<PAGE>
FORM 10-K/A
Sequential Page 1 of 33
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 COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3487402
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
203 East Main Street
Spartanburg, South Carolina 29319-9966
(Address of principal executive offices)
(Zip Code)
(803) 597-8000
(Registrant's telephone number, including area code)
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 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 1994 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, Financial Statement Schedules, and reports
on Form 8-K.
Exhibit 23.1 Consent of Deloitte & Touche LLP 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
undersighned, thereunto duly authorized.
FLAGSTAR COMPANIES, INC.
(Registrant)
DATE: June 29, 1995
BY:/s/ C. Robert Campbell
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 1994 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, 1994
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 COMPANIES, INC.
203 E. MAIN STREET
SPARTANBURG, SOUTH CAROLINA 29319-9966
Part IV, Item 14 (a) (1) of the Annual Report on form 10-K for the period
ended December 31, 1994 is amended to insert the following financial
statements required by Form 11-K, copies of which are filed herewith:
1. Flagstar Thrift Plan Financial Statements at December 31, 1994 and
1993 and for Each of the Three Years in the Period ended December 31,
1994, Supplemental Schedules for the Year Ended December 31, 1994
and Independent Auditors' Report.
2. Denny's, Inc. Profit Sharing Retirement Plan Plan Financial Statements
at December 31, 1994 and 1993 and for Each of the Three Years in the
Period ended December 31, 1994, Supplemental Schedules for the Year
Ended December 31, 1994 and Independent Auditors' Report.
The financial statements described in 1. and 2. above are included as
pages 4 through 32 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, 1994 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 LLP pursuant to Note to
Required Information of Form 11-K
The consent described as Exhibit No. 23.1 is included as page 33 herein.
3
<PAGE>
Flagstar Thrift Plan
Financial Statements at December 31, 1994 and 1993 and for each
of the Three Years in the Period Ended December 31, 1994, Supplemental Schedules
for The Year Ended December 31, 1994, and Independent Auditors' Report.
4
<PAGE>
FLAGSTAR THRIFT PLAN
TABLE OF CONTENTS
PAGES
INDEPENDENT AUDITORS' REPORT 6
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
as of December 31, 1994 and 1993 7
Statements of Changes in Net Assets
Available for Benefits for the Years
Ended December 31, 1994, 1993 and 1992 8
Notes to Financial Statements 9-15
SUPPLEMENTAL SCHEDULES:
IRS Form 5500, Item 27a - Schedule of Assets
Held for Investment Purposes as of
December 31, 1994 16-17
IRS Form 5500, Item 27d - Schedule of
Reportable Transactions for the Year
Ended December 31, 1994 18-19
Schedules required under the Employee Retirement Income Security
Act of 1974, other than the schedules listed above, are omitted
because of the absence of conditions under which such schedules
are required.
5
<PAGE>
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, 1994 and 1993, and the
related statements of changes in net assets of the Flagstar
Thrift Plan (the Plan ) available for benefits for each of the
three years in the period ended December 31, 1994. 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, 1994 and 1993 and the changes in net
assets available for benefits for each of the three years in the
period ended December 31, 1994 in conformity with generally
accepted accounting principles.
As discussed in Note 2 to the financial statements, in 1993 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 1994 financial statement 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 LLP
Greenville, South Carolina
June 21, 1995
6
<PAGE>
<TABLE>
<CAPTION>
FLAGSTAR THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1994 AND 1993
1994 1993
<S> <C> <C>
ASSETS:
Investments:
Flagstar Companies, Inc. Common Stock $ 2,674,956 $ 3,144,195
Government Bond Fund 5,131,170 4,338,050
Dreyfus Equity Fund 12,060,887 12,578,236
Vanguard Explorer Fund 5,637,577 4,713,297
Interest Fund-insurance contracts 35,620,084 43,208,347
Loans to participants 2,021,267 2,696,647
Total Investments 63,145,941 70,678,772
Receivables:
Accrued income 135,539 1,323,096
Contributions receivable:
Participants 168,224 577,849
Employer 243,482 240,283
Accrued transfers from Denny's --- 12,529
Total Receivables 547,245 2,153,757
Cash and Cash Equivalents 10,791,531 5,241,932
TOTAL ASSETS PLAN 74,484,717 78,074,461
LESS - LIABILITIES
Accrued liabilities 151,055 292,779
TOTAL LIABILITIES 151,055 292,779
NET ASSETS AVAILABLE FOR BENEFITS $74,333,662 $77,781,682
See notes to financial statements.
