SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)*
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30,
1995, or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from
____________ to _____________
Commission file number 0-18051
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)
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
As of November 14, 1995 42,434,408 shares of the registrant's Common Stock, par
value $0.50 per share, were outstanding.
1
FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Flagstar Companies, Inc.
Statements of Consolidated Operations
For the Three Months and Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
(In thousands, except per share amounts)
Operating Revenues............................................ $676,899 $700,589 $1,994,826 $2,006,425
Operating Expenses:
Product costs............................................... 229,446 239,479 686,206 691,856
Payroll & benefits.......................................... 229,368 238,075 696,940 706,812
Depreciation & amortization expense......................... 32,802 32,866 99,800 96,346
Utilities expense........................................... 27,361 27,370 73,771 75,811
Other....................................................... 101,634 100,684 294,349 289,296
620,611 638,474 1,851,066 1,860,121
Operating Income.............................................. 56,288 62,115 143,760 146,304
Other Charges:
Interest and debt expense................................... 58,555 59,259 173,982 167,863
Other non-operating expenses - net.......................... 497 715 884 1,393
59,052 59,974 174,866 169,256
Income(Loss) From Continuing Operations
Before Income Taxes......................................... (2,764) 2,141 (31,106) (22,952)
Provision For(Benefit From) Income Taxes...................... 5 (2,109) 400 (1,663)
Income(Loss)From Continuing Operations........................ (2,769) 4,250 (31,506) (21,289)
Gain on Sale of Discontinued Operation,
Net of Income Taxes of $7,056............................... --- --- --- 383,944
Income(Loss) From Discontinued
Operations.................................................. 16,625 17,614 517 (1,473)
Provision For (Benefit From) Income
Taxes On Discontinued Operations............................ 91 (1,655) (140) (884)
Income From Discontinued
Operations, Net............................................. 16,534 19,269 657 383,355
Extraordinary Item, Net of Income Tax
Provision (Benefit) of $25 for the
three months of 1995 and $25 and
($1,111) for the nine months of
1995 and 1994, respectively................................. 466 --- 466 (10,822)
Net Income (Loss)............................................. 14,231 23,519 (30,383) 351,244
Dividends on Preferred Stock.................................. (3,543) (3,543) (10,631) (10,631)
Net Income(Loss) Applicable to Common
Stockholders................................................ $ 10,688 $ 19,976 $ (41,014) $ 340,613
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FORM 10-Q
Flagstar Companies, Inc.
Statements of Consolidated Operations (Continued)
For the Three Months and Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
(In thousands, except per share amounts)
Income (Loss) Per Share Applicable to Common
Stockholders:
Primary
Income (Loss) From Continuing
Operations................................................. $ (0.15) $ 0.02 $ (0.99) $ (0.27)
Income From Discontinued
Operations, Net............................................. 0.39 0.45 0.01 7.33
Extraordinary Item, Net...................................... 0.01 --- 0.01 (0.21)
Net Income(Loss)............................................. $ 0.25 $ 0.47 $ (0.97) $ 6.85
Average Outstanding and Equivalent
Common Shares............................................... 42,434 42,369 42,429 52,283
Fully Diluted
Income (Loss) From Continuing
Operations................................................ $ (0.15) $ 0.02 $ (0.99) $ 0.06
Income From Discontinued
Operations, Net........................................... 0.39 0.45 0.01 5.90
Extraordinary Item, Net..................................... 0.01 --- 0.01 (0.17)
Net Income.................................................. $ 0.25 $ 0.47 $ (0.97) $ 5.79
Average Outstanding and Equivalent
Common Shares.............................................. 42,434 42,369 42,429 64,981
3
FORM 10-Q
Flagstar Companies, Inc.
