Denny’s Corporation Reports Results For Second Quarter 2016

SPARTANBURG, S.C. - Aug. 03, 2016 // 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 second quarter ended June 29, 2016.

Second Quarter Highlights

  • Raised 2016 full year guidance for Adjusted EBITDA*.
  • Domestic system-wide same-store sales decreased 0.5%, including a decrease of 0.1% at company restaurants and a decrease of 0.5% at domestic franchised restaurants.
  • Two-year domestic system-wide same-store sales increased 6.8%.
  • Opened 13 system restaurants including 12 domestic and one international franchised locations.
  • Completed 57 remodels including six at company restaurants.
  • Company restaurant operating margin of $16.4 million increased 0.4% and franchise operating margin of $24.3 million increased 3.7%.
  • Net Loss was $11.6 million, or $0.15 per diluted share, due to a pre-tax settlement loss of $24.3 million resulting from the Company's pension plan liquidation.
  • Adjusted Net Income* grew 8.3% to $10.6 million while Adjusted Net Income per Share* increased 18.6% to $0.13.
  • Adjusted EBITDA* increased $1.7 million, or 6.8%, to $26.1 million.
  • Generated $18.5 million of Free Cash Flow*, after cash capital expenditures of $4.1 million.
  • Allocated $3.8 million towards share repurchases.

John Miller, President and Chief Executive Officer, stated, “We continued to generate strong Free Cash Flow* during the second quarter which supported ongoing investments in both Denny's brand revitalization and company restaurants and the return of capital to our shareholders.  Not unlike others in the industry, our quarterly results were impacted by a challenging full-service dining environment as well as our prior year quarter, during which we achieved our strongest same-store sales performance in over a decade.  Despite these circumstances, we continued to grow our revenues and improve our company and franchised restaurant margins through effective cost management.  Going forward, we remain committed to delivering positive and profitable system sales growth by executing our brand revitalization strategy, enhancing the overall guest experience, and expanding our global reach.”

Second Quarter Results

Denny’s domestic system-wide same-store sales decreased 0.5%, including a 0.1% decrease at company restaurants and a 0.5% decrease at domestic franchised restaurants.  During the quarter, Denny’s franchisees opened 13 restaurants.  In addition, the Company acquired two franchised restaurants and refranchised two company restaurants.  Denny’s franchisees closed six franchised restaurants, bringing the total number of restaurants to 1,720.

Denny’s total operating revenue grew 0.8% to $124.3 million due to an increase in both company restaurant sales and franchise royalties.  Company restaurant sales grew 0.7% to $89.2 million due to a greater number of company restaurants compared to the prior year quarter.  Franchise and licensing revenue grew 1.2% to $35.1 million primarily due to higher royalty revenue, partially offset by a decrease in occupancy revenue.

Company restaurant operating margin of $16.4 million, or 18.4% of company restaurant sales, increased $0.1 million and was flat on a percentage points basis.  Franchise operating margin of $24.3 million, or 69.4% of franchise and licensing revenue, increased $0.9 million, or 1.7 percentage points.

Total general and administrative expenses of $16.2 million improved $0.6 million compared to the prior year quarter due to lower incentive compensation expense, partially offset by an increase in payroll and benefits expenses.  Interest expense of $3.0 million increased $0.8 million due to higher borrowings compared to the prior year quarter.  Denny’s ended the quarter with $221.7 million of total debt outstanding, including $198.0 million of borrowings under its revolving credit facility. 

The provision for income taxes was $3.8 million, reflecting an effective tax rate of (49.5)%.  This includes an income tax benefit of $2.1 million resulting from the pension plan liquidation.  Excluding the impact of the liquidation, the effective income tax rate was 36.0%.  Due to the use of net operating loss and tax credit carryforwards, the Company paid $0.6 million in cash taxes during the quarter.

Denny's Net Loss of $11.6 million, or $0.15 per diluted share, includes the impact of the Company's pension plan liquidation.  Adjusted Net Income per Share* of $0.13 increased 18.6% compared to the prior year quarter and excludes the $22.2 million net settlement loss associated with the pension plan liquidation.

