Delaware
|
|
13-3487402
|
(State or other jurisdiction of incorporation or organization
|
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
|
þ
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
|
Smaller reporting company
|
¨
|
Emerging growth company
|
¨
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
$.01 Par Value, Common Stock
|
|
DENN
|
|
The Nasdaq Stock Market
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 27, 2019
|
|
December 26, 2018
|
||||
|
(In thousands, except per share amounts)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,897
|
|
|
$
|
5,026
|
|
Investments
|
3,048
|
|
|
1,709
|
|
||
Receivables, net
|
18,304
|
|
|
26,283
|
|
||
Inventories
|
2,872
|
|
|
2,993
|
|
||
Assets held for sale
|
14,956
|
|
|
723
|
|
||
Prepaid and other current assets
|
7,962
|
|
|
10,866
|
|
||
Total current assets
|
49,039
|
|
|
47,600
|
|
||
Property, net of accumulated depreciation of $189,939 and $226,620, respectively
|
108,844
|
|
|
117,251
|
|
||
Financing lease right-of-use assets, net of accumulated amortization of $16,413 and $15,526, respectively
|
20,962
|
|
|
22,753
|
|
||
Operating lease right-of-use assets
|
94,249
|
|
|
—
|
|
||
Goodwill
|
38,124
|
|
|
39,781
|
|
||
Intangible assets, net
|
56,631
|
|
|
59,067
|
|
||
Deferred financing costs, net
|
2,183
|
|
|
2,335
|
|
||
Deferred income taxes
|
20,617
|
|
|
17,333
|
|
||
Other noncurrent assets
|
31,683
|
|
|
29,229
|
|
||
Total assets
|
$
|
422,332
|
|
|
$
|
335,349
|
|
Liabilities
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Current finance lease liabilities
|
$
|
3,487
|
|
|
$
|
3,410
|
|
Current operating lease liabilities
|
17,004
|
|
|
—
|
|
||
Accounts payable
|
28,584
|
|
|
29,527
|
|
||
Other current liabilities
|
50,500
|
|
|
61,790
|
|
||
Total current liabilities
|
99,575
|
|
|
94,727
|
|
||
Long-term liabilities:
|
|
|
|
|
|
||
Long-term debt
|
283,500
|
|
|
286,500
|
|
||
Noncurrent finance lease liabilities
|
25,439
|
|
|
27,181
|
|
||
Noncurrent operating lease liabilities
|
84,220
|
|
|
—
|
|
||
Liability for insurance claims, less current portion
|
12,454
|
|
|
12,199
|
|
||
Other noncurrent liabilities
|
57,365
|
|
|
48,087
|
|
||
Total long-term liabilities
|
462,978
|
|
|
373,967
|
|
||
Total liabilities
|
562,553
|
|
|
468,694
|
|
||
Shareholders' deficit
|
|
|
|
|
|
||
Common stock $0.01 par value; shares authorized - 135,000; March 27, 2019: 108,986 shares issued and 61,038 shares outstanding; December 26, 2018: 108,585 shares issued and 61,533 shares outstanding
|
$
|
1,090
|
|
|
$
|
1,086
|
|
Paid-in capital
|
598,825
|
|
|
592,944
|
|
||
Deficit
|
(291,318
|
)
|
|
(306,414
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
(16,299
|
)
|
|
(4,146
|
)
|
||
Treasury stock, at cost, 47,948 and 47,052 shares, respectively
|
(432,519
|
)
|
|
(416,815
|
)
|
||
Total shareholders' deficit
|
(140,221
|
)
|
|
(133,345
|
)
|
||
Total liabilities and shareholders' deficit
|
$
|
422,332
|
|
|
$
|
335,349
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands, except per share amounts)
|
||||||
Revenue:
|
|
|
|
||||
Company restaurant sales
|
$
|
98,545
|
|
|
$
|
101,193
|
|
Franchise and license revenue
|
52,866
|
|
|
54,080
|
|
||
Total operating revenue
|
151,411
|
|
|
155,273
|
|
||
Costs of company restaurant sales, excluding depreciation and amortization:
|
|
|
|
||||
Product costs
|
23,905
|
|
|
24,935
|
|
||
Payroll and benefits
|
39,832
|
|
|
41,226
|
|
||
Occupancy
|
5,784
|
|
|
5,647
|
|
||
Other operating expenses
|
14,592
|
|
|
15,050
|
|
||
Total costs of company restaurant sales
|
84,113
|
|
|
86,858
|
|
||
Costs of franchise and license revenue, excluding depreciation and amortization
|
27,058
|
|
|
28,556
|
|
||
General and administrative expenses
|
18,811
|
|
|
16,560
|
|
||
Depreciation and amortization
|
6,233
|
|
|
6,514
|
|
||
Operating (gains), losses and other charges, net
|
(8,935
|
)
|
|
360
|
|
||
Total operating costs and expenses, net
|
127,280
|
|
|
138,848
|
|
||
Operating income
|
24,131
|
|
|
16,425
|
|
||
Interest expense, net
|
5,407
|
|
|
4,625
|
|
||
Other nonoperating (income) expense, net
|
(1,423
|
)
|
|
212
|
|
||
Net income before income taxes
|
20,147
|
|
|
11,588
|
|
||
Provision for income taxes
|
4,657
|
|
|
1,829
|
|
||
Net income
|
$
|
15,490
|
|
|
$
|
9,759
|
|
|
|
|
|
||||
Basic net income per share
|
$
|
0.25
|
|
|
$
|
0.15
|
|
Diluted net income per share
|
$
|
0.24
|
|
|
$
|
0.15
|
|
|
|
|
|
||||
Basic weighted average shares outstanding
|
61,651
|
|
|
64,432
|
|
||
Diluted weighted average shares outstanding
|
63,683
|
|
|
66,946
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Net income
|
$
|
15,490
|
|
|
$
|
9,759
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Minimum pension liability adjustment, net of tax of $6 and $6, respectively
|
16
|
|
|
22
|
|
||
Recognition of unrealized loss on hedge transactions, net of tax of $(4,629) and $(1,085), respectively
|
(12,169
|
)
|
|
(3,113
|
)
|
||
Other comprehensive loss
|
(12,153
|
)
|
|
(3,091
|
)
|
||
Total comprehensive income
|
$
|
3,337
|
|
|
$
|
6,668
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Paid-in Capital
|
|
Deficit
|
|
Accumulated
Other
Comprehensive
Income
(Loss), Net
|
|
Total
Shareholders’
Deficit
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Balance, December 26, 2018
|
108,585
|
|
|
$
|
1,086
|
|
|
(47,052
|
)
|
|
$
|
(416,815
|
)
|
|
$
|
592,944
|
|
|
$
|
(306,414
|
)
|
|
$
|
(4,146
|
)
|
|
$
|
(133,345
|
)
|
Cumulative effect adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(394
|
)
|
|
—
|
|
|
(394
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,490
|
|
|
—
|
|
|
15,490
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,153
|
)
|
|
(12,153
|
)
|
||||||
Share-based compensation on equity classified awards, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(985
|
)
|
|
—
|
|
|
—
|
|
|
(985
|
)
|
||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
(507
|
)
|
|
(8,941
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,941
|
)
|
||||||
Equity forward contract settlement
|
—
|
|
|
—
