Delaware
|
|
13-3487402
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
203 East Main Street
|
|
|
|
Spartanburg,
|
South Carolina
|
|
29319-9966
|
(Address of principal executive offices)
|
|
(Zip Code)
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Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
$.01 Par Value, Common Stock
|
|
DENN
|
|
The Nasdaq Stock Market
|
Large accelerated filer
|
☑
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
Emerging growth company
|
☐
|
|
Page
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
demographics;
|
•
|
traffic patterns;
|
•
|
visibility;
|
•
|
building constraints;
|
•
|
competition;
|
•
|
environmental restrictions; and
|
•
|
proximity to high-traffic consumer activities.
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||
Company restaurants, beginning of period
|
173
|
|
|
178
|
|
|
169
|
|
|
164
|
|
|
161
|
|
Units opened
|
—
|
|
|
1
|
|
|
3
|
|
|
1
|
|
|
3
|
|
Units acquired from franchisees
|
—
|
|
|
6
|
|
|
10
|
|
|
10
|
|
|
3
|
|
Units sold to franchisees
|
(105
|
)
|
|
(8
|
)
|
|
(4
|
)
|
|
(6
|
)
|
|
(1
|
)
|
Units closed
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
End of period
|
68
|
|
|
173
|
|
|
178
|
|
|
169
|
|
|
164
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Franchised and licensed restaurants, beginning of period
|
1,536
|
|
|
1,557
|
|
|
1,564
|
|
|
1,546
|
|
|
1,541
|
|
Units opened
|
30
|
|
|
29
|
|
|
36
|
|
|
49
|
|
|
42
|
|
Units purchased from Company
|
105
|
|
|
8
|
|
|
4
|
|
|
6
|
|
|
1
|
|
Units acquired by Company
|
—
|
|
|
(6
|
)
|
|
(10
|
)
|
|
(10
|
)
|
|
(3
|
)
|
Units closed
|
(36
|
)
|
|
(52
|
)
|
|
(37
|
)
|
|
(27
|
)
|
|
(35
|
)
|
End of period
|
1,635
|
|
|
1,536
|
|
|
1,557
|
|
|
1,564
|
|
|
1,546
|
|
Total restaurants, end of period
|
1,703
|
|
|
1,709
|
|
|
1,735
|
|
|
1,733
|
|
|
1,710
|
|
Number of Restaurants Owned
|
|
Franchisees
|
|
Percentage of Franchisees
|
|
Restaurants
|
|
Percentage of Restaurants
|
||||
One
|
|
84
|
|
|
35.6
|
%
|
|
84
|
|
|
5.1
|
%
|
Two to five
|
|
84
|
|
|
35.6
|
%
|
|
237
|
|
|
14.5
|
%
|
Six to ten
|
|
33
|
|
|
14.0
|
%
|
|
264
|
|
|
16.1
|
%
|
Eleven to fifteen
|
|
12
|
|
|
5.1
|
%
|
|
145
|
|
|
8.9
|
%
|
Sixteen to thirty
|
|
13
|
|
|
5.5
|
%
|
|
300
|
|
|
18.4
|
%
|
Thirty-one and over
|
|
10
|
|
|
4.2
|
%
|
|
605
|
|
|
37.0
|
%
|
Total
|
|
236
|
|
|
100.0
|
%
|
|
1,635
|
|
|
100.0
|
%
|
Name
|
|
Age
|
|
Positions
|
Christopher D. Bode
|
|
57
|
|
Senior Vice President and Chief Operating Officer
|
|
|
|
|
|
John W. Dillon
|
|
48
|
|
Executive Vice President and Chief Brand Officer
|
|
|
|
|
|
Stephen C. Dunn
|
|
55
|
|
Senior Vice President and Chief Global Development Officer
|
|
|
|
|
|
Michael L. Furlow
|
|
62
|
|
Senior Vice President and Chief Information Officer
|
|
|
|
|
|
John C. Miller
|
|
64
|
|
Chief Executive Officer
|
|
|
|
|
|
Jill A. Van Pelt
|
|
51
|
|
Senior Vice President and Chief People Officer
|
|
|
|
|
|
Robert P. Verostek
|
|
48
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
F. Mark Wolfinger
|
|
64
|
|
President
|
•
|
prevailing economic conditions, including interest rates;
|
•
|
energy costs, especially gasoline prices;
|
•
|
levels of employment;
|
•
|
salaries and wage rates, including tax rates; and
|
•
|
consumer confidence.
|
•
|
restaurant location;
|
•
|
advantageous commercial real estate suitable for restaurants;
|
•
|
number and location of competing restaurants;
|
•
|
attractiveness and repair and maintenance of facilities;
|
•
|
ability to develop and support evolving technology to deliver a consistent and compelling guest experience;
|
•
|
food quality, new product development and value;
|
•
|
dietary trends, including nutritional content;
|
•
|
training, courtesy and hospitality standards;
|
•
|
ability to attract and retain high quality staff;
|
•
|
quality and speed of service; and
|
•
|
the effectiveness of marketing and advertising programs, including the effective use of social media platforms and digital marketing initiatives.
|
•
|
consumer preferences, including nutritional and dietary concerns;
|
•
|
consumer spending habits;
|
•
|
global, national, regional and local economic conditions;
|
•
|
demographic trends;
|
•
|
traffic patterns;
|
•
|
the type, number and location of competing restaurants; and
|
•
|
the ability to renew leased properties on commercially acceptable terms, if at all.
|
•
|
inflation;
|
•
|
volatility in certain commodity markets;
|
•
|
increased food costs;
|
•
|
health concerns arising from food safety issues and other food-related pandemics, outbreaks of flu or viruses, such as coronavirus, or other diseases;
|
•
|
increased energy costs;
|
•
|
labor and employee benefits costs (including increases in minimum hourly wage, employment tax rates, health care costs and workers’ compensation costs);
|
•
|
regional weather conditions; and
|
•
|
the availability of experienced management and hourly employees.
|
•
|
franchisee defaults on their obligations to us arising from financial or other difficulties encountered by them, such as the inability to pay financial obligations including royalties, rent on leases on which we retain contingent liability, and certain loans on which we have guarantees;
|
•
|
limitations on enforcement of franchisee obligations due to bankruptcy or insolvency proceedings;
|
•
|
the inability to participate in business strategy changes due to financial constraints;
|
•
|
failure to operate restaurants in accordance with required standards, including food quality and safety;
|
•
|
and impacts of the financial performance of other businesses operated by franchisees on the overall financial performance and condition of the franchsiee.
|
•
|
inability to identify suitable franchisees;
|
•
|
costs and availability of capital for the Company and/or franchisees;
|
•
|
competition for restaurant sites;
|
•
|
negotiation of favorable purchase or lease terms for restaurant sites;
|
•
|
inability to obtain all required governmental approvals and permits;
|
•
|
delays in completion of construction;
|
•
|
challenge of identifying, recruiting and training qualified restaurant managers;
|
•
|
developed restaurants not achieving the expected revenue or cash flow once opened;
|
•
|
challenges specific to the growth of international operations that are different from domestic development; and
|
•
|
general economic conditions.
|
•
|
preparation, labeling, advertising and sale of food;
|
•
|
sanitation;
|
•
|
health and fire safety;
|
•
|
land use, sign restrictions and environmental matters;
|
•
|
employee health care requirements, including the implementation and uncertain legal, regulatory and cost implications of the health care reform law;
|
•
|
management and protection of the personnel data of our guests, employees and franchisees;
|
•
|
payment card regulation and related industry rules;
|
•
|
the sale of alcoholic beverages;
|
•
|
hiring and employment practices, including minimum wage and tip credit laws and fair labor standards; and
|
•
|
Americans with Disabilities Act.
|
United States
|
|
Company
|
|
Franchised / Licensed
|
|
Total
|
|||
Alabama
|
|
—
|
|
|
6
|
|
|
6
|
|
Alaska
|
|
—
|
|
|
2
|
|
|
2
|
|
Arizona
|
|
1
|
|
|
84
|
|
|
85
|
|
Arkansas
|
|
—
|
|
|
9
|
|
|
9
|
|
California
|
|
25
|
|
|
359
|
|
|
384
|
|
Colorado
|
|
—
|
|
|
19
|
|
|
19
|
|
Connecticut
|
|
—
|
|
|
10
|
|
|
10
|
|
Delaware
|
|
—
|
|
|
1
|
|
|
1
|
|
District of Columbia
|
|
—
|
|
|
2
|
|
|
2
|
|
Florida
|
|
9
|
|
|
122
|
|
|
131
|
|
Georgia
|
|
—
|
|
|
17
|
|
|
17
|
|
Hawaii
|
|
2
|
|
|
4
|
|
|
6
|
|
Idaho
|
|
—
|
|
|
10
|
|
|
10
|
|
Illinois
|
|
—
|
|
|
57
|
|
|
57
|
|
Indiana
|
|
—
|
|
|
37
|
|
|
37
|
|
Iowa
|
|
—
|
|
|
3
|
|
|
3
|
|
Kansas
|
|
—
|
|
|
8
|
|
|
8
|
|
Kentucky
|
|
—
|
|
|
15
|
|
|
15
|
|
Louisiana
|
|
—
|
|
|
5
|
|
|
5
|
|
Maine
|
|
—
|
|
|
6
|
|
|
6
|
|
Maryland
|
|
—
|
|
|
25
|
|
|
25
|
|
Massachusetts
|
|
2
|
|
|
4
|
|
|
6
|
|
Michigan
|
|
—
|
|
|
18
|
|
|
18
|
|
Minnesota
|
|
—
|
|
|
18
|
|
|
18
|
|
Mississippi
|
|
—
|
|
|
4
|
|
|
4
|
|
Missouri
|
|
—
|
|
|
35
|
|
|
35
|
|
Montana
|
|
—
|
|
|
4
|
|
|
4
|
|
Nebraska
|
|
—
|
|
|
3
|
|
|
3
|
|
Nevada
|
|
7
|
|
|
32
|
|
|
39
|
|
New Hampshire
|
|
2
|
|
|
—
|
|
|
2
|
|
New Jersey
|
|
—
|
|
|
8
|
|
|
8
|
|
New Mexico
|
|
—
|
|
|
29
|
|
|
29
|
|
New York
|
|
—
|
|
|
54
|
|
|
54
|
|
North Carolina
|
|
—
|
|
|
28
|
|
|
28
|
|
North Dakota
|
|
—
|
|
|
4
|
|
|
4
|
|
Ohio
|
|
—
|
|
|
40
|
|
|
40
|
|
Oklahoma
|
|
—
|
|
|
14
|
|
|
14
|
|
Oregon
|
|
—
|
|
|
23
|
|
|
23
|
|
Pennsylvania
|
|
—
|
|
|
37
|
|
|
37
|
|
Rhode Island
|
|
—
|
|
|
5
|
|
|
5
|
|
South Carolina
|
|
3
|
|
|
11
|
|
|
14
|
|
South Dakota
|
|
—
|
|
|
3
|
|
|
3
|
|
Tennessee
|
|
—
|
|
|
7
|
|
|
7
|
|
Texas
|
|
13
|
|
|
183
|
|
|
196
|
|
Utah
|
|
—
|
|
|
29
|
|
|
29
|
|
Vermont
|
|
2
|
|
|
—
|
|
|
2
|
|
Virginia
|
|
2
|
|
|
25
|
|
|
27
|
|
Washington
|
|
—
|
|
|
41
|
|
|
41
|
|
West Virginia
|
|
—
|
|
|
4
|
|
|
4
|
|
Wisconsin
|
|
—
|
|
|
23
|
|
|
23
|
|
Wyoming
|
|
—
|
|
|
4
|
|
|
4
|
|
Total Domestic
|
|
68
|
|
|
1,491
|
|
|
1,559
|
|
International
|
|
Company
|
|
Franchised / Licensed
|
|
Total
|
|||
Aruba
|
|
—
|
|
|
1
|
|
|
1
|
|
Canada
|
|
—
|
|
|
77
|
|
|
77
|
|
Costa Rica
|
|
—
|
|
|
3
|
|
|
3
|
|
El Salvador
|
|
—
|
|
|
1
|
|
|
1
|
|
Guam
|
|
—
|
|
|
2
|
|
|
2
|
|
Guatemala
|
|
—
|
|
|
2
|
|
|
2
|
|
Honduras
|
|
—
|
|
|
6
|
|
|
6
|
|
Indonesia
|
|
—
|
|
|
1
|
|
|
1
|
|
Mexico
|
|
—
|
|
|
11
|
|
|
11
|
|
New Zealand
|
|
—
|
|
|
7
|
|
|
7
|
|
Philippines
|
|
—
|
|
|
10
|
|
|
10
|
|
Puerto Rico
|
|
—
|
|
|
15
|
|
|
15
|
|
United Arab Emirates
|
|
—
|
|
|
6
|
|
|
6
|
|
United Kingdom
|
|
—
|
|
|
2
|
|
|
2
|
|
Total International
|
|
—
|
|
|
144
|
|
|
144
|
|
Total Domestic
|
|
68
|
|
|
1,491
|
|
|
1,559
|
|
Total
|
|
68
|
|
|
1,635
|
|
|
1,703
|
|
|
Company Restaurants
|
|
Franchised Restaurants
|
|
Total
|
|||
Owned properties
|
15
|
|
|
76
|
|
|
91
|
|
Leased properties
|
53
|
|
|
229
|
|
|
282
|
|
|
68
|
|
|
305
|
|
|
373
|
|
•
|
an amount not to exceed $50.0 million if the Consolidated Leverage Ratio (as defined in the credit agreement, as amended) is 3.5x or greater and an unlimited amount if the Consolidated Leverage Ratio is below 3.5x, provided that, in each case, at least $20.0 million of availability is maintained under the revolving credit facility after such payment; and
|
•
|
an additional annual aggregate amount equal to $0.05 times the number of outstanding shares of our common stock, as of September 27, 2017, plus each additional share of our common stock that is issued after such date.