Free Cash Flow* and Capital Allocation

Denny’s generated $18.5 million of Free Cash Flow* in the quarter after investing $4.1 million in cash capital expenditures, including the remodeling of six company restaurants.

During the quarter, the Company allocated $3.8 million to repurchase 0.4 million shares.  As of June 29, 2016, the Company had approximately $130 million remaining in authorized share repurchases, including the impact of the $50 million accelerated share repurchase agreement announced in November 2015.  As part of that agreement, the Company received 3.5 million shares at the beginning of the term and received the remaining 1.5 million shares at the end of the agreement, which was completed during July 2016, after the quarter close.

Pension Plan Liquidation

As previously announced, the Company’s Advantica Pension Plan, which was closed to new participants at the end of 1999, was liquidated during the second quarter.  As a result of the liquidation, the Company made a final contribution of $9.5 million and recorded a pre-tax settlement loss of $24.3 million during the quarter.

Business Outlook

Mark Wolfinger, Denny's Executive Vice President, Chief Administrative Officer and Chief Financial Officer, commented, “The continued successful execution of our brand transformation initiatives resulted in another quarter of increased revenues and company and franchise restaurant margins, along with greater profitability when excluding the one-time loss associated with our pension plan liquidation.  Our highly franchised business is expected to generate over $50 million of Free Cash Flow* in 2016, after completing substantially all remodels at company restaurants and acquiring seven high-volume franchised restaurants."

The following full year 2016 estimates are based on management’s expectations at this time and exclude any impact from the liquidation of the Advantica Pension Plan.

  • Same-store sales growth at company restaurants between 1.5% and 2.5% with same-store sales growth at domestic franchised restaurants between 1% and 2%.
  • 44 to 48 new restaurant openings, with net restaurant growth of 10 to 15 restaurants.
  • Acquisition of seven (vs. one**) franchised restaurants and refranchising of six (vs. four**) company restaurants.
  • Total operating revenue between $505 and $508 million (vs. $500 and $505 million**) including franchise and licensing revenue between $139 and $140 million.
  • Company restaurant margin between 17% and 17.5% (vs. 16.5% and 17.5%**) and franchise restaurant margin between 69% and 69.5% (vs. 68.5% and 69%**).
  • Total general and administrative expenses between $65 and $67 million (vs. $64 and $67 million**).
  • Adjusted EBITDA* between $96 and $98 million (vs. $94 and $96 million**).
  • Depreciation and amortization expense between $21.5 and $22 million.
  • Net interest expense between $11.5 and $12 million (vs. $11 and $11.5 million**).
  • Effective income tax rate between 33% and 37% with $3 to $5 million of cash taxes.
  • Cash capital expenditures between $29 and $31 million (vs. $19 and $21 million**) including the acquisition of seven franchised restaurants, completion of approximately 25 remodels at company restaurants, the opening of one new company restaurant, and the scrape and rebuild of one company restaurant.
  • Free Cash Flow* between $51 and $53 million (vs. $60 and $62 million**).

* Adjusted Net Income excludes debt refinancing charges, impairment charges, gains on sales of assets, and other adjustments including the pension settlement loss.  The forward looking non-GAAP estimates set forth above are provided only on a non-GAAP basis.  The Company is not able to reconcile these forward-looking non-GAAP estimates to their most directly comparable GAAP estimates without unreasonable efforts because it is unable to predict or forecast the items impacting these estimates with a reasonable degree of accuracy.  The Company is unable to determine the probable significance of the unavailable information.  Please refer to the historical reconciliation of Net Income to Adjusted Income Before Taxes, Adjusted Net Income, Adjusted Net Income per Share, Adjusted EBITDA, and Free Cash Flow included in the following tables.

