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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 199629, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from -------------------- to-----------------____________________ to_________________
Commission file number: 1-2207
TRIARC COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 38-0471180
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 Third280 Park Avenue, New York, New York 1002210017
(Address of principal executive offices) (Zip Code)
(212) 230-3000451-3000
(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes (X) No ( )
There were 23,884,12924,026,654 shares of the registrant's Class A Common Stock and
5,997,622 shares of the registrant's Class B Common Stock outstanding as of
JulyAugust 31, 1996.1997.
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This Form 10-Q/A of Triarc Companies, Inc. ("Triarc") constitutes
Amendment No. 1 to Triarc's Quarterly Report on Form 10-Q which was filed with
the Securities and Exchange Commission on August 14, 1996.13, 1997. This amendment
furnishes additional exhibitsupdates the information required to be filed pursuant to Item 6(a)1 of the Form.Form,
furnishes the information required to be filed pursuant to Item 6. Exhibits4 of the Form
and Reportsincludes for filing certain agreements and documents relating to Triarc and
its subsidiaries.
ITEM 1. LEGAL PROCEEDINGS
As reported in the 10-K and in Triarc's Quarterly Report on Form 8-K
(a) Exhibits
1.1 -10-Q for
the fiscal quarter ended March 30, 1997 (the "10-Q"), on June 27, 1996, three
former directors of Triarc commenced an action against Nelson Peltz, Victor
Posner and Steven Posner. On May 20, 1997, plaintiffs filed a purported amended
complaint asserting additional claims against each of the defendants. The
amended complaint alleges, among other things, that the defendants conspired to
mislead the United States District Court for the Northern District of Ohio in
connection with the change of control of Triarc in 1993 and the termination of
the consent decree pursuant to which plaintiffs were initially named to Triarc's
Board of Directors. The amended complaint also alleges that Mr. Peltz and Steven
Posner conspired to frustrate collection of amounts owed by Steven Posner to the
United States. The amended complaint seeks, among other relief, damages against
Mr. Peltz and Steven Posner in an amount not less than $4.5 million; an order
stating that plaintiffs must be returned to Triarc's Board of Directors; and
rescission of the 1993 change of control transaction. Mr. Peltz's time to
respond to the amended complaint has not yet expired. In July 1997, plaintiffs
voluntarily dismissed their claims against Victor Posner without prejudice.
As more fully described in the 10-K, as of December 31, 1996, Triarc was
a party to three litigation proceedings involving Victor Posner ("Posner") and
entities owned or controlled by Posner (collective, the "Posner Actions"): (1)
an action commenced by Triarc in October 1995 in the Southern District of New
York against Posner and a related entity (the "New York Action"); (2) an
adversary proceeding (the "APL Litigation") brought against Triarc and
Chesapeake in connection with the bankruptcy proceeding of APL Corporation (the
"APL Bankruptcy Proceeding"); and (3) an adversary proceeding brought by Triarc
and Chesapeake in the APL Bankruptcy Proceeding against Posner and two
affiliated entities under Section 1144 of the Bankruptcy Code (the "1144
Proceeding"). In addition, Triarc and Chesapeake asserted claims against the
debtor in the APL Bankruptcy Proceeding (the "APL Bankruptcy Claims"). Triarc
had previously been a party to an action (the "Granada Action") in which Posner
had asserted certain claims against it. On June 6, 1997, Triarc entered into a
settlement agreement (the "Settlement Agreement") with Posner and two affiliated
entities (including APL). Pursuant to the Settlement Agreement, among other
things, (1) Posner and an affiliated entity paid a total of $2.5 million to
Triarc and Chesapeake; (2) the parties dismissed with prejudice each of the
Posner Actions; (3) Triarc and Chesapeake waived the APL Bankruptcy Claims; and
(4) the parties entered into releases with respect to the claims asserted in the
Posner Actions, the Granada Action, and the APL Bankruptcy Proceeding.
