Denny’s Corporation Reports Results For Third Quarter 2016

SPARTANBURG, S.C. - Nov. 01, 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 third quarter ended September 28, 2016.

Third Quarter Highlights

  • Raised 2016 full year guidance for Adjusted EBITDA*.
  • Domestic system-wide same-store sales increased 1.0%, including an increase of 1.0% at company restaurants and an increase of 1.0% at domestic franchised restaurants.
  • Opened 13 system restaurants including ten domestic and three international franchised locations.
  • Completed 62 remodels including six at company restaurants.
  • Company restaurant operating margin expanded 12.8% to $16.0 million while franchise operating margin grew 4.8% to $25.0 million.
  • Net Income increased 8.7% to $9.7 million, or $0.13 per diluted share.
  • Adjusted Net Income* grew 3.9% to $9.7 million while Adjusted Net Income per Share* grew 15.0% to $0.13.
  • Adjusted EBITDA* improved by 5.9% to $24.9 million. 
  • Generated $3.7 million of Free Cash Flow*, after cash capital expenditures of $18.1 million.
  • Allocated $11.9 million towards share repurchases.

John Miller, President and Chief Executive Officer, stated, “As we continue to build one of the leading franchise systems in the country, our strategic initiatives have resulted in consistent revenue and earnings growth along with stable Free Cash Flow* generation.  During the third quarter, we achieved positive system same-store sales and significantly improved both our company and franchise operating margins as we continued with our improvements in guest appeal.”

Miller continued, “With our marketing efforts focused on driving additional gains in traffic, ongoing enhancements to our menu and atmosphere, and improved execution for our guests, we remain enthusiastic as we look ahead.  As our successful brand revitalization program accelerates throughout the system, we are confident in our ability to deliver profitable system sales growth while we expand our global reach and position Denny’s for long-term success.”

Third Quarter Results

Denny’s domestic system-wide same-store sales increased 1.0%, including a 1.0% increase at company restaurants and a 1.0% increase at domestic franchised restaurants.  During the quarter, the Company acquired six franchised restaurants.  Denny’s franchisees opened 13 restaurants and closed five restaurants, bringing the total number of restaurants to 1,728.

Denny’s total operating revenue grew 3.7% to $128.4 million due to an increase in both company restaurant sales and franchise royalties.  Company restaurant sales improved 4.3% to $93.1 million due to a greater number of company restaurants compared to the prior year quarter and the growth in same-store sales.  Franchise and licensing revenue grew 2.2% to $35.3 million primarily due to higher royalty revenue, partially offset by a decrease in occupancy revenue.

Company restaurant operating margin of $16.0 million, or 17.2% of company restaurant sales, increased $1.8 million, or 130 basis points.  Franchise operating margin of $25.0 million, or 70.9% of franchise and licensing revenue, increased $1.1 million, or 180 basis points.

Total general and administrative expenses were $17.6 million compared to $16.0 million in the prior year quarter primarily due to a $1.2 million market valuation change in our non-qualified deferred compensation plan liabilities.  A corresponding gain on plan assets is reflected in other non operating income, resulting in no impact on net income.  Interest expense of $3.1 million increased $0.8 million due to higher borrowings compared to the prior year quarter.  Denny’s ended the quarter with $228.5 million of total debt outstanding, including $203.0 million of borrowings under its revolving credit facility.  Depreciation and amortization expense of $5.6 million increased $0.2 million.

The provision for income taxes was $5.3 million, reflecting an effective tax rate of 35.2%. Due to the use of net operating loss and tax credit carry forwards, the Company paid $0.2 million in cash taxes during the quarter.

Denny's Net Income of $9.7 million, or $0.13 per diluted share, grew 8.7%.  Adjusted Net Income per Share* of $0.13 grew 15.0% compared to the prior year quarter.

Free Cash Flow* and Capital Allocation

Denny’s generated $3.7 million of Free Cash Flow* in the quarter after investing $18.1 million in cash capital expenditures, including the acquisition of six franchised restaurants and the remodeling of six company restaurants.

During the quarter, the Company allocated $11.9 million to repurchase 1.1 million shares, excluding shares received associated with the $50 million accelerated share repurchase agreement announced in November 2015.  As of September 28, 2016, the Company had approximately $118 million remaining in authorized share repurchases, including the impact of the accelerated share repurchase agreement.  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 in July 2016.