|
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)
|
|
|
|
||||||||||
September 26, 2019 – October 23, 2019
|
|
281
|
|
|
$
|
22.03
|
|
|
281
|
|
|
$
|
71,402
|
|
|
October 24, 2019 – November 20, 2019
|
|
942
|
|
|
19.86
|
|
|
942
|
|
|
$
|
52,674
|
|
|
|
November 21, 2019 – December 25, 2019
|
|
1,024
|
|
|
19.98
|
|
|
1,024
|
|
|
$
|
282,196
|
|
|
|
Total
|
|
2,247
|
|
|
$
|
20.18
|
|
|
2,247
|
|
|
|
|
(1)
|
Average price paid per share excludes commissions.
|
(2)
|
On December 2, 2019, we announced that our Board of Directors approved a new share repurchase program, authorizing us to repurchase up to an additional $250 million of our common stock (in addition to prior authorizations). Such repurchases are to be made in a manner similar to, and will be in addition to, authorizations under the October 27, 2017 repurchase program. During the quarter ended December 25, 2019, we purchased 2,246,739 shares of our common stock for an aggregate consideration of approximately $45.4 million pursuant to this share repurchase program.
|
|
Russell 2000®
Index (1)
|
|
Peer Group (2)
|
|
Denny’s Corporation
|
||||||
December 31, 2014
|
$
|
100.00
|
|
|
$
|
100.00
|
|
|
$
|
100.00
|
|
December 30, 2015
|
$
|
96.74
|
|
|
$
|
88.82
|
|
|
$
|
96.90
|
|
December 28, 2016
|
$
|
116.26
|
|
|
$
|
108.86
|
|
|
$
|
124.83
|
|
December 27, 2017
|
$
|
133.58
|
|
|
$
|
100.27
|
|
|
$
|
129.97
|
|
December 26, 2018
|
$
|
116.57
|
|
|
$
|
101.98
|
|
|
$
|
157.71
|
|
December 25, 2019
|
$
|
149.23
|
|
|
$
|
100.17
|
|
|
$
|
196.41
|
|
(1)
|
The Russell 2000 Index is a broad equity market index of 2,000 companies that measures the performance of the small-cap segment of the U.S. equity universe. As of December 25, 2019, the weighted average market capitalization of companies within the index was approximately $2.5 billion with the median market capitalization being approximately $0.8 billion.
|
(2)
|
The peer group consists of 12 public companies that operate in the restaurant industry. The peer group includes the following companies: BJ’s Restaurants, Inc. (BJRI), Brinker International, Inc. (EAT), Cracker Barrel Old Country Store, Inc. (CBRL), Dine Brands Global, Inc. (DIN), El Pollo Loco Holdings, Inc. (LOCO), Fiesta Restaurant Group, Inc. (FRGI), Jack in the Box Inc. (JACK), Nathan’s Famous, Inc. (NATH), Red Robin Gourmet Burgers, Inc. (RRGB), Del Taco Restaurants, Inc. (TACO), Texas Roadhouse, Inc. (TXRH), and The Cheesecake Factory Incorporated (CAKE).
|
|
|
Fiscal Year Ended
|
||||||||||||||||||
|
|
December 25, 2019 (a)(b)
|
|
December 26, 2018 (c)
|
|
December 27, 2017
|
|
December 28, 2016 (d)
|
|
December 30, 2015
|
||||||||||
|
|
(In millions, except ratios and per share amounts)
|
||||||||||||||||||
Statement of Income Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenue
|
|
$
|
541.4
|
|
|
$
|
630.2
|
|
|
$
|
529.2
|
|
|
$
|
506.9
|
|
|
$
|
491.3
|
|
Operating income
|
|
$
|
165.0
|
|
|
$
|
73.6
|
|
|
$
|
70.7
|
|
|
$
|
47.0
|
|
|
$
|
63.2
|
|
Net income
|
|
$
|
117.4
|
|
|
$
|
43.7
|
|
|
$
|
39.6
|
|
|
$
|
19.4
|
|
|
$
|
36.0
|
|
Basic net income per share:
|
|
$
|
1.96
|
|
|
$
|
0.69
|
|
|
$
|
0.58
|
|
|
$
|
0.26
|
|
|
$
|
0.44
|
|
Diluted net income per share:
|
|
$
|
1.90
|
|
|
$
|
0.67
|
|
|
$
|
0.56
|
|
|
$
|
0.25
|
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends per common share (e)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets
|
|
$
|
52.7
|
|
|
$
|
47.6
|
|
|
$
|
41.3
|
|
|
$
|
35.9
|
|
|
$
|
36.4
|
|
Working capital deficit (f)
|
|
$
|
(42.8
|
)
|
|
$
|
(47.1
|
)
|
|
$
|
(53.6
|
)
|
|
$
|
(57.5
|
)
|
|
$
|
(65.1
|
)
|
Property and financing lease right-of-use assets, net
|
|
$
|
109.3
|
|
|
$
|
140.0
|
|
|
$
|
139.9
|
|
|
$
|
133.1
|
|
|
$
|
124.8
|
|
Total assets
|
|
$
|
460.4
|
|
|
$
|
335.3
|
|
|
$
|
323.8
|
|
|
$
|
306.2
|
|
|
$
|
297.0
|
|
Long-term debt and finance lease obligations, excluding current portion
|
|
$
|
254.8
|
|
|
$
|
313.7
|
|
|
$
|
286.1
|
|
|
$
|
242.3
|
|
|
$
|
212.5
|
|
(a)
|
During 2019, the Company migrated from a 90% franchised business model to one that is 96% franchised by selling company owned restaurants to franchisees which resulted in, among other items, a reduction in revenues and the recording of approximately $82.9 million of gains. In addition, the Company also recorded an additional $11.9 million of gains related to the sale of real estate. See Note 4 and Note 5 to our Consolidated Financial Statements for details.
|
(b)
|
During 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. Upon adoption, we recorded operating lease liabilities of $101.3 million and right-of-use assets of $94.2 million related to existing operating leases. See Note 2 and Note 3 to our Consolidated Financial Statements for details.
|
(c)
|
During 2018, we adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” which clarifies the principles used to recognize revenue. We elected to apply the modified retrospective method of adoption; therefore, results for reporting periods after December 28, 2017 are presented under the new guidance and prior period amounts have not been adjusted. The increase in operating revenue was primarily the result of recognizing advertising revenue on a gross basis versus recording it on a net basis as previously reported. See Note 12 to our Consolidated Financial Statements for details.
|
(d)
|
During 2016, we completed the liquidation of the Advantica Pension Plan (the “Pension Plan”). Accordingly, we made a final contribution of $9.5 million to the Pension Plan and recognized a settlement loss of $24.3 million, reflecting the recognition of unamortized actuarial losses that were recorded in accumulated other comprehensive income.
|
(e)
|
Our credit facility allows for the payment of cash dividends and/or the purchase of our common stock subject to certain limitations. See Part II Item 5.
|
(f)
|
A negative working capital position is not unusual for a restaurant operating company.
|
|
Fiscal Year Ended
|
|||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
|||
Company restaurants, beginning of period
|
173
|
|
|
178
|
|
|
169
|
|
Units opened
|
—
|
|
|
1
|
|
|
3
|
|
Units acquired from franchisees
|
—
|
|
|
6
|
|
|
10
|
|
Units sold to franchisees
|
(105
|
)
|
|
(8
|
)
|
|
(4
|
)
|
Units closed
|
—
|
|
|
(4
|
)
|
|
—
|
|
End of period
|
68
|
|
|
173
|
|
|
178
|
|
|
|
|
|
|
|
|||
Franchised and licensed restaurants, beginning of period
|
1,536
|
|
|
1,557
|
|
|
1,564
|
|
Units opened
|
30
|
|
|
29
|
|
|
36
|
|
Units purchased from Company
|
105
|
|
|
8
|
|
|
4
|
|
Units acquired by Company
|
—
|
|
|
(6
|
)
|
|
(10
|
)
|
Units closed
|
(36
|
)
|
|
(52
|
)
|
|
(37
|
)
|
End of period
|
1,635
|
|
|
1,536
|
|
|
1,557
|
|
Total restaurants, end of period
|
1,703
|
|
|
1,709
|
|
|
1,735
|
|
•
|
Company restaurant sales have decreased from $390.4 million in 2017 to $306.4 million in 2019, primarily as a result of the sale of company restaurants to franchisees.
|
•
|
Royalty income, which is included as a component of franchise and license revenue, has increased from $100.6 million in 2017 to $108.8 million in 2019, primarily as a result of the sale of company restaurants to franchisees, increases in same-store sales and a higher average royalty rate.
|
•
|
Occupancy revenues, included as a component of franchise and license revenue, result from leasing or subleasing restaurants to franchisees. When restaurants are sold and leased or subleased to franchisees, the occupancy costs related to these restaurants move from costs of company restaurant sales to costs of franchise and license revenue to match the related occupancy revenue. Additionally, as leases or subleases with franchisees expire, franchise occupancy revenue and costs could decrease if franchisees enter into direct leases with landlords. Occupancy revenue has increased from $35.7 million in 2017 to $38.5 million in 2019 as a result of the sale of restaurants to franchisees, partially offset by the impact of lease expirations. At the end of 2019, we had 305 franchised restaurants that were leased or subleased from Denny’s, compared to 266 at the end of 2017.
|
(1)
|
System-wide same-store sales include sales at company restaurants and non-consolidated franchised and licensed restaurants that were open the same period in the prior year. While we do not record franchise and licensed sales as revenue in our consolidated financial statements, we believe system-wide same-store sales information is useful to investors in understanding our financial performance, as our royalty revenues are calculated based on a percentage of franchise sales. Accordingly, system-wide same-store sales should be considered as a supplement to, not a substitute for, our results as reported under GAAP.
