<PAGE>
FORM 10-K/A
Sequential Page 1 of 31
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K/A
Amendment No. 1
Annual Report Pursuant to Section 13 or 15 (d)
Of The Securities Exchange Act Of 1934
FLAGSTAR CORPORATION
(Exact name of registrant as specified in charter)
Delaware 13-3027522
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
203 East Main Street 29319-9966
Spartanburg, South Carolina (zip code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (803) 597-8700.
____________________
Explanatory Note: This Amendment No. 1 to the Annual Report on Form 10-K of
the above-referenced registrant is being filed pursuant to Rule 15d-21 of the
Commission solely to furnish the financial statements required by Form 11-K
with respect to the Flagstar Thrift Plan and the Denny's, Inc. Profit Sharing
Retirement Plan.
1
<PAGE>
FORM 10-K/A
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report for 1993 on Form
10-K as set forth in the pages attached hereto:
Part II, Item 8. Financial Statements and Supplemental Data
Part IV, Item 14. Exhibits and Financial Statement Schedules, and
Reports on Form 8-K.
Exhibit 23.1 Consent of Deloitte & Touche pursuant to Note to
Required Information of Form 11-K.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
FLAGSTAR CORPORATION
(Registrant)
DATE: June 29, 1994 BY: /s/ A. R. Biggs
A. R. Biggs
Senior Vice President and Chief Financial Officer
2
<PAGE>
FORM 10-K/A
Part II, Item 8. Financial Statements and Supplemental Data of the
Annual Report for 1993 on Form 10-K is hereby amended to include the following:
FINANCIAL STATEMENTS
OF
FORM 11-K
ANNUAL REPORT
Filed pursuant to Rule 15d-21
promulgated under Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1993
Full title of the plans and the address of the plans, if different from that
of the issuer named below:
1. FLAGSTAR THRIFT PLAN
2. DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
C/O DENNY'S INC.
203 E. MAIN STREET
SPARTANBURG, SOUTH CAROLINA 29319
Name of the issuer of the securities held pursuant to the plans and the
address of its principal executive offices:
FLAGSTAR CORPORATION
203 EAST MAIN STREET
SPARTANBURG, SC 29319-9966
Part IV, Item 14 (a) (1) of the Annual Report on Form 10-K for the period
ended December 31, 1993 is amended to insert the following financial
statements required by Form 11-K, copies of which are filed herewith:
1. Financial Statements At December 31, 1993 and 1992 and for
Each of the Three Years in the Period Ended December 31, 1993,
Supplemental Schedules for the Year Ended December 31, 1993,
and Independent Auditors' Report.
2. Financial Statements At December 31, 1993 and 1992 and for
Each of the Three Years in the Period Ended December 31, 1993,
Supplemental Schedules for the Year Ended December 31, 1993,
and Independent Auditors' Report.
The financial statements described in 1. and 2. above are included as
pages 4 through 30 herein.
Part IV, Item 14 (a) (3) and the Exhibit Index of the Annual Report on
Form 10-K for the period ended December 31, 1993 are amended to insert the
following exhibit required by Form 11-K in appropriate numerical order, a copy
of which is filed herewith.
Exhibit No. Description
23.1 Consent of Deloitte & Touche pursuant to Note to
Required Information of Form 11-K.
The consent described as Exhibit No. 23.1 is included as page 31 herein.
3
<PAGE>
FORM 10-K/A
FLAGSTAR THRIFT PLAN
Financial Statements at December 31, 1993 and 1992 and for
each of the Three Years in the Period Ended December 31, 1993,
Supplemental Schedules for the Year Ended December 31, 1993,
and Independent Auditors' Report.
INDEPENDENT AUDITORS' REPORT
The Administrative Committee
Flagstar Thrift Plan
We have audited the accompanying statements of net assets available for
benefits as of December 31, 1993 and 1992, and the related statements of
changes in net assets available for benefits for each of the three years
in the period ended December 31, 1993 of the Flagstar Thrift Plan (the
"Plan"), formerly the Thrift Plan for Noncontract Employees of TW
Services, Inc. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the net assets available for benefits of the Plan at
December 31, 1993 and 1992 and the changes in net assets available for
benefits for each of the three years in the period ended December 31,
1993 in conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, the Plan changed its
method of accounting for benefits payable to participants who have
withdrawn from participation in the Plan.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules
listed in the foregoing Table of Contents are presented for the purpose
of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. These
schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in our
audit of the basic 1993 financial statements and, in our opinion, are
fairly stated in all material respects when considered in relation to
the basic financial statements taken as a whole.
