EX-99.1 2 q32012pressrelease.htm PRESS RELEASE Q3 2012 Press Release



DENNY'S CORPORATION REPORTS RESULTS FOR THIRD QUARTER 2012
- Adjusted Income Before Taxes* Grows 9% -
- Achieves Sixth Consecutive Quarter of Positive System-wide Same-Store Sales -

SPARTANBURG, S.C., October 30, 2012 - Denny's Corporation (NASDAQ: DENN), franchisor and operator of one of America's largest full-service restaurant chains, today reported results for its third quarter ended September 26, 2012.

Third Quarter Summary
System-wide same-store sales grew 0.4%, which marks the sixth consecutive quarter that system-wide same-store sales have been positive.
Opened 12 franchised units, including the first international university unit located in Canada at the Southern Alberta Institute of Technology.
Signed first international development agreement in South America for 10 units in Chile.
Franchise operating margin increased $1.0 million to $22.3 million while franchise operating margin (as a percentage of franchise and license revenue) was 64.9%.
Company restaurant operating margin increased 0.6 percentage points to 14.7% compared with the prior year, and was impacted by $1.3 million for unfavorable workers' compensation claims development.
Adjusted Income Before Taxes* grew 9.3% to $13.1 million compared with the prior year.
Net income of $5.4 million, or $0.06 per diluted share, was impacted by $2.5 million in impairment expense and $1.3 million for unfavorable workers' compensation claims development.
Generated $12.9 million of Free Cash Flow* in the quarter which was used to reduce outstanding term loan debt by $7.0 million and repurchase 1.0 million shares.

John Miller, President and Chief Executive Officer, stated, “We are pleased that we achieved our sixth consecutive quarter of positive system-wide same-store sales despite the ongoing challenging consumer economic environment. We continue to grow and revitalize the brand and are making progress in our efforts to differentiate Denny's in the market place. As Denny's approaches its 60th anniversary and 1,700th location, we believe that Denny's will grow its position as one of the largest American full-service brands in the world. Our recent partnership to open units in South America is another step toward that goal. By executing on our strategies to further reinforce our position as America's Diner, we will build on our efforts to grow the brand and increase shareholder value.”






Third Quarter Results

For the third quarter of 2012, franchise and license revenue increased 7.3% to $34.4 million compared with $32.0 million in the prior year quarter. The $2.3 million increase in franchise revenue was primarily driven by a $1.2 million increase in occupancy revenue and $0.9 million increase in royalties due to 60 additional equivalent franchise restaurants. Company restaurant sales of $86.6 million decreased $18.1 million due to 49 fewer equivalent company restaurants compared with the prior year quarter. This decrease reflects the continuing impact of selling company-owned units to franchisees as part of our FGI refranchising strategy that will be completed at the end of 2012. Denny's total operating revenue, including both company restaurant sales and franchise revenue, was $120.9 million compared with $136.7 million in the prior year quarter.

Denny's opened 12 new franchised units in the third quarter of this year, including the first international university unit located in Calgary, Canada, at the Southern Alberta Institute of Technology. During the quarter, Denny's closed nine franchised and company restaurants and franchisees purchased five company-owned restaurants.

Franchise operating margin increased $1.0 million to $22.3 million primarily due to the increases in occupancy margin and franchise royalties. Franchise operating margin (as a percentage of franchise and license revenue) was 64.9%, a decrease of 1.5 percentage points compared with the prior year quarter, primarily due to an increase in direct franchise costs.

Company restaurant operating margin decreased $2.0 million primarily due to a $1.3 million unfavorable workers' compensation claims development and the impact of selling company-owned units to franchisees. Company restaurant operating margin (as a percentage of company restaurant sales) was 14.7%, an increase of 0.6 percentage points compared with the prior year quarter. The current year quarter included a 1.5 percentage point unfavorable impact from worker's compensation claims development.

Total general and administrative expenses increased $1.4 million compared with the prior year quarter primarily due to higher performance-based compensation accruals.