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
|||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Company restaurant sales
|
$
|
306,377
|
|
|
56.6
|
%
|
|
$
|
411,932
|
|
|
65.4
|
%
|
|
$
|
390,352
|
|
|
73.8
|
%
|
Franchise and license revenue
|
235,012
|
|
|
43.4
|
%
|
|
218,247
|
|
|
34.6
|
%
|
|
138,817
|
|
|
26.2
|
%
|
|||
Total operating revenue
|
541,389
|
|
|
100.0
|
%
|
|
630,179
|
|
|
100.0
|
%
|
|
529,169
|
|
|
100.0
|
%
|
|||
Costs of company restaurant sales (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Product costs
|
74,720
|
|
|
24.4
|
%
|
|
100,532
|
|
|
24.4
|
%
|
|
97,825
|
|
|
25.1
|
%
|
|||
Payroll and benefits
|
118,806
|
|
|
38.8
|
%
|
|
164,314
|
|
|
39.9
|
%
|
|
153,037
|
|
|
39.2
|
%
|
|||
Occupancy
|
18,613
|
|
|
6.1
|
%
|
|
23,228
|
|
|
5.6
|
%
|
|
20,802
|
|
|
5.3
|
%
|
|||
Other operating expenses
|
46,257
|
|
|
15.1
|
%
|
|
60,708
|
|
|
14.7
|
%
|
|
53,049
|
|
|
13.6
|
%
|
|||
Total costs of company restaurant sales
|
258,396
|
|
|
84.3
|
%
|
|
348,782
|
|
|
84.7
|
%
|
|
324,713
|
|
|
83.2
|
%
|
|||
Costs of franchise and license revenue (a)
|
120,326
|
|
|
51.2
|
%
|
|
114,296
|
|
|
52.4
|
%
|
|
39,294
|
|
|
28.3
|
%
|
|||
General and administrative expenses
|
69,018
|
|
|
12.7
|
%
|
|
63,828
|
|
|
10.1
|
%
|
|
66,415
|
|
|
12.6
|
%
|
|||
Depreciation and amortization
|
19,846
|
|
|
3.7
|
%
|
|
27,039
|
|
|
4.3
|
%
|
|
23,720
|
|
|
4.5
|
%
|
|||
Operating (gains), losses and other charges, net
|
(91,180
|
)
|
|
(16.8
|
)%
|
|
2,620
|
|
|
0.4
|
%
|
|
4,329
|
|
|
0.8
|
%
|
|||
Total operating costs and expenses, net
|
376,406
|
|
|
69.5
|
%
|
|
556,565
|
|
|
88.3
|
%
|
|
458,471
|
|
|
86.6
|
%
|
|||
Operating income
|
164,983
|
|
|
30.5
|
%
|
|
73,614
|
|
|
11.7
|
%
|
|
70,698
|
|
|
13.4
|
%
|
|||
Interest expense, net
|
18,547
|
|
|
3.4
|
%
|
|
20,745
|
|
|
3.3
|
%
|
|
15,640
|
|
|
3.0
|
%
|
|||
Other nonoperating (income) expense, net
|
(2,763
|
)
|
|
(0.5
|
)%
|
|
619
|
|
|
0.1
|
%
|
|
(1,743
|
)
|
|
(0.3
|
)%
|
|||
Net income before income taxes
|
149,199
|
|
|
27.6
|
%
|
|
52,250
|
|
|
8.3
|
%
|
|
56,801
|
|
|
10.7
|
%
|
|||
Provision for income taxes
|
31,789
|
|
|
5.9
|
%
|
|
8,557
|
|
|
1.4
|
%
|
|
17,207
|
|
|
3.3
|
%
|
|||
Net income
|
$
|
117,410
|
|
|
21.7
|
%
|
|
$
|
43,693
|
|
|
6.9
|
%
|
|
$
|
39,594
|
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Company average unit sales
|
$
|
2,477
|
|
|
|
|
|
$
|
2,300
|
|
|
|
|
$
|
2,278
|
|
|
|
|
|
Franchise average unit sales
|
$
|
1,669
|
|
|
|
|
|
$
|
1,615
|
|
|
|
|
$
|
1,590
|
|
|
|
|
|
Company equivalent units (b)
|
124
|
|
|
|
|
|
179
|
|
|
|
|
171
|
|
|
|
|
||||
Franchise equivalent units (b)
|
1,578
|
|
|
|
|
|
1,538
|
|
|
|
|
1,556
|
|
|
|
|
||||
Company same-store sales increase (c)(d)
|
1.9
|
%
|
|
|
|
|
1.8
|
%
|
|
|
|
1.0
|
%
|
|
|
|
||||
Domestic franchised same-store sales increase (c)(d)
|
2.0
|
%
|
|
|
|
|
0.6
|
%
|
|
|
|
1.1
|
%
|
|
|
|
(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. While we do not record franchise and licensed sales as revenue in our consolidated financial statements, we believe domestic franchised same-store sales information is useful to investors in understanding our financial performance, as our royalty revenues are calculated based on a percentage of franchise sales. Accordingly, domestic franchised same-store sales should be considered as a supplement to, not a substitute for, our results as reported under GAAP.
|
(d)
|
Prior year amounts have not been restated for 2019 comparable restaurants.
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
|||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Utilities
|
$
|
10,359
|
|
|
3.4
|
%
|
|
$
|
14,347
|
|
|
3.5
|
%
|
|
$
|
13,263
|
|
|
3.4
|
%
|
Repairs and maintenance
|
6,792
|
|
|
2.2
|
%
|
|
7,761
|
|
|
1.9
|
%
|
|
6,738
|
|
|
1.7
|
%
|
|||
Marketing
|
11,195
|
|
|
3.7
|
%
|
|
15,008
|
|
|
3.6
|
%
|
|
14,315
|
|
|
3.7
|
%
|
|||
Other direct costs
|
17,911
|
|
|
5.8
|
%
|
|
23,592
|
|
|
5.7
|
%
|
|
18,733
|
|
|
4.8
|
%
|
|||
Other operating expenses
|
$
|
46,257
|
|
|
15.1
|
%
|
|
$
|
60,708
|
|
|
14.7
|
%
|
|
$
|
53,049
|
|
|
13.6
|
%
|
|
Fiscal Year Ended
|
|||||||||||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
|||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Royalties
|
$
|
108,813
|
|
|
46.3
|
%
|
|
$
|
101,557
|
|
|
46.5
|
%
|
|
$
|
100,631
|
|
|
72.5
|
%
|
Advertising revenue
|
81,144
|
|
|
34.5
|
%
|
|
78,308
|
|
|
35.9
|
%
|
|
—
|
|
|
—
|
%
|
|||
Initial and other fees
|
6,541
|
|
|
2.8
|
%
|
|
6,422
|
|
|
2.9
|
%
|
|
2,466
|
|
|
1.8
|
%
|
|||
Occupancy revenue
|
38,514
|
|
|
16.4
|
%
|
|
31,960
|
|
|
14.6
|
%
|
|
35,720
|
|
|
25.7
|
%
|
|||
Franchise and license revenue
|
$
|
235,012
|
|
|
100.0
|
%
|
|
$
|
218,247
|
|
|
100.0
|
%
|
|
$
|
138,817
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Advertising costs
|
$
|
81,144
|
|
|
34.5
|
%
|
|
$
|
78,309
|
|
|
35.9
|
%
|
|
$
|
1,921
|
|
|
1.4
|
%
|
Occupancy costs
|
25,806
|
|
|
11.0
|
%
|
|
22,285
|
|
|
10.2
|
%
|
|
25,466
|
|
|
18.3
|
%
|
|||
Other direct costs
|
13,376
|
|
|
5.7
|
%
|
|
13,702
|
|
|
6.3
|
%
|
|
11,907
|
|
|
8.6
|
%
|
|||
Costs of franchise and license revenue
|
$
|
120,326
|
|
|
51.2
|
%
|
|
$
|
114,296
|
|
|
52.4
|
%
|
|
$
|
39,294
|
|
|
28.3
|
%
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Corporate administrative expenses
|
$
|
50,319
|
|
|
$
|
52,439
|
|
|
$
|
50,838
|
|
Share-based compensation
|
6,694
|
|
|
6,038
|
|
|
8,541
|
|
|||
Incentive compensation
|
9,425
|
|
|
6,388
|
|
|
5,398
|
|
|||
Deferred compensation valuation adjustments
|
2,580
|
|
|
(1,037
|
)
|
|
1,638
|
|
|||
Total general and administrative expenses
|
$
|
69,018
|
|
|
$
|
63,828
|
|
|
$
|
66,415
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Depreciation of property and equipment
|
$
|
13,295
|
|
|
$
|
18,506
|
|
|
$
|
17,121
|
|
Amortization of finance right-of-use assets
|
2,991
|
|
|
4,451
|
|
|
4,087
|
|
|||
Amortization of intangible and other assets
|
3,560
|
|
|
4,082
|
|
|
2,512
|
|
|||
Total depreciation and amortization expense
|
$
|
19,846
|
|
|
$
|
27,039
|
|
|
$
|
23,720
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
(Gains) losses on sales of assets and other, net
|
$
|
(93,608
|
)
|
|
$
|
(513
|
)
|
|
$
|
(1,729
|
)
|
Software implementation costs
|
—
|
|
|
—
|
|
|
5,247
|
|
|||
Restructuring charges and exit costs
|
2,428
|
|
|
1,575
|
|
|
485
|
|
|||
Impairment charges
|
—
|
|
|
1,558
|
|
|
326
|
|
|||
Operating (gains), losses and other charges, net
|
$
|
(91,180
|
)
|
|
$
|
2,620
|
|
|
$
|
4,329
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Exit costs
|
$
|
272
|
|
|
$
|
518
|
|
|
$
|
385
|
|
Severance and other restructuring charges
|
2,156
|
|
|
1,057
|
|
|
100
|
|
|||
Total restructuring and exit costs
|
$
|
2,428
|
|
|
$
|
1,575
|
|
|
$
|
485
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Interest on credit facilities
|
$
|
11,685
|
|
|
$
|
11,792
|
|
|
$
|
7,586
|
|
Interest on interest rate swaps
|
291
|
|
|
307
|
|
|
73
|
|
|||
Interest on finance lease liabilities
|
4,537
|
|
|
6,354
|
|
|
5,797
|
|
|||
Letters of credit and other fees
|
1,208
|
|
|
1,288
|
|
|
1,216
|
|
|||
Interest income
|
(170
|
)
|
|
(146
|
)
|
|
(106
|
)
|
|||
Total cash interest
|
17,551
|
|
|
19,595
|
|
|
14,566
|
|
|||
Amortization of deferred financing costs
|
608
|
|
|
607
|
|
|
596
|
|
|||
Interest accretion on other liabilities
|
388
|
|
|
543
|
|
|
478
|
|
|||
Total interest expense, net
|
$
|
18,547
|
|
|
$
|
20,745
|
|
|
$
|
15,640
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Net cash provided by operating activities
|
$
|
43,327
|
|
|
$
|
73,690
|
|
|
$
|
78,269
|
|
Net cash provided by (used in) investing activities
|
104,969
|
|
|
(32,017
|
)
|
|
(27,147
|
)
|
|||
Net cash used in financing activities
|
(149,950
|
)
|
|
(41,630
|
)
|
|
(48,731
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
$
|
(1,654
|
)
|
|
$
|
43
|
|
|
$
|
2,391
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Facilities
|
$
|
9,078
|
|
|
$
|
9,613
|
|
|
$
|
7,144
|
|
New construction
|
2,019
|
|
|
3,186
|
|
|
6,115
|
|
|||
Remodeling
|
1,124
|
|
|
4,525
|
|
|
2,270
|
|
|||
Information technology
|
1,060
|
|
|
1,930
|
|
|
1,470
|
|
|||
Other
|
694
|
|
|
2,771
|
|
|
1,812
|
|
|||
Capital expenditures (excluding acquisitions)
|
$
|
13,975
|
|
|
$
|
22,025
|
|
|
$
|
18,811
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 Year
|
|
1-2 Years
|
|
3-4 Years
|
|
5 Years and Thereafter
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Long-term debt
|
$
|
240,000
|
|
|
$
|
—
|
|
|
$
|
240,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Finance lease obligations (a)
|
42,640
|
|
|
4,654
|
|
|
8,621
|
|
|
6,855
|
|
|
22,510
|
|
|||||
Operating lease obligations
|
234,788
|
|
|
26,148
|
|
|
46,069
|
|
|
38,878
|
|
|
123,693
|
|
|||||
Interest obligations (a)
|
27,103
|
|
|
9,566
|
|
|
17,537
|
|
|
—
|
|
|
—
|
|
|||||
Defined benefit plan obligations
|
2,402
|
|
|
662
|
|
|
550
|
|
|
550
|
|
|
640
|
|
|||||
Purchase obligations (b)
|
193,494
|
|
|
193,494
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Unrecognized tax benefits (c)
|
1,047
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
741,474
|
|
|
$
|
234,524
|
|
|
$
|
312,777
|
|
|
$
|
46,283
|
|
|
$
|
146,843
|
|
(a)
|
Interest obligations represent payments related to our long-term debt outstanding at December 25, 2019. For long-term debt with variable rates, we have used the rate applicable at December 25, 2019 to project interest over the periods presented in the table above, taking into consideration the impact of the interest rate swaps for the applicable periods. The finance lease obligation amounts above are inclusive of interest.
