Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 27, 2019 | Apr. 30, 2019 | |
Document Information [Line Items] | ||
Entity Registrant Name | DENNYS CORP | |
Entity Central Index Key | 0000852772 | |
Current Fiscal Year End Date | --12-25 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 60,298,826 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 27, 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 27, 2019 | Dec. 26, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 1,897 | $ 5,026 |
Investments | 3,048 | 1,709 |
Receivables, net | 18,304 | 26,283 |
Inventories | 2,872 | 2,993 |
Assets held for sale | 14,956 | 723 |
Prepaid and other current assets | 7,962 | 10,866 |
Total current assets | 49,039 | 47,600 |
Property, net of accumulated depreciation of $189,939 and $226,620, respectively | 108,844 | 117,251 |
Financing lease right-of-use assets, net of accumulated amortization of $16,413 and $15,526, respectively | 20,962 | 22,753 |
Operating lease right-of-use assets | 94,249 | 0 |
Goodwill | 38,124 | 39,781 |
Intangible assets, net | 56,631 | 59,067 |
Deferred financing costs, net | 2,183 | 2,335 |
Deferred income taxes | 20,617 | 17,333 |
Other noncurrent assets | 31,683 | 29,229 |
Total assets | 422,332 | 335,349 |
Current liabilities: | ||
Current finance lease liabilities | 3,487 | 3,410 |
Current operating lease liabilities | 17,004 | 0 |
Accounts payable | 28,584 | 29,527 |
Other current liabilities | 50,500 | 61,790 |
Total current liabilities | 99,575 | 94,727 |
Long-term liabilities: | ||
Long-term debt | 283,500 | 286,500 |
Noncurrent finance lease liabilities | 25,439 | 27,181 |
Noncurrent operating lease liabilities | 84,220 | 0 |
Liability for insurance claims, less current portion | 12,454 | 12,199 |
Other noncurrent liabilities | 57,365 | 48,087 |
Total long-term liabilities | 462,978 | 373,967 |
Total liabilities | 562,553 | 468,694 |
Shareholders' deficit | ||
Common stock $0.01 par value; shares authorized - 135,000; March 27, 2019: 108,986 shares issued and 61,038 shares outstanding; December 26, 2018: 108,585 shares issued and 61,533 shares outstanding | 1,090 | 1,086 |
Paid-in capital | 598,825 | 592,944 |
Deficit | (291,318) | (306,414) |
Accumulated other comprehensive loss, net of tax | (16,299) | (4,146) |
Treasury stock, at cost, 47,948 and 47,052 shares, respectively | (432,519) | (416,815) |
Total shareholders' deficit | (140,221) | (133,345) |
Total liabilities and shareholders' deficit | $ 422,332 | $ 335,349 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Thousands | Mar. 27, 2019 | Dec. 26, 2018 |
Assets [Abstract] | ||
Accumulated depreciation | $ 189,939,000 | $ 226,620,000 |
Accumulated amortization | $ 16,413 | $ 15,526 |
Shareholders' deficit | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 135,000 | 135,000 |
Common stock, shares issued | 108,986 | 108,585 |
Common stock, shares outstanding | 61,038 | 61,533 |
Treasury stock, at cost, shares | 47,948 | 47,052 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 27, 2019 | Mar. 28, 2018 | |
Revenue: | ||
Total operating revenue | $ 151,411 | $ 155,273 |
Costs of company restaurant sales, excluding depreciation and amortization: | ||
Product costs | 23,905 | 24,935 |
Payroll and benefits | 39,832 | 41,226 |
Occupancy | 5,784 | 5,647 |
Other operating expenses | 14,592 | 15,050 |
Total costs of company restaurant sales | 84,113 | 86,858 |
Costs of franchise and license revenue | 27,058 | 28,556 |
General and administrative expenses | 18,811 | 16,560 |
Depreciation and amortization | 6,233 | 6,514 |
Operating (gains), losses and other charges, net | (8,935) | 360 |
Total operating costs and expenses, net | 127,280 | 138,848 |
Operating income | 24,131 | 16,425 |
Interest expense, net | 5,407 | 4,625 |
Other nonoperating (income) expense, net | (1,423) | 212 |
Net income before income taxes | 20,147 | 11,588 |
Provision for income taxes | 4,657 | 1,829 |
Net income | $ 15,490 | $ 9,759 |
Basic net income per share | $ 0.25 | $ 0.15 |
Diluted net income per share | $ 0.24 | $ 0.15 |
Basic weighted average shares outstanding | 61,651 | 64,432 |
Diluted weighted average shares outstanding | 63,683 | 66,946 |
Franchisor Owned Outlet [Member] | ||
Revenue: | ||
Total operating revenue | $ 98,545 | $ 101,193 |
Franchise [Member] | ||
Revenue: | ||
Total operating revenue | $ 52,866 | $ 54,080 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2019 | Mar. 28, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 15,490 | $ 9,759 |
Other comprehensive income (loss), net of tax: | ||
Minimum pension liability adjustment, net of tax of $6 and $6, respectively | 16 | 22 |
Recognition of unrealized loss on hedge transactions, net of tax of $(4,629) and $(1,085), respectively | (12,169) | (3,113) |
Other comprehensive loss | (12,153) | (3,091) |
Total comprehensive income | $ 3,337 | $ 6,668 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2019 | Mar. 28, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Minimum pension liability adjustment, tax | $ 6 | $ 6 |
Unrealized loss on hedge transactions, tax | $ (4,629) | $ (1,085) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Shareholders' Deficit (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Treasury Stock [Member] | Paid-in Capital [Member] | (Deficit) [Member] | Accumulated Other Comprehensive Loss, Net [Member] | Share Repurchase Program 2017 [Member] | Accelerated Share Repurchase 2018 [Member] | Accelerated Share Repurchase 2018 [Member]Treasury Stock [Member] |
Balance at Dec. 27, 2017 | $ (97,360) | $ 1,077 | $ (355,626) | $ 594,166 | $ (334,661) | $ (2,316) | |||
Balance, common stock, shares issued at Dec. 27, 2017 | 107,740 | ||||||||
Balance, treasury stock, at cost, shares at Dec. 27, 2017 | (43,151) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 9,759 | 9,759 | |||||||
Other comprehensive loss | (3,091) | (3,091) | |||||||
Share-based compensation on equity classified awards, net | (104) | (104) | |||||||
Purchase of treasury stock | (16,186) | $ (16,186) | |||||||
Purchase of treasury stock (in shares) | (1,071) | ||||||||
Issuance of common stock for share-based compensation | 0 | $ 3 | (3) | ||||||
Issuance of common stock for share-based compensation (in shares) | 233 | ||||||||
Exercise of common stock options | 1,013 | $ 3 | 1,010 | ||||||
Exercise of common stock options (in shares) | 286 | ||||||||
Balance at Mar. 28, 2018 | (121,415) | $ 1,083 | $ (371,812) | 595,069 | (340,348) | (5,407) | |||
Balance, common stock, shares issued at Mar. 28, 2018 | 108,259 | ||||||||
Balance, treasury stock, at cost, shares at Mar. 28, 2018 | (44,222) | ||||||||
Balance at Dec. 26, 2018 | $ (133,345) | $ 1,086 | $ (416,815) | 592,944 | (306,414) | (4,146) | |||
Balance, common stock, shares issued at Dec. 26, 2018 | 108,585 | 108,585 | |||||||
Balance, treasury stock, at cost, shares at Dec. 26, 2018 | (47,052) | (47,052) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | $ 15,490 | 15,490 | |||||||
Other comprehensive loss | (12,153) | (12,153) | |||||||
Share-based compensation on equity classified awards, net | (985) | (985) | |||||||
Purchase of treasury stock | (8,941) | $ (8,941) | $ (8,900) | $ (6,800) | |||||
Equity forward contract settlement | $ (6,763) | 6,763 | |||||||
Purchase of treasury stock (in shares) | (507) | (500) | (400) | (389) | |||||
Issuance of common stock for share-based compensation | 0 | $ 3 | (3) | ||||||
Issuance of common stock for share-based compensation (in shares) | 347 | ||||||||
Exercise of common stock options | 107 | $ 1 | 106 | ||||||
Exercise of common stock options (in shares) | 54 | ||||||||
Balance at Mar. 27, 2019 | $ (140,221) | $ 1,090 | $ (432,519) | $ 598,825 | $ (291,318) | $ (16,299) | |||
Balance, common stock, shares issued at Mar. 27, 2019 | 108,986 | 108,986 | |||||||
Balance, treasury stock, at cost, shares at Mar. 27, 2019 | (47,948) | (47,948) | (5,100) |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2019 | Mar. 28, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 15,490 | $ 9,759 |
Adjustments to reconcile net income to cash flows provided by operating activities: | ||
Depreciation and amortization | 6,233 | 6,514 |
Operating (gains), losses and other charges, net | (8,935) | 360 |
Amortization of deferred financing costs | 152 | 152 |
Gain on investments | 39 | 0 |
Gain on early extinguishments of debt and leases | (74) | 0 |
Deferred income tax expense | 1,476 | 1,118 |
Share-based compensation | 2,253 | 1,350 |
Decrease (increase) in assets: | ||
Receivables | 7,428 | 1,821 |
Inventories | 121 | 33 |
Other current assets | 2,904 | 2,739 |
Other assets | 2,897 | (160) |
Increase (decrease) in liabilities: | ||
Accounts payable | (1,471) | (9,865) |
Accrued salaries and vacations | (6,439) | (4,048) |
Accrued taxes | (494) | 38 |
Other accrued liabilities | (5,918) | (5,948) |
Other noncurrent liabilities | (3,116) | (413) |
Net cash flows provided by operating activities | 12,468 | 3,450 |
Cash flows from investing activities: | ||
Capital expenditures | (3,109) | (4,148) |
Acquisition of restaurants and real estate | (4,706) | (8,418) |
Proceeds from sales of restaurants and real estate | 7,914 | 4 |
Investment purchases | (1,300) | 0 |
Collections on notes receivable | 425 | 859 |
Issuance of notes receivable | (571) | (1,934) |
Net cash flows used in investing activities | (1,347) | (13,637) |
Cash flows from financing activities: | ||
Revolver borrowings | 28,500 | 39,500 |
Revolver payments | (31,500) | (16,500) |
Long-term debt payments | (795) | (823) |
Proceeds from exercise of stock options | 107 | 1,013 |
Tax withholding on share-based payments | (3,178) | (1,696) |
Purchase of treasury stock | (8,089) | (15,691) |
Net bank overdrafts | 705 | 3,320 |
Net cash flows (used in) provided by financing activities | (14,250) | 9,123 |
Decrease in cash and cash equivalents | (3,129) | (1,064) |
Cash and cash equivalents at beginning of period | 5,026 | 4,983 |
Cash and cash equivalents at end of period | $ 1,897 | $ 3,919 |
Introduction and Basis of Prese
Introduction and Basis of Presentation | 3 Months Ended |