Consolidated Balance Sheets
September 30, 1995 and December 31, 1994
(Unaudited)
September 30, December 31,
1995 1994
(In thousands)
Assets
Current Assets:
Cash and cash equivalents........................................... $ 86,636 $ 66,720
Receivables, less allowance for doubtful
accounts of:
1995 - $3,843; 1994 - $4,561..................................... 22,700 37,381
Merchandise and supply inventories.................................. 37,693 62,293
Net assets held for sale............................................ 71,029 77,320
Other............................................................... 23,406 14,344
241,464 258,058
Property:
Property owned (at cost):
Land............................................................. 265,420 273,411
Buildings and improvements....................................... 837,800 813,305
Other property and equipment..................................... 484,946 462,421
Total property owned................................................ 1,588,166 1,549,137
Less accumulated depreciation....................................... 547,692 477,176
Property owned - net................................................ 1,040,474 1,071,961
Buildings and improvements, vehicles, and
other equipment held under capital
leases............................................................ 180,860 194,348
Less accumulated amortization....................................... 76,537 69,958
Property held under capital leases - net............................ 104,323 124,390
1,144,797 1,196,351
Other Assets:
Other intangible assets - net....................................... 22,208 25,009
Deferred financing costs............................................ 66,159 71,955
Other............................................................... 32,087 30,762
120,454 127,726
Total Assets $1,506,715 $1,582,135
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FORM 10-Q
Flagstar Companies, Inc.
Consolidated Balance Sheets
September 30, 1995 and December 31, 1994
(Unaudited)
September 30, December 31,
1995 1994
(In thousands)
Liabilities
Current Liabilities:
Current maturities of long-term debt................................ $ 29,549 $ 31,408
Accounts payable.................................................... 62,418 102,464
Accrued salaries and vacations...................................... 51,934 56,159
Accrued insurance................................................... 49,375 45,165
Accrued taxes....................................................... 22,799 21,795
Accrued interest and dividends...................................... 68,468 47,568
Other............................................................... 57,434 81,757
341,977 386,316
Long-Term Liabilities:
Debt, less current maturities....................................... 2,012,193 2,067,648
Deferred income taxes............................................... 20,577 21,679
Liability for self-insured claims................................... 51,185 58,128
Other non-current liabilities and
deferred credits.................................................. 184,297 110,864
2,268,252 2,258,319
Total Liabilities 2,610,229 2,644,635
Stockholders' Deficit (1,103,514) (1,062,500)
Total Liabilities & Stockholders' Deficit $1,506,715 $ 1,582,135
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FORM 10-Q
Flagstar Companies, Inc.
Statements of Consolidated Cash Flows
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Nine Months Ended
September 30,
1995 1994
(In thousands)
Cash Flows From Operating Activities:
Net income(loss) $ (30,383) $ 351,244
Adjustments to reconcile net income(loss)
to cash flows from operating
activities:
Depreciation and amortization
of property 94,940 91,285
Amortization of other
intangible assets 4,860 5,061
Amortization of deferred
financing costs 4,844 4,935
Deferred income tax benefit (1,102) (1,354)
Extraordinary items, net (466) 10,822
Gain on sale of discontinued operation, net --- (383,944)
Equity in (income) loss from discontinued
operations, net (657) 589
Other (19,198) 9,806
Decrease (increase) in assets (net of accounts relating to sold subsidiary):
Receivables 1,137 444
Inventories (6,382) (3,246)
Other current assets (9,736) (14,395)
Other assets (2,585) (450)
Increase (decrease) in
liabilities (net of accounts relating to
sold subsidiary):
Accounts payable (26,975) (10,354)
Accrued salary and vacations (2,198) 9,692
Accrued taxes 11,162 3,993
Other accrued liabilities 7,973 (28,218)
Other non-current liabilities
and deferred credits (12,430) (5,575)
Total adjustments 43,187 (310,909)
Net cash flows from operating activities 12,804 40,335
Cash Flows From (Used In) Investing Activities:
Purchases of property (78,464) (83,499)
Proceeds from disposition of
property 24,142 10,817
Proceeds from sale of distribution subsidiary 122,500 ---
Proceeds from sale of discontinued operation --- 450,000
Receipts from discontinued operations 6,948 1,139
Other long-term assets, net (1,664) (2,280)
Net cash flows from
investing activities 73,462 376,177
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FORM 10-Q
Flagstar Companies, Inc.