Deloitte & Touche
Greenville, SC
June 20, 1994
4
<PAGE>
Flagstar Thrift Plan
<TABLE>
Statements of Net Assets Available for Benefits
December 31, 1993 and 1992
<CAPTION>
December 31, December 31,
1993 1992
<S> <C> <C>
ASSETS:
Investments:
Flagstar Companies, Inc. common stock (Cost of
$6,396,614 in 1993 and $5,660,859 in 1992) $ 3,144,195 $ 5,240,200
U. S. Government notes and bonds (Cost of
$4,186,308 in 1993 and $4,004,394 in 1992) 4,338,050 4,118,468
Dreyfus Equity Fund, Inc. (Cost of $11,699,625
in 1993 and $10,930,433 in 1992) 12,578,236 12,137,998
Vanguard Explorer Equity Fund (Cost of
$3,675,385 in 1993 and $2,960,551 in 1992) 4,713,297 4,110,715
Interest Fund - US Government and government
agency debt securities (Cost of $5,166,894
in 1993) 5,221,136 -
Interest Fund - insurance contracts
(at contract value) 37,987,211 43,736,431
Loans to participants 2,696,647 2,380,491
Total Investments 70,678,772 71,724,303
RECEIVABLES:
Accrued income 1,323,096 186,594
Contributions receivable:
Participants 577,849 997,359
Employer 240,283 246,806
Accrued transfers from Denny's
Profit Sharing Plan 12,529 5,804
Total Receivables 2,153,757 1,436,563
CASH AND CASH EQUIVALENTS 5,241,932 1,556,342
TOTAL ASSETS 78,074,461 74,717,208
LESS - LIABILITIES:
Accrued distributions - 609,985
Accrued liabilities 292,779 211,745
TOTAL LIABILITIES 292,779 821,730
NET ASSETS AVAILABLE FOR BENEFITS $77,781,682 $73,895,478
See notes to financial statements.
5
<PAGE>
Flagstar Thrift Plan
<CAPTION>
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 1993, 1992, and 1991
<S> <C> <C> <C>
1993 1992 1991
Increase in net assets:
INVESTMENT INCOME:
Net (depreciation) appreciation
in fair value of investments $(3,067,360) $ 1,765,659 $ 3,374,200
Dividend income 1,491,440 592,047 541,906
Interest income 4,251,321 4,140,387 4,044,771
Investment income - net 2,675,401 6,498,093 7,960,877
CONTRIBUTIONS:
Participants 6,058,275 5,554,905 5,103,916
Employer 2,364,196 2,217,032 2,051,642
Total contributions 8,422,471 7,771,937 7,155,558
TOTAL INCREASE IN NET ASSETS 11,097,872 14,270,030 15,116,435
Decrease in net assets:
DISTRIBUTIONS TO PARTICIPANTS (7,334,238) (5,819,279) (10,374,513)
OTHER ADDITIONS(DEDUCTIONS):
Transfers from Denny's Profit Sharing Plan 5,369 1,632,537
Administrative expenses (492,784) (357,189) (182,960)
Total (487,415) 1,275,348 (182,960)
NET INCREASE IN NET ASSETS BEFORE CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE 3,276,219 9,726,099 4,558,962
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE 609,985 - -
NET INCREASE IN NET ASSETS AVAILABLE FOR
BENEFITS 3,886,204 9,726,099 4,558,962
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 73,895,478 64,169,379 59,610,417
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $77,781,682 $73,895,478 $64,169,379
See notes to financial statements.
</TABLE>
6
<PAGE>
FLAGSTAR THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
1. DESCRIPTION OF PLAN
General - The Flagstar Thrift Plan (the "Plan"), formerly the
Thrift Plan for Noncontract Employees of TW Services, Inc., is a
qualified deferred compensation plan subject to the Employee
Retirement Income Security Act of 1974. Any salaried employee of
Flagstar Corporation ("Flagstar" or the "Company" and the Plan's
Administrator), Canteen Corporation (Canteen) and Flagstar Systems,
Inc. (FSI) who has attained age 21 and has completed twelve
months of service with the Company is eligible to participate in
the Plan.
Pre-tax contributions deductions are limited to 10% of eligible
compensation or $8,994 in 1993, $8,728 in 1992, and $8,475 in
1991, whichever is less. After-tax contributions are limited to
10% of each employee's eligible compensation; however, no after-tax
contribution can be made by an employee in any month in which the
employee makes a pre-tax contribution. The Company contributes an
amount equal to 25% of each participating employee's after-tax
contributions, and 25% of employee pre-tax contributions up to 6%
of such employee's compensation, plus 75% of the first $500 per
year of employee pre-tax contributions.
Participating employees may elect to have their contributions
initially invested 100% (except the Company Stock Fund as described
below) in any one, or in multiples of 25% in up to any four, of the
following: Company Stock Fund, U. S. Government Bond Fund, one or
more available mutual funds and trust funds of equity securities
(both called Equity Funds), and an Interest Fund which consists of
insurance contracts and government obligations that provide fixed
interest rates on the Fund investments, but in no event may more
than 25% of the participating employee's contribution for any pay
period be invested in the Company's common stock. Employees may at
any time, but only once in any one calendar quarter, direct certain
transfers of investments arising from their contributions in prior
years. A participating employee, however, may not transfer amounts
to the Company Stock Fund to exceed 25% of his total investment in
the Plan.
All Company contributions vest immediately to the employees. In
the event the Plan should be terminated, all remaining Plan assets
would be allocated to members as described in the full text of the
Plan.
Effective October 14, 1991, administrative expenses of the Plan are
paid from the assets of the Plan. Previously, such expenses were
paid by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Plan are
presented on the accrual basis of accounting.