Business Outlook

Mark Wolfinger, Denny's Executive Vice President, Chief Administrative Officer and Chief Financial Officer, commented, “By successfully delivering a differentiated and relevant brand, we once again outperformed key industry benchmarks and increased our market share.  In addition, we continued to strategically acquire select franchised restaurants that we intend to reinvigorate and reposition in order to enhance our return on invested capital.  With one of the industry’s strongest balance sheets, we have the financial capacity to support our continued growth initiatives while simultaneously returning value to our shareholders with our ongoing share repurchase program.”

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%.
  • 45 to 50 (vs. 44 to 48**) new restaurant openings, with net restaurant growth of 15 to 20 (vs. 10 to 15**) restaurants.
  • Acquisition of nine (vs. seven**) franchised restaurants and refranchising of six company restaurants.
  • Total operating revenue between $506 and $509 million (vs. $505 and $508 million**) including franchise and licensing revenue between $139 and $140 million.
  • Company restaurant margin between 17.5% and 18% (vs. 17% and 17.5%**) and franchise restaurant margin between 69.5% and 70% (vs. 69% and 69.5%**).
  • Total general and administrative expenses between $66 and $68 million (vs. $65 and $67 million**).
  • Adjusted EBITDA* between $97 and $99 million (vs. $96 and $98 million**).
  • Depreciation and amortization expense between $22 and $22.5 million (vs. $21.5 and $22 million**).
  • Net interest expense between $11.5 and $12 million.
  • Effective income tax rate between 33% and 37% with cash taxes between $2 and $3 million (vs. $3 and $5 million**).
  • Cash capital expenditures between $33 and $35 million (vs. $29 and 31 million**) including the acquisition of nine (vs. 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 $50 and $52 million (vs. $51 and $53 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 second quarter 2016 earnings release dated August 3, 2016.

Conference Call and Webcast Information

Denny’s will provide further commentary on the results for the third quarter ended September 28, 2016 on its quarterly investor conference call today, Tuesday, November 1, 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 September 28, 2016, Denny’s had 1,728 franchised, licensed, and company restaurants around the world with combined sales of $2.8 billion including 119 restaurants in Canada, Puerto Rico, Mexico, New Zealand, Honduras, Costa Rica, Dominican Republic, the United Arab Emirates, Guam, 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) 9/28/16   12/30/15
Assets      
  Current assets      
    Cash and cash equivalents $ 1,526     $ 1,671  
    Receivables 14,175     16,552  
    Assets held for sale     931  
    Other current assets 10,179     17,260  
      Total current assets 25,880     36,414  
  Property, net 131,537     124,816  
  Goodwill 35,270     33,454  
  Intangible assets, net 53,897     46,074  
  Deferred income taxes 23,083     29,159  
  Other noncurrent assets 28,065     27,120  
      Total assets $ 297,732     $ 297,037  
             
Liabilities      
  Current liabilities      
    Current maturities of capital lease obligations $ 3,311     $ 3,246  
    Accounts payable 14,877     20,759  
    Other current liabilities 55,745     77,548  
      Total current liabilities 73,933     101,553  
  Long-term liabilities      
    Long-term debt, less current maturities 203,000     195,000  
    Capital lease obligations, less current maturities 22,227     17,499  
    Other 52,324     43,580  
      Total long-term liabilities 277,551     256,079  
      Total liabilities 351,484     357,632  
             
Shareholders' deficit      
    Common stock 1,070     1,065  
    Paid-in capital 582,864     565,364  
    Deficit (394,117 )   (402,245 )
    Accumulated other comprehensive loss, net of tax (9,808 )   (23,777 )
    Treasury stock (233,761 )   (201,002 )
      Total shareholders' deficit (53,752 )   (60,595 )
      Total liabilities and shareholders' deficit $ 297,732     $ 297,037  
             
Debt Balances
(In thousands) 9/28/16   12/30/15
Credit facility revolver due 2020 $ 203,000     $ 195,000  
Capital leases 25,538     20,745  
  Total debt $ 228,538     $ 215,745  

 