Depreciation and amortization expense decreased by $1.7 million compared with the prior year quarter, primarily as a result of the sale of restaurants over the past two years. Net operating gains, losses and other charges, which include restructuring charges, exit costs, impairment charges and gains or losses on the sale of assets, decreased $1.6 million in the quarter. The decrease was primarily the result of lower gains on the sale of company-owned units to franchisees and higher restructuring costs.

Interest expense decreased $1.7 million to $3.1 million as a result of a $37.4 million reduction in total gross debt over the last 12 months and lower interest rates under the refinanced credit facility.

Adjusted Income Before Taxes*, Denny's target metric for earnings, increased 9.3% to $13.1 million compared with the prior year quarter Adjusted Income Before Taxes* of $12.0 million.

In the third quarter, the provision for income taxes increased $2.8 million, primarily due to a higher effective tax rate of 37.4% compared to 4.8% effective tax rate in the prior year quarter. The change in the effective tax rate compared to the prior year resulted from the release of a substantial portion of the valuation allowance on certain deferred tax assets based on our improved historical and projected pre-tax income. Due to the use of net operating loss and tax credit carryforwards, the Company only paid $0.5 million in cash taxes in the third quarter.







Denny's net income was $5.4 million for the third quarter 2012, or $0.06 per diluted share, compared with prior year period net income of $8.0 million, or $0.08 per diluted share. Net income was impacted by $2.5 million in impairment expense and $1.3 million for unfavorable workers' compensation claims development.

In the first three quarters of 2012, Denny's has generated $41.5 million of Free Cash Flow* which the Company has used to reduce its outstanding term loan by $22.0 million and repurchase 2.4 million shares. As of October 26, 2012, the Company has repurchased approximately 10 million shares since initiating a share repurchase strategy and now has 5 million shares remaining in its current authorized share repurchase initiative.

Business Outlook

Mark Wolfinger, Executive Vice President, Chief Administrative Officer and Chief Financial Officer, stated, “The continuous improvements we are making to our franchised-focused business model are reflected in our results where we have been able to generate new unit growth, positive same-store sales, and growing profitability. Our franchise-focused business model provides financial stability and flexibility enabling us to navigate the challenging environment while continuing to return value to shareholders through debt repayment and share repurchases.”

Based on year-to-date results and management's expectations at this time, Denny's is updating its full-year 2012 financial guidance to reflect the third quarter results and current thinking for the fourth quarter. The Company anticipates that the system will achieve its second consecutive year of positive same-store sales. Despite the challenging consumer economic environment, the company expects Adjusted Income Before Taxes* to grow more than 20% this year while generating around $50 million of Free Cash Flow*.

Component
Full Year 2012 Guidance
 
Previous**
Current
Franchise Same-Store Sales
1.0% to 3.0%
1.0% to 1.5%
Company Same-Store Sales
0.0% to 2.0%
0.0% to 0.5%
New System Units
45 - 50
(includes 1 company-owned
unit)
46 - 48
(includes 1 company-owned unit)
Adjusted EBITDA*
$80M to $84M
$77M to $80M
Adjusted Income Before Taxes*
$45M to $49M
$45M to $48M
Interest Expense, net
$12.5M to $13.5M
(includes $10.5M to $11.5M of net cash interest expense)
No Change
Cash Capital Expenditure
$15M to $16M
No Change
Cash Taxes
$3M to $4M
$2M to $2.5M
Free Cash Flow*
$51M to $55M
$49M to $52M
 
*
Please refer to the historical reconciliation of net income to Adjusted Income Before Taxes, Adjusted EBITDA, and Free Cash Flow included in the tables below.
**
As announced in First Quarter 2012 Earnings Release on April 30, 2012 and reiterated in Second Quarter 2012 Earnings Release on July 31, 2012.





