SPARTANBURG, S.C., Feb 18, 2009 (BUSINESS WIRE) -- Denny's Corporation (NASDAQ: DENN) today reported results for its fourth
quarter and year ended December 31, 2008.
Full Year Summary
-
Increased franchised restaurant mix to 80% of the Denny's system
-
Sold 79 company restaurants to franchisees under Franchise Growth
Initiative (FGI)
-
Opened 31 new franchised restaurants and 3 new company restaurants
-
Same-store sales decreased 4.6% at franchised units and decreased 1.4%
at company units
-
Adjusted income before taxes increased $12.7 million, or 120%, to
$23.2 million
-
Net income decreased $16.7 million due primarily to $20.3 million less
asset sale gains
-
Generated $37.5 million in cash asset sale proceeds and reduced
outstanding debt by $25.3 million
-
Full year 2008 included 53 operating weeks compared with 52 operating
weeks in the prior year period
Fourth Quarter Summary
-
Sold 17 company restaurants to franchisees under FGI
-
Opened 12 new franchised restaurants
-
Same-store sales decreased 7.2% at franchised units and decreased 3.2%
at company units
-
Adjusted income before taxes increased $3.6 million, or 107%, to $7.0
million
-
Net income decreased $17.9 million due primarily to $17.7 million less
asset sale gains
-
Generated $6.2 million in cash asset sale proceeds and reduced
outstanding debt by $10.3 million
-
Approximately $3.0 million of income in the fourth quarter of 2008 was
attributable to an additional operating week compared with prior year
Nelson Marchioli, President and Chief Executive Officer, stated, "In
2008, Denny's made significant progress in its strategic initiatives
including the transformation to a franchise-focused business model and
the further strengthening of our balance sheet. Due to the success of
our FGI program, we opened 34 new restaurants across our system and
reduced our debt by $25 million. We delivered solid core earnings growth
as we enhanced our operating efficiency and improved our food cost
margins. This performance was accomplished against the backdrop of a
difficult economic environment which put significant pressure on our
consumers and our guest traffic.
"Looking ahead, we acknowledge the uncertain outlook for the broader
economy as well as the restaurant industry. To meet these challenges, we
are focused on improving sales trends and reconnecting with Denny's
lapsed users. Two weeks ago we took a bold step in our marketing plan
with Denny's first ever Super Bowl advertisement and subsequent Grand
Slam event. The offer was an overwhelming success and drove
approximately 1.5 million customers into Denny's restaurants across the
country. We will now build off the terrific publicity this promotion
generated by delivering great food, great value and great service
throughout the year," Marchioli concluded.
Fourth Quarter Results
For the fourth quarter of 2008, Denny's reported total operating
revenue, including company restaurant sales and franchise revenue, of
$184.7 million compared with $220.3 million in the prior year quarter.
Company restaurant sales decreased $38.9 million due primarily to 131
fewer equivalent company restaurants compared with the prior year
quarter resulting from the sale of company restaurants to franchisees
under FGI. During the fourth quarter, Denny's sold 17 restaurants to
franchisee operators.
Company restaurant operating margin (as a percentage of company
restaurant sales) for the fourth quarter was 11.8%, a decrease of 0.2
percentage points compared with the same period last year. Product costs
for the fourth quarter decreased 0.9 percentage points to 24.4% of sales
due primarily to favorable menu mix and higher average guest check.
Payroll and benefit costs decreased 1.5 percentage points to 41.1% of
sales due primarily to improvements in staffing efficiency and higher
average guest check. Offsetting these cost improvements, occupancy costs
increased 0.7 percentage points to 6.7% of sales due primarily to
unfavorable developments in general liability claims. Additionally,
marketing expenses increased 1.2 percentage points to 4.1% of sales due
to the purchase of $0.9 million of incremental television media in the
fourth quarter of 2008 combined with a $0.9 million adjustment to
marketing expense accruals in the fourth quarter of 2007.
For the fourth quarter of 2008, Denny's reported franchise and license
revenue of $29.9 million compared with $26.6 million in the prior year
quarter. Franchise revenue increased $3.3 million, or 12.6%, due
primarily to an additional 127 equivalent franchise restaurants compared
with the prior year period. The growth in franchise revenue included a
$3.2 million increase in occupancy revenue and a $2.3 million increase
in royalty revenue. These revenue increases were partially offset by a
$2.1 million decrease in initial franchise fee revenue as the number of
FGI transactions decreased by 57 from the prior year period. During the
fourth quarter, Denny's franchisees opened 12 new restaurants, closed
nine and purchased 17 company restaurants.
