 6,600 9 191.00 06/10/08 395,743 Michael Weinstein.................. 0 0 -- -- --
- ------------ (1) These options consist of options to purchase shares of Triarc Beverage Holdings common stock which were granted under the Triarc Beverage Holdings Option Plan on June 10, 1998. One-third of the options will vest on each of July 1, 1999, 2000, and 2001, and they will be exercisable at any time between the date of vesting and the tenth anniversary of the date of grant. (footnotes continued on next page) 85 (footnotes continued from previous page) (2) The percentages are based on the aggregate number of options granted in Triarc Beverage Holdings' fiscal year ending January 3, 1999 to purchase Triarc Beverage Holdings common stock. (3) In May 1999, in accordance with the terms of the Triarc Beverage Holdings Option Plan, equitable adjustments were made to the exercise price of all outstanding options under the Triarc Beverage Holdings Option Plan to reflect the effects of the transfer of cash and deferred tax assets from Triarc Beverage Holdings to Triarc Parent and the transfer of Stewart's to Triarc Beverage Holdings. As a result, the exercise price of each option granted in 1997 was equitably adjusted from $147.30 per share to $107.05 per share and the exercise price of each option granted in 1998 was equitably adjusted from $191.00 per share to $138.83 per share. In addition, holders of options granted in 1997 may be entitled to a cash payment of $51.34 per share, and holders of options granted in 1998 may be entitled to a cash payment of $39.40 per share, if they exercise their options or their right to resell their shares to Triarc Beverage Holdings. (4) These values were calculated using a Black-Scholes option pricing model. The actual value, if any, that an executive may realize will depend on the excess, if any, of the stock price over the exercise price on the date the options are exercised, and no assurance exists that the value realized by an executive will be at or near the value estimated by the Black-Scholes model. The following assumptions were used to calculate the present value of the option grants with respect to Triarc Beverage Holdings common stock: (a) assumed option term of seven years; (b) stock price volatility factor of .0001; (c) annual discount rate of 5.5%; and (d) no dividend payment. No discount factor to the Black-Scholes ratio was used for each year an option remains unvested. The exercise price reflects the fair market value of the Triarc Beverage Holdings common stock on the date of grant as determined by an independent third party appraiser, and the volatility factor reflects the fact that, as a privately held subsidiary, the Triarc Beverage Holdings common stock does not have a public trading market. These estimated option values, including the underlying assumptions used in calculating them, constitute forward-looking statements and involve risks, uncertainties and other factors which may cause the actual value of the options to be materially different from those expressed or implied above. OPTION VALUES AT END OF FISCAL 1998 The following table provides information concerning the value of unexercised Triarc Beverage Holdings options under the Triarc Beverage Holdings Option Plan and unexercised Triarc Parent options under the Triarc Parent 1993 Equity Participation Plan held by the named executive officers as of January 3, 1999. 86 AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNDERLYING UNEXERCISED IN-THE- SHARES UNEXERCISED OPTIONS MONEY OPTIONS AT ACQUIRED AT FISCAL YEAR END FISCAL YEAR-END ON VALUE 1998(#) EXERCISABLE/ 1998($)(1) EXERCISABLE/ NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE ---- -------- -------- ------------- ------------- Nelson Peltz Triarc Parent Options ............ -0- -0- 1,173,333/2,316,667 2,287,041/389,984 TBHC Options ..................... -0- -0- -0-/26,000 -0-/-0- Peter W. May Triarc Parent Options ............ -0- -0- 785,000/1,550,000 1,533,959/277,916 TBHC Options ..................... -0- -0- -0-/13,000 -0-/-0- Roland C. Smith Triarc Parent Options ............ -0- -0- 54,665/60,335 184,776/130,949 TBHC Options ..................... -0- -0- -0-/-0- -0-/-0- John L. Barnes, Jr. Triarc Parent Options ............ -0- -0- 136,667/123,333 382,775/295,550 TBHC Options ..................... -0- -0- -0-/6,600 -0-/-0- Eric D. Kogan Triarc Parent Options ............ -0- -0- 145,667/133,333 411,000/333,500 TBHC Options ..................... -0- -0- -0-/6,600 -0-/-0- Brian L. Schorr Triarc Parent Options ............ -0- -0- 181,667/113,333 417,775/266,800 TBHC Options ..................... -0- -0- -0-/6,600 -0-/-0- Michael Weinstein Triarc Parent Options ............ -0- -0- 18,333/26,667 68,416/79,334 TBHC Options ..................... -0- -0- -0-/21,000 -0-/917,700
(1) On December 31, 1998, the last trading day during the fiscal year ended January 3, 1999, the closing price of Triarc Parent's class A common stock on the New York Stock Exchange was $15.875 per share. Triarc Beverage Holdings common stock is not publicly traded. The per share value ($191.00) as of January 3, 1999 is based on a June 10, 1998 valuation provided to Triarc Beverage Holdings by an independent third party. Each of the grants made to holders of Triarc Beverage Holdings options was made at the above per share value. In May 1999, in accordance with the terms of the Triarc Beverage Holdings Option Plan, equitable adjustments were made to the exercise price of all outstanding options under the Triarc Beverage Holdings Option Plan to reflect the effects of the transfer of cash and deferred tax assets from Triarc Beverage Holdings to Triarc Parent and the transfer of Stewart's to Triarc Beverage Holdings. As a result, the exercise price of each option granted in 1997 was equitably adjusted from $147.30 per share to $107.05 per share and the exercise price of each option granted in 1998 was equitably adjusted from $191.00 per share to $138.83 per share. In addition, holders of options granted in 1997 may be entitled to a cash payment of $51.34 per share, and holders of options granted in 1998 may be entitled to a cash payment of $39.40 per share, if they exercise their options or their right to resell their shares to Triarc Beverage Holdings. LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL 1998 The following table shows specified information for awards made during the fiscal year ended January 3, 1999 to Roland C. Smith under Triarc Restaurant Group's mid-term incentive plan. No other named executive officer received awards in 1998 under the mid-term incentive plan. For additional information regarding the mid-term incentive plan, see ' -- Cash Incentive Plans.'
ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK PRICE BASED PLANS(1) PERFORMANCE OR ------------------------------------- OTHER PERIOD UNTIL MATURATION OR THRESHOLD TARGET MAXIMUM NAME PAYOUT ($ OR #) ($ OR #) ($ OR #) ---- ------ -------- -------- -------- Roland C. Smith............................. 1998-2000 -0- $300,000 $450,000
(footnote on next page) 87 (footnote from previous page) (1) Awards were made in fiscal 1998 under the mid-term incentive plan to participants, including Mr. Smith, approved by the board of directors of Triarc Restaurant Group for the three-year performance period 1998-2000. Each participant's target incentive is set at a percentage of his or her annual base salary and is based on meeting operating profit targets over the three year performance cycle. Under Mr. Smith's employment agreement, his target incentive was set at 75% of his annual base salary. No amount will be payable if operating profits are less than 80% of the specified performance objective for the three year cycle. If a participant is terminated without cause, that participant will be entitled to amounts accrued under the plan as of the date of termination. If a participant is not employed by the Triarc Restaurant Group on the last day of the three-year performance cycle for reasons other than death, an approved absence or excused transfers, the participant is not entitled to any incentive compensation under the plan unless the board of directors of Triarc Restaurant Group determines otherwise. Mr. Smith resigned effective May 7, 1999 from his position at the Triarc Restaurant Group and will not receive any further payments under the mid-term incentive plan. 88 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The following are summaries of the material terms of certain agreements and arrangements to which we are a party. You should be aware that these summaries are not a complete description of these agreements and arrangements. OLD TAX SHARING AGREEMENT RC/Arby's, Triarc Beverage Holdings, including Stewart's effective August 15, 1998, and Stewart's, through August 15, 1998, were each parties to separate tax sharing agreements with Triarc Parent whereby each was required to pay amounts relating to taxes based on their taxable income and the taxable income of their eligible subsidiaries on a stand-alone basis. Because of net operating losses in prior periods, including 1997, in excess of pre-tax income for the first nine months of 1998 and/or prior period overpayments, no payments were required for RC/Arby's, Triarc Beverage Holdings or Stewart's during 1997 or for RC/Arby's during 1998. During 1998, Triarc Beverage Holdings made tax sharing payments to Triarc Parent of $10.5 million. Stewart's made a $0.9 million tax sharing payment during 1998. TAX SHARING AGREEMENT Triarc Consumer Products Group's principal subsidiaries are included in a consolidated federal income tax return with Triarc Parent and combined state tax returns in some states. In connection with the offering of initial notes, Triarc Consumer Products Group's and some of its subsidiaries entered into a tax sharing agreement with Triarc Parent, which was amended effective as of the February 25, 1999 date of the agreement. Under this tax sharing agreement, for each year for which any of Triarc Consumer Products Group's subsidiaries are included in the Triarc Parent return, Triarc Consumer Products Group will pay, or cause its subsidiaries to pay, to Triarc Parent an amount equal to the federal income tax liability that would have been payable by Triarc Consumer Products Group for that year, or portion of the amount payable, determined generally as if Triarc Consumer Products Group had filed a separate, consolidated federal income tax return for that year on behalf of itself and its subsidiaries. The payment to Triarc Parent is based on current income less the following tax benefits: losses, credits and overpayments of any of our subsidiaries carried over from 1998 or prior years, deductions relating to the write-off of call premiums and debt issuance expenses on indebtedness of any of our subsidiaries that was outstanding before the effective date of this tax sharing agreement, deductions relating to exercise or payment in cancellation of stock options of Triarc Parent, and any losses relating to any investment in Chesapeake Insurance Company Limited by a subsidiary of Triarc Consumer Products Group. Triarc Parent has the right to cause the effective transfer of any unutilized portion of the above four items but only to the extent permitted under the net worth covenant in the credit agreement. Also under this tax sharing agreement, similar arrangements apply in some states where we or any of our subsidiaries file on a combined basis with Triarc Parent or any of its other subsidiaries. However, the liability of Triarc Consumer Products Group will not be less than any increase in taxes resulting from the inclusions of Triarc Consumer Products Group or any of its subsidiaries in the combined return. SUPPLY ARRANGEMENTS We purchase some raw materials, flavors and packaging from Triarc Parent at Triarc Parent's purchase cost from unaffiliated third-party suppliers. We purchased raw materials, flavors and packaging from Triarc Parent in the amount of $17.2 million in 1997 and $123.0 million in 1998. 89 MANAGEMENT SERVICES AGREEMENTS Under two management services agreements with Triarc Parent, we receive from Triarc Parent management services, including legal, accounting, tax, insurance, financial and other management services under existing management service agreements. The management fee payable to Triarc Parent is an aggregate of $10.5 million per year, which may be increased but not decreased, based on changes in an appropriate consumer price index. We are also required to reimburse Triarc Parent for costs and expenses incurred by Triarc Parent in connection with supply agreements that Triarc Parent has entered into relating to items used in connection with the business of the Triarc Beverage Group. We also reimburse Triarc Parent for costs and expenses incurred by Triarc Parent relating to: insurance maintained by Triarc Parent, including medical, general liability and directors and officers liability insurance, the management or operation of employee benefit plans and the acquisition from third parties of goods and services and the use of equipment purchased, arranged for or provided by Triarc Parent, to the extent that any of the above are for the benefit of, or used by, us or any of our subsidiaries. Before we entered into the existing management services agreements, Triarc Parent allocated $8.5 million of costs to us in 1996, $9.4 million in 1997 and $10.5 million in 1998 for these services. REPAYMENT OF INTERCOMPANY PROMISSORY NOTES Before 1998, subsidiaries of Triarc Consumer Products Group borrowed cash under promissory notes with Triarc Parent and two of its subsidiaries, Southeastern Public Service Company and Chesapeake Insurance Company Ltd., and made cash advances to Triarc Parent under a promissory note receivable upon demand. We earned interest income on these notes of $261,000 in 1996, $230,000 in 1997 and $118,000 in 1998. We incurred interest expense on these notes of $2.8 million in 1996, $1.4 million in 1997 and $39,000 in 1998. The $1.2 million of promissory notes payable by us at December 28, 1997 and the $2.0 million of promissory notes payable to us at December 28, 1998 were repaid during 1998. ISSUANCE OF TRIARC BEVERAGE HOLDINGS PREFERRED STOCK On May 22, 1997, Triarc Beverage Holdings issued 75,000 shares of redeemable cumulative convertible preferred stock to Triarc Parent for $75,000,000. Following a reverse stock split, there are currently 750 shares issued and outstanding. The preferred stock bears a cumulative annual dividend of 10% per annum that is payable in cash or in kind if declared by, and at the option of, Triarc Beverage Holdings. Each share is convertible into a share of common stock of Triarc Beverage Holdings. The preferred stock must be redeemed on May 22, 2009 at $100,000 per share plus accrued and unpaid dividends. No cash dividends were paid in 1997 or 1998, although we recorded cumulative dividends of $4.6 million in 1997 and $8.0 million in 1998. Triarc Parent contributed the preferred stock to Triarc Consumer Products Group in connection with the offering of initial notes. NOTE PURCHASES BY MESSRS. PELTZ AND MAY On February 25, 1999, Messrs. Peltz and May purchased an aggregate $20.0 million of initial notes. We have been advised by Messrs. Peltz and May that they no longer hold any of these initial notes. OTHER TRANSACTIONS Mr. May has an equity interest in a franchisee that owns an Arby's restaurant in New Milford, Connecticut. That franchisee is a party to a standard Arby's franchise license agreement and under 90 that agreement pays to Arby's the same fees and royalty payments that unaffiliated third-party franchisees pay. In connection with the sale in May 1997 of all of the company-owned Arby's restaurants, the three RC/Arby's subsidiaries that sold the restaurants received promissory notes aggregating $1.95 million principal amount at maturity and options to acquire an aggregate of up to 20% of the common stock of the two entities that own the restaurants. In February 1999, the successor to the three RC/Arby's subsidiaries sold to Triarc Parent the promissory notes and options for an aggregate purchase price of $2.0 million. The $2.0 million purchase price was equal to the amount that Triarc Parent realized upon disposition in May 1999 of the promissory notes and options to an affiliate of the purchaser of the Arby's restaurants. We paid $32,000 in 1997 to Triarc Parent for the use of aircraft that Triarc Parent leased from Triangle Aircraft Services Corporation, an affiliate of Messrs. Peltz and May. We believe that this payment was on terms no less favorable to us than if it was between unrelated parties. 91 PRINCIPAL SHAREHOLDERS Triarc Consumer Products Group is a wholly owned subsidiary of Triarc Parent. The following table sets forth the beneficial ownership of Triarc Parent as of November 30, 1999, by: (1) each person known by Triarc Parent to be the beneficial owner of more than 5% of the outstanding shares of Triarc Parent class A common stock, (2) each director of Triarc Parent, (3) each named executive officer of Triarc Parent and (4) all directors and executive officers of Triarc Parent as a group. Except as otherwise indicated, each person has sole voting and dispositive power with respect to his, her or its shares.
AMOUNT AND NATURE OF NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS ------------------------------------ -------------------- ---------------- DWG Acquisition Group, L.P. 5,982,867 shares(1) 30.3% 1201 North Market Street Wilmington, DE 19801 Nelson Peltz .......................................... 7,315,233 shares(1)(2)(3) 34.8% 280 Park Avenue New York, NY 10017 Peter W. May .......................................... 6,889,667 shares(1)(2) 33.4% 280 Park Avenue New York, NY 10017 William Ehrman ........................................ 2,279,022 shares(4) 11.5% Frederick Ketcher Jonas Gerstl Frederic Greenberg James McLaren William D. Lautman 350 Park Avenue New York, NY 10022 Hugh L. Carey.......................................... 37,622 shares * Clive Chajet........................................... 33,300 shares(5) * Joseph A. Levato....................................... 172,500 shares * David E. Schwab II..................................... 30,000 shares * Jeffrey S. Silverman................................... 37,691 shares * Raymond S. Troubh...................................... 45,500 shares * Gerald Tsai, Jr........................................ 42,070 shares * John L. Barnes, Jr..................................... 207,334 shares 1.0% Eric D. Kogan.......................................... 226,334 shares 1.1% Brian L. Schorr........................................ 245,324 shares 1.2% Directors and Executive Officers as a group (18 9,527,758 shares 41.4% persons).............................................
- ------------ * Less than 1% (1) Triarc Parent has been informed that DWG Acquisition has pledged its shares to a financial institution on behalf of Messrs. Peltz and May to secure loans made to them. (2) Includes 5,982,867 shares held by DWG Acquisition, of which Mr. Peltz and Mr. May are the sole general partners. (3) Includes 21,200 shares owned by a family trust of which Mr. Peltz is a trustee and 2,600 shares owned by minor children of Mr. Peltz. Mr. Peltz disclaims beneficial ownership. (4) The information described in this document relating to Messrs. Ehrman, Greenberg, Ketcher, Gerstl, McLaren and Lautman is based solely on information contained in a Schedule 13G/A filed with the Securities Exchange Commission on May 13, 1999 under the Securities Exchange Act. The shares reflected include an aggregate of 2,147,045 shares of Triarc Parent class A common stock that Messrs. Ehrman, Ketcher, Gerstl, Greenberg, McLaren and Lautman may (footnotes continued on next page) 92 (footnotes continued from previous page) be deemed to beneficially own as general partners of EGS Associates, L.P., a Delaware limited partnership, EGS Partners, L.L.C., a Delaware limited liability company, Bev Partners, L.P., a Delaware limited partnership, Jonas Partners, L.P., a Delaware limited partnership and FK Investments, L.P., a Delaware limited partnership. The shares reflected also include (1) 56,650 shares of Triarc Parent class A common stock owned directly by Mr. Ehrman and 55,927 shares of Triarc Parent class A common stock owned by members of Mr. Ehrman's immediate family and his sister-in-law; (2) 8,400 shares of Triarc Parent class A common stock owned directly by Mr. Ketcher; (3) 1,500 shares of Triarc Parent class A common stock owned directly by Mr. Gerstl and his wife and 4,500 shares of Triarc Parent class A common stock owned by a member of Mr. Gerstl's immediate family; and (4) 2,000 shares of Triarc Parent class A common stock owned directly by Mr. Greenberg and 3,000 shares of Triarc Parent class A common stock owned by a member of Mr. Greenberg's immediate family. (5) Includes 1,300 shares owned by Mr. Chajet's wife, as to which shares Mr. Chajet disclaims beneficial ownership. The above beneficial ownership table includes options to purchase shares of Triarc Parent class A common stock which have vested or will vest within 60 days of November 30, 1999 as follows:
NUMBER OF SHARES NAME OF BENEFICIAL OWNER REPRESENTED BY OPTIONS ------------------------ ---------------------- Nelson Peltz................................................ 1,281,666 shares Peter W. May................................................ 860,000 shares Hugh L. Carey............................................... 25,500 shares Clive Chajet................................................ 25,500 shares Joseph A. Levato............................................ 144,500 shares David E. Schwab II.......................................... 25,500 shares Jeffrey S. Silverman........................................ 0 shares Raymond S. Troubh........................................... 25,500 shares Gerald Tsai, Jr............................................. 28,500 shares John L. Barnes, Jr.......................................... 203,334 shares Eric D. Kogan............................................... 212,334 shares Brian L. Schorr............................................. 238,334 shares Directors and Executive Officers as a group (18 persons).... 3,291,167 shares
The beneficial ownership table does not include 3,998,414 shares of Triarc Parent's non-voting Triarc Parent class B common stock owned as of November 30, 1999 by entities controlled by Victor Posner. In August, 1999, Triarc Parent entered into a definitive agreement with entities controlled by Mr. Posner pursuant to which Triarc Parent will acquire all of the class B common stock held by these entities. One-third of these shares were acquired by Triarc Parent in August 1999. The agreement further provides that one-half of the remaining shares of class B common stock will be acquired by Triarc Parent on or before the first anniversary of the initial purchase and the balance of these shares will be purchased on or before the second anniversary of the initial purchase. Each of the purchase dates can be extended under limited circumstances. None of the directors of Triarc Parent or the named executive officers beneficially owned any Triarc Parent class B common stock as of November 30, 1999. Except for the arrangements relating to the shares described in footnote (1) to the above table, there are no arrangements known to Triarc Parent the operation of which may at a later date result in a change in control of Triarc Parent. 93 DESCRIPTION OF INDEBTEDNESS CREDIT FACILITY In connection with the offering of the initial notes, Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown entered into a credit facility. The credit facility allows each of Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown to borrow, on a joint and several basis, up to $535.0 million. DLJ Capital Funding, Inc. serves as the syndication agent for the lenders, Morgan Stanley Senior Funding, Inc. as the documentation agent for the lenders and The Bank of New York as the administrative agent for the lenders. The following is a description of the principal terms of the credit facility. Structure. The credit facility consists of: a revolving credit facility in the amount of $60.0 million, $25.0 million of which is available for letters of credit, a term A loan in the amount of $45.0 million, a term B loan in the amount of $125.0 million, and a term C loan in the amount of $305.0 million. Security, Guaranty. Triarc Consumer Products Group and substantially all of its domestic subsidiaries that are not borrowers unconditionally guarantee the borrowers' obligations under the credit facility. In addition, the obligations of the borrowers under the credit facility and the guarantors under the guarantees are secured by substantially all of Triarc Consumer Products Group's assets, each borrower's assets and each guarantor's assets, including: a pledge of the capital stock of all of Triarc Consumer Products Group's present and future direct and indirect domestic subsidiaries and 65% of the capital stock of its first tier foreign subsidiaries, other than special purpose subsidiaries, a security interest in substantially all of Triarc Consumer Products Group's property and assets and substantially all of the property and assets of its present and future direct and indirect domestic subsidiaries, other than special purpose subsidiaries, including accounts receivables, inventory, equipment, general intangibles and real property, and a security interest in all intercompany indebtedness in favor of Triarc Consumer Products Group and its direct or indirect domestic subsidiaries. Availability. The borrowers may not reborrow amounts repaid or prepaid under the term loans. The borrowers may borrow under the revolving credit facility at any time before its final maturity. However, the maximum principal amount of outstanding borrowings under the revolving credit facility may not exceed the lesser of (1) $60 million and (2) a borrowing base comprised of a percentage of the value of all eligible inventory and a percentage of the value of all eligible accounts receivable of the borrowers and their domestic subsidiaries that are not borrowers. The following table indicates the amounts outstanding under the credit facility as of October 3, 1999, all of which are joint and several obligations of all of the borrowers:
TERM A TERM B TERM C TOTAL ------ ------ ------ ----- Snapple........................ $26,735,119 $ 75,787,589 $184,921,717 $287,444,425 Mistic......................... 8,244,802 23,372,017 57,027,720 88,644,539 Royal Crown.................... 8,895,079 25,215,394 61,525,563 95,636,036 Total..................... $43,875,000 $124,375,000 $303,475,000 $471,725,000
No borrowings were outstanding under the revolving credit facility as of October 3, 1999. Amortization. The borrowers must repay the principal amount that they borrow as follows: the revolving credit facility is a six-year facility that must be repaid in full upon its final maturity, 94 the term A loan must be repaid over a six-year period in quarterly installments aggregating 5.0% in the first year, 10.0% in the second year, 15.0% in the third year, 20.0% in the fourth year and 25.0% per year thereafter, the term B loan must be repaid over a seven-year period in quarterly principal payments of 1.0% per year for the first six years, with the remaining balance payable in quarterly installments during the seventh year, and the term C loan must be repaid over an eight-year period in quarterly principal payments of 1.0% per year for the first seven years with the remaining balance payable in quarterly installments during the eighth year. Interest. The outstanding loans bear interest at an applicable margin plus, at the borrowers' option, the administrative agent's base rate or a London inter-bank offered rate ('LIBOR'). The applicable margins were initially as follows:
BASE RATE LOANS LIBOR LOANS --------------- ----------- Revolving credit facility............................. 2.00% 3.00% Term A loan........................................... 2.00% 3.00% Term B loan........................................... 2.50% 3.50% Term C loan........................................... 2.75% 3.75%
Beginning August 25, 1999, the applicable margins for the revolving credit facility and the term A loan may be reduced if the borrowers meet performance criteria based on a leverage ratio. If the borrowers do not make required payments of principal or other monetary obligations when due, they must pay interest on the outstanding principal amount of the monetary obligation at a default rate equal to 2.0% above the otherwise applicable base rate. Optional Prepayments. The borrowers may prepay loans under the revolving credit facility and reduce the amounts available to them under the revolving credit facility at any time, and may prepay term A loan at any time, in each case, without premium or penalty. The borrowers may prepay the term B loan and the term C loan at any time at the following percentages of the principal amounts of loans prepaid:
PERCENTAGE --------------------------- PAYMENT DATE TERM B LOANS TERM C LOANS ------------ ------------ ------------ Year 1.................................................... 102.0% 103.0% Year 2.................................................... 101.0% 101.5% Year 3 and thereafter..................................... 100.0% 100.0%
Mandatory Prepayments. Generally, although with some exceptions, the borrowers must prepay the term loans and, after the term loans have been repaid, prepay the revolving credit facility and, with exceptions, reduce the commitments under the credit facility, in an amount equal to: 100% of the net after-tax cash proceeds of dispositions of assets by Triarc Consumer Products Group or any of its subsidiaries, other than dispositions or issuances occurring in the ordinary course of business, including net after-tax cash proceeds from the first $350.0 million, which may be increased by up to $10.0 million in some circumstances, of gross proceeds received from the securitization of Arby's assets, as well as the net after-tax cash proceeds from a permitted sale, if any, of Royal Crown, with exceptions for reinvestment baskets, 100% of net cash proceeds received from debt issuances by Triarc Consumer Products Group or its subsidiaries, 50% of the net cash proceeds of equity issuances by Triarc Consumer Products Group or its subsidiaries, plus 100% of net after-tax insurance recoveries or net after-tax condemnation awards, but minus exceptions for reinvestment baskets. 95 In addition, each year the borrowers must repay the term loans in an amount equal to 75% of the excess cash flow of the borrowers and their subsidiaries that are not borrowers for the previous year, which percentage will be reduced to 50% if the borrowers meet performance criteria based on a leverage ratio. Fees. The borrowers are required to pay the following fees under the credit facility: an annual commitment fee of 0.75% of the daily average unused portion of the unborrowed portion of the revolving credit facility; beginning six months after the closing of the credit facility, the annual commitment fee may be reduced if the borrowers meet performance criteria based on a leverage ratio, an annual fronting fee of 0.25% of the stated amount of letters of credit to the lender that issues any letters of credit, a letter of credit fee on the daily average undrawn amount of outstanding letters of credit equal to the applicable margin on LIBOR loans under the revolving credit facility, annual administration fees, and arrangement and other similar fees. Covenants. The credit facility contains covenants that require Triarc Consumer Products Group and its subsidiaries to comply with financial ratios and tests, including a minimum interest coverage ratio, a maximum leverage ratio, a minimum fixed charge coverage ratio and a minimum net worth test. The credit facility also contains financial and operational covenants and other restrictions that, among other things, with customary exceptions and baskets described in the credit facility, restrict the ability of Triarc Consumer Products Group and its subsidiaries to: dispose of assets, engage in mergers or make acquisitions, make capital expenditures, pay dividends and prepay other indebtedness, incur additional indebtedness and guarantee obligations, make investments and loans, create liens on assets, engage in transactions with affiliates, and amend other debt instruments and make material changes to organizational and other specified material documents. In addition, the issuers are restricted in their business activities. Events of Default. The credit facility contains the following customary events of default: payment defaults, breach of representations and warranties, breach of performance of covenants, defaults under other contracts, specified events of bankruptcy, ERISA defaults, the invalidity of any collateral or guarantees, and change of ownership or control. 96 LOANS MADE TO ARBY'S SUBSIDIARIES In connection with the sale in May 1997 of all of the company-owned Arby's restaurants the purchaser assumed all indebtedness of subsidiaries of RC/Arby's that was secured by the assets of the sold restaurants. The subsidiaries of RC/Arby's were released from their obligations for this indebtedness except that a subsidiary of RC/Arby's, ARHC, LLC remains a co-obligor with the purchaser under loans in an aggregate principal amount of approximately $3.2 million as of January 3, 1999. These loans are secured by some of the purchaser's assets but not by any of our assets or assets of our subsidiaries. In addition, these loans are guaranteed by Triarc Parent and Arby's, Inc. The purchaser is entitled to indemnification from ARHC, LLC and Triarc Parent in respect of any payments it is required to make to the lender under these loans. These loans either bear interest at 10.35% and are repayable in equal monthly installments through 2016 or bear interest at 10.5% and are repayable in equal monthly installments through 2003. In connection with the restaurants sale, the purchaser assumed an aggregate of approximately $54.7 million principal amount of mortgage notes and equipment notes with FFCA Mortgage Corporation or its affiliates and approximately $15.0 million of capitalized lease obligations associated with the restaurants sold. We remain contingently liable with respect to the capital leases until the end of their terms. The equipment notes bear interest at 10.5% and are repayable in equal monthly installments through 2003. In addition, ARHC, LLC and the purchaser are co-obligors under loans in an aggregate principal amount of approximately $.6 million as of January 3, 1999 relating to an additional restaurant sold to the purchaser. ARHC, LLC will be released from its obligations under the loans if and when it obtains the consent of the restaurant's ground lessor to the assignment to the purchaser of the restaurant's ground lease. This loan is also guaranteed by Triarc Parent. This loan is secured by some of the purchaser's assets but not by any of our assets or assets of our subsidiaries, other than the ground lease. ARHC, LLC is entitled to indemnification from the purchaser for any payments it is required to make under this loan. THE EXCHANGE OFFER PURPOSE OF THE EXCHANGE OFFER Our registration rights agreement requires us to file the registration statement of which this prospectus is a part for a registered exchange offer with respect to an issue of new notes in exchange for the initial notes. The exchange notes will be substantially identical in all material respects to the initial notes except that the exchange notes will be registered under the Securities Act, will not bear legends restricting their transfer and will not be entitled to registration rights under our registration rights agreement. This summary of the terms of the registration rights agreement does not contain all the information that you should consider and we refer you to the provisions of the registration rights agreement, which has been filed as an exhibit to the registration statement of which this prospectus is a part and a copy of which is available as indicated in the section of this prospectus entitled 'Where You Can Find More Information.' We are required to: cause the registration statement to be declared effective no later than August 24, 1999, which is 180 days after the date the initial notes were issued, keep the exchange offer effective for not less than 20 business days, or longer if required by applicable law, after the date that notice of the exchange offer is mailed to holders of the initial notes, and complete the exchange offer no later than the earlier to occur of (a) 30 business days after the date that the registration statement is declared effective or (b) September 23, 1999, which is 30 days after the date we are required to cause the registration statement to be declared effective. In accordance with the registration rights agreement, because the registration statement of which this prospectus is a part did not become effective as of August 24, 1999, the interest 97 payable on the initial notes increased by an annual rate of 0.5%. The increase was effective as of August 24, 1999 and will remain in effect until the registration statement is declared effective. The exchange offer being made here, if completed within the time periods described above, will satisfy those requirements under the registration rights agreement. This prospectus, together with the letter of transmittal, is being sent to all record holders of initial notes as of , 1999. Based on interpretations by the staff of the Securities and Exchange Commission in no-action letters issued to third parties, we believe that the exchange notes issued under the exchange offer may be offered for resale, resold or otherwise transferred by each holder of exchange notes, other than (1) a broker-dealer who acquired the initial notes directly from us for resale under Rule 144A under the Securities Act or any other available exemption under the Securities Act, and (2) any other holder that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, us, without compliance with the registration and prospectus delivery provisions of the Securities Act, so long as that holder: is acquiring the exchange notes in the ordinary course of its business, and is not participating in, and does not intend to participate in, a distribution of the exchange notes within the meaning of the Securities Act and has no arrangement or understanding with any person to participate in a distribution of the exchange notes within the meaning of the Securities Act. By tendering the initial notes in exchange for exchange notes, each holder, other than a broker-dealer, will be required to make representations regarding the above matters. If a holder of initial notes is participating in or intends to participate in, a distribution of the exchange notes, or has any arrangement or understanding with any person to participate in a distribution of the exchange notes to be acquired in this exchange offer, this holder may be deemed to have received restricted securities and may not rely on the applicable interpretations of the staff of the Securities and Exchange Commission. Any such holder will have to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. Each broker-dealer that receives exchange notes for its own account in exchange for initial notes may be deemed to be an underwriter within the meaning of the Securities Act and must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of these exchange notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with offers to resell, resales and other transfers of exchange notes received in exchange for initial notes which were acquired by the broker-dealer through market-making or other trading activities. We have agreed that we will make this prospectus available to any broker-dealer for a period of time not to exceed 180 days after the completion of the exchange offer for use in connection with any offer to resell, resale or other transfer by the broker-dealer. Please refer to the section of this prospectus entitled 'Plan of Distribution.' Each broker-dealer who acquired the initial notes directly from the issuers for resale under Rule 144A under the Securities Act or any other available exemption under the Securities Act, and not through market-making or other trading activities: (1) may not rely on the applicable interpretations of the staff of the Securities and Exchange Commission; and (2) will have to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. 98 SHELF REGISTRATION STATEMENT If: we determine that the exchange offer is not available or may not be completed on time because it would violate applicable law or its interpretations by the staff of the Securities and Exchange Commission, or for any other reason, the exchange offer is not completed before September 23, 1999, which is 180 days from the date the initial notes were issued, or in the opinion of counsel of the initial purchasers of the initial notes, a registration statement must be filed and a prospectus must be delivered by the initial purchasers in connection with any offering or sale of initial notes, then, we will be obligated, at our sole expense, to use our reasonable best efforts: as promptly as practicable to file with the Securities and Exchange Commission a shelf registration statement covering resales of the initial notes, to cause the shelf registration statement to be declared effective under the Securities Act, and to keep the shelf registration statement continuously effective, supplemented and amended as required by the Securities Act, to permit the prospectus which is a part of the shelf registration statement to be usable by holders for a period of two years after the shelf registration statement is declared effective or any shorter period of time that will terminate when all of the initial notes covered by the shelf registration statement have been sold under the shelf registration statement or are no longer are considered restricted securities under the Securities Act. If we file a shelf registration statement, we will provide to each holder of the initial notes being registered copies of the prospectus that is a part of the shelf registration statement. We will also notify each of these holders when the shelf registration statement has become effective and take other actions as are required to permit unrestricted resales of the initial notes being registered. A holder that sells initial notes under the shelf registration statement will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, liable under some of the civil liability provisions under the Securities Act in connection with those sales and bound by the provisions of the registration rights agreement that are applicable to the holder, including indemnification rights and obligations. EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION The exchange offer will expire at 5:00 p.m., New York City time, on , 2000, unless the issuers extend it in their reasonable discretion. The expiration date of the exchange offer will be at least 20 business days after the issuers mail notice of the exchange offer to holders as provided in Rule 14e-1(a) under the Securities Exchange Act and the registration rights agreement. To extend the expiration date, the issuers will need to notify the exchange agent of any extension by oral notice, promptly confirmed in writing, or written notice. The issuers will also need to notify the holders of the initial notes by mailing an announcement or by means of a press release or other public announcement communicated, unless otherwise required by applicable law or regulation, before 9:00 A.M., New York City time, on the next business day after the previously scheduled expiration date. The issuers expressly reserve the right: to delay acceptance of any initial notes, to extend or to terminate the exchange offer and not permit acceptance of initial notes not previously accepted if any of the conditions described below under ' -- Conditions to the Exchange Offer' have occurred and have not 99 been waived by them, if permitted to be waived, by giving oral or written notice of the delay, extension or termination to the exchange agent, or to amend the terms of the exchange offer in any manner. If the issuers amend the exchange offer in a manner determined by us to constitute a material change, they will promptly disclose the amendment in a manner reasonably calculated to inform the holders of the initial notes of the amendment including providing public announcement or giving oral or written notice to the holders of the initial notes. A material change in the terms of the exchange offer could include a change in the timing of the exchange offer, a change in the exchange agent and other similar changes in the terms of the exchange offer. If any material change is made to terms of the exchange offer, the issuers will disclose the change by means of a post-effective amendment to the registration statement of which this prospectus is a part and will distribute an amended or supplemented prospectus to each registered holder of initial notes. In addition, the issuers will extend the exchange offer for an additional five to ten business days as required by the Securities Exchange Act, depending on the significance of the amendment, if the exchange offer would otherwise expire during that period. Any delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral notice, promptly confirmed in writing, or written notice to the exchange agent. PROCEDURES FOR TENDERING INITIAL NOTES PROPER EXECUTION AND DELIVERY OF LETTERS OF TRANSMITTAL To tender your initial notes in this exchange offer, you must use one of the three alternative procedures described below: Regular delivery procedure: Complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal. Have the signatures on the letter of transmittal, guaranteed if required by the letter of transmittal. Mail or otherwise deliver the letter of transmittal or the facsimile, together with the certificates representing your initial notes being tendered and any other required documents, to the exchange agent on or before 5:00 p.m., New York City time, on the expiration date. Book-entry delivery procedure: Send a timely confirmation of a book-entry transfer of your initial notes, if this procedure is available, into the exchange agent's account at The Depository Trust Company as contemplated by the procedures for book-entry transfer described under ' -- Book-Entry Delivery Procedure' below, on or before 5:00 p.m., New York City time, on the expiration date. Guaranteed delivery procedure: If time will not permit you to complete your tender by using the procedures described above before the expiration date, comply with the guaranteed delivery procedures described under ' -- Guaranteed Delivery Procedure' below. The method of delivery of initial notes, the letter of transmittal and all other required documents is at your election and risk. Instead of delivery by mail, we recommend that you use an overnight or hand-delivery service. If you choose the mail, we recommend that you use registered mail, properly insured, with return receipt requested. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE TIMELY DELIVERY. You should not send any letters of transmittal or initial notes to us. You must deliver all documents to the exchange agent at its address provided below. You may also request your respective brokers, dealers, commercial banks, trust companies or nominees to tender your initial notes on your behalf. Only a holder of initial notes may tender initial notes in this exchange offer. For purposes of this exchange offer, a holder is any person in whose name initial notes are registered on our books or any other person who has obtained a properly completed bond power from the registered holder. If you are the beneficial owner of initial notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your notes, you must contact this registered holder promptly and instruct this registered holder to tender these 100 notes on your behalf. If you wish to tender these initial notes on your own behalf, you must, before completing and executing the letter of transmittal and delivering your initial notes, either make appropriate arrangements to register the ownership of these notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. You must have any signatures on a letter of transmittal or a notice of withdrawal guaranteed by an eligible institution. An eligible institution is: (1) a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., (2) a commercial bank or trust company having an office or correspondent in the United States, or (3) an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Securities Exchange Act. However, signatures on a letter of transmittal do not have to be guaranteed if initial notes are tendered: by a registered holder, or by a participant in The Depository Trust Company in the case of book-entry transfers, whose name appears on a security position listing as the owner, who has not completed the box entitled 'Special Issuance Instructions' or 'Special Delivery Instructions' on the letter of transmittal and only if the exchange notes are being issued directly to this registered holder, or deposited into this participant's account at The Depository Trust Company in the case of book-entry transfers, or for the account of an eligible institution. If the letter of transmittal or any bond powers are signed by: The recordholder(s) of the initial notes tendered: The signature must correspond with the name(s) written on the face of the initial notes without alteration, enlargement or any change whatsoever. A participant in The Depository Trust Company: The signature must correspond with the name as it appears on the security position listing as the holder of the initial notes. A person other than the registered holder of any initial notes: These initial notes must be endorsed or accompanied by bond powers and a proxy that authorizes this person to tender the initial notes on behalf of the registered holder, in satisfactory form to the issuers as determined in their sole discretion, in each case, as the name of the registered holder or holders appears on the initial notes. Trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity: These persons should so indicate when signing. Unless waived by the issuers, evidence satisfactory to them of their authority to so act must also be submitted with the letter of transmittal. BOOK-ENTRY DELIVERY PROCEDURE Any financial institution that is a participant in The Depository Trust Company's system may make book-entry deliveries of initial notes by causing The Depository Trust Company to transfer these initial notes into the exchange agent's account at The Depository Trust Company according to The Depository Trust Company's procedures for transfer. To effectively tender notes through The Depository Trust Company, the financial institution that is a participant in The Depository Trust Company will electronically transmit its acceptance through the Automatic Tender Offer Program. The Depository Trust Company will then edit and verify the acceptance and send an agent's message to the exchange agent for its acceptance. An agent's message is a message transmitted by The Depository Trust Company to the exchange agent stating that The Depository Trust Company has received an express acknowledgment from the participant in The Depository Trust Company tendering the initial notes, that the participant has received and agrees to be 101 bound by the terms of the letter of transmittal, and that we may enforce this agreement against this participant. The exchange agent will make a request to establish an account for the initial notes at The Depository Trust Company for purposes of the exchange offer within two business days after the date of this prospectus. A delivery of initial notes through a book-entry transfer into the exchange agent's account at The Depository Trust Company will only be effective if an agent's message or the letter of transmittal or a facsimile of the letter of transmittal with any required signature guarantees and any other required documents is transmitted to and received by the exchange agent at the address indicated below under ' -- Exchange Agent' on or before the expiration date unless the guaranteed delivery procedures described below are complied with. DELIVERY OF DOCUMENTS TO THE DEPOSITORY TRUST COMPANY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. GUARANTEED DELIVERY PROCEDURE If you are a registered holder of initial notes and desire to tender your notes, and (1) these notes are not immediately available, (2) time will not permit your notes or other required documents to reach the exchange agent before the expiration date, or (3) the procedures for book-entry transfer cannot be completed on a timely basis and an agent's message delivered, you may still tender in this exchange offer if: you tender through an eligible institution, on or before the expiration date, the exchange agent receives a properly completed and duly executed letter of transmittal or facsimile of the letter of transmittal and a notice of guaranteed delivery, substantially in the form provided by the issuers, with your name and address as holder of the initial notes and the amount of notes tendered, stating that the tender is being made by this letter and notice and guaranteeing that within three New York Stock Exchange trading days after the expiration date the certificates for all the initial notes tendered, in proper form for transfer, or a book-entry confirmation with an agent's message, as the case may be, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent, and the certificates for all your tendered initial notes in proper form for transfer, or a book-entry confirmation, as the case may be, and all other documents required by the letter of transmittal are received by the exchange agent within three New York Stock Exchange trading days after the expiration date. ACCEPTANCE OF INITIAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES Your tender of initial notes will constitute an agreement between you and the issuers governed by the terms and conditions provided in this prospectus and in the letter of transmittal. The issuers will be deemed to have received your tender as of the date when your duly signed letter of transmittal accompanied by your initial notes tendered, or a timely confirmation of a book-entry transfer of these notes into the exchange agent's account at The Depository Trust Company with an agent's message, or a notice of guaranteed delivery from an eligible institution is received by the exchange agent. All questions as to the validity, form, eligibility, including time of receipt, acceptance and withdrawal tenders will be determined by the issuers in their sole discretion. The issuers' determination will be final and binding. The issuers reserve the absolute right to reject any and all initial notes not properly tendered or any initial notes which, if accepted, would, in their opinion or their counsel's opinion, be unlawful. The issuers also reserve the absolute right to waive any conditions of this exchange offer or irregularities or defects in tender as to particular notes. The issuers' interpretation of the terms and conditions of this exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of initial notes must be cured within the time that the issuers shall determine. Neither the 102 issuers, the exchange agent nor any other person will be under any duty to give notification of defects or irregularities with respect to tenders of initial notes. Neither the issuers, the exchange agent nor any other person will incur any liability for any failure to give notification of these defects or irregularities. Tenders of initial notes will not be deemed to have been made until the irregularities have been cured or waived. The exchange agent will return without cost to their holders any initial notes that are not properly tendered and as to which the defects or irregularities have not been cured or waived as promptly as practicable following the expiration date. If all the conditions to the exchange offer are satisfied or waived on the expiration date, the issuers will accept all initial notes properly tendered and will issue the exchange notes promptly thereafter. Please refer to the section of this prospectus entitled ' -- Conditions to the Exchange Offer' below. For purposes of this exchange offer, initial notes will be deemed to have been accepted as validly tendered for exchange when, as and if, the issuers give oral or written notice of acceptance to the exchange agent. The issuers will issue the exchange notes in exchange for the initial notes tendered by a notice of guaranteed delivery by an eligible institution only against delivery to the exchange agent of the letter of transmittal, the tendered initial notes and any other required documents, or the receipt by the exchange agent of a timely confirmation of a book-entry transfer of initial notes into the exchange agent's account at The Depository Trust Company with an agent's message, in each case, in form satisfactory to the issuers and the exchange agent. If any tendered initial notes are not accepted for any reason or if initial notes are submitted for a greater principal amount than the holder desires to exchange, the unaccepted or non-exchanged initial notes will be returned without expense to the tendering holder, or, in the case of initial notes tendered by book-entry transfer procedures described above, will be credited to an account maintained with the book-entry transfer facility, as promptly as practicable after withdrawal, rejection of tender or the expiration or termination of the exchange offer. In addition, the issuers reserve the right in their sole discretion, but in compliance with the provisions of the indenture, to: purchase or make offers for any initial notes that remain outstanding after the expiration date, or, as described under ' -- Expiration Date; Extensions; Amendments; Termination,' to terminate the exchange offer as provided by the terms of our registration rights agreement, and purchase initial notes in the open market, in privately negotiated transactions or otherwise, to the extent permitted by applicable law. The terms of any of the purchases or offers described above could differ from the terms of the exchange offer. WITHDRAWAL OF TENDERS Except as otherwise provided in this prospectus, you may withdraw tenders of initial notes at any time before 5:00 p.m., New York City time, on the expiration date. For a withdrawal to be effective, you must send a written or facsimile transmission notice of withdrawal to the exchange agent before 5:00 p.m., New York City time, on the expiration date at the address provided below under ' -- Exchange Agent' and before acceptance of your tendered initial notes for exchange by us. Any notice of withdrawal must: specify the name of the person having tendered the initial notes to be withdrawn, identify the initial notes to be withdrawn, including, if applicable, the registration number or numbers and total principal amount of these notes, be signed by the person having tendered the initial notes to be withdrawn in the same manner as the original signature on the letter of transmittal by which these initial notes 103 were tendered, including any required signature guarantees, or be accompanied by documents of transfer sufficient to permit the trustee for the initial notes to register the transfer of these notes into the name of the person having made the original tender and withdrawing the tender, and state that you are withdrawing your tender of initial notes. The issuers will determine all questions as to the validity, form and eligibility, including time of receipt, of all notices of withdrawal and their determination will be final and binding on all parties. Initial notes that are withdrawn will be deemed not to have been validly tendered for exchange in this exchange offer. You may retender properly withdrawn initial notes in this exchange offer by following one of the procedures described under ' -- Procedures for Tendering Initial Notes' above at any time before the expiration date. CONDITIONS TO THE EXCHANGE OFFER With exceptions, the issuers will not be required to accept initial notes for exchange, or issue exchange notes in exchange for any initial notes, and the issuers may terminate or amend the exchange offer as provided in this prospectus before the acceptance of the initial notes, if: the exchange offer violates applicable law of any interpretation of the staff of the Securities and Exchange Commission, you do not tender your initial notes in the manner required by the exchange offer, or a court or governmental authority has issued an injunction, order or decree that would prevent or impair the issuers' ability to proceed with the exchange offer. These conditions are for the issuers' sole benefit. The issuers may assert any of these conditions regardless of the circumstances giving rise to any of them. The issuers may also waive these conditions, in whole or in part, at any time and from time to time, if we determine in their reasonable discretion, but within the limits of applicable law, that any of the foregoing events or conditions has occurred or exists or has not been satisfied. The issuers' failure at any time to exercise any of rights will not be deemed a waiver of these rights and these rights will be deemed ongoing rights which they may assert at any time and from time to time. If the issuers determine that they may terminate the exchange offer, as provided above, they may: refuse to accept any initial notes and return any initial notes that have been tendered to their holders, extend the exchange offer and retain all initial notes tendered before the expiration date, allowing, however, the holders of tendered initial notes to exercise their rights to withdraw their tendered initial notes, or waive any termination event with respect to the exchange offer and accept all properly tendered initial notes that have not been withdrawn or otherwise amend the terms of the exchange offer in any respect as provided under the section of this prospectus entitled ' -- Expiration Date; Extensions; Amendments; Termination.' If the issuers determine that they may terminate the exchange offer, they may be required to file a shelf registration statement with the Securities and Exchange Commission as described under ' -- Shelf Registration Statement.' The exchange offer is not dependent upon any minimum principal amount of initial notes being tendered for exchange. The issuers have no obligation to, and will not knowingly, permit acceptance of tenders of initial notes: from persons who are considered affiliates under Rule 405 of the Securities Act, 104 from any other holder or holders who are not eligible to participate in the exchange offer under the applicable law or its interpretations by the Securities and Exchange Commission, or if the exchange notes to be received by the holder or holders of initial notes in the exchange offer, upon receipt, will not be tradable by these holders without restriction under the Securities Act and the Securities Exchange Act and without material restrictions under the blue sky or securities laws of substantially all of the states of the United States. ACCOUNTING TREATMENT The issuers will record the exchange notes at the same carrying value as the initial notes, as reflected in their accounting records on the date of the exchange. Accordingly, the issuers will not recognize any gain or loss for accounting purposes. The issuers will amortize the costs of the exchange offer and the unamortized expenses related to the issuance of the exchange notes over the term of the exchange notes. EXCHANGE AGENT The issuers have appointed The Bank of New York as exchange agent for the exchange offer. You should direct all questions and requests for assistance or additional copies of this prospectus or the letter of transmittal to the exchange agent as follows: By Registered or Certified By Facsimile in New York: By Overnight Courier or Hand: Mail: (for Eligible Institutions only) The Bank of New York The Bank of New York (212) 815-6339 101 Barclay Street 101 Barclay Street-Floor 7E Corporate Trust Service Window New York, New York 10286 Confirm by Telephone: Ground Floor Attention: [ ] (212) 815- [ ] New York, New York 10286 Attention: [ ]
FEES AND EXPENSES The issuers will bear the expenses of soliciting tenders under the exchange offer. The principal solicitation for tenders under the exchange offer is being made by mail; however, the issuers' officers and other employees may make additional solicitations by telegraph, telephone, telecopy or in person. The issuers will not make any payments to brokers, dealers or other persons soliciting acceptances of the exchange offer. However, the issuers will pay the exchange agent reasonable and customary fees for its services and will reimburse the exchange agent for its reasonable out-of-pocket expenses in connection with the exchange offer. The issuers may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of the prospectus, letters of transmittal and related documents to the beneficial owners of the initial notes, and in handling or forwarding tenders for exchange. The issuers will pay the expenses incurred in connection with the exchange offer, including fees and expenses of the exchange agent and trustee and accounting, legal, printing and related fees and expenses. The issuers will generally pay all transfer taxes, if any, applicable to the exchange of initial notes, under the exchange offer. However, tendering holders will pay the amount of any transfer taxes, whether imposed on the registered holder or any other person, if: certificates representing exchange notes or initial notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the initial notes tendered, tendered initial notes are registered in the name of any person other than the person signing the letter of transmittal, or 105 a transfer tax is imposed for any reason other than the exchange of initial notes under the exchange offer. If satisfactory evidence of payment of these taxes or exemption therefrom is not submitted with the letter of transmittal, the amount of the transfer taxes will be billed directly to the tendering holder. YOUR FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE CONSEQUENCES If you do not exchange your initial notes for exchange notes under the exchange offer or if you do not properly tender your initial notes in the exchange offer, your initial notes will remain outstanding and continue to accrue interest. However, you will not be able to resell, offer to resell or otherwise transfer the initial notes unless they are registered under the Securities Act or unless you resell them, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not governed by the Securities Act. In addition, you will no longer be able to obligate us to register the initial notes under the Securities Act, except in the limited circumstances provided under our registration rights agreement. The restrictions on transfer of your initial notes arise because the issuers issued the initial notes under exemptions from, or in transactions not governed by, the registration requirements of the Securities Act and applicable state securities laws. In addition, if you want to exchange your initial notes in the exchange offer for the purpose of participating in a distribution of the exchange notes, you may be deemed to have received restricted securities, and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. To the extent the initial notes are tendered and accepted in the exchange offer, the trading market, if any, for the initial notes would be adversely affected. Please refer to the section of this prospectus entitled 'Risk Factors -- Your failure to participate in the exchange offer will have adverse consequences.' 106 DESCRIPTION OF THE EXCHANGE NOTES The form and terms of the exchange notes are the same as the form and terms of the initial notes, except that the exchange notes: have been registered under the Securities Act, will not bear legends restricting the transfer thereof and will not be entitled to registration rights under our registration rights agreement. The issuers issued the initial notes and will issue the exchange notes under the indenture, dated as of February 25, 1999, among the issuers, the guarantors of the initial notes and The Bank of New York, as trustee. The terms of the exchange notes will include those stated in the indenture and in the provisions of the exchange notes themselves, as well as those made part of the indenture by reference to the Trust Indenture Act. Except as stated above, the exchange notes will be subject to all these terms, and we refer you to the indenture, the exchange notes and the Trust Indenture Act for a statement of such terms. Except as otherwise indicated, the following description relates both to the initial notes and the exchange notes and is a summary of the material provisions of the indenture and the exchange notes. It does not restate those items in their entirety. We urge you to read the indenture and the exchange notes because they, and not this description, define your rights as holder of the exchange notes. We have filed copies of the indenture and the form of exchange notes as exhibits to the registration statement which includes this prospectus. The definitions of certain terms used in the following summary are indicated below under ' -- Certain Definitions.' For purposes of this summary, the term 'Triarc Consumer Products Group' refers only to Triarc Consumer Products Group, LLC and not to any of Triarc Consumer Products Group, LLC's subsidiaries. Also, in this description 'initial notes' and 'exchange notes' are collectively referred to as the 'notes.' GENERAL The exchange notes are unsecured senior subordinated obligations of the issuers, initially limited to $300 million aggregate principal amount, and mature on February 15, 2009. The exchange notes bear interest at 10 1/4% from February 25, 1999, or from the most recent date to which interest has been paid or provided for. Interest on the exchange notes is payable semiannually in arrears to holders of record at the close of business on the February 1 or August 1 immediately preceding the interest payment date on February 15 and August 15 of each year, commencing February 15, 2000. The issuers will pay interest on overdue principal at 1% per annum in excess of such rate, and they will pay interest on overdue installments of interest at the higher rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Triarc Consumer Products Group was informed that some prospective purchasers of the notes may have been restricted in their ability to purchase debt securities of limited liability companies, including Triarc Consumer Products Group, unless the debt securities were jointly issued by a corporation. Accordingly, Triarc Beverage Holdings, a wholly owned subsidiary of Triarc Consumer Products Group, served as the co-issuer of the initial notes to facilitate the offering of initial notes. Triarc Beverage Holdings is the holding company for Triarc Consumer Products Group's premium beverage businesses. As a co-issuer of the notes, Triarc Beverage Holdings is jointly and severally liable, together with Triarc Consumer Products Group, for the performance of the obligations under the notes. Accordingly, holders of the notes can make claims directly against Triarc Consumer Products Group and/or Triarc Beverage Holdings. The exchange notes will be issued only in fully registered form, without coupons, in denominations of $1,000 and any integral multiple of $1,000. No service charge shall be made for any registration of transfer or exchange of the initial notes. The issuers may, however, require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith. 107 In accordance with the covenants described below, the issuers may issue additional notes under the indenture. Any additional notes will have the same terms in all respects as the exchange notes except that interest will accrue on the additional notes from and including the date of issuance of the additional notes. The exchange notes that the issuers are offering and any additional notes would be treated as a single class for all purposes under the indenture and will vote together as one class on all matters with respect to the notes. OPTIONAL REDEMPTION Except as set forth in the following paragraph, the notes will not be redeemable at the option of the issuers prior to February 15, 2004. Following that date, the notes will be redeemable, from time to time, at the option of the issuers, in whole or in part. Any redemption requires not less than 30 nor more than 60 days' prior notice mailed by first class mail to each holder's registered address. The applicable redemption prices, based on a redemption during the 12-month period commencing on February 15 of the years set forth below, are as follows:
REDEMPTION PERIOD PRICE - ------ ----- 2004........................................................ 105.1250% 2005........................................................ 103.4167 2006........................................................ 101.7083 2007 and thereafter......................................... 100.0000
The above redemption prices are expressed as percentages of principal amount on the redemption date, plus accrued and unpaid interest to the redemption date. The redemption price is subject to the right of the holders of record on the relevant record date to receive interest due on the relevant interest payment date. In addition, at any time and from time to time prior to February 15, 2002, the issuers may redeem in the aggregate up to 35% of the original principal amount of the notes with the proceeds of one or more qualified public offerings. A qualified public offering is an underwritten primary public offering of common stock of Triarc Consumer Products Group or Triarc Parent, to the extent the proceeds are contributed to Triarc Consumer Products Group as equity, pursuant to an effective registration statement under the Securities Act. If so redeemed, the redemption price, expressed as a percentage of principal amount on the redemption date, is 110.25% plus accrued and unpaid interest to the redemption date, subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date. In order to redeem the notes in this manner: (1) at least 65% of the aggregate principal amount of the notes ever issued under the indenture must remain outstanding and be held, directly or indirectly, by persons other than Triarc Consumer Products Group and its affiliates, immediately after each such redemption; and (2) the redemption shall occur within 60 days of the applicable qualified public equity offering. In the case of any partial redemption, selection of the notes for redemption will be made by the trustee on a pro rata basis. The selection will be by lot or by any other method as the trustee in its sole discretion deems to be fair and appropriate. In no event will a note of $1,000 in original principal amount or less be redeemed in part. If any note is to be redeemed in part only, the notice of redemption relating to that note shall state the portion of the principal amount thereof to be redeemed. A new note in principal amount equal to the unredeemed portion will be issued in the name of the holder upon cancellation of the original note. 108 SINKING FUND There is no sinking fund payments for the notes. GUARANTEES The obligations of the issuers pursuant to the notes, including the repurchase obligation resulting from a change of control, are unconditionally guaranteed, jointly and severally, on an unsecured senior subordinated basis, by each of the subsidiary guarantors. Each subsidiary guaranty is limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the applicable subsidiary guarantor without rendering the subsidiary guaranty, as it relates to the applicable subsidiary guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. If a subsidiary guaranty were to be rendered voidable, it could be subordinated by a court to all other indebtedness, including guarantees and other contingent liabilities, of the applicable subsidiary guarantor. Depending on the amount of the affected indebtedness, a subsidiary guarantor's liability on its subsidiary guaranty could be reduced by a court to zero. See 'Risk Factors -- A court could declare the exchange notes junior in right of payment or take other actions under fraudulent transfer statutes that are detrimental to you.' Upon satisfaction of the conditions described in the definition of 'Permitted Arby's Dividend,' the indenture permits: (1) the subsidiary guaranty of RC/Arby's and each of its direct and indirect subsidiaries, other than Royal Crown Company, Inc. and its subsidiaries, to be released and (2) Triarc Consumer Products Group to distribute the capital stock of RC/Arby's and those subsidiaries referred to in clause (1) above to Triarc Parent, as a Permitted Arby's Dividend. RANKING The indebtedness evidenced by the notes and the subsidiary guarantees is unsecured senior subordinated obligations of the issuers and the subsidiary guarantors. The obligations of the issuers and the subsidiary guarantors with respect to the indebtedness are subordinate in right of payment to the prior payment in full of all Senior Indebtedness, whether outstanding on the closing date, which occurred on February 25, 1999, or thereafter incurred. Those obligations are also subordinate to the obligations of the issuers and subsidiary guarantors under the credit agreement. For purposes of this section, 'payment in full,' as used with respect to Senior Indebtedness means the payment of cash. As of July 4, 1999, the Senior Indebtedness of the issuers and the subsidiary guarantors, on a consolidated basis was approximately $484.2 million, substantially all of which is secured indebtedness. Although the indenture contains limitations on the amount of additional Indebtedness that the issuers and the subsidiary guarantors may incur, there are circumstances where the amount of Indebtedness could be substantial and, in any case, additional Indebtedness may be Senior Indebtedness. See ' -- Certain Covenants -- Limitation on Indebtedness.' All the operations of Triarc Consumer Products Group are conducted through its subsidiaries. Triarc Consumer Products Group's foreign subsidiaries do not guarantee the notes. The notes and each subsidiary guaranty will be effectively subordinated to creditors, including trade creditors, and preferred stockholders, if any, of subsidiaries of Triarc Consumer Products Group, other than the subsidiary guarantors. As of July 4, 1999, the total liabilities of the subsidiaries that were not subsidiary guarantors, was approximately $5.2 million, including trade payables. Although the indenture limits the incurrence of Indebtedness and preferred stock by some of Triarc Consumer Products Group's subsidiaries, the limitations are subject to a number of significant qualifications. Moreover, the indenture does not impose any limitation on the incurrence by those subsidiaries of liabilities that are not considered Indebtedness under the indenture. See ' -- Certain Covenants -- Limitation on Indebtedness.' 109 Only Indebtedness of an issuer or a subsidiary guarantor that is Senior Indebtedness will rank senior to the notes and the relevant subsidiary guaranty in accordance with the provisions of the indenture. The notes and each subsidiary guaranty will rank equally with all other Senior Subordinated Indebtedness of the relevant issuer or subsidiary guarantor, respectively. Each issuer and each subsidiary guarantor has agreed in the indenture that it will not incur, directly or indirectly, any Indebtedness that is subordinate or junior in ranking in right of payment to its Senior Indebtedness unless the Indebtedness incurred is: (1) Senior Subordinated Indebtedness or, (2) expressly subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not deemed to be subordinated or junior to Secured Indebtedness merely because it is unsecured. No direct or indirect payment, deposit or distribution of any kind or character, whether pursuant to the terms of the notes or upon acceleration, by way of repurchase, redemption, defeasance or otherwise, may be made if any Designated Senior Indebtedness of an issuer is not paid when due, whether at maturity, on account of: (1) mandatory redemption or (2) prepayment, acceleration or otherwise. A payment of the sort described above may be made, however, if the default has been cured or waived and any resulting acceleration has been rescinded or the applicable Designated Senior Indebtedness has been paid in full. Further, the paying issuer may pay the notes without regard to the foregoing if it and the trustee receive written notice approving the payment from the representative of the Designated Senior Indebtedness. During the continuance of any default on Designated Senior Indebtedness that entitles the holders of such indebtedness to accelerate its maturity immediately without further notice, other than a default described in the preceding paragraph, that issuer may not pay the notes during the payment blockage period, The payment blockage period commences upon the receipt by the trustee of written notice, the blockage notice, of such default from the representative of the holders of such Designated Senior Indebtedness specifying an election to effect a payment blockage period and ends ending 179 days thereafter, or earlier if the payment blockage period is terminated: (a) by written notice to the trustee and the applicable issuer from the person or persons who gave the blockage notice, (b) because the default giving rise to the blockage notice is no longer continuing or (c) because such Designated Senior Indebtedness has been repaid in full. Despite the provisions described in the last sentence of the immediately preceding paragraph, the applicable issuer may resume payments on the notes after the end of the payment blockage period as long as a payment default on any Designated Senior Indebtedness has not occurred and is continuing. The issuer may not do so, however, if the holders of the Designated Senior Indebtedness have, or the representative of the applicable holders has, accelerated the maturity of the Designated Senior Indebtedness. There may not be more than one payment blockage period in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during the period. Upon any payment or distribution of the assets of an issuer as a result of a total or partial liquidation or dissolution or reorganization of or similar proceeding relating to the issuer or its property, the holders of Senior Indebtedness will be entitled to receive payment in full in cash of that Senior Indebtedness before the noteholders are entitled to receive any payment. Further, until the Senior Indebtedness is paid in full in cash, any payment or distribution to which noteholders would otherwise be entitled to will be made to holders of such Senior Indebtedness as their interests may appear. However, the noteholders may receive: 110 (a) shares of stock, other than any shares of stock which: (1) by their terms or the terms of any security into which they are convertible or for which they are exchangeable, or (2) upon the happening of any event, mature or are mandatorily redeemable or are redeemable at the option of the holder thereof, in whole or in part, and (b) any debt securities that are subordinated to the Senior Indebtedness to at least the same extent as the notes. The noteholders may receive the securities referred to in paragraphs (a) and (b) above, only if the securities shall be provided for by a plan of reorganization or readjustment authorized by an order or decree of a court of competent jurisdiction in a reorganization proceeding under any applicable bankruptcy, insolvency or other similar law. If a distribution is made to noteholders that, due to the subordination provisions, should not have been made to them, the recurring noteholders are required to hold it in trust for the holders of Senior Indebtedness and pay it over to them as their interests may appear. If payment of the notes is accelerated because of an event of default, the issuers or the trustee shall promptly notify the holders of Designated Senior Indebtedness or the representative of these holders of the acceleration. If any Designated Senior Indebtedness is outstanding, neither the issuers nor any subsidiary guarantor may pay the notes until five business days after the representatives of all the issues of Designated Senior Indebtedness receive notice of the acceleration. Afterwards, they may pay the notes only if the indenture otherwise permits payment at that time. To the extent any payment of Senior Indebtedness is: (1) declared to be fraudulent or preferential, (2) set aside or (3) required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then if it is recovered by, or paid over to that person, the Senior Indebtedness or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if the payment had not occurred. To the extent the obligation to repay any Senior Indebtedness is determined to be fraudulent, invalid, or otherwise set aside under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then the obligation as so declared shall be deemed to be reinstated and outstanding as Senior Indebtedness for all purposes hereof as if the declaration, invalidity or setting aside had not occurred. If the issuers fail to make any payment on the notes when due or within any applicable grace period, whether or not on account of the payment blockage provision referred to above, that failure would constitute an event of default under the indenture and would enable the holders to accelerate the maturity of the indenture. See ' -- Events of Default.' The obligations of a subsidiary guarantor under its subsidiary guaranty are unsecured senior subordinated obligations. Accordingly, the rights of noteholders to receive payment by a subsidiary guarantor pursuant to its subsidiary guaranty will be subordinated in right of payment to the rights of holders of Senior Indebtedness of any subsidiary guarantor. The terms of the subordination provisions described above with respect to the issuers' obligations under the notes apply equally to a subsidiary guarantor and the obligations of a subsidiary guarantor under its subsidiary guaranty. BY REASON OF THE SUBORDINATION PROVISIONS CONTAINED IN THE INDENTURE, IN THE EVENT OF INSOLVENCY, CREDITORS OF AN ISSUER OR A SUBSIDIARY GUARANTOR WHO ARE HOLDERS OF SENIOR INDEBTEDNESS OF THE APPLICABLE ISSUER OR SUBSIDIARY GUARANTOR, AS THE CASE MAY BE, MAY RECOVER MORE, RATABLY, THAN THE NOTEHOLDERS. 