Further Information

Denny's will provide further commentary on the results for the third quarter of 2012 on its quarterly investor conference call today, Tuesday, October 30, 2012 at 5:00 p.m. ET.  Interested parties are invited to listen to a live broadcast of the conference call accessible through the investor relations section of Denny's website at ir.dennys.com.  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 the franchisor and operator of one of America's largest full-service restaurant chains, based on number of units. As of September 26, 2012, Denny's had 1,687 franchised, licensed, and company-owned restaurants across the United States, Canada, Costa Rica, Mexico, Honduras, Guam, Curaçao, Puerto Rico, Dominican Republic and New Zealand. For further information on Denny's, including news releases, links to SEC filings and other financial information, please visit the Denny's investor relations website.




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, which reflect our best judgment based on factors currently known, are intended to speak only as of the date such statements are made and 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”, “hopes”, and 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 strategic and 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 and other filings, including but not limited to the discussion in Management's Discussion and Analysis and the risks identified in Item 1A. Risk Factors contained in the Company's Annual Report on Form 10-K for the year ended December 28, 2011 (and in the Company's subsequent quarterly reports on Form 10-Q).  


Investor Contact:
Whit Kincaid
877-784-7167
    
Media Contact:
Liz Brady, ICR
646-277-1226








DENNY’S CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
 
 
 
 
 
 
 
 
Quarter Ended
(In thousands, except per share amounts)
9/26/2012
 
9/28/2011
Revenue:
 
 
 
 
Company restaurant sales
$
86,575

 
$
104,659

 
Franchise and license revenue
34,370

 
32,023

 
 
Total operating revenue
120,945

 
136,682

Costs of company restaurant sales
73,808

 
89,887

Costs of franchise and license revenue
12,078

 
10,747

General and administrative expenses
14,702

 
13,335

Depreciation and amortization
5,287

 
6,955

Operating (gains), losses and other charges, net
3,380

 
1,791

 
 
Total operating costs and expenses
109,255

 
122,715

Operating income
11,690

 
13,967

Other expenses:
 
 
 
 
Interest expense, net
3,088

 
4,796

 
Other nonoperating expense, net
38

 
780

 
 
Total other expenses, net
3,126

 
5,576

Net income before income taxes
8,564

 
8,391

Provision for income taxes
3,201

 
406

Net income
$
5,363

 
$
7,985

 
 
 
 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
Basic
$
0.06

 
$
0.08

 
Diluted
$
0.06

 
$
0.08

 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
Basic
94,705

 
96,997

 
Diluted
96,745

 
98,746

 
 
 
 
 
 
Comprehensive income
$
5,631

 
$
7,985







DENNY’S CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Quarters Ended
(In thousands, except per share amounts)
9/26/2012
 
9/28/2011
Revenue:
 
 
 
 
Company restaurant sales
$
271,977

 
$
313,235

 
Franchise and license revenue
100,437

 
95,105

 
 
Total operating revenue
372,414

 
408,340

Costs of company restaurant sales
231,506

 
271,989

Costs of franchise and license revenue
34,776

 
33,397

General and administrative expenses
45,150

 
41,566

Depreciation and amortization
17,174

 
21,377

Operating (gains), losses and other charges, net
(794
)
 
843

 
 
Total operating costs and expenses
327,812

 
369,172

Operating income
44,602

 
39,168

Other expenses:
 
 
 
 
Interest expense, net
10,537

 
15,390

 
Other nonoperating expense, net
7,941

 
2,526

 
 
Total other expenses, net
18,478

 
17,916

Net income before income taxes
26,124

 
21,252

Provision for income taxes
10,295

 
1,013

Net income
$
15,829

 
$
20,239

 
 
 
 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
Basic
$
0.17

 
$
0.21

 
Diluted
$
0.16

 
$
0.20

 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
Basic
95,472

 
98,132

 
Diluted
97,196

 
100,203

 
 
 
 
 
 
Comprehensive income
$
16,633

 
$
20,239







DENNY’S CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
 
 
 
