8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (date of earliest event reported):  October 26, 2006

DENNY’S CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	0-18051	13-3487402
(State or other jurisdiction of	Commission File No.	(I.R.S. Employer
Incorporation or organization		Identification No.)

203 East Main Street

Spartanburg, South Carolina 29319-0001

(Address of principal executive offices)

(Zip Code)

(864) 597-8000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

[    ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[    ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[    ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(B))

[    ]   Pre-commencement communications pursuant to  Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02  Results of Operations and Financial Condition

On October 26, 2006, Denny’s Corporation issued a press release announcing financial results for the third quarter ended September 27, 2006.  A copy of the press release, amended to include the financial tables, is attached as Exhibit 99.1 hereto and incorporated herein by reference.

Item 9.01  Financial Statements and Exhibits

(c) Exhibits

  Exhibit 99.1 -- Press release issued by Denny's Corporation on October 26, 2006.

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 hereunto duly authorized.

	Denny's Corporation
Date:  November 1, 2006	/s/ F. Mark Wolfinger
	F. Mark Wolfinger
	Executive Vice President,
	Growth Initiatives and
	Chief Financial Officer

EX-99.1

Investor Contact:Alex Lewis   

     877-784-7167

Media Contact:      Debbie AtkinsNEWS RELEASE

               864-597-8361

DENNY’S CORPORATION REPORTS THIRD QUARTER 2006 RESULTS

SPARTANBURG, S.C., October 26, 2006 - Denny’s Corporation (Nasdaq: DENN) today reported results for its third quarter ended September 27, 2006.

Third Quarter Summary

·   Company unit same-store sales increased 4.2% with positive guest traffic

·   Franchised unit same-store sales increased 4.7%

·   Total operating revenue increased $9.5 million to $258.2 million

·   The divestiture of 65 real estate assets for gross proceeds of $67 million resulted in gains on disposition of assets of $39 million

·   Denny’s prepaid $80 million in debt with proceeds from asset sales and surplus cash

·   The asset sales resulted in an incremental $13.1 million provision for income taxes

·   Operating income (excluding asset sale gains) increased $7.5 million to $16.6 million

·   Net income (excluding gains and tax provision) increased $4.9 million to $0.1 million

Nelson Marchioli, President and Chief Executive Officer, stated, “Denny’s results in the third quarter were driven by a strong positive response to our promotional and product offerings. During the quarter, Denny’s also launched a new television campaign along with a targeted discounting program. Together, these initiatives successfully revitalized demand and produced solid sales growth. Denny’s value proposition in the quarter was particularly effective in driving guest traffic without sacrificing average check. This contributed to our improved sales momentum despite the challenging consumer environment and the difficult traffic trends experienced by our industry in 2006.

“During the third quarter, we made significant progress towards our goal of reducing long-term debt. Through the sale of non-core real estate we reduced our debt by $80 million. Denny’s is stronger financially than at any time in the past 15 years, carrying less debt and lower interest costs. As a result, Denny’s is better positioned to reinvest in this great brand and to focus its efforts on new unit development in the coming years,” Marchioli concluded.

Third Quarter Results

For the third quarter of 2006, Denny’s reported total operating revenue of $258.2 million, an increase of 3.8%, or $9.5 million over the prior year quarter. Company restaurant sales increased 3.9%, or $8.9 million, to $234.7 million as a result of a 4.2% increase in company same-store sales. This sales increase offset an eleven-unit decline in company-owned restaurants since the third quarter of last year. Franchise revenue increased 2.6%, or $0.6 million, to $23.5 million as a 4.7% increase in same-store sales offset a twelve-unit decline in franchised restaurants.

Company restaurant operating margin (as a percentage of company restaurant sales) for the third quarter was 13.8% compared with 10.7% for the same period last year. Product costs for the third quarter increased by 0.3 percentage points compared with last year due primarily to a shift in entrée mix towards lunch and dinner items. Payroll and benefits improved by 1.1 percentage points due primarily to improving experience in worker’s compensation costs. Other operating costs improved 2.4 percentage points due to a $7.2 million reduction in legal settlement costs resulting primarily from $5.8 million in specific charges taken in the prior year period. Partially offsetting the decrease in legal costs was a $1.0 million increase in utilities and a $0.6 million decrease in supplemental restaurant income.