7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLAGSTAR THRIFT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
1994 1993 1992
<S> <C> <C> <C>
Increase in net assets:
INVESTMENT INCOME
Net(depreciation)appreciation
In fair value of investments $ (2,630,739) $ (3,067,360) $ 1,765,659
Divided income 862,145 1,491,440 592,047
Interest income 4,087,850 4,251,321 4,140,387
Investment income - net 2,319,256 2,675,401 6,498,093
CONTRIBUTIONS:
Participants 4,473,768 6,058,275 5,554,905
Employer 2,048,595 2,364,196 2,217,032
Total contributions 6,522,363 8,422,471 7,771,937
TRANSFERS FROM DENNY'S PROFIT SHARING PLAN --- 5,369 1,632,537
TOTAL INCREASE IN NET ASSETS 8,841,619 11,103,241 15,902,567
Decrease in net assets:
DISTRIBUTION TO PARTICIPANTS (11,983,361) (7,334,238) (5,819,279)
ADMINISTRATIVE EXPENSES (306,278) (492,784) (357,189)
TOTAL DECREASE IN NET ASSETS (12,289,639) (7,827,022) (6,176,468)
NET INCREASE(DECREASE)IN NET ASSETS BEFORE CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (3,448,020) 3,276,219 9,726,099
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE --- 609,985 ---
NET INCREASE(DECREASE) IN NET ASSETS AVAILABLE FOR
BENEFITS (3,448,020) 3,886,204 9,726,099
NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF
YEAR 77,781,682 73,895,478 64,169,379
NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $74,333,662 $77,781,682 $73,895,478
See notes to financial statements.
8
</TABLE>
<PAGE>
FLAGSTAR THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994
1. DESCRIPTION OF PLAN
The following description of the Flagstar Thrift Plan (the
Plan ) provides only general information. Participants should
refer to the Plan document for a more complete description of the
Plan provisions.
a. 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
nonhighly compensated salaried employee of Flagstar
Corporation (Flagstar, the Company and the Plan's
Administrator) and Flagstar Systems, Inc. (Spartan) who has
attained age 21 and has completed twelve months of service
with the Company is eligible to participate in the Plan.
Prior to May 6, 1994, any salaried employee of Canteen
Corporation and, prior to November 30, 1994, any salaried
employee of TW Recreational Services, Inc. (TW Rec) could
participate in the Plan in accordance with the same
eligibility requirements. The Flagstar Thrift Plan
Committee and the Plan Administrator control and manage the
operation and administration of the Plan. NationsBank
serves as the Trustee of the Plan.
Effective June 17, 1994, (the Transition Date ), IM Vending
Inc., Canteen Corporation and the subsidiaries of Canteen
Corporation (collectively, the Canteen Group ) were sold to
an entity outside of the Flagstar Corporation controlled
group. Effective May 6, 1994, employees classified as
Canteen Group employees were no longer eligible to become
participants in the plan. Effective as of the Transition
Date and thereafter, the Canteen Group is not a Plan Sponsor
or participating employer under the plan and active
employees of the Canteen Group as of the Transition Date
were not permitted to make contributions under the plan or
eligible to receive employer contributions under the plan.
In accordance with the Plan provisions, Canteen Group
employees were given the right to elect to receive a lump
sum distribution of their entire Pre-Tax Account as of the
Transition Date, receive distribution of the Pre-Tax Account
when he or she separates from service with the Canteen
Group, or postpone distribution of the account if their
account balance did not exceed $3,500 as of the Transition
Date. At December 31, 1994, Canteen employee participant
account balances included in the net assets available for
benefits of the Plan were approximately $17,535,859.
Effective November 30, 1994, employees classified as TW Rec
employees were no longer eligible to become participants in
the plan.