Franchise operating margin (as a percentage of franchise and license
revenue) for the fourth quarter was 68.3%, a decrease of 2.6 percentage
points compared with the same period last year. The franchise margin
decrease is due primarily to the increasing contribution of lower-margin
occupancy revenue as leased company restaurants are in turn subleased to
franchisees through FGI. Franchise operating margin increased by $1.6
million, or 8.5%, to $20.4 million in the fourth quarter as higher
franchise revenue offset a $1.8 million increase in franchise costs,
primarily franchise occupancy costs.
General and administrative expenses for the fourth quarter declined $3.4
million from the same period last year resulting primarily from reduced
staffing attributable to the new organizational structure implemented in
the second quarter of 2008.
Depreciation and amortization expense for the fourth quarter declined by
$2.2 million compared with the prior year period primarily as a result
of the sale of restaurant and real estate assets over the past year.
Operating gains, losses and other charges, net, which reflect
restructuring charges, exit costs, impairment charges and gains or
losses on the sale of assets, decreased $19.8 million in the quarter due
primarily to a $17.7 million decrease in gains on the sale of
restaurants combined with a $1.9 million increase in impairment charges
and a $0.2 million increase in restructuring charges.
Operating income for the fourth quarter decreased $17.6 million from the
prior year period to $10.4 million. Excluding gains, losses, and other
charges in both periods, operating income increased $2.2 million despite
a $35.5 million decrease in total operating revenue attributable
primarily to the sale of company restaurants.
Interest expense for the fourth quarter decreased $1.6 million, or
15.4%, to $8.6 million as a result of a $25.3 million reduction in debt
from the prior year period. Other nonoperating expense increased $3.7
million in the fourth quarter due primarily to changes in the fair value
of interest rate and natural gas hedging transactions.
Denny's reported a net loss of $3.2 million for the fourth quarter, or
$0.03 per diluted common share, a decrease of $17.9 million compared
with prior year net income of $14.7 million, or $0.15 per diluted common
share. The income decline is due primarily to lower asset sale gains and
a higher impairment charge. Adjusted income before taxes, Denny's metric
for earnings guidance, increased $3.6 million, or 107%, in the fourth
quarter to $7.0 million. This measure, which is used as an internal
profitability metric, excludes restructuring charges, exit costs,
impairment charges, asset sale gains and losses, share-based
compensation, other nonoperating expenses and income taxes.
Franchise Growth Initiative (FGI)
Denny's continued its strategic initiative to increase franchise
restaurant development through the sale of certain company restaurants.
During the fourth quarter, the company sold 17 restaurants to six
franchisee operators under FGI, bringing the number of company
restaurants sold in 2008 to 79 and the number sold since the program
began in early 2007 to 209. Additionally, over the last 18 months
Denny's has signed development agreements for 154 new restaurants, 26 of
which have opened, yielding a current development pipeline of 128 new
restaurants.
Denny's ended the fourth quarter of 2008 with a system mix of 80%
franchised and licensed restaurants and 20% company restaurants compared
with 66% franchised and licensed restaurants and 34% company restaurants
before the FGI program.
The 79 company restaurant operations and other assets sold in 2008
generated net sales proceeds of $40.2 million of which $37.5 million was
received in cash and the remaining $2.7 million in the form of notes
receivable. Approximately $25.9 million of the cash proceeds were used
to reduce Denny's credit facility term loan during 2008.
Business Outlook
Mark Wolfinger, Executive Vice President, Chief Administrative Officer
and Chief Financial Officer, stated, "Given the unprecedented economic
uncertainties impacting our business we have limited visibility for 2009
guidance. We are encouraged by the reception to our new marketing
programs and our new product offerings but cannot yet predict a change
in our sales trends, particularly against an industry outlook that
projects considerable sales weakness in 2009. Our ongoing transition to
a franchise-focused business model is driving margin expansion and
earnings growth but the impact of further sales declines could lessen
these benefits in the near term. We remain committed to the execution of
our strategic initiatives. Additionally, we will continue to manage our
expenses and capital spending to protect our liquidity, reduce our debt
and further strengthen our balance sheet."