|
(b)
|
Purchase obligations include amounts payable under purchase contracts for food and non-food products. Many of these agreements do not obligate us to purchase any specific volumes and include provisions that would allow us to cancel such agreements with appropriate notice. For agreements with cancellation provisions, amounts included in the table above represent our estimate of purchase obligations during the periods presented if we were to cancel these contracts with appropriate notice.
|
(c)
|
Unrecognized tax benefits are related to uncertain tax positions. As we are not able to reasonably estimate the timing or amount of these payments, the related balances have not been reflected in this table.
|
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.
|
Plan category
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
|
|
Weighted average exercise price of outstanding options, warrants and rights (2)
|
|
Number of securities remaining available for future issuance under equity compensation plans
|
|
|
||||
Equity compensation plans approved by security holders
|
|
4,079,895
|
|
|
(1)
|
|
$
|
3.89
|
|
|
2,581,846
|
|
|
(3)
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
|
|
—
|
|
|
704,166
|
|
|
(4)
|
|
Total
|
|
4,079,895
|
|
|
|
|
$
|
3.89
|
|
|
3,286,012
|
|
|
|
(1)
|
Includes shares issuable in connection with our outstanding stock options, performance share awards and restricted stock units awards.
|
(2)
|
Includes the weighted-average exercise price of stock options only.
|
(3)
|
Includes shares of our common stock available for issuance as awards of stock options, restricted stock, restricted stock units, deferred stock units and performance awards under the Denny’s Corporation 2017 Omnibus Incentive Plan.
|
(4)
|
Includes shares of our common stock available for issuance as awards of stock options and restricted stock units outside of the Denny’s Incentive Plans in accordance with NASDAQ Listing Rule 5635(c)(4).
|
Exhibit No.
|
Description
|
|
|
*3.1
|
|
|
|
*3.2
|
|
|
|
4.1
|
|
|
|
+*10.1
|
|
|
|
+*10.2
|
|
|
|
+*10.3
|
|
|
|
*10.4
|
|
|
|
*10.5
|
|
|
|
*10.6
|
|
|
|
+*10.7
|
|
|
|
+*10.8
|
|
|
|
+*10.9
|
Exhibit No.
|
Description
|
|
|
+*10.10
|
|
|
|
+*10.11
|
|
|
|
+*10.12
|
|
|
|
+*10.13
|
|
|
|
+*10.14
|
|
|
|
+*10.15
|
|
|
|
+*10.16
|
|
|
|
+*10.17
|
|
|
|
+*10.18
|
|
|
|
+*10.19
|
|
|
|
+*10.20
|
|
|
|
+*10.21
|
|
|
|
+*10.22
|
|
|
|
+*10.23
|
|
|
|
+*10.24
|
|
|
|
+*10.25
|
Exhibit No.
|
Description
|
|
|
+*10.26
|
|
|
|
21.1
|
|
|
|
23.1
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
101.INS
|
XBRL Instance 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
|
|
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
+
|
Denotes management contracts or compensatory plans or arrangements.
|
*
|
Incorporated by reference.
|
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
|
F-2
|
Consolidated Balance Sheets
|
F-5
|
Consolidated Statements of Income
|
F-6
|
Consolidated Statements of Comprehensive Income
|
F-7
|
Consolidated Statements of Shareholders’ Deficit
|
F-8
|
Consolidated Statements of Cash Flows
|
F-9
|
Notes to Consolidated Financial Statements
|
F-10
|
•
|
performing an independent assessment of the frequency and severity of the claims used by the Company to estimate the self-insurance liabilities, and
|
•
|
developing an independent acceptable range for the self-insurance liabilities using the Company’s underlying historical claims data, which involved assessing the frequency and severity of the Company’s claim assumptions.
|
•
|
independently estimating the credit rating of the Company by performing a synthetic credit rating analysis, and
|
•
|
evaluating the IBRs used by the Company by comparing them against a range that was independently developed using publicly available market data.
|
•
|
performing an independent assessment of the methodology used by the Company to estimate the fair value of the noncash consideration received,
|
•
|
assessing the Company’s risk assumption over construction underlying the fair value estimate of the noncash consideration received, and
|
•
|
developing an independent acceptable range for the fair value of the non-cash consideration received using market data and comparing it to the amount recorded by the Company.
|
|
December 25, 2019
|
|
December 26, 2018
|
||||
|
(In thousands, except per share amounts)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,372
|
|
|
$
|
5,026
|
|
Investments
|
3,649
|
|
|
1,709
|
|
||
Receivables, net
|
27,488
|
|
|
26,283
|
|
||
Inventories
|
1,325
|
|
|
2,993
|
|
||
Assets held for sale
|
1,925
|
|
|
723
|
|
||
Prepaid and other current assets
|
14,974
|
|
|
10,866
|
|
||
Total current assets
|
52,733
|
|
|
47,600
|
|
||
Property, net of accumulated depreciation of $147,445 and $226,620, respectively
|
97,626
|
|
|
117,251
|
|
||
Financing lease right-of-use assets, net of accumulated amortization of $8,468 and $15,526, respectively
|
11,720
|
|
|
22,753
|
|
||
Operating lease right-of-use assets, net
|
158,550
|
|
|
—
|
|
||
Goodwill
|
36,832
|
|
|
39,781
|
|
||
Intangible assets, net
|
53,956
|
|
|
59,067
|
|
||
Deferred financing costs, net
|
1,727
|
|
|
2,335
|
|
||
Deferred income taxes, net
|
14,718
|
|
|
17,333
|
|
||
Other noncurrent assets
|
32,525
|
|
|
29,229
|
|
||
Total assets
|
$
|
460,387
|
|
|
$
|
335,349
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current finance lease liabilities
|
$
|
1,674
|
|
|
$
|
3,410
|
|
Current operating lease liabilities
|
16,344
|
|
|
—
|
|
||
Accounts payable
|
20,256
|
|
|
29,527
|
|
||
Other current liabilities
|
57,307
|
|
|
61,790
|
|
||
Total current liabilities
|
95,581
|
|
|
94,727
|
|
||
Long-term liabilities:
|
|
|
|
||||
Long-term debt
|
240,000
|
|
|
286,500
|
|
||
Noncurrent finance lease liabilities
|
14,779
|
|
|
27,181
|
|
||
Noncurrent operating lease liabilities
|
152,750
|
|
|
—
|
|
||
Liability for insurance claims, less current portion
|
11,454
|
|
|
12,199
|
|
||
Other noncurrent liabilities
|
83,887
|
|
|
48,087
|
|
||
Total long-term liabilities
|
502,870
|
|
|
373,967
|
|
||
Total liabilities
|
598,451
|
|
|
468,694
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
||||
|
|
|
|
||||
Shareholders’ deficit
|
|
|
|
||||
Common stock $0.01 par value; shares authorized - 135,000; December 25, 2019: 109,415 shares issued and 57,095 shares outstanding; December 26, 2018: 108,585 shares issued and 61,533 shares outstanding
|
1,094
|
|
|
1,086
|
|
||
Paid-in capital
|
603,980
|
|
|
592,944
|
|
||
Deficit
|
(189,398
|
)
|
|
(306,414
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
(33,960
|
)
|
|
(4,146
|
)
|
||
Treasury stock, at cost, 52,320 and 47,052 shares, respectively
|
(519,780
|
)
|
|
(416,815
|
)
|
||
Total shareholders’ deficit
|
(138,064
|
)
|
|
(133,345
|
)
|
||
Total liabilities and shareholders’ deficit
|
$
|
460,387
|
|
|
$
|
335,349
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands, except per share amounts)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Company restaurant sales
|
$
|
306,377
|
|
|
$
|
411,932
|
|
|
$
|
390,352
|
|
Franchise and license revenue
|
235,012
|
|
|
218,247
|
|
|
138,817
|
|
|||
Total operating revenue
|
541,389
|
|
|
630,179
|
|
|
529,169
|
|
|||
Costs of company restaurant sales:
|
|
|
|
|
|
||||||
Product costs
|
74,720
|
|
|
100,532
|
|
|
97,825
|
|
|||
Payroll and benefits
|
118,806
|
|
|
164,314
|
|
|
153,037
|
|
|||
Occupancy
|
18,613
|
|
|
23,228
|
|
|
20,802
|
|
|||
Other operating expenses
|
46,257
|
|
|
60,708
|
|
|
53,049
|
|
|||
Total costs of company restaurant sales
|
258,396
|
|
|
348,782
|
|
|
324,713
|
|
|||
Costs of franchise and license revenue
|
120,326
|
|
|
114,296
|
|
|
39,294
|
|
|||
General and administrative expenses
|
69,018
|
|
|
63,828
|
|
|
66,415
|
|
|||
Depreciation and amortization
|
19,846
|
|
|
27,039
|
|
|
23,720
|
|
|||
Operating (gains), losses and other charges, net
|
(91,180
|
)
|
|
2,620
|
|
|
4,329
|
|
|||
Total operating costs and expenses, net
|
376,406
|
|
|
556,565
|
|
|
458,471
|
|
|||
Operating income
|
164,983
|
|
|
73,614
|
|
|
70,698
|
|
|||
Interest expense, net
|
18,547
|
|
|
20,745
|
|
|
15,640
|
|
|||
Other nonoperating (income) expense, net
|
(2,763
|
)
|
|
619
|
|
|
(1,743
|
)
|
|||
Net income before income taxes
|
149,199
|
|
|
52,250
|
|
|
56,801
|
|
|||
Provision for income taxes
|
31,789
|
|
|
8,557
|
|
|
17,207
|
|
|||
Net income
|
$
|
117,410
|
|
|
$
|
43,693
|
|
|
$
|
39,594
|
|
|
|
|
|
|
|
||||||
Basic net income per share
|
$
|
1.96
|
|
|
$
|
0.69
|
|
|
$
|
0.58
|
|
Diluted net income per share
|
$
|
1.90
|
|
|
$
|
0.67
|
|
|
$
|
0.56
|
|
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
59,944
|
|
|
63,364
|
|
|
68,077
|
|
|||
Diluted weighted average shares outstanding
|
61,833
|
|
|
65,562
|
|
|
70,403
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Net income
|
$
|
117,410
|
|
|
$
|
43,693
|
|
|
$
|
39,594
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Minimum pension liability adjustment, net of tax of $15, $53 and $(22), respectively
|
46
|
|
|
155
|
|
|
(37
|
)
|
|||
Changes in the effective portion of the fair value of derivatives, net of tax of $(10,410), $(339) and $(579), respectively
|
(30,076
|
)
|
|
(2,256
|
)
|
|
(924
|
)
|
|||
Reclassification of derivatives to interest expense, net of tax of $75, $36 and $20, respectively
|
216
|
|
|
271
|
|
|
52
|
|
|||
Other comprehensive loss
|
(29,814
|
)
|
|
(1,830
|
)
|
|
(909
|
)
|
|||
Total comprehensive income
|
$
|
87,596
|
|
|
$
|
41,863
|
|
|
$
|
38,685
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Paid-in
|
|
|
|
Accumulated
Other
Comprehensive
|
|
Total
Shareholders’
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
(Deficit)
|
|
Loss, Net
|
|
Deficit
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Balance, December 28, 2016
|
107,115
|
|
|
$
|
1,071
|
|
|
(35,757
|
)
|
|
$
|
(265,884
|
)
|
|
$
|
577,951
|
|
|
$
|
(382,843
|
)
|
|
$
|
(1,407
|
)
|
|
$
|
(71,112
|
)
|
Cumulative effect adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
551
|
|
|
8,588
|
|
|
—
|
|
|
9,139
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,594
|
|
|
—
|
|
|
39,594
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(909
|
)
|
|
(909
|
)
|
||||||
Share-based compensation on equity classified awards, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,131
|
|
|
—
|
|
|
—
|
|
|
8,131
|
|
||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
(6,840
|
)
|
|
(82,858
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(82,858
|
)
|
||||||
Equity forward contract settlement
|
—
|
|
|
—
|
|
|
(554
|
)
|
|
(6,884
|
)
|
|
6,884
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock for share-based compensation
|
398
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Exercise of common stock options
|
227
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
653
|
|
|
—
|
|
|
—
|
|
|
655
|
|
||||||
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
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,693
|
|
|
—
|
|
|
43,693
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,830
|
)
|
|
(1,830
|
)
|
||||||
Share-based compensation on equity classified awards, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,325
|
|
|
—
|
|
|
—
|
|
|
4,325
|
|
||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
(3,901
|
)
|
|
(61,189
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(61,189
|
)
|
||||||
Equity forward contract issuance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,763
|
)
|
|
—
|
|
|
—
|
|
|
(6,763
|
)
|
||||||
Issuance of common stock for share-based compensation
