Denny’s Corporation Reports Results for Third Quarter 2017

Nov 1, 2017

SPARTANBURG, S.C., Nov. 01, 2017 (GLOBE NEWSWIRE) -- Denny’s Corporation (NASDAQ:DENN), franchisor and operator of one of America's largest franchised full-service restaurant chains, today reported results for its third quarter ended September 27, 2017.

Third Quarter 2017 Highlights

  • Domestic system-wide same-store sales increased 0.6%, including growth of 0.6% at company restaurants and 0.6% at domestic franchised restaurants.
  • Opened nine system restaurants, including eight franchised restaurants and one company restaurant.
  • Completed 58 remodels, including 57 at franchised restaurants.
  • Operating Income increased 5.5% to $18.5 million.
  • Company Restaurant Operating Margin* grew 3.7% to $16.6 million and Franchise Operating Margin* was $25.0 million in both periods.
  • Net Income was $9.3 million, or $0.13 per diluted share.
  • Adjusted Net Income* was $9.7 million, while Adjusted Net Income per Share* was $0.14.
  • Adjusted EBITDA* improved 9.6% to $27.3 million.
  • Generated $12.6 million of Adjusted Free Cash Flow*, after cash capital expenditures of $8.5 million.
  • Allocated $29.7 million towards share repurchases.

John Miller, President and Chief Executive Officer, stated, “We once again achieved positive system same-store sales and continued to perform well against key industry benchmarks during the third quarter despite persistent challenges within the full-service dining environment.  The disciplined execution of our brand revitalization strategy, which delivers an enhanced guest experience across food, service and atmosphere, coupled with our highly franchised business model, continues to generate growth in revenue and cash flows.  We remain committed to effectively reinvesting capital in the business along with returning capital to our shareholders.  While the industry outlook remains uncertain, we are focused on further elevating the guest experience, growing sales, and expanding Denny’s global reach to ensure long-term success.”

Third Quarter Results

Denny’s total operating revenue grew 3.1% to $132.4 million primarily due to an increase in company restaurant sales.  Company restaurant sales were up 5.1% to $97.9 million due to a greater number of company restaurants compared to the prior year quarter and same-store sales growth.  Franchise and licensing revenue was $34.5 million compared to $35.3 million in the prior year quarter as an increase in royalty revenue was offset by lower occupancy revenue due to scheduled lease terminations and a reduction in initial fees from fewer restaurant openings.

Company Restaurant Operating Margin* was $16.6 million, or 16.9% of company restaurant sales, compared to $16.0 million, or 17.2%, in the prior year quarter, driven by expected increases in product costs and minimum wages, partially offset by higher sales and favorable workers' compensation experience.  Franchise Operating Margin* was $25.0 million, or 72.5% of franchise and licensing revenue, compared to $25.0 million, or 70.9%, in the prior year quarter, driven by higher royalty revenue and an improved occupancy margin.

Total general and administrative expenses improved to $16.4 million compared to $17.6 million in the prior year quarter.  Interest expense was $4.1 million versus $3.1 million in the prior year quarter.  Denny’s ended the quarter with $291.4 million of total debt outstanding, including $261.8 million of borrowings under its revolving credit facility.  The provision for income taxes was $5.4 million, reflecting an effective tax rate of 36.8%.  Due to the use of net operating loss and tax credit carryforwards, the Company paid $2.4 million in cash taxes during the quarter.

Net Income was $9.3 million, or $0.13 per diluted share, compared to $9.7 million, or $0.13 per diluted share, in the prior year quarter.  Adjusted Net Income per Share* grew 11.2% to $0.14 compared to the prior year quarter.

Adjusted Free Cash Flow* and Capital Allocation

Denny’s generated $12.6 million of Adjusted Free Cash Flow* in the quarter after investing $8.5 million in cash capital expenditures, including the acquisition of one franchised restaurant and costs associated with opening a new company restaurant and relocating a high-performing company restaurant due to the loss of property control.

During the quarter, the Company allocated $29.7 million to share repurchases.  As of September 27, 2017, the Company had approximately $13 million remaining in authorized share repurchases under its existing $100 million share repurchase authorization.  On October 31, 2017, the Company announced a new multi-year share repurchase program authorizing the repurchase of an additional $200 million of common stock.

