REGISTRATION NO. 333-127818
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________
TRIARC COMPANIES, INC.
(Exact name of Registrant as specified in its charter)
_________________________
DELAWARE 38-0471180
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
_________________________
280 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 451-3000
(Address, including zip code, and telephone
number, including area code, of
Registrant's principal executive offices)
BRIAN L. SCHORR, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
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)
_________________________
COPIES TO:
PAUL D. GINSBERG, ESQ.
RAPHAEL M. RUSSO, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
(212) 373-3000
_________________________
APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC: From time to time after this
registration statement becomes effective.
_________________________
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933,
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to 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 pursuant to Rule 462(c) 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
_________________________
THE REGISTRANT HEREBY AMENDS 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 IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED. THE
SELLING STOCKHOLDERS 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 NOR IS IT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED NOVEMBER 22, 2005
PROSPECTUS
TRIARC COMPANIES, INC.
9,684,316 Shares of Class B Common Stock, Series 1
This prospectus relates to up to 9,684,316 shares of our Class B common
stock, Series 1, that may be offered for sale from time to time by the selling
stockholders named in this prospectus. We issued these shares to the selling
stockholders on July 25, 2005 in connection with our acquisition of RTM
Restaurant Group.
The shares of Class B common stock, Series 1, may be sold at fixed
prices, prevailing market prices at the times of sale, prices related to the
prevailing market prices, varying prices determined at the times of sale or
negotiated prices. The shares of Class B common stock, Series 1, offered by this
prospectus and any prospectus supplement may be offered by the selling
stockholders directly to investors or to or through underwriters, dealers or
other agents. We will not receive any of the proceeds from the sale of the
shares of Class B common stock, Series 1, sold by the selling stockholders. We
will bear all expenses of this offering of the Class B common stock, Series 1,
other than the following expenses: all selling expenses (including underwriting
discounts and commissions and transfer taxes) of the selling stockholders, all
fees and expenses of the selling stockholders' counsel, any stock transfer taxes
in connection with any underwritten offering and all registration expenses to
the extent required by applicable law.
Our Class B common stock, Series 1, trades on the New York Stock
Exchange under the symbol "TRY.B." On November 17, 2005, the last reported
sale price of our Class B common stock, Series 1, was $14.76.
_________________________
INVESTING IN THE SECURITIES OFFERED BY THIS PROSPECTUS INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION, NOR ANY STATE
SECURITIES COMMISSION, HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
_________________________
The date of this prospectus is ________________, 2005.
TABLE OF CONTENTS
Where You Can Find More Information...........................................2
Incorporation of Documents by Reference.......................................3
Triarc Companies, Inc.........................................................4
The RTM Acquisition...........................................................5
Potential Corporate Restructuring.............................................6
Risk Factors..................................................................7
Forward-Looking Statements...................................................21
Use of Proceeds..............................................................23
Selling Stockholders.........................................................24
Plan of Distribution.........................................................26
Legal Matters................................................................28
Experts......................................................................28
WHERE YOU CAN FIND MORE INFORMATION
We have filed a Registration Statement on Form S-3 with the Securities
and Exchange Commission (the "SEC") regarding the offering of the securities
offered by this prospectus. This prospectus, which forms part of the
registration statement, does not contain all of the information included in the
registration statement. For further information about us and the securities
offered by this prospectus, you should refer to the registration statement, its
exhibits and the documents incorporated by reference.
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy materials that we have
filed with the SEC at the SEC public reference room located at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. Our SEC filings can also be read at
the New York Stock Exchange, 20 Broad Street, New York, New York 10005. Our SEC
filings are also available to the public on the SEC's Internet website at
http://www.sec.gov.
Our Class A common stock is listed on the New York Stock Exchange under
the symbol "TRY" and our Class B common stock, Series 1, is listed on the New
York Stock Exchange under the symbol "TRY.B."
We incorporate by reference into this prospectus the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended, including any
filings after the date of this prospectus, until all of the securities to which
this prospectus relates are sold or the offering is otherwise terminated, other
than any portions of any such documents that are not deemed "filed" under the
Exchange Act in accordance with the Exchange Act and applicable SEC rules and
regulations. The information incorporated by reference is an important part of
this prospectus. Any statement in a document incorporated by reference into this
prospectus will be deemed to be modified or superseded to the extent a statement
contained in (1) this prospectus or (2) any other subsequently filed document
that is incorporated by reference into this prospectus modifies or supersedes
such statement.
2
INCORPORATION OF DOCUMENTS BY REFERENCE
We are incorporating by reference into this prospectus the following
documents filed by us with the SEC:
o Annual Report on Form 10-K for the fiscal year ended January 2,
2005, filed on March 18, 2005;
o Quarterly Report on Form 10-Q for the fiscal quarter ended April
3, 2005, filed on May 12, 2005;
o Quarterly Report on Form 10-Q for the fiscal quarter ended July 3,
2005, filed on August 12, 2005;
o Quarterly Report on Form 10-Q for the fiscal quarter ended October
2, 2005, filed on November 14, 2005;
o Current Reports on Form 8-K, filed on January 19, 2005, January
31, 2005, March 10, 2005 (as amended and restated by the Current
Report on Form 8-K/A filed on March 11, 2005), March 18, 2005
(with respect to Item 8.01 and the exhibit filed pursuant thereto
only), April 6, 2005, May 25, 2005, June 3, 2005, June 6, 2005,
July 29, 2005 (as amended by the Current Report on Form 8-K/A
filed on August 26, 2005) and August 17, 2005;
o the description of the Class B common stock, Series 1, contained
in the Registration Statement on Form 8-A, filed pursuant to
Section 12 of the Exchange Act on August 11, 2003, and any
amendment or report filed for the purpose of updating such
description; and
o all other documents filed pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and
prior to the termination of the offering other than any such
documents or portions thereof that are not deemed "filed" under
the Exchange Act in accordance with the Exchange Act and
applicable SEC rules and regulations.
You should rely only on the information contained in this document or
that information to which we have referred you. We have not authorized anyone to
provide you with any additional information.
The documents incorporated by reference into this prospectus are
available from us upon request. We will provide a copy of any and all of the
information that is incorporated by reference in this prospectus to any person,
without charge, upon written or oral request. Requests for such copies should be
directed to the following:
Triarc Companies, Inc.
280 Park Avenue
New York, New York 10017
Attention: Investor Relations
Telephone: (212) 451-3000
EXCEPT AS EXPRESSLY PROVIDED ABOVE, NO OTHER INFORMATION, INCLUDING
INFORMATION ON OUR WEBSITE, IS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
3
TRIARC COMPANIES, INC.
We are a holding company and, through our subsidiaries, the franchisor
of the Arby's(R) restaurant system and the owner and operator of over 1,000
Arby's restaurants in the United States. The Arby's restaurant system is
comprised of approximately 3,500 restaurants, of which approximately 2,500
restaurants are owned and operated by franchisees. We also own an approximate
64% capital interest in Deerfield & Company LLC, which, through its wholly-owned
subsidiary Deerfield Capital Management LLC ("DCM"), is a Chicago-based asset
manager offering a diverse range of fixed income strategies to institutional
investors. As of November 1, 2005, DCM had approximately $10.5 billion of assets
under management. We also have seeded two funds managed by DCM, currently
holding an approximate 77.54% capital interest in Deerfield Opportunities Fund,
LLC and an approximate 93.3% capital interest in DM Fund, LLC. We also own an
approximate 29% capital interest in Jurlique International Pty Ltd, a privately
held Australian skin and health care products company. The following chart is a
summary of our organizational structure:
|-----------------------|
| TRIARC COMPANIES, INC.|
|-----------------------| |---------------------------------|
| | All ownership is common equity |
| | and 100% unless otherwise noted |
| |---------------------------------|
-------------------------------------------------------------------------------------------------------------------
| | | | | |
63.6% Capital 93.30% Capital 77.54% Capital 29.17% Capital | |
Interest Interest Interest Interest | (direct and
(indirect) (indirect) (direct and indirect) (indirect) | indirect)
| | | | | |
|---------------------| |--------------| |---------------------| |------------------------| |-------------------| |----------------|
| Deerfield & Company | | DM Fund, LLC | | Deerfield | | Jurlique International | | Arby's Restaurant | | Other Triarc |
| LLC | | | | Opportunities Fund, | | Pty Ltd | | Holdings, LLC | | Subsidiaries |
| | | | | LLC | | | | | | |
|---------------------| |--------------| |---------------------| |------------------------| |-------------------| |----------------|
| |
| |
|---------------------| |-------------------|
| Deerfield Capital | | Triarc Restaurant |
| Management LLC | | Holdings, LLC |
|---------------------| |-------------------|
|
|
|-------------------|
| Arby's Restaurant |
| Group, Inc. |
|-------------------|
|
|
--------------------------------------------------------------------------------------------
| | | | |
| | | | |
|--------------| |---------------------| |------------------------| |-------------------| |----------------|
| RTMMC | | RTM Acquisition | | Arby's Restaurant, | | Sybra, Inc. | | Arby's, LLC |
| Acquisition, | | Company, L.L.C. | | LLC | | | | |
| LLC | | | | | | | | |
|--------------| |---------------------| |------------------------| |-------------------| |----------------|
| |
(direct and (direct and
indirect) indirect)
| |
|------------------------| |----------------|
| | |Arby's Franchise|
| Arby's Restaurant, | | Trust and Other|
| LLC Subsidiaries | | Arby's, LLC |
| | | Subsidiaries |
|------------------------| |----------------|
For the nine months ended October 2, 2005, our unaudited consolidated
net loss was approximately $39.4 million. For the nine months ended October 2,
2005, our restaurant segment accounted for approximately 93.0%, and our asset
management segment accounted for approximately 7.0%, of our unaudited
consolidated operating profit before general corporate operating losses.
Our corporate predecessor was incorporated in Ohio in 1929. We
reincorporated in Delaware in June 1994. Our principal executive offices are
located at 280 Park Avenue, New York, New York 10017 and our telephone number is
(212) 451-3000. Our website address is: www.triarc.com. Information contained on
our website is not part of this prospectus.
4
THE RTM ACQUISITION
On July 25, 2005, we completed our acquisition of RTM. Prior to the
acquisition, RTM was the largest Arby's(R) franchisee, with 775 Arby's
restaurants in 22 states. As a result of the RTM acquisition, the 775 Arby's
restaurants previously franchised by RTM are now owned and operated by us.
As total consideration in the RTM acquisition, we paid $175 million
in cash (which is subject to post closing adjustment), we issued 9,684,316
shares of our Class B common stock, Series 1, and we issued options to
purchase approximately 774,000 shares of our Class B common stock, Series 1
(with a weighted average exercise price of $8.92 per share) in replacement of
existing RTM stock options. The combined value of the shares and options that
we issued in connection with the RTM acquisition was approximately $150
million, based on a closing price of $15.00 per share on July 25, 2005 and the
two days prior. In connection with the RTM acquisition, Arby's Restaurant
Group, Inc. ("ARG"), our wholly owned subsidiary, also assumed approximately
$400 million of RTM net debt, including approximately $184 million of RTM
capitalized lease and financing obligations. We provided $135 million in cash
to fund the RTM acquisition, and ARG provided the remaining cash needed to
complete the RTM acquisition, including transaction costs.
In connection with the RTM acquisition, ARG refinanced substantially
all of its and RTM's existing indebtedness. This refinancing included the
repayment of approximately $234 million of RTM third-party debt and
approximately $71 million of ARG third-party debt, as well as the defeasance of
the Arby's Franchise Trust, 7.44% insured non-recourse securitization notes
(total principal amount of $198 million at July 25, 2005), which were redeemed
in full on August 22, 2005, and the payment of related prepayment penalties. The
refinancing also included the repayment of approximately $21.8 million of
indebtedness (including prepayment fees) of certain entities related to RTM and
the selling stockholders that Triarc did not acquire in the transaction. We
refer to those related entities that Triarc did not acquire in the transaction
as the "Non-Acquired Entities". RTM had guaranteed the debt of the Non-Acquired
Entities that was repaid in connection with the RTM acquisition. ARG funded its
portion of the cash consideration paid in the RTM acquisition, the transaction
costs and the refinancing with the proceeds from a new $720 million credit
facility (consisting of a $620 million senior term loan B facility and a $100
million senior revolving credit facility, with a $30 million subfacility for
letters of credit).