General and administrative expenses for the third quarter increased $1.8 million from the same period last year due mainly to higher incentive and stock-based compensation as well as additional corporate staff.

Gains on disposition of assets increased $39.0 million due to the sale of 65 restaurant properties owned by the company but previously leased to franchisee operators.

Operating income for the third quarter was $55.6 million, an increase of $46.4 million compared with prior year operating income of $9.2 million. This increase was due primarily to $39.0 million in asset sale gains. Excluding these gains, operating income increased $7.5 million to $16.6 million compared with $9.1 million in the prior year period.

Interest expense for the third quarter increased $1.0 million to $15.0 million due to higher interest rates on the variable-rate portions of Denny’s debt compared with the prior year period. Other nonoperating expense increased $1.6 million due to a pro rata write-off of deferred financing costs associated with the $80.0 million prepayment of first lien term loan debt during the quarter.

Provision for income taxes for the third quarter increased by $14.9 million over the prior year due primarily to $12.8 million in deferred income taxes and $0.3 million in current income taxes recorded as a result of the asset sales. The deferred income tax provision relates primarily to the utilization of deferred income tax assets which had been previously recorded relying on certain tax planning strategies.

Net income for the third quarter was $25.5 million, or $0.26 per diluted common share, an increase of $28.9 million compared with prior year net loss of $3.4 million, or $0.04 per common share. Excluding asset sale gains and income taxes from the current and prior year period, net income increased $4.9 million to $0.1 million.

Real Estate Sales / Debt Reduction

During the third quarter, Denny’s made substantial progress on its initiative to sell non-core real estate assets and utilize the proceeds to reduce debt. Denny’s previously announced a sale transaction of 60 restaurant properties for gross proceeds of approximately $62 million. An additional five properties were sold during the third quarter for gross proceeds of $5 million. Denny’s applied the net proceeds from these transactions, along with surplus cash, to reduce the outstanding balance on its first lien term loan by $80 million during the quarter. Year-to-date Denny’s has reduced its debt balances by approximately 15%, or $84 million.

At the end of the third quarter, Denny’s owned 21 restaurant properties that were being marketed for sale. Six of these properties are contracted for sale under the earlier multi-property transaction and are expected to close by year end. In total, 19 of the remaining properties are expected to be sold within the next twelve months.

Business Outlook

While the Company acknowledges that third quarter sales results were higher than previously expected, it remains cautious in the sales outlook for the fourth quarter based on the uncertain macroeconomic environment and the difficulty that presents when forecasting revenues. Given an improved outlook for full-year sales, the Company would expect adjusted EBITDA at the upper end of the previous guidance range of $113 to $118 million.

The earnings per share guidance management previously provided is no longer relevant due to the asset sale gains, restructuring and impairment charges, nonoperating expenses and provision for income taxes recorded in the third quarter. The expectation of further gains, charges and nonoperating expenses, along with a potential debt refinancing transaction, could cause fourth quarter earnings to vary materially.

Further Information

Denny’s will provide further commentary on the third quarter and the remainder of 2006 on its quarterly investor conference call today, Thursday, October 26, 2006 at 5:00 p.m. EST. Interested parties are invited to listen to a live broadcast of the conference call accessible through Denny’s website at www.dennys.com. On the front page of the website, follow the link to “Investor Relations.” Then select the “Webcast” icon under “Upcoming Events.” A replay of the call may be accessed at the same location later in the day and will remain available for 30 days.

Denny’s is America’s largest full-service family restaurant chain, consisting of 535 company-owned units and 1,024 franchised and licensed units, with operations in the United States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico. For further information on Denny’s, including news releases, links to SEC filings and other financial information, please visit the Denny’s website referenced above.