Mar. 27, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Introduction and Basis of Presentation | Introduction and Basis of Presentation Denny’s Corporation, or Denny’s or the Company, is one of America’s largest full-service restaurant chains based on number of restaurants. At March 27, 2019 , the Denny's brand consisted of 1,705 restaurants, 1,535 of which were franchised/licensed restaurants and 170 of which were company operated. Our unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Therefore, certain information and notes normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. In our opinion, all adjustments considered necessary for a fair presentation of the interim periods presented have been included. Such adjustments are of a normal and recurring nature. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates are reasonable. These interim condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto for the fiscal year ended December 26, 2018 which are contained in our Annual Report on Form 10-K for the fiscal year ended December 26, 2018 . Certain reclassifications have been made to the prior year amounts to conform to the current year presentation. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire fiscal year ending December 25, 2019 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 27, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Newly Adopted Accounting Standards Effective December 27, 2018, the first day of fiscal 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The new guidance established a right-of-use model (“ROU”) that requires lessees to recognize a ROU asset and a lease liability for all leases with terms greater than 12 months. Lessees will classify leases as financing or operating. The guidance requires lessors to classify leases as sales-type, direct financing or operating. We elected to apply the modified retrospective transition approach as the date of initial application without restating comparative period financial statements. Results for reporting periods beginning after December 27, 2018 are presented under Topic 842. Prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 840. Our transition to Topic 842 represents a change in accounting principle. The new guidance provided a number of optional practical expedients in transition. We elected the package of practical expedients that did not require us to reassess whether existing contracts were or contained leases, lease classification for existing or expired leases or the accounting for initial direct costs that were previously capitalized. In addition, we did not elect the hindsight practical expedient which would have allowed us to reassess lease terms and impairment of the ROU assets, nor did we elect the land easement practical expedient. In preparation for adoption, we completed the implementation of a new lease management system. Upon adoption of Topic 842, we recorded operating lease liabilities of $101.3 million and ROU assets of $94.1 million related to existing operating leases. In addition, we recorded a cumulative effect adjustment increasing opening deficit by $0.4 million and deferred tax assets by $0.1 million . The lease liabilities were based on the present value of remaining rental payments under previous leasing standards for existing operating leases primarily related to real estate leases. Exit cost and straight-line lease liabilities that existed at the adoption date were reclassified against the ROU assets upon adoption. The amount recorded to opening deficit represents the initial impairment of ROU assets, net of the deferred tax impact. See Note 3 for further information about our transition to Topic 842 and the newly required disclosures. Additional new accounting guidance became effective for us as of December 27, 2018 that we reviewed and concluded was either not applicable to our operations or had no material effect on the our Consolidated Financial Statements and related disclosures. Accounting Standards to be Adopted In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The new guidance replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform financial statement users of credit loss estimates. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 (our fiscal 2020) with early adoption permitted for annual and interim periods beginning after December 15, 2018 (our fiscal 2019). We do not expect the adoption of this guidance to have a material impact on our Consolidated Financial Statements. |
Leases
Leases | 3 Months Ended |
Mar. 27, 2019 | |
Leases [Abstract] | |
Lessee and Lessor Disclosure [Text Block] | Leases Lessee We lease certain land, buildings and equipment for our restaurants and support facilities. At contract inception, we determine whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides us the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, we consider it to be, or contain, a lease. We recognize a lease liability and an ROU asset at the lease commencement date. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently measured at amortized cost using the effective interest method. For operating leases, the ROU asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus any prepaid lease payments, less any accrued lease payments and unamortized lease incentives received, if any. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For finance leases, the ROU asset is initially measured at cost and subsequently amortized using the straight-line method generally from the lease commencement date to the earlier of the end of its useful life or the end of the lease term. ROU assets for operating and finance leases are assessed for impairment using the long-lived assets impairment guidance. The new lease guidance provides practical expedients and accounting elections for our ongoing accounting after adoption. We elected the practical expedient that allows us to not separate nonlease components from lease components in regards to all leases. Therefore, we do not separate nonlease components, such as common area maintenance, from lease components in these leases. We also elected the portfolio approach in applying the discount rate to our leases. Key estimates and judgments include how we determine (1) lease payments, (2) lease term and (3) the discount rate used to discount the unpaid lease payments to present value. We have certain lease agreements structured with both a fixed base rent and a contingent rent based on a percentage of sales over contractual levels, others with only contingent rent based on a percentage of sales and some with a fixed base rent adjusted periodically for inflation or changes in fair market value of the underlying real estate. Contingent rent is recognized as sales occur. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The exercise of lease renewal options is at our sole discretion, except in certain sublease situations in which we have determined that it is reasonably certain that one or more options will be exercised, including where the exercise of a sublease option compels us to exercise the renewal option of the underlying master lease. Renewal option periods are included in the measurement of lease ROU asset and lease liability where the exercise is reasonably certain to occur. Initial terms of land and restaurant building leases generally range from 10 to 20 years, exclusive of options to renew, which are typically for five year periods. Leases of equipment consist primarily of restaurant equipment, computer equipment and vehicles. Initial terms of equipment leases generally range from three to five years. The discount rate used to determine the present value of the lease payments is our estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as we generally cannot determine the interest rate implicit in the lease. Lessor We lease or sublease certain restaurant properties to our franchisees and occasionally to third parties. The lease descriptions, terms, variable lease payments and renewal options are the same as the lessee leases described above. Similar to our lessee accounting, we elected the lessor practical expedient that allow us to not separate nonlease components from lease components in regards to all leases. The components of lease expense were as follows: Quarter Ended Classification March 27, 2019 (In thousands) Lease costs Finance lease costs: Amortization of right-of-use assets Depreciation and amortization $ 996 Interest on lease liabilities Interest expense, net 1,516 Operating lease costs: Operating lease costs - company Occupancy 2,503 Operating lease costs - franchise Costs of franchise and license revenue 3,465 Operating lease costs - general and administrative General and administrative expenses 26 Variable lease costs: Variable lease costs - company Occupancy 1,783 Variable lease costs - franchise Costs of franchise and license revenue 1,374 Variable lease costs - closed stores Restructuring charges and exit costs 55 Total lease costs $ 11,718 Lease terms and discount rates were as follows: Quarter Ended March 27, 2019 Weighted-average remaining lease term (in years) Finance leases 8.4 Operating leases 8.3 Weighted-average discount rate Finance leases 24.3 % Operating leases 6.7 % The components of lease income were as follows: Quarter Ended Classification March 27, 2019 (In thousands) Lease income Operating lease income - franchise Franchise and license revenue $ 5,425 Operating lease income - closed stores Restructuring and exist costs 66 Variable lease income Franchise and license revenue 2,120 Total lease income $ 7,611 Cash and supplemental noncash amounts were as follows: Quarter Ended March 27, 2019 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 1,516 Operating cash flows from operating leases 6,311 Financing cash flows from finance leases 795 Right-of-use assets obtained in exchange for new finance lease liabilities — Right-of-use assets obtained in exchange for new operating lease liabilities 5,050 Maturities of lease liabilities and receipts in accordance with Topic 842 as of March 27, 2019 are as follows: Lease Liabilities Lease Receipts Finance Operating Operating (In thousands) Remainder of 2019 $ 6,821 $ 17,481 $ 16,107 2020 8,481 20,106 19,257 2021 7,838 16,948 17,351 2022 7,129 14,293 15,685 2023 6,239 11,210 13,466 Thereafter 31,693 54,010 73,083 Total undiscounted cash flows 68,201 134,048 $ 154,949 Less: interest 39,275 32,824 Present value of lease liabilities 28,926 101,224 Less: current lease liabilities 3,487 17,004 Long-term lease liabilities $ 25,439 $ 84,220 Maturities of lease liabilities in accordance with Topic 840 as of December 26, 2018 are as follows: Commitments Capital Operating (In thousands) 2019 $ 9,271 $ 23,504 2020 8,664 20,161 2021 8,010 17,316 2022 7,320 14,646 2023 6,451 11,881 Thereafter 33,670 49,004 Total 73,386 $ 136,512 Less imputed interest 42,795 Present value of capital lease obligations $ 30,591 |
Refranchisings and Acquisitions
Refranchisings and Acquisitions | 3 Months Ended |
Mar. 27, 2019 | |
Refranchisings and Acquisitions [Abstract] | |