At the time the RTM acquisition was completed, we entered into a
registration rights agreement with the selling stockholders. The registration
rights agreement requires us to register for sale from time to time by the
selling stockholders all of the shares of our Class B common stock, Series 1
that we issued in connection with the RTM acquisition. The shares covered by
this prospectus are being registered in accordance with the registration rights
agreement. Under the registration rights agreement, we have agreed to keep the
shelf registration statement effective until the earlier of the date that is (i)
two years after the date on which the shelf registration statement becomes
effective, as may be extended under certain circumstances and (ii) the date that
all shares received by the selling stockholders from the RTM acquisition have
been sold under the shelf registration statement or under Rule 144 or Regulation
S of the Securities Act. We have agreed to indemnify in certain circumstances
the selling stockholders against certain liabilities, including liabilities
under the Securities Act. The selling stockholders have agreed to indemnify us
in certain circumstances against certain liabilities, including liabilities
under the Securities Act.
We and ARG also entered into an escrow agreement at the time the RTM
acquisition was completed. Pursuant to the escrow agreement, 1,203,372 of the
shares of our Class B common stock, Series 1 that were issued, and $2 million of
the cash that was paid, in connection with the RTM acquisition was deposited
with an escrow agent as security for the post-closing adjustment based upon the
combined RTM net liabilities and for indemnification obligations of the former
shareholders of RTM Restaurant Group, Inc., the former members of RTM
Acquisition Company, L.L.C., RTM Management Company, L.L.C. and the members of
RTM Management Company, L.L.C. under the definitive agreements related to the
RTM acquisition. The indemnification obligations relate in part to certain lease
obligations of certain of the Non-Acquired Entities that are guaranteed by RTM.
Portions of the escrow are subject to release on the 18-month and 24-month
anniversaries of the completion of the RTM acquisition, and the escrow will be
terminated on the 30-month anniversary of the completion of the RTM acquisition
or, if there are any claims pending against the escrow on the 30-month
anniversary, upon final resolution of those pending claims.
5
In addition, at the time the RTM acquisition was completed, Michael I.
Lippert, a selling stockholder, entered into a promissory note with ARG pursuant
to which Mr. Lippert promised to pay the principal amount of $519,128 plus
interest at an annual rate equal to the base rate announced by Citibank, N.A.
from time to time plus 2%. The promissory note is secured by a pledge in favor
of ARG of 88,058 shares of our Class B common stock, Series 1 that we issued to
Mr. Lippert in connection with the RTM acquisition.
At the time the RTM acquisition was completed, ARG entered into a
short-term lease arrangement with RTM Management Company, L.L.C., an entity that
is owned by certain selling stockholders, whereby ARG will use substantially all
of the current headquarters of RTM as its headquarters, and assumed the lease
between RTM Management Company, L.L.C. and RTM Georgia, Inc., a subsidiary of
RTM, for the current southeast regional headquarters of RTM. Each lease expires
on February 28, 2006, subject, in each case, to two six-month options held by
ARG to extend the term of such lease. ARG may terminate either lease upon 30
days prior written notice. Under the lease for the RTM headquarters, the monthly
rent is approximately $43,557 in addition to a proportionate share of the real
estate taxes and operating costs. Under the assumed lease for the southeast
regional headquarters of RTM, the monthly rent is $10,550, which includes all
real estate taxes and operating costs.
In addition, at the time the RTM acquisition was completed, ARG entered
into a management services agreement with certain of the Non-Acquired Entities.
Under the new agreement, as amended, ARG provides specified management services
in exchange for a monthly payment of $35,500 plus the reimbursement of
out-of-pocket expenses that it has incurred. The management services agreement
may be terminated upon 30 days prior written notice by either party on or after
February 1, 2006.
Finally, ARG entered into employment agreements with Thomas Garrett,
Sharron Barton and Michael Lippert, and Arby's Restaurant, LLC, our subsidiary
and the successor to RTM Restaurant Group, Inc., entered into employment
agreements with Michael Abt, Jerry Ardizzone and Robert Rogers, each of which
became effective at the completion of the acquisition of RTM. Each of these
individuals is a selling stockholder. Mr. Garrett is to serve as ARG's Chief
Operating Officer, Ms. Barton is to serve as ARG's Chief Administrative Officer
and Mr. Lippert is to serve as ARG's Senior Vice President - Company Operations.
Messrs. Abt, Ardizzone and Rogers are to serve as Arby's Restaurant, LLC's
Southern Region President, Midwest Region President, and Great Lakes Region
President, respectively. We do not expect any of these employment agreements to
be affected by the potential corporate restructuring described below.
POTENTIAL CORPORATE RESTRUCTURING
We are continuing to explore the feasibility, as well as the risks and
opportunities, of a possible corporate restructuring that may involve the
spin-off of our asset management operations to our stockholders. Options for our
other non-restaurant assets are also under review and could include the
allocation of these other assets between our two businesses and/or a special
dividend or distribution to stockholders. The goal of the restructuring would be
to enhance value to our stockholders by allowing them to hold shares in two
industry-specific public companies thereby potentially unlocking the value of
both independently-managed businesses. There can be no assurance that the
corporate restructuring will occur or the terms or timing of such restructuring
if it does occur. Our board of directors has not reached any definitive
conclusions concerning the scope, benefits or timing of the corporate
restructuring.
If the corporate restructuring is completed, following a transition
period, it is currently anticipated that Arby's would be led by its current
President and Chief Executive Officer, Douglas N. Benham, and the Arby's
management team, and that Deerfield & Company would be led by its current
Chairman and Chief Executive Officer, Gregory H. Sachs, and the Deerfield
management team. In addition, Nelson Peltz and Peter W. May, currently our
Chairman and Chief Executive Officer and President and Chief Operating Officer,
respectively, who together beneficially owned an aggregate of approximately
30.9% of the shares of our Class A common stock and Class B common stock, Series
1, as of November 1, 2005, would continue to be large stockholders and directors
of the two new public companies. It is also currently anticipated that Messrs.
Peltz and May would be Chairman and Vice Chairman, respectively, of Arby's, that
Mr. Peltz would continue in his role as Chairman of Deerfield Triarc Capital
Corp. ("DTCC"), a publicly traded mortgage REIT managed by DCM, and that Messrs.
Peltz and May and our current Vice Chairman, Edward P. Garden, would continue in
their roles on the DTCC investment committee.
6
On November 1, 2005, Messrs. Peltz, May and Garden (collectively, the
"Principals") started a series of equity investment funds (the "Funds") that are
separate and distinct from us and that are being managed by the Principals and
our other senior officers (the "Employees") through a management company (the
"Management Company") formed by the Principals.
We have committed to invest $75,000,000 in an account to be managed by
the Management Company that will co-invest substantially in parallel with the
Funds (subject to legal, tax or regulatory constraints). The Principals
and certain Employees have invested in the Funds and certain Employees may
invest in the Funds or in an account to be managed by the Management Company.
The Management Company has agreed not to charge us, the Principals or the
Employees any management fees with respect to our and their investments.
Further, the Principals and the Employees will not pay any incentive fees while
we will pay no incentive fees for the first two years and, thereafter, will pay
lower incentive fees than those generally charged to other investors in the
Funds. We will be entitled to withdraw our investment on the same terms as the
Principals. A special committee comprised of independent members of our Board of
Directors (the "Special Committee") unanimously recommended our investment on
these terms to the Executive Committee of our Board of Directors, which in turn
unanimously approved such investment, with Messrs. Peltz and May abstaining from
the vote.
The Principals and Employees continue to serve as officers of, and to
be compensated by us. We are making available the services of the Principals and
the Employees, as well as certain support services, to the Management Company.
The extent and length of time that these management services will be provided
and the amount and/or timing of any reimbursement of the costs that we incur for
the allocable portion of these services has not yet been determined. The Special
Committee is reviewing and considering these arrangements.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW AND IN THE
DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS BEFORE MAKING AN
INVESTMENT DECISION. OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS
COULD BE MATERIALLY ADVERSELY AFFECTED BY ANY OF THESE RISKS. THE TRADING PRICE
OF OUR SECURITIES COULD DECLINE DUE TO ANY OF THESE RISKS, AND YOU MAY LOSE ALL
OR PART OF YOUR INVESTMENT.
THIS PROSPECTUS ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THE RISKS FACED BY US DESCRIBED BELOW AND ELSEWHERE IN THIS
PROSPECTUS.
RISKS RELATED TO TRIARC
A SUBSTANTIAL AMOUNT OF OUR SHARES OF CLASS A COMMON STOCK AND CLASS B
COMMON STOCK, SERIES 1, IS CONCENTRATED IN THE HANDS OF CERTAIN STOCKHOLDERS.
As of November 1, 2005, Nelson Peltz, our Chairman and Chief Executive
Officer, and Peter May, our President and Chief Operating Officer, each
individually beneficially owned shares of our outstanding Class A common stock
and Class B common stock, Series 1 (including shares issuable upon the exercise
of options exercisable within 60 days of November 1, 2005), that collectively
constituted approximately 42.7% of our Class A common stock, 25.5% of our Class
B common stock, Series 1 and 39.6% of our total voting power. In addition, in
accordance with procedures adopted by the Performance Compensation Subcommittee
of our Board of Directors, in 2003 and 2004 Messrs. Peltz and May elected to
defer receipt of a significant number of shares issuable to them upon exercise
of stock options previously granted to them. In connection with these deferred
compensation arrangements, a corresponding number of shares of our Class A
common stock and Class B common stock, Series 1 are being held in trusts for the
benefit of Messrs. Peltz and May. As of November 1, 2005, these trusts
beneficially owned shares of our Class A common stock and Class B common stock,
Series 1 that collectively constituted approximately 7.1% of our Class A common
stock, 6.5% of our Class B common stock, Series 1 and 7.0% of our total voting
power. The trustee of the trusts has the sole right to vote these shares until
they are released from the trusts, subject to the rights of Messrs. Peltz and
May to consult with the trustee regarding any such vote. The trusts currently
terminate on January 2, 2008, subject to extension and/or earlier distribution
of the shares under certain circumstances. Accordingly, these shares are not
deemed to be beneficially owned by Messrs. Peltz and May and are not included in
the percentage ownership and voting interests of Messrs. Peltz and May referred
to above.
7
Messrs. Peltz and May may from time to time acquire additional shares
of Class A common stock, including by exchanging some or all of their shares of
Class B common stock, Series 1 for shares of Class A common stock. Additionally,
we may from time to time repurchase shares of Class A common stock or Class B
common stock, Series 1. Such transactions could result in Messrs. Peltz and May
together owning more than a majority of our outstanding voting power. As a
result, Messrs. Peltz and May would be able to determine the outcome of the
election of members of our board of directors and the outcome of corporate
actions requiring majority stockholder approval, including mergers,
consolidations and the sale of all or substantially all of our assets. They
would also be in a position to prevent or cause a change in control of us. In
addition, to the extent we issue additional shares of our Class B common stock,
Series 1 for acquisitions, financings or compensation purposes, such issuances
would not proportionally dilute the voting power of existing stockholders,
including Messrs. Peltz and May.
OUR SUCCESS DEPENDS SUBSTANTIALLY UPON THE CONTINUED
RETENTION OF CERTAIN KEY PERSONNEL.
We believe that our success has been and will continue to be dependent
to a significant extent upon the efforts and abilities of our senior management
team. The failure by us to retain members of our senior management team could
adversely affect our ability to build on the efforts undertaken by our current
management to increase the efficiency and profitability of our businesses.
Specifically, the loss of Nelson Peltz, our Chairman and Chief Executive
Officer, or Peter May, our President and Chief Operating Officer, other members
of our senior management team or the senior management of our subsidiaries could
adversely affect us.