111 The terms of the subordination provisions described above will not apply to payments from money or the proceeds of U.S. Government obligations deposited in trust prior to the occurrence of an event prohibiting payment of or on the notes and held in trust by the trustee for the payment of principal of and interest on the notes pursuant to the provisions described under ' -- Defeasance.' CERTAIN COVENANTS The indenture contains covenants including, among others, the following: LIMITATION ON INDEBTEDNESS. (a) Triarc Consumer Products Group shall not, and shall not permit any Restricted Subsidiary to, incur, directly or indirectly, any Indebtedness; provided, however, that any issuer or any subsidiary guarantor may incur Indebtedness if, on the date of such incurrence and after giving effect thereto, the Consolidated Coverage Ratio exceeds 2.0 to 1. (b) Despite the foregoing paragraph (a), Triarc Consumer Products Group and the Restricted Subsidiaries may incur any or all of the following Indebtedness: (1) Indebtedness incurred pursuant to the Credit Agreement by an issuer or a subsidiary guarantor. After giving effect to the incurrence, the aggregate principal amount of Indebtedness then outstanding must not exceed the greater of (i) $545.0 million less the sum of all principal payments with respect to Indebtedness pursuant to: (A) the covenant described under ' -- Limitation on Sales of Assets and Subsidiary Stock' and/or (B) a Permitted Arby's Securitization. After a Permitted Arby's IPO Dividend has been made, the aggregate principal amount of Indebtedness then outstanding shall not exceed $425.0 million less the sum of all principal payments with respect to Indebtedness pursuant to the covenant described under ' -- Limitation on Sales of Assets and Subsidiary Stock'; or (ii) the sum of: (x) 50.0% of the book value of the inventory of Triarc Consumer Products Group and its Restricted Subsidiaries and (y) 80.0% of the book value of the accounts receivable of Triarc Consumer Products Group and its Restricted Subsidiaries, to the extent inventory or accounts receivable are not encumbered by any lien securing Indebtedness other than liens securing obligations under the credit agreement, The book value of the inventory and accounts receivable will be determined as of the date of the most recent balance sheet of Triarc Consumer Products Group filed or delivered to the trustee pursuant to the 'SEC Reports' covenant, and on a pro forma basis after giving effect to any Business Disposition, Business Acquisition or designation of a Restricted Subsidiary as an Unrestricted Subsidiary occurring after the date of such balance sheet. (2) Indebtedness owed to and held by Triarc Consumer Products Group or a Restricted Subsidiary. This exception is subject to the following limitations: (a) any subsequent issuance or transfer of any capital stock which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness, other than to Triarc Consumer Products Group or a Restricted Subsidiary, shall be deemed, in each case, to constitute the incurrence of such Indebtedness by the obligor thereon not permitted by this clause (2) and 112 (b) if an issuer or a subsidiary guarantor is the obligor on the Indebtedness, the Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the notes; (3) the notes, but not any additional notes, and the subsidiary guarantees; (4) Indebtedness outstanding on the closing date, other than Indebtedness described in clause (1), (2) or (3) of this covenant; (5) Indebtedness of Foreign Restricted Subsidiaries in an aggregate principal amount at any time outstanding under this clause (5) not to exceed the greater of (x) $5.0 million or (y) 10% of Consolidated Total Assets of Triarc Consumer Products Group's Foreign Restricted Subsidiaries; (6) Refinancing Indebtedness in respect of Indebtedness incurred pursuant to paragraph (a) or pursuant to clause (3), (4) or this clause (6); (7) hedging obligations under currency agreements and interest rate agreements. This exception is subject to the following limitations: (a) the currency agreements may not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder and (b) the notional principal amount of Indebtedness with respect to any interest rate agreement must not exceed the principal amount of the Indebtedness to which the interest rate agreement relates; (8) Indebtedness, in an aggregate principal amount at any time outstanding under this clause (8) not to exceed $20.0 million, represented by capital lease obligations or other purchase money Indebtedness of any issuer or any subsidiary guarantor incurred for the purpose of leasing, financing or refinancing all or any part of the purchase price or cost of construction or improvements of any property, real or personal, or other assets that are used or useful in a Related Business. This Indebtedness may be incurred: (a) as a result of the direct purchase of assets or the capital stock of any person owning such assets or (b) as Indebtedness owed to the seller or the person carrying out any construction or improvement or to any third party; In each case: (x) such Indebtedness must not be secured by any property or assets of Triarc Consumer Products Group and its Restricted Subsidiaries other than the property or assets so leased, acquired, constructed or improved and (y) such Indebtedness must be created within 90 days of the acquisition or completion of construction or improvement of the related property or asset. (9) Indebtedness arising from agreements of Triarc Consumer Products Group or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, incurred or assumed in connection with the disposition of any business, asset or subsidiary. This exception excludes guarantees of Indebtedness incurred by any person acquiring all or any portion of any business, assets or subsidiary for the purpose of financing the acquisition. In addition: (A) the maximum assumable liability in respect of the Indebtedness must at no time exceed the gross proceeds, including non-cash proceeds and (B) the fair market value of any non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value, actually received by Triarc Consumer Products Group and/or the applicable Restricted Subsidiary in connection with the disposition; 113 (10) obligations in respect of performance and surety bonds and completion guarantees provided by Triarc Consumer Products Group or any Restricted Subsidiary in the ordinary course of business. (11) Indebtedness of a subsidiary guarantor incurred and outstanding on or prior to the date on which such person was acquired by Triarc Consumer Products Group. This exception excludes Indebtedness incurred in connection with, or to provide all or any portion of the funds or credit support utilized to consummate, the transactions or series of related transactions as a result of which the applicable person became a subsidiary or was acquired by Triarc Consumer Products Group. The aggregate principal amount of Indebtedness under this exception at any time outstanding, which together with the principal amount of all other Indebtedness under this clause (11) outstanding on the date of incurrence must not exceed $20.0 million. (12) guarantees by any issuer or any subsidiary guarantor of any Indebtedness permitted to be incurred pursuant to this covenant. (13) Indebtedness of any issuer or any subsidiary guarantor in an aggregate principal amount which, together with all other Indebtedness of the issuers and the subsidiary guarantors outstanding on the date of incurrence, other than Indebtedness permitted by clauses (1) through (12) above or paragraph (a), after giving effect to the use of the proceeds of the incurrence of Indebtedness, does not exceed $45.0 million. (c) Depite the foregoing, the issuers and the subsidiary guarantors shall not incur any Indebtedness pursuant to the foregoing paragraph (b) if the proceeds are used, directly or indirectly, to refinance any Subordinated Obligations. However, the Indebtedness may be incurred if it is subordinated to the notes or the subsidiary guarantees, as the case may be, to at least the same extent as such subordinated obligations. (d) For purposes of determining compliance with the foregoing covenant: (i) in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, Triarc Consumer Products Group, in its sole discretion, will classify that item of Indebtedness and only be required to include the amount and type of that Indebtedness in one of the above clauses or the first paragraph hereof, and (ii) an item of Indebtedness may be divided and classified in more than one of the types of Indebtedness described above. In addition, Triarc Consumer Products Group may, at any time, change the classification of an item, or portion of an item, of Indebtedness to any other clause or to the first paragraph hereof. Triarc Consumer Products Group may do so, however, only if it would be permitted to incur such item of Indebtedness, or portion thereof, pursuant to the proposed new clause or the first paragraph hereof, as the case may be, at the time of reclassification. LIMITATION ON RESTRICTED PAYMENTS. (a) Triarc Consumer Products Group shall not, and shall not permit any Restricted Subsidiary, directly or indirectly, to make a restricted payment if at the time Triarc Consumer Products Group or the applicable Restricted Subsidiary makes the restricted payment: (1) a default shall have occurred and be continuing, or would result therefrom; (2) Triarc Consumer Products Group is not able to incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under ' -- Limitation on Indebtedness'; or (3) the aggregate amount of the restricted payment and all other restricted payments since the closing date, would exceed the sum of, without duplication: (A) 50% of the Consolidated Net Income accrued during the period, treated as one accounting period, from the beginning of the fiscal quarter immediately following the closing date to the end of the most recent fiscal quarter ending prior to the date of the 114 restricted payment for which reports have been filed or provided to the trustee pursuant to the 'SEC Reports' covenant, or, in case the Consolidated Net Income so determined shall be a deficit, minus 100% of such deficit; (B) the aggregate net cash proceeds received by Triarc Consumer Products Group as a contribution to its capital or from the issuance or sale of its capital stock, other than Disqualified Stock, after to the closing date, including an issuance or sale permitted by the indenture of Indebtedness of Triarc Consumer Products Group for cash subsequent to the closing date upon the conversion of such Indebtedness into capital stock, other than Disqualified Stock, of Triarc Consumer Products Group. Issuances and sales of capital stock to a subsidiary of Triarc Consumer Products Group, may not be included in this paragraph (B); (C) an amount equal to the sum of: (i) the net reduction in Investments in Unrestricted Subsidiaries resulting from dividends, repayments of loans or advances or other transfers of assets, in each case to Triarc Consumer Products Group or any Restricted Subsidiary from Unrestricted Subsidiaries, and (ii) the portion, proportionate to Triarc Consumer Products Group's equity interest in the applicable subsidiary, of the fair market value of the net assets of an Unrestricted Subsidiary at the time the Unrestricted Subsidiary is designated a Restricted Subsidiary; except that the foregoing sum must not exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made, and treated as a restricted payment, by Triarc Consumer Products Group or any Restricted Subsidiary in the applicable Unrestricted Subsidiary; and (D) to the extent that any Investment, other than a Permitted Investment, that was made after the closing date is sold for cash or otherwise liquidated, repaid or otherwise reduced, including by way of dividend, for cash, an amount equal to the lesser of: (i) the cash return of capital with respect to the Investment less the cost of disposition, if any, and (ii) the initial amount of the Investment. For purposes of this provision, a restricted payment with respect to any person means: (i)(A) the declaration or payment of any dividends or any other distributions of any sort in respect of its capital stock, including any payment in connection with any merger or consolidation involving the applicable person, or similar payment to the direct or indirect holders of its capital stock in their capacity as holders, other than dividends or distributions payable solely in its capital stock, other than Disqualified Stock, and (B) dividends or distributions payable solely to Triarc Consumer Products Group or a Restricted Subsidiary, (ii) the purchase, redemption or other acquisition or retirement for value of any capital stock of: (A) an issuer, any affiliate of Triarc Consumer Products Group or any subsidiary guarantor held by any person, other than Triarc Consumer Products Group or a wholly owned subsidiary, or (B) a Restricted Subsidiary that is not a subsidiary guarantor or an issuer held by any affiliate of Triarc Consumer Products Group, other than a Restricted Subsidiary, including, in respect of both clause (A) and (B) above, the exercise of any option to exchange any capital stock, other than into capital stock of Triarc Consumer Products Group that is not Disqualified Stock, (iii) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment 115 of any Subordinated Obligations, other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition, or (iv) the making of any Investment in any person, other than a Permitted Investment. So long as, other than with respect to clauses (iv), (viii), except for payments of any management fees, (x) and (xii) below, no default or event of default shall have occurred and be continuing or occur as a consequence of the actions or payments set forth below, the provisions of paragraph (a) of this covenant shall not prohibit: (i) payment of the Closing Dividend to Triarc Parent, but the payment must be excluded in the calculation of the amount of restricted payments made under paragraph (a) above; (ii) any restricted payment, other than a restricted payment described in clause (i) of the definition of 'restricted payment' made out of the net cash proceeds of a capital contribution to Triarc Consumer Products Group or the substantially concurrent sale of, or made by exchange for, capital stock of Triarc Consumer Products Group, other than Disqualified Stock; except that: (A) the capital contribution or sale must occur within 20 business days of the date of the restricted payment, (B) the restricted payment must be excluded in the calculation of the amount of restricted payments made under paragraph (a) above and (C) the net cash proceeds from the capital contribution or sale must, to the extent used to make the applicable payment, be excluded from the calculation of amounts under clause (3)(B) of paragraph (a) above; (iii) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations made by exchange for, or out of the sale of, Indebtedness of Triarc Consumer Products Group which is permitted to be incurred pursuant to paragraph (b)(6) of the covenant described under ' -- Limitation on Indebtedness'; except that: (A) the sale must occur within 20 business days of the date of the restricted payment and (B) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value must be excluded in the calculation of the amount of restricted payments made under paragraph (a) above; (iv) dividends paid within 60 days after the date of declaration thereof if at the date of its declaration the dividend would have complied with this covenant; but that the dividend shall be included in the calculation of the amount of restricted payments made under paragraph (a) above; (v) the repurchase or other acquisition of shares of, or options to purchase shares of, common stock of Triarc Consumer Products Group or any of its subsidiaries from employees, former employees, directors or former directors of Triarc Consumer Products Group or any of its subsidiaries, or permitted transferees of these persons, pursuant to the terms of the agreements, including employment agreements, or plans or amendments thereto, approved by the board of directors of Triarc Consumer Products Group or the applicable subsidiary under which individuals purchase or sell shares of common stock (collectively, 'plan participants'). The aggregate price paid for all repurchased or acquired common stock must not exceed: (a) $5 million in the twelve month period beginning on the closing date, (b) $7.5 million in the twelve month period beginning on the first anniversary of the closing date and (c) $10.0 million in each twelve month period beginning on the second anniversary of the closing date and each anniversary of the closing date thereafter. 116 The aggregate price paid for all repurchased or acquired common stock repurchased or acquired pursuant to this clause (v) on and after the closing date shall not exceed $25.0 million plus an amount equal to the net cash proceeds received by Triarc Consumer Products Group or any Restricted Subsidiary after the closing date from the sale of capital stock, other than Disqualified Stock, to plan participants. In addition: (A) the repurchases and other acquisitions shall be excluded in the calculation of the amount of restricted payments made under paragraph (a) above and (B) the net cash proceeds from the sales shall, to the extent used to make repurchases or other acquisitions, be excluded from the calculation of amounts under clause (3)(B) of paragraph (a) above; (vi) any Permitted Arby's Dividend; but any such payment shall be excluded in the calculation of the amount of restricted payments made under paragraph (a) above; (vii) dividends or distributions by any Restricted Subsidiary payable to all holders of a class of capital stock of the applicable Restricted Subsidiary on a pro rata basis; provided that the payment shall be excluded in the calculation of the amount of restricted payments made under paragraph (a) above; (viii) payments to Triarc Parent pursuant to the management agreement; provided that the payment shall be excluded in the calculation of the amount of restricted payments made under paragraph (a) above; (ix) Investments by Arby's or any of its subsidiaries in the Arby's Securitization Entity in an amount that, together with all other Investments made pursuant to this clause (ix) on or after the closing date, do not exceed $15.0 million; but the Investment shall be included in the calculation of the amount of restricted payments made under paragraph (a) above; (x) payments or distributions to Triarc Parent pursuant to any tax sharing agreement; but the payment shall, to the extent not deducted in calculating Consolidated Net Income or recorded as deferred income taxes, be included in the calculation of the amount of restricted payments made under paragraph (a) above; (xi) the declaration and payment of dividends to holders of any class or series of Disqualified Stock issued on or after the closing date in accordance with the covenant entitled ' -- Limitation on Indebtedness'; but the payment shall be excluded in the calculation of restricted payments made under paragraph (a) above; (xii) repurchases of capital stock deemed to occur upon exercise of stock options to the extent that the capital stock represents a portion of the exercise price of such options; but the amount shall be excluded in the calculation of the amount of restricted payments made pursuant to paragraph (a) above; (xiii) any other Investment made in a Related Business or a person engaged in a Related Business which, together with all other Investments made pursuant to this clause (xiii) on or after the closing date, does not exceed $25.0 million. In each case, after giving effect to any subsequent reduction in the amount of any Investments made pursuant to this clause (xiii) as a result of the repayment or other disposition for cash as set forth in clause 3(D) of paragraph (a) above, the amount of such reduction shall not exceed the amount of any Investment previously made pursuant to this clause (xiii); but the applicable Investment shall be included in the calculation of restricted payments made under paragraph (a) above; (xiv) any other restricted payment that, together with all other restricted payments made pursuant to this clause (xiv) on or after the closing date, does not exceed $10.0 million; provided that the amount shall be included in the calculation of the amount of restricted payments made pursuant to paragraph (a) above. The amount of all restricted payments, other than cash, shall be the fair market value on the date of the restricted payment of the assets or securities proposed to be transferred or issued by 117 Triarc Consumer Products Group or any relevant subsidiary, as the case may be, pursuant to the restricted payment. The fair market value of any non-cash restricted payment shall be determined in good faith by the board of directors of Triarc Consumer Products Group, whose good faith determination shall be conclusive. LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS The issuers and the subsidiary guarantors shall not incur any Indebtedness that is subordinate in right of payment to any Senior Indebtedness unless such Indebtedness ranks equal to, or is subordinated in right of payment to, the notes or the subsidiary guarantees, as the case may be. This limitation shall not apply to distinctions between categories of Senior Indebtedness of an issuer or a subsidiary guarantor that exist by reason of any liens or guarantees arising or created in respect of some but not all Senior Indebtedness. LIMITATION ON LIENS The issuers and the subsidiary guarantors shall not incur any Indebtedness secured by a lien ('Secured Indebtedness') which is not Senior Indebtedness. They may do so, however, if: (1) contemporaneously therewith effective provision is made to secure the notes, or the subsidiary guaranty, as the case may be, equally and ratably with, or (2) the Secured Indebtedness is subordinated in right of payment to the notes or the subsidiary guaranty, prior to, the Secured Indebtedness for so long as the Secured Indebtedness is secured by a lien. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES Triarc Consumer Products Group shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (a) pay dividends or make any other distributions on its capital stock to Triarc Consumer Products Group or any other Restricted Subsidiary or pay any Indebtedness owed to Triarc Consumer Products Group or any other Restricted Subsidiary, (b) make any loans or advances to Triarc Consumer Products Group or any other Restricted Subsidiary or (c) transfer any of its property or assets to Triarc Consumer Products Group or any other Restricted Subsidiary. The above restriction shall not apply to: (i) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the closing date, including the credit agreement as in effect on the closing date; (ii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness incurred by that Restricted Subsidiary on or prior to the date on which the Restricted Subsidiary was acquired by Triarc Consumer Products Group and outstanding on the date of acquisition. However, Indebtedness incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which the Restricted Subsidiary became a Restricted Subsidiary or was acquired by Triarc Consumer Products Group, shall be excluded from this exception; (iii) any encumbrance or restriction pursuant to an agreement effecting a refinancing of Indebtedness incurred pursuant to an agreement referred to in clause (i) or (ii) of this covenant or this clause (iii) or contained in any amendment to an agreement referred to in clause (i) or (ii) of this covenant or this clause (iii). The encumbrances and restrictions with respect to such Restricted Subsidiary contained in any applicable refinancing agreement or 118 amendment, taken as a whole, shall not be materially more restrictive than encumbrances and restrictions with respect to the applicable Restricted Subsidiary contained in any predecessor agreements, as determined in good faith by Triarc Consumer Products Group's board of directors; (iv) any encumbrance or restriction consisting of customary non-assignment provisions in leases governing leasehold interests to the extent these provisions restrict: (A) the transfer of the lease or the property leased thereunder or other customary non-assignment provisions in agreements entered into in the ordinary course of business and (B) the assignment of those agreements; (v) in the case of clause (c) above, restrictions contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent the restrictions restrict the transfer of the property subject to the security agreements or mortgages; (vi) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the capital stock or assets of the Restricted Subsidiary pending the closing of the sale or disposition; (vii) encumbrances or restrictions contained in the terms of any Indebtedness or any agreement pursuant to which the applicable Indebtedness was issued if: (A) the encumbrances or restrictions, taken as a whole, are not materially more restrictive than is customary in comparable financings, as determined in good faith by Triarc Consumer Products Group's board of directors; and (B) the encumbrances or restrictions will not materially adversely affect Triarc Consumer Products Group's ability to make principal or interest payments on the notes, as determined in good faith by Triarc Consumer Products Group's board of directors; and (viii) any applicable law, rule, regulation or order. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK Triarc Consumer Products Group will not, and will not permit any Restricted Subsidiary to, consummate any asset disposition, unless: (i) the consideration received by Triarc Consumer Products Group or the applicable Restricted Subsidiary is at least equal to the fair market value of the assets sold or disposed of and (ii) at least 75% of the consideration received consists of cash, Temporary Cash Investments, liquid securities or the assumption by the purchaser of Indebtedness, other than Subordinated Obligations. An asset disposition means any sale, lease, transfer or other disposition, or series of related sales, leases, transfers or dispositions, by Triarc Consumer Products Group or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction, each referred to for the purposes of this definition as a 'disposition,' of (i) any shares of capital stock of a Restricted Subsidiary, other than directors' qualifying shares or shares required by applicable law to be held by a person other than Triarc Consumer Products Group or a Restricted Subsidiary, (ii) all or substantially all the assets of any division or line of business of Triarc Consumer Products Group or any Restricted Subsidiary or (iii) any other assets of Triarc Consumer Products Group or any Restricted Subsidiary outside of the ordinary course of business of Triarc Consumer Products Group or the applicable Restricted Subsidiary. 119 An asset disposition does not include any of the following: (A) a disposition to Triarc Consumer Products Group or a Restricted Subsidiary, (B) a disposition that constitutes a restricted payment permitted by the covenant described under ' -- Certain Covenants -- Limitation on Restricted Payments' or a Permitted Investment, (C) sales or other dispositions for consideration at least equal to the fair market value of the assets sold or disposed of as determined in good faith by the board of directors of Triarc Consumer Products Group, but only to the extent that the consideration received consists of property or assets that are to be used in a Related Business or the capital stock of a person engaged in a Related Business if that person becomes, or is merged or consolidated into, a Restricted Subsidiary as a result of the receipt of capital stock, (D) a Permitted Arby's Securitization, (E) a disposition covered by and permitted under ' -- Consolidation, Merger and Sale of Assets,' (F) the sale or discount of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof, (G) a disposition of capital stock of an Unrestricted Subsidiary, (H) a disposition of an Investment in any person made on or after the closing date, that was not a Permitted Investment when made, (I) disposals or replacements of obsolete or worn equipment in the ordinary course of business, (J) a disposition of assets, including capital stock, in a transaction or series of related transactions with a fair market value of less than $1,000,000 and (K) the sale of capital stock of Triarc Consumer Products Group or any of its Restricted Subsidiaries to employees, managers, directors and consultants of Triarc Consumer Products Group and its Restricted Subsidiaries pursuant to plans approved by the board of directors of Triarc Consumer Products Group. However the net proceeds, if any, must be applied pursuant to the provisions of this covenant ' -- Certain Covenants -- Limitation on Sale of Assets and Subsidiary Stock.' In the event and to the extent that the net available cash received by Triarc Consumer Products Group or any Restricted Subsidiary from one or more asset dispositions occurring on or after the closing date in any period of 12 consecutive months exceeds $10.0 million, then Triarc Consumer Products Group shall: (i) within 360 days after the date that the net available cash so received exceeds $10.0 million and to the extent Triarc Consumer Products Group elects, or is required by the terms of any Indebtedness, (A) apply an amount equal to the excess net available cash to repay Senior Indebtedness of an issuer or any subsidiary guarantor, in each case owing to a person other than Triarc Consumer Products Group or any affiliate of Triarc Consumer Products Group, and, in the case of revolving credit indebtedness, correspondingly reduce any commitment therefor or (B) invest all or a portion of such amount, or the amount not so applied pursuant to clause (A), in Additional Assets, and (ii) apply the excess net available cash, to the extent not applied pursuant to clause (i), as provided in the following paragraphs of the covenant described hereunder. The amount of excess net available cash required to be applied or reinvested during the applicable period and not applied or reinvested as so required by the end of the applicable period shall constitute 'excess proceeds.' 120 If, as of the first day of any calendar month, the aggregate amount of excess proceeds not previously covered by an excess proceeds offer discussed below totals at least $10.0 million, Triarc Consumer Products Group must, not later than the fifteenth business day of that month, make an offer (an 'excess proceeds offer') to purchase outstanding Indebtedness on the following terms: Triarc Consumer Products Group must purchase on a ratable basis from the holders of the notes and, if an issuer or a subsidiary guarantor is required to do so under the terms of any of its other Indebtedness that is not subordinated to the notes, that other Indebtedness, Triarc Consumer Products Group will be required to purchase an aggregate principal amount of notes and applicable other Indebtedness equal to the excess proceeds, rounded down to the nearest multiple of $1,000, and the purchase price will equal 100% of the principal amount of the applicable notes or other Indebtedness, as the case may be, plus, in each case, accrued interest, if any, to the date of purchase (the 'excess proceeds payment'). Upon completion of an excess proceeds offer, the amount of excess proceeds shall be reset at zero. Triarc Consumer Products Group will comply, to the extent applicable, with the requirements of Section 14(e) of the Securities Exchange Act and any other securities laws or regulations in the event that the excess proceeds are received by Triarc Consumer Products Group under this covenant and Triarc Consumer Products Group is required to repurchase notes as described above. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described hereunder, Triarc Consumer Products Group shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the covenant described hereunder by virtue thereof. LIMITATION ON AFFILIATE TRANSACTIONS (a) Triarc Consumer Products Group shall not, and shall not permit any Restricted Subsidiary to, enter into or permit to exist any transaction including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service with any affiliate of Triarc Consumer Products Group (an 'affiliate transaction') unless the terms thereof: (1) are no less favorable to Triarc Consumer Products Group or the Restricted Subsidiary than those that could be obtained at the time of such transaction in arm's-length dealings with a person who is not an affiliate, (2) if the affiliate transaction involves an amount in excess of $2.5 million: (i) are set forth in writing and (ii) have been approved by a majority of the members of the board of directors of Triarc Consumer Products Group having no personal stake in the affiliate transaction and (3) if the affiliate transaction involves as amount in excess of $10.0 million, the financial terms of which have been determined by a nationally recognized investment banking firm to be fair, from a financial standpoint, to Triarc Consumer Products Group and its Restricted Subsidiaries. (b) The provisions of the foregoing paragraph (a) shall not prohibit: (i) any Restricted Payment permitted to be paid pursuant to the covenant described under ' -- Limitation on Restricted Payments,' (ii) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the board of directors of Triarc Consumer Products Group, (iii) the grant of stock options or similar rights to employees, managers, directors and consultants of Triarc Consumer Products Group and its subsidiaries pursuant to plans approved by the board of directors of Triarc Consumer Products Group, 121 (iv) loans or advances to employees in the ordinary course of business in accordance with the past practices of Triarc Consumer Products Group or its Restricted Subsidiaries, but in any event not to exceed $2.5 million in the aggregate outstanding at any one time, (v) the payment of reasonable fees to directors of Triarc Consumer Products Group and its Restricted Subsidiaries who are not employees of Triarc Consumer Products Group or its Restricted Subsidiaries, (vi) any affiliate transaction between Triarc Consumer Products Group and a Restated Subsidiary or between Restricted Subsidiaries, (vii) the issuance or sale of any capital stock, other than Disqualified Stock, of Triarc Consumer Products Group, (viii) transactions pursuant to any contract or agreement in effect on or entered into on the closing date, and any renewal, extension or amendment thereof that is on terms no less favorable to Triarc Consumer Products Group than the terms in effect on the closing date, as determined in good faith by Triarc Consumer Products Group's board of directors, (ix) the purchase by Triarc Consumer Products Group and its Restricted Subsidiaries of raw materials, flavors and packaging materials from Triarc Parent at Triarc Parent's cost, (x) the transactions which consist of the issuance and sale of the notes and the closing of the credit agreement and the borrowings thereunder for the purpose of: (A) repaying Triarc Beverage Holdings' existing credit agreement, (B) redeeming the existing notes of RC/Arby's, (C) paying the Closing Dividend and (D) purchasing Millrose and Mid-State on or about the closing date, and (xi) any transactions constituting part of the Permitted Arby's Securitization. REPURCHASE OF NOTES UPON A CHANGE OF CONTROL (a) Upon the occurrence of a change of control, each holder shall have the right to require that the issuers repurchase his, her or its notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase. This right is subject to the right of holders of record on the relevant record date to receive interest on the relevant interest payment date, in accordance with the terms contemplated in paragraph (b) below. A change of control means the occurrence of any of the following events: (i)(A) any 'person' or 'group,' within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act, other than one or more permitted holders, is or becomes the beneficial owner, as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act, directly or indirectly, of more than 35% of the total voting power of the voting stock of Triarc Consumer Products Group or Triarc Parent and (B) the permitted holders beneficially own, directly or indirectly, in the aggregate a lesser percentage of the total voting power of the voting stock of Triarc Consumer Products Group or Triarc Parent than the applicable other person or group and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of Triarc Consumer Products Group or of Triarc Parent. Permitted holders means, collectively, Nelson Peltz, Peter W. May, DWG Acquisition Group, L.P., and/or their respective affiliates, including members of their immediate families, and any trusts and estates of which any of them are primary beneficiaries and any entities of which any of them hold a majority of the equity securities; 122 (ii) individuals who: (A) on the closing date constituted the board of directors of Triarc Parent, Triarc Consumer Products Group or Triarc Beverage Holdings, together with (B) any new directors whose election by any of these boards of directors or whose nomination for election by the shareholders of the same persons was approved by a vote of a majority of their directors then still in office who were either directors as of the closing date, or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the board of directors then in office; (iii) the adoption of a plan relating to the liquidation or dissolution of Triarc Consumer Products Group; (iv) (A) the merger or consolidation of Triarc Consumer Products Group or Triarc Parent with or into another person, (B) the merger of another person with or into Triarc Consumer Products Group or Triarc Parent, or (C) the sale of all or substantially all the assets of Triarc Consumer Products Group or Triarc Parent to another person, and, in the case of a merger or consolidation, the securities of Triarc Consumer Products Group or Triarc Parent that are outstanding immediately prior to such transaction are changed into or exchanged for cash, securities or property. Mergers and consolidations where the outstanding securities of Triarc Consumer Products Group or Triarc Parent are changed into or exchanged for, in addition to any other consideration, securities of the surviving person or transferee that represent immediately after the transaction, at least a majority of the aggregate voting power of the voting stock of the surviving person or transferee are excluded from clause (iv). Mergers, consolidations and sales to a person that is directly or indirectly controlled by one or more permitted holders are also excluded from clause (iv); or (v) any 'person' or 'group,' within the meaning of Section 13(d) and 14(d) of the Securities Exchange Act, other than one or more permitted holders, is or becomes the 'beneficial owner,' as defined in clause (i) above, directly or indirectly, of both (A) 25% or more of the total voting power of all classes of capital stock then outstanding of Triarc Beverage Holdings normally entitled to vote in elections of directors ('Triarc Beverage voting stock') or 40% or more of the economic interest in Triarc Beverage Holdings held by holders of capital stock thereof ('Triarc Beverage economic interest') and (B) a greater percentage of the Triarc Beverage voting stock or Triarc Beverage economic interest than is then beneficially owned, directly or indirectly, in the aggregate by Triarc Consumer Products Group and the permitted holders. (b) Within 30 days following any change of control, the issuers shall mail a notice to each holder with a copy to the trustee (the 'change of control offer') stating: (1) that a change of control has occurred and that the holder has the right to require the issuers to purchase his, her or its notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase. This right shall be subject to the right of holders of record on the relevant record date to receive interest on the relevant interest payment date; (2) the circumstances and relevant facts regarding the change of control, including, if applicable, information with respect to pro forma historical income, cash flow and capitalization after giving effect to the change of control; (3) the repurchase date which shall be no earlier than 30 days nor later than 60 days from the date the notice is mailed; and 123 (4) the instructions determined by the issuer, consistent with the covenant described hereunder, that a holder must follow in order to have its notes purchased. (c) The issuers will not be required to make a change of control offer following a change of control if a third party makes the change of control offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a change of control offer made by the issuers and purchases all notes validly tendered and not withdrawn under the change of control offer. (d) The issuers shall comply, to the extent applicable, with the requirements of Section 14(e) of the Securities Exchange Act and any other securities laws or regulations in connection with the repurchase of notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this covenant, the issuers shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under this covenant by virtue thereof. The credit agreement generally prohibits the issuers from purchasing any notes in the event of a change of control and also provides that the occurrence of some change of control events with respect to Triarc Consumer Products Group would constitute a default thereunder. In the event a change of control occurs at a time when the issuers are prohibited from purchasing notes, the issuers could seek the consent of the credit agreement lenders to the purchase of notes or could attempt to refinance the borrowings that contain a prohibition. If the issuers do not obtain a consent or repay the borrowings, the issuers will remain prohibited from purchasing the notes. In that case, the issuers' failure to purchase tendered notes would constitute an event of default under the indenture which would, in turn, constitute a default under the credit agreement. In those circumstances, the subordination provisions in the indenture would restrict payment to the holders of notes. See 'Risk Factors -- We may be unable to purchase your notes upon a change of control.' Future indebtedness of the issuers may contain prohibitions on the occurrence of events that would constitute a change of control or require the future indebtedness to be repurchased upon a change of control. Moreover, the exercise by the holders of their right to require the issuers to repurchase the notes could cause a default under any future indebtedness, even if the change of control itself does not, due to the financial effect of any required repurchase on the issuers. Finally, the issuers' ability to pay cash to the holders following the occurrence of a change of control may be limited by the issuers' then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases. The provisions under the indenture relative to the issuers' obligation to make an offer to repurchase the notes as a result of a change of control may be waived or modified with the written consent of the holders of a majority in principal amount of the notes. LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES Triarc Consumer Products Group shall not sell or otherwise dispose of any capital stock of a Restricted Subsidiary, and shall not permit any Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any of its capital stock except: (i) to Triarc Consumer Products Group or a Restricted Subsidiary, (ii) directors' qualifying shares, (iii) if, immediately after giving effect to any issuance, sale or other disposition, neither Triarc Consumer Products Group nor any of its subsidiaries own any capital stock of the applicable Restricted Subsidiary, (iv) if, immediately after giving effect to any issuance, sale or other disposition, the applicable Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in the Restricted Subsidiary remaining after giving effect thereto would have been permitted to be made under the covenant described under ' -- Limitation on Restricted Payments' if made on the date of the issuance, sale or other disposition, or 124 (v) the issuance or sale of common stock of a Restricted Subsidiary that remains a Restricted Subsidiary after a transaction of the sort described above and the issuance or sale of preferred stock of any subsidiary guarantor or Triarc Beverage Holdings. ADDITIONAL GUARANTEES The indenture provides that if Triarc Consumer Products Group or any of its Restricted Subsidiaries acquires or creates another Domestic Restricted Subsidiary after the date of the indenture, then the newly acquired or created Domestic Restricted Subsidiary shall execute a subsidiary guaranty and deliver an opinion of counsel, in accordance with the terms of the indenture. CONSOLIDATION, MERGER AND SALE OF ASSETS Triarc Consumer Products Group shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of related transactions, all or substantially all its assets to, any person, unless: (i) the resulting, surviving or transferee person (the 'successor company'): (A) shall be a person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and (B) if not Triarc Consumer Products Group, shall expressly assume, by an indenture supplemental thereto, executed and delivered to the trustee, in form satisfactory to the trustee, all the obligations of Triarc Consumer Products Group under the notes and the indenture; (ii) immediately after giving effect to the transaction, and treating any Indebtedness which becomes an obligation of the successor company or any subsidiary as a result of the transaction as having been incurred by the successor company or subsidiary at the time of the transaction, no default shall have occurred and be continuing; (iii) immediately after giving effect to the transaction, and treating any Indebtedness which becomes an obligation of the successor company or any subsidiary as a result of the transaction as having been incurred by the successor company or subsidiary at the time of the transaction, the successor company would be able to incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under ' -- Limitation on Indebtedness'. This clause (iii) shall not apply to a consolidation or merger with or into a wholly owned Restricted Subsidiary that is an issuer or a subsidiary guarantor. Further, in connection with any merger or consolidation of the sort described above, no consideration, other than common stock in the surviving person or Triarc Consumer Products Group, shall be issued or distributed to the stockholders of Triarc Consumer Products Group; and (iv) Triarc Consumer Products Group shall have delivered to the trustee an Officers' Certificate and an opinion of counsel, each stating that the consolidation, merger or transfer and any supplemental indenture, if any, comply with the indenture. Clause (iii) does not apply if, in the good faith determination of the board of directors of Triarc Consumer Products Group, whose determination shall be evidenced by a board resolution, the principal purpose of the transaction is to change the state of organization of, or to incorporate, Triarc Consumer Products Group. However, any such transaction may not have as one of its purposes the evasion of the foregoing limitations. The successor company shall be the successor to Triarc Consumer Products Group and shall succeed to, and be substituted for, and may exercise every right and power of, Triarc Consumer Products Group under the indenture. The predecessor Triarc Consumer Products Group shall be released from the indenture, but the predecessor Triarc Consumer Products Group in the case of a conveyance, transfer or lease to an affiliate of Triarc Consumer Products Group shall not be released from the indenture. 125 The indenture provides that no Material Subsidiary Obligor shall: (A) consolidate with or merge with or into, unless the Material Subsidiary Obligor or an issuer or any wholly owned subsidiary that is or becomes a subsidiary guarantor concurrently with the transaction is the surviving person and a wholly owned subsidiary after giving effect to the transaction or Triarc Consumer Products Group is the surviving person, or (B) convey, transfer or lease, in one transaction or a series of transactions, all or substantially all its assets to, any person, other than an issuer or any wholly owned subsidiary that is or becomes a subsidiary guarantor concurrently with the transaction, unless: (i) except as set forth in the next succeeding paragraph, the resulting, surviving or transferee person shall expressly assume, by an indenture supplemental thereto, executed and delivered to the trustee, in form reasonably satisfactory to the trustee, all the obligations of the Material Subsidiary Obligor under the notes or its subsidiary guaranty, as the case may be, and the indenture; (ii) immediately after giving effect to the transaction, no default shall have occurred and be continuing; and (iii) immediately after giving effect to the transaction, Triarc Consumer Products Group would be able to incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under ' -- Limitation on Indebtedness.' No transaction made pursuant to this paragraph shall be permitted if it is not made in compliance with the first paragraph of this section. The requirements of clause (i) of the preceding paragraph will not apply in the case of: (A) a sale or other disposition, including by way of consolidation or merger, of a Material Subsidiary Obligor or (B) the sale or disposition of all or substantially all the assets of a Material Subsidiary Obligor, in each case other than to Triarc Consumer Products Group or an affiliate of Triarc Consumer Products Group, otherwise permitted by the indenture, and in compliance with clauses (ii) and (iii) of the preceding paragraph. The Material Subsidiary Obligor described in (A) and (B) above will be released and relieved from all its obligations under the notes or its subsidiary guaranty, as the case may be, if these conditions are met. In addition, Triarc Beverage Holdings shall not consolidate with or merge with or into, or convey, transfer or lease, in a single transaction or a series of transactions, all or substantially all of its assets to any person unless concurrently therewith, a corporate Restricted Subsidiary of Triarc Consumer Products Group, which may be the successor to Triarc Beverage Holdings as a result of the same transaction, shall expressly assume, by an indenture supplemental thereto, executed and delivered to the trustee, in form reasonably satisfactory to the trustee, all the obligations of an issuer under the notes and the indenture. This covenant shall not apply to a transfer of substantially all of the capital stock of RC/Arby's or any of its subsidiaries to Triarc Parent as a Permitted Arby's Dividend. SEC REPORTS Notwithstanding that Triarc Consumer Products Group may not be subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act, Triarc Consumer Products Group shall provide the trustee and noteholders with (i) all quarterly and annual financial information that would be required to be contained in a filing with the Securities and Exchange Commission on Forms 10-Q and 10-K, if Triarc Consumer Products Group were required to file such forms including a 'Management's Discussion and Analysis of Financial Condition and Results of Operations' and, with respect to annual information only, a report thereon by Triarc Consumer Products Group's certified independent accountants, and 126 (ii) all current reports that would be required to be filed with the Securities and Exchange Commission on Form 8-K, if Triarc Consumer Products Group were required to file such reports. Following the consummation of the exchange offer contemplated by the registration rights agreement, whether or not required by the rules and regulations of the Securities and Exchange Commission, Triarc Consumer Products Group will: (A) file a copy of all information and reports described above with the Securities and Exchange Commission for public availability, unless the Securities and Exchange Commission will not accept the filing, and (B) make such information available to prospective investors upon request. In addition, Triarc Consumer Products Group has agreed that, for so long as any of the notes remain outstanding and constitute 'restricted securities' under Rule 144, it will furnish to the holders of the notes and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. EVENTS OF DEFAULT An event of default is defined in the indenture as: (i) a default in the payment of interest or any additional amounts on the notes when due, which has continued for 30 days, whether or not such payment is prohibited by the provisions described above under ' -- Ranking,' (ii) a default in the payment of principal of any note when due at its stated maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise, whether or not the payment is prohibited by the provisions described above under ' -- Ranking,' (iii) the failure by the issuers to comply with their obligations under ' -- Consolidation, Merger and Sale of Assets' above and under ' -- Covenants' under ' -- Limitation on Sales of Assets and Subsidiary Stock' and under ' -- Repurchase of Notes Upon a Change of Control,' (iv) the failure by the issuers to comply for 60 days after written notice with any other agreements contained in the indenture, (v) Indebtedness of an issuer or any subsidiary that would be a 'significant subsidiary' of Triarc Consumer Products Group within the meaning of Rule 1-02 under Regulation S-X promulgated by the Securities and Exchange Commission, is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $20.0 million, (vi) certain events of bankruptcy, insolvency or reorganization of an issuer or a significant subsidiary (vii) any judgment or decree for the payment of money in excess of $20.0 million is entered against an issuer or a significant subsidiary, remains outstanding for a period of 60 consecutive days following such judgment and is not discharged, waived or stayed, or (viii) a subsidiary guaranty ceases to be in full force and effect, other than in accordance with its terms, or a subsidiary guarantor denies or disaffirms its obligations under its subsidiary guaranty. However, a default under clause (iv) will not constitute an event of default until the trustee or the holders of 25% in principal amount of the outstanding notes notify the issuers of the default and the issuers do not cure such default within the time specified after receipt of the notice. If an event of default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the outstanding notes may declare the principal of, and accrued but unpaid interest on, all the notes to be due and payable. Upon the declaration, the principal and interest shall be due and payable immediately. If any Designated Senior Indebtedness is outstanding, the principal and interest shall not become due and payable until five business days after the 127 representatives of all the issues of Designated Senior Indebtedness receive notice of the acceleration. If an event of default relating to some events of bankruptcy, insolvency or reorganization of the issuers occurs and is continuing, the principal of and interest on all the notes will then become and be immediately due and payable without any declaration or other act on the part of the trustee or any holders of the notes. Under some circumstances, the holders of a majority in principal amount of the outstanding notes may rescind the acceleration with respect to the notes and its consequences. If the provisions of the indenture relating to the duties of the trustee are complied with, in case an event of default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any of the holders of the notes unless the holders have offered to the trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no holder of a note may pursue any remedy with respect to the indenture or the notes unless: (i) the holder has previously given the trustee notice that an event of default is continuing, (ii) holders of at least 25% in principal amount of the outstanding notes have requested the trustee to pursue the remedy, (iii) the holders have offered the trustee reasonable security or indemnity against any loss, liability or expense, (iv) the trustee has not complied with the holders' request within 60 days after the receipt thereof and the offer of security or indemnity and (v) the holders of a majority in principal amount of the outstanding notes have not given the trustee a direction inconsistent with their request within the 60-day period. With some exceptions, the holders of a majority in principal amount of the outstanding notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or of exercising any trust or power conferred on the trustee. The trustee, however, may refuse to follow any direction that conflicts with law or the indenture or that the trustee determines is unduly prejudicial to the rights of any other holder of a note or that would involve the trustee in personal liability. The indenture provides that if a default occurs and is continuing and is known to the trustee, the trustee must mail to each holder of the notes notice of the default within 90 days after it occurs. Except in the case of a default in the payment of principal of or interest on any note, the trustee may withhold notice if and so long as a committee of its trust officers determines that withholding notice is not opposed to the interest of the holders of the notes. In addition, the issuers are required to deliver to the trustee, within 120 days after the end of each fiscal year, a certificate indicating whether they know of any default that occurred during the previous year. The issuers are also required to deliver to the trustee, within 30 days after its occurrence, written notice of any default, its status and what action the issuers are taking or propose to take. NO PERSONAL LIABILITY OF DIRECTORS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator, member or stockholder of any issuer or subsidiary guarantor, in his or her capacity as one of the above, shall have any liability for any obligations of an issuer or subsidiary guarantor under the notes, subsidiary guarantees or the indenture or for any claim based on, in respect of, or by reason of, any obligations or their creation. Each holder of notes by accepting a note waives and releases all liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Securities and Exchange Commission that the waiver is against public policy. 128 AMENDMENTS AND WAIVERS With some exceptions, the indenture may be amended with the consent of the holders of a majority in principal amount of the notes then outstanding, including consents obtained in connection with a tender offer or exchange offer for the notes. Any past default or compliance with any provisions may also be waived with the consent of the holders of a majority in principal amount of the notes then outstanding, including consents obtained in connection with a tender offer or exchange offer for the notes. However, without the consent of each holder of an outstanding note affected thereby, no amendment, with respect to any notes held by a non-consenting holder, may be made to, among other things: (i) reduce the amount of notes whose holders must consent to an amendment, (ii) reduce the rate of or extend the time for payment of interest on any note, (iii) reduce the principal or extend the stated maturity of any note, (iv) reduce the amount payable upon the redemption of any note or change the time at which any note may be redeemed as described under ' -- Optional Redemption' above, (v) make any note payable in money other than that stated in the note, (vi) impair the right of any holder of the notes to receive payment of principal of, and interest on, the applicable holder's notes, on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to the applicable holder's notes, (vii) make any change in the amendment provisions which require each holder's consent or in the waiver provisions, (viii) make any change to the subordination provisions of the indenture that would adversely affect the noteholders or (ix) make any change in any subsidiary guaranty that would adversely affect the noteholders. Without the consent of any holder of the notes, the issuers and the trustee may amend the indenture to: cure any ambiguity, omission, defect or inconsistency, provide for the assumption by a successor corporation of the obligations of an issuer under the indenture, provide for uncertificated notes in addition to or in place of certificated notes, provided that the uncertificated notes are issued in registered form for purposes of Section 163(f) of the Internal Revenue Code, or in a manner such that the uncertificated notes are described in Section 163(f)(2)(B) of the Internal Revenue Code, add guarantees with respect to the notes, secure the notes, add to the covenants of the issuers for the benefit of the holders of the notes, surrender any right or power conferred upon the issuer, make any change that does not adversely affect the rights of any holder of the notes, or comply with any requirement of the Securities and Exchange Commission in connection with the qualification of the indenture under the Trust Indenture Act. However, no amendment may be made to the subordination provisions of the indenture that adversely affects the rights of any holder of Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness, or their representative consents to such change. The consent of the holders of the notes is not necessary under the indenture to approve the particular form of any proposed amendment. It is sufficient if the consent approves the substance of the proposed amendment. 129 After an amendment under the indenture becomes effective, the issuers are required to mail to holders of the notes a notice briefly describing such amendment. However, the failure to give notice to all holders of the notes, or any defect therein, will not impair or affect the validity of the amendment. TRANSFER The notes will be issued in registered form and will be transferable only upon the surrender of the notes being transferred for registration of transfer. The issuers may require payment of a sum sufficient to cover any tax, assessment or other governmental charge payable in connection with certain transfers and exchanges. DEFEASANCE Each issuer at any time may terminate all of the issuers' and the subsidiary guarantors' obligation under the notes, the subsidiary guarantees and the indenture ('legal defeasance'). The right of termination does not extend to some obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the notes, to replace mutilated, destroyed, lost or stolen notes and to maintain a registrar and paying agent in respect of the notes. The issuers at any time may terminate the issuers' obligations under the covenants described under ' -- Covenants' and ' -- SEC Reports,' the operation of the cross acceleration provision, the bankruptcy provisions with respect to subsidiaries, the judgment default provision or the guarantee provision described under ' -- Events of Default' above and the limitations contained in clause (iii) under ' -- Consolidation, Merger and Sale of Assets' above ('covenant defeasance'). The issuers may exercise the legal defeasance option notwithstanding a prior exercise of the covenant defeasance option. If an issuer exercises the legal defeasance option, payment of the notes may not be accelerated because of an event of default with respect thereto. If an issuer exercises the covenant defeasance option, payment of the notes may not be accelerated because of an event of default specified in clause (iii), (iv), (v), (vii) or (viii) under ' -- Events of Default' above or because of the failure of Triarc Consumer Products Group to comply with clause (iii) under ' -- Consolidation, Merger and Sale of Assets' above. If an issuer exercises the legal defeasance option or the covenant defeasance option, each subsidiary guarantor will be released from all of its obligations with respect to its subsidiary guaranty. In order to exercise either defeasance option, an issuer must irrevocably deposit in trust (the 'defeasance trust') with the trustee money or U.S. government obligations for the payment of principal and interest on the notes to redemption or maturity, as the case may be. In addition, the trustee must comply with other conditions, including: (A) delivery to the trustee of an opinion of counsel to the effect that holders of the notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred, and (B) in the case of legal defeasance only, the opinion of counsel must be based on a ruling of the Internal Revenue Service or other change in applicable Federal income tax law. CONCERNING THE TRUSTEE The Bank of New York is to be the trustee under the indenture and has been appointed by the issuers as registrar and paying agent with regard to the notes. The indenture contains certain limitations on the rights of the trustee, should it become a creditor of an issuer, to obtain payment of claims in some cases, or to realize on some property received in respect of any applicable claim as security or otherwise. The trustee will be permitted 130 to engage in other transactions; provided, however, that if it acquires any conflicting interest it must either: (1) eliminate the conflict within 90 days, (2) apply to the Securities and Exchange Commission for permission to continue or (3) resign. With some exceptions, the holders of a majority in principal amount of the outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee. The indenture provides that if an event of default occurs, and is not cured, the trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. With some exceptions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of notes, unless the applicable holder shall have offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense and then only to the extent required by the terms of the indenture. The Bank of New York is the trustee for Triarc Parent's subordinated convertible debentures and is an agent and lender under the credit agreement. BOOK-ENTRY; DELIVERY AND FORM Except as described below, the certificates representing the exchange notes will be issued in the form of one or more registered exchange notes in global form without interest coupons. Each global note will be deposited on the closing of the exchange offer with, or on behalf of, The Depository Trust Company and registered in the name of The Depository Trust Company or its nominee. Ownership of beneficial interests in a global note will be limited to persons who have accounts with The Depository Trust Company ('participants') or persons who hold interests through participants. Ownership of beneficial interests in a global note will be shown on, and the transfer of that ownership will be effected only through, records maintained by The Depository Trust Company or its nominee, with respect to interests of participants, and the records of participants, with respect to interests of persons other than participants. So long as The Depository Trust Company, or its nominee, is the registered owner or holder of a global note, The Depository Trust Company or its nominee, as the case may be, will be considered the sole owner or holder of the notes represented by the global note for all purposes under the indenture and the notes. No beneficial owner of an interest in a global note will be able to transfer that interest except in accordance with The Depository Trust Company's applicable procedures, in addition to those provided for under the indenture and, if applicable, those of Euroclear and Cedel Bank. Payments of the principal of, and interest on, a global note will be made to The Depository Trust Company or its nominee, as the case may be, as the registered owner thereof. Neither the issuer, the subsidiary guarantors, the trustee nor any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a global note or for maintaining, supervising or reviewing any records relating to the beneficial ownership interests. The issuers expect that The Depository Trust Company or its nominee, upon receipt of any payment of principal or interest in respect of a global note, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the global note as shown on the records of The Depository Trust Company or its nominee. The issuers also expect that payments by participants to owners of beneficial interests in the global note held through those participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of the participants. 131 Transfers between participants in The Depository Trust Company will be effected in the ordinary way in accordance with The Depository Trust Company rules and will be settled in same-day funds. Transfers between participants in Euroclear and Cedel Bank will be effected in the ordinary way in accordance with their respective rules and operating procedures. The issuers expect that The Depository Trust Company will take any action permitted to be taken by a holder of notes, including the presentation of notes for exchange as described below, only at the direction of one or more participants to whose account The Depository Trust Company interests in a global note is credited and only in respect of that portion of the aggregate principal amount of notes as to which the applicable participant or participants has or have given the direction. However, if there is an event of default under the notes, The Depository Trust Company will exchange the applicable global note for certificated notes, which it will distribute to its participants. The issuers understand that The Depository Trust Company is a limited purpose trust company organized under the laws of the State of New York, a 'banking organization' within the meaning of New York Banking Law, a member of the Federal Reserve System, a 'clearing corporation' within the meaning of the Uniform Commercial Code and a 'Clearing Agency' registered pursuant to the provisions of Section 17A of the Securities Exchange Act. The Depository Trust Company was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to The Depository Trust Company system is available to others including banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ('indirect participants'). Although The Depository Trust Company, Euroclear and Cedel Bank are expected to follow the foregoing procedures in order to facilitate transfers of interests in a global note among participants of The Depository Trust Company, Euroclear and Cedel Bank, they are under no obligation to perform or continue to perform these procedures, and the procedures may be discontinued at any time. Neither the issuer, the guarantors nor the trustee will have any responsibility for the performance by The Depository Trust Company, Euroclear or Cedel Bank or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations. If The Depository Trust Company is at any time unwilling or unable to continue as a depositary for the global notes and a successor depositary is not appointed by Triarc Consumer Products Group within 90 days, the issuers will issue certificated notes in exchange for the global notes. Holders of an interest in a global note may receive certificated notes, at the option of Triarc Consumer Products Group in accordance with The Depository Trust Company's rules and procedures in addition to those provided for under the indenture. GOVERNING LAW The indenture provides that it, the notes and the subsidiary guarantees will be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. SAME DAY SETTLEMENT AND PAYMENT The indenture requires that payments in respect of the notes represented by the global notes including principal, premium, if any, interest and additional amounts, if any, be made by wire transfer of immediately available funds to the accounts specified by the global note holder. With respect to notes in certificated form, the issuers will make all payments of principal, premium, if any, interest and additional amounts, if any, by wire transfer of immediately available funds to the 132 accounts specified by the holders thereof or, if no such account is specified, by mailing a check to each holder's registered address. The exchange notes represented by the global notes are expected to be eligible to trade in The Depository Trust Company's Same-Day Funds Settlement System, and any permitted secondary market trading activity in the notes will, therefore, be required by The Depository Trust Company to be settled in immediately available funds. We expect that secondary trading in any certificated notes will also be settled in immediately available funds. Because of time zone differences, the securities account of a Euroclear or Cedel participant purchasing an interest in a global note from a participant in The Depository Trust Company will be credited. Any crediting will be reported to the relevant Euroclear or Cedel participant, during the securities settlement processing day, which must be a business day for Euroclear and Cedel, immediately following the settlement date of The Depository Trust Company. The Depository Trust Company has advised Triarc Consumer Products Group that cash received in Euroclear or Cedel as a result of sales of interests in a global note by or through a Euroclear or Cedel participant to a participant in The Depository Trust Company will be received with value on the settlement date of The Depository Trust Company but will be available in the relevant Euroclear or Cedel cash account only as of the business day for Euroclear or Cedel following The Depository Trust Company's settlement date. CERTAIN DEFINITIONS 'Additional Assets' means: (i) any property, plant or equipment, other tangible assets or intangible assets, if such assets are trademarks or intellectual property used in connection with a brand, in each case used in a Related Business; (ii) the capital stock of a person that becomes a Restricted Subsidiary as a result of the acquisition of such capital stock by Triarc Consumer Products Group or another Restricted Subsidiary or (iii) capital stock constituting a minority interest in any person that at such time is a Restricted Subsidiary; provided, however, that any such Restricted Subsidiary described in clauses (ii) or (iii) above is primarily engaged in a Related Business. 'Arby's Securitization Assets' means: (i) all right, title and interest to the trademarks 'Arby's,' 'T.J. Cinnamon's' and/or 'Pasta Connection' or any variations or successors thereto and the goodwill related to such trademarks, (ii) all existing and future franchise, licensing and other rights to grant to any persons the right to use the names 'Arby's,' 'T.J. Cinnamon's' and/or 'Pasta Connection' or operate restaurants identified with the names 'Arby's,' 'T.J. Cinnamon's' and/or 'Pasta Connection' (iii) the right to enforce and take all other actions with respect to such agreements and collect and receive all royalties, fees and other amounts payable under such agreements, and (iv) all other assets of Arby's and its subsidiaries reasonably related to any of the foregoing. 'Arby's Securitization Entity' means any newly created Unrestricted Subsidiary of Triarc Consumer Products Group formed for the sole purpose of consummating the Permitted Arby's Securitization. 'Arby's Securitization Notes' means the notes, certificates, participation interests or other securities to be issued by an Arby's Securitization Entity in connection with the Permitted Arby's Securitization. 'Arby's Securitization Residual Note' means a subordinated promissory note payable by an Arby's Securitization Entity to Arby's in connection with the Permitted Arby's Securitization. 133 'Attributable Debt' in respect of a sale/leaseback transaction means, as at the time of determination, the present value, discounted at the interest rate borne by the notes, compounded annually, of the total obligations of the lessee for rental payments during the remaining term of the lease included in such sale/leaseback transaction, including any period for which such lease has been extended. 'Average Life' means, as of the date of determination, with respect to any Indebtedness or preferred stock, the quotient obtained by dividing (i) the sum of the products of numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such preferred stock multiplied by the amount of such payment by (ii) the sum of all such payments. 'Bank Indebtedness' means all obligations, monetary or otherwise, pursuant to the credit agreement, including, without limitation, all interest accruing on or after, or which would accrue but for, the filing of any petition in bankruptcy or for reorganization, whether or not allowed thereby. 'Business Acquisition' means: (i) an Investment by Triarc Consumer Products Group or any of its Restricted Subsidiaries in any other person pursuant to which that person shall become a Restricted Subsidiary or shall be merged into or consolidated with Triarc Consumer Products Group or any of its Restricted Subsidiaries or (ii) an acquisition by Triarc Consumer Products Group or any of its Restricted Subsidiaries of the property and assets of any person other than Triarc Consumer Products Group or any of its Restricted Subsidiaries that constitute substantially all of the assets of such person or of any division, brand or line of business of such person. 'Business Disposition' means any sale, transfer or other disposition, including by way of merger or consolidation, in one transaction or a series of related transactions by Triarc Consumer Products Group or any of its Restricted Subsidiaries to any person other than Triarc Consumer Products Group or any of its Restricted Subsidiaries of: (i) all or substantially all of the capital stock of any Restricted Subsidiary or (ii) all or substantially all of the assets of any Restricted Subsidiary or of any division, brand or line of business of Triarc Consumer Products Group or any of its Restricted Subsidiaries. 'Closing Dividend' means a cash dividend by Triarc Consumer Products Group to Triarc Parent on the closing date, and/or on a later date as provided in clauses (i) and (iii) below, consisting of: (i) the net proceeds from the offering of the notes and the borrowings of term loans under the credit agreement made on the closing date, to the extent such proceeds exceed the amount necessary to repay all amounts outstanding under Triarc Beverage Holdings' existing credit agreement and RC/Arby's existing notes, to fund the purchase price for the acquisition of certain Snapple and Stewart's distributors and to pay related fees and expenses; provided that all or a portion of the excess proceeds of term loan borrowings may also be dividended to Triarc Parent within 35 days after the closing date; (ii) any amount contributed by Triarc Parent to fund the purchase price for the acquisition of the Snapple distributor and the assets of the Stewart's distributor, if such purchase occurred prior to the closing date; and (iii) all cash and cash equivalents of Triarc Consumer Products Group and its subsidiaries, other than RC/Arby's and its subsidiaries, as of the closing date, determined on a consolidated basis, to the extent such cash and cash equivalents exceed $2 million in the aggregate; and (iv) all cash and cash equivalents of RC/Arby's and its subsidiaries as of the closing date, determined on a consolidated basis, to be paid on the date of the redemption of RC/Arby's existing notes. 134 'Consolidated Coverage Ratio' as of any date of determination means the ratio of (i) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which reports have been filed or provided to the trustee pursuant to the 'SEC Reports' covenant to (ii) Consolidated Interest Expense for such four fiscal quarters; provided, however, that: (1) if Triarc Consumer Products Group or any Restricted Subsidiary has incurred any Indebtedness since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an incurrence of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis (A) to such Indebtedness as if such Indebtedness had been incurred on the first day of such period and (B) the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period, (2) if Triarc Consumer Products Group or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged, in each case other than Indebtedness incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced, on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such discharge had occurred on the first day of such period, (3) (A) if since the beginning of such period Triarc Consumer Products Group or any Restricted Subsidiary shall have made any Business Disposition, the EBITDA for such period shall: (x) be reduced by an amount equal to the EBITDA, if positive, directly attributable to the assets which are the subject of such Business Disposition for such period, or (y) increased by an amount equal to the EBITDA, if negative, directly attributable thereto for such period and (B) Consolidated Interest Expense for such period shall be reduced by an amount equal to: (x) the Consolidated Interest Expense directly attributable to any Indebtedness of Triarc Consumer Products Group or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to Triarc Consumer Products Group and its continuing Restricted Subsidiaries in connection with such Business Disposition for such period, or (y) if the capital stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent Triarc Consumer Products Group and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale, (4) if since the beginning of such period Triarc Consumer Products Group or any Restricted Subsidiary, by merger or otherwise, shall have made a Business Acquisition, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto, including: (x) pro forma effect to the incurrence of any Indebtedness and (y) pro forma effect to cost savings resulting from such Business Acquisition, regardless of whether such cost savings could then be reflected in pro forma financial statements under GAAP, Regulation S-X promulgated by the Securities and Exchange Commission or any other regulation or policy of the Securities and Exchange Commission, that Triarc Consumer Products Group reasonably determines are probable based upon specifically identified actions that it has determined to take, net of any reduction in 135 EBITDA as a result of such cost savings that Triarc Consumer Products Group reasonably determines are probable; provided that Triarc Consumer Products Group's chief financial officer shall have certified in an officer's certificate delivered to the trustee: (x) the specific actions to be taken, (y) the cost savings to be achieved from each such action, that such savings have reasonably been determined to be probable, and (z) the amount, if any, of any reduction in EBITDA as a result thereof reasonably determined to be probable, provided further that such certificate shall be accompanied by a resolution of the board of directors of Triarc Consumer Products Group specifically approving such cost savings and authorizing such certification to be delivered to the trustee, such cost savings, as certified to the trustee, the 'net cost savings,' as if such Business Acquisition occurred on the first day of such period, (5) if since the beginning of such period any person, that subsequently became a Restricted Subsidiary or was merged with or into Triarc Consumer Products Group or any Restricted Subsidiary since the beginning of such period, shall have made any Business Acquisition or Business Disposition that would have required an adjustment pursuant to clause (3) or (4) above if made by Triarc Consumer Products Group or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto, including any net cost savings in connection with any such Business Acquisition, as if such Business Acquisition or Business Disposition occurred on the first day of such period and (6) if since the beginning of such period any person was designated as an Unrestricted Subsidiary or redesignated as a Restricted Subsidiary, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such designation or redesignation occurred on the first day of such period. For purposes of this definition, to the extent that clause (3), (4) or (5) require that pro forma effect be given to a Business Acquisition or Business Disposition, such pro forma calculation shall be based upon the four full fiscal quarters immediately preceding the date of determination of the person, or division, brand or line of business of the person, that is acquired or disposed for which financial information is available. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest of such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period, taking into account any interest rate agreement applicable to such Indebtedness if such interest rate agreement has a remaining term in excess of 12 months. 'Consolidated Interest Expense' means, for any period, the total interest expense of Triarc Consumer Products Group and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent incurred by Triarc Consumer Products Group or its Restricted Subsidiaries, without duplication: (i) interest expense attributable to capital leases and the interest expense attributable to leases constituting part of a sale/leaseback transaction, (ii) amortization of debt discount and debt issuance cost but excluding amortization of deferred financing charges incurred in respect of the notes and the credit agreement on or prior to the closing date, (iii) capitalized interest, (iv) non-cash interest expenses, (v) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (vi) net costs associated with hedging obligations, including amortization of fees, and 136 (vii) the product of: (a) dividends in respect of all preferred stock of any Restricted Subsidiary that is not a subsidiary guarantor or an issuer, and dividends in respect of all Disqualified Stock of Triarc Consumer Products Group or any Restricted Subsidiary, in each case held by persons other than Triarc Consumer Products Group or a wholly owned subsidiary, other than dividend payments paid in capital stock that is not Disqualified Stock, times (b) a fraction, the numerator of which is 1 and the denominator of which is 1 minus the then current combined federal, state and local statutory tax rate of such person expressed as a decimal. Notwithstanding the foregoing, Consolidated Interest Expense shall exclude any amount of such interest or dividends of any Restricted Subsidiary if the net income of such Restricted Subsidiary is excluded in the calculation of Consolidated Net Income pursuant to clause (iii) of the definition thereof, but only in the same proportion as the net income of such Restricted Subsidiary is excluded from the calculation of Consolidated Net Income pursuant to clause (iii) of the definition thereof. 'Consolidated Leverage Ratio' as of any date of determination means the ratio of: (i) the aggregate amount of Indebtedness of Triarc Consumer Products Group and its Restricted Subsidiaries, net of: (x) net cash proceeds from the initial public offering of Triarc Consumer Products Group, to the extent not otherwise used by Triarc Consumer Products Group as of such date of determination other than to invest in cash equivalents and (y) cash and cash equivalents on hand as of such date in the ordinary course of business, to (ii) EBITDA for the most recent four consecutive fiscal quarters ending prior to the date of such determination for which reports have been filed pursuant to the 'SEC Reports' covenant (the 'reference period'); provided, however, that (1) if Triarc Consumer Products Group or any Restricted Subsidiary has incurred or will incur any Indebtedness or will repay, defease or discharge any Indebtedness on the date of the transaction giving rise to the need to calculate the Consolidated Leverage Ratio, the aggregate amount of Indebtedness as of such date of determination shall be calculated on a pro forma basis giving effect to such incurrence of Indebtedness and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness or the initial public offering of Triarc Consumer Products Group as if such discharge had occurred on the first day of such period, (2) if since the beginning of such period Triarc Consumer Products Group or any Restricted Subsidiary shall have made any Business Disposition, the EBITDA for such period shall be reduced by an amount equal to the EBITDA, if positive, directly attributable to the assets which are the subject of such Business Disposition for such period, or increased by an amount equal to the EBITDA, if negative, directly attributable thereto for such period, (3) if since the beginning of such period Triarc Consumer Products Group or any Restricted Subsidiary, by merger or otherwise, shall have made a Business Acquisition, the aggregate amount of Indebtedness shall be calculated on a pro forma basis giving effect to any incurrence of Indebtedness as a result thereof and EBITDA for such period shall be calculated after giving pro forma effect thereto, including pro forma effect to: (x) the incurrence of any Indebtedness and (y) net cost savings, as if such Business Acquisition occurred on the first day of such period, (4) if since the beginning of such period any person, that subsequently became a Restricted Subsidiary or was merged with or into Triarc Consumer Products Group or any 137 Restricted Subsidiary since the beginning of such period, shall have made any Business Acquisition or Business Disposition that would have required an adjustment pursuant to clause (2) or (3) above if made by Triarc Consumer Products Group or a Restricted Subsidiary during such period, EBITDA for such period shall be calculated after giving pro forma effect thereto, including any net cost savings in connection with any such Business Acquisition, as if such Business Acquisition or Business Disposition occurred on the first day of such period and (5) if since the beginning of such period any person was designated as an Unrestricted Subsidiary or redesignated as a Restricted Subsidiary, EBITDA for such period shall be calculated after giving pro forma effect thereto as if such designation or redesignation occurred on the first day of such period. For purposes of this definition, to the extent that clause (2), (3) or (4) require that pro forma effect be given to a Business Acquisition or Business Disposition, such pro forma calculation shall be based upon the four full fiscal quarters immediately preceding the date of determination of the person, or division, brand or line of business of the person, that is acquired or disposed for which financial information is available. The aggregate amount of Indebtedness outstanding at such date of determination shall be deemed to include the average amount of funds outstanding during such reference period under any revolving credit or similar facilities of Triarc Consumer Products Group or its Restricted Subsidiaries, in lieu of the actual amount outstanding thereunder as of the date of determination. 'Consolidated Net Income' means, for any period, the net income of Triarc Consumer Products Group and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income: (i) any net income of any person, other than Triarc Consumer Products Group, if such person is not a Restricted Subsidiary, except that subject to the exclusion contained in clause (iv) below, Triarc Consumer Products Group's equity in the net income of any such person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such person during such period to Triarc Consumer Products Group or a Restricted Subsidiary as a dividend or other distribution, subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (iii) below; (ii) any net income, or loss, of any person acquired by Triarc Consumer Products Group or a subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition; (iii) the net income, but not loss, of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of such net income is not permitted at such time of determination by its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Restricted Subsidiary, other than any restriction under the credit agreement; (iv) any gain or loss, on an after-tax basis, realized upon the sale or other disposition of any assets of Triarc Consumer Products Group, its consolidated Subsidiaries or any other person, including pursuant to any sale-and-leaseback arrangement, which is not sold or otherwise disposed of in the ordinary course of business and any gain or loss, on an after-tax basis, realized upon the sale or other disposition of any capital stock of any person; (v) any net after-tax extraordinary gains or losses; and (vi) the cumulative effect of a change in accounting principles. Notwithstanding the foregoing, for the purposes of the covenant described under ' -- Certain Covenants -- Limitation on Restricted Payments' only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries to Triarc Consumer Products Group or a Restricted Subsidiary to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under such covenant pursuant to clause (a)(3)(C) or (D) thereof. 138 'Consolidated Total Assets' means, as of any date of determination, the total assets of the Foreign Restricted Subsidiaries of Triarc Consumer Products Group, on a consolidated basis, included in the consolidated balance sheet of Triarc Consumer Products Group and its Restricted Subsidiaries as of the most recent date for which such a balance sheet has been filed or delivered to the trustee pursuant to the 'SEC Reports' covenant above, and, in the case of any determination relating to any incurrence of Indebtedness, on a pro forma basis including any property or assets being acquired in connection therewith. 'Credit Agreement' means the Credit Agreement entered into on the closing date by and among, Triarc Consumer Products Group and/or certain of its subsidiaries, the financial institutions party thereto from time to time, the Administrative Agent party thereto, DLJ Capital Funding, Inc., as Syndication Agent, and Morgan Stanley Senior Funding, Inc., as Documentation Agent, together with the related documents thereto, including, without limitation, the term loans, revolving loans and swingline loans thereunder, the letters of credit issued pursuant thereto and any guarantees and security documents, as amended, extended, renewed, restated, supplemented or otherwise modified, in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions, from time to time, and any agreement, and related document, governing Indebtedness incurred to refinance, in whole or in part, the borrowings, letters of credit, commitments and other obligations then outstanding or permitted to be outstanding under such Credit Agreement or a successor Credit Agreement, whether by the same or any other lender or group of lenders. 'Designated Senior Indebtedness' means, with respect to any person: (i) the Bank Indebtedness and (ii) any other Senior Indebtedness of the referent person which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to, at least $25.0 million and is specifically designated by the referent person in the instrument evidencing or governing such Senior Indebtedness as 'Designated Senior Indebtedness' for purposes of the indenture. 'Disqualified Stock' means, with respect to any person, any capital stock which by its terms, or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder, or upon the happening of any event: (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable at the option of the holder for Indebtedness or Disqualified Stock or (iii) is mandatorily redeemable or must be purchased, upon the occurrence of certain events or otherwise, in whole or in part, in each case on or prior to the stated maturity of the notes; provided, however, that any capital stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such person to purchase or redeem such capital stock upon the occurrence of an 'asset sale' or 'change of control' occurring prior to the stated maturity of the notes shall not constitute Disqualified Stock if: (x) the 'asset sale' or 'change of control' provisions applicable to such capital stock cannot become operative in any circumstance that does not trigger the provisions applicable to the notes and described under ' -- Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock' and ' -- Certain Covenants -- Repurchase of Notes upon a Change of Control' and (y) any such requirement only becomes operative after compliance with such terms applicable to the notes, including the purchase of any notes tendered pursuant thereto. 'Domestic Restricted Subsidiary' means, with respect to Triarc Consumer Products Group, any Restricted Subsidiary of Triarc Consumer Products Group (x) that was formed under the laws of the United States of America or any state, district or territory thereof or the District of Columbia 139 or (y) 50% or more of the assets of which are located in the United States or any territory thereof. 'EBITDA' for any period means the sum of Consolidated Net Income, plus the following to the extent deducted in calculating such Consolidated Net Income: (a) all income tax expense of Triarc Consumer Products Group and its consolidated Restricted Subsidiaries, other than income taxes, either positive or negative, attributable to extraordinary gains or losses or sales of assets that are excluded from the computation of Consolidated Net Income, (b) Consolidated Interest Expense, (c) depreciation and amortization expense of Triarc Consumer Products Group and its consolidated Restricted Subsidiaries, excluding amortization expense attributable to a prepaid cash item that was paid in a prior period, (d) all other non-cash charges of Triarc Consumer Products Group and its consolidated Restricted Subsidiaries, excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period or amortization of a prepaid cash expense that was paid in a prior period, (e) expenses and charges of Triarc Consumer Products Group relating to the transactions which are paid, taken or otherwise accounted for within 180 days of the closing date, plus (f) nonrecurring charges, cash or otherwise, incurred in connection with any Business Acquisition, but not otherwise, in each case for such period. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent, and in the same proportion, that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income, provided, that it will be added only if a corresponding amount would be permitted at the date of determination to be dividended to Triarc Consumer Products Group by such Restricted Subsidiary without prior approval of a third party, that has not been obtained, pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary, other than pursuant to the credit agreement. 'Foreign Restricted Subsidiary' means any Restricted Subsidiary other than a Domestic Restricted Subsidiary. 'Indebtedness' means, with respect to any person on any date of determination, without duplication: (i) the principal in respect of: (A) indebtedness of such person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable; (ii) all capital lease obligations of such person and all Attributable Debt in respect of sale/leaseback transactions entered into by such person; (iii) all obligations of such person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such person and all obligations of such person under any title retention agreement, but excluding take-or-pay agreements and trade accounts payable arising, in each case, in the ordinary course of business; (iv) all obligations of such person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction, other than obligations with respect to letters of credit securing obligations, other than obligations described in clauses (i) through (iii) above, entered into in the ordinary course of business of such person, but only to the 140 extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth business day following payment on the letter of credit; (v) the amount of all obligations of such person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any subsidiary of such person that is not a subsidiary guarantor or an issuer, the liquidation preference with respect to, any preferred stock, but excluding, in each case, any accrued dividends; (vi) all obligations of the type referred to in clauses (i) through (v) of other persons and all dividends of other persons for the payment of which, in either case, such person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any guarantee; (vii) all obligations of the type referred to in clauses (i) through (vi) of other persons secured by any lien on any property or asset of such person, whether or not such obligation is assumed by such person, the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured; and (viii) to the extent not otherwise included in this definition, hedging obligations of such person. Except as provided in clause (vii), the amount of indebtedness of any person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. Notwithstanding the foregoing, capital stock issued or issuable pursuant to: (A) the Triarc Beverage Holdings 1997 Stock Option Plan as such plan is in effect on the closing date, and as such plan may be amended, but not to change the financial terms thereof in any way that is materially less favorable to Triarc Consumer Products Group and its subsidiaries or the holders of the notes, and (B) any stock option plan of Arby's, provided that such plan, and any amendment thereto, is not materially less favorable to Triarc Consumer Products Group and its subsidiaries or to the holders of the notes, including with respect to the percentage of shares of Arby's to be issued thereunder, than the Triarc Beverage Holdings 1997 Stock Option Plan as such plan is in effect on the closing date, shall not be considered Indebtedness, unless, as of the date of determination, Triarc Consumer Products Group is required to purchase such stock pursuant to the put rights contained in such plan, is not prohibited by the terms of any Indebtedness from purchasing such stock and has not purchased it. However, any interest on capital stock issued or issuable under any stock option plans referred to in clauses (A) and (B) above shall be included in the calculation of Consolidated Interest Expense. 