7
<PAGE>
Investments - Investments in the Company Stock Fund, the U. S.
Government Bond Fund, the Equity Funds and the Interest Fund
(government obligations) are carried at market values as determined
by published market prices. The investment in the Interest Fund
(insurance contracts) is valued at the contract value, which
represents contributions made under the contract, plus interest
earned, less withdrawals and administrative expenses.
Cash and cash equivalents - The Plan considers all highly liquid
investments purchased with an original maturity of three months or
less to be cash equivalents. Cash equivalents typically represent
money market funds.
Benefits payable - In 1993, the Plan changed its method of
accounting for benefits payable to comply with the 1993 AICPA Audit
and Accounting Guide, "Audits of Employee Benefit Plans." The new
guidance requires that benefits payable to persons who have
withdrawn from participation in a deferred contribution plan be
disclosed in the footnotes to the financial statements rather than
be recorded as a liability of the plan. As of December 31, 1993,
net assets available for benefits included benefits of $1,229,729
due to participants who have withdrawn from participation in the
Plan.
Transfers from other benefit plans - During 1993 and 1992 a number
of participants in the Denny's, Inc. Profit Sharing Retirement Plan
(the "Denny's, Inc. Plan"), became salaried employees of Flagstar,
Canteen, or FSI. As a result, the account
balances of these participants in the Denny's, Inc. Plan were
transferred to the Plan.
3. PARTICIPANT LOANS
Effective October 1, 1991, the Plan introduced a participant loan
program. Under this program, participants can borrow up to the
lesser of 50% of the vested portion of their account balance or the
amount of $50,000 less the highest outstanding loan balance during
the prior 12 month period. The minimum loan amount is $1,000 and
each employee can have only one loan outstanding at any time. The
Plan documents indicate that a reasonable rate of interest will be
assessed, typically evidenced by the prime rate charged by the
Plan's trustee. The participant also bears any loan administration
costs incurred. Loans are repaid through payroll deductions in
equal installments, with the loan terms ranging from 6 to 54
months. Loan repayments cannot exceed 30% of the participants
salary. If an employee who has a loan outstanding terminates
employment, no benefits will be paid from the Plan to the
participant until the outstanding loan balance and accrued interest
is paid in full. Loans outstanding at December 31, 1993 have a
range of interest rates from 6.0% to 8.5% and are due on various
dates from July 1996 to June 1998.
8
<PAGE>
As of December 31, 1993, there were approximately $197,500 of
additional loans to participants in process for which the proceeds
were actually paid to participants after December 31, 1993.
4. PARTICIPANTS
As of December 31, 1993, 1992, and 1991 there were approximately
4,400, 4,200 and 3,800 participants respectively in the Plan out of
the total eligible participants of approximately 7,700, 7,200 and
5,500.
9
<PAGE>
5. INVESTMENTS
Assets held for investment at December 31, 1993 and 1992 are as follows:
December 31,
Description 1993 1992
Flagstar Companies, Inc. common stock $ 3,144,195 $ 5,240,200
United States Government Notes and Bonds:
9.00% due February 15, 1994 201,500 211,061
8.75% due August 15, 1994 516,095 534,530
7.00% due April 15, 1999 539,375 515,780
6.75% due May 31, 1997 530,780 515,780
8.625% due October 15, 1995 322,782 327,093
9.50% due May 15, 1994 102,250 107,063
7.875% due July 15, 1996 324,189 322,314
8.00% due August 15, 1999 226,000 216,438
8.00% due January 15, 1997 218,812 215,938
7.875% due January 15, 1998 331,500 322,407
6.375% due July 15, 1999 262,578 -
6.00% due November 30, 1997 259,220 -
5.125% due March 31, 1998 250,937 -
5.50% due April 15, 2000 252,032 -
8.625% due November 15, 1993 - 208,376
10.125% due May 15, 1993 - 102,438
11.75% due November 15, 1993 - 106,750
8.75% due August 15, 1993 - 412,500
Total 4,338,050 4,118,468
Mutual Funds:
Vanguard Explorer Equity Fund, Inc. 4,713,297 4,110,715
Dreyfus Equity Fund, Inc. 12,578,236 12,137,998
Total 17,291,533 16,248,713
10
<PAGE>
December 31,
Description 1993 1992
Interest Fund: government obligations
US Treasury Bond
7.25% due May 15, 2016 $ 346,202 -
US Treasury Bond
7.50% due November 15, 2016 2,320,548 -
Government National Mortgage Assn.
9.00% due October 15, 2019 61,798 -
Federal Home Loan Mortgage Corp.
9.00% due July 1, 2020 169,936 -
Federal Home Loan Mortgage Corp.
9.00% due August 1, 2020 175,307 -
Federal Home Loan Mortgage Corp.
8.50% due June 1, 2022 166,425 -
Federal Home Loan Mortgage Corp.
8.50% due June 1, 2022 212,276 -
Government National Mortgage Assn.
8.00% due August 15, 2022 61,758 -
Federal Home Loan Mortgage Corp.
8.50% due December 1, 2022 179,307 -
Federal Home Loan Mortgage Corp.
