Exhibit 99.1
Investor Contact: Alex Lewis
877-784-7167
NEWS RELEASE
Media Contact: Debbie Atkins
864-597-8361
DENNY'S CORPORATION REPORTS FIRST QUARTER 2005 RESULTS
SPARTANBURG, S.C., April 28, 2005 - Denny's Corporation (OTCBB: DNYY)
today reported results for its first quarter ended March 30, 2005.
Highlights for the quarter include:
o Same-store sales increased 6.3% at company units and 7.1% at franchised units.
o Guest counts increased 3.0% at company units.
o Total operating revenue increased $10.7 million, or 4.6%, to $240.0 million.
o Operating income increased $0.4 million, or 3.3%, to $11.2 million.
o Net loss improved $7.2 million to $1.5 million compared with a net loss of
$8.7 million last year.
Nelson J. Marchioli, President and Chief Executive Officer, said, "Our
strong sales performance in the first quarter on top of solid sales increases
last year clearly demonstrates the strength of the Denny's brand today. Over the
last six quarters, we have effectively grown sales through increases in both
average guest check and guest counts. Following this outstanding performance our
path going forward is clear. Denny's future success will be driven by increasing
customer counts and capitalizing on the significant capacity for sales growth in
our restaurants."
First Quarter Results
For the first quarter of 2005, Denny's reported total operating revenue
of $240.0 million, an increase of 4.6%, or $10.7 million over the prior year
quarter. Company restaurant sales grew 4.9%, or $10.3 million, to $218.0
million, as a 6.3% increase in same-store sales offset a 9-unit decline in
company-owned restaurants. Franchise revenue grew 1.8%, or $0.4 million, to
$22.0 million, as a 7.1% increase in same-store sales at franchise restaurants
offset a 28-unit decline in franchised restaurants. With Easter falling in
fiscal March this year compared with April last year, first quarter sales
benefited by approximately 0.5% from travel related to the holiday and spring
break.
Company restaurant operating margin (costs of company restaurant sales
as a percentage of company restaurant sales) was 12.4% in the first quarter,
equal to the same period last year. Payroll and benefit costs decreased by 0.5
percentage points, due primarily to lower incentive compensation for restaurant
management which offset increases in crew-level labor costs including payroll
taxes and fringe. Repairs and maintenance costs increased 0.5 percentage points
due primarily to unusually low expense in the prior year period.
General and administrative expenses increased $0.9 million in the first
quarter. During the period, Denny's incurred $2.6 million of stock-based
incentive compensation expense, up $2.3 million from the same period last year.
Partially offsetting this expense, Denny's incurred no transaction costs in the
first quarter this year compared with $2.0 million in the first quarter last
year.
Operating income increased $0.4 million to $11.2 million in the first
quarter. Restructuring charges and exit costs of $2.3 million resulted from
restaurant closures and severance expenses compared with $0.1 million of similar
costs in last year's first quarter. In addition, gains from the sale of surplus
properties increased $0.8 million from the prior year period.
Interest expense decreased $6.3 million to $13.2 million due to the
financial recapitalization completed during 2004, which lowered borrowing costs.
Net loss for the first quarter of 2005 was $1.5 million, or $0.02 per
diluted common share, compared with the prior year's first quarter net loss of
$8.7 million, or $0.21 per diluted common share.
"While our top-line gains somewhat insulated us from a challenging cost
environment, we still experienced cost pressures in food, labor and utilities.
In addition, we continue to make the necessary investments in our menu, staffing
and facilities in order to provide our guests with the very best Denny's
experience. We credit the outstanding effort of all our team members as we
maintained our operating margins at levels equal to last year," Marchioli
concluded.
Balance Sheet
As of March 30, 2005, Denny's $75 million revolver had no outstanding
advances, while letters of credit totaled $37.5 million, resulting in a net
availability of $37.5 million. In addition, surplus cash totaled $16.7 million.
On April 1, 2005, Denny's made a scheduled interest payment on its 10% Senior
Notes of $8.6 million.
NASDAQ Relisting
Denny's has applied to be listed on the NASDAQ stock market and
anticipates action in response to the application by the end of the second
quarter 2005.
Business Outlook
Based on year-to-date results and management's expectations at this
time, Denny's reiterates its 2005 guidance previously issued in February 2005.