The Company urges caution in considering its current trends and any outlook on earnings disclosed in this press release. In addition, certain matters discussed in this release may constitute forward-looking statements. These forward-looking statements involve risks, uncertainties, and other factors that may cause the actual performance of Denny’s Corporation, its subsidiaries and underlying restaurants to be materially different from the performance indicated or implied by such statements. Words such as “expects”, “anticipates”, “believes”, “intends”, “plans”, and “hopes”, variations of such words and similar expressions are intended to identify such forward-looking statements. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Factors that could cause actual performance to differ materially from the performance indicated by these forward-looking statements include, among others: the competitive pressures from within the restaurant industry; the level of success of the Company’s operating initiatives, advertising and promotional efforts; adverse publicity; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy, particularly at the retail level; political environment (including acts of war and terrorism); and other factors from time to time set forth in the Company’s SEC reports, including but not limited to the discussion in Management’s Discussion and Analysis and the risks identified in Exhibit 99 contained in the Company’s Annual Report on Form 10-K for the year ended December 28, 2005 (and in the Company’s subsequent quarterly reports on Form 10-Q).

DENNY’S CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
		Quarter			Quarter
		Ended			Ended
(In thousands, except per share amounts)		9/27/06			9/28/05
Revenue:
Company restaurant sales	$	234,705		$	225,824
Franchise and license revenue		23,491			22,898
Total operating revenue		258,196			248,722
Costs of company restaurant sales		202,279			201,695
Costs of franchise and license revenue		6,772			7,069
General and administrative expenses		16,440			14,654
Depreciation and amortization		13,812			13,818
Restructuring charges and exit costs, net		1,461			2,056
Impairment charges		831			320
Gains on disposition of assets and other, net		(38,995	)		(40	)
Total operating costs and expenses		202,600			239,572
Operating income		55,596			9,150
Other expenses:
Interest expense, net		14,959			13,934
Other nonoperating expense (income), net		1,499			(86	)
Total other expenses, net		16,458			13,848
Income (loss) before income taxes		39,138			(4,698	)
Provision for (benefit from) income taxes		13,635			(1,264	)
Net income (loss)	$	25,503		$	(3,434	)
Net income (loss) per share:
Basic	$	0.28		$	(0.04	)
Diluted	$	0.26		$	(0.04	)
Weighted average shares outstanding:
Basic		92,348			91,363
Diluted		96,498			91,363

DENNY’S CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
		Three Quarters			Three Quarters
		Ended			Ended
(In thousands, except per share amounts)		9/27/06			9/28/05
Revenue:
Company restaurant sales	$	680,735		$	667,833
Franchise and license revenue		68,937			67,513
Total operating revenue		749,672			735,346
Costs of company restaurant sales		592,911			586,613
Costs of franchise and license revenue		21,220			21,530
General and administrative expenses		49,259			46,873
Depreciation and amortization		41,997			40,857
Restructuring charges and exit costs, net		3,342			4,416
Impairment charges		831			585
Gains on disposition of assets and other, net		(47,664	)		(1,790	)
Total operating costs and expenses		661,896			699,084
Operating income		87,776			36,262
Other expenses:
Interest expense, net		44,449			40,810
Other nonoperating income, net		1,475			(545	)
Total other expenses, net		45,924			40,265
Income (loss) before income taxes and cumulative effect of change in accounting principle		41,852			(4,003	)
Provision for (benefit from) income taxes		14,015			(1,178	)
Net income (loss) before cumulative effect of change in accounting principle		27,837			(2,825	)
Cumulative effect of change in accounting principle, net of tax		232			-
Net income (loss)	$	28,069		$	(2,825	)
Net income (loss) per share:
Basic	$	0.30		$	(0.03	)
Diluted	$	0.29		$	(0.03	)
Weighted average shares outstanding:
Basic		92,060			90,785
Diluted		97,184			90,785