 
 
 
 
(In thousands)
9/26/2012
 
12/28/2011
Assets
 
 
 
 
Current assets
 
 
 
 
 
Cash and cash equivalents
$
24,148

 
$
13,740

 
 
Receivables, net
13,614

 
14,971

 
 
Assets held for sale
1,582

 
2,351

 
 
Current deferred tax asset
18,706

 
15,519

 
 
Other
10,183

 
14,712

 
 
 
 
68,233

 
61,293

 
Property, net
103,235

 
112,772

 
Goodwill
30,402

 
30,764

 
Intangible assets, net
49,208

 
50,921

 
Noncurrent deferred tax asset
47,943

 
60,636

 
Other assets
26,833

 
34,115

 
 
 
Total assets
$
325,854

 
$
350,501

 
 
 
 
 
 
 
Liabilities
 
 
 
 
Current liabilities
 
 
 
 
 
Current maturities of long-term debt
$
9,781

 
$
2,591

 
 
Current maturities of capital lease obligations
4,264

 
4,380

 
 
Accounts payable
17,604

 
25,935

 
 
Other current liabilities
53,673

 
54,289

 
 
 
85,322

 
87,195

 
Long-term liabilities
 
 
 
 
 
Long-term debt, less current maturities
166,250

 
193,257

 
 
Capital lease obligations, less current maturities
16,239

 
18,077

 
 
Other
57,480

 
61,648

 
 
 
 
239,969

 
272,982

 
 
 
Total liabilities
325,291

 
360,177

 
 
 
 
 
 
 
Shareholders' equity
 
 
 
 
 
Common stock
1,037

 
1,027

 
 
Paid-in capital
561,665

 
557,396

 
 
Deficit
(501,998
)
 
(517,827
)
 
 
Accumulated other comprehensive loss, net of tax
(24,009
)
 
(24,813
)
 
 
Treasury stock
(36,132
)
 
(25,459
)
 
 
 
Total shareholders' equity
563

 
(9,676
)
 
 
 
Total liabilities and shareholders' equity
$
325,854

 
$
350,501

 
 
 
 
 
 
 
Debt Balances
(In thousands)
9/26/2012
 
12/28/2011
Credit facility term loan due 2017, net of discount of $0 and $2,251, respectively
$
176,000

 
$
195,749

Capital leases and other debt
20,534

 
22,556

 
Total debt
$
196,534

 
$
218,305







DENNY’S CORPORATION
Income, EBITDA, Free Cash Flow and G&A Reconciliations
(Unaudited)
 
 
 
 
 
 
 
 
 
 
Income and EBITDA Reconciliation
Quarter Ended
 
Three Quarters Ended
(In thousands)
9/26/2012
 
9/28/2011
 
9/26/2012
 
9/28/2011
Net income
$
5,363

 
$
7,985

 
$
15,829

 
$
20,239

 
 
 
 
 
 
 
 
Provision for (benefit from) income taxes
3,201

 
406

 
10,295

 
1,013

Operating (gains), losses and other charges, net
3,380

 
1,791

 
(794
)
 
843

Other nonoperating expense, net
38

 
780

 
7,941

 
2,526

Share-based compensation
1,128

 
1,031

 
2,794

 
3,180

 
 
 
 
 
 
 
 
Adjusted Income Before Taxes (1)
$
13,110

 
$
11,993

 
$
36,065

 
$
27,801

 
 
 
 
 
 
 
 
Interest expense, net
3,088

 
4,796

 
10,537

 
15,390

Depreciation and amortization
5,287

 
6,955

 
17,174

 
21,377

Cash payments for restructuring charges and exit costs
(1,521
)
 
(633
)
 
(2,845
)
 
(2,086
)
Cash payments for share-based compensation
(294
)
 
(495
)
 
(649
)
 
(594
)
 
 
 
 
 
 
 
 
Adjusted EBITDA (1)
$
19,670

 
$
22,616

 
$
60,282

 
$
61,888

 
 