The following financial guidance for full-year 2009 is based on 2008
results and management's expectations at this time.
-
Company same-store sales of (3.0%) to (1.0%) for 2009
-
Franchise same-store sales of (5.0%) to (3.0%) for 2009
-
3 new company restaurant openings
-
30 new franchise restaurant openings
-
Company restaurant sales of between $485 million and $500 million
-
Franchise and license revenue of between $120 million and $123 million
-
Adjusted EBITDA* of between $73 million and $78 million
-
Adjusted income before taxes* of between $15 million and $20 million
-
Cash interest expense of $29 million
-
Cash capital expenditures of $23 million
Certain key considerations for understanding the Company's outlook for
fiscal 2009 compared with its 2008 results include:
-
2009 will include a typical 52 operating weeks compared with 2008
which included an additional week that contributed approximately $3.0
million to income.
-
Subsequent to year-end 2008, Denny's sold an additional 25 company
restaurants to franchisees. Due to the lack of available transaction
financing Denny's is unable to give an estimate of further FGI
transactions for 2009. Denny's will provide updates on the progress of
FGI each quarter.
* Please refer to the historical reconciliation of net income to
adjusted income before taxes and adjusted EBITDA included in the tables
below.
Further Information
Denny's will provide further commentary on its results for the fourth
quarter of 2008 and its outlook for 2009 on its quarterly investor
conference call today, Wednesday, February 18, 2009 at 5:00 p.m. EST.
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.
The Board of Directors of Denny's has set Wednesday, May 20, 2009, as
the date for the 2009 Annual Meeting of Denny's Shareholders to be held
in Spartanburg, South Carolina.
Denny's is one of America's largest full-service family restaurant
chains, consisting of 315 company-owned units and 1,226 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 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 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, 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 26,
2007 (and in the Company's subsequent quarterly reports on Form 10-Q).
|
|
|
|
|
|
DENNY'S CORPORATION
Condensed Consolidated Statements
of Operations
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14 Weeks
|
|
13 Weeks
|
|
|
|
Ended
|
|
Ended
|
|
(In thousands, except per share amounts)
|
12/31/08
|
|
12/26/07
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
Company restaurant sales
|
$
|
154,830
|
|
|
$
|
193,712
|
|
|
Franchise and license revenue
|
|
29,898
|
|
|
|
26,554
|
|
|
|
Total operating revenue
|
|
184,728
|
|
|
|
220,266
|
|
|
Costs of company restaurant sales
|
|
136,629
|
|
|
|
170,548
|
|
|
Costs of franchise and license revenue
|
|
9,485
|
|
|
|
7,739
|
|
|
General and administrative expenses
|
|
14,924
|
|
|
|
18,307
|
|
|
Depreciation and amortization
|
|
9,656
|
|
|
|
11,872
|
|
|
Operating gains, losses and other charges, net
|
|
3,596
|
|
|
|
(16,192
|
)
|
|
|
Total operating costs and expenses
|
|
174,290
|
|
|
|
192,274
|
|
|
Operating income
|
|
10,438
|
|
|
|
27,992
|
|
|
Other expenses:
|
|
|
|
|
Interest expense, net
|
|
8,612
|
|
|
|
10,174
|
|
|