As reported in the 10-K and the 10-Q, in January 1997 the bankruptcy
trustee appointed in the case of Prime Capital Corporation ("Prime") (formerly
known as Intercapital Funding
Resources, Inc.) commenced avoidance actions against SEPSCO and Chesapeake
Insurance Company Limited ("Chesapeake") (as well as actions against certain
current and former officers of Triarc or their spouses with respect to payments
made directly to them), claiming certain payments to them were preferences or
fraudulent transfers. Discovery is ongoing and the court has adjourned the trial
date from July 28, 1997 to October 27, 1997.
Snapple Beverage Corp. ("Snapple") and The Quaker Oats Company ("Quaker")
are defendants in a breach of contract case filed on April 16, 1997 in Rhode
Island Superior Court by Rhode Island Beverage Packing Company, L.P. ("RIB"),
prior to Triarc's acquisition of Snapple. RIB and Snapple disagree as to whether
the co-packing agreement between them had been amended to a) change the end of
the term from December 30, 1997 to December 30, 1999 and b) more than double
Snapple's take or pay obligations thereunder. RIB sets forth various causes of
action in its complaint: (1) that Snapple materially breached the agreement; (2)
that the agreement was reformed; (3) that Snapple as 50% owner of RIB had a
fiduciary duty, which it breached; (4) that the alleged amendment was relied
upon and therefore should be enforced; (5) that Snapple breached the RIB
Partnership Agreement; (6) that the defendants tortiously interfered with RIB's
contractual relation with its lender and with other prospective contractual
relations; and (7) that Quaker is liable for the actions of Snapple. RIB seeks
reformation of the contract, compliance with promises, consequential damages
including lost profits, attorney's fees and punitive damages. On June 16, 1997,
Snapple and Quaker filed an answer to the complaint in which they denied all
liability to RIB, denied the material allegations of the complaint, and raised
various affirmative defenses.
Snapple has established a reserve to cover future potential payments
relating to outstanding litigations and claims, including the RIB litigation
described above. The litigations and claims consist primarily of lawsuits filed
by distributors and co-packers and to a lesser extent, product liability,
commercial and labor related claims. It is the opinion of management of Triarc
and Snapple that the outcome of such matters will not have a material adverse
affect on Triarc's consolidated financial condition or results of operations.
On June 3, 1997, ZuZu, Inc. ("ZuZu") and its subsidiary, ZuZu Franchising
Corporation ("ZFC") commenced an action against Arby's, Inc. ("Arby's") and
Triarc in the District Court of Dallas County, Texas. Plaintiffs allege that
Arby's and Triarc conspired to steal the ZuZu Speedy Tortilla concept and
convert it to their own use. ZuZu seeks actual damages in excess of $70.0
million and punitive damages of not less than $200.0 million against Triarc for
its alleged appropriation of trade secrets, conversion and unfair competition.
Additionally, plaintiffs seek injunctive relief against Arby's and Triarc
enjoining them from disclosing or using ZuZu's trade secrets. ZFC also made a
demand for arbitration with the Dallas, Texas office of the American Arbitration
Association ("AAA") against Arby's alleging that Arby's had breached a Master
Franchise Agreement between ZFC and Arby's. Arby's and Triarc have moved to
dismiss or, in the alternative, abate the Texas court action on the ground that
a Stock Purchase Agreement between Triarc and ZuZu required that disputes be
subject to mediation in Wilmington, Delaware and that any litigation be brought
in the Delaware courts. On July 16, 1997, Arby's and Triarc commenced a
declaratory judgment action against ZuZu and ZFC in Delaware Chancery Court for
New Castle County seeking a declaration that the claims in both the litigation
and the
arbitration must be subject to mediation in Wilmington, Delaware. In the
arbitration proceeding, Arby's has asserted counterclaims against ZuZu for
unjust enrichment, breach of contract and breach of the duty of good faith and
fair dealing and has successfully moved to transfer the proceeding to the
Atlanta, Georgia office of the AAA. Arby's and Triarc are vigorously contesting
plaintiffs' claims in both the litigation and the arbitration and believe that
plaintiffs' various claims are without merit.