We are continuing to explore the feasibility, as well as the risks and
opportunities, of a possible corporate restructuring that may involve the
spin-off of our asset management operations to our stockholders. Our senior
officers have also started the Funds, which are managed and owned by such
officers, and which are separate and distinct from Triarc and the spun-off
businesses. If the corporate restructuring is completed, following a transition
period, it is currently anticipated that Arby's would be led by its current
President and Chief Executive Officer, Douglas N. Benham and the Arby's
management team, and that Deerfield & Company would be led by its current
Chairman and Chief Executive Officer, Gregory H. Sachs, and the Deerfield
management team. In addition, Nelson Peltz and Peter W. May would continue to be
large shareholders and directors of the two new public companies. It is also
currently anticipated that Messrs. Peltz and May would be Chairman and Vice
Chairman, respectively, of Arby's, that Mr. Peltz would continue in his role as
Chairman of DTCC and that Messrs. Peltz, May and Garden would continue in their
roles on the DTCC investment committee. As a result, if the corporate
restructuring is completed, the success of Arby's and Deerfield & Company will
depend to a significant extent upon the efforts and abilities of their
respective senior management teams.
WE HAVE BROAD DISCRETION IN THE USE OF OUR SIGNIFICANT CASH, CASH
EQUIVALENTS AND INVESTMENTS, WHICH WE MAY USE IN WAYS THAT DO NOT IMPROVE OUR
OPERATING RESULTS OR INCREASE THE VALUE OF YOUR INVESTMENT.
As of October 2, 2005, we had approximately $538.5 million of cash and
cash equivalents, restricted cash equivalents, investments other than
investments held in deferred compensation trusts and receivables from sales of
investments, net of liabilities related to investments. This amount includes
$100 million invested in funds managed by DCM and consolidated by us and which
we have agreed not to withdraw before October 4, 2006. We continue to evaluate
strategic opportunities for the use of our significant cash and investment
position, including additional business acquisitions, a potential corporate
restructuring as discussed above under "Potential Corporate Restructuring,"
repurchases of Triarc common stock and investments. We may not be able to
identify any such strategic opportunities or may use our significant cash and
investment position in ways that do not improve our operating results or
increase the value of your investment.
ACQUISITIONS ARE A KEY ELEMENT OF OUR BUSINESS STRATEGY, BUT WE CANNOT
ASSURE YOU THAT WE WILL BE ABLE TO IDENTIFY APPROPRIATE ACQUISITION TARGETS IN
THE FUTURE AND THAT WE WILL BE ABLE TO SUCCESSFULLY INTEGRATE ANY FUTURE
ACQUISITIONS INTO OUR EXISTING OPERATIONS.
Acquisitions involve numerous risks, including difficulties
assimilating new operations and products. In addition, acquisitions may require
significant management time and capital resources. We cannot assure you that we
will have access to the capital required to finance potential acquisitions on
satisfactory terms, that any acquisition would result in long-term benefits to
us or that management would be able to manage effectively the
8
resulting business. Future acquisitions are likely to result in the incurrence
of additional indebtedness, which could contain restrictive covenants, or the
issuance of additional equity securities, which could dilute our existing
stockholders.
WE CANNOT ASSURE YOU THAT OUR PROPOSED CORPORATE RESTRUCTURING WILL BE
SUCCESSFULLY IMPLEMENTED.
We are continuing to explore the feasibility, as well as the risks and
opportunities, of a possible corporate restructuring that may involve the
spin-off of our asset management operations to our stockholders. Our senior
officers have also started the Funds, which are managed and owned by such
officers, and which are separate and distinct from Triarc and the spun-off
businesses. There can be no assurance that the corporate restructuring will
occur or the terms or timing of such restructuring if it does occur. Our failure
to implement these transactions timely and economically could materially
increase our costs and impair our results of operations. Even if the
restructuring is completed, there can be no assurance that the expected benefits
to Triarc and its stockholders would be realized.
OUR INVESTMENT OF EXCESS FUNDS MAY BE SUBJECT TO RISK, PARTICULARLY DUE
TO USE OF LEVERAGE AND THE RISKINESS OF UNDERLYING ASSETS.
From time to time we place our excess cash in investment funds managed
by third parties or by DCM. Some of these funds use substantial leverage in
their trading, including through the use of borrowed funds, total return swaps
and/or other derivatives. The use of leverage generates various risks, including
the exacerbation of losses, increased interest expense in the case of leverage
through borrowing, and exposure to counterparty risk in the case of leverage
through derivatives. However, volatility in the value of a fund is a function
not only of the amount of leverage employed but also of the riskiness of the
underlying investments. Therefore, the greater the amount of leverage used by a
fund and the greater the riskiness of a fund's underlying assets, the greater
the risk associated with our investment in such fund.
WE MAY BE REQUIRED TO TAKE OR NOT TAKE CERTAIN ACTIONS, SUCH AS
FOREGOING INVESTMENT OPPORTUNITIES, SO AS NOT TO BE DEEMED AN "INVESTMENT
COMPANY" UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
The Investment Company Act of 1940, as amended (the "1940 Act"),
requires the registration of, and imposes various restrictions on the operations
of, companies that own "investment securities" having a value exceeding 40% of
their assets (excluding government securities and cash items) on an
unconsolidated basis, absent an available exclusion. We and/or our subsidiaries
may be required to take actions that we and/or our subsidiaries would not
otherwise take so as not to be deemed an "investment company" under the 1940
Act. Presently, neither we nor any of our subsidiaries is an investment company
required to register under the 1940 Act. If we or one of our subsidiaries
invests more than 40% of its assets in investment securities, and is unable to
rely on an exclusion from being an investment company, we and/or that subsidiary
might be required to register under and thus become subject to the restrictions
of the 1940 Act. We and our subsidiaries intend to continue to make acquisitions
and other investments in a manner so as not to be an investment company. As a
result, we and/or our subsidiaries may forego investments that we and/or our
subsidiaries might otherwise make or retain or dispose of investments or assets
that we and/or our subsidiaries might otherwise sell or hold.
IN THE FUTURE, WE MAY HAVE TO TAKE ACTIONS THAT WE WOULD NOT OTHERWISE
TAKE SO AS NOT TO BE SUBJECT TO TAX AS A "PERSONAL HOLDING COMPANY."
If at any time during the last half of our taxable year, five or fewer
individuals own or are deemed to own more than 50% of the total value of our
shares and if during such taxable year we receive 60% or more of our gross
income, as specially adjusted, from specified passive sources, we would be
classified as a "personal holding company" for U.S. federal income tax purposes.
If this were the case, we would be subject to additional taxes at the rate of
15% on a portion of our income, to the extent this income is not distributed to
stockholders. We do not currently expect to have any liability in 2005 for tax
under the personal holding company rules. However, we cannot assure you that we
will not become liable for such tax in the future. Because we do not wish to be
classified as a personal holding company or to incur any personal holding
company tax, we may be required in the future to take actions that we would not
otherwise take. These actions may influence our strategic and business
decisions, including causing us to conduct our business and acquire or dispose
of investments differently than we otherwise would.
9
OUR CERTIFICATE OF INCORPORATION CONTAINS CERTAIN ANTI-TAKEOVER
PROVISIONS AND PERMITS OUR BOARD OF DIRECTORS TO ISSUE PREFERRED STOCK AND
ADDITIONAL SERIES OF CLASS B COMMON STOCK WITHOUT STOCKHOLDER APPROVAL.
Certain provisions in our certificate of incorporation are intended to
discourage or delay a hostile takeover of control of us. Our certificate of
incorporation authorizes the issuance of shares of "blank check" preferred stock
and additional series of Class B common stock, which will have such
designations, rights and preferences as may be determined from time to time by
our board of directors. Accordingly, our board of directors is empowered,
without stockholder approval, to issue preferred stock and/or Class B common
stock with dividend, liquidation, conversion, voting or other rights that could
adversely affect the voting power and other rights of the holders of our Class A
common stock and Class B common stock, Series 1. The preferred stock and
additional series of Class B common stock could be used to discourage, delay or
prevent a change in control of us that is determined by our board of directors
to be undesirable. Although we have no present intention to issue any shares of
preferred stock or additional series of Class B common stock, we cannot assure
you that we will not do so in the future.
RISKS RELATING TO ARBY'S
ARBY'S IS SIGNIFICANTLY DEPENDENT ON NEW RESTAURANT OPENINGS, WHICH MAY
BE INTERRUPTED BY FACTORS BEYOND OUR CONTROL.
Our restaurant business derives a significant portion of its earnings
from franchise royalties and fees from franchised restaurants and sales in
company-owned restaurants. Growth in our restaurant earnings is significantly
dependent on new restaurant openings. Numerous factors beyond our control may
affect restaurant openings. These factors include but are not limited to:
o our ability to attract new franchisees;
o the availability of site locations for new restaurants;
o the ability of potential restaurant owners to obtain financing;
o the ability of restaurant owners to hire, train and retain
qualified operating personnel;
o the availability of construction materials and labor;
o construction and development costs of new restaurants,
particularly in highly-competitive markets;
o the ability of restaurant owners to secure required governmental
approvals and permits in a timely manner, or at all; and
o adverse weather conditions.
Although as of October 2, 2005, franchisees had signed commitments to
open 253 Arby's restaurants and have made or are required to make non-refundable
deposits of $10,000 per restaurant, we cannot assure you that franchisees will
meet these commitments and that they will result in open restaurants.
OUR FRANCHISEES COULD TAKE ACTIONS THAT COULD HARM OUR BUSINESS.
Our franchisees are contractually obligated to operate their
restaurants in accordance with the standards we set in our agreements with them.
We also provide training and support to franchisees. However, franchisees are
independent third parties that we do not control, and the franchisees own,
operate and oversee the daily operations of their restaurants. As a result, the
ultimate success and quality of any franchise restaurant rests with the
franchisee. If franchisees do not successfully operate restaurants in a manner
consistent with our standards, the Arby's image and reputation could be harmed,
which in turn could hurt our business and operating results.
10
OUR SUCCESS DEPENDS ON OUR FRANCHISEES' PARTICIPATION IN OUR STRATEGY.
Our franchisees are an integral part of our business. We may be unable
to successfully implement our brand strategies that we believe are necessary for
further growth if our franchisees do not participate in that implementation. The
failure of our franchisees to focus on the fundamentals of restaurant operations
such as quality, service and cleanliness would have a negative impact on our
success.
OUR FINANCIAL RESULTS ARE AFFECTED BY THE FINANCIAL RESULTS OF OUR
FRANCHISEES.
We receive revenue in the form of royalties and fees from our
franchisees. A substantial portion of our financial results are to a large
extent dependent upon the operational and financial success of our franchisees,
including their implementation of our strategic plans, as well as their ability
to secure adequate financing. If sales trends or economic conditions worsen for
our franchisees, their financial results may worsen and our collection rates may
decline. To the extent we divest restaurants in the future, we may also be
required to assume the responsibility for lease payments for these restaurants
if the relevant franchisees default on their leases. Additionally, if our
franchisees fail to renew their franchise agreements, or if we are required to
restructure our franchise agreements in connection with such renewal, it would
result in decreased revenues for us.
ARBY'S DOES NOT CONTROL ADVERTISING AND PURCHASING FOR THE ARBY'S
RESTAURANT SYSTEM, WHICH COULD HURT SALES AND THE ARBY'S BRAND.
Arby's franchisees control the provision of national advertising and
marketing services to the Arby's franchise system through AFA Service
Corporation, a not-for-profit entity controlled by Arby's franchisees. Subject
to the Company's right to protect its trademarks, and except to the extent that
Arby's participates in AFA Service Corporation through its company-owned
restaurants, AFA Service Corporation makes all decisions regarding the national
marketing and advertising strategies and the creative content of advertising for
the Arby's system. However, in August 2005, Arby's and AFA Service Corporation
entered into a management agreement pursuant to which Arby's, on behalf of AFA
Service Corporation, started to furnish marketing and advertising services to
the Arby's franchisees from October 1, 2005. Although this may afford Arby's
enhanced influence over marketing matters, during the term of the management
agreement, decisions regarding marketing strategy and the marketing calendar
will continue to be subject to the approval of AFA Service Corporation's Board
of Directors, which consists entirely of Arby's franchisees. In addition, local
cooperatives run by operators of Arby's restaurants in a particular local area
(including us) make their own decisions regarding local advertising
expenditures, subject to spending the required minimum amounts. Our lack of
control over advertising could hurt sales and the Arby's brand.