Other nonoperating expense, net
|
|
4,754
|
|
|
|
1,059
|
|
|
|
Total other expenses, net
|
|
13,366
|
|
|
|
11,233
|
|
|
Income (loss) before income taxes
|
|
(2,928
|
)
|
|
|
16,759
|
|
|
Provision for income taxes
|
|
247
|
|
|
|
2,028
|
|
|
Net income (loss)
|
$
|
(3,175
|
)
|
|
$
|
14,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
Basic
|
$
|
(0.03
|
)
|
|
$
|
0.16
|
|
|
Diluted
|
$
|
(0.03
|
)
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
Basic
|
|
95,708
|
|
|
|
94,398
|
|
|
Diluted
|
|
95,708
|
|
|
|
99,031
|
|
|
|
|
|
|
|
DENNY'S CORPORATION
Condensed Consolidated Statements
of Operations
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53 Weeks
|
|
52 Weeks
|
|
|
|
Ended
|
|
Ended
|
|
(In thousands, except per share amounts)
|
12/31/08
|
|
12/26/07
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
Company restaurant sales
|
$
|
648,264
|
|
|
$
|
844,621
|
|
|
Franchise and license revenue
|
|
112,007
|
|
|
|
94,747
|
|
|
|
Total operating revenue
|
|
760,271
|
|
|
|
939,368
|
|
|
Costs of company restaurant sales
|
|
570,075
|
|
|
|
745,940
|
|
|
Costs of franchise and license revenue
|
|
34,933
|
|
|
|
28,005
|
|
|
General and administrative expenses
|
|
60,970
|
|
|
|
67,374
|
|
|
Depreciation and amortization
|
|
39,766
|
|
|
|
49,347
|
|
|
Operating gains, losses and other charges, net
|
|
(6,384
|
)
|
|
|
(31,082
|
)
|
|
|
Total operating costs and expenses
|
|
699,360
|
|
|
|
859,584
|
|
|
Operating income
|
|
60,911
|
|
|
|
79,784
|
|
|
Other expenses:
|
|
|
|
|
Interest expense, net
|
|
35,457
|
|
|
|
42,957
|
|
|
Other nonoperating expense, net
|
|
9,190
|
|
|
|
668
|
|
|
|
Total other expenses, net
|
|
44,647
|
|
|
|
43,625
|
|
|
Income before income taxes
|
|
16,264
|
|
|
|
36,159
|
|
|
Provision for income taxes
|
|
1,602
|
|
|
|
4,808
|
|
|
Net income
|
$
|
14,662
|
|
|
$
|
31,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
Basic
|
$
|
0.15
|
|
|
$
|
0.33
|
|
|
Diluted
|
$
|
0.15
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
Basic
|
|
95,230
|
|
|
|
93,855
|
|
|
Diluted
|
|
98,842
|
|
|
|
98,844
|
|
|
|
|
|
|
|
DENNY'S CORPORATION
Condensed Consolidated Balance
Sheets
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
12/31/08
|
|
12/26/07
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current Assets
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
21,042
|
|
|
$
|
21,565
|
|
|
|
Receivables, net
|
|
15,146
|
|
|
|
13,585
|
|
|
|
Assets held for sale
|
|
2,285
|
|
|
|
6,712
|
|
|
|
Other
|
|
14,986
|
|
|
|
16,011
|
|
|
|
|
|
53,459
|
|
|
|
57,873
|
|
|
|
|
|
|
|
|
Property, net
|
|
159,978
|
|
|
|
184,610
|
|
|
Goodwill
|
|
40,006
|
|
|
|
42,439
|
|
|
Intangible assets, net
|
|
58,832
|
|
|
|
62,657
|
|
|
Other assets
|
|
34,920
|
|
|
|
29,777
|
|
|
|
Total Assets
|
$
|
347,195
|
|
|
$
|
377,356
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
Current maturities of notes and debentures
|
$
|
1,403
|
|
|
$
|
2,085
|
|
|
|
Current maturities of capital lease obligations
|
|
3,535
|
|
|
|
4,051
|
|
|
|
Accounts payable
|
|
25,255
|
|
|
|
43,262
|
|
|
|
Other current liabilities
|
|
76,924
|
|
|
|
82,069
|
|
|
|
|
|
107,117
|
|
|
|
131,467
|
|
|
Long-Term Liabilities
|
|
|
|
|
|
Notes and debentures, less current maturities
|
|
300,617
|
|
|
|