Refranchisings and Acquisitions | Refranchisings and Acquisitions Refranchisings The following table summarizes the activity related to our current real estate and development strategy. Gains on the sales of company restaurants and real estate are included as a component of operating (gains), losses and other charges, net in our Condensed Consolidated Statements of Income. See Note 5 . Quarter Ended March 27, 2019 March 28, 2018 (Dollars in thousands) Restaurants sold to franchisees 3 — Gains on sales of company restaurants: Cash proceeds $ 2,833 $ — Less: Property sold (550 ) — Less: Goodwill related to the sales of company restaurants (79 ) — Total gains of sales of company restaurants $ 2,204 $ — Real estate sold 1 — Gains on sales of real estate: Cash proceeds $ 4,688 — Noncash consideration 3,000 — Less: Property sold (190 ) — Total gains on sale of real estate $ 7,498 $ — In addition to the cash proceeds received on the sale of real estate, we also recorded additional noncash consideration for the fair value of restaurant space we expect to receive within a building being developed by the buyer of the real estate. The $3.0 million of noncash consideration is recorded as a component of other noncurrent assets in our Condensed Consolidated Balance Sheets. The fair value of the noncash consideration is based upon Level 2 inputs. As of March 27, 2019 , we have recorded assets held for sale at their carrying amount of $15.0 million (comprised of property of $11.7 million , goodwill of $1.6 million and reacquired franchise rights of $1.7 million ) related to 48 company restaurants . There were $0.7 million in assets held for sale as of December 26, 2018 related to three company restaurants and one piece of real estate . The fair value of assets held for sale is based upon Level 2 inputs, which include sales agreements. Acquisitions We account for the acquisition of franchised restaurants using the acquisition method of accounting for business combinations. The purchase price allocations were based on Level 3 fair value estimates. The following table summarizes our acquisition activity. Quarter Ended March 27, 2019 March 28, 2018 (Dollars in thousands) Restaurants acquired from franchisees — 5 Purchase price allocation: Reacquired franchise rights $ — $ 5,315 Property — 1,029 Goodwill — 1,574 Total purchase price $ — $ 7,918 Financing leases recorded $ — $ 2,409 Real estate acquired 2 — Total purchase price $ 4,706 $ — |
Operating (Gains), Losses and O
Operating (Gains), Losses and Other Charges, Net | 3 Months Ended |
Mar. 27, 2019 | |
Other Income and Expenses [Abstract] | |
Operating (Gains), Losses and Other Charges, Net | Operating (Gains), Losses and Other Charges, Net Operating (gains), losses and other charges, net are comprised of the following: Quarter Ended March 27, 2019 March 28, 2018 (In thousands) Gains on sales of assets and other, net (9,475 ) (37 ) Restructuring charges and exit costs 540 360 Impairment charges — 37 Operating (gains), losses and other charges, net $ (8,935 ) $ 360 Gains on sales of assets and other, net for the quarter ended March 27, 2019 were primarily comprised of $7.5 million in gains related to the sale of real estate and $2.2 million in gains related to the refranchising of three company restaurants. See Note 4 . Restructuring charges and exit costs were comprised of the following: Quarter Ended March 27, 2019 March 28, 2018 (In thousands) Exit costs $ 122 $ 24 Severance and other restructuring charges 418 336 Total restructuring charges and exit costs $ 540 $ 360 Exit cost liabilities were $0.1 million and $1.2 million as of March 27, 2019 and December 26, 2018 , respectively. As a result of the adoption of Topic 842, exit cost liabilities related to lease costs are now included as a component of operating lease liabilities in our Condensed Consolidated Balance Sheets. See Note 3 . As of March 27, 2019 and December 26, 2018 , we had accrued severance and other restructuring charges of $0.8 million and $0.6 million , respectively. The balance as of March 27, 2019 |
Receivables
Receivables | 3 Months Ended |
Mar. 27, 2019 | |
Receivables [Abstract] | |
Receivables | Receivables Receivables were comprised of the following: March 27, 2019 December 26, 2018 (In thousands) Receivables, net: Trade accounts receivable from franchisees $ 9,863 $ 11,459 Financing receivables from franchisees 3,177 3,211 Vendor receivables 2,782 4,016 Credit card receivables 1,480 5,955 Other 1,306 1,942 Allowance for doubtful accounts (304 ) (300 ) Total receivables, net $ 18,304 $ 26,283 Other noncurrent assets: Financing receivables from franchisees and other $ 1,573 $ 1,528 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 27, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The following table reflects the changes in carrying amounts of goodwill. (In thousands) Balance, December 26, 2018 $ 39,781 Adjustments related to the sale of restaurants and reclassifications to assets held for sale (1,657 ) Balance, March 27, 2019 $ 38,124 Other intangible assets were comprised of the following: March 27, 2019 December 26, 2018 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization (In thousands) Intangible assets with indefinite lives: Trade names $ 44,087 $ — $ 44,087 $ — Liquor licenses 166 — 166 — Intangible assets with definite lives: Reacquired franchise rights 17,537 5,159 19,933 5,119 Intangible assets, net $ 61,790 $ 5,159 $ 64,186 $ 5,119 |
Other Current Liabilities
Other Current Liabilities | 3 Months Ended |
Mar. 27, 2019 | |
Other Liabilities, Current [Abstract] | |
Other Liabilities Disclosure | Other Current Liabilities Other current liabilities consisted of the following: March 27, 2019 December 26, 2018 (In thousands) Accrued payroll $ 17,040 $ 23,395 Accrued insurance, primarily current portion of liability for insurance claims 7,285 7,323 Accrued taxes 7,173 7,667 Accrued advertising 4,253 7,413 Gift cards 4,776 6,546 Other 9,973 9,446 Other current liabilities $ 50,500 $ 61,790 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 27, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures | Fair Value of Financial Instruments Financial assets and liabilities measured at fair value on a recurring basis are summarized below: Total Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (In thousands ) Fair value measurements as of March 27, 2019: Deferred compensation plan investments (1) $ 12,267 $ 12,267 $ — $ — Interest rate swaps, net (2) (21,273 ) — (21,273 ) — Investments (3) 3,048 — 3,048 — Total $ (5,958 ) $ 12,267 $ (18,225 ) $ — Fair value measurements as of December 26, 2018: Deferred compensation plan investments (1) $ 11,235 $ 11,235 $ — $ — Interest rate swaps, net (2) (4,475 ) — (4,475 ) — Investments (3) 1,709 — 1,709 — Total $ 8,469 $ 11,235 $ (2,766 ) $ — (1) The fair values of our deferred compensation plan investments are based on the closing market prices of the elected investments. (2) The fair values of our interest rate swaps are based upon Level 2 inputs, which include valuation models as reported by our counterparties. The key inputs for the valuation models are quoted market prices, interest rates and forward yield curves. See Note 10 for details on the interest rate swaps. (3) |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 27, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Denny's and certain of its subsidiaries have a credit facility consisting of a five-year $400 million senior secured revolver (with a $30 million letter of credit sublimit). The credit facility includes an accordion feature that would allow us to increase the size of the revolver to $450 million . As of March 27, 2019 , we had outstanding revolver loans of $283.5 million and outstanding letters of credit under the senior secured revolver of $19.7 million . These balances resulted in availability of $96.8 million under the credit facility. Prior to considering the impact of our interest rate swaps, described below, the weighted-average interest rate on outstanding revolver loans was 4.74% and 4.43% as of March 27, 2019 and December 26, 2018 , respectively. Taking into consideration our interest rate swaps, the weighted-average interest rate of outstanding revolver loans was 4.72% and 4.48% as of March 27, 2019 and December 26, 2018 , respectively. A commitment fee, which is based on our consolidated leverage ratio, is paid on the unused portion of the credit facility and was 0.35% as of March 27, 2019 . Borrowings under the credit facility bear a tiered interest rate, also based on our leverage ratio, and was set at LIBOR plus 2.25% as of March 27, 2019 . The maturity date for the credit facility is October 26, 2022 . The credit facility is available for working capital, capital expenditures and other general corporate purposes. The credit facility is guaranteed by Denny's and its material subsidiaries and is secured by assets of Denny's and its subsidiaries, including the stock of its subsidiaries (other than our insurance captive subsidiary). It includes negative covenants that are usual for facilities and transactions of this type. The credit facility also includes certain financial covenants with respect to a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. We were in compliance with all financial covenants as of March 27, 2019 . Interest Rate Hedges We have interest rate swaps to hedge a portion of the forecasted cash flows of our floating rate debt. We designated the interest rate swaps as cash flow hedges of our exposure to variability in future cash flows attributable to payments of LIBOR due on forecasted notional amounts. Under the interest rate swaps, we pay a fixed rate on the notional amount in addition to the current interest rate as determined by our consolidated leverage ratio in effect at the time. A summary of our interest rate swaps as of March 27, 2019 is as follows: 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. As of March 27, 2019 , the fair value of the interest rate swaps was a liability of $21.3 million , which is recorded as a component of other noncurrent liabilities in our Condensed Consolidated Balance Sheets. See Note 16 |
Revenues
Revenues | 3 Months Ended |
Mar. 27, 2019 | |
Revenues [Abstract] | |