 
 
 
 
 
 
Cash interest expense, net
(2,719
)
 
(4,027
)
 
(9,048
)
 
(13,112
)
Cash paid for income taxes, net
(500
)
 
(251
)
 
(1,865
)
 
(988
)
Cash paid for capital expenditures
(3,567
)
 
(4,073
)
 
(7,846
)
 
(12,927
)
 
 
 
 
 
 
 
 
Free Cash Flow (1)
$
12,884

 
$
14,265

 
$
41,523

 
$
34,861

 
 
 
 
 
 
 
 
General and Administrative Expenses Reconciliation
Quarter Ended
 
Three Quarters Ended
(In thousands)
9/26/2012
 
9/28/2011
 
9/26/2012
 
9/28/2011
 
Share-based compensation
$
1,128

 
$
1,031

 
$
2,794

 
$
3,180

 
Other general and administrative expenses
13,574

 
12,304

 
42,356

 
38,386

 
Total general and administrative expenses
$
14,702

 
$
13,335

 
$
45,150

 
$
41,566


(1)
We believe that, in addition to other financial measures, Adjusted Income Before Taxes, Adjusted EBITDA and Free Cash Flow are appropriate indicators to assist in the evaluation of our operating performance on a period-to-period basis. We also use Adjusted Income, Adjusted EBITDA and Free Cash Flow internally as performance measures for planning purposes, including the preparation of annual operating budgets, and for compensation purposes, including bonuses for certain employees. Adjusted EBITDA is 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 credit facility for the computation of our debt covenant ratios. Free Cash Flow, defined as Adjusted EBITDA less cash portion of interest expense net of interest income, capital expenditures, and cash taxes, is used to evaluate operating effectiveness and decisions regarding the allocation of resources. However, Adjusted Income, Adjusted EBITDA and Free Cash Flow should be considered as a supplement to, not a substitute for, operating income, net income or other financial performance measures prepared in accordance with U.S. generally accepted accounting principles.






DENNY’S CORPORATION
Operating Margins
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
(In thousands)
9/26/2012

9/28/2011
Company restaurant operations: (2)
 
 
 
 
 
 
Company restaurant sales
$
86,575

100.0
%
 
$
104,659

100.0
%
 
Costs of company restaurant sales:
 
 
 
 
 
 
 
Product costs
21,449

24.8
%
 
25,847

24.7
%
 
 
Payroll and benefits
34,409

39.7
%
 
41,261

39.4
%
 
 
Occupancy
5,780

6.7
%
 
6,928

6.6
%
 
 
Other operating costs:
 
 
 
 
 
 
 
 
Utilities
3,760

4.3
%
 
4,762

4.6
%
 
 
 
Repairs and maintenance
1,578

1.8
%
 
1,754

1.7
%
 
 
 
Marketing
3,213

3.7
%
 
3,926

3.8
%
 
 
 
Legal settlements
197

0.2
%
 
607

0.6
%
 
 
 
Other
3,422

4.0
%
 
4,802

4.6
%
 
Total costs of company restaurant sales
$
73,808

85.3
%
 
$
89,887

85.9
%
 
Company restaurant operating margin (3)
$
12,767

14.7
%
 
$
14,772

14.1
%
 
 
 
 
 
 
 
 
 
Franchise operations: (4)
 
 
 
 
 
 
Franchise and license revenue
 
 
 
 
 
 
   Royalty and license revenue
$
21,333

62.1
%
 
$
20,449

63.9
%
 
   Initial and other fee revenue
728

2.1
%
 
437

1.3
%
 
   Occupancy revenue
12,309

35.8
%
 
11,137

34.8
%
 
Total franchise and license revenue
$
34,370

100.0
%
 
$
32,023

100.0
%
 
 
 
 
 
 
 
 
 
 
Costs of franchise and license revenue
 
 
 
 
 
