-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, SNu7aDeKe/nAagIk0m3h+6mUrosy2Yk76TYxdQBBRJpWAWKWcFN9zjUtHx/hisE2 HTripcG6kdgkjiKumog0oQ== 0000852772-95-000002.txt : 199506300000852772-95-000002.hdr.sgml : 19950630 ACCESSION NUMBER: 0000852772-95-000002 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950629 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLAGSTAR COMPANIES INC CENTRAL INDEX KEY: 0000852772 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133487402 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-18051 FILM NUMBER: 95551073 BUSINESS ADDRESS: STREET 1: 203 E MAIN ST CITY: SPARTANBURG STATE: SC ZIP: 29319 BUSINESS PHONE: 8035978700 MAIL ADDRESS: STREET 1: 203 EAST MAINE STREET CITY: SPARTANBURG STATE: SC ZIP: 29319 FORMER COMPANY: FORMER CONFORMED NAME: TW HOLDINGS INC DATE OF NAME CHANGE: 19920703 10-K/A 1 FLAGSTAR THRIFT PLAN; DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN 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 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 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 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 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 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
FLAGSTAR THRIFT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31, 1994 AND 1993 1994 1993 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
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 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
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 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 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 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 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.
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 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
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 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
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: 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
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 provision for income taxes has been included in the Plan's financial statements. 15
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 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
FLAGSTAR THRIFT PLAN IRS FORM 5500, ITEM 27a SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1994 CONTRACT DESCRIPTION COST VALUE 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
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) 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
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) 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
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 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 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
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31, 1994 AND 1993 1994 1993 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
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 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
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 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 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.
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 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
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 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
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.
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: 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
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
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
DENNY'S, INC. PROFIT SHARING RETIREMENT PLAN IRS FORM 5500, ITEM 27a SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1994 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
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) 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
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 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
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 -----END PRIVACY-ENHANCED MESSAGE-----