9
<PAGE>
b. Contributions and Withdrawals - Pre-tax contribution
deductions are limited to 10% of eligible compensation, or
$9,240 in 1994, $8,994 in 1993, and $8,728 in 1992,
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. In no event
may more than 25% of the participating employees
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 or her total
investment in the Plan.
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's in the year of the withdrawal.
c. Vesting and Participant Accounts - All company contributions
vest immediately to the employees. 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) Monthly 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.
10
<PAGE>
d. Termination - Although it has not expressed any intention to
do so, the Company has the right under the Plan to
discontinue its contributions at any time and to terminate
the Plan subject to the provisions set forth in ERISA. In
the event of any 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
a. Basis of Accounting - The financial statements of the
Plan are presented on the accrual basis of accounting.
b. Investment Valuation - Investments in marketable equity
securities, mutual equity funds, and debt securities
are carried at market values as determined by published
market prices. Investments in insurance contracts and
synthetic insurance contracts are valued at contract
value, which represents contributions made under the
contract, plus interest earned, less withdrawals and
administrative expenses.
Synthetic insurance contracts operate similarly to
other guaranteed investment contracts except that the
assets are placed in a trust (with ownership by the
plan) rather than a separate account of the issuer and
a financially responsible third party (i.e. an
insurance company) issues a wrapper contract that
provides that participants can, and must, execute plan
transactions at contract value.
In May 1994, the American Institute of Certified Public
Accountants (AICPA) issued Statement of Position (SOP)
94-4 Reporting of Investment Contracts Held by Health
and Welfare Benefit Plans and Defined-Contribution
Pension Plans which requires defined-contribution
plans to report investment contracts with fully
benefit-responsive features (as defined in the SOP) at
contract value and other investment contracts at fair
value. The Plan, which will be required to implement
this statement at the beginning of the 1995 fiscal
year, does not plan to implement this statement prior
to the effective date. The impact of this SOP on the
Plan's financial statements is not expected to have a
material impact on its operations.
c. 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
Corporation, Canteen (through May 6, 1994), or Spartan.
11
<PAGE>
As a result, the account balances of these participants
in the Denny's, Inc. Plan were transferred to the Plan.
d. Administrative Expenses - Administrative expenses of
the Plan are paid by the Plan and allocated to
participant accounts.
e. 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, 1994 and 1993, benefits of $ 15,381,241
and $1,229,729, respectively, were due to participants
who have withdrawn from participation in the Plan
(including balances of employees of Canteen who have
elected to withdraw their balances in the Plan - see
Note 1).
f. 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.
3. PARTICIPANT LOANS
Participants may 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 borrowing rate 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, 1994 have a range of
interest rates from 6.0% to 9.0%.
12
<PAGE>
4. PARTICIPANTS
As of December 31, 1994, 1993, and 1992 there were
approximately 2,600, 4,400, and 4,200 participants,
respectively, in the plan out of the total eligible
participants of approximately 3,400, 7,700 and 7,200.
<TABLE>
<CAPTION>
5. INVESTMENTS EXCEEDING 5% OF NET ASSETS
The Plan's investments which exceeded 5% of net assets available
for benefits as of December 31, 1994 and 1993 are as follows:
1994 1993
Carrying Carrying
Description Value Value
<S> <C> <C>
Interest Fund: Insurance Contract
Great West Life Assurance Co.
9.20% due April 30, 1996 $ 3,718,799 $ 5,108,241
Mutual Life Insurance Co. Of NY
9.72% due April 30, 1995 5,983,113 5,453,137
New York Life Insurance Co.
7.35% due May 7, 1997 7,154,051 6,685,146
Principal Mutual Life Insurance Co.
9.72% due April 30, 1996 7,752,066 7,072,307
People's Security Life Insurance
5.9346% due April 30, 1998 9,359,310 5,221,136
Hartford Life Insurance Company
8.50% due April 30, 1997 --- 8,703,946
Mutual Funds:
Vanguard Explorer Equity Fund, Inc. 5,637,577 4,713,297
Dreyfus Equity Fund, Inc. 12,060,887 12,578,236
</TABLE>
<TABLE>
<CAPTION>
6. NET (DEPRECIATION)/APPRECIATION IN FAIR VALUE OF INVESTMENTS
The net (depreciation) appreciation including investments
bought, sold and held by type of security, during the years
ended December 31, 1994, 1993, and 1992 is summarized as
follows:
1994 1993 1992
<S> <C> <C> <C>
Flagstar Companies, Inc.