DENNY’S CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
           
      Quarter Ended
(In thousands, except per share amounts) 9/28/16   9/30/15
Revenue:      
  Company restaurant sales $ 93,122     $ 89,279  
  Franchise and license revenue 35,264     34,499  
    Total operating revenue 128,386     123,778  
Costs of company restaurant sales 77,118     75,090  
Costs of franchise and license revenue 10,275     10,649  
General and administrative expenses 17,558     16,008  
Depreciation and amortization 5,609     5,422  
Operating (gains), losses and other charges, net 249     886  
    Total operating costs and expenses, net 110,809     108,055  
Operating income 17,577     15,723  
Interest expense, net 3,117     2,327  
Other nonoperating (income) expense, net (543 )   592  
Net income before income taxes 15,003     12,804  
Provision for income taxes 5,277     3,854  
Net income $ 9,726     $ 8,950  
           
           
Basic net income per share $ 0.13     $ 0.11  
Diluted net income per share $ 0.13     $ 0.11  
           
Basic weighted average shares outstanding 74,851     82,923  
Diluted weighted average shares outstanding 76,791     85,056  
           
Comprehensive income $ 9,771     $ 5,673  
       
General and Administrative Expenses Quarter Ended
(In thousands) 9/28/2016   9/30/2015
Share-based compensation $ 1,775     $ 1,941  
Other general and administrative expenses 15,783     14,067  
  Total general and administrative expenses $ 17,558     $ 16,008  

 

DENNY’S CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
           
      Three Quarters Ended
(In thousands, except per share amounts) 9/28/16   9/30/15
Revenue:      
  Company restaurant sales $ 272,718     $ 263,890  
  Franchise and license revenue 104,625     103,378  
    Total operating revenue 377,343     367,268  
Costs of company restaurant sales 224,066     218,718  
Costs of franchise and license revenue 31,037     32,843  
General and administrative expenses 50,691     49,771  
Depreciation and amortization 16,207     15,760  
Operating (gains), losses and other charges, net 24,365     1,722  
    Total operating costs and expenses, net 346,366     318,814  
Operating income 30,977     48,454  
Interest expense, net 8,905     6,678  
Other nonoperating (income) expense, net (635 )   538  
Net income before income taxes 22,707     41,238  
Provision for income taxes 14,579     14,021  
Net income $ 8,128     $ 27,217  
           
           
Basic net income per share $ 0.11     $ 0.32  
Diluted net income per share $ 0.10     $ 0.32  
           
Basic weighted average shares outstanding 76,214     83,952  
Diluted weighted average shares outstanding 78,052     86,067  
           
Comprehensive income $ 22,097     $ 25,973  
       
General and Administrative Expenses Three Quarters Ended
(In thousands) 9/28/16   9/30/15
Share-based compensation $ 5,625     $ 5,505  
Other general and administrative expenses 45,066     44,266  
  Total general and administrative expenses $ 50,691     $ 49,771  

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   Three Quarters Ended
(In thousands, except per share amounts) 9/28/16   9/30/15   9/28/16   9/30/15
Net income $ 9,726     $ 8,950     $ 8,128     $ 27,217  
Provision for income taxes 5,277     3,854     14,579     14,021  
Operating (gains), losses and other charges, net 249     886     24,365     1,722  
Other nonoperating (income) expense, net (543 )   592     (635 )   538  
Share-based compensation 1,775     1,941     5,625     5,505  
Adjusted Income Before Taxes $ 16,484     $ 16,223     $ 52,062     $ 49,003  
               
Interest expense, net 3,117     2,327     8,905     6,678  
Depreciation and amortization 5,609     5,422     16,207     15,760  
Cash payments for restructuring charges and exit costs (271 )   (417 )   (1,104 )   (1,216 )
Cash payments for share-based compensation         (2,529 )   (3,440 )
Adjusted EBITDA $ 24,939     $ 23,555     $ 73,541     $ 66,785  
               
Cash interest expense, net (2,869 )   (2,086 )   (8,150 )   (5,951 )
Cash paid for income taxes, net (202 )   (756 )   (1,140 )   (4,916 )
Cash paid for capital expenditures (18,122 )   (8,361 )   (27,571 )   (20,762 )
Free Cash Flow $ 3,746     $ 12,352     $ 36,680     $ 35,156  
               
