Delaware
|
|
13-3487402
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
203 East Main Street
|
|
|
|
Spartanburg,
|
South Carolina
|
|
29319-0001
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
$.01 Par Value, Common Stock
|
|
DENN
|
|
The Nasdaq Stock Market LLC
|
Large Accelerated Filer
|
ý
|
Accelerated Filer
|
☐
|
Non-Accelerated Filer
|
☐
|
Smaller Reporting Company
|
☐
|
Emerging Growth Company
|
☐
|
|
Page
|
|
|
|
|
Item 1. Financial Statements (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
March 25, 2020
|
|
December 25, 2019
|
||||
|
(In thousands, except per share amounts)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
39,218
|
|
|
$
|
3,372
|
|
Investments
|
5,165
|
|
|
3,649
|
|
||
Receivables, net
|
15,136
|
|
|
27,488
|
|
||
Inventories
|
1,202
|
|
|
1,325
|
|
||
Assets held for sale
|
—
|
|
|
1,925
|
|
||
Prepaid and other current assets
|
10,863
|
|
|
14,974
|
|
||
Total current assets
|
71,584
|
|
|
52,733
|
|
||
Property, net of accumulated depreciation of $151,140 and $147,445, respectively
|
97,077
|
|
|
97,626
|
|
||
Financing lease right-of-use assets, net of accumulated amortization of $8,920 and $8,468, respectively
|
11,205
|
|
|
11,720
|
|
||
Operating lease right-of-use assets, net
|
152,952
|
|
|
158,550
|
|
||
Goodwill
|
36,884
|
|
|
36,832
|
|
||
Intangible assets, net
|
53,270
|
|
|
53,956
|
|
||
Deferred financing costs, net
|
1,575
|
|
|
1,727
|
|
||
Deferred income taxes, net
|
28,999
|
|
|
14,718
|
|
||
Other noncurrent assets
|
30,587
|
|
|
32,525
|
|
||
Total assets
|
$
|
484,133
|
|
|
$
|
460,387
|
|
Liabilities
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Current finance lease liabilities
|
$
|
1,637
|
|
|
$
|
1,674
|
|
Current operating lease liabilities
|
16,403
|
|
|
16,344
|
|
||
Accounts payable
|
12,009
|
|
|
20,256
|
|
||
Other current liabilities
|
35,989
|
|
|
57,307
|
|
||
Total current liabilities
|
66,038
|
|
|
95,581
|
|
||
Long-term liabilities:
|
|
|
|
|
|
||
Long-term debt
|
318,000
|
|
|
240,000
|
|
||
Noncurrent finance lease liabilities
|
14,413
|
|
|
14,779
|
|
||
Noncurrent operating lease liabilities
|
149,239
|
|
|
152,750
|
|
||
Liability for insurance claims, less current portion
|
11,978
|
|
|
11,454
|
|
||
Other noncurrent liabilities
|
124,957
|
|
|
83,887
|
|
||
Total long-term liabilities
|
618,587
|
|
|
502,870
|
|
||
Total liabilities
|
684,625
|
|
|
598,451
|
|
||
Shareholders' deficit
|
|
|
|
|
|
||
Common stock $0.01 par value; 135,000 shares authorized; March 25, 2020: 109,677 shares issued and 55,667 shares outstanding; December 25, 2019: 109,415 shares issued and 57,095 shares outstanding
|
$
|
1,097
|
|
|
$
|
1,094
|
|
Paid-in capital
|
599,401
|
|
|
603,980
|
|
||
Deficit
|
(180,385
|
)
|
|
(189,398
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
(66,632
|
)
|
|
(33,960
|
)
|
||
Treasury stock, at cost, 54,010 and 52,320 shares, respectively
|
(553,973
|
)
|
|
(519,780
|
)
|
||
Total shareholders' deficit
|
(200,492
|
)
|
|
(138,064
|
)
|
||
Total liabilities and shareholders' deficit
|
$
|
484,133
|
|
|
$
|
460,387
|
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands, except per share amounts)
|
||||||
Revenue:
|
|
|
|
||||
Company restaurant sales
|
$
|
42,291
|
|
|
$
|
98,545
|
|
Franchise and license revenue
|
54,404
|
|
|
52,866
|
|
||
Total operating revenue
|
96,695
|
|
|
151,411
|
|
||
Costs of company restaurant sales, excluding depreciation and amortization:
|
|
|
|