|
447
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Exercise of common stock options
|
398
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
1,221
|
|
|
—
|
|
|
—
|
|
|
1,225
|
|
||||||
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
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
117,410
|
|
|
—
|
|
|
117,410
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,814
|
)
|
|
(29,814
|
)
|
||||||
Share-based compensation on equity classified awards, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,310
|
|
|
—
|
|
|
—
|
|
|
3,310
|
|
||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
(4,879
|
)
|
|
(96,202
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(96,202
|
)
|
||||||
Equity forward contract settlement
|
—
|
|
|
—
|
|
|
(389
|
)
|
|
(6,763
|
)
|
|
6,763
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock for share-based compensation
|
468
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Exercise of common stock options
|
362
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
968
|
|
|
—
|
|
|
—
|
|
|
971
|
|
||||||
Balance, December 25, 2019
|
109,415
|
|
|
$
|
1,094
|
|
|
(52,320
|
)
|
|
$
|
(519,780
|
)
|
|
$
|
603,980
|
|
|
$
|
(189,398
|
)
|
|
$
|
(33,960
|
)
|
|
$
|
(138,064
|
)
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
117,410
|
|
|
$
|
43,693
|
|
|
$
|
39,594
|
|
Adjustments to reconcile net income to cash flows provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
19,846
|
|
|
27,039
|
|
|
23,720
|
|
|||
Operating (gains), losses and other charges, net
|
(91,180
|
)
|
|
2,620
|
|
|
4,329
|
|
|||
Amortization of deferred financing costs
|
608
|
|
|
607
|
|
|
596
|
|
|||
Gains on investments
|
(180
|
)
|
|
(9
|
)
|
|
—
|
|
|||
(Gains) losses on early extinguishments of debt and leases
|
(4
|
)
|
|
(171
|
)
|
|
130
|
|
|||
Deferred income tax expense
|
16,005
|
|
|
6,193
|
|
|
10,271
|
|
|||
(Decrease) increase of tax valuation allowance
|
(2,935
|
)
|
|
121
|
|
|
216
|
|
|||
Share-based compensation
|
6,694
|
|
|
6,038
|
|
|
8,541
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Receivables
|
(2,030
|
)
|
|
(4,722
|
)
|
|
(807
|
)
|
|||
Inventories
|
1,668
|
|
|
141
|
|
|
(192
|
)
|
|||
Other current assets
|
(4,108
|
)
|
|
921
|
|
|
(2,380
|
)
|
|||
Other assets
|
(4,581
|
)
|
|
2
|
|
|
(6,327
|
)
|
|||
Operating lease assets/liabilities
|
(601
|
)
|
|
—
|
|
|
—
|
|
|||
Accounts payable
|
(5,170
|
)
|
|
(5,147
|
)
|
|
10,025
|
|
|||
Accrued salaries and vacations
|
(3,826
|
)
|
|
2,175
|
|
|
(6,446
|
)
|
|||
Accrued taxes
|
(2,043
|
)
|
|
283
|
|
|
(23
|
)
|
|||
Other accrued liabilities
|
(4,144
|
)
|
|
(1,676
|
)
|
|
135
|
|
|||
Other noncurrent liabilities
|
1,898
|
|
|
(4,418
|
)
|
|
(3,113
|
)
|
|||
Net cash flows provided by operating activities
|
43,327
|
|
|
73,690
|
|
|
78,269
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(13,975
|
)
|
|
(22,025
|
)
|
|
(18,811
|
)
|
|||
Acquisition of restaurants and real estate
|
(11,320
|
)
|
|
(10,416
|
)
|
|
(12,353
|
)
|
|||
Proceeds from disposition of property
|
129,721
|
|
|
3,052
|
|
|
2,318
|
|
|||
Investment purchases
|
(1,760
|
)
|
|
(1,700
|
)
|
|
—
|
|
|||
Collections on notes receivable
|
3,654
|
|
|
2,740
|
|
|
4,405
|
|
|||
Issuance of notes receivable
|
(1,351
|
)
|
|
(3,668
|
)
|
|
(2,706
|
)
|
|||
Net cash flows provided by (used in) investing activities
|
104,969
|
|
|
(32,017
|
)
|
|
(27,147
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Revolver borrowings
|
164,400
|
|
|
136,000
|
|
|
391,900
|
|
|||
Revolver payments
|
(210,900
|
)
|
|
(108,500
|
)
|
|
(351,400
|
)
|
|||
Long-term debt payments
|
(2,464
|
)
|
|
(3,181
|
)
|
|
(3,322
|
)
|
|||
Tax withholding on share-based payments
|
(3,206
|
)
|
|
(1,714
|
)
|
|
—
|
|
|||
Deferred financing costs
|
—
|
|
|
—
|
|
|
(1,602
|
)
|
|||
Purchase of treasury stock
|
(94,459
|
)
|
|
(61,237
|
)
|
|
(83,050
|
)
|
|||
Purchase of equity forward contract
|
—
|
|
|
(6,763
|
)
|
|
—
|
|
|||
Proceeds from exercise of stock options
|
971
|
|
|
1,225
|
|
|
655
|
|
|||
Net bank overdrafts
|
(4,292
|
)
|
|
2,540
|
|
|
(1,912
|
)
|
|||
Net cash flows used in financing activities
|
(149,950
|
)
|
|
(41,630
|
)
|
|
(48,731
|
)
|
|||
(Decrease) increase in cash and cash equivalents
|
(1,654
|
)
|
|
43
|
|
|
2,391
|
|
|||
Cash and cash equivalents at beginning of period
|
5,026
|
|
|
4,983
|
|
|
2,592
|
|
|||
Cash and cash equivalents at end of period
|
$
|
3,372
|
|
|
$
|
5,026
|
|
|
$
|
4,983
|
|
|
Fiscal Year Ended
|
|||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
|||
Company restaurants, beginning of period
|
173
|
|
|
178
|
|
|
169
|
|
Units opened
|
—
|
|
|
1
|
|
|
3
|
|
Units acquired from franchisees
|
—
|
|
|
6
|
|
|
10
|
|
Units sold to franchisees
|
(105
|
)
|
|
(8
|
)
|
|
(4
|
)
|
Units closed
|
—
|
|
|
(4
|
)
|
|
—
|
|
End of period
|
68
|
|
|
173
|
|
|
178
|
|
|
|
|
|
|
|
|||
Franchised and licensed restaurants, beginning of period
|
1,536
|
|
|
1,557
|
|
|
1,564
|
|
Units opened
|
30
|
|
|
29
|
|
|
36
|
|
Units purchased from Company
|
105
|
|
|
8
|
|
|
4
|
|
Units acquired by Company
|
—
|
|
|
(6
|
)
|
|
(10
|
)
|
Units closed
|
(36
|
)
|
|
(52
|
)
|
|
(37
|
)
|
End of period
|
1,635
|
|
|
1,536
|
|
|
1,557
|
|
Total restaurants, end of period
|
1,703
|
|
|
1,709
|
|
|
1,735
|
|
|
|
|
Fiscal Year Ended
|
||
|
Classification
|
|
December 25, 2019
|
||
|
|
|
(In thousands)
|
||
Lease costs
|
|
|
|
||
Finance lease costs:
|
|
|
|
||
Amortization of right-of-use assets
|
Depreciation and amortization
|
|
$
|
2,991
|
|
Interest on lease liabilities
|
Interest expense, net
|
|
4,536
|
|
|
Operating lease costs:
|
|
|
|
||
Operating lease costs - company
|
Occupancy
|
|
8,253
|
|
|
Operating lease costs - franchise
|
Costs of franchise and license revenue
|
|
17,097
|
|
|
Operating lease costs - general and administrative
|
General and administrative expenses
|
|
108
|
|
|
Variable lease costs:
|
|
|
|
||
Variable lease costs - company
|
Occupancy
|
|
5,993
|
|
|
Variable lease costs - franchise
|
Costs of franchise and license revenue
|
|
7,001
|
|
|
Variable lease costs - general and administrative
|
General and administrative expenses
|
|
41
|
|
|
Variable lease costs - closed stores
|
Restructuring charges and exit costs
|
|
49
|
|
|
Sublease income:
|
|
|
|
||
Sublease income - franchise
|
Franchise and license revenue
|
|
(28,986
|
)
|
|
Sublease income - closed stores
|
Restructuring charges and exit costs
|
|
(306
|
)
|
|
Total lease costs
|
|
|
$
|
16,777
|
|
|
December 25, 2019
|
|
Weighted-average remaining lease term (in years):
|
|
|
Finance leases
|
9.7
|
|
Operating leases
|
10.8
|
|
Weighted-average discount rate:
|
|
|
Finance leases
|
23.5
|
%
|
Operating leases
|
5.9
|
%
|
|
|
|
Fiscal Year Ended
|
||
|
Classification
|
|
December 25, 2019
|
||
|
|
|
(In thousands)
|
||
Lease income
|
|
|
|
||
Operating lease income - franchise
|
Franchise and license revenue
|
|
$
|
28,050
|
|
Operating lease income - closed stores
|
Restructuring charges and exit costs
|
|
255
|
|
|
Variable lease income - franchise
|
Franchise and license revenue
|
|
10,464
|
|
|
Variable lease income - closed stores
|
Restructuring charges and exit costs
|
|
49
|
|
|
Total lease income
|
|
|
$
|
38,818
|
|
|
|
Fiscal Year Ended
|
||
|
|
December 25, 2019
|
||
|
|
(In thousands)
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
||
Operating cash flows from finance leases
|
|
$
|
4,536
|
|
Operating cash flows from operating leases
|
|
$
|
26,329
|
|
Financing cash flows from finance leases
|
|
$
|
2,464
|
|
Right-of-use assets obtained in exchange for new finance lease liabilities
|
|
$
|
305
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
|
$
|
79,534
|
|
|
Lease Liabilities
|
|
Lease Receipts
|
||||||||
|
Finance
|
|
Operating
|
|
Operating
|
||||||
|
(In thousands)
|
||||||||||
2020
|
$
|
4,654
|
|
|
$
|
26,148
|
|
|
$
|
32,435
|
|
2021
|
4,413
|
|
|
24,097
|
|
|
30,711
|
|
|||
2022
|
4,208
|
|
|
21,972
|
|
|
29,182
|
|
|||
2023
|
3,693
|
|
|
20,185
|
|
|
27,113
|
|
|||
2024
|
3,162
|
|
|
18,693
|
|
|
25,610
|
|
|||
Thereafter
|
22,510
|
|
|
123,693
|
|
|
207,063
|
|
|||
Total undiscounted cash flows
|
42,640
|
|
|
234,788
|
|
|
$
|
352,114
|
|
||
Less: interest
|
26,187
|
|
|
65,694
|
|
|
|
||||
Present value of lease liabilities
|
16,453
|
|
|
169,094
|
|
|
|
||||
Less: current lease liabilities
|
1,674
|
|
|
16,344
|
|
|
|
||||
Long-term lease liabilities
|
$
|
14,779
|
|
|
$
|
152,750
|
|
|
|
|
Fiscal Year Ended
|
||||||
|
December 26, 2018
|
|
December 27, 2017
|
||||
|
(In thousands)
|
||||||
Rental expense:
|
|
|
|
||||
Included as a component of occupancy:
|
|
|
|
||||
Base rents
|
$
|
10,272
|
|
|
$
|
9,315
|
|
Contingent rents
|
3,074
|
|
|
3,168
|
|
||
Included as a component of costs of franchise and license expense:
|
|
|
|
||||
Base rents
|
15,108
|
|
|
17,674
|
|
||
Contingent rents
|
2,629
|
|
|
2,864
|
|
||
Total rental expense
|
$
|
31,083
|
|
|
$
|
33,021
|
|
|
|
|
|
||||
Rental income:
|
|
|
|
||||
Included as a component of franchise and license revenue:
|
|
|
|
||||
Base rents
|
$
|
22,831
|
|
|
$
|
25,781
|
|
Contingent rents
|
4,662
|
|
|
5,042
|
|
||
Total rental income
|
$
|
27,493
|
|
|
$
|
30,823
|
|
|
Commitments
|
|
Lease Receipts
|
||||||||
|
Capital
|
|
Operating
|
|
Operating
|
||||||
|
(In thousands)
|
||||||||||
2019
|
$
|
9,271
|
|
|
$
|
23,504
|
|
|
$
|
21,001
|
|
2020
|
8,664
|
|
|
20,161
|
|
|
18,493
|
|
|||
2021
|
8,010
|
|
|
17,316
|
|
|
16,573
|
|
|||
2022
|
7,320
|
|
|
14,646
|
|
|
14,887
|
|
|||
2023
|
6,451
|
|
|
11,881
|
|
|
12,932
|
|
|||
Thereafter
|
33,670
|
|
|
49,004
|
|
|
65,273
|
|
|||
Total
|
73,386
|
|
|
$
|
136,512
|
|
|
$
|
149,159
|
|
|
Less imputed interest
|
42,795
|
|
|
|
|
|
|||||
Present value of capital lease obligations
|
$
|
30,591
|
|
|
|
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Restaurants sold to franchisees
|
105
|
|
|
8
|
|
|
4
|
|
|||
Gains (losses) on sales of company restaurants:
|
|
|
|
|
|
||||||
Cash Proceeds
|
$
|
118,964
|
|
|
$
|
1,777
|
|
|
$
|
751
|
|
Receivables
|
920
|
|
|
—
|
|
|
—
|
|
|||
Less: Property sold
|
(30,511
|
)
|
|
(2,448
|
)
|
|
(996
|
)
|
|||
Less: Goodwill
|
(2,897
|
)
|
|
(62
|
)
|
|
(23
|
)
|
|||
Less: Intangibles
|
(2,260
|
)
|
|
(13
|
)
|
|
—
|
|
|||
Less: Deferred gain
|
(1,350
|
)
|
|
—
|
|
|
—
|
|
|||
Total gains (losses) on sales of company restaurants
|
$
|
82,866
|
|
|
$
|
(746
|
)
|
|
$
|
(268
|
)
|
|
|
|
|
|
|
||||||
Real estate parcels sold
|
6
|
|
|
—
|
|
|
3
|
|
|||
Gains on sales of real estate:
|
|
|
|
|
|
||||||
Cash proceeds
|
$
|
10,680
|
|
|
$
|
—
|
|
|
$
|
3,247
|
|
Noncash consideration
|
3,000
|
|
|
—
|
|
|
—
|
|
|||
Less: Property sold
|
(1,686
|
)
|
|
—
|
|
|
(1,103
|
)
|
|||
Less: Other assets
|
(120
|
)
|
|
—
|
|
|
(226
|
)
|
|||
Total gains on sales of real estate
|
$
|
11,874
|
|
|
$
|
—
|
|
|
$
|
1,918
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Restaurants acquired from franchisees (1)
|
—
|
|
|
6
|
|
|
11
|
|
|||
|
|
|
|
|
|
||||||
Purchase price allocation:
|
|
|
|
|
|
||||||
Reacquired franchise rights
|
$
|
—
|
|
|
$
|
5,434
|
|
|
$
|
4,476
|
|
Property
|
—
|
|
|
1,121
|
|
|
1,293
|
|
|||
Goodwill
|
—
|
|
|
1,574
|
|
|
3,022
|
|
|||
Total purchase price
|
$
|
—
|
|
|
$
|
8,129
|
|
|
$
|
8,791
|
|
|
|
|
|
|
|
||||||
Finance leases recorded
|
$
|
—
|
|
|
$
|
2,409
|
|
|
$
|
2,321
|
|
|
|
|
|
|
|
||||||
Real estate parcels acquired
|
5
|
|
|
1
|
|
|
2
|
|
|||
Total purchase price
|
$
|
11,320
|
|
|
$
|
1,787
|
|
|
$
|
4,062
|
|
(1)
|
2017 includes one restaurant acquired from a former franchisee.