** Represents guidance ranges provided in Denny's first quarter 2016 earnings release dated May 2, 2016.

Conference Call and Webcast Information

Denny’s will provide further commentary on the results for the second quarter ended June 29, 2016 on its quarterly investor conference call today,Wednesday, August 3, 2016 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 June 29, 2016, Denny’s had 1,720 franchised, licensed, and company restaurants around the world with combined sales of $2.8 billion including 117 restaurants in Canada, Puerto Rico, New Zealand, Mexico, Costa Rica, Dominican Republic, Honduras, Guam, the United Arab Emirates,Chile, Curaçao, El Salvador, and Trinidad and Tobago.  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 30, 2015 (and in the Company’s subsequent quarterly reports on Form 10-Q).

 
DENNY’S CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
             
(In thousands) 6/29/16   12/30/15
Assets      
  Current assets      
    Cash and cash equivalents $ 6,693     $ 1,671  
    Receivables 14,109     16,552  
    Assets held for sale     931  
    Other current assets 9,690     17,260  
      Total current assets 30,492     36,414  
  Property, net 126,075     124,816  
  Goodwill 33,668     33,454  
  Intangible assets, net 48,779     46,074  
  Deferred income taxes 26,664     29,159  
  Other noncurrent assets 27,562     27,120  
      Total assets $ 293,240     $ 297,037  
             
Liabilities      
  Current liabilities      
    Current maturities of capital lease obligations $ 3,276     $ 3,246  
    Accounts payable 14,289     20,759  
    Other current liabilities 57,441     77,548  
      Total current liabilities 75,006     101,553  
  Long-term liabilities      
    Long-term debt, less current maturities 198,000     195,000  
    Capital lease obligations, less current maturities 20,457     17,499  
    Other 52,434     43,580  
      Total long-term liabilities 270,891     256,079  
      Total liabilities 345,897     357,632  
             
Shareholders' deficit      
    Common stock 1,070     1,065  
    Paid-in capital 568,697     565,364  
    Deficit (403,843 )   (402,245 )
    Accumulated other comprehensive loss, net of tax (9,853 )   (23,777 )
    Treasury stock (208,728 )   (201,002 )
      Total shareholders' deficit (52,657 )   (60,595 )
      Total liabilities and shareholders' deficit $ 293,240     $ 297,037  
             
Debt Balances
(In thousands) 6/29/16   12/30/15
Credit facility revolver due 2020 $ 198,000     $ 195,000  
Capital leases 23,733     20,745  
  Total debt $ 221,733     $ 215,745  
                 

 

DENNY’S CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
           
      Quarter Ended
(In thousands, except per share amounts) 6/29/16   7/1/15
Revenue:      
  Company restaurant sales $ 89,210     $ 88,629  
  Franchise and license revenue 35,105     34,690  
    Total operating revenue 124,315     123,319  
Costs of company restaurant sales 72,837     72,320  
Costs of franchise and license revenue 10,759     11,216  
General and administrative expenses 16,206     16,827  
Depreciation and amortization 5,105     5,314  
Operating (gains), losses and other charges, net 24,241     228  
    Total operating costs and expenses, net 129,148     105,905  
Operating income (loss) (4,833 )   17,414  
Interest expense, net 3,014     2,264  
Other nonoperating income, net (119 )   (83 )
Net income (loss) before income taxes (7,728 )   15,233  
Provision for income taxes 3,824     5,499  
Net income (loss) $ (11,552 )   $ 9,734  
           
           
Basic net income (loss) per share $ (0.15 )   $ 0.12  
Diluted net income (loss) per share $ (0.15 )   $ 0.11  
           
Basic weighted average shares outstanding 76,730     83,975  
Diluted weighted average shares outstanding 76,730     86,080  
           
Comprehensive income $ 7,052     $ 13,317  
       
General and Administrative Expenses Quarter Ended
(In thousands) 6/29/2016   7/1/2015
Share-based compensation $ 1,902     $ 1,859  
Other general and administrative expenses 14,304     14,968  
  Total general and administrative expenses $ 16,206     $ 16,827  
                 

 