'Investment' in any person means any direct or indirect advance, loan, other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender, or other extensions of credit, including by way of guarantee or similar arrangement but only when payment has been made thereunder or such arrangement would be classified and accounted for as a liability on a balance sheet of the person extending such credit prepared in accordance with GAAP, or capital contribution to, by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others, or any purchase or acquisition of capital stock, Indebtedness or other similar instruments issued by such person and shall include: (i) the designation of a Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the fair market value of the capital stock, or any other Investment held by Triarc Consumer Products Group or any of its Restricted Subsidiaries of, or in, any person that has ceased to be a Restricted Subsidiary, including without limitation by reason of a transaction 141 permitted by clause (iv) of the 'Limitation on the Sale or Issuance of Capital Stock of Restricted Subsidiaries' covenant. For purposes of the definition of 'Unrestricted Subsidiary', the definition of 'restricted payment' and the covenant described under ' -- Certain Covenants -- Limitation on Restricted Payments,' (i) 'Investment' shall include the portion, proportionate to Triarc Consumer Products Group's equity interest in such subsidiary, of the fair market value of the net assets of any subsidiary of Triarc Consumer Products Group at the time that such subsidiary is designated an Unrestricted Subsidiary and (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the board of directors of Triarc Consumer Product Group. 'Material Subsidiary Obligor' means any subsidiary guarantor, Triarc Beverage Holdings and any other subsidiary that is an issuer, other than, in each case, any subsidiary principally engaged in Triarc Consumer Products Group's soft drink concentrate business segment, which, together with its consolidated subsidiaries, had EBITDA for the period of the most recent four consecutive fiscal quarters of Triarc Consumer Products Group ending prior to the date of such determination for which reports have been filed or provided to the trustee pursuant to the 'SEC Reports' covenant equal to or more than 15% of the EBITDA of Triarc Consumer Products Group and its Restricted Subsidiaries including such issuer or subsidiary guarantor, for such four fiscal quarters. In each case EBITDA shall be calculated on a pro forma basis giving effect to any Business Disposition, other than the disposition of such subsidiary guarantor, Business Acquisition, designation of a Restricted Subsidiary as an Unrestricted Subsidiary or redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary occurring since the beginning of such period and on or prior to the date of such determination. 'Non-Recourse Debt' means Indebtedness of any person: (i) as to which neither Triarc Consumer Products Group nor any of its subsidiaries: (a) provides credit support of any kind, including, without limitation, any undertaking, agreement or instrument that would constitute Indebtedness, or (b) is directly or indirectly liable, as a guarantor or otherwise; and (ii) no default with respect to which, including any rights that the holders thereof may have to take enforcement action, would permit, upon notice, lapse of time or both, any holder of any other Indebtedness of Triarc Consumer Products Group or any of its subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity. 'Permitted Arby's Dividend' means (i) a Permitted Arby's Securitization Residual Payment and (ii) a Permitted Arby's IPO Dividend; provided that, in each case, immediately after giving effect to such dividend of capital stock: (x) RC/Arby's and its subsidiaries: (i) have no Indebtedness other than Non-Recourse Debt and (ii) are not party to any arrangement with Triarc Consumer Products Group or any of its subsidiaries, including without limitation any arrangement to make payments in respect of service provided to RC/Arby's and its subsidiaries under the management agreement, the tax sharing agreement or any other agreement, unless the terms of such arrangement are on an arms-length basis, (y) neither Triarc Consumer Products Group nor any of its subsidiaries has any direct or indirect contractual obligations: (i) with respect to any obligation of RC/Arby's and its subsidiaries, including without limitation, any guarantee thereof, 142 (ii) to subscribe for additional capital stock of RC/Arby's or any of its subsidiaries or (iii) to maintain or preserve the financial condition of RC/Arby's or any of its subsidiaries or to cause any of them to achieve any specified levels of operating results and (z) RC/Arby's and its subsidiaries shall jointly and severally indemnify Triarc Consumer Products Group and its subsidiaries from and against all losses, claims, damages and liabilities, including, without limitation, any tax, ERISA or environmental losses (collectively, 'losses') related to the actions or operations of RC/Arby's and its subsidiaries, other than any losses related to the actions or operations of Royal Crown Company, Inc. and each of its subsidiaries, the capital stock of which has been conveyed to Triarc Consumer Products Group or any of its subsidiaries. Triarc Consumer Products Group and its subsidiaries shall jointly and severally indemnify RC/Arby's and its subsidiaries from and against all losses related to the actions or operations of Triarc Consumer Products Group and its subsidiaries, including Royal Crown Company, Inc. and each of its subsidiaries, if the capital stock of such person has been conveyed to Triarc Consumer Products Group or any of its subsidiaries. 'Permitted Arby's IPO Dividend' means a distribution by Triarc Consumer Products Group to Triarc Parent of all of the capital stock, but not assets, of RC/Arby's, and any of its subsidiaries, so long as each such person has no assets other than Arby's Securitization Assets, the net cash proceeds of any Permitted Arby's Securitization, any Arby's Securitization Residual Notes, the capital stock of any Arby's Securitization Entity and businesses related thereto and any other assets, other than cash and cash equivalents that do not constitute net cash proceeds of a Permitted Arby's Securitization, used in connection with any restaurant franchising business, and not used in connection with the beverage business, of Triarc Consumer Products Group and its Restricted Subsidiaries; provided that, as a condition to such distribution: (i) no default shall have occurred and be continuing; (ii) Triarc Consumer Products Group shall have consummated an underwritten primary public offering of its common stock substantially concurrently with, but no later than, the date of such distribution; and (iii) immediately after giving effect to such transaction, including the distribution of RC/Arby's capital stock, the public offering described in clause (ii) and the use of proceeds therefrom, Triarc Consumer Products Group would (A) be able to incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under 'Limitation on Indebtedness'; and (B) have a Consolidated Leverage Ratio no greater than 5.0 to 1. 'Permitted Arby's Securitization' means the sale, transfer and assignment by Arby's and/or one or more of its subsidiaries to one or more Arby's Securitization Entities of Arby's Securitization Assets to occur within nine months of the closing date, the issuance and sale by the Arby's Securitization Entity of the Arby's Securitization Notes and the Arby's Securitization Residual Note and the right and obligations of Arby's and/or one or more of its subsidiaries to provide certain servicing and other services with respect to such Arby's Securitization Assets and the Arby's Securitization Entity; provided that: (i) Triarc Consumer Products Group receives net cash proceeds from such sale by Arby's and/or one or more of its subsidiaries of at least $300.0 million; (ii) the aggregate consideration received in such sale is at least equal to the aggregate fair market value of the assets sold, as determined by Triarc Consumer Products Group's board of directors in good faith; (iii) Triarc Consumer Products Group applies the net cash proceeds from the first $350.0 million of gross proceeds of such sale to repay Senior Indebtedness of an issuer or any subsidiary guarantor, and to correspondingly reduce any commitments therefor in the case of revolving credit indebtedness, and if such proceeds exceed the amount of Senior Indebtedness outstanding, to offer to purchase the notes and any other equally ranking Indebtedness, on a pro rata basis, such offer to be on substantially the same terms and at the same price as an 143 offer to purchase pursuant to the 'Limitation on Sale of Assets and Subsidiary Stock' covenant; and (iv) (A) neither Triarc Consumer Products Group nor any Restricted Subsidiary of Triarc Consumer Products Group retains any obligation, contingent or otherwise: (x) with respect to the assets so sold, (y) for the indebtedness or other liabilities, contingent or otherwise, of any Arby's Securitization Entity purchasing such assets or (z) to subscribe for additional shares of capital stock or other equity interests or make any additional capital contribution or similar payment or transfer to any Arby's Securitization Entity or any other person purchasing such assets or to maintain or preserve the solvency or any balance sheet term, financial condition, level of income or results of operations thereof and (B) no property of Triarc Consumer Products Group or any Restricted Subsidiary of Triarc Consumer Products Group is subject, directly or indirectly, to the satisfaction therefor, other than any such obligations or subjecting of property of Arby's or any subsidiary of Arby's pursuant to customary representations, warranties and covenants made in connection with the sale of such assets and other than obligations to service such assets. 'Permitted Arby's Securitization Residual Payment' means, in the event that the gross proceeds received by Triarc Consumer Products Group from the Permitted Arby's Securitization exceeds $350.0 million, a distribution by Triarc Consumer Products Group to Triarc Parent of all of the capital stock of RC/Arby's and any of its subsidiaries, so long as each such person has no assets other than Arby's Securitization Assets, the net cash proceeds of the Permitted Arby's Securitization, any Arby's Securitization Residual Notes, the capital stock of any Arby's Securitization Entity and businesses related thereto (collectively, 'Arby's assets'); provided that the capital stock of any other subsidiary of RC/Arby's, but not any assets of such person other than Arby's assets, that has any obligations or liabilities, contingent or otherwise with respect to the assets transferred pursuant to such securitization are also distributed to Triarc Parent at such time. 'Permitted Investment' means an Investment by Triarc Consumer Products Group or any Restricted Subsidiary in: (i) Triarc Consumer Products Group, a Restricted Subsidiary or a person that will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Related Business; (ii) another person if as a result of such Investment such other person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, Triarc Consumer Products Group or a Restricted Subsidiary; provided, however, that such person's primary business is a Related Business; (iii) Temporary Cash Investments; (iv) receivables owing to Triarc Consumer Products Group or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as Triarc Consumer Products Group or any such Restricted Subsidiary deems reasonable under the circumstances; (v) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (vi) loans or advances to employees or directors made in the ordinary course of business consistent with past practices of Triarc Consumer Products Group or such Restricted Subsidiary; 144 (vii) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to Triarc Consumer Products Group or any Restricted Subsidiary or in satisfaction of judgments; (viii) any Arby's Securitization Residual Note and any contribution of Arby's Securitization Assets to any Arby's Securitization Entity and (ix) any person to the extent such Investment represents the non-cash portion of the consideration received for an asset disposition as permitted pursuant to the covenant described under ' -- Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock.' 'Refinancing Indebtedness' means Indebtedness that refinances any Indebtedness of Triarc Consumer Products Group or any Restricted Subsidiary existing on the closing date or incurred in compliance with the indenture, including Indebtedness that Refinances Refinancing Indebtedness; provided, however, that: (i) such Refinancing Indebtedness has a stated maturity no earlier than the stated maturity of the Indebtedness being refinanced, (ii) such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced and (iii) such Refinancing Indebtedness has an aggregate principal amount, or if incurred with original issue discount, an aggregate issue price, that is equal to or less than the aggregate principal amount, or if Incurred with original issue discount, the aggregate accreted value, then outstanding or committed, plus fees and expenses, including any premium and defeasance costs, under the Indebtedness being refinanced; provided, further, however, that Refinancing Indebtedness shall not include: (x) Indebtedness of a subsidiary that is not a subsidiary guarantor or an issuer that Refinances Indebtedness of an issuer or a subsidiary guarantor or (y) Indebtedness of Triarc Consumer Products Group or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary. 'Related Business' means the business of Triarc Consumer Products Group and its Restricted Subsidiaries on the closing date and any business related, ancillary or complementary to the businesses of Triarc Consumer Products Group and its Restricted Subsidiaries on the closing date. 'Restricted Subsidiary' means any subsidiary of Triarc Consumer Products Group that is not an Unrestricted Subsidiary. 'Senior Indebtedness' means, with respect to any person on any date of determination: (i) the Bank Indebtedness, (ii) all other Indebtedness of such person, whether outstanding on the closing date or thereafter incurred, and (iii) accrued and unpaid interest, including interest accruing on or after, or which would accrue but for, the filing of any petition in bankruptcy or for reorganization, whether or not allowed thereby in respect of: (A) indebtedness of such person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such person is responsible or liable, unless, in each case, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are to rank equal to or subordinate in right of payment to the notes; provided, however, that Senior Indebtedness shall not include: (1) any obligation of an issuer or subsidiary guarantor to any affiliate of Triarc Consumer Products Group, 145 (2) any liability for Federal, state, local or other taxes owed or owing by such person, (3) any accounts payable or other liability to trade creditors arising in the ordinary course of business, including guarantees thereof or instruments evidencing such liabilities, (4) any Indebtedness of such person, and any accrued and unpaid interest in respect thereof, which is subordinate or junior in any respect to any other Indebtedness or other obligation of such person or (5) that portion of any Indebtedness which at the time of incurrence is incurred in violation of the indenture; provided that Bank Indebtedness shall be deemed not to have been incurred in violation of the indenture if Triarc Consumer Products Group shall, or shall be deemed to, have represented that the incurrence thereof does not violate the indenture. 'Senior Subordinated Indebtedness' means the notes and the subsidiary guarantees and any other Indebtedness of the issuers or the subsidiary guarantors that specifically provides that such Indebtedness is to rank equal to the notes or the subsidiary guarantees, as applicable, in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the issuers or the subsidiary guarantors, as applicable, which is not Senior Indebtedness. 'Subordinated Obligation' means any Indebtedness of an issuer or a subsidiary guarantor, whether outstanding on the closing date or thereafter incurred, which is subordinate or junior in right of payment to the notes pursuant to a written agreement to that effect. 'Temporary Cash Investments' means any of the following: (i) any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof, (ii) investments in demand deposit accounts, time deposit accounts, certificates of deposit and money market deposits maturing within 365 days of the date of acquisition thereof issued by a commercial banking institution that is a lender under the credit agreement or a member of the Federal Reserve System and has a combined capital and surplus and undivided profits aggregating in excess of $500,000,000, or the foreign currency equivalent thereof, or any money-market fund sponsored by a registered broker dealer or mutual fund distributor, (iii) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (i), (ii) or (iv) entered into with a bank meeting the qualifications described in clause (ii) above, (iv) investments in commercial paper, maturing not more than nine months after the date of acquisition, issued by a corporation, other than an affiliate of Triarc Consumer Products Group, organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of 'P-l', or higher, according to Moody's or 'A-1', or higher, according to Standard & Poors, and (v) investments in securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least 'AA' by Standard & Poors or 'Aa' by Moody's. 'Unrestricted Subsidiary' means: (i) any subsidiary of Triarc Consumer Products Group that at the time of determination shall be designated an Unrestricted Subsidiary by the board of directors of Triarc Consumer Products Group in the manner provided below and (ii) any subsidiary of an Unrestricted Subsidiary. The board of directors of Triarc Consumer Products Group may designate any subsidiary of Triarc Consumer Products Group, including any newly acquired or newly formed subsidiary, to be an Unrestricted Subsidiary, other than Triarc Beverage Holdings, unless such subsidiary or any of its subsidiaries owns any capital stock or Indebtedness of, or holds any lien on any property of, 146 Triarc Consumer Products Group or any other subsidiary of Triarc Consumer Products Group that is not a subsidiary of the subsidiary to be so designated; provided that (A) any guarantee by Triarc Consumer Products Group or any Restricted Subsidiary of any Indebtedness of the subsidiary being so designated shall be deemed an 'incurrence' of such Indebtedness and, if such guarantee is called upon or would be required to be classified and accounted for as a liability on a balance sheet of Triarc Consumer Products Group or any Restricted Subsidiary prepared in accordance with GAAP, an 'Investment' by Triarc Consumer Products Group or such Restricted Subsidiary, or both, if applicable, at the time of such designation, (B) either: (i) the subsidiary to be so designated has total assets of $1,000 or less or (ii) if such subsidiary has assets greater than $1,000, such designation would be permitted under the covenant described under ' -- Certain Covenants -- Limitation on Restricted Payments' and (C) if applicable, the incurrence of Indebtedness and the Investment referred to in clause (A) of this proviso would be permitted under the 'Limitation on Indebtedness' and 'Limitation on Restricted Payments' covenants described above. The board of directors of Triarc Consumer Products Group may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation: (x) Triarc Consumer Products Group could incur $1.00 of additional Indebtedness under paragraph (a) of the covenant described under ' -- Certain Covenants -- Limitation on Indebtedness' and (y) no default shall have occurred and be continuing. Any such designation by the board of directors of Triarc Consumer Products Group shall be evidenced to the trustee by promptly filing with the trustee a copy of the resolution of the board of directors giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. 147 FEDERAL INCOME TAX CONSIDERATIONS The following presents the opinion of Paul, Weiss, Rifkind, Wharton & Garrison, special United States tax counsel to Triarc Consumer Products Group, Triarc Beverage Holdings, and certain other subsidiaries of Triarc Consumer Products Group, regarding the material United States federal income tax consequences to U.S. and non-U.S. holders of the consummation of the exchange offer and the ownership and disposition of the exchange notes. The following does not purport to be a complete analysis of all of the potential United States federal income tax considerations relating to the purchase, ownership and disposition of the exchange notes and generally does not address any other taxes that might be applicable to a holder of the exchange notes. We cannot assure you that the United States Internal Revenue Service will take a view similar to that described below. Further, the following does not address all aspects of taxation that may be relevant to (1) particular holders of initial notes or exchange notes in light of their individual circumstances, including the effect of any foreign, state or local laws, or (2) particular types of purchasers that receive special treatment under United States federal income tax laws, including (a) dealers in securities, (b) insurance companies, (c) financial institutions, (d) persons that hold the initial notes or exchange notes that are a hedge or that are hedged against currency risks or that are part of a straddle or conversion transaction or a constructive sale, (e) persons whose functional currency is not the U.S. dollar, and (f) tax-exempt entities. The following assumes that the initial notes or exchange notes are held as capital assets within the meaning of section 1221 of the Internal Revenue Code of 1986. The following is based on currently existing provisions of the Code, the applicable Treasury regulations promulgated and proposed thereunder, judicial decisions, and administrative interpretations, all of which are subject to change, possibly on a retroactive basis. Because individual circumstances may differ, you are strongly urged to consult your tax advisor with respect to your particular tax situation and the particular tax effects of any state, local, non-United States or other tax laws and possible changes in the tax laws. As used in this section, the term U.S. holder means a beneficial owner of an exchange note who or which is for United States federal income tax purposes (1) a citizen or resident of the United States, (2) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (3) an estate the income of which is subject to United States federal income taxation regardless of its source, or (4) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. The term also includes those former citizens of the United States whose income and gain on the exchange notes will be subject to United States taxation. As used herein, the term non-U.S. holder means a beneficial owner of an exchange note that is not a U.S. holder. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER The exchange of initial notes for exchange notes pursuant to the exchange offer will not be treated as an exchange or otherwise as a taxable event to holders. Consequently, (1) no gain or 148 loss will be realized by a holder upon receipt of an exchange note, (2) the holding period of the exchange note will include the holding period of the initial note exchanged therefor and (3) the adjusted tax basis of the exchange note will be the same as the adjusted tax basis of the initial note exchanged therefor immediately before the exchange. Additional interest paid to a U.S. holder in connection with a default under the registration rights agreement should be taxable as ordinary income at the time it accrues or is received in accordance with the U.S. holder's regular method of accounting. It is possible, however, that the Internal Revenue Service may take a different position, in which case the timing and amount of income inclusion may be different. In the event any additional interest paid to a non-U.S. holder in connection with a default under the registration rights agreement is treated as interest, the tax treatment of the payments should be the same as that of other interest payments received by the non-U.S. holder. However, the Internal Revenue Service might not treat the payments as interest, in which case the payments generally would be subject to United States federal income withholding tax at a rate of 30%, unless (1) the payments are effectively connected with the non-U.S. holder's conduct of a trade or business in the United States, in which case the tax treatment of the payments will be the same as that of other effectively connected income earned by the non-U.S. holder, or (2) the non-U.S. holder qualifies for a reduced rate of tax or an exemption under a tax treaty. TAX CONSIDERATIONS FOR U.S. HOLDERS PAYMENTS OF INTEREST Interest on an exchange note generally will be taxable to a U.S. holder as ordinary interest income at the time it accrues or is received in accordance with the U.S. holder's method of accounting for United States federal income tax purposes. MARKET DISCOUNT AND BOND PREMIUM If a U.S. holder purchases an exchange note for an amount that is less than its principal amount, the difference generally will be treated as market discount. In that case, any partial principal payment on, or any gain realized on the sale, exchange, retirement or other disposition of, including dispositions which are nonrecognition transactions under certain provisions of the Code, the exchange note will be included in gross income and characterized as ordinary income to the extent of the market discount that (1) has not previously been included in income and (2) is treated as having accrued on the exchange note prior to the payment or disposition. Market discount generally accrues on a straight-line basis over the remaining term of the exchange note. Upon an irrevocable election, however, market discount will accrue on a constant yield basis. A U.S. holder might be required to defer all or a portion of the interest expense on any indebtedness incurred or continued to purchase or carry an exchange note. A U.S. holder may elect to include market discount in gross income currently as it accrues. If such an election is made, the preceding rules relating to the recognition of market discount and deferral of interest expense will not apply. An election made to include market discount in gross income as it accrues will apply to all debt instruments acquired by the U.S. holder on or after the first day of the taxable year to which the election applies and may be revoked only with the consent of the Internal Revenue Service. If a U.S. holder purchases an exchange note for an amount that is in excess of all amounts payable on the exchange note after the purchase date, other than payments of qualified stated interest, the excess will be treated as bond premium. In general, a U.S. holder may elect to amortize bond premium over the remaining term of the exchange note on a constant yield method. The amount of bond premium allocable to any accrual period is offset against the qualified stated interest allocable to the accrual period. If, following the offset determination described in the immediately preceding sentence, there is any excess allocable bond premium remaining, that excess may, in some circumstances, be deducted. An election to amortize bond premium applies to all taxable debt instruments held at the beginning of the first taxable year to 149 which the election applies and thereafter acquired by the U.S. holder and may be revoked only with the consent of the Internal Revenue Service. SALE, EXCHANGE OR RETIREMENT OF NOTES Upon the sale, exchange or retirement of an exchange note, a U.S. holder will recognize taxable gain or loss equal to the difference between the amount of cash plus the fair market value of any property received, but not including any amount attributable to accrued but unpaid interest, and the holder's adjusted tax basis in the exchange note. A U.S. holder's adjusted tax basis in an exchange note will be its cost, increased by any accrued market discount included in gross income and reduced by any amortized bond premium and any principal payment on the exchange note received by the holder. Subject to the discussion of market discount above, gain or loss realized on the sale, exchange or retirement of an exchange note by a U.S. holder generally will be capital gain or loss if the exchange note is held as a capital asset by the U.S. holder. Long-term capital gains of individuals will be subject to a maximum federal income tax rate of 20%. There are limitations which apply to the deductibility of capital losses. TAX CONSIDERATIONS FOR NON-U.S. HOLDERS Generally, payments of principal or interest on the exchange notes by Triarc Consumer Products Group or any paying agent to a beneficial owner of an exchange note that is a non-U.S. holder will not be subject to U.S. federal income tax or income withholding tax, provided that, in the case of interest, (1) the non-U.S. holder does not own, actually or constructively, 10% or more of the combined voting power of all classes of stock of either Triarc Parent or Triarc Beverage Holdings entitled to vote, (2) the non-U.S. holder is not, for U.S. federal income tax purposes, a controlled foreign corporation related to either Triarc Parent or Triarc Beverage Holdings actually or constructively through stock ownership, (3) the non-U.S. holder is not a bank receiving interest described in section 881(c)(3)(A) of the Code, and (4) either (a) the non-U.S. holder provides Triarc Consumer Products Group or its agent with an Internal Revenue Service Form W-8, or a suitable substitute form, signed under penalties of perjury that includes its name and address and certifies as to its non-United States status in compliance with applicable law and Treasury Regulations, or (b) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business holds the exchange note and provides a statement to Triarc Consumer Products Group or its agent signed under penalties of perjury in which the organization, bank or financial institution certifies that a Form W-8, or a suitable substitute form, has been received by it from the non-U.S. holder or from another financial institution acting on behalf of the non-U.S. holder and furnishes Triarc Consumer Products Group or its agent with a copy thereof. If these requirements cannot be met, a non-U.S. holder generally will be subject to United States federal income withholding tax at a rate of 30%, or such lower rate provided by an applicable treaty, with respect to payments of interest on the exchange notes. The non-U.S. holder must inform Triarc Consumer Products Group or its agent or the financial institution to which the non-U.S. holder provided the Form W-8, or the suitable substitute form, within 30 days of any change in the information provided in the form submitted. Treasury Regulations generally effective for payments made after December 31, 2000 provide alternative methods for satisfying the certification requirements described in clause (4) above. These new regulations also will require, in the case of exchange notes held by a foreign 150 partnership, that (1) the certification be provided by the partners rather than by the foreign partnership and (2) the partnership provide prescribed information, including a U.S. taxpayer identification number. A non-U.S. holder of an exchange note generally will not be subject to United States federal income or income withholding tax on gain realized on the sale, exchange, redemption, retirement or other disposition of his, her or its exchange note, unless (1) the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition, and other conditions are met, or (2) the gain is effectively connected with the conduct by the non-U.S. holder of a trade or business in the United States. Notwithstanding the above, if a non-U.S. holder of an exchange note is engaged in a trade or business in the United States and if interest on the exchange note, or gain realized on the disposition of the exchange note, is effectively connected with the conduct of that trade or business, the non-U.S. holder generally will be subject to regular United States federal income tax on the interest or gain in the same manner as if it were a U.S. holder, unless an applicable treaty provides otherwise. In addition, if the non-U.S. holder is a foreign corporation, it may be subject to a branch profits tax equal to 30%, or such lower rate provided by an applicable treaty, of its effectively connected earnings and profits for the taxable year, as adjusted. Even though effectively connected income is subject to income tax and possibly also branch profits tax, it generally is not subject to income withholding if the non-U.S. holder delivers a properly executed Internal Revenue Service Form 4224, or other form applicable under the new regulations, to the payor. An exchange note held by an individual non-U.S. holder who at the time of death is not a United States citizen or resident of the United States, as defined for United States federal estate tax purposes, will not be subject to United States federal estate taxation as a result of the individual's death unless (1) the individual owns, actually or constructively, 10% or more of the combined voting power of all classes of stock of either Triarc Parent or Triarc Beverage Holdings entitled to vote, or (2) the interest on the exchange note is effectively connected with the conduct by the individual of a trade or business in the United States. TAX CONSIDERATIONS APPLICABLE TO BOTH U.S. HOLDERS AND NON-U.S. HOLDERS BACKUP WITHHOLDING AND INFORMATION REPORTING Under current United States federal income tax law, a 31% backup withholding tax might apply to some payments on, and the proceeds from a sale, exchange or redemption of, the exchange notes, unless the holder of the exchange note (1) is a corporation or comes within other exempt categories and, when required, demonstrates that fact, or (2) provides a correct taxpayer identification number, certifies as to its exemption from backup withholding and otherwise complies with applicable requirements of the backup withholding rules. Backup withholding and information reporting generally will not apply to payments made by Triarc Consumer Products Group or a paying agent on an exchange note to a non-U.S. holder if the certification described under 'Tax Considerations for Non-U.S. Holders' is duly provided or the non-U.S. holder otherwise establishes an exemption and the payor does not have actual knowledge that the conditions of any other exemption are not, in fact, satisfied. The payments of proceeds from the disposition of an exchange note to or through a non-United States office of a broker that is (1) a United States person, (2) a controlled foreign corporation for United States federal income tax purposes, 151 (3) a foreign person, 50% or more of whose gross income from all sources for specified periods was effectively connected with the conduct of a United States trade or business, or (4) after December 31, 2000, a foreign partnership if either (a) more than 50% of the income or capital interest is owned by U.S. persons, or (b) the partnership has the requisite connections to the United States, will be subject to information reporting requirements unless the broker has documentary evidence in its files of the holder's non-U.S. holder status and has no actual knowledge to the contrary or otherwise establishes an exemption. Before January 1, 2001, backup withholding will not apply to any payment of the proceeds from the sale of an exchange note made to or through a foreign office of a broker. However, after December 31, 2000, backup withholding might apply if the broker has actual knowledge that the payee is a U.S. holder. Payments of the proceeds from the sale of an exchange note to or through the United States office of a broker are subject to information reporting and possible backup withholding unless the holder certifies, under penalties of perjury, that it is not a U.S. holder and that other conditions are met or otherwise establishes an exemption, provided that the broker does not have actual knowledge that the holder is a U.S. holder or that the conditions of any other exemption are not, in fact, satisfied. Holders of exchange notes should consult their tax advisors regarding the application of backup withholding in their particular situations, the availability of an exemption therefrom, and the procedure for obtaining an exemption, if available. Any amounts withheld from payment under the backup withholding rules will be allowed as a credit against the holder's United States federal income tax liability and may entitle the holder to a refund if the required information is furnished to the Internal Revenue Service. THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF THE EXCHANGE OFFER AND OF PURCHASING, HOLDING AND DISPOSING OF THE INITIAL NOTES OR THE EXCHANGE NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR NON-UNITED STATES TAX LAWS AND ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS AND THE EFFECT OF THE NEW REGULATIONS WITH RESPECT TO PAYMENTS MADE AFTER DECEMBER 31, 2000. PLAN OF DISTRIBUTION We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account in the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of these methods of resale, at market prices prevailing at the time of resale, at prices related to these prevailing market prices or negotiated prices. These resales may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such exchange notes. Any broker-dealer that receives exchange notes for its own account under the exchange offer in exchange for initial notes acquired by it as a result of market making or other trading activities or participates in a distribution of these exchange notes may be deemed to be an underwriter within the meaning of the Securities Act and, therefore, must deliver a prospectus meeting the requirements of the Securities Act for any resales, offers to resell or other transfers of the exchange notes received by it in the exchange offer. Accordingly, each such broker-dealer must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of these exchange notes. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchanges notes received in exchange for initial notes where these initial notes were acquired through market-making activities or other trading activities. We have agreed that, for a period of 180 days after the completion of the exchange offer, we will 152 promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests these documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer, including the expenses of one counsel for the holders of the initial notes, other than commissions or concessions of any brokers or dealers and will indemnify the holders of the initial notes, including any broker-dealers, against specified liabilities, including liabilities under the Securities Act. LEGAL MATTERS Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York, will pass upon certain legal matters, including some tax matters, on our behalf, regarding exchange notes. EXPERTS The consolidated balance sheets of Triarc Consumer Products Group, LLC and subsidiaries and the consolidated balance sheets of Triarc Beverage Holdings Corp. as of December 28, 1997 and January 3, 1999, and the related statements of operations, member's equity or stockholder's equity, and cash flows for the three fiscal years ended January 3, 1999, included in this prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports appearing on page F-2 and F-70 of this prospectus, and are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. The combined statements of certain revenues and operating expenses of the Snapple Beverage Business of The Quaker Oats Company for the year ended December 31, 1996 and the four month and twenty-two day period ended May 22, 1997 included in this prospectus have been audited by Arthur Andersen LLP, independent public accountants as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. WHERE YOU CAN FIND MORE INFORMATION We have filed a registration statement on Form S-4 with the Securities and Exchange Commission covering the exchange notes, and this prospectus is part of our registration statement. For further information on us and the exchange notes, you should refer to our registration statement and its exhibits. This prospectus summarizes material provisions of contracts and other documents that we refer you to. Because the prospectus may not contain all the information that you may find important, you should review the full text of these documents. We have included copies of these documents as exhibits to our registration statement. When the exchange offer is completed, we will be subject to the information requirements of the Securities Exchange Act and will be required to file reports and other information with the Securities and Exchange Commission. You can inspect and copy at prescribed rates the reports and other information that we file with the Securities and Exchange Commission at the public reference facilities maintained by the Securities and Exchange Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also at the regional offices of the Securities and Exchange Commission located at 7 World Trade Center, Suite 1300, New York, New York 10048 and the Citicorp Center at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may obtain information on the operation of the public reference facilities by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission also maintains an Internet web site at http://www.sec.gov that contains reports, proxy and information statements and other information. You can also obtain copies of these materials from us upon request. In addition, the indenture requires that, whether or not we are subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act, we will provide the trustee and registered noteholders, and will, if permitted, file with the Securities and Exchange Commission (1) all quarterly and annual financial information that would be required to be contained in a filing with the Securities and Exchange Commission on Forms 10-Q and 10-K if we were required to file these forms, including a 'Management's Discussion and Analysis of Financial 153 Condition and Results of Operations' and, with respect to the annual information only, a report thereon by our certified independent accountants, and (2) all reports that would be required to be filed with the Securities and Exchange Commission on Form 8-K if we were required to file these reports. In addition, for so long as any of the initial notes or the exchange notes remain outstanding and constitute 'restricted securities' under Rule 144, we have agreed to make available to any prospective purchaser of these notes or beneficial owner of these notes in connection with any sale of these notes the information required by Rule 144 under the Securities Act. Any requests should be directed to Triarc Parent at 280 Park Avenue, New York, New York 10017, Attention: Investor Relations; Telephone: (212) 451-3000. This information can also be obtained from Triarc Parent's website at http://www.triarc.com. 154 INDEX TO FINANCIAL STATEMENTS
PAGE ---- TRIARC CONSUMER PRODUCTS GROUP, LLC AND RELATED COMPANIES Independent Auditors' Report.............................. F-2 Consolidated Balance Sheets as of December 28, 1997 and January 3, 1999........................................ F-3 Consolidated Statements of Operations for the year ended December 31, 1996 and the fiscal years ended December 28, 1997 and January 3, 1999.................. F-4 Consolidated Statements of Member's Equity for the year ended December 31, 1996 and the fiscal years ended December 28, 1997 and January 3, 1999.................. F-5 Consolidated Statements of Cash Flows for the year ended December 31, 1996 and the fiscal years ended December 28, 1997 and January 3, 1999.................. F-6 Notes to Consolidated Financial Statements................ F-8 Condensed Consolidated Balance Sheets as of January 3, 1999 and October 3, 1999 (unaudited)................... F-48 Condensed Consolidated Statements of Operations for the nine months ended September 27, 1998 and October 3, 1999 (unaudited)....................................... F-49 Condensed Consolidated Statements of Cash Flows for the nine months ended September 27, 1998 and October 3, 1999 (unaudited)....................................... F-50 Notes to Condensed Consolidated Financial Statements (unaudited)............................................ F-51 SNAPPLE BEVERAGE BUSINESS OF THE QUAKER OATS COMPANY Report of Independent Public Accountants.................. F-63 Combined Statements of Certain Revenues and Operating Expenses for the twelve months ended December 31, 1996 and the four months and twenty-two days ended May 22, 1997................................................... F-64 Notes to the Combined Statements of Certain Revenues and Operating Expenses..................................... F-65 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES Independent Auditors' Report.............................. F-71 Consolidated Balance Sheets as of December 28, 1997 and January 3, 1999........................................ F-72 Consolidated Statements of Operations for the year ended December 31, 1996 and the fiscal years ended December 28, 1997 and January 3, 1999........................... F-73 Consolidated Statements of Stockholder's Equity for the year ended December 31, 1996 and the fiscal years ended December 28, 1997 and January 3, 1999.................. F-74 Consolidated Statements of Cash Flows for the year ended December 31, 1996 and the fiscal years ended December 28, 1997 and January 3, 1999........................... F-75 Notes to Consolidated Financial Statements................ F-77 Condensed Consolidated Balance Sheets as of January 3, 1999 and October 3, 1999 (unaudited)................... F-98 Condensed Consolidated Statements of Operations for the nine months ended September 27, 1998 and October 3, 1999 (unaudited)....................................... F-99 Condensed Consolidated Statements of Cash Flows for the nine months ended September 27, 1998 and October 3, 1999 (unaudited)....................................... F-100 Notes to Condensed Consolidated Financial Statements (unaudited)............................................ F-101
F-1 INDEPENDENT AUDITORS' REPORT To the Board of Managers and Member of Triarc Consumer Products Group, LLC New York, New York We have audited the accompanying consolidated balance sheets of Triarc Consumer Products Group, LLC and subsidiaries as of January 3, 1999 and December 28, 1997, and the related consolidated statements of operations, member's equity and cash flows for each of the three fiscal years in the period ended January 3, 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the consolidated financial position of Triarc Consumer Products Group, LLC and subsidiaries as of January 3, 1999 and December 28, 1997, and the consolidated results of their operations and their consolidated cash flows for each of the three fiscal years in the period ended January 3, 1999 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP New York, New York July 30, 1999 F-2 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
DECEMBER 28, JANUARY 3, 1997 1999 ---- ---- ASSETS Current assets: Cash (including cash equivalents of $26,974 and $66,422).............................................. $ 34,242 $ 72,792 Receivables (Note 4)................................... 76,177 66,690 Inventories (Note 4)................................... 57,394 46,761 Deferred income tax benefit (Note 8)................... 47,992 18,934 Note receivable from Triarc Companies, Inc. (Note 18)................................................... 2,000 -- Prepaid expenses and other current assets.............. 6,398 7,258 --------- --------- Total current assets.............................. 224,203 212,435 Investments in affiliates (Note 5).......................... 25,476 -- Properties (Note 4)......................................... 27,912 25,320 Unamortized costs in excess of net assets of acquired companies (Note 4)........................................ 278,986 268,215 Trademarks (Note 4)......................................... 269,201 261,906 Deferred costs and other assets (Note 4).................... 28,183 23,094 --------- --------- $ 853,961 $ 790,970 --------- --------- --------- --------- LIABILITIES AND MEMBER'S DEFICIT Current liabilities: Current portion of long-term debt (Notes 6, 7 and 21)................................................... $ 13,798 $ 9,678 Notes payable to affiliates (Note 18).................. 1,200 -- Accounts payable....................................... 45,126 36,993 Accrued expenses (Note 4).............................. 110,836 81,448 Due to affiliates (Note 18)............................ 22,710 29,082 --------- --------- Total current liabilities......................... 193,670 157,201 Long-term debt (Notes 6, 7 and 21).......................... 564,114 560,977 Deferred income taxes (Note 8).............................. 27,764 9,173 Deferred income and other liabilities....................... 31,669 20,753 Redeemable preferred stock (Note 9)......................... 79,604 87,587 Commitments and contingencies (Notes 3, 8, 17 and 19) Member's equity (deficit) (Notes 10 and 21): Contributed capital.................................... 138,059 106,269 Accumulated deficit.................................... (180,719) (150,732) Accumulated other comprehensive deficit................ (200) (258) --------- --------- Total member's deficit............................ (42,860) (44,721) --------- --------- $ 853,961 $ 790,970 --------- --------- --------- ---------
See accompanying notes to consolidated financial statements. F-3 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)
YEAR ENDED ------------------------------------------ DECEMBER 31, DECEMBER 28, JANUARY 3, 1996 1997 1999 ---- ---- ---- Revenues: Net sales........................................... $540,106 $629,621 $735,436 Royalties, franchise fees and other revenues........ 57,329 66,531 79,600 -------- -------- -------- 597,435 696,152 815,036 -------- -------- -------- Costs and expenses: Cost of sales, excluding depreciation and amortization related to sales of $13,545, $1,032 and $1,672........................................ 314,641 332,217 390,883 Advertising, selling and distribution (Note 1)...... 135,806 184,722 197,065 General and administrative.......................... 75,759 81,219 89,088 Depreciation and amortization, excluding amortization of deferred financing costs.......... 29,964 25,244 32,808 Charges related to post-acquisition transition, integration and changes to business strategies (Note 11)......................................... -- 33,815 -- Facilities relocation and corporate restructuring (Note 12)......................................... 7,800 7,063 -- Impairment of company-owned restaurants and related exit costs (Note 3)............................... 58,900 -- -- -------- -------- -------- 622,870 664,280 709,844 -------- -------- -------- Operating profit (loss)........................ (25,435) 31,872 105,192 Interest expense......................................... (50,031) (58,019) (60,235) Gain (loss) on sale of businesses, net (Note 13)......... -- (3,513) 5,016 Other income, net (Note 14).............................. 470 5,532 5,298 -------- -------- -------- Income (loss) before income taxes and extraordinary charges........................ (74,996) (24,128) 55,271 (Provision for) benefit from income taxes (Note 8)....... 23,628 5,142 (25,284) -------- -------- -------- Income (loss) before extraordinary charges..... (51,368) (18,986) 29,987 Extraordinary charges (Note 15).......................... -- (2,954) -- -------- -------- -------- Net income (loss).............................. $(51,368) $(21,940) $ 29,987 -------- -------- -------- -------- -------- --------
See accompanying notes to consolidated financial statements. F-4 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY (IN THOUSANDS)
CUMULATIVE OTHER COMPREHENSIVE INCOME (LOSS) ---------------------------- UNREALIZED GAIN (LOSS) ON CURRENCY CONTRIBUTED ACCUMULATED SHORT-TERM TRANSLATION CAPITAL DEFICIT INVESTMENTS ADJUSTMENT TOTAL ------- ------- ----------- ---------- ----- Balance at December 31, 1995........................ $ 70,301 $(107,411) $ -- $ -- $(37,110) Net loss and comprehensive loss........................ -- (51,368) -- -- (51,368) Capital contribution through forgiveness of a liability to Triarc Parent (Note 18)................... 1,500 -- -- -- 1,500 -------- --------- ----- ----- -------- Balance at December 31, 1996........................ 71,801 (158,779) -- -- (86,978) Comprehensive loss: Net loss................. -- (21,940) -- -- (21,940) Unrealized gain on short-term investment............. -- -- 42 -- 42 Net change in currency translation adjustment............. -- -- -- (242) (242) -------- Comprehensive loss....... -- -- -- -- (22,140) -------- Capital contribution through forgiveness of a liability to Triarc Parent (Note 18)................... 625 -- -- -- 625 Issuance of Triarc Beverage Holdings Corp. common stock....................... 1 -- -- -- 1 Capital contribution consisting of cash of $6,211 and forgiveness of a note payable to Triarc Companies, Inc. (Note 18).............. 29,390 -- -- -- 29,390 Issuance of shares of Cable Car Beverage Corporation common stock and pushdown of Triarc Companies, Inc.'s acquisition basis in Cable Car Beverage Corporation (Note 3).................... 40,847 -- -- -- 40,847 Dividend requirement on redeemable preferred stock (Note 9).................... (4,604) -- -- -- (4,604) Other......................... (1) -- -- -- (1) -------- --------- ----- ----- -------- Balance at December 28, 1997........................ 138,059 (180,719) 42 (242) (42,860) Comprehensive income: Net income............... -- 29,987 -- -- 29,987 Reclassification adjustment for prior year appreciation on short-term investment sold during the year... -- -- (42) -- (42) Net change in currency translation adjustment............. -- -- -- (16) (16) -------- Comprehensive income..... -- -- -- -- 29,929 -------- Adjustment to pushdown of Triarc Companies, Inc.'s acquisition basis in Cable Car Beverage Corporation (Note 3).................... (251) -- -- -- (251) Cash dividends................ (23,556) -- -- -- (23,556) Dividend requirement on redeemable preferred stock (Note 9).................... (7,983) -- -- -- (7,983) -------- --------- ----- ----- -------- Balance at January 3, 1999.... $106,269 $(150,732) $-- $(258) $(44,721) -------- --------- ----- ----- -------- -------- --------- ----- ----- --------
See accompanying notes to consolidated financial statements. F-5 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED ------------------------------------------ DECEMBER 31, DECEMBER 28, JANUARY 3, 1996 1997 1999 ---- ---- ---- Cash flows from operating activities: Net income (loss)...................................... $(51,368) $ (21,940) $ 29,987 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Amortization of costs in excess of net assets of acquired companies, trademarks and certain other items........................................... 15,388 18,879 23,151 Depreciation and amortization of properties....... 14,576 6,365 9,657 Amortization of deferred financing costs.......... 3,322 3,716 4,075 Write-off of unamortized deferred financing costs........................................... -- 4,839 -- Impairment of company-owned restaurants and related exit costs.............................. 58,900 -- -- Provision for (benefit from) deferred income taxes........................................... (24,988) (10,644) 10,467 Provision for doubtful accounts................... 3,450 3,794 2,387 (Gain) loss on sale of businesses, net............ -- 3,513 (5,016) Net provision (payments) for charges related to post-acquisition transition, integration and changes to business strategies.................. -- 22,483 (6,025) Net provision (payments) for facilities relocation and corporate restructuring..................... 6,953 821 (1,914) Other, net........................................ 398 (4,072) 1,846 Changes in operating assets and liabilities: Decrease (increase) in receivables................ (9,263) 8,289 6,994 Decrease (increase) in inventories................ (2,823) 3,993 10,607 Decrease (increase) in prepaid expenses and other current assets.................................. (818) 4,664 (1,044) Decrease in accounts payable and accrued expenses........................................ (4,606) (21,779) (29,615) Increase in due to affiliates..................... 2,204 12,519 3,547 -------- --------- -------- Net cash provided by operating activities.... 11,325 35,440 59,104 -------- --------- -------- Cash flows from investing activities: Proceeds from sale of investment in Select Beverages, Inc................................................... -- -- 28,342 Proceeds from sales of properties and business......... 1,413 3,529 1,538 Capital expenditures................................... (17,113) (4,204) (11,107) Acquisition of Snapple Beverage Corp................... -- (307,205) (43) Other business acquisitions, net of cash acquired of $2,409 in 1997........................................ (1,972) 2,409 (3,000) Other.................................................. (356) (158) 41 -------- --------- -------- Net cash provided by (used in) investing activities................................. (18,028) (305,629) 15,771 -------- --------- -------- Cash flows from financing activities: Dividends.............................................. -- -- (23,556) Repayments of long-term debt........................... (11,453) (79,901) (14,158) Proceeds from long-term debt........................... 12,476 303,400 -- Net borrowings from affiliates and, in 1998, increase in due to affiliates.................................. 3,690 3,535 1,389 Proceeds from issuance of common stock................. -- 1 -- Proceeds from issuance of redeemable preferred stock... -- 75,000 -- Capital contributions.................................. -- 6,211 -- Deferred financing costs............................... (325) (11,385) -- -------- --------- -------- Net cash provided by (used in) financing activities................................. 4,388 296,861 (36,325) -------- --------- -------- Net increase (decrease) in cash and cash equivalents........ (2,315) 26,672 38,550 Cash and cash equivalents at beginning of year.............. 9,885 7,570 34,242 -------- --------- -------- Cash and cash equivalents at end of year.................... $ 7,570 $ 34,242 $ 72,792 -------- --------- -------- -------- --------- -------- Supplemental disclosures of cash flow information: Cash paid during the year for: Interest.......................................... $ 43,649 $ 55,047 $ 52,437 -------- --------- -------- -------- --------- -------- Income taxes, net of refunds...................... $ -- $ 3,450 $ 4,205 -------- --------- -------- -------- --------- --------
F-6 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED) Due to their non-cash nature, the following transactions are not reflected in the respective consolidated statements of cash flows (expressed in whole dollars): On November 25, 1997 Triarc Companies, Inc. ('Triarc Parent'), parent of the Company (see Note 1 for definition), acquired (the 'Stewart's Acquisition') Cable Car Beverage Corporation ('Cable Car') for 1,566,858 shares of Triarc Parent common stock exchanged for all of the Cable Car outstanding stock and 154,931 stock options of Triarc Parent exchanged for all of the outstanding stock options of Cable Car. The Stewart's Acquisition was accounted for by Triarc Parent in accordance with the purchase method of accounting. Triarc Parent's basis in Cable Car was 'pushed down' to Cable Car and the excess of the purchase price over the net assets acquired was allocated to the Cable Car assets and liabilities as of November 25, 1997. See Note 3 to the consolidated financial statements for further discussion of this transaction. In May 1997 Triarc Beverage Holdings Corp., a subsidiary of the Company, acquired Snapple Beverage Corp. The portion of the purchase price that was not yet paid as of December 28, 1997, representing a portion of the expenses related to the acquisition, was $2,181,000. In May 1997 two subsidiaries of the Company issued common shares representing approximately 49% of each of their common stock after such issuances to Triarc Parent in consideration for, in addition to cash of $6,211,000, forgiveness of the then outstanding principal and accrued interest aggregating $25,788,000 under a note payable by the Company to Triarc Parent. See Note 18 to the consolidated financial statements for a further discussion of this transaction. During 1996 and 1997 Triarc Parent made capital contributions to the Company through the assumption or forgiveness of liabilities of Mistic Brands, Inc. of $1,500,000 and $625,000, respectively. See Note 18 to the consolidated financial statements for further discussion of these transactions. During 1997 and 1998 the Company recorded cumulative dividends not declared or paid on its redeemable preferred stock of $4,604,000 and $7,983,000, respectively, as increases in 'Redeemable preferred stock' with offsetting charges to 'Contributed capital' since payment of the dividends is not solely in the control of the Company. See accompanying notes to consolidated financial statements. F-7 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 3, 1999 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION Triarc Consumer Products Group, LLC ('TCPG'), a wholly-owned subsidiary of Triarc Companies, Inc. ('Triarc Parent'), was formed on January 15, 1999 and, effective February 25, 1999, acquired by way of capital contribution all of the stock previously owned directly or indirectly by Triarc Parent of (i) RC/Arby's Corporation ('RC/Arby's'), (ii) Triarc Beverage Holdings Corp. ('Triarc Beverage Holdings' -- commenced operations on May 22, 1997 with the concurrent acquisition by Triarc Beverage Holdings of Snapple Beverage Corp. ('Snapple') and the concurrent contribution to Triarc Beverage Holdings by Triarc Parent of Mistic Brands, Inc. ('Mistic' -- acquired by Triarc Parent on August 9, 1995)) and (iii) Cable Car Beverage Corporation ('Cable Car' -- acquired by Triarc Parent on November 25, 1997). RC/Arby's principal direct wholly-owned subsidiaries are Royal Crown Company, Inc. ('Royal Crown') and Arby's, Inc. ('Arby's'). Additionally, RC/Arby's had three subsidiaries which, prior to the May 1997 sale of all company-owned restaurants, owned and/or operated Arby's restaurants, consisting of Arby's Restaurant Development Corporation, Arby's Restaurant Holding Company ('ARHC') and Arby's Restaurant Operations Company ('AROC'). See Note 3 for a discussion of the 1997 acquisitions and disposition referred to above. The accompanying consolidated financial statements present the consolidated financial position, results of operations and cash flows of TCPG as if it had been formed as of January 1, 1996. The consolidated financial position, results of operations and cash flows of each of TCPG, RC/Arby's, Triarc Beverage Holdings and Cable Car and their subsidiaries have been consolidated from their respective formation dates or acquisition dates by Triarc Parent since such entities were under the common control of Triarc Parent during such periods and, accordingly, are presented on an 'as if pooling' basis. The aforementioned capital contributions of subsidiaries by Triarc Parent to TCPG and to Triarc Beverage Holdings have been recognized using carryover basis accounting since all such entities were under common control. The entity representative of TCPG and its subsidiaries or any one or more of such entities or their subsidiaries, is referred to herein as the 'Company'. All significant intercompany balances and transactions have been eliminated in combination. CHANGE IN FISCAL YEAR Effective January 1, 1997 the Company changed its fiscal year from a calendar year to a year consisting of 52 or 53 weeks ending on the Sunday closest to December 31. In accordance therewith, the Company's 1997 fiscal year commenced January 1, 1997 and ended on December 28, 1997 and its 1998 fiscal year commenced December 29, 1997 and ended on January 3, 1999. Such periods are referred to herein as (i) 'the year ended December 28, 1997' or '1997' and (ii) 'the year ended January 3, 1999' or '1998', respectively. December 28, 1997 and January 3, 1999 are referred to herein as 'Year-End 1997' and 'Year-End 1998', respectively. CASH EQUIVALENTS All highly liquid investments with a maturity of three months or less when acquired are considered cash equivalents. The Company typically invests its excess cash in commercial paper of high credit-quality entities and repurchase agreements with high credit-quality financial institutions. Securities pledged as collateral for repurchase agreements are segregated and held by the financial institution until the maturity of each repurchase agreement. While the market value of the collateral is sufficient in the event of default, realization and/or retention of the collateral may be subject to legal proceedings in the event of default or bankruptcy by the other party to the agreement. INVENTORIES The Company's inventories are stated at the lower of cost (determined on the first-in, first-out basis) or market. F-8 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 INVESTMENTS IN AFFILIATES The Company's investments in affiliates in which it has significant influence over the investee ('Equity Investments') are accounted for in accordance with the equity method of accounting under which the consolidated results include the Company's share of income or loss of such investees. The excess, if any, of the carrying value of the Company's Equity Investments over the underlying equity in net assets of each investee is being amortized to 'Other income, net' on a straight-line basis over 35 years. The Company's investments in which it does not have significant influence over the investee are accounted for at cost. PROPERTIES AND DEPRECIATION AND AMORTIZATION Properties are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of properties is computed principally on the straight-line basis using the estimated useful lives of the related major classes of properties: 3 to 15 years for machinery and equipment and 15 to 40 years for buildings. Leased assets capitalized and leasehold improvements are amortized over the shorter of their estimated useful lives or the terms of the respective leases. AMORTIZATION OF INTANGIBLES Costs in excess of net assets of acquired companies ('Goodwill') are being amortized on the straight-line basis over 15 to 40 years. Trademarks are being amortized on the straight-line basis over 15 to 35 years. Deferred financing costs are being amortized as interest expense over the lives of the respective debt using the interest rate method. IMPAIRMENTS Intangible Assets The amount of impairment, if any, in unamortized Goodwill is measured based on projected future operating performance. To the extent future operating performance of those companies to which the Goodwill relates through the period such Goodwill is being amortized are sufficient to absorb the related amortization, the Company has deemed there to be no impairment of Goodwill. Long-Lived Assets The Company reviews its long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such review indicates an asset may not be recoverable, an impairment loss is recognized for the excess of the carrying value over the fair value of an asset to be held and used or over the net realizable value of an asset to be disposed. DERIVATIVE FINANCIAL INSTRUMENTS The Company enters into interest rate cap agreements in order to protect against significant interest rate increases on certain of its floating-rate debt. The costs of such agreements are amortized over the lives of the respective agreements. The only cap agreement outstanding as of January 3, 1999 is approximately 3% higher than the interest rate on the related debt as of such date. The Company had an interest rate swap agreement (see Note 6) entered into in order to synthetically alter the interest rate of certain of the Company's fixed-rate debt until the agreement's maturity in 1996. Losses or gains were recognized as incurred or earned as a component of interest expense, effectively correlated with the fair value of the underlying debt. In addition, a payment received at the inception of the agreement, which was deemed to be a fee to induce the Company to enter into the agreement, was amortized over the full life of the agreement since the Company was not at risk for any gain or loss on such payment. F-9 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 STOCK-BASED COMPENSATION The Company measures compensation costs for its employee stock-based compensation under the intrinsic value method. Accordingly, compensation cost for the Company's stock options is measured as the excess, if any, of the market price of the Company's stock at the date of grant over the amount an employee must pay to acquire the stock. FOREIGN CURRENCY TRANSLATION Financial statements of foreign subsidiaries are prepared in their respective local currencies and translated into United States dollars at the current exchange rates for assets and liabilities and an average rate for the year for revenues, costs and expenses. Net gains or losses resulting from the translation of foreign financial statements are charged or credited directly to the 'Currency translation adjustment' component of 'Accumulated other comprehensive deficit' in 'Member's equity (deficit)'. ADVERTISING COSTS AND PROMOTIONAL ALLOWANCES The Company accounts for advertising production costs by expensing such production costs the first time the related advertising takes place. Advertising costs amounted to $37,882,000, $40,730,000 and $48,389,000 for 1996, 1997 and 1998, respectively. In addition the Company supports its beverage bottlers and distributors with promotional allowances the most significant of which are for (i) indirect advertising by such bottlers and distributors including in-store displays and point-of-sale materials, (ii) cold drink equipment and (iii) promotional merchandise. Promotional allowances are principally expensed when the related promotion takes place. Estimates used to expense the costs of certain promotions where the Company expects reporting delays by the bottlers or distributors are adjusted quarterly based on actual amounts reported. Promotional allowances amounted to $74,597,000, $106,687,000 and $100,861,000 for 1996, 1997 and 1998, respectively and are included in 'Advertising, selling and distribution' in the accompanying consolidated statements of operations. INCOME TAXES The Company is included in the consolidated Federal income tax return of Triarc Parent. Pursuant to tax-sharing agreements with Triarc Parent, the Company provides for Federal income taxes on the same basis as if it filed a separate consolidated return. Deferred income taxes are provided to recognize the tax effect of temporary differences between the bases of assets and liabilities for tax and financial statement purposes. REVENUE RECOGNITION The Company records sales when inventory is shipped or delivered. Sales terms generally do not allow a right of return. Franchise fees are recognized as income when a franchised restaurant is opened since all material services and conditions related to the franchise fee have been substantially performed by the Company upon the restaurant opening. Franchise fees for multiple area development agreements represent the aggregate of the franchise fees for the number of restaurants in the area development and are recognized as income when each restaurant is opened in the same manner as franchise fees for individual restaurants. Royalties are based on a percentage of restaurant sales of the franchised outlet and are accrued as earned. (2) SIGNIFICANT RISKS AND UNCERTAINTIES NATURE OF OPERATIONS The Company is a holding company which is engaged in three lines of business: premium beverages, soft drink concentrates and restaurants. The premium beverage segment represents approximately 75% of the Company's consolidated revenues for the year ended January 3, 1999, the soft drink concentrate segment represents approximately 15% of such revenues, and the restaurant segment represents approximately 10% of such revenues. F-10 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 The premium beverage segment markets and distributes, principally to distributors and, to a lesser extent, directly to retailers, premium beverages and/or ready-to-drink iced teas under the principal brand names Snapple'r', Whipper Snapple'r', Snapple Farms'r', Mistic'r', Mistic Rain Forest Nectars'r', Mistic Fruit Blast'TM' and Stewart's'r'. The soft drink concentrate segment produces and sells, to bottlers, a broad selection of concentrates and, to a much lesser extent in 1996 and 1997 (none in 1998), carbonated beverages to distributors. These products are sold principally under the brand names RC Cola'r', Diet RC Cola'r', Cherry RC Cola'r', Diet Rite Cola'r', Diet Rite'r' flavors, Nehi'r', Upper 10'r' and Kick'r'. The restaurant segment franchises Arby's quick service restaurants representing the largest franchise restaurant system specializing in slow-roasted roast beef sandwiches. Prior to the May 1997 sale of all company-owned restaurants, the Company also operated Arby's restaurants (see Note 3). The Company operates its businesses principally throughout the United States. Information concerning the number of Arby's restaurants is as follows:
1996 1997 1998 ---- ---- ---- Franchised restaurants opened.......................... 129 125 130 Franchised restaurants closed.......................... 43 63 87 Restaurants transferred to franchisees................. 4 355 -- Restaurants open at end of period: Company-owned..................................... 355 -- -- Franchised........................................ 2,675 3,092 3,135 ----- ----- ----- Total........................................ 3,030 3,092 3,135 ----- ----- ----- ----- ----- -----
USE OF ESTIMATES The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. CERTAIN RISK CONCENTRATIONS The Company believes that its vulnerability to risk concentrations related to significant customers and vendors, products sold and sources of raw materials is somewhat mitigated due to the diversification of its businesses. Although premium beverages accounted for 75% of consolidated revenues in 1998, the Company believes that the risks from concentrations within the premium beverage segment are mitigated for several reasons. No customer of the premium beverage segment accounted for more than 3% of consolidated revenues in 1998. While the premium beverage segment has chosen to purchase certain raw materials (such as aspartame) on an exclusive basis from single suppliers, the Company believes that, if necessary, adequate raw materials can be obtained from alternate sources. The beverage segments' product offerings are varied, including fruit flavored beverages, iced teas, lemonades, carbonated sodas, 100% fruit juices, nectars and flavored seltzers. Risk of geographical concentration for all of the Company's businesses is also minimized since each of such businesses generally operates throughout the United States with minimal foreign exposure. (3) BUSINESS ACQUISITIONS AND DISPOSITIONS 1997 TRANSACTIONS Acquisition of Snapple On May 22, 1997 Triarc Beverage Holdings acquired (the 'Snapple Acquisition') Snapple, a marketer and distributor of premium beverages, from The Quaker Oats Company ('Quaker') for $309,386,000 consisting of cash of $300,126,000 (including $126,000 of post-closing adjustments) and $9,260,000 of fees and expenses. The purchase price for the Snapple Acquisition was funded from F-11 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (i) $250,000,000 of borrowings by Snapple on May 22, 1997 under a $380,000,000 credit agreement, as amended (the 'Existing Beverage Credit Agreement' -- see Note 6), entered into by Snapple, Mistic, Triarc Beverage Holdings and, as amended as of August 15, 1998, Cable Car and (ii) $75,000,000 from the issuance of 75,000 shares of redeemable preferred stock (see Note 9) of Triarc Beverage Holdings to Triarc Parent. The Snapple Acquisition was accounted for in accordance with the purchase method of accounting. The allocation of the purchase price of Snapple to the assets acquired and liabilities assumed, along with allocations related to the other 1997 acquisitions, is presented below under 'Purchase Price Allocations of Acquisitions'. The results of operations of Snapple have been included in the accompanying consolidated statements of operations from the May 22, 1997 date of the Snapple Acquisition. See below under 'Pro Forma Operating Data' for the unaudited supplemental pro forma condensed consolidated summary operating data of the Company (the 'Pro Forma Data') for the year ended December 28, 1997 giving effect to the Snapple Acquisition and related transactions, the Stewart's Acquisition (see below), the RTM Sale (see below) and the C&C Sale (see below). Stewart's Acquisition On November 25, 1997 Triarc Parent acquired (the 'Stewart's Acquisition') Cable Car, a marketer and distributor of premium beverages in the United States and Canada, primarily under the Stewart's'r' brand, for an aggregate purchase price of $40,596,000, as adjusted in 1998. Such purchase price consisted of (i) 1,566,858 shares of Triarc Parent common stock with a value of $37,409,000 as of November 25, 1997 (based on the closing price of such common stock on such date of $23.875 per share) issued in exchange for all of the outstanding stock of Cable Car, (ii) 154,931 options to acquire Triarc Parent common stock, with a value of $2,788,000 (based on a calculation using the Black-Scholes option pricing model) as of November 25, 1997 issued in exchange for all of the outstanding stock options of Cable Car and (iii) $399,000 (originally estimated at $650,000) of related expenses. The Stewart's Acquisition was accounted for in accordance with the purchase method of accounting. The allocation of the purchase price of Cable Car to the assets acquired and liabilities assumed, along with allocations related to the other 1997 acquisitions, is presented below under 'Purchase Price Allocations of Acquisitions'. See below under 'Pro Forma Operating Data' for the Pro Forma Data giving effect to, among other things, the Stewart's Acquisition. Sale of Restaurants In the fourth quarter of 1996, the Company decided to sell all of its company-owned restaurants in order to place greater focus on the more profitable franchise operations. Discussions commenced with RTM, Inc. in October 1996 which led to an agreement in principle in December 1996 to sell all of our restaurants to RTM, Inc. for an agreed-upon multiple of cash flow, the measurement of which was to be negotiated, plus $7,000,000. It was also agreed that the primary consideration would be the assumption of certain mortgage notes and equipment notes payable to FFCA Mortgage Corporation. On May 5, 1997 certain subsidiaries of the Company consummated the sale to affiliates of RTM, Inc. ('RTM'), the largest franchisee in the Arby's system, of all of the 355 company-owned restaurants (the 'RTM Sale'). The sales price consisted of cash and promissory notes (discounted value) aggregating $3,471,000 (including $2,092,000 of post-closing adjustments) and the assumption by RTM of an aggregate $54,682,000 in mortgage notes (the 'Mortgage Notes') and equipment notes (the 'Equipment Notes') payable to FFCA Mortgage Corporation and $14,955,000 in capitalized lease obligations. Effective May 5, 1997 RTM operates the 355 restaurants as a franchisee and pays royalties to the Company at a rate of 4% of those restaurants' net sales. In 1997 the Company recorded a $4,089,000 loss on the sale included in 'Gain (loss) on sale of businesses, net' (see Note 13) representing (i) a $1,457,000 provision for the fair value of the Company's effective guarantee of future lease commitments and then effective guarantee of debt repayments assumed by RTM (see below) and (ii) the adjustment of prior year F-12 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 estimates resulting from reconciling actual amounts to prior estimates for (a) remaining costs of previously closed restaurants, (b) transaction costs and (c) interpretative issues between the Company and RTM regarding the measurement of cash flow. Such 1997 loss is exclusive of an extraordinary charge in connection with the early extinguishment of the Mortgage Notes and the Equipment Notes (see Note 15). The results of operations of the sold restaurants have been included in the accompanying consolidated statements of operations until the May 5, 1997 date of sale. Following the RTM Sale the Company continues as the franchisor of the more than 3,000 Arby's restaurants. See below under 'Pro Forma Operating Data' for the Pro Forma Data giving effect to, among other things, the RTM Sale. Obligations under (i) approximately $117,000,000 of operating and capitalized lease payments (approximately $107,000,000 and $98,000,000 as of December 28, 1997 and January 3, 1999, respectively, assuming RTM has made all scheduled payments through such dates under such lease obligations) (see Note 17) and (ii) an aggregate $54,682,000 of Mortgage Notes and Equipment Notes which were assumed by RTM in connection with the RTM Sale (approximately $53,000,000 and $51,000,000 outstanding as of December 28, 1997 and January 3, 1999, respectively, assuming RTM has made all scheduled repayments through such dates), have been guaranteed by the Company and Triarc Parent, respectively. In addition, a subsidiary of the Company is a co-obligor with RTM under a loan, the repayments of which are being made by RTM, with an aggregate principal amount of $626,000 as of May 5, 1997 ($612,000 and $586,000 as of December 28, 1997 and January 3, 1999, respectively, assuming RTM had made all scheduled repayments through such dates). This loan has been guaranteed by Triarc Parent. In 1996 the Company recorded a $58,900,000 charge reported as 'Impairment of company-owned restaurants and related exit costs' consisting of (i) $46,000,000 for the reduction in carrying value of long lived assets to be disposed, (ii) $2,191,000 of estimated transaction costs and (iii) $10,709,000 of liabilities for exit costs associated with selling the company-owned restaurants. The $46,000,000 reduced the carrying value of the restaurant segment's long-lived assets to be sold from $117,116,000 to estimated fair value of $71,116,000 as of December 31, 1996, consisting of adjustments to 'Properties' of $36,343,000, 'Unamortized costs in excess of net assets of acquired companies' of $5,214,000 and 'Deferred costs and other assets' of $4,443,000. The $10,709,000 of liabilities for exit costs included $9,650,000 reflecting the present value of certain equipment operating lease obligations which would not be assumed by the purchaser and $1,059,000 relating to vacation and personal or medical absence entitlement costs principally paid to RTM for approximately 6,500 employees associated with the sold restaurants who became employees of RTM as a result of the RTM Sale. Although RTM was not assuming the operating lease obligations, RTM acquired the use of the leased equipment. The components of the liabilities for exit costs associated with selling the company-owned restaurants and an analysis of related activity are as follows (in thousands):
1996 PROVISION AND BALANCE BALANCE BALANCE DECEMBER 31, 1997 1997 DECEMBER 28, 1998 1998 JANUARY 3, 1996 PAYMENTS ADJUSTMENTS 1997 PAYMENTS ADJUSTMENTS 1999 ---- -------- ----------- ---- -------- ----------- ---- Equipment operating lease obligations........................ $ 9,650 $(2,313) $(364)(a) $6,973 $(2,873) $150(a) $4,250(b) Vacation and personal or medical absence entitlement costs principally paid to RTM for employees who became employees of RTM................................ 1,059 (1,059) -- -- -- -- -- ------- ------- ----- ------ ------- ---- ------ $10,709 $(3,372) $(364) $6,973 $(2,873) $150 $4,250 ------- ------- ----- ------ ------- ---- ------ ------- ------- ----- ------ ------- ---- ------
- ------------ (a) The adjustments represent changes in estimate of the remaining operating lease obligations. (b) The balance of equipment operating lease obligations as of January 3, 1999 represents lease payments extending to various dates through November 2001. F-13 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 The estimated fair value of the long-lived assets to be sold was determined based on the terms of the February 1997 agreement for the RTM Sale, including the sales price anticipated as of December 31, 1996 as discussed above. During 1996 and 1997 the operations of the restaurants to be disposed in the RTM Sale had net sales of $228,031,000 and $74,195,000, respectively, and a pretax income (loss) of $(2,602,000) and $848,000, respectively. Such loss during 1996 and income during 1997 reflected $9,913,000 and $3,319,000, respectively, of allocated general and administrative expenses and $8,421,000 and $2,756,000, respectively, of interest expense related to the Mortgage Notes and Equipment Notes and capitalized lease obligations directly related to the operations of the restaurants sold to RTM. During 1996 and 1997 all the company-owned restaurants, including units closed during 1996 prior to the RTM Sale, had net sales of $231,041,000 and $74,195,000, respectively, and cost of sales of $179,137,000 and $59,222,000, respectively, excluding depreciation and amortization related to sales of $12,008,000 and none, respectively. C&C Sale On July 18, 1997 Royal Crown completed the sale (the 'C&C Sale' and, collectively with the Snapple Acquisition, the Stewart's Acquisition and the RTM Sale, the '1997 Significant Transactions') of its rights to the C&C beverage line of mixers, colas and flavors, including the C&C trademark and equipment related to the operation of the C&C beverage line, to Kelco Sales & Marketing Inc. ('Kelco') for $750,000 in cash and an $8,650,000 note (the 'Kelco Note') with a discounted value of $6,003,000 of which $3,623,000 were allocated to the C&C Sale resulting in aggregate proceeds relating to the C&C Sale of $4,373,000. The Kelco Note included compensation both for the C&C Sale and future sales of concentrate for C&C products to Kelco subsequent to July 18, 1997 (the 'Minimum Sales Commitments') and technical services to be performed for Kelco by the Company subsequent to July 18, 1997. The principal of the Kelco Note was allocated first to the Minimum Sales Commitments based on the minimum Kelco purchase commitments set forth in the C&C Sale agreement resulting in a discounted value of $2,096,000, second to technical services to be performed for Kelco, as requested by Kelco, for seven years with a discounted value of $284,000 and the remainder was allocated to the C&C Sale. The Minimum Sales Commitments were valued at the contracted sales price for any Kelco purchases in excess of the minimums since the C&C Sale contract did not provide any price for the Minimum Sales Commitments. The technical services to be performed were valued based on the Company's estimated costs to provide such services based on an estimate of the services to be requested by Kelco since the C&C Sale contract did not provide any price for such technical services. The excess of the proceeds of $4,373,000 over the carrying value of the C&C trademark of $1,575,000 and the related equipment of $2,000 resulted in a pretax gain of $2,796,000 which, commencing in the third quarter of 1997, is being recognized pro rata between the gain on sale and the carrying value of the assets sold based on the cash proceeds and collections under the Kelco Note since realization of the Kelco Note was not at the date of sale, and is not yet, fully assured. Accordingly, gains of $576,000 and $314,000 were recognized in 'Gain (loss) on sale of businesses, net' (see Note 13) in the accompanying consolidated statements of operations for the years ended December 28, 1997 and January 3, 1999, respectively. See below under 'Pro Forma Operating Data' for the Pro Forma Data giving effect to, among other things, the C&C Sale. PRO FORMA OPERATING DATA (UNAUDITED) As a result of the 1997 Significant Transactions, the results of operations for the year ended January 3, 1999 are not comparable with such results for the year ended December 28, 1997. Accordingly, the following Pro Forma Data of the Company are set forth in order to present the 1997 results of operations on a more consistent basis with 1998. The 1997 Pro Forma Data have been prepared by adjusting the historical data as set forth in the accompanying 1997 consolidated statement of operations to give effect to the 1997 Significant Transactions on a consolidated basis, as if all of such transactions had been consummated on January 1, 1997. Such Pro Forma Data are presented for comparative purposes only and do not purport to be indicative of the Company's actual results of F-14 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 operations had such transactions actually been consummated on January 1, 1997 or of the Company's future results of operations and are as follows (in thousands):
AS REPORTED PRO FORMA -------- --------- Revenues.................................................... $696,152 $815,085 Operating profit............................................ 31,872 35,117 Loss before extraordinary charges........................... (18,986) (20,205)
1996 AND 1998 TRANSACTIONS Acquisition of T.J. Cinnamons In August 1996 Arby's acquired (the '1996 T.J. Cinnamons Acquisition') from Paramark Enterprises, Inc. ('Paramark', formerly known as T.J. Cinnamons, Inc.) the trademarks, service marks, recipes and proprietary formulae of T.J. Cinnamons, an operator and franchisor of retail bakeries specializing in gourmet cinnamon rolls and related products for cash of $1,972,000, interest-bearing notes payable of $1,750,000 paid through September 1998, non-interest bearing obligations of $600,000 (discounted value of $546,000) paid through July 1998 resulting from non-compete agreements and stock sale restrictions and a contingent payment dependent upon achieving certain specified sales targets over a seven-year period. Further on August 27, 1998 the Company acquired (together with the 1996 T.J. Cinnamons Acquisition, the 'T.J. Cinnamons Acquisition') from Paramark all of Paramark's franchise agreements for T.J. Cinnamons full concept bakeries and Paramark's wholesale distribution rights for T.J. Cinnamons products, as well as settling remaining contingent payments for the 1996 T.J. Cinnamons Acquisition. The aggregate consideration in 1998 of $3,910,000 consisted of cash of $3,000,000 and a $1,000,000 (discounted value of $910,000) non-interest bearing obligation due in equal monthly installments through August 2000. The T.J. Cinnamons Acquisition was accounted for in accordance with the purchase method of accounting. The allocation of the purchase price of the T.J. Cinnamons Acquisition to the assets acquired and liabilities assumed is presented below under 'Purchase Price Allocations of Acquisitions'. PURCHASE PRICE ALLOCATIONS OF ACQUISITIONS The Snapple Acquisition, the Stewart's Acquisition and the T.J. Cinnamons Acquisition discussed above, have been accounted for in accordance with the purchase method of accounting. In accordance therewith, the following table sets forth the allocation of the aggregate purchase prices and a reconciliation to business acquisitions in the accompanying consolidated statements of cash flows (in thousands):
1996 1997 1998 ---- ---- ---- Current assets............................................ $ -- $113,767 $ -- Properties................................................ -- 21,613 -- Goodwill (amortized over 15 to 35 years).................. -- 102,271 160 Trademarks................................................ 3,951 221,300 3,389 Other assets.............................................. 317 27,697 110 Current liabilities....................................... (358) (71,717) -- Long-term debt assumed including current portion.......... -- (686) -- Other liabilities......................................... (188) (66,421) -- ------ -------- ------ 3,722 347,824 3,659 Less (plus): Long-term debt issued to sellers..................... 1,750 -- 910 Purchase price (adjustment in 1998) for Stewart's Acquisition paid by Triarc Parent through the issuance of its common stock and stock options and 'pushed down' to Cable Car......................... -- 40,847 (251) ------ -------- ------ $1,972 $306,977 $3,000 ------ -------- ------ ------ -------- ------
F-15 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (4) BALANCE SHEET DETAIL RECEIVABLES The following is a summary of the components of receivables (in thousands):
YEAR-END ----------------- 1997 1998 ---- ---- Receivables: Trade.................................................. $71,133 $63,283 Affiliates............................................. 4,327 -- Other.................................................. 11,958 8,958 ------- ------- 87,418 72,241 Less allowance for doubtful accounts........................ 11,241 5,551 ------- ------- $76,177 $66,690 ------- ------- ------- -------
The following is an analysis of the allowance for doubtful accounts (in thousands):
1996 1997 1998 ---- ---- ---- Trade: Balance at beginning of year........................ $1,696 $ 2,559 $ 7,971 Provision for doubtful accounts..................... 1,450 6,048(a) 2,861 Recoveries of accounts previously written off....... 195 725 32 Uncollectible accounts written off.................. (782) (1,361) (5,313) ------ ------- ------- Balance at end of year.............................. $2,559 $ 7,971 $ 5,551 ------ ------- ------- ------ ------- -------
(a) Includes $3,229,000 included in 'Charges related to post-acquisition transition, integration and changes to business strategies.'