In addition, although Arby's ensures that all suppliers to the Arby's
system meet quality control standards, our franchisees control the purchasing of
food, proprietary paper and other operating supplies from such suppliers through
ARCOP, Inc., a not-for-profit entity controlled by our franchisees. ARCOP
negotiates national contracts for such food and supplies. We are entitled to
appoint one representative on the board of directors of ARCOP and participate in
ARCOP through our company-owned restaurants, but otherwise exercise no control
over the decisions and activities of ARCOP except to ensure that all suppliers
satisfy Arby's quality control standards. If ARCOP does not properly estimate
the needs of the Arby's system with respect to one or more products, makes poor
purchasing decisions, or decides to cease its operations, system sales and the
financial condition of Arby's franchisees could be hurt.
ADDITIONAL INSTANCES OF MAD COW DISEASE OR OTHER FOOD-BORNE ILLNESSES,
SUCH AS BIRD FLU, COULD ADVERSELY AFFECT THE PRICE AND AVAILABILITY OF BEEF,
POULTRY OR OTHER MEATS AND CREATE NEGATIVE PUBLICITY, WHICH COULD RESULT IN A
DECLINE IN OUR SALES.
Instances of mad cow disease or other food-borne illnesses, such as
bird flu, e-coli or hepatitis A, could adversely affect the price and
availability of beef, poultry or other meats, including if additional incidents
cause consumers to shift their preferences to other meats. As a result, Arby's
restaurants could experience a significant increase in food costs if there are
additional instances of mad cow disease or other food-borne illnesses. In
addition to losses associated with higher prices and a lower supply of our food
ingredients, instances of food-borne illnesses could result in negative
publicity for us. This negative publicity, as well as any other negative
publicity concerning
11
food products we serve, may reduce demand for our food and could result in a
decrease in guest traffic to our restaurants. A decrease in guest traffic to
Arby's restaurants as a result of these health concerns or negative publicity
could result in a decline in our sales.
CHANGES IN CONSUMER TASTES AND PREFERENCES AND IN DISCRETIONARY
CONSUMER SPENDING COULD RESULT IN A DECLINE IN SALES AT COMPANY-OWNED
RESTAURANTS AND IN THE ROYALTIES THAT WE RECEIVE FROM FRANCHISEES.
The quick service restaurant industry is often affected by changes in
consumer tastes, national, regional and local economic conditions, discretionary
spending priorities, demographic trends, traffic patterns and the type, number
and location of competing restaurants. Our success depends to a significant
extent on discretionary consumer spending, which is influenced by general
economic conditions and the availability of discretionary income. Accordingly,
we may experience declines in sales during economic downturns. Any material
decline in the amount of discretionary spending or a decline in family
food-away-from-home spending could hurt our sales, results of operations,
business and financial condition.
In addition, if company-owned and franchised restaurants are unable to
adapt to changes in consumer preferences and trends, we and our franchisees may
lose customers and the resulting revenues from company-owned restaurants and the
royalties that Arby's receives from its franchisees may decline.
CHANGES IN FOOD AND SUPPLY COSTS COULD HARM OUR RESULTS OF OPERATIONS.
Our profitability depends in part on our ability to anticipate and
react to changes in food and supply costs. Any increase in food prices,
especially that of roast beef, could harm our operating results. For example, we
experienced increases in the cost of roast beef in 2003 and 2004 due to
decreased supply and increased demand. In addition, we are susceptible to
increases in food costs as a result of factors beyond our control, such as
weather conditions, food safety concerns, product recalls and government
regulations. We cannot predict whether we will be able to anticipate and react
to changing food costs by adjusting our purchasing practices and menu prices,
and a failure to do so could adversely affect our operating results. In
addition, we may not seek to or be able to pass along price increases to our
customers.
COMPETITION FROM OTHER RESTAURANT COMPANIES COULD HURT US.
The market segments in which owned and franchised Arby's restaurants
compete are highly competitive with respect to, among other things, price, food
quality and presentation, service, location, and the nature and condition of the
financed business unit. Arby's restaurants compete with a variety of
locally-owned restaurants, as well as competitive regional and national chains
and franchises. Several of these chains compete by offering higher quality
sandwiches and/or menu items that are specifically identified as low in
carbohydrates or otherwise targeted at certain consumer groups. Additionally,
many of our competitors are introducing lower cost, value meal menu options. Our
revenues and those of our franchisees may be hurt by this product and price
competition.
Moreover, new companies, including operators outside the quick service
restaurant industry, may enter our market areas and target our customer base.
For example, additional competitive pressures for prepared food purchases have
recently come from deli sections and in-store cafes of several major grocery
store chains, as well as from convenience stores and casual dining outlets. Such
competitors may have, among other things, lower operating costs, lower debt
service requirements, better locations, better facilities, better management,
more effective marketing and more efficient operations. All such competition may
adversely affect our revenues and profits by reducing gross revenues of
company-owned restaurants and royalty payments from franchised restaurants. Many
of Arby's competitors have substantially greater financial, marketing, personnel
and other resources than Arby's, which may allow them to react to changes in
pricing and marketing in the quick service restaurant industry better than we
can.
OUR BUSINESS COULD BE HURT BY INCREASED LABOR COSTS OR LABOR SHORTAGES.
Labor is a primary component in the cost of operating our company-owned
restaurants. We devote significant resources to recruiting and training our
managers and hourly employees. Increased labor costs due to
12
competition, increased minimum wage or employee benefits costs or otherwise
would adversely impact our operating expenses. In addition, our success depends
on our ability to attract, motivate and retain qualified employees, including
restaurant managers and staff. If we are unable to do so, our results of
operations may be hurt.
COMPLAINTS OR LITIGATION MAY HURT US.
Occasionally, our customers file complaints or lawsuits against us
alleging that we are responsible for an illness or injury they suffered at or
after a visit to an Arby's restaurant, or alleging that there was a problem with
food quality or operations at an Arby's restaurant. We are also subject to a
variety of other claims arising in the ordinary course of our business,
including personal injury claims, contract claims, claims from franchisees and
claims alleging violations of federal and state law regarding workplace and
employment matters, discrimination and similar matters. We could also become
subject to class action lawsuits related to these matters in the future.
Regardless of whether any claims against us are valid or whether we are found to
be liable, claims may be expensive to defend and may divert our management's
attention away from our operations and hurt our performance. A judgment
significantly in excess of our insurance coverage for any claims could
materially adversely affect our financial condition or results of operations.
Further, adverse publicity resulting from these allegations may hurt us and our
franchisees.
Additionally, the restaurant industry has been subject to a number of
claims that the menus and actions of restaurant chains have led to the obesity
of certain of their customers. Adverse publicity resulting from these
allegations may harm the reputation of Arby's restaurants, even if the
allegations are not directed against Arby's restaurants or are not valid, and
even if we are not found liable or the concerns relate only to a single
restaurant or a limited number of our restaurants. Moreover, complaints,
litigation or adverse publicity experienced by one or more of our franchisees
could also hurt our business as a whole.
OUR CURRENT INSURANCE MAY NOT PROVIDE ADEQUATE LEVELS OF COVERAGE
AGAINST CLAIMS WE MAY FILE.
We currently maintain insurance that we believe is customary for
businesses of our size and type. However, there are types of losses we may incur
that cannot be insured against or that we believe are not economically
reasonable to insure, such as losses due to natural disasters or acts of
terrorism. In addition, we currently self-insure a significant portion of
expected losses under our workers compensation, general liability and property
insurance programs. Unanticipated changes in the actuarial assumptions and
management estimates underlying our reserves for these losses could result in
materially different amounts of expense under these programs, which could harm
our business and cause a decline in our results of operations and financial
condition.
CHANGES IN GOVERNMENTAL REGULATION MAY HURT OUR ABILITY TO OPEN NEW
RESTAURANTS OR OTHERWISE HURT OUR EXISTING AND FUTURE OPERATIONS AND RESULTS.
Each Arby's restaurant is subject to licensing and regulation by
health, sanitation, safety and other agencies in the state and/or municipality
in which the restaurant is located. There can be no assurance that we, or our
franchisees, will not experience material difficulties or failures in obtaining
the necessary licenses or approvals for new restaurants, which could delay the
opening of such restaurants in the future. In addition, more stringent and
varied requirements of local and tax governmental bodies with respect to zoning,
land use and environmental factors could delay or prevent development of new
restaurants in particular locations. We, and our franchisees, are also subject
to the Fair Labor Standards Act, which governs such matters as minimum wages,
overtime and other working conditions, along with the Americans with
Disabilities Act, family leave mandates and a variety of other laws enacted by
the states that govern these and other employment law matters. We cannot predict
the amount of future expenditures that may be required in order to permit our
company-owned restaurants to comply with any changes in existing regulations or
to comply with any future regulations that may become applicable to our
business.
OUR OPERATIONS COULD BE INFLUENCED BY WEATHER CONDITIONS.
Weather, which is unpredictable, can impact our restaurant sales. Harsh
weather conditions that keep customers from dining out result in lost
opportunities for our restaurants. A heavy snowstorm in the Northeast or Midwest
or a hurricane in the Southeast can shut down an entire metropolitan area,
resulting in a reduction in sales
13
in that area. Our first quarter includes winter months and historically has a
lower level of sales. Because a significant portion of our restaurant operating
costs is fixed or semi-fixed in nature, the loss of sales during these periods
hurts our operating margins, resulting in restaurant operating losses. For these
reasons, a quarter-to-quarter comparison may not be a good indication of our
performance or how we may perform in the future.
OUR SUBSIDIARY, ARBY'S RESTAURANT HOLDINGS, LLC AND ITS SUBSIDIARIES
ARE SUBJECT TO VARIOUS RESTRICTIONS, AND SUBSTANTIALLY ALL OF THEIR ASSETS ARE
PLEDGED UNDER THE NEW CREDIT AGREEMENT.
Under the new credit agreement, substantially all of the assets of
Arby's Restaurant Holdings, LLC and its subsidiaries (other than real property)
are pledged as collateral security. The affirmative and negative covenants under
the new credit facility include, among others, preservation of corporate
existence, payment of taxes, maintenance of insurance, limitations on liens,
limitations on debt, limitations on dividends, redemptions and repurchases with
respect of capital stock and limitations on transactions with affiliates. The
new credit agreement also contains the following financial covenants: a maximum
leverage ratio, a maximum lease adjusted leverage ratio, a minimum interest
coverage ratio and maximum capital expenditures. Mandatory prepayments of the
credit facilities will be required upon the occurrence of certain events,
including the incurrence of additional indebtedness and the sale of assets under
certain circumstances. Commencing in March 2007, the loans must also be prepaid
from excess cash flow if a certain leverage ratio is exceeded. If Arby's
Restaurant Holdings, LLC and its subsidiaries are unable to generate sufficient
cash flow or otherwise obtain the funds necessary to make required payments of
interest or principal under, or are unable to comply with covenants of, the new
credit agreement, they would be in default under the terms of the agreement
which would, under certain circumstances, permit the lenders to accelerate the
maturity of the balance of the indebtedness under the new credit agreement.
RISKS RELATING TO DEERFIELD
DCM MAY LOSE CLIENT ASSETS, AND THUS FEE REVENUE, FOR VARIOUS REASONS.
DCM's success depends on its ability to earn investment advisory fees
from the client accounts it manages. Such fees generally consist of payments
based on the amount of assets in the account (management fees), and on the
profits earned by the account or the returns to certain investors in the
accounts (performance fees). If there is a reduction in an account's assets,
there will be a corresponding reduction in DCM's management fees from the
account, and a likely reduction in DCM's performance fees (if any) relating to
the account, since the smaller the account's asset base the smaller will be the
potential profits earned by the account. There could be a reduction in an
account's assets as the result of investment losses in the account, the
withdrawal by investors of their capital in the account, or both. Investors in
the accounts managed by DCM have various types of withdrawal rights, ranging
from the right of investors in separate accounts to withdraw any or all of their
capital on a daily basis, the right of investors in hedge funds to withdraw
their capital on a monthly or quarterly basis, and the right of investors in
collateral debt obligation vehicles ("CDOs") to terminate the CDO in specified
situations. Investors may withdraw capital for many reasons, including their
dissatisfaction with the account's performance, adverse publicity regarding DCM,
DCM's loss of key personnel, errors in reporting to investors account values or
account performance, other matters resulting from problems in DCM's systems
technology, investors' desire to invest the capital elsewhere, and their need
(in the case of investors that are themselves investment funds) for the capital
to fund withdrawals by their investors. DCM could experience a major loss of
account assets, and thus advisory fee revenue, at any time.