||||
Product costs
|
10,130
|
|
|
23,905
|
|
||
Payroll and benefits
|
17,106
|
|
|
39,832
|
|
||
Occupancy
|
3,163
|
|
|
5,784
|
|
||
Other operating expenses
|
5,719
|
|
|
14,592
|
|
||
Total costs of company restaurant sales
|
36,118
|
|
|
84,113
|
|
||
Costs of franchise and license revenue, excluding depreciation and amortization
|
29,170
|
|
|
27,058
|
|
||
General and administrative expenses
|
7,742
|
|
|
18,811
|
|
||
Depreciation and amortization
|
4,146
|
|
|
6,233
|
|
||
Operating (gains), losses and other charges, net
|
1,473
|
|
|
(8,935
|
)
|
||
Total operating costs and expenses, net
|
78,649
|
|
|
127,280
|
|
||
Operating income
|
18,046
|
|
|
24,131
|
|
||
Interest expense, net
|
3,951
|
|
|
5,407
|
|
||
Other nonoperating expense (income), net
|
2,763
|
|
|
(1,423
|
)
|
||
Income before income taxes
|
11,332
|
|
|
20,147
|
|
||
Provision for income taxes
|
2,319
|
|
|
4,657
|
|
||
Net income
|
$
|
9,013
|
|
|
$
|
15,490
|
|
|
|
|
|
||||
Basic net income per share
|
$
|
0.16
|
|
|
$
|
0.25
|
|
Diluted net income per share
|
$
|
0.16
|
|
|
$
|
0.24
|
|
|
|
|
|
||||
Basic weighted average shares outstanding
|
56,300
|
|
|
61,651
|
|
||
Diluted weighted average shares outstanding
|
58,106
|
|
|
63,683
|
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Net income
|
$
|
9,013
|
|
|
$
|
15,490
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Minimum pension liability adjustment, net of tax of $6 and $6, respectively
|
17
|
|
|
16
|
|
||
Changes in the fair value of derivatives, net of tax of $(11,795) and $(4,622), respectively
|
(32,928
|
)
|
|
(12,152
|
)
|
||
Reclassification of derivatives to interest expense, net of tax of $86 and $(7), respectively
|
239
|
|
|
(17
|
)
|
||
Other comprehensive loss
|
(32,672
|
)
|
|
(12,153
|
)
|
||
Total comprehensive income (loss)
|
$
|
(23,659
|
)
|
|
$
|
3,337
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Paid-in Capital
|
|
Deficit
|
|
Accumulated
Other
Comprehensive Loss, Net
|
|
Total
Shareholders’
Deficit
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||
Balance, December 25, 2019
|
109,415
|
|
|
$
|
1,094
|
|
|
(52,320
|
)
|
|
$
|
(519,780
|
)
|
|
$
|
603,980
|
|
|
$
|
(189,398
|
)
|
|
$
|
(33,960
|
)
|
|
$
|
(138,064
|
)
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,013
|
|
|
—
|
|
|
9,013
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,672
|
)
|
|
(32,672
|
)
|
||||||
Share-based compensation on equity classified awards, net of withholding tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,576
|
)
|
|
—
|
|
|
—
|
|
|
(4,576
|
)
|
||||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
(1,690
|
)
|
|
(34,193
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,193
|
)
|
||||||
Issuance of common stock for share-based compensation
|
262
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, March 25, 2020
|
109,677
|
|
|
$
|
1,097
|
|
|
(54,010
|
)
|
|
$
|
(553,973
|
)
|
|
$
|
599,401
|
|
|
$
|
(180,385
|
)
|
|
$
|
(66,632
|
)
|
|
$
|
(200,492
|
)
|
|
Common Stock
|
|
Treasury Stock
|
|
Paid-in Capital
|
|
Deficit
|
|
Accumulated
Other
Comprehensive
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 of withholding tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(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
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
9,013
|
|
|
$
|
15,490
|
|
Adjustments to reconcile net income to cash flows provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