8.00% due January 1, 2023 235,082 -
Federal Home Loan Mortgage Corp.
8.00% due February 1, 2023 112,796 -
Federal Home Loan Mortgage Corp.
7.50% due July 1, 2023 348,096 -
Federal Home Loan Mortgage Corp.
7.50% due August 1, 2023 471,870 -
Government National Mortgage Assn.
8.00% due September 15, 2023 180,043 -
Government National Mortgage Assn.
7.50% due September 15, 2023 179,692 -
Total 5,221,136 -
11
<PAGE>
December 31,
Description 1993 1992
Interest Fund: Insurance Contracts
Hartford Life Insurance Company
8.50% due April 30, 1997 $ 8,703,946 $ 8,075,659
Great West Life Assurance Co.
9.09% due April 30, 1994 2,699,090 2,497,242
Great West Life Assurance Co.
9.00% due April 30, 1996 5,108,241 4,717,886
Mutual Life Insurance Co. of NY
9.72% due April 30, 1995 5,453,137 5,003,272
Principal Mutual Life Insurance Co.
9.00% due April 30, 1996 2,265,344 2,092,246
Principal Mutual Life Insurance Co.
9.72% due April 30, 1996 7,072,307 6,488,839
New York Life Insurance Co.
7.35% due April 30, 1994 6,685,146 -
New York Life Insurance Company
7.7% due April 30, 1993 - 6,296,142
Principal Mutual Life Insurance Co.
9.36% due April 30, 1993 - 6,221,703
Merrill Lynch Series Fund Inc. - 42,543
Penn Mutual Life Insurance Co.
9.33% due April 30, 1993 - 2,300,899
Total 37,987,211 43,736,431
Loans to participants 2,696,647 2,380,491
TOTAL INVESTMENTS $70,678,772 $71,724,303
12
<PAGE>
<TABLE>
<CAPTION>
The net (depreciation) appreciation including investments bought, sold and held by type of
security, during the years ended December 31, 1993, 1992, and 1991 is summarized as follows:
1993 1992 1991
<S> <C> <C> <C>
Flagstar Companies, Inc. common stock $(3,110,586) $ 1,228,757 $ 25,944
United States Government obligations 50 (17,721) 91,292
Vanguard Explorer Equity Fund 105,075 412,752 1,223,909
Dreyfus Equity Fund, Inc. (140,270) 141,871 2,004,628
Interest Fund: insurance contracts - - 28,427
Interest Fund: government debt securities 78,371 - -
Net (Depreciation) Appreciation $(3,067,360) $ 1,765,659 $ 3,374,200
</TABLE>
13
<PAGE>
6. TAX STATUS
The Plan obtained its latest determination letter on July 6, 1988,
in which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Internal Revenue Code. The Plan has been amended since receiving
the determination letter. However, the Plan administrator believes
that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue
Code.
7. PLAN AMENDMENTS
Effective October 1991, the Plan was amended to allow for
participant loans (See Note 3), and also provided for
administrative expenses to be paid by the Plan. These expenses had
previously been paid by the Company.
Effective June 16, 1993, the name of the Plan was changed to the
"Flagstar Thrift Plan" in connection with the corporate name change
from TW Services, Inc. to Flagstar Corporation.
8. SUBSEQUENT EVENT
Effective June 17, 1994, the Company sold the Food and Vending
division of Canteen. As a result, the related plan participants
will be given the option to withdraw from the Plan. Management has
not estimated the impact of this event at this time.
14
<PAGE>
FLAGSTAR THRIFT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT, DECEMBER 31, 1993
SHARES,
UNITS OR MARKET
DESCRIPTION PAR VALUE COST VALUE
FLAGSTAR COMPANIES, INC.
common stock 339,913 $ 6,396,614 $ 3,144,195
UNITED STATES GOVERNMENT NOTES AND BONDS:
9.00% due February 15, 1994 $ 200,000 204,662 201,500
8.75% due August 15, 1994 500,000 520,393 516,095
7.00% due April 15, 1999 500,000 500,781 539,375
6.75% due May 31, 1997 500,000 503,125 530,780
8.625% due October 15, 1995 300,000 301,784 322,782
9.50% due May 15, 1994 100,000 99,938 102,250
7.875% due July 15, 1996 300,000 298,219 324,189
8.00% due August 15, 1999 200,000 210,313 226,000
8.00% due January 15, 1997 200,000 211,813 218,812
7.875% due January 15, 1998 300,000 315,750 331,500
6.375% due July 15, 1999 250,000 261,953 262,578
6.00% due November 30, 1997 250,000 258,984 259,220
5.125% due March 31, 1998 250,000 249,570 250,937
5.50% due April 15, 2000 250,000 249,023 252,032
Total 4,186,308 4,338,050
MUTUAL FUNDS:
Vanguard Explorer Equity Fund, Inc. 104,485 3,675,385 4,713,297
Dreyfus Equity Fund, Inc. 960,171 11,699,625 12,578,236
Total 15,375,010 17,291,533
15
<PAGE>
FLAGSTAR THRIFT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT, DECEMBER 31, 1993
PAR MARKET
DESCRIPTION VALUE COST VALUE
INTEREST FUND: US GOVERNMENT AND GOVERNMENT
AGENCY DEBT SECURITIES
US Treasury Bond
7.25% due May 15, 2016 $ 320,000 $ 353,628 $ 346,202
US Treasury Bond
7.50% due November 15, 2016 2,090,000 2,247,549 2,320,548
Government National Mortgage Assn.