DCM COULD BE REMOVED AS INVESTMENT MANAGER OF ACCOUNTS IT MANAGES, THUS
LOSING ANY FUTURE FEE REVENUE FROM THE ACCOUNT.
The accounts managed by DCM generally have the right to remove DCM as
the investment manager of the account, and replace DCM with a substitute
investment manager, pursuant to the investment management agreement between the
account and DCM. There are significant differences among the accounts in terms
of removal rights, but in some cases, such as CDOs, DCM can be removed without
cause by investors that hold a specified amount of the securities issued by the
CDO. In the event of its removal, DCM would no longer receive any advisory fees
from the account, and any termination fees received by DCM would likely be
insignificant.
14
DCM COULD LOSE CLIENT ASSETS AS THE RESULT OF THE LOSS OF KEY DCM
PERSONNEL.
DCM generally assigns the management of its investment products to
specific teams, consisting of DCM portfolio management and other personnel. The
loss of a particular member or members of such a team - for example, because of
resignation or retirement - could cause investors in the product to withdraw all
or a portion of their investment in the product, and adversely affect the
marketing of the product to new investors. In the case of some accounts, such as
certain CDOs, DCM can be removed as investment manager upon its loss of
specified key employees. In addition to the loss of specific portfolio
management team members, the loss of one or more members of DCM's senior
management involved in supervising the portfolio teams could have similar
adverse effects on DCM's investment products.
DCM MAY NEED TO OFFER NEW INVESTMENT STRATEGIES AND PRODUCTS IN ORDER
TO CONTINUE TO GENERATE REVENUE.
The segments of the asset management industry in which DCM operates are
subject to rapid change. Investment strategies and products that had
historically been attractive to investors may lose their appeal, for various
reasons. Thus, strategies and products that have generated fee revenue for DCM
in the past may fail to do so in the future, in which case DCM would have to
develop new strategies and products in order to retain investors or replace
withdrawing investors with new investors. It could be both expensive and
difficult for DCM to develop new strategies and products, and there is no
assurance that DCM would be successful in this regard. In addition, alternative
asset management products represent a substantially smaller segment of the
overall asset management industry than traditional asset management products
(such as many corporate bond funds). DCM's inability to expand its offerings
beyond alternative asset management products could inhibit the growth of its
business.
CHANGES IN THE FIXED INCOME MARKETS COULD ADVERSELY AFFECT DCM.
DCM's success generally depends on the attractiveness to institutional
investors of investing in the fixed income markets, and changes in those markets
could significantly reduce the appeal of DCM's investment products to such
investors. Such changes could include increased volatility in the prices of
fixed income instruments, periods of illiquidity in the fixed income trading
markets, adverse changes in the taxation of fixed income instruments,
significant changes in the "spreads" in the fixed income markets (the amount by
which the yields on particular fixed income instruments exceed the yields on
benchmark U.S. Treasury securities), and the lack of arbitrage opportunities
between U.S. Treasury securities and their related instruments (such as interest
rate swap and futures contracts). Such changes may be caused by many reasons,
including economic and political events and acts of terrorism beyond DCM's
control. If adverse changes in the prices of fixed income instruments caused
DCM's revenues to decline, this could have a material and adverse effect on
DCM's earnings.
THE NARROWING OF CDO SPREADS COULD MAKE IT DIFFICULT FOR DCM TO LAUNCH
NEW CDOS.
It is important for DCM to be able to launch new CDO products from time
to time, both to expand its CDO activities (which are a major part of DCM's
business) and to replace existing CDOs as they are terminated or mature. The
ability to launch new CDOs is dependent on, among other factors, the amount by
which the interest earned on the collateral held by the CDO (such as bank loans
or corporate bonds) exceeds the interest payable by the CDO on the debt
obligations it issues to investors. If these "spreads" are not wide enough, the
proposed CDO will not be attractive to investors and thus cannot be launched.
There may be sustained periods when such spreads will not be sufficient for DCM
to launch new CDO products.
DCM'S FEE REVENUE COULD BE REDUCED BECAUSE OF THE NEED TO LOWER THE
ADVISORY FEES IT CHARGES.
As a general matter, the fees charged by "alternative" asset managers
such as DCM are higher than those charged by traditional managers, particularly
with respect to hedge funds and similar products. This could change, however, as
a result of competitive pressures or other factors and DCM might have to reduce
the fees it charges to some or all of its clients. This would reduce DCM's fee
revenue unless DCM was able to counteract the effect of the lower fees by
increasing its assets under management. There is no assurance that DCM will be
able to do so.
15
DCM COULD LOSE CLIENT ASSETS AS THE RESULT OF ADVERSE PUBLICITY.
Asset managers such as DCM can be particularly vulnerable to losing
clients because of adverse publicity. Asset managers are generally regarded as
fiduciaries, and if they fail to adhere at all times to a high level of honesty,
fair dealing and professionalism they can incur large and rapid losses of client
assets. Accordingly, a relatively small lapse in this regard, particularly if it
resulted in a regulatory investigation or enforcement proceeding, could hurt
DCM's business.
DCM COULD LOSE MANAGEMENT FEE INCOME FROM ITS CDOS BECAUSE OF PAYMENT
DEFAULTS BY ISSUERS OF COLLATERAL HELD BY THE CDOS.
Pursuant to the investment management agreements between DCM and the
CDOs it manages, DCM's management fee from the CDO is generally subject to a
"waterfall" structure, under which DCM will not receive all or a portion of its
fees if, among other things, the CDO does not have sufficient income from its
underlying collateral (such as corporate bonds or bank loans) to pay the
required interest on the notes it has issued to investors and certain expenses.
This could occur if there are defaults by issuers of the collateral on their
payments of principal or interest relating to the collateral. In that event,
DCM's management fees would be deferred until funds are available to pay the
fees, if such funds become available.
DCM MAY BE UNABLE TO INCREASE ITS ASSETS UNDER MANAGEMENT IN CERTAIN OF
ITS INVESTMENT VEHICLES, OR IT MAY HAVE TO REDUCE SUCH ASSETS, BECAUSE OF
CAPACITY CONSTRAINTS.
A number of DCM's investment vehicles are limited in the amount of
client assets they can accommodate by the amount of liquidity in the instruments
traded by such vehicles, the arbitrage opportunities available in those
instruments, or other factors. Thus, DCM may manage investment vehicles that are
relatively successful but that cannot accept additional capital because of such
constraints. Conversely, DCM might have to reduce the amount of assets managed
by investment vehicles that face capacity constraints. Changes in the fixed
income markets could materially increase capacity constraints, such as an
increase in the number of asset managers using the same or similar strategies as
DCM.
DCM MAY LOSE CLIENT ASSETS BECAUSE OF COMPETITION FROM OTHER ASSET
MANAGERS.
The areas of the asset management industry in which DCM operates are
highly competitive. For example, there are numerous other asset managers that
have substantial experience in managing CDOs, fixed income arbitrage hedge funds
and REITs. DCM could lose existing and prospective clients to these managers for
various reasons, such as lower advisory fees than those charged by DCM or
investment vehicles with more attractive structural features than those managed
by DCM. In addition, DCM may be at a disadvantage in competing with other asset
managers for clients for various other reasons, such as that DCM may be
competing with managers that are subject to less regulation and thus less
restricted in their client solicitation and portfolio management activities, and
DCM may be competing for non-U.S. clients with asset managers that are based in
the jurisdiction of the prospective client's domicile. The barriers to entry
into the asset management business are not particularly high, and thus DCM may
face increased competition from many new entrants. DCM's current focus is on
providing fixed income asset management services to institutional clients, and
the market for such services is limited.
CHANGES IN GOVERNMENTAL REGULATIONS, ACCOUNTING STANDARDS OR TAXATION
COULD ADVERSELY AFFECT DCM'S BUSINESS.
The level of investor participation in the products offered by DCM is
affected by various factors other than the actual performance of the products,
such as regulatory and self-regulatory requirements and restrictions applicable
to DCM, the products or the investors in the products, the manner in which
investors in the products must account for their investments for financial
reporting purposes, and the manner in which such investors are taxed on their
investments. Adverse changes in any of these areas could cause DCM to lose
existing investors and fail to attract new investors.
16
DCM IS SUBJECT TO EXTENSIVE REGULATION, WHICH COULD MATERIALLY AND
ADVERSELY AFFECT ITS BUSINESS.
DCM's business is subject to extensive government regulation. This
regulation is primarily at the federal level, through regulation by the SEC
under the Investment Advisers Act of 1940, as amended, and regulation by the
Commodity Futures Trading Commission, or CFTC, under the Commodity Exchange Act.
The Investment Advisers Act imposes numerous obligations on investment advisers
including record-keeping, advertising and operating requirements, disclosure
obligations and prohibitions on fraudulent activities. The CFTC regulates
commodity futures and option markers and imposes numerous obligations on the
industry. DCM is registered with the CFTC as both a commodity trading advisor
and a commodity pool operator and certain of its employees are registered with
CFTC as "associated persons." DCM is also a member of the National Futures
Association, the self-regulatory organization for the U.S. commodity futures
industry, and thus subject to its regulations. If DCM fails to comply with
applicable laws or regulations, it could be subject to fines, censure,
suspensions of personnel or other sanctions, including revocation of its
registration as an investment adviser, commodity trading advisor or commodity
pool operator, any of which could cause its earnings to decline.
Although DCM is not directly regulated outside of the United States,
the non-U.S. domiciled investment funds that it manages are regulated in the
jurisdiction of their domicile. Changes in these non-U.S. laws, regulations or
government policies could limit DCM's revenues from these funds, increase its
costs of doing business in these jurisdictions and materially and adversely
affect its business. Furthermore, to the extent DCM expands its business into
foreign jurisdictions and establishes offices or subsidiaries overseas, DCM
could become subject to non-U.S. laws, regulations and government policies.
DCM IS NOT AS DIVERSIFIED AS NUMEROUS OTHER RELATIVELY LARGE ASSET
MANAGERS.
DCM currently focuses almost exclusively on fixed income securities and
related financial instruments in managing client accounts. DCM has little or no
experience in investing in equity securities. This is in contrast to numerous
other asset managers with comparable assets under management, which have
significant background and experience in both the equity and debt markets. These
managers have a more diversified revenue base than DCM and thus are better able
to withstand periods of lack of investor interest in a particular asset class.
DCM'S EMPHASIS ON PERFORMANCE FEES MAY INCREASE ITS EARNINGS
VOLATILITY.
A portion of DCM's revenues are derived from performance fees on the
various accounts that it manages. Performance fees are based on investment
returns. With respect to DCM's hedge funds, DCM is entitled to a performance fee
to the extent that the current period profits exceed the prior period's losses.
With respect to DCM's REIT and CDOs, it is entitled to performance fees only if
the returns on the related portfolios exceed agreed-upon periodic or cumulative
return targets. Performance fees will vary from period to period in relation to
volatility in investment returns, causing DCM's earnings to be more volatile
than if it did not manage assets on a performance fee basis. Alternative asset
managers such as DCM typically derive a greater portion of their revenues from
performance fees than traditional asset managers, thus increasing the potential
volatility in DCM's earnings.
DCM'S FAILURE TO COMPLY WITH GUIDELINES SET BY ITS CLIENTS COULD RESULT
IN DAMAGE AWARDS AGAINST DCM AND A LOSS OF ASSETS UNDER MANAGEMENT.
As an investment adviser, DCM has a fiduciary duty to its clients. When
clients retain DCM to manage assets on their behalf, they may specify certain
guidelines regarding investment allocation and strategy that DCM must observe in
the management of their portfolios. DCM's failure to comply with these
guidelines could result in losses to a client or a fund that the client or
investors in the fund, as the case may be, could seek to recover from DCM and
could result in the client withdrawing its assets from management, the fund
terminating DCM's management agreement or investors withdrawing their capital
from the fund. Although DCM has installed procedures and utilizes the services
of experienced administrators, accountants and lawyers to assist it in adhering
to these guidelines, and maintains limited insurance to protect DCM in the case
of client losses, DCM cannot assure you that such precautions or insurance will
protect DCM from potential liabilities. The occurrence of any of these events
could cause DCM's earnings to decline.