325,971
|
|
|
|
Capital lease obligations, less current maturities
|
|
22,084
|
|
|
|
20,845
|
|
|
|
Other
|
|
91,414
|
|
|
|
81,305
|
|
|
|
|
|
414,115
|
|
|
|
428,121
|
|
|
Total Liabilities
|
|
521,232
|
|
|
|
559,588
|
|
|
Total Shareholders' Deficit
|
|
(174,037
|
)
|
|
|
(182,232
|
)
|
|
Total Liabilities and Shareholders' Deficit
|
$
|
347,195
|
|
|
$
|
377,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Balances
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
12/31/08
|
|
|
|
12/26/07
|
|
|
|
|
|
|
|
|
Credit facility revolver loans due 2011
|
$
|
-
|
|
|
$
|
-
|
|
|
Credit facility term loans due 2012
|
|
126,652
|
|
|
|
152,523
|
|
|
Capital leases and other debt
|
|
25,987
|
|
|
|
25,429
|
|
|
Senior notes due 2012
|
|
175,000
|
|
|
|
175,000
|
|
|
Total Debt
|
|
327,639
|
|
|
$
|
352,952
|
|
|
|
|
|
|
|
|
|
|
|
DENNY'S CORPORATION
Income, EBITDA and G&A
Reconciliations
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14 Weeks
Ended
12/31/08
|
|
13 Weeks
Ended
12/26/07
|
|
53 Weeks
Ended
12/31/08
|
|
52 Weeks
Ended
12/26/07
|
|
Income and EBITDA Reconciliation
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(3.2
|
)
|
|
$
|
14.7
|
|
|
$
|
14.7
|
|
|
$
|
31.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
0.2
|
|
|
|
2.0
|
|
|
|
1.6
|
|
|
|
4.8
|
|
|
Operating gains, losses and other charges, net
|
|
3.6
|
|
|
|
(16.2
|
)
|
|
|
(6.4
|
)
|
|
|
(31.1
|
)
|
|
Other nonoperating expense, net
|
|
4.8
|
|
|
|
1.1
|
|
|
|
9.2
|
|
|
|
0.7
|
|
|
Share-based compensation
|
|
1.6
|
|
|
|
1.8
|
|
|
|
4.1
|
|
|
|
4.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income before taxes (1)
|
$
|
7.0
|
|
|
$
|
3.4
|
|
|
$
|
23.2
|
|
|
$
|
10.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
8.6
|
|
|
|
10.2
|
|
|
|
35.5
|
|
|
|
43.0
|
|
|
Depreciation and amortization
|
|
9.7
|
|
|
|
11.9
|
|
|
|
39.8
|
|
|
|
49.3
|
|
|
Cash payments for restructuring charges and exit costs
|
|
(1.7
|
)
|
|
|
(2.8
|
)
|
|
|
(9.1
|
)
|
|
|
(9.1
|
)
|
|
Cash payments for share-based compensation
|
|
-
|
|
|
|
-
|
|
|
|
(0.9
|
)
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (1)
|
$
|
23.6
|
|
|
$
|
22.6
|
|
|
$
|
88.4
|
|
|
$
|
92.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14 Weeks
Ended
12/31/08
|
|
13 Weeks
Ended
12/26/07
|
|
53 Weeks
Ended
12/31/08
|
|
52 Weeks
Ended
12/26/07
|
|
General and Administrative Expenses Reconciliation
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
$
|
1.6
|
|
|
$
|
1.8
|
|
|
$
|
4.1
|
|
|
$
|
4.8
|
|
|
Other general and administrative expenses
|
$
|
13.3
|
|
|
$
|
16.5
|
|
|
|
56.9
|
|
|
$
|
62.6
|
|
|
Total general and administrative expenses
|
$
|
14.9
|
|
|
$
|
18.3
|
|
|
$
|
61.0
|
|
|
$
|
67.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) We believe that, in addition to other financial measures,
Adjusted Income Before Taxes and Adjusted EBITDA are appropriate
indicators to assist in the evaluation of our operating performance
on a period-to-period basis. We also use Adjusted Income and
Adjusted EBITDA 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 senior credit facility for the computation of
our debt covenant ratios. However, Adjusted Income 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 U.S. generally accepted
accounting principles.