9.00% due October 15, 2019 57,687 62,501 61,798
Federal Home Loan Mortgage Corp.
9.00% due July 1, 2020 159,893 170,486 169,936
Federal Home Loan Mortgage Corp.
9.00% due August 1, 2020 164,947 175,875 175,307
Federal Home Loan Mortgage Corp.
8.50% due June 1, 2022 158,185 167,528 166,425
Federal Home Loan Mortgage Corp.
8.50% due June 1, 2022 201,766 211,854 212,276
Government National Mortgage Assn.
8.00% due August 15, 2022 58,654 62,210 61,758
Federal Home Loan Mortgage Corp.
8.50% due December 1, 2022 170,430 180,496 179,307
Federal Home Loan Mortgage Corp.
8.00% due January 1, 2023 224,936 236,182 235,082
Federal Home Loan Mortgage Corp.
8.00% due February 1, 2023 107,926 113,424 112,796
Federal Home Loan Mortgage Corp.
7.50% due July 1, 2023 337,002 349,343 348,096
Federal Home Loan Mortgage Corp.
7.50% due August 1, 2023 456,829 472,175 471,870
Government National Mortgage Assn.
8.00% due September 15, 2023 170,994 181,361 180,043
Government National Mortgage Assn.
7.50% due September 15, 2023 173,318 182,282 179,692
Total 5,166,894 5,221,136
16
<PAGE>
FLAGSTAR THRIFT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT, DECEMBER 31, 1993
CONTRACT
DESCRIPTION COST VALUE
INTEREST FUND: INSURANCE CONTRACTS
Hartford Life Insurance Company
8.50% due April 30, 1997 $ 8,703,946 $ 8,703,946
Great West Life Assurance Co.
9.09% due April 30, 1994 2,699,090 2,699,090
Great West Life Assurance Co.
9.00% due April 30, 1996 5,108,241 5,108,241
Mutual Life Insurance Co. of NY
9.72% due April 30, 1995 5,453,137 5,453,137
New York Life Insurance Company
7.35% due April 30, 1994 6,685,146 6,685,146
Principal Mutual Life Insurance Co.
9.00% due April 30, 1996 2,265,344 2,265,344
Principal Mutual Life Insurance Co.
9.72% due April 30, 1996 7,072,307 7,072,307
Total 37,987,211 37,987,211
LOANS TO PARTICIPANTS 2,696,647 2,696,647 (1)
TOTAL INVESTMENTS $71,808,684 $70,678,772
(1) Represents estimated fair value of loans to participants.
17
<PAGE>
FLAGSTAR THRIFT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS (SINGLE TRANSACTIONS),
YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Description of Security Purchase/Sale Cost Proceeds Gain(Loss)
<S> <C> <C> <C> <C>
Principal Mutual Life Insurance Co.
9.36% due April 30, 1993 Sale $ 5,555,169 $ 5,555,169 -
UMB Federal I (*) Purchase 15,191,664 - -
UMB Federal I (*) Sale 8,778,916 8,778,916 -
UMB Federal I (*) Sale 8,008,667 8,008,667 -
(*) UMB Federal I represents cash equivalents of the Plan.
</TABLE>
18
<PAGE>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
Financial Statements at December 31, 1993 and
1992 and for each of the Three Years in the
Period Ended December 31, 1993, Supplemental
Schedules for the Year Ended December 31, 1993
and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
The Administrative Committee
Denny's, Inc. Profit Sharing Retirement Plan:
We have audited the accompanying statements of net assets available for
benefits as of December 31, 1993 and 1992, and the related statements of
changes in net assets available for benefits for each of the three years
in the period ended December 31, 1993 of the Denny's, Inc. Profit
Sharing Retirement Plan (the "Plan"). These financial statements are
the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the net assets available for benefits of the Plan as
of December 31, 1993 and 1992, and the changes in net assets available
for benefits for each of the three years in the period ended December
31, 1993 in conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, the Plan changed its
method of accounting for benefits payable to participants who have
withdrawn from participation in the Plan.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules
listed in the foregoing Table of Contents are presented for the purpose
of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. These
schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in our
audit of the basic 1993 financial statements and, in our opinion, are
fairly stated in all material respects when considered in relation to
the basic financial statements taken as a whole.