17
OTHER RISKS
WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY,
WHICH COULD HARM THE VALUE OF OUR BRANDS AND HURT OUR BUSINESS.
Our intellectual property is material to the conduct of our business.
We rely on a combination of trademarks, copyrights, service marks, trade secrets
and similar intellectual property rights to protect our brands and other
intellectual property. The success of our business strategy depends, in part, on
our continued ability to use our existing trademarks and service marks in order
to increase brand awareness and further develop our branded products in both
existing and new markets. If our efforts to protect our intellectual property
are not adequate, or if any third party misappropriates or infringes on our
intellectual property, either in print or on the Internet, the value of our
brands may be harmed, which could have a material adverse effect on our
business, including the failure of our brands to achieve and maintain market
acceptance. This could harm our image, brand or competitive position and, if we
commence litigation to enforce our rights, cause us to incur significant legal
fees.
We franchise our restaurant brands to various franchisees. While we try
to ensure that the quality of our brands is maintained by all of our
franchisees, we cannot assure you that these franchisees will not take actions
that hurt the value of our intellectual property or the reputation of the Arby's
restaurant system. We have registered certain trademarks and have other
trademark registrations pending in the United States and certain foreign
jurisdictions. The trademarks that we currently use have not been registered in
all of the countries outside of the United States in which we do business or may
do business in the future and may never be registered in all of these countries.
We cannot assure you that all of the steps we have taken to protect our
intellectual property in the United States and foreign countries will be
adequate. The laws of some foreign countries do not protect intellectual
property rights to the same extent as the laws of the United States.
In addition, we cannot assure you that third parties will not claim
infringement by us in the future. Any such claim, whether or not it has merit,
could be time-consuming, result in costly litigation, cause delays in
introducing new menu items or investment products or require us to enter into
royalty or licensing agreements. As a result, any such claim could harm our
business and cause a decline in our results of operations and financial
condition.
WE, AND SOME OF OUR SUBSIDIARIES, REMAIN CONTINGENTLY LIABLE WITH
RESPECT TO CERTAIN OBLIGATIONS RELATING TO BUSINESSES THAT WE HAVE SOLD.
In July 1999, we sold 41.7% of our then remaining 42.7% interest in
National Propane Partners, L.P. and a sub-partnership, National Propane, L.P. to
Columbia Energy Group, and retained less than a 1% special limited partner
interest in AmeriGas Eagle Propane, L.P. (formerly known as National Propane,
L.P. and as Columbia Propane, L.P.). As part of the transaction, our subsidiary,
National Propane Corporation, agreed that while it remains a special limited
partner of AmeriGas, it would indemnify the owner of AmeriGas for any payments
the owner makes under certain debt of AmeriGas (aggregating approximately $138
million as of January 2, 2005), if AmeriGas is unable to repay or refinance such
debt, but only after recourse to the assets of AmeriGas. Either National Propane
Corporation or AmeriGas Propane, L.P., the owner of AmeriGas, may require
AmeriGas to repurchase the special limited partner interest. However, we believe
it is unlikely that either party would require repurchase prior to 2009 as
either AmeriGas Propane, L.P. would owe us tax indemnification payments or we
would accelerate payment of deferred taxes, which amount to approximately $36.1
million as of October 2, 2005, associated with our sale of the propane business.
Although we believe that it is unlikely that we will be called upon to
make any payments under the indemnification described above, if we are required
to make such payments it could have a material adverse effect on our financial
position and results of operations.
CHANGES IN GOVERNMENTAL REGULATION MAY ADVERSELY AFFECT OUR EXISTING
AND FUTURE OPERATIONS AND RESULTS.
Certain of our current and past operations are or have been subject to
federal, state and local environmental laws and regulations concerning the
discharge, storage, handling and disposal of hazardous or toxic substances that
18
provide for significant fines, penalties and liabilities, in certain cases
without regard to whether the owner or operator of the property knew of, or was
responsible for, the release or presence of such hazardous or toxic substances.
In addition, third parties may make claims against owners or operators of
properties for personal injuries and property damage associated with releases of
hazardous or toxic substances. Although we believe that our operations comply in
all material respects with all applicable environmental laws and regulations, we
cannot predict what environmental legislation or regulations will be enacted in
the future or how existing or future laws or regulations will be administered or
interpreted. We cannot predict the amount of future expenditures that may be
required in order to comply with any environmental laws or regulations or to
satisfy any such claims.
RISKS RELATING TO OUR COMMON STOCK
WE ARE A HOLDING COMPANY AND DEPEND ON DIVIDENDS OF AND DISTRIBUTIONS
FROM OUR SUBSIDIARIES AND OUR CASH OR CASH EQUIVALENTS TO MEET OUR OBLIGATIONS.
Because we are a holding company, our ability to service debt and pay
dividends, including dividends on our Class A common stock and Class B common
stock, is dependent upon our cash, cash equivalents and short-term investments
on hand, cash flows from our subsidiaries, including loans, cash dividends and
reimbursement by subsidiaries to us in connection with providing certain
management services and payments by subsidiaries under certain tax sharing
agreements. At October 2, 2005, the cash flow from our subsidiaries is
inadequate to cover all of the expenses of our holding company. Accordingly, we
may need to use our cash and cash equivalents or income from other investments
we may make to pay dividends on our common stock and preferred stock (if any)
and interest and principal on our debt securities.
Under the terms of the new credit agreement, there are restrictions on
the ability of Arby's Restaurant Holdings, LLC and its subsidiaries to pay
dividends and/or make loans or advances to us. The ability of any of our
subsidiaries to pay cash dividends and/or make loans or advances to us is also
dependent upon the respective abilities of such entities to achieve sufficient
cash flows after satisfying their respective cash requirements, including debt
service, to enable the payment of such dividends or the making of such loans or
advances.
THE THEN CURRENT HOLDERS OF OUR COMMON STOCK MAY EXPERIENCE A DILUTION
IN THE VALUE OF THEIR EQUITY INTEREST AS A RESULT OF THE ISSUANCE AND SALE OF
ADDITIONAL SHARES OF OUR COMMON STOCK.
We may decide to raise additional funds through public or private debt
or equity financing to fund our operations. If we raise funds by issuing equity
securities, the percentage ownership of then current securityholders will be
reduced and the new equity securities may have rights senior to those of the
then outstanding common stock. This dilution could be significant depending upon
the type of financing obtained and the terms of such financing.
SHARES OF OUR COMMON STOCK OR PREFERRED STOCK ELIGIBLE FOR PUBLIC SALE
COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR CLASS A COMMON STOCK AND CLASS B
COMMON STOCK, SERIES 1, AND ANY OTHER OF OUR SECURITIES THAT MAY BE LISTED IN
THE FUTURE.
The market price of our Class A common stock and Class B common stock,
Series 1, and any other of our securities that may be listed in the future could
decline as a result of sales of a large number of shares in the market in the
future or market perception that such sales could occur, including sales or
distributions of shares by one or more of our large securityholders or by our
controlling securityholder. These factors could also make it more difficult for
us to raise funds through offerings of equity securities in the future at a time
and at a price that we deem appropriate. As of October 31, 2005, there were
23,964,599 shares of our Class A common stock and 52,472,346 shares of our Class
B common stock, Series 1, outstanding. All of the shares of Class A common stock
and Class B common stock, Series 1, are freely transferable without restriction
or further registration under the federal securities laws, except for any shares
held by our affiliates, sales of which will be limited by Rule 144 under the
Securities Act absent registration under the Securities Act, and except for the
shares covered by this prospectus.
19
WE HAVE OUTSTANDING A SUBSTANTIAL AMOUNT OF STOCK OPTIONS EXERCISABLE
INTO OUR CLASS A COMMON STOCK AND CLASS B COMMON STOCK, SERIES 1.
As of October 2, 2005, options to purchase 3,546,968 shares of our
Class A common stock and 13,333,102 shares of our Class B common stock, Series
1, were outstanding under our equity participation plans for our directors,
officers, key employees and consultants and had 4,736,134 shares of Class A
common stock and 2,808,828 shares of Class B common stock, Series 1, available
for future grant. In addition, as of October 2, 2005, there were outstanding
options to purchase 774,066 shares of our Class B common stock, Series 1 that
were issued in connection with the RTM acquisition in replacement of existing
RTM stock options. The exercise of outstanding options or the future issuance of
options (and the exercise of such options) or restricted stock will dilute the
beneficial ownership of holders of our Class A common stock and Class B common
stock, Series 1.
THE PRICE OF OUR CLASS A COMMON STOCK AND CLASS B COMMON STOCK, SERIES
1, MAY FLUCTUATE SIGNIFICANTLY.
The price of our Class A common stock and Class B common stock, Series
1, on the New York Stock Exchange constantly changes. We expect that the market
price of our Class A common stock and Class B common stock, Series 1, will
continue to fluctuate. Our stock prices can fluctuate as a result of a variety
of factors, many of which are beyond our control. These factors include:
o significant acquisitions or business combinations, strategic
partnerships, joint ventures or capital commitments by or
involving us or our competitors;
o failure to integrate our acquisitions or realize anticipated
benefits from our acquisitions;
o competition, including pricing pressures, the potential impact of
competitors' new units on sales by Arby's restaurants and
consumers' perceptions of the relative quality, variety and value
of the food products offered;
o market acceptance of new product offerings;
o new product and concept development by competitors;
o changing trends in consumer tastes and preferences (including
changes resulting from health or safety concerns with respect to
the consumption of beef, french fries or other foods or the
effects of food-borne illnesses) and in spending and demographic
patterns;
o the ability of franchisees to open new restaurants in accordance
with their development commitments, including the ability of
franchisees to finance restaurant development;
o delays in opening new restaurants or completing remodels;
o anticipated and unanticipated restaurant closures by us and our
franchisees;
o availability of qualified personnel to us and to our franchisees;
o changes in government regulations;
o changes in applicable accounting policies and practices; and
o geopolitical conditions such as acts or threats of terrorism or
military conflicts.
General market fluctuations, industry factors and economic conditions,
such as economic slowdowns, recessions or interest rate changes, also could
cause our stock price to fluctuate. See "Forward-Looking Statements."
20
In addition, the stock market in general has experienced extreme
volatility that has often been unrelated to the operating performance of a
particular company. These broad market fluctuations may adversely affect the
market price of our Class A common stock and Class B common stock, Series 1.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus or incorporated by
reference into this prospectus are "forward-looking statements" that involve
risks, uncertainties and assumptions with respect to us, including some
statements concerning the transactions described in this prospectus, future
results, plans, goals and other events which have not yet occurred. These
statements are intended to qualify for the safe harbors from liability provided
by Section 27A of the Securities Act and Section 21E of the Exchange Act. You
can find many (but not all) of these statements by looking for words like
"will," "may," "believes," "expects," "anticipates," "forecast," "future,"
"intends," "plans" and "estimates" and for similar expressions.