Common Stock $ (858,863) $(3,110,586) $ 1,228,757
Government Bond Fund (467,398) 50 (17,721)
Vanguard Explorer Fund (227,383) 105,075 412,752
Dreyfus Equity Fund (1,145,824) (140,270) 141,871
Interest Fund-insurance contracts 68,729 78,371 ---
$ (2,630,739) $(3,067,360) $ 1,765,659
13
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
7. FUND INFORMATION
Participant contributions, employer contributions,
distributions to participants and investment income by fund
are as follows for the year ended December 31, 1994:
Participant Contributions:
<S> <C>
Flagstar Companies, Inc. Common Stock $ 583,071
Government Bond fund 505,080
Dreyfus Equity Fund 931,059
Vanguard Explorer Fund 506,638
Interest Fund 1,947,920
Total $ 4,473,768
Employer Contributions:
Flagstar Companies, Inc. Common Stock $ 270,122
Government Bond Fund 241,004
Dreyfus Equity Fund 436,794
Vanguard Explorer Fund 195,736
Interest Fund 904,939
Total $ 2,048,595
Distribution to Participants:
Flagstar Companies, Inc. Common stock $ 515,421
Government Bond fund 992,150
Dreyfus Equity Fund 2,206,113
Vanguard Explorer Fund 783,351
Interest Fund 7,486,326
Total $ 11,983,361
Investment Income/Dividends:
Flagstar Companies, Inc. Common Stock $ 5,475
Government Bond Fund 313,414
Dreyfus Equity Fund 545,106
Vanguard Explorer Fund 326,985
Interest Fund 3,729,942
Loans to Participants 29,073
Total $ 4,949,995
</TABLE>
8. 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. Therefore, no
14
<PAGE>
provision for income taxes has been included in the Plan's
financial statements.
15
<PAGE>
<TABLE>
<CAPTION>
FLAGSTAR THRIFT PLAN
IRS FORM 5500, ITEM 27a
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1994
Shares,
Units or
Par Carrying
Description Value Cost Value
<C> <C> <C> <C>
Flagstar Companies, Inc.
Common Stock 382,137 $ 6,004,890 $2,674,956
United States Government Notes
and Bonds:
7.00% due April 14, 1999 500,000 500,781 484,530
6.75% due May 31, 1997 500,000 503,125 488,830
8.625% due October 15, 1995 300,000 301,784 303,186
7.875% due July 15, 1996 300,000 298,219 301,218
8.00% due August 15, 1999 200,000 210,313 201,156
8.00% due January 15, 1997 200,000 211,813 201,032
7.875% due January 15, 1998 300,000 315,750 300,375
6.375% due July 15, 1999 250,000 261,953 236,210
6.00% due November 30, 1997 250,000 258,984 238,398
5.125% due March 31, 1998 250,000 249,570 230,860
5.50% due April 15, 2000 250,000 249,023 224,882
3,361,315 3,210,677
NationsBank Short-Intermediate
Government Fund 489,922 2,028,472 1,920,493
Total 5,389,787 5,131,170
Mutual Funds:
Dreyfus Equity Fund 1,010,971 11,254,430 12,060,887
Vanguard Explorer Fund 131,535 3,951,775 5,637,577
Total 15,206,205 17,698,464
16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLAGSTAR THRIFT PLAN
IRS FORM 5500, ITEM 27a
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1994
CONTRACT
DESCRIPTION COST VALUE
<S> <C> <C>
Interest Fund:
Insurance contracts:
Great West Life Assurance Co.
9.20% due April 30, 1996 3,718,799 3,718,799
Mutual Life Insurance Co. Of NY
9.72% due April 30, 1995 5,983,113 5,983,113
New York Life Insurance Co.