Deloitte & Touche
Greenville, SC
June 20, 1994
19
<PAGE>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1993 AND 1992
December 31, December 31,
1993 1992
ASSETS
Investments:
Contracts with
insurance companies $70,647,246 $67,574,395
Mutual funds (Cost of $10,451,907 in
1993 and $8,305,423 in 1992) 11,504,037 9,678,279
Flagstar Companies, Inc. common
stock (Cost of $5,864,437 in 1993
and $5,189,939 in 1992) 3,157,210 5,293,876
Total Investments 85,308,493 82,546,550
Receivables:
Employer's contribution 283,015 306,726
Participants' contributions 275,427 150,502
Accrued interest 7,199 18,717
Total Receivables 565,641 475,945
Cash and cash equivalents 6,188,914 9,185,172
TOTAL ASSETS 92,063,048 92,207,667
LESS - LIABILITIES
Distributions payable to
participants - 1,895,401
Accrued liabilities 158,083 385,828
Accrued transfer to Flagstar
Thrift Plan - 5,804
TOTAL LIABILITIES 158,083 2,287,033
NET ASSETS AVAILABLE FOR BENEFITS $91,904,965 $89,920,634
See notes to financial statements.
20
<PAGE>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE
YEARS ENDED DECEMBER 31, 1993, 1992, and 1991
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Increase in net assets:
INVESTMENT INCOME:
Net (depreciation) appreciation in fair
value of investments $(3,120,431) $ 1,633,390 $ 1,872,471
Interest income 5,026,877 5,737,496 6,694,800
Dividend income 944,907 347,419 317,361
Investment Income, net 2,851,353 7,718,305 8,884,632
CONTRIBUTIONS:
Employer 3,146,775 3,023,131 3,530,927
Participants 8,005,818 8,115,638 8,214,710
Total contributions 11,152,593 11,138,769 11,745,637
TOTAL INCREASE IN NET ASSETS 14,003,946 18,857,074 20,630,269
Decrease in net assets:
DISTRIBUTIONS TO PARTICIPANTS:
Distribution of participants' accounts (13,891,947) (17,758,693) (19,003,956)
Less forfeitures allocable to remaining participants 383,260 516,821 412,736
Net distributions to participants (13,508,687) (17,241,872) (18,591,220)
OTHER DEDUCTIONS:
Transfers to Flagstar Thrift Plan (5,369) (1,632,537) -
Administrative expenses (400,960) (414,499) (510,551)
TOTAL DECREASE IN NET ASSETS (13,915,016) (19,288,908) (19,101,771)
NET INCREASE (DECREASE) IN NET ASSETS BEFORE CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE 88,930 (431,834) 1,528,498
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE 1,895,401 - -
NET INCREASE (DECREASE) IN NET ASSETS 1,984,331 (431,834) 1,528,498
NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF YEAR 89,920,634 90,352,468 88,823,970
NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $91,904,965 $89,920,634 $90,352,468
See notes to financial statements.
</TABLE>
21
<PAGE>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
1. DESCRIPTION OF PLAN
General - The Denny's, Inc. Profit Sharing Retirement Plan (the
"Plan") is a qualified deferred compensation plan, subject to the
Employee Retirement Income Security Act of 1974, to which member
employees contribute 1% to 15% of their salaries on a weekly basis,
with annual limitations of $8,994 in 1993, $8,728 in 1992, and
$8,475 in 1991. Any United States employee of Denny's, Inc. (the
"Company") and its domestic subsidiaries who has attained age 21
and who has completed twelve months of service with the Company, is
eligible to participate in the Plan.
Effective January 1, 1990, the Plan was amended and restated for
changes relating to Company contributions, investment options, and
other matters. The Administrative Committee believes that these
changes will not adversely affect the previously determined tax-
exempt status of the Plan, and intends to apply to the Internal
Revenue Service for a ruling to that effect (Note 6).
At July 1, 1990, a special election period was designated. The
election allowed participants to redistribute both their
contributions and matching Company contributions to any of the
available investment options. Investment in Flagstar Companies,
Inc. common stock was limited to 25% of their total amount. All
elections were executed per their instructions. Funds of
participants who did not respond to the election were placed in the
Employee Income Fund.
Contributions and Withdrawals - Contributions to the Plan can be
invested in any combination of four funds chosen by the
participants: Employee Income Fund, Employee Dreyfus Fund,
Employee Explorer Fund, and Flagstar Companies Employee Stock Fund.
Contributions are temporarily invested in short-term money market
deposits and/or commercial paper until employee elections are
executed. The Employee Income Fund consists of insurance contracts
that provide fixed interest rates on the Fund investments. The
Dreyfus Equity Fund and Explorer Equity Fund are mutual equity
funds that provide dividends and gains/losses as the market
fluctuates. The Flagstar Companies Employee Stock Fund (formerly
TW Holdings Employee Stock Fund) is invested in Flagstar Companies,
Inc. Common Stock which also generates gains/losses as the market
fluctuates.
The Company's contributions to the Plan match employee
contributions up to the first 3% of each employee's salary at the
rate of $1.00 for each employee dollar contributed (net of
forfeitures). These Company contributions are made to the Plan
monthly and are invested to mirror the employee election.
22
<PAGE>
Contributions to the Plan are not taxable to a participant when
contributed. Similarly, the earnings on the participant's accounts
are not taxable when earned. However, any withdrawal from the Plan
is taxable to the participant in the year of the withdrawal.
Vesting and Participant Accounts - A participant's contributions
and earnings on those contributions are 100% vested at all times.