Revenues | Revenues Our revenues are derived primarily from two sales channels, which we operate as one segment: company restaurants and franchised and licensed restaurants. The following table disaggregates our revenue by sales channels and types of goods or services. Quarter Ended March 27, 2019 March 28, 2018 (Dollars in thousands) Company restaurant sales $ 98,545 $ 101,193 Franchise and license revenue: Royalties 25,240 25,165 Advertising revenue 18,942 19,310 Initial and other fees 1,139 1,417 Occupancy revenue 7,545 8,188 Franchise and license revenue 52,866 54,080 Total operating revenue $ 151,411 $ 155,273 Balances related to contracts with customers consist of receivables, deferred franchise revenue and deferred gift card revenue. See Note 6 for details on our receivables. Deferred franchise revenue consists primarily of the unamortized portion of initial franchise fees that are currently being amortized into revenue and amounts related to development agreements and unopened restaurants that will begin amortizing into revenue when the related restaurants are opened. Deferred franchise revenue represents our remaining performance obligations to our franchisees, excluding amounts of variable consideration related to sales-based royalties and advertising. The components of the change in deferred franchise revenue are as follows: (In thousands) Balance, December 26, 2018 $ 20,538 Fees received from franchisees 517 Revenue recognized (1) (642 ) Balance, March 27, 2019 20,413 Less current portion included in other current liabilities 2,109 Deferred franchise revenue included in other noncurrent liabilities $ 18,304 (1) Of this amount $0.6 million was included in the deferred franchise revenue balance as of December 26, 2018. Deferred gift card liabilities consist of the unredeemed portion of gift cards sold in company restaurants and at third party locations. The balance of deferred gift card liabilities represents our remaining performance obligations to our customers. The balance of deferred gift card liabilities as of March 27, 2019 and December 26, 2018 was $4.8 million and $6.5 million , respectively. During the quarter ended March 27, 2019 , we recognized revenue of $0.7 million |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 27, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation Total share-based compensation cost included as a component of general and administrative expenses was as follows: Quarter Ended March 27, 2019 March 28, 2018 (In thousands) Performance share awards $ 1,998 $ 1,078 Restricted stock units for board members 255 272 Total share-based compensation $ 2,253 $ 1,350 Performance Share Units During the quarter ended March 27, 2019 , we granted certain employees approximately 0.3 million performance share units with a grant date fair value of $20.47 per share that vest based on the total shareholder return (“TSR”) of our common stock compared to the TSRs of a group of peer companies and 0.3 million performance share units with a grant date fair value of $17.58 per share that vest based on our Adjusted EPS growth rate versus plan, as defined under the terms of the award. The performance period for these performance share units is the three year fiscal period beginning December 27, 2018 and ending December 29, 2021. They will vest and be earned (from 0% to 150% of the target award for each such increment) at the end of the performance period. During the quarter ended March 27, 2019 , we issued 0.3 million shares of common stock related to vested performance share units. In addition 0.4 million shares of common stock were deferred and 0.2 million shares of common stock were withheld in lieu of taxes related to vested performance share units. As of March 27, 2019 , we had approximately $20.6 million of unrecognized compensation cost related to all unvested performance share awards outstanding, which have a weighted average remaining contractual term of 2.3 years . Restricted Stock Units for Board Members As of March 27, 2019 , we had approximately $0.2 million of unrecognized compensation cost related to all unvested restricted stock unit awards outstanding, which have a weighted average remaining contractual term of 0.2 years |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 27, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective income tax rate was 23.1% for the quarter ended March 27, 2019 compared to 15.8% for the prior year period. The 2018 period benefited from a discrete item relating to share-based compensation of 4.7% . Subsequent to the end of the quarter, we completed an Internal Revenue Service federal income tax audit of the 2016 tax year. See Note 18 |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Mar. 27, 2019 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share The amounts used for the basic and diluted net income per share calculations are summarized below: Quarter Ended March 27, 2019 March 28, 2018 (In thousands, except for per share amounts) Net income $ 15,490 $ 9,759 Weighted average shares outstanding - basic 61,651 64,432 Effect of dilutive share-based compensation awards 2,032 2,514 Weighted average shares outstanding - diluted 63,683 66,946 Basic net income per share $ 0.25 $ 0.15 Diluted net income per share $ 0.24 $ 0.15 Anti-dilutive share-based compensation awards 630 471 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 27, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Quarter Ended March 27, 2019 March 28, 2018 (In thousands) Income taxes paid, net $ 367 $ 423 Interest paid $ 5,067 $ 4,272 Noncash investing and financing activities: Issuance of common stock, pursuant to share-based compensation plans $ 6,333 $ 3,513 Noncash consideration received in connection with the sale of real estate $ 3,000 $ — Execution of finance leases $ — $ 2,478 Treasury stock payable $ 925 $ 615 |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 27, 2019 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Shareholders' equity | Shareholders' Equity Share Repurchase Our credit facility permits the purchase of Denny’s stock and the payment of cash dividends subject to certain limitations. In October 2017, our Board of Directors approved a share repurchase program authorizing us to repurchase up to $200 million of our common stock (in addition to prior authorizations). Under this program, we may, from time to time, purchase shares in the open market (including pre-arranged stock trading plans in accordance with the guidelines specified in Rule 10b5-1 under the Securities Exchange Act of 1934, as amended) or in privately negotiated transactions, subject to market and business conditions. In November 2018, as part of our previously authorized share repurchase programs, we entered into a $25 million accelerated share repurchase (the "ASR") agreement with MUFG Securities EMEA plc (“MUFG”). We paid $25 million in cash and received approximately 1.1 million shares of our common stock (which represents the minimum shares to be delivered based on the cap price) and recorded $18.2 million of treasury stock related to these shares. The remaining balance of $6.8 million was recorded as additional paid-in capital in shareholders’ deficit as of December 26, 2018 as an equity forward contract. During the quarter ended March 27, 2019 , we settled the ASR agreement with MUFG. As a result, we received final delivery of an additional 0.4 million shares of our common stock. The total number of shares repurchased was based on a combined discounted volume-weighted average price (“VWAP”) of $17.04 per share, which was determined based on the average of the daily VWAP of our common stock, less a fixed discount, over the term of the ASR agreement. As a result of settling the ASR agreement, we recorded $6.8 million of treasury stock related to the settlement of the equity forward contract related to the ASR agreement. In addition to the settlement of the ASR, during the quarter ended March 27, 2019 , we repurchased a total of 0.5 million of our common stock for approximately $8.9 million . This brings the total amount repurchased under the current repurchase program to 5.1 million shares of our common stock for approximately $80.5 million , leaving approximately $119.5 million that can be used to repurchase our common stock under this program as of March 27, 2019 . Repurchased shares are included as treasury stock in our Condensed Consolidated Balance Sheets and our Condensed Consolidated Statement of Shareholders' Deficit. Accumulated Other Comprehensive Loss The components of the change in accumulated other comprehensive loss were as follows: Defined Benefit Plans Derivatives Accumulated Other Comprehensive Loss (In thousands) Balance as of December 26, 2018 $ (827 ) $ (3,319 ) $ (4,146 ) Amortization of net loss (1) 22 — 22 Net change in fair value of derivatives — (16,774 ) (16,774 ) Reclassification of derivatives to interest expense, net (2) — (24 ) (24 ) Income tax (expense) benefit related to items of other comprehensive loss (6 ) 4,629 4,623 Balance as of March 27, 2019 $ (811 ) $ (15,488 ) $ (16,299 ) (1) Before-tax amount related to our defined benefit plans that was reclassified from accumulated other comprehensive loss and included as a component of pension expense within general and administrative expenses in our Condensed Consolidated Statements of Income during the quarter ended March 27, 2019 . (2) Amounts reclassified from accumulated other comprehensive loss into income represent payments either received from or made to the counterparty for the effective portions of the interest rate swaps. These amounts are included as a component of interest expense, net in our Condensed Consolidated Statements of Income. We expect to receive payments from the counterparty and reclassify approximately $0.1 million from accumulated other comprehensive loss related to our interest rate swaps during the next twelve months. See Note 10 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 27, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We have guarantees related to certain franchisee loans. Payments under these guarantees would result from the inability of a franchisee to fund required payments when due. Through March 27, 2019 , no events had occurred that caused us to make payments under these guarantees. There were $2.2 million and $2.5 million of loans outstanding under these programs as of March 27, 2019 and December 26, 2018 , respectively. As of March 27, 2019 , the maximum amount payable under the loan guarantees was $0.8 million . As a result of these guarantees, we have recorded liabilities of less than $0.1 million as of both March 27, 2019 and December 26, 2018 , which are included as a component of other noncurrent liabilities in our Condensed Consolidated Balance Sheets and other nonoperating expense in our Condensed Consolidated Statements of Income. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 27, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events During April 2019, we completed an IRS federal income tax audit of the 2016 tax year. Upon completion of this audit, revaluations of certain tax positions were performed and as a result, we will recognize a net benefit to the provision for income taxes of $2.0 million |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 27, 2019 | |
Accounting Policies [Abstract] | |