DENNY’S CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
           
      Two Quarters Ended
(In thousands, except per share amounts) 6/29/16   7/1/15
Revenue:      
  Company restaurant sales $ 179,596     $ 174,611  
  Franchise and license revenue 69,361     68,879  
    Total operating revenue 248,957     243,490  
Costs of company restaurant sales 146,948     143,628  
Costs of franchise and license revenue 20,762     22,194  
General and administrative expenses 33,133     33,763  
Depreciation and amortization 10,598     10,338  
Operating (gains), losses and other charges, net 24,116     836  
    Total operating costs and expenses, net 235,557     210,759  
Operating income 13,400     32,731  
Interest expense, net 5,788     4,351  
Other nonoperating income, net (92 )   (54 )
Net income before income taxes 7,704     28,434  
Provision for income taxes 9,302     10,167  
Net income (loss) $ (1,598 )   $ 18,267  
           
           
Basic net income (loss) per share $ (0.02 )   $ 0.22  
Diluted net income (loss) per share $ (0.02 )   $ 0.21  
           
Basic weighted average shares outstanding 76,895     84,467  
Diluted weighted average shares outstanding 76,895     86,547  
           
Comprehensive income $ 12,326     $ 20,300  
       
General and Administrative Expenses Two Quarters Ended
(In thousands) 6/29/16   7/1/15
Share-based compensation $ 3,850     $ 3,564  
Other general and administrative expenses 29,283     30,199  
  Total general and administrative expenses $ 33,133     $ 33,763  
                 

DENNY’S CORPORATION
Reconciliation of Net (Loss) Income to Non-GAAP Operating 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, 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 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. 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, 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   Two Quarters Ended
(In thousands, except per share amounts) 6/29/16   7/1/15   6/29/16   7/1/15
Net income (loss) $ (11,552 )   $ 9,734     $ (1,598 )   $ 18,267  
Provision for income taxes 3,824     5,499     9,302     10,167  
Operating (gains), losses and other charges, net 24,241     228     24,116     836  
Other nonoperating income, net (119 )   (83 )   (92 )   (54 )
Share-based compensation 1,902     1,859     3,850     3,564  
Adjusted Income Before Taxes $ 18,296     $ 17,237     $ 35,578     $ 32,780  
               
Interest expense, net 3,014     2,264     5,788     4,351  
Depreciation and amortization 5,105     5,314     10,598     10,338  
Cash payments for restructuring charges and exit costs (339 )   (397 )   (833 )   (799 )
Cash payments for share-based compensation         (2,529 )   (3,440 )
Adjusted EBITDA $ 26,076     $ 24,418     $ 48,602     $ 43,230  
               
Cash interest expense, net (2,763 )   (2,019 )   (5,281 )   (3,864 )
Cash paid for income taxes, net (627 )   (3,862 )   (938 )   (4,160 )
Cash paid for capital expenditures (4,142 )   (8,955 )   (9,449 )   (12,401 )
Free Cash Flow $ 18,544     $ 9,582     $ 32,934     $ 22,805  
               
  Quarter Ended   Two Quarters Ended
(In thousands, except per share amounts) 6/29/16   7/1/15   6/29/16   7/1/15
Net income (loss) $ (11,552 )   $ 9,734     $ (1,598 )   $ 18,267  
Pension settlement loss 24,297         24,297      
Losses (gains) on sales of assets and other, net (43 )   2     (687 )   (20 )
Impairment charges     45         94  
Loss on debt refinancing             293  
Tax effect (1) (2,128 )   (17 )   (1,897 )   (131 )
Adjusted Net Income $ 10,574     $ 9,764     $ 20,115     $ 18,503  
               
Diluted weighted average shares outstanding (2) 78,583     86,080     78,701     86,547  
               
Adjusted Net Income Per Share $ 0.13     $ 0.11     $ 0.26     $ 0.21  
                               

 