  Quarter Ended   Three Quarters Ended
(In thousands, except per share amounts) 9/28/16   9/30/15   9/28/16   9/30/15
Net income $ 9,726     $ 8,950     $ 8,128     $ 27,217  
Pension settlement loss         24,297      
Gains on sales of assets and other, net (77 )   (23 )   (764 )   (43 )
Impairment charges     577         671  
Loss on debt refinancing             293  
Tax effect (1) 27     (188 )   (1,871 )   (313 )
Adjusted Net Income $ 9,676     $ 9,316     $ 29,790     $ 27,825  
               
Diluted weighted average shares outstanding 76,791     85,056     78,052     86,067  
               
Adjusted Net Income Per Share $ 0.13     $ 0.11     $ 0.38     $ 0.32  

 

  (1 ) Tax adjustment for the loss on pension termination for the three and nine months ended September 28, 2016 are calculated using an effective tax rate of 8.8%. The remaining tax adjustments for the three and nine months ended September 28, 2016 are calculated using the Company's year-to-date effective tax rate of 35.6%, which excludes the impact of the pension termination. Tax adjustments for the three and nine months ended September 30, 2015 are calculated using the Company's 2015 year-to-date effective tax rate of 34.0%.

 

DENNY’S CORPORATION
Operating Margins
(Unaudited)
             
        Quarter Ended
(In thousands) 9/28/16   9/30/15
Company restaurant operations: (1)          
  Company restaurant sales $ 93,122   100.0 %   $ 89,279   100.0 %
  Costs of company restaurant sales:          
    Product costs 22,819   24.5 %   23,289   26.1 %
    Payroll and benefits 35,999   38.7 %   34,249   38.4 %
    Occupancy 4,928   5.3 %   5,164   5.8 %
    Other operating costs:          
      Utilities 3,429   3.7 %   3,517   3.9 %
      Repairs and maintenance 1,559   1.7 %   1,549   1.7 %
      Marketing 3,500   3.8 %   3,383   3.8 %
      Other 4,884   5.2 %   3,939   4.4 %
  Total costs of company restaurant sales $ 77,118   82.8 %   $ 75,090   84.1 %
  Company restaurant operating margin (2) $ 16,004   17.2 %   $ 14,189   15.9 %
                 
Franchise operations: (3)          
  Franchise and license revenue:          
    Royalties $ 25,039   71.0 %   $ 23,922   69.3 %
    Initial fees 757   2.1 %   558   1.6 %
    Occupancy revenue 9,468   26.8 %   10,019   29.1 %
  Total franchise and license revenue $ 35,264   100.0 %   $ 34,499   100.0 %
                 
  Costs of franchise and license revenue:          
    Occupancy costs $ 7,023   19.9 %   $ 7,620   22.1 %
    Other direct costs 3,252   9.2 %   3,029   8.8 %
  Total costs of franchise and license revenue $ 10,275   29.1 %   $ 10,649   30.9 %
  Franchise operating margin (2) $ 24,989   70.9 %   $ 23,850   69.1 %
                 
Total operating revenue (4) $ 128,386   100.0 %   $ 123,778   100.0 %
Total costs of operating revenue (4) 87,393   68.1 %   85,739   69.3 %
Total operating margin (4)(2) $ 40,993   31.9 %   $ 38,039   30.7 %
                 
Other operating expenses: (4)(2)          
  General and administrative expenses $ 17,558   13.7 %   $ 16,008   12.9 %
  Depreciation and amortization 5,609   4.4 %   5,422   4.4 %
  Operating (gains), losses and other charges, net 249   0.2 %   886   0.7 %
  Total other operating expenses $ 23,416   18.2 %   $ 22,316   18.0 %
                 
Operating income (4) $ 17,577   13.7 %   $ 15,723   12.7 %
                 
  (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)
             