4,146
|
|
|
6,233
|
|
||
Operating (gains), losses and other charges, net
|
1,473
|
|
|
(8,935
|
)
|
||
Amortization of deferred financing costs
|
152
|
|
|
152
|
|
||
Gains on investments
|
(116
|
)
|
|
(39
|
)
|
||
Losses (gains) on early extinguishments of debt and leases
|
28
|
|
|
(74
|
)
|
||
Deferred income tax (benefit) expense
|
(2,577
|
)
|
|
1,476
|
|
||
Share-based compensation (benefit) expense
|
(1,537
|
)
|
|
2,253
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Receivables
|
15,815
|
|
|
7,428
|
|
||
Inventories
|
(4
|
)
|
|
121
|
|
||
Other current assets
|
4,111
|
|
|
2,904
|
|
||
Other assets
|
1,578
|
|
|
(1,355
|
)
|
||
Operating lease assets/liabilities
|
(18
|
)
|
|
(234
|
)
|
||
Accounts payable
|
(7,465
|
)
|
|
(1,471
|
)
|
||
Accrued salaries and vacations
|
(12,783
|
)
|
|
(6,439
|
)
|
||
Accrued taxes
|
(971
|
)
|
|
(494
|
)
|
||
Other accrued liabilities
|
(6,337
|
)
|
|
(5,499
|
)
|
||
Other noncurrent liabilities
|
(2,607
|
)
|
|
951
|
|
||
Net cash flows provided by operating activities
|
1,901
|
|
|
12,468
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(2,818
|
)
|
|
(3,109
|
)
|
||
Acquisition of restaurants and real estate
|
—
|
|
|
(4,706
|
)
|
||
(Costs) proceeds from sales of restaurants, real estate and other assets
|
(35
|
)
|
|
7,914
|
|
||
Investment purchases
|
(1,400
|
)
|
|
(1,300
|
)
|
||
Collections on notes receivable
|
505
|
|
|
425
|
|
||
Issuance of notes receivable
|
(408
|
)
|
|
(571
|
)
|
||
Net cash flows used in investing activities
|
(4,156
|
)
|
|
(1,347
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Revolver borrowings
|
102,500
|
|
|
28,500
|
|
||
Revolver payments
|
(24,500
|
)
|
|
(31,500
|
)
|
||
Long-term debt payments
|
(406
|
)
|
|
(795
|
)
|
||
Proceeds from exercise of stock options
|
—
|
|
|
107
|
|
||
Tax withholding on share-based payments
|
(3,036
|
)
|
|
(3,178
|
)
|
||
Purchase of treasury stock
|
(36,008
|
)
|
|
(8,089
|
)
|
||
Net bank overdrafts
|
(449
|
)
|
|
705
|
|
||
Net cash flows provided by (used in) financing activities
|
38,101
|
|
|
(14,250
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
35,846
|
|
|
(3,129
|
)
|
||
Cash and cash equivalents at beginning of period
|
3,372
|
|
|
5,026
|
|
||
Cash and cash equivalents at end of period
|
$
|
39,218
|
|
|
$
|
1,897
|
|
|
March 25, 2020
|
|
December 25, 2019
|
||||
|
(In thousands)
|
||||||
Receivables, net:
|
|
|
|
||||
Trade accounts receivable from franchisees
|
$
|
8,669
|
|
|
$
|
14,551
|
|
Financing receivables from franchisees
|
1,819
|
|
|
2,230
|
|
||
Receivables in connection with disposition of property
|
2,291
|
|
|
—
|
|
||
Vendor receivables
|
1,198
|
|
|
3,260
|
|
||
Credit card receivables
|
85
|
|
|
6,806
|
|
||
Other
|
2,323
|
|
|
915
|
|
||
Allowance for doubtful accounts
|
(1,249
|
)
|
|
(274
|
)
|
||
Total receivables, net
|
$
|
15,136
|
|
|
$
|
27,488
|
|
|
|
|
|
||||
Other noncurrent assets:
|
|
|
|
||||
Financing receivables from franchisees
|
$
|
248
|
|
|
$
|
364
|
|
|
(In thousands)
|
||
Balance, December 25, 2019
|
$
|
36,832
|
|
Reclassification from assets held for sale
|
52
|
|
|
Balance, March 25, 2020
|
$
|
36,884
|
|
|
March 25, 2020
|
|
December 25, 2019
|
||||||||||||
|
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
|
|
|
—
|
|
|
120
|
|
|
—
|
|
||||
Intangible assets with definite lives:
|
|
|
|
|
|
|
|
||||||||
Reacquired franchise rights
|
15,432
|
|
|
6,369
|
|
|
15,516
|
|
|
5,767
|
|
||||