Newly adopted accounting standards and accounting standards to be adopted | Newly Adopted Accounting Standards Effective December 27, 2018, the first day of fiscal 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The new guidance established a right-of-use model (“ROU”) that requires lessees to recognize a ROU asset and a lease liability for all leases with terms greater than 12 months. Lessees will classify leases as financing or operating. The guidance requires lessors to classify leases as sales-type, direct financing or operating. We elected to apply the modified retrospective transition approach as the date of initial application without restating comparative period financial statements. Results for reporting periods beginning after December 27, 2018 are presented under Topic 842. Prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 840. Our transition to Topic 842 represents a change in accounting principle. The new guidance provided a number of optional practical expedients in transition. We elected the package of practical expedients that did not require us to reassess whether existing contracts were or contained leases, lease classification for existing or expired leases or the accounting for initial direct costs that were previously capitalized. In addition, we did not elect the hindsight practical expedient which would have allowed us to reassess lease terms and impairment of the ROU assets, nor did we elect the land easement practical expedient. In preparation for adoption, we completed the implementation of a new lease management system. Upon adoption of Topic 842, we recorded operating lease liabilities of $101.3 million and ROU assets of $94.1 million related to existing operating leases. In addition, we recorded a cumulative effect adjustment increasing opening deficit by $0.4 million and deferred tax assets by $0.1 million . The lease liabilities were based on the present value of remaining rental payments under previous leasing standards for existing operating leases primarily related to real estate leases. Exit cost and straight-line lease liabilities that existed at the adoption date were reclassified against the ROU assets upon adoption. The amount recorded to opening deficit represents the initial impairment of ROU assets, net of the deferred tax impact. See Note 3 for further information about our transition to Topic 842 and the newly required disclosures. Additional new accounting guidance became effective for us as of December 27, 2018 that we reviewed and concluded was either not applicable to our operations or had no material effect on the our Consolidated Financial Statements and related disclosures. Accounting Standards to be Adopted In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The new guidance replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform financial statement users of credit loss estimates. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 (our fiscal 2020) with early adoption permitted for annual and interim periods beginning after December 15, 2018 (our fiscal 2019). We do not expect the adoption of this guidance to have a material impact on our Consolidated Financial Statements. |
Leases (Tables)
Leases (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 27, 2019 | Dec. 26, 2018 | |
Leases [Abstract] | ||
Components of lease expense | The components of lease expense were as follows: Quarter Ended Classification March 27, 2019 (In thousands) Lease costs Finance lease costs: Amortization of right-of-use assets Depreciation and amortization $ 996 Interest on lease liabilities Interest expense, net 1,516 Operating lease costs: Operating lease costs - company Occupancy 2,503 Operating lease costs - franchise Costs of franchise and license revenue 3,465 Operating lease costs - general and administrative General and administrative expenses 26 Variable lease costs: Variable lease costs - company Occupancy 1,783 Variable lease costs - franchise Costs of franchise and license revenue 1,374 Variable lease costs - closed stores Restructuring charges and exit costs 55 Total lease costs $ 11,718 | |
Lease terms and discount rates | Lease terms and discount rates were as follows: Quarter Ended March 27, 2019 Weighted-average remaining lease term (in years) Finance leases 8.4 Operating leases 8.3 Weighted-average discount rate Finance leases 24.3 % Operating leases 6.7 % | |
Components of lease income | The components of lease income were as follows: Quarter Ended Classification March 27, 2019 (In thousands) Lease income Operating lease income - franchise Franchise and license revenue $ 5,425 Operating lease income - closed stores Restructuring and exist costs 66 Variable lease income Franchise and license revenue 2,120 Total lease income $ 7,611 | |
Lessee supplemental cash flow information | Cash and supplemental noncash amounts were as follows: Quarter Ended March 27, 2019 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 1,516 Operating cash flows from operating leases 6,311 Financing cash flows from finance leases 795 Right-of-use assets obtained in exchange for new finance lease liabilities — Right-of-use assets obtained in exchange for new operating lease liabilities 5,050 | |
Finance lease, liability, maturity | Maturities of lease liabilities and receipts in accordance with Topic 842 as of March 27, 2019 are as follows: Lease Liabilities Lease Receipts Finance Operating Operating (In thousands) Remainder of 2019 $ 6,821 $ 17,481 $ 16,107 2020 8,481 20,106 19,257 2021 7,838 16,948 17,351 2022 7,129 14,293 15,685 2023 6,239 11,210 13,466 Thereafter 31,693 54,010 73,083 Total undiscounted cash flows 68,201 134,048 $ 154,949 Less: interest 39,275 32,824 Present value of lease liabilities 28,926 101,224 Less: current lease liabilities 3,487 17,004 Long-term lease liabilities $ 25,439 $ 84,220 | |
Operating lease, liability, maturity | Maturities of lease liabilities and receipts in accordance with Topic 842 as of March 27, 2019 are as follows: Lease Liabilities Lease Receipts Finance Operating Operating (In thousands) Remainder of 2019 $ 6,821 $ 17,481 $ 16,107 2020 8,481 20,106 19,257 2021 7,838 16,948 17,351 2022 7,129 14,293 15,685 2023 6,239 11,210 13,466 Thereafter 31,693 54,010 73,083 Total undiscounted cash flows 68,201 134,048 $ 154,949 Less: interest 39,275 32,824 Present value of lease liabilities 28,926 101,224 Less: current lease liabilities 3,487 17,004 Long-term lease liabilities $ 25,439 $ 84,220 | |
Operating lease, payments to be received, maturity | Maturities of lease liabilities and receipts in accordance with Topic 842 as of March 27, 2019 are as follows: Lease Liabilities Lease Receipts Finance Operating Operating (In thousands) Remainder of 2019 $ 6,821 $ 17,481 $ 16,107 2020 8,481 20,106 19,257 2021 7,838 16,948 17,351 2022 7,129 14,293 15,685 2023 6,239 11,210 13,466 Thereafter 31,693 54,010 73,083 Total undiscounted cash flows 68,201 134,048 $ 154,949 Less: interest 39,275 32,824 Present value of lease liabilities 28,926 101,224 Less: current lease liabilities 3,487 17,004 Long-term lease liabilities $ 25,439 $ 84,220 | |
Capital lease, liability, maturity | Maturities of lease liabilities in accordance with Topic 840 as of December 26, 2018 are as follows: Commitments Capital Operating (In thousands) 2019 $ 9,271 $ 23,504 2020 8,664 20,161 2021 8,010 17,316 2022 7,320 14,646 2023 6,451 11,881 Thereafter 33,670 49,004 Total 73,386 $ 136,512 Less imputed interest 42,795 Present value of capital lease obligations $ 30,591 | |
Operating lease, liability, maturity | Maturities of lease liabilities in accordance with Topic 840 as of December 26, 2018 are as follows: Commitments Capital Operating (In thousands) 2019 $ 9,271 $ 23,504 2020 8,664 20,161 2021 8,010 17,316 2022 7,320 14,646 2023 6,451 11,881 Thereafter 33,670 49,004 Total 73,386 $ 136,512 Less imputed interest 42,795 Present value of capital lease obligations $ 30,591 |
Refranchisings and Acquisitio_2
Refranchisings and Acquisitions (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Refranchisings and Acquisitions [Abstract] | |
Activity related to real estate and development strategy | The following table summarizes the activity related to our current real estate and development strategy. Gains on the sales of company restaurants and real estate are included as a component of operating (gains), losses and other charges, net in our Condensed Consolidated Statements of Income. See Note 5 . Quarter Ended March 27, 2019 March 28, 2018 (Dollars in thousands) Restaurants sold to franchisees 3 — Gains on sales of company restaurants: Cash proceeds $ 2,833 $ — Less: Property sold (550 ) — Less: Goodwill related to the sales of company restaurants (79 ) — Total gains of sales of company restaurants $ 2,204 $ — Real estate sold 1 — Gains on sales of real estate: Cash proceeds $ 4,688 — Noncash consideration 3,000 — Less: Property sold (190 ) — Total gains on sale of real estate $ 7,498 $ — |
Acquisition activity | The following table summarizes our acquisition activity. Quarter Ended March 27, 2019 March 28, 2018 (Dollars in thousands) Restaurants acquired from franchisees — 5 Purchase price allocation: Reacquired franchise rights $ — $ 5,315 Property — 1,029 Goodwill — 1,574 Total purchase price $ — $ 7,918 Financing leases recorded $ — $ 2,409 Real estate acquired 2 — Total purchase price $ 4,706 $ — |
Operating (Gains), Losses and_2
Operating (Gains), Losses and Other Charges, Net (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Other Income and Expenses [Abstract] | |
Operating gains losses and other charges net | Operating (gains), losses and other charges, net are comprised of the following: Quarter Ended March 27, 2019 March 28, 2018 (In thousands) Gains on sales of assets and other, net (9,475 ) (37 ) Restructuring charges and exit costs 540 360 Impairment charges — 37 Operating (gains), losses and other charges, net $ (8,935 ) $ 360 |
Restructuring charges and exit costs | Restructuring charges and exit costs were comprised of the following: Quarter Ended March 27, 2019 March 28, 2018 (In thousands) Exit costs $ 122 $ 24 Severance and other restructuring charges 418 336 Total restructuring charges and exit costs $ 540 $ 360 |
Receivables (Tables)
Receivables (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Receivables [Abstract] | |
Receivables, net | Receivables were comprised of the following: March 27, 2019 December 26, 2018 (In thousands) Receivables, net: Trade accounts receivable from franchisees $ 9,863 $ 11,459 Financing receivables from franchisees 3,177 3,211 Vendor receivables 2,782 4,016 Credit card receivables 1,480 5,955 Other 1,306 1,942 Allowance for doubtful accounts (304 ) (300 ) Total receivables, net $ 18,304 $ 26,283 Other noncurrent assets: Financing receivables from franchisees and other $ 1,573 $ 1,528 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | The following table reflects the changes in carrying amounts of goodwill. (In thousands) Balance, December 26, 2018 $ 39,781 Adjustments related to the sale of restaurants and reclassifications to assets held for sale (1,657 ) Balance, March 27, 2019 $ 38,124 |
Indefinite-Lived Intangible Assets | Other intangible assets were comprised of the following: March 27, 2019 December 26, 2018 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization (In thousands) Intangible assets with indefinite lives: Trade names $ 44,087 $ — $ 44,087 $ — Liquor licenses 166 — 166 — Intangible assets with definite lives: Reacquired franchise rights 17,537 5,159 19,933 5,119 Intangible assets, net $ 61,790 $ 5,159 $ 64,186 $ 5,119 |