 
   Occupancy costs
$
9,027

26.2
%
 
$
8,349

26.1
%
 
   Direct franchise costs
3,051

8.9
%
 
2,398

7.5
%
 
Total costs of franchise and license revenue
$
12,078

35.1
%
 
$
10,747

33.6
%
 
Franchise operating margin (3)
$
22,292

64.9
%
 
$
21,276

66.4
%
 
 
 
 
 
 
 
 
 
Total operating revenue (1)
$
120,945

100.0
%
 
$
136,682

100.0
%
Total costs of operating revenue (1)
85,886

71.0
%
 
100,634

73.6
%
Total operating margin (1)(3)
$
35,059

29.0
%
 
$
36,048

26.4
%
 
 
 
 
 
 
 
 
 
Other operating expenses: (1)(3)
 
 
 
 
 
 
General and administrative expenses
$
14,702

12.2
%
 
$
13,335

9.8
%
 
Depreciation and amortization
5,287

4.4
%
 
6,955

5.1
%
 
Operating gains, losses and other charges, net
3,380

2.8
%
 
1,791

1.3
%
 
Total other operating expenses
$
23,369

19.3
%
 
$
22,081

16.2
%
 
 
 
 
 
 
 
 
 
Operating income (1)
$
11,690

9.7
%
 
$
13,967

10.2
%

(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 U.S. generally accepted accounting principles.
(4)
As a percentage of franchise and license revenue





DENNY’S CORPORATION
Operating Margins
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Quarters Ended
(In thousands)
9/26/2012
 
9/28/2011
Company restaurant operations: (2)
 
 
 
 
 
 
Company restaurant sales
$
271,977

100.0
 %
 
$
313,235

100.0
%
 
Costs of company restaurant sales:
 
 
 
 
 
 
 
Product costs
67,684

24.9
 %
 
77,095

24.6
%
 
 
Payroll and benefits
108,779

40.0
 %
 
127,876

40.8
%
 
 
Occupancy
17,776

6.5
 %
 
20,581

6.6
%
 
 
Other operating costs:
 
 
 
 
 
 
 
 
Utilities
11,066

4.1
 %
 
13,741

4.4
%
 
 
 
Repairs and maintenance
4,901

1.8
 %
 
5,485

1.8
%
 
 
 
Marketing
10,138

3.7
 %
 
11,738

3.7
%
 
 
 
Legal settlements
366

0.1
 %
 
671

0.2
%
 
 
 
Other
10,796

4.0
 %
 
14,802

4.7
%
 
Total costs of company restaurant sales
$
231,506

85.1
 %
 
$
271,989

86.8
%
 
Company restaurant operating margin (3)
$
40,471

14.9
 %
 
$
41,246

13.2
%
 
 
 
 
 
 
 
 
 
Franchise operations: (4)
 
 
 
 
 
 
Franchise and license revenue
 
 
 
 
 
 
   Royalty and license revenue
$
62,734

62.5
 %
 
$
59,669

62.7
%
 
   Initial and other fee revenue
2,167

2.2
 %
 
2,050

2.2
%
 
   Occupancy revenue
35,536

35.3
 %
 
33,386

35.1
%
 
Total franchise and license revenue
$
100,437

100.0
 %
 
$
95,105

100.0
%
 
 
 
 
 
 
 
 
 
 
Costs of franchise and license revenue
 
 
 
 
 
 
   Occupancy costs
$
26,455

26.3
 %
 
$
25,567

26.9
%
 
   Direct franchise costs
8,321

8.3
 %
 
7,830

8.2
%
 
Total costs of franchise and license revenue
$
34,776

34.6
 %
 
$
33,397

35.1
%
 
Franchise operating margin (3)
$
65,661

65.4
 %
 
$
61,708

64.9
%
 
 
 
 
 
 
 
 
 