On October 31, 2017, the Company also announced the refinance of its existing $325 million credit facility with a new five-year $400 million senior secured revolving credit facility.  Borrowings under the new credit facility bear a tiered interest rate, which is based on the Company's consolidated leverage ratio and was initially set at LIBOR plus 200 basis points.  The maturity date for the new credit facility is October 26, 2022.

Business Outlook

The following full year 2017 estimates are based on management's expectations at this time.  Differences from previously provided guidance are noted in parenthesis below.

  • Same-store sales growth at company and domestic franchised restaurants between 0% and 2%.
  • 40 to 45 new restaurant openings (vs 45 to 50 restaurant openings), with net restaurant growth of 5 to 10 restaurants (vs. 5 to 15 restaurants).
  • Total operating revenue between $523 and $532 million including franchise and licensing revenue between $140 and $142 million.
  • Company Restaurant Operating Margin* between 17.0% and 17.5% and Franchise Operating Margin* between 71.0% and 71.5%.
  • Total general and administrative expenses between $67 and $70 million.
  • Adjusted EBITDA* between $101 and $103 million.
  • Depreciation and amortization expense between $23 and $24 million.
  • Net interest expense between $14.5 and $15.0 million.
  • Effective income tax rate between 35% and 37% with cash taxes between $6 and $8 million.
  • Cash capital expenditures between $32 and $34 million (vs. $25 and $27 million).
  • Adjusted Free Cash Flow* between $48 and $50 million (vs. $55 and $57 million).

* Please refer to the historical reconciliation of Net Income to Adjusted Income Before Taxes, Adjusted EBITDA, Adjusted Free Cash Flow, Adjusted Net Income, and Adjusted Net Income per Share, as well as the reconciliation of Operating Income to non-GAAP financial measures included in the following tables.  The Company is not able to reconcile the forward-looking non-GAAP estimates set forth above to their most directly comparable GAAP estimates without unreasonable efforts because it is unable to predict, forecast or determine the probable significance of the items impacting these estimates, including gains, losses and other charges, with a reasonable degree of accuracy.  Accordingly, the most directly comparable forward-looking GAAP estimates are not provided.

Conference Call and Webcast Information

Denny’s will provide further commentary on the results for the third quarter ended September 27, 2017 on its quarterly investor conference call today, Wednesday, November 1, 2017 at 4:30 p.m. Eastern Time.  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 investor.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.

About Denny’s

Denny's Corporation is the franchisor and operator of one of America's largest franchised full-service restaurant chains, based on the number of restaurants.  As of September 27, 2017, Denny’s had 1,725 franchised, licensed, and company restaurants around the world including 125 restaurants in Canada, Puerto Rico, Mexico, New Zealand, Honduras, the Philippines, Costa Rica, Dominican Republic, the United Arab Emirates, Guam, Curaçao, and El Salvador.  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 at investor.dennys.com.

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 its 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 “expect”, “anticipate”, “believe”, “intend”, “plan”, “hope”, 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:  competitive pressures from within the restaurant industry; the level of success of our operating initiatives and advertising and promotional efforts; adverse publicity; health concerns arising from food-related pandemics, outbreaks of flu viruses, such as avian flu, or other diseases; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy (including with regard to energy costs), 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, 2016 (and in the Company’s subsequent quarterly reports on Form 10-Q).

Investor Contact:
Curt Nichols
877-784-7167

Media Contact:
Christine Beggan, ICR
203-682-8329

 

DENNY’S CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
       
(In thousands)9/27/17 12/28/16
Assets   
 Current assets   
  Cash and cash equivalents$1,663  $2,592 
  Receivables17,423  19,841 
  Assets held for sale  1,020 
  Other current assets11,571  12,454 
   Total current assets30,657  35,907 
 Property, net138,049  133,102 
 Goodwill37,821  35,233 
 Intangible assets, net56,075  54,493 
 Deferred income taxes17,966  17,683 
 Other noncurrent assets28,658  29,733 
   Total assets$309,226  $306,151 
       
Liabilities   
 Current liabilities   
  Current maturities of capital lease obligations$3,289  $3,285 
  Accounts payable19,002  25,289 
  Other current liabilities53,748  64,796 
   Total current liabilities76,039  93,370 
 Long-term liabilities   
  Long-term debt, less current maturities261,800  218,500 
  Capital lease obligations, less current maturities26,296  23,806 
  Other42,688  41,587 
   Total long-term liabilities330,784  283,893 
   Total liabilities406,823  377,263 
       