Finite-Lived Intangible Assets | Other intangible assets were comprised of the following: March 27, 2019 December 26, 2018 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization (In thousands) Intangible assets with indefinite lives: Trade names $ 44,087 $ — $ 44,087 $ — Liquor licenses 166 — 166 — Intangible assets with definite lives: Reacquired franchise rights 17,537 5,159 19,933 5,119 Intangible assets, net $ 61,790 $ 5,159 $ 64,186 $ 5,119 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Other Liabilities, Current [Abstract] | |
Schedule of Other Current Liabilities | Other current liabilities consisted of the following: March 27, 2019 December 26, 2018 (In thousands) Accrued payroll $ 17,040 $ 23,395 Accrued insurance, primarily current portion of liability for insurance claims 7,285 7,323 Accrued taxes 7,173 7,667 Accrued advertising 4,253 7,413 Gift cards 4,776 6,546 Other 9,973 9,446 Other current liabilities $ 50,500 $ 61,790 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Fair Value Disclosures [Abstract] | |
Financial assets and liabilities measured at fair value on a recurring basis | Financial assets and liabilities measured at fair value on a recurring basis are summarized below: Total Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (In thousands ) Fair value measurements as of March 27, 2019: Deferred compensation plan investments (1) $ 12,267 $ 12,267 $ — $ — Interest rate swaps, net (2) (21,273 ) — (21,273 ) — Investments (3) 3,048 — 3,048 — Total $ (5,958 ) $ 12,267 $ (18,225 ) $ — Fair value measurements as of December 26, 2018: Deferred compensation plan investments (1) $ 11,235 $ 11,235 $ — $ — Interest rate swaps, net (2) (4,475 ) — (4,475 ) — Investments (3) 1,709 — 1,709 — Total $ 8,469 $ 11,235 $ (2,766 ) $ — (1) The fair values of our deferred compensation plan investments are based on the closing market prices of the elected investments. (2) The fair values of our interest rate swaps are based upon Level 2 inputs, which include valuation models as reported by our counterparties. The key inputs for the valuation models are quoted market prices, interest rates and forward yield curves. See Note 10 for details on the interest rate swaps. (3) |
Long-Term Debt Derivative Instr
Long-Term Debt Derivative Instruments (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest rate swaps | A summary of our interest rate swaps as of March 27, 2019 is as follows: 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 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Revenues [Abstract] | |
Disaggregation of revenue | The following table disaggregates our revenue by sales channels and types of goods or services. Quarter Ended March 27, 2019 March 28, 2018 (Dollars in thousands) Company restaurant sales $ 98,545 $ 101,193 Franchise and license revenue: Royalties 25,240 25,165 Advertising revenue 18,942 19,310 Initial and other fees 1,139 1,417 Occupancy revenue 7,545 8,188 Franchise and license revenue 52,866 54,080 Total operating revenue $ 151,411 $ 155,273 |
Components of the change in deferred franchise revenue | The components of the change in deferred franchise revenue are as follows: (In thousands) Balance, December 26, 2018 $ 20,538 Fees received from franchisees 517 Revenue recognized (1) (642 ) Balance, March 27, 2019 20,413 Less current portion included in other current liabilities 2,109 Deferred franchise revenue included in other noncurrent liabilities $ 18,304 (1) Of this amount $0.6 million |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Total share-based compensation | Total share-based compensation cost included as a component of general and administrative expenses was as follows: Quarter Ended March 27, 2019 March 28, 2018 (In thousands) Performance share awards $ 1,998 $ 1,078 Restricted stock units for board members 255 272 Total share-based compensation $ 2,253 $ 1,350 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | The amounts used for the basic and diluted net income per share calculations are summarized below: Quarter Ended March 27, 2019 March 28, 2018 (In thousands, except for per share amounts) Net income $ 15,490 $ 9,759 Weighted average shares outstanding - basic 61,651 64,432 Effect of dilutive share-based compensation awards 2,032 2,514 Weighted average shares outstanding - diluted 63,683 66,946 Basic net income per share $ 0.25 $ 0.15 Diluted net income per share $ 0.24 $ 0.15 Anti-dilutive share-based compensation awards 630 471 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Quarter Ended March 27, 2019 March 28, 2018 (In thousands) Income taxes paid, net $ 367 $ 423 Interest paid $ 5,067 $ 4,272 Noncash investing and financing activities: Issuance of common stock, pursuant to share-based compensation plans $ 6,333 $ 3,513 Noncash consideration received in connection with the sale of real estate $ 3,000 $ — Execution of finance leases $ — $ 2,478 Treasury stock payable $ 925 $ 615 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 27, 2019 | |
Statement of Comprehensive Income [Abstract] | |
Components of accumulated other comprehensive income (loss) | The components of the change in accumulated other comprehensive loss were as follows: Defined Benefit Plans Derivatives Accumulated Other Comprehensive Loss (In thousands) Balance as of December 26, 2018 $ (827 ) $ (3,319 ) $ (4,146 ) Amortization of net loss (1) 22 — 22 Net change in fair value of derivatives — (16,774 ) (16,774 ) Reclassification of derivatives to interest expense, net (2) — (24 ) (24 ) Income tax (expense) benefit related to items of other comprehensive loss (6 ) 4,629 4,623 Balance as of March 27, 2019 $ (811 ) $ (15,488 ) $ (16,299 ) (1) Before-tax amount related to our defined benefit plans that was reclassified from accumulated other comprehensive loss and included as a component of pension expense within general and administrative expenses in our Condensed Consolidated Statements of Income during the quarter ended March 27, 2019 . (2) Amounts reclassified from accumulated other comprehensive loss into income represent payments either received from or made to the counterparty for the effective portions of the interest rate swaps. These amounts are included as a component of interest expense, net in our Condensed Consolidated Statements of Income. We expect to receive payments from the counterparty and reclassify approximately $0.1 million from accumulated other comprehensive loss related to our interest rate swaps during the next twelve months. See Note 10 for additional details. |
Introduction and Basis of Pre_2
Introduction and Basis of Presentation (Details) | Mar. 27, 2019restaurant |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 1,705 |
Franchised/licensed restaurants [Member] | |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 1,535 |
Company restaurants [Member] | |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 170 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Mar. 27, 2019 | Dec. 27, 2018 | Dec. 26, 2018 | Dec. 28, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating lease liabilities | $ 101,224 | $ 101,300 | ||
Operating lease right-of-use assets | $ 94,249 | 94,100 | $ 0 | |
Cumulative effect adjustment | (394) | $ (15,446) | ||
(Deficit) [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect adjustment | (400) | |||
Deferred Tax Asset [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect adjustment | $ 100 |
Leases (Details)
Leases (Details) | Mar. 27, 2019 |
Lessee, Lease, Description [Line Items] | |
Lessee, Finance Lease, Renewal Term | 5 years |
Real Estate [Member] | Minimum [Member] | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 10 years |
Real Estate [Member] | Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 20 years |
Equipment [Member] | Minimum [Member] | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 3 years |
Equipment [Member] | Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 5 years |
Lease Expense (Details)
Lease Expense (Details) $ in Thousands | 3 Months Ended |
Mar. 27, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
Amortization of right-of-use assets | $ 996 |
Interest on lease liabilities | 1,516 |
Total lease costs | $ 11,718 |
Finance leases, weighted-average remaining lease term, years | 8 years 4 months 24 days |
Operating leases weighted-average remaining lease term, years | 8 years 3 months 18 days |
Finance leases, discount rate | 24.30% |
Operating leases, discount rate | 6.70% |
Franchisor Owned Outlet [Member] | |
Lessee, Lease, Description [Line Items] | |
Operating lease costs | $ 2,503 |
Variable lease costs | 1,783 |
Franchise [Member] | |
Lessee, Lease, Description [Line Items] | |
Operating lease costs | 3,465 |
Variable lease costs | 1,374 |
General and Administrative Expense [Member] | |
Lessee, Lease, Description [Line Items] | |
Operating lease costs | 26 |
Restructuring and Exit Costs [Member] | |
Lessee, Lease, Description [Line Items] | |
Variable lease costs | $ 55 |
Lease Income (Details)
Lease Income (Details) $ in Thousands | 3 Months Ended |
Mar. 27, 2019USD ($) | |
Lessor, Lease, Description [Line Items] | |
Total lease income | $ 7,611 |
Restructuring and Exit Costs [Member] | |
Lessor, Lease, Description [Line Items] | |
Operating lease income | 66 |
Franchise [Member] | |
Lessor, Lease, Description [Line Items] | |
Operating lease income | 5,425 |
Variable lease income | $ 2,120 |
Cash and Supplemental Noncash (
Cash and Supplemental Noncash (Details) $ in Thousands | 3 Months Ended |
Mar. 27, 2019USD ($) | |
Leases Cash and Supplemental Noncash [Abstract] | |
Operating cash flows from finance leases | $ 1,516 |
Operating cash flows from operating leases | 6,311 |
Financing cash flows from finance leases | 795 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 0 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 5,050 |
Lease Maturity (Details)
Lease Maturity (Details) - USD ($) $ in Thousands | Mar. 27, 2019 | Dec. 27, 2018 | Dec. 26, 2018 |
Leases Maturity [Abstract] | |||
Finance Lease Payments, Remainder of 2019 | $ 6,821 | ||
Finance Lease Payments, 2020 | 8,481 | ||
Finance Lease Payments, 2021 | 7,838 | ||
Finance Lease Payments, 2022 | 7,129 | ||
Finance Lease Payments, 2023 | 6,239 | ||
Finance Lease Payments, Thereafter | 31,693 | ||
Finance Lease Payments, Total Undiscounted Cash Flows | 68,201 | ||
Finance Lease Payments, Interest | 39,275 | ||
Finance Lease, Present Value Lease Liabilities | 28,926 | ||
Finance Lease, Current Lease Liabilities | 3,487 | $ 3,410 | |
Finance Lease, Long-term Lease Liabilities | 25,439 | 27,181 | |