Statements of Consolidated Cash Flows
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Nine Months Ended
September 30,
1995 1994
(In thousands)
Cash Flows From (Used in) Financing Activities:
Net short-term borrowings(repayments)
under credit agreement $ --- $ (93,000)
Deferred financing costs --- (20)
Long-term debt payments (55,719) (193,789)
Cash dividends on preferred stock (10,631) (10,631)
Net cash flows used in financing activities (66,350) (297,440)
Increase in cash and
cash equivalents 19,916 119,072
Cash and Cash Equivalents at:
Beginning of period 66,720 24,174
End of period $ 86,636 $ 143,246
Supplemental Cash Flow Information:
Income taxes paid $ 1,710 $ 4,340
Interest paid $ 151,452 $ 159,781
Non-cash financing activities:
Capital lease obligations $ 4,211 $ 14,856
Dividends declared but not paid $ 3,543 $ 3,543
7
FORM 10-Q
FLAGSTAR COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
Note 1. Introduction.
Flagstar Companies, Inc. ("FCI" or, together with its subsidiaries, the
"Company") is the parent holding company of Flagstar Corporation ("Flagstar").
Flagstar, through its wholly-owned subsidiaries, Denny's Holdings, Inc. and
Spartan Holdings, Inc. (and their respective subsidiaries), operates four
restaurant chains.
Note 2. Interim Period Presentation.
The Statements of Consolidated Operations of FCI and its subsidiaries
for the three months and nine months ended September 30, 1995 and 1994,
respectively, include all adjustments management believes are necessary for a
fair presentation of the results of operations for such interim periods. All
such adjustments are of a normal and recurring nature.
Note 3. Divestiture of Canteen Holdings, Inc.
During the second quarter of 1994, the Company sold its food and
vending subsidiary for approximately $450.0 million and adopted a plan to
dispose of the remaining concession and recreation services businesses of its
subsidiary, Canteen Holdings, Inc. The accompanying Consolidated Balance Sheets
and Statements of Consolidated Operations and Cash Flows reflect such businesses
as discontinued operations. During July, 1995, the Company announced that it had
entered into an agreement to sell TW Recreational Services, Inc. ("TWRS") which
operates its recreation services business, for $110.0 million, subject to
certain adjustments. Such transaction is subject to National Park Service
approval and is expected to be completed during the fourth quarter of 1995. The
Company also is continuing in its efforts to sell Volume Services, Inc.
("Volume"), which operates its concession services business. Although the major
league baseball strike ended during April 1995, continuing uncertainty regarding
labor issues in baseball has delayed the sale of Volume beyond the time
originally anticipated.
The Company has allocated to the discontinued segment a
pro-rata portion of its interest expense. Such pro-rata portion was of
$4.5 million for the quarters ended September 30, 1995 and 1994,
respectively, and $13.6 million and $29.2 million for the nine months
ended September 30, 1995 and 1994, respectively.
Note 4. Divestitures
During September 1995, the Company sold its distribution
subsidiary, Proficient Food Company, for approximately $130.0 million
including receipt of cash of approximately $122.5 million. This
transaction resulted in a deferred gain of approximately $70.0 million
which will be recognized as income over the term of certain distribution
agreements entered into with the buyer.
During the third quarter of 1995, the Company entered into discussions
with the management of Quincy's regarding the potential sale of such concept.
Note 5. Earnings (Loss) Per Common Share
The Company uses the modified treasury stock method in its computation
of earnings (loss) per common share.
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FORM 10-Q
Item 2. Management's Discussion And Analysis Of Financial Condition
And Results of Operations
The following discussion is intended to highlight significant changes
in financial position as of September 30, 1995 and the results of operations for
the three months and nine months ended September 30, 1995 as compared to the
corresponding 1994 periods.
The interim Consolidated Financial Statements and this Management's
Discussion and Analysis of Financial Condition and Results of Operations should
be read in conjunction with the Consolidated Financial Statements and Notes
thereto for the year ended December 31, 1994 and the related Management's
Discussion and Analysis of Financial Condition and Results of Operations, both
of which are contained in the Flagstar Companies, Inc. 1994 Annual Report on
Form 10-K.