DENNY’S CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)		9/27/06			12/28/05
ASSETS
Current Assets
Cash and cash equivalents	$	26,059		$	28,236
Assets held for sale		6,627			-
Other		29,330			33,398
		62,016			61,634
Property, net		241,584			288,140
Goodwill		50,127			50,186
Intangible assets, net		68,065			71,664
Other assets		32,546			39,642
Total Assets	$	454,338		$	511,266
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Current maturities of notes and debentures	$	7,906		$	1,871
Current maturities of capital lease obligations		7,128			6,226
Accounts payable and other accrued liabilities		119,759			140,307
		134,793			148,404
Long-Term Liabilities
Notes and debentures, less current maturities		429,507			516,803
Capital lease obligations, less current maturities		25,351			28,862
Other		95,720			83,744
		550,578			629,409
Total Liabilities		685,371			777,813
Total Shareholders' Deficit		(231,033	)		(266,547	)
Total Liabilities and Shareholders' Deficit	$	454,338		$	511,266
Debt Balances
(In thousands)		9/27/06			12/28/05
First lien revolver loans	$	-		$	-
First lien term loans		141,628			222,752
Second lien term loans		120,000			120,000
Capital leases and other debt		33,264			36,010
Senior notes due 2012		175,000			175,000
Total Debt	$	469,892		$	553,762

DENNY’S CORPORATION
EBITDA and G&A Reconciliation
(Unaudited)
		Quarter			Quarter			Three Quarters			Three Quarters
EBITDA Reconciliation		Ended			Ended			Ended			Ended
(In millions)		9/27/06			9/28/05			9/27/06			9/28/05
Net income	$	25.5		$	(3.4	)	$	28.1		$	(2.8	)
Cumulative effect of change in accounting principle, net of tax	$	-		$	-		$	(0.2	)	$	-
Provision for income taxes	$	13.6		$	(1.3	)	$	14.0		$	(1.2	)
Interest expense, net	$	15.0		$	13.9		$	44.4		$	40.8
Depreciation and amortization	$	13.8		$	13.8		$	42.0		$	40.9
EBITDA (1)	$	67.9		$	23.1		$	128.3		$	77.7
Restructuring charges and exit costs, net	$	1.5		$	2.1		$	3.3		$	4.4
Impairment charges	$	0.8		$	0.3		$	0.8		$	0.6
Gains on disposition of assets and other, net	$	(39.0	)	$	(0.0	)	$	(47.7	)	$	(1.8	)
Other nonoperating expense (income), net	$	1.5		$	(0.1	)	$	1.5		$	(0.5	)
Other noncash charges	$	(0.1	)	$	(0.2	)	$	(0.4	)	$	(0.5	)
Stock-based incentive compensation (2)	$	1.7		$	1.4		$	5.4		$	6.1
Adjusted EBITDA (1)	$	34.3		$	26.6		$	91.3		$	86.0
		Quarter			Quarter			Three Quarters			Tjree Quarters
General and Administrative Reconciliation		Ended			Ended			Ended			Ended
(In millions)		9/27/06			9/28/05			9/27/06			9/28/05
Stock-based incentive compensation (2)	$	1.7		$	1.4		$	5.4		$	6.1
Other general and administrative expenses	$	14.7		$	13.3		$	43.9		$	40.8
Total general and administrative expenses	$	16.4		$	14.7		$	49.3		$	46.9

(1)

We believe that, in addition to other financial measures, EBITDA and Adjusted EBITDA are appropriate indicators to assist in the evaluation of our operating performance because they provide additional information with respect to our ability to meet our future debt service, capital expenditures and working capital needs. We also use EBITDA and Adjusted EBITDA for planning purposes, including the preparation of annual operating budgets, and for compensation purposes, including bonuses for certain employees. EBITDA and Adjusted EBITDA are also used to evaluate our ability to service debt because the excluded charges do not have an impact on our prospective debt servicing capability and these adjustments are contemplated in our senior credit facility for the computation of our debt covenant ratios. However, EBITDA and Adjusted EBITDA should be considered as a supplement to, not a substitute for, operating income, net income or other financial performance measures prepared in accordance with accounting principles generally accepted in the United States of America.

(2)

This compensation expense is attributable to options and restricted stock units granted under Denny’s 2002 and 2004 Omnibus Incentive Plans.