Operating Lease Payments, Remainder of 2019 | 17,481 | ||
Operating Lease Payments, Liability, 2020 | 20,106 | ||
Operating Lease Payments, Liability, 2021 | 16,948 | ||
Operating Lease Payments, Liability, 2022 | 14,293 | ||
Operating Lease Payments, Liability, 2023 | 11,210 | ||
Operating Lease Payments, Thereafter | 54,010 | ||
Operating Lease Payments, Total Discounted Cash Flows | 134,048 | ||
Operating Lease Payments, Interest | 32,824 | ||
Operating Lease, Present Value of Lease Liabilities | 101,224 | $ 101,300 | |
Operating Lease, Current Lease Liabilities | 17,004 | 0 | |
Operating Lease, Long-term Lease Liabilities | 84,220 | 0 | |
Operating Lease, Payments to be Received, Remainder of 2019 | 16,107 | ||
Operating Lease, Payments to be Received, 2020 | 19,257 | ||
Operating Lease, Payments to be Received, 2021 | 17,351 | ||
Operating Lease, Payments to be Received, 2022 | 15,685 | ||
Operating Lease, Payments to be Received, 2023 | 13,466 | ||
Operating Lease, Payments to be Received, Thereafter | 73,083 | ||
Operating Lease, Payments to be Received, Total Undiscounted Cash Flows | $ 154,949 | ||
Capital Leases, Future Minimum Payments Due, Next Twelve Months | 9,271 | ||
Capital Leases, Future Minimum Payments Due in Two Years | 8,664 | ||
Capital Leases, Future Minimum Payments Due in Three Years | 8,010 | ||
Capital Leases, Future Minimum Payments Due in Four Years | 7,320 | ||
Capital Leases, Future Minimum Payments Due in Five Years | 6,451 | ||
Capital Leases, Future Minimum Payments Due Thereafter | 33,670 | ||
Capital Leases, Future Minimum Payments Due | 73,386 | ||
Capital Leases, Future Minimum Payments, Interest Included in Payments | 42,795 | ||
Capital Leases, Future Minimum Payments, Present Value of Net Minimum Payments | 30,591 | ||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | 23,504 | ||
Operating Leases, Future Minimum Payments, Due in Two Years | 20,161 | ||
Operating Leases, Future Minimum Payments, Due in Three Years | 17,316 | ||
Operating Leases, Future Minimum Payments, Due in Four Years | 14,646 | ||
Operating Leases, Future Minimum Payments, Due in Five Years | 11,881 | ||
Operating Leases, Future Minimum Payments, Due Thereafter | 49,004 | ||
Operating Leases, Future Minimum Payments Due | $ 136,512 |
Refranchisings (Details)
Refranchisings (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 27, 2019USD ($)Unitsrestaurant | Mar. 28, 2018USD ($)Unitsrestaurants | Dec. 26, 2018USD ($) | |
Franchisor Disclosure [Line Items] | |||
Noncash consideration | $ 3,000 | $ 0 | |
Less: Goodwill related to the sales of company restaurants | (1,600) | ||
Gains on sales of assets and other, net | 9,475 | $ 37 | |
Assets held for sale | 14,956 | $ 723 | |
Assets held for sale, property | 11,700 | ||
Assets held for sale, goodwill | 1,600 | ||
Assets held for sale, intangibles | $ 1,700 | ||
Assets held for sale, description | 48 company restaurants | three company restaurants and one piece of real estate | |
Real Estate [Member] | |||
Franchisor Disclosure [Line Items] | |||
Real estate sold | Units | 1 | 0 | |
Cash proceeds | $ 4,688 | $ 0 | |
Noncash consideration | 3,000 | 0 | |
Less: Property sold | (190) | 0 | |
Gains on sales of assets and other, net | $ 7,498 | $ 0 | |
Franchisor Owned Outlet [Member] | |||
Franchisor Disclosure [Line Items] | |||
Restaurants sold to franchisees | 3 | 0 | |
Cash proceeds | $ 2,833 | $ 0 | |
Less: Property sold | (550) | 0 | |
Less: Goodwill related to the sales of company restaurants | (79) | 0 | |
Gains on sales of assets and other, net | 2,204 | 0 | |
Assets held for sale, goodwill | $ 79 | $ 0 |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands | 3 Months Ended | |
Mar. 27, 2019USD ($) | Mar. 28, 2018USD ($) | |
Business Acquisition [Line Items] | ||
Restaurants acquired from franchisees | 0 | 5 |
Purchase price allocation of reacquired franchise rights | $ 0 | $ 5,315 |
Purchase price allocation of property | 0 | 1,029 |
Purchase price allocation of goodwill | 0 | 1,574 |
Total purchase price to reacquire franchised restaurants | 0 | 7,918 |
Capital leases recorded related to acquired franchise restaurants | $ 0 | $ 2,409 |
Real Estate [Member] | ||
Business Acquisition [Line Items] | ||
Real estate acquired | 2 | 0 |
Purchase price allocation of property | $ 4,706 | $ 0 |
Operating (Gains), Losses and_3
Operating (Gains), Losses and Other Charges, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 27, 2019 | Mar. 28, 2018 | Dec. 26, 2018 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Total restructuring charges and exit costs | $ 540 | $ 360 | |
Impairment charges | 0 | 37 | |
Operating (gains), losses and other charges, net | (8,935) | 360 | |
Gains on sales of assets and other, net | (9,475) | (37) | |
Restructuring Charges [Abstract] | |||
Exit costs | 122 | 24 | |
Severance and other restructuring charges | 418 | 336 | |
Total restructuring charges and exit costs | 540 | 360 | |
Exit cost liabilities | 100 | $ 1,200 | |
Accrued severance and other restructuring charges | 800 | $ 600 | |
Franchisor Owned Outlet [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Gains on sales of assets and other, net | (2,204) | 0 | |
Real Estate [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Gains on sales of assets and other, net | $ (7,498) | $ 0 |
Receivables (Details)
Receivables (Details) - USD ($) $ in Thousands | Mar. 27, 2019 | Dec. 26, 2018 |
Receivables [Abstract] | ||
Trade accounts receivable from franchisees, gross, current | $ 9,863 | $ 11,459 |
Financing receivables from franchisees, gross, current | 3,177 | 3,211 |
Allowance for doubtful accounts | (304) | (300) |
Total current receivables, net | 18,304 | 26,283 |
Noncurrent assets (included as a component of other noncurrent assets): | ||
Financing receivables from franchisees and other | 1,573 | 1,528 |
Vendor receivables [Member] | ||
Receivables [Abstract] | ||
Other receivables, gross, current | 2,782 | 4,016 |
Credit card receivables [Member] | ||
Receivables [Abstract] | ||
Other receivables, gross, current | 1,480 | 5,955 |
Other [Member] | ||
Receivables [Abstract] | ||
Other receivables, gross, current | $ 1,306 | $ 1,942 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2019 | Dec. 26, 2018 | |
Goodwill [Roll Forward] | ||
Balance, December 26, 2018 | $ 39,781 | |
Adjustments related to the sale of restaurants and reclassifications to assets held for sale | (1,657) | |
Balance, March 27, 2019 | 38,124 | |
Gross carrying amount - Trade names | 44,087 | $ 44,087 |
Gross carrying amount - Liquor licenses | 166 | 166 |
Gross carrying amount - Intangible assets with definite lives | 17,537 | 19,933 |
Accumulated amortization - Intangible assets with definite lives | 5,159 | 5,119 |
Intangible assets, net | $ 61,790 | $ 64,186 |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 27, 2019 | Dec. 26, 2018 |
Other Liabilities, Current [Abstract] | ||
Accrued payroll | $ 17,040 | $ 23,395 |
Accrued insurance, primarily current portion of liability for insurance claims | 7,285 | 7,323 |
Accrued taxes | 7,173 | 7,667 |
Accrued advertising | 4,253 | 7,413 |
Gift cards | 4,776 | 6,546 |
Other | 9,973 | 9,446 |
Other current liabilities | $ 50,500 | $ 61,790 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 27, 2019 | Dec. 26, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swaps, net | $ (21,300) | ||
Investments | 3,048 | $ 1,709 | |
Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total, assets | 8,469 | ||
Total, liabilities | (5,958) | ||
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total, assets | 12,267 | 11,235 | |
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total, liabilities | (18,225) | (2,766) | |
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total, assets | 0 | 0 | |
Recurring [Member] | Deferred Compensation Plan Investments [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Deferred compensation plan investments | [1] | 12,267 | 11,235 |
Recurring [Member] | Deferred Compensation Plan Investments [Member] | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Deferred compensation plan investments | [1] | 12,267 | 11,235 |
Recurring [Member] | Deferred Compensation Plan Investments [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Deferred compensation plan investments | [1] | 0 | 0 |
Recurring [Member] | Deferred Compensation Plan Investments [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Deferred compensation plan investments | [1] | 0 | 0 |
Recurring [Member] | Interest Rate Swap [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swaps, net | [2] | (21,273) | (4,475) |
Recurring [Member] | Interest Rate Swap [Member] | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swaps, net | [2] | 0 | 0 |
Recurring [Member] | Interest Rate Swap [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swaps, net | [2] | (21,273) | (4,475) |
Recurring [Member] | Interest Rate Swap [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swaps, net | [2] | 0 | 0 |
Recurring [Member] | Securities (Assets) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investments | [3] | 3,048 | 1,709 |
Recurring [Member] | Securities (Assets) [Member] | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investments | [3] | 0 | 0 |
Recurring [Member] | Securities (Assets) [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investments | [3] | 3,048 | 1,709 |
Recurring [Member] | Securities (Assets) [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investments | [3] | $ 0 | $ 0 |
[1] | The fair values of our deferred compensation plan investments are based on the closing market prices of the elected investments. | ||
[2] | The fair values of our interest rate swaps are based upon Level 2 inputs, which include valuation models as reported by our counterparties. The key inputs for the valuation models are quoted market prices, interest rates and forward yield curves. See Note 10 for details on the interest rate swaps. (3) | ||
[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. |
Long-Term Debt (Narrative) (Det
Long-Term Debt (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 27, 2019 | Dec. 26, 2018 | |
Senior secured revolver [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, current borrowing capacity | $ 400 | |
Accordion feature that allows increase in size of facility | 450 | |
Outstanding amount under credit facility | 283.5 | |
Availability under the credit facility | $ 96.8 | |
Weighted-average interest rate (in hundredths) | 4.74% | 4.43% |
Commitment fee for unused portion of revolving credit facility (in hundredths) | 0.35% | |
Basis spread on variable rate debt | 2.25% | |
Maturity date | Oct. 26, 2022 | |
Letter of Credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, current borrowing capacity | $ 30 | |
Outstanding amount of letters of credit | $ 19.7 | |
