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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported): June 17, 1994
Commission File Number: 1-9364
FLAGSTAR CORPORATION
(Exact name of Registrant as Specified in Charter)
Delaware 13-3027522
(State of 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
N/A
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
As of June 17, 1994, Flagstar Corporation ("Flagstar")
closed the sale of its Food and Vending operation as conducted
through its Canteen Corporation subsidiary. The buyer in the
transaction was a subsidiary of Compass Group PLC, a London-based
food service company. The sale, effected in the form of a sale
of the stock of IM Vending, Inc., an indirect subsidiary of
Flagstar and the parent company of Canteen Corporation, was for a
cash purchase price paid at closing of $450 million, subject to
post-closing adjustment under certain circumstances. Such
purchase price was the result of arm's-length negotiations
between the parties. A copy of the press release issued on the
closing date is attached hereto as Exhibit 99.1.
Under the terms of certain public indentures governing
Flagstar's public debt, Net Proceeds (as defined therein) of the
sale must be applied within one year from the closing date to one
or more of the following in such combination as Flagstar may
choose: (i) an investment in other food service businesses or
assets related thereto, (ii) an offer, in accordance with
applicable law, to repurchase such public debt at a price not
less than 100% of the principal amount thereof plus accrued and
unpaid interest thereon, or (iii) the purchase, redemption or
other prepayment or repayment of outstanding Senior Indebtedness
(as defined in such indentures).
For certain pro forma financial information concerning the
transaction, see Item 7 below.
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Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
The following pro forma financial information is included
herein:
Page
Number
in
Filing
(i) Pro Forma Condensed Consolidated
Balance Sheets (Unaudited) as of
March 31, 1994, 5
(ii) Pro Forma Condensed Statements of
Consolidated Operations (Unaudited)
for the Year Ended December 31, 1993,
and 7
(iii) Pro Forma Condensed Statements
of Consolidated Operations (Unaudited)
for the Three Months Ended March 31,
1994. 7
(c) Exhibits.
Exhibit No. Description
99.1 Press Release of Flagstar
Companies, Inc. dated
June 17, 1994. 9
(c) Exhibits.
Exhibit No. Description
99.2 Stock Purchase Agreement
among Flagstar Corporation,
Canteen Holdings, Inc.,
Compass Group PLC, and
Compass Holdings, Inc.
dated as of April 26, 1994
(incorporated by reference
to Exhibit 10.1 to the
registrant's Quarterly Report
on Form 10-Q for the quarter
ended March 31, 1994, File No.
1-9364).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly cause this report to be signed
on its behalf by the undersigned hereunto duly authorized.
FLAGSTAR CORPORATION
Date: July 1, 1994 /s/ A. Ray Biggs
A. Ray Biggs,
Senior Vice President and
Chief Financial Officer
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PRO FORMA FINANCIAL STATEMENTS
The unaudited pro forma condensed statements of consolidated
operations on the following pages are based upon the historical
results of operations of the Company for the year ended December
31, 1993 and the three month period ended March 31, 1994. The
unaudited pro forma condensed consolidated balance sheets for
March 31, 1994 presented below are based upon the historical
balance sheet as of March 31, 1994 and include pro forma
adjustments as if the sale of Canteen's food and vending
subsidiary had occurred on that date. The reclassifications
made to the historical results of operations give effect to the
reporting of Canteen's food and vending and recreational
services subsidiaries as discontinued operations for the year
ended December 31, 1993 and the pro forma adjustments thereto
give effect to the sale of Canteen's food and vending subsidiary
as if such sale had occurred on January 1, 1993. The pro forma
condensed consolidated balance sheets and pro forma condensed
statements of consolidated operations were derived by adjusting
the historical financial statements of the Company for certain
pro forma transactions as described in the respective notes
thereto. Since Flagstar is a wholly-owned subsidiary of Flagstar
Companies, Inc., per share data is not meaningful and has been
omitted for the periods presented.
Flagstar Corporation
Pro Forma Condensed Consolidated Balance Sheets
as of March 31, 1994
(Amounts in thousands)
(Unaudited)
Pro Forma
Adjustments
for Sale of
Food and
Historical Vending Pro Forma
Assets
Current Assets:
Cash and cash equivalents $ 24,514 $ 190,388 (1)$ 214,902
Receivables, net 36,624 36,624
Merchandise and supply
inventories 63,881 63,881
Net assets held for sale 87,389 (41,500)(2) 45,889
Other 3,594 3,594
216,002 148,888 364,890
Property, net 1,156,094 1,156,094
Other Assets:
Other intangible assets, net 24,666 24,666
Deferred financing costs, net 89,065 (12,418)(3) 76,647
Other 41,112 41,112
154,843 (12,418) 142,425
Total Assets $ 1,526,939 $ 136,470 $ 1,663,409
Liabilities
Current Liabilities:
Current maturities of
long-term debt $ 34,948 $ (5,435)(4)$ 29,513
Accounts payable 92,057 92,057
Accrued salaries and vacations 55,435 55,435
Accrued insurance 53,109 53,109
Accrued taxes 12,688 20,822 (5) 33,510
Accrued interest and dividends 68,018 (458)(6) 67,560
Accrued restructuring cost 15,146 15,146
Other 90,948 8,500 (7) 99,448
422,349 23,429 445,778
Long-Term Liabilities:
Debt, less current maturities 2,471,836 (244,719)(8) 2,227,117
Deferred income taxes 24,001 24,001
Liability for self-insured claims 61,294 61,294
Other non-current liabilities -
and deferred credits 140,124 140,124
2,697,255 (244,719) 2,452,536
Total Liabilities 3,119,604 (221,290) 2,898,314
Shareholders' Deficit (1,592,665) 357,760 (9) (1,234,905)
Total Liabilities and
Shareholders' Deficit $ 1,526,939 $ 136,470 $ 1,663,409
See notes to pro forma condensed consolidated balance sheets.