On August 13, 1997, Ruth LeWinter and Calvin Shapiro commenced a
purported class and derivative action (the "Original LeWinter Action") against
certain current and former directors of the Company (and naming the Company as a
nominal defendant) in the United States District Court for the Southern District
of New York. The complaint alleges that the June 1994 award of stock options
(the "Performance Options") to Messrs. Peltz and May was invalid because the
shareholder approval of the awards was secured by a proxy statement which
misrepresented or omitted material facts, and between National
Propane Partners, L.P.that the terms of the 1994
compensation arrangements with Messrs. Peltz and May were violated by awarding
additional compensation of options and cash to Messrs. Peltz and May. The suit
also claims that members of the Board breached their duty of loyalty to Triarc
and its shareholders by acting fraudulently and/or in bad faith to deceive
Triarc shareholders into approving the 1994 grants through material
misrepresentations and omissions in the 1994 Proxy Statement and that the
directors breached their fiduciary duties by failing to disclose material facts
to the shareholders while seeking their approval. The suit further alleges that
the Board of Directors breached the fiduciary duty of care owed to the Company
and shareholders by approving the issuance of a materially false and misleading
proxy statement. In addition, the suit alleges that the Compensation Committee
of Triarc's Board of Directors (the "Partnership""Compensation Committee") intentionally or
recklessly approved substantial awards of cash and options to Messrs. Peltz and
May contrary to the 1994 Proxy Statement and that the Compensation Committee had
a duty to either refrain from approving these awards or seek shareholder
approval of them, and that the failure to do so breached the duties of care,
loyalty, good faith, and fair dealing owed to the Company and its shareholders.
The complaint seeks, among other remedies, rescission of the 1994 option grants
and all grants of options made to Messrs. Peltz and May subsequent to June 9,
1994 and repayment by Messrs. Peltz and May of all cash bonuses they received
subsequent to June 9, 1994. On September 11, 1997, the plaintiffs amended their
complaint in the Original LeWinter Action to drop a current and a former
director as defendants. The amended complaint also alleges that defendants
fraudulently and in bad faith misrepresented the terms and the value of the
Performance Options, and that defendants acted improperly in awarding to Messrs.
Peltz and May certain other items of compensation. The amended complaint also
seeks additional relief, including repayment by Messrs. Peltz and May of all
compensation paid to them after June 9, 1994 and the amount by which the alleged
value of the Performance Options exceeded their value as set forth in the 1994
Proxy Statement. The defendants have not yet responded to the complaint or the
amended complaint.
Three other purported class and derivative actions have been filed in the
Delaware Court of Chancery, New Castle County, naming as defendants certain
current directors and certain former directors of the Company (and naming the
Company as a nominal defendant). The Delaware actions assert substantially
similar claims and seek substantially similar relief as the Original LeWinter
Action. Defendants have not yet responded to the Delaware complaints.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
On June 4, 1997, Triarc held its Annual Meeting of Stockholders. At the
Annual Meeting,Nelson Peltz, Peter W. May, Hugh L. Carey, Clive Chajet, Stanley
R. Jaffe, Joseph A. Levato, David E. Schwab II, Raymond S. Troubh and Gerald
Tsai, Jr. were elected to serve as Directors. At the Annual Meeting, the
stockholders also approved proposal 2, amending Triarc's certificate of
incorporation to change the minimum number of directors to seven (7) and the
maximum number of directors to fifteen (15), Merrill Lynchand proposal 3, ratifying the
appointment of Deloitte & Co.Touche, LLP as Triarc's independent certified public
accountants.
The voting on the above matters is set forth below:
NOMINEE VOTES FOR VOTES WITHHELD
Nelson Peltz 21,522,973 32,219
Peter W. May 21,522,973 32,219
Hugh L. Carey 21,518,033 37,159
Clive Chajet 21,523,107 32,085
Stanley R. Jaffe 21,523,107 32,085
Joseph A. Levato 21,523,107 32,085
David E. Schwab II 21,523,107 32,085
Raymond S. Troubh 21,520,407 34,785
Gerald Tsai, Jr. 21,521,607 33,585
Proposal 2 - There were 21,446,924 votes for, 83,779 votes against and 24,489
abstentions.