  (1 ) Tax adjustments for the loss on pension termination for the three and six months ended June 29, 2016 are calculated using an effective tax rate of 8.8%. The remaining tax adjustments for the three and six months ended June 29, 2016 are calculated using the Company's year-to-date effective tax rate of 35.8%, which excludes the impact of the pension termination. Tax adjustments for the three and six months ended July 1, 2015 are calculated using the Company's 2015 year-to-date effective tax rate of 35.8%.
  (2 ) Due to the net loss for the three and six months ended June 29, 2016, in accordance with GAAP, awards related to share-based compensation are anti-dilutive and are excluded from diluted weighted average share outstanding.  Basic and diluted shares were 76,730 for the quarter and 76,895 year-to-date. Since the net loss position is adjusted to an income position in our calculation of Adjusted Net Income, GAAP diluted weighted average shares outstanding have been adjusted for the effect of dilutive share-based compensation awards to calculate Adjusted Net Income Per Share.
       

 

DENNY’S CORPORATION
Operating Margins
(Unaudited)
             
        Quarter Ended
(In thousands) 6/29/16   7/1/15
Company restaurant operations: (1)          
  Company restaurant sales $ 89,210   100.0 %   $ 88,629   100.0 %
  Costs of company restaurant sales:                      
    Product costs 21,781   24.4 %   21,876   24.7 %
    Payroll and benefits 34,088   38.2 %   33,665   38.0 %
    Occupancy 4,993   5.6 %   4,913   5.5 %
    Other operating costs:                      
      Utilities 2,852   3.2 %   3,132   3.5 %
      Repairs and maintenance 1,732   1.9 %   1,497   1.7 %
      Marketing 3,381   3.8 %   3,258   3.7 %
      Other 4,010   4.5 %   3,979   4.5 %
  Total costs of company restaurant sales $ 72,837   81.6 %   $ 72,320   81.6 %
  Company restaurant operating margin (2) $ 16,373   18.4 %   $ 16,309   18.4 %
                             
Franchise operations: (3)                      
  Franchise and license revenue:                      
  Royalties $ 24,511   69.8 %   $ 23,774   68.5 %
  Initial fees 798   2.3 %   656   1.9 %
  Occupancy revenue 9,796   27.9 %   10,260   29.6 %
  Total franchise and license revenue $ 35,105   100.0 %   $ 34,690   100.0 %
                             
  Costs of franchise and license revenue:                      
  Occupancy costs $ 7,287   20.8 %   $ 7,733   22.3 %
  Other direct costs 3,472   9.9 %   3,483   10.0 %
  Total costs of franchise and license revenue $ 10,759   30.6 %   $ 11,216   32.3 %
  Franchise operating margin (2) $ 24,346   69.4 %   $ 23,474   67.7 %
                             
Total operating revenue (4) $ 124,315   100.0 %   $ 123,319   100.0 %
Total costs of operating revenue (4) 83,596   67.2 %   83,536   67.7 %
Total operating margin (4)(2) $ 40,719   32.8 %   $ 39,783   32.3 %
                             
Other operating expenses: (4)(2)                      
  General and administrative expenses $ 16,206   13.0 %   $ 16,827   13.6 %
  Depreciation and amortization 5,105   4.1 %   5,314   4.3 %
  Operating (gains), losses and other charges, net 24,241   19.5 %   228   0.2 %
  Total other operating expenses $ 45,552   36.6 %   $ 22,369   18.1 %
                             
Operating income (loss) (4) $ (4,833 ) (3.9 )%   $ 17,414   14.1 %
                 
  (1 ) As 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)
             
        Two Quarters Ended
(In thousands) 6/29/16   7/1/15
Company restaurant operations: (1)          
  Company restaurant sales $ 179,596   100.0 %   $ 174,611   100.0 %
  Costs of company restaurant sales:                      
    Product costs 44,434   24.7 %   43,320   24.8 %
    Payroll and benefits 68,549   38.2 %   66,869   38.3 %
    Occupancy 9,793   5.5 %   9,808   5.6 %
    Other operating costs:                      
      Utilities 5,803   3.2 %   6,308   3.6 %
      Repairs and maintenance 3,334   1.9 %   2,947   1.7 %
      Marketing 6,623   3.7 %   6,465   3.7 %
      Other 8,412   4.7 %   7,911   4.5 %
  Total costs of company restaurant sales $ 146,948   81.8 %   $ 143,628   82.3 %
  Company restaurant operating margin (2) $ 32,648   18.2 %   $ 30,983   17.7 %
                             