|
|
|
|
|
|
|
|
|
|
|
DENNY'S CORPORATION
|
|
Operating Margins
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14 Weeks
|
|
13 Weeks
|
|
|
|
|
Ended
|
|
Ended
|
|
(In millions)
|
12/31/08
|
|
12/26/07
|
|
|
|
|
|
|
|
|
|
|
Company restaurant operations: (2)
|
|
|
|
|
|
|
Company restaurant sales
|
|
154.8
|
100.0
|
%
|
|
|
193.7
|
|
100.0
|
%
|
|
Costs of company restaurant sales:
|
|
|
|
|
|
|
|
Product costs
|
|
37.8
|
24.4
|
%
|
|
|
49.0
|
|
25.3
|
%
|
|
|
Payroll and benefits
|
|
63.6
|
41.1
|
%
|
|
|
82.6
|
|
42.6
|
%
|
|
|
Occupancy
|
|
10.4
|
6.7
|
%
|
|
|
11.6
|
|
6.0
|
%
|
|
|
Other operating costs:
|
|
|
|
|
|
|
|
|
Utilities
|
|
7.7
|
5.0
|
%
|
|
|
9.1
|
|
4.7
|
%
|
|
|
|
Repairs and maintenance
|
|
3.6
|
2.3
|
%
|
|
|
4.1
|
|
2.1
|
%
|
|
|
|
Marketing
|
|
6.3
|
4.1
|
%
|
|
|
5.6
|
|
2.9
|
%
|
|
|
|
Legal settlements
|
|
0.7
|
0.5
|
%
|
|
|
0.5
|
|
0.3
|
%
|
|
|
|
Other
|
|
6.5
|
4.2
|
%
|
|
|
7.9
|
|
4.1
|
%
|
|
Total costs of company restaurant sales
|
$
|
136.6
|
88.2
|
%
|
|
$
|
170.5
|
|
88.0
|
%
|
|
Company restaurant operating margin (3)
|
$
|
18.2
|
11.8
|
%
|
|
$
|
23.2
|
|
12.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Franchise operations: (4)
|
|
|
|
|
|
|
Franchise and license revenue
|
|
|
|
|
|
|
Royalty and license revenue
|
$
|
18.3
|
61.2
|
%
|
|
$
|
16.0
|
|
60.4
|
%
|
|
Initial and other fee revenue
|
|
1.3
|
4.4
|
%
|
|
|
3.4
|
|
12.8
|
%
|
|
Occupancy revenue
|
|
10.3
|
34.4
|
%
|
|
|
7.1
|
|
26.9
|
%
|
|
Total franchise and license revenue
|
$
|
29.9
|
100.0
|
%
|
|
$
|
26.6
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Costs of franchise and license revenue
|
|
|
|
|
|
|
Direct franchise costs
|
$
|
1.8
|
6.0
|
%
|
|
$
|
2.1
|
|
8.1
|
%
|
|
Occupancy costs
|
|
7.7
|
25.7
|
%
|
|
|
5.6
|
|
21.1
|
%
|
|
Total costs of franchise and license revenue
|
$
|
9.5
|
31.7
|
%
|
|
$
|
7.7
|
|
29.1
|
%
|
|
Franchise operating margin (3)
|
$
|
20.4
|
68.3
|
%
|
|
$
|
18.8
|
|
70.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue (1)
|
$
|
184.7
|
100.0
|
%
|
|
$
|
220.3
|
|
100.0
|
%
|
|
Total costs of operating revenue (1)
|
|
146.1
|
79.1
|
%
|
|
|
178.3
|
|
80.9
|
%
|
|
Total operating margin (1)(3)
|
$
|
38.6
|
20.9
|
%
|
|
$
|
42.0
|
|
19.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses: (1)(3)
|
|
|
|
|
|
|
General and administrative expenses
|
|
14.9
|
8.1
|
%
|
|
|
18.3
|
|
8.3
|
%
|
|
Depreciation and amortization
|
|
9.7
|
5.2
|
%
|
|
|
11.9
|
|
5.4
|
%
|
|
Operating gains, losses and other charges, net
|
|
3.6
|
1.9
|
%
|
|
|
(16.2
|
)
|
(7.4
|
%)
|
|
Total other operating expenses
|
$
|
28.2
|
15.3
|
%
|
|
$
|
14.0
|
|
6.4
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating income (1)
|
$
|
10.4
|
5.7
|
%
|
|
$
|
28.0
|
|
12.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 U.S. generally accepted
accounting principles.