1996 1997 1998 ---- ---- ---- Affiliates: Balance at beginning of year...................... $ 551 $2,551 $ 3,270 Provision for (reversal from) doubtful accounts (subsequent recoveries of accounts previously fully reserved) (Note 18)....................... 2,000 975 (474) Recoveries of accounts previously written off..... -- -- 474 Uncollectible accounts written off................ -- (256) (3,270) ------ ------ ------- Balance at end of year............................ $2,551 $3,270 $ -- ------ ------ ------- ------ ------ -------
Substantially all receivables are pledged as collateral for certain debt (Notes 6 and 21). INVENTORIES The following is a summary of the components of inventories (in thousands):
YEAR-END ----------------- 1997 1998 ---- ---- Raw materials............................................... $19,835 $20,268 Work in process............................................. 214 98 Finished goods.............................................. 37,345 26,395 ------- ------- $57,394 $46,761 ------- ------- ------- -------
Substantially all inventories are pledged as collateral for certain debt (see Notes 6 and 21). F-16 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 PROPERTIES The following is a summary of the components of properties (in thousands):
YEAR-END --------------------- 1997 1998 ---- ---- Land...................................................... $ 2,351 $ 1,911 Buildings and improvements................................ 5,961 5,623 Leasehold improvements.................................... 5,349 6,628 Machinery and equipment................................... 29,763 35,329 Leased assets capitalized................................. 787 431 ------- ------- 44,211 49,922 Less accumulated depreciation and amortization............ 16,299 24,602 ------- ------- $27,912 $25,320 ------- ------- ------- -------
Substantially all properties are pledged as collateral for certain debt (see Notes 6 and 21). UNAMORTIZED COSTS IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES The following is a summary of the components of unamortized costs in excess of net assets of acquired companies (in thousands):
YEAR-END ----------------------- 1997 1998 ---- ---- Costs in excess of net assets of acquired companies..... $355,321 $355,482 Less accumulated amortization........................... 76,335 87,267 -------- -------- $278,986 $268,215 -------- -------- -------- --------
TRADEMARKS The following is a summary of the components of trademarks (in thousands):
YEAR-END ----------------------- 1997 1998 ---- ---- Trademarks.............................................. $282,701 $286,231 Less accumulated amortization........................... 13,500 24,325 -------- -------- $269,201 $261,906 -------- -------- -------- --------
Substantially all trademarks are pledged as collateral for certain debt (see Notes 6 and 21). DEFERRED COSTS AND OTHER ASSETS The following is a summary of the components of deferred costs and other assets (in thousands):
YEAR-END --------------------- 1997 1998 ---- ---- Deferred financing costs.................................. $27,123 $26,948 Other..................................................... 12,229 11,354 ------- ------- 39,352 38,302 Less accumulated amortization of deferred financing costs................................................... 11,169 15,208 ------- ------- $28,183 $23,094 ------- ------- ------- -------
F-17 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 ACCRUED EXPENSES The following is a summary of the components of accrued expenses (in thousands):
YEAR-END ---------------------- 1997 1998 ---- ---- Accrued interest..................................... $ 17,345 $19,166 Accrued promotional allowances....................... 21,022 14,922 Accrued compensation and related benefits............ 12,785 13,328 Accrued production contract losses(a)................ 13,022 4,639 Accrued advertising.................................. 3,832 2,582 Accrued legal settlements and environmental matters (Note 19).......................................... 10,274 1,534 Other................................................ 32,556 25,277 -------- ------- $110,836 $81,448 -------- ------- -------- -------
- ------------ (a) Represents obligations related to the portion of those long-term production contracts with copackers, assumed in connection with the Snapple Acquisition, which the Company does not anticipate utilizing based on projected future volumes. The decrease in this amount during 1998 was due to obligations settled or repaid during such year. (5) INVESTMENTS IN AFFILIATES The following is a summary of the components of 'Investments in affiliates' at December 28, 1997 (none at January 3, 1999) (in thousands): Select Beverages........................................... $24,926 Rhode Island Beverages..................................... 550 ------- $25,476 ------- -------
Snapple owned 20% of Select Beverages, Inc. ('Select Beverages') until its sale on May 1, 1998. The Company's equity in the earnings (loss) of Select Beverages of $862,000 and $(1,222,000) for 1997 and 1998 (prior to the sale of Select Beverages), respectively, is included in 'Other income, net' (see Note 14) in the accompanying consolidated statements of operations. The Company's investment in Select Beverages exceeded the underlying equity in Select Beverage's net assets. Amortization of such excess in 1998 of $341,000 was included in the Company's equity in the loss of Select Beverages during 1998. On May 1, 1998 the Company sold its interest in Select Beverages for $28,342,000, subject to certain post-closing adjustments. The Company recognized a pre-tax gain on the sale of Select Beverages during 1998 of $4,702,000, included in 'Gain (loss) on sale of businesses, net' (see Note 13), representing the excess of the net sales price over the Company's carrying value of the investment in Select Beverages and related post-closing adjustments and expenses. Snapple owned 50% of the stock of Rhode Island Beverage Packing Company, L.P. ('Rhode Island Beverages' or 'RIB') prior to its disposition in February 1998. Snapple and Quaker were defendants in a breach of contract case filed in April 1997 by RIB, prior to the Snapple Acquisition (the 'RIB Matter'). The RIB Matter was settled in February 1998 and in accordance therewith Snapple surrendered (i) its 50% investment in RIB ($550,000) and (ii) certain properties ($1,202,000) and paid RIB $8,230,000. The settlement amounts were fully provided for in a combination of (i) $6,530,000 of legal reserves provided in 'Charges related to post-acquisition transition, integration and changes to business strategies' (see Note 11), (ii) $3,321,000 of reserves for losses in long-term production contracts established in the Snapple Acquisition purchase accounting (see Note 3) and (iii) $131,000 of a current year accrual related to the RIB long-term production contract included in historical liabilities at the date of the Snapple Acquisition. Since at the date of the Snapple Acquisition the investment in RIB F-18 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 was expected to be surrendered in connection with the settlement of the RIB Matter, the Company did not recognize any equity in the earnings of RIB prior to such surrender in February 1998. (6) LONG-TERM DEBT Long-term debt consisted of the following (in thousands):
YEAR-END ----------------------- 1997 1998 ---- ---- 9 3/4% senior secured notes due 2000(a)................. $275,000 $275,000 Existing Beverage Credit Agreement(b) Term loans bearing interest at a weighted average rate of 8.99% at January 3, 1999................... 296,500 284,333 Mortgage Notes and Equipment Notes payable to FFCA Mortgage Corporation, bearing interest at a weighted average rate of 10.39% as of January 3, 1999, due through 2016............................. 4,297 3,733 Capitalized lease obligations........................... 719 158 Other................................................... 1,396 7,431 -------- -------- Total debt......................................... 577,912 570,655 Less amounts payable within one year............... 13,798 9,678(c) -------- -------- $564,114 $560,977 -------- -------- -------- --------
Aggregate annual maturities of long-term debt, including capitalized lease obligations, were as follows as of January 3, 1999 (in thousands)(c): 1999.............................................. $ 9,678 2000.............................................. 11,794 2001.............................................. 10,662 2002.............................................. 12,929 2003.............................................. 15,126 Thereafter........................................ 510,466 -------- $570,655 -------- --------
(a) On February 25, 1999 the 9 3/4% senior secured notes due 2000 (the '9 3/4% Senior Notes') were called for redemption by the Company on March 30, 1999, prior to their scheduled maturity of August 1, 2000, with the funding thereof to come from a portion of the proceeds from the Refinancing Transactions (see Note 21). Prior to 1996 the Company entered into a three-year interest rate swap agreement (the 'Swap Agreement') in the amount of $137,500,000. Under the Swap Agreement, interest on $137,500,000 was paid by the Company at a floating rate (the 'Floating Rate') based on the 180-day London Interbank Offered Rate ('LIBOR') and the Company received interest at a fixed rate of 4.72%. The Floating Rate was set at the inception of the Swap Agreement through January 31, 1994 and thereafter was retroactively reset at the end of each six-month calculation period through July 31, 1996 and at the maturity of the Swap Agreement on September 24, 1996. The transaction effectively changed the Company's interest rate on $137,500,000 of the 9 3/4% Senior Notes from a fixed-rate to a floating-rate basis through September 24, 1996. Under the Swap Agreement during 1994 the Company received $614,000 which was determined at the inception of the Swap Agreement. Subsequently, the Company paid (i) $2,271,000 during 1995 in connection with such year's two six-month reset periods and (ii) $1,631,000 during 1996 in connection with such year's two six-month reset periods and the reset period ending with the Swap Agreement's maturity on September 24, 1996. (b) The $284,333,000 of outstanding term loans (there were no outstanding revolving credit loans) under the Existing Beverage Credit Agreement as of January 3, 1999 and February 25, 1999 was repaid on February 25, 1999 using a portion of the proceeds from the Refinancing Transactions (see (footnotes on next page) F-19 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (footnotes from previous page) Note 21). The Existing Beverage Credit Agreement consisted of a $300,000,000 term facility of which $225,000,000 and $75,000,000 of loans (the 'Existing Term Loans') were borrowed by Snapple and Mistic, respectively, at the Snapple Acquisition date ($213,250,000 and $71,083,000, respectively, outstanding at January 3, 1999) and an $80,000,000 revolving credit facility which provided for revolving credit loans (the 'Existing Revolving Loans') by Snapple, Mistic, Triarc Beverage Holdings and, as amended as of August 15, 1998, Cable Car of which $25,000,000 and $5,000,000 were borrowed on the Snapple Acquisition date by Snapple and Mistic, respectively. The Existing Revolving Loans were repaid prior to December 28, 1997 and no Existing Revolving Loans were outstanding at December 28, 1997 or January 3, 1999. The aggregate $250,000,000 originally borrowed by Snapple was principally used to fund a portion of the purchase price for Snapple (see Note 3). The aggregate $80,000,000 originally borrowed by Mistic was principally used to repay all of the $70,850,000 then outstanding borrowings under Mistic's former bank credit facility (the 'Former Mistic Bank Facility') plus accrued interest thereon. (c) The current portion of long-term debt as of January 3, 1999 reflects a reclassification to long term of the portion ($9,419,000) of the amount originally due in 1999 under the Existing Beverage Credit Agreement which on February 25, 1999 was refinanced to long term (see Note 21). The annual maturities of long-term debt in each of the five years from 1999 through 2003 are lower following such refinancing than under the Existing Beverage Credit Agreement and the 9 3/4% Senior Notes. Accordingly, the annual maturities of long-term debt set forth in the table above reflect such refinancing. The Company's debt agreements contain various covenants which (i) require meeting certain financial amount and ratio tests; (ii) limit, among other matters, (a) the incurrence of indebtedness, (b) the retirement of certain debt prior to maturity, (c) investments, (d) asset dispositions, (e) capital expenditures and (f) affiliate transactions other than in the normal course of business; and (iii) restrict the payment of dividends to Triarc Parent (see below). As of January 3, 1999 the Company was in compliance with all such covenants. RC/Arby's, Triarc Beverage Holdings and Cable Car were unable to pay any dividends or make any loans or advances to Triarc Parent as of January 3, 1999 under the terms of the Company's indenture and credit agreements. See Note 21 for disclosure regarding one-time distributions paid to Triarc by certain of its subsidiaries in connection with the Refinancing Transactions. Under the Company's various debt agreements, substantially all of the Company's assets other than cash and cash equivalents are pledged as security as of January 3, 1999. In addition, (i) obligations under the 9 3/4% Senior Notes have been guaranteed by Royal Crown and Arby's, (ii) obligations under the Existing Beverage Credit Agreement were guaranteed by Snapple, Mistic, Triarc Beverage Holdings and Cable Car prior to the repayment thereof and (iii) the remaining obligations under the Mortgage Notes and Equipment Notes retained by the Company (see Note 3 for disclosure regarding the guarantee of the Mortgage Notes and Equipment Notes assumed by RTM) have been guaranteed by Triarc Parent. As collateral for the guarantees of the obligations under the 9 3/4% Senior Notes and the Existing Beverage Credit Agreement, all of the stock of Royal Crown, Arby's, Snapple, Mistic, Triarc Beverage Holdings and Cable Car was pledged. See Note 21 for the effect of the February 25, 1999 refinancing on the pledging of assets and debt guarantees and related collateral. (7) FAIR VALUE OF FINANCIAL INSTRUMENTS The Company has the following financial instruments for which the disclosure of fair values is required: cash and cash equivalents, accounts receivable and payable, accrued expenses, due to affiliates, long-term debt and, as of December 28, 1997, note receivable from Triarc and notes payable to affiliates. The carrying amounts of cash and cash equivalents, accounts payable, accrued expenses, due to affiliates, the note receivable from Triarc and notes payable to affiliates approximated fair value due to the short-term maturities of such assets and liabilities. The carrying amount of accounts receivable approximated fair value due to the related allowance for doubtful accounts. The carrying amounts and fair values of long-term debt (see Note 6) were as follows (in thousands): F-20 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999
YEAR-END ----------------------------------------- 1997 1998 ------------------- ------------------- CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE ------ ----- ------ ----- 9 3/4% Senior Notes......................... $275,000 $279,000 $275,000 $278,000 Existing Beverage Credit Agreement.......... 296,500 296,500 284,333 284,333 Mortgage Notes and Equipment Notes.......... 4,297 4,612 3,733 4,175 Other long-term debt........................ 2,115 2,115 7,589 7,589 -------- -------- -------- -------- $577,912 $582,227 $570,655 $574,097 -------- -------- -------- -------- -------- -------- -------- --------
The fair values of the 9 3/4% Senior Notes are based on quoted market prices. The fair values of the Existing Term Loans under the Existing Beverage Credit Agreement approximated their carrying values due to the relatively frequent resets of their floating interest rates. The fair values of the Mortgage Notes and Equipment Notes were determined by discounting the future scheduled payments using an interest rate assuming the same original issuance spread over a current Treasury bond yield for securities with similar durations. The fair values of all other long-term debt were assumed to reasonably approximate their carrying amounts since (i) for capitalized lease obligations, the weighted average implicit interest rate approximates current levels and (ii) for all other debt, the remaining maturities are relatively short-term or the carrying amounts of such debt are relatively insignificant. (8) INCOME TAXES As discussed in Note 1, the Company is included in the consolidated Federal income tax return of Triarc Parent. Pursuant to tax-sharing agreements between Triarc Parent and each of Triarc Beverage Holdings (including Cable Car effective August 15, 1998), RC/Arby's and Cable Car (through August 15, 1998), the Company provides for Federal income taxes on the same basis as if separate consolidated returns for Triarc Beverage Holdings, RC/Arby's and Cable Car were filed. As of December 28, 1997 and January 3, 1999, the Company was in a net operating loss carryforward position and, as such, there were no taxes currently payable. The income (loss) before income taxes and extraordinary charges consisted of the following components (in thousands):
1996 1997 1998 ---- ---- ---- Domestic............................................... $(71,588) $(24,807) $55,050 Foreign................................................ (3,408) 679 221 -------- -------- ------- $(74,996) $(24,128) $55,271 -------- -------- ------- -------- -------- -------
The (provision for) benefit from income taxes consisted of the following components (in thousands):
1996 1997 1998 ---- ---- ---- Current: Federal............................................ $ (239) $(3,646) $(11,695) State.............................................. (751) (1,051) (2,665) Foreign............................................ (370) (805) (457) ------- ------- -------- (1,360) (5,502) (14,817) ------- ------- -------- Deferred: Federal............................................ 22,570 9,722 (8,407) State.............................................. 2,418 922 (2,060) ------- ------- -------- 24,988 10,644 (10,467) ------- ------- -------- Total......................................... $23,628 $ 5,142 $(25,284) ------- ------- -------- ------- ------- --------
The current deferred income tax asset and the net non-current deferred income tax (liability) resulted from the following components (in thousands): F-21 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999
YEAR-END ------------------- 1997 1998 ---- ---- Current deferred income tax assets: Federal net operating loss carryforwards under tax-sharing agreements with Triarc Parent ($17,058) and state net operating loss carryforwards ($870).... $ 17,928 $ -- Accrued employee benefit costs......................... 3,491 3,363 Glass front vending machines written off............... 2,925 2,925 Allowance for doubtful accounts........................ 4,095 2,340 Closed facilities reserves............................. 1,919 1,371 Accrued production contract losses..................... 4,588 1,320 Inventory obsolescence reserves........................ 533 1,210 Accrued interest relating to income tax matters........ 773 1,123 Accrued lease payments for equipment transferred to RTM (see Note 17)........................................ -- 1,082 Accrued advertising and promotions..................... 2,468 675 Facilities relocation and corporate restructuring...... 1,185 449 Accrued legal settlements and environmental matters.... 3,643 284 Other, net............................................. 4,444 2,792 -------- -------- 47,992 18,934 -------- -------- Non-current deferred income tax assets (liabilities): Trademarks basis differences........................... (53,929) (55,962) Reserve for income tax contingencies and other tax matters.............................................. (6,518) (9,379) Federal net operating loss carryforwards and excess income tax payments under tax-sharing agreements..... 20,650 39,518 State net operating loss carryforwards................. 3,716 5,158 Properties basis differences including depreciation.... (1,676) 3,978 Deferred franchise fees................................ 1,581 2,108 Accrued production contract losses..................... 3,471 -- Other, net............................................. 4,941 5,406 -------- -------- (27,764) (9,173) -------- -------- $ 20,228 $ 9,761 -------- -------- -------- --------
As of January 3, 1999 the Company had net operating loss carryforwards for Federal income tax purposes (the 'NOLs') under tax-sharing agreements with Triarc Parent of $84,476,000. Such carryforwards will expire $424,000, $6,827,000, $13,575,000, $1,956,000 and $61,694,000 in each of the years 2008 through 2012, respectively. Subsequent to January 3, 1999 the Company entered into a revised tax-sharing agreement and amendment thereto with Triarc Parent limiting the benefit available to the Company for the NOLs (see Note 21). F-22 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 The difference between the reported (provision for) benefit from income taxes and the tax (provision) benefit that would result from applying the 35% Federal statutory rate to the income (loss) before income taxes and extraordinary charges is reconciled as follows (in thousands):
1996 1997 1998 ---- ---- ---- Income tax (provision) benefit computed at Federal statutory rate........................................ $26,249 $ 8,445 $(19,345) Increase (decrease) in Federal tax benefit in 1996 and 1997 and (increase) decrease in Federal tax provision in 1998 resulting from: Amortization of non-deductible Goodwill............ (2,005) (2,471) (3,138) State income tax (provision) benefit, net of Federal income tax effect........................ 1,084 (84) (3,071) Foreign tax rate in excess of United States Federal statutory rate and foreign withholding taxes, net of Federal income tax benefit.................... (241) (432) (247) Effect of net operating losses of foreign subsidiary for which no tax carryback benefit is available (1,193) -- -- Other, net......................................... (266) (316) 517 ------- ------- -------- $23,628 $ 5,142 $(25,284) ------- ------- -------- ------- ------- --------
The Federal income tax returns of Triarc Parent and its subsidiaries, including RC/Arby's, have been examined by the Internal Revenue Service (the 'IRS') for the tax years 1989 through 1992. Triarc Parent has reached a tentative settlement with the IRS, which is subject to review by the Congressional Joint Committee on Taxation, regarding all remaining issues in such audit. In connection therewith, the Company paid $4,576,000, including interest, during 1997 of which $2,426,000 was the amount of tax due and $2,150,000 was interest thereon. Such amounts were charged to reserves principally provided in prior years. If the settlement is so approved, the Company anticipates it would not have to make any further payments. The IRS is examining the Federal income tax returns of Triarc Parent and its subsidiaries, including RC/Arby's, for the year ended April 30, 1993 and eight-month transition period ended December 31, 1993. In connection therewith, Triarc Parent has not received any notices of proposed adjustments. In each of 1996, 1997 and 1998, the Company provided $1,000,000 for estimated interest, included in 'Interest expense,' principally on the Company's reserve for income tax contingencies relating to such examinations and anticipated subsequent examinations through December 31, 1996, December 28, 1997 and January 3, 1999, respectively. Management of the Company believes that adequate aggregate provisions have been made principally in years prior to 1996 for any tax liabilities, including interest thereon through January 3, 1999, that may result from the resolution of these IRS examinations. (9) REDEEMABLE PREFERRED STOCK On May 22, 1997 Triarc Beverage Holdings issued 75,000 shares of its redeemable cumulative convertible preferred stock, $1.00 par value (the 'Redeemable Preferred Stock') to Triarc Parent for $75,000,000. On August 21, 1997 each of the 75,000 outstanding shares of Redeemable Preferred Stock was converted into 1/100 of a share as a result of a 1:100 reverse stock split, resulting in 750 issued and outstanding shares of Redeemable Preferred Stock. The Redeemable Preferred Stock (i) bears a cumulative annual dividend of 10% on stated value compounded annually for any undeclared dividends, payable in cash or additional shares of Redeemable Preferred Stock, if declared by, and at the option of, the Company, (ii) is convertible into 750 shares of Triarc Beverage Holdings' common stock (the 'Triarc Beverage Common Stock') at an adjusted conversion price of $100,000 per share, (iii) requires mandatory redemption on May 22, 2009 at $100,000 per share plus accrued and unpaid dividends and (iv) has an aggregate liquidation value of $75,000,000 plus accrued and unpaid dividends of $12,587,000 F-23 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 as of January 3, 1999. The cumulative dividends not declared or paid of $4,604,000 and $7,983,000 for each of the years ended December 28, 1997 and January 3, 1999, respectively, have been accounted for as increases in 'Redeemable preferred stock' with offsetting charges to 'Contributed capital' since payment of the dividends is not solely in the control of the Company. (10) MEMBER'S EQUITY Triarc Beverage Holdings adopted the Triarc Beverage Holdings Corp. 1997 Stock Option Plan (the 'Triarc Beverage Plan') in 1997 which provides for the grant of options to purchase shares of Triarc Beverage Common Stock to key employees, officers, directors and consultants of Triarc Beverage Holdings, Triarc Parent and their affiliates. Stock options under the Triarc Beverage Plan have maximum terms of ten years and vest ratably over periods not exceeding four years from the date of grant. The Triarc Beverage Plan provides for a maximum of 150,000 shares of Triarc Beverage Common Stock to be issued upon the exercise of stock options and there remain 4,575 shares available for future grants under the Triarc Beverage Plan as of January 3, 1999. A summary of changes in outstanding stock options under the Triarc Beverage Plan is as follows:
OPTION OPTIONS PRICE ------- ----- Granted during 1997......................................... 76,250 $147.30 ------- Outstanding at December 28, 1997............................ 76,250 $147.30 Granted during 1998......................................... 72,175 $191.00 Terminated during 1998...................................... (3,000) $147.30 ------- Outstanding at January 3, 1999.............................. 145,425 ------- -------
The option prices of the grants during 1997 and 1998 were equal to fair value at the respective dates of grant as determined by independent appraisals. The weighted average grant date fair value of the grants during 1997 and 1998 was $50.75 and $60.01, respectively. The weighted average option price of the outstanding options at January 3, 1999 was $168.99. Such options (i) vest ratably on July 1 of 1999, 2000 and 2001 and, accordingly, no options have been exercised or are exercisable as of January 3, 1999 and (ii) have a remaining weighted average term of 9.1 years at January 3, 1999. As previously disclosed in Note 1, the Company accounts for stock options in accordance with the intrinsic value method. Accordingly, the Company has not recognized any compensation expense for the stock options granted in 1997 or 1998. Had compensation cost for such options been determined in accordance with the fair value method, the Company's 1997 net loss would have been $22,264,000 and the Company's net income for 1998 would have been $28,277,000. The fair values of stock options on the date of grant were estimated using the Black-Scholes option pricing model with the following assumptions: (i) weighted average risk-free interest rate of 6.22% and 5.54% for the 1997 and 1998 grants, respectively, (ii) expected option life of 7 years and (iii) no dividends would be paid. Since the stock of Triarc Beverage Holdings is not publicly traded, volatility was not applicable. The above pro forma amounts are not likely to be representative of the effects on net income in future periods because pro forma compensation expense for grants under the Triarc Beverage Plan did not occur prior to its adoption in 1997. In 1995 the Company granted the syndicating lending bank in connection with the Former Mistic Bank Facility and two senior officers of Mistic stock appreciation rights (the 'Mistic Rights') for the equivalent of 3% and 9.7% respectively, of Mistic's outstanding common stock plus the equivalent shares represented by such stock appreciation rights. The Mistic Rights granted to the syndicating lending bank were immediately vested and of those granted to the senior officers, one-third vested over time and two-thirds vested depending on Mistic's performance. The Mistic Rights provided for appreciation in the per-share value of Mistic common stock above a base price of $28,637 per share, F-24 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 which was equal to the price per share paid by Triarc Parent at the time of the Mistic acquisition in 1995. The value of the Mistic Rights granted to the syndicating lending bank was recorded as deferred financing costs. The Company recognized periodically the estimated increase or decrease in the value of the Mistic Rights; such amounts were not significant to the Company's consolidated results of operations in 1996 or 1997. In connection with the refinancing of the Former Mistic Bank Facility in May 1997, the Mistic Rights granted to the syndicating lending bank were repurchased by the Company for $492,000; the $177,000 excess of such cost over the then recorded value of such rights of $315,000 was recorded as 'Interest expense' during 1997. In addition, the Mistic Rights granted to the two senior officers were canceled in 1997 in consideration for, among other things, their participation in the Triarc Beverage Plan. Since the estimated per-share value of the Mistic common stock at the time of such cancellation was lower than the base price of the Mistic Rights, no income or expense was required to be recorded as a result of such cancellation. (11) CHARGES RELATED TO POST-ACQUISITION TRANSITION, INTEGRATION AND CHANGES TO BUSINESS STRATEGIES Charges related to post-acquisition transition, integration and changes to business strategies are attributed to the Snapple Acquisition and the Stewart's Acquisition during 1997 and consisted of the following (in thousands): Non-cash charges: Write down glass front vending machines based on the Company's change in estimate of their value considering the Company's plans for their future use(a)................................................ $12,557 Provide additional reserves for doubtful accounts related to Snapple ($2,254) and the effect of the Snapple Acquisition ($975) on collectibility of a receivable from MetBev, Inc., an affiliate (see Note 18) based on the Company's change in estimate of the related write-off to be incurred(b)............... 3,229 Cash obligations: Provide additional reserves for legal matters based on the Company's change in Quaker's estimate of the amounts required reflecting the Company's plans and estimates of costs to resolve such matters(c)......... 6,697 Provide for certain costs in connection with the successful consummation of the Snapple Acquisition and the Mistic refinancing in connection with entering into the Existing Beverage Credit Agreement(d)........ 4,000 Provide for fees paid to Quaker pursuant to a transition services agreement(e)...................... 2,819 Provide for the portion of promotional expenses relating to the period of 1997 prior to the Snapple Acquisition as a result of the Company's then current operating expectations(f)............................. 2,510 Provide for costs, principally for independent consultants, incurred in connection with the conversion of Snapple to the Company's operating and financial information systems(g)...................... 1,603 Sign-on bonus related to the Stewart's Acquisition..... 400 ------- $33,815 ------- -------
- ------------ (a) During Quaker's ownership of Snapple, the glass front vending machines were held for sale to distributors and, accordingly, were carried at their estimated net realizable value. During the business transition following the Snapple Acquisition, the Company became aware that these machines were frequently unreliable in the field. The Company made the decision to correct the mechanical defects in the machines and to allow distributors to use the machines at locations (footnotes continued on next page) F-25 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (footnotes continued from previous page) chosen by them, without the cost of purchasing them. By deciding to no longer sell the glass front vending machines, the Company will not recover from its customers the value of the machines acquired in the Snapple Acquisition. Accordingly, because the Company expects no specific identifiable future cash flows, the Company wrote off an amount representing the excess of the carrying value of the machines over their estimated scrap value given the Company's decision described above. (b) In the transition following the Snapple Acquisition, the Company decided that, in order to improve relationships with customers, it would not actively seek to collect certain past due balances, disputed amounts or amounts that were not sufficiently supportable, and provided additional reserves for doubtful accounts of $2,254,000. The Company's soft drink concentrate segment sold finished products through MetBev, Inc. ('MetBev'), a distributor in the New York metropolitan area. Prior to the Snapple Acquisition, the MetBev business was sold to a competitor of Snapple (see Note 18). When the Company acquired Snapple, it recognized that its efforts to rebuild Snapple would have a severe competitive effect on the acquiror of the MetBev business. The Company acquired Snapple with the intent that Snapple would regain market share it had lost in the New York metropolitan area. As a result of the Snapple Acquisition and the Company's business strategy, the Company concluded that the remaining $975,000 receivable from MetBev would more likely than not become uncollectible. (c) In the transition following the Snapple Acquisition, the Company decided that, in order to improve relationships with customers and reverse Snapple's sales decline, it would attempt to settle as many of the legal matters pending at the time of the Snapple Acquisition, in particular the RIB Matter (see Note 5), as quickly as possible. Accordingly, the Company provided $6,697,000 representing the excess of the Company's estimate to settle such claims over the existing reserves established by Quaker as of the date of the Snapple Acquisition. (d) In connection with the Snapple Acquisition and the related refinancing of the debt of Mistic, Snapple and Mistic paid a $4,000,000 fee to Triarc Parent on May 22, 1997 in order to compensate Triarc Parent for its recurring indirect costs incurred while providing assistance in consummating these transactions. (e) During the transition following the Snapple Acquisition, the Company paid $2,819,000 to Quaker in return for Quaker providing certain operating and accounting services for Snapple for a six-week period in accordance with the terms of a transition services agreement. Quaker performed these services while the Company transitioned the records, operations and management to the Company and its systems. (f) In the transition following the Snapple Acquisition, the Company decided that, in order to improve relationships with customers, the Company would not pursue collection of the many questionable claimed promotional credits and recognized within 'Charges related to post-acquisition transition, integration and changes to business strategies' the $2,510,000 of promotional costs in June 1997 which were in excess of the high end of the range of the Company's expectations for promotional costs. (g) In the transition following the Snapple Acquisition, the Company recognized $1,603,000 of costs incurred to engage various consultants to help the Company plan for the related systems and business procedure modifications necessary in order to be able to manage the Snapple business. As of December 28, 1997 all cash obligations had been liquidated other than $6,697,000 of the additional reserves for legal matters, which were liquidated during the year ended January 3, 1999. F-26 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (12) FACILITIES RELOCATION AND CORPORATE RESTRUCTURING The components of the facilities relocation and corporate restructuring charge and an analysis of related activity are as follows (in thousands):
1996 ---------------------------------------------------- WRITE-OFF BALANCE OF RELATED DECEMBER 31, PROVISION (A) PAYMENTS ASSETS 1996 ------------- -------- ------ ---- Non-cash charges: Estimated costs related to the sublease of excess office space associated with The relocation of Royal Crown's corporate headquarters....................................... $1,190 $-- $(1,190) $ -- The sale of all company-owned restaurants............. 2,018 -- (2,018) -- Costs of terminating Mistic distribution agreements....... 453 -- (453) -- Estimated costs of a Royal Crown plant closing............ 150 -- -- 150 Estimated cost of Mistic information systems to be abandoned............................................... 150 -- (150) -- Cash obligations: Employee severance and related termination costs associated with The relocation of Royal Crown's corporate headquarters....................................... 2,028 -- -- 2,028 A Royal Crown plant closing........................... 172 -- -- 172 Estimated costs related to the sublease of excess office space associated with The relocation of Royal Crown's corporate headquarters....................................... 110 -- -- 110 The sale of all company-owned restaurants............. 382 -- -- 382 Costs of terminating Mistic distribution agreements....... 847 (847) -- -- Estimated costs other than severance of a Royal Crown plant closing........................................... 300 -- -- 300 ------ ----- ------- ------ $7,800 $(847) $(3,811) $3,142 ------ ----- ------- ------ ------ ----- ------- ------
1997 --------------------------------------------------------------------------------- BALANCE WRITE-OFF BALANCE JANUARY 1, OF RELATED DECEMBER 28, 1997 PROVISION (B) PAYMENTS ASSETS ADJUSTMENTS 1997 ---- ------------- -------- ------ ----------- ---- Non-cash charges: Estimated costs of a Royal Crown plant closing............................. $ 150 $ -- $ -- $(143) $ (7) $ -- Write-off of certain beverage distribution rights................. -- 300 -- (300) -- -- Cash obligations: Employee severance and related termination costs associated with The relocation of Royal Crown's corporate headquarters......... 2,028 500 (1,463) -- (1) 1,064 A Royal Crown plant closing....... 172 -- (173) -- 1 -- The sale of all company-owned restaurants.................... -- 4,897 (3,088) -- -- 1,809 Other............................. -- 29 (29) -- -- -- Employee relocation costs associated with The relocation of Royal Crown's corporate headquarters......... -- 637 (894) -- -- (257) The sale of all company-owned restaurants.................... -- 700 (327) -- -- 373 Estimated costs related to the sublease of excess office space associated with The relocation of Royal Crown's corporate headquarters......... 110 -- -- -- -- 110 The sale of all company-owned restaurants.................... 382 -- (140) -- (87) 155 Estimated costs other than severance of a Royal Crown plant closing...... 300 -- (128) -- (172) -- ------ ------ ------- ----- ------ ------ $3,142 $7,063 $(6,242) $(443) $ (266) $3,254 ------ ------ ------- ----- ------ ------ ------ ------ ------- ----- ------ ------
F-27 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999
1998 ---------------------------------------------------- BALANCE BALANCE DECEMBER 29, JANUARY 3, 1997 PAYMENTS ADJUSTMENTS 1999(C) ---- -------- ----------- ------- Cash obligations: Employee severance and related termination costs associated with The relocation of Royal Crown's corporate headquarters............................... $1,064 $ (601) $ -- $ 463 The sale of all company-owned restaurants.... 1,809 (1,236) -- 573 Employee relocation costs associated with The relocation of Royal Crown's corporate headquarters............................... (257) -- -- (257) The sale of all company-owned restaurants.... 373 (24) (65) 284 Estimated costs related to the sublease of excess office space associated with The relocation of Royal Crown's corporate headquarters............................... 110 -- -- 110 The sale of all company-owned restaurants.... 155 (53) (102) -- ------ ------- ----- ------ $3,254 $(1,914) $(167) $1,173 ------ ------- ----- ------ ------ ------- ----- ------
- ------------ (a) The 1996 facilities relocation and corporate restructuring charge principally related to (i) estimated losses on planned subleases of surplus office space (principally for (a) the write-off of nonrecoverable unamortized leasehold improvements and employee work stations included in furniture and fixtures which were abandoned and no longer depreciated after December 31, 1996 and (b) rent and common area maintenance costs for the estimated period the surplus space would remain unoccupied) as a result of the then planned sale of company-owned restaurants and the relocation (the 'Royal Crown Relocation') of Royal Crown's corporate headquarters which were centralized with Triarc Beverage Holdings' offices in White Plains, New York, (ii) employee severance costs associated with the 1997 termination of 35 headquarters employees, principally in finance and accounting, legal, marketing and human resources, in connection with the Royal Crown Relocation and 5 operations employees at Royal Crown's Ohio production facility which was shut down, (iii) the settlement costs of terminating certain Mistic distribution agreements including cash payments of $847,000 and the write-off of receivables from such distributors, in lieu of additional cash payments, of $453,000, (iv) the shutdown of Royal Crown's Ohio production facility (principally for (a) an estimated $150,000 write-off of obsolete steel drums used to send concentrate to bottlers and (b) estimated cash obligations principally for an estimated $150,000 for refurbishing the plant and $50,000 for the transfer of equipment to the Company's other soft drink concentrate plant) and (v) a provision for the write-off of the unamortized deferred cost of Mistic information systems as a result of the planned merger of the Royal Crown and Mistic information systems following the Royal Crown Relocation. (b) The 1997 facilities relocation and corporate restructuring charge principally related to (i) employee severance and related termination costs associated with restructuring the restaurant segment in connection with the RTM Sale (see Note 3) and, to a much lesser extent, employee severance and related termination costs of three additional Royal Crown headquarters employees terminated in 1997 and employee relocation costs, which are expensed as incurred, associated with the RTM Sale and the Royal Crown Relocation, (ii) costs associated with the Royal Crown Relocation and (iii) the write-off of the remaining unamortized costs of certain beverage distribution rights reacquired in prior years and no longer being utilized by the Company as a result of the sale or liquidation of the assets and liabilities of MetBev, Inc. (see Note 18). The severance and termination costs in the restaurant segment were as a result of the termination in 1997 of 54 employees principally in finance and accounting, owned restaurant operations, marketing and human resources as well as the president and chief executive officer of Arby's. Adjustments to the (footnotes continued on next page) F-28 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (footnotes continued from previous page) accrual for estimated costs related to the sublease of excess office space associated with the sale of company-owned restaurants resulted from subsequent favorable lease negotiations with the landlord for the divisional office space. Adjustments to the accrual for estimated costs of the Royal Crown plant closing resulted from certain costs associated with the plant closing running less than expected, specifically estimated costs for refurbishing the plant. (c) Adjustments to the accrual for estimated costs principally relate to the sublease of excess office space associated with the sale of company-owned restaurants which resulted from subsequent favorable lease negotiations with the landlord. The balance in the facilities relocation and corporate restructuring accrual as of January 3, 1999 consists principally of employee severance and related termination costs of $1,036,000 for employees terminated in 1997 which are principally scheduled to be paid during the fiscal year ending January 2, 2000. (13) GAIN (LOSS) ON SALE OF BUSINESSES, NET The 'Gain (loss) on sale of businesses, net' as reflected in the accompanying consolidated statements of operations was $(3,513,000) and $5,016,000 in 1997 and 1998, respectively. The loss in 1997 resulted from the $4,089,000 loss from the RTM Sale (see Note 3) less the $576,000 recognized gain on the C&C Sale (see Note 3). The gain in 1998 consisted of (i) the $4,702,000 gain from the sale of Select Beverages (see Note 5) and (ii) $314,000 additional recognition of deferred gain from the C&C Sale. (14) OTHER INCOME, NET Other income, net consisted of the following components (in thousands):
1996 1997 1998 ---- ---- ---- Equity in earnings (losses) of affiliates................... $ -- $ 862 $(1,222) Interest income............................................. 503 1,671 3,754 Rental income............................................... 195 894 916 Gain (loss) on sale of fixed assets......................... (307) 1,008 502 Gain on lease termination................................... -- 892 -- Other, net.................................................. 79 205 1,348 ----- ------ ------- $ 470 $5,532 $ 5,298 ----- ------ ------- ----- ------ -------
(15) EXTRAORDINARY CHARGES The 1997 extraordinary charges resulted from the assumption and the early extinguishment, respectively, of (i) the Mortgage Notes and Equipment Notes assumed by RTM in connection with the RTM Sale (see Note 3) and (ii) obligations under the Former Mistic Bank Facility in May 1997 refinanced in connection with entering into the Existing Beverage Credit Agreement (see Note 6). Such extraordinary charges consisted of the write-off of $4,839,000 of previously unamortized deferred financing costs less $1,885,000 of income tax benefit. (16) RETIREMENT AND OTHER BENEFIT PLANS The Company maintains several 401(k) defined contribution plans and participates in a Triarc Parent 401(k) defined contribution plan (collectively, the 'Plans') covering all of the Company's employees who meet certain minimum requirements and elect to participate including subsequent to (i) May 22, 1997 employees of Snapple and (ii) May 1, 1998 employees of Cable Car. Under the provisions of the Plans, employees may contribute various percentages of their compensation ranging up to a maximum of 15%, subject to certain limitations. The Plans provide for Company matching contributions at either (i) 50% of employee contributions up to the first 5% thereof or (ii) 100% of employee contributions up to the first 3% thereof. In addition, the Plans also provide for annual Company contributions of a discretionary aggregate amount to be determined by the employer. In F-29 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 connection with both of these employer contributions, the Company provided as compensation expense $1,141,000, $1,181,000 and $1,470,000 in 1996, 1997 and 1998, respectively. The Company maintains a defined benefit plan for eligible employees through December 31, 1988 of certain subsidiaries, benefits under which were frozen in 1992. The net periodic pension cost for 1996, 1997 and 1998, as well as the accrued pension cost as of December 28, 1997 and January 3, 1999, were insignificant. The Company maintains unfunded postretirement medical and death benefit plans for a limited number of retired employees who have provided certain minimum years of service. The medical benefits are principally contributory while death benefits are non-contributory. The net postretirement benefit cost for 1996, 1997 and 1998, as well as the accumulated postretirement benefit obligation as of December 28, 1997 and January 3, 1999, were insignificant. Triarc Parent has granted stock options to certain key employees of the Company under Triarc Parent's 1993 Equity Participation Plan and 1997 Equity Participation Plan. Included in such options are (i) 165,000 granted prior to 1996 at an option price of $20.00 per share which was below the $31.75 fair market value of Triarc Parent's Class A Common Stock on the date of grant (based on the closing price on such date) resulting in an aggregate difference of $1,939,000 and (ii) 445,000 granted in 1997 at a weighted average option price of $12.59 which was below the $14.46 weighted average fair market value of Triarc Parent's Class A Common Stock on the respective dates of grant (based on the closing price on such dates) resulting in an aggregate difference of $832,000. Since the key employees provide services to the Company and not to Triarc Parent, all of such differences are being charged to the Company as compensation expense over the applicable vesting periods through 2002, net of reversals of prior charges arising from the forfeiture of certain of those options in connection with employee terminations (the 'Forfeiture Adjustments'). Compensation expense resulting from the below market stock options aggregated $74,000 (net of $173,000 of Forfeiture Adjustments), $144,000 (net of $325,000 of Forfeiture Adjustments) and $287,000 (net of $14,000 of Forfeiture Adjustments) during 1996, 1997 and 1998, respectively, and is included in 'General and administrative' in the accompanying consolidated statements of operations. (17) LEASE COMMITMENTS The Company leases buildings and improvements and machinery and equipment. Prior to the RTM Sale, some leases provided for contingent rentals based upon sales volume. In connection with the RTM Sale in May 1997, substantially all operating and capitalized lease obligations associated with the sold restaurants were assumed by RTM, although the Company remains contingently liable if the future lease payments (which could potentially aggregate a maximum of approximately $98,000,000 as of January 3, 1999 assuming RTM has made all scheduled payments to date under such lease obligations) are not made by RTM. The Company provided $9,677,000 in 'Reduction in carrying value of long-lived assets to be disposed' in 1996 representing the present value of future operating lease payments relating to certain equipment transferred to RTM but the obligations for which remain with the Company. Rental expense under operating leases consisted of the following components (in thousands):
1996 1997 1998 ---- ---- ---- Minimum rentals........................................... $23,489 $14,952 $7,463 Contingent rentals........................................ 794 204 -- ------- ------- ------ 24,283 15,156 7,463 Less sublease income...................................... 5,460 6,027 4,354 ------- ------- ------ $18,823 $ 9,129 $3,109 ------- ------- ------ ------- ------- ------
F-30 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 The Company's future minimum rental payments and sublease rental income for leases having an initial lease term in excess of one year as of January 3, 1999, excluding $4,586,000 as of January 3, 1999 of those remaining future operating lease payments for which the Company has provided as set forth above, are as follows (in thousands):
RENTAL PAYMENTS SUBLEASE ----------------------- INCOME- CAPITALIZED OPERATING OPERATING LEASES LEASES LEASES ------ ------ ------ 1999.................................................. $ 41 $ 6,479 $ 2,953 2000.................................................. 35 6,080 2,909 2001.................................................. 35 6,130 2,711 2002.................................................. 35 4,899 636 2003.................................................. 26 4,823 400 Thereafter............................................ 39 20,640 1,665 ---- ------- ------- Total minimum payments........................... 211 $49,051 $11,274 ------- ------- ------- ------- Less interest......................................... 53 ---- Present value of minimum capitalized lease payments... $158 ---- ----
The present value of minimum capitalized lease payments is included, as applicable, with 'Long-term debt' or 'Current portion of long-term debt' in the accompanying consolidated balance sheets (see Note 6). (18) TRANSACTIONS WITH RELATED PARTIES The following is a summary of transactions between the Company and its related parties (in thousands):
1996 1997 1998 ---- ---- ---- Purchases of raw materials from Triarc Parent(a)......... $ -- $17,159 $123,014 Costs allocated to the Company by Triarc Parent under management services agreements(b)...................... 8,500 9,417 10,500 Cash dividends paid to Triarc............................ -- -- 23,556 Cumulative dividends on the Redeemable Preferred Stock recorded but not declared or paid (Note 9)............. -- 4,604 7,983 Provision (reversal) for uncollectible receivables (subsequent recoveries of accounts previously fully reserved) from sales and advance to MetBev, Inc.(c).... 2,000 975 (474) Compensation costs charged to the Company by Triarc Parent for below market stock options (Note 16)........ 74 144 287 Interest income on notes receivable from Triarc Parent(d).............................................. 261 230 118 Interest expense on notes payable to: Chesapeake Insurance Company Limited(e)............. 208 130 27 Triarc Parent(e).................................... 2,588 1,278 12 Issuance of Redeemable Preferred Stock (Note 9).......... -- 75,000 -- Capital contributions(f)................................. 1,500 30,015 -- Repurchase of $720 principal amount of promissory notes due from franchisees from Southeastern Public Service Company, a subsidiary of Triarc Parent, at fair value.................................................. -- 690 -- Net sales to MetBev, Inc. net of marketing support credits(c)............................................. 8,985 -- -- Payments to Triarc Parent for usage of aircraft.......... -- 32 --
- ------------ (a) The Company purchases certain raw materials from Triarc Parent at Triarc Parent's purchase cost from unaffiliated third-party suppliers. At December 28, 1997 and January 3, 1999, $14,576,000 and (footnotes continued on next page) F-31 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (footnotes continued from previous page) $18,618,000, respectively, of amounts owed for such purchases were included in 'Due to affiliates' in the accompanying consolidated balance sheets. (b) The Company receives from Triarc Parent certain management services, including legal, accounting, tax, insurance, financial and other management services, under management services agreements. Such costs were allocated to the Company by Triarc Parent based upon the pro rata share of the sum of the greater of income before income taxes, depreciation and amortization and 10% of revenues for each of the Company's principal operating subsidiaries to the aggregate for all of Triarc Parent's principal operating subsidiaries, except that such costs paid by Mistic through May 22, 1997 were limited to amounts permitted under the Former Mistic Bank Facility and such costs paid by Mistic and Snapple commencing May 22, 1997 and Cable Car commencing August 15, 1998 were limited to amounts permitted under the subsequent Existing Beverage Credit Agreement (see Note 21 for disclosure regarding amendments to the management services agreements with Mistic, Snapple, Cable Car, Royal Crown and Arby's). Management of the Company believes that such allocation method is reasonable. Further, management of the Company believes that such allocation approximates the costs that would have been incurred by the Company on a stand alone basis. (c) Prior to 1996 the Company acquired preferred stock in MetBev representing a 37.5% voting interest and a warrant to acquire 37.5% of the common stock of MetBev for $1,000,000 and a license for a five-year period for the Royal Crown distribution rights for its products in New York City and certain surrounding counties. Such investment was written off prior to 1996. In December 1996 the distribution rights of MetBev were sold to a third party (the 'MetBev Purchaser') for minimum payments over a three-year period aggregating $1,050,000 and MetBev commenced the liquidation of its remaining assets and liabilities. In connection therewith, the Company's voting interest in MetBev increased to 44.7% principally due to the cancellation of non-vested stock owned by third parties. The Company has not received any payments on the $1,050,000 from the MetBev Purchaser and, as of December 28, 1997, did not expect to collect any payments due to financial difficulties of the MetBev Purchaser which the Company believes were due to competitive pressures on the MetBev Purchaser following the Snapple Acquisition and the Company's revitalization of Snapple. The MetBev Purchaser has remained in business and during 1997 and 1998 continued to purchase Royal Crown product. The Company has withheld a portion of promotional allowances otherwise due to the MetBev Purchaser and offset such amounts against the $1,050,000 purchase price. The Company sold (with minimal gross profit) finished product to MetBev and, since MetBev had incurred significant losses from its inception and had a stockholders' deficit as of December 31, 1996 of $8,943,000, provided $2,000,000 in 1996 in 'Advertising, selling and distribution' for resulting uncollectible receivables. In 1997 the Company provided a reserve for its remaining receivables from MetBev, including $539,000 advanced in 1997 for costs incurred to liquidate the remaining assets and liabilities and related close-down costs, since MetBev's only source of funds to pay the Company would be collection of the $1,050,000 purchase price. Such provision after offsetting $384,000 principally reflecting amounts otherwise payable to the MetBev Purchaser for promotional allowances, amounted to $975,000 and is included in 'Acquisition related' costs (see Note 11). During the year ended January 3, 1999, the Company reversed $474,000 in 'Advertising, selling and distribution' of the reserve for uncollectible amounts due from the MetBev Purchaser representing the offset of promotional allowances otherwise owed to the MetBev Purchaser. (d) The Company earned interest income at 11 7/8% on cash advances made to Triarc Parent under a promissory note receivable. (e) The Company incurred interest expense at 9 1/2% and 11 7/8% under promissory notes payable to Chesapeake Insurance Company Limited ('Chesapeake Insurance'), a subsidiary of Triarc Parent (footnotes continued on next page) F-32 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (footnotes continued from previous page) until its sale in December 1998, and Triarc Parent, respectively. The balances of notes payable to Chesapeake Insurance and Triarc Parent at December 28, 1997 (none at January 3, 1999) were $1,000,000 and $200,000, respectively. (f) In 1996 and 1997, Mistic was prohibited from paying $1,500,000 and $625,000, respectively, of management services fees described in (b) above under the terms of the Former Mistic Bank Facility prior to its repayment and, accordingly, such amounts were accounted for as capital contributions from Triarc Parent in such years. In May 1997, in connection with the RTM Sale, ARHC and AROC issued 950 of each of their common shares (approximately 49% of the common stock after such issuances) to Triarc Parent in exchange for aggregate consideration of $31,999,000 consisting of cash of $6,211,000 and forgiveness of the then outstanding principal amount of $23,150,000, plus related accrued interest of $2,638,000, under a note payable by the Company to Triarc Parent as of May 5, 1997. Triarc Parent's 49% interest in the equity of ARHC and AROC amounting to $2,570,000 and $2,472,000 as of December 28, 1997 and January 3, 1999, respectively, is included in 'Deferred income and other liabilities' in the accompanying consolidated balance sheets. The excess of $29,390,000 of the consideration for the stock issued to Triarc Parent of $31,999,000 over such minority interest of $2,609,000 as of May 5, 1997 was accounted for as a capital contribution and is reflected in 'Contributed capital.' The 49% minority interest in the losses of ARHC and AROC for the years ended December 28, 1997 and January 3, 1999 aggregated $39,000 and $99,000, respectively, and is included as income in 'Other income, net' in the accompanying consolidated statements of operations. Certain officers and directors of the Company are also officers and directors of Triarc Parent. See also Notes 5, 9, 10 and 16 with respect to other transactions with related parties. (19) LEGAL AND ENVIRONMENTAL MATTERS The Company is involved in litigation, claims and environmental matters incidental to its businesses. The Company has reserves for such legal and environmental matters aggregating approximately $1,534,000 (see Note 4) as of January 3, 1999. Although the outcome of such matters cannot be predicted with certainty and some of these may be disposed of unfavorably to the Company, based on currently available information and given the Company's aforementioned reserves, the Company does not believe that such legal and environmental matters will have a material adverse effect on its consolidated financial position or results of operations. (20) BUSINESS SEGMENTS The Company has adopted Statement of Financial Accounting Standards No. 131 ('SFAS 131') 'Disclosures about Segments of an Enterprise and Related Information' which requires disclosure of financial and descriptive information by operating segment in the Company's consolidated financial statements. SFAS 131 utilizes a management approach to define operating segments along the lines used by management internally for evaluating segment performance and deciding resource allocations to segments. The Company manages and internally reports its operations by business segments which, under the criteria of SFAS 131, are: premium beverages, soft drink concentrates and restaurants (see Note 2 for a description of each segment). The premium beverage segment consists of Mistic and the operations acquired in (i) the Snapple Acquisition (see Note 3) commencing May 22, 1997 and (ii) the Stewart's Acquisition (see Note 3) commencing November 25, 1997. The Company evaluates segment performance and allocates resources based on each segment's earnings before interest, taxes, depreciation and amortization and reduction in carrying value of long-lived assets to be disposed ('EBITDA'). Information concerning the segments in which the Company operates is shown in the table below. EBITDA has been computed as operating profit (loss) plus (less) depreciation and amortization. Operating profit (loss) has been computed as revenues less operating expenses. In computing EBITDA and operating profit or loss, interest expense and non-operating income and expenses have not been considered. Operating loss for the restaurant segment for 1996 F-33 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 reflects a provision of $58,900,000 for the impairment of company-owned restaurants and related exit costs (see Note 3). EBITDA and operating loss for 1996 reflect $7,800,000 of facilities relocation and corporate restructuring charges (see Note 12), of which $1,450,000 relates to the premium beverage segment, $3,950,000 relates to the soft drink concentrate segment and $2,400,000 relates to the restaurant segment. EBITDA and operating loss for 1997 reflect (i) $33,815,000 of charges related to post-acquisition transition, integration and changes to business strategies for the premium beverage segment (see Note 11) and (ii) $7,063,000 of facilities relocation and corporate restructuring charges (see Note 12), of which $29,000 relates to the premium beverage segment, $1,437,000 relates to the soft drink concentrate segment and $5,597,000 relates to the restaurant segment. Identifiable assets by segment are those assets that are used in the Company's operations in each segment. General corporate assets consist primarily of cash and cash equivalents, deferred income tax benefit (principally resulting from net operating loss carryforwards of RC/Arby's parent company) and deferred financing costs. The products and services in each of the Company's segments are relatively homogeneous and, as such, revenues by product and service have not been reported. The Company's operations are principally in the United States with foreign operations representing less than 3% of revenues in 1996, 1997 and 1998. Accordingly, revenues and assets by geographical area have not been presented since they are insignificant. In addition, no customer accounted for more than 10% of consolidated revenues in 1996, 1997 or 1998. The following is a summary of the Company's segment information for the years ended December 31, 1996, December 28, 1997 and January 3, 1999 or, in the case of identifiable assets, as of the end of such periods in thousands:
1996 1997 1998 ---- ---- ---- Revenues: Premium beverages................................ $131,083 $408,841 $611,545 Soft drink concentrates.......................... 178,059 146,882 124,868 Restaurants...................................... 288,293 140,429 78,623 -------- -------- -------- Consolidated revenues....................... $597,435 $696,152 $815,036 -------- -------- -------- -------- -------- -------- EBITDA: Premium beverages................................ $ 13,381 $ 7,561 $ 77,825 Soft drink concentrates.......................... 18,418 18,504 17,006 Restaurants...................................... 31,819 31,200 43,180 General corporate................................ (189) (149) (11) -------- -------- -------- Consolidated EBITDA......................... 63,429 57,116 138,000 -------- -------- -------- Less depreciation and amortization: Premium beverages................................ 7,233 16,236 21,665 Soft drink concentrates.......................... 6,471 6,340 8,640 Restaurants...................................... 16,260 2,668 2,503 -------- -------- -------- Consolidated depreciation and amortization.............................. 29,964 25,244 32,808 -------- -------- -------- Less reduction in carrying value of long-lived assets to be disposed: Restaurants...................................... 58,900 -- -- -------- -------- --------
(table continued on next page) F-34 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (table continued from previous page)
1996 1997 1998 ---- ---- ---- Operating profit (loss): Premium beverages................................ $ 6,148 $ (8,675) $ 56,160 Soft drink concentrates.......................... 11,947 12,164 8,366 Restaurants...................................... (43,341) 28,532 40,677 General corporate................................ (189) (149) (11) -------- -------- -------- Consolidated operating profit (loss)........ (25,435) 31,872 105,192 Interest expense...................................... (50,031) (58,019) (60,235) Gain (loss) on sale of businesses, net................ -- (3,513) 5,016 Other income, net..................................... 470 5,532 5,298 -------- -------- -------- Consolidated income (loss) before income taxes and extraordinary charges........... $(74,996) $(24,128) $ 55,271 -------- -------- -------- -------- -------- -------- Identifiable assets: Premium beverages................................ $110,950 $586,731 $535,565 Soft drink concentrates.......................... 203,847 194,603 171,647 Restaurants...................................... 154,410 53,759 52,267 General corporate assets......................... 11,385 18,868 31,491 -------- -------- -------- Consolidated identifiable assets............ $480,592 $853,961 $790,970 -------- -------- -------- -------- -------- --------
(21) SUBSEQUENT EVENTS On February 25, 1999 TCPG and Triarc Beverage Holdings issued $300,000,000 (including $20,000,000 aggregate issued to the Chairman and Chief Executive Officer and the President and Chief Operating Officer of the Company) principal amount of 10 1/4% senior subordinated notes due 2009 (the 'Notes') and Snapple, Mistic, Cable Car, RC/Arby's and Royal Crown concurrently entered into an agreement (the 'Credit Agreement') for a new $535,000,000 senior bank credit facility (the 'Credit Facility') consisting of a $475,000,000 term facility, all of which was borrowed as term loans (the 'Term Loans') on February 25, 1999, and a $60,000,000 revolving credit facility (the 'Revolving Credit Facility') which provides for revolving credit loans (the 'Revolving Loans') by Snapple, Mistic or Cable Car effective February 25, 1999 and RC/Arby's or Royal Crown effective upon the redemption of the 9 3/4% Senior Notes (see below). There were no borrowings of Revolving Loans on February 25, 1999. The Company utilized the aggregate net proceeds of these borrowings to (i) repay on February 25, 1999 the outstanding principal amount ($284,333,000 as of January 3, 1999 and February 25, 1999) of the Existing Term Loans under the Existing Beverage Credit Agreement and related accrued interest ($2,231,000 and $1,503,000 as of January 3, 1999 and February 25, 1999, respectively), (ii) fund the redemption (the 'Redemption') on March 30, 1999 of the $275,000,000 of borrowings under the 9 3/4% Senior Notes including related accrued interest ($11,460,000 and $4,395,000 as of January 3, 1999 and March 30, 1999, respectively) and redemption premium ($7,662,000 as of January 3, 1999 and March 30, 1999), (iii) acquire Millrose Distributors, Inc. and the assets of Mid-State Beverage, Inc., two New Jersey distributors of the Company's premium beverages, for $17,376,000, including expenses, (iv) provide for estimated fees and expenses of $29,600,000 relating to the issuance of the Notes and the consummation of the Credit Facility (the 'Refinancing Transactions') and (v) pay one-time distributions, including dividends, to Triarc Parent of the remaining net proceeds from the above borrowings and all the Company's cash and cash equivalents on hand in excess of $2,000,000 retained by the Company for working capital purposes. The currently estimated fees and expenses of $29,600,000 relating to the issuance of the Notes and the consummation of the Credit Facility consist of approximately $15,200,000 of fees and expenses, including commitment fees, paid to the lenders under the Credit Facility, approximately $9,700,000 of fees paid to the underwriters of the Notes, approximately $3,400,000 of legal, auditing and accounting fees, approximately $700,000 of printing fees F-35 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 and approximately $600,000 of other fees. Such one-time distributions consisted of $91,420,000 paid on February 25, 1999 and approximately $124,000,000 expected to be paid on March 30, 1999 following the Redemption. As a result of the repayment prior to maturity of the Existing Term Loans and the Redemption, the Company recognized an extraordinary charge during the first quarter of the year ending January 2, 2000 of an estimated $11,772,000 for (i) the write-off of previously unamortized (a) deferred financing costs ($11,622,000 and $10,792,000 as of January 3, 1999 and March 30, 1999, respectively) and (b) interest rate cap agreement costs ($159,000 and $146,000 as of January 3, 1999 and February 25, 1999, respectively) and (ii) the payment of the aforementioned redemption premium, net of income tax benefit ($7,136,000 and $6,828,000 as of January 3, 1999 and March 30, 1999, respectively). Under the indenture (the 'Indenture') pursuant to which the Notes were issued, the Notes are redeemable at the option of the Company at amounts commencing at 105.125% of principal beginning February 2004 decreasing annually to 100% in February 2007 through February 2009. In addition, should the Company consummate a permitted public equity offering or receive proceeds from a public equity offering by Triarc Parent, the Company may at any time prior to February 2002 redeem up to $105,000,000 of the Notes at 110.25% of principal amount with the net proceeds of such public offering. The Company has agreed to use its best efforts to have a registration statement (the 'Registration Statement') covering resales by holders of the Notes declared effective by the SEC on or before August 24, 1999. In the event the Notes are not registered for resale by such date, the annual interest rate on the Notes will increase by 1/2% to 10 3/4% until such time as the Registration Statement is declared effective. Borrowings under the Credit Facility bear interest, at the Company's option, at rates based on either the 30, 60, 90 or 180-day LIBOR (ranging from 5.06% to 5.07% at January 3, 1999) or an alternate base rate (the 'ABR'). The ABR (7 3/4% at January 3, 1999) represents the higher of the prime rate or 1/2% over the Federal funds rate. The interest rates on LIBOR-based loans are reset at the end of the period corresponding with the duration of the LIBOR selected. The interest rates on ABR-based loans are reset at the time of any change in the ABR. Revolving Loans and one class of the Term Loans with an initial borrowing of $45,000,000 bear interest at 3% over LIBOR or 2% over ABR until such time as such margins may be subject to downward adjustment by up to 3/4% based on the borrowers' leverage ratio, as defined. The other two classes of Term Loans with initial borrowings of $125,000,000 and $305,000,000 bear interest at 3 1/2% and 3 3/4% over LIBOR, respectively, and 2 1/2% and 2 3/4%, respectively, over ABR. The borrowing base for Revolving Loans is the sum of 80% of eligible accounts receivable and 50% of eligible inventories. At January 31, 1999 there would have been $39,423,000 (unaudited) (excluding $12,433,000 (unaudited) of availability relating to RC/Arby's and Royal Crown which will not be available until the Redemption) of borrowing availability under the Revolving Credit Facility in accordance with limitations due to such borrowing base. The Term Loans are due $4,912,000 in 1999, $8,238,000 in 2000, $10,488,000 in 2001, $12,738,000 in 2002, $14,987,000 in 2003, $15,550,000 in 2004, $94,299,000 in 2005, $242,875,000 in 2006 and $70,913,000 in 2007 and any Revolving Loans would be due in full in March 2005. The borrowers must also make mandatory prepayments in an amount, if any, initially equal to 75% of excess cash flow, as defined in the Credit Agreement. Under the Credit Agreement substantially all of the assets, other than cash and cash equivalents of Snapple, Mistic and Cable Car (and of RC/Arby's, Royal Crown and Arby's upon the Redemption) and their subsidiaries, are pledged as security. The Company's obligations with respect to the Notes are guaranteed by Snapple, Mistic and Cable Car and all of their domestic subsidiaries and, upon the Redemption, the Notes will be guaranteed by RC/Arby's and all of its domestic subsidiaries. All of such subsidiary guarantors of the Notes effective February 25, 1999 are directly or indirectly wholly-owned by TCPG or Triarc Beverage Holdings. Such guarantees are or will be full and unconditional and on a joint and several basis and are or will be unsecured. As a result of such guarantees, condensed consolidating financial statements of the Company are presented in Note 22 which depict, in separate F-36 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 columns, the parent companies of each of the issuers of the Notes (TCPG, which as previously indicated was formed January 15, 1999 and, as such, had no balances or transactions during any of the years presented, and Triarc Beverage Holdings), those subsidiaries which are or will be guarantors, those subsidiaries which are or will be non-guarantors, elimination adjustments and the consolidated total as if such guarantees were in effect as of January 1, 1996. Separate financial statements of the guarantor subsidiaries are not presented because the Company's management has determined that they would not be material to investors. The Company's obligations with respect to the Credit Facility are guaranteed (the 'Guarantee') by substantially all of the domestic subsidiaries of Snapple, Mistic and Cable Car (and those of RC/Arby's and Royal Crown upon the Redemption). As collateral for such guarantees under the Credit Facility, all of the stock of Snapple, Mistic and Cable Car and substantially all of their domestic and 65% of the stock of their directly-owned foreign subsidiaries are pledged and, upon the Redemption, all of the stock of RC/Arby's and Royal Crown and substantially all of their domestic and 65% of the stock of their directly-owned foreign subsidiaries, will be pledged. The Indenture, the Credit Agreement and the Guarantee contain various covenants which (i) require meeting certain financial amount and ratio tests, (ii) limit, among other matters (a) the incurrence of indebtedness, (b) the retirement of certain debt prior to maturity, (c) investments, (d) asset dispositions and (e) affiliate transactions other than in the normal course of business, and (iii) restrict the payment of dividends to Triarc Parent. Under the most restrictive of such covenants, the borrowers would not be able to pay any dividends to Triarc Parent other than (i) the aforementioned one-time distributions, including dividends, paid to Triarc Parent in connection with the Refinancing Transactions and (ii) certain defined amounts in the event of consummation of a securitization of certain assets of Arby's. In connection with the Refinancing Transactions, on February 25, 1999 the Company entered into a revised tax-sharing agreement with Triarc Parent pursuant to which the Company would not receive credit for its existing NOLs and excess Federal income tax payments as of the date of the new agreement. Under such agreement, the Company would not receive any benefit for the deferred tax assets associated with the NOLs and excess Federal income tax payments aggregating $39,518,000. However, were such deferred tax assets to be written off, the Company would have been in default under the minimum net worth covenant of the Credit Agreement (the 'Minimum Net Worth Covenant'). Such Minimum Net Worth Covenant inadvertently did not provide for the write-off of such deferred tax assets. Accordingly, the tax-sharing agreement was amended effective February 25, 1999 to provide that the Company would continue to receive benefit for deferred tax assets associated with the NOLs and the Federal income tax prepayments except that Triarc Parent has the right to cause the effective transfer of any unutilized benefits from the Company to Triarc Parent, but only to the extent any such transfer would not cause a default under the Minimum Net Worth Covenant. Subsequent to January 3, 1999 and through July 4, 1999 the Company utilized $6,355,000 of such benefits to offset income taxes otherwise payable on its pre-tax income before extraordinary charges and generated an additional $6,339,000 of such benefits as a result of the extraordinary charges resulting from the repayment prior to maturity of the Existing Term Loans and the Redemption and transferred $20,799,000 of such deferred tax benefits to Triarc Parent as if such transfer were a distribution from the Company to Triarc Parent. Accordingly, the Company has $18,703,000 of such deferred tax benefits as of July 4, 1999. The Company has not established a valuation allowance relating to such net operating loss carryforwards and excess Federal income tax payments since as of July 4, 1999 it is more likely than not that the Company can realize the related deferred tax benefit. In connection with the Refinancing Transactions, on February 25, 1999 the Company entered into two (one each with respect to the combined beverage businesses of TCPG (the 'Triarc Beverage Group') and Arby's) amended management services agreements (see Note 18 for disclosure concerning the previous management services agreements) with Triarc Parent. The agreements provide for annual fixed fees of $6,700,000 for Triarc Beverage Group and $3,800,000 for Arby's plus, commencing January F-37 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 1, 2000, annual cost of living adjustments. The fee to the Triarc Beverage Group is to be allocated among the companies based upon each company's pro rata share of the sum of the greater of EBITDA and 10% of revenues to the aggregate for the Triarc Beverage Group. The following unaudited pro forma data of the Company for 1998 have been prepared by adjusting the historical data reflected in the accompanying statement of operations for such year to reflect the effects of the Refinancing Transactions as if such transactions had been consummated on December 29, 1997. Such pro forma data are presented for information purposes only and do not purport to be indicative of the Company's actual results of operations had such transaction actually been consummated on December 29, 1997 or of the Company's future results of operations and are as follows (in thousands):