Company contributions related to participants that joined the Plan
prior to January 1, 1988 vest at 20% each year and become fully
vested after five years of employment with the Company.
Participants who joined the Plan after December 31, 1987 have no
vesting until after five years, at which time they become 100%
vested.
A separate account is maintained for each Plan participant. The
account balances for Plan participants are adjusted periodically as
follows:
a) Monthly for contributions and participant withdrawals.
b) Quarterly for a pro rata share of income, gains and losses on
investments and expenses, determined by the relative percentage
of the participant's average account balance in comparison to
the total average account balance of all participants'
accounts.
Termination - While the Company has not expressed any intent to
terminate the Plan, it is free to do so at any time. In the event
of termination of the Plan, each participant automatically becomes
fully vested to the extent of the balance in the participant's
separate account after reflection of the fund's activity to the
date of such termination.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Plan are
presented on the accrual basis of accounting.
Investment Valuation - Investments in insurance contracts are
valued at contract value, which represents contributions made under
the contract, plus interest earned, less withdrawals and
administrative expenses. Investments in money market deposits and
commercial paper are carried at cost, which approximates market.
Investments in marketable equity securities and mutual equity funds
are carried at their quoted market price as of the valuation date.
Contributions - Contributions (in the form of withholding from
wages) from employees are recorded for all pay periods completed
prior to year end. Contributions from Denny's, Inc. are accrued in
the period in which they become obligations of the Company.
23
<PAGE>
Transfers to Other Benefit Plan - During 1993 and 1992 a number of
Denny's, Inc. employees who were participants in the Plan became
employees of Flagstar Corporation, Canteen Corporation or Flagstar
Systems, Inc. As a result, the account balances of these
participants were transferred to the Thrift Plan for NonContract
Employees of Flagstar Corporation.
Administrative Expenses - Administrative expenses of the Plan are
paid by the Plan and allocated to participant accounts (see Note
4).
Benefits Payable - In 1993, the Plan changed its method of
accounting for benefits payable to comply with the 1993 AICPA Audit
and Accounting Guide, "Audits of Employee Benefit Plans." The new
guidance requires that benefits payable to persons who have
withdrawn from participation in a defined contribution plan be
disclosed in the footnotes to the financial statements rather than
be recorded as a liability of the plan. As of December 31, 1993,
net assets available for benefits included benefits of $2,391,794
due to participants who have withdrawn from participation in the
Plan.
Cash and Cash Equivalents - The Plan considers all highly liquid
investments purchased with an original maturity of three months or
less to be cash equivalents. Cash equivalents typically represent
money market funds.
24
<PAGE>
3. INVESTMENTS
Assets held for investment are as follows:
December 31,
1993 1992
Interest Fund: Insurance Contracts
John Hancock Mutual Life Ins. Co.
5.87% due 12/31/96 $15,873,128 $15,000,000
Metropolitan Life Ins. Co.
6.00% due 12/12/12 9,128,025 5,000,000
Allstate Life Ins. Co.
6.95% due 1/2/97 3,762,128 3,517,651
Lehmann Government Sec. Ins.
5.85% due 6/30/95 4,358,549 4,115,721
John Hancock Mutual Life Ins. Co.
7.95% due 12/30/94 3,152,005 3,635,096
Metropolitan Life Ins. Co.
8.63% due 12/31/94 4,661,902 8,583,084
Mutual Benefit Life
11.25% due 12/31/94 1,741,962 1,741,962
IDS Life Insurance Company
8.25% due 1/4/94 26,452,735 24,551,166
IDS Life Insurance Company
6.10% due 8/24/95 1,516,812 1,429,715
TOTAL 70,647,246 67,574,395
Mutual Funds:
Dreyfus Equity Fund 7,983,084 6,910,556
Vanguard Explorer Equity Fund 3,520,953 2,767,723
Total 11,504,037 9,678,279
Flagstar Companies, Inc.
Common Stock 3,157,210 5,293,876
TOTAL INVESTMENTS $85,308,493 $82,546,550
25
<PAGE>
3. INVESTMENTS (Continued)
The net (depreciation) appreciation (including investments bought,
sold and held), by type of security, during the years ended
December 31, 1993, 1992 and 1991 is summarized as follows:
1993 1992 1991
Flagstar Companies, Inc.
common stock $(2,886,509) $ 1,320,399 $ 13,296
Vanguard Explorer
Equity Fund (32,403) 249,723 761,233
Dreyfus Equity Fund (201,519) 63,268 1,097,942
$(3,120,431) $ 1,633,390 $ 1,872,471
Effective July 16, 1991, the State of New Jersey assumed control of
Mutual Benefit Life Insurance Company, Inc. (Mutual), as a result
of approximately $1,000,000,000 in policy surrenders during the
period immediately preceding the seizure. The Plan's investment in
an insurance contract with Mutual as of December 31, 1993 and 1992,
including accrued interest totalled approximately $1.7 million.