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Flagstar Corporation
Notes to Pro Forma Condensed Consolidated Balance Sheets
as of March 31, 1994
<TABLE>
<CAPTION>
(2) (4)
Net (3) Current (7) (8)
Assets Deferred maturities of (5) (6) Other Debt, less (9)
(1) Held for financing long-term Accrued Accrued Accrued current Shareholders'
Cash Sale costs debt taxes interest Liabilities maturities Deficit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(a) $ 450,000 $ (41,500) $ 22,468 $ 386,032
(b) (9,000) (963) $ 8,500 (16,537)
(c) (250,154) $ (5,435) $ (244,719)
(d) $ (12,418) (683) (11,735)
(e) (458) $ (458)
Total$ 190,388 $ (41,500) $ (12,418)$ (5,435) $ 20,822 $ (458) $ 8,500 $ (244,719) $ 357,760
</TABLE>
(a) To reflect cash proceeds of $450 million and the estimated gain (before
estimated costs described in (b)) of $386.0 million, net of estimated
net assets of $41.5 million and income taxes of $22.5 million.
(b) To reflect estimated costs of $17.5 million related to sale of the
food and vending subsidiary and for services to be provided subsequent
to sale, net of income taxes of $1.0 million.
(c) To reflect the prepayment of borrowings outstanding under the restated
credit agreement of $170.2 million for term loan advances and $80.0
million for working capital advances.
(d) Represents the charge-off of unamortized deferred financing costs
associated with the prepayment of senior debt, net of income taxes of
$0.7 million.
(e) To reflect the payment of accrued interest on senior debt.
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Flagstar Corporation
Pro Forma Condensed Statements of Consolidated Operations
for the Year Ended December 31, 1993
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Adjustments Pro Forma
for Disposition Adjustments
of Assets of Adjusted for for Sale of
Discontinued Discontinued Food and
Historical Operations Operations Vending Pro Forma
<S> <C> <C> <C> <C> <C>
Operating revenues $ 3,970,205 $(1,355,036) $ 2,615,169 $ $ 2,615,169
Operating expenses 5,430,958 (1,713,419) 3,717,539 3,717,539
Operating Income (1,460,753) 358,383 (1,102,370) - (1,102,370)
Other charges:
Interest and debt expense 280,314 (53,042) 227,272 14,932 (1) 242,204
Other--net 2,501 (67) 2,434 2,434
Income (loss) before income taxes
from continuing operations (1,743,568) 411,492 (1,332,076) (14,932) (1,347,008)
Provision (benefit) for income taxes (81,149) 1,821 (79,328) (747)(2) (80,075)
Loss from continuing operations $ (1,662,419)$ 409,671 $ (1,252,748)$ (14,185) $ (1,266,933)
</TABLE>
See notes to pro forma condensed statements of consolidated operations.
Flagstar Corporation
Pro Forma Condensed Statements of Consolidated Operations
for the Three Months Ended March 31, 1994
(Amounts in thousands)
(Unaudited)
Pro Forma
Adjustments
for Sale of
Food and
Historical Vending Pro Forma
Operating revenues $ 626,273 $ $ 626,273
Operating expenses 587,447 587,447
Operating Income 38,826 - 38,826
Other charges:
Interest and debt expense 57,187 3,788 (1) 60,975
Other--net 256 256
Income (loss) before income taxes
from continuing operations (18,617) (3,788) (22,405)
Provision (benefit) for income taxes (2,411) (606)(2) (3,017)
Loss from continuing operations $ (16,206)$ (3,182) $ (19,388)
See notes to pro forma condensed statements of consolidated operations.
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Flagstar Corporation
Notes to Pro Forma Condensed Statements of Consolidated Operations
(1) To reflect for the year ended December 31, 1993 and three months ended
March 31, 1994 the reversal of interest and debt expense of $31.0
million and $8.4 million, respectively, attributable to the Canteen
food and vending subsidiary. Such amounts were previously included as
an allocation of interest and debt expense to discontinued operations.
In addition, amounts for the year ended December 31, 1993 and three
months ended March 31, 1994 reflect a reduction of interest and debt
expense $16.1 million and $4.6 million, respectively, related to the
liquidation of $170.2 million of term loan and outstanding working
capital advances under the Company's credit agreement.
(2) To record the estimated income tax effects of additional interest and
debt expense.
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EXHIBIT 99.1
Media contact: Coleman Sullivan
Karen Randall
803/597-8642
Investor contact: Larry Gosnell
803/597-8658
FOR IMMEDIATE RELEASE
FLAGSTAR REPORTS CANTEEN SALES COMPLETE,
PRE-TAX GAIN EXCEEDS $350 MILLION
SPARTANBURG, S.C., June 17 -- The previously announced sale of
Canteen food and vending by Flagstar Companies, Inc.
(NASDAQ:FLST) to Compass Group PLC was completed today.
The London-based food service company purchased Canteen for
$450 million.
Flagstar expects to report a pre-tax gain exceeding $350
million as a result of the Canteen sale.
As part of its strategic decision to focus on its core
restaurant businesses, Flagstar also has engaged Morgan Stanley
& Company to seek buyers for its TW Recreational Services and
Volume Services divisions.
Flagstar, one of the nation's largest restaurant companies,
owns and operates Denny's, Quincy's Family Steakhouse and El
Pollo Loco restaurants and is the largest franchisee of Hardee's
restaurants.
6/17/94
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