AS PRO REPORTED FORMA -------- ----- Revenues.................................................. $815,036 $827,589 Operating profit.......................................... 105,192 106,047 Interest expense.......................................... (60,235) (78,935) Income from continuing operations......................... 29,987 18,057
(22) CONDENSED CONSOLIDATING FINANCIAL INFORMATION The following consolidating financial statements of the Company depict, in separate columns, the parent companies of each of the issuers of the Notes (TCPG and Triarc Beverage Holdings -- collectively, the 'Parent Companies') on a consolidated basis, those subsidiaries which are guarantors, those subsidiaries which are non-guarantors, elimination adjustments and the consolidated total. F-38 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 CONDENSED CONSOLIDATING BALANCE SHEETS
DECEMBER 28, 1997 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) ASSETS Current assets: Cash and cash equivalents....... $ 1 $ 33,294 $ 947 $ -- $ 34,242 Receivables..................... -- 74,985 1,192 -- 76,177 Inventories..................... -- 55,181 2,213 -- 57,394 Deferred income tax benefit..... -- 47,992 -- -- 47,992 Note receivable from Triarc Companies, Inc. .............. -- 2,000 -- -- 2,000 Prepaid expenses and other current assets................ -- 6,342 56 -- 6,398 --------- --------- ------- --------- --------- Total current assets....... 1 219,794 4,408 -- 224,203 Investment in subsidiaries........... 36,743 6,472 -- (43,215) -- Investments in affiliates............ -- 25,476 -- -- 25,476 Intercompany receivables............. -- 2,494 1,961 (4,455) -- Properties........................... -- 24,085 3,827 -- 27,912 Unamortized costs in excess of net assets of acquired companies....... -- 278,986 -- -- 278,986 Trademarks........................... -- 269,201 -- -- 269,201 Deferred costs and other assets...... -- 28,172 11 -- 28,183 --------- --------- ------- --------- --------- $ 36,744 $ 854,680 $10,207 $ (47,670) $ 853,961 --------- --------- ------- --------- --------- --------- --------- ------- --------- --------- LIABILITIES AND MEMBER'S DEFICIT Current liabilities: Current portion of long-term debt.......................... $ -- $ 13,798 $ -- $ -- $ 13,798 Notes payable to affiliates..... -- 1,200 -- -- 1,200 Accounts payable................ -- 44,302 824 -- 45,126 Accrued expenses................ -- 110,459 377 -- 110,836 Due to affiliates............... -- 22,710 -- -- 22,710 --------- --------- ------- --------- --------- Total current liabilities.............. -- 192,469 1,201 -- 193,670 Long-term debt....................... -- 564,114 -- -- 564,114 Intercompany payables................ -- 1,961 2,494 (4,455) -- Deferred income taxes................ -- 27,724 40 -- 27,764 Deferred income and other liabilities........................ -- 31,669 -- -- 31,669 Redeemable preferred stock........... 79,604 -- -- -- 79,604 Member's equity (deficit): Common stock.................... -- 4 526 (530) -- Contributed capital............. 138,059 217,659 7,996 (225,655) 138,059 Accumulated deficit............. (180,719) (180,720) (1,786) 182,506 (180,719) Accumulated other comprehensive deficit....................... (200) (200) (264) 464 (200) --------- --------- ------- --------- --------- Total member's equity (deficit)................ (42,860) 36,743 6,472 (43,215) (42,860) --------- --------- ------- --------- --------- $ 36,744 $ 854,680 $10,207 $ (47,670) $ 853,961 --------- --------- ------- --------- --------- --------- --------- ------- --------- ---------
F-39 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999
JANUARY 3, 1999 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) ASSETS Current assets: Cash and cash equivalents....... $ 1 $ 71,335 $ 1,456 $ -- $ 72,792 Receivables..................... -- 66,078 612 -- 66,690 Inventories..................... -- 45,446 1,315 -- 46,761 Deferred income tax benefit..... -- 18,934 -- -- 18,934 Prepaid expenses and other current assets................ -- 7,232 26 -- 7,258 --------- --------- ------- --------- --------- Total current assets....... 1 209,025 3,409 -- 212,435 Investment in subsidiaries........... 42,865 9,901 -- (52,766) -- Intercompany receivables............. -- 1,077 6,067 (7,144) -- Properties........................... -- 21,543 3,777 -- 25,320 Unamortized costs in excess of net assets of acquired companies....... -- 268,215 -- -- 268,215 Trademarks........................... -- 261,906 -- -- 261,906 Deferred costs and other assets...... -- 23,082 12 -- 23,094 --------- --------- ------- --------- --------- $ 42,866 $ 794,749 $13,265 $ (59,910) $ 790,970 --------- --------- ------- --------- --------- --------- --------- ------- --------- --------- LIABILITIES AND MEMBER'S DEFICIT Current liabilities: Current portion of long-term debt.......................... $ -- $ 9,678 $ -- $ -- $ 9,678 Accounts payable................ -- 36,463 530 -- 36,993 Accrued expenses................ -- 79,724 1,724 -- 81,448 Due to affiliates............... -- 29,082 -- -- 29,082 --------- --------- ------- --------- --------- Total current liabilities.............. -- 154,947 2,254 -- 157,201 Long-term debt....................... -- 560,977 -- -- 560,977 Intercompany payables................ -- 6,067 1,077 (7,144) -- Deferred income taxes................ -- 9,140 33 -- 9,173 Deferred income and other liabilities........................ -- 20,753 -- -- 20,753 Redeemable preferred stock........... 87,587 -- -- -- 87,587 Member's equity (deficit): Common stock.................... -- 4 526 (530) -- Contributed capital............. 106,269 197,886 9,533 (207,419) 106,269 Accumulated deficit............. (150,732) (154,767) 168 154,599 (150,732) Accumulated other comprehensive deficit....................... (258) (258) (326) 584 (258) --------- --------- ------- --------- --------- Total member's equity (deficit)................ (44,721) 42,865 9,901 (52,766) (44,721) --------- --------- ------- --------- --------- $ 42,866 $ 794,749 $13,265 $ (59,910) $ 790,970 --------- --------- ------- --------- --------- --------- --------- ------- --------- ---------
F-40 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) Revenues: Net sales........................ $ -- $532,014 $ 8,092 $-- $540,106 Royalties, franchise fees and other revenues................. -- 57,571 (242) -- 57,329 -------- -------- ------- ------- -------- -- 589,585 7,850 -- 597,435 -------- -------- ------- ------- -------- Costs and expenses: Cost of sales, excluding depreciation and amortization................... -- 308,014 6,627 -- 314,641 Advertising, selling and distribution................... -- 135,157 649 -- 135,806 General and administrative....... -- 73,940 1,819 -- 75,759 Depreciation and amortization, excluding amortization of deferred financing costs....... -- 29,453 511 -- 29,964 Facilities relocation and corporate restructuring........ -- 7,800 -- -- 7,800 Impairment of company-owned restaurants and related exit costs.......................... -- 55,945 2,955 -- 58,900 -------- -------- ------- ------- -------- -- 610,309 12,561 -- 622,870 -------- -------- ------- ------- -------- Operating loss.............. -- (20,724) (4,711) -- (25,435) Interest expense...................... -- (50,031) -- -- (50,031) Other income (expense), net........... -- (823) 1,293 -- 470 Equity in net losses of subsidiaries........................ (51,368) (3,423) -- 54,791 -- -------- -------- ------- ------- -------- Loss before income taxes.... (51,368) (75,001) (3,418) 54,791 (74,996) (Provision for) benefit from income taxes............................... -- 23,633 (5) -- 23,628 -------- -------- ------- ------- -------- Net loss.................... $(51,368) $(51,368) $(3,423) $54,791 $(51,368) -------- -------- ------- ------- -------- -------- -------- ------- ------- --------
F-41 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999
YEAR ENDED DECEMBER 28, 1997 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLDIATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) Revenues: Net sales........................ $ -- $614,516 $15,105 $-- $629,621 Royalties, franchise fees and other revenues................. -- 66,556 (25) -- 66,531 -------- -------- ------- ------- -------- -- 681,072 15,080 -- 696,152 -------- -------- ------- ------- -------- Costs and expenses: Cost of sales, excluding depreciation and amortization................... -- 323,423 8,794 -- 332,217 Advertising, selling and distribution................... -- 180,383 4,339 -- 184,722 General and administrative....... -- 78,733 2,486 -- 81,219 Depreciation and amortization, excluding amortization of deferred financing costs....... -- 25,219 25 -- 25,244 Charges related to post-acquisition transition, integration and changes to business strategies............ -- 33,815 -- -- 33,815 Facilities relocation and corporate restructuring........ -- 7,063 -- -- 7,063 -------- -------- ------- ------- -------- -- 648,636 15,644 -- 664,280 -------- -------- ------- ------- -------- Operating profit (loss)..... -- 32,436 (564) -- 31,872 Interest expense...................... -- (58,019) -- -- (58,019) Gain on sale of businesses, net....... -- (3,493) (20) -- (3,513) Other income, net..................... -- 4,244 1,288 -- 5,532 Equity in net earnings (losses) of subsidiaries........................ (21,940) 292 -- 21,648 -- -------- -------- ------- ------- -------- Income (loss) before income taxes and extraordinary charge.................... (21,940) (24,540) 704 21,648 (24,128) (Provision for) benefit from income taxes............................... -- 5,554 (412) -- 5,142 -------- -------- ------- ------- -------- Income (loss) before extraordinary charge...... (21,940) (18,986) 292 21,648 (18,986) Extraordinary charge.................. -- (2,954) -- -- (2,954) -------- -------- ------- ------- -------- Net income (loss)........... $(21,940) $(21,940) $ 292 $21,648 $(21,940) -------- -------- ------- ------- -------- -------- -------- ------- ------- --------
F-42 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999
YEAR ENDED JANUARY 3, 1999 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) Revenues: Net sales........................ $ -- $719,116 $16,320 $ -- $735,436 Royalties, franchise fees and other revenues................. -- 79,599 1 -- 79,600 ------- -------- ------- -------- -------- -- 798,715 16,321 -- 815,036 ------- -------- ------- -------- -------- Costs and expenses: Cost of sales, excluding depreciation and amortization................... -- 380,025 10,858 -- 390,883 Advertising, selling and distribution................... -- 195,028 2,037 -- 197,065 General and administrative....... -- 87,876 1,212 -- 89,088 Depreciation and amortization, excluding amortization of deferred financing costs....... -- 32,765 43 -- 32,808 ------- -------- ------- -------- -------- -- 695,694 14,150 -- 709,844 ------- -------- ------- -------- -------- Operating profit............ -- 103,021 2,171 -- 105,192 Interest expense...................... -- (60,235) -- -- (60,235) Gain on sale of businesses, net....... -- 5,016 -- -- 5,016 Other income, net..................... -- 4,244 1,054 -- 5,298 Equity in net earnings of subsidiaries........................ 29,987 1,988 -- (31,975) -- ------- -------- ------- -------- -------- Income before income taxes..................... 29,987 54,034 3,225 (31,975) 55,271 Provision for income taxes............ -- (24,047) (1,237) -- (25,284) ------- -------- ------- -------- -------- Net income.................. $29,987 $ 29,987 $ 1,988 $(31,975) $ 29,987 ------- -------- ------- -------- -------- ------- -------- ------- -------- --------
F-43 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) Net cash provided by (used in) operating activities................ $-- $ 11,842 $ (517) $-- $ 11,325 ------ -------- ------- ------ -------- Cash flows from investing activities: Capital expenditures............. -- (17,104) (9) -- (17,113) Business acquisitions............ -- (1,972) -- -- (1,972) Proceeds from sales of properties..................... -- 1,413 -- -- 1,413 Other............................ -- (356) -- -- (356) ------ -------- ------- ------ -------- Net cash used in investing activities.......................... -- (18,019) (9) -- (18,028) ------ -------- ------- ------ -------- Cash flows from financing activities: Proceeds from long-term debt..... -- 12,476 -- -- 12,476 Repayments of long-term debt..... -- (11,453) -- -- (11,453) Capital contribution............. -- (3,981) 3,981 -- -- Net borrowings from (repayments to) affiliates................. -- 6,593 (2,903) -- 3,690 Deferred financing costs......... -- (325) -- -- (325) ------ -------- ------- ------ -------- Net cash provided by financing activities.......................... -- 3,310 1,078 -- 4,388 ------ -------- ------- ------ -------- Net increase (decrease) in cash and cash equivalents.................... -- (2,867) 552 -- (2,315) Cash and cash equivalents at beginning of year............................. -- 9,090 795 -- 9,885 ------ -------- ------- ------ -------- Cash and cash equivalents at end of year................................ $-- $ 6,223 $ 1,347 $-- $ 7,570 ------ -------- ------- ------ -------- ------ -------- ------- ------ --------
F-44 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999
YEAR ENDED DECEMBER 28, 1997 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) Net cash provided by (used in) operating activities............... $ -- $ 35,466 $ (26) $-- $ 35,440 -------- --------- ------ ------ --------- Cash flows from investing activities: Acquisition of Snapple Beverage Corp.......................... (75,000) (232,205) -- -- (307,205) Other business acquisitions, net of cash acquired of $2,409,000.................... -- 2,409 -- -- 2,409 Capital expenditures............ -- (4,204) -- -- (4,204) Proceeds from sales of properties and businesses..... -- 3,529 -- -- 3,529 Other........................... -- (158) -- -- (158) -------- --------- ------ ------ --------- Net cash used in investing activities......................... (75,000) (230,629) -- -- (305,629) -------- --------- ------ ------ --------- Cash flows from financing activities: Proceeds from long-term debt.... -- 303,400 -- -- 303,400 Repayments of long-term debt.... -- (79,901) -- -- (79,901) Proceeds from issuance of common stock......................... 1 -- -- -- 1 Proceeds from issuance of redeemable preferred stock.... 75,000 -- -- -- 75,000 Capital contribution............ -- 6,211 -- -- 6,211 Net borrowings from (repayments to) affiliates................ -- 3,909 (374) -- 3,535 Deferred financing costs........ -- (11,385) -- -- (11,385) -------- --------- ------ ------ --------- Net cash provided by (used in) financing activities............... 75,001 222,234 (374) -- 296,861 -------- --------- ------ ------ --------- Net increase (decrease) in cash and cash equivalents................... 1 27,071 (400) -- 26,672 Cash and cash equivalents at beginning of year.................. -- 6,223 1,347 -- 7,570 -------- --------- ------ ------ --------- Cash and cash equivalents at end of year............................... $ 1 $ 33,294 $ 947 $-- $ 34,242 -------- --------- ------ ------ --------- -------- --------- ------ ------ ---------
F-45 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999
YEAR ENDED JANUARY 3, 1999 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) Net cash provided by operating activities.......................... $ -- $ 58,723 $ 381 $-- $ 59,104 ------- -------- ------ ------ -------- Cash flows from investing activities: Proceeds from sale of investment in Select Beverages............ -- 28,342 -- -- 28,342 Proceeds from sales of properties..................... -- 1,538 -- -- 1,538 Capital expenditures............. -- (11,107) -- -- (11,107) Business acquisition............. -- (3,000) -- -- (3,000) Other............................ -- (2) -- -- (2) ------- -------- ------ ------ -------- Net cash provided by investing activities.......................... -- 15,771 -- -- 15,771 ------- -------- ------ ------ -------- Cash flows from financing activities: Dividends........................ -- (23,556) -- -- (23,556) Repayments of long-term debt..... -- (14,158) -- -- (14,158) Net borrowings from affiliates... -- 1,261 128 -- 1,389 ------- -------- ------ ------ -------- Net cash provided by (used in) financing activities................ -- (36,453) 128 -- (36,325) ------- -------- ------ ------ -------- Net increase in cash and cash equivalents......................... -- 38,041 509 -- 38,550 Cash and cash equivalents at beginning of year............................. 1 33,294 947 -- 34,242 ------- -------- ------ ------ -------- Cash and cash equivalents at end of year................................ $ 1 $ 71,335 $1,456 $-- $ 72,792 ------- -------- ------ ------ -------- ------- -------- ------ ------ --------
(23) SUMMARIZED FINANCIAL INFORMATION OF CO-ISSUER OF THE NOTES Summarized balance sheet information as of December 28, 1997 and January 3, 1999 and statement of operations information for the years ended December 31, 1996, December 28, 1997 and January 3, 1999 is being presented for the co-issuer of the Notes, Triarc Beverage Holdings. As set forth in Note 1, Triarc Beverage Holdings did not commence operations until May 22, 1997 when Triarc Parent contributed Mistic to it and Triarc Beverage Holdings acquired Snapple. The financial information from January 1, 1996 to May 22, 1997 is that of Mistic, which Triarc Parent had acquired on August 9, 1995 as the predecessor company to Triarc Beverage Holdings. The Mistic information has been derived and condensed, as applicable, from the audited financial statements of Mistic not included herein. Further, effective May 17, 1999 TCPG contributed the stock of Cable Car to Triarc Beverage Holdings; accordingly the summarized financial information of the co-issuer reflects the financial information of Cable Car from the November 25, 1997 date of its acquisition by Triarc on an 'as if pooling' basis. Such information for Triarc Beverage Holdings is as follows (in thousands): F-46 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999
DECEMBER 28, JANUARY 3, 1997 1999 ---- ---- BALANCE SHEET INFORMATION Current assets......................................... $139,184 $134,924 Unamortized costs in excess of net assets of acquired companies............................................ 125,590 120,145 Trademarks............................................. 264,498 254,340 Other assets........................................... 57,459 27,161 -------- -------- $586,731 $536,570 -------- -------- -------- -------- Current liabilities.................................... $117,424 $ 95,674 Long-term debt......................................... 284,507 282,951 Other liabilities...................................... 61,197 39,052 Redeemable preferred stock............................. 79,604 87,587 Stockholder's equity................................... 43,999 31,306 -------- -------- $586,731 $536,570 -------- -------- -------- --------
YEAR ENDED ------------------------------------------- DECEMBER 31, DECEMBER 28, JANUARY 3, 1996 1997 1999 ---- ---- ---- STATEMENT OF OPERATIONS INFORMATION Revenues.................................. $131,083 $408,841 $611,546 Operating profit (loss)................... 6,148 (8,676)(a) 56,160 Income (loss) before extraordinary charge.................................. (810) (18,803) 19,158 Net income (loss)......................... (810) (19,957) 19,158
- ------------ (a) Reflects charges related to post-acquisition transition, integration and changes to business strategies of $32,840,000 for the year ended December 28, 1997 (see Note 11). The amount of the charges recognized by Triarc Beverage Holdings differs from the $33,815,000 recognized by the Company by $975,000, representing a charge relating to MetBev (see Note 18) which was recorded by Royal Crown, a company which was not a subsidiary of Triarc Beverage Holdings. * * * * * F-47 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
JANUARY 3, OCTOBER 3, 1999(A) 1999 ------- ---- (IN THOUSANDS) (UNAUDITED) ASSETS Current assets: Cash and cash equivalents.............................. $ 72,792 $ 40,131 Receivables............................................ 66,690 105,814 Inventories............................................ 46,761 67,326 Deferred income tax benefit............................ 18,934 18,901 Prepaid expenses and other current assets.............. 7,258 5,568 --------- --------- Total current assets.............................. 212,435 237,740 Properties.................................................. 25,320 25,118 Unamortized costs in excess of net assets of acquired companies................................................. 268,215 273,065 Trademarks.................................................. 261,906 253,768 Deferred costs and other assets............................. 23,094 38,139 --------- --------- $ 790,970 $ 827,830 --------- --------- --------- --------- LIABILITIES AND MEMBER'S DEFICIT Current liabilities: Current portion of long-term debt...................... $ 9,678 $ 45,570 Accounts payable....................................... 36,993 37,659 Accrued expenses....................................... 81,448 88,342 Due to Triarc Companies, Inc. and other affiliates..... 29,082 32,960 --------- --------- Total current liabilities......................... 157,201 204,531 Long-term debt.............................................. 560,977 734,218 Deferred income taxes....................................... 9,173 41,329 Deferred income and other liabilities....................... 20,753 21,367 Redeemable preferred stock.................................. 87,587 -- Member's equity (deficit): Contributed capital.................................... 106,269 -- Accumulated deficit.................................... (150,732) (173,311) Accumulated other comprehensive deficit................ (258) (304) --------- --------- Total member's deficit............................ (44,721) (173,615) --------- --------- $ 790,970 $ 827,830 --------- --------- --------- ---------
(A) Derived from the audited consolidated financial statements as of January 3, 1999 See accompanying notes to condensed consolidated financial statements. F-48 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED -------------------------- SEPTEMBER 27, OCTOBER 3, 1998 1999 ---- ---- (IN THOUSANDS) (UNAUDITED) Revenues: Net sales.............................................. $594,439 $619,630 Royalties, franchise fees and other revenues........... 57,536 60,098 -------- -------- 651,975 679,728 -------- -------- Costs and expenses: Cost of sales, excluding depreciation and amortization related to sales of $1,231,000 and $1,518,000......... 316,364 329,740 Advertising, selling and distribution.................. 166,811 164,772 General and administrative............................. 68,842 69,887 Depreciation and amortization, excluding amortization of deferred financing costs........................... 24,974 23,649 Capital structure reorganization related............... -- 3,208 -------- -------- 576,991 591,256 -------- -------- Operating profit.................................. 74,984 88,472 Interest expense............................................ (44,658) (56,931) Investment income........................................... 1,864 2,692 Gain (loss) on sale of businesses, net...................... 4,934 (627) Other income, net........................................... 1,839 2,112 -------- -------- Income before income taxes and extraordinary charges... 38,963 35,718 Provision for income taxes.................................. (18,663) (18,204) -------- -------- Income before extraordinary charges.................... 20,300 17,514 Extraordinary charges....................................... -- (11,772) -------- -------- Net income............................................. $ 20,300 $ 5,742 -------- -------- -------- --------
See accompanying notes to condensed consolidated financial statements. F-49 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED -------------------------- SEPTEMBER 27, OCTOBER 3, 1998 1999 ---- ---- (IN THOUSANDS) (UNAUDITED) Cash flows from operating activities: Net income............................................. $ 20,300 $ 5,742 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of costs in excess of net assets of acquired companies, trademarks and certain other items............................................... 17,394 17,234 Depreciation and amortization of properties.......... 7,580 6,415 Amortization of deferred financing costs............. 3,063 3,202 Write-off of unamortized deferred financing costs and interest rate cap agreement costs................... -- 10,938 Provision for deferred income taxes.................. 12,973 12,123 Capital structure reorganization related charge...... -- 3,208 Provision for doubtful accounts...................... 2,368 2,112 (Gain) loss on sale of businesses, net............... (4,934) 627 Payments for charges related to post-acquisition transition, integration and changes to business strategies.......................................... (5,943) (204) Other, net........................................... (1,150) 1,152 Changes in operating assets and liabilities: Increase in receivables........................... (21,526) (39,014) Increase in inventories........................... (13,946) (19,017) Decrease (increase) in prepaid expenses and other current assets.................................. (1,853) 1,544 Increase in accounts payable and accrued expenses........................................ 14,803 2,759 Increase in due to Triarc Companies, Inc. and other affiliates................................ 12,954 6,608 -------- --------- Net cash provided by operating activities....... 42,083 15,429 -------- --------- Cash flows from investing activities: Acquisition of Millrose Distributors, Inc.............. -- (17,491) Proceeds from sale of investment in Select Beverages, Inc................................................... 28,342 -- Capital expenditures................................... (9,007) (5,764) Other.................................................. (1,629) 452 -------- --------- Net cash provided by (used in) investing activities................................... 17,706 (22,803) -------- --------- Cash flows from financing activities: Proceeds from long-term debt........................... -- 775,000 Repayments of long-term debt........................... (10,426) (565,941) Dividends.............................................. (23,556) (204,746) Deferred financing costs............................... -- (29,600) Net borrowings from affiliates......................... 1,389 -- -------- --------- Net cash used in financing activities........... (32,593) (25,287) -------- --------- Net increase (decrease) in cash and cash equivalents........ 27,196 (32,661) Cash and cash equivalents at beginning of period............ 34,242 72,792 -------- --------- Cash and cash equivalents at end of period.................. $ 61,438 $ 40,131 -------- --------- -------- ---------
See accompanying notes to condensed consolidated financial statements. F-50 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 3, 1999 (UNAUDITED) (1) BASIS OF PRESENTATION Triarc Consumer Products Group, LLC ('TCPG' and together with its subsidiaries, the 'Company'), a wholly-owned subsidiary of Triarc Companies, Inc. ('Triarc Parent'), was formed on January 15, 1999 and, effective February 23, 1999, acquired through a capital contribution all of the stock previously owned directly or indirectly by Triarc Parent of RC/Arby's Corporation ('RC/Arby's'), Triarc Beverage Holdings Corp. ('Triarc Beverage Holdings') and Stewart's Beverages, Inc. ('Stewart's'), formerly Cable Car Beverage Corporation. Effective May 17, 1999 TCPG contributed the stock of Stewart's to Triarc Beverage Holdings. Triarc Beverage Holdings' principal wholly-owned subsidiaries are Snapple Beverage Corp. ('Snapple'), Mistic Brands, Inc. ('Mistic') and, effective May 17, 1999, Stewart's. RC/Arby's principal wholly-owned subsidiaries are Royal Crown Company, Inc. ('Royal Crown') and Arby's, Inc. ('Arby's'). The accompanying prior year consolidated financial statements present the consolidated financial position, results of operations and cash flows of TCPG as if it had been formed prior to December 29, 1997. The consolidated financial position, results of operations and cash flows of each of TCPG, RC/Arby's, Triarc Beverage Holdings and, prior to May 17, 1999, Stewart's and their subsidiaries have been consolidated since such entities were under the common control of Triarc Parent since December 29, 1997 and, accordingly, the accompanying condensed consolidated financial statements are presented on an 'as-if pooling' basis. The accompanying unaudited condensed consolidated financial statements of TCPG have been prepared in accordance with Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (the 'SEC') and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of the Company, however, the accompanying condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company's financial position as of January 3, 1999 and October 3, 1999 and its results of operations and cash flows for the nine-month periods ended September 27, 1998 and October 3, 1999 (see below). This information should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended January 3, 1999 included elsewhere herein. The Company reports on a fiscal year basis consisting of 52 or 53 weeks ending on the Sunday closest to December 31. In accordance therewith, the Company's first nine months of 1998 commenced on December 29, 1997 and ended on September 27, 1998 and the Company's first nine months of 1999 commenced on January 4, 1999 and ended on October 3, 1999. For the purposes of these condensed consolidated financial statements, the period from December 29, 1997 to September 27, 1998 is referred to below as the nine-month period ended September 27, 1998 and the period from January 4, 1999 to October 3, 1999 is referred to below as the nine-month period ended October 3, 1999. (2) INVENTORIES The following is a summary of the components of inventories (in thousands):
JANUARY 3, OCTOBER 3, 1999 1999 ---- ---- Raw materials.......................................... $20,268 $26,785 Work in process........................................ 98 283 Finished goods......................................... 26,395 40,258 ------- ------- $46,761 $67,326 ------- ------- ------- -------
(3) LONG-TERM DEBT On February 25, 1999 TCPG and Triarc Beverage Holdings issued $300,000,000 principal amount of 10 1/4% senior subordinated notes due 2009 (the 'Notes'), including an aggregate $20,000,000 issued F-51 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) to the Chairman and Chief Executive Officer and President and Chief Operating Officer (the 'Executives') of the Company. The Company has been informed that, as of April 23, 1999, the Executives no longer hold any of the Notes. Concurrently, Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown entered into an agreement (the 'Credit Agreement') for a new $535,000,000 senior bank credit facility (the 'Credit Facility') consisting of a $475,000,000 term facility, all of which was borrowed as three classes of term loans (the 'Term Loans') on February 25, 1999, and a $60,000,000 revolving credit facility (the 'Revolving Credit Facility') which provides for revolving credit loans (the 'Revolving Loans') by Snapple, Mistic, Stewart's, RC/Arby's or Royal Crown. There have been no borrowings of Revolving Loans through October 3, 1999. The Company utilized the aggregate net proceeds of these borrowings to (1) repay on February 25, 1999 the $284,333,000 outstanding principal amount of the term loans under a former $380,000,000 credit agreement, as amended (the 'Former Beverage Credit Agreement') entered into by Snapple, Mistic, Triarc Beverage Holdings and Stewart's and $1,503,000 of related accrued interest, (2) redeem (the 'Redemption') on March 30, 1999 the $275,000,000 of borrowings under the RC/Arby's 9 3/4% senior secured notes due 2000 (the '9 3/4% Senior Notes') and pay $4,395,000 of related accrued interest and $7,662,000 of redemption premium, (3) acquire Millrose Distributors, Inc. and the assets of Mid-State Beverage, Inc. (collectively, 'Millrose'), two New Jersey distributors of the Company's premium beverages, for $17,491,000, including expenses of $241,000, (4) pay estimated fees and expenses of $29,600,000 relating to the issuance of the Notes and the consummation of the Credit Facility (collectively, the 'Refinancing Transactions') and (5) pay one-time distributions, including dividends, to Triarc Parent of the remaining net proceeds from the above borrowings and all the Company's cash and cash equivalents on hand in excess of approximately $2,000,000, which was retained by the Company for working capital purposes. Such one-time distributions consisted of $91,420,000 paid on February 25, 1999 and $124,108,000 paid on March 30, 1999 following the Redemption, and included aggregate dividends of $204,746,000. See Note 8 for disclosure of the extraordinary charges related to the aforementioned debt repayments and recorded during the first quarter of the year ending January 2, 2000. The Notes mature in 2009 and do not require any amortization of principal prior to 2009. However, under the indenture (the 'Indenture') pursuant to which the Notes were issued, the Notes are redeemable at the option of the Company at amounts commencing at 105.125% of principal beginning February 2004 decreasing annually to 100% in February 2007 through February 2009. In addition, should the Company consummate a permitted public equity offering or receive proceeds from a public equity offering by Triarc Parent, the Company may at any time prior to February 2002 redeem up to $105,000,000 of the Notes at 110.25% of principal amount with the net proceeds of such public offering. On November 12, 1999, TCPG and Triarc Beverage Holdings filed with the SEC amendment No. 3 to a registration statement (the 'Registration Statement') covering resales by holders of the Notes. The Registration Statement was not declared effective by the SEC by August 24, 1999 and, in accordance with the Indenture, the annual interest rate on the Notes increased by 1/2% to 10 3/4% and will remain at 10 3/4% until the Registration Statement is declared effective. Borrowings under the Credit Facility bear interest, at the Company's option, at rates based on either the 30, 60, 90 or 180-day London Interbank Offered Rate ('LIBOR') (ranging from 5.40% to 6.08% at October 3, 1999) or an alternate base rate (the 'ABR'). The ABR (8 1/4% at October 3, 1999) represents the higher of the prime rate or 1/2% over the Federal funds rate. The interest rates on LIBOR-based loans are reset at the end of the period corresponding with the duration of the LIBOR selected. The interest rates on ABR-based loans are reset at the time of any change in the ABR. Revolving Loans and one class of the Term Loans with $43,875,000 outstanding as of October 3, 1999 (the 'Term A Loans') bear interest at 3% over LIBOR or 2% over ABR until such time as such margins may be subject to downward adjustment by up to 3/4% based on the borrowers' leverage ratio, as defined. It is not expected that such interest rate margins will be adjusted during the remainder of 1999. The other two classes of Term Loans with $124,375,000 and $303,475,000 outstanding as of F-52 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) October 3, 1999 (the 'Term B Loans' and 'Term C Loans,' respectively) bear interest at 3 1/2% and 3 3/4% over LIBOR, respectively, and 2 1/2% and 2 3/4%, respectively, over ABR. The borrowing base for Revolving Loans is the sum of 80% of eligible accounts receivable and 50% of eligible inventories. At October 3, 1999 there was $59,951,000 of borrowing availability under the Revolving Credit Facility in accordance with limitations due to such borrowing base. Before consideration of the effect of an excess cash flow prepayment discussed below, the Term Loans are due $1,637,000 during the remainder of 1999, $8,238,000 in 2000, $10,488,000 in 2001, $12,738,000 in 2002, $14,987,000 in 2003, $15,550,000 in 2004, $94,299,000 in 2005, $242,875,000 in 2006 and $70,913,000 in 2007 and any Revolving Loans would be due in full in March 2005. The Company must also make mandatory annual prepayments in an amount, if any, initially equal to 75% of excess cash flow, as defined in the Credit Agreement. Such mandatory prepayments would be applied on a pro rata basis to the remaining outstanding balances of the Term Loans except that any lender that has Term B Loans or Term C Loans outstanding may elect not to have its pro rata share of such loans repaid. Any amount prepaid and not applied to Term B Loans or Term C Loans as a result of such election would be applied first to the outstanding balance of the Term A Loans and second to any outstanding balance of Revolving Loans, with any remaining amount being returned to the Company. The Company currently expects that a prepayment will be required to be made in the second quarter of 2000 in respect of the year ending January 2, 2000, the amount of which is currently estimated at $34,000,000. Accordingly, the estimated $34,000,000 the borrowers will be required to prepay is included in 'Current portion of long-term debt' in the accompanying condensed balance sheet as of October 3, 1999. After consideration of the effect of this estimated prepayment and assuming that the prepayment is applied on a pro rata basis to the remaining outstanding balances of all outstanding Term Loans, the Term Loans would be due $1,637,000 during the remainder of 1999, $41,765,000 in 2000 including the estimated excess cash flow prepayment, $9,737,000 in 2001, $11,826,000 in 2002, $13,915,000 in 2003, $14,437,000 in 2004, $87,389,000 in 2005, $225,401,000 in 2006 and $65,618,000 in 2007. Pursuant to the Credit Agreement the Company can make voluntary prepayments of the Term Loans. However, if the Company makes voluntary prepayments of the Term B and Term C Loans through February 25, 2000, it will incur prepayment penalties of 2.0% and 3.0% of the amounts prepaid, respectively, and from February 26, 2000 through February 25, 2001 it will incur prepayment penalties of 1.0% and 1.5% of the amounts prepaid, respectively. Under the Credit Agreement substantially all of the assets, other than cash and cash equivalents, of Snapple, Mistic, Stewart's, RC/Arby's, Royal Crown and Arby's and their subsidiaries are pledged as security. The Company's obligations with respect to the Notes are guaranteed by Snapple, Mistic, Stewart's and RC/Arby's and all of their domestic subsidiaries, all of which effective February 23, 1999 are wholly-owned by TCPG or Triarc Beverage Holdings. Such guarantees are full and unconditional, are on a joint and several basis and are unsecured. The Company's obligations with respect to the Credit Facility are guaranteed (the 'Guaranty') by TCPG, Triarc Beverage Holdings and substantially all of the domestic subsidiaries of Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown. As collateral for the Guaranty, all of the stock of Snapple, Mistic, Stewart's, RC/Arby's and Royal Crown and all of their domestic subsidiaries and 65% of the stock of each of their directly-owned foreign subsidiaries is pledged. The Indenture, the Credit Agreement and the Guaranty contain various covenants which (1) require meeting certain financial amount and ratio tests, (2) limit, among other matters, (a) the incurrence of indebtedness, (b) the retirement of certain debt prior to maturity, (c) investments, (d) asset dispositions and (e) affiliate transactions other than in the normal course of business, and (3) restrict the payment of dividends to Triarc Parent. Under the most restrictive of such covenants, the Company would not be able to pay any dividends to Triarc Parent other than the aforementioned one-time distributions, including dividends, paid to Triarc Parent in connection with the Refinancing Transactions. F-53 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) The following pro forma data of the Company for the nine months ended October 3, 1999 have been prepared by adjusting the historical data reflected in the accompanying condensed consolidated statement of operations for such period to reflect the effects of the Refinancing Transactions, including the acquisition of Millrose, as if such transactions had been consummated on January 4, 1999. Such pro forma data is presented for information purposes only and does not purport to be indicative of the Company's actual results of operations had such transactions actually been consummated on January 4, 1999 or of the Company's future results of operations and are as follows (in thousands):
AS PRO REPORTED FORMA -------- ----- Revenues.................................................... $679,728 $681,402 Operating profit............................................ 88,472 88,381 Interest expense............................................ (56,931) (59,933) Income before extraordinary charges......................... 17,514 14,777
(4) ACQUISITION The acquisition of Millrose described in Note 3 has been accounted for in accordance with the purchase method of accounting. In accordance therewith, the following table sets forth the preliminary allocation of the aggregate purchase price (in thousands): Current assets.............................................. $ 3,770 Properties.................................................. 1,000 Unamortized costs in excess of net assets of acquired companies (amortized over 15 years)....................... 13,579 Current liabilities......................................... (858) ------- $17,491 ------- -------
(5) CAPITAL STRUCTURE REORGANIZATION RELATED CHARGE The capital structure reorganization related charge of $3,208,000 recognized during the nine months ended October 3, 1999, including $208,000 recognized during the three months ended October 3, 1999, resulted from equitable adjustments to the terms of outstanding options under the Triarc Beverage Holdings Stock Option Plan (the 'Option Plan'), to adjust for the effects of net distributions of $91,342,000, principally consisting of transfers of cash and deferred tax assets, from Triarc Beverage Holdings to Triarc Parent, partially offset by the effect of the contribution of Stewart's to Triarc Beverage Holdings effective May 17, 1999. The Option Plan provides for an equitable adjustment of options in the event of a recapitalization or similar event. As a result of these net distributions and the terms of the Option Plan, the exercise prices of the options granted in 1997 and 1998 were equitably adjusted from $147.30 and $191.00 per share, respectively, to $107.05 and $138.83 per share, respectively, and a cash payment of $51.34 and $39.40 per share, respectively, is due from Triarc Beverage Holdings to the option holder following the exercise of the stock options. Compensation expense is being recognized for the cash to be paid upon the exercise of the stock options by employees of Triarc Beverage Holdings ratably over the vesting period of the stock options. The charges to be recognized over the vesting period aggregate $4,166,000. No compensation expense will be recognized for other changes in the terms of the outstanding options because the modifications to the options did not create a new measurement date under generally accepted accounting principles. (6) INCOME TAXES The Company is included in the consolidated Federal income tax return of Triarc Parent. As discussed more fully in the Company's consolidated financial statements for the year ended January 3, 1999, the Company provides for Federal income taxes on the same basis as if the Company filed separate consolidated returns pursuant to tax-sharing agreements with Triarc Parent. On February 25, F-54 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) 1999 the Company entered into a revised tax-sharing agreement with Triarc Parent which, as amended effective February 25, 1999, provides that the Company would continue to receive benefit for deferred tax assets associated with existing Federal net operating loss carryforwards and excess Federal income tax payments made in accordance with the prior tax-sharing agreement aggregating $39,518,000 as of January 3, 1999 except that Triarc Parent has the right to cause the effective transfer of any unutilized benefits from the Company to Triarc Parent, but only to the extent any such transfer would not result in non-compliance with a Credit Agreement covenant. In accordance therewith, during the nine months ended October 3, 1999 the Company recorded a charge to 'Accumulated deficit' and a credit to 'Deferred income taxes' to transfer $22,691,000 of such deferred tax benefits to Triarc Parent as if such transfer were a distribution from the Company to Triarc Parent. During the nine months ended October 3, 1999 the Company utilized $14,542,000 of such benefits to offset income taxes otherwise payable on its pre-tax income before extraordinary charges and generated an additional $6,339,000 of such benefits as a result of the extraordinary charges (see Note 8). Accordingly, the Company has $8,624,000 of such deferred tax benefits as of October 3, 1999. The Company has not established a valuation allowance relating to such net operating loss carryforwards and excess Federal income tax payments since as of October 3, 1999 it is more likely than not that the Company can realize the related deferred tax benefit. The Federal income tax returns of Triarc Parent and its subsidiaries, including RC/Arby's, have been examined by the Internal Revenue Service (the 'IRS') for the tax years from 1989 through 1992. Prior to 1999 Triarc Parent resolved and settled certain issues with the IRS regarding such audit and in July 1999 Triarc Parent resolved all remaining issues. In connection therewith, the Company paid $4,576,000 during 1997, of which $2,426,000 was the amount of tax due and $2,150,000 was interest thereon, and no further payments are required. Such amounts were charged to reserves principally provided in prior years. The IRS is examining the Federal income tax returns of Triarc Parent and its subsidiaries, including RC/Arby's, for the year ended April 30, 1993 and transition period ended December 31, 1993 (the '1993 Examination'). In connection therewith, Triarc Parent has received to date notices of proposed adjustments of which $722,000 would increase the taxable income relating to RC/Arby's, the tax effect of which has not yet been determined. Triarc Parent does not expect to receive any additional proposed adjustments relating to RC/Arby's with respect to the 1993 Examination. The Company has adequate Federal net operating loss carryforwards and excess income tax payments under tax sharing agreements (see prior paragraph) to provide for any tax liabilities that may result from the resolution of the 1993 Examination. (7) MEMBER'S DEFICIT The following is a summary of the changes in member's deficit for the nine months ended October 3, 1999 (in thousands): Balance at January 3, 1999.................................. $ (44,721) Net income............................................. 5,742 Cash dividends paid to Triarc Parent (Note 3).......... (204,746) Transfer of deferred income tax benefits (Note 6)...... (22,691) Dividend requirement on redeemable preferred stock through February 23, 1999 (Note 10)................... (1,192) Contribution of redeemable preferred stock (Note 10)... 88,779 Contribution to the Company of amounts payable to Triarc Parent (Note 10)............................... 7,766 Contribution to the Company of Triarc Parent's 49% interests in two subsidiaries of the Company (Note 10)............................................. 2,448 Dividend of amounts receivable from Triarc Parent (Note 10)............................................. (4,954) Net change in currency translation adjustment (Note 9).............................................. (46) --------- Balance at October 3, 1999.................................. $(173,615) --------- ---------
F-55 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) (8) EXTRAORDINARY CHARGES The extraordinary charges in the nine months ended October 3, 1999 resulted from the early extinguishment of borrowings under the Former Beverage Credit Agreement and the 9 3/4% Senior Notes (see Note 3). Such extraordinary charges consisted of (1) the write-off of previously unamortized (a) deferred financing costs of $10,792,000 and (b) interest rate cap agreement costs of $146,000 and (2) the payment of the $7,662,000 redemption premium (see Note 3), less income tax benefit of $6,828,000. (9) COMPREHENSIVE INCOME The following is a summary of the components of comprehensive income (in thousands):
NINE MONTHS ENDED -------------------------- SEPTEMBER 27, OCTOBER 3, 1998 1999 ---- ---- Net income.................................................. $20,300 $ 5,742 Net change in currency translation adjustment............... 20 (46) Reclassification adjustment for prior year appreciation on short-term investment sold during the period.............. (42) -- ------- ------- Comprehensive income........................................ $20,278 $ 5,696 ------- ------- ------- -------
(10) TRANSACTIONS WITH RELATED PARTIES On February 23, 1999 Triarc Parent contributed the redeemable preferred stock which it held in Triarc Beverage Holdings to the capital of TCPG and accordingly, the $88,779,000 carrying value of such stock, reflecting the cumulative unpaid dividends of $13,779,000 through February 23, 1999 (including $1,192,000 of dividends accrued in the first quarter of 1999 through February 23, 1999), has been reclassified to 'Member's deficit' in the accompanying condensed consolidated balance sheet as of October 3, 1999. On February 24, 1999 Triarc Parent contributed $7,766,000 of amounts payable to it by a subsidiary of the Company to the Company. Also on February 24, 1999 Triarc Parent contributed each of its 49% interests in two of the Company's restaurant subsidiaries previously 51%-owned by the Company; such contribution was valued at Triarc Parent's carrying value of such investments at the date of the contribution of $2,448,000. On March 30, 1999 the Company paid a non-cash dividend to Triarc Parent represented by $4,954,000 of amounts previously receivable from Triarc Parent. In February 1999 the Company sold to Triarc Parent for cash of $2,000,000 the promissory notes receivable and options it had received as a portion of the proceeds of the May 5, 1997 sale of the 355 company-owned Arby's restaurants. The $1,950,000 aggregate principal amount of the promissory notes had a discounted carrying value of $1,693,000 as of the date of their sale to Triarc Parent. The options which permitted the Company to acquire up to 20% of the common stock of the companies which purchased the restaurants had no carrying value. The Company understands that in May 1999 Triarc Parent sold those promissory notes and options to an affiliate of the purchasers for the same $2,000,000 amount it had paid the Company. The Company deferred recognition of the $307,000 gain on the sale of those assets until the May 1999 sale by Triarc Parent to the unaffiliated entity. The Company continues to have certain related party transactions with Triarc Parent and its subsidiaries of the same nature and general magnitude as those described in Note 17 to the Company's consolidated financial statements for the year ended January 3, 1999. In addition, see Notes 3 and 6 above for discussion of certain other related party transactions for the nine-month period ended October 3, 1999. F-56 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) (11) LEGAL AND ENVIRONMENTAL MATTERS The Company is involved in litigation, claims and environmental matters incidental to its businesses. The Company has reserves for such legal and environmental matters aggregating $1,537,000 as of October 3, 1999. Although the outcome of such matters cannot be predicted with certainty and some of these matters may be disposed of unfavorably to the Company, based on currently available information and given the Company's aforementioned reserves, the Company does not believe that such legal and environmental matters will have a material adverse effect on its consolidated financial position or results of operations. (12) BUSINESS SEGMENTS The following is a summary of the Company's segment information (in thousands):
NINE MONTHS ENDED --------------------------- SEPTEMBER 27, OCTOBER 3, 1998 1999 ---- ---- Revenues: Premium beverages...................................... $495,817 $525,702 Soft drink concentrates................................ 99,166 94,934 Restaurants............................................ 56,992 59,092 -------- -------- Consolidated revenues............................. $651,975 $679,728 -------- -------- -------- -------- Earnings before interest, taxes, depreciation and amortization: Premium beverages...................................... $ 57,472 62,059 (a) Soft drink concentrates................................ 13,232 15,756 Restaurants............................................ 29,356 34,382 General corporate...................................... (102) (76) -------- -------- Consolidated earnings before interest, taxes, depreciation and amortization................... 99,958 112,121 -------- -------- Less depreciation and amortization: Premium beverages...................................... 16,385 16,612 Soft drink concentrates................................ 6,832 5,406 Restaurants............................................ 1,757 1,631 -------- -------- Consolidated depreciation and amortization........ 24,974 23,649 -------- -------- Operating profit: Premium beverages...................................... 41,087 45,447 (a) Soft drink concentrates................................ 6,400 10,350 Restaurants............................................ 27,599 32,751 General corporate...................................... (102) (76) -------- -------- Consolidated operating profit..................... 74,984 88,472 Interest expense............................................ (44,658) (56,931) Investment income........................................... 1,864 2,692 Gain (loss) on sale of businesses, net...................... 4,934 (627) Other income, net........................................... 1,839 2,112 -------- -------- Consolidated income before income taxes and extraordinary charges........................... $ 38,963 $ 35,718 -------- -------- -------- --------
- ------------ (a) Reflects the capital structure reorganization related charge discussed in Note 5 of $3,208,000 for the nine-month period ended October 3, 1999. F-57 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) (13) CONDENSED CONSOLIDATING FINANCIAL INFORMATION The following consolidating financial statements of the Company depict, in separate columns, the parent companies of each of the issuers of the Notes (TCPG and Triarc Beverage Holdings -- collectively, the 'Parent Companies') on a consolidated basis, those subsidiaries which are guarantors, those subsidiaries which are non-guarantors, elimination adjustments and the consolidated total. CONDENSED CONSOLIDATING BALANCE SHEET
OCTOBER 3, 1999 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) ASSETS Current assets: Cash and cash equivalents....... $ 13 $ 39,388 $ 730 $ -- $ 40,131 Receivables..................... -- 103,430 2,384 -- 105,814 Inventories..................... -- 65,408 1,918 -- 67,326 Deferred income tax benefit..... -- 18,901 -- -- 18,901 Prepaid expenses and other current assets................ -- 5,549 19 -- 5,568 --------- --------- ------- -------- --------- Total current assets....... 13 232,676 5,051 -- 237,740 Investment in subsidiaries........... (184,381) 11,983 -- 172,398 -- Intercompany receivables............. -- 734 7,920 (8,654) -- Properties........................... -- 21,368 3,750 -- 25,118 Unamortized costs in excess of net assets of acquired companies....... -- 273,065 -- -- 273,065 Trademarks........................... -- 253,768 -- -- 253,768 Deferred costs and other assets...... 11,958 26,169 12 -- 38,139 --------- --------- ------- -------- --------- $(172,410) $ 819,763 $16,733 $163,744 $ 827,830 --------- --------- ------- -------- --------- --------- --------- ------- -------- --------- LIABILITIES AND MEMBER'S DEFICIT Current liabilities: Current portion of long-term debt.......................... $ -- $ 45,570 $ -- $ -- $ 45,570 Accounts payable................ -- 36,029 1,630 -- 37,659 Accrued expenses................ 4,377 81,617 2,348 -- 88,342 Due to affiliates............... (3,197) 36,157 -- -- 32,960 --------- --------- ------- -------- --------- Total current liabilities.............. 1,180 199,373 3,978 -- 204,531 Note payable from RC/Arby's to TCPG.. (300,000) 300,000 -- -- -- Long-term debt....................... 300,000 434,218 -- -- 734,218 Intercompany payables................ -- 7,920 734 (8,654) -- Deferred income taxes................ 25 41,266 38 -- 41,329 Deferred income and other liabilities........................ -- 21,367 -- -- 21,367 Member's equity (deficit): Common stock.................... -- 4 526 (530) -- Contributed capital............. -- 43,744 9,533 (53,277) -- Accumulated deficit............. (173,311) (227,825) 2,243 225,582 (173,311) Accumulated other comprehensive deficit....................... (304) (304) (319) 623 (304) --------- --------- ------- -------- --------- Total members's equity (deficit)................ (173,615) (184,381) 11,983 172,398 (173,615) --------- --------- ------- -------- --------- $(172,410) $ 819,763 $16,733 $163,744 $ 827,830 --------- --------- ------- -------- --------- --------- --------- ------- -------- ---------
F-58 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 27, 1998 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) Revenues: Net sales....................... $ -- $579,003 $15,436 $ -- $594,439 Royalties, franchise fees and other revenues................ -- 57,536 -- -- 57,536 ------- -------- ------- -------- -------- -- 636,539 15,436 -- 651,975 ------- -------- ------- -------- -------- Costs and expenses: Cost of sales, excluding depreciation and amortization.................. -- 306,065 10,299 -- 316,364 Advertising, selling and distribution.................. -- 164,947 1,864 -- 166,811 General and administrative...... -- 68,038 804 -- 68,842 Depreciation and amortization, excluding amortization of deferred financing costs...... -- 24,944 30 -- 24,974 ------- -------- ------- -------- -------- -- 563,994 12,997 -- 576,991 ------- -------- ------- -------- -------- Operating profit........... -- 72,545 2,439 -- 74,984 Interest expense..................... -- (44,658) -- -- (44,658) Investment income.................... -- 1,864 -- -- 1,864 Gain on sale of businesses........... -- 4,934 -- -- 4,934 Other income, net.................... -- 1,144 695 -- 1,839 Equity in net earnings of subsidiaries....................... 20,300 3,134 -- (23,434) -- ------- -------- ------- -------- -------- Income before income taxes.................... 20,300 38,963 3,134 (23,434) 38,963 Provision for income taxes........... -- (18,663) -- -- (18,663) ------- -------- ------- -------- -------- Net income................. $20,300 $ 20,300 $ 3,134 $(23,434) $ 20,300 ------- -------- ------- -------- -------- ------- -------- ------- -------- --------
F-59 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED)
NINE MONTHS ENDED OCTOBER 3, 1999 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) Revenues: Net sales....................... $ -- $608,755 $10,875 $ -- $619,630 Royalties, franchise fees and other revenues................ -- 60,097 1 -- 60,098 ------- -------- ------- -------- -------- -- 668,852 10,876 -- 679,728 ------- -------- ------- -------- -------- Costs and expenses: Cost of sales, excluding depreciation and amortization.................. -- 322,443 7,297 -- 329,740 Advertising, selling and distribution.................. -- 163,419 1,353 -- 164,772 General and administrative...... 62 68,948 877 -- 69,887 Depreciation and amortization, excluding amortization of deferred financing costs...... -- 23,620 29 -- 23,649 Capital structure reorganization related -- 3,208 -- -- 3,208 ------- -------- ------- -------- -------- 62 581,638 9,556 -- 591,256 ------- -------- ------- -------- -------- Operating profit (loss).... (62) 87,214 1,320 -- 88,472 Interest expense..................... (19,670) (37,261) -- -- (56,931) Investment income.................... 1,122 1,561 9 -- 2,692 Loss on sale of businesses, net...... -- (627) -- -- (627) Other income (expense), net.......... 15,866 (14,538) 784 -- 2,112 Equity in earnings of subsidiaries before extraordinary charges....... 20,284 2,113 -- (22,397) -- ------- -------- ------- -------- -------- Income before income taxes and extraordinary charges.................. 17,540 38,462 2,113 (22,397) 35,718 Provision for income taxes........... (26) (18,178) -- -- (18,204) ------- -------- ------- -------- -------- Income before extraordinary charges.................. 17,514 20,284 2,113 (22,397) 17,514 Extraordinary charges and equity in extraordinary charges.............. (11,772) (11,772) -- 11,772 (11,772) ------- -------- ------- -------- -------- Net income................. $ 5,742 $ 8,512 $ 2,113 $(10,625) $ 5,742 ------- -------- ------- -------- -------- ------- -------- ------- -------- --------
F-60 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 27, 1998 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) Net cash provided by (used in) operating activities................ $ -- $ 42,204 $(121) $-- $ 42,083 --------- -------- ----- ------- -------- Cash flows from investing activities: Proceeds from sale of investment in Select Beverages, Inc....... -- 28,342 -- -- 28,342 Capital expenditures............. -- (9,007) -- -- (9,007) Other............................ -- (1,629) -- -- (1,629) --------- -------- ----- ------- -------- Net cash provided by investing activities.......................... -- 17,706 -- -- 17,706 --------- -------- ----- ------- -------- Cash flows from financing activities: Repayments of long-term debt..... -- (10,426) -- -- (10,426) Dividends........................ -- (23,556) -- -- (23,556) Net borrowings from affiliates... -- 1,389 -- -- 1,389 --------- -------- ----- ------- -------- Net cash used in financing activities.......................... -- (32,593) -- -- (32,593) --------- -------- ----- ------- -------- Net increase (decrease) in cash and cash equivalents.................... -- 27,317 (121) -- 27,196 Cash and cash equivalents at beginning of period........................... 1 33,294 947 -- 34,242 --------- -------- ----- ------- -------- Cash and cash equivalents at end of period.............................. $ 1 $ 60,611 $ 826 $-- $ 61,438 --------- -------- ----- ------- -------- --------- -------- ----- ------- --------
F-61 TRIARC CONSUMER PRODUCTS GROUP, LLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED)
NINE MONTHS ENDED OCTOBER 3, 1999 ----------------------------------------------------------------- PARENT NON- COMPANIES GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ (IN THOUSANDS) Net cash provided by (used in) operating activities............... $ 2,283 $ 13,564 $ (418) $ -- $ 15,429 --------- --------- ------ -------- --------- Cash flows from investing activities: Acquisition of Millrose Distributors, Inc............. -- (17,491) -- -- (17,491) Capital expenditures............ -- (5,762) (2) -- (5,764) Dividends from subsidiaries..... 12,084 -- -- (12,084) -- Other........................... -- 452 -- -- 452 --------- --------- ------ -------- --------- Net cash provided by (used in) investing activities............... 12,084 (22,801) (2) (12,084) (22,803) --------- --------- ------ -------- --------- Cash flows from financing activities: Proceeds from long-term debt.... 300,000 475,000 -- -- 775,000 Repayments of long-term debt.... -- (565,941) -- -- (565,941) Dividends....................... (1,624) (215,206) -- 12,084 (204,746) Deferred financing costs........ (12,731) (16,869) -- -- (29,600) Transfer of cash from TCPG to RC/Arby's..................... (300,000) 300,000 -- -- -- Intercompany advances and repayments.................... -- 306 (306) -- -- --------- --------- ------ -------- --------- Net cash used in financing activities......................... (14,355) (22,710) (306) 12,084 (25,287) --------- --------- ------ -------- --------- Net increase (decrease) in cash and cash equivalents................... 12 (31,947) (726) -- (32,661) Cash and cash equivalents at beginning of period................ 1 71,335 1,456 -- 72,792 --------- --------- ------ -------- --------- Cash and cash equivalents at end of period............................. $ 13 $ 39,388 $ 730 $ -- $ 40,131 --------- --------- ------ -------- --------- --------- --------- ------ -------- ---------
F-62 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of THE QUAKER OATS COMPANY: We have audited the accompanying combined statements of certain revenues and operating expenses (as described in Note 2) of the Snapple Beverage Business (the 'Snapple Business' as described in Note 1) of The Quaker Oats Company for the year ended December 31, 1996 and the four month and twenty-two day period ended May 22, 1997. These statements are the responsibility of the Snapple Business' management. Our responsibility is to express an opinion on these statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The statements have been prepared pursuant to the Stock Purchase Agreement between The Quaker Oats Company and Triarc Companies, Inc. dated March 27, 1997, as amended (described in Note 1), and are not intended to be a complete presentation of the revenues and operating expenses on a stand-alone basis of the Snapple Business of The Quaker Oats Company. In our opinion, the statements referred to above present fairly, in all material respects, certain revenues and operating expenses of the Snapple Business for the year ended December 31, 1996 and the four month and twenty-two day period ended May 22, 1997, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Chicago, Illinois, September 11, 1997 F-63 SNAPPLE BEVERAGE BUSINESS OF THE QUAKER OATS COMPANY COMBINED STATEMENTS OF CERTAIN REVENUES AND OPERATING EXPENSES
TWELVE FOUR MONTHS MONTHS AND TWENTY-TWO ENDED DAYS ENDED DECEMBER 31, MAY 22, 1996 1997 ---- ---- (IN THOUSANDS) Net sales................................................... $ 550,800 $ 172,500 Cost of goods sold.......................................... 352,900 100,700 --------- ----------- Gross profit........................................... 197,900 71,800 --------- ----------- Advertising and merchandising............................... 145,800 44,200 Marketing and selling....................................... 42,600 14,500 Amortization of intangibles................................. 54,200 13,500 Other general and administrative expenses................... 39,700 14,700 Loss on assets held for sale................................ -- 1,414,600 Restructuring charges....................................... 16,600 -- --------- ----------- Loss before interest and income taxes....................... $(101,000) $(1,429,700) --------- ----------- --------- -----------
The accompanying notes to the combined statements of certain revenues and operating expenses are an integral part of these statements. F-64 SNAPPLE BEVERAGE BUSINESS OF THE QUAKER OATS COMPANY NOTES TO THE COMBINED STATEMENTS OF CERTAIN REVENUES AND OPERATING EXPENSES (1) PRINCIPLES OF COMBINATION The combined statements reflect certain revenues and operating expenses of the Snapple Beverage Business (Snapple Business) of The Quaker Oats Company. The Snapple Business is engaged in the production, marketing and distribution of beverages under the Snapple trademark and related trademarks and trade names through Snapple Beverage Corp. (Snapple) and its subsidiaries, as well as through The Quaker Oats Company (Quaker), a New Jersey corporation, and certain affiliates of Quaker. Snapple, a Delaware corporation, is a wholly-owned subsidiary of Quaker. Refer to Note 2, 'Basis of Presentation,' for further discussion regarding the presentation of the financial statements. The Snapple Business has U.S. and international operations. All significant intercompany transactions have been eliminated. On December 6, 1994, Quaker purchased Snapple for a tender-offer price of $1.7 billion. The acquisition was accounted for as a purchase and the results of the Snapple Business were included in Quaker's consolidated financial statements from the acquisition date through the divestiture date. On May 22, 1997, Quaker completed the sale of 100 percent of the shares of Snapple to Triarc Companies, Inc. (Triarc), a Delaware corporation located in New York, New York, for $300 million, subject to certain adjustments. In addition, certain other assets and liabilities related to the Snapple Business were transferred to Triarc or its affiliates. (2) BASIS OF PRESENTATION The financial statements have been prepared as of the close of business on May 22, 1997, pursuant to the terms of the Stock Purchase Agreement (Agreement) between Quaker and Triarc. These financial statements include certain revenues and operating expenses for the twelve months ended December 31, 1996 and for the four month and twenty-two day period ended May 22, 1997. In the opinion of management, these financial statements include all adjustments necessary to present fairly the combined statements of certain revenues and operating expenses for the year ended December 31, 1996 and the four months and twenty-two days ended May 22, 1997. All adjustments made have been of a normal recurring nature. The statement of certain revenues and operating expenses for the four months and twenty-two days ended May 22, 1997 is not indicative of operating results for an entire year. In addition, the Snapple Business was not separately accounted for as a business segment of Quaker as it was operated as a product line of Quaker's beverages business. Line of business reporting for the Snapple Business prepared for managerial purposes contained allocations of the expenses of Quaker's beverages business including supply chain (procurement, production and quality control), human resource, finance and accounting functions. In addition, certain other expenses were allocated to the Snapple Business including certain research and development, information services, human resource, finance, legal and administrative functions that were performed on a company-wide basis for the benefit of all operating businesses of Quaker, including the beverages business. As a result, the distinct and separate accounts necessary to present complete separate statements of operations of the Snapple Business have not been maintained by Quaker since Snapple was acquired. As a result of the relationship between Snapple and Quaker, the results of operations are not indicative of the results of the Snapple Business had it been a stand-alone entity. Additionally, these financial statements are not indicative of the future results of operations of the Snapple Business. No activity of the Snapple Business or decisions made by Triarc subsequent to May 22, 1997 have been reflected in these financial statements. COMBINED STATEMENTS OF CERTAIN REVENUES AND OPERATING EXPENSES The Combined Statements of Certain Revenues and Operating Expenses reflect the sales and substantially all of the costs of operating the Snapple Business in the normal and ordinary course. These costs include direct expenses and certain shared expenses incurred by Quaker on behalf of the Snapple F-65 SNAPPLE BEVERAGE BUSINESS OF THE QUAKER OATS COMPANY NOTES TO THE COMBINED STATEMENTS OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED) Business. Management believes that the methods of allocating shared expenses to the Snapple Business are reasonable and approximate the costs of actual services provided. Refer to Note 6, 'Supplementary Expense Information,' for further discussion. Interest and income taxes are excluded. ESTIMATES AND ASSUMPTIONS The preparation of the financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. (3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES COMMODITY OPTIONS AND FUTURES Commodity options and futures contracts were used in the management of commodity price exposures. Realized and unrealized gains and losses on commodity options and futures contracts that hedged commodity price exposures were deferred and subsequently included in the cost of goods sold as the finished goods inventory was sold. INTANGIBLES Intangible assets consist of goodwill, trademarks, proprietary formulas and distribution network/rights. Intangible assets are amortized on a straight-line basis over the amortization periods indicated in the following table:
AMORTIZATION PERIOD (IN YEARS) ---------- Goodwill.................................................... 30-40 Trademark -- Snapple........................................ 40 Trademark -- Made From The Best Stuff on Earth.............. 7 Proprietary formulas........................................ 15 Distribution network/rights................................. 10-30
PROPERTY AND DEPRECIATION Capital leases and leasehold improvements and machinery and equipment were reported at cost and depreciated on a straight-line basis over the estimated useful lives. Useful lives were 3 to 12 years for machinery and equipment. Depreciation expense for the year ended December 31, 1996 and for the four months and twenty-two days ended May 22, 1997 was $5.6 million and $2.4 million, respectively. ADVERTISING AND MERCHANDISING COSTS Advertising and merchandising expenses are for amounts paid for media, production activities, cooperative retailer advertising and in-store promotion. Statement of Position No. 93-7, 'Reporting on Advertising Costs,' addresses the accounting for these expenses. The Snapple Business expensed all of these expenses as incurred except for production costs which are deferred and expensed when advertisements air for the first time. The amounts of production costs deferred at December 31, 1996 and May 22, 1997, were not significant. F-66 SNAPPLE BEVERAGE BUSINESS OF THE QUAKER OATS COMPANY NOTES TO THE COMBINED STATEMENTS OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED) FOREIGN CURRENCY TRANSLATION Income and expenses of the international operations of the Snapple Business were translated at average rates for the periods presented. Translation gains and losses were not material for the periods presented. REVENUE RECOGNITION Sales are recorded when inventory is shipped or delivered. (4) LOSS ON ASSETS HELD FOR SALE On March 27, 1997, Quaker entered into an agreement to sell the Snapple Business to Triarc. Under the provisions of FASB Statement No. 121, 'Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,' the Snapple Business was then considered an asset held for sale and, as such, the carrying value of Quaker's basis in the Snapple Business was reduced to fair market value. The fair market value used in determining the impairment loss was based on the sale price of $300 million. Accordingly, a pretax impairment loss of $1.4 billion was recorded and a valuation reserve for the write-down of the excess carrying value over fair market value was established in the first quarter of 1997. Upon the Snapple sale completion on May 22, 1997, an additional pretax loss of $10.6 million was realized and an additional valuation reserve was established in the second quarter of 1997. This additional loss, combined with the previously recorded impairment loss in the first quarter of 1997, resulted in a total pretax loss of $1.41 billion. Snapple long-lived assets, including intangible assets, were evaluated as of December 31, 1996, pursuant to the provisions of Financial Accounting Standards Board (FASB) Statement No. 121, 'Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.' Estimated undiscounted future cash flows were compared to the carrying value of Snapple long-lived assets, including intangible assets. As the estimated undiscounted future cash flows exceeded the carrying value of long-lived assets, an impairment loss was not required or permitted to be recognized at December 31, 1996. (5) RESTRUCTURING CHARGES The Snapple Business' wholly-owned distributor, Southwest Snapple, was performing at less than acceptable levels. As a result, the Snapple Business decided to shut down Southwest Snapple and recorded a restructuring charge of $16.6 million in September 1996. Subsequent to the restructuring, Snapple beverages are sold through third-party distributors in certain Texas markets. Estimated savings from this restructuring action of about $2 million annually beginning in 1997, of which approximately 90 percent in cash, were consistent with expectations. The restructuring charges and utilization to date are as follows (in thousands):
AS OF AMOUNTS CHARGED MAY 22, 1997 --------------------------- -------------------- NON- AMOUNT REMAINING CASH CASH TOTAL UTILIZED RESERVE ---- ---- ----- -------- ------- Severance and termination benefits(a)......... $ 500 $ -- $ 500 $ 500 $-- Asset write-offs(b)........................... -- 13,700 13,700 13,700 -- Loss on lease and other(c).................... 2,400 -- 2,400 2,400 -- ------- ------- ------- ------- ------ Total............................... $ 2,900 $13,700 $16,600 $16,600 $-- ------- ------- ------- ------- ------ ------- ------- ------- ------- ------
- ------------ (a) These changes resulted in the elimination of 102 positions from all departments of Southwest Snapple. (footnotes continued on next page) F-67 SNAPPLE BEVERAGE BUSINESS OF THE QUAKER OATS COMPANY NOTES TO THE COMBINED STATEMENTS OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED) (footnotes continued from previous page) (b) In accordance with SFAS 121, the assets written-off were for goodwill, purchased intangibles, and equipment specifically associated with this distribution business. The amounts included in the charge were for the net book value of the intangibles and distribution rights at time of closure and the net book value less estimated selling proceeds for the equipment. (c) The 'loss on lease and other' component of the charge was for lease payments that the Snapple Business was obligated to make for the period after the closure of the facility. (6) SUPPLEMENTARY EXPENSE INFORMATION The Snapple Business conducted its operations as an integrated component of Quaker's beverages business. Certain shared operating and general and administrative expenses were allocated to the Snapple Business by Quaker. Management believes that the methods used for allocating these expenses were reasonable. It was not practicable to estimate what expenses would have been for the Snapple Business on a stand-alone basis for the periods presented. Selling, general and administrative expenses were as follows (in thousands):
TWELVE MONTHS FOUR MONTHS ENDED AND TWENTY-TWO DECEMBER 31, DAYS ENDED 1996 MAY 22, 1997 ---- ------------ Advertising and merchandising............................... $145,800 $44,200 Selling and marketing(a)(b)................................. 42,600 14,500 Amortization of intangibles................................. 54,200 13,500 Other general and administrative expenses(a)(b)(c).......... 39,700 14,700 -------- ------- Total selling, general and administrative expenses........................................ $282,300 $86,900 -------- ------- -------- -------
- ------------ (a) Shared Operating Expenses -- Quaker allocated a portion of shared operating expenses including broker selling expenses, certain other marketing expenses, certain other product research expenses, and certain other general and administrative services to the Snapple Business. These expenses were allocated to the Snapple Business based on measures such as percentages of sales, headcounts, and estimates of time requirements to support the business. We believe that this approximates the actual costs of services provided. The Snapple Business also participated in Quaker's consolidated insurance and risk management programs for property and casualty insurance. The Snapple Business was directly charged for related insurance costs. (b) Employees -- Certain employees of the Snapple Business were employed by Quaker and their compensation was paid by Quaker. These employees also participated in certain Quaker employee benefit plans. The Snapple Business was directly charged for actual salary costs and allocated fringe benefit costs. The allocated fringe benefit costs were allocated based on actual salary costs. Employees who were primarily employed in the Snapple Business on May 22, 1997, other than certain nontransferred employees as provided in the Agreement, were transferred to Triarc on the date of sale. (c) Corporate Overhead Allocations -- Quaker provided certain corporate general and administrative services to the Snapple Business including human resources, legal, finance, facility management and utilities. These expenses were allocated to the Snapple Business based on the underlying costs of the expense. We believe that this approximates the actual costs of services provided. F-68 SNAPPLE BEVERAGE BUSINESS OF THE QUAKER OATS COMPANY NOTES TO THE COMBINED STATEMENTS OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED) (7) SELECTED CASH FLOW INFORMATION Due to the relationship between the Snapple Business and Quaker and the basis of presentation of the financial statements contained herein (refer to Note 2, 'Basis of Presentation'), the selected cash flow information presented below is not indicative of what the cash flows of the Snapple Business would have been if it had been a stand-alone entity or indicative of future cash flows of the Snapple Business (in thousands).
