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) <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 (In thousands, except per share amounts) <S> <C> <C> <C> <C> 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 </TABLE> 2
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) <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30 September 30 1995 1994 1995 1994 (In thousands, except per share amounts) <S> <C> <C> <C> <C> 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 </TABLE> 3
FORM 10-Q Flagstar Companies, Inc. Consolidated Balance Sheets September 30, 1995 and December 31, 1994 (Unaudited) <TABLE> <CAPTION> September 30, December 31, 1995 1994 (In thousands) <S> <C> <C> 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 </TABLE> 4
FORM 10-Q Flagstar Companies, Inc. Consolidated Balance Sheets September 30, 1995 and December 31, 1994 (Unaudited) <TABLE> <CAPTION> September 30, December 31, 1995 1994 (In thousands) <S> <C> <C> 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 </TABLE> 5
FORM 10-Q Flagstar Companies, Inc. Statements of Consolidated Cash Flows For the Nine Months Ended September 30, 1995 and 1994 (Unaudited) <TABLE> <CAPTION> Nine Months Ended September 30, 1995 1994 (In thousands) <S> <C> <C> 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 </TABLE> 6
FORM 10-Q Flagstar Companies, Inc. Statements of Consolidated Cash Flows For the Nine Months Ended September 30, 1995 and 1994 (Unaudited) <TABLE> <CAPTION> Nine Months Ended September 30, 1995 1994 (In thousands) <S> <C> <C> 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 </TABLE> 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. 8
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. 12
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