Intangible assets, net
|
$
|
59,639
|
|
|
$
|
6,369
|
|
|
$
|
59,723
|
|
|
$
|
5,767
|
|
|
March 25, 2020
|
|
December 25, 2019
|
||||
|
(In thousands)
|
||||||
Accrued payroll
|
$
|
7,047
|
|
|
$
|
19,689
|
|
Accrued insurance, primarily current portion of liability for insurance claims
|
6,316
|
|
|
6,515
|
|
||
Accrued taxes
|
4,653
|
|
|
5,624
|
|
||
Accrued advertising
|
3,331
|
|
|
6,753
|
|
||
Gift cards
|
4,790
|
|
|
6,469
|
|
||
Other
|
9,852
|
|
|
12,257
|
|
||
Other current liabilities
|
$
|
35,989
|
|
|
$
|
57,307
|
|
|
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 25, 2020:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments (1)
|
$
|
11,174
|
|
|
$
|
11,174
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps (2)
|
(89,068
|
)
|
|
—
|
|
|
(89,068
|
)
|
|
—
|
|
||||
Investments (3)
|
5,165
|
|
|
—
|
|
|
5,165
|
|
|
—
|
|
||||
Total
|
$
|
(72,729
|
)
|
|
$
|
11,174
|
|
|
$
|
(83,903
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Fair value measurements as of December 25, 2019:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan investments (1)
|
$
|
13,517
|
|
|
$
|
13,517
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps (2)
|
(44,670
|
)
|
|
—
|
|
|
(44,670
|
)
|
|
—
|
|
||||
Investments (3)
|
3,649
|
|
|
—
|
|
|
3,649
|
|
|
—
|
|
||||
Total
|
$
|
(27,504
|
)
|
|
$
|
13,517
|
|
|
$
|
(41,021
|
)
|
|
$
|
—
|
|
(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 7 for details on the interest rate swaps.
|
(3)
|
The fair values of our investments are 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.
|
|
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Impairment Charges
|
||||
|
|
||||||||
Fair value measurements as of March 25, 2020:
|
|
|
|
|
|
||||
Assets held and used (1)
|
|
|
$
|
2,718
|
|
|
$
|
2,181
|
|
(1)
|
As of March 25, 2020, impaired assets were written down to their fair value. To determine fair value, we used the income approach, which assumes that the future cash flows reflect current market expectations. These fair value measurements require significant judgment using Level 3 inputs, such as discounted cash flows from operations, which are not observable from the market, directly or indirectly. There is uncertainty in the projected future cash flows used in the Company's impairment analysis, which requires the use of estimates and assumptions. If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods.
|
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 amounts of the swaps entered into on February 15, 2018 increase annually beginning September 30, 2020 until they reach the maximum notional amount of $425.0 million on September 28, 2029.
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
March 27, 2019
|
|||||
|
(Dollars in thousands)
|
||||||
Company restaurant sales
|
$
|
42,291
|
|
|
$
|
98,545
|
|
Franchise and license revenue:
|
|
|
|
||||
Royalties
|
23,847
|
|
|
25,240
|
|
||
Advertising revenue
|
17,526
|
|
|
18,942
|
|
||
Initial and other fees
|
1,697
|
|
|
1,139
|
|
||
Occupancy revenue
|
11,334
|
|
|
7,545
|
|
||
Franchise and license revenue
|
54,404
|
|
|
52,866
|
|
||
Total operating revenue
|
$
|
96,695
|
|
|
$
|
151,411
|
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Operating lease revenue
|
$
|
8,622
|
|
|
$
|
5,425
|
|
Variable lease revenue
|
2,712
|
|
|
2,120
|
|
||
Total occupancy revenue
|
$
|
11,334
|
|
|
$
|
7,545
|
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Gains on sales of assets and other, net