Results of Operations
Three Months Ended September 30, 1995 Compared to Three Months Ended September
30, 1994
Operating revenues from continuing operations for the third
quarter of 1995 decreased by approximately $23.7 million (3.4%) as
compared with the same period in 1994. Denny's revenues (including
revenues for its processing and distribution operations) decreased by
$8.8 million (2.1%). Such decrease resulted from a 42-unit net
decrease in the number of Company-operated restaurants as of
September 30, 1995 as compared to September 30, 1994, largely due to the
sale of Company-owned restaurants to franchisees, and the sale of
Denny's distribution subsidiary during September 1995. Such
decreases were mitigated by a 2.0% increase in comparable store
sales during the 1995 quarter over the 1994 quarter. Denny's
increase in average check of 4.8% was partially offset by a 2.7%
decrease in traffic. During the 1995 quarter, Denny's completed remodels
on 50 Company-owned restaurants. Hardee's revenues decreased by
$16.0 million (8.7%) during the 1995 quarter as compared with the same
period in 1994 due to a 10.6% decrease in comparable sales, reflecting
continued aggressive discounting and promotions by quick-service
competitors. Such decreases more than offset a 9-unit net increase in
the number of restaurants over the prior year quarter. Hardee's
experienced a 12.2% decrease in traffic which was partially offset by a
1.9% increase in average check. During the 1995 quarter, the Company
completed remodels on 3 of its Hardee's units. Quincy's revenues
increased by $3.5 million (4.8%) during the 1995 quarter as compared
with the third quarter of 1994, despite an 8-unit net decrease in the
number of restaurants at September 30, 1995 as compared with
September 30, 1994. Comparable store sales increased 6.4% as a result
of increases in average check of 4.7% and traffic of 1.6%. During the
1995 quarter, the Company completed remodels on 16 of its Quincy's
units. Revenues decreased at El Pollo Loco to $32.4 million during the
third quarter of 1995 from $34.8 million during the third quarter of
1994 as a result of a net decrease of 26 Company-owned restaurants at
September 30, 1995 as compared with September 30, 1994. Such
decrease in the number of units was due primarily to the sale of
Company-owned restaurants to franchisees. El Pollo Loco's comparable
store sales increased by 0.8% during the 1995 quarter as compared to
the 1994 period and reflect an increase in average check of 0.9% which
was partially offset by a decrease in traffic of 0.1%. During the
1995 quarter, El Pollo Loco completed remodels on 6 Company-owned
restaurants.
9
FORM 10-Q
Operating expenses from continuing operations decreased
by $17.9 million (2.8%) in the third quarter of 1995 as compared with
the same period of 1994. Such decrease reflects a $16.6 million
decrease in operating expenses attributable to Denny's. Denny's
operating expenses were reduced by gains on the sale of restaurants to
franchisees of $10.3 million during the third quarter of 1995.
Additional decreases in operating expenses at Denny's are comprised
primarily of decreases of $5.8 million in product cost and $5.4
million in payroll and benefits expense. These decreases resulted
primarily from the decrease in the number of Company-owned restaurants
and were partially offset by incremental increases in other expense
items, including an increase in advertising
expense of $3.4 million. At Hardee's, operating expenses decreased by
$3.3 million during the third quarter of 1995 over the corresponding
1994 period principally due to a decrease in product cost of $4.7
million as a result of decreased sales during the 1995 quarter.
Quincy's operating expenses increased by $2.5 million during the 1995
quarter over the corresponding period of 1994 primarily due to
increases in product costs of $1.8 million and payroll and benefits
expenses of $1.0 million. Operating expenses at El Pollo Loco
decreased by $3.3 million primarily due to a 26-unit decrease in the
number of Company-owned restaurants at September 30, 1995 as compared
with September 30, 1994 as a result of the sale of restaurants to
franchisees. El Pollo Loco's operating expenses included gains on the
sale of restaurants to franchisees of $1.4 million and $0.4 million
during the third quarters of 1995 and 1994, respectively. Corporate
and other expenses increased by $2.9 million due primarily to
increased expenses of $1.0 million recorded at the corporate level
related to the Denny's consent decree with the U. S. Department of
Justice and charges of $2.3 million related to various management
recruiting, training, and information services initiatives.
Total interest and debt expense from continuing and
discontinued operations decreased by $0.6 million in the third quarter
of 1995 as compared with the corresponding quarter of 1994.
The Company's concession and recreation services businesses,
which are accounted for as discontinued operations, recorded operating
revenues of $130.7 million during the third quarter of 1995, an
increase of $0.6 million over the same period of 1994. Revenues related
to the operation of major league baseball and National Football League
stadium concessions were up $1.7 million during the third quarter
of 1995 over the same period of 1994 due to an increase in the number of
events. Operating income and depreciation and amortization expense
related to the Company's discontinued operations were $20.9 million and
$3.5 million, respectively, for the third quarter of 1995 as
compared with $22.1 million and $3.5 million, respectively, during
the comparable period of 1994.