FOUR MONTHS AND TWENTY-TWO YEAR ENDED DAYS ENDED DECEMBER 31, 1996 MAY 22, 1997 ----------------- ------------ Cash used in operating activities(a)........................ $(29,000) $(25,900) Cash used in investing activities(b)........................ (9,200) (1,900) Cash provided by financing activities(c).................... 37,300 23,400 -------- -------- Net decrease in cash and cash equivalents................... $ (900) $ (4,400) -------- -------- -------- --------
- ------------ (a) Operating Activities -- Cash used in operating activities for the twelve months ended December 31, 1996 was primarily comprised of the net loss before interest and income taxes, adjusted for depreciation, amortization and the restructuring charge, and a decrease in accrued liabilities, partly offset by decreases in trade accounts receivable and inventory of approximately $21 million and $11 million, respectively. Cash used in operating activities for the four months and twenty-two days ended May 22, 1997, was primarily comprised of increases in trade accounts receivable and inventory of approximately $19 million and $8 million, respectively, and a decrease in accrued liabilities of approximately $15 million, partly offset by an increase in trade accounts payable of approximately $11 million. (b) Investing Activities -- The principal component of cash used in investing activities is capital expenditures related to machinery and equipment. (c) Financing Activities -- Cash advances made by Quaker to cover operating expenses and capital requirements of the Snapple Business are the principal component of cash provided by financing activities. (8) FINANCIAL INSTRUMENTS Financial instruments were primarily used to reduce the impact of commodity price fluctuations. The main financial instruments used were commodity options and futures contracts. The commodity hedge instruments were used to reduce the risk that raw material purchases would be adversely affected as commodity prices changed. While the hedge instruments were subject to the risk of loss from decreasing commodity prices, any losses would be generally offset by reduced costs of the purchases being hedged. Quaker, acting on behalf of the Snapple Business, did not trade these instruments with the objective of earning financial gains on the commodity price fluctuations, nor did it trade in commodities for which there were no underlying exposures. Quaker's management believes that its use of financial instruments to reduce the effects of commodity price fluctuations was in the best interest of the Snapple Business. Primarily purchases of corn sweetener were hedged for the Snapple Business. For the twelve months ended December 31, 1996 and the four months and twenty-two days ended May 22, 1997, approximately $21.0 million and $5.3 million, respectively, of the cost of goods sold was in hedged corn sweetener. Quaker's strategy is typically to hedge certain production requirements for various periods up to 12 months. As of December 31, 1996, approximately 39 percent of hedgeable production F-69 SNAPPLE BEVERAGE BUSINESS OF THE QUAKER OATS COMPANY NOTES TO THE COMBINED STATEMENTS OF CERTAIN REVENUES AND OPERATING EXPENSES -- (CONTINUED) requirements for the next 12 months were hedged. During 1997, Quaker, on behalf of the Snapple Business, entered into an agreement with its corn sweetener supplier that effectively hedged production requirements by establishing a pricing cap for 1997 purchases. Subsequent to the agreement, Quaker closed out of its positions in commodity hedge instruments. Deferred realized losses related to commodity options and futures contracts were immaterial as of May 22, 1997. No realized gains or losses related to commodity options and futures contracts were deferred as of December 31, 1996. The realized (loss) gain included in cost of goods sold for the twelve months ended December 31, 1996, and the four months and twenty-two days ended May 22, 1997, were $2.1 million and $(0.1) million, respectively. The unrealized loss on open commodity instruments as of December 31, 1996, based on quotes from brokers, was $0.9 million. No open commodity instruments were outstanding as of May 22, 1997. (9) COPACKER CONTRACT LIABILITIES The Snapple Business has entered into long-term agreements with certain copackers (contract manufacturers). These arrangements require the Snapple Business to purchase minimum volumes over various determined time periods through 2000. Inventory product costs under these arrangements include a case-rate packing fee plus a fixed fee, if any, that is incurred if the minimum volume is not met. At May 22, 1997, an accrual of $1.2 million had been recorded for fixed fees incurred but not yet paid. At December 31, 1996, an accrual of $6.4 million had been recorded for fixed fees incurred but not yet paid. As Snapple volumes declined, the Snapple Business performed a manufacturing capacity study. As a result of this study, management reconfigured Snapple's manufacturing network and abandoned certain manufacturing arrangements. An accrual was established for future guaranteed payments that were required to be made to the contract manufacturers that were abandoned by Snapple. Because these guaranteed payments had no future benefits to Snapple, a liability of $14.4 million was established. The amounts charged against the accrual during the twelve months ended December 31, 1996 and the four months and twenty-two days ended May 22, 1997 were $2.4 million and $5.3 million, respectively. The accrual balance related to these fixed fees at December 31, 1996 and May 22, 1997 were $12.0 million and $6.7 million, respectively. Changes in assumptions, as well as actual experience, could cause these estimates to change. (10) LITIGATION AND CLAIMS The Snapple Business is a party to a number of lawsuits and claims, which have been vigorously defended. Such matters arise out of the normal course of business and other issues. Certain of these actions seek damages in large amounts. While the results of litigation cannot be predicted with certainty, it is believed that the final outcome of such litigation will not have a material adverse effect on the consolidated financial position or results of operations of the Snapple Business. Changes in assumptions, as well as actual experience, could cause these estimates to change. F-70 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholder of Triarc Beverage Holdings Corp. White Plains, New York We have audited the accompanying consolidated balance sheets of Triarc Beverage Holdings Corp. and subsidiaries (the 'Company') as of January 3, 1999 and December 28, 1997, and the related consolidated statements of operations, stockholder's equity and cash flows for each of the three fiscal years in the period ended January 3, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 3, 1999 and December 28, 1997, and the results of their operations and their cash flows for each of the three fiscal years in the period ended January 3, 1999 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP New York, New York July 30, 1999 F-71 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE DATA)
DECEMBER 28, JANUARY 3, 1997 1999 ---- ---- ASSETS Current assets: Cash (including cash equivalents of $19,899 and $32,997).............................................. $ 23,779 $ 39,578 Receivables (Note 4)................................... 41,186 37,710 Inventories (Note 4)................................... 44,951 41,563 Deferred income tax benefit (Note 8)................... 26,455 11,700 Due from affiliates.................................... -- 1,029 Prepaid expenses and other current assets.............. 2,813 3,344 -------- -------- Total current assets.............................. 139,184 134,924 Investments in affiliates (Note 5).......................... 25,476 -- Properties (Note 4)......................................... 19,107 15,998 Unamortized costs in excess of net assets of acquired companies (Note 4)........................................ 125,590 120,145 Trademarks (Note 4)......................................... 264,498 254,340 Deferred costs and other assets (Note 4).................... 12,876 11,163 -------- -------- $586,731 $536,570 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Current portion of long-term debt (Notes 6, 7 and 18)................................................... $ 12,243 $ 8,338 Accounts payable....................................... 31,543 33,918 Accrued expenses (Note 4).............................. 58,990 35,260 Due to Triarc Companies, Inc. and afffiliates (Note 16)............................................. 14,648 18,158 -------- -------- Total current liabilities......................... 117,424 95,674 Long-term debt (Notes 6, 7 and 18).......................... 284,507 282,951 Deferred income taxes (Note 8).............................. 48,010 35,500 Other liabilities........................................... 13,187 3,552 Redeemable preferred stock (Note 9)......................... 79,604 87,587 Commitments and contingencies (Notes 8, 15 and 17) Stockholder's equity (Notes 10 and 18): Common stock, $1.00 par value; authorized 2,000,000 shares, issued and outstanding 850,000 shares......... 850 850 Additional paid-in capital............................. 63,518 35,761 Accumulated deficit.................................... (20,467) (5,342) Accumulated other comprehensive income................. 98 37 -------- -------- Total stockholder's equity........................ 43,999 31,306 -------- -------- $586,731 $536,570 -------- -------- -------- --------
See accompanying notes to consolidated financial statements. F-72 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)
YEAR ENDED ---------------------------------------- DECEMBER 31, DECEMBER 28, JANUARY 3, 1996 1997 1999 ---- ---- ---- Net revenues............................................. $131,083 $408,841 $611,546 -------- -------- -------- Costs and expenses: Cost of sales, excluding depreciation and amortization related to sales of $289, $790 and $1,265............................................ 80,342 239,963 362,012 Advertising, selling and distribution (Note 1)...... 28,016 100,226 133,883 General and administrative.......................... 7,894 28,220 37,825 Depreciation and amortization, excluding amortization of deferred financing costs.......... 7,233 16,239 21,666 Charges related to post-acquisition transition, integration and changes to business strategies (Note 11)......................................... -- 32,840 -- Facilities relocation and corporate restructuring (Note 12)......................................... 1,450 29 -- -------- -------- -------- 124,935 417,517 555,386 -------- -------- -------- Operating profit (loss)........................ 6,148 (8,676) 56,160 Interest expense......................................... (7,148) (22,270) (28,587) Gain on sale of business (Note 5)........................ -- -- 4,702 Other income (expense), net.............................. (92) 2,071 1,510 -------- -------- -------- Income (loss) before income taxes and extraordinary charge............................................ (1,092) (28,875) 33,785 (Provision for) benefit from income taxes (Note 8)....... 282 10,072 (14,627) -------- -------- -------- Income (loss) before extraordinary charge........... (810) (18,803) 19,158 Extraordinary charge (Note 13)........................... -- (1,154) -- -------- -------- -------- Net income (loss)................................... $ (810) $(19,957) $ 19,158 -------- -------- -------- -------- -------- --------
See accompanying notes to consolidated financial statements. F-73 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (IN THOUSANDS)
CUMULATIVE OTHER COMPREHENSIVE INCOME (LOSS) ---------------------------- COMMON STOCK RETAINED UNREALIZED ----------------- ADDITIONAL EARNINGS/ GAIN (LOSS) ON CURRENCY NUMBER PAR PAID-IN ACCUMULATED SHORT-TERM TRANSLATION OF SHARES VALUE CAPITAL DEFICIT INVESTMENTS ADJUSTMENT TOTAL --------- ----- ------- ------- ----------- ---------- ----- Balance at December 31, 1995............. 873 $ 1 $ 25,999 $ 300 $ -- $ -- $ 26,300 Net loss and comprehensive loss..... -- -- -- (810) -- -- (810) Capital contribution to Mistic Brands, Inc. through forgiveness of a liability (Note 16).......... -- -- 1,500 -- -- -- 1,500 ------- ---- -------- -------- ------ ------ -------- Balance at December 31, 1996............. 873 1 27,499 (510) -- -- 26,990 Comprehensive loss: Net loss.......................... -- -- -- (19,957) -- -- (19,957) Unrealized gain on short-term investment..................... -- -- -- -- 42 -- 42 Net change in currency translation adjustment..................... -- -- -- -- -- 56 56 -------- Comprehensive loss.................. -- -- -- -- -- -- (19,859) -------- Capital contribution to Mistic Brands, Inc. through forgiveness of a liability (Note 16).......... -- -- 625 -- -- -- 625 Issuance of 1,000 shares of Triarc Beverage Holdings Corp. common stock (Note 10)................... 1,000 1 -- -- -- -- 1 Contribution of 873 shares of the Mistic Brands, Inc. common stock to Triarc Beverage Holdings Corp. (Note 10)......................... (873) (1) -- -- -- -- (1) Triarc Beverage Holdings Corp. common stock split (Note 10)...... 849,000 849 (849) -- -- -- -- Pushdown of Triarc Companies, Inc.'s acquisition basis in Cable Car Beverage Corporation (Notes 3 and 10)........................... -- -- 40,847 -- -- -- 40,847 Dividend requirement on redeemable preferred stock (Note 9).......... -- -- (4,604) -- -- -- (4,604) ------- ---- -------- -------- ---- ---- -------- Balance at December 28, 1997............. 850,000 850 63,518 (20,467) 42 56 43,999 Comprehensive income: Net income........................ -- -- -- 19,158 -- -- 19,158 Reclassification adjustment for prior year appreciation on short-term investment sold during the year................ -- -- -- -- (42) -- (42) Net change in currency translation adjustment..................... -- -- -- -- -- (19) (19) -------- Comprehensive income.............. -- -- -- -- -- -- 19,097 -------- Adjustment to pushdown of Triarc Companies, Inc.'s acquisition basis in Cable Car Beverage Corporation (Note 3).............. -- -- (251) -- -- -- (251) Cash dividends...................... -- -- (19,523) (4,033) -- -- (23,556) Dividend requirement on redeemable preferred stock (Note 9).......... -- -- (7,983) -- -- -- (7,983) ------- ---- -------- -------- ---- ---- -------- Balance at January 3, 1999............... 850,000 $850 $ 35,761 $ (5,342) $-- $ 37 $ 31,306 ------- ---- -------- -------- ---- ---- -------- ------- ---- -------- -------- ---- ---- --------
See accompanying notes to consolidated financial statements. F-74 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED ---------------------------------------- DECEMBER 31, DECEMBER 28, JANUARY 3, 1996 1997 1999 ---- ---- ---- Cash flows from operating activities: Net income (loss)...................................... $ (810) $ (19,957) $ 19,158 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Amortization of costs in excess of net assets of acquired companies, trademarks and certain other items............................................... 6,752 11,677 16,170 Depreciation and amortization of properties.......... 481 4,562 5,496 Amortization of deferred financing costs............. 953 1,541 1,885 Provision for (benefit from) deferred income taxes... (610) (10,855) 2,245 Provision for doubtful accounts...................... 355 1,878 1,029 Net provision (payments) for charges related to post-acquisition transition, integration and changes to business strategies.............................. -- 21,509 (6,025) Gain on sale of business............................. -- -- (4,702) Write-off of unamortized deferred financing costs.... -- 1,886 -- Other, net........................................... 1,262 3,781 (195) Changes in operating assets and liabilities: Decrease (increase) in receivables................ (3,638) 7,478 2,447 Decrease (increase) in inventories................ (3,990) 6,854 3,388 Decrease (increase) in prepaid expenses and other current assets.................................. (909) 1,957 (531) Increase (decrease) in accounts payable and accrued expenses................................ (2,026) (6,808) (14,197) Increase (decrease) in due to parent and affiliates...................................... (200) 13,903 2,404 ------- --------- -------- Net cash provided by (used in) operating activities................................ (2,380) 39,406 28,572 ------- --------- -------- Cash flows from investing activities: Proceeds from sale of investment in Select Beverages, Inc................................................... -- -- 28,342 Proceeds from sales of properties...................... 5 354 542 Capital expenditures................................... (937) (2,724) (5,799) Acquisition of Snapple Beverage Corp................... -- (307,205) (43) Cash acquired in the acquisition of Cable Car Beverage Corporation........................................... -- 2,409 -- Other.................................................. (120) -- -- ------- --------- -------- Net cash provided by (used in) investing activities................................ (1,052) (307,166) 23,042 ------- --------- -------- Cash flows from financing activities: Dividends.............................................. -- -- (23,556) Repayments of long-term debt........................... (5,000) (75,636) (12,259) Proceeds from long-term debt........................... 8,450 303,400 -- Proceeds from issuance of redeemable preferred stock... -- 75,000 -- Proceeds from issuance of common stock................. -- 1 -- Deferred financing costs............................... -- (11,385) -- ------- --------- -------- Net cash provided by (used in) financing activities................................ 3,450 291,380 (35,815) ------- --------- -------- Net increase in cash and cash equivalents................... 18 23,620 15,799 Cash and cash equivalents at beginning of year.............. 141 159 23,779 ------- --------- -------- Cash and cash equivalents at end of year.................... $ 159 $ 23,779 $ 39,578 ------- --------- -------- ------- --------- -------- Supplemental disclosures of cash flow information: Cash paid during the year for: Interest............................................. $ 5,718 $ 18,413 $ 24,552 ------- --------- -------- ------- --------- -------- Income taxes......................................... $-- $ 391 $ 2,784 ------- --------- -------- ------- --------- --------
F-75 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED) Due to their non-cash nature, the following transactions are not reflected in the consolidated statements of cash flows (expressed in whole dollars): On November 25, 1997 Triarc Companies, Inc. ('Triarc Parent'), indirect parent of the Company (see Note 1 for definition), acquired (the 'Stewart's Acquisition') Cable Car Beverage Corporation ('Cable Car') for 1,566,858 shares of Triarc Parent common stock exchanged for all of the Cable Car outstanding stock and 154,931 stock options of Triarc Parent exchanged for all of the outstanding stock options of Cable Car. The Stewart's Acquisition was accounted for by Triarc Parent in accordance with the purchase method of accounting. Triarc Parent's basis in Cable Car was 'pushed down' to Cable Car and the excess of the purchase price over the net assets acquired was allocated to the Cable Car assets and liabilities as of November 25, 1997. See Notes 1 and 3 to the consolidated financial statements for further discussion of this transaction. In May 1997 the Company acquired Snapple Beverage Corp. The portion of the purchase price that was not yet paid as of December 28, 1997, representing a portion of the expenses related to the acquisition, was $2,181,000. During 1996 and 1997 Triarc Parent made capital contributions to the Company through the assumption or forgiveness of liabilities of Mistic Brands, Inc. of $1,500,000 and $625,000, respectively. See Note 16 to the consolidated financial statements for further discussion of these transactions. During 1997 and 1998 the Company recorded cumulative dividends not declared or paid on its redeemable preferred stock of $4,604,000 and $7,983,000, respectively, as increases in 'Redeemable preferred stock' with offsetting charges to 'Additional paid-in-capital' since payment of the dividends is not solely in the control of the Company. See accompanying notes to consolidated financial statements. F-76 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 3, 1999 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION Triarc Beverage Holdings Corp. ('Triarc Beverage Holdings'), a wholly-owned subsidiary of Triarc Companies, Inc. ('Triarc Parent'), commenced operations on May 22, 1997 with the concurrent acquisition by Triarc Beverage Holdings of Snapple Beverage Corp. ('Snapple') and the concurrent contribution to Triarc Beverage Holdings by Triarc Parent of Mistic Brands, Inc. ('Mistic' -- acquired by Triarc Parent on August 9, 1995). On February 23, 1999, Triarc Consumer Products Group, LLC ('TCPG'), a wholly-owned subsidiary of Triarc Parent, acquired all of the stock of Triarc Beverage Holdings previously owned by Triarc Parent. Effective May 17, 1999 TCPG contributed the stock of Cable Car Beverage Corporation ('Cable Car') to Triarc Beverage Holdings. Since Triarc Beverage Holdings and Cable Car were under the common control of Triarc Parent since the November 25, 1997 acquisition (the 'Stewart's Acquisition') of Cable Car by Triarc Parent, the Stewart's Acquisition has been accounted for on an 'as if pooling' basis subsequent to November 25, 1997. See Note 3 for a discussion of the 1997 Snapple and Stewart's acquisitions. The accompanying consolidated financial statements represent the financial position, results of operations and cash flows of Mistic from January 1, 1996 through May 22, 1997 and of Triarc Beverage Holdings and its subsidiaries, Snapple, Mistic and, effective November 25, 1997, Cable Car, from May 22, 1997 to January 3, 1999. The financial statements for the period from January 1, 1996 through May 22, 1997 reflect the financial position, results of operations and cash flows of Mistic since Mistic was under the common control of Triarc Parent during such period and, accordingly, the financial statements are presented on an 'as if pooling' basis. The entity representative of Mistic from January 1, 1996 to May 22, 1997 and Triarc Beverage Holdings and its subsidiaries from May 22, 1997 through January 3, 1999, or any one or more of such entities or their subsidiaries, is referred to herein as the 'Company'. All significant intercompany balances and transactions have been eliminated in consolidation. CHANGE IN FISCAL YEAR Effective January 1, 1997 the Company changed its fiscal year from a calendar year to a year consisting of 52 or 53 weeks ending on the Sunday closest to December 31. In accordance therewith, the Company's 1997 fiscal year commenced January 1, 1997 and ended on December 28, 1997 and its 1998 fiscal year commenced December 29, 1997 and ended on January 3, 1999. Such periods are referred to herein as (i) 'the year ended December 28, 1997' or '1997' and (ii) 'the year ended January 3, 1999' or '1998', respectively. December 28, 1997 and January 3, 1999 are referred to herein as 'Year-End 1997' and 'Year-End 1998', respectively. CASH EQUIVALENTS All highly liquid investments with a maturity of three months or less when acquired are considered cash equivalents. The Company typically invests its excess cash in commercial paper of high credit-quality entities and repurchase agreements with high credit-quality financial institutions. Securities pledged as collateral for repurchase agreements are segregated and held by the financial institution until the maturity of each repurchase agreement. While the market value of the collateral is sufficient in the event of default, realization and/or retention of the collateral may be subject to legal proceedings in the event of default or bankruptcy by the other party to the agreement. INVENTORIES The Company's inventories are stated at the lower of cost (determined on the first-in, first-out basis) or market. F-77 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 INVESTMENTS IN AFFILIATES The Company's investments in affiliates in which it has significant influence over the investee ('Equity Investments') are accounted for in accordance with the equity method of accounting under which the consolidated results include the Company's share of income or loss of such investees. The excess, if any, of the carrying value of the Company's Equity Investments over the underlying equity in net assets of each investee is being amortized to 'Other income (expense), net' on a straight-line basis over 35 years. PROPERTIES AND DEPRECIATION AND AMORTIZATION Properties are stated at cost less accumulated depreciation and amortization. Depreciation of machinery and equipment is computed principally on the straight-line basis using the estimated useful lives of 3 to 5 years. Leasehold improvements and leased assets capitalized are amortized over the shorter of their estimated useful lives or the terms of the respective leases. AMORTIZATION OF INTANGIBLES Costs in excess of net assets of acquired companies ('Goodwill') and trademarks are being amortized on the straight-line basis over 15 to 35 years. Deferred financing costs are being amortized as interest expense over the lives of the respective debt using the interest rate method. IMPAIRMENTS Intangible Assets The amount of impairment, if any, in unamortized Goodwill is measured based on projected future operating performance. To the extent future operating performance of those companies to which the Goodwill relates through the period such Goodwill is being amortized are sufficient to absorb the related amortization, the Company has deemed there to be no impairment of Goodwill. Long-Lived Assets The Company reviews its long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such review indicates an asset may not be recoverable, an impairment loss is recognized for the excess of the carrying value over the fair value of an asset to be held and used or over the net realizable value of an asset to be disposed. DERIVATIVE FINANCIAL INSTRUMENTS The Company enters into interest rate cap agreements in order to protect against significant interest rate increases on certain of its floating-rate debt. The costs of such agreements are amortized over the lives of the respective agreements. The only cap agreement outstanding as of January 3, 1999 is approximately 3% higher than the interest rate on the related debt as of such date. STOCK-BASED COMPENSATION The Company measures compensation costs for its employee stock-based compensation under the intrinsic value method. Accordingly, compensation cost for the Company's stock options is measured as the excess, if any, of the market price of the Company's stock at the date of grant over the amount an employee must pay to acquire the stock. F-78 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 FOREIGN CURRENCY TRANSLATION Financial statements of foreign subsidiaries are prepared in their respective local currencies and translated into United States dollars at the current exchange rates for assets and liabilities and an average rate for the year for revenues, costs and expenses. Net gains or losses resulting from the translation of foreign financial statements are charged or credited directly to the 'Currency translation adjustment' component of 'Accumulated other comprehensive income' in 'Stockholder's equity.' ADVERTISING COSTS AND PROMOTIONAL ALLOWANCE The Company accounts for advertising production costs by expensing such production costs the first time the related advertising takes place. Advertising costs amounted to $6,826,000, $24,661,000 and $33,205,000 for 1996, 1997 and 1998, respectively. In addition the Company supports its beverage bottlers and distributors with promotional allowances the most significant of which are for (i) indirect advertising by such bottlers and distributors including in-store displays and point-of-sale materials, (ii) cold drink equipment and (iii) promotional merchandise. Promotional allowances are principally expensed when the related promotion takes place. Estimates used to expense the costs of certain promotions where the Company expects reporting delays by the bottlers or distributors are adjusted quarterly based on actual amounts reported. Promotional allowances amounted to $13,360,000, $50,185,000 and $63,071,000 for 1996, 1997 and 1998, respectively, and are included in 'Advertising, selling and distribution' in the accompanying consolidated statements of operations. INCOME TAXES The Company is included in the consolidated Federal income tax return of Triarc Parent. Pursuant to a tax-sharing agreement with Triarc Parent, the Company provides for Federal income taxes on the same basis as if it filed a separate consolidated return. Deferred income taxes are provided to recognize the tax effect of temporary differences between the bases of assets and liabilities for tax and financial statement purposes. REVENUE RECOGNITION The Company records sales when inventory is shipped or delivered. Sales terms generally do not allow a right of return. RECLASSIFICATIONS Certain amounts included in the prior years' consolidated financial statements have been reclassified to conform with the current year's presentation. (2) SIGNIFICANT RISKS AND UNCERTAINTIES NATURE OF OPERATIONS The Company markets and distributes, principally to distributors and, to a lesser extent, directly to retailers, premium beverages and/or ready-to-drink iced teas under the principal brand names Snapple'r', Whipper Snapple'r', Snapple Farms'r', Mistic'r', Mistic Rain Forest Nectars'r', Mistic Fruit Blast'TM' and Stewart's'r'. The Company manages and internally reports its operations as one business segment in order to evaluate performance and in determining resource allocation. The Company operates its businesses principally throughout the United States. F-79 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 USE OF ESTIMATES The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. CERTAIN RISK CONCENTRATIONS The Company believes that its vulnerability to risk concentrations related to significant customers and vendors, products sold and sources of raw materials is somewhat mitigated for several reasons. No customer accounted for more than 2% of consolidated revenues. While the Company has chosen to purchase certain raw materials (such as aspartame) on an exclusive basis from single suppliers, the Company believes that, if necessary, adequate raw materials can be obtained from alternate sources. The Company's product offerings are varied, including fruit flavored beverages, iced teas, lemonades, carbonated sodas, 100% fruit juices, nectars and flavored seltzers. Risk of geographical concentration is also minimized since the Company generally operates throughout the United States with minimal foreign exposure. Three co-packer facilities represented 27%, 14% and 10% of the Company's total case production for the year ended January 3, 1999. One co-packer maintains 13% of the Company's finished goods inventory as of January 3, 1999. The Company believes, however, that sufficient replacement co-packer services could be obtained if necessary. (3) BUSINESS ACQUISITIONS Acquisition of Snapple On May 22, 1997 Triarc Beverage Holdings acquired (the 'Snapple Acquisition') Snapple, a marketer and distributor of premium beverages, from The Quaker Oats Company ('Quaker') for $309,386,000 consisting of cash of $300,126,000 (including $126,000 of post-closing adjustments) and $9,260,000 of fees and expenses. The purchase price for the Snapple Acquisition was funded from (i) $250,000,000 of borrowings by Snapple on May 22, 1997 under a $380,000,000 credit agreement, as amended (the 'Existing Beverage Credit Agreement' -- see Note 6), entered into by Snapple, Mistic, Triarc Beverage Holdings and, as amended as of August 15, 1998, Cable Car and (ii) $75,000,000 from the issuance of 75,000 shares of redeemable preferred stock (see Note 9) of Triarc Beverage Holdings to Triarc Parent. The Snapple Acquisition was accounted for in accordance with the purchase method of accounting. The allocation of the purchase price of Snapple to the assets acquired and liabilities assumed, along with allocations related to the Stewart's Acquisition (see below), is presented below under 'Purchase Price Allocations of Acquisitions'. The results of operations of Snapple have been included in the accompanying consolidated statements of operations from the May 22, 1997 date of the Snapple Acquisition. See below under 'Pro Forma Operating Data' for the unaudited supplemental pro forma condensed consolidated summary operating data of the Company (the 'Pro Forma Data') for the year ended December 28, 1997 giving effect to the Snapple Acquisition and related transactions and the Stewart's Acquisition (collectively, the 'Acquisitions'). F-80 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 Stewart's Acquisition On November 25, 1997 Triarc Parent acquired Cable Car, a marketer and distributor of premium beverages in the United States and Canada, primarily under the Stewart's'r' brand, for an aggregate purchase price of $40,596,000, as adjusted in 1998. Such purchase price consisted of (i) 1,566,858 shares of Triarc Parent common stock with a value of $37,409,000 as of November 25, 1997 (based on the closing price of such common stock on such date of $23.875 per share) issued in exchange for all of the outstanding stock of Cable Car, (ii) 154,931 options to acquire Triarc Parent common stock, with a value of $2,788,000 (based on a calculation using the Black-Scholes option pricing model) as of November 25, 1997 issued in exchange for all of the outstanding stock options of Cable Car and (iii) $399,000 (originally estimated at $650,000) of related expenses. The Stewart's Acquisition was accounted for in accordance with the purchase method of accounting. The allocation of the purchase price of Cable Car to the assets acquired and liabilities assumed, along with allocations related to the Snapple Acquisition, is presented below under 'Purchase Price Allocations of Acquisitions'. See below under 'Pro Forma Operating Data' for the Pro Forma Data giving effect to, among other things, the Stewart's Acquisition. PURCHASE PRICE ALLOCATIONS OF ACQUISITIONS The Acquisitions discussed above have been accounted for in accordance with the purchase method of accounting. In accordance therewith, the following table sets forth the allocation of the aggregate purchase prices and a reconciliation to business acquisitions in the accompanying consolidated statements of cash flows (in thousands):
1997 1998 ---- ---- Current assets.............................................. $113,767 $-- Properties.................................................. 21,613 -- Goodwill (amortized over 35 years).......................... 102,271 (251) Trademarks.................................................. 221,300 -- Other assets................................................ 27,697 -- Current liabilities......................................... (71,717) -- Long-term debt assumed including current portion............ (686) -- Other liabilities........................................... (66,421) -- -------- ----- 347,824 (251) Less (plus): Purchase price (adjustment in 1998) for Stewart's Acquisition paid by Triarc Parent through the issuance of its common stock and stock options and 'pushed down' to Cable Car.................................... 40,847 (251) -------- ----- $306,977 $-- -------- ----- -------- -----
PRO FORMA OPERATING DATA (UNAUDITED) As a result of the Acquisitions, the results of operations for the year ended January 3, 1999 are not comparable with such results for the year ended December 28, 1997. Accordingly, the following Pro Forma Data of the Company are set forth in order to present the 1997 results of operations on a more consistent basis with 1998. The 1997 Pro Forma Data have been prepared by adjusting the historical data as set forth in the accompanying 1997 consolidated statement of operations to give effect to the Acquisitions as if they had been consummated on January 1, 1997. Such Pro Forma Data are presented for comparative purposes only and do not purport to be indicative of the Company's actual results of operations had the Acquisitions actually been consummated on January 1, 1997 or of the Company's future results of operations and are as follows (in thousands): F-81 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999
AS REPORTED PRO FORMA -------- --------- Net revenues................................................ 408,841 605,844 Operating loss.............................................. (8,676) (10,559) Loss before extraordinary charge............................ (18,803) (27,511)
(4) BALANCE SHEET DETAIL RECEIVABLES The following is a summary of the components of receivables (in thousands):
YEAR-END ----------------- 1997 1998 ---- ---- Receivables: Trade.................................................. $41,617 $35,521 Other.................................................. 4,126 5,208 ------- ------- 45,743 40,729 Less allowance for doubtful accounts........................ 4,557 3,019 ------- ------- $41,186 $37,710 ------- ------- ------- -------
The following is an analysis of the allowance for doubtful accounts (in thousands):
1996 1997 1998 ---- ---- ---- Trade: Balance at beginning of year......................... $ 336 $ 450 $4,557 Provision for doubtful accounts...................... 355 4,132(a) 1,029 Recoveries of accounts previously written off........ -- 595 -- Uncollectible accounts written off................... (241) (620) (2,567) ----- ------ ------ Balance at end of year............................... $ 450 $4,557 $3,019 ----- ------ ------ ----- ------ ------
- ------------ (a) Includes $2,254,000 included in 'Charges related to post-acquisition transition, integration and changes to business strategies.' Substantially all receivables are pledged as collateral for certain debt (see Notes 6 and 18). INVENTORIES The following is a summary of the components of inventories (in thousands):
YEAR-END ----------------- 1997 1998 ---- ---- Raw materials............................................... $13,931 $16,662 Finished goods.............................................. 31,020 24,901 ------- ------- $44,951 $41,563 ------- ------- ------- -------
Substantially all inventories are pledged as collateral for certain debt (see Notes 6 and 18). F-82 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 PROPERTIES The following is a summary of the components of properties (in thousands):
YEAR-END ----------------- 1997 1998 ---- ---- Machinery and equipment..................................... $20,825 $21,648 Leasehold improvements...................................... 3,033 4,166 Leased assets capitalized................................... 294 294 ------- ------- 24,152 26,108 Less accumulated depreciation and amortization.............. 5,045 10,110 ------- ------- $19,107 $15,998 ------- ------- ------- -------
Substantially all properties are pledged as collateral for certain debt (see Notes 6 and 18). UNAMORTIZED COSTS IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES The following is a summary of the components of unamortized costs in excess of net assets of acquired companies (in thousands):
YEAR-END ------------------- 1997 1998 ---- ---- Costs in excess of net assets of acquired companies......... $131,600 $131,349 Less accumulated amortization............................... 6,010 11,204 -------- -------- $125,590 $120,145 -------- -------- -------- --------
TRADEMARKS The following is a summary of the components of trademarks (in thousands):
YEAR-END ------------------- 1997 1998 ---- ---- Trademarks.................................................. $276,900 $276,900 Less accumulated amortization............................... 12,402 22,560 -------- -------- $264,498 $254,340 -------- -------- -------- --------
Substantially all trademarks are pledged as collateral for certain debt (see Notes 6 and 18). DEFERRED COSTS AND OTHER ASSETS The following is a summary of the components of deferred costs and other assets (in thousands):
YEAR-END ----------------- 1997 1998 ---- ---- Deferred financing costs.................................... $11,385 $11,246 Other....................................................... 2,708 3,018 ------- ------- 14,093 14,264 Less accumulated amortization of deferred financing costs... 1,217 3,101 ------- ------- $12,876 $11,163 ------- ------- ------- -------
F-83 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 ACCRUED EXPENSES The following is a summary of the components of accrued expenses (in thousands):
YEAR-END ----------------- 1997 1998 ---- ---- Accrued promotional allowances.............................. $12,183 $10,587 Accrued compensation and related benefits................... 6,284 6,618 Accrued production contract losses(a)....................... 13,022 4,639 Accrued legal settlements (Note 17)......................... 9,201 672 Other....................................................... 18,300 12,744 ------- ------- $58,990 $35,260 ------- ------- ------- -------
- ------------ (a) Represents obligations related to the portion of those long-term production contracts with copackers, assumed in connection with the Snapple Acquisition, which the Company does not anticipate utilizing based on projected future volumes. The decrease in this amount during 1998 was due to obligations settled or repaid during such year. (5) INVESTMENTS IN AFFILIATES The following is a summary of the components of 'Investments in affiliates' at December 28, 1997 (none at January 3, 1999) (in thousands): Select Beverages............................................ $24,926 Rhode Island Beverages...................................... 550 ------- $25,476 ------- -------
The Company owned 20% of Select Beverages, Inc. ('Select Beverages') until its sale on May 1, 1998. The Company's equity in the earnings (loss) of Select Beverages of $862,000 and $(1,222,000) for 1997 and 1998 (prior to the sale of Select Beverages), respectively, is included in 'Other income (expense), net' in the accompanying consolidated statements of operations. The Company's investment in Select Beverages exceeded the underlying equity in Select Beverage's net assets. Amortization of such excess in 1998 of $341,000 was included in the Company's equity in the loss of Select Beverages during 1998. On May 1, 1998 the Company sold its interest in Select Beverages for $28,342,000, subject to certain post-closing adjustments. The Company recognized a pre-tax gain on the sale of Select Beverages during 1998 of $4,702,000, reported as 'Gain on sale of business', representing the excess of the net sales price over the Company's carrying value of the investment in Select Beverages and related post-closing adjustments and expenses. The Company, through its ownership of Snapple, owned 50% of the stock of Rhode Island Beverage Packing Company, L.P. ('Rhode Island Beverages' or 'RIB') prior to its disposition in February 1998. Snapple and Quaker were defendants in a breach of contract case filed in April 1997 by RIB prior to the Snapple Acquisition (the 'RIB Matter'). The RIB Matter was settled in February 1998 and in accordance therewith Snapple surrendered (i) its 50% investment in RIB ($550,000) and (ii) certain properties ($1,202,000) and paid RIB $8,230,000. The settlement amounts were fully provided for in a combination of (i) $6,530,000 of legal reserves provided in 'Charges related to post-acquisition transition, integration and changes to business strategies' (see Note 11), (ii) $3,321,000 of reserves for losses on long-term production contracts established in the Snapple Acquisition purchase accounting (see Note 3) and (iii) $131,000 of a current year accrual related to the RIB long-term production contract included in historical liabilities at the date of the Snapple Acquisition. Since at the date of the Snapple Acquisition the investment in RIB was expected to be surrendered in connection with the F-84 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 settlement of the RIB Matter, the Company did not recognize any equity in the earnings of RIB prior to such surrender in February 1998. (6) LONG-TERM DEBT Long-term debt consisted of the following (in thousands):
YEAR-END ------------------- 1997 1998 ---- ---- Existing Beverage Credit Agreement (a) Term loans bearing interest at a weighted average rate of 8.99% at January 3, 1999.......................... $296,500 $284,333 Capitalized lease obligations............................... 250 158 Other....................................................... -- 6,798 -------- -------- Total debt............................................. 296,750 291,289 Less amounts payable within one year................... 12,243 8,338(b) -------- -------- $284,507 $282,951 -------- -------- -------- --------
Aggregate annual maturities of long-term debt, including capitalized lease obligations, were as follows as of January 3, 1999 (in thousands) (b): 1999........................................................ $ 8,338 2000........................................................ 11,660 2001........................................................ 10,513 2002........................................................ 12,764 2003........................................................ 15,008 Thereafter.................................................. 233,006 -------- $291,289 -------- --------
- ------------ (a) The $284,333,000 of outstanding term loans (there were no outstanding revolving credit loans) under the Existing Beverage Credit Agreement as of January 3, 1999 and February 25, 1999 was repaid on February 25, 1999 using a portion of the proceeds from the Refinancing Transactions (see Note 18). The Existing Beverage Credit Agreement consisted of a $300,000,000 term facility of which $225,000,000 and $75,000,000 of loans (the 'Existing Term Loans') were borrowed by Snapple and Mistic, respectively, at the Snapple Acquisition date ($213,250,000 and $71,083,000, respectively, outstanding at January 3, 1999) and an $80,000,000 revolving credit facility which provided for revolving credit loans (the 'Existing Revolving Loans') by Snapple, Mistic, Triarc Beverage Holdings and, as amended as of August 15, 1998, Cable Car, of which $25,000,000 and $5,000,000 were borrowed on the Snapple Acquisition date by Snapple and Mistic, respectively. The Existing Revolving Loans were repaid prior to December 28, 1997 and no Existing Revolving Loans were outstanding at December 28, 1997 or January 3, 1999. The aggregate $250,000,000 originally borrowed by Snapple was principally used to fund a portion of the purchase price for Snapple (see Note 3). The aggregate $80,000,000 originally borrowed by Mistic was principally used to repay all of the $70,850,000 then outstanding borrowings under Mistic's former bank credit facility (the 'Former Mistic Bank Facility') plus accrued interest thereon. (b) The current portion of long-term debt as of January 3, 1999 reflects a reclassification to long term of the portion ($9,419,000) of the amount originally due in 1999 under the Existing Beverage Credit Agreement which on February 25, 1999 was refinanced to long term (see Note 18). The annual maturities of long-term debt in each of the five years from 1999 through 2003 are lower following (footnotes continued on next page) F-85 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (footnotes continued from previous page) such refinancing than under the Existing Beverage Credit Agreement. Accordingly, the annual maturities of long-term debt set forth in the table above reflect such refinancing. The Existing Beverage Credit Agreement contains various covenants which (i) require meeting certain financial amount and ratio tests; (ii) limit, among other matters, (a) the incurrence of indebtedness, (b) the retirement of certain debt prior to maturity, (c) investments, (d) asset dispositions, (e) capital expenditures and (f) affiliate transactions other than in the normal course of business; and (iii) restrict the payment of dividends to Triarc Parent (see below). As of January 3, 1999 the Company was in compliance with all such covenants. The Company was unable to pay any dividends or make any loans or advances to Triarc Parent as of January 3, 1999 under the terms of the Existing Beverage Credit Agreement then in effect. See Note 18 for disclosure regarding one-time distributions paid to Triarc Parent by the Company in connection with the February 25, 1999 refinancing. Under the Existing Beverage Credit Agreement, substantially all of the Company's assets other than cash and cash equivalents are pledged as security as of January 3, 1999. In addition, obligations under the Existing Beverage Credit Agreement were guaranteed by Snapple, Mistic, Triarc Beverage Holdings and Cable Car prior to the repayment thereof. As collateral for such guarantees, all of the stock of Snapple, Mistic, Triarc Beverage Holdings and Cable Car was pledged. See Note 18 for the effect of the February 25, 1999 refinancing on the pledging of assets and debt guarantees and related collateral. (7) FAIR VALUE OF FINANCIAL INSTRUMENTS The Company has the following financial instruments for which the disclosure of fair values is required: cash and cash equivalents, accounts receivable and payable, accrued expenses, due from affiliates, due to Triarc Parent and affiliates and long-term debt. The carrying amounts of cash and cash equivalents, accounts payable, accrued expenses, due from affiliates and due to Triarc Parent and affiliates approximated fair value due to the short-term maturities of such assets and liabilities. The carrying amount of accounts receivable approximated fair value due to the related allowance for doubtful accounts. The fair values of the Existing Term Loans under the Existing Beverage Credit Agreement approximated their carrying values due to the relatively frequent resets of their floating interest rates. The fair values of all other long-term debt were assumed to reasonably approximate their carrying amounts since (i) for capitalized lease obligations, the weighted average implicit interest rate approximates current levels and (ii) for all other debt, the remaining maturities are relatively short-term. (8) INCOME TAXES As discussed in Note 1, the Company is included in the consolidated Federal income tax return of Triarc Parent. Pursuant to a tax-sharing agreement with Triarc Parent, the Company provides for Federal income taxes on the same basis as if separate consolidated returns for Triarc Beverage Holdings were filed. As of December 28, 1997 and January 3, 1999, the Company was in a net operating loss position and, as such, there were no taxes currently payable. The income (loss) before income taxes and extraordinary charge consisted of the following components (in thousands):
1996 1997 1998 ---- ---- ---- Domestic................................................ $(1,092) $(29,340) $33,641 Foreign................................................. -- 465 144 ------- -------- ------- $(1,092) $(28,875) $33,785 ------- -------- ------- ------- -------- -------
F-86 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 The (provision for) benefit from income taxes consisted of the following components (in thousands):
1996 1997 1998 ---- ---- ---- Current: Federal.............................................. $(278) $ (262) $(11,638) State................................................ (50) (160) (699) Foreign.............................................. -- (361) (45) ----- ------- -------- (328) (783) (12,382) ----- ------- -------- Deferred: Federal.............................................. 606 9,518 (661) State................................................ 4 1,337 (1,584) ----- ------- -------- 610 10,855 (2,245) ----- ------- -------- Total................................................ $ 282 $10,072 $(14,627) ----- ------- -------- ----- ------- --------
The current deferred income tax asset and the net non-current deferred income tax (liability) resulted from the following components (in thousands):
YEAR-END ------------------- 1997 1998 ---- ---- Current deferred income tax assets: Federal net operating loss carryforwards under tax-sharing agreements with Triarc Parent ($6,008) and state net operating loss carryforwards ($111)......... $ 6,119 $ -- Glass front vending machines written off............... 2,925 2,925 Allowance for doubtful accounts........................ 1,617 1,320 Accrued production contract losses..................... 4,588 1,382 Accrued employee benefit costs......................... 1,697 1,402 Inventory obsolescence reserves........................ 625 1,298 Accrued advertising and promotional allowances......... 2,367 606 Accrued legal settlements.............................. 3,588 262 Other, net............................................. 2,929 2,505 -------- -------- 26,455 11,700 -------- -------- Non-current deferred income tax assets (liabilities): Trademarks basis differences........................... (53,929) (55,962) Reserve for income tax contingencies and other tax matters............................................... (130) (567) Federal net operating loss carryforwards and excess income tax payments under tax-sharing agreements...... -- 12,211 Properties basis differences including depreciation.... (1,362) 3,945 State net operating loss carryforwards................. 679 1,549 Accrued production contract losses..................... 3,471 -- Other, net............................................. 3,261 3,324 -------- -------- (48,010) (35,500) -------- -------- $(21,555) $(23,800) -------- -------- -------- --------
As of January 3, 1999 the Company had net operating loss carryforwards for Federal income tax purposes (the 'NOLs') under its tax-sharing agreement with Triarc Parent of $2,904,000 expiring in 2012. Subsequent to January 3, 1999 TCPG entered into a revised tax-sharing agreement and amendment thereto with Triarc Parent limiting the benefit available to the Company for the NOLs (see Note 18). F-87 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 The difference between the reported (provision for) benefit from income taxes and the tax (provision) benefit that would result from applying the 35% Federal statutory rate to the income (loss) before income taxes and extraordinary charge is reconciled as follows (in thousands):
1996 1997 1998 ---- ---- ---- Income tax (provision) benefit computed at Federal statutory rate........................................... $382 $10,106 $(11,825) Increase (decrease) in Federal tax benefit in 1996 and 1997 and (increase) decrease in Federal tax provision in 1998 resulting from: Amortization of non-deductible Goodwill............... -- (467) (1,134) State income tax (provision) benefit, net of Federal income tax effect................................... (30) 765 (1,484) Foreign tax rate in excess of United States Federal statutory rate...................................... -- (199) 5 Other, net............................................ (70) (133) (189) ---- ------- -------- $282 $10,072 $(14,627) ---- ------- -------- ---- ------- --------
(9) REDEEMABLE PREFERRED STOCK On May 22, 1997 Triarc Beverage Holdings issued 75,000 shares of its redeemable cumulative convertible preferred stock, $1.00 par value (the 'Redeemable Preferred Stock') to Triarc Parent for $75,000,000. On August 21, 1997 each of the 75,000 outstanding shares of Redeemable Preferred Stock was converted into 1/100 of a share as a result of a 1:100 reverse stock split, resulting in 750 issued and outstanding shares of Redeemable Preferred Stock. The Redeemable Preferred Stock (i) bears a cumulative annual dividend of 10% on stated value compounded annually for any undeclared dividends, payable in cash or additional shares of Redeemable Preferred Stock, if declared by, and at the option of, the Company, (ii) is convertible into 750 shares of Triarc Beverage Holdings' common stock (the 'Triarc Beverage Common Stock') at an adjusted conversion price of $100,000 per share, (iii) requires mandatory redemption on May 22, 2009 at $100,000 per share plus accrued and unpaid dividends and (iv) has an aggregate liquidation value of $75,000,000 plus accrued and unpaid dividends of $12,587,000 as of January 3, 1999. The cumulative dividends not declared or paid of $4,604,000 and $7,983,000 for each of the years ended December 28, 1997 and January 3, 1999, respectively, have been accounted for as increases in 'Redeemable preferred stock' with offsetting charges to 'Additional paid-in capital' since payment of the dividends is not solely in the control of the Company. (10) STOCKHOLDER'S EQUITY Through May 22, 1997 the common stock reflected in the accompanying consolidated statements of stockholder's equity (deficit) was the 873 issued and outstanding shares of Mistic common stock with a par value of $1.00 per share. On May 22, 1997 the then outstanding 873 shares of Mistic common stock were contributed to Triarc Beverage Holdings by Triarc Parent and Triarc Beverage Holdings issued 1,000 shares of Triarc Beverage Common Stock to Triarc Parent for $1,000. On August 21, 1997 each of the 1,000 issued and outstanding shares of Triarc Beverage Common Stock was split into 850 shares, resulting in 850,000 issued and outstanding shares of Triarc Beverage Common Stock. Triarc Beverage Holdings adopted the Triarc Beverage Holdings Corp. 1997 Stock Option Plan (the 'Triarc Beverage Plan') in 1997 which provides for the grant of options to purchase shares of Triarc Beverage Common Stock to key employees, officers, directors and consultants of Triarc Beverage Holdings, Triarc Parent and their affiliates. Stock options under the Triarc Beverage Plan have maximum terms of ten years and vest ratably over periods not exceeding four years from the date of grant. The Triarc Beverage Plan provides for a maximum of 150,000 shares of Triarc Beverage Common F-88 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 Stock to be issued upon the exercise of stock options and there remain 4,575 shares available for future grants under the Triarc Beverage Plan as of January 3, 1999. A summary of changes in outstanding stock options under the Triarc Beverage Plan is as follows:
OPTION OPTIONS PRICE ------- ----- Granted during 1997......................................... 76,250 $147.30 ------- Outstanding at December 28, 1997............................ 76,250 $147.30 Granted during 1998......................................... 72,175 $191.00 Terminated during 1998...................................... (3,000) $147.30 ------- Outstanding at January 3, 1999.............................. 145,425 ------- -------
The option prices of the grants during 1997 and 1998 were equal to fair value at the respective dates of grant as determined by independent appraisals. The weighted average grant date fair value of the grants during 1997 and 1998 was $50.75 and $60.01, respectively. The weighted average option price of the outstanding options at January 3, 1999 was $168.99. Such options (i) vest ratably on July 1 of 1999, 2000 and 2001 and, accordingly, no options have been exercised or are exercisable as of January 3, 1999 and (ii) have a remaining weighted average term of 9.1 years at January 3, 1999. As previously disclosed in Note 1, the Company accounts for stock options in accordance with the intrinsic value method. Accordingly, the Company has not recognized any compensation expense for the stock options granted in 1997 or 1998. Had compensation cost for such options been determined in accordance with the fair value method, the Company's 1997 net loss would have been $20,281,000 and the Company's net income for 1998 would have been $17,448,000. The fair values of stock options on the date of grant were estimated using the Black-Scholes option pricing model with the following assumptions: (i) weighted average risk-free interest rate of 6.22% and 5.54% for the 1997 and 1998 grants, respectively, (ii) expected option life of 7 years and (iii) no dividends would be paid. Since Triarc Beverage Common Stock is not publicly traded, volatility was not applicable. The above pro forma amounts are not likely to be representative of the effects on net income in future periods because pro forma compensation expense for grants under the Triarc Beverage Plan did not occur prior to such plan's adoption in 1997. In 1995 the Company granted the syndicating lending bank in connection with the Former Mistic Bank Facility and two senior officers of Mistic stock appreciation rights (the 'Mistic Rights') for the equivalent of 3% and 9.7%, respectively, of Mistic's outstanding common stock plus the equivalent shares represented by such stock appreciation rights. The Mistic Rights granted to the syndicating lending bank were immediately vested and of those granted to the senior officers, one-third vested over time and two-thirds vested depending on Mistic's performance. The Mistic Rights provided for appreciation in the per-share value of Mistic common stock above a base price of $28,637 per share, which was equal to the price per share paid by Triarc Parent at the time of the Mistic acquisition in 1995. The value of the Mistic Rights granted to the syndicating lending bank was recorded as deferred financing costs. The Company recognized periodically the estimated increase or decrease in the value of the Mistic Rights; such amounts were not significant to the Company's consolidated results of operations in 1996 or 1997. In connection with the refinancing of the Former Mistic Bank Facility in May 1997, the Mistic Rights granted to the syndicating lending bank were repurchased by the Company for $492,000; the $177,000 excess of such cost over the then recorded value of such rights of $315,000 was recorded as 'Interest expense' during 1997. In addition, the Mistic Rights granted to the two senior officers were canceled in 1997 in consideration for, among other things, their participation in the Triarc Beverage Plan. Since the estimated per-share value of the Mistic common stock at the time of such cancellation was lower than the base price of the Mistic Rights, no income or expense was required to be recorded as a result of such cancellation. F-89 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (11) CHARGES RELATED TO POST-ACQUISITION TRANSITION, INTEGRATION AND CHANGES TO BUSINESS STRATEGIES Charges related to post-acquisition transition, integration and changes to business strategies are attributed to the Snapple Acquisition and the Stewart's Acquisition during 1997 and consisted of the following (in thousands): Non-cash charges: Write down glass front vending machines based on the Company's change in estimate of their value considering the Company's plans for their future use(a)................................................ $12,557 Provide additional reserves for doubtful accounts based on the Company's change in estimate of the related write-off to be incurred(b)........................... 2,254 Cash obligations: Provide additional reserves for legal matters based on the Company's change in Quaker's estimate of the amounts required reflecting the Company's plans and estimates of costs to resolve such matters(c)......... 6,697 Provide for certain costs in connection with the successful consummation of the Snapple Acquisition and the Mistic refinancing in connection with entering into the Existing Beverage Credit Agreement(d)........ 4,000 Provide for fees paid to Quaker pursuant to a transition services agreement(e)...................... 2,819 Provide for the portion of promotional expenses relating to the period of 1997 prior to the Snapple Acquisition as a result of the Company's then current operating expectations(f)............................. 2,510 Provide for costs, principally for independent consultants, incurred in connection with the conversion of Snapple to the Company's operating and financial information systems(g)...................... 1,603 Sign-on bonus related to the Stewart's Acquisition..... 400 ------- $32,840 ------- -------
- ------------ (a) During Quaker's ownership of Snapple, the glass front vending machines were held for sale to distributors and, accordingly, were carried at their estimated net realizable value. During the business transition following the Snapple Acquisition, the Company became aware that these machines were frequently unreliable in the field. The Company made the decision to correct the mechanical defects in the machines and to allow distributors to use the machines at locations chosen by them, without the cost of purchasing them. By deciding to no longer sell the glass front vending machines, the Company will not recover from its customers the value of the machines acquired in the Snapple Acquisition. Accordingly, because the Company expects no specific identifiable future cash flows, the Company wrote off an amount representing the excess of the carrying value of the machines over their estimated scrap value given the Company's decision described above. (b) In the transition following the Snapple Acquisition, the Company decided that, in order to improve relationships with customers, it would not actively seek to collect certain past due balances, disputed amounts or amounts that were not sufficiently supportable, and provided additional reserves for doubtful accounts of $2,254,000. (c) In the transition following the Snapple Acquisition, the Company decided that, in order to improve relationships with customers and reverse Snapple's sales decline, it would attempt to settle as many of the legal matters pending at the time of the Snapple Acquisition, in particular the RIB Matter (see Note 5), as quickly as possible. Accordingly, the Company provided $6,697,000 representing the excess of the Company's estimate to settle such claims over the existing reserves established by Quaker as of the date of the Snapple Acquisition. (footnotes continued on next page) F-90 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (footnotes continued from previous page) (d) In connection with the Snapple Acquisition and the related refinancing of the debt of Mistic, Snapple and Mistic paid a $4,000,000 fee to Triarc Parent on May 22, 1997 in order to compensate Triarc Parent for its recurring indirect costs incurred while providing assistance in consummating these transactions. (e) During the transition following the Snapple Acquisition, the Company paid $2,819,000 to Quaker in return for Quaker providing certain operating and accounting services for Snapple for a six-week period in accordance with the terms of a transition services agreement. Quaker performed these services while the Company transitioned the records, operations and management to the Company and its systems. (f) In the transition following the Snapple Acquisition, the Company decided that, in order to improve relationships with customers, the Company would not pursue collection of the many questionable claimed promotional credits and recognized within 'Charges related to post-acquisition transition, integration and changes to business strategies' the $2,510,000 of promotional costs in June 1997 which were in excess of the high end of the range of the Company's expectations for promotional costs. (g) In the transition following the Snapple Acquisition, the Company recognized $1,603,000 of costs incurred to engage various consultants to help the Company plan for the related systems and business procedure modifications necessary in order to be able to manage the Snapple business. As of December 28, 1997 all cash obligations had been liquidated other than $6,697,000 of the additional reserves for legal matters, which were liquidated during the year ended January 3, 1999. (12) FACILITIES RELOCATION AND CORPORATE RESTRUCTURING The components of the facilities relocation and corporate restructuring charge and an analysis of related activity are as follows (in thousands):
1996 1997 --------------------------------------------------- ----------------------------------- BALANCE DECEMBER 28, WRITE-OFF BALANCE 1997 AND OF RELATED DECEMBER 31, JANUARY 3, PROVISION(A) PAYMENTS ASSETS 1996 PROVISION PAYMENTS 1999 ------------ -------- ------ ---- --------- -------- ---- Non-cash charges: Costs of terminating Mistic distribution agreements........... $ 453 $ -- $(453) $ -- $ -- $ -- $ -- Estimated cost of Mistic information systems to be abandoned............ 150 -- (150) -- -- -- -- Cash obligations: Employee severance and related termination costs................ -- -- -- -- 29 (29) -- Cost of terminating Mistic distribution agreements........... 847 (847) -- -- -- -- -- ------ ----- ----- ------ ------ ------ ------ $1,450 $(847) $(603) $ -- $ 29 $ (29) $ -- ------ ----- ----- ------ ------ ------ ------ ------ ----- ----- ------ ------ ------ ------
- ------------ (a) The 1996 facilities relocation and corporate restructuring charge principally related to the settlement costs of terminating certain Mistic distribution agreements including cash payments of $847,000 and the write-off of receivables from such distributors, in lieu of additional cash payments, of $453,000, and a provision for the write-off of the unamortized deferred cost of Mistic information systems as a result of the planned merger of the Royal Crown and Mistic information systems F-91 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 related to the then planned relocation (the 'Royal Crown Relocation') of the headquarters of Royal Crown Company Inc. ('Royal Crown'), a subsidiary of Triarc Parent, which were centralized with the Company's offices in White Plains, New York. (13) EXTRAORDINARY CHARGE The 1997 extraordinary charge resulted from the early extinguishment of obligations under the Former Mistic Bank Facility in May 1997 refinanced in connection with entering into the Existing Beverage Credit Agreement (see Note 6). Such extraordinary charge consisted of the write-off of $1,889,000 of previously unamortized deferred financing costs less $735,000 of income tax benefit. (14) RETIREMENT AND OTHER BENEFIT PLANS The Company maintains several 401(k) defined contribution plans and participates in a Triarc Parent 401(k) defined contribution plan (collectively, the 'Plans') covering all of the Company's employees who meet certain minimum requirements and elect to participate including subsequent to (i) May 22, 1997 employees of Snapple and (ii) May 1, 1998 employees of Cable Car. Under the provisions of the Plans, employees may contribute various percentages of their compensation ranging up to a maximum of 15%, subject to certain limitations. The Plans provide for Company matching contributions at either (i) 50% of employee contributions up to the first 5% thereof or (ii) 100% of employee contributions up to the first 3% thereof. In addition, the Plans also provide for annual Company contributions of a discretionary aggregate amount to be determined by the employer. In connection with both of these employer contributions, the Company provided as compensation expense $137,000, $302,000 and $796,000 in 1996, 1997 and 1998, respectively. Triarc Parent has granted stock options to certain key employees of the Company under Triarc Parent's 1993 Equity Participation Plan and 1997 Equity Participation Plan. Included in such options are 147,000 granted in 1997 at a weighted average option price of $12.64 which was below the $14.10 weighted average fair market value of Triarc Parent's Class A Common Stock on the respective dates of grant (based on the closing price on such dates) resulting in an aggregate difference of $214,000. Since the key employees provide services to the Company and not to Triarc Parent, all of such difference is being charged to the Company as compensation expense over the applicable vesting periods through 2002, net of reversals of prior charges arising from the forfeiture of certain of those options in connection with employee terminations (the 'Forfeiture Adjustments'). Compensation expense resulting from the below market stock options aggregated $93,000 and $77,000 (net of $4,000 of Forfeiture Adjustments) during 1997 and 1998, respectively, and is included in 'General and administrative' in the accompanying consolidated statements of operations. There was no such compensation expense for 1996 since no below market stock options were granted to employees of the Company prior to 1997. (15) LEASE COMMITMENTS The Company leases office space and equipment. Rental expense under operating leases consisted of the following components (in thousands):
1996 1997 1998 ---- ---- ---- Minimum rentals............................................. $325 $2,302 $4,018 Less sublease income........................................ -- 518 865 ---- ------ ------ $325 $1,784 $3,153 ---- ------ ------ ---- ------ ------
F-92 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 The Company's future minimum rental payments and sublease rental income for leases having an initial lease term in excess of one year as of January 3, 1999 are as follows (in thousands):
RENTAL PAYMENTS SUBLEASE ----------------------- INCOME- CAPITALIZED OPERATING OPERATING LEASES LEASES LEASES ------ ------ ------ 1999...................................................... $ 41 $ 3,920 $ 867 2000...................................................... 35 3,582 893 2001...................................................... 35 3,240 920 2002...................................................... 35 3,162 -- 2003...................................................... 26 3,215 -- Thereafter................................................ 39 18,054 -- ---- ------- ------ Total minimum payments............................... 211 $35,173 $2,680 ------- ------ ------- ------ Less interest............................................. 53 ---- Present value of minimum capitalized lease payments....... $158 ---- ----
The present value of minimum capitalized lease payments is included, as applicable, with 'Long-term debt' or 'Current portion of long-term debt' in the accompanying consolidated balance sheets (see Note 6). (16) TRANSACTIONS WITH RELATED PARTIES The following is a summary of transactions between the Company and its related parties (in thousands):
1996 1997 1998 ---- ---- ---- Purchases of raw materials from Triarc Parent(a)......... $ -- $13,023 $112,489 Cash dividend paid to Triarc Parent...................... -- -- 23,556 Cumulative dividends on the Redeemable Preferred Stock recorded but not declared or paid (Note 9)............. -- 4,604 7,983 Costs allocated to the Company by Triarc Parent under management services agreements(b)...................... 1,500 3,042 3,500 Net costs allocated to Royal Crown by the Company for joint services(c)...................................... -- 547 1,654 Compensation costs charged to the Company by Triarc Parent for below market stock options (Note 14)........ -- 93 77 Issuance of Redeemable Preferred Stock (Note 9).......... -- 75,000 -- Capital contributions from Triarc Parent(b).............. 1,500 625 --
- ------------ (a) The Company purchases certain raw materials from Triarc Parent at Triarc Parent's purchase cost from unaffiliated third-party suppliers. At December 28, 1997 and January 3, 1999, $13,023,000 and $15,274,000, respectively, of amounts owed for such purchases were included in 'Due to Triarc Companies, Inc. and affiliates' in the accompanying consolidated balance sheets. (b) The Company receives from Triarc Parent certain management services, including legal, accounting, tax, insurance, financial and other management services, under management services agreements. Under such agreements such costs were to be allocated to the Company by Triarc Parent based upon the pro rata share of the sum of the greater of income before income taxes, depreciation and amortization ('EBITDA') and 10% of revenues for each of the Company's principal operating subsidiaries to the aggregate for all of Triarc Parent's principal operating subsidiaries. However, (footnotes continued on next page) F-93 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 (footnotes continued from previous page) such costs allocated to Mistic through May 22, 1997 were limited to amounts permitted under the Former Mistic Bank Facility aggregating $1,500,000 and $625,000 in 1996 and 1997, respectively. Mistic was prohibited from paying such amounts to Triarc Parent under the terms of the Former Mistic Bank Facility prior to its repayment and, accordingly, such amounts were accounted for as capital contributions from Triarc Parent. Such costs allocated to Mistic and Snapple commencing May 22, 1997 and Cable Car commencing August 15, 1998 were limited to amounts permitted under the subsequent Existing Beverage Credit Agreement aggregating $2,375,000 and $3,000,000 in 1997 and 1998, respectively (see Note 18 for disclosure regarding a new agreement for management services to the Company). Management of the Company believes that such allocation method is reasonable. Further, management of the Company believes that such allocation approximates the costs that would have been incurred by the Company on a stand alone basis. (c) Commencing in July 1997 following the Royal Crown Relocation, the Company commenced performing certain services for Royal Crown as well as Royal Crown performing certain services for the Company. The Company provides certain finance, administrative, operational and, commencing in 1998, legal services for Royal Crown. In 1997 Royal Crown provided legal services to the Company and in 1998 provided certain operational services to the Company. The costs of all such services have been allocated based on estimated time expended. The allocated charges by the Company to Royal Crown net of the allocated charges to the Company by Royal Crown were $547,000 and $1,654,000 for 1997 and 1998, respectively. Management of the Company believes that such allocation method is reasonable. Further, management of the Company believes that such allocation approximates the net costs that would have been incurred by Royal Crown on a stand alone basis. Certain officers and directors of the Company are also officers and directors of Triarc Parent. See also Notes 1, 5, 10 and 14 with respect to other transactions with related parties. (17) LEGAL MATTERS The Company is involved in litigation and claims incidental to its business. The Company has reserves for such legal matters aggregating approximately $672,000 (see Note 4) as of January 3, 1999. Although the outcome of such matters cannot be predicted with certainty and some of these may be disposed of unfavorably to the Company, based on currently available information and given the Company's aforementioned reserves, the Company does not believe that such legal matters will have a material adverse effect on its consolidated financial position or results of operations. (18) SUBSEQUENT EVENTS On February 25, 1999 Snapple, Mistic and Cable Car, as well as RC/Arby's Corporation ('RC/Arby's'), an indirect wholly-owned subsidiary of Triarc Parent until its contribution to TCPG in 1999, and Royal Crown (collectively, the 'Borrowers') entered into an agreement (the 'Credit Agreement') for a new $535,000,000 senior bank credit facility (the 'Credit Facility') consisting of a $475,000,000 term facility, all of which was borrowed as term loans (the 'Term Loans') on February 25, 1999, and a $60,000,000 revolving credit facility (the 'Revolving Credit Facility') which provides for revolving credit loans (the 'Revolving Loans') by Snapple, Mistic and Cable Car effective February 25, 1999 and RC/Arby's and Royal Crown effective upon the redemption (the 'Redemption') of the $275,000,000 of borrowings under the RC/Arby's 9 3/4% senior secured notes due 2000 (the '9 3/4% Senior Notes') on March 30, 1999. There were no borrowings of Revolving Loans on February 25, 1999. The Company utilized the aggregate net proceeds of these borrowings together with available cash and cash equivalents to (i) repay on February 25, 1999 the outstanding principal amount ($284,333,000 as of January 3, 1999 and February 25, 1999) of the Existing Term Loans under the Existing Beverage Credit F-94 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 Agreement and related accrued interest ($2,231,000 and $1,503,000 as of January 3, 1999 and February 25, 1999, respectively), (ii) transfer $92,500,000 of proceeds in conjunction with the transfer of $96,300,000 (including $3,800,000 relating to estimated deferred financing costs) of obligations under the Term Loans to Royal Crown upon the Redemption, (iii) acquire Millrose Distributors, Inc. and the assets of Mid-State Beverage, Inc., two New Jersey distributors of the Company's premium beverages, for $17,376,000 including expenses, (iv) provide for allocated currently estimated fees and expenses of $13,400,000 relating to the consummation of the Credit Facility (the 'Refinancing Transactions') and (v) pay one-time distributions, including dividends, to Triarc Parent of $87,220,000. The estimated fees and expenses of $13,400,000 relating to the consummation of the Credit Facility consist of approximately $12,100,000 of fees paid to the Company's lenders, including commitment fees, approximately $1,200,000 of legal, auditing and accounting fees and approximately $100,000 of other fees. As a result of the repayment prior to maturity of the Existing Term Loans, the Company recognized an extraordinary charge during the first quarter of the year ending January 2, 2000 of $4,876,000 for (i) the write-off of previously unamortized (a) deferred financing costs ($8,146,000 and $7,844,000 as of January 3, 1999 and February 25, 1999, respectively) and (b) interest rate cap agreement costs ($159,000 and $146,000 as of January 3, 1999 and February 25, 1999, respectively), net of income tax benefit ($3,237,000 and $3,114,000 as of January 3, 1999 and February 25, 1999, respectively). Borrowings under the Credit Facility bear interest, at the Borrowers' option, at rates based on either the 30, 60, 90 or 180-day London Interbank Offered Rate ('LIBOR') (ranging from 5.06% to 5.07% at January 3, 1999) or an alternate base rate (the 'ABR'). The ABR (7 3/4% at January 3, 1999) represents the higher of the prime rate or 1/2% over the Federal funds rate. The interest rates on LIBOR-based loans are reset at the end of the period corresponding with the duration of the LIBOR selected. The interest rates on ABR-based loans are reset at the time of any change in the ABR. Revolving Loans and one class of the Term Loans with an initial borrowing of $45,000,000 bear interest at 3% over LIBOR or 2% over ABR until such time as such margins may be subject to downward adjustment by up to 3/4% based on the Borrowers' leverage ratio, as defined. The other two classes of Term Loans with initial borrowings of $125,000,000 and $305,000,000 bear interest at 3 1/2% and 3 3/4% over LIBOR, respectively, and 2 1/2% and 2 3/4%, respectively, over ABR. The borrowing base for Revolving Loans is the sum of 80% of eligible accounts receivable and 50% of eligible inventories. At January 31, 1999 there would have been $39,423,000 (unaudited) of borrowing availability to the Company under the Revolving Credit Facility in accordance with limitations due to such borrowing base. The Term Loans are initially due $4,912,000 in 1999, $8,238,000 in 2000, $10,488,000 in 2001, $12,738,000 in 2002, $14,987,000 in 2003, $15,550,000 in 2004, $94,299,000 in 2005, $242,875,000 in 2006 and $70,913,000 in 2007 and any Revolving Loans would be due in full in March 2005. Upon consummation of the Redemption and the concurrent transfer of the $96,300,000 of Term Loans to Royal Crown, the Company's annual maturities of the Term Loans decreased proportionately. The Borrowers must also make mandatory prepayments in an amount, if any, initially equal to 75% of excess cash flow, as defined in the Credit Agreement. Under the Credit Agreement substantially all of the assets, other than cash and cash equivalents of the Company, among other subsidiaries of TCPG, are pledged as security. The Borrowers' obligations with respect to the Credit Facility are guaranteed (the 'Guarantee') by, among other subsidiaries of TCPG, substantially all of the domestic subsidiaries of Snapple, Mistic and Cable Car. As collateral for such guarantees, all of the stock of Snapple, Mistic and Cable Car and substantially all of their domestic, and 65% of the stock of their directly-owned foreign, subsidiaries are pledged. In addition, with respect to obligations of TCPG under $300,000,000 principal amount of 10 1/4% senior subordinated notes due 2009 (the 'Notes') issued on February 25, 1999, Triarc Beverage Holdings is a co-issuer and the obligations are guaranteed by, among other subsidiaries of TCPG, Snapple, Mistic and Cable Car and all of their domestic subsidiaries, all of which effective May 17, 1999 F-95 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 are wholly-owned by Triarc Beverage Holdings or TCPG. Such guarantees are full and unconditional, are on a joint and several basis and are unsecured. Since Triarc Beverage Holdings is a co-issuer, it will reflect on its consolidated balance sheet such $300,000,000 principal amount as long-term debt and any related accrued but unpaid interest as an accrued expense with corresponding charges to a receivable from TCPG component of stockholder's equity (deficit). Such amounts will be increased for interest accrued and reduced to the extent that TCPG makes interest and principal payments on the Notes. The Credit Agreement, Guarantee and indenture pursuant to which the Notes were issued contain various covenants which (i) require meeting certain financial amount and ratio tests, (ii) limit, among other matters (a) the incurrence of indebtedness, (b) the retirement of certain debt prior to maturity, (c) investments, (d) asset dispositions and (e) affiliate transactions other than in the normal course of business, and (iii) restrict the payment of dividends to TCPG. Under the most restrictive of such covenants, the Company would not be able to pay any dividends to TCPG other than the aforementioned one-time distributions, including dividends, paid to TCPG in connection with the Refinancing Transactions. In connection with the Refinancing Transactions, on February 25, 1999 TCPG entered into a revised tax-sharing agreement (including the Company) with Triarc Parent replacing Triarc Beverage Holdings' tax-sharing agreement with Triarc Parent. Pursuant to such revised agreement, TCPG will not receive credit and, accordingly, the Company will not receive credit for the existing NOLs and excess Federal income tax payments of the Company as of the date of the new agreement. Under such revised agreement, TCPG would not receive any benefit for the deferred tax assets associated with the NOLs and excess Federal income tax payments aggregating $39,518,000 of which the Company's portion aggregates $12,211,000. However, were such aggregate TCPG deferred tax assets of $39,518,000 to be written off, the borrowers, including the Company, would have been in default under the minimum net worth covenant of the Credit Agreement (the 'Minimum Net Worth Covenant'). Such Minimum Net Worth Covenant inadvertently did not provide for the write-off of such deferred tax assets. Accordingly, the tax-sharing agreement was amended effective February 25, 1999 to provide that TCPG (and the Company through informal arrangements with TCPG) would continue to receive benefit from deferred tax assets associated with the NOLs and the Federal income tax prepayments except that Triarc Parent has the right to cause the effective transfer of any unutilized benefits from TCPG (and the Company through informal arrangements with TCPG) to Triarc Parent, but only to the extent any such transfer would not cause a default under the Minimum Net Worth Covenant. Subsequent to January 3, 1999 and through July 4, 1999 the Company generated an additional $2,626,000 of such benefits as a result of the extraordinary charge resulting from the repayment prior to maturity of the Existing Term Loans, utilized $161,000 of such benefits to offset income taxes otherwise payable on its pre-tax income before extraordinary charge and transferred the remaining $14,676,000 of such deferred tax benefits to Triarc Parent as if such transfer were a distribution from the Company to TCPG and, in turn, a distribution from TCPG to Triarc Parent. In connection with the Refinancing Transactions, on February 25, 1999 the Company together with Royal Crown (collectively, the 'Triarc Beverage Group') entered into a new management services agreement (see Note 16 for disclosure concerning the previous management services agreement) with Triarc Parent. The new agreement provides for an annual fixed fee of $6,700,000 plus annual cost of living adjustments to the Triarc Beverage Group as a whole commencing January 1, 2000. The fee to the Triarc Beverage Group is to be allocated to the Company based upon the Company's pro rata share of the sum of the greater of EBITDA and 10% of revenues to the aggregate for the Triarc Beverage Group. The following unaudited pro forma data of the Company for 1998 have been prepared by adjusting the historical data reflected in the accompanying statement of operations for such year to reflect the effects of the Refinancing Transactions as if such transactions had been consummated on December 29, 1997. Such pro forma data are presented for information purposes only and do not purport to be F-96 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) JANUARY 3, 1999 indicative of the Company's actual results of operations had such transactions actually been consummated on December 29, 1997 or of the Company's future results of operations and are as follows (in thousands):
AS PRO REPORTED FORMA -------- ----- Net revenues................................................ $611,546 $624,099 Operating profit............................................ 56,160 57,015 Interest expense............................................ (28,587) (35,696) Income before extraordinary charge.......................... 19,158 14,946
* * * * * F-97 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
JANUARY 3, OCTOBER 3, 1999(A) 1999 ------- ---- (IN THOUSANDS) (UNAUDITED) ASSETS Current assets: Cash and cash equivalents.............................. $ 39,578 $ 15,126 Receivables............................................ 37,710 74,031 Inventories............................................ 41,563 61,254 Deferred income tax benefit............................ 11,700 11,668 Due from affiliates.................................... 1,029 -- Prepaid expenses and other current assets.............. 3,344 2,984 -------- --------- Total current assets.............................. 134,924 165,063 Properties.................................................. 15,998 17,479 Unamortized costs in excess of net assets of acquired companies................................................. 120,145 129,315 Trademarks.................................................. 254,340 246,721 Deferred costs and other assets............................. 11,163 14,790 -------- --------- $536,570 $ 573,368 -------- --------- -------- --------- LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) Current liabilities: Current portion of long-term debt...................... $ 8,338 $ 36,418 Accounts payable....................................... 33,918 34,415 Accrued expenses....................................... 35,260 48,744 Due to Triarc Companies, Inc. and other affiliates..... 18,158 23,370 -------- --------- Total current liabilities......................... 95,674 142,947 Long-term debt.............................................. 282,951 644,052 Deferred income taxes....................................... 35,500 56,345 Other liabilities........................................... 3,552 7,776 Redeemable preferred stock.................................. 87,587 94,077 Stockholder's equity (deficit): Common stock........................................... 850 850 Additional paid-in capital............................. 35,761 -- Accumulated deficit.................................... (5,342) (68,315) Accumulated other comprehensive income (deficit)....... 37 13 Receivable from Triarc Companies, Inc.................. -- (304,377) -------- --------- Total stockholder's equity (deficit).............. 31,306 (371,829) -------- --------- $536,570 $ 573,368 -------- --------- -------- ---------
- ------------ (A) Derived from the audited consolidated financial statements as of January 3, 1999 See accompanying notes to condensed consolidated financial statements. F-98 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED -------------------------- SEPTEMBER 27, OCTOBER 3, 1998 1999 ---- ---- (IN THOUSANDS) (UNAUDITED) Net revenues................................................ $495,817 $525,702 -------- -------- Costs and expenses: Cost of sales, excluding depreciation and amortization related to sales of $931,000 and $1,163,000........... 292,639 308,134 Advertising, selling and distribution.................. 116,752 120,391 General and administrative............................. 28,953 31,910 Depreciation and amortization, excluding amortization of deferred financing costs........................... 16,385 16,612 Capital structure reorganization related............... -- 3,208 -------- -------- 454,729 480,255 -------- -------- Operating profit....................................... 41,088 45,447 Interest expense............................................ (21,343) (25,827) Investment income........................................... 1,341 446 Gain (loss) on sale of business............................. 4,702 (889) Other income (loss), net.................................... (50) 333 -------- -------- Income before income taxes and extraordinary charge.... 25,738 19,510 Provision for income taxes.................................. (10,549) (9,365) -------- -------- Income before extraordinary charge..................... 15,189 10,145 Extraordinary charge........................................ -- (4,876) -------- -------- Net income............................................. $ 15,189 $ 5,269 -------- -------- -------- --------
See accompanying notes to condensed consolidated financial statements. F-99 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED -------------------------- SEPTEMBER 27, OCTOBER 3, 1998 1999 ---- ---- (IN THOUSANDS) (UNAUDITED) Cash flows from operating activities: Net income............................................. $15,189 $ 5,269 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of costs in excess of net assets of acquired companies, trademarks and certain other items........................................... 12,273 12,214 Depreciation and amortization of properties....... 4,112 4,398 Amortization of deferred financing costs.......... 1,442 1,573 Write-off of unamortized deferred financing costs and interest rate cap agreement costs........... -- 7,990 Capital structure reorganization related charge... -- 3,208 (Gain) loss on sale of business................... (4,702) 889 Provision for deferred income taxes............... 5,956 8,826 Provision for doubtful accounts................... 1,406 637 Payments for charges related to post-acquisition transition, integration and changes to business strategies...................................... (5,943) (204) Other, net........................................ 242 1,412 Changes in operating assets and liabilities: Increase in receivables...................... (24,588) (34,736) Increase in inventories...................... (20,130) (18,143) Decrease (increase) in prepaid expenses and other current assets....................... (2,372) 214 Increase in accounts payable and accrued expenses................................... 31,527 5,303 Increase in due to Triarc Companies, Inc. and other affiliates, net...................... 6,383 6,217 ------- -------- Net cash provided by operating activities............................ 20,795 5,067 ------- -------- Cash flows from investing activities: Proceeds from sale of investment in Select Beverages, Inc. ................................................. 28,342 -- Acquisition of Millrose Distributors, Inc.............. -- (17,491) Capital expenditures................................... (3,877) (5,008) Other.................................................. 639 159 ------- -------- Net cash provided by (used in) investing activities............................ 25,104 (22,340) ------- -------- Cash flows from financing activities: Proceeds from long-term debt........................... -- 475,000 Repayments of long-term debt........................... (9,265) (289,593) Transfer of long-term debt to affiliate................ -- (96,300) Dividends.............................................. (23,556) (82,837) Deferred financing costs............................... -- (16,869) Reimbursement of deferred financing costs from affiliate............................................. -- 3,420 ------- -------- Net cash used in financing activities... (32,821) (7,179) ------- -------- Net increase (decrease) in cash and cash equivalents........ 13,078 (24,452) Cash and cash equivalents at beginning of period............ 23,779 39,578 ------- -------- Cash and cash equivalents at end of period.................. $36,857 $ 15,126 ------- -------- ------- --------
See accompanying notes to condensed consolidated financial statements. F-100 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 3, 1999 (UNAUDITED) (1) BASIS OF PRESENTATION Triarc Beverage Holdings Corp. ('Triarc Beverage Holdings' and, together with its subsidiaries, the 'Company'), is a wholly-owned subsidiary of Triarc Consumer Products Group, LLC ('TCPG'), effective February 23, 1999, and of Triarc Companies, Inc. ('Triarc Parent'), the parent of TCPG, prior to February 23, 1999. Effective May 17, 1999, the common stock of Stewart's Beverages, Inc. ('Stewarts'), formerly Cable Car Beverage Corporation, was contributed by TCPG to Triarc Beverage Holdings. The consolidated financial position, results of operations and cash flows of each of Triarc Beverage Holdings and Stewart's and their subsidiaries have been consolidated since such entities were under the common control of Triarc Parent since December 29, 1997 and, accordingly, the accompanying condensed consolidated financial statements are presented on an 'as if pooling' basis. The accompanying unaudited condensed consolidated financial statements of Triarc Beverage Holdings have been prepared in accordance with Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (the 'SEC') and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of the Company, however, the accompanying condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company's financial position as of January 3, 1999 and October 3, 1999 and its results of operations and cash flows for the nine-month periods ended September 27, 1998 and October 3, 1999 (see below). This information should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended January 3, 1999 included elsewhere herein. The Company reports on a fiscal year basis consisting of 52 or 53 weeks ending on the Sunday closest to December 31. In accordance therewith, the Company's first nine months of 1998 commenced on December 29, 1997 and ended on September 27, 1998 and the Company's first nine months of 1999 commenced on January 4, 1999 and ended on October 3, 1999. For the purposes of these condensed consolidated financial statements, the period from December 29, 1997 to September 27, 1998 is referred to herein as the nine-month period ended September 27, 1998 and the period from January 4, 1999 to October 3, 1999 is referred to below as the nine-month period ended October 3, 1999. (2) INVENTORIES The following is a summary of the components of inventories (in thousands):
JANUARY 3, OCTOBER 3, 1999 1999 ---- ---- Raw materials.......................................... $16,662 $23,071 Finished goods......................................... 24,901 38,183 ------- ------- $41,563 $61,254 ------- ------- ------- -------
(3) LONG-TERM DEBT On February 25, 1999 Snapple Beverage Corp. ('Snapple'), Mistic Brands, Inc. ('Mistic') and Stewart's, wholly-owned subsidiaries of Triarc Beverage Holdings, as well as RC/Arby's Corporation ('RC/Arby's'), a wholly-owned subsidiary of TCPG, and Royal Crown Company, Inc. ('Royal Crown'), a wholly-owned subsidiary of RC/Arby's, (collectively, the 'Borrowers') entered into an agreement (the 'Credit Agreement') for a new $535,000,000 senior bank credit facility (the 'Credit Facility') consisting of a $475,000,000 term facility, all of which was borrowed as three classes of term loans (the 'Term Loans') on February 25, 1999, and a $60,000,000 revolving credit facility (the 'Revolving Credit Facility') which provides for revolving credit loans (the 'Revolving Loans') by Snapple, Mistic, Stewart's, RC/Arby's or Royal Crown. There have been no borrowings of Revolving F-101 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) Loans through October 3, 1999. The Company utilized a portion of the aggregate net proceeds of these borrowings together with available cash and cash equivalents to (1) repay on February 25, 1999 the $284,333,000 outstanding principal amount of the term loans under a former $380,000,000 credit agreement, as amended (the 'Former Beverage Credit Agreement') entered into by Snapple, Mistic, Triarc Beverage Holdings and Stewart's and $1,503,000 of related accrued interest, (2) transfer $92,500,000 of proceeds in conjunction with the transfer of $96,300,000 (including $3,800,000 relating to estimated deferred financing costs) of obligations under the Term Loans to Royal Crown, (3) acquire Millrose Distributors, Inc. and the assets of Mid-State Beverage, Inc. (collectively, 'Millrose'), two New Jersey distributors of the Company's premium beverages, for $17,491,000, including expenses of $241,000, (4) pay estimated allocated fees and expenses of $16,869,000, including $3,420,000 of actual costs reimbursed by Royal Crown, relating to the consummation of the Credit Facility (collectively, the 'Refinancing Transactions'), and (5) pay one-time distributions to Triarc Parent of $87,220,000, including dividends of $82,837,000. See Note 8 for disclosure of the extraordinary charge related to the aforementioned debt repayments recorded during the first quarter of the year ending January 2, 2000. Borrowings under the Credit Facility bear interest, at the Borrowers' option, at rates based on either the 30, 60, 90 or 180-day London Interbank Offered Rate ('LIBOR') (ranging from 5.40% to 6.08% at October 3, 1999) or an alternate base rate (the 'ABR'). The ABR (8 1/4% at October 3, 1999) represents the higher of the prime rate or 1/2% over the Federal funds rate. The interest rates on LIBOR-based loans are reset at the end of the period corresponding with the duration of the LIBOR selected. The interest rates on ABR-based loans are reset at the time of any change in the ABR. Revolving Loans and one class of the Term Loans with $34,981,000 outstanding as of October 3, 1999 (the 'Term A Loans') bear interest at 3% over LIBOR or 2% over ABR until such time as such margins may be subject to downward adjustment by up to 3/4% based on the borrowers' leverage ratio, as defined. It is not expected that such interest rate margins will be adjusted during the remainder of 1999. The other two classes of Term Loans with $99,160,000 and $241,950,000 outstanding as of October 3, 1999 (the 'Term B Loans' and 'Term C Loans,' respectively) bear interest at 3 1/2% and 3 3/4% over LIBOR, respectively, and 2 1/2% and 2 3/4%, respectively, over ABR. The borrowing base for Revolving Loans is the sum of 80% of eligible accounts receivable and 50% of eligible inventories. At October 3, 1999 there was $59,951,000 of borrowing availability to the Borrowers under the Revolving Credit Facility in accordance with limitations due to such borrowing base. Before consideration of the effect of an excess cash flow prepayment discussed below, the Term Loans are due $1,307,000 during the remainder of 1999, $6,568,000 in 2000, $8,362,000 in 2001, $10,156,000 in 2002, $11,949,000 in 2003, $12,397,000 in 2004, $75,181,000 in 2005, $193,635,000 in 2006 and $56,536,000 in 2007 and any Revolving Loans would be due in full in March 2005. The Borrowers must also make mandatory annual prepayments in an amount, if any, initially equal to 75% of excess cash flow, as defined in the Credit Agreement. Such mandatory prepayments would be applied on a pro rata basis to the remaining outstanding balances of the Term Loans except that any lender that has Term B Loans or Term C Loans outstanding may elect not to have its pro rata share of such loans repaid. Any amount prepaid and not applied to Term B Loans or Term C Loans as a result of such election would be applied first to the outstanding balance of the Term A Loans and second to any outstanding balance of Revolving Loans, with any remaining amount being returned to the Borrowers. The Borrowers currently expect that a prepayment will be required to be made in the second quarter of 2000 in respect of the year ended January 2, 2000, the Company's portion of which is currently estimated at $26,856,000. Accordingly, the estimated $26,856,000 the Company will be required to prepay is included in 'Current portion of long-term debt' in the accompanying condensed balance sheet as of October 3, 1999. After consideration of the effect of this estimated prepayment and assuming that the prepayment is applied on a pro rata basis to the remaining outstanding balances of all outstanding Term Loans, the Term Loans would be due $1,307,000 during the remainder of 1999, $33,298,000 in 2000 including the estimated excess cash flow prepayment, $7,763,000 in 2001, $9,428,000 in 2002, $11,094,000 in 2003, F-102 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) $11,510,000 in 2004, $69,672,000 in 2005, $179,704,000 in 2006 and $52,315,000 in 2007. Pursuant to the Credit Agreement the Company can make voluntary prepayments of the Term Loans. However, if the Company makes voluntary prepayments of the Term B and Term C Loans through February 25, 2000, it will incur prepayment penalties of 2.0% and 3.0% of the amounts prepaid, respectively, and from February 26, 2000 through February 25, 2001 it will incur prepayment penalties of 1.0% and 1.5% of the amounts prepaid, respectively. Under the Credit Agreement substantially all of the assets, other than cash and cash equivalents, of the Company, among other subsidiaries of TCPG, are pledged as security. The Borrowers' obligations with respect to the Credit Facility are guaranteed (the 'Guaranty') by, among other subsidiaries of TCPG, substantially all of the domestic subsidiaries of Snapple, Mistic and Stewart's, all of which effective May 17, 1999 are wholly-owned by Triarc Beverage Holdings. As collateral for the Guaranty, all of the stock of Snapple, Mistic and Stewart's, among other subsidiaries of TCPG, and all of their domestic subsidiaries and 65% of the stock of each of their directly-owned foreign subsidiaries is pledged. In addition, with respect to the obligations of TCPG under $300,000,000 principal amount of 10 1/4% senior subordinated notes due 2009 (the 'Notes') issued on February 25, 1999, Triarc Beverage Holdings is a co-issuer and the obligations are guaranteed by, among other subsidiaries of TCPG, Snapple, Mistic and Stewart's and all of their domestic subsidiaries, all of which effective May 17, 1999 are wholly-owned by Triarc Beverage Holdings or TCPG. Such guarantees are full and unconditional, are on a joint and several basis and are unsecured. Since Triarc Beverage Holdings is a co-issuer, it has reflected on its consolidated balance sheet as of October 3, 1999 such $300,000,000 principal amount as long-term debt and $4,377,000 of related accrued but unpaid interest in 'Accrued expenses' with a corresponding charge of $304,377,000 in 'Receivable from Triarc Companies, Inc.' included as a component of stockholder's equity (deficit). Such amounts will be increased for interest accrued and reduced to the extent that TCPG makes interest and principal payments on the Notes. On the date of issuance of the Notes, an aggregate $20,000,000 of Notes were issued to the Chairman and Chief Executive Officer and President and Chief Operating Officer (the 'Executives') of TCPG. The Company has been informed that, as of April 23, 1999, the Executives no longer held any of the Notes. The Notes mature in 2009 and do not require any amortization of principal prior to 2009. However, under the indenture (the 'Indenture') pursuant to which the Notes were issued, the Notes are redeemable at the option of the Company at amounts commencing at 105.125% of principal beginning February 2004 decreasing annually to 100% in February 2007 through February 2009. In addition, should TCPG consummate a permitted public equity offering or receive proceeds from a public equity offering by Triarc Parent, TCPG and the Company may at any time prior to February 2002 redeem up to an aggregate of $105,000,000 of the Notes at 110.25% of principal amount with the net proceeds of such public offering. On November 12, 1999 TCPG and the Company filed with the SEC amendment No. 3 to a registration statement (the 'Registration Statement') covering resales by holders of the Notes. The Registration Statement was not declared effective by the SEC by August 24, 1999 and, in accordance with the Indenture, the annual interest rate on the Notes increased by 1/2% to 10 3/4% and will remain at 10 3/4% until the Registration Statement is declared effective. The Indenture, the Credit Agreement, and the Guaranty contain various covenants which (1) require meeting certain financial amount and ratio tests, (2) limit, among other matters, (a) the incurrence of indebtedness, (b) the retirement of certain debt prior to maturity, (c) investments, (d) asset dispositions and (e) affiliate transactions other than in the normal course of business, and (3) restrict the payment of dividends to TCPG. Under the most restrictive of such covenants, the Company would not be able to pay any dividends to TCPG other than (1) the aforementioned one-time distributions, including dividends, paid to TCPG in connection with the Refinancing Transactions, (2) dividends paid to TCPG to the extent necessary to allow TCPG to make scheduled interest F-103 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) payments on the Notes, and (3) dividends paid to TCPG in an amount not to exceed $250,000 in any fiscal year, to the extent necessary to allow TCPG to pay certain expenses. The following pro forma data of the Company for the nine months ended October 3, 1999 have been prepared by adjusting the historical data reflected in the accompanying condensed consolidated statement of operations for such period to reflect the effects of the Refinancing Transactions, including the acquisition of Millrose, as if such transactions had been consummated on January 4, 1999. Such pro forma data is presented for information purposes only and does not purport to be indicative of the Company's actual results of operations had such transactions actually been consummated on January 4, 1999 or of the Company's future results of operations and are as follows (in thousands):
AS PRO REPORTED FORMA -------- ----- Revenues.................................................... $525,702 $527,376 Operating profit............................................ 45,447 45,356 Interest expense............................................ (25,827) (27,240) Income before extraordinary charge.......................... 10,145 9,168
(4) ACQUISITION The acquisition of Millrose described in Note 3 has been accounted for in accordance with the purchase method of accounting. In accordance therewith, the following table sets forth the preliminary allocation of the aggregate purchase price (in thousands): Current assets.............................................. $ 3,770 Properties.................................................. 1,000 Unamortized costs in excess of net assets of acquired companies (amortized over 15 years)....................... 13,579 Current liabilities......................................... (858) ------- $17,491 ------- -------
(5) CAPITAL STRUCTURE REORGANIZATION RELATED CHARGE The capital structure reorganization related charge of $3,208,000 recognized during the nine months ended October 3, 1999, including $208,000 recognized during the three months ended October 3, 1999, resulted from equitable adjustments to the terms of outstanding options under the Triarc Beverage Holdings Stock Option Plan (the 'Option Plan'), to adjust for the effects of net distributions of $91,342,000, principally consisting of transfers of cash and deferred tax assets, from Triarc Beverage Holdings to Triarc Parent, partially offset by the effect of the contribution of Stewart's to Triarc Beverage Holdings effective May 17, 1999. The Option Plan provides for an equitable adjustment of options in the event of a recapitalization or similar event. As a result of these net distributions and the terms of the Option Plan, the exercise prices of the options granted in 1997 and 1998 were equitably adjusted from $147.30 and $191.00 per share, respectively, to $107.05 and $138.83 per share, respectively, and a cash payment of $51.34 and $39.40 per share, respectively, is due from Triarc Beverage Holdings to the option holder following the exercise of the stock options. Compensation expense is being recognized for the cash to be paid upon the exercise of the stock options by employees of the Company ratably over the vesting period of the stock options. The charges to be recognized over the vesting period aggregate $4,166,000. No compensation expense will be recognized for other changes in the terms of the outstanding options because the modifications to the options did not create a new measurement date under generally accepted accounting principles. F-104 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) (6) INCOME TAXES The Company is included in the consolidated Federal income tax return of Triarc Parent. As discussed more fully in the Company's consolidated financial statements for the year ended January 3, 1999, the Company provides for Federal income taxes on the same basis as if the Company filed separate consolidated returns pursuant to tax-sharing agreements with Triarc Parent. On February 25, 1999 TCPG entered into a revised tax-sharing agreement (including the Company) with Triarc Parent which, as amended effective February 25, 1999, provides that TCPG would continue to receive, and accordingly the Company would continue to receive, benefit for deferred tax assets associated with existing Federal net operating loss carryforwards and excess Federal income tax payments made in accordance with the prior tax-sharing agreement aggregating $12,211,000 as of January 3, 1999 except that Triarc Parent has the right to cause the effective transfer of any unutilized benefits from TCPG, and accordingly the Company, to Triarc Parent, but only to the extent any such transfer would not result in non-compliance with a Credit Agreement covenant. In accordance therewith, during the nine months ended October 3, 1999 the Company generated an additional $2,626,000 of such benefits as a result of the extraordinary charge (see Note 8), utilized $161,000 of such benefits to offset income taxes otherwise payable on its pre-tax income before extraordinary charge and transferred the remaining $14,676,000 of such deferred tax benefits to Triarc Parent as if such transfer were a distribution from the Company to TCPG and, in turn, a distribution from TCPG to Triarc Parent. Such transfer was recorded as a charge to 'Accumulated deficit' and a credit to 'Deferred income taxes'. (7) STOCKHOLDER'S EQUITY (DEFICIT) The following is a summary of the changes in stockholder's equity (deficit) for the nine months ended October 3, 1999 (in thousands): Balance of stockholder's equity at January 3, 1999.......... $ 31,306 Net income............................................. 5,269 Cash dividends paid to Triarc Parent (Note 3).......... (82,837) Charge to receivable from TCPG related to issuance of the Notes (Note 3).................................... (300,000) Increase to receivable from TCPG for accrued interest on the Notes (Note 3)................................. (4,377) Transfer of deferred tax benefits (Note 6)............. (14,676) Dividend requirement on redeemable preferred stock..... (6,490) Net change in currency translation adjustment (Note 9).............................................. (24) --------- Balance of stockholder's deficit at October 3, 1999......... $(371,829) --------- ---------
(8) EXTRAORDINARY CHARGE The extraordinary charge in the nine months ended October 3, 1999 resulted from the early extinguishment of borrowings under the Former Beverage Credit Agreement (see Note 3). Such extraordinary charge consisted of the write-off of previously unamortized (1) deferred financing costs of $7,844,000 and (2) interest rate cap agreement costs of $146,000, less income tax benefit of $3,114,000. F-105 TRIARC BEVERAGE HOLDINGS CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 3, 1999 (UNAUDITED) (9) COMPREHENSIVE INCOME The following is a summary of the components of comprehensive income (in thousands):
NINE MONTHS ENDED -------------------------- SEPTEMBER 27, OCTOBER 3, 1998 1999 ---- ---- Net income.................................................. $15,189 $5,269 Net change in currency translation adjustment............... 21 (24) Reclassification adjustment for prior year appreciation on short-term investment sold during the period.............. (42) -- ------- ------ Comprehensive income........................................ $15,168 $5,245 ------- ------ ------- ------
(10) TRANSACTIONS WITH RELATED PARTIES The Company continues to have certain related party transactions with Triarc Parent and its subsidiaries of the same nature and general magnitude as those described in Note 16 to the Company's consolidated financial statements for the year ended January 3, 1999. In addition, see Notes 3 and 6 for discussion of certain other related party transactions for the nine-month period ended October 3, 1999. (11) LEGAL MATTERS The Company is involved in litigation and claims incidental to its business. The Company has reserves for such legal matters aggregating $468,000 as of October 3, 1999. Although the outcome of such matters cannot be predicted with certainty and some of these matters may be disposed of unfavorably to the Company, based on currently available information and given the Company's aforementioned reserves, the Company does not believe that such legal matters will have a material adverse effect on its consolidated financial position or results of operations. F-106 ================================================================================ NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN, OR DEEMED TO BE CONSIDERED PART OF, THIS DOCUMENT IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY TRIARC CONSUMER PRODUCTS OR TRIARC BEVERAGE HOLDINGS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF TRIARC CONSUMER PRODUCTS OR TRIARC BEVERAGE HOLDINGS SINCE THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, THE SECURITIES WE ARE OFFERING BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. ------------------------ TRIARC CONSUMER PRODUCTS GROUP, LLC TRIARC BEVERAGE HOLDINGS CORP. OFFER TO EXCHANGE $300,000,000 10 1/4% SENIOR SUBORDINATED NOTES DUE 2009 ------------------------ PROSPECTUS ------------------------ DECEMBER , 1999 UNTIL MARCH , 2000 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENT. ================================================================================ PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 18-108 of the Delaware Limited Liability Company Act, as amended (the 'Act'), grants a Delaware limited liability company the power, subject to such standards and restrictions, if any, as are set forth in its limited liability company agreement to indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever. Article 19 of the Limited Liability Company Operating Agreement of Triarc Consumer Products Group, LLC (the 'Operating Agreement') provides that the member shall not have any liability for the obligations or liabilities of Triarc Consumer Products Group, except to the extent provided in the Act. Section 18-303 provides that except as otherwise provided therein the debts, obligations and liabilities of a limited liability company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the limited liability company, and no member or manager of a limited liability company shall be obligated personally for any such debt, obligation or liability of the limited liability company solely by reason of being a member or acting as a manager of the limited liability company. Section 20.1 of the Operating Agreement provides that the member, any manager, any affiliate of the member or any manager and any officers, directors, shareholder, partners or employees of the member or any manager and their respective affiliates, and any officer, employee or expressly authorized agent of Triarc Consumer Products Group or its affiliates are each a 'Covered Person.' No Covered Person shall be liable to Triarc Consumer Products Group or any other Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of Triarc Consumer Products Group and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by the Operating Agreement, except that a Covered Person shall be liable for any such loss, damage or claim incurred by reason of such Covered Person's gross negligence or willful misconduct. A Covered Person shall be fully protected in relying in good faith upon the records of Triarc Consumer Products Group and upon such information, opinions, reports or statements presented to Triarc Consumer Products Group by any person as to matters the Covered Person reasonably believes are within the professional or expert competence of such person or entity and who or which has been selected with reasonable care by or on behalf of Triarc Consumer Products Group, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which distributions to the member properly be paid. Section 145 of the Delaware General Corporation Law (the 'DGCL') grants a Delaware corporation the power to indemnify any director, officer, employee or agent against reasonable expenses (including attorneys' fees) incurred by him in connection with any proceeding brought by or on behalf of the corporation and against judgments, fines, settlements and reasonable expenses (including attorneys' fees) incurred by him in connection with any other proceeding, if (a) he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and (b) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. Except as ordered by a court, however, no indemnification is to be made in connection with any proceeding brought by or in the right of the corporation where the person involved is adjudged to be liable to the corporation. Article 8 of the Triarc Beverage Holdings Corp. certificate of incorporation and Article 8 of Triarc Beverage Holdings' by-laws provide that Triarc Beverage Holdings shall, to the extent not prohibited by law, indemnify any person who is or was made, or threatened to be made, a party to any threatened, pending or completed action, suit or proceeding (a 'Proceeding'), whether civil, criminal, administrative or investigative, including, without limitation, an action by or in the right of Triarc Beverage Holdings to procure a judgment in its favor, by reason of the fact that such person, or a person of whom such person is the legal representative, is or was a director or officer of Triarc Beverage Holdings, or is II-1 or was serving in a capacity at the request of Triarc Beverage Holdings as a director or officer of any other corporation or for any corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (an 'Other Entity'), against judgments, fines, penalties, excise taxes, amounts paid in settlement and costs, charges and expenses (including attorneys' fees and disbursements). Persons who are not directors or officers of Triarc Beverage Holdings may be similarly indemnified in respect of service to Triarc Beverage Holdings or to an Other Entity at the request of Triarc Beverage Holdings to the extent the board of directors of Triarc Beverage Holdings at any time specifies that such persons are entitled to the benefits of this Article 8. Section 102(b)(7) of the DGCL permits the elimination or limitation of directors' personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duties as a director except for (1) any breach of the director's duty of loyalty to the corporation or its stockholders, (2) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (3) breaches under section 174 of the DGCL, which relate to unlawful payments of dividends or unlawful stock repurchase or redemptions, and (4) any transaction from which the director derived an improper personal benefit. Section 7 of Triarc Beverage Holdings's certificate of incorporation limits the personal liability of directors of Triarc Beverage Holdings to the fullest extent permitted by paragraph (7) of subsection (b) of section 102 of the DGCL. Each of Triarc Consumer Products Group and Triarc Beverage Holdings also enters into indemnification agreements with their, and some of their subsidiaries', managers, directors and officers, as the case may be, indemnifying them to the fullest extent permitted by law against liability, including related expenses, they may incur in their capacity as directors, managers, officers, employees, trustees, agents or fiduciaries of Triarc Consumer Products Group or Triarc Beverage Holdings, as the case may be, and/or any liability relating to their service in any such capacity, at the request of Triarc Consumer Products Group or Triarc Beverage Holdings for other corporations or entities. The indemnification agreements are meant to provide specific contractual assurance that the indemnification provided by Triarc Consumer Products Group and Triarc Beverage Holdings under their organizational documents or directors' and officers' liability insurance will be available regardless of changes to their organizational documents, or any acquisition transactions relating to their organizational documents. The indemnification agreements do not provide indemnification (1) for the return by the indemnitee of any illegal remuneration paid to him or her, (2) for any profits payable by the indemnitee to Triarc Consumer Products Group or Triarc Beverage Holdings under Section 16(b) of the Securities Exchange Act, (3) for any liability resulting from the indemnitee's knowingly fraudulent, dishonest or willful misconduct, (4) for any amount the payment of which is not permitted by applicable law, (5) for any liability resulting from conduct producing unlawful personal benefit, (6) if a final court adjudication determines that indemnification is not lawful, or (7) to the extent indemnification has been provided by either Triarc Consumer Products Group or Triarc Beverage Holdings under its Operating Agreement, certificate of incorporation, by-laws or directors and officers liability insurance, as the case may be. Determination as to whether an indemnitee is entitled to be paid under the indemnification agreements may be made by the majority vote of a quorum of disinterested directors or managers of Triarc Consumer Products Group or Triarc Beverage Holdings, as the case may be, independent legal counsel selected by the Managers of Triarc Consumer Products Group or directors of Triarc Berverage Holdings, as the case may be, a majority of disinterested members of Triarc Consumer Products Group or stockholders of Triarc Beverage Holdings or by a final adjudication of a court of competent jurisdiction. If Triarc Consumer Products Group or Triarc Beverage Holdings undergoes a change of control under the indemnification agreements all such determinations are to be made by special independent counsel selected by the indemnitee and approved by Triarc Consumer Products Group or Triarc Beverage Holdings, as the case may be, which approval may not be unreasonably withheld. Triarc Consumer Products Group or Triarc Beverage Holdings will pay the reasonable fees and expenses of the special independent counsel. An indemnitee may be able to require Triarc Consumer Products Group or Triarc Beverage Holdings to establish a trust fund to assure that funds will be available to pay any amounts which may be due to an indemnitee under an indemnification agreement. II-2 Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling Triarc Consumer Products Group and Triarc Beverage Holdings pursuant to the foregoing provisions, Triarc Consumer Products Group and Triarc Beverage Holdings have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. Pursuant to Section 5(b) of the registration rights agreement dated February 18, 1999, between Triarc Consumer Products Group, Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation, Wasserstein Perella Securities, Inc., and certain guarantors thereto, the holders of the notes have agreed to indemnify the parties thereto and their directors, officers and controlling persons against any losses, claims, damages, liabilities or expenses that may arise out of an untrue statement or alleged untrue statement of or omission to state a material fact, contained in the registration statement or prospectus, but only (i) with reference to information relating to such holder furnished in writing by such holders to Triarc Consumer Products Group and Triarc Beverage Holdings for use in the registration statement and (ii) with respect to any losses that may arise as a result of the disposition by such holder of registerable notes to the person asserting the claim from which such losses arise pursuant to a registration statement if such holder sent or delivered, or was required by law to send or deliver, a prospectus in connection with such disposition, such holder received a blockage notice with respect to such prospectus in writing at least four business days prior to the date of such disposition and the untrue statement or alleged untrue statement or omission or alleged omission was the reason for the blockage notice. Section 1.17 of the indenture dated as of February 25, 1999, by and among Triarc Consumer Products Group, Triarc Beverage Holdings, the Subsidiary Guarantors and The Bank of New York provides that the holders of the debentures have agreed to waive all liability for any obligations incurred by Triarc Consumer Products Group, Triarc Beverage Holdings or the Subsidiary Guarantors under the notes, Subsidiary Guarantees or the indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation, against any incorporator, member, director, manager, officer, employee or stockholder, as such, of Triarc Consumer Products Group, Triarc Beverage Holdings or the Subsidiary Guarantors, and have agreed to the release of such persons from any such liability. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 3.1* -- Certificate of Formation of Triarc Consumer Products Group, LLC 3.2* -- Certificate of Incorporation of Triarc Beverage Holdings Corp., as amended 3.3* -- Certificate of Incorporation of Mistic Brands, Inc., as amended 3.4* -- Restated Certificate of Incorporation of Snapple Beverage Corp. 3.5* -- Certificate of Incorporation of Snapple International Corp. 3.6* -- Certificate of Incorporation of Snapple Caribbean Corp. 3.7* -- Certificate of Incorporation of Snapple Worldwide Corp. 3.8* -- Certificate of Incorporation of Snapple Finance Corp. 3.9* -- Articles of Incorporation of Pacific Snapple Distributors, Inc., as amended 3.10* -- Certificate of Incorporation of Mr. Natural, Inc., as amended 3.11* -- Certificate of Incorporation of Kelrae, Inc. 3.12* -- Certificate of Incorporation of Millrose Distributors, Inc. 3.13* -- Certificate of Incorporation of RC/Arby's Corporation 3.14* -- Certificate of Formation of ARHC, LLC 3.15* -- Certificate of Incorporation of RCAC Asset Management, Inc. 3.16* -- Certificate of Incorporation of Arby's, Inc., as amended 3.17* -- Articles of Incorporation of Arby's Building and Construction Co. 3.18* -- Certificate of Incorporation of TJ Holding Company, Inc.