|
$
|
(1,070
|
)
|
|
$
|
(9,475
|
)
|
Restructuring charges and exit costs
|
362
|
|
|
540
|
|
||
Impairment charges
|
2,181
|
|
|
—
|
|
||
Operating (gains), losses and other charges, net
|
$
|
1,473
|
|
|
$
|
(8,935
|
)
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Exit costs
|
$
|
44
|
|
|
$
|
122
|
|
Severance and other restructuring charges
|
318
|
|
|
418
|
|
||
Total restructuring charges and exit costs
|
$
|
362
|
|
|
$
|
540
|
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Performance share awards
|
$
|
(1,746
|
)
|
|
$
|
1,998
|
|
Restricted stock units for board members
|
209
|
|
|
255
|
|
||
Total share-based compensation
|
$
|
(1,537
|
)
|
|
$
|
2,253
|
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands, except for per share amounts)
|
||||||
Net income
|
$
|
9,013
|
|
|
$
|
15,490
|
|
|
|
|
|
||||
Weighted average shares outstanding - basic
|
56,300
|
|
|
61,651
|
|
||
Effect of dilutive share-based compensation awards
|
1,806
|
|
|
2,032
|
|
||
Weighted average shares outstanding - diluted
|
58,106
|
|
|
63,683
|
|
||
|
|
|
|
||||
Basic net income per share
|
$
|
0.16
|
|
|
$
|
0.25
|
|
Diluted net income per share
|
$
|
0.16
|
|
|
$
|
0.24
|
|
|
|
|
|
||||
Anti-dilutive share-based compensation awards
|
1
|
|
|
630
|
|
|
Defined Benefit Plans
|
|
Derivatives
|
|
Accumulated Other Comprehensive Loss
|
||||||
|
(In thousands)
|
||||||||||
Balance as of December 25, 2019
|
$
|
(781
|
)
|
|
$
|
(33,179
|
)
|
|
$
|
(33,960
|
)
|
Amortization of net loss (1)
|
23
|
|
|
—
|
|
|
23
|
|
|||
Net change in fair value of derivatives
|
—
|
|
|
(44,723
|
)
|
|
(44,723
|
)
|
|||
Reclassification of derivatives to interest expense, net (2)
|
—
|
|
|
325
|
|
|
325
|
|
|||
Income tax (expense) benefit related to items of other comprehensive loss
|
(6
|
)
|
|
11,709
|
|
|
11,703
|
|
|||
Balance as of March 25, 2020
|
$
|
(764
|
)
|
|
$
|
(65,868
|
)
|
|
$
|
(66,632
|
)
|
(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 25, 2020.
|
(2)
|
Amounts reclassified from accumulated other comprehensive loss into income represent payments either received from or made to the counterparty for the interest rate swaps. These amounts are included as a component of interest expense, net in our Condensed Consolidated Statements of Income. See Note 7 for additional details.
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Income taxes paid, net
|
$
|
224
|
|
|
$
|
367
|
|
Interest paid
|
$
|
3,596
|
|
|
$
|
5,067
|
|
|
|
|
|
||||
Noncash investing and financing activities:
|
|
|
|
||||
Issuance of common stock, pursuant to share-based compensation plans
|
$
|
5,313
|
|
|
$
|
6,333
|
|
Noncash consideration received in connection with the sale of real estate
|
$
|
—
|
|
|
$
|
3,000
|
|
Execution of finance leases
|
$
|
11
|
|
|
$
|
—
|
|
Treasury stock payable
|
$
|
—
|
|
|
$
|
925
|
|
Receivables in connection with disposition of property
|
$
|
2,291
|
|
|
$
|
—
|
|
Week Ended 4/1
|
Week Ended 4/8
|
Week Ended 4/15
|
Week Ended 4/22
|
Week Ended 4/29
|
Week Ended 5/6
|
-79%
|
-78%
|
-76%
|
-72%
|
-72%
|
-68%
|
(1)
|
Domestic system 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. Total operating revenue is limited to company restaurant sales and royalties, advertising revenue, fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic system-wide same-store sales should be considered as a supplement to, not a substitute for, the Company's results as reported under GAAP.