Total operating revenue (1)
$
372,414

100.0
 %
 
$
408,340

100.0
%
Total costs of operating revenue (1)
266,282

71.5
 %
 
305,386

74.8
%
Total operating margin (1)(3)
$
106,132

28.5
 %
 
$
102,954

25.2
%
 
 
 
 
 
 
 
 
 
Other operating expenses: (1)(3)
 
 
 
 
 
 
General and administrative expenses
$
45,150

12.1
 %
 
$
41,566

10.2
%
 
Depreciation and amortization
17,174

4.6
 %
 
21,377

5.2
%
 
Operating gains, losses and other charges, net
(794
)
(0.2
)%
 
843

0.2
%
 
Total other operating expenses
$
61,530

16.5
 %
 
$
63,786

15.6
%
 
 
 
 
 
 
 
 
 
Operating income (1)
$
44,602

12.0
 %
 
$
39,168

9.6
%

(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 U.S. generally accepted accounting principles.
(4)
As a percentage of franchise and license revenue





DENNY’S CORPORATION
Statistical Data
(Unaudited)
 
 
 
 
 
 
 
 
 
 
Same-Store Sales
Quarter Ended
 
Three Quarters Ended
(increase/(decrease) vs. prior year)
9/26/2012
 
9/28/2011
 
9/26/2012
 
9/28/2011
 
Company Restaurants
(0.5
)%
 
1.1
 %
 
0.1
 %
 
0.7
%
 
Franchised Restaurants
0.6
 %
 
0.8
 %
 
1.4
 %
 
0.3
%
 
System-wide Restaurants
0.4
 %
 
0.9
 %
 
1.1
 %
 
0.4
%
 
 
 
 
 
 
 
 
 
 
Company Restaurant Sales Detail
 
 
 
 
 
 
 
 
Guest Check Average
1.8
 %
 
1.3
 %
 
1.9
 %
 
0.8
%
 
Guest Counts
(2.2
)%
 
(0.2
)%
 
(1.8
)%
 
0.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Unit Sales
Quarter Ended
 
Three Quarters Ended
(In thousands)
9/26/2012
 
9/28/2011
 
9/26/2012
 
9/28/2011
 
Company Restaurants
$
493

 
$
468

 
$
1,447

 
$
1,383

 
Franchised Restaurants
$
358

 
$
355

 
$
1,061

 
$
1,043

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franchised
 
 
 
 
Restaurant Unit Activity
Company
 
 & Licensed
 
Total
 
 
Ending Units 6/27/12
177

 
1,507

 
1,684

 
 
 
Units Opened
0

 
12

 
12

 
 
 
Units Refranchised
(5
)
 
5

 
0

 
 
 
Units Closed
(1
)
 
(8
)
 
(9
)
 
 
 
 
Net Change
(6
)
 
9

 
3

 
 
Ending Units 9/26/12
171

 
1,516

 
1,687

 
 
 
 
 
 
 
 
 
 
 
 
Equivalent Units
 
 
 
 
 
 
 
 
Third Quarter 2012
175

 
1,511

 
1,686

 
 
 
Third Quarter 2011
224

 
1,451

 
1,675

 
 
 
 
 
(49
)
 
60

 
11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franchised
 
 
 
 
Restaurant Unit Activity
Company
 
 & Licensed
 
Total
 
 
Ending Units 12/28/11
206

 
1,479

 
1,685

 
 
 
Units Opened
0

 
27

 
27

 
 
 
Units Refranchised
(28
)
 
28

 
0

 
 
 
Units Closed
(7
)
 
(18
)
 
(25
)
 
 
 
 
Net Change
(35
)
 
37

 
2

 
 
Ending Units 9/26/12
171

 
1,516

 
1,687

 
 
 
 
 
 
 
 
 
 
 
 
Equivalent Units
 
 
 
 
 
 
 
 
Year-to-Date 2012
188

 
1,495

 
1,683

 
 
 
Year-to-Date 2011
226

 
1,441

 
1,667

 
 
 
 
 
(38
)
 
54

 
16