Shareholders' deficit   
  Common stock1,076  1,071 
  Paid-in capital591,773  577,951 
  Deficit(347,976) (382,843)
  Accumulated other comprehensive loss, net of tax(3,323) (1,407)
  Treasury stock(339,147) (265,884)
   Total shareholders' deficit(97,597) (71,112)
   Total liabilities and shareholders' deficit$309,226  $306,151 
       
Debt Balances
(In thousands)9/27/17 12/28/16
Credit facility revolver due 2020$261,800  $218,500 
Capital leases29,585  27,091 
 Total debt$291,385  $245,591 
         

 

DENNY’S CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
      
   Quarter Ended
(In thousands, except per share amounts)9/27/17 9/28/16
Revenue:   
 Company restaurant sales$97,915  $93,122 
 Franchise and license revenue34,469  35,264 
  Total operating revenue132,384  128,386 
Costs of company restaurant sales81,322  77,118 
Costs of franchise and license revenue9,493  10,275 
General and administrative expenses16,446  17,558 
Depreciation and amortization5,958  5,609 
Operating (gains), losses and other charges, net630  249 
  Total operating costs and expenses, net113,849  110,809 
Operating income18,535  17,577 
Interest expense, net4,067  3,117 
Other nonoperating income, net(286) (543)
Net income before income taxes14,754  15,003 
Provision for income taxes5,429  5,277 
Net income$9,325  $9,726 
      
      
Basic net income per share$0.14  $0.13 
Diluted net income per share$0.13  $0.13 
      
Basic weighted average shares outstanding66,873  74,851 
Diluted weighted average shares outstanding69,210  76,791 
      
Comprehensive income$9,548  $9,771 
    
General and Administrative ExpensesQuarter Ended
(In thousands)9/27/17 9/28/16
Share-based compensation$2,493  $1,775 
Other general and administrative expenses13,953  15,783 
 Total general and administrative expenses$16,446  $17,558 
         

 

DENNY’S CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
      
   Three Quarters Ended
(In thousands, except per share amounts)9/27/17 9/28/16
Revenue:   
 Company restaurant sales$290,049  $272,718 
 Franchise and license revenue103,621  104,625 
  Total operating revenue393,670  377,343 
Costs of company restaurant sales240,854  224,066 
Costs of franchise and license revenue29,483  31,037 
General and administrative expenses50,536  50,691 
Depreciation and amortization17,493  16,207 
Operating (gains), losses and other charges, net3,459  24,365 
  Total operating costs and expenses, net341,825  346,366 
Operating income51,845  30,977 
Interest expense, net11,348  8,905 
Other nonoperating income, net(1,053) (635)
Net income before income taxes41,550  22,707 
Provision for income taxes15,103  14,579 
Net income$26,447  $8,128 
      
      
Basic net income per share$0.38  $0.11 
Diluted net income per share$0.37  $0.10 
      
Basic weighted average shares outstanding69,095  76,214 
Diluted weighted average shares outstanding71,377  78,052 
      
Comprehensive income$24,531  $22,097 
    
General and Administrative ExpensesThree Quarters Ended
(In thousands)9/27/17 9/28/16
Share-based compensation$6,546  $5,625 
Other general and administrative expenses43,990  45,066 
 Total general and administrative expenses$50,536  $50,691 
         

 

DENNY’S CORPORATION
Reconciliation of Net (Loss) Income to Non-GAAP Financial Measures
(Unaudited)

The Company believes that, in addition to GAAP measures, certain other non-GAAP financial measures are appropriate indicators to assist in the evaluation of operating performance on a period-to-period basis.  The Company uses Adjusted Income Before Taxes, Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted Net Income 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 the ability to service debt because the excluded charges do not have an impact on prospective debt servicing capability and these adjustments are contemplated in our credit facility for the computation of our debt covenant ratios.  We define Adjusted Free Cash Flow for a given period as Adjusted EBITDA less the cash portion of interest expense net of interest income, capital expenditures, and cash taxes.  Management believes that the presentation of Adjusted Free Cash Flow provides useful information to investors because it represents a liquidity measure used to evaluate, among other things, operating effectiveness and is used in decisions regarding the allocation of resources.  However, each of these non-GAAP financial measures 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.