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EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 3.19* -- Certificate of Incorporation of Arby's Restaurant Construction Company 3.20* -- Certificate of Incorporation of Arby's Restaurants, Inc. 3.21* -- Articles of Incorporation of RC-11, Inc., as amended 3.22* -- Certificate of Incorporation of RC Leasing, Inc. 3.23* -- Certificate of Incorporation of Royal Crown Bottling Company of Texas, as amended 3.24* -- Certificate of Incorporation of Royal Crown Company, Inc., as amended 3.25* -- Articles of Incorporation of Retailer Concentrate Products, Inc. 3.26* -- Certificate of Incorporation of TriBev Corporation 3.27* -- Certificate of Incorporation of Stewart's Beverages, Inc., as amended 3.28* -- Articles of Incorporation of Old San Francisco Seltzer, Inc., as amended 3.29* -- Articles of Incorporation of Fountain Classics, Inc. 3.30* -- Limited Liability Company Operating Agreement of Triarc Consumer Products Group, LLC 3.31* -- By-laws of Triarc Beverage Holdings Corp. 3.32* -- By-laws of Mistic Brands, Inc. 3.33* -- Amended and Restated By-laws of Snapple Beverage Corp. 3.34* -- By-laws of Snapple International Corp. 3.35* -- By-laws of Snapple Caribbean Corp. 3.36* -- By-laws of Snapple Worldwide Corp. 3.37* -- By-laws of Snapple Finance Corp. 3.38* -- By-laws of Pacific Snapple Distributors, Inc. 3.39* -- By-laws of Mr. Natural, Inc. 3.40* -- By-laws of Kelrae, Inc. 3.41* -- Amended and Restated By-laws of Millrose Distributors, Inc. 3.42* -- By-laws of RC/Arby's Corporation 3.43* -- Limited Liability Company Operating Agreement of ARHC, LLC 3.44* -- By-laws of RCAC Asset Management, Inc. 3.45* -- By-laws of Arby's, Inc. 3.46* -- By-laws of Arby's Building and Construction Co. 3.47* -- By-laws of TJ Holding Company, Inc. 3.48* -- By-laws of Arby's Restaurant Construction Company 3.49* -- By-laws of Arby's Restaurants, Inc. 3.50* -- By-laws of RC-11, Inc. 3.51* -- By-laws of RC Leasing, Inc. 3.52* -- By-laws of Royal Crown Bottling Company of Texas 3.53* -- By-laws of Royal Crown Company, Inc. 3.54* -- By-laws of Retailer Concentrate Products, Inc. 3.55* -- By-laws of TriBev Corporation 3.56* -- By-laws of Stewart's Beverages, Inc. (f/k/a Cable Car Beverage Corporation) 3.57* -- By-laws of Old San Francisco Seltzer, Inc. 3.58* -- By-laws of Fountain Classics, Inc. 4.1 -- Credit Agreement dated as of February 25, 1999, among Snapple Beverage Corp. ('Snapple'), Mistic Brands, Inc. ('Mistic'), Stewart's Beverages, Inc. (f/k/a Cable Car Beverage Corporation) ('Stewart's Beverages'), RC/Arby's Corporation and Royal Crown Company Inc. ('Royal Crown'), as Borrowers, various financial institutions party thereto, as Lenders, DLJ Capital Funding, Inc., as syndication agent, Morgan Stanley Senior Funding, Inc., as Documentation Agent, and The Bank of New York, as Administrative Agent, incorporated herein by reference to Exhibit 4.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 11, 1999 (SEC file no. 1-2207). 4.2 -- Indenture dated of February 25, 1999 among Triarc Consumer Products Group LLC ('Triarc Consumer Products Group'), Triarc Beverage Holdings Corp. ('Triarc Beverage Holdings'), as Issuers, the subsidiary guarantors party thereto and The Bank of New York, as Trustee, incorporated herein by reference to Exhibit 4.2 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 11, 1999 (SEC file no. 1-2207).
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EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 4.3 -- Registration Rights Agreement dated February 18, 1999 among Triarc Consumer Products Group, Triarc Beverage Holdings, the Guarantors party thereto and Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation and Wasserstein Perella Securities, Inc., incorporated herein by reference to Exhibit 4.3 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 11, 1999 (SEC file no. 1-2207). 4.4 -- Registration Rights Agreement dated as of February 25, 1999 among Triarc Consumer Products Group, Triarc Beverage Holdings, the Guarantors party thereto and Nelson Peltz and Peter W. May, incorporated herein by reference to Exhibit 4.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated April 1, 1999 (SEC file no. 1-2207). 4.5* -- Form of 10 1/4% Senior Subordinated Note of Triarc Consumer Products Group and Triarc Beverage Holdings due 2009. 4.6* -- Supplemental Indenture, dated as of February 26, 1999, among Triarc Consumer Products Group, Triarc Beverage Holdings, Millrose Distributors, Inc., and The Bank of New York as Trustee. 4.7* -- Supplemental Indenture No. 2, dated as of September 8, 1999, among Triarc Consumer Products Group, Triarc Beverage Holdilngs, the subsidiary guarantors party thereto and The Bank of New York, as Trustee. 5.1** -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to legality of the exchange notes (replaces previously filed exhibit). 5.2** -- Opinion of Sonnenschein Nath & Rosenthal as to certain legal matters relating to Pacific Snapple Distributors, Inc. 5.3** -- Opinion of Schenck, Price, Smith & King, LLP as to certain legal matters relating to Millrose Distributors, Inc. 5.4** -- Opinion of Powell, Goldstein, Frazer & Murphy LLP as to certain legal matters relating to Arby's Building and Construction Company. 5.5** -- Opinion of Watkins Ludlam Winter & Stennis, P.A. as to certain legal matters relating to RC-11, Inc. 5.6** -- Opinion of Hunton & Williams as to certain legal matters relating to Retailer Concentrate Products, Inc. 5.7** -- Opinion of Holland & Hart LLP as to certain legal matters relating to Old San Francisco Seltzers, Inc. 5.8** -- Opinion of Holland & Hart LLP as to certain legal matters relating to Fountain Classics, Inc. 8.1* -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to federal income tax matters. 10.1 -- Triarc Companies, Inc.'s 1993 Equity Participation Plan, as amended, incorporated herein by reference to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 31, 1997 (SEC file no. 1-2207). 10.2 -- Form of Non-Incentive Stock Option Agreement under Triarc Companies, Inc.'s 1993 Equity Participation Plan, incorporated herein by reference to Exhibit 10.2 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 31, 1997 (SEC file no. 1-2207). 10.3 -- Form of Restricted Stock Agreement under Triarc Companies, Inc.'s 1933 Equity Participation Plan, incorporated herein by reference to Exhibit 13 to Triarc Companies, Inc.'s Current Report on Form 8-K dated April 23, 1993 (SEC file no. 1-2207). 10.4 -- Concentrate Sales Agreement dated as of January 28, 1994 between Royal Crown Cola Co. and Cott -- Confidential treatment has been granted for portions of the agreement -- incorporated herein by reference to Exhibit 10.12 to Amendment No. 1 to Triarc Companies, Inc.'s Registration Statement on Form S-4 dated March 11, 1994 (SEC file no. 1-2207). 10.5 -- Form of Indemnification Agreement, between Triarc Companies, Inc. and certain officers, directors, and employees of Triarc Companies, Inc., incorporated herein by reference to Exhibit F to the 1994 Proxy (SEC file no. 1-2207). 10.6 -- Employment Agreement, dated as June 29, 1994, between Brian L. Schorr and Triarc Companies, Inc., incorporated herein by reference to Exhibit 10.2 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 29, 1995 (SEC file no. 1-2207). 10.7 -- Amended and Restated Employment Agreement dated as of June 1, 1997 by and between Snapple, Mistic and Michael Weinstein, incorporated herein by reference to Exhibit 10.3 to Triarc Companies, Inc.'s Current Report on Form 8-K/A dated March 16, 1998 (SEC file no. 1-2207).
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EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 10.8 -- Amended and Restated Employment Agreement dated as of June 1, 1997 by and between Snapple, Mistic and Ernest J. Cavallo, incorporated herein by reference to Exhibit 10.4 to Triarc Companies, Inc.'s Current Report on Form 8-K/A dated March 16, 1998 (SEC file no. 1-2207). 10.9 -- Employment Agreement dated as of April 29, 1996 between Triarc Companies, Inc. and John L. Barnes, Jr., incorporated herein by reference to Exhibit 10.3 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 31, 1997 (SEC file no. 1-2207). 10.10 -- Stock Purchase Agreement dated as of March 27, 1997 between The Quaker Oats Company and Triarc Companies, Inc., incorporated herein by reference to Exhibit 2.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 31, 1997 (SEC file no. 1-2207). 10.11 -- Agreement and Plan of Merger dated as of June 24, 1997 between Stewart's Beverages, Triarc Companies, Inc. and CCB Merger Corporation ('CCB'), incorporated herein by reference to Exhibit 2.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated June 24, 1997 (SEC file no. 1-2207). 10.12 -- Amendment No. 1 to Agreement and Plan of Merger, dated as of September 30, 1997, between Stewart's Beverages, Triarc Companies, Inc. and CCB, incorporated herein by reference to Appendix B-1 to the Proxy Statement/Prospectus filed pursuant to Triarc Companies, Inc.'s Registration Statement on Form S-4 dated October 22, 1997 (SEC file no. 1-2207). 10.13 -- Option granted by RTM Partners, Inc. ('RTM Partners') in favor of Arby's Restaurants Holding Company, together with a schedule identifying other documents omitted and the material details in which such documents differ, incorporated herein by reference to Exhibit 10.30 to Triarc Companies, Inc.'s Registration Statement on Form S-4 dated October 22, 1997 (SEC file no. 1-2207). 10.14 -- Guaranty dated as of May 5, 1997 by RTM, Inc., RTM Parent, RTM Partners, RTM Management Co., LLC and RTM Operating Company in favor of Arby's, Arby's Restaurant Development Corporation, Arby's Restaurant Holding Company, Arby's Restaurant Operations Company and Triarc Companies, Inc., incorporated herein by reference to Exhibit 10.31 to Triarc Companies, Inc.'s Registration Statement on Form S-4 dated October 22, 1997 (SEC file no. 1-2007). 10.15 -- Triarc Companies, Inc.'s, Inc. 1997 Equity Participation Plan (the '1997 Equity Plan'), incorporated herein by reference to Exhibit 10.5 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 16, 1998 (SEC file no. 1-2207). 10.16 -- Form of Non-Incentive Stock Option Agreement under the 1997 Equity Plan, incorporated herein by reference to Exhibit 10.6 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 16, 1998 (SEC file no. 1-2207). 10.17 -- Triarc Companies, Inc.'s Stock Option Plan for Stewart's Beverages Employees, incorporated herein by reference to Exhibit 4.3 to Triarc Companies, Inc.'s Registration Statement on Form S-8 dated January 22, 1998 (Registration No. 333-44711). 10.18 -- Triarc Beverage Holdings Corp. 1997 Stock Option Plan (the 'TBHC Option Plan'), incorporated herein by reference to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 16, 1998 (SEC file no. 1-2207). 10.19 -- Form of Non-Qualified Stock Option Agreement under the TBHC Option Plan, incorporated herein by reference to Exhibit 10.2 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 16, 1998 (SEC file no. 1-2207). 10.20 -- Triarc Companies, Inc.'s 1998 Equity Participation Plan, as currently in effect, incorporated herein by reference to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated May 13, 1998 (SEC file no. 1-2207). 10.21 -- Form of Non-Incentive Stock Option Agreement under Triarc Companies, Inc.'s 1998 Equity Participation Plan, incorporated herein by reference to Exhibit 10.2 to Triarc Companies, Inc.'s Current Report on Form 8-K dated May 13, 1998 (SEC file no. 1-2207). 10.22 -- Letter Agreement, dated as of March 10, 1998, between Triarc Companies, Inc. and John L. Barnes, Jr., incorporated herein by reference to Exhibit 10.3 to Triarc Companies, Inc.'s Current Report on Form 8-K dated May 13, 1998 (SEC file no. 1-2207). 10.23 -- Letter Agreement dated July 23, 1998 between John L. Belsito and Royal Crown, incorporated herein by reference to Exhibit 10.1 to RC/Arby's Corporation's Current Report on Form 8-K dated November 5, 1998 (SEC file no. 33-62778). 10.24 -- Letter Agreement dated August 27, 1998 among John C. Carson, Triarc Companies, Inc. and Royal Crown, incorporated herein by reference to Exhibit 10.2 to RC/Arby's Corporation's Current Report on Form 8-K dated November 5, 1998 (SEC file no. 33-62778).
II-6
EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 10.25 -- Letter Agreement dated as of February 13, 1997 between Arby's and Roland Smith, incorporated herein by reference to Exhibit 10.1 to Triarc Companies Inc.'s Current Report on Form 8-K dated April 1, 1999 (SEC file no. 1-2207). 10.26 -- Triarc Restaurant Group Senior Executive Mid-term Incentive Plan (Portions of this exhibit have been omitted pursuant to a grant of confidential treatment), incorporated herein by reference to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated April 30, 1999 (SEC file 1-2207). 10.27* -- Management Services Agreement, dated February 25, 1999, by and between Triarc Companies, Inc. and Arby's, Inc. 10.28* -- Management Services Agreement, dated February 25, 1999, by and between Triarc Companies, Inc., Snapple, Mistic, Stewart's Beverages and Royal Crown. 10.29* -- Tax Sharing Agreement, dated February 25, 1999, by and between Triarc Companies, Inc., Triarc Consumer Products Group, Triarc Beverage Holdings, Snapple, Mistic, Stewart's Beverages, RC/Arby's Corporation, Royal Crown, Arby's, and ARHC, LLC. 10.30* -- Amendment No. 1 to the Tax Sharing Agreement, dated April 23, 1999, by and among Triarc Companies, Inc., Triarc Consumer Products Group, Triarc Beverage Holdings, Snapple, Mistic, Stewart's Beverages, RC/Arby's Corporation, Royal Crown, Arby's and ARHC, LLC. 10.31* -- Tax Sharing Agreement, dated May 22, 1997, by and among Triarc Companies Inc., Triarc Beverage Holdings, Snapple and Mistic. 10.32* -- Tax Sharing Agreement, dated November 25, 1997, by and among Triarc Companies, Inc. and Stewart's Beverages. 10.33* -- Amendment to Tax Sharing Agreements, dated as of August 15, 1998, among Triarc Beverage Holdings, Snapple, Mistic and Stewart's Beverages. 10.34* -- Contribution Agreement, dated as of February 23, 1999, between Triarc Companies, Inc. and Triarc Consumer Products Group. 10.35* -- Letter Agreement dated as of April 28, 1999, between Triarc Companies, Inc. and John L. Barnes, Jr. 10.36* -- Amendment No. 1 to Triarc Beverage Holdings Corp. 1997 Stock Option Plan. 10.37* -- Letter Agreement dated as of July 28, 1999, between Triarc Companies, Inc. and John L. Barnes, Jr. 10.38* -- Amendment No. 2 to the Tax Sharing Agreement, dated as of April 23, 1999, by and among Triarc Companies, Inc., Triarc Consumer Products Group, Triarc Beverage Holdings, Snapple, Mistic, Stewart's Beverages, RC/Arby's Corporation, Royal Crown, Arby's and ARHC, LLC. 10.39** -- Form of Indemnification Agreement of Triarc Consumer Products Group, LLC. 10.40** -- Form of Indemnification Agreement fo Triarc Beverage Holdings Corp. 12.1** -- Statement of Computation of Ratios of Earnings to Fixed Charges. 21.1* -- Subsidiaries of Triarc Consumer Products Group, LLC. 23.1** -- Consent of Deloitte & Touche LLP relating to Triarc Consumer Products Group, LLC. 23.2** -- Consent of Deloitte & Touche LLP relating to Triarc Beverage Holdings Corp. 23.3** -- Consent of Arthur Andersen LLP. 23.4** -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in the opinion filed as Exhibit 5.1 of this Registration Statement). 23.5* -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in the opinion filed as Exhibit 8.1 of this Registration Statement). 23.6** -- Consent of Sonnenschein Nath & Rosenthal. 23.7** -- Consent of Schenck, Price, Smith & King, LLP. 23.8** -- Consent of Powell, Goldstein, Frazer & Murphy LLP. 23.9** -- Consent of Watkins Ludlam Winter & Stennis, P.A. 23.10** -- Consent of Hunton & Williams. 23.11** -- Consent of Holland & Hart LLP. 23.12** -- Consent of Holland & Hart LLP. 24.1* -- Powers of Attorney (contained on signature pages). 24.2* -- Power of Attorney, dated September 29, 1999, by Jonathan P. May. 25.1* -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Indenture. 27.1** -- Financial Data Schedule of Triarc Consumer Products Group, LLC.
II-7
EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 27.2** -- Financial Data Schedule of Triarc Beverage Holdings Corp. 99.1* -- Form of Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number of Substitute Form W-9). 99.2* -- Form of Notice of Guaranteed Delivery.
- ------------------------ * Previously filed. ** Filed herewith. (b) Financial Data Schedules None ITEM 22. UNDERTAKINGS. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 20, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officers or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned registrants hereby undertake: To respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed after the effective date of this Registration Statement through the date of responding to the request; To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective; The undersigned registrants hereby undertake: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement; (i) to include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof which, individually or in the aggregate, represent a fundamental change in the information described in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the 'Calculation of Registration Fee' table in the effective Registration Statement; (iii) to include any material information with respect to the not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; (2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; (3) to remove from registration by means of post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-8 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999. TRIARC CONSUMER PRODUCTS GROUP, LLC By: * ................................. JOHN L. BARNES, JR. CHIEF FINANCIAL OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- /s/ NELSON PELTZ Chairman and Chief Executive Officer and Manager ......................................... (Principal Executive Officer) NELSON PELTZ * President and Chief Operating Officer and Manager ......................................... PETER W. MAY * Executive Vice President and Chief Financial Officer and ......................................... Manager (Principal Financial Officer) JOHN L. BARNES, JR. * Vice President and Chief Accounting Officer (Principal ......................................... Accounting Officer) FRED H. SCHAEFER * Executive Vice President and Manager ......................................... ERIC D. KOGAN * Executive Vice President and Manager ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-9 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999. TRIARC BEVERAGE HOLDINGS CORP. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director (Principal ......................................... Executive Officer) MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * President and Chief Operating Officer and Director ......................................... ERNEST J. CAVALLO /s/ NELSON PELTZ Chairman and Director ......................................... NELSON PELTZ * Vice Chairman and Director ......................................... PETER W. MAY * Executive Vice President and Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-10 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999. MISTIC BRANDS, INC. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director (Principal ......................................... Executive Officer) MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN President and Chief Operating Officer and Director ......................................... ERNEST J. CAVALLO /s/ NELSON PELTZ Director ......................................... NELSON PELTZ * Director ......................................... PETER W. MAY * Executive Vice President and Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-11 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999. SNAPPLE BEVERAGE CORP. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director (Principal ......................................... Executive Officer) MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * President and Chief Operating Officer and Director ......................................... ERNEST J. CAVALLO /s/ NELSON PELTZ Director ......................................... NELSON PELTZ * Director ......................................... PETER W. MAY * Executive Vice President and Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-12 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. SNAPPLE INTERNATIONAL CORP. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer (Principal Executive Officer) ......................................... MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... ERIC D. KOGAN * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-13 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. SNAPPLE CARIBBEAN CORP. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer (Principal Executive Officer) ......................................... MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... ERIC D. KOGAN * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-14 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. SNAPPLE WORLDWIDE CORP. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer (Principal Executive Officer) ......................................... MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... ERIC D. KOGAN * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-15 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. SNAPPLE FINANCE CORP. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer (Principal Executive Officer) ......................................... MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... ERIC D. KOGAN * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-16 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. PACIFIC SNAPPLE DISTRIBUTORS, INC. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer (Principal Executive Officer) ......................................... MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... ERIC D. KOGAN * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-17 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. MR. NATURAL, INC. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chairman and Chief Executive Officer and Director ......................................... (Principal Executive Officer) MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... ERIC D. KOGAN * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-18 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999. KELRAE, INC. By: * ................................. JOHN L. BARNES, JR. PRESIDENT PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * President (Principal Executive, Financial and Accounting ......................................... Officer) JOHN L. BARNES, JR. * Director ......................................... ANDREW M. JOHNSTON * Director ......................................... ANDREW PANACCIONE * Director ......................................... FRANCIS T. MCCARRON *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-19 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. MILLROSE DISTRIBUTORS, INC. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer (Principal Executive Officer) ......................................... MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... ERIC D. KOGAN * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-20 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999. RC/ARBY'S CORPORATION By: * ................................. CURTIS S. GIMSON SENIOR VICE PRESIDENT PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer ......................................... JONATHAN P. MAY * Senior Vice President, Treasurer and Chief Financial ......................................... Officer and Director (Principal Financial and KENNETH A. THOMAS Accounting Officer) * Director ......................................... ALEXANDER E. FISHER * Director ......................................... CURTIS S. GIMSON *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-21 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON DECEMBER 10, 1999. ARHC, LLC By: * ................................. JOHN L. BARNES, JR. EXECUTIVE VICE PRESIDENT AND CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Executive Vice President and Chief Executive Officer and ......................................... Manager (Principal Executive, Financial and Accounting JOHN L. BARNES, JR. Officer) * Executive Vice President and Manager ......................................... ERIC D. KOGAN * Executive Vice President and Manager ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-22 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. RCAC ASSET MANAGEMENT, INC. By: * ................................. MICHAEL F. WEINSTEIN PRESIDENT AND CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * President and Chief Executive Officer and Director ......................................... (Principal Executive Officer) MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer and ......................................... Director (Principal Financial and Accounting Officer) KENNETH A. THOMAS * Senior Vice President and Director ......................................... CURTIS S. GIMSON *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-23 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999. ARBY'S, INC. By: * ................................. CURTIS S. GIMSON SENIOR VICE PRESIDENT PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer (Principal Executive Officer) ......................................... JONATHAN P. MAY * Senior Vice President and Chief Financial Officer and ......................................... Director (Principal Financial and Accounting Officer) KENNETH A. THOMAS /s/ NELSON PELTZ Director ......................................... NELSON PELTZ * Director ......................................... PETER W. MAY *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-24 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999. ARBY'S BUILDING AND CONSTRUCTION COMPANY By: * ................................. CURTIS S. GIMSON SENIOR VICE PRESIDENT PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer ......................................... JONATHAN P. MAY * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) KENNETH A. THOMAS * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-25 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999. TJ HOLDING COMPANY, INC. By: * ................................. CURTIS S. GIMSON SENIOR VICE PRESIDENT PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer ......................................... JONATHAN P. MAY * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) KENNETH A. THOMAS * Director ......................................... JOHN L. BARNES * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-26 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999. ARBY'S RESTAURANT CONSTRUCTION COMPANY By: * ................................. CURTIS S. GIMSON SENIOR VICE PRESIDENT PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer ......................................... JONATHAN P. MAY * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) KENNETH A. THOMAS * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-27 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF FT. LAUDERDALE, STATE OF FLORIDA, ON DECEMBER 10, 1999. ARBY'S RESTAURANTS, INC. By: * ................................. CURTIS S. GIMSON SENIOR VICE PRESIDENT PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer ......................................... JONATHAN P. MAY * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) KENNETH A. THOMAS * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... ERIC D. KOGAN * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-28 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. RC-11, INC. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director (Principal ......................................... Executive Officer) MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-29 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. RC LEASING, INC. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director (Principal ......................................... Executive Officer) MICHAEL F. WEINSTEIN * Vice President and Chief Financial Officer (Principal ......................................... Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-30 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. ROYAL CROWN BOTTLING COMPANY OF TEXAS By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director (Principal ......................................... Executive Officer) MICHAEL F. WEINSTEIN * Vice President and Chief Financial Officer (Principal ......................................... Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-31 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. ROYAL CROWN COMPANY, INC. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director (Principal ......................................... Executive Officer) MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... ERNEST J. CAVALLO * Director ......................................... PETER W. MAY /s/ NELSON PELTZ Director ......................................... NELSON PELTZ *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-32 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. RETAILER CONCENTRATE PRODUCTS, INC. By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director (Principal ......................................... Executive Officer) MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-33 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WHITE PLAINS, STATE OF NEW YORK, ON DECEMBER 10, 1999. TRIBEV CORPORATION By: * ................................. MICHAEL F. WEINSTEIN CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer (Principal Executive Officer) ......................................... MICHAEL F. WEINSTEIN * Senior Vice President and Chief Financial Officer ......................................... (Principal Financial and Accounting Officer) RICHARD ALLEN * Director ......................................... JOHN L. BARNES, JR. * Director ......................................... STUART I. ROSEN * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-34 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DENVER, STATE OF COLORADO, ON DECEMBER 10, 1999. STEWART'S BEVERAGES, INC. By: * ................................. SAMUEL M. SIMPSON PRESIDENT AND CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * President and Chief Executive Officer and Director ......................................... (Principal Executive Officer) SAMUEL M. SIMPSON * Vice President and Chief Financial Officer (Principal ......................................... Financial and Accounting Officer) MYRON D. STADLER * Director ......................................... ERNEST J. CAVALLO /s/ NELSON PELTZ Chairman and Director ......................................... NELSON PELTZ * Vice Chairman and Director ......................................... PETER W. MAY * Director ......................................... BRIAN L. SCHORR * Director ......................................... MICHAEL F. WEINSTEIN *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-35 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DENVER, STATE OF COLORADO, ON DECEMBER 10, 1999. OLD SAN FRANCISCO SELTZER, INC. By: * ................................. SAMUEL M. SIMPSON CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * President and Chief Executive Officer (Principal ......................................... Executive Officer) SAMUEL M. SIMPSON * Vice President and Chief Financial Officer (Principal ......................................... Financial and Accounting Officer) MYRON D. STADLER * Director ......................................... JOHN L. BARNES * Director ......................................... ERIC D. KOGAN * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-36 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DENVER, STATE OF COLORADO, ON DECEMBER 10, 1999. FOUNTAIN CLASSICS, INC. By: * ................................. SAMUEL M. SIMPSON CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 4 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW AND ON DECEMBER 10, 1999.
SIGNATURES TITLE ---------- ----- * President and Chief Executive Officer (Principal ......................................... Executive Officer) SAMUEL M. SIMPSON * Vice President and Chief Financial Officer (Principal ......................................... Financial and Accounting Officer) MYRON D. STADLER * Director ......................................... JOHN L. BARNES * Director ......................................... ERIC D. KOGAN * Director ......................................... BRIAN L. SCHORR *By /s/ NELSON PELTZ ......................................... NELSON PELTZ ATTORNEY-IN-FACT
II-37 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE ------ ----------- ---- 3.1* -- Certificate of Formation of Triarc Consumer Products Group, LLC................................................ 3.2* -- Certificate of Incorporation of Triarc Beverage Holdings Corp., as amended......................................... 3.3* -- Certificate of Incorporation of Mistic Brands, Inc., as amended................................................... 3.4* -- Restated Certificate of Incorporation of Snapple Beverage Corp. .................................................... 3.5* -- Certificate of Incorporation of Snapple International Corp...................................................... 3.6* -- Certificate of Incorporation of Snapple Caribbean Corp...................................................... 3.7* -- Certificate of Incorporation of Snapple Worldwide Corp...................................................... 3.8* -- Certificate of Incorporation of Snapple Finance Corp...... 3.9* -- Articles of Incorporation of Pacific Snapple Distributors, Inc., as amended............................ 3.10* -- Certificate of Incorporation of Mr. Natural, Inc., as amended................................................... 3.11* -- Certificate of Incorporation of Kelrae, Inc............... 3.12* -- Certificate of Incorporation of Millrose Distributors, Inc....................................................... 3.13* -- Certificate of Incorporation of RC/Arby's Corporation..... 3.14* -- Certificate of Formation of ARHC, LLC..................... 3.15* -- Certificate of Incorporation of RCAC Asset Management, Inc....................................................... 3.16* -- Certificate of Incorporation of Arby's, Inc., as amended................................................... 3.17* -- Articles of Incorporation of Arby's Building and Construction Co........................................... 3.18* -- Certificate of Incorporation of TJ Holding Company, Inc....................................................... 3.19* -- Certificate of Incorporation of Arby's Restaurant Construction Company...................................... 3.20* -- Certificate of Incorporation of Arby's Restaurants, Inc....................................................... 3.21* -- Articles of Incorporation of RC-11, Inc., as amended...... 3.22* -- Certificate of Incorporation of RC Leasing, Inc........... 3.23* -- Certificate of Incorporation of Royal Crown Bottling Company of Texas, as amended.............................. 3.24* -- Certificate of Incorporation of Royal Crown Company, Inc., as amended.......................................... 3.25* -- Articles of Incorporation of Retailer Concentrate Products, Inc............................................. 3.26* -- Certificate of Incorporation of TriBev Corporation........ 3.27* -- Certificate of Incorporation of Stewart's Beverages, Inc., as amended.......................................... 3.28* -- Articles of Incorporation of Old San Francisco Seltzer, Inc., as amended.......................................... 3.29* -- Articles of Incorporation of Fountain Classics, Inc....... 3.30* -- Limited Liability Company Operating Agreement of Triarc Consumer Products Group, LLC.............................. 3.31* -- By-laws of Triarc Beverage Holdings Corp.................. 3.32* -- By-laws of Mistic Brands, Inc............................. 3.33* -- Amended and Restated By-laws of Snapple Beverage Corp..... 3.34* -- By-laws of Snapple International Corp..................... 3.35* -- By-laws of Snapple Caribbean Corp......................... 3.36* -- By-laws of Snapple Worldwide Corp......................... 3.37* -- By-laws of Snapple Finance Corp........................... 3.38* -- By-laws of Pacific Snapple Distributors, Inc.............. 3.39* -- By-laws of Mr. Natural, Inc............................... 3.40* -- By-laws of Kelrae, Inc.................................... 3.41* -- Amended and Restated By-laws of Millrose Distributors, Inc....................................................... 3.42* -- By-laws of RC/Arby's Corporation.......................... 3.43* -- Limited Liability Company Operating Agreement of ARHC, LLC....................................................... 3.44* -- By-laws of RCAC Asset Management, Inc..................... 3.45* -- By-laws of Arby's, Inc.................................... 3.46* -- By-laws of Arby's Building and Construction Co............ 3.47* -- By-laws of TJ Holding Company, Inc........................ 3.48* -- By-laws of Arby's Restaurant Construction Company......... 3.49* -- By-laws of Arby's Restaurants, Inc........................ 3.50* -- By-laws of RC-11, Inc.....................................
II-38
EXHIBIT NUMBER DESCRIPTION PAGE ------ ----------- ---- 3.51* -- By-laws of RC Leasing, Inc................................ 3.52* -- By-laws of Royal Crown Bottling Company of Texas.......... 3.53* -- By-laws of Royal Crown Company, Inc....................... 3.54* -- By-laws of Retailer Concentrate Products, Inc............. 3.55* -- By-laws of TriBev Corporation............................. 3.56* -- By-laws of Cable Car Beverage Corporation................. 3.57* -- By-laws of Stewart's Beverages, Inc. (f/k/a Old San Francisco Seltzer, Inc.).................................. 3.58* -- By-laws of Fountain Classics, Inc......................... 4.1 -- Credit Agreement dated as of February 25, 1999, among Snapple Beverage Corp., ('Snapple'), Mistic Brands, Inc. ('Mistic'), Stewart's Beverages, Inc. (f/k/a Cable Car Beverage Corporation, Stewart's Beverages), RC/Arby's Corporation and Royal Crown Company Inc. ('Royal Crown'), as Borrowers, various financial institutions party thereto, as Lenders, DLJ Capital Funding, Inc., as syndication agent, Morgan Stanley Senior Funding, Inc., as Documentation Agent, and The Bank of New York, as Administrative Agent, incorporated herein by reference to Exhibit 4.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 11, 1999 (SEC file no. 1-2207)....... 4.2 -- Indenture dated of February 25, 1999 among Triarc Consumer Products Group LLC ('Triarc Consumer Products Group'), Triarc Beverage Holdings Corp. ('Triarc Beverage Holdings'), as Issuers, the subsidiary guarantors party thereto and The Bank of New York, as Trustee, incorporated herein by reference to Exhibit 4.2 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 11, 1999 (SEC file no. 1-2207)..................................... 4.3 -- Registration Rights Agreement dated February 18, 1999 among Triarc Consumer Products Group, Triarc Beverage Holdings, the Guarantors party thereto and Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation and Wasserstein Perella Securities, Inc., incorporated herein by reference to Exhibit 4.3 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 11, 1999 (SEC file no. 1-2207)...................... 4.4 -- Registration Rights Agreement dated as of February 25, 1999 among Triarc Consumer Products Group, Triarc Beverage Holdings, the Guarantors party thereto and Nelson Peltz and Peter W. May, incorporated herein by reference to Exhibit 4.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated April 1, 1999 (SEC file no. 1-2207)........ 4.5* -- Form of 10 1/4% Senior Subordinated Note of Triarc Consumer Products Group and Triarc Beverage Holdings due 2009...................................................... 4.6* -- Supplemental Indenture, dated as of February 26, 1999, among Triarc Consumer Products Group, Triarc Beverage Holdings, Millrose Distributors, Inc., and The Bank of New York as Trustee........................................... 4.7* -- Supplemental Indenture No. 2, dated as of September 8, 1999, among Triarc Consumer Products Group, Triarc Beverage Holdilngs, the subsidiary guarantors party thereto and The Bank of New York, as Trustee.............. 5.1** -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to legality of the exchange notes (replaces previously filed exhibit).................................................. 5.2** -- Opinion of Sonnenschein Nath & Rosenthal as to certain legal matters relating to Pacific Snapple Distributors, Inc....................................................... 5.3** -- Opinion of Schenck, Price, Smith & King, LLP as to certain legal matters relating to Millrose Distributors, Inc....................................................... 5.4** -- Opinion of Powell, Goldstein, Frazer & Murphy LLP as to certain legal matters relating to Arby's Building and Construction Company...................................... 5.5** -- Opinion of Watkins Ludlam Winter & Stennis, P.A. as to certain legal matters relating to RC-11, Inc.............. 5.6** -- Opinion of Hunton & Williams as to certain legal matters relating to Retailer Concentrate Products, Inc............ 5.7** -- Opinion of Holland & Hart LLP as to certain legal matters relating to Old San Francisco Seltzers, Inc............... 5.8** -- Opinion of Holland & Hart LLP as to certain legal matters relating to Fountain Classics, Inc........................
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EXHIBIT NUMBER DESCRIPTION PAGE ------ ----------- ---- 8.1* -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to federal income tax matters................................ 10.1 -- Triarc Companies, Inc.'s 1993 Equity Participation Plan, as amended, incorporated herein by reference to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 31, 1997 (SEC file no. 1-2207)............ 10.2 -- Form of Non-Incentive Stock Option Agreement under Triarc Companies, Inc.'s 1993 Equity Participation Plan, incorporated herein by reference to Exhibit 10.2 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 31, 1997 (SEC file no. 1-2207)............................ 10.3 -- Form of Restricted Stock Agreement under Triarc Companies, Inc.'s 1933 Equity Participation Plan, incorporated herein by reference to Exhibit 13 to Triarc Companies, Inc.'s Current Report on Form 8-K dated April 23, 1993 (SEC file no. 1-2207)...................... 10.4 -- Concentrate Sales Agreement dated as of January 28, 1994 between Royal Crown Cola Co. and Cott -- Confidential treatment has been granted for portions of the agreement -- incorporated herein by reference to Exhibit 10.12 to Amendment No. 1 to Triarc Companies, Inc.'s Registration Statement on Form S-4 dated March 11, 1994 (SEC file no. 1-2207)..................................... 10.5 -- Form of Indemnification Agreement, between Triarc Companies, Inc. and certain officers, directors, and employees of Triarc Companies, Inc., incorporated herein by reference to Exhibit F to the 1994 Proxy (SEC file no. 1-2207)............................................... 10.6 -- Employment Agreement, dated as June 29, 1994, between Brian L. Schorr and Triarc Companies, Inc., incorporated herein by reference to Exhibit 10.2 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 29, 1995 (SEC file no. 1-2207)..................................... 10.7 -- Amended and Restated Employment Agreement dated as of June 1, 1997 by and between Snapple, Mistic and Michael Weinstein, incorporated herein by reference to Exhibit 10.3 to Triarc Companies, Inc.'s Current Report on Form 8-K/A dated March 16, 1998 (SEC file no. 1-2207).......... 10.8 -- Amended and Restated Employment Agreement dated as of June 1, 1997 by and between Snapple, Mistic and Ernest J. Cavallo, incorporated herein by reference to Exhibit 10.4 to Triarc Companies, Inc.'s Current Report on Form 8-K/A dated March 16, 1998 (SEC file no. 1-2207)................ 10.9 -- Employment Agreement dated as of April 29, 1996 between Triarc Companies, Inc. and John L. Barnes, Jr., incorporated herein by reference to Exhibit 10.3 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 31, 1997 (SEC file no. 1-2207)...................... 10.10 -- Stock Purchase Agreement dated as of March 27, 1997 between The Quaker Oats Company and Triarc Companies, Inc., incorporated herein by reference to Exhibit 2.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 31, 1997 (SEC file no. 1-2207)...................... 10.11 -- Agreement and Plan of Merger dated as of June 24, 1997 between Stewart's Beverages, Triarc Companies, Inc. and CCB Merger Corporation ('CCB'), incorporated herein by reference to Exhibit 2.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated June 24, 1997 (SEC file no. 1-2207)............................................... 10.12 -- Amendment No. 1 to Agreement and Plan of Merger, dated as of September 30, 1997, between Stewart's Beverages, Triarc Companies, Inc. and CCB, incorporated herein by reference to Appendix B-1 to the Proxy Statement/Prospectus filed pursuant to Triarc Companies, Inc.'s Registration Statement on Form S-4 dated October 22, 1997 (SEC file no. 1-2207)................................................... 10.13 -- Option granted by RTM Partners, Inc. ('RTM Partners') in favor of Arby's Restaurants Holding Company, together with a schedule identifying other documents omitted and the material details in which such documents differ, incorporated herein by reference to Exhibit 10.30 to Triarc Companies, Inc.'s Registration Statement on Form S-4 dated October 22, 1997 (SEC file no. 1-2207).......... 10.14 -- Guaranty dated as of May 5, 1997 by RTM, Inc., RTM Parent, RTM Partners, RTM Management Co., LLC and RTM Operating Company in favor of Arby's, Arby's Restaurant Development Corporation, Arby's Restaurant Holding Company, Arby's Restaurant Operations Company and Triarc Companies, Inc., incorporated herein by reference to Exhibit 10.31 to Triarc Companies, Inc.'s Registration Statement on Form S-4 dated October 22, 1997 (SEC file no. 1-2007)...................................................
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EXHIBIT NUMBER DESCRIPTION PAGE ------ ----------- ---- 10.15 -- Triarc Companies, Inc.'s, Inc. 1997 Equity Participation Plan (the '1997 Equity Plan'), incorporated herein by reference to Exhibit 10.5 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 16, 1998 (SEC file no. 1-2207)............................................... 10.16 -- Form of Non-Incentive Stock Option Agreement under the 1997 Equity Plan, incorporated herein by reference to Exhibit 10.6 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 16, 1998 (SEC file no. 1-2207)....... 10.17 -- Triarc Companies, Inc.'s Stock Option Plan for Stewart's Beverages Employees, incorporated herein by reference to Exhibit 4.3 to Triarc Companies, Inc.'s Registration Statement on Form S-8 dated January 22, 1998 (Registration No. 333-44711)............................................ 10.18 -- Triarc Beverage Holdings Corp. 1997 Stock Option Plan (the 'TBHC Option Plan'), incorporated herein by reference to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 16, 1998 (SEC file no. 1-2207).... 10.19 -- Form of Non-Qualified Stock Option Agreement under the TBHC Option Plan, incorporated herein by reference to Exhibit 10.2 to Triarc Companies, Inc.'s Current Report on Form 8-K dated March 16, 1998 (SEC file no. 1-2207)....... 10.20 -- Triarc Companies, Inc.'s 1998 Equity Participation Plan, as currently in effect, incorporated herein by reference to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated May 13, 1998 (SEC file no. 1-2207)...... 10.21 -- Form of Non-Incentive Stock Option Agreement under Triarc Companies, Inc.'s 1998 Equity Participation Plan, incorporated herein by reference to Exhibit 10.2 to Triarc Companies, Inc.'s Current Report on Form 8-K dated May 13, 1998 (SEC file no. 1-2207)................................ 10.22 -- Letter Agreement, dated as of March 10, 1998, between Triarc Companies, Inc. and John L. Barnes, Jr., incorporated herein by reference to Exhibit 10.3 to Triarc Companies, Inc.'s Current Report on Form 8-K dated May 13, 1998 (SEC file no. 1-2207)................................ 10.23 -- Letter Agreement dated July 23, 1998 between John L. Belsito and Royal Crown, incorporated herein by reference to Exhibit 10.1 to RC/Arby's Corporation's Current Report on Form 8-K dated November 5, 1998 (SEC file no. 33-62778)................................................. 10.24 -- Letter Agreement dated August 27, 1998 among John C. Carson, Triarc Companies, Inc. and Royal Crown, incorporated herein by reference to Exhibit 10.2 to RC/Arby's Corporation's Current Report on Form 8-K dated November 5, 1998 (SEC file no. 33-62778).................. 10.25 -- Letter Agreement dated as of February 13, 1997 between Arby's and Roland Smith, incorporated herein by reference to Exhibit 10.1 to Triarc Companies Inc.'s Current Report on Form 8-K dated April 1, 1999 (SEC file no. 1-2207)..... 10.26 -- Triarc Restaurant Group Senior Executive Mid-term Incentive Plan (Portions of this exhibit have been omitted pursuant to a grant of confidential treatment), incorporated herein by reference to Exhibit 10.1 to Triarc Companies, Inc.'s Current Report on Form 8-K dated April 30, 1999 (SEC file 1-2207)................................ 10.27* -- Management Services Agreement, dated February 25, 1999, by and between Triarc Companies, Inc. and Arby's, Inc..... 10.28* -- Management Services Agreement, dated February 25, 1999, by and between Triarc Companies, Inc., Snapple, Mistic, Stewart's Beverages and Royal Crown....................... 10.29* -- Tax Sharing Agreement, dated February 25, 1999, by and between Triarc Companies, Inc., Triarc Consumer Products Group, Triarc Beverage Holdings, Snapple, Mistic, Stewart's Beverages, RC/Arby's Corporation, Royal Crown, Arby's, and ARHC, LLC..................................... 10.30* -- Amendment No. 1 to the Tax Sharing Agreement, dated April 23, 1999, by and among Triarc Companies, Inc., Triarc Consumer Products Group, Triarc Beverage Holdings, Snapple, Mistic, Stewart's Beverages, RC/Arby's Corporation, Royal Crown, Arby's and ARHC, LLC............ 10.31* -- Tax Sharing Agreement, dated May 22, 1997, by and among Triarc Companies Inc., Triarc Beverage Holdings, Snapple and Mistic................................................ 10.32* -- Tax Sharing Agreement, dated November 25, 1997, by and among Triarc Companies, Inc. and Stewart's Beverages...... 10.33* -- Amendment to Tax Sharing Agreements, dated as of August 15, 1998, among Triarc Beverage Holdings, Snapple, Mistic and Stewart's Beverages...................................
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EXHIBIT NUMBER DESCRIPTION PAGE ------ ----------- ---- 10.34* -- Contribution Agreement, dated as of February 23, 1999, between Triarc Companies, Inc. and Triarc Consumer Products Group............................................ 10.35* -- Letter Agreement dated as of April 28, 1999, between Triarc Companies, Inc. and John L. Barnes, Jr............. 10.36* -- Amendment No. 1 to Triarc Beverage Holdings Corp. 1997 Stock Option Plan......................................... 10.37* -- Letter Agreement dated as of July 28, 1999, between Triarc Companies, Inc. and John L. Barnes, Jr............. 10.38* -- Amendment No. 2 to the Tax Sharing Agreement, dated as of April 23, 1999, by and among Triarc Consumer Products Group, Triarc Beverage Holdings, Snapple, Mistic, Stewart's Beverages, RC/Arby's Corporation, Royal Crown, Arby's and ALIRC, LLC..................................... 10.39** -- Form of Indemnification Agreement of Triarc Consumer Products Group, LLC....................................... 10.40** -- Form of Indemnification Agreement of Triarc Beverage Holdings Corp............................................. 12.1** -- Statement of Computation of Ratios of Earnings to Fixed Charges................................................... 21.1* -- Subsidiaries of Triarc Consumer Products Group, LLC...... 23.1** -- Consent of Deloitte & Touche LLP relating to Triarc Consumer Products Group, LLC.............................. 23.2** -- Consent of Deloitte & Touche LLP relating to Triarc Beverage Holdings Corp. .................................. 23.3** -- Consent of Arthur Andersen LLP........................... 23.4** -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in the opinion filed as Exhibit 5.1 of this Registration Statement)................................... 23.5* -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in the opinion filed as Exhibit 8.1 of this Registration Statement)................................... 23.6** -- Consent of Sonnenschein Nath & Rosenthal.................. 23.7** -- Consent of Schenck, Price, Smith & King, LLP.............. 23.8** -- Consent of Powell, Goldstein, Frazer & Murphy LLP......... 23.9** -- Consent of Watkins Ludlam Winter & Stennis, P.A........... 23.10** -- Consent of Hunton & Williams.............................. 23.11** -- Consent of Holland & Hart LLP............................. 23.12** -- Consent of Holland & Hart LLP............................. 24.1* -- Powers of Attorney (contained on signature pages)......... 24.2* -- Power of Attorney, dated September 29, 1999, by Jonathan P. May.................................................... 25.1* -- Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Indenture..................... 27.1** -- Financial Data Schedule of Triarc Consumer Products Group, LLC................................................ 27.2** -- Financial Data Schedule of Triarc Beverage Holdings Corp. .................................................... 99.1* -- Form of Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number of Substitute Form W-9)...................................... 99.2* -- Form of Notice of Guaranteed Delivery.....................