|
|
|
(389
|
)
|
|
(6,763
|
)
|
|
6,763
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock for share-based compensation
|
347
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Exercise of common stock options
|
54
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
106
|
|
|
—
|
|
|
—
|
|
|
107
|
|
||||||
Balance, March 27, 2019
|
108,986
|
|
|
$
|
1,090
|
|
|
(47,948
|
)
|
|
$
|
(432,519
|
)
|
|
$
|
598,825
|
|
|
$
|
(291,318
|
)
|
|
$
|
(16,299
|
)
|
|
$
|
(140,221
|
)
|
|
Common Stock
|
|
Treasury Stock
|
|
Paid-in Capital
|
|
Deficit
|
|
Accumulated
Other
Comprehensive
Loss, Net
|
|
Total
Shareholders’
Deficit
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Balance, December 27, 2017
|
107,740
|
|
|
$
|
1,077
|
|
|
(43,151
|
)
|
|
$
|
(355,626
|
)
|
|
$
|
594,166
|
|
|
$
|
(334,661
|
)
|
|
$
|
(2,316
|
)
|
|
$
|
(97,360
|
)
|
Cumulative effect adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,446
|
)
|
|
—
|
|
|
(15,446
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,759
|
|
|
—
|
|
|
9,759
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,091
|
)
|
|
(3,091
|
)
|
||||||
Share-based compensation on equity classified awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(104
|
)
|
|
—
|
|
|
—
|
|
|
(104
|
)
|
||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
(1,071
|
)
|
|
(16,186
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,186
|
)
|
||||||
Issuance of common stock for share-based compensation
|
233
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Exercise of common stock options
|
286
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
1,010
|
|
|
—
|
|
|
—
|
|
|
1,013
|
|
||||||
Balance, March 28, 2018
|
108,259
|
|
|
$
|
1,083
|
|
|
(44,222
|
)
|
|
$
|
(371,812
|
)
|
|
$
|
595,069
|
|
|
$
|
(340,348
|
)
|
|
$
|
(5,407
|
)
|
|
$
|
(121,415
|
)
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
15,490
|
|
|
$
|
9,759
|
|
Adjustments to reconcile net income to cash flows provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
6,233
|
|
|
6,514
|
|
||
Operating (gains), losses and other charges, net
|
(8,935
|
)
|
|
360
|
|
||
Amortization of deferred financing costs
|
152
|
|
|
152
|
|
||
Gain on investments
|
(39
|
)
|
|
—
|
|
||
Gain on early extinguishments of debt and leases
|
(74
|
)
|
|
—
|
|
||
Deferred income tax expense
|
1,476
|
|
|
1,118
|
|
||
Share-based compensation
|
2,253
|
|
|
1,350
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Decrease (increase) in assets:
|
|
|
|
||||
Receivables
|
7,428
|
|
|
1,821
|
|
||
Inventories
|
121
|
|
|
33
|
|
||
Other current assets
|
2,904
|
|
|
2,739
|
|
||
Other assets
|
2,897
|
|
|
(160
|
)
|
||
Increase (decrease) in liabilities:
|
|
|
|
||||
Accounts payable
|
(1,471
|
)
|
|
(9,865
|
)
|
||
Accrued salaries and vacations
|
(6,439
|
)
|
|
(4,048
|
)
|
||
Accrued taxes
|
(494
|
)
|
|
38
|
|
||
Other accrued liabilities
|
(5,918
|
)
|
|
(5,948
|
)
|
||
Other noncurrent liabilities
|
(3,116
|
)
|
|
(413
|
)
|
||
Net cash flows provided by operating activities
|
12,468
|
|
|
3,450
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(3,109
|
)
|
|
(4,148
|
)
|
||
Acquisition of restaurants and real estate
|
(4,706
|
)
|
|
(8,418
|
)
|
||
Proceeds from sales of restaurants and real estate
|
7,914
|
|
|
4
|
|
||
Investment purchases
|
(1,300
|
)
|
|
—
|
|
||
Collections on notes receivable
|
425
|
|
|
859
|
|
||
Issuance of notes receivable
|
(571
|
)
|
|
(1,934
|
)
|
||
Net cash flows used in investing activities
|
(1,347
|
)
|
|
(13,637
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Revolver borrowings
|
28,500
|
|
|
39,500
|
|
||
Revolver payments
|
(31,500
|
)
|
|
(16,500
|
)
|
||
Long-term debt payments
|
(795
|
)
|
|
(823
|
)
|
||
Proceeds from exercise of stock options
|
107
|
|
|
1,013
|
|
||
Tax withholding on share-based payments
|
(3,178
|
)
|
|
(1,696
|
)
|
||
Purchase of treasury stock
|
(8,089
|
)
|
|
(15,691
|
)
|
||
Net bank overdrafts
|
705
|
|
|
3,320
|
|
||
Net cash flows (used in) provided by financing activities
|
(14,250
|
)
|
|
9,123
|
|
||
Decrease in cash and cash equivalents
|
(3,129
|
)
|
|
(1,064
|
)
|
||
Cash and cash equivalents at beginning of period
|
5,026
|
|
|
4,983
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,897
|
|
|
$
|
3,919
|
|
|
|
|
Quarter Ended
|
||
|
Classification
|
|
March 27, 2019
|
||
|
|
|
(In thousands)
|
||
Lease costs
|
|
|
|
||
Finance lease costs:
|
|
|
|
||
Amortization of right-of-use assets
|
Depreciation and amortization
|
|
$
|
996
|
|
Interest on lease liabilities
|
Interest expense, net
|
|
1,516
|
|
|
Operating lease costs:
|
|
|
|
||
Operating lease costs - company
|
Occupancy
|
|
2,503
|
|
|
Operating lease costs - franchise
|
Costs of franchise and license revenue
|
|
3,465
|
|
|
Operating lease costs - general and administrative
|
General and administrative expenses
|
|
26
|
|
|
Variable lease costs:
|
|
|
|
||
Variable lease costs - company
|
Occupancy
|
|
1,783
|
|
|
Variable lease costs - franchise
|
Costs of franchise and license revenue
|
|
1,374
|
|
|
Variable lease costs - closed stores
|
Restructuring charges and exit costs
|
|
55
|
|
|
Total lease costs
|
|
|
$
|
11,718
|
|
|
Quarter Ended
|
|
|
March 27, 2019
|
|
Weighted-average remaining lease term (in years)
|
|
|
Finance leases
|
8.4
|
|
Operating leases
|
8.3
|
|
Weighted-average discount rate
|
|
|
Finance leases
|
24.3
|
%
|
Operating leases
|
6.7
|
%
|
|
|
|
Quarter Ended
|
||
|
Classification
|
|
March 27, 2019
|
||
|
|
|
(In thousands)
|
||
Lease income
|
|
|
|
||
Operating lease income - franchise
|
Franchise and license revenue
|
|
$
|
5,425
|
|
Operating lease income - closed stores
|
Restructuring and exist costs
|
|
66
|
|
|
Variable lease income
|
Franchise and license revenue
|
|
2,120
|
|
|
Total lease income
|
|
|
$
|
7,611
|
|
|
Quarter Ended
|
||
|
March 27, 2019
|
||
|
(In thousands)
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from finance leases
|
$
|
1,516
|
|
Operating cash flows from operating leases
|
6,311
|
|
|
Financing cash flows from finance leases
|
795
|
|
|