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Gains on sales of assets and other, net
|
$
|
(93,608
|
)
|
|
$
|
(513
|
)
|
|
$
|
(1,729
|
)
|
Software implementation costs
|
—
|
|
|
—
|
|
|
5,247
|
|
|||
Restructuring charges and exit costs
|
2,428
|
|
|
1,575
|
|
|
485
|
|
|||
Impairment charges
|
—
|
|
|
1,558
|
|
|
326
|
|
|||
Operating (gains), losses and other charges, net
|
$
|
(91,180
|
)
|
|
$
|
2,620
|
|
|
$
|
4,329
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Exit costs
|
$
|
272
|
|
|
$
|
518
|
|
|
$
|
385
|
|
Severance and other restructuring charges
|
2,156
|
|
|
1,057
|
|
|
100
|
|
|||
Total restructuring charges and exit costs
|
$
|
2,428
|
|
|
$
|
1,575
|
|
|
$
|
485
|
|
Balance, beginning of year
|
$
|
1,180
|
|
Exit costs (1)
|
518
|
|
|
Payments, net of sublease receipts
|
(615
|
)
|
|
Interest accretion
|
72
|
|
|
Balance, end of year
|
1,155
|
|
|
Less current portion included in other current liabilities
|
546
|
|
|
Long-term portion included in other noncurrent liabilities
|
$
|
609
|
|
(1)
|
Included as a component of operating (gains), losses and other charges, net.
|
|
December 25, 2019
|
|
December 26, 2018
|
||||
|
(In thousands)
|
||||||
Receivables, net:
|
|
|
|
||||
Trade accounts receivable from franchisees
|
$
|
14,551
|
|
|
$
|
11,459
|
|
Financing receivables from franchisees
|
2,230
|
|
|
3,211
|
|
||
Vendor receivables
|
3,260
|
|
|
4,016
|
|
||
Credit card receivables
|
6,806
|
|
|
5,955
|
|
||
Other
|
915
|
|
|
1,942
|
|
||
Allowance for doubtful accounts
|
(274
|
)
|
|
(300
|
)
|
||
Total receivables, net
|
$
|
27,488
|
|
|
$
|
26,283
|
|
|
|
|
|
||||
Other noncurrent assets:
|
|
|
|
||||
Financing receivables from franchisees
|
$
|
364
|
|
|
$
|
1,528
|
|
|
December 25, 2019
|
|
December 26, 2018
|
||||
|
(In thousands)
|
||||||
Land
|
$
|
39,720
|
|
|
$
|
33,566
|
|
Buildings and leasehold improvements
|
172,881
|
|
|
241,990
|
|
||
Other property and equipment
|
32,470
|
|
|
68,315
|
|
||
Total property owned
|
245,071
|
|
|
343,871
|
|
||
Less accumulated depreciation
|
147,445
|
|
|
226,620
|
|
||
Property owned, net
|
$
|
97,626
|
|
|
$
|
117,251
|
|
|
December 25, 2019
|
|
December 26, 2018
|
||||
|
(In thousands)
|
||||||
Land
|
$
|
27,205
|
|
|
$
|
16,730
|
|
Buildings and leasehold improvements
|
78,584
|
|
|
53,790
|
|
||
Total property owned, leased to franchisees
|
105,789
|
|
|
70,520
|
|
||
Less accumulated depreciation
|
65,476
|
|
|
46,354
|
|
||
Property owned, leased to franchisees, net
|
40,313
|
|
|
24,166
|
|
||
Buildings held under finance leases, leased to franchisees
|
8,445
|
|
|
5,776
|
|
||
Less accumulated amortization
|
3,768
|
|
|
2,746
|
|
||
Property held under finance leases, leased to franchisees, net
|
4,677
|
|
|
3,030
|
|
||
Total property leased to franchisees, net
|
$
|
44,990
|
|
|
$
|
27,196
|
|
|
December 25, 2019
|
|
December 26, 2018
|
||||
|
(In thousands)
|
||||||
Balance, beginning of year
|
$
|
39,781
|
|
|
$
|
38,269
|
|
Additions related to acquisitions
|
—
|
|
|
1,574
|
|
||
Adjustments related to the sale of restaurants
|
(2,949
|
)
|
|
(62
|
)
|
||
Balance, end of year
|
$
|
36,832
|
|
|
$
|
39,781
|
|
|
December 25, 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
|
120
|
|
|
—
|
|
|
166
|
|
|
—
|
|
||||
Intangible assets with definite lives:
|
|
|
|
|
|
|
|
||||||||
Reacquired franchise rights
|
15,516
|
|
|
5,767
|
|
|
19,933
|
|
|
5,119
|
|
||||
Intangible assets
|
$
|
59,723
|
|
|
$
|
5,767
|
|
|
$
|
64,186
|
|
|
$
|
5,119
|
|
|
(In thousands)
|
||
2020
|
$
|
2,289
|
|
2021
|
1,347
|
|
|
2022
|
1,240
|
|
|
2023
|
915
|
|
|
2024
|
845
|
|
|
December 25, 2019
|
|
December 26, 2018
|
||||
|
(In thousands)
|
||||||
Accrued payroll
|
$
|
19,689
|
|
|
$
|
23,395
|
|
Accrued insurance, primarily current portion of liability for insurance claims
|
6,515
|
|
|
7,323
|
|
||
Accrued taxes
|
5,624
|
|
|
7,667
|
|
||
Accrued advertising
|
6,753
|
|
|
7,413
|
|
||
Gift cards
|
6,469
|
|
|
6,546
|
|
||
Other
|
12,257
|
|
|
9,446
|
|
||
Other current liabilities
|
$
|
57,307
|
|
|
$
|
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 December 25, 2019:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments (1)
|
$
|
13,517
|
|
|
$
|
13,517
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps, net (2)
|
(44,670
|
)
|
|
—
|
|
|
(44,670
|
)
|
|
—
|
|
||||
Investments (3)
|
3,649
|
|
|
—
|
|
|
3,649
|
|
|
—
|
|
||||
Total
|
$
|
(27,504
|
)
|
|
$
|
13,517
|
|
|
$
|
(41,021
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Fair value measurements as of December 26, 2018:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments (1)
|
$
|
11,235
|
|
|
$
|
11,235
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps (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 11 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.
|
|
December 25, 2019
|
|
December 26, 2018
|
||||
|
(In thousands)
|
||||||
Revolving loans
|
$
|
240,000
|
|
|
$
|
286,500
|
|
Finance lease obligations
|
16,453
|
|
|
30,591
|
|
||
Total long-term debt
|
256,453
|
|
|
317,091
|
|
||
Less current maturities
|
1,674
|
|
|
3,410
|
|
||
Noncurrent portion of long-term debt
|
$
|
254,779
|
|
|
$
|
313,681
|
|
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.
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017 (1)
|
||||||
|
|
|
|
||||||||
Company restaurant sales
|
$
|
306,377
|
|
|
$
|
411,932
|
|
|
$
|
390,352
|
|
Franchise and license revenue:
|
|
|
|
|
|
||||||
Royalties
|
108,813
|
|
|
101,557
|
|
|
100,631
|
|
|||
Advertising revenue
|
81,144
|
|
|
78,308
|
|
|
—
|
|
|||
Initial and other fees
|
6,541
|
|
|
6,422
|
|
|
2,466
|
|
|||
Occupancy revenue
|
38,514
|
|
|
31,960
|
|
|
35,720
|
|
|||
Franchise and license revenue
|
235,012
|
|
|
218,247
|
|
|
138,817
|
|
|||
Total operating revenue
|
$
|
541,389
|
|
|
$
|
630,179
|
|
|
$
|
529,169
|
|
(1)
|
As disclosed in Note 2, prior period amounts have not been adjusted under the modified retrospective method of adoption of Topic 606.