|
|
(4) As a percentage of franchise and license revenue
|
|
|
|
|
|
|
|
|
|
|
DENNY'S CORPORATION
|
|
Operating Margins
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53 Weeks
|
|
52 Weeks
|
|
|
|
|
Ended
|
|
Ended
|
|
(In millions)
|
12/31/08
|
|
12/26/07
|
|
|
|
|
|
|
|
|
|
|
Company restaurant operations: (2)
|
|
|
|
|
|
|
Company restaurant sales
|
|
648.3
|
|
100.0
|
%
|
|
|
844.6
|
|
100.0
|
%
|
|
Costs of company restaurant sales:
|
|
|
|
|
|
|
|
Product costs
|
|
157.5
|
|
24.3
|
%
|
|
|
215.9
|
|
25.6
|
%
|
|
|
Payroll and benefits
|
|
271.9
|
|
41.9
|
%
|
|
|
355.7
|
|
42.1
|
%
|
|
|
Occupancy
|
|
40.4
|
|
6.2
|
%
|
|
|
51.0
|
|
6.0
|
%
|
|
|
Other operating costs:
|
|
|
|
|
|
|
|
|
Utilities
|
|
33.2
|
|
5.1
|
%
|
|
|
40.9
|
|
4.8
|
%
|
|
|
|
Repairs and maintenance
|
|
14.6
|
|
2.3
|
%
|
|
|
18.3
|
|
2.2
|
%
|
|
|
|
Marketing
|
|
23.2
|
|
3.6
|
%
|
|
|
27.5
|
|
3.3
|
%
|
|
|
|
Legal settlements
|
|
2.3
|
|
0.4
|
%
|
|
|
3.6
|
|
0.4
|
%
|
|
|
|
Other
|
|
26.9
|
|
4.2
|
%
|
|
|
33.0
|
|
3.9
|
%
|
|
Total costs of company restaurant sales
|
$
|
570.1
|
|
87.9
|
%
|
|
$
|
745.9
|
|
88.3
|
%
|
|
Company restaurant operating margin (3)
|
$
|
78.2
|
|
12.1
|
%
|
|
$
|
98.7
|
|
11.7
|
%
|
|
|
|
|
|
|
|
|
|
|
Franchise operations: (4)
|
|
|
|
|
|
|
Franchise and license revenue
|
|
|
|
|
|
|
Royalty and license revenue
|
$
|
70.1
|
|
62.6
|
%
|
|
$
|
63.1
|
|
66.6
|
%
|
|
Initial and other fee revenue
|
|
4.9
|
|
4.4
|
%
|
|
|
6.3
|
|
6.7
|
%
|
|
Occupancy revenue
|
|
37.0
|
|
33.0
|
%
|
|
|
25.3
|
|
26.7
|
%
|
|
Total franchise and license revenue
|
$
|
112.0
|
|
100.0
|
%
|
|
$
|
94.7
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Costs of franchise and license revenue
|
|
|
|
|
|
Direct franchise costs
|
$
|
6.5
|
|
5.8
|
%
|
|
$
|
7.8
|
|
8.2
|
%
|
|
Occupancy costs
|
|
28.5
|
|
25.4
|
%
|
|
|
20.2
|
|
21.3
|
%
|
|
Total costs of franchise and license revenue
|
|
34.9
|
|
31.2
|
%
|
|
$
|
28.0
|
|
29.6
|
%
|
|
Franchise operating margin (3)
|
$
|
77.1
|
|
68.8
|
%
|
|
$
|
66.7
|
|
70.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue (1)
|
$
|
760.3
|
|
100.0
|
%
|
|
$
|
939.4
|
|
100.0
|
%
|
|
Total costs of operating revenue (1)
|
|
605.0
|
|
79.6
|
%
|
|
|
773.9
|
|
82.4
|
%
|
|
Total operating margin (1) (3)
|
$
|
155.3
|
|
20.4
|
%
|
|
$
|
165.4
|
|
17.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses: (1) (3)
|
|
|
|
|
|
|
General and administrative expenses
|
|
61.0
|
|
8.0
|
%
|
|
|
67.4
|
|
7.2
|
%
|
|
Depreciation and amortization
|
|
39.8
|
|
5.2
|
%
|
|
|
49.3
|
|
5.3
|
%
|
|
Operating gains, losses and other charges, net
|
|
(6.4
|
)
|
(0.8
|
%)
|
|
|
(31.1
|
)
|
(3.3
|
%)
|
|
Total other operating expenses
|
$
|
94.4
|
|
12.4
|
%
|
|
$
|
85.6
|
|
9.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating income (1)
|
$
|
60.9
|
|
8.0
|
%
|
|
$
|
79.8
|
|
8.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14 Weeks
|
|
13 Weeks
|
|
53 Weeks
|
|
52 Weeks