Proposal 3 - There were 21,528,402 votes for, 14,745 votes against and 12,045
abstentions.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
10.1 -Amended and Restated Credit Agreement dated as of August 15, 1997
among Mistic Brands, Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated,Snapple Beverage Corp. and Triarc
Beverage Holdings Corp., as the Borrowers, Various Financial
Institutions, as the Lenders, Donaldson, Lufkin & Jenrette
Securities Corporation, Janney Montgomery Scottas the arranger for the Lenders, Morgan
Stanley Senior Funding, Inc., Rauscher Pierce
Refsnes, Inc. as co-arranger and as the
Robinson-Humphrey
Company, Inc. is incorporated herein by
reference to Exhibit 1.1 toDocumentation Agent for the Partnership's
report on Form 8-K dated August 16, 1996 (SEC
File No. 1-11867).
10.1 - Credit Agreement, dated as of June 26, 1996,
among National Propane, L.P., The First
National Bank of Boston, as administrative
agent and a lender, Bank of America NT &SA,
as a lender, and BA Securities,Lenders, DLJ Capital Funding, Inc.,
as syndication agent, incorporated herein by
reference to Exhibit 10.1 to the Partnership's report on Form 8-K dated August
16, 1996 (SEC File No. 1-11867).
10.2 - Note Purchase Agreement, datedSyndication Agent for the Lenders, and The Bank of New
York, as of June 26,
1996, among National Propane, L.P. and each
ofAdministrative Agent for the Purchasers listed in Schedule A
thereto relating to $125 million aggregate
principal amount of 8.54% First Mortgage
Notes due June 30, 2010, incorporated herein
by reference to Exhibit 10.2 to the
Partnership's report on Form 8-K dated August
16, 1996 (SEC File No. 1-11867).
10.3- Conveyance, Contribution and Assumption
Agreement dated as of July 2, 1996, among
National Propane Partners, L.P., National
Propane Corporation and National Propane SGP,
Inc., incorporated herein by reference to
Exhibit 10.3 to the Partnership's report on
Form 8-K dated August 16, 1996 (SEC File No.
1-11867).
10.4 - Contribution and Assumption Agreement dated
as of July 2, 1996, among National Propane
Partners, L.P., National Propane Corporation,
National Propane SGP, Inc. and National Sales
& Service, Inc., incorporated herein by
reference to Exhibit 10.4 to the
Partnership's report on Form 8-K dated August
16, 1996 (SEC File No. 1-11867).
10.6 - Note dated July 2, 1996 of Triarc, payable to
the order of National Propane, L.P.,
incorporated herein by reference to Exhibit
10.5 to the Partnership's report on Form 8-K
dated August 16, 1996 (SEC File No. 1-11867).
10.7 - Amendment to Employment Agreement of Ronald
D. Paliughi dated as of June 10, 1996,
incorporated herein by reference to Exhibit
10.7 to the Partnership's report on Form 8-K
dated August 16, 1996 (SEC File No. 1-11867).Lenders.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned hereunto
duly authorized.
Date: August 19, 1996September 29, 1997 TRIARC COMPANIES, INC.
By: Joseph Levato
--------------------
Joseph A. Levato
Executive__________________________
John L. Barnes, Jr.
Senior Vice President
and Chief Financial Officer
Exhibit Index
Exhibit
No. Description Page No.
10.1 - Amended and Restated Credit Agreement dated as of August
15, 1997 among Mistic Brands, Inc., Snapple Beverage Corp.
and Triarc Beverage Holdings Corp., as the Borrowers,
Various Financial Institutions, as the Lenders, Donaldson,
Lufkin & Jenrette Securities Corporation, as the arranger for
the Lenders, Morgan Stanley Senior Funding, Inc. as co-
arranger and as the Documentation Agent for the Lenders, DLJ
Capital Funding, Inc., as the Syndication Agent for the
Lenders, and The Bank of New York, as Administrative Agent