|
|
(In thousands)
|
||
2020
|
$
|
2,235
|
|
2021
|
2,049
|
|
|
2022
|
1,940
|
|
|
2023
|
1,860
|
|
|
2024
|
1,809
|
|
|
Thereafter
|
13,363
|
|
|
Deferred franchise revenue
|
$
|
23,256
|
|
|
Year ended December 26, 2018
|
||||||||||
Consolidated Balance Sheet
|
As Reported
|
|
Adjustments
|
|
Amounts without adoption of Topic 606
|
||||||
|
(In thousands)
|
||||||||||
Prepaid and other current assets
|
$
|
10,866
|
|
|
$
|
509
|
|
|
$
|
11,375
|
|
Deferred income taxes
|
17,333
|
|
|
(4,988
|
)
|
|
12,345
|
|
|||
Other current liabilities
|
61,790
|
|
|
(407
|
)
|
|
61,383
|
|
|||
Other noncurrent liabilities
|
48,087
|
|
|
(18,370
|
)
|
|
29,717
|
|
|||
Deficit
|
(306,414
|
)
|
|
14,298
|
|
|
(292,116
|
)
|
|
Quarter ended December 26, 2018
|
|
Year ended December 26, 2018
|
||||||||||||||||||||
Consolidated Statement of Income
|
As Reported
|
|
Adjustments
|
|
Amounts without adoption of Topic 606
|
|
As Reported
|
|
Adjustments
|
|
Amounts without adoption of Topic 606
|
||||||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||||||||||
Franchise and license revenue
|
$
|
55,160
|
|
|
$
|
(21,162
|
)
|
|
$
|
33,998
|
|
|
$
|
218,247
|
|
|
$
|
(82,815
|
)
|
|
$
|
135,432
|
|
Costs of franchise and license revenue
|
28,517
|
|
|
(20,962
|
)
|
|
7,555
|
|
|
114,296
|
|
|
(81,268
|
)
|
|
33,028
|
|
||||||
Provision for income taxes
|
1,340
|
|
|
(52
|
)
|
|
1,288
|
|
|
8,557
|
|
|
(400
|
)
|
|
8,157
|
|
||||||
Net income
|
11,503
|
|
|
(148
|
)
|
|
11,355
|
|
|
43,693
|
|
|
(1,147
|
)
|
|
42,546
|
|
||||||
Basic net income per share
|
0.19
|
|
|
(0.01
|
)
|
|
0.18
|
|
|
0.69
|
|
|
(0.02
|
)
|
|
0.67
|
|
||||||
Diluted net income per share
|
0.18
|
|
|
—
|
|
|
0.18
|
|
|
0.67
|
|
|
(0.02
|
)
|
|
0.65
|
|
|
Quarter ended December 26, 2018
|
|
Year ended December 26, 2018
|
||||||||||||||||||||
Consolidated Statement of Comprehensive Income
|
As Reported
|
|
Adjustments
|
|
Amounts without adoption of Topic 606
|
|
As Reported
|
|
Adjustments
|
|
Amounts without adoption of Topic 606
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Net income
|
$
|
11,503
|
|
|
$
|
(148
|
)
|
|
$
|
11,355
|
|
|
$
|
43,693
|
|
|
$
|
(1,147
|
)
|
|
$
|
42,546
|
|
Total comprehensive income
|
4,816
|
|
|
(148
|
)
|
|
4,668
|
|
|
41,863
|
|
|
(1,147
|
)
|
|
40,716
|
|
|
Year ended December 26, 2018
|
||||||||||
Consolidated Statement of Cash Flow
|
As Reported
|
|
Adjustments
|
|
Amounts without adoption of Topic 606
|
||||||
|
(In thousands)
|
||||||||||
Net income
|
$
|
43,693
|
|
|
$
|
(1,147
|
)
|
|
$
|
42,546
|
|
Deferred income tax expense
|
6,193
|
|
|
(400
|
)
|
|
5,793
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Other current assets
|
921
|
|
|
(509
|
)
|
|
412
|
|
|||
Other accrued liabilities
|
(1,676
|
)
|
|
573
|
|
|
(1,103
|
)
|
|||
Other noncurrent liabilities
|
(4,418
|
)
|
|
1,483
|
|
|
(2,935
|
)
|
|||
Net cash flows provided by operating activities
|
73,690
|
|
|
—
|
|
|
73,690
|
|
•
|
Upon adoption of Topic 606, we recorded a cumulative effect adjustment related to previously recognized initial franchise fees resulting in a $21.0 million increase to deferred franchise revenue, a $15.6 million increase to opening deficit and a $5.4 million increase to deferred tax assets. The deferred franchise revenue resulting from the cumulative effect adjustment will be amortized over the remaining lives of the individual franchise agreements. Also upon adoption, we recorded a cumulative effect adjustment to recognize breakage in proportion to redemptions that occurred prior to December 28, 2017 resulting in a decrease of $0.6 million to gift card liability (a component of other current liabilities), a $0.5 million increase to accrued advertising (a component of other current liabilities) and a $0.1 million decrease to opening deficit.
|
•
|
We recognized franchise and license revenue and costs of franchise and license revenue of $19.9 million for the quarter and $78.3 million year-to-date resulting from the recording of advertising revenues and expenditures on a gross basis under Topic 606 versus recording these amounts on a net basis under Topic 605.
|
•
|
We recognized additional franchise and license revenue of $0.2 million for the quarter and $1.5 million year-to-date under Topic 606 than we would have recognized under Topic 605, resulting from the timing of recognition of initial franchise fees.
|
•
|
We recognized franchise and license revenue and costs of franchise and license revenue of $1.0 million for the quarter and $3.0 million year-to-date resulting from the recording of other franchise services fees on a gross basis under Topic 606 versus recording these amount on a net basis under Topic 605.
|
|
December 25, 2019
|
|
December 26, 2018
|
||||
|
(In thousands)
|
||||||
Change in Benefit Obligation:
|
|
|
|
||||
Benefit obligation at beginning of year
|
$
|
2,393
|
|
|
$
|
2,608
|
|
Interest cost
|
81
|
|
|
76
|
|
||
Actuarial losses (gains)
|
25
|
|
|
(96
|
)
|
||
Benefits paid
|
(162
|
)
|
|
(195
|
)
|
||
Benefit obligation at end of year
|
$
|
2,337
|
|
|
$
|
2,393
|
|
Accumulated benefit obligation
|
$
|
2,337
|
|
|
$
|
2,393
|
|
Change in Plan Assets:
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
$
|
—
|
|
|
$
|
—
|
|
Employer contributions
|
162
|
|
|
195
|
|
||
Benefits paid
|
(162
|
)
|
|
(195
|
)
|
||
Fair value of plan assets at end of year
|
$
|
—
|
|
|
$
|
—
|
|
Unfunded status at end of year
|
$
|
(2,337
|
)
|
|
$
|
(2,393
|
)
|
Amounts recognized on the balance sheet:
|
|
|
|
||||
Other current liabilities
|
$
|
(662
|
)
|
|
$
|
(584
|
)
|
Other noncurrent liabilities
|
(1,675
|
)
|
|
(1,809
|
)
|
||
Net amount recognized
|
$
|
(2,337
|
)
|
|
$
|
(2,393
|
)
|
Amounts in accumulated other comprehensive loss not yet reflected in net period benefit cost:
|
|
|
|
||||
Unamortized actuarial losses, net
|
$
|
(823
|
)
|
|
$
|
(885
|
)
|
Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive loss:
|
|
|
|
||||
Benefit obligation actuarial (loss) gain
|
$
|
(25
|
)
|
|
$
|
96
|
|
Amortization of net loss
|
86
|
|
|
112
|
|
||
Other comprehensive income
|
$
|
61
|
|
|
$
|
208
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Interest cost
|
$
|
81
|
|
|
$
|
76
|
|
|
$
|
83
|
|
Amortization of net loss
|
86
|
|
|
112
|
|
|
92
|
|
|||
Settlement loss recognized
|
—
|
|
|
—
|
|
|
21
|
|
|||
Net periodic benefit cost
|
$
|
167
|
|
|
$
|
188
|
|
|
$
|
196
|
|
|
Defined Benefit Plans
|
||
|
(In thousands)
|
||
2020
|
$
|
662
|
|
2021
|
223
|
|
|
2022
|
327
|
|
|
2023
|
418
|
|
|
2024
|
132
|
|
|
2025 through 2029
|
640
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Performance share awards
|
$
|
5,765
|
|
|
$
|
5,039
|
|
|
$
|
7,838
|
|
Restricted stock units for board members
|
929
|
|
|
999
|
|
|
703
|
|
|||
Total share-based compensation
|
$
|
6,694
|
|
|
$
|
6,038
|
|
|
$
|
8,541
|
|
|
Units
|
|
Weighted Average Grant Date
Fair Value
|
|||
|
(In thousands)
|
|
|
|||
Outstanding, beginning of year
|
1,688
|
|
|
$
|
12.65
|
|
Granted
|
631
|
|
|
$
|
19.02
|
|
Vested
|
(631
|
)
|
|
$
|
9.48
|
|
Forfeited
|
(7
|
)
|
|
$
|
14.48
|
|
Outstanding, end of year
|
1,681
|
|
|
$
|
16.22
|
|
Convertible, end of year
|
586
|
|
|
$
|
12.59
|
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life (in years)
|
|
Aggregate
Intrinsic
Value
|
|||||
|
(In thousands, except per share amounts)
|
|||||||||||
Outstanding, beginning of year
|
502
|
|
|
$
|
3.02
|
|
|
|
|
|
||
Exercised
|
(362
|
)
|
|
$
|
2.68
|
|
|
|
|
|
||
Outstanding, end of year
|
140
|
|
|
$
|
3.89
|
|
|
1.1
|
|
$
|
2,284
|
|
Exercisable, end of year
|
140
|
|
|
$
|
3.89
|
|
|
1.1
|
|
$
|
2,284
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
12,421
|
|
|
$
|
(632
|
)
|
|
$
|
3,688
|
|
State and local
|
5,156
|
|
|
1,833
|
|
|
2,071
|
|
|||
Foreign
|
1,142
|
|
|
1,042
|
|
|
961
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
9,944
|
|
|
5,432
|
|
|
10,075
|
|
|||
State and local
|
6,061
|
|
|
761
|
|
|
196
|
|
|||
(Decrease) increase of valuation allowance
|
(2,935
|
)
|
|
121
|
|
|
216
|
|
|||
Total provision for income taxes
|
$
|
31,789
|
|
|
$
|
8,557
|
|
|
$
|
17,207
|
|
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
|||
Statutory provision rate
|
21
|
%
|
|
21
|
%
|
|
35
|
%
|
State and local taxes, net of federal income tax benefit
|
8
|
|
|
6
|
|
|
5
|
|
Reduction in state valuation allowance
|
(2
|
)
|
|
—
|
|
|
—
|
|
Wage addback on income tax credits earned
|
—
|
|
|
—
|
|
|
2
|
|
General business credits generated
|
(2
|
)
|
|
(5
|
)
|
|
(5
|
)
|
Foreign tax credits generated
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
Share-based compensation
|
(3
|
)
|
|
(3
|
)
|
|
(3
|
)
|
Impact of tax reform
|
—
|
|
|
—
|
|
|
(3
|
)
|
Other
|
—
|
|
|
(1
|
)
|
|
1
|
|
Effective tax rate
|
21
|
%
|
|
16
|
%
|
|
30
|
%
|
|
December 25, 2019
|
|
December 26, 2018
|
||||
|
(In thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Self-insurance accruals
|
$
|
4,202
|
|
|
$
|
4,647
|
|
Finance lease liabilities
|
1,263
|
|
|
2,045
|
|
||
Operating lease liabilities
|
43,497
|
|
|
—
|
|
||
Accrued exit cost
|
48
|
|
|
445
|
|
||
Interest rate swaps
|
11,491
|
|
|
1,157
|
|
||
Pension, other retirement and compensation plans
|
10,549
|
|
|
10,568
|
|
||
Deferred income
|
4,688
|
|
|
5,099
|
|
||
Other accruals
|
—
|
|
|
633
|
|
||
Alternative minimum tax credit carryforwards
|
—
|
|
|
928
|
|
||
General business and foreign tax credit carryforwards - state and federal
|
2,945
|
|
|
11,061
|
|
||
Net operating loss carryforwards - state
|
9,621
|
|
|
13,899
|
|
||
Total deferred tax assets before valuation allowance
|
88,304
|
|
|
50,482
|
|
||
Less: valuation allowance
|
(10,264
|
)
|
|
(13,199
|
)
|
||
Total deferred tax assets
|
78,040
|
|
|
37,283
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Intangible assets
|
(14,858
|
)
|
|
(14,631
|
)
|
||
Deferred finance costs
|
(211
|
)
|
|
(286
|
)
|
||
Operating lease right-of-use assets
|
(40,751
|
)
|
|
—
|
|
||
Fixed assets
|
(6,711
|
)
|
|
(5,033
|
)
|
||
Other accruals
|
(791
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