Denny's anticipates total operating revenue for 2005 of between $975
million and $985 million based on same-store sales increases at both company and
franchised units of approximately 2 to 3 percent. With regard to new unit
development, Denny's expects to open 2 to 3 new company units while franchisees
are expected to open 15 to 20 new units. Denny's anticipates earnings before
interest, taxes, depreciation and amortization (EBITDA) for 2005 of between $110
million and $115 million. Included in anticipated EBITDA is approximately $10
million of stock-based compensation expense, along with other noncash and
nonoperating items. Denny's anticipates 2005 capital spending of between $55
million and $65 million, including investments in a new point-of-sale system and
new company restaurant development.
Further Information
Denny's will host its quarterly conference call for investors and
analysts today, Thursday, April 28, 2005 at 5:00 p.m. EDT. Interested parties
are invited to listen to a live broadcast of the conference call accessible
through our website at www.dennys.com. On the front page of the website, follow
the link to "About Us;" then follow the link to "Investor Info;" and then select
the "Live Webcast" icon. A replay of the call may be accessed at the same
location later in the day and will remain available for at least 30 days.
The Board of Directors of Denny's has set Wednesday, May 25, 2005, as
the date for the 2005 Annual Meeting of Denny's Shareholders, which will be held
in Spartanburg, South Carolina.
Denny's is America's largest full-service family restaurant chain,
consisting of 549 company-owned units and 1,036 franchised and licensed units,
with operations in the United States, Canada, Costa Rica, Guam, Mexico, New
Zealand and Puerto Rico. For further information on Denny's, including news
releases, links to SEC filings and other financial information, please visit our
website referenced above.
Certain matters discussed in this release constitute forward looking
statements. These forward-looking statements involve risks, uncertainties, and
other factors that may cause the actual performance of Denny's Corporation, its
subsidiaries and underlying restaurants to be materially different from the
performance indicated or implied by such statements. Words such as "expects",
"anticipates", "believes", "intends", "plans", and "hopes", variations of such
words and similar expressions are intended to identify such forward-looking
statements. Except as may be required by law, the Company expressly disclaims
any obligation to update these forward-looking statements to reflect events or
circumstances after the date of this release or to reflect the occurrence of
unanticipated events. Factors that could cause actual performance to differ
materially from the performance indicated by these forward-looking statements
include, among others: the competitive pressures from within the restaurant
industry; the level of success of the Company's operating initiatives and
advertising and promotional efforts; adverse publicity; changes in business
strategy or development plans; terms and availability of capital; regional
weather conditions; overall changes in the general economy, particularly at the
retail level; political environment (including acts of war and terrorism); and
other factors from time to time set forth in the Company's SEC reports,
including but not limited to the discussion in Management's Discussion and
Analysis and the risks identified in Exhibit 99 contained in the Company's
Annual Report on Form 10-K for the year ended December 29, 2004 (and in the
Company's subsequent quarterly reports on Form 10-Q).
DENNY'S CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
13 Weeks 3 Weeks
Ended Ended
(In thousands, except per share amounts) 3/30/2005 3/31/2004
---------------- ----------------
Revenue:
Company restaurant sales $ 218,015 $ 207,762
Franchise and license revenue 22,034 21,633
---------------- ---------------
Total operating revenue 240,049 229,395
---------------- ---------------
Costs of company restaurant sales 191,073 181,920
Costs of franchise and license revenue 7,009 7,168
General and administrative expenses 16,068 15,181
Depreciation and amortization 13,270 14,218
Restructuring charges and exit costs 2,274 105
Impairment charges - -
Gains on disposition of assets and other, net (885) (74)
---------------- ---------------
Total operating costs and expenses 228,809 218,518
---------------- ---------------
Operating income 11,240 10,877
---------------- ---------------
Other expenses:
Interest expense, net 13,212 19,468
Other nonoperating income, net (371) (65)
---------------- ---------------
Total other expenses, net 12,841 19,403
---------------- ---------------
Loss before income taxes (1,601) (8,526)
Provision for (benefit from) income taxes (141) 204
---------------- ---------------
Net loss $ (1,460) $ (8,730)
================ ===============
Basic and diluted net loss per share $ (0.02) $ (0.21)
================ ===============
Basic and diluted weighted average shares outstanding 90,219 41,065
================