The contract was scheduled to mature on December 31, 1991, however,
Plan management received correspondence from Mutual indicating that
due to the State of New Jersey's seizure of control and the severe
restrictions placed on withdrawals, they would not be able to
release the scheduled maturity payment on the Plan's contract. A
rehabilitation plan, proposed by an industry consortium, was
approved by the Superior Court of New Jersey in November 1993.
Under such plan, mutual contract holders can continue to
participate in the contracts, in which case such holders will
receive a reduced interest rate and extended maturity through
December 2003, or accept a current maturity value at 55% of the
contract value. Management intends to hold this contract to the
extended maturity date; therefore, no reduction in carrying value
has been recorded.
4. ADMINISTRATIVE EXPENSES
Prior to October 14, 1991, certain administrative expenses incurred
by the Plan were allocated between the Plan and Denny's, Inc.
These expenses included payments to outside vendors as well as
in-house expenses incurred by Denny's, Inc. for accounting and
processing. In-house expenses incurred by Denny's, Inc. and
charged to the Plan for processing and accounting amounted to
approximately $161,000 for the year ended December 31, 1991.
Effective October 14, 1991, the Profit Sharing Administrative
Committee voted to discontinue the allocation to Denny's, Inc. of
a portion of the Plan's expenses paid to outside vendors. In
addition, they agreed that Denny's, Inc. would no longer charge the
Plan for a portion of the accounting and processing expenses
incurred by Denny's, Inc. on the Plan's behalf.
26
<PAGE>
5. PARTICIPANTS
As of December 31, 1993, 1992, and 1991 there were approximately
9,000, 8,600, and 8,700 participants, respectively in the Plan out
of the total eligible participants of approximately 24,300, 24,200,
and 24,000, respectively.
6. TAX STATUS
The Plan obtained its latest determination letter on July 19, 1985,
in which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Internal Revenue Code. The Plan has been amended since receiving
the determination letter. However, the Plan administrator believes
that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue
Code.
27
<PAGE>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT, DECEMBER 31, 1993
Shares,
Units or Market
Description Par Value Cost Value
Flagstar Companies, Inc.
Common Stock 341,320 $ 5,864,437 $ 3,157,210
Mutual Funds:
Dreyfus Equity Fund 609,396 7,528,157 7,983,084
Vanguard Explorer Equity Fund 78,053 2,923,750 3,520,953
Total 10,451,907 11,504,037
Contract
Interest Fund: Insurance Contracts Cost Value
John Hancock Mutual Life Ins. Co.
5.87% due 12/31/96 15,873,128 15,873,128
Metropolitan Life Ins. Co.
6.00% due 12/12/12 9,128,025 9,128,025
Allstate Life Ins. Co.
6.95% due 1/2/97 3,762,128 3,762,128
Lehmann Government Sec. Inc.
5.85% due 6/30/95 4,358,549 4,358,549
John Hancock Mutual Life Ins. Co.
7.95% due 12/30/94 3,152,005 3,152,005
Metropolitan Life
8.63% due 12/31/94 4,661,902 4,661,902
Mutual Benefit Life
11.25% due 12/31/91 1,741,962 1,741,962
IDS Life Insurance Company
8.25% due 1/4/94 26,452,735 26,452,735
IDS Life Insurance Company
6.10% due 8/24/95 1,516,812 1,516,812
TOTAL 70,647,246 70,647,246
TOTAL INVESTMENTS $86,963,590 $85,308,493
28
<PAGE>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1993 (Single Transactions)
<TABLE>
<CAPTION>
Description of Security Purchase/Sale Cost Proceeds Gain(Loss)
<S> <C> <C> <C> <C>
MetLife GIC
8.63% due 12/31/94 Sale $ 4,660,845 $ 4,660,845 -
John Hancock Mutual Life Ins. Co.
5.87% due 12/31/96 Purchase 15,000,000 - -
Metropolitan Life Ins. Co.
6.00% due 12/12/12 Purchase 5,000,000 - -
NationsBank Daily Income Fund (*) Sale 20,533,560 20,533,560 -
Nations Prime Portfolio
Trust A Shares (*) Purchase 4,749,928 - -
(*) Represents cash equivalents of the Plan
29
<PAGE>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS,
YEAR ENDED DECEMBER 31, 1993 (Series of Transactions)
<CAPTION>
Number of
Transactions Dollar Value Realized
Description of Security Purchases Sales Purchases Sales Gain (Loss)
<S> <C> <C> <C> <C> <C>
Met Life GIC
8.63% due 12/31/94 1 $ 4,660,845 -
John Hancock Mutual Life Ins. Co.
5.87% due 12/31/96 13 $15,873,128 - -
Metropolitan Life Ins. Co.
6.00% due 12/12/12 13 5,321,572 - -
</TABLE>
30
FORM 10-K/A
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-35098 and 33-35099 of Flagstar Corporation (formerly TW Services, Inc.)
on Form S-8 of our reports dated June 20, 1994 appearing in this Annual Report
on Form 11-K of the Flagstar Thrift Plan (formerly the Thrift Plan for
Noncontract Employees of TW Services, Inc.) and the Denny's, Inc. Profit Sharing
Retirement Plan for the year ended December 31, 1993.
Deloitte & Touche
Greenville, South Carolina
June 29, 1994
31
