Denny's Corporation Reports Results for Second Quarter 2014

Denny's Corporation Reports Results for Second Quarter 2014  - Domestic System-Wide Same-Store Sales Increases 1.9% with Company Same-Store                              Sales Growing 3.7% -     - Generated $11.6 million of Free Cash Flow* and Repurchased 2.3 Million                                    Shares -                         - Raises 2014 Annual Guidance -  SPARTANBURG, S.C., July 28, 2014 (GLOBE NEWSWIRE) -- Denny's Corporation (Nasdaq:DENN), franchisor and operator of one of America's largest franchised full-service restaurant chains, today reported results for its second quarter ended June 25, 2014.  Second Quarter Summary    *Domestic system-wide same-store sales increased 1.9%, comprised of a 3.7%     increase at company restaurants and 1.7% increase at domestic franchised     restaurants.   *43 remodels were completed at company and franchise restaurants, including     30 in the new Heritage image.   *Adjusted EBITDA* of $21.1 million, or 18.4% of total operating revenue,     increased $1.1 million compared with the prior year quarter.   *Net Income of $8.3 million, or $0.09 per diluted share, increased 33.5%     compared with the prior year quarter Net Income of $6.2 million, or $0.07     per diluted share.   *Adjusted Net Income per Share* increased 15.7% compared with the prior     year quarter.   *Generated $11.6 million of Free Cash Flow* after remodel investments at     company restaurants.   *Repurchased 2.3 million shares for $14.9 million with 5.6 million     authorized shares remaining at the end of the second quarter.  * Adjusted Net Income excludes debt refinancing charges, impairment charges and gains on sales of assets and other. Please refer to the historical reconciliation of Net Income to Adjusted Net Income, Adjusted Net Income per Share, Adjusted EBITDA and Free Cash Flow included in the following tables.  John Miller, President and Chief Executive Officer, stated, "We generated another quarter of growing franchise and company same-store sales as we continue to build on the positive momentum from our brand revitalization. Our America's Diner strategy, supported by our newly launched Heritage remodel program, continues to resonate with our guests and our franchisees. The investments we are making in our remodel program contributed to our company restaurants growing same-store guest traffic for the second consecutive quarter. We remain focused on driving long-term shareholder value through our brand revitalization strategy. Our strong balance sheet and free cash flow enables us to prudently allocate capital between reinvesting in the brand and returning value to shareholders."  Second Quarter Results  Denny's total operating revenue, including company restaurant sales and franchise and license revenue, was $114.6 million resulting from a reduction in both company restaurant sales and franchise and license revenue. Franchise and license revenue was $33.5 million compared with $33.7 million due to a decrease in occupancy revenue, partially offset by an increase in royalty revenue from nine additional equivalent franchised restaurants. Company restaurant sales were $81.1 million compared with $82.8 million due to five fewer equivalent company restaurants. The reduction in equivalent company restaurants includes the impact of the previously announced temporary closure for the reconstruction of the highest volume restaurant located in Las Vegas and temporary closures for remodeling restaurants. The decrease in company restaurant sales was partially offset by a 3.7% increase in same-store sales during the quarter.  Denny's opened three franchised restaurants in the second quarter of this year and closed six system restaurants (five franchised and one company) bringing the total restaurant count to 1,693, comprised of 160 company restaurants and 1,533 franchised restaurants.  Franchise operating margin was $22.8 million, or 68.2% of franchise and license revenue, an increase of 2.5 percentage points. This improvement was primarily due to an increase in royalties. Company restaurant operating margin of $11.5 million, or 14.2% of company restaurant sales, expanded 0.5 percentage points. The increase in company margin was primarily driven by a reduction in payroll and benefits and occupancy costs, which were partially offset by higher product costs and the previously mentioned temporary restaurant closure in Las Vegas. In the second quarter of 2013, this high volume restaurant generated pre-tax operating income of $0.8 million on sales of $2.1 million.  Total general and administrative expenses of $14.1 million and depreciation and amortization expense of $5.3 million were both flat to the prior year. Net operating gains, losses and other charges, which include restructuring charges, exit costs, impairment charges and gains or losses on the sale of assets, decreased $1.4 million in the quarter.Interest expense improved $0.3 million to $2.3 million as a result of lower interest rates under the Company's refinanced credit facility.In the second quarter, the provision for income taxes was $4.7 million, reflecting an effective tax rate of 36.4%.Due to the use of net operating loss and tax credit carryforwards, the Company paid $0.8 million in cash taxes during the second quarter.  Denny's second quarter net income of $8.3 million, or $0.09 per diluted share, increased 33.5% compared to prior year quarter net income of $6.2 million, or $0.07 per diluted share.Adjusted net income* of $8.3 million grew 9.2% compared to prior year quarter adjusted net income* of $7.6 million.Adjusted Net Income per Share* of $0.09 increased 15.7% compared with the prior year quarter Adjusted Net Income per Share* of $0.08.  