|
|
Same-Store Sales
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
(increase/(decrease) vs. prior year)
|
12/31/08
|
|
12/26/07
|
|
12/31/08
|
|
12/26/07
|
|
|
|
|
|
|
|
|
|
|
|
Same-Store Sales
|
|
|
|
|
|
|
|
|
Company Restaurants
|
|
(3.2
|
%)
|
|
|
(1.2
|
%)
|
|
|
(1.4
|
%)
|
|
|
0.3
|
%
|
|
Franchised Restaurants
|
|
(7.2
|
%)
|
|
|
0.3
|
%
|
|
|
(4.6
|
%)
|
|
|
1.7
|
%
|
|
System-wide Restaurants
|
|
(6.1
|
%)
|
|
|
(0.2
|
%)
|
|
|
(3.7
|
%)
|
|
|
1.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Company Restaurant Sales Detail
|
|
|
|
|
|
|
|
|
Guest Check Average
|
|
4.6
|
%
|
|
|
6.3
|
%
|
|
|
5.9
|
%
|
|
|
4.6
|
%
|
|
Guest Counts
|
|
(7.5
|
%)
|
|
|
(7.1
|
%)
|
|
|
(6.9
|
%)
|
|
|
(4.1
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14 Weeks
|
|
13 Weeks
|
|
53 Weeks
|
|
52 Weeks
|
|
Average Unit Sales
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
($ in thousands)
|
12/31/08
|
|
12/26/07
|
|
12/31/08
|
|
12/26/07
|
|
|
|
|
|
|
|
|
|
|
|
Company Restaurants
|
$
|
478.6
|
|
$
|
426.8
|
|
$
|
1,813.3
|
|
$
|
1,716.4
|
|
|
|
|
|
|
|
|
|
|
|
Franchised Restaurants
|
$
|
378.4
|
|
$
|
374.0
|
|
$
|
1,490.1
|
|
$
|
1,522.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchised
|
|
|
|
|
|
Restaurant Unit Activity
|
Company
|
|
& Licensed
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Units 9/24/08
|
|
332
|
|
|
|
1,206
|
|
|
|
1,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units Opened
|
|
0
|
|
|
|
12
|
|
|
|
12
|
|
|
|
|
Units Refranchised
|
|
(17
|
)
|
|
|
17
|
|
|
|
0
|
|
|
|
|
Units Closed
|
|
0
|
|
|
|
(9
|
)
|
|
|
(9
|
)
|
|
|
|
Net Change
|
|
(17
|
)
|
|
|
20
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Units 12/31/08
|
|
315
|
|
|
|
1,226
|
|
|
|
1,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equivalent Units
|
|
|
|
|
|
|
|
|
Fourth Quarter 2007
|
|
454
|
|
|
|
1,086
|
|
|
|
1,540
|
|
|
|
|
Fourth Quarter 2008
|
|
323
|
|
|
|
1,213
|
|
|
|
1,536
|
|
|
|
|
|
|
|
(131
|
)
|
|
|
127
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchised
|
|
|
|
|
|
Restaurant Unit Activity
|
Company
|
|
& Licensed
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Units 12/26/07
|
|
394
|
|
|
|
1,152
|
|
|
|
1,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units Opened
|
|
3
|
|
|
|
31
|
|
|
|
34
|
|
|
|
|
Units Refranchised
|
|
(79
|
)
|
|
|
79
|
|
|
|
0
|
|
|
|
|
Units Closed
|
|
(3
|
)
|
|
|
(36
|
)
|
|
|
(39
|
)
|
|
|
|
Net Change
|
|
(79
|
)
|
|
|
74
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Units 12/31/08
|
|
315
|
|
|
|
1,226
|
|
|
|
1,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equivalent Units
|
|
|
|
|
|
|
|
|
Full Year 2007
|
|
492
|
|
|
|
1,049
|
|
|
|
1,541
|
|
|
|
|
Full Year 2008
|
|
357
|
|
|
|
1,186
|
|
|
|
1,543
|
|
|
|
|
|
|
|
(135
|
)
|
|
|
137
|
|
|
|
2
|
|
|
|
SOURCE: Denny's Corporation
Investor Contact:
Denny's Corporation
Alex Lewis, 877-784-7167
or
Media Contact:
Hill & Knowlton, 786-553-1542