 Quarter Ended Three Quarters Ended
(In thousands, except per share amounts)9/27/17 9/28/16 9/27/17 9/28/16
Net income$9,325  $9,726  $26,447  $8,128 
Provision for income taxes5,429  5,277  15,103  14,579 
Operating (gains), losses and other charges, net630  249  3,459  24,365 
Other nonoperating income, net(286) (543) (1,053) (635)
Share-based compensation2,493  1,775  6,546  5,625 
Adjusted Income Before Taxes$17,591  $16,484  $50,502  $52,062 
        
Interest expense, net4,067  3,117  11,348  8,905 
Depreciation and amortization5,958  5,609  17,493  16,207 
Cash payments for restructuring charges and exit costs(274) (271) (1,483) (1,104)
Cash payments for share-based compensation    (3,946) (2,529)
Adjusted EBITDA$27,342  $24,939  $73,914  $73,541 
        
Cash interest expense, net(3,800) (2,869) (10,536) (8,150)
Cash paid for income taxes, net(2,371) (202) (5,039) (1,140)
Cash paid for capital expenditures(8,522) (18,122) (23,601) (27,571)
Adjusted Free Cash Flow$12,649  $3,746  $34,738  $36,680 
        
 Quarter Ended Three Quarters Ended
(In thousands, except per share amounts)9/27/17 9/28/16 9/27/17 9/28/16
Net income$9,325  $9,726  $26,447  $8,128 
Pension settlement loss      24,297 
Losses (gains) on sales of assets and other, net590  (77) 3,023  (764)
Tax effect (1)(214) 27  (1,097) (1,871)
Adjusted Net Income$9,701  $9,676  $28,373  $29,790 
        
Diluted weighted average shares outstanding69,210  76,791  71,377  78,052 
        
Diluted Net Income Per Share$0.13  $0.13  $0.37  $0.10 
Adjustments Per Share$0.01  $  $0.03  $0.28 
Adjusted Net Income Per Share$0.14  $0.13  $0.40  $0.38 
                

 

(1) Tax adjustments for the three and nine months ended September 27, 2017 are calculated using the Company's year-to-date effective tax rate of 36.3%. Tax adjustments for the loss on pension termination for the nine months ended September 28, 2016 are calculated using an effective tax rate of 8.8%. The remaining tax adjustments for the three and nine months ended September 28, 2016 are calculated using the Company's year-to-date effective tax rate of 35.6%, which excludes the impact of the pension termination.

 

DENNY’S CORPORATION
Reconciliation of Operating Income to Non-GAAP Financial Measures
(Unaudited)

The Company believes that, in addition to GAAP measures, certain other non-GAAP financial measures are appropriate indicators to assist in the evaluation of restaurant-level operating efficiency and performance of ongoing restaurant-level operations.  The Company uses Total Operating Margin, Company Restaurant Operating Margin and Franchise Operating Margin internally as performance measures for planning purposes, including the preparation of annual operating budgets, and these three non-GAAP measures are used to evaluate operating effectiveness.

We define Total Operating Margin as operating income excluding the following three items: general and administrative expenses, depreciation and amortization, and operating (gains), losses and other charges, net.  We present Total Operating Margin as a percent of total operating revenue.  We exclude general and administrative expenses, which includes primarily non-restaurant-level costs associated with support of company and franchise restaurants and other activities at our corporate office. We exclude depreciation and amortization expense, substantially all of which is related to company restaurant-level assets, because such expenses represent historical sunk costs which do not reflect current cash outlays for the restaurants. We exclude special items, included within operating (gains), losses and other charges, net, to provide investors with a clearer perspective of the Company’s ongoing operating performance and a more relevant comparison to prior period results.

Total Operating Margin is the total of Company Restaurant Operating Margin and Franchise Operating Margin. We define Company Restaurant Operating Margin as company restaurant sales less costs of company restaurant sales (which include product costs, company restaurant level payroll and benefits, occupancy costs, and other operating costs including utilities, repairs and maintenance, marketing and other expenses) and present it as a percent of company restaurant sales. We define Franchise Operating Margin as franchise and license revenue (which includes franchise royalties and other non-food and beverage revenue streams such as initial franchise fees and occupancy revenue) less costs of franchise and license revenue and present it as a percent of franchise and license revenue.