Denny's generated $11.6 million of Free Cash Flow* in the second quarter, after spending $6.7 million on capital expenditures, primarily to remodel 17 company restaurants.During the quarter, the Company repurchased 2.3 million shares for $14.9 million.As of June25, 2014, the Company had repurchased 19.4 million shares since initiating its share repurchase strategy in November 2010.At the end of the second quarter, the Company had 5.6 million authorized shares remaining to be purchased.Denny's ended the second quarter with $179.9 million of total debt outstanding, including $105.0 million of borrowings under the revolving line of credit and $56.3 million of term loan debt outstanding.  Business Outlook  Mark Wolfinger, Executive Vice President, Chief Administrative Officer and Chief Financial Officer, commented, "Our ability to grow profitability and Free Cash Flow* while making investments in our company restaurants through our Heritage remodel program is a testament to our highly franchised business, which provides financial stability and flexibility.Returning value to our shareholders remains a very important part of our strategic plan as evidenced by the 2.3 million shares repurchased in the second quarter of this year.With our momentum growing through the first half of the year, we are well positioned to raise our annual guidance."  Key considerations impacting the Company's outlook for 2014 include:    *2014 will include 53 operating weeks (14 in the fourth quarter) compared     to 52 operating weeks in 2013.   *The highest volume company operated restaurant located on the Las Vegas     Strip is closed for reconstruction and expected to reopen in early     2015.In 2013, this restaurant generated $7.9 million of sales and $2.9     million of pre-tax operating income.The new retail development will     include a completely reconstructed Denny's restaurant, funded by the     landlord, where Denny's will have a new long-term lease.  Based on year-to-date results and management's expectations at this time, Denny's is updating the Company's financial guidance for full year 2014.The Company is increasing expectations for AdjustedEBITDA* and Free Cash Flow* in addition to updating expectations for other selected components.  Component                              Full Year 2014 Guidance                                       Previous**            Current Domestic Franchise Same-Store Sales    1.0% to 2.0%          No Change Company Same-Store Sales               2.0% to 3.0%          2.5% to 3.5% New Restaurant Openings                45 - 50 (All          40 - 45 (All                                        Franchised)           Franchised) Net Restaurant Growth                  5 - 15                No Change Total General and Administrative Expenses (includes Share-Based         $57M to $59M          $56M to $58M Compensation) Adjusted EBITDA*                       $77M to $79M          $78M to $80M Cash Capital Expenditures              $20M to $22M          No Change Depreciation and Amortization Expense  $20.5M to $21.5M      No Change Interest Expense, net                  $9.0M to $9.5M        No Change Effective Income Tax Rate              34% to 38%            No Change (Cash Taxes)                           ($3.5M to $4.5M) Free Cash Flow*                        $44M to $47M          $45M to $48M                                                             * Please refer to the historical reconciliation of Net Income to Adjusted Net Income, Adjusted Net Income per Share, Adjusted EBITDA and Free Cash Flow included in the following tables. ** As announced in First Quarter 2014 Earnings Release on April 28, 2014.  Conference Call and Webcast Information  Denny's will provide further commentary on the results for the second quarter ended June25, 2014 on its quarterly investor conference call today, Monday, July28, 2014 at 4:30 p.m. ET.Interested parties are invited to listen to a live broadcast of the conference call accessible through the investor relations section of Denny's website at investor.dennys.com.A replay of the call may be accessed at the same location later in the day and will remain available for 30 days.  About Denny's  Denny's is the franchisor and operator of one of America's largest franchised full-service restaurant chains, based on the number of restaurants.Denny's currently has 1,693 franchised, licensed, and company restaurants around the world with combined sales of $2.5 billion including 1,591 restaurants in the United States and 102 restaurants in Canada, Costa Rica, Mexico, Honduras, Guam, Curaçao, Puerto Rico, Dominican Republic, El Salvador, Chile and New Zealand.As of June25, 2014, 1,533 of Denny's restaurants were franchised and 160 restaurants were company operated.For further information on Denny's, including news releases, links to SEC filings and other financial information, please visit the Denny's investor relations website at investor.dennys.com.  The Company urges caution in considering its current trends and any outlook on earnings disclosed in this press release.In addition, certain matters discussed in this release may constitute forward-looking statements.These forward-looking statements, which reflect its best judgment based on factors currently known, are intended to speak only as of the date such statements are made and involve risks, uncertainties, and other factors that may cause the actual performance of Denny's Corporation, its subsidiaries and underlying restaurants to be materially different from the performance indicated or implied by such statements.Words such as "expects", "anticipates", "believes", "intends", "plans", "hopes", and variations of such words and similar expressions are intended to identify such forward-looking statements.Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.Factors that could cause actual performance to differ materially from the performance indicated by these forward-looking statements include, among others:the competitive pressures from within the restaurant industry; the level of success of the Company's strategic and operating initiatives; advertising and promotional efforts; adverse publicity; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy, particularly at the retail level; political environment (including acts of war and terrorism); and other factors from time to time set forth in the Company's SEC reports and other filings, including but not limited to the discussion in Management's Discussion and Analysis and the risks identified in Item 1A. Risk Factors contained in the Company's Annual Report on Form 10-K for the year ended December25, 2013 (and in the Company's subsequent quarterly reports on Form 10-Q).  DENNY'S CORPORATION Condensed Consolidated Balance Sheets (Unaudited)                                                              (In thousands)                                     6/25/2014  12/25/2013 Assets                                                        Current assets                                                Cash and cash equivalents                          $1,221   $2,943 Receivables                                        13,998     17,321 Current deferred tax asset                         22,385     23,264 Other current assets                               7,840      10,298 Total current assets                               45,444     53,826 Property, net                                      108,280    105,620 Goodwill                                           31,451     31,451 Intangible assets, net                             47,093     47,925 Noncurrent deferred tax asset                      24,071     28,290 Other noncurrent assets                            27,855     28,665 Total assets                                       $284,194 $295,777                                                              Liabilities                                                   Current liabilities                                           Current maturities of long-term debt               $3,375   $3,000 Current maturities of capital lease obligations    4,047      4,150 Accounts payable                                   14,332     14,237 Other current liabilities                          45,179     52,698 Total current liabilities                          66,933     74,085 Long-term liabilities                                         Long-term debt, less current maturities            157,875    150,000 Capital lease obligations, less current maturities 14,556     15,923 Other                                              44,844     47,338 Total long-term liabilities                        217,275    213,261 Total liabilities                                  284,208    287,346                                                              Shareholders' equity                                          Common stock                                       1,053      1,050 Paid-in capital                                    568,939    567,505 Deficit                                            (456,242)  (470,946) Accumulated other comprehensive loss, net of tax   (17,438)   (16,842) Treasury stock                                     (96,326)   (72,336) Total shareholders' equity (deficit)               (14)       8,431 Total liabilities and shareholders' equity         $284,194 $295,777                                                              Debt Balances (In thousands)                                     6/25/2014  12/25/2013 Credit facility term loan and revolver due 2018    $161,250 $153,000 Capital leases                                     18,603     20,073 Total debt                                         $179,853 $173,073   DENNY'S CORPORATION Condensed Consolidated Statements of Comprehensive Income (Unaudited)                                                                                                           Quarter Ended (In thousands, except per share amounts)         6/25/2014 6/26/2013 Revenue:                                                   Company restaurant sales                         $81,138 $82,841 Franchise and license revenue                    33,476    33,730 Total operating revenue                          114,614   116,571 Costs of company restaurant sales                69,647    71,451 Costs of franchise and license revenue           10,633    11,585 General and administrative expenses              14,068    14,085 Depreciation and amortization                    5,281     5,352 Operating (gains), losses and other charges, net 40        1,484 Total operating costs and expenses, net          99,669    103,957 Operating income                                 14,945    12,614 Interest expense, net                            2,274     2,548 Other nonoperating (income) expense, net         (332)     1,331 Net income before income taxes                   13,003    8,735 Provision for income taxes                       4,730     2,537 Net income                                       $8,273  $6,198                                                                                                                     Basic net income per share                       $0.10   $0.07 Diluted net income per share                     $0.09   $0.07                                                           Basic weighted average shares outstanding        86,781    91,659 Diluted weighted average shares outstanding      88,384    93,665                                                           Comprehensive income                             $7,885  $8,793                                                           General and Administrative Expenses              Quarter Ended (In thousands)                                   6/25/2014 6/26/2013 Share-based compensation                         $1,180  $1,206 Other general and administrative expenses        12,888    12,879 Total general and administrative expenses        $14,068 $14,085   DENNY'S CORPORATION Condensed Consolidated Statements of Comprehensive Income (Unaudited)                                                                                                            Two Quarters Ended (In thousands, except per share amounts)         6/25/2014  6/26/2013 Revenue:                                                    Company restaurant sales                         $160,442 $163,871 Franchise and license revenue                    66,092     67,190 Total operating revenue                          226,534    231,061 Costs of company restaurant sales                139,822    140,571 Costs of franchise and license revenue           21,330     22,987 General and administrative expenses              28,184     29,244 Depreciation and amortization                    10,519     10,576 Operating (gains), losses and other charges, net 462        1,618 Total operating costs and expenses, net          200,317    204,996 Operating income                                 26,217     26,065 Interest expense, net                            4,596      5,348 Other nonoperating (income) expense, net         (432)      1,332 Net income before income taxes                   22,053     19,385 Provision for income taxes                       7,349      6,106 Net income                                       $14,704  $13,279                                                                                                                       Basic net income per share                       $0.17    $0.14 Diluted net income per share                     $0.16    $0.14                                                            Basic weighted average shares outstanding        87,792     92,004 Diluted weighted average shares outstanding      89,630     94,081                                                            Comprehensive income                             $14,108  $16,128                                                            General and Administrative Expenses              Two Quarters Ended (In thousands)                                   6/25/2014  6/26/2013 Share-based compensation                         $2,344   $2,381 Other general and administrative expenses        25,840     26,863 Total general and administrative expenses        $28,184  $29,244   DENNY'S CORPORATION Income, EBITDA, Free Cash Flow, and Net Income Reconciliations (Unaudited)                                                                Income, EBITDA and Free    Quarter Ended             Two Quarters Ended Cash Flow Reconciliation (In thousands)             6/25/2014    6/26/2013    6/25/2014    6/26/2013 Net income                 $8,273     $6,198     $14,704    $13,279 Provision for income taxes 4,730        2,537        7,349        6,106 Operating (gains), losses  40           1,484        462          1,618 and other charges, net Other nonoperating         (332)        1,331        (432)        1,332 (income) expense, net Share-based compensation   1,180        1,206        2,344        2,381 Adjusted Income Before     $13,891    $12,756    $24,427    $24,716 Taxes ^(1)                                                                Interest expense, net      2,274        2,548        4,596        5,348 Depreciation and           5,281        5,352        10,519       10,576 amortization Cash payments for restructuring charges and  (385)        (725)        (1,016)      (1,397) exit costs Cash payments for          —            (10)         (1,083)      (900) share-based compensation Adjusted EBITDA ^(1)       21,061       19,921       37,443       38,343                                                                Cash interest expense, net (2,010)      (2,249)      (4,062)      (4,734) Cash paid for income       (820)        (992)        (1,640)      (1,335) taxes, net Cash paid for capital      (6,669)      (5,538)      (13,526)     (8,544) expenditures Free Cash Flow ^(1)        $11,562    $11,142    $18,215    $23,730                                                                Net Income Reconciliation  Quarter Ended             Quarter Ended (In thousands)             6/25/2014    6/26/2013    6/25/2014    6/26/2013 Net income                 $8,273     $6,198     $14,704    $13,279 (Gains) losses on sales of (33)         (33)         (41)         (15) assets and other, net Impairment charges         28           857          28           857 Loss on debt refinancing   —            1,187        —            1,187 Tax effect ^(2)            2            (633)        4            (639) Adjusted Net Income ^(1)   $8,270     $7,576     $14,695    $14,669                                                                Diluted weighted-average   88,384       93,665       89,630       94,081 shares outstanding                                                                Adjusted Net Income Per    $0.09      $0.08      $0.16      $0.16 Share ^(1)                                                                (1) The Company believes that, in addition to other financial measures, Adjusted Income Before Taxes, Adjusted EBITDA, Free Cash Flow, Adjusted Net Income and Adjusted Net Income Per Share are appropriate indicators to assist in the evaluation of its operating performance on a period-to-period basis. The Company also uses Adjusted Income, Adjusted EBITDA and Free Cash Flow internally as performance measures for planning purposes, including the preparation of annual operating budgets, and for compensation purposes, including bonuses for certain employees. Adjusted EBITDA is also used to evaluate its ability to service debt because the excluded charges do not have an impact on its prospective debt servicing capability and these