DENNY’S CORPORATION
Quarterly Operating Margins
(Unaudited)
(In millions)	Quarter Ended 9/27/06						Quarter Ended 9/28/05
Total operating revenue (1)	$	258.2		100.0	%	$	248.7		100.0	%
Company restaurant operations: (2)
Company restaurant sales		234.7		100.0	%		225.8		100.0	%
Costs of company restaurant sales:
Product costs		59.5		25.4	%		56.7		25.1	%
Payroll and benefits		95.6		40.7	%		94.3		41.8	%
Occupancy		12.9		5.5	%		12.2		5.4	%
Other operating costs:
Utilities		12.2		5.2	%		11.2		5.0	%
Repairs and maintenance		5.0		2.1	%		4.7		2.1	%
Marketing		7.8		3.3	%		7.4		3.3	%
Legal settlements		(0.8	)	(0.3	%)		6.4		2.8	%
Other		10.1		4.3	%		8.6		3.8	%
Total costs of company restaurant sales		202.3		86.2	%		201.7		89.3	%
Company restaurant operating margin (3)	$	32.4		13.8	%	$	24.1		10.7	%
Franchise operations: (4)
Franchise and license revenue		23.5		100.0	%		22.9		100.0	%
Costs of franchise and license revenue		6.8		28.8	%		7.1		30.9	%
Franchise operating margin (3)	$	16.7		71.2	%	$	15.8		69.1	%
Total operating margin (1)(3)	$	49.1		19.0	%	$	40.0		16.1	%
Other operating expenses: (1)(3)
General and administrative expenses		16.4		6.4	%		14.7		5.9	%
Depreciation and amortization		13.8		5.3	%		13.8		5.6	%
Restructuring, exit costs and impairment		2.3		0.9	%		2.4		1.0	%
Gains on disposition of assets and other, net		(39.0	)	(15.1	%)		(0.0	)	(0.0	%)
Total other operating expenses	$	(6.5	)	(2.5	%)	$	30.8		12.4	%
Operating income (1)	$	55.6		21.5	%	$	9.2		3.7	%

(1)	As a percentage of total operating revenue
(2)	As a percentage of company restaurant sales
(3)	Other operating expenses such as general and administrative expenses and depreciation and amortization relate to both company and franchise operations and are not allocated to costs of company restaurant sales and costs of franchise and license revenue. As such, operating margin is considered a non-GAAP financial measure. Operating margins should be considered as a supplement to, not as a substitute for, operating income, net income or other financial measures prepared in accordance with accounting principles generally accepted in the United States of America.
(4)	As a percentage of franchise and license revenue

DENNY’S CORPORATION
Statistical Data
(Unaudited)
		Quarter			Quarter			Three Quarters			Three Quarters
Same-Store Sales		Ended			Ended			Ended			Ended
(increase/(decrease) vs. prior year)		9/27/06			9/28/05			9/27/06			9/28/05
Company-Owned Same-Store Sales		4.2	%		1.5	%		2.8	%		3.9	%
Guest Check Average		3.7	%		4.1	%		5.2	%		4.1	%
Guest Counts		0.6	%		(2.5	%)		(2.2	%)		(0.2	%)
Franchised Same-Store Sales		4.7	%		3.8	%		4.1	%		5.6	%
		Quarter			Quarter			Three Quarters			Three Quarters
Average Unit Sales		Ended			Ended			Ended			Ended
($ in thousands)		9/27/06			9/28/05			9/27/06			9/28/05
Company-Owned Units	$	438.0		$	418.2		$	1,270.1		$	1,227.6
Franchised Units	$	385.8		$	364.4		$	1,113.5		$	1,056.4
					Franchised
Restaurant Units		Company			& Licensed			Total
Ending Units 9/28/05		546			1,036			1,582
Units Opened		2			17			19
Units Acquired		1			(1	)		-
Units Refranchised		-			-			-
Units Closed		(14	)		(28	)		(42	)
Net Change		(11	)		(12	)		(23	)
Ending Units 9/27/06		535			1,024			1,559