7.35% due May 7, 1997 7,154,051 7,154,051
Principal Mutual Life Ins. Co.
9.00% due April 30, 1996 1,652,745 1,652,745
Principal Mutual Life Ins. Co.
9.72% due April 30, 1996 7,752,066 7,752,066
26,260,774 26,260,774
Synthetic Insurance Contract:
People's Security Life Insurance
5.9346% due April 30, 1998
US Government and Agency
Issuances 7,541,136 7,388,162
Asset Backed Securities 829,651 817,912
Wrapper Contract 988,523 1,153,236
9,359,310 9,359,310
Total 35,620,084 35,620,084
Loans to participants 2,021,267 2,021,267 (1)
Total Investments $ 64,242,233 $63,145,941
(1) Represents estimated fair value of loans to participants.
17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLAGSTAR THRIFT PLAN
IRS FORM 5500, ITEM 27d
SCHEDULE OF REPORTABLE TRANSACTIONS (SINGLE TRANSACTIONS)
FOR THE YEAR ENDED DECEMBER 31, 1994
Realized
Description of Security Purchase/Sale Cost Proceeds Gain(Loss)
<S> <C> <C> <C> <C>
Nations Prime Fund
Trust A Shares (*) Purchase $4,301,201 --- ---
Hartford Life Insurance
Company
8.50% due April 30, 1997 Sale 9,306,369 $9,306,369 ---
Nations Prime Fund
Trust A Shares (*) Purchase 9,436,568 --- ---
(*) Represent Cash Equivalents of the Plan.
18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLAGSTAR THRIFT PLAN
IRS FORM 5500, ITEM 27d
SCHEDULE OF REPORTABLE TRANSACTIONS (SERIES OF TRANSACTIONS)
FOR THE YEAR ENDED DECEMBER 31, 1994
Number of
Transactions Dollar Value Realized
Description of Security Purchases Sales Purchases Sales Gain(Loss)
<S> <C> <C> <C> <C> <C>
Nations Prime Fund
Trust A Shares (*) 38 49 $16,723,224 $5,931,693 ---
Hartford Life Insurance
Company
8.50% due April 30, 1997 -- 1 --- 9,306,369 ---
(*) Represent Cash Equivalents of the Plan.
19
</TABLE>
<PAGE>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
Financial Statements at December 31, 1994 and 1993 and
for each of the Three Years in the Period Ended
December 31, 1994, Supplemental Schedules
for the Year Ended December 31, 1994, and Independent
Auditors' Report.
20
<PAGE>
FORM 10-K/A
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
TABLE OF CONTENTS
PAGES
INDEPENDENT AUDITORS' REPORT 22
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
as of December 31, 1994 and 1993 23
Statements of Changes in Net Assets
Available for Benefits for the Years
Ended December 31, 1994, 1993 and 1992 24
Notes to Financial Statements 25-29
SUPPLEMENTAL SCHEDULES:
IRS Form 5500, Item 27a - Schedule of Assets Held
for Investment Purposes as of December 31, 1994 30
IRS Form 5500, Item 27d - Schedule of Reportable
Transactions for the Year Ended December 31, 1994 31-32
Schedules required under the Employee Retirement Income Security Act of 1974,
other than the schedules listed above, are omitted due to the absence of
conditions under which such schedules are required.
21
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Administrative Committee
Denny's, Inc. Profit Sharing Retirement Plan:
We have audited the accompanying statements of net assets available for
benefits of Denny's, Inc. Profit Sharing Retirement Plan as of December 31,
1994 and 1993, and the related statements of changes in net assets available
for benefits for each of the three years in the period ended December 31,
1994. 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,
1994 and 1993, and the changes in net assets available for benefits for each
of the three years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the financial statements, in 1993 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 1994 financial statement 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 LLP
Greenville, South Carolina
June 21, 1995
22
<PAGE>
<TABLE>
<CAPTION>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1994 AND 1993
1994 1993
<S> <C> <C>
ASSETS:
Investments:
Interest fund - insurance contracts $68,681,662 $70,647,246
Dreyfus Equity Fund 7,488,243 7,983,084
Vanguard Explorer Fund 3,980,232 3,520,953
Flagstar Companies, Inc. Common Stock 2,627,754 3,157,210
Total Investments 82,777,891 85,308,493
Receivables:
Employer's contribution 188,476 283,015
Participants' contributions 397,874 275,427
Accrued interest 30,661 7,199
Total Receivables 617,011 565,641
Cash and cash equivalents 4,509,650 6,188,914
TOTAL ASSETS 87,904,552 92,063,048
LESS-LIABILITIES
Accrued liabilities 77,650 158,083
TOTAL LIABILITIES 77,650 158,083
NET ASSETS AVAILABLE FOR BENEFITS $87,826,902 $91,904,965
See notes to financial statements.