These non-GAAP financial measures provide a meaningful comparison between periods and enable investors to focus on the performance of restaurant-level operations by excluding revenues and costs unrelated to food and beverage sales in addition to corporate general and administrative expense, depreciation and amortization, and other gains and charges. However, each of these non-GAAP financial measures 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. Total Operating Margin, Company Restaurant Operating Margin and Franchise Operating Margin do not accrue directly to the benefit of shareholders because of the aforementioned excluded costs, and are not indicative of the overall results for the Company.

 Quarter Ended Three Quarters Ended
(In thousands)9/27/17 9/28/16 9/27/17 9/28/16
Operating income$18,535  $17,577  $51,845  $30,977 
General and administrative expenses16,446  17,558  50,536  50,691 
Depreciation and amortization5,958  5,609  17,493  16,207 
Operating (gains), losses and other charges, net630  249  3,459  24,365 
  Total Operating Margin$41,569  $40,993  $123,333  $122,240 
        
Total Operating Margin consists of:       
  Company Restaurant Operating Margin (1)$16,593  $16,004  $49,195  $48,652 
  Franchise Operating Margin (2)24,976  24,989  74,138  73,588 
  Total Operating Margin$41,569  $40,993  $123,333  $122,240 
                

 

(1) Company Restaurant Operating Margin is calculated as operating income plus general and administrative expenses; depreciation and amortization; operating (gains), losses and other charges; and costs of franchise and license revenue; less franchise and license revenue.
(2)Franchise Operating Margin is calculated as operating income plus general and administrative expenses; depreciation and amortization; operating (gains), losses and other charges; and costs of company restaurant sales; less company restaurant sales.

 

DENNY’S CORPORATION
Operating Margins
(Unaudited)
       
    Quarter Ended
(In thousands)9/27/17 9/28/16
Company restaurant operations: (1)     
 Company restaurant sales$97,915 100.0% $93,122 100.0%
 Costs of company restaurant sales:     
  Product costs24,896 25.4% 22,819 24.5%
  Payroll and benefits37,332 38.1% 35,999 38.7%
  Occupancy5,054 5.2% 4,928 5.3%
  Other operating costs:     
   Utilities3,767 3.8% 3,429 3.7%
   Repairs and maintenance1,642 1.7% 1,559 1.7%
   Marketing3,740 3.8% 3,500 3.8%
   Other4,891 5.0% 4,884 5.2%
 Total costs of company restaurant sales$81,322 83.1% $77,118 82.8%
 Company restaurant operating margin (non-GAAP) (2)$16,593 16.9% $16,004 17.2%
         
Franchise operations: (3)     
 Franchise and license revenue:     
 Royalties$25,174 73.0% $25,039 71.0%
 Initial fees507 1.5% 757 2.1%
 Occupancy revenue8,788 25.5% 9,468 26.8%
 Total franchise and license revenue$34,469 100.0% $35,264 100.0%
         
 Costs of franchise and license revenue:     
 Occupancy costs$6,343 18.4% $7,023 19.9%
 Other direct costs3,150 9.1% 3,252 9.2%
 Total costs of franchise and license revenue$9,493 27.5% $10,275 29.1%
 Franchise operating margin (non-GAAP) (2)$24,976 72.5% $24,989 70.9%
         
Total operating revenue (4)$132,384 100.0% $128,386 100.0%
Total costs of operating revenue (4)90,815 68.6% 87,393 68.1%
Total operating margin (non-GAAP)  (4)(2)$41,569 31.4% $40,993 31.9%
         
Other operating expenses: (4)(2)     
 General and administrative expenses$16,446 12.4% $17,558 13.7%
 Depreciation and amortization5,958 4.5% 5,609 4.4%
 Operating (gains), losses and other charges, net630 0.5% 249 0.2%
 Total other operating expenses$23,034 17.4% $23,416 18.2%
         
Operating income (4)$18,535 14.0% $17,577 13.7%
         
(1As a percentage of company restaurant sales.
(2)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.
(3)As a percentage of franchise and license revenue.
(4)As a percentage of total operating revenue.
   