Franchise operations: (3)                      
  Franchise and license revenue:                      
  Royalties $ 48,655   70.1 %   $ 46,937   68.1 %
  Initial fees 1,324   1.9 %   1,101   1.6 %
  Occupancy revenue 19,382   28.0 %   20,841   30.3 %
  Total franchise and license revenue $ 69,361   100.0 %   $ 68,879   100.0 %
                             
  Costs of franchise and license revenue:                      
  Occupancy costs $ 14,350   20.7 %   $ 15,624   22.7 %
  Other direct costs 6,412   9.2 %   6,570   9.5 %
  Total costs of franchise and license revenue $ 20,762   29.9 %   $ 22,194   32.2 %
  Franchise operating margin (2) $ 48,599   70.1 %   $ 46,685   67.8 %
                             
Total operating revenue (4) $ 248,957   100.0 %   $ 243,490   100.0 %
Total costs of operating revenue (4) 167,710   67.4 %   165,822   68.1 %
Total operating margin (4)(2) $ 81,247   32.6 %   $ 77,668   31.9 %
                             
Other operating expenses: (4)(2)                      
  General and administrative expenses $ 33,133   13.3 %   $ 33,763   13.9 %
  Depreciation and amortization 10,598   4.3 %   10,338   4.2 %
  Operating gains, losses and other charges, net 24,116   9.7 %   836   0.3 %
  Total other operating expenses $ 67,847   27.3 %   $ 44,937   18.5 %
                             
Operating income (4) $ 13,400   5.4 %   $ 32,731   13.4 %
                 
  (1 ) As 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 Sales Quarter Ended   Two Quarters Ended
(increase (decrease) vs. prior year) 6/29/16   7/1/15   6/29/16   7/1/15
  Company Restaurants (0.1 )%   7.9 %   1.7 %   7.7 %
  Domestic Franchised Restaurants (0.5 )%   7.2 %   0.9 %   7.2 %
  Domestic System-wide Restaurants (0.5 )%   7.3 %   1.0 %   7.2 %
  System-wide Restaurants (0.7 )%   6.4 %   0.7 %   6.5 %
                   
Average Unit Sales Quarter Ended   Two Quarters Ended
(In thousands) 6/29/16   7/1/15   6/29/16   7/1/15
  Company Restaurants $ 562     $ 559     $ 1,116     $ 1,097  
  Franchised Restaurants $ 390     $ 393     $ 778     $ 774  
                   
          Franchised        
Restaurant Unit Activity Company   & Licensed   Total    
Ending Units March 30, 2016 162     1,551     1,713      
  Units Opened     13     13      
  Units Reacquired 2     (2 )        
  Units Refranchised (2 )   2          
  Units Closed     (6 )   (6 )    
    Net Change     7     7      
Ending Units June 29, 2016 162     1,558     1,720      
                   
Equivalent Units              
  Second Quarter 2016 159     1,555     1,714      
  Second Quarter 2015 158     1,536     1,694      
    Net Change 1     19     20      
                   
          Franchised        
Restaurant Unit Activity Company   & Licensed   Total    
Ending Units December 30, 2015 164     1,546     1,710      
  Units Opened 1     24     25      
  Units Reacquired 3     (3 )        
  Units Refranchised (6 )   6          
  Units Closed     (15 )   (15 )    
    Net Change (2 )   12     10      
Ending Units June 29, 2016 162     1,558     1,720      
                   
Equivalent Units              
  Year-to-Date 2016 161     1,551     1,712      
  Year-to-Date 2015 159     1,536     1,695      
    Net Change 2     15     17      
                         

SOURCE Denny's

Contacts:

Curt Nichols
Investor Relations
877-784-7167

Jessica Liddell
Media Relations, ICR
203-682-8208

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