23
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1994, 1993, and 1992
1994 1993 1992
<S> <C> <C> <C>
Increase in net assets:
INVESTMENT INCOME:
Net (depreciation) appreciation in
fair value of investments (Note 4) $ (1,792,198) $ (3,120,431) $ 1,633,390
Interest Income 4,118,730 5,026,877 5,737,496
Dividend income 591,098 944,907 347,419
Investment income, net 2,917,630 2,851,353 7,718,305
CONTRIBUTIONS:
Employer 2,848,715 3,146,775 3,023,131
Participants 7,375,619 8,005,818 8,115,638
Total contributions 10,224,334 11,152,593 11,138,769
TOTAL INCREASE IN NET ASSETS 13,141,964 14,003,946 18,857,074
Decrease in net assets:
DISTRIBUTIONS TO PARTICIPANTS (16,923,299) (13,508,687) (17,241,872)
TRANSFERS TO FLAGSTAR THRIFT PLAN --- (5,369) (1,632,537)
ADMINISTRATIVE EXPENSES (296,728) (400,960) (414,499)
TOTAL DECREASE IN NET ASSETS (17,220,027) (13,915,016) (19,288,908)
NET INCREASE(DECREASE)IN NET ASSETS
BEFORE CUMULATIVE EFFECT OF A CHANGE
IN ACCOUNTING PRINCIPLE (4,078,063) 88,930 (431,834)
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE --- 1,895,401 ---
NET INCREASE(DECREASE) IN NET ASSETS (4,078,063) 1,984,331 (431,834)
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 91,904,965 89,920,634 90,352,468
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $ 87,826,902 $ 91,904,965 $89,920,634
See notes to financial statements.
24
</TABLE>
<PAGE>
DENNY'S INC. PROFIT SHARING RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994
1. DESCRIPTION OF PLAN
The following description of the Denny's, Inc. Profit Sharing
Retirement Plan (the "Plan") provides only general information. Participants
should refer to the Plan document for a more complete description of the Plan's
provisions.
a. 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 $9,240 in 1994, $8,994 in 1993,
and $8,728 in 1992. 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. The Denny's,
Inc. Profit Sharing Retirement Plan Committee and the Plan
Administrator control and manage the operation and administration
of the Plan. NationsBank serves as the trustee of the Plan.
b. Contributions and Withdrawals - Pre-tax contribution deductions
are limited to 15% of eligible compensation, or $9,240 in 1994,
$8,994 in 1993, and $8,728 in 1992, whichever is less. 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.
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 is invested in Flagstar
Companies, Inc. common stock which also generates gains/losses as
the market fluctuates but in no event may more than 25% of the
participating employees contribution for any pay period be
invested in the Company's common stock. Participants may change
or transfer their investment options quarterly. A participating
employee, however, may not transfer amounts to the Company stock
fund to exceed 25% of his or her total investment in the plan.
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.
25
<PAGE>
c. Vesting and Participant Accounts - A participant's contributions
and earnings on those contributions are immediately vested.
Vesting in the Company contributions to their accounts become
100% vested upon completion of five years of credited service.
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
withdrawls.
b) Monthly 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. Forfeited balances of terminated
participants' nonvested accounts are used to reduce future
Company contributions.
d. Termination - Although it has not expressed any intention to do
so, the Company has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject to
the provisions set forth in ERISA. In the event of any
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
a. Basis of Accounting - The financial statements of the Plan are
presented on the accrual basis of accounting.
b. Investment Valuation - Investments in insurance contracts and
synthetic 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.