For the third quarter of 1995, the Company recognized an
extraordinary gain totaling $0.5 million, net of income taxes, which
represents a gain on the repurchase of $24,975,000 principal amount of
certain senior indebtedness, net of the charge-off of the related
unamortized deferred financing costs.
10
FORM 10-Q
Nine Months Ended September 30, 1995 Compared to Nine Months Ended September 30,
1994
Operating revenues from continuing operations for the first
nine months of 1995 decreased by approximately $11.6 million (0.6%)
as compared with the same period in 1994. Denny's revenues increased
by $5.9 million (0.5%) during the first nine months of 1995 as compared
with the same 1994 period. Comparable store sales at Denny's increased
by 2.8% during the first nine months of 1995 as compared with the same
period of 1994, reflecting increases in average check of 2.0% and
traffic of 0.8%, while the number of Company-owned units declined.
During the first nine months of 1995, Denny's completed remodels
of 136 Company-owned restaurants. Hardee's revenues decreased by 4.8% to
$500.5 million from $526.0 million during the corresponding period of
1994 despite a 9-unit net increase in the number of restaurants operated
at September 30, 1995 as compared to September 30, 1994. Hardee's
comparable store sales decreased by 8.1% during the first nine months of
1995 as compared with the 1994 period reflecting a decrease in
traffic of 9.3% which was mitigated by an increase in average check of
1.3%. Hardee's traffic continues to be significantly affected by
aggressive discounting and promotions by quick-service competitors.
During the first nine months of 1995, the Company had remodeled 60
of its Hardee's restaurants. Despite an 8-unit decrease in the number
of restaurants at September 30, 1995 as compared to September 30,
1994, Quincy's revenues increased by $12.2 million (5.8%) during the
first nine months of 1995 as compared with the first nine months of
1994, primarily due to a 7.1% increase in comparable store sales. The
increase in comparable store sales resulted from increases of 5.8% in
traffic and 1.2% in average check. During the first nine months of 1995,
the Company completed remodels on 35 of its Quincy's units. Revenues
at El Pollo Loco decreased by $4.2 million (4.2%) to $96.6 million
during the first nine months of 1995 from $100.8 million during the
corresponding 1994 period. Such decrease is attributable primarily
to a 26-unit net decrease in the number of Company-operated
restaurants following the sale of units to franchisees. Comparable
store sales at Company-operated El Pollo Loco units increased by 2.1%
reflecting an increase in average check of 2.3% which was partially
offset by a 0.2% decrease in traffic. During the first nine months of
1995, El Pollo Loco completed remodels on 45 of its Company-owned
units.
The Company's operating expenses from continuing operations
decreased by $9.1 million (0.5%) in the first nine months of 1995 as
compared with the same period of 1994. Operating expenses at Denny's
decreased $22.3 million principally due to decreases in payroll and
benefits of $14.2 million and occupancy expense of $2.1 million.
Denny's operating expenses were also reduced by gains on the sale of
restaurants to franchisees of $18.9 million during the first nine months
of 1995 as compared with $3.9 million during the 1994 period.
Such decreases were offset, in part, by increases in advertising expense
of $4.8 million and overhead expense of $4.8 million. At Hardee's, an
increase in operating expenses of $2.6 million is mainly attributable
to increased expenses for payroll and benefits of $3.2 million, overhead
expense of $3.9 million in 1995 related to the restructuring of field
management during 1994, other expenses of $2.7 million, and an
increase of $1.3 million in workers' compensation charges. Such
increases were offset, in part, by a $9.2 million decrease in product
costs associated with decreased revenues in the 1995 period. An
increase in operating expenses of $12.2 million at Quincy's is
principally attributable to increases in payroll and benefits
expense of $4.6 million, product costs of $4.4 million associated
with an increase in revenues during the first nine months of 1995,
advertising expense of $1.7 million, and repairs and maintenance
expense of $0.6 million. Operating expense at El Pollo Loco decreased
by $7.5 million during the first nine months of 1995 due primarily to a
26-unit decrease in the number of Company-operated restaurants at
September 30, 1995 as compared with September 30, 1994 following the
sale of
11
FORM 10-Q
restaurants to franchisees. El Pollo Loco's operating expenses during
the first nine months of 1995 included gains on the sale of restaurants
of $3.1 million as compared with $0.5 million during the corresponding
period of 1994. Corporate and other expenses increased by $5.9
million during the first nine months of 1995 as compared with 1994 due
primarily to increased expenses of $3.2 million recorded at the
corporate level related to the Denny's consent decree with the U. S.