|
|
Quarter Ended
|
||||||||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||
Company restaurant sales
|
$
|
42,291
|
|
|
43.7
|
%
|
|
$
|
98,545
|
|
|
65.1
|
%
|
Franchise and license revenue
|
54,404
|
|
|
56.3
|
%
|
|
52,866
|
|
|
34.9
|
%
|
||
Total operating revenue
|
96,695
|
|
|
100.0
|
%
|
|
151,411
|
|
|
100.0
|
%
|
||
Costs of company restaurant sales, excluding depreciation and amortization (a):
|
|
|
|
|
|
|
|
|
|
||||
Product costs
|
10,130
|
|
|
24.0
|
%
|
|
23,905
|
|
|
24.3
|
%
|
||
Payroll and benefits
|
17,106
|
|
|
40.4
|
%
|
|
39,832
|
|
|
40.4
|
%
|
||
Occupancy
|
3,163
|
|
|
7.5
|
%
|
|
5,784
|
|
|
5.9
|
%
|
||
Other operating expenses
|
5,719
|
|
|
13.5
|
%
|
|
14,592
|
|
|
14.8
|
%
|
||
Total costs of company restaurant sales
|
36,118
|
|
|
85.4
|
%
|
|
84,113
|
|
|
85.4
|
%
|
||
Costs of franchise and license revenue, excluding depreciation and amortization (a)
|
29,170
|
|
|
53.6
|
%
|
|
27,058
|
|
|
51.2
|
%
|
||
General and administrative expenses
|
7,742
|
|
|
8.0
|
%
|
|
18,811
|
|
|
12.4
|
%
|
||
Depreciation and amortization
|
4,146
|
|
|
4.3
|
%
|
|
6,233
|
|
|
4.1
|
%
|
||
Operating (gains), losses and other charges, net
|
1,473
|
|
|
1.5
|
%
|
|
(8,935
|
)
|
|
(5.9
|
)%
|
||
Total operating costs and expenses, net
|
78,649
|
|
|
81.3
|
%
|
|
127,280
|
|
|
84.1
|
%
|
||
Operating income
|
18,046
|
|
|
18.7
|
%
|
|
24,131
|
|
|
15.9
|
%
|
||
Interest expense, net
|
3,951
|
|
|
4.1
|
%
|
|
5,407
|
|
|
3.6
|
%
|
||
Other nonoperating expense (income), net
|
2,763
|
|
|
2.9
|
%
|
|
(1,423
|
)
|
|
(0.9
|
)%
|
||
Income before income taxes
|
11,332
|
|
|
11.7
|
%
|
|
20,147
|
|
|
13.3
|
%
|
||
Provision for income taxes
|
2,319
|
|
|
2.4
|
%
|
|
4,657
|
|
|
3.1
|
%
|
||
Net income
|
$
|
9,013
|
|
|
9.3
|
%
|
|
$
|
15,490
|
|
|
10.2
|
%
|
|
|
|
|
|
|
|
|
||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
|
||
Company average unit sales
|
$
|
627
|
|
|
|
|
|
$
|
582
|
|
|
|
|
Franchise average unit sales
|
$
|
384
|
|
|
|
|
|
$
|
402
|
|
|
|
|
Company equivalent units (b)
|
67
|
|
|
|
|
|
169
|
|
|
|
|
||
Franchise equivalent units (b)
|
1,631
|
|
|
|
|
|
1,534
|
|
|
|
|
||
Company same-store sales increase (decrease) (c)(d)
|
(9.4
|
)%
|
|
|
|
|
1.5
|
%
|
|
|
|
||
Domestic franchise same-store sales increase (decrease) (c)(d)
|
(6.0
|
)%
|
|
|
|
|
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 2020 comparable units.