Right-of-use assets obtained in exchange for new finance lease liabilities
|
—
|
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
5,050
|
|
|
Lease Liabilities
|
|
Lease Receipts
|
||||||||
|
Finance
|
|
Operating
|
|
Operating
|
||||||
|
(In thousands)
|
||||||||||
Remainder of 2019
|
$
|
6,821
|
|
|
$
|
17,481
|
|
|
$
|
16,107
|
|
2020
|
8,481
|
|
|
20,106
|
|
|
19,257
|
|
|||
2021
|
7,838
|
|
|
16,948
|
|
|
17,351
|
|
|||
2022
|
7,129
|
|
|
14,293
|
|
|
15,685
|
|
|||
2023
|
6,239
|
|
|
11,210
|
|
|
13,466
|
|
|||
Thereafter
|
31,693
|
|
|
54,010
|
|
|
73,083
|
|
|||
Total undiscounted cash flows
|
68,201
|
|
|
134,048
|
|
|
$
|
154,949
|
|
||
Less: interest
|
39,275
|
|
|
32,824
|
|
|
|
||||
Present value of lease liabilities
|
28,926
|
|
|
101,224
|
|
|
|
||||
Less: current lease liabilities
|
3,487
|
|
|
17,004
|
|
|
|
||||
Long-term lease liabilities
|
$
|
25,439
|
|
|
$
|
84,220
|
|
|
|
|
Commitments
|
||||||
|
Capital
|
|
Operating
|
||||
|
(In thousands)
|
||||||
2019
|
$
|
9,271
|
|
|
$
|
23,504
|
|
2020
|
8,664
|
|
|
20,161
|
|
||
2021
|
8,010
|
|
|
17,316
|
|
||
2022
|
7,320
|
|
|
14,646
|
|
||
2023
|
6,451
|
|
|
11,881
|
|
||
Thereafter
|
33,670
|
|
|
49,004
|
|
||
Total
|
73,386
|
|
|
$
|
136,512
|
|
|
Less imputed interest
|
42,795
|
|
|
|
|||
Present value of capital lease obligations
|
$
|
30,591
|
|
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(Dollars in thousands)
|
||||||
Restaurants sold to franchisees
|
3
|
|
|
—
|
|
||
Gains on sales of company restaurants:
|
|
|
|
|
|
||
Cash proceeds
|
$
|
2,833
|
|
|
$
|
—
|
|
Less: Property sold
|
(550
|
)
|
|
—
|
|
||
Less: Goodwill related to the sales of company restaurants
|
(79
|
)
|
|
—
|
|
||
Total gains of sales of company restaurants
|
$
|
2,204
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||
Real estate sold
|
1
|
|
|
—
|
|
||
Gains on sales of real estate:
|
|
|
|
|
|
||
Cash proceeds
|
$
|
4,688
|
|
|
—
|
|
|
Noncash consideration
|
3,000
|
|
|
—
|
|
||
Less: Property sold
|
(190
|
)
|
|
—
|
|
||
Total gains on sale of real estate
|
$
|
7,498
|
|
|
$
|
—
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(Dollars in thousands)
|
||||||
Restaurants acquired from franchisees
|
—
|
|
|
5
|
|
||
Purchase price allocation:
|
|
|
|
||||
Reacquired franchise rights
|
$
|
—
|
|
|
$
|
5,315
|
|
Property
|
—
|
|
|
1,029
|
|
||
Goodwill
|
—
|
|
|
1,574
|
|
||
Total purchase price
|
$
|
—
|
|
|
$
|
7,918
|
|
|
|
|
|
||||
Financing leases recorded
|
$
|
—
|
|
|
$
|
2,409
|
|
|
|
|
|
||||
Real estate acquired
|
2
|
|
|
—
|
|
||
Total purchase price
|
$
|
4,706
|
|
|
$
|
—
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Gains on sales of assets and other, net
|
(9,475
|
)
|
|
(37
|
)
|
||
Restructuring charges and exit costs
|
540
|
|
|
360
|
|
||
Impairment charges
|
—
|
|
|
37
|
|
||
Operating (gains), losses and other charges, net
|
$
|
(8,935
|
)
|
|
$
|
360
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Exit costs
|
$
|
122
|
|
|
$
|
24
|
|
Severance and other restructuring charges
|
418
|
|
|
336
|
|
||
Total restructuring charges and exit costs
|
$
|
540
|
|
|
$
|
360
|
|
|
March 27, 2019
|
|
December 26, 2018
|
||||
|
(In thousands)
|
||||||
Receivables, net:
|
|
|
|
||||
Trade accounts receivable from franchisees
|
$
|
9,863
|
|
|
$
|
11,459
|
|
Financing receivables from franchisees
|
3,177
|
|
|
3,211
|
|
||
Vendor receivables
|
2,782
|
|
|
4,016
|
|
||
Credit card receivables
|
1,480
|
|
|
5,955
|
|
||
Other
|
1,306
|
|
|
1,942
|
|
||
Allowance for doubtful accounts
|
(304
|
)
|
|
(300
|
)
|
||
Total receivables, net
|
$
|
18,304
|
|
|
$
|
26,283
|
|
|
|
|
|
||||
Other noncurrent assets:
|
|
|
|
||||
Financing receivables from franchisees and other
|
$
|
1,573
|
|
|
$
|
1,528
|
|
|
(In thousands)
|
||
Balance, December 26, 2018
|
$
|
39,781
|
|
Adjustments related to the sale of restaurants and reclassifications to assets held for sale
|
(1,657
|
)
|
|
Balance, March 27, 2019
|
$
|
38,124
|
|
|
March 27, 2019
|
|
December 26, 2018
|
||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||||||
|
(In thousands)
|
||||||||||||||
Intangible assets with indefinite lives:
|
|
|
|
|
|
|
|
||||||||
Trade names
|
$
|
44,087
|
|
|
$
|
—
|
|
|
$
|
44,087
|
|
|
$
|
—
|
|
Liquor licenses
|
166
|
|
|
—
|
|
|
166
|
|
|
—
|
|
||||
Intangible assets with definite lives:
|
|
|
|
|
|
|
|
||||||||
Reacquired franchise rights
|
17,537
|
|
|
5,159
|
|
|
19,933
|
|
|
5,119
|
|
||||
Intangible assets, net
|
$
|
61,790
|
|
|
$
|
5,159
|
|
|
$
|
64,186
|
|
|
$
|
5,119
|
|
|
March 27, 2019
|
|
December 26, 2018
|
||||
|
(In thousands)
|
||||||
Accrued payroll
|
$
|
17,040
|
|
|
$
|
23,395
|
|
Accrued insurance, primarily current portion of liability for insurance claims
|
7,285
|
|
|
7,323
|
|
||
Accrued taxes
|
7,173
|
|
|
7,667
|
|
||
Accrued advertising
|
4,253
|
|
|
7,413
|
|
||
Gift cards
|
4,776
|
|
|
6,546
|
|
||
Other
|
9,973
|
|
|
9,446
|
|
||
Other current liabilities
|
$
|
50,500
|
|
|
$
|
61,790
|
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets/Liabilities
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
|
(In thousands)
|
||||||||||||||
Fair value measurements as of March 27, 2019:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments (1)
|
$
|
12,267
|
|
|
$
|
12,267
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps, net (2)
|
(21,273
|
)
|
|
—
|
|
|
(21,273
|
)
|
|
—
|
|
||||
Investments (3)
|
3,048
|
|
|
—
|
|
|
3,048
|
|
|
—
|
|
||||
Total
|
$
|
(5,958
|
)
|
|
$
|
12,267
|
|
|
$
|
(18,225
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Fair value measurements as of December 26, 2018:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments (1)
|
$
|
11,235
|
|
|
$
|
11,235
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps, net (2)
|
(4,475
|
)
|
|
—
|
|
|
(4,475
|
)
|
|
—
|
|
||||
Investments (3)
|
1,709
|
|
|
—
|
|
|
1,709
|
|
|
—
|
|
||||
Total
|
$
|
8,469
|
|
|
$
|
11,235
|
|
|
$
|
(2,766
|
)
|
|
$
|
—
|
|
(1)
|
The fair values of our deferred compensation plan investments are based on the closing market prices of the elected investments.