adjustments are contemplated in its credit facility for the computation of its debt covenant ratios. Free Cash Flow, defined as Adjusted EBITDA less cash portion of interest expense net of interest income, capital expenditures, and cash taxes, is used to evaluate operating effectiveness and decisions regarding the allocation of resources. However, Adjusted Income, Adjusted EBITDA, Free Cash Flow, Adjusted Net Income and Adjusted Net Income Per Share should be considered as a supplement to, not a substitute for, operating income, net income or other financial performance measures prepared in accordance with U.S. generally accepted accounting principles. (2) Tax adjustments for the three and six months ended June 25, 2014 are calculated using the Company's year-to-date effective tax rate of 33.3%. Tax adjustments for the three and six months ended June 26, 2013 are calculated using the Company's year-to-date effective tax rate of 31.5%.   DENNY'S CORPORATION Operating Margins (Unaudited)                                                                                            Quarter Ended (In thousands)             6/25/2014                 6/26/2013 Company restaurant                                                operations: ^(1) Company restaurant sales   $81,138      100.0%     $82,841      100.0% Costs of company                                                  restaurant sales: Product costs              21,327         26.3%      21,402         25.8% Payroll and benefits       31,978         39.4%      33,220         40.1% Occupancy                  4,899          6.0%       5,513          6.7% Other operating costs:                                            Utilities                  3,326          4.1%       3,178          3.8% Repairs and maintenance    1,473          1.8%       1,524          1.8% Marketing                  2,855          3.5%       3,113          3.8% Legal settlements          200            0.2%       238            0.3% Other                      3,589          4.4%       3,263          3.9% Total costs of company     $69,647      85.8%      $71,451      86.3% restaurant sales Company restaurant         $11,491      14.2%      $11,390      13.7% operating margin ^(2)                                                                  Franchise operations: ^(3)                                        Franchise and license                                             revenue: Royalties                  $22,125      66.1%      $21,401      63.5% Initial fees               332            1.0%       450            1.3% Occupancy revenue          11,019         32.9%      11,879         35.2% Total franchise and        $33,476      100.0%     $33,730      100.0% license revenue                                                                  Costs of franchise and                                            license revenue: Occupancy costs            $8,213       24.6%      $8,766       26.0% Other direct costs         2,420          7.2%       2,819          8.3% Total costs of franchise   $10,633      31.8%      $11,585      34.3% and license revenue Franchise operating margin $22,843      68.2%      $22,145      65.7% ^(2)                                                                  Total operating revenue    $114,614     100.0%     $116,571     100.0% ^(4) Total costs of operating   80,280         70.0%      83,036         71.2% revenue ^(4) Total operating margin     $34,334      30.0%      $33,535      28.8% ^(4)(2)                                                                  Other operating expenses:                                         ^(4)(2) General and administrative $14,068      12.3%      $14,085      12.1% expenses Depreciation and           5,281          4.6%       5,352          4.6% amortization Operating gains, losses    40             0.0%       1,484          1.3% and other charges, net Total other operating      $19,389      16.9%      $20,921      17.9% expenses                                                                  Operating income ^(4)      $14,945      13.0%      $12,614      10.8%                                                                  (1) As a percentage of company restaurant sales (2) Other operating expenses such as general and administrative expenses and depreciation and amortization relate to both company and franchise operations and are not allocated to costs of company restaurant sales and costs of franchise and license revenue.As such, operating margin is considered a non-GAAP financial measure.Operating margins should be considered as a supplement to, not as a substitute for, operating income, net income or other financial measures prepared in accordance with U.S. generally accepted accounting principles. (3) As a percentage of franchise and license revenue (4) As a percentage of total operating revenue   DENNY'S CORPORATION Operating Margins (Unaudited)                                                                                            Two Quarters Ended (In thousands)             6/25/2014                 6/26/2013 Company restaurant                                                operations: ^(1) Company restaurant sales   $160,442     100.0%     $163,871     100.0% Costs of company                                                  restaurant sales: Product costs              41,910         26.1%      42,548         26.0% Payroll and benefits       65,077         40.6%      64,766         39.5% Occupancy                  10,027         6.2%       10,741         6.6% Other operating costs:                                            Utilities                  6,657          4.1%       6,305          3.8% Repairs and maintenance    2,932          1.8%       2,873          1.8% Marketing                  5,862          3.7%       6,129          3.7% Legal settlements          