Interest Rate Swap [Member] | Senior secured revolver [Member] | ||
Line of Credit Facility [Line Items] | ||
Weighted-average interest rate (in hundredths) | 4.72% | 4.48% |
Long-Term Debt Interest Rate Sw
Long-Term Debt Interest Rate Swaps (Details) $ in Thousands | 3 Months Ended | |
Mar. 27, 2019USD ($) | ||
Derivative [Line Items] | ||
Interest rate swaps, net | $ (21,300) | |
Interest Rate Swap 2018-2025 [Member] | ||
Derivative [Line Items] | ||
Trade date | Mar. 20, 2015 | |
Effective date | Mar. 29, 2018 | |
Maturity date | Mar. 31, 2025 | |
Notional amount | $ 120,000 | |
Fixed rate | 2.44% | |
Interest Rate Swap 2018-2026 [Member] | ||
Derivative [Line Items] | ||
Trade date | Oct. 1, 2015 | |
Effective date | Mar. 29, 2018 | |
Maturity date | Mar. 31, 2026 | |
Notional amount | $ 50,000 | |
Fixed rate | 2.46% | |
Interest Rate Swap 2020-2033 [Member] | ||
Derivative [Line Items] | ||
Trade date | Feb. 15, 2018 | |
Effective date | Mar. 31, 2020 | |
Maturity date | Dec. 31, 2033 | |
Notional amount | $ 80,000 | [1] |
Fixed rate | 3.19% | |
Interest Rate Swap 2020-2033 [Member] | Maximum [Member] | ||
Derivative [Line Items] | ||
Notional amount | $ 425,000 | |
[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 $425.0 million |
Revenues Disaggregation of Reve
Revenues Disaggregation of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2019 | Mar. 28, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Total operating revenue | $ 151,411 | $ 155,273 |
Franchisor Owned Outlet [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenue | 98,545 | 101,193 |
Franchisor Owned Outlet [Member] | Sales Channel, Directly to Consumer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenue | 98,545 | 101,193 |
Royalties [Member] | Sales Channel, Through Intermediary [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenue | 25,240 | 25,165 |
Advertising [Member] | Sales Channel, Through Intermediary [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenue | 18,942 | 19,310 |
Initial and other fees [Member] | Sales Channel, Through Intermediary [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenue | 1,139 | 1,417 |
Occupancy [Member] | Sales Channel, Through Intermediary [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenue | 7,545 | 8,188 |
Franchise [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenue | 52,866 | 54,080 |
Franchise [Member] | Sales Channel, Through Intermediary [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenue | $ 52,866 | $ 54,080 |
Revenues Contract Balances (Det
Revenues Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 27, 2019 | Dec. 26, 2018 | ||
Revenues [Abstract] | |||
Balance, December 26, 2018 | $ 20,538 | ||
Fees received from franchisees | 517 | ||
Revenue recognized | [1] | (642) | |
Balance, March 27, 2019 | 20,413 | ||
Less current portion included in other current liabilities | 2,109 | ||
Deferred franchise revenue included in other noncurrent liabilities | 18,304 | ||
Revenue recognized that was included in the deferred franchise revenue balance as of December 26, 2018 | 600 | ||
Gift card liabilities | 4,776 | $ 6,546 | |
Revenue recognized from gift card redemptions | $ 700 | ||
[1] | Of this amount $0.6 million |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | |
Mar. 27, 2019 | Dec. 27, 2017 | |
Total share-based compensation [Abstract] | ||
Total share-based compensation | $ 2,253 | $ 1,350 |
Performance share units [Member] | ||
Total share-based compensation [Abstract] | ||
Total share-based compensation | $ 1,998 | 1,078 |
Restricted Stock Units [Abstract] | ||
Performance period, equity award | 3 years | |
Common stock shares issued (in shares) | 0.3 | |
Common stock shares deferred (in shares) | 0.4 | |
Shares paid for tax withholding (in shares) | 0.2 | |
Unrecognized compensation cost [Abstract] | ||
Unrecognized compensation cost related to unvested share awards outstanding | $ 20,600 | |
Unrecognized compensation cost, expected weighted average period | 2 years 3 months 18 days | |
Performance share units [Member] | Minimum [Member] | ||
Restricted Stock Units [Abstract] | ||
Percentage of target awards to be earned (in hundredths) | 0.00% | |
Performance share units [Member] | Maximum [Member] | ||
Restricted Stock Units [Abstract] | ||
Percentage of target awards to be earned (in hundredths) | 150.00% | |
Performance share units [Member] | Performance share units that vest based on TSR [Member] | ||
Restricted Stock Units [Abstract] | ||
Equity awards granted (in shares) | 0.3 | |
Equity awards, grant date fair value (in dollars per share) | $ 20.47 | |
Performance share units [Member] | Performance share units that vest based on Adjusted EPS growth [Member] | ||
Restricted Stock Units [Abstract] | ||
Equity awards granted (in shares) | 0.3 | |
Equity awards, grant date fair value (in dollars per share) | $ 17.58 | |
Restricted stock units for board members [Member] | ||
Total share-based compensation [Abstract] | ||
Total share-based compensation | $ 255 | $ 272 |
Unrecognized compensation cost [Abstract] | ||
Unrecognized compensation cost related to unvested share awards outstanding | $ 200 | |
Unrecognized compensation cost, expected weighted average period | 2 months 12 days |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 27, 2019 | Mar. 28, 2018 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate, percent | 23.10% | 15.80% |
Effective income tax rate reconciliation, discrete item relating to share-based compensation, percent | 4.70% |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 27, 2019 | Mar. 28, 2018 | |
Earnings Per Share [Abstract] | ||
Net income | $ 15,490 | $ 9,759 |
Weighted average shares outstanding - basic (in shares) | 61,651 | 64,432 |
Effect of dilutive share-based compensation awards | 2,032 | 2,514 |
Weighted average shares outstanding - diluted (in shares) | 63,683 | 66,946 |
Basic net income per share | $ 0.25 | $ 0.15 |
Diluted net income per share | $ 0.24 | $ 0.15 |
Antidilutive share-based compensation awards (in shares) | 630 | 471 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 27, 2019 | Mar. 28, 2018 | |
Supplemental Cash Flow Information [Abstract] | ||
Income taxes paid, net | $ 367 | $ 423 |
Interest paid | 5,067 | 4,272 |
Noncash investing and financing activities: | ||
Issuance of common stock, pursuant to share-based compensation plans | 6,333 | 3,513 |
Noncash consideration received in connection with the sale of real estate | 3,000 | 0 |
Execution of finance leases | 0 | 2,478 |
Treasury stock payable | $ 925 | $ 615 |
Shareholders' Equity (Share Rep
Shareholders' Equity (Share Repurchase) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 27, 2019 | Dec. 26, 2018 | Mar. 28, 2018 | |
Equity, Class of Treasury Stock [Line Items] | |||
Purchase of treasury stock | $ 8,941 | $ 16,186 | |
Number of accumulated shares repurchased (in shares) | 47,948 | 47,052 | |
Share Repurchase Program 2017 [Member] | |||
Equity, Class of Treasury Stock [Line Items] | |||
Share repurchase, authorized amount (in dollars) | $ 200,000 | ||
Purchase of treasury stock (in shares) | 500 | ||
Purchase of treasury stock | $ 8,900 | ||
Remaining shares to be repurchased (in dollars) | $ 119,500 | ||
Number of accumulated shares repurchased (in shares) | 5,100 | ||
Value of shares repurchased | $ 80,500 | ||
Accelerated Share Repurchase 2018 [Member] | |||
Equity, Class of Treasury Stock [Line Items] | |||
Share repurchase, authorized amount (in dollars) | $ 25,000 | ||
Purchase of treasury stock (in shares) | 400 | 1,100 | |
Purchase of treasury stock | $ 6,800 | $ 18,200 | |
Remaining shares to be repurchased (in dollars) | $ 6,800 | ||
Volume-weighted average price | $ 17.04 |
Shareholders' Equity (Component
Shareholders' Equity (Components of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 27, 2019 | Mar. 28, 2018 | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance as of December 26, 2018 | $ (4,146) | ||
Amortization of net loss | [1] | 22 | |
Net change in fair value of derivatives | (16,774) | ||
Reclassification of derivatives to interest expense | [2] | (24) | |
Income tax (expense) benefit related to defined benefit plans | (6) | $ (6) | |
Income tax (expense) benefit related to derivatives | 4,629 | $ 1,085 | |
Income tax (expense) benefit related to items of other comprehensive loss | 4,623 | ||
Balance as of March 27, 2019 | (16,299) | ||
Estimated reclassification from accumulated other comprehensive income to interest expense related to the interest rate swaps over the next 12 months | 100 | ||
Pensions [Member] | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance as of December 26, 2018, defined benefit plans | (827) | ||
Amortization of net loss | [1] | 22 | |
Income tax (expense) benefit related to defined benefit plans | (6) | ||
Balance as of March 27, 2019, defined benefit plans | (811) | ||
Derivatives [Member] | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance as of December 26, 2018, derivatives | (3,319) | ||
Net change in fair value of derivatives | (16,774) | ||
Reclassification of derivatives to interest expense | [2] | (24) | |
Income tax (expense) benefit related to derivatives | 4,629 | ||
Balance as of March 27, 2019, derivatives | $ (15,488) | ||
[1] | Before-tax amount related to our defined benefit plans that was reclassified from accumulated other comprehensive loss and included as a component of pension expense within general and administrative expenses in our Condensed Consolidated Statements of Income during the quarter ended March 27, 2019 | ||
[2] | Amounts reclassified from accumulated other comprehensive loss into income represent payments either received from or made to the counterparty for the effective portions of the interest rate swaps. These amounts are included as a component of interest expense, net in our Condensed Consolidated Statements of Income. We expect to receive payments from the counterparty and reclassify approximately $0.1 million from accumulated other comprehensive loss related to our interest rate swaps during the next twelve months. See Note 10 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Mar. 27, 2019 | Dec. 26, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Loan amounts outstanding under the loan pools | $ 2.2 | $ 2.5 |
Maximum payments guaranteed | 0.8 | |
Guarantee liabilities included as a component of other noncurrent liabilities | $ 0.1 | $ 0.1 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | 3 Months Ended |
Jun. 26, 2019USD ($) | |
Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Benefit from completion of IRS audit, tax contingency, domestic, amount | $ 2 |
Uncategorized Items - q1201910-
Label | Element | Value |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (15,446,000) |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (394,000) |