These forward-looking statements are based on our current expectations,
speak only as of the date of this prospectus and are susceptible to a number of
risks, uncertainties and other factors. Our actual results, performance and
achievements may differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. For those
statements, we claim the protection of the safe-harbor for forward-looking
statements contained in the Securities Litigation Reform Act of 1995. Many
important factors could affect our future results and could cause those results
to differ materially from those expressed in the forward-looking statements
contained in this prospectus. Such factors include, but are not limited to, the
following:
o competition, including pricing pressures and the potential impact
of competitors' new units on sales by Arby's restaurants;
o consumers' perceptions of the relative quality, variety and value
of the food products we offer;
o success of operating initiatives;
o development costs;
o advertising and promotional efforts;
o brand awareness;
o the existence or absence of positive or adverse publicity;
o new product and concept development by us and our competitors, and
market acceptance of such new product offerings and concepts;
o changes in consumer tastes and preferences, including changes
resulting from concerns over nutritional or safety aspects of
beef, poultry, french fries or other foods or the effects of
food-borne illnesses such as "mad cow disease" and avian influenza
or "bird flu";
o changes in spending patterns and demographic trends;
o adverse economic conditions, including high unemployment rates,
in geographic regions that contain a high concentration of Arby's
restaurants;
o the business and financial viability of key franchisees;
o the timely payment of franchisee obligations due to us;
o availability, location and terms of sites for restaurant
development by us and our franchisees;
21
o the ability of our franchisees to open new restaurants in
accordance with their development commitments, including the
ability of franchisees to finance restaurant development;
o delays in opening new restaurants or completing remodels;
o anticipated or unanticipated restaurant closures by us and our
franchisees;
o our ability to identify, attract and retain potential franchisees
with sufficient experience and financial resources to develop and
operate Arby's restaurants;
o changes in business strategy or development plans, and the
willingness of our franchisees to participate in our strategy;
o business abilities and judgment of our and our franchisees'
management and other personnel;
o availability of qualified restaurant personnel to us and to our
franchisees;
o our ability, if necessary, to secure alternative distribution of
supplies of food, equipment and other products to Arby's
restaurants at competitive rates and in adequate amounts, and the
potential financial impact of any interruptions in such
distribution;
o changes in commodity (including beef), labor, supplies and other
operating costs and availability and cost of insurance;
o adverse weather conditions;
o significant reductions in our client assets under management
(which would reduce our advisory fee revenue), due to such factors
as weak performance of our investment products (either on an
absolute basis or relative to our competitors or other investment
strategies), substantial illiquidity or price volatility in the
fixed income instruments that we trade, loss of key portfolio
management or other personnel, reduced investor demand for the
types of investment products we offer, and loss of investor
confidence due to adverse publicity;
o increased competition from other asset managers offering similar
types of products to those we offer;
o pricing pressure on the advisory fees that we can charge for our
investment advisory services;
o difficulty in increasing assets under management, or efficiently
managing existing assets, due to market-related constraints on
trading capacity or lack of potentially profitable trading
opportunities;
o our removal as investment manager of one or more of the CDOs or
other accounts we manage, or the reduction in our CDO management
fees because of payment defaults by issuers of the underlying
collateral;
o availability, terms (including changes in interest rates) and
deployment of capital;
o changes in legal or self-regulatory requirements, including
franchising laws, investment management regulations, accounting
standards, environmental laws, overtime rules, minimum wage rates
and taxation rates;
o the costs, uncertainties and other effects of legal, environmental
and administrative proceedings;
o the impact of general economic conditions on consumer spending or
securities investing, including a slower consumer economy, rising
energy and gasoline prices and the effects of war or terrorist
activities;
22
o our ability to identify appropriate acquisition targets in the
future and to successfully integrate acquisitions into our
existing operations; and
o other risks and uncertainties referred to in this prospectus and
in our other current and periodic filings with the SEC, all of
which are difficult or impossible to predict accurately and many
of which are beyond our control.
We will not undertake and specifically decline any obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events. In addition, it is our policy generally not to make any specific
projections as to future earnings, and we do not endorse any projections
regarding future performance that may be made by third parties.
USE OF PROCEEDS
We will not receive any proceeds from the sale of our Class B common
stock, Series 1, by the selling stockholders.
23
SELLING STOCKHOLDERS
The shares of our Class B common stock, Series 1, to which this
prospectus relates are being registered for offers and sales by the selling
stockholders named below. We have registered the shares to permit the selling
stockholders and some of their transferees after the date of this prospectus to
sell the shares when they deem appropriate. We refer to all of these possible
sellers as the "selling stockholders" in this prospectus. The selling
stockholders may sell all, a portion or none of their shares at any time.
The following table sets forth information regarding the beneficial
ownership of the Class B common stock, Series 1, by the selling stockholders as
of October 31, 2005.
SHARES OF
CLASS B COMMON
SHARES OF CLASS B COMMON STOCK, STOCK, SERIES 1, SHARES OF CLASS B COMMON
SERIES 1, BENEFICIALLY OWNED THAT MAY BE SOLD STOCK, SERIES 1, BENEFICIALLY
PRIOR TO OFFERING(1) HEREUNDER(1) OWNED AFTER OFFERING
------------------------------- -------------------------------- ------------------- --------------------------------
NAME NUMBER PERCENT NUMBER PERCENT
Russell V. Umphenour, Jr.(2) 3,614,427 6.9% 3,614,177 250 *
Dennis E. Cooper 1,571,498 3.0% 1,571,498 - -
Thomas A. Garrett 1,034,010(3) 2.0% 711,414 322,596(3) *
J. Russell Welch 947,119 1.8% 947,119 - -
Russell V. Umphenour, III 647,259 1.2% 647,259 - -
Sharon S. Umphenour 526,355 1.0% 526,355 - -
Sharron L. Barton 254,219 * 254,219 - -
Cooper Family Partnership 207,783 * 207,783 - -
Deborah K. Pike 198,453 * 198,453 - -
Michael I. Lippert 116,313(4)(5) * 100,553 15,760(5) *
Joseph Gondolfo 117,199 * 117,199 - -
J. David Pipes 107,885(6) * 3,866 104,019(6) *
Royal Family Kids Camp 103,891 * 103,891 - -
Michael B. Abt 100,553 * 100,553 - -
John L. Gray, Jr. 100,553 * 100,553 - -
Robert P. Rogers 100,553 * 100,553 - -
Ray Biondi 85,961 * 85,961 - -
Robert S. Stallings 30,165 * 30,165 - -
John A. Todd, Jr. 30,165 * 30,165 - -
Karen G. Samples 29,589 * 29,589 - -
Gregory L. Hawkins 20,431 * 20,431 - -
Allison K. Hyer 20,270 * 20,270 - -
Susan A. Bauer 20,110 * 20,110 - -
Daniel T. Collins 20,110 * 20,110 - -
Wendy E. Henderson 20,110 * 20,110 - -
Jeryl M. McIntyre 20,110 * 20,110 - -
Melissa M. Strait 20,110 * 20,110 - -
Michael P. Kovac 11,658 * 11,658 - -
John M. Davis, Jr. 11,034 * 11,034 - -
Jason T. Abelkop 10,908 * 10,908 - -
Patrick S. Herreman 10,215 * 10,215 - -
Thomas L. Stager 10,055 * 10,055 - -
Lynn P. Alexander 2,285 * 2,285 - -
Jerry R. Ardizzone 1,513 * 1,513 - -
Cynthia S. Richardson 1,481 * 1,481 - -
24
SHARES OF
CLASS B COMMON
SHARES OF CLASS B COMMON STOCK, STOCK, SERIES 1, SHARES OF CLASS B COMMON
SERIES 1, BENEFICIALLY OWNED THAT MAY BE SOLD STOCK, SERIES 1, BENEFICIALLY
PRIOR TO OFFERING(1) HEREUNDER(1) OWNED AFTER OFFERING
------------------------------- -------------------------------- ------------------- --------------------------------
NAME NUMBER PERCENT NUMBER PERCENT
Christopher P. Kuehn 804 * 804 - -
James M. Hannan 504 * 504 - -
John S. Dritt 489 * 489 - -
John A. Odachowski 489 * 489 - -
Kito O. Cody 160 * 160 - -
Gary A. Clough 145 * 145 - -
--------------------
*Less than 1%.
(1) Includes shares of Class B common stock, Series 1 deposited in an
escrow account in connection with the RTM acquisition. See "The
RTM Acquisition."
(2) Mr. Umphenour became a director of Triarc on August 11, 2005. He
received 250 shares of Class B common stock, Series 1 on October
3, 2005 in lieu of a cash payment of director's fees otherwise
payable to him.
(3) Includes options to purchase 322,596 shares of our Class B common
stock, Series 1 held by Mr. Garrett that have vested.
(4) Includes 88,058 shares of our Class B common stock, Series 1
pledged by Mr. Lippert in favor of ARG. See "The RTM Acquisition."
(5) Includes options to purchase 15,760 shares of our Class B common
stock, Series 1 held by Mr. Lippert that have vested.
(6) Includes options to purchase 104,019 shares of our Class B common
stock, Series 1 held by Mr. Pipes that have vested.
RELATIONSHIP WITH SELLING STOCKHOLDERS
All of the shares offered by the selling stockholders were received by
them in connection with the RTM acquisition. As part of the total consideration
in the RTM acquisition, we issued 9,684,316 shares of our Class B common stock,
Series 1 and options to purchase approximately 774,000 shares of our Class B
common stock, Series 1 (with a weighted average exercise price of $8.92 per
share). The number of shares and options that were issued to the selling
stockholders are set forth above. Of the shares that were issued, a total of
1,203,372 shares were deposited in an escrow account in connection with the RTM
acquisition. See "The RTM Acquisition" for a more detailed description of
certain relationships among us and the selling stockholders.
25
PLAN OF DISTRIBUTION
The selling stockholders may sell the securities from time to time on
any stock exchange or automated interdealer quotation system on which the
securities are listed, in the over-the-counter market, in privately negotiated
transactions or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at prices otherwise negotiated.
The selling stockholders may sell the securities by one or more of the
following methods, without limitation:
o block trades in which the broker or dealer so engaged will attempt
to sell the securities as agent but may position and sell a
portion of the block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and sale by the
broker or dealer for its own account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of any stock
exchange on which the securities are listed;
o ordinary brokerage transactions and transactions in which the
broker solicits purchases;
o privately negotiated transactions;
o short sales;
o through the writing of options on the securities, whether or not
the options are listed on an options exchange;
o through the distribution of the securities by any selling
stockholder to its partners, members or stockholders;
o one or more underwritten offerings on a firm commitment or best
efforts basis; and
o any combination of any of these methods of sale.
We do not know of any arrangements by the selling stockholders for the
sale of any of the securities.
The selling stockholders may engage brokers and dealers, and any
brokers or dealers may arrange for other brokers or dealers to participate in
effecting sales of the securities. These brokers, dealers or underwriters may
act as principals, or as an agent of a selling stockholder. Broker-dealers may
agree with a selling stockholder to sell a specified number of the securities at
a stipulated price per security. If the broker-dealer is unable to sell
securities acting as agent for a selling stockholder, it may purchase as
principal any unsold securities at the stipulated price. Broker-dealers who
acquire securities as principals may thereafter sell the securities from time to
time in transactions on any stock exchange or automated interdealer quotation
system on which the securities are then listed, at prices and on terms then
prevailing at the time of sale, at prices related to the then-current market
price or in negotiated transactions. Broker-dealers may use block transactions
and sales to and through broker-dealers, including transactions of the nature
described above. The selling stockholders may also sell the securities in
accordance with Rule 144 under the Securities Act rather than pursuant to this
prospectus, regardless of whether the securities are covered by this prospectus.
From time to time, one or more of the selling stockholders may pledge,
hypothecate or grant a security interest in some or all of the securities owned
by them. The pledgees, secured parties or persons to whom the securities have
been hypothecated will, upon foreclosure in the event of default, be deemed to
be selling stockholders. As and when a selling stockholder takes such actions,
the number of securities offered under this prospectus on behalf of such selling
stockholder will decrease. The plan of distribution for that selling
stockholder's securities will otherwise
26
remain unchanged. In addition, a selling stockholder may, from time to time,
sell the securities short, and, in those instances, this prospectus may be
delivered in connection with the short sales and the securities offered under
this prospectus may be used to cover short sales.
To the extent required under the Securities Act, the aggregate amount
of selling stockholders' securities being offered and the terms of the offering,
the names of any agents, brokers, dealers or underwriters and any applicable
commission with respect to a particular offer will be set forth in an
accompanying prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the securities may receive compensation in
the form of underwriting discounts, concessions, commissions or fees from a
selling stockholder and/or purchasers of selling stockholders' securities for
whom they may act (which compensation as to a particular broker-dealer might be
in excess of customary commissions).
The selling stockholders and any underwriters, brokers, dealers or
agents that participate in the distribution of the securities may be deemed to
be "underwriters" within the meaning of the Securities Act, and any discounts,
concessions, commissions or fees received by them and any profit on the sale of
the securities sold by them may be deemed to be underwriting discounts and
commissions.