------------------------ * Previously filed. ** Filed herewith. II-42 STATEMENT OF DIFFERENCES ------------------------ The trademark symbol shall be expressed as ............................ 'TM' The registered trademark symbol shall be expressed as ................. 'r' EX-5 2 EXHIBIT 5.1 Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019 212-373-3000 December 10, 1999 Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. The Guarantor Subsidiaries (as defined) c/o Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Registration Statement on Form S-4 Ladies and Gentlemen: In connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer Products Group, LLC, a Delaware limited liability company (the "Company"), Triarc Beverage Holdings Corp., a Delaware corporation (the "Co-Issuer" and, together with the Company, the "Issuers"), and certain other subsidiaries of the Issuers (the "Guarantor Subsidiaries" and, together with the Issuers, the "Co-Registrants") with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act"), and the rules and regulations under the Act, we have been requested to render our opinion as to the legality of the securities being registered under the Registration Statement. The Registration Statement relates to the registration under the Act of the Triarc Consumer Products Group, LLC 2 Triarc Beverage Holdings Corp. The Guarantor Subsidiaries Issuers' $300,000,000 aggregate principal amount of 10 1/4 % Senior Subordinated Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes by the Guarantor Subsidiaries (the "Subsidiary Guaranties"). The Exchange Notes are to be offered in. exchange for the Issuers' outstanding 10 1/4 % Senior Subordinated Notes due 2009 (the "Existing Notes") issued and sold by the Issuers on February 25, 1999 in an offering exempt from registration under the Act. The Exchange Notes will be issued by the Issuers in accordance with the terms of the Indenture, dated as of February 25, 1999 (the "Indenture"), among the Issuers, the Guarantor Subsidiaries party to it and The Bank of New York, as trustee (the "Trustee"). Capitalized terms used in this opinion and not otherwise defined shall have the respective meanings ascribed to them in the Registration Statement. In connection with this opinion, we have examined originals, conformed copies or photocopies, certified or otherwise identified to our satisfaction, of the following documents (collectively, the "Documents"): (i) the Registration Statement (including its exhibits); (ii) the Indenture included as Exhibit 4.2 to the Registration Statement; (iii) the proposed form of the Exchange Notes included as Exhibit 4.5 to the Registration Statement; and Triarc Consumer Products Group, LLC 3 Triarc Beverage Holdings Corp. The Guarantor Subsidiaries (iv) the Registration Rights Agreement, dated as of February 18, 1999 (the "Registration Rights Agreement"), among the Issuers, the Guarantor Subsidiaries party to it and Morgan Stanley & Co. Incorporated, Donaldson Lufkin & Jenrette Securities Corporation and Wasserstein Perella Securities, Inc., included as Exhibit 4.3 to the Registration Statement. In addition, we have examined: (i) those corporate and limited liability company records of the Co-Registrants as we have considered appropriate, including the certificate of incorporation, as amended, and by-laws, as amended, of each Co-Registrant or, in the case of the Company and ARHC, LLC, the certificate of formation and limited liability company operating agreement, as in effect on the date of this letter (collectively, the "Organizational Documents"), and copies of resolutions of the board of directors of the Co-Registrants or, in the case of the Company and ARHC, LLC, the board of managers, each certified by an officer of that Co-Registrant; and (ii) those other certificates, agreements and other documents as we deemed relevant and necessary as a basis for the opinions expressed below. In our examination of the Documents and in rendering our opinions, we have assumed, without independent investigation, (i) the enforceability of the Documents against each party to them (other than the Co-Registrants), (ii) that the Exchange Notes and the Subsidiary Guaranties will be issued in accordance with the Indenture as described in the Registration Statement, duly authenticated by the Trustee Triarc Consumer Products Group, LLC 4 Triarc Beverage Holdings Corp. The Guarantor Subsidiaries in accordance with the Indenture and in the form reviewed by us and that any information omitted from the form will be properly added, (iii) the genuineness of all signatures, (iv) the mental capacity (including, without limitation, the ability of a person to act in a reasonable manner in relation to the transaction) of all individuals who have executed any of the documents which we examined, (v) the authenticity of all documents submitted to us as originals, (vi) the conformity to the original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of validly existing agreements or other documents, (vii) the authenticity of all the latter documents and (viii) that the statements regarding matters of fact in the certificates, records, agreements, instruments and documents that we examined are accurate and complete. In expressing our opinions, we have relied upon (i) the factual matters contained in the representations and warranties of the Co-Registrants made in the Documents and upon certificates of public officials and officers of the Co-Registrants and (ii) in respect of the Subsidiary Guaranties provided by each of Pacific Snapple Distributors, Inc., a California corporation, Millrose Distributors, Inc., a New Jersey Corporation, Old San Francisco Seltzer, Inc., a Colorado corporation, Fountain Classics, Inc., a Colorado corporation, Arby's Building and Construction Co., a Georgia corporation, RC-11, Inc., a Mississippi corporation, and Retailer Concentrate Triarc Consumer Products Group, LLC 5 Triarc Beverage Holdings Corp. The Guarantor Subsidiaries Products Inc., a Florida corporation, the legal opinions in respect thereof rendered by appropriate local counsel. Based upon the above, and subject to the stated assumptions, exceptions and qualifications, we are of the opinion that, when issued, authenticated and delivered in accordance with the terms of the Indenture and against exchange for the Existing Notes in accordance with the terms set forth in the Registration Rights Agreement, the Exchange Notes will be legal, valid and binding obligations of the Issuers, enforceable against the Issuers in accordance with their terms, and the Subsidiary Guaranties will be legal, valid and binding obligations of the Guarantor Subsidiaries, enforceable against the Guarantor Subsidiaries in accordance with their terms, except in each case as enforceability may be limited by (i) bankruptcy, insolvency, fraudulent conveyance or transfer, reorganization, moratorium and other similar laws affecting creditors' rights generally and (ii) general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). Our opinions expressed above are limited to the laws of the State of New York, the Delaware General Corporation Law, the Limited Liability Company Act of the State of Delaware, the federal laws of the United States of America, and the judicial decisions interpreting the same. Our opinion is rendered only with respect to the laws, and the rules, regulations and orders under them, that are currently in effect. Please be advised that no member of this firm is admitted to practice in the State of Delaware. Triarc Consumer Products Group, LLC 6 Triarc Beverage Holdings Corp. The Guarantor Subsidiaries We hereby consent to the use of our name in the Registration Statement and in the prospectus contained in the Registration Statement as it appears under the caption "Legal Matters" and to the use of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we come within the category of persons whose consent is required by the Act or by the rules and regulations promulgated under it. Very truly yours, /s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON PAUL, WEISS, RIFKIND, WHARTON & GARRISON EX-5 3 EXHIBIT 5.2 [LETTERHEAD OF SONNENSCHEIN NATH & ROSENTHAL] November 17, 1999 Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Pacific Snapple Distributors, Inc. c/o Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Registration Statement on Form S-4 Ladies and Gentlemen: We have acted as special counsel in the State of California to Pacific Snapple Distributors, Inc., a California corporation (the "Guarantor") in connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer Products Group, LLC, a Delaware limited liability company ("TCPG"), Triarc Beverage Holdings Corp., a Delaware corporation (together with TCPG, the "Issuers"), the Guarantor and certain other subsidiaries of the Issuers (the "Guarantor Subsidiaries") with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Act"), and the rules and regulations under the Act. We have been informed by Paul, Weiss, Rifkind, Wharton & Garrison that (a) the Registration Statement relates to the Subordinated Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes by the Guarantor Subsidiaries, including the guaranty by the Guarantor (the "Guarantee"), (b) the Exchange Notes are to be offered in exchange for the Issuers' outstanding 10 1/4% Senior Subordinated Notes due 2009 issued and sold by the Issuers on February 25, 1999 in an offering exempt from registration under the Act, and (c) the Exchange Notes will be issued by the Issuers in accordance with the terms of the Indenture, dated as of February 25, 1999 (as amended, the "Indenture"), among the Issuers, the Guarantor Subsidiaries party to it and The Bank of New York, as trustee. In connection with the foregoing, we have been requested to render our opinion as to certain legal matters relating to the Guarantor. In connection with this opinion, we have examined originals, conformed copies or photocopies, certified or otherwise identified to our satisfaction, of the following documents (collectively, the "Documents"): SONNENSCHEIN NATH & ROSENTHAL Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Pacific Snapple Distributors, Inc. November 17, 1999 Page 2 (i) the Indenture; (ii) the Unanimous Written Consent in Lieu of Meeting of the Board of Directors of the Guarantor dated as of February 18, 1999, which, among other things, pertains to the authorization and execution by the Guarantor of the Indenture, including the Guarantee; (iii) the Articles of Incorporation, as amended, and by-laws, as amended, of the Guarantor (collectively, the "Organizational Documents"), as certified by the Secretary of the Guarantor as being in effect as of November 16, 1999. In our examination of the Documents and in rendering our opinions, we have assumed, without independent investigation, (i) the genuineness of all signatures, (ii) the authenticity of all documents submitted to us as originals, (iii) the conformity to the original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of validly existing agreements or other documents, (iv) the authenticity of all the latter documents, (v) the legal capacity of all natural persons executing the Documents, and (vi) that the statements regarding matters of fact in the certificates, records, agreements, instruments and documents that we examined are accurate and complete. Based upon the above, and subject to the stated assumptions, exceptions and qualifications, we are of the opinion that: 1. The Indenture, including the Guarantee, has been duly authorized, executed and delivered by the Guarantor. 2. The due authorization, execution and delivery by the Guarantor of the Indenture, including the Guarantee, and the consummation by the Guarantor of the transactions contemplated thereby do not violate or result in a breach of or default under the Organizational Documents or the laws of the State of California. Our opinions expressed above are limited to the laws of the State of California (excluding local laws), and the judicial decisions interpreting the same. This opinion is rendered on the date hereof and we have no continuing obligation hereunder to inform you of changes of law or fact subsequent to the date hereof or facts of which we have become aware after the date hereof. SONNENSCHEIN NATH & ROSENTHAL Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Pacific Snapple Distributors, Inc. November 17, 1999 Page 3 This opinion is solely for your benefit and may not be furnished to, or relied upon by, any other person or entity without the express written consent of the undersigned, except that this opinion may be relied upon by Paul, Weiss, Rifkind, Wharton & Garrison in connection with the delivery of its legal opinion concerning the validity of the Exchange Notes and the Subsidiary Guaranties. This opinion is limited to the matters set forth herein; no opinion may be inferred or implied beyond the matters expressly stated in this letter. Very truly yours, /s/ SONNENSCHEIN NATH & ROSENTHAL SONNENSCHEIN NATH & ROSENTHAL EX-5 4 EXHIBIT 5.3 [LETTERHEAD OF SCHENCK, PRICE, SMITH & KING, LLP] November 16, 1999 Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Millrose Distributors, Inc. c/o Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Registration Statement on Form S-4 Ladies and Gentlemen; This opinion is being delivered to you in connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer Products Group, LLC, a Delaware limited liability company ("TCPG"), Triarc Beverage Holdings Corp., a Delaware corporation (the "Co-Issuer" and, together with TCPG, the "Issuers"), and certain other subsidiaries of the Issuers (the "Guarantor Subsidiaries" and, together with the Issuers, the "Co-Registrants") with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act"), and the rules and regulations under the Act. The Registration Statement relates to the registration under the Act of the Issuers' $300,000,000 aggregate principal amount of 10 1/4% Senior Subordinated Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes by the Guarantor Subsidiaries (the "Subsidiary Guaranties"), including the guaranty by the Guarantor (the "Guarantee"). The Exchange Notes are to be offered in exchange for the Issuers' outstanding 10 1/4% Senior Subordinated Notes due 2009 (the "Existing Notes") issued and sold by the Issuers on February 25, 1999 in an offering exempt from registration under the Act. The Exchange Notes will be issued by the Issuers in SCHENCK, PRICE, SMITH & KING, LLP Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Millrose Distributors, Inc. Page 2 accordance with the terms of the Indenture, dated as of February 25, 1999 (as amended, the "Indenture"), among the Issuers, the Guarantor Subsidiaries party to it and The Bank of New York, as trustee (the "Trustee"). In connection with the foregoing, we have been requested to render our opinion as to certain legal matters relating to Millrose Distributors, Inc., a New Jersey corporation (the "Guarantor"). Capitalized terms used in this opinion and not otherwise defined shall have the respective meanings ascribed to them in the Registration Statement. In connection with this opinion, we have examined originals, conformed copies or photocopies, certified or otherwise identified to or satisfaction, of the following documents (collectively, the "Documents"): (i) the Indenture included as Exhibit 4.2 to the Registration Statement; (ii) corporate minutes of Millrose Distributors, Inc., which, among other things, pertain to the authorization and execution of the Indenture by Millrose Distributors, Inc., including the Guarantee; and (iii) Certificate of Good Standing of Millrose Distributors, Inc. issued by the Treasurer of the State of New Jersey and dated November 15, 1999. In addition, we have examined: (i) those corporate records of the Guarantor as we have considered appropriate, including the certificate of incorporation, as amended, and by-laws, as amended, of the Guarantor, as in effect on the date of this letter (collectively, the "Organizational Documents"); and (ii) those other certificates, agreements and other documents as we deemed relevant and necessary as a basis for the opinions expressed below. SCHENCK, PRICE, SMITH & KING, LLP Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Millrose Distributors, Inc. Page 3 In rendering our opinions, we have relied upon (i) factual representations made by the Guarantor in the Documents and in response to our inquiries, and (ii) the Certificate of Good Standing with respect to the Guarantor issued by the New Jersey Secretary of State dated [Insert Date Of Certificate]. In our examination of the Documents and in rendering our opinions, we have assumed, without independent investigation, (i) the genuineness of all signatures, (ii) the legal capacity of all natural persons who are involved in the transaction on behalf of the Guarantor to carry out their respective roles in the transaction; (iii) the accuracy and completeness of each document submitted to us for review; (iv) the authenticity of all documents submitted to us as originals, (v) the conformity to the original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of validly existing agreements or other documents, (vi) the authenticity of all the latter documents and (vii) that the statements regarding matters of fact in the certificates, records, agreement, instruments and documents that we examined, such as the certificate of corporate good standing issued by the New Jersey Secretary of State, are accurate, complete and authentic, and all official public records (including their proper indexing and filing) are accurate and complete. Based upon the above, and subject to the stated assumptions, exceptions and qualifications, we are of the opinion that: 1. The Indenture and the Guarantee have been duly authorized, executed and delivered by the Guarantor. 2. The due authorization, execution and delivery by the Guarantor of each Document to which it is a party and the consummation by the Guarantor of the transactions contemplated by such SCHENCK, PRICE, SMITH & KING, LLP Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Millrose Distributors, Inc. Page 4 Documents do not violate or result in a breach of or default under the Organizational Documents thereof or the laws of the State of New Jersey. Our opinions expressed above are limited to the internal laws of the State of New Jersey (excluding laws regarding conflict of laws), and the judicial decisions interpreting the same, and are subject to and may be limited by the effect of any future legislation and case law. Our opinion is rendered only with respect to the laws, and the rules, regulations and orders under them, that are currently in effect. We express no opinion as to matters governed by any laws other than the internal laws of the State of New Jersey nor do we express any opinion as to any matter not expressly set forth herein. We have no obligation to advise you (or any third party) of changes of law or fact that occur after the date hereof, even though the change may affect the legal analysis, a legal conclusion or an informational confirmation stated herein. This opinion may be relied upon by Paul, Weiss, Rifkind, Wharton & Garrison in connection with the delivery of its legal opinion concerning the validity of the Exchange Notes and the Subsidiary Guaranties. It may not be relied on by, in whole or in part, nor may copies be delivered to, any other person or entity without our prior written consent. Very truly yours, /s/ SCHENCK, PRICE, SMITH & KING, LLP SCHENCK, PRICE, SMITH & KING, LLP EX-5 5 EXHIBIT 5.4 [LETTERHEAD OF POWELL, GOLDSTEIN, FRAZER & MURPHY LLP] November 18, 1999 Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Arby's Building and Construction Company c/o Triarc Companies, Inc. 280 Park Avenue New York, NY 10017 Re: Registration Statement on Form S-4 Ladies and Gentlemen: In connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer Products Group, LLC, a Delaware limited liability company ("TCPG"), Triarc Beverage Holdings Corp., a Delaware corporation (the "Co-Issuer" and, together with TCPG, the "Issuers"), and certain other subsidiaries of the Issuers (the "Guarantor Subsidiaries" and, together with the Issuers, the "Co-Registrants") with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act"), and the rules and regulations under the Act, we have been requested to render our opinion as to certain legal matters relating to Arby's Building and Construction Co., a Georgia corporation (the "Guarantor"). Capitalized terms used in this opinion and not otherwise defined shall have the respective meanings ascribed to them in the Registration Statement. The Registration Statement relates to the registration under the Act of the Issuer's $300,000,000 aggregate principal amount of 10 1/4% Senior Subordinated Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes by the Guarantor Subsidiaries (the "Subsidiary Guaranties"), including the guaranty as set forth in the Indenture (the "Guarantee") by the Guarantor as set forth in the Indenture dated as of February 25, 1999 (as amended , the "Indenture"), among the Issuers, the Guarantor Subsidiaries party to it and The Bank of New York, as trustee (the "Trustee"). The Exchange Notes are to be offered in exchange for the Issuers' outstanding 10 1/4 % Senior Subordinated Notes due 2009 (the "Existing Notes") issued and sold by the Issuers on February 25, 1999 in an offering exempt from registration under the Act. The Exchange Notes will be issued by the Issuers in accordance with the terms of the Indenture. POWELL, GOLDSTEIN, FRAZER & MURPHY LLP Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. November 18, 1999 Page 2 In connection with this opinion, we have examined originals, conformed copies or photocopies, certified or otherwise identified to our satisfaction of the following documents (collectively, the "Documents"): (i) the Indenture included as Exhibit 4.2 to the Registration Statement; and (ii) corporate minutes of Guarantor dated February 18, 1999, which among other things, pertain to the authorization and execution of the Indenture, including the Guarantee, by the Guarantor. In addition, we have examined: (i) those corporate records of the Guarantor as we have considered appropriate, including the certificate of incorporation, as amended, and by-laws, as amended, of the Guarantor, as in effect on the date of this letter (collectively, the "Organizational Documents"); and (ii) those other certificates, agreements and other documents as we deemed relevant and necessary as a basis for the opinions expressed below. In our examination of the Documents and in rendering our opinions, we have assumed, without independent investigation and with your permission, (i) the genuineness of all signatures, the legal capacity of all natural persons and the incumbency of all directors and officers executing documents on behalf of Guarantor, (ii) the authenticity of all documents submitted to us as originals, (iii) the conformity to the original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of validly existing agreements or other documents, (iv) the authenticity of all the latter documents, (v) that all certifications of public officials regarding corporate matters examined by us were properly issued, were true, complete and accurate at the date of issuance and remain so at the date hereof, and (vi) that the statements regarding matters of fact in the certificates, records, agreements, instruments and documents that we examined are accurate and complete at the date hereof and (vii) that the Guarantor does not conduct any business in the state of Georgia of such a nature so as to cause it to be bound by laws, rules or regulations not applicable to Georgia business corporations generally. Based upon the above, and subject to the stated assumptions, exceptions and qualifications, we are of the opinion that: 1. The Indenture and the Guarantee have been duly authorized, executed and delivered by the Guarantor. 2. The due authorization, execution and delivery by the Guarantor of the Indenture and the Guarantee and the consummation by the Guarantor of the transactions contemplated by the Indenture and the Guarantee do not violate or result in a breach of or default under the Organizational Documents or the laws of the State of Georgia. POWELL, GOLDSTEIN, FRAZER & MURPHY LLP Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. November 18, 1999 Page 3 Our opinions expressed above are limited to the laws of the State of Georgia, and the judicial decisions interpreting the same, however we express no opinion regarding state securities or blue sky laws. Our opinion is rendered only as of the date of this letter and is given with respect to the laws, and the rules, regulations and orders under them, that are currently in effect. We assume no obligation or responsibility to update or supplement this opinion to reflect any facts or circumstances occurring after the date hereof that would alter the opinions contained herein. This opinion may be relied upon only by you and by your counsel, Paul, Weiss, Rifkind, Wharton & Garrison, in connection with the delivery of its legal opinion concerning the validity of the Exchange Notes and the Subsidiary Guaranties. Very truly yours, /s/ POWELL, GOLDSTEIN, FRAZER & MURPHY LLP POWELL, GOLDSTEIN, FRAZER & MURPHY LLP EX-5 6 EXHIBIT 5.5 [LETTERHEAD OF WATKINS LUDLAM WINTER & STENNIS, P.A.] Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. RC-11, Inc. c/o Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Re: Registration Statement on Form S-4 Ladies and Gentlemen: This opinion is being delivered to you in connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer Products Group, LLC, a Delaware limited liability company ("TCPG"), Triarc Beverage Holdings Corp., a Delaware corporation (the "Co-Issuer" and, together with TCPG, the "Issuers"), and certain other subsidiaries of the Issuers (the "Guarantor Subsidiaries" and, together with the Issuers, the "Co-Registrants") with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act"), and the rules and regulations under the Act. The Registration Statement relates to the registration under the Act of the Issuers' $300,000,000 aggregate principal amount of 10 1/4% Senior Subordinated Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes by the Guarantor Subsidiaries (the "Subsidiary Guaranties"), including the guaranty by the Guarantor (the "Guarantee"). The Exchange Notes are to be offered in exchange for the Issuers' outstanding 10 1/4% Senior Subordinated Notes due 2009 (the "Existing Notes") issued and sold by the Issuers on February 25, 1999 in an offering exempt from registration under the Act. The Exchange Notes will be issued by the Issuers in accordance with the terms of the Indenture, dated as of February 25, 1999 (as amended, the "Indenture"), among the Issuers, the Guarantor Subsidiaries party to it and The Bank of New York, as trustee (the "Trustee"). In connection with the foregoing, we have been requested to render our opinion as to certain legal matters relating to RC-11, Inc., a Mississippi corporation (the "Guarantor"). Capitalized terms used in this opinion and not otherwise defined shall have the respective meanings ascribed to them in the Registration Statement. In connection with this opinion, we have examined originals, conformed copies or Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. RC-11, Inc. November 19, 1999 Page 2 photocopies, certified or otherwise identified to our satisfaction, of the following documents (collectively, the "Documents"): (i) the Indenture included as Exhibit 4.2 to the Registration Statement; and (ii) corporate minutes of the Guarantor, which, among other things, pertain to the authorization and execution of the Indenture by the Guarantor, including the Guarantee (the "Resolutions"). In addition, we have examined: (i) the certificate of incorporation, as amended, and by-laws, as amended, of the Guarantor, and the Resolutions as in effect on the date of this letter as certified by an officer of the Guarantor to be true, accurate and complete (collectively, the "Organizational Documents"); and (ii) such other certificates and considered such laws we deemed relevant and necessary as a basis for the opinions expressed below. In our examination of the Documents and in rendering our opinions, we have assumed, without independent investigation, (i) the genuineness of all signatures, (ii) the authenticity of all documents submitted to us as originals, (iii) the conformity to the original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of validly existing agreements or other documents, (iv) the authenticity of all the latter documents and (v) that the statements regarding matters of fact in the certificates, records, agreements, instruments and documents that we examined are accurate and complete. Based upon the above, and subject to the stated assumptions, exceptions and qualifications, we are of the opinion that: 1. The Indenture and the Guarantee have been duly authorized, executed and delivered by the Guarantor. 2. The due authorization, execution and delivery by the Guarantor of each Document to which it is a party and the consummation by the Guarantor of the transactions contemplated by such Documents do not violate or result in a breach of or default under the Organizational Documents thereof or the laws of the State of Mississippi. Our opinions expressed above are limited to the laws of the State of Mississippi, and the judicial decisions interpreting the same. Our opinion is rendered only with respect to the laws, and Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. RC-11, Inc. November 19, 1999 Page 3 the rules, regulations and orders under them, that are currently in effect. This opinion may be relied upon by Paul, Weiss, Rifkind, Wharton & Garrison in connection with the delivery of its legal opinion concerning the validity of the Exchange Notes and the Subsidiary Guaranties. Very truly yours, /s/ WATKINS LUDLAM WINTER & STENNIS, P.A. WATKINS LUDLAM WINTER & STENNIS, P.A. EX-5 7 EXHIBIT 5.6 [LETTERHEAD OF HUNTON & WILLIAMS] November 16, 1999 Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Retailer Concentrate Products, Inc. c/o Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Re: Registration Statement on Form S-4 Ladies and Gentlemen: We are special Florida counsel for Retailer Concentrate Products, Inc., a Florida corporation (the "Guarantor") and this opinion is being delivered to you in connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer Products Group, LLC, a Delaware limited liability company ("TCPG"), Triarc Beverage Holdings Corp., a Delaware corporation (the "Co-Issuer" and, together with TCPG, the "Issuers"), and certain other subsidiaries of the Issuers (the "Guarantor Subsidiaries" and, together with the Issuers, the "Co-Registrants") with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act"), and the rules and regulations under the Act. The Registration Statement relates to the registration under the Act of the Issuers' $300,000,000 aggregate principal amount of 10 1/4% Senior Subordinated Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes by the Guarantor Subsidiaries set forth in Article 13 of the Indenture (the "Subsidiary Guaranties"), including the guaranty by the Guarantor set forth in Article 13 of the Indenture (the "Guarantee"). The Exchange Notes are to be offered in exchange for the Issuers' outstanding 10 1/4% Senior Subordinated Notes due 2009 (the "Existing Notes") issued and sold by the Issuers on February 25, 1999 in an offering exempt from registration under the Act. The Exchange Notes will be issued by the Issuers in accordance with the terms of the Indenture, dated as of February 25, 1999 (as amended, the "Indenture"), among the Issuers, the Guarantor Subsidiaries party to it (including the Guarantor) and The Bank of New York, as trustee (the "Trustee"). In connection with the foregoing, we have been HUNTON & WILLIAMS Addressees November 16, 1999 Page 2 requested by you to render our opinion as to certain legal matters relating to the Guarantor. Capitalized terms which are used herein and not defined herein shall have the meanings given such terms in the Indenture. We have made such examinations of the law of the State of Florida as we have deemed relevant for purposes of this opinion, and have not made any independent review of the law of any other state or other jurisdiction. The opinions expressed herein are limited solely to the laws of the State of Florida. In connection with this opinion, we have examined conformed copies or photocopies, certified or otherwise identified to our satisfaction, of the following documents (collectively, the "Documents"): (i) the Indenture as delivered to us on November 12, 1999, by Paul, Weiss, Rifkind, Wharton & Garrison; and (ii) corporate minutes of the Guarantor attached to the officer's certificate attached hereto as Exhibit A (the "Officer's Certificate"), which, among other things, pertain to the authorization and execution of the Indenture by the Guarantor, including the Guarantee; and (iii) the articles of incorporation, as amended, and by-laws, as amended, of the Guarantor as certified to us pursuant to the Officer's Certificate (collectively, the "Organizational Documents"). We have reviewed only the Documents and have made no other investigation or inquiry. We have relied, without additional investigation, upon the facts set forth in the respective representations made by the parties in the Indenture and in the Officer's Certificate. We have acted as special Florida counsel to the Guarantor and our engagement has been limited to such matters as to which we have been consulted. Consequently, there may exist matters of a legal nature involving the Guarantor in connection with which we have not been consulted and have not represented the Guarantor. Consequently there may exist matters of a legal nature involving these entities which would affect the opinions rendered herein. In our examination of the foregoing, we have assumed without investigation, (a) the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as HUNTON & WILLIAMS Addressees November 16,1999 Page 3 certified or photostatic copies and the authenticity of the originals of such copies; (b) the legal capacity of all natural persons; (c) that each of the Indenture and the other documents executed in connection with the Indenture (collectively with the Indenture, the "Indenture Documents") constitutes the legal, valid and binding obligation of each of the respective parties thereto (other than the Guarantor) enforceable against each such party and the Guarantor in accordance with its respective terms; (d) that sufficient consideration has been received by the Guarantor and each of the other parties to the Indenture Documents in respect of their respective obligations thereunder; and (e) the constitutionality and validity of all relevant laws, regulations and agency actions unless a reported case has otherwise held or widespread concern has been expressed by commentators as reflected in materials which lawyers routinely consult. Based solely upon our examination and consideration of the Documents as described above, and in reliance thereon, and in reliance upon the factual representations contained in the Officer's Certificate, and our consideration of such matters of law as we have considered necessary or appropriate for the expression of the opinions contained herein, and subject to the limitations, qualifications and assumptions expressed herein, we are of the opinion that: 1. The Indenture and the Guarantee have been duly authorized, executed and delivered by the Guarantor. 2. The authorization, execution and delivery by the Guarantor of each of the Indenture and Guarantee and the consummation by the Guarantor of the transactions contemplated by such documents do not violate or result in a breach of or default under the Organizational Documents or any applicable laws of the State of Florida. The foregoing opinions are subject to the following qualifications: (A) We express no opinion as to whether any of the following would be a violation of any laws of the State of Florida: (i) any provisions (a) purporting to waive or affect any rights to notice or the obligations of good faith, fair dealing, diligence and reasonableness, (b) providing for specific performance or the appointment of a receiver, (c) purporting to establish evidentiary standards for suits or proceedings to enforce the Indenture Documents, (d) which, under Florida law, could be deemed to be unconscionable, to be evidence of bad faith or to be violative of public policy, or (e) releasing, exculpating or exempting a party from, or requiring indemnification of a party for, liability for its own actions or inactions, to the extent the action or inaction involves gross negligence, recklessness, willful misconduct or unlawful conduct; or HUNTON & WILLIAMS Addressees November 16, 1999 Page 4 (ii) the extent to which any party may charge or collect interest, fees and other amounts payable pursuant to the Documents which are or would be deemed to be interest or charges in the nature of interest which in the aggregate exceed twenty-five percent (25%) per annum simple interest. We have not reviewed and express no opinion with respect to any document or instrument (other than the Indenture) referred to in any of the Indenture Documents with respect to which we opine. We express no opinion as to matters which may be governed by any laws other than the laws of the State of Florida and the opinions given herein are only expressed as to those matters governed by Florida law. This opinion is limited to the matters stated herein and no opinions may be implied or inferred beyond the matters expressly stated herein. We have assumed no obligation to advise you beyond the opinions specifically expressed herein. The opinions expressed herein are as of this date, and we assume no obligation to update or supplement our opinions to reflect any facts or circumstances which may come to our attention or any changes in law which may occur. This opinion is provided to you for your benefit and is provided only in connection with this transaction and may not be relied upon in any respect by any other person or for any other purpose, provided that, this opinion may be relied upon by Paul, Weiss, Rifkind, Wharton & Garrison in connection with the Registration Statement. Without our prior written consent, this opinion letter may not be quoted in whole or in part or otherwise referred to in any document or report and may not be furnished to any person or entity. Very truly yours, /s/ HUNTON & WILLIAMS HUNTON & WILLIAMS EX-5 8 EXHIBIT 5.7 [LETTERHEAD OF HOLLAND & HART LLP] November 24, 1999 Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Old San Francisco Seltzer, Inc. c/o Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Re: Registration Statement on Form S-4 Ladies and Gentlemen: This opinion is being delivered to you in connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer Products Group, LLC, a Delaware limited liability company ("TCPG"), Triarc Beverage Holdings Corp., a Delaware corporation (the "Co-Issuer" and, together with TCPG, the "Issuers"), and certain other subsidiaries of the Issuers (the "Guarantor Subsidiaries" and, together with the Issuers, the "Co-Registrants"), with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act"), and the rules and regulations under the Act. The Registration Statement relates to the registration under the Act of the Issuers' $300,000,000 aggregate principal amount of 10 1/4% Senior Subordinated Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes by the Guarantor Subsidiaries (the "Subsidiary Guaranties"), including the guaranty by the Guarantor named below (the "Guarantee"). The Exchange Notes are to be offered in exchange for the Issuers' outstanding 10 1/4% Senior Subordinated Notes due 2009 (the "Existing Notes") issued and sold by the Issuers on February 25, 1999 in an offering exempt from registration under the Act. The Exchange Notes will be issued by the issuers in accordance with the terms of the Indenture, dated as of February 25, 1999 (as amended, the "Indenture"), among the Issuers, the Guarantor Subsidiaries party to it and The Bank of New York, as trustee (the "Trustee"). In connection with the foregoing, we have been requested to render our opinion [LETTERHEAD OF HOLLAND & HART LLP] Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Old San Francisco Seltzer, Inc. November 24, 1999 Page 2 as to certain legal matters relating to Old San Francisco Seltzer, Inc. a Colorado corporation (the "Guarantor"). In connection with this opinion, we examined originals, conformed copies or photocopies, certified or otherwise identified to our satisfaction, of the following documents (collectively, the "Documents"): (i) the Indenture; (ii) certain corporate minutes of Guarantor, which, among other things, pertain to the authorization and execution of the Indenture by Guarantor, including the Guarantee, and approval of the Guarantee by the sole shareholder of the Guarantor. In addition, we have examined: (i) those corporate records of the Guarantor as we have considered appropriate, including the certificate of incorporation, as amended, and by-laws, as amended, of the Guarantor, in the form provided to us by Paul, Weiss, Rifkind, Wharton & Garrison (collectively, the "Organizational Documents"); and (ii) those other certificates, agreements and other documents as we deemed relevant and necessary as a basis for the opinions expressed below. In our examination of the Documents and in rendering our opinions, we have assumed, without independent investigation, (i) the genuineness of all signatures, (ii) the authenticity of all documents submitted to us as originals, (iii) the conformity to the original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of validly existing agreements or other documents, (iv) the authenticity of all the latter documents, (v) that the statements regarding matters of fact in the certificates, records, agreements, instruments and documents that we examined are accurate and complete, (vi) that the Guarantor delivered physically to the parties the fully executed Indenture, (vii) that the Guarantor is an indirect wholly-owned subsidiary of the Issuers, (viii) that the Guarantee furthers the corporate purposes of the Guarantor, and (ix) that the Guarantor has received direct benefits for the Guarantee. [LETTERHEAD OF HOLLAND & HART LLP] Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Old San Francisco Seltzer, Inc. November 24, 1999 Page 3 We express no opinion relating to the effect of bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance, redemption, reinstatement or other similar laws relating to or affecting the rights of creditors generally. Based upon the above, and subject to the stated assumptions, exceptions and qualifications, we are of the opinion that: 1. The Indenture and Guarantee have been duly authorized, executed and delivered by the Guarantor. 2. The due authorization, execution and delivery by the Guarantor of each Document to which it is a party and the consummation by the Guarantor of the transactions contemplated by such Documents do not violate or result in a breach of or default under the Organizational Documents thereof or the laws of the State of Colorado. Our opinions expressed above are limited to the laws of the State of Colorado and the judicial decisions interpreting the same. Our opinion is rendered only with respect to the laws, and the rules, regulations and orders under them, that are currently in effect. This opinion is provided as a legal opinion only, effective as of the date of this letter, and not as a guaranty or warranty of the matters discussed herein. This opinion may be relied upon only by the addressees hereof and by Paul, Weiss, Rifkind, Wharton & Garrison in connection with the delivery of its legal opinion concerning the validity of the Exchange Notes and the Subsidiary Guaranties. Very truly yours, /s/ HOLLAND & HART LLP HOLLAND & HART LLP EX-5 9 EXHIBIT 5.8 [LETTERHEAD OF HOLLAND & HART LLP] November 24, 1999 Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Fountain Classics, Inc. c/o Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Re: Registration Statement on Form S-4 Ladies and Gentlemen: This opinion is being delivered to you in connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by Triarc Consumer Products Group, LLC, a Delaware limited liability company ("TCPG"), Triarc Beverage Holdings Corp., a Delaware corporation (the "Co-Issuer" and, together with TCPG, the "Issuers"), and certain other subsidiaries of the Issuers (the "Guarantor Subsidiaries" and, together with the Issuers, the "Co-Registrants"), with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act"), and the rules and regulations under the Act. The Registration Statement relates to the registration under the Act of the Issuers' $300,000,000 aggregate principal amount of 10 1/4% Senior Subordinated Notes due 2009 (the "Exchange Notes") and the guaranties of the Exchange Notes by the Guarantor Subsidiaries (the "Subsidiary Guaranties"), including the guaranty by the Guarantor named below (the "Guarantee"). The Exchange Notes are to be offered in exchange for the Issuers' outstanding 10 1/4% Senior Subordinated Notes due 2009 (the "Existing Notes") issued and sold by the Issuers on February 25, 1999 in an offering exempt from registration under the Act. The Exchange Notes will be issued by the Issuers in accordance with the terms of the Indenture, dated as of February 25, 1999 (as amended, the "Indenture"), among the Issuers, the Guarantor Subsidiaries party to it and The Bank of New York, as trustee (the "Trustee"). In connection with the foregoing, we have been requested to render our opinion HOLLAND & HART LLP ATTORNEYS AT LAW Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Fountain Classics, Inc. November 24, 1999 Page 2 as to certain legal matters relating to Fountain Classics, Inc. a Colorado corporation (the "Guarantor"). In connection with this opinion, we examined originals, conformed copies or photocopies, certified or otherwise identified to our satisfaction, of the following documents (collectively, the "Documents"): (i) the Indenture; (ii) certain corporate minutes of Guarantor, which, among other things, pertain to the authorization and execution of the Indenture by Guarantor, including the Guarantee, and approval of the Guarantee by the sole shareholder of the Guarantor. In addition, we have examined: (i) those corporate records of the Guarantor as we have considered appropriate, including the certificate of incorporation, as amended, and by-laws, as amended, of the Guarantor, in the form provided to us by Paul, Weiss, Rifkind, Wharton & Garrison (collectively, the "Organizational Documents"); and (ii) those other certificates, agreements and other documents as we deemed relevant and necessary as a basis for the opinions expressed below. In our examination of the Documents and in rendering our opinions, we have assumed, without independent investigation, (i) the genuineness of all signatures, (ii) the authenticity of all documents submitted to us as originals, (iii) the conformity to the original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of validly existing agreements or other documents, (iv) the authenticity of all the latter documents, (v) that the statements regarding matters of fact in the certificates, records, agreements, instruments and documents that we examined are accurate and complete, (vi) that the Guarantor delivered physically to the parties the fully executed Indenture, (vii) that the Guarantor is an indirect wholly-owned subsidiary of the Issuers, (viii) that the Guarantee furthers the corporate purposes of the Guarantor, and (ix) that the Guarantor has received direct benefits for the Guarantee. HOLLAND & HART LLP ATTORNEYS AT LAW Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Fountain Classics, Inc. November 24, 1999 Page 3 We express no opinion relating to the effect of bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance, redemption, reinstatement or other similar laws relating to or affecting the rights of creditors generally. Based upon the above, and subject to the stated assumptions, exceptions and qualifications, we are of the opinion that: 1. The Indenture and Guarantee have been duly authorized, executed and delivered by the Guarantor. 2. The due authorization, execution and delivery by the Guarantor of each Document to which it is a party and the consummation by the Guarantor of the transactions contemplated by such Documents do not violate or result in a breach of or default under the Organizational Documents thereof or the laws of the State of Colorado. Our opinions expressed above are limited to the laws of the State of Colorado and the judicial decisions interpreting the same. Our opinion is rendered only with respect to the laws, and the rules, regulations and orders under them, that are currently in effect. This opinion is provided as a legal opinion only, effective as of the date of this letter, and not as a guaranty or warranty of the matters discussed herein. This opinion may be relied upon only by the addressees hereof and by Paul, Weiss, Rifkind, Wharton & Garrison in connection with the delivery of its legal opinion concerning the validity of the Exchange Notes and the Subsidiary Guaranties. Very truly yours, /s/ HOLLAND & HART LLP HOLLAND & HART LLP EX-10 10 EXHIBIT 10.39 FORM OF INDEMNIFICATION AGREEMENT AGREEMENT, made effective as of the _____ day of ______, _____ between Triarc Consumer Products Group, LLC, a Delaware limited liability company (the "Company") and _______________________ (the "Indemnitee"). WHEREAS, it is essential to the Company and its stockholders to attract and retain qualified and capable directors, officers, employees, trustees, agents and fiduciaries; and WHEREAS, it has been the policy of the Company to indemnify its directors and officers so as to provide them with the maximum possible protection permitted by law; and WHEREAS, in recognition of Indemnitee's need for protection against personal liability in order to induce Indemnitee to serve or continue to serve the Company in an effective manner, and, in the case of directors and officers, to supplement or replace the Company's directors' and officers' liability insurance coverage, and in part to provide Indemnitee with specific contractual assurance that the protection promised by the Company's corporate charter and/or corporate by-laws or similar governing documents or the partnership agreements or limited liability company agreements or similar governing documents of partnerships and limited liability companies for which the Company serves or has served as general partner or manager (together, the Company's "Governing Documents") will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of the Governing Documents or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), the Company, with the prior approval of the Company's stockholders, wishes to provide the Indemnitee with the benefits contemplated by this Agreement; and WHEREAS, as a result of the provision of such benefits Indemnitee has agreed to serve or to continue to serve the Company; NOW, THEREFORE, the parties hereto do hereby agree as follows: 1. Definitions. The following terms, as used herein, shall have the following respective meanings: (a) An Affiliate of a specified Person is a Person who directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. The term Associate used to indicate a relationship with any Person shall mean (i) any corporation or organization (other than the Company or a Subsidiary) of which such Person is an officer or partner or is, directly, or indirectly, the Beneficial Owner of ten (10) percent or more of any class of Equity Securities, (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity (other than an Employee Plan Trustee), (iii) any Relative of such Person, or (iv) any officer or director of any corporation controlling or controlled by such Person. (b) Beneficial Ownership shall be determined, and a Person shall be the Beneficial Owner of all securities which such Person is deemed to own beneficially, pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3 as in effect on January 15, 1999; provided, however, that a Person shall, in any event, also be deemed to be the Beneficial Owner of any Voting Shares: (A) of which such Person or any of its Affiliates or Associates is, directly or indirectly, the Beneficial Owner, or (B) of which such Person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is 2 exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants, or options, or otherwise, or (ii) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the Beneficial Owner of any Voting Shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such Person nor any such Affiliate or Associate is otherwise deemed the Beneficial Owner), or (C) of which any other Person is, directly or indirectly, the Beneficial Owner if such first mentioned Person or any of its Affiliates or Associates acts with such other Person as a partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Company; and provided further, however, that (i) no director or officer of the Company, nor any Associate or Affiliate of any such director or officer, shall, solely by reason of any or all of such directors and officers acting in their capacities as such, be deemed for any purposes hereof, to be the Beneficial Owner of any Voting Shares of which any other such director or officer (or any Associate or Affiliate thereof) is the Beneficial Owner and (ii) no trustee of an employee stock ownership or similar plan of the Company or any Subsidiary ("Employee Plan Trustee") or any Associate or Affiliate of any such Trustee, shall, solely by reason of being an Employee Plan Trustee or Associate or Affiliate of an Employee Plan Trustee, be deemed for any purposes hereof to be the Beneficial Owner of any Voting Shares held by or under any such plan. (c) Change in Control shall be deemed to have occurred if (A) any Person (other than (i) the Company or any Subsidiary, (ii) any pension, profit sharing, employee 3 stock ownership or other employee benefit plan of the Company or any Subsidiary or any trustee of or fiduciary with respect to any such plan when acting in such capacity, or (iii) DWG Acquisition Group, L.P. ("DWG Acquisition"), Nelson Peltz ("Peltz"), Peter W. May ("May") or any Affiliate or Associate of DWG Acquisition or of Peltz or May) who is or becomes, after the date of this Agreement, the Beneficial Owner of 20% or more of the total voting power of the Voting Shares, (B) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election or appointment by the Board of Directors or nomination or recommendation for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, (C) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Shares of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Shares of the surviving entity) at least 80% of the total voting power represented by the Voting Shares of the Company or such surviving entity outstanding, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, or (D) a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14 promulgated under the Securities Exchange Act of 1934, as amended, as in effect on January 15, 1999. 4 (d) Claim means any threatened, pending or completed action, suit, arbitration or proceeding, or any inquiry or investigation, whether brought by or in the right of the Company or otherwise, that Indemnitee in good faith believes might lead to the institution of any such action, suit, arbitration or proceeding, whether civil, criminal, administrative, investigative or other, or any appeal therefrom. (e) D&O Insurance means any valid directors' and officers' liability insurance policy maintained by the Company for the benefit of the Indemnitee, if any. (f) Determination means a determination, and Determined means a matter which has been determined based on the facts known at the time, by: (i) a majority vote of a quorum of disinterested directors, or (ii) if such a quorum is not obtainable, or even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or, in the event there has been a Change in Control, by the Special Independent Counsel (in a written opinion) selected by Indemnitee as set forth in Section 6, or (iii) a majority of the disinterested stockholders of the Company, or (iv) a final adjudication by a court of competent jurisdiction. (g) Equity Security shall have the meaning given to such term under Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, as in effect on January 15, 1999. (h) Excluded Claim means any payment for Losses or Expenses in connection with any Claim: (i) based upon or attributable to Indemnitee gaining in fact any personal profit or advantage to which Indemnitee is not entitled; or (ii) for the return by Indemnitee of any remuneration paid to Indemnitee without the previous approval of the stockholders of the Company which is illegal; or (iii) for an accounting of profits in fact made 5 from the purchase or sale by Indemnitee of securities of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, as in effect on January 15, 1999, or similar provisions of any state law; or (iv) resulting from Indemnitee's knowingly fraudulent, dishonest or willful misconduct; or (v) the payment of which by the Company under this Agreement is not permitted by applicable law. (i) Expenses means any reasonable expenses incurred by Indemnitee as a result of a Claim or Claims made against Indemnitee for Indemnifiable Events including, without limitation, attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in any Claim relating to any Indemnifiable Event. (j) Fines means any fine, penalty or, with respect to an employee benefit plan, any excise tax or penalty assessed with respect thereto. (k) Indemnifiable Event means any event or occurrence, occurring prior to or after the date of this Agreement, related to the fact that Indemnitee is or was a director, officer, employee, trustee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, manager, employee, trustee, agent or fiduciary of another corporation, partnership, joint venture, limited liability company, employee benefit plan, trust or other enterprise, or by reason of anything done or not done by Indemnitee, including, but not limited to, any breach of duty, neglect, error, misstatement, misleading statement, omission, or other act done or wrongfully attempted by Indemnitee, or any of the foregoing alleged by any claimant, in any such capacity. 6 (l) Losses means any amounts or sums which Indemnitee is legally obligated to pay as a result of a Claim or Claims made against Indemnitee for Indemnifiable Events including, without limitation, damages, judgments and sums or amounts paid in settlement of a Claim or Claims, and Fines. (m) Person means any individual, partnership, corporation, business trust, joint stock company, trust, limited liability company, unincorporated association, joint venture, governmental authority or other entity of whatever nature. (n) Potential Change in Control shall be deemed to have occurred if (A) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (B) any Person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; (C) any Person (other than (i) the Company or any Subsidiary, (ii) any pension, profit sharing, employee stock ownership or other employee benefit plan of the Company or any Subsidiary or any trustee of or fiduciary with respect to any such plan when acting in such capacity, or (iii) DWG Acquisition, Peltz, May, or any Affiliate or Associate of DWG Acquisition or of Peltz or May) who is or becomes the Beneficial Owner of 9.5% or more of the total voting power of the Voting Shares, increases his Beneficial Ownership of such voting power by 5% or more over the percentage so owned by such Person on the date hereof; or (D) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. (o) Relative means a Person's spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothersand sisters-in-law. (p) Reviewing Party means any appropriate person or body consisting 7 of a member or members of the Company's Board of Directors or any other person or body appointed by the Board (including the Special Independent Counsel referred to in Section 6) who is not a party to the particular Claim for which Indemnitee is seeking indemnification. (q) Subsidiary means any corporation of which a majority of any class of Equity Security is owned, directly or indirectly, by the Company. (r) Trust means the trust established pursuant to Section 7 hereof. (s) Voting Shares means any issued and outstanding shares of capital stock of the Company entitled to vote generally in the election of directors. 2. Basic Indemnification Agreement. In consideration of, and as an inducement to, the Indemnitee rendering valuable services to the Company, the Company agrees that in the event Indemnitee is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company will indemnify Indemnitee to the fullest extent authorized by law, against any and all Expenses and Losses (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses and Losses) of such Claim, whether or not such Claim proceeds to judgment or is settled or otherwise is brought to a final disposition, subject in each case, to the further provisions of this Agreement. 3. Limitations on Indemnification. Notwithstanding the provisions of Section 2, Indemnitee shall not be indemnified and held harmless from any Losses or Expenses (a) which have been Determined, as provided herein, to constitute an Excluded Claim; (b) to the extent Indemnitee is indemnified by the Company and has actually received payment pursuant to the Company's Governing Documents, D&O Insurance, or otherwise; or (c) other than pursuant 8 to the last sentence of Section 4(d) or Section 14, in connection with any Claim initiated by Indemnitee, unless the Company has joined in or the Board of Directors has authorized such Claim. 4. Indemnification Procedures. (a) Promptly after receipt by Indemnitee of notice of any Claim, Indemnitee shall, if indemnification with respect thereto may be sought from the Company under this Agreement, notify the Company of the commencement thereof and Indemnitee agrees further not to make any admission or effect any settlement with respect to such Claim without the consent of the Company, except any Claim with respect to which the Indemnitee has undertaken the defense in accordance with the second to last sentence of Section 4(d). (b) If, at the time of the receipt of such notice, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of Claim to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all Losses and Expenses payable as a result of such Claim. (c) To the extent the Company does not, at the time of the Claim have applicable D&O Insurance, or if a Determination is made that any Expenses arising out of such Claim will not be payable under the D&O Insurance then in effect, the Company shall be obligated to pay the Expenses of any Claim in advance of the final disposition thereof and the Company, if appropriate, shall be entitled to assume the defense of such Claim, with counsel satisfactory to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, the Company will not be liable to Indemnitee under this Agreement for any legal or other Expenses subsequently incurred by the Indemnitee in 9 connection with such defense other than reasonable Expenses of investigation; provided that Indemnitee shall have the right to employ its counsel in such Claim but the fees and expenses of such counsel incurred after delivery of notice from the Company of its assumption of such defense shall be at the Indemnitee's expense; provided further that if: (i) the employment of counsel by Indemnitee has been previously authorized by the Company; (ii) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense; or (iii) the Company shall not, in fact, have employed counsel to assume the defense of such action, the reasonable fees and expenses of counsel shall be at the expense of the Company. (d) All payments on account of the Company's indemnification obligations under this Agreement shall be made within sixty (60) days of Indemnitee's written request therefor unless a Determination is made that the Claims giving rise to Indemnitee's request are Excluded Claims or otherwise not payable under this Agreement, provided that all payments on account of the Company's obligation to pay Expenses under Section 4(c) of this Agreement prior to the final disposition of any Claim shall be made within 20 days of Indemnitee's written request therefor and such obligation shall not be subject to any such Determination but shall be subject to Section 4(e) of this Agreement. In the event the Company takes the position that the Indemnitee is not entitled to indemnification in connection with the proposed settlement of any Claim, the Indemnitee shall have the right at its own expense to undertake defense of any such Claim, insofar as such proceeding involves Claims against the Indemnitee, by written notice given to the Company within 10 days after the Company has notified the Indemnitee in writing of its contention that the Indemnitee is not entitled to indemnification. If it is subsequently determined in connection with such proceeding that the 10 Indemnifiable Events are not Excluded Claims and that the Indemnitee, therefore, is entitled to be indemnified under the provisions of Section 2 hereof, the Company shall promptly indemnify the Indemnitee. (e) Indemnitee hereby expressly undertakes and agrees to reimburse the Company for all Losses and Expenses paid by the Company in connection with any Claim against Indemnitee in the event and only to the extent that a Determination shall have been made by a court of competent jurisdiction in a decision from which there is no further right to appeal that Indemnitee is not entitled to be indemnified by the Company for such Losses and Expenses because the Claim is an Excluded Claim or because Indemnitee is otherwise not entitled to payment under this Agreement. 5. Settlement. The Company shall have no obligation to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Claim effected without the Company's prior written consent. The Company shall not settle any Claim in which it takes the position that Indemnitee is not entitled to indemnification in connection with such settlement without the consent of the Indemnitee, nor shall the Company settle any Claim in any manner which would impose any Fine or any obligation on Indemnitee, without Indemnitee's written consent. Neither the Company nor Indemnitee shall unreasonably withhold their consent to any proposed settlement. 6. Change in Control; Extraordinary Transactions. The Company and Indemnitee agree that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control) then all Determinations thereafter with respect to the rights of Indemnitee to be paid Losses and Expenses under this Agreement shall be 11 made only by a special independent counsel (the "Special Independent Counsel") selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld) or by a court of competent jurisdiction. The Company shall pay the reasonable fees of such Special Independent Counsel and shall indemnify such Special Independent Counsel against any and all reasonable expenses (including reasonable attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. The Company covenants and agrees that, in the event of a Change in Control of the sort set forth in clause (C) of Section 1(c), the Company will use its best efforts (a) to have the obligations of the Company under this Agreement including, but not limited to those under Section 7, expressly assumed by the surviving, purchasing or succeeding entity, or (b) otherwise to adequately provide for the satisfaction of the Company's obligations under this Agreement, in a manner reasonably acceptable to the Indemnitee. 7. Establishment of Trust. In the event of a Potential Change in Control the Company shall, upon written request by Indemnitee, create a trust (the "Trust") for the benefit of the Indemnitee and from time to time upon written request of Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Losses and Expenses which are actually paid or which Indemnitee reasonably determines from time to time may be payable by the Company under this Agreement. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Reviewing Party, in any case in which the Special Independent Counsel is involved. The terms of the Trust shall provide that upon a Change in Control: (i) the Trust shall not be revoked or the principal thereof invaded without the written consent of the Indemnitee; (ii) the trustee of the Trust shall advance, within twenty days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby 12 agrees to reimburse the Trust under the circumstances under which the Indemnitee would be required to reimburse the Company under Section 4(e) of this Agreement); (iii) the Company shall continue to fund the Trust from time to time in accordance with the funding obligations set forth above; (iv) the trustee of the Trust shall promptly pay to the Indemnitee all Losses and Expenses for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement; and (v) all unexpended funds in the Trust shall revert to the Company upon a final determination by a court of competent jurisdiction in a final decision from which there is no further right of appeal that the Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee of the Trust shall be chosen by the Indemnitee. 8. No Presumption. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 9. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company's Governing Documents or under the laws, as in effect from time to time, of the Company's state of incorporation (such laws being the "Applicable State Laws"), any vote of stockholders or disinterested directors or otherwise, both as to action in the Indemnitee's official capacity and as to action in any other capacity by holding such office, and shall continue after the Indemnitee ceases to serve the Company as a director, officer, employee, agent or fiduciary, for so long as the Indemnitee shall be subject to any Claim by reason of (or arising in part out of) an Indemnifiable Event. To the 13 extent that a change in the Applicable State Laws (whether by statute or judicial decision or by reincorporation of the Company in a different jurisdiction) permits greater indemnification by agreement than would be afforded currently under the Company's Governing Documents and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 10. Liability Insurance. To the extent the Company maintains D&O Insurance, Indemnitee, if an officer or director of the Company, shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 11. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 12. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses and Losses of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to any Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses incurred in connection therewith. In connection with any Determination as to whether Indemnitee is entitled 14 to be indemnified hereunder the burden of proof shall be on the Company to establish that Indemnitee is not so entitled. 13. Liability of Company. The Indemnitee agrees that neither the stockholders nor the directors nor any officer, employee, representative or agent of the Company shall be personally liable for the satisfaction of the Company's obligations under this Agreement and the Indemnitee shall look solely to the assets of the Company for satisfaction of any claims hereunder. 14. Enforcement. (a) Indemnitee's right to indemnification and other rights under this Agreement shall be specifically enforceable by Indemnitee only in the state or Federal courts of the State of New York or of the then current State of incorporation of the Company and shall be enforceable notwithstanding any adverse Determination by the Company's Board of Directors, independent legal counsel, the Special Independent Counsel or the Company's stockholders and no such Determination shall create a presumption that Indemnitee is not entitled to be indemnified hereunder. In any such action the Company shall have the burden of proving that indemnification is not required under this Agreement. (b) In the event that any action is instituted by Indemnitee under this Agreement, or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and reasonable expenses, including reasonable counsel fees, incurred by Indemnitee with respect to such action, unless the court determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. 15 15. Severability. In the event that any provision of this Agreement is determined by a court to require the Company to do or to fail to do an act which is in violation of applicable law, such provision (including any provision within a single section, paragraph or sentence) shall be limited or modified in its application to the minimum extent necessary to avoid a violation of law, and, as so limited or modified, such provision and the balance of this Agreement shall be enforceable in accordance with their terms to the fullest extent permitted by law. 16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state in which the Company is incorporated at the time any claim for indemnification is made hereunder applicable to agreements made and to be performed entirely within such state. 17. Consent to Jurisdiction. The Company and the Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of New York and the State promulgating the Applicable State Laws at the time any claim for indemnification hereunder is made for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state and Federal courts of the States indicated in this Section. 18. Notices. All notices, or other communications required or permitted hereunder shall be sufficiently given for all purposes if in writing and personally delivered, telegraphed, telexed, sent by facsimile transmission or sent by registered or certified mail, return receipt requested, with postage prepaid addressed as follows, or to such other address as the parties shall have given notice of pursuant hereto: 16 (a) If to the Company, to: Triarc Consumer Products Group, LLC 709 Westchester Avenue White Plains, New York 10604 Attention: Senior Vice President & General Counsel Telecopier No.: 914-397-9368 with a copy to: Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Attention: Executive Vice President & General Counsel Telecopier No.: 212-451-3216 (b) If to the Indemnitee, to: <> <
> 19. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original and all of which, when taken together, shall constitute one and the same instrument. 20. Successors and Assigns. This Agreement shall be (i) binding upon all successors and assigns of the Company, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, and (ii) shall be binding upon and inure to the benefit of any successors and assigns, heirs, and personal or legal representatives of Indemnitee. 17 21. Amendment; Waiver. No amendment, modification, termination or cancellation of this Agreement shall be effective unless made in writing signed by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement effective as of the day and year first above written. TRIARC CONSUMER PRODUCTS GROUP, LLC By: ------------------------------------- Name: Title: ATTEST: [Corporate Seal] By: -------------------------------- Title: WITNESS: - ------------------------------------ ------------------------------------- <>, Indemnitee 18 EX-10 11 EXHIBIT 10.40 FORM OF INDEMNIFICATION AGREEMENT AGREEMENT, made effective as of the _____ day of ______, _____ between Triarc Beverage Holdings Corp., a Delaware corporation (the "Company") and ________________________ (the "Indemnitee"). WHEREAS, it is essential to the Company and its stockholders to attract and retain qualified and capable directors, officers, employees, trustees, agents and fiduciaries; and WHEREAS, it has been the policy of the Company to indemnify its directors and officers so as to provide them with the maximum possible protection permitted by law; and WHEREAS, in recognition of Indemnitee's need for protection against personal liability in order to induce Indemnitee to serve or continue to serve the Company in an effective manner, and, in the case of directors and officers, to supplement or replace the Company's directors' and officers' liability insurance coverage, and in part to provide Indemnitee with specific contractual assurance that the protection promised by the Company's corporate charter and/or corporate by-laws or similar governing documents or the partnership agreements or limited liability company agreements or similar governing documents of partnerships and limited liability companies for which the Company serves or has served as general partner or manager (together, the Company's "Governing Documents") will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of the Governing Documents or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), the Company, with the prior approval of the Company's stockholders, wishes to provide the Indemnitee with the benefits contemplated by this Agreement; and WHEREAS, as a result of the provision of such benefits Indemnitee has agreed to serve or to continue to serve the Company; NOW, THEREFORE, the parties hereto do hereby agree as follows: 1. Definitions. The following terms, as used herein, shall have the following respective meanings: (a) An Affiliate of a specified Person is a Person who directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. The term Associate used to indicate a relationship with any Person shall mean (i) any corporation or organization (other than the Company or a Subsidiary) of which such Person is an officer or partner or is, directly, or indirectly, the Beneficial Owner of ten (10) percent or more of any class of Equity Securities, (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity (other than an Employee Plan Trustee), (iii) any Relative of such Person, or (iv) any officer or director of any corporation controlling or controlled by such Person. (b) Beneficial Ownership shall be determined, and a Person shall be the Beneficial Owner of all securities which such Person is deemed to own beneficially, pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3 as in effect on January 15, 1999; provided, however, that a Person shall, in any event, also be deemed to be the Beneficial Owner of any Voting Shares: (A) of which such Person or any of its Affiliates or Associates is, directly or indirectly, the Beneficial Owner, or (B) of which such Person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, 2 arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants, or options, or otherwise, or (ii) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the Beneficial Owner of any Voting Shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such Person nor any such Affiliate or Associate is otherwise deemed the Beneficial Owner), or (C) of which any other Person is, directly or indirectly, the Beneficial Owner if such first mentioned Person or any of its Affiliates or Associates acts with such other Person as a partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Company; and provided further, however, that (i) no director or officer of the Company, nor any Associate or Affiliate of any such director or officer, shall, solely by reason of any or all of such directors and officers acting in their capacities as such, be deemed for any purposes hereof, to be the Beneficial Owner of any Voting Shares of which any other such director or officer (or any Associate or Affiliate thereof) is the Beneficial Owner and (ii) no trustee of an employee stock ownership or similar plan of the Company or any Subsidiary ("Employee Plan Trustee") or any Associate or Affiliate of any such Trustee, shall, solely by reason of being an Employee Plan Trustee or Associate or Affiliate of an Employee Plan Trustee, be deemed for any purposes hereof to be the Beneficial Owner of any Voting Shares held by or under any such plan. (c) Change in Control shall be deemed to have occurred if (A) any Person (other than (i) the Company or any Subsidiary, (ii) any pension, profit sharing, employee stock ownership or other employee benefit plan of the Company or any Subsidiary or any trustee 3 of or fiduciary with respect to any such plan when acting in such capacity, or (iii) DWG Acquisition Group, L.P. ("DWG Acquisition"), Nelson Peltz ("Peltz"), Peter W. May ("May") or any Affiliate or Associate of DWG Acquisition or of Peltz or May) who is or becomes, after the date of this Agreement, the Beneficial Owner of 20% or more of the total voting power of the Voting Shares, (B) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election or appointment by the Board of Directors or nomination or recommendation for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, (C) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Shares of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Shares of the surviving entity) at least 80% of the total voting power represented by the Voting Shares of the Company or such surviving entity outstanding, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, or (D) a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14 promulgated under the Securities Exchange Act of 1934, as amended, as in effect on January 1, 1999. (d) Claim means any threatened, pending or completed action, suit, arbitration or proceeding, or any inquiry or investigation, whether brought by or in the right of 4 the Company or otherwise, that Indemnitee in good faith believes might lead to the institution of any such action, suit, arbitration or proceeding, whether civil, criminal, administrative, investigative or other, or any appeal therefrom. (e) D&O Insurance means any valid directors' and officers' liability insurance policy maintained by the Company for the benefit of the Indemnitee, if any. (f) Determination means a determination, and Determined means a matter which has been determined based on the facts known at the time, by: (i) a majority vote of a quorum of disinterested directors, or (ii) if such a quorum is not obtainable, or even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or, in the event there has been a Change in Control, by the Special Independent Counsel (in a written opinion) selected by Indemnitee as set forth in Section 6, or (iii) a majority of the disinterested stockholders of the Company, or (iv) a final adjudication by a court of competent jurisdiction. (g) Equity Security shall have the meaning given to such term under Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, as in effect on January 1, 1999. (h) Excluded Claim means any payment for Losses or Expenses in connection with any Claim: (i) based upon or attributable to Indemnitee gaining in fact any personal profit or advantage to which Indemnitee is not entitled; or (ii) for the return by Indemnitee of any remuneration paid to Indemnitee without the previous approval of the stockholders of the Company which is illegal; or (iii) for an accounting of profits in fact made from the purchase or sale by Indemnitee of securities of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, as in effect on January 1, 1999, 5 or similar provisions of any state law; or (iv) resulting from Indemnitee's knowingly fraudulent, dishonest or willful misconduct; or (v) the payment of which by the Company under this Agreement is not permitted by applicable law. (i) Expenses means any reasonable expenses incurred by Indemnitee as a result of a Claim or Claims made against Indemnitee for Indemnifiable Events including, without limitation, attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in any Claim relating to any Indemnifiable Event. (j) Fines means any fine, penalty or, with respect to an employee benefit plan, any excise tax or penalty assessed with respect thereto. (k) Indemnifiable Event means any event or occurrence, occurring prior to or after the date of this Agreement, related to the fact that Indemnitee is or was a director, officer, employee, trustee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, manager, employee, trustee, agent or fiduciary of another corporation, partnership, joint venture, limited liability company, employee benefit plan, trust or other enterprise, or by reason of anything done or not done by Indemnitee, including, but not limited to, any breach of duty, neglect, error, misstatement, misleading statement, omission, or other act done or wrongfully attempted by Indemnitee, or any of the foregoing alleged by any claimant, in any such capacity. (l) Losses means any amounts or sums which Indemnitee is legally obligated to pay as a result of a Claim or Claims made against Indemnitee for Indemnifiable Events including, without limitation, damages, judgments and sums or amounts paid in 6 settlement of a Claim or Claims, and Fines. (m) Person means any individual, partnership, corporation, business trust, joint stock company, trust, limited liability company, unincorporated association, joint venture, governmental authority or other entity of whatever nature. (n) Potential Change in Control shall be deemed to have occurred if (A) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (B) any Person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; (C) any Person (other than (i) the Company or any Subsidiary, (ii) any pension, profit sharing, employee stock ownership or other employee benefit plan of the Company or any Subsidiary or any trustee of or fiduciary with respect to any such plan when acting in such capacity, or (iii) DWG Acquisition, Peltz, May, or any Affiliate or Associate of DWG Acquisition or of Peltz or May) who is or becomes the Beneficial Owner of 9.5% or more of the total voting power of the Voting Shares, increases his Beneficial Ownership of such voting power by 5% or more over the percentage so owned by such Person on the date hereof; or (D) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. (o) Relative means a Person's spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers and sisters-in-law. (p) Reviewing Party means any appropriate person or body consisting of a member or members of the Company's Board of Directors or any other person or body appointed by the Board (including the Special Independent Counsel referred to in Section 6) who is not a party to the particular Claim for which Indemnitee is seeking indemnification. 7 (q) Subsidiary means any corporation of which a majority of any class of Equity Security is owned, directly or indirectly, by the Company. (r) Trust means the trust established pursuant to Section 7 hereof. (s) Voting Shares means any issued and outstanding shares of capital stock of the Company entitled to vote generally in the election of directors. 2. Basic Indemnification Agreement. In consideration of, and as an inducement to, the Indemnitee rendering valuable services to the Company, the Company agrees that in the event Indemnitee is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company will indemnify Indemnitee to the fullest extent authorized by law, against any and all Expenses and Losses (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses and Losses) of such Claim, whether or not such Claim proceeds to judgment or is settled or otherwise is brought to a final disposition, subject in each case, to the further provisions of this Agreement. 3. Limitations on Indemnification. Notwithstanding the provisions of Section 2, Indemnitee shall not be indemnified and held harmless from any Losses or Expenses (a) which have been Determined, as provided herein, to constitute an Excluded Claim; (b) to the extent Indemnitee is indemnified by the Company and has actually received payment pursuant to the Company's Governing Documents, D&O Insurance, or otherwise; or (c) other than pursuant to the last sentence of Section 4(d) or Section 14, in connection with any Claim initiated by Indemnitee, unless the Company has joined in or the Board of Directors has authorized such Claim. 8 4. Indemnification Procedures. (a) Promptly after receipt by Indemnitee of notice of any Claim, Indemnitee shall, if indemnification with respect thereto may be sought from the Company under this Agreement, notify the Company of the commencement thereof and Indemnitee agrees further not to make any admission or effect any settlement with respect to such Claim without the consent of the Company, except any Claim with respect to which the Indemnitee has undertaken the defense in accordance with the second to last sentence of Section 4(d). (b) If, at the time of the receipt of such notice, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of Claim to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all Losses and Expenses payable as a result of such Claim. (c) To the extent the Company does not, at the time of the Claim have applicable D&O Insurance, or if a Determination is made that any Expenses arising out of such Claim will not be payable under the D&O Insurance then in effect, the Company shall be obligated to pay the Expenses of any Claim in advance of the final disposition thereof and the Company, if appropriate, shall be entitled to assume the defense of such Claim, with counsel satisfactory to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, the Company will not be liable to Indemnitee under this Agreement for any legal or other Expenses subsequently incurred by the Indemnitee in connection with such defense other than reasonable Expenses of investigation; provided that Indemnitee shall have the right to employ its counsel in such Claim but the fees and expenses of such counsel incurred after delivery of notice from the Company of its assumption of such 9 defense shall be at the Indemnitee's expense; provided further that if: (i) the employment of counsel by Indemnitee has been previously authorized by the Company; (ii) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense; or (iii) the Company shall not, in fact, have employed counsel to assume the defense of such action, the reasonable fees and expenses of counsel shall be at the expense of the Company. (d) All payments on account of the Company's indemnification obligations under this Agreement shall be made within sixty (60) days of Indemnitee's written request therefor unless a Determination is made that the Claims giving rise to Indemnitee's request are Excluded Claims or otherwise not payable under this Agreement, provided that all payments on account of the Company's obligation to pay Expenses under Section 4(c) of this Agreement prior to the final disposition of any Claim shall be made within 20 days of Indemnitee's written request therefor and such obligation shall not be subject to any such Determination but shall be subject to Section 4(e) of this Agreement. In the event the Company takes the position that the Indemnitee is not entitled to indemnification in connection with the proposed settlement of any Claim, the Indemnitee shall have the right at its own expense to undertake defense of any such Claim, insofar as such proceeding involves Claims against the Indemnitee, by written notice given to the Company within 10 days after the Company has notified the Indemnitee in writing of its contention that the Indemnitee is not entitled to indemnification. If it is subsequently determined in connection with such proceeding that the Indemnifiable Events are not Excluded Claims and that the Indemnitee, therefore, is entitled to be indemnified under the provisions of Section 2 hereof, the Company shall promptly indemnify the Indemnitee. 10 (e) Indemnitee hereby expressly undertakes and agrees to reimburse the Company for all Losses and Expenses paid by the Company in connection with any Claim against Indemnitee in the event and only to the extent that a Determination shall have been made by a court of competent jurisdiction in a decision from which there is no further right to appeal that Indemnitee is not entitled to be indemnified by the Company for such Losses and Expenses because the Claim is an Excluded Claim or because Indemnitee is otherwise not entitled to payment under this Agreement. 5. Settlement. The Company shall have no obligation to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Claim effected without the Company's prior written consent. The Company shall not settle any Claim in which it takes the position that Indemnitee is not entitled to indemnification in connection with such settlement without the consent of the Indemnitee, nor shall the Company settle any Claim in any manner which would impose any Fine or any obligation on Indemnitee, without Indemnitee's written consent. Neither the Company nor Indemnitee shall unreasonably withhold their consent to any proposed settlement. 6. Change in Control; Extraordinary Transactions. The Company and Indemnitee agree that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control) then all Determinations thereafter with respect to the rights of Indemnitee to be paid Losses and Expenses under this Agreement shall be made only by a special independent counsel (the "Special Independent Counsel") selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld) or by a court of competent jurisdiction. The Company shall pay the reasonable fees of such 11 Special Independent Counsel and shall indemnify such Special Independent Counsel against any and all reasonable expenses (including reasonable attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. The Company covenants and agrees that, in the event of a Change in Control of the sort set forth in clause (C) of Section 1(c), the Company will use its best efforts (a) to have the obligations of the Company under this Agreement including, but not limited to those under Section 7, expressly assumed by the surviving, purchasing or succeeding entity, or (b) otherwise to adequately provide for the satisfaction of the Company's obligations under this Agreement, in a manner reasonably acceptable to the Indemnitee. 7. Establishment of Trust. In the event of a Potential Change in Control the Company shall, upon written request by Indemnitee, create a trust (the "Trust") for the benefit of the Indemnitee and from time to time upon written request of Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Losses and Expenses which are actually paid or which Indemnitee reasonably determines from time to time may be payable by the Company under this Agreement. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Reviewing Party, in any case in which the Special Independent Counsel is involved. The terms of the Trust shall provide that upon a Change in Control: (i) the Trust shall not be revoked or the principal thereof invaded without the written consent of the Indemnitee; (ii) the trustee of the Trust shall advance, within twenty days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under the circumstances under which the Indemnitee would be required to reimburse the Company under Section 4(e) of this Agreement); (iii) the Company shall continue to fund the Trust from time to time in accordance with the funding obligations set 12 forth above; (iv) the trustee of the Trust shall promptly pay to the Indemnitee all Losses and Expenses for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement; and (v) all unexpended funds in the Trust shall revert to the Company upon a final determination by a court of competent jurisdiction in a final decision from which there is no further right of appeal that the Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee of the Trust shall be chosen by the Indemnitee. 8. No Presumption. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 9. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company's Governing Documents or under the laws, as in effect from time to time, of the Company's state of incorporation (such laws being the "Applicable State Laws"), any vote of stockholders or disinterested directors or otherwise, both as to action in the Indemnitee's official capacity and as to action in any other capacity by holding such office, and shall continue after the Indemnitee ceases to serve the Company as a director, officer, employee, agent or fiduciary, for so long as the Indemnitee shall be subject to any Claim by reason of (or arising in part out of) an Indemnifiable Event. To the extent that a change in the Applicable State Laws (whether by statute or judicial decision or by reincorporation of the Company in a different jurisdiction) permits greater indemnification by agreement than would be afforded currently under the Company's Governing Documents and this 13 Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 10. Liability Insurance. To the extent the Company maintains D&O Insurance, Indemnitee, if an officer or director of the Company, shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 11. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 12. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses and Losses of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to any Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses incurred in connection therewith. In connection with any Determination as to whether Indemnitee is entitled to be indemnified hereunder the burden of proof shall be on the Company to establish that Indemnitee is not so entitled. 13. Liability of Company. The Indemnitee agrees that neither the 14 stockholders nor the directors nor any officer, employee, representative or agent of the Company shall be personally liable for the satisfaction of the Company's obligations under this Agreement and the Indemnitee shall look solely to the assets of the Company for satisfaction of any claims hereunder. 14. Enforcement. (a) Indemnitee's right to indemnification and other rights under this Agreement shall be specifically enforceable by Indemnitee only in the state or Federal courts of the State of New York or of the then current State of incorporation of the Company and shall be enforceable notwithstanding any adverse Determination by the Company's Board of Directors, independent legal counsel, the Special Independent Counsel or the Company's stockholders and no such Determination shall create a presumption that Indemnitee is not entitled to be indemnified hereunder. In any such action the Company shall have the burden of proving that indemnification is not required under this Agreement. (b) In the event that any action is instituted by Indemnitee under this Agreement, or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and reasonable expenses, including reasonable counsel fees, incurred by Indemnitee with respect to such action, unless the court determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. 15. Severability. In the event that any provision of this Agreement is determined by a court to require the Company to do or to fail to do an act which is in violation of applicable law, such provision (including any provision within a single section, paragraph or sentence) shall be limited or modified in its application to the minimum extent necessary to avoid 15 a violation of law, and, as so limited or modified, such provision and the balance of this Agreement shall be enforceable in accordance with their terms to the fullest extent permitted by law. 16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state in which the Company is incorporated at the time any claim for indemnification is made hereunder applicable to agreements made and to be performed entirely within such state. 17. Consent to Jurisdiction. The Company and the Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of New York and the State promulgating the Applicable State Laws at the time any claim for indemnification hereunder is made for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state and Federal courts of the States indicated in this Section. 18. Notices. All notices, or other communications required or permitted hereunder shall be sufficiently given for all purposes if in writing and personally delivered, telegraphed, telexed, sent by facsimile transmission or sent by registered or certified mail, return receipt requested, with postage prepaid addressed as follows, or to such other address as the parties shall have given notice of pursuant hereto: 16 (a) If to the Company, to: Triarc Beverage Holdings Corp. 709 Westchester Avenue White Plains, New York 10604 Attention: Senior Vice President & General Counsel Telecopier No.: 914-397-9368 with a copy to: Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 Attention: Executive Vice President & General Counsel Telecopier No.: 212-451-3216 (b) If to the Indemnitee, to: --------------------------- --------------------------- 19. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original and all of which, when taken together, shall constitute one and the same instrument. 20. Successors and Assigns. This Agreement shall be (i) binding upon all successors and assigns of the Company, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, and (ii) shall be binding upon and inure to the benefit of any successors and assigns, heirs, and personal or legal representatives of Indemnitee. 17 21. Amendment; Waiver. No amendment, modification, termination or cancellation of this Agreement shall be effective unless made in writing signed by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement effective as of the day and year first above written. TRIARC BEVERAGE HOLDINGS CORP. By: ------------------------------------- Name: Title: ATTEST: [Corporate Seal] By: -------------------------------- Title: WITNESS: - ----------------------------------- ------------------------------------- , Indemnitee 18 EX-12 12 EXHIBIT 12.1 EXHIBIT 12.1 TRIARC CONSUMER PRODUCTS GROUP, LLC AND RELATED COMPANIES UNAUDITED COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
PRO HISTORICAL FORMA(a) -------------------------------------------------------- ---------- YEAR ENDED DECEMBER 31, YEAR ENDED YEAR ENDED JANUARY 3, ----------------------------- DECEMBER 28, ---------------------- 1994 1995 1996 1997 1999 1999 ---- ---- ---- ---- ---- ---- (IN THOUSANDS EXCEPT RATIOS) Income (loss) before income taxes and extraordinary charges...................... $(3,773) $(45,606) $(74,996) $(24,128) $ 55,271 $ 37,394 ------- -------- -------- -------- -------- -------- Fixed charges: Interest expense.......... 34,433 42,386 50,031 58,019 60,235 78,935 Interest portion of rent expense(b).............. 4,538 6,884 8,094 5,052 2,488 2,594 ------- -------- -------- -------- -------- -------- 38,971 49,270 58,125 63,071 62,723 81,529 ------- -------- -------- -------- -------- -------- Adjusted earnings (loss) before income taxes and extraordinary charges........ $35,198 $ 3,664 $(16,871) $ 38,943 $117,994 $118,923 ------- -------- -------- -------- -------- -------- ------- -------- -------- -------- -------- -------- Amount by which earnings were insufficient to cover fixed charges...................... $ 3,773 $ 45,606 $ 74,996 $ 24,128 ------- -------- -------- -------- ------- -------- -------- -------- Ratio of earnings to fixed charges...................... 1.9x 1.5x -------- -------- -------- --------
PRO HISTORICAL FORMA(a) ------------------------------------------- --------- NINE MONTHS ENDED -------------------------------------------------------- OCTOBER 3, SEPTEMBER 27, -------------------- 1998 1999 1999 ---- ---- ---- (IN THOUSANDS EXCEPT RATIOS) Income before income taxes and extraordinary charges..... $38,963 $35,718 $31,509 ------- ------- ------- Fixed charges: Interest expense.................................... 44,658 56,931 59,933 Interest portion of rent expense(b)................. 1,922 1,702 1,747 ------- ------- ------- 46,580 58,633 61,680 ------- ------- ------- Adjusted earnings before income taxes and extraordinary charges................................................ $85,543 $94,351 $93,189 ------- ------- ------- ------- ------- ------- Ratio of earnings to fixed charges....................... 1.8x 1.6x 1.5x ------- ------- ------- ------- ------- -------
- ------------ (a) The pro forma information has been determined by adjusting the results of operations of the Company for the year ended January 3, 1999 and the nine months ended October 3, 1999 to give effect to the offering, the new credit facility and the related use of proceeds, including the acquisition of Millrose. Such pro forma information is derived from the pro forma condensed consolidated statements of operations contained elsewhere herein and should be read in conjunction therewith and with the notes thereto. (b) Represents one-third of rental expense deemed for this purpose to represent the interest component of rental payments. EX-23 13 EXHIBIT 23.1 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the use in this Amendment No. 4 to Registration Statements Nos. 333-78625; 333-78625-01 through 333-78625-28 of Triarc Consumer Products Group, LLC of our report dated July 30, 1999 appearing in the Prospectus, which is part of such Registration Statements, and to the reference to us under the headings 'Summary Consolidated Financial Data', 'Selected Consolidated Financial Data' and 'Experts' in such Prospectus. /s/ DELOITTE & TOUCHE LLP Deloitte & Touche LLP New York, New York December 10, 1999 EX-23 14 EXHIBIT 23.2 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the use in this Amendment No. 4 to Registration Statements Nos. 333-78625; 333-78625-01 through 333-78625-28 of Triarc Beverage Holdings Corp. of our report dated July 30, 1999 appearing in the Prospectus, which is part of such Registration Statements, and to the reference to us under the headings 'Summary Consolidated Financial Data', 'Selected Consolidated Financial Data' and 'Experts' in such Prospectus. /s/ DELOITTE & TOUCHE LLP Deloitte & Touche LLP New York, New York December 10, 1999 EX-23 15 EXHIBIT 23.3 EXHIBIT 23.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report dated September 11, 1997 (and to all references to our Firm) included in or made part of this registration statement. /s/ ARTHUR ANDERSEN LLP Chicago, Illinois December 10, 1999 EX-23 16 EXHIBIT 23.6 [LETTERHEAD OF SONNENSCHEIN NATH & ROSENTHAL] CONSENT We hereby consent to the use of the opinion, dated November 17, 1999, we have provided to Triarc Consumer Products Group, LLC, Triarc Beverage Holdings Corp. and Pacific Snapple Distributors, Inc., as an exhibit to the Registration Statement on Form S-4 (Registration Nos. 333-78625; 333-78625-01 through 333-78625-28). Very truly yours, /s/ SONNENSCHEIN NATH & ROSENTHAL SONNENSCHEIN NATH & ROSENTHAL Dated: December 8, 1999 EX-23 17 EXHIBIT 23.7 CONSENT We hereby consent to the use of the opinion, dated November 16, 1999, we have provided to Triarc Consumer Products Group, LLC, Triarc Beverage Holdings Corp. and Millrose Distributors, Inc., as an exhibit to the Registration Statement of Form S-4 (Registration Nos. 333-78625; 333-78625-01 through 333-78625-28). Very truly yours, /s/ SCHENCK, PRICE, SMITH & KING, LLP SCHENCK, PRICE, SMITH & KING, LLP Dated: December 10, 1999 EX-28 18 EXHIBIT 23.8 [LETTERHEAD OF POWELL, GOLDSTEIN, FRAZER & MURPHY LLP] Triarc Consumer Products Group, LLC Triarc Beverage Holdings Corp. Arby's Building and Construction Company c/o Triarc Companies, Inc. 280 Park Avenue New York, New York 10017 CONSENT We hereby consent to the use of the opinion, dated November 18, 1999, we have provided to Triarc Consumer Products Group, LLC, Triarc Beverage Holdings Corp. and Arby's Building and Construction Co., as an exhibit to the Registration Statement on Form S-4 (Registration Nos. 333-78625; 333-78625-01 through 333-78625-28). Very truly yours, /s/ POWELL, GOLDSTEIN, FRAZER & MURPHY LLP POWELL, GOLDSTEIN, FRAZER & MURPHY LLP Dated: December 10, 1999 EX-23 19 EXHIBIT 23.9 CONSENT We hereby consent to the use of the opinion, dated November 19, 1999, we have provided to Triarc Consumer Products Group, LLC, Triarc Beverage Holdings Corp. and RC-11, Inc., as an exhibit to the Registration Statement on Form S-4 (Registration Nos. 333-78625; 333-78625-01 through 333-78625-28). Very truly yours, /s/ WATKINS, LUDLAM WINTER & STENNIS, P.A. WATKINS, LUDLAM WINTER & STENNIS, P.A. Dated: December 10, 1999 EX-23 20 EXHIBIT 23.10 CONSENT We hereby consent to the use of the opinion of Hunton & Williams, dated November 16, 1999, we have provided to Triarc Consumer Products Group, LLC, Triarc Beverage Holdings Corp. and Retailer Concentrate Products, Inc., as an exhibit to the Triarc Consumer Products Group LLC and Triarc Beverage Holdings Corp. Registration Statement on Form S-4 (Registration Nos. 333-78625; 333-78625-01 through 333-78625-28). Very truly yours, /s/ HUNTON & WILLIAMS HUNTON & WILLIAMS Dated: December 10, 1999 EX-23 21 EXHIBIT 23.11 CONSENT We hereby consent to the use of the opinion, dated November 24, 1999, we have provided to Triarc Consumer Products Group, LLC, Triarc Beverage Holdings Corp. and Old San Francisco Seltzer, Inc., as an exhibit to the Registration Statement on Form S-4 (Registration Nos. 333-78625; 333-78625-01 through 333-78625-28), Very truly yours, /s/ HOLLAND & HART LLP HOLLAND & HART LLP Dated: December 10, 1999 EX-23 22 EXHIBIT 23.12 CONSENT We hereby consent to the use of the opinion, dated November 24, 1999, we have provided to Triare Consumer Products Group, LLC, Triarc Beverage Holdings Corp. and Fountain Classics, Inc., as an exhibit to the Registration Statement on Form S-4 (Registration Nos 333-78625; 333-78625-01 through 333-78625-28). Very truly yours, /s/ HOLLAND & HART LLP HOLLAND & HART LLP Dated: December 10, 1999 EX-27 23 FDS 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE YEAR ENDED JANUARY 3, 1999 (RESTATED) AND THE NINE-MONTH PERIOD ENDED OCTOBER 3, 1999 EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF TRIARC CONSUMER PRODUCTS GROUP, LLC INCLUDED IN THE ACCOMPANYING FORM S-4 OF TRIARC CONSUMER PRODUCTS GROUP, LLC FOR THE YEAR ENDED JANUARY 3, 1999 AND THE NINE-MONTH PERIOD ENDED OCTOBER 3, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM S-4. 0001086090 TRIARC CONSUMER PRODUCTS GROUP, LLC 1,000 US DOLLARS 12-MOS 9-MOS JAN-03-1999 JAN-02-2000 DEC-29-1997 JAN-04-1999 JAN-03-1999 OCT-03-1999 1 1 72,792 40,131 0 0 72,241 105,814 5,551 0 46,761 67,326 212,435 237,740 49,922 25,118 24,602 0 790,970 827,830 157,201 204,531 560,977 734,218 87,587 0 0 0 0 0 (44,721) (173,615) 790,970 827,830 735,436 619,630 815,036 679,728 390,883 329,740 390,883 329,740 0 0 2,387 2,112 60,235 56,931 55,271 35,718 (25,284) (18,204) 29,987 17,514 0 0 0 (11,772) 0 0 29,987 5,742 0 0 0 0 EX-27 24 FDS 27.2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE YEAR ENDED JANUARY 3, 1999 (RESTATED) AND THE NINE-MONTH PERIOD ENDED OCTOBER 3, 1999 EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF TRIARC BEVERAGE HOLDINGS CORP. INCLUDED IN THE ACCOMPANYING FORM S-4 OF TRIARC CONSUMER PRODUCTS GROUP, LLC FOR THE YEAR ENDED JANUARY 3, 1999 AND THE NINE-MONTH PERIOD ENDED OCTOBER 3, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM S-4. 0001086093 TRIARC BEVERAGE HOLDINGS CORP. 1,000 US DOLLARS 12-MOS 9-MOS JAN-03-1999 JAN-02-2000 DEC-29-1997 JAN-04-1999 JAN-03-1999 OCT-03-1999 1 1 39,578 15,126 0 0 40,729 74,031 3,019 0 41,563 61,254 134,924 165,063 26,108 17,479 10,110 0 536,570 573,368 95,674 142,947 282,951 644,052 87,587 94,077 0 0 850 850 30,456 (372,679) 536,570 573,368 611,546 525,702 611,546 525,702 362,012 308,134 362,012 308,134 0 0 1,029 637 28,587 25,827 33,785 19,510 (14,627) (9,365) 19,158 10,145 0 0 0 (4,876) 0 0 19,158 5,269 0 0 0 0
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