Synthetic insurance contracts operate similarly to other
guaranteed investment contracts except that the assets are placed
in a trust (with ownership by the plan) rather than a separate
account of the issuer and a financially responsible third party
(i.e. an insurance company) issues a "wrapper" contract that
provides that participants can, and must, execute plan
transactions at contract value.
In May 1994, the American Institute of Certified Public
Accountants (AICPA) issued Statement of Position (SOP) 94-4
"Reporting of Investment Contracts Held by Health and Welfare
Benefit Plans and Defined-Contribution Pension Plans" which
requires defined-contribution plans to report investment
contracts with fully benefit-responsive features (as defined in
the SOP) at contract value and other investment contracts at fair
value. The Plan, which will be required to implement this
statement at the beginning of the 1995 fiscal year, does not plan
to implement this statement prior to the effective date. The
impact of this SOP on the Plan's financial statements is not
expected to have a material impact on its operations.
26
<PAGE>
c. 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.
d. Administrative Expenses - Administrative expenses of the Plan
are paid by the Plan and allocated to participant accounts.
e. 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,
1994 and 1993, benefits of $2,354,198 and $2,391,791,
respectively, were due to participants who have withdrawn from
participation in the Plan.
f. 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.
<TABLE>
<CAPTION>
3. INVESTMENTS EXCEEDING 5% OF NET ASSETS AVAILABLE FOR BENEFITS
The Plan's investments which exceeded 5% of net assets available for benefits as of
December 31, 1994 and 1993 are as follows:
Interest Fund: Insurance Contracts 1994 1993
Carrying Value Carrying Value
<S> <C> <C>
Amber Synthetic
5.50% $21,098,174 -
John Hancock Mutual Life Ins. Co.
4.87% due 12/31/96 16,655,190 $15,873,128
Lehmann Government Sec. Ins.
5.85% due 6/30/95 4,591,262 4,358,549
John Hancock Mutual Life Ins. Co.
5.35% due 12/31/97 8,424,390 -
Metropolitan Life Ins. Co. - Proceeds
from redeemed/matured insurance
contracts which were reinvested in
insurance contracts subsequent to
December 31, 1994 10,286,429 13,789,927
IDS Life Insurance Company
8.25% due 1/4/94 - 26,452,735
Mutual Funds - Dreyfus Equity Fund 7,488,243 7,983,084
27
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4. NET (DEPRECIATION)/APPRECIATION IN FAIR VALUE OF INVESTMENTS
The net (depreciation) appreciation including investments bought, sold and held, by type of
security, during the years ended December 31, 1994, 1993 and 1992 is summarized as follows:
1994 1993 1992
<S> <C> <C> <C>
Flagstar Companies, Inc.
Common Stock $ (878,768) $(2,886,509) $1,320,399
Vanguard Explorer Fund (189,114) (32,403) 249,723
Dreyfus Equity Fund (724,316) (201,519) 63,268
$(1,792,198) $(3,120,431) $1,633,390
</TABLE>
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, 1994, including accrued interest totaled approximately $2.0
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.
<TABLE>
<CAPTION>
5. FUND INFORMATION
Participant contributions, employer contributions, distributions to participants and
investment income/dividends by fund are as follows for the year ended December 31, 1994:
<S> <C>
Participant Contributions:
Interest Fund $ 4,219,749
Dreyfus Equity Fund 1,408,380
Vanguard Explorer Fund 795,678
Flagstar Companies, Inc. common stock 951,812
Total $ 7,375,619
Employer Contributions:
Interest Fund $ 1,728,563
Dreyfus Equity Fund 495,829
Vanguard Explorer Fund 260,323
Flagstar Companies, Inc. common stock 364,000
Total $ 2,848,715
28
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Distributions to Participants:
Interest Fund $ 13,618,549
Dreyfus Equity Fund 1,650,613
Vanguard Explorer Fund 905,970
Flagstar Companies, Inc. common stock 748,167
Total $ 16,923,299
Investment Income/Dividends:
Interest Fund $ 4,125,760
Dreyfus Equity Fund 367,043
Vanguard Explorer Fund 213,593
Flagstar Companies, Inc. common stock 3,432
Total $ 4,709,828
</TABLE>
6. PARTICIPANTS
As of December 31, 1994, 1993, and 1992 there were approximately 8,300,
9,000 and 8,600 participants, respectively in the Plan out of the total
eligible participants of approximately 22,400, 24,300 and 24,200,
respectively.