 

DENNY’S CORPORATION
Operating Margins
(Unaudited)
       
    Three Quarters Ended
(In thousands)9/27/17 9/28/16
Company restaurant operations: (1)     
 Company restaurant sales$290,049 100.0% $272,718 100.0%
 Costs of company restaurant sales:     
  Product costs72,798 25.1% 67,253 24.7%
  Payroll and benefits113,221 39.0% 104,548 38.3%
  Occupancy15,291 5.3% 14,721 5.4%
  Other operating costs:     
   Utilities9,873 3.4% 9,232 3.4%
   Repairs and maintenance4,972 1.7% 4,893 1.8%
   Marketing10,982 3.8% 10,123 3.7%
   Other13,717 4.7% 13,296 4.9%
 Total costs of company restaurant sales$240,854 83.0% $224,066 82.2%
 Company restaurant operating margin (non-GAAP) (2)$49,195 17.0% $48,652 17.8%
         
Franchise operations: (3)     
 Franchise and license revenue:     
 Royalties$75,056 72.4% $73,694 70.4%
 Initial fees1,579 1.5% 2,081 2.0%
 Occupancy revenue26,986 26.0% 28,850 27.6%
 Total franchise and license revenue$103,621 100.0% $104,625 100.0%
         
 Costs of franchise and license revenue:     
 Occupancy costs$19,420 18.7% $21,373 20.4%
 Other direct costs10,063 9.7% 9,664 9.2%
 Total costs of franchise and license revenue$29,483 28.5% $31,037 29.7%
 Franchise operating margin (non-GAAP) (2)$74,138 71.5% $73,588 70.3%
         
Total operating revenue (4)$393,670 100.0% $377,343 100.0%
Total costs of operating revenue (4)270,337 68.7% 255,103 67.6%
Total operating margin (non-GAAP) (4)(2)$123,333 31.3% $122,240 32.4%
         
Other operating expenses: (4)(2)     
 General and administrative expenses$50,536 12.8% $50,691 13.4%
 Depreciation and amortization17,493 4.4% 16,207 4.3%
 Operating gains, losses and other charges, net3,459 0.9% 24,365 6.5%
 Total other operating expenses$71,488 18.2% $91,263 24.2%
         
Operating income (4)$51,845 13.2% $30,977 8.2%
         
(1As a percentage of company restaurant sales.
(2)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.
(3)As a percentage of franchise and license revenue.
(4)As a percentage of total operating revenue.
   

 

DENNY’S CORPORATION
Statistical Data
(Unaudited)
          
Same-Store SalesQuarter Ended Three Quarters Ended
(increase vs. prior year)9/27/17 9/28/16 9/27/17 9/28/16
 Company Restaurants0.6% 1.0% 0.6% 1.5%
 Domestic Franchised Restaurants0.6% 1.0% 0.7% 0.9%
 Domestic System-wide Restaurants0.6% 1.0% 0.7% 1.0%
 System-wide Restaurants0.9% 0.9% 0.8% 0.8%
          
Average Unit SalesQuarter Ended Three Quarters Ended
(In thousands)9/27/17 9/28/16 9/27/17 9/28/16
 Company Restaurants$577  $573  $1,706  $1,689 
 Franchised Restaurants$403  $396  $1,188  $1,174 
          
     Franchised    
Restaurant Unit ActivityCompany  & Licensed Total  
Ending Units June 28, 2017172  1,552  1,724   
 Units Opened1  8  9   
 Units Reacquired1  (1)    
 Units Refranchised       
 Units Closed  (8) (8)  
  Net Change2  (1) 1   
Ending Units September 27, 2017174  1,551  1,725   
          
Equivalent Units       
 Third Quarter 2017170  1,550  1,720   
 Third Quarter 2016163  1,560  1,723   
  Net Change7  (10) (3)  
          
     Franchised    
Restaurant Unit ActivityCompany  & Licensed Total  
Ending Units December 28, 2016169  1,564  1,733   
 Units Opened2  23  25   
 Units Reacquired7  (7)    
 Units Refranchised(4) 4     
 Units Closed  (33) (33)  
  Net Change5  (13) (8)  
Ending Units September 27, 2017174  1,551  1,725   
          
Equivalent Units       
 Year-to-Date 2017170  1,557  1,727   
 Year-to-Date 2016161  1,554  1,715   
  Net Change9  3  12   
             

 

Source: Denny's Corporation
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