254            0.2%       514            0.3% Other                      7,103          4.4%       6,695          4.1% Total costs of company     $139,822     87.1%      $140,571     85.8% restaurant sales Company restaurant         $20,620      12.9%      $23,300      14.2% operating margin ^(2)                                                                  Franchise operations: ^(3)                                        Franchise and license                                             revenue: Royalties                  $43,606      66.0%      $42,428      63.1% Initial fees               449            0.7%       730            1.1% Occupancy revenue          22,037         33.3%      24,032         35.8% Total franchise and        $66,092      100.0%     $67,190      100.0% license revenue                                                                  Costs of franchise and                                            license revenue: Occupancy costs            $16,481      25.0%      $17,619      26.2% Other direct costs         4,849          7.3%       5,368          8.0% Total costs of franchise   $21,330      32.3%      $22,987      34.2% and license revenue Franchise operating margin $44,762      67.7%      $44,203      65.8% ^(2)                                                                  Total operating revenue    $226,534     100.0%     $231,061     100.0% ^(4) Total costs of operating   161,152        71.1%      163,558        70.8% revenue ^(4) Total operating margin     $65,382      28.9%      $67,503      29.2% ^(4)(2)                                                                  Other operating expenses:                                         ^(4)(2) General and administrative $28,184      12.4%      $29,244      12.7% expenses Depreciation and           10,519         4.6%       10,576         4.6% amortization Operating gains, losses    462            0.2%       1,618          0.7% and other charges, net Total other operating      $39,165      17.3%      $41,438      17.9% expenses                                                                  Operating income ^(4)      $26,217      11.6%      $26,065      11.3%                                                                  (1) As a percentage of company restaurant sales (2) Other operating expenses such as general and administrative expenses and depreciation and amortization relate to both company and franchise operations and are not allocated to costs of company restaurant sales and costs of franchise and license revenue.As such, operating margin is considered a non-GAAP financial measure.Operating margins should be considered as a supplement to, not as a substitute for, operating income, net income or other financial measures prepared in accordance with U.S. generally accepted accounting principles. (3) As a percentage of franchise and license revenue (4) As a percentage of total operating revenue   DENNY'S CORPORATION Statistical Data (Unaudited)                                                                   Same-Store Sales                     Quarter Ended         Two Quarters Ended (increase / (decrease) vs. prior     6/25/2014 6/26/2013   6/25/2014 6/26/2013 year) Company Restaurants                  3.7%      (0.5)%      3.4%      (1.0)% Domestic Franchised Restaurants      1.7%      0.7%        1.6%      0.1% Domestic System-wide Restaurants     1.9%      0.6%        1.8%      0.0% System-wide Restaurants              1.7%      0.6%        1.5%      0.0%                                                                   Average Unit Sales                   Quarter Ended         Two Quarters Ended (In thousands)                       6/25/2014 6/26/2013   6/25/2014 6/26/2013 Company Restaurants                  $511    $505      $1,009  $999 Franchised Restaurants               $366    $359      $722    $708                                                                                                                Franchised            Restaurant Unit Activity             Company   & Licensed Total      Ending Units 3/26/14                 161       1,535       1,696      Units Opened                         —         3           3          Units Closed                         (1)       (5)         (6)        Net Change                           (1)       (2)         (3)        Ending Units 6/25/14                 160       1,533       1,693                                                                        Equivalent Units                                                   Second Quarter 2014                  159       1,534       1,693      Second Quarter 2013                  164       1,525       1,689                                          (5)       9           4                                                                                                                         Franchised            Restaurant Unit Activity             Company   & Licensed Total      Ending Units 12/25/13                163       1,537       1,700      Units Opened                         —         7           7          Units Closed                         (3)       (11)        (14)       Net Change                           (3)       (4)         (7)        Ending Units 6/25/14                 160       1,533       1,693                                                                        Equivalent Units                                                   Year-to-Date 2014                    159       1,535       1,694      Year-to-Date 2013                    164       1,525       1,689                                          (5)       10          5           CONTACT: Investor Contact: Whit Kincaid          877-784-7167                   Media Contact: Liz DiTrapano, ICR          646-277-1226  Denny's Corporation Logo  
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