        Three Quarters Ended
(In thousands) 9/28/16   9/30/15
Company restaurant operations: (1)          
  Company restaurant sales $ 272,718   100.0 %   $ 263,890   100.0 %
  Costs of company restaurant sales:          
    Product costs 67,253   24.7 %   66,609   25.2 %
    Payroll and benefits 104,548   38.3 %   101,118   38.3 %
    Occupancy 14,721   5.4 %   14,972   5.7 %
    Other operating costs:          
      Utilities 9,232   3.4 %   9,825   3.7 %
      Repairs and maintenance 4,893   1.8 %   4,496   1.7 %
      Marketing 10,123   3.7 %   9,848   3.7 %
      Other 13,296   4.9 %   11,850   4.5 %
  Total costs of company restaurant sales $ 224,066   82.2 %   $ 218,718   82.9 %
  Company restaurant operating margin (2) $ 48,652   17.8 %   $ 45,172   17.1 %
                 
Franchise operations: (3)          
  Franchise and license revenue:          
    Royalties $ 73,694   70.4 %   $ 70,859   68.5 %
    Initial fees 2,081   2.0 %   1,659   1.6 %
    Occupancy revenue 28,850   27.6 %   30,860   29.9 %
  Total franchise and license revenue $ 104,625   100.0 %   $ 103,378   100.0 %
                 
  Costs of franchise and license revenue:          
    Occupancy costs $ 21,373   20.4 %   $ 23,244   22.5 %
    Other direct costs 9,664   9.2 %   9,599   9.3 %
  Total costs of franchise and license revenue $ 31,037   29.7 %   $ 32,843   31.8 %
  Franchise operating margin (2) $ 73,588   70.3 %   $ 70,535   68.2 %
                 
Total operating revenue (4) $ 377,343   100.0 %   $ 367,268   100.0 %
Total costs of operating revenue (4) 255,103   67.6 %   251,561   68.5 %
Total operating margin (4)(2) $ 122,240   32.4 %   $ 115,707   31.5 %
                 
Other operating expenses: (4)(2)          
  General and administrative expenses $ 50,691   13.4 %   $ 49,771   13.6 %
  Depreciation and amortization 16,207   4.3 %   15,760   4.3 %
  Operating gains, losses and other charges, net 24,365   6.5 %   1,722   0.5 %
  Total other operating expenses $ 91,263   24.2 %   $ 67,253   18.3 %
                 
Operating income (4) $ 30,977   8.2 %   $ 48,454   13.2 %
                 
  (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   Three Quarters Ended
(increase vs. prior year) 9/28/16   9/30/15   9/28/16   9/30/15
  Company Restaurants 1.0 %   7.0 %   1.5 %   7.5 %
  Domestic Franchised Restaurants 1.0 %   5.9 %   0.9 %   6.7 %
  Domestic System-wide Restaurants 1.0 %   6.1 %   1.0 %   6.8 %
  System-wide Restaurants 0.9 %   5.0 %   0.8 %   6.0 %
                   
Average Unit Sales Quarter Ended   Three Quarters Ended
(In thousands) 9/28/16   9/30/15   9/28/16   9/30/15
  Company Restaurants $ 573     $ 563     $ 1,689     $ 1,660  
  Franchised Restaurants $ 396     $ 393     $ 1,174     $ 1,167  
                   
          Franchised        
Restaurant Unit Activity Company    & Licensed   Total    
Ending Units June 29, 2016 162     1,558     1,720      
  Units Opened     13     13      
  Units Reacquired 6     (6 )        
  Units Refranchised              
  Units Closed     (5 )   (5 )    
    Net Change 6     2     8      
Ending Units September 28, 2016 168     1,560     1,728      
                   
Equivalent Units              
  Third Quarter 2016 163     1,560     1,723      
  Third Quarter 2015 159     1,536     1,695      
    Net Change 4     24     28      
                   
          Franchised        
Restaurant Unit Activity Company    & Licensed   Total    
Ending Units December 30, 2015 164     1,546     1,710      
  Units Opened 1     37     38      
  Units Reacquired 9     (9 )        
  Units Refranchised (6 )   6          
  Units Closed     (20 )   (20 )    
    Net Change 4     14     18      
Ending Units September 28, 2016 168     1,560     1,728      
                   
Equivalent Units              
  Year-to-Date 2016 161     1,554     1,715      
  Year-to-Date 2015 159     1,536     1,695      
    Net Change 2     18     20      

SOURCE Denny's Corporation

Contacts:

Curt Nichols
Investor Relations
877-784-7167

Jessica Liddell
Media Relations
ICR
203-682-8208

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