|
|
Quarter Ended
|
||||
|
March 25, 2020
|
|
March 27, 2019
|
||
Company restaurants, beginning of period
|
68
|
|
|
173
|
|
Units opened
|
—
|
|
|
—
|
|
Units acquired from franchisees
|
—
|
|
|
—
|
|
Units sold to franchisees
|
—
|
|
|
(3
|
)
|
Units closed
|
(1
|
)
|
|
—
|
|
End of period
|
67
|
|
|
170
|
|
|
|
|
|
||
Franchised and licensed restaurants, beginning of period
|
1,635
|
|
|
1,536
|
|
Units opened
|
8
|
|
|
2
|
|
Units purchased from Company
|
—
|
|
|
3
|
|
Units acquired by Company
|
—
|
|
|
—
|
|
Units closed
|
(15
|
)
|
|
(6
|
)
|
End of period
|
1,628
|
|
|
1,535
|
|
Total restaurants, end of period
|
1,695
|
|
|
1,705
|
|
|
Quarter Ended
|
||||||||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||
Utilities
|
$
|
1,436
|
|
|
3.4
|
%
|
|
$
|
3,372
|
|
|
3.4
|
%
|
Repairs and maintenance
|
789
|
|
|
1.9
|
%
|
|
1,888
|
|
|
1.9
|
%
|
||
Marketing
|
1,119
|
|
|
2.6
|
%
|
|
3,707
|
|
|
3.8
|
%
|
||
Other direct costs
|
2,375
|
|
|
5.6
|
%
|
|
5,625
|
|
|
5.7
|
%
|
||
Other operating expenses
|
$
|
5,719
|
|
|
13.5
|
%
|
|
$
|
14,592
|
|
|
14.8
|
%
|
|
Quarter Ended
|
||||||||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||
Royalties
|
$
|
23,847
|
|
|
43.8
|
%
|
|
$
|
25,240
|
|
|
47.7
|
%
|
Advertising revenue
|
17,526
|
|
|
32.2
|
%
|
|
18,942
|
|
|
35.8
|
%
|
||
Initial and other fees
|
1,697
|
|
|
3.1
|
%
|
|
1,139
|
|
|
2.2
|
%
|
||
Occupancy revenue
|
11,334
|
|
|
20.8
|
%
|
|
7,545
|
|
|
14.3
|
%
|
||
Franchise and license revenue
|
$
|
54,404
|
|
|
100.0
|
%
|
|
$
|
52,866
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||||
Advertising costs
|
$
|
17,526
|
|
|
32.2
|
%
|
|
$
|
18,942
|
|
|
35.8
|
%
|
Occupancy costs
|
7,409
|
|
|
13.6
|
%
|
|
5,249
|
|
|
9.9
|
%
|
||
Other direct costs
|
4,235
|
|
|
7.8
|
%
|
|
2,867
|
|
|
5.4
|
%
|
||
Costs of franchise and license revenue
|
$
|
29,170
|
|
|
53.6
|
%
|
|
$
|
27,058
|
|
|
51.2
|
%
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Corporate administrative expenses
|
$
|
11,781
|
|
|
$
|
12,868
|
|
Share-based compensation
|
(1,537
|
)
|
|
2,253
|
|
||
Incentive compensation
|
14
|
|
|
2,539
|
|
||
Deferred compensation valuation adjustments
|
(2,516
|
)
|
|
1,151
|
|
||
Total general and administrative expenses
|
$
|
7,742
|
|
|
$
|
18,811
|
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Depreciation of property and equipment
|
$
|
2,881
|
|
|
$
|
4,283
|
|
Amortization of financing lease right-of-use assets
|
500
|
|
|
995
|
|
||
Amortization of intangible and other assets
|
765
|
|
|
955
|
|
||
Total depreciation and amortization expense
|
$
|
4,146
|
|
|
$
|
6,233
|
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Gains on sales of assets and other, net
|
$
|
(1,070
|
)
|
|
$
|
(9,475
|
)
|
Restructuring charges and exit costs
|
362
|
|
|
540
|
|
||
Impairment charges
|
2,181
|
|
|
—
|
|
||
Operating (gains), losses and other charges, net
|
$
|
1,473
|
|
|
$
|
(8,935
|
)
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Exit costs
|
$
|
44
|
|
|
$
|
122
|
|
Severance and other restructuring charges
|
318
|
|
|
418
|
|
||
Total restructuring and exit costs
|
$
|
362
|
|
|
$
|
540
|
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Interest on credit facilities
|
$
|
2,379
|
|
|
$
|
3,394
|
|
Interest on interest rate swaps, net
|
325
|
|
|
(24
|
)
|
||
Interest on financing lease liabilities
|
785
|
|
|
1,516
|
|
||
Letters of credit and other fees
|
261
|
|
|
304
|
|
||
Interest income
|
(30
|
)
|
|
(42
|
)
|
||
Total cash interest
|
3,720
|
|
|
5,148
|
|
||
Amortization of deferred financing costs
|
152
|
|
|
152
|
|
||
Interest accretion on other liabilities
|
79
|
|
|
107
|
|
||
Total interest expense, net
|
$
|
3,951
|
|
|
$
|
5,407
|
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Net cash provided by operating activities
|
$
|
1,901
|
|
|
$
|
12,468
|
|
Net cash used in investing activities
|
(4,156
|
)
|
|
(1,347
|
)
|
||
Net cash provided by (used in) financing activities
|
38,101
|
|
|
(14,250
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
$
|
35,846
|
|
|
$
|
(3,129
|
)
|
|
Quarter Ended
|
||||||
|
March 25, 2020
|
|
March 27, 2019
|
||||
|
(In thousands)
|
||||||
Facilities
|
$
|
1,073
|
|
|
$
|
1,064
|
|
New construction
|
64
|
|
|
1,320
|
|
||
Remodeling
|
596
|
|
|
349
|
|
||
Information technology
|
925
|
|
|
332
|
|
||
Other
|
160
|
|
|
44
|
|
||
Capital expenditures (excluding acquisitions)
|
$
|
2,818
|
|
|
$
|
3,109
|
|
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 amounts of the swaps entered into on February 15, 2018 increase annually beginning September 30, 2020 until they reach the maximum notional amount of $425.0 million on September 28, 2029.
