SPARTANBURG, S.C.--(BUSINESS WIRE)--Oct. 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).
|
|
|
|
|
|
|
DENNY’S CORPORATION
|
|
Condensed Consolidated Statements of Comprehensive Income
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
(In thousands, except per share amounts)
|
|
|
9/26/12
|
|
|
9/28/11
|
|
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)
|
|
|
9/26/12
|
|
|
|
9/28/11
|
|
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)
|
|
|
9/26/12
|
|
|
|
12/28/11
|
|
|
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)
|
|
|
9/26/12
|
|
|
|
12/28/11
|
|
|
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)
|
|
|
9/26/12
|
|
|
|
9/28/11
|
|
|
|
9/26/12
|
|
|
|
9/28/11
|
|
|
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)
|
|
|
9/26/12
|
|
|
|
9/28/11
|
|
|
|
9/26/12
|
|
|
|
9/28/11
|
|
|
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)
|
|
9/26/12
|
|
|
9/28/11
|
|
|
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)
|
|
9/26/12
|
|
|
9/28/11
|
|
|
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)
|
|
9/26/12
|
|
9/28/11
|
|
9/26/12
|
|
9/28/11
|
|
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)
|
|
9/26/12
|
|
9/28/11
|
|
9/26/12
|
|
9/28/11
|
|
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
|
|
|
|
Source: Denny’s Corporation
Investor Contact:
Denny’s Corporation
Whit Kincaid,
877-784-7167
or
Media Contact:
ICR
Liz Brady,
646-277-1226