7. 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. Therefore,
no provision for income taxes has been included in the Plan's financial
statements.
29
<PAGE>
<TABLE>
<CAPTION>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
IRS FORM 5500, ITEM 27a
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1994
<S> <C> <C> <C>
Shares,
Units or Carrying
Description Par Value Cost Value
Flagstar Companies, Inc.
Common Stock 375,393 $ 5,497,004 $ 2,627,754
Mutual Funds:
Dreyfus Equity Fund 627,682 7,774,840 7,488,243
Vanguard Explorer Equity Fund 92,866 3,670,122 3,980,232
Total 11,444,962 11,468,475
Interest Fund:
Insurance Contracts:
John Hancock Mutual Life Ins. Co.
4.87% due 12/31/96 16,655,190 16,655,190
Allstate Life Ins. Co.
6.95% due 1/2/97 4,023,596 4,023,596
John Hancock Mutual Life Ins. Co.
5.35% due 12/31/97 8,424,390 8,424,390
Mutual Benefit Life
11.25% due 12/31/91 1,995,109 1,995,109
IDS Life Insurance Company
6.10% due 8/24/95 1,607,512 1,607,512
Metropolitan Life Ins. Co.-Proceeds
from redeemed/matured insurance
contracts which were reinvested in
insurance contracts subsequent to
December 31, 1994 10,286,429 10,286,429
Total 42,992,226 42,992,226
Synthetic Insurance Contracts:
Amber Synthetic
5.50%
U. S. Government and Agency Issuances 18,339,173 17,620,929
Asset Backed Securities 702,141 697,087
Corporate Bonds 908,058 874,403
Wrapper Contract 1,148,802 1,905,755
Lehmann Government Sec. Inc.
5.85% due 6/30/95
Asset Backed Securities 4,480,669 4,669,814
Wrapper contract 110,593 (78,552)
Total 25,689,436 25,689,436
TOTAL INVESTMENTS $85,623,628 $82,777,891
30
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
IRS FORM 5500, ITEM 27d
SCHEDULE OF REPORTABLE TRANSACTIONS (SINGLE TRANSACTIONS)
FOR THE YEAR ENDED DECEMBER 31, 1994
Description of Security Purchase/Sale Cost Proceeds Gain(Loss)
<S> <C> <C> <C> <C>
John Hancock Mutual Life
Insurance Co.
5.35% due 12/31/97 Purchase $8,000,000
IDS Life Insurance Co.
8.25% due 1/4/94 Sale 24,101,125 $24,101,125
31
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN
IRS FORM 5500, ITEM 27d
SCHEDULE OF REPORTABLE TRANSACTIONS (SERIES OF TRANSACTIONS)
FOR THE YEAR ENDED DECEMBER 31, 1994
<S> <C> <C> <C> <C> <C>
Transactions Dollar Value
Description of Security Purchases Sales Purchases Sales Gain(Loss)
John Hancock Mutual Life Ins. Co.
5.35% due 12/31/97 13 --- $8,424,390 --- ---
Metropolitan Life Ins. Co.
6.00% due 12/12/12 -- 18 8,350,630 --- ---
IDS Life Insurance Co. -- 3 --- $26,479,330 ---
8.25% due 1/4/94
Nations Prime Portfolio
Trust A Shares (*) 47 36 8,260,973 9,850,648 ---
(*) Represents cash equivalents of the Plan.
32
</TABLE>
<PAGE>
FORM 10-K/A
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-35098 and 33-35099 of Flagstar Companies, Inc. (formerly TW Holdings, inc.)
on Form S-8 of our reports dated June 21, 1995 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, 1994.
DELOITTE & TOUCHE LLP
GREENVILLE, SOUTH CAROLINA
JUNE 29, 1995
33