A selling stockholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the
securities in the course of hedging the positions they assume with that selling
stockholder, including, without limitation, in connection with distributions of
the securities by those broker-dealers. A selling stockholder may enter into
option or other transactions with broker-dealers that involve the delivery of
the securities offered hereby to the broker-dealers, who may then sell or
otherwise transfer those securities. A selling stockholder may also loan or
pledge the securities offered hereby to a broker-dealer and the broker-dealer
may sell the securities offered hereby so loaned or upon a default may sell or
otherwise transfer the pledged securities offered hereby.
A selling stockholder may enter into derivative transactions with third
parties, or sell securities not covered by this prospectus to third parties in
privately negotiated transactions. If the applicable prospectus supplement
indicates, in connection with those derivatives, the third parties may sell
securities covered by this prospectus and the applicable prospectus supplement,
including in short sale transactions. If so, the third party may use securities
pledged by the selling stockholder or borrowed from the selling stockholder or
others to settle those sales or to close out any related open borrowings of
stock, and may use securities received from the selling stockholder in
settlement of those derivatives to close out any related open borrowings of
stock. The third party in such sale transactions will be an underwriter and, if
not identified in this prospectus, will be identified in the applicable
prospectus supplement (or a post-effective amendment).
The selling stockholders and other persons participating in the sale or
distribution of the securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M.
This regulation may limit the timing of purchases and sales of any of the
securities by the selling stockholders and any other person. The
anti-manipulation rules under the Exchange Act may apply to sales of securities
in the market and to the activities of the selling stockholders and their
affiliates. Furthermore, Regulation M may restrict the ability of any person
engaged in the distribution of the securities to engage in market-making
activities with respect to the particular securities being distributed for a
period of up to five business days before the distribution. These restrictions
may affect the marketability of the securities and the ability of any person or
entity to engage in market-making activities with respect to the securities.
We have agreed to indemnify in certain circumstances the selling
stockholders against certain liabilities, including liabilities under the
Securities Act. The selling stockholders have agreed to indemnify us in certain
circumstances against certain liabilities, including liabilities under the
Securities Act.
The securities offered hereby were originally issued to the selling
stockholders in a private placement pursuant to an exemption from the
registration requirements of the Securities Act. We agreed to register the
securities under the Securities Act and to keep the registration statement of
which this prospectus is a part effective for a specified period of time. We
have agreed to pay all expenses in connection with this offering, but not
including underwriting discounts, concessions, commissions or fees of the
selling stockholders or their counsel, or transfer taxes and expenses related
thereto.
27
We will not receive any proceeds from sales of any securities by the
selling stockholders.
We cannot assure you that the selling stockholders will sell all or any
portion of the securities offered hereby.
LEGAL MATTERS
Certain legal matters relating to the validity of the securities will
be passed upon by Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, New
York.
EXPERTS
The consolidated financial statements as of January 2, 2005 and
December 28, 2003 and for each of the three years in the period ended January 2,
2005 and management's report on the effectiveness of internal control over
financial reporting as of January 2, 2005 incorporated by reference into this
prospectus have been audited by Deloitte & Touche LLP, an independent registered
public accounting firm, as stated in their reports which are incorporated herein
by reference and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of Encore Capital Group, Inc. and
management's report on the effectiveness of Encore's internal control over
financial reporting appearing in Encore's Annual Report on Form 10-K for the
year ended December 31, 2004, incorporated by reference in this Prospectus, have
been audited by BDO Seidman, LLP, an independent registered public accounting
firm, to the extent and for the periods set forth in their reports dated
February 4, 2005 incorporated herein by reference, and are incorporated herein
in reliance upon such reports given upon the authority of said firm as experts
in auditing and accounting.
The combined financial statements of RTM Restaurant Group as of May 30,
2004 and May 25, 2003, and for each of the three years in the period ended May
30, 2004, incorporated herein by reference from our Current Report on Form 8-K/A
dated August 26, 2005, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon and incorporated by reference
herein, and are incorporated herein in reliance on such report given on the
authority of such firm as experts in accounting and auditing.
28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14 - OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following statement sets forth the expenses to be borne by the
Registrant in connection with the distribution of the offered securities. All
amounts other than the filing fee for the registration statement are estimates.
Filing fee for Registration Statement....................... $ 16,859
Printing fees and expenses.................................. 7,000
Legal fees and expenses..................................... 40,000
Accounting and auditor fees and expenses.................... 35,000
Miscellaneous............................................... 16,141
------------
Total.............................................. $ 115,000
============
ITEM 15 - INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The certificate of incorporation of Triarc Companies, Inc. (the
"Registrant" or the "Company"), as amended to date (the "Triarc Charter"),
provides indemnification to the extent not prohibited by Delaware law (including
as such law may be amended in the future to be more favorable to directors and
officers). Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") provides that a corporation may indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed civil, criminal, administrative or investigative action, suit or
proceeding (other than an action by or in the right of the corporation, such as
a derivative action) by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent for any
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise (an "Other Entity"). The Triarc Charter provides that its officers
and directors, and any person serving in any capacity at the request of the
Company for an Other Entity shall be entitled to such indemnification; however,
the Board of Directors of the Company (the "Triarc Board") may specifically
grant such indemnification to other persons in respect of service to the Company
or an Other Entity. The Triarc Charter specifies that any director or officer of
the Company serving in any capacity with a majority owned subsidiary or any
employee benefit plan of the Company or of any majority owned subsidiary shall
be deemed to be doing so at the request of the Company.
Under Section 145 of the DGCL, depending on the nature of the
proceeding, a corporation may indemnify against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding if the person so
indemnified acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe that
his or her conduct was unlawful. In the case of a derivative action, no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation, unless and
only to the extent that the Delaware Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability, such person is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
Section 145 further provides that to the extent that a director or
officer of a corporation is successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred in connection therewith. However, if such
director or officer is not successful in the defense of any such action, suit or
proceeding, or in the defense of any claim, issue or matter therein, he or she
shall only be indemnified by the corporation as authorized in the specific case
upon a determination that indemnification is proper because he or she met the
applicable standard set forth above as determined by a majority of the
disinterested directors, by independent legal counsel or by the stockholders.
II-1
The Triarc Charter provides that expenses are to be advanced prior to
the final disposition of a proceeding upon the receipt by the Company of an
undertaking, as required by the DGCL, that the director or officer or other
indemnified person will repay such advances if he or she is ultimately found not
to be entitled to indemnification under the DGCL.
The Triarc Charter permits a person entitled to indemnity to bring an
action in court to obtain such indemnity and provides that, in any such action,
the court will not be bound by a decision of the Triarc Board, independent
counsel or stockholders that such person is not entitled to indemnification.
Such person is also indemnified for any expenses incurred in connection with
successfully establishing his or her right to indemnification in any such
proceeding. The Triarc Charter expressly provides that the right to
indemnification thereunder is a contract right and, therefore, cannot be
retroactively eliminated by a later stockholder vote, and is not an exclusive
right and, therefore, the Company may provide other indemnification, if
appropriate.
The Company also enters into indemnification agreements with its
directors and officers indemnifying them against liability they may incur in
their capacity as such. The indemnification agreements do not provide
indemnification to the extent that the indemnitee is indemnified by the Company
under the Triarc Charter, its bylaws, its directors' and officers' liability
insurance, or otherwise. Additionally, the indemnification agreements do not
provide indemnification (i) for the return by the indemnitee of any illegal
remuneration paid to him or her; (ii) for any profits payable by the indemnitee
to the Company pursuant to Section 16(b) of the Exchange Act; (iii) for any
liability resulting from the indemnitee's fraudulent, dishonest or willful
misconduct; (iv) for any amount the payment of which is not permitted by
applicable law; (v) for any liability resulting from conduct producing unlawful
personal benefit; or (vi) if a final court adjudication determines such
indemnification is not lawful.
Determinations 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, independent legal counsel selected by the Triarc Board,
a majority of disinterested Company stockholders or by a final adjudication of a
court of competent jurisdiction. In the event that the Company undergoes a
"Change of Control" (as defined in the indemnification agreements) all such
determinations shall be made by special independent counsel selected by the
indemnitee and approved by the Company, which approval may not be unreasonably
withheld. In certain circumstances, an indemnitee may require the Company to
establish a trust fund to assure that funds will be available to pay any amounts
which may be due such indemnitee under an indemnification agreement.
As permitted by Section 102(b)(7) of the DGCL, the Triarc Charter
includes a provision which eliminates the personal liability of a director to
the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director, other than liability (i) for the breach of a director's duty
of loyalty to the Company and its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL (relating to unlawful payment of a
dividend and unlawful stock purchase and redemption) or (iv) for any transaction
from which the director derived any improper personal benefit.
Finally, the Triarc Charter authorizes the Company, as permitted by the
DGCL, to purchase directors' and officers' liability insurance. The Company
carries directors' and officers' liability insurance covering losses up to
specified amounts.
In addition, the by-laws of the Company, as amended to date (the
"Triarc By-Laws"), also provides indemnification to its directors and officers
to the extent not prohibited by Delaware law.
The foregoing statements are subject to the detailed provisions of
Sections 145 and 102 of the DGCL, the Triarc Charter, the Triarc By-Laws and the
referenced indemnification agreements. The Company has also agreed to indemnify
in certain circumstances the selling stockholders against certain liabilities,
including liabilities under the Securities Act.
II-2
ITEM 16 - EXHIBITS.
5.1** Opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP as to the
legality of the securities being registered.
23.1* Consent of Deloitte & Touche LLP.
23.2* Consent of BDO Seidman, LLP.
23.3* Consent of Ernst &Young LLP.
23.4** Consent of Paul, Weiss, Rifkind, Wharton & Garrison LLP.
24.1** Powers of Attorney of certain officers and directors of Triarc
Companies, Inc.
---------------
* Filed herewith.
** Filed previously.
ITEM 17 - UNDERTAKINGS.
The Registrant hereby undertakes:
(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 of 1933;
(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 set forth 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 SEC 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
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) hereof do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the SEC
by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended, that are incorporated by reference in this
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 a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering; and
II-3
(4) that, for purposes of determining any liability under the
Securities Act of 1933, as amended, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934, as amended, that is incorporated by reference in this Registration
Statement 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers, and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, 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 registrant 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 of 1933, as amended, and will be
governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this 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 November 22, 2005.
TRIARC COMPANIES, INC.
(Registrant)
By: /s/ Nelson Peltz
--------------------------
Nelson Peltz
Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below on November 22, 2005 by the following persons
in the capacities indicated.
SIGNATURE TITLES
/s/ Nelson Peltz Chairman and Chief Executive Officer
--------------------------------- and Director
Nelson Peltz (Principal Executive Officer)
/s/ Peter W. May President and Chief Operating Officer
--------------------------------- and Director
Peter W. May (Principal Operating Officer)
/s/ Francis T. McCarron Executive Vice President and Chief
--------------------------------- Financial Officer
Francis T. McCarron (Principal Financial Officer)
/s/ Fred H. Schaefer Senior Vice President and Chief
--------------------------------- Accounting Officer
Fred H. Schaefer (Principal Accounting Officer)
* Director
---------------------------------
Hugh L. Carey
* Director
---------------------------------
Clive Chajet
* Vice Chairman and Director
---------------------------------
Edward P. Garden
* Director
---------------------------------
Joseph A. Levato
* Director
---------------------------------
Gregory H. Sachs
* Director
---------------------------------
David E. Schwab II
II-5
* Director
---------------------------------
Raymond S. Troubh
* Director
---------------------------------
Gerald Tsai, Jr.
* Director
---------------------------------
Russell V. Umphenour Jr.
* Director
---------------------------------
Jack G. Wasserman
* By: /s/ Nelson Peltz
---------------------------
Nelson Peltz
Attorney - in - fact
II-6
EXHIBIT INDEX
EXHIBIT DESCRIPTION
5.1** Opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP as to the
legality of the securities being registered.
23.1* Consent of Deloitte & Touche LLP.
23.2* Consent of BDO Seidman, LLP.
23.3* Consent of Ernst &Young LLP.
23.4** Consent of Paul, Weiss, Rifkind, Wharton & Garrison LLP.
24.1** Powers of Attorney of certain officers and directors of Triarc
Companies, Inc.
---------------
* Filed herewith.
** Filed previously.
II-7