Department of Justice and charges of $3.1 million related to various
management recruiting, training, and information services initiatives.
Total interest and debt expense from continuing and
discontinued operations decreased by $13.4 million in the first
nine months of 1995 as compared to the same period of 1994 principally
as a result of a reduction in interest expense following the payment
during June 1994 of the principal amount ($170.2 million) outstanding
under the term facility of the Company's Restated Credit Agreement and
certain other indebtedness following the sale of the Company's food
and vending subsidiary, and an increase in interest income,
partially offset by an increase in expense related to interest rate
exchange agreements.
The Company's concession and recreation services businesses,
which are accounted for as discontinued operations, recorded operating
revenues of $248.0 million during the first nine months of 1995, a
decrease of $13.1 million from the $260.2 million recorded during
the same period of 1994. Revenues related to the operation of major
league baseball stadium concessions were down $12.9 million during the
first nine months of 1995 as compared to the corresponding period of
1994 due to the average attendance at such games during 1995
being down approximately 31% from 1994. Operating income and
depreciation and amortization expense were $14.9 million and $10.8
million, respectively, for the first nine months of 1995 as compared
with $22.5 million and $10.6 million, respectively, during the
comparable period of 1994.
For the nine months ended September 30, 1995, the Company
recognized an extraordinary gain totaling $0.5 million, net of income
taxes, which represents a gain on the repurchase of $24,975,000
principal amount of certain senior indebtedness, net of the charge off
of the related unamortized deferred financing costs. For the first
nine months ended September 30, 1994, the Company recognized an
extraordinary loss totaling $10.8 million, net of income tax
benefits of $1.1 million. The extraordinary loss represents the
charge-off of unamortized deferred financing costs associated with the
prepayment in June 1994 of senior bank debt.
Liquidity And Capital Resources
At September 30, 1995 and December 31, 1994, the Company had
working capital deficits of $100.5 million and $128.3 million,
respectively. The decrease in the deficit between December 31, 1994
and September 30, 1995 is attributable primarily to an increase in
cash and cash equivalents following the sale of the Company's food
distribution subsidiary, Proficient Food Company ("PFC"), during
September 1995. The sale price of $130.0 million included receipt
of $122.5 million in cash by the Company. The Company is able to operate
with a substantial working capital deficiency because (i) restaurant
operations and most other food service operations are conducted
primarily on a cash (and cash equivalent) basis with a low investment of
accounts receivable, (ii) rapid turnover allows a limited investment
in inventories and (iii) accounts payable for food, beverages and
supplies usually become due after the receipt of cash from the related
sales.
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FORM 10-Q
The Company is currently evaluating its options regarding the
proceeds from the pending sale of its recreation services subsidiary,
TW Recreational Services, Inc. Such options include the repayment of
long-term debt and financing the Company's restaurant remodeling and
capital expenditures. The Company is also in discussion with the
management of Quincy's regarding the potential sale of such concept.
13
FORM 10-Q
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
a. The following are included as exhibits to this filing: (1)
Exhibit 10, Ninth Amendment, waiver and consent, dated as of
August 24, 1995, to the Amended and Restated Credit Agreement,
dated as of October 26, 1992, among Flagstar and TWS Funding,
Inc., as borrowers, certain lenders and co-agents named
therein, and Citibank, N.A., as managing agent (2) Exhibit 11,
Computation of Earnings (Loss) per Share and (3) Exhibit 27,
Financial Data Schedule.
b. Not applicable.
14
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FLAGSTAR COMPANIES, INC.
Date: November 14, 1995 By: /s/ Rhonda J. Parish
Rhonda J. Parish
Vice President and
General Counsel
Date: November 14, 1995 By: /s/ C. Robert Campbell
C. Robert Campbell
Vice President and
Chief Financial Officer
15