|
•
|
Disruptions or restrictions on our employees’ ability to work effectively due to travel bans, quarantines, shelter-in-place orders or other limitations.
|
•
|
Temporary restrictions on and closures of our company operated restaurants and our franchisees’ restaurants or our suppliers.
|
•
|
Failure of third parties on which we rely, including our franchisees and suppliers, to meet their respective obligations to the Company, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties or issues with the regional or national supply chain.
|
•
|
Volatility of commodity costs due to the COVID-19 outbreak.
|
•
|
Disruptions or uncertainties related to the COVID-19 outbreak for a sustained period of time which could hinder our ability to achieve our strategic goals and our ability to meet financial obligations as they come due.
|
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 26, 2019 - January 22, 2020
|
690
|
|
|
$
|
20.41
|
|
|
690
|
|
|
$
|
268,101
|
|
January 23, 2020 - February 19, 2020
|
615
|
|
|
20.71
|
|
|
615
|
|
|
$
|
255,354
|
|
|
February 20, 2020 - March 25, 2020
|
385
|
|
|
19.06
|
|
|
385
|
|
|
$
|
248,004
|
|
|
Total
|
1,690
|
|
|
$
|
20.21
|
|
|
1,690
|
|
|
|
(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, which was completed in February 2020. During the quarter ended March 25, 2020, we purchased 1.7 million shares of our common stock for an aggregate consideration of approximately $34.2 million pursuant to these share repurchase programs. The Company suspended share repurchases as of February 27, 2020, and terminated its 10b5-1 Plan effective March 16, 2020, in light of uncertain market conditions arising from the COVID-19 pandemic. Under our Amended Credit Agreement, we are prohibited until the date of delivery of our financial statements for the fiscal quarter ending June 30, 2021, from making any stock repurchases.
|
Exhibit No.
|
|
Description
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
101.INS
|
|
Inline 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
|
|
Inline XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
|
DENNY'S CORPORATION
|
|
|
|
|
|
|
|
Date:
|
May 15, 2020
|
By:
|
/s/ Robert P. Verostek
|
|
|
|
|
Robert P. Verostek
|
|
|
|
|
Senior Vice President and
Chief Financial Officer
|
|
|
|
|
|
|
Date:
|
May 15, 2020
|
By:
|
/s/ Jay C. Gilmore
|
|
|
|
|
Jay C. Gilmore
|
|
|
|
|
Vice President,
Chief Accounting Officer and
Corporate Controller
|
|
|
|
|
|
|
Date:
|
May 15, 2020
|
By:
|
/s/ John C. Miller
|
|
|
|
|
John C. Miller
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
Date:
|
May 15, 2020
|
By:
|
/s/ Robert P. Verostek
|
|
|
|
|
Robert P. Verostek
|
|
|
|
|
Senior Vice President and
|
|
|
|
|
Chief Financial Officer
|
|
Date:
|
May 15, 2020
|
By:
|
/s/ John C. Miller
|
|
|
|
|
John C. Miller
|
|
|
|
|
Chief Executive Officer
|
|
Date:
|
May 15, 2020
|
By:
|
/s/ Robert P. Verostek
|
|
|
|
|
Robert P. Verostek
|
|
|
|
|
Senior Vice President and
|
|
|
|
|
Chief Financial Officer
|
|