(63,322
|
)
|
|
(19,950
|
)
|
||
Net deferred tax asset
|
$
|
14,718
|
|
|
$
|
17,333
|
|
|
December 25, 2019
|
|
December 26, 2018
|
||||
|
(In thousands)
|
||||||
Balance, beginning of year
|
$
|
2,940
|
|
|
$
|
1,469
|
|
Increase related to current-year tax positions
|
—
|
|
|
941
|
|
||
(Decrease) increase related to prior-year tax positions
|
(1,893
|
)
|
|
530
|
|
||
Balance, end of year
|
$
|
1,047
|
|
|
$
|
2,940
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands, except per share amounts)
|
||||||||||
Net income
|
$
|
117,410
|
|
|
$
|
43,693
|
|
|
$
|
39,594
|
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding - basic
|
59,944
|
|
|
63,364
|
|
|
68,077
|
|
|||
Effect of dilutive share-based compensation awards
|
1,889
|
|
|
2,198
|
|
|
2,326
|
|
|||
Weighted average shares outstanding - diluted
|
61,833
|
|
|
65,562
|
|
|
70,403
|
|
|||
|
|
|
|
|
|
||||||
Basic net income per share
|
$
|
1.96
|
|
|
$
|
0.69
|
|
|
$
|
0.58
|
|
Diluted net income per share
|
$
|
1.90
|
|
|
$
|
0.67
|
|
|
$
|
0.56
|
|
|
|
|
|
|
|
||||||
Anti-dilutive share-based compensation awards
|
270
|
|
|
—
|
|
|
606
|
|
|
Pensions
|
|
Derivatives
|
|
Accumulated Other Comprehensive Loss
|
||||||
|
(In thousands)
|
||||||||||
Balance as of December 28, 2016
|
$
|
(945
|
)
|
|
$
|
(462
|
)
|
|
$
|
(1,407
|
)
|
Benefit obligation actuarial loss
|
(172
|
)
|
|
—
|
|
|
(172
|
)
|
|||
Amortization of net loss (1)
|
92
|
|
|
—
|
|
|
92
|
|
|||
Settlement loss recognized
|
21
|
|
|
—
|
|
|
21
|
|
|||
Net change in fair value of derivatives
|
—
|
|
|
(1,359
|
)
|
|
(1,359
|
)
|
|||
Reclassification of derivatives to interest expense (2)
|
—
|
|
|
(72
|
)
|
|
(72
|
)
|
|||
Income tax benefit
|
22
|
|
|
559
|
|
|
581
|
|
|||
Balance as of December 27, 2017
|
$
|
(982
|
)
|
|
$
|
(1,334
|
)
|
|
$
|
(2,316
|
)
|
Benefit obligation actuarial gain
|
96
|
|
|
—
|
|
|
96
|
|
|||
Amortization of net loss (1)
|
112
|
|
|
—
|
|
|
112
|
|
|||
Net change in fair value of derivatives
|
—
|
|
|
(2,595
|
)
|
|
(2,595
|
)
|
|||
Reclassification of derivatives to interest expense (2)
|
—
|
|
|
307
|
|
|
307
|
|
|||
Income tax (expense) benefit
|
(53
|
)
|
|
303
|
|
|
250
|
|
|||
Balance as of December 26, 2018
|
$
|
(827
|
)
|
|
$
|
(3,319
|
)
|
|
$
|
(4,146
|
)
|
Benefit obligation actuarial loss
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
|||
Amortization of net loss (1)
|
86
|
|
|
—
|
|
|
86
|
|
|||
Net change in fair value of derivatives
|
—
|
|
|
(40,486
|
)
|
|
(40,486
|
)
|
|||
Reclassification of derivatives to interest expense (2)
|
—
|
|
|
291
|
|
|
291
|
|
|||
Income tax (expense) benefit
|
(15
|
)
|
|
10,335
|
|
|
10,320
|
|
|||
Balance as of December 25, 2019
|
$
|
(781
|
)
|
|
$
|
(33,179
|
)
|
|
$
|
(33,960
|
)
|
(1)
|
Before-tax amount that was reclassified from accumulated other comprehensive loss and included as a component of pension expense within general and administrative expenses in our Consolidated Statements of Income. See Note 13 for additional details.
|
(2)
|
Amounts reclassified from accumulated other comprehensive loss into income represent payments made to the counterparty for the effective portions of the interest rate swaps. These amounts are included as a component of interest expense in our Consolidated Statements of Income. We expect to reclassify approximately $1.2 million from accumulated other comprehensive loss related to our interest rate swaps during the next twelve months. See Note 11 for additional details.
|
|
(In thousands)
|
||
Less than 1 year
|
$
|
193,494
|
|
1-2 years
|
—
|
|
|
3-4 years
|
—
|
|
|
5 years and thereafter
|
—
|
|
|
Total
|
$
|
193,494
|
|
|
Fiscal Year Ended
|
||||||||||
|
December 25, 2019
|
|
December 26, 2018
|
|
December 27, 2017
|
||||||
|
(In thousands)
|
||||||||||
Income taxes paid, net
|
$
|
24,147
|
|
|
$
|
3,254
|
|
|
$
|
6,367
|
|
Interest paid
|
$
|
17,792
|
|
|
$
|
19,447
|
|
|
$
|
14,636
|
|
|
|
|
|
|
|
||||||
Noncash investing and financing activities:
|
|
|
|
|
|
||||||
Noncash consideration received in connection
with the sale of real estate
|
$
|
3,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Notes received in connection with disposition
of property
|
$
|
920
|
|
|
$
|
—
|
|
|
$
|
1,750
|
|
Property acquisition payable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500
|
|
Accrued purchase of property
|
$
|
1,791
|
|
|
$
|
178
|
|
|
$
|
531
|
|
Insurance proceeds receivable
|
$
|
48
|
|
|
$
|
653
|
|
|
$
|
364
|
|
Issuance of common stock, pursuant to share-based compensation plans
|
$
|
7,522
|
|
|
$
|
4,671
|
|
|
$
|
4,961
|
|
Execution of finance leases
|
$
|
305
|
|
|
$
|
3,623
|
|
|
$
|
6,573
|
|
Treasury stock payable
|
$
|
1,816
|
|
|
$
|
72
|
|
|
$
|
120
|
|
|
Fiscal Year Ended December 25, 2019
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
(In thousands, except per share data)
|
||||||||||||||
Company restaurant sales (1)
|
$
|
98,545
|
|
|
$
|
95,447
|
|
|
$
|
63,582
|
|
|
$
|
48,803
|
|
Franchise and licensing revenue (1)
|
52,866
|
|
|
56,437
|
|
|
60,676
|
|
|
65,033
|
|
||||
Total operating revenue (1)
|
151,411
|
|
|
151,884
|
|
|
124,258
|
|
|
113,836
|
|
||||
Total operating costs and expenses (1)
|
127,280
|
|
|
105,769
|
|
|
56,084
|
|
|
87,273
|
|
||||
Operating income (1)
|
$
|
24,131
|
|
|
$
|
46,115
|
|
|
$
|
68,174
|
|
|
$
|
26,563
|
|
Net income (1)
|
$
|
15,490
|
|
|
$
|
34,239
|
|
|
$
|
49,122
|
|
|
$
|
18,559
|
|
Basic net income per share (1)(2)
|
$
|
0.25
|
|
|
$
|
0.57
|
|
|
$
|
0.83
|
|
|
$
|
0.32
|
|
Diluted net income per share (1)(2)
|
$
|
0.24
|
|
|
$
|
0.55
|
|
|
$
|
0.80
|
|
|
$
|
0.31
|
|
|
Fiscal Year Ended December 26, 2018
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
(In thousands, except per share data)
|
||||||||||||||
Company restaurant sales
|
$
|
101,193
|
|
|
$
|
102,741
|
|
|
$
|
103,609
|
|
|
$
|
104,389
|
|
Franchise and licensing revenue
|
54,080
|
|
|
54,593
|
|
|
54,414
|
|
|
55,160
|
|
||||
Total operating revenue
|
155,273
|
|
|
157,334
|
|
|
158,023
|
|
|
159,549
|
|
||||
Total operating costs and expenses
|
138,848
|
|
|
138,374
|
|
|
139,554
|
|
|
139,789
|
|
||||
Operating income
|
$
|
16,425
|
|
|
$
|
18,960
|
|
|
$
|
18,469
|
|
|
$
|
19,760
|
|
Net income
|
$
|
9,759
|
|
|
$
|
11,626
|
|
|
$
|
10,805
|
|
|
$
|
11,503
|
|
Basic net income per share (2)
|
$
|
0.15
|
|
|
$
|
0.18
|
|
|
$
|
0.17
|
|
|
$
|
0.19
|
|
Diluted net income per share (2)
|
$
|
0.15
|
|
|
$
|
0.18
|
|
|
$
|
0.16
|
|
|
$
|
0.18
|
|
(1)
|
During 2019, the Company migrated from a 90% franchised business model to one that is 96% franchised by selling company owned restaurants to franchisees which resulted in, among other items, a reduction in revenues and the recording of approximately $82.9 million of gains. In addition, the Company also recorded an additional $11.9 million of gains related to the sale of real estate. See Note 4 and Note 5 for details.
|
(2)
|
Per share amounts do not necessarily sum to the total year amounts due to changes in shares outstanding and rounding.
|
|
DENNY’S CORPORATION
|
|
|
BY:
|
/s/ Robert P. Verostek
|
|
Robert P. Verostek
|
|
Senior Vice President and Chief Financial Officer
|
Signature
|
Title
|
Date
|
|
|
|
/s/ John C. Miller
|
Chief Executive Officer and Director
|
February 24, 2020
|
(John C. Miller)
|
(Principal Executive Officer)
|
|
|
|
|
/s/ Robert P. Verostek
|
Senior Vice President and Chief Financial Officer
|
February 24, 2020
|
(Robert P. Verostek)
|
(Principal Financial Officer)
|
|
|
|
|
/s/ Jay C. Gilmore
|
Vice President, Chief Accounting Officer and Corporate Controller
|
February 24, 2020
|
(Jay C. Gilmore)
|
(Principal Accounting Officer)
|
|
|
|
|
/s/ Brenda J. Lauderback
|
Director and Chair of the Board of Directors
|
February 24, 2020
|
(Brenda J. Lauderback)
|
|
|
|
|
|
/s/ Bernadette S. Aulestia
|
Director
|
February 24, 2020
|
(Bernadette S. Aulestia)
|
|
|
|
|
|
/s/ Gregg R. Dedrick
|
Director
|
February 24, 2020
|
(Gregg R. Dedrick)
|
|
|
|
|
|
/s/ José M. Gutiérrez
|
Director
|
February 24, 2020
|
(José M. Gutiérrez)
|
|
|
|
|
|
/s/ Robert E. Marks
|
Director
|
February 24, 2020
|
(Robert E. Marks)
|
|
|
|
|
|
/s/ Donald C. Robinson
|
Director
|
February 24, 2020
|
(Donald C. Robinson)
|
|
|
|
|
|
/s/ Laysha Ward
|
Director
|
February 24, 2020
|
(Laysha Ward)
|
|
|
|
|
|
/s/ F. Mark Wolfinger
|
President and Director
|
February 24, 2020
|
(F. Mark Wolfinger)
|
|
|
•
|
the business combination or the transaction that resulted in the interested stockholder becoming an interested stockholder is approved by the corporation’s board of directors prior to the time the interested stockholder becomes an interested stockholder;
|
•
|
upon consummation of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation, other than stock held by directors who are also officers or by specified employee stock plans; or
|
•
|
at or after the time the stockholder becomes an interested stockholder, the business combination is approved by a majority of the board of directors and, at an annual or special meeting, by the affirmative vote of two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
|
•
|
for any breach of the director’s duty of loyalty to the Company or its stockholders,
|
•
|
for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law,
|
•
|
under section 174 of the DGCL, which pertains, among other things, to liability for the unlawful payment of dividends, or
|
•
|
for any transaction from which the director derived an improper personal benefit.
|
|
|
|
|
|
Date:
|
February 24, 2020
|
By:
|
/s/ John C. Miller
|
|
|
|
|
John C. Miller
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
Date:
|
February 24, 2020
|
By:
|
/s/ Robert P. Verostek
|
|
|
|
|
Robert P. Verostek
|
|
|
|
|
Senior Vice President and
|
|
|
|
|
Chief Financial Officer
|
|
Date:
|
February 24, 2020
|
By:
|
/s/ John C. Miller
|
|
|
|
|
John C. Miller
|
|
|
|
|
Chief Executive Officer
|
|
Date:
|
February 24, 2020
|
By:
|
/s/ Robert P. Verostek
|
|
|
|
|
Robert P. Verostek
|
|
|
|
|
Senior Vice President and
|
|
|
|
|
Chief Financial Officer
|
|