|
(2)
|
The fair values of our interest rate swaps are based upon Level 2 inputs, which include valuation models as reported by our counterparties. The key inputs for the valuation models are quoted market prices, interest rates and forward yield curves. See Note 10 for details on the interest rate swaps.
|
(3)
|
The fair value of investments is valued using a readily determinable net asset value per share based on the fair value of the underlying securities. There are no significant redemption restrictions associated with these investments.
|
Trade Date
|
|
Effective Date
|
|
Maturity Date
|
|
Notional Amount
|
|
Fixed Rate
|
|||
|
|
|
|
|
|
(In thousands)
|
|
|
|||
March 20, 2015
|
|
March 29, 2018
|
|
March 31, 2025
|
|
$
|
120,000
|
|
|
2.44
|
%
|
October 1, 2015
|
|
March 29, 2018
|
|
March 31, 2026
|
|
50,000
|
|
|
2.46
|
%
|
|
February 15, 2018
|
|
March 31, 2020
|
|
December 31, 2033
|
|
80,000
|
|
(1)
|
3.19
|
%
|
(1)
|
The notional amount of the swaps entered into on February 15, 2018 increases annually beginning September 30, 2020 until they reach the maximum notional amount of $425.0 million on September 28, 2029.
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
March 28, 2018
|
|||||
|
(Dollars in thousands)
|
||||||
Company restaurant sales
|
$
|
98,545
|
|
|
$
|
101,193
|
|
Franchise and license revenue:
|
|
|
|
||||
Royalties
|
25,240
|
|
|
25,165
|
|
||
Advertising revenue
|
18,942
|
|
|
19,310
|
|
||
Initial and other fees
|
1,139
|
|
|
1,417
|
|
||
Occupancy revenue
|
7,545
|
|
|
8,188
|
|
||
Franchise and license revenue
|
52,866
|
|
|
54,080
|
|
||
Total operating revenue
|
$
|
151,411
|
|
|
$
|
155,273
|
|
|
(In thousands)
|
||
Balance, December 26, 2018
|
$
|
20,538
|
|
Fees received from franchisees
|
517
|
|
|
Revenue recognized (1)
|
(642
|
)
|
|
Balance, March 27, 2019
|
20,413
|
|
|
Less current portion included in other current liabilities
|
2,109
|
|
|
Deferred franchise revenue included in other noncurrent liabilities
|
$
|
18,304
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Performance share awards
|
$
|
1,998
|
|
|
$
|
1,078
|
|
Restricted stock units for board members
|
255
|
|
|
272
|
|
||
Total share-based compensation
|
$
|
2,253
|
|
|
$
|
1,350
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands, except for per share amounts)
|
||||||
Net income
|
$
|
15,490
|
|
|
$
|
9,759
|
|
|
|
|
|
||||
Weighted average shares outstanding - basic
|
61,651
|
|
|
64,432
|
|
||
Effect of dilutive share-based compensation awards
|
2,032
|
|
|
2,514
|
|
||
Weighted average shares outstanding - diluted
|
63,683
|
|
|
66,946
|
|
||
|
|
|
|
||||
Basic net income per share
|
$
|
0.25
|
|
|
$
|
0.15
|
|
Diluted net income per share
|
$
|
0.24
|
|
|
$
|
0.15
|
|
|
|
|
|
||||
Anti-dilutive share-based compensation awards
|
630
|
|
|
471
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Income taxes paid, net
|
$
|
367
|
|
|
$
|
423
|
|
Interest paid
|
$
|
5,067
|
|
|
$
|
4,272
|
|
|
|
|
|
||||
Noncash investing and financing activities:
|
|
|
|
||||
Issuance of common stock, pursuant to share-based compensation plans
|
$
|
6,333
|
|
|
$
|
3,513
|
|
Noncash consideration received in connection with the sale of real estate
|
$
|
3,000
|
|
|
$
|
—
|
|
Execution of finance leases
|
$
|
—
|
|
|
$
|
2,478
|
|
Treasury stock payable
|
$
|
925
|
|
|
$
|
615
|
|
|
Defined Benefit Plans
|
|
Derivatives
|
|
Accumulated Other Comprehensive Loss
|
||||||
|
(In thousands)
|
||||||||||
Balance as of December 26, 2018
|
$
|
(827
|
)
|
|
$
|
(3,319
|
)
|
|
$
|
(4,146
|
)
|
Amortization of net loss (1)
|
22
|
|
|
—
|
|
|
22
|
|
|||
Net change in fair value of derivatives
|
—
|
|
|
(16,774
|
)
|
|
(16,774
|
)
|
|||
Reclassification of derivatives to interest expense, net (2)
|
—
|
|
|
(24
|
)
|
|
(24
|
)
|
|||
Income tax (expense) benefit related to items of other comprehensive loss
|
(6
|
)
|
|
4,629
|
|
|
4,623
|
|
|||
Balance as of March 27, 2019
|
$
|
(811
|
)
|
|
$
|
(15,488
|
)
|
|
$
|
(16,299
|
)
|
(1)
|
Before-tax amount related to our defined benefit plans that was reclassified from accumulated other comprehensive loss and included as a component of pension expense within general and administrative expenses in our Condensed Consolidated Statements of Income during the quarter ended March 27, 2019.
|
(2)
|
Amounts reclassified from accumulated other comprehensive loss into income represent payments either received from or made to the counterparty for the effective portions of the interest rate swaps. These amounts are included as a component of interest expense, net in our Condensed Consolidated Statements of Income. We expect to receive payments from the counterparty and reclassify approximately $0.1 million from accumulated other comprehensive loss related to our interest rate swaps during the next twelve months. See Note 10 for additional details.
|
|
Quarter Ended
|
||||||||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||
Company restaurant sales
|
$
|
98,545
|
|
|
65.1
|
%
|
|
$
|
101,193
|
|
|
65.2
|
%
|
Franchise and license revenue
|
52,866
|
|
|
34.9
|
%
|
|
54,080
|
|
|
34.8
|
%
|
||
Total operating revenue
|
151,411
|
|
|
100.0
|
%
|
|
155,273
|
|
|
100.0
|
%
|
||
Costs of company restaurant sales, excluding depreciation and amortization (a):
|
|
|
|
|
|
|
|
|
|
||||
Product costs
|
23,905
|
|
|
24.3
|
%
|
|
24,935
|
|
|
24.6
|
%
|
||
Payroll and benefits
|
39,832
|
|
|
40.4
|
%
|
|
41,226
|
|
|
40.7
|
%
|
||
Occupancy
|
5,784
|
|
|
5.9
|
%
|
|
5,647
|
|
|
5.6
|
%
|
||
Other operating expenses
|
14,592
|
|
|
14.8
|
%
|
|
15,050
|
|
|
14.9
|
%
|
||
Total costs of company restaurant sales
|
84,113
|
|
|
85.4
|
%
|
|
86,858
|
|
|
85.8
|
%
|
||
Costs of franchise and license revenue, excluding depreciation and amortization (a)
|
27,058
|
|
|
51.2
|
%
|
|
28,556
|
|
|
52.8
|
%
|
||
General and administrative expenses
|
18,811
|
|
|
12.4
|
%
|
|
16,560
|
|
|
10.7
|
%
|
||
Depreciation and amortization
|
6,233
|
|
|
4.1
|
%
|
|
6,514
|
|
|
4.2
|
%
|
||
Operating (gains), losses and other charges, net
|
(8,935
|
)
|
|
(5.9
|
)%
|
|
360
|
|
|
0.2
|
%
|
||
Total operating costs and expenses, net
|
127,280
|
|
|
84.1
|
%
|
|
138,848
|
|
|
89.4
|
%
|
||
Operating income
|
24,131
|
|
|
15.9
|
%
|
|
16,425
|
|
|
10.6
|
%
|
||
Interest expense, net
|
5,407
|
|
|
3.6
|
%
|
|
4,625
|
|
|
3.0
|
%
|
||
Other nonoperating (income) expense, net
|
(1,423
|
)
|
|
(0.9
|
)%
|
|
212
|
|
|
0.1
|
%
|
||
Net income before income taxes
|
20,147
|
|
|
13.3
|
%
|
|
11,588
|
|
|
7.5
|
%
|
||
Provision for income taxes
|
4,657
|
|
|
3.1
|
%
|
|
1,829
|
|
|
1.2
|
%
|
||
Net income
|
$
|
15,490
|
|
|
10.2
|
%
|
|
$
|
9,759
|
|
|
6.3
|
%
|
|
|
|
|
|
|
|
|
||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
|
||
Company average unit sales
|
$
|
582
|
|
|
|
|
|
$
|
565
|
|
|
|
|
Franchise average unit sales
|
$
|
402
|
|
|
|
|
|
$
|
396
|
|
|
|
|
Company equivalent units (b)
|
169
|
|
|
|
|
|
179
|
|
|
|
|
||
Franchise equivalent units (b)
|
1,534
|
|
|
|
|
|
1,543
|
|
|
|
|
||
Company same-store sales increase (c)(d)
|
1.5
|
%
|
|
|
|
|
3.2
|
%
|
|
|
|
||
Domestic franchise same-store sales increase (c)(d)
|
1.2
|
%
|
|
|
|
|
1.2
|
%
|
|
|
|
(a)
|
Costs of company restaurant sales percentages are as a percentage of company restaurant sales. Costs of franchise and license revenue percentages are as a percentage of franchise and license revenue. All other percentages are as a percentage of total operating revenue.
|
(b)
|
Equivalent units are calculated as the weighted average number of units outstanding during a defined time period.
|
(c)
|
Same-store sales include sales from company restaurants or non-consolidated franchised and licensed restaurants that were open the same period in the prior year.
|
(d)
|
Prior year amounts have not been restated for 2019 comparable units.
|
|
Quarter Ended
|
||||
|
March 27, 2019
|
|
March 28, 2018
|
||
Company restaurants, beginning of period
|
173
|
|
|
178
|
|
Units opened
|
—
|
|
|
—
|
|
Units acquired from franchisees
|
—
|
|
|
5
|
|
Units sold to franchisees
|
(3
|
)
|
|
—
|
|
Units closed
|
—
|
|
|
(1
|
)
|
End of period
|
170
|
|
|
182
|
|
|
|
|
|
||
Franchised and licensed restaurants, beginning of period
|
1,536
|
|
|
1,557
|
|
Units opened
|
2
|
|
|
10
|
|
Units purchased from Company
|
3
|
|
|
—
|
|
Units acquired by Company
|
—
|
|
|
(5
|
)
|
Units closed
|
(6
|
)
|
|
(20
|
)
|
End of period
|
1,535
|
|
|
1,542
|
|
Total restaurants, end of period
|
1,705
|
|
|
1,724
|
|
|
Quarter Ended
|
||||||||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||
Utilities
|
$
|
3,372
|
|
|
3.4
|
%
|
|
$
|
3,405
|
|
|
3.4
|
%
|
Repairs and maintenance
|
1,888
|
|
|
1.9
|
%
|
|
1,890
|
|
|
1.9
|
%
|
||
Marketing
|
3,707
|
|
|
3.8
|
%
|
|
3,765
|
|
|
3.7
|
%
|
||
Other direct costs
|
5,625
|
|
|
5.7
|
%
|
|
5,990
|
|
|
5.9
|
%
|
||
Other operating expenses
|
$
|
14,592
|
|
|
14.8
|
%
|
|
$
|
15,050
|
|
|
14.9
|
%
|
|
Quarter Ended
|
||||||||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||
Royalties
|
$
|
25,240
|
|
|
47.7
|
%
|
|
$
|
25,165
|
|
|
46.5
|
%
|
Advertising revenue
|
18,942
|
|
|
35.8
|
%
|
|
19,310
|
|
|
35.7
|
%
|
||
Initial and other fees
|
1,139
|
|
|
2.2
|
%
|
|
1,417
|
|
|
2.6
|
%
|
||
Occupancy revenue
|
7,545
|
|
|
14.3
|
%
|
|
8,188
|
|
|
15.1
|
%
|
||
Franchise and license revenue
|
$
|
52,866
|
|
|
100.0
|
%
|
|
$
|
54,080
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||||
Advertising costs
|
$
|
18,942
|
|
|
35.8
|
%
|
|
$
|
19,310
|
|
|
35.7
|
%
|
Occupancy costs
|
5,249
|
|
|
9.9
|
%
|
|
5,829
|
|
|
10.8
|
%
|
||
Other direct costs
|
2,867
|
|
|
5.4
|
%
|
|
3,417
|
|
|
6.3
|
%
|
||
Costs of franchise and license revenue
|
$
|
27,058
|
|
|
51.2
|
%
|
|
$
|
28,556
|
|
|
52.8
|
%
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Share-based compensation
|
$
|
2,253
|
|
|
$
|
1,350
|
|
Other general and administrative expenses
|
16,558
|
|
|
15,210
|
|
||
Total general and administrative expenses
|
$
|
18,811
|
|
|
$
|
16,560
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Depreciation of property and equipment
|
$
|
4,283
|
|
|
$
|
4,480
|
|
Amortization of financing lease ROU assets
|
995
|
|
|
1,071
|
|
||
Amortization of intangible and other assets
|
955
|
|
|
963
|
|
||
Total depreciation and amortization expense
|
$
|
6,233
|
|
|
$
|
6,514
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Gains on sales of assets and other, net
|
(9,475
|
)
|
|
(37
|
)
|
||
Restructuring charges and exit costs
|
540
|
|
|
360
|
|
||
Impairment charges
|
—
|
|
|
37
|
|
||
Operating (gains), losses and other charges, net
|
$
|
(8,935
|
)
|
|
$
|
360
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Exit costs
|
$
|
122
|
|
|
$
|
24
|
|
Severance and other restructuring charges
|
418
|
|
|
336
|
|
||
Total restructuring and exit costs
|
$
|
540
|
|
|
$
|
360
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Interest on credit facilities
|
$
|
3,394
|
|
|
$
|
2,590
|
|
Interest on interest rate swaps
|
(24
|
)
|
|
(140
|
)
|
||
Interest on financing lease liabilities
|
1,516
|
|
|
1,604
|
|
||
Letters of credit and other fees
|
304
|
|
|
320
|
|
||
Interest income
|
(42
|
)
|
|
(29
|
)
|
||
Total cash interest
|
5,148
|
|
|
4,345
|
|
||
Amortization of deferred financing costs
|
152
|
|
|
152
|
|
||
Interest accretion on other liabilities
|
107
|
|
|
128
|
|
||
Total interest expense, net
|
$
|
5,407
|
|
|
$
|
4,625
|
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Net cash provided by operating activities
|
$
|
12,468
|
|
|
$
|
3,450
|
|
Net cash used in investing activities
|
(1,347
|
)
|
|
(13,637
|
)
|
||
Net cash (used in) provided by financing activities
|
(14,250
|
)
|
|
9,123
|
|
||
Decrease in cash and cash equivalents
|
$
|
(3,129
|
)
|
|
$
|
(1,064
|
)
|
|
Quarter Ended
|
||||||
|
March 27, 2019
|
|
March 28, 2018
|
||||
|
(In thousands)
|
||||||
Facilities
|
$
|
1,064
|
|
|
$
|
2,208
|
|
New construction
|
1,320
|
|
|
205
|
|
||
Remodeling
|
349
|
|
|
126
|
|
||
Information technology
|
332
|
|
|
215
|
|
||
Other
|
44
|
|
|
1,394
|
|
||
Capital expenditures (excluding acquisitions)
|
$
|
3,109
|
|
|
$
|
4,148
|
|
Trade Date
|
|
Effective Date
|
|
Maturity Date
|
|
Notional Amount
|
|
Fixed Rate
|
|||
|
|
|
|
|
|
(In thousands)
|
|
|
|||
March 20, 2015
|
|
March 29, 2018
|
|
March 31, 2025
|
|
$
|
120,000
|
|
|
2.44
|
%
|
October 1, 2015
|
|
March 29, 2018
|
|
March 31, 2026
|
|
50,000
|
|
|
2.46
|
%
|
|
February 15, 2018
|
|
March 31, 2020
|
|
December 31, 2033
|
|
80,000
|
|
(1)
|
3.19
|
%
|
(1)
|
The notional amount of the swaps entered into on February 15, 2018 increases annually beginning September 28, 2020 until they reach the maximum notional amount of $425.0 million on September 26, 2029.
|
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share (1)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Programs (2)
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Programs (2)
|
||||||
|
(In thousands, except per share amounts)
|
||||||||||||
December 27, 2018 - January 23, 2019
|
104
|
|
|
$
|
16.93
|
|
|
104
|
|
|
$
|
126,626
|
|
January 24, 2019 - February 20, 2019
|
103
|
|
|
17.73
|
|
|
103
|
|
|
$
|
124,800
|
|
|
February 21, 2019 - March 27, 2019
|
689
|
|
(3)
|
17.39
|
|
(3)
|
689
|
|
(3)
|
$
|
119,450
|
|
|
Total
|
896
|
|
|
$
|
17.37
|
|
(3)
|
896
|
|
|
|
(1)
|
Average price paid per share excludes commissions.
|
(2)
|
On October 27, 2017, we announced that our Board of Directors approved a new share repurchase program, authorizing us to repurchase up to an additional $200 million of our common stock (in addition to prior authorizations). Such repurchases may take place from time to time in the open market (including pre-arranged stock trading plans in accordance with the guidelines specified in Rule 10b5-1 under the Exchange Act) or in privately negotiated transactions, subject to market and business conditions. During the quarter ended March 27, 2019, taking into consideration the settlement of the ASR agreement (described below), we purchased 895,918 shares of our common stock for an aggregate consideration of approximately $8.9 million pursuant to the share repurchase program.
|
(3)
|
Includes the settlement of the $6.8 million equity forward contract and the final delivery of 0.4 million shares of our common stock received under the ASR agreement we entered in November 2018 to repurchase an aggregate $25 million of our common stock. In total 1.5 million shares of our common stock were repurchased pursuant to the ASR agreement at an average purchase price of $17.04.
|
Exhibit No.
|
|
Description
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
DENNY'S CORPORATION
|
|
|
|
|
|
|
|
Date:
|
May 3, 2019
|
By:
|
/s/ F. Mark Wolfinger
|
|
|
|
|
F. Mark Wolfinger
|
|
|
|
|
Executive Vice President,
Chief Administrative Officer and
Chief Financial Officer
|
|
|
|
|
|
|
Date:
|
May 3, 2019
|
By:
|
/s/ Jay C. Gilmore
|
|
|
|
|
Jay C. Gilmore
|
|
|
|
|
Vice President,
Chief Accounting Officer and
Corporate Controller
|
|
•
|
Target Award of TSR Performance Share Units = Total Target Number of Performance Share Units * 50% =
|
•
|
Target Award of Adjusted EPS Growth Performance Share Units = Total Target Number of Performance Share Units * 50% =
|
1.
|
Vesting and Forfeiture of Award. If the Threshold Performance Goal is satisfied, the Award will vest and become non-forfeitable on December 29, 2021, subject to accelerated vesting under certain circumstances as provided in Section 4 below (the “Vesting Date”). Notwithstanding anything contained in the Plan to the contrary, if Grantee’s employment with the Company terminates for any reason other than as set forth in paragraph (a) or (b) of Section 4 below, Grantee shall forfeit all of Grantee’s right, title and interest in and to any unvested Performance Share Units as of the date of termination of employment. In addition, if Grantee’s employment is terminated by the Company for Cause, Grantee shall also forfeit any vested Performance Share Units that have not yet been converted to Shares; provided, that the foregoing shall not apply to any vested Performance Share Units that are deferred pursuant to Section 14 below.
|
2.
|
Performance Share Units Earned Based on TSR Comparison and Adjusted EPS Growth. Except as otherwise provided in Sections 4 and 5 below, the number of Performance Share Units earned shall be determined following the end of the Performance Period based on achievement of the TSR Comparison and Adjusted EPS Growth goals set by and on file with the Compensation Committee.
|
3.
|
Conversion to Shares. Except as otherwise provided in Sections 4, 5 and 14 below, the earned Performance Share Units (as determined based on the TSR Comparison and Adjusted EPS Growth as described in Section 2 above) will be converted into Shares as soon as practicable following the end of the Performance Period, and no later than February 28, 2022. Any fractional Shares will be rounded up or down to the nearest next whole Share. Any Performance Share Units that are not earned will be forfeited. Stock certificates evidencing Shares paid upon conversion of the Performance Share Units earned will be registered on the books of the Company in Grantee’s name (or in street name to Grantee’s brokerage account) as of the date of payment in uncertificated (book- entry) form.
|
4.
|
Vesting and Payout Under Certain Employment Terminations. The Award shall be subject to accelerated vesting and/or payout in connection with termination of employment under certain circumstances, as set forth below.
|
5.
|
Change in Control. Upon a Change in Control of the Company, the Award will vest and become non-forfeitable. The number of Performance Share Units earned shall be determined based on the TSR Comparison and Adjusted EPS Growth performance as described in Section 2 above, subject to the following adjustments: (i) the TSR Comparison shall be applied based on the Company’s TSR ranking relative to the Peer Group (S&P 600 Small Cap Consumer Discretionary Index companies) as of the date of the Change in Control (as if the Performance Period had ended on the date of the Change in Control), and (ii) Adjusted EPS Growth performance shall be determined based on actual EPS Growth as of the end of the Company’s fiscal quarter preceding the fiscal quarter in which the Change in Control occurs. The earned Performance Share Units shall then be converted into Shares and paid out within 30 days following the Change in Control.
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6.
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Limitation of Rights. The Award does not confer to Grantee or Grantee’s beneficiary any rights of a stockholder of the Company unless and until Shares are in fact issued to such person in connection with the Award. Nothing in this Award Certificate shall interfere with or limit in any way the right of the Company or any Affiliate to terminate Grantee’s employment at any time, nor confer upon Grantee any right to continue in employment of the Company or any Affiliate.
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7.
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Payment of Taxes. Grantee will owe federal, state, and local taxes (including FICA required by law to be withheld with respect to any taxable event arising as a result of the vesting or settlement of the Award (the “Taxes”)). The withholding of Taxes shall be mandatorily satisfied by withholding from the settlement of the Performance Share Units a number of Shares having a fair market value equal to the amount required to be withheld for the Taxes (provided, however, that if Grantee has elected to defer 100% of his or her Award as provided in Section 14 herein (or a lesser amount but the remaining number of Shares are insufficient to cover the applicable FICA obligation), any Grantee FICA obligation will be separately payable to the Company by cash or check). Grantee’s acceptance of the Award constitutes Grantee’s instruction and authorization to the Company to withhold on Grantee’s behalf a number of Shares sufficient to satisfy the Taxes (except as provided in the foregoing sentence). The obligations of the Company under this Award Certificate will be conditional on such payment of the Taxes by Grantee.
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8.
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Restrictions on Issuance of Shares. If at any time the Compensation Committee shall determine, in its discretion, that registration, listing or qualification of the Shares underlying the Performance Share Units upon any securities exchange or similar self-regulatory organization or under any foreign, federal, or local law or practice, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition to the settlement of the Performance Share Units, the Shares will not be paid unless and until such registration, listing, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Compensation Committee.
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9.
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Plan Controls. The terms contained in the Plan are incorporated into and made a part of this Award Certificate and this Award Certificate shall be governed by and construed in accordance with the Plan. In the event of any actual or alleged conflict between the provisions of the Plan and the provisions of this Award Certificate, the provisions of the Plan shall be controlling and determinative.
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10.
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Successors. This Award Certificate shall be binding upon any successor of the Company, in accordance with the terms of this Award Certificate and thePlan.
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11.
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Severability. If any one or more of the provisions contained in this Award Certificate is deemed to be invalid, illegal or unenforceable, the other provisions of this Award Certificate will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.
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12.
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Notice. Notices and communications under this Award Certificate must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid. Notices to the Company must be addressed to Denny’s Corporation, 203 East Main Street, Spartanburg, SC 29319-0001, Attn: Secretary, or any other address designated by the Company in a written notice to Grantee. Notices to Grantee will be directed to the address of Grantee then currently on file with the Company, or at any other address given by Grantee in a written notice to the Company.
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13.
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Clawback or Recoupment Policy. Grantee agrees that Grantee will be subject to any compensation, clawback and recoupment policies in the Plan and that may be applicable to Grantee as an employee of the Company, as in effect from time to time and as approved by the Board of Directors, the Compensation Committee or a duly authorized committee thereof, whether or not approved before or after the Grant Date.
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14.
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Deferral Election. Notwithstanding anything contained herein to the contrary, Grantee will be permitted to make deferral elections with respect to the Award pursuant to the Denny’s Deferred Compensation Plan, as amended and restated (the “DC Plan”). Any deferral election shall be made in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the DC Plan terms and pursuant to a Deferral Agreement (as defined in the DC Plan) and may be credited with Dividend Equivalents as set forth in the DC Plan.
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15.
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Governing Law. This Award Certificate shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law, rule or principle that might otherwise refer construction or interpretation of this Award Certificate to the substantive law of another jurisdiction.
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16.
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Section 409A Compliance. This Award Certificate is intended to be exempt from or otherwise comply with the provisions of Section 409A of the Code. The Company may change or modify the terms of this Award Certificate without Grantee’s consent or signature if the Company determines, in its sole discretion, provided that such change or modification is necessary for purposes of compliance with or exemption from the requirements of Section 409A of the Code or any regulations or other guidance issued thereunder.
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•
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Target Award of TSR Performance Share Units = Total Target Number of Performance Share Units * 50% =
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•
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Target Award of Adjusted EPS Growth Performance Share Units = Total Target Number of Performance Share Units * 50% =
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1.
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Vesting and Forfeiture of Award. If the Threshold Performance Goal is satisfied, the Award will vest and become non-forfeitable on December 29, 2021, subject to accelerated vesting under certain circumstances as provided in Section 4 below (the “Vesting Date”). Notwithstanding anything contained in the Plan to the contrary, if Grantee’s employment with the Company terminates for any reason other than as set forth in paragraph (a) or (b) of Section 4 below, Grantee shall forfeit all of Grantee’s right, title and interest in and to any unvested Performance Share Units as of the date of termination of employment. In addition, if Grantee’s employment is terminated by the Company for Cause, Grantee shall also forfeit any vested Performance Share Units that have not yet been converted to Shares; provided, that the foregoing shall not apply to any vested Performance Share Units that are deferred pursuant to Section 14 below.
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2.
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Performance Share Units Earned Based on TSR Comparison and Adjusted EPS Growth. Except as otherwise provided in Sections 4 and 5 below, the number of Performance Share Units earned shall be determined following the end of the Performance Period based on achievement of the TSR Comparison and Adjusted EPS Growth goals set by and on file with the Compensation Committee.
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3.
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Conversion to Shares. Except as otherwise provided in Sections 4, 5 and 14 below, the earned Performance Share Units (as determined based on the TSR Comparison and Adjusted EPS Growth as described in Section 2 above) will be converted into Shares as soon as practicable following the end of the Performance Period, and no later than February 28, 2022. Any fractional Shares will be rounded up or down to the nearest next whole Share. Any Performance Share Units that are not earned will be forfeited. Stock certificates evidencing Shares paid upon conversion of the Performance Share Units earned will be registered on the books of the Company in Grantee’s name (or in street name to Grantee’s brokerage account) as of the date of payment in uncertificated (book- entry) form.
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4.
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Vesting and Payout Under Certain Employment Terminations. The Award shall be subject to accelerated vesting and/or payout in connection with termination of employment under certain circumstances, as set forth below.
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(c)
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In the event of Grantee’s termination of employment with the Company due to Retirement, 100% of the TSR Performance Share Units and the Adjusted EPS Growth Performance Share Units will vest and become non-forfeitable as of the regular Vesting Date, provided (i) Grantee has not engaged in any Restricted Activities with a Competitor during the Performance Period and prior to the Vesting Date, (ii) Grantee’s termination of employment with the Company due to Retirement occurs on or after December 31, 2020, and (iii) Grantee’s has achieved the Retirement Goal (as defined below). For the avoidance of doubt, if Grantee’s Retirement does not comply with the foregoing requirements, the Pro Rata Target Amounts will vest and become non-forfeitable in accordance with Section 4(b). The number of Performance Share Units earned shall be determined based on the TSR Comparison and Adjusted EPS Growth performance as described in Section 2 above through the end of the regular Performance Period. The earned Performance Share Units shall convert into Shares and be paid at the same time and on the regular payment schedule set forth in Section 3 above.
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5.
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Change in Control. Upon a Change in Control of the Company, the Award will vest and become non-forfeitable. The number of Performance Share Units earned shall be determined based on the TSR Comparison and Adjusted EPS Growth performance as described in Section 2 above, subject to the following adjustments: (i) the TSR Comparison shall be applied based on the Company’s TSR ranking relative to the Peer Group (S&P 600 Small Cap Consumer Discretionary Index companies) as of the date of the Change in Control (as if the Performance Period had ended on the date of the Change in Control), and (ii) Adjusted EPS Growth performance shall be determined based on actual EPS Growth as of the end of the Company’s fiscal quarter preceding the fiscal quarter in which the Change in Control occurs. The earned Performance Share Units shall then be converted into Shares and paid out within 30 days following the Change in Control.
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6.
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Limitation of Rights. The Award does not confer to Grantee or Grantee’s beneficiary any rights of a stockholder of the Company unless and until Shares are in fact issued to such person in connection with the Award. Nothing in this Award Certificate shall interfere with or limit in any way the right of the Company or any Affiliate to terminate Grantee’s employment at any time, nor confer upon Grantee any right to continue in employment of the Company or any Affiliate.
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7.
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Payment of Taxes. Grantee will owe federal, state, and local taxes (including FICA required by law to be withheld with respect to any taxable event arising as a result of the vesting or settlement of the Award (the “Taxes”)). The withholding of Taxes shall be mandatorily satisfied by withholding from the settlement of the Performance Share Units a number of Shares having a fair market value equal to the amount required to be withheld for the Taxes (provided, however, that if Grantee has elected to defer 100% of his or her Award as provided in Section 14 herein (or a lesser amount but the remaining number of Shares are insufficient to cover the applicable FICA obligation), any Grantee FICA obligation will be separately payable to the Company by cash or check). Grantee’s acceptance of the Award constitutes Grantee’s instruction and authorization to the Company to withhold on Grantee’s behalf a number of Shares sufficient to satisfy the Taxes (except as provided in the foregoing sentence). The obligations of the Company under this Award Certificate will be conditional on such payment of the Taxes by Grantee.
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8.
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Restrictions on Issuance of Shares. If at any time the Compensation Committee shall determine, in its discretion, that registration, listing or qualification of the Shares underlying the Performance Share Units upon any securities exchange or similar self-regulatory organization or under any foreign, federal, or local law or practice, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition to the settlement of the Performance Share Units, the Shares will not be paid unless and until such registration, listing, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Compensation Committee.
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9.
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Plan Controls. The terms contained in the Plan are incorporated into and made a part of this Award Certificate and this Award Certificate shall be governed by and construed in accordance with the Plan. In the event of any actual or alleged conflict between the provisions of the Plan and the provisions of this Award Certificate, the provisions of the Plan shall be controlling and determinative.
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10.
|
Successors. This Award Certificate shall be binding upon any successor of the Company, in accordance with the terms of this Award Certificate and thePlan.
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11.
|
Severability. If any one or more of the provisions contained in this Award Certificate is deemed to be invalid, illegal or unenforceable, the other provisions of this Award Certificate will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.
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12.
|
Notice. Notices and communications under this Award Certificate must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid. Notices to the Company must be addressed to Denny’s Corporation, 203 East Main Street, Spartanburg, SC 29319-0001, Attn: Secretary, or any other address designated by the Company in a written notice to Grantee. Notices to Grantee will be directed to the address of Grantee then currently on file with the Company, or at any other address given by Grantee in a written notice to the Company.
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13.
|
Clawback or Recoupment Policy. Grantee agrees that Grantee will be subject to any compensation, clawback and recoupment policies in the Plan and that may be applicable to Grantee as an employee of the Company, as in effect from time to time and as approved by the Board of Directors, the Compensation Committee or a duly authorized committee thereof, whether or not approved before or after the Grant Date.
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14.
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Deferral Election. Notwithstanding anything contained herein to the contrary, Grantee will be permitted to make deferral elections with respect to the Award pursuant to the Denny’s Deferred Compensation Plan, as amended and restated (the “DC Plan”). Any deferral election shall be made in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the DC Plan terms and pursuant to a Deferral Agreement (as defined in the DC Plan) and may be credited with Dividend Equivalents as set forth in the DC Plan.
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15.
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Governing Law. This Award Certificate shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law, rule or principle that might otherwise refer construction or interpretation of this Award Certificate to the substantive law of another jurisdiction.
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16.
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Section 409A Compliance. This Award Certificate is intended to be exempt from or otherwise comply with the provisions of Section 409A of the Code. The Company may change or modify the terms of this Award Certificate without Grantee’s consent or signature if the Company determines, in its sole discretion, provided that such change or modification is necessary for purposes of compliance with or exemption from the requirements of Section 409A of the Code or any regulations or other guidance issued thereunder.
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Date: May 3, 2019
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By:
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/s/ John C. Miller
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John C. Miller
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President and Chief Executive Officer
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Date: May 3, 2019
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By:
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/s/ F. Mark Wolfinger
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F. Mark Wolfinger
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Executive Vice President,
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Chief Administrative Officer and
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Chief Financial Officer
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Date: May 3, 2019
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By:
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/s/ John C. Miller
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John C. Miller
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|
|
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President and Chief Executive Officer
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Date: May 3, 2019
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By:
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/s/ F. Mark Wolfinger
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|
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F. Mark Wolfinger
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Executive Vice President,
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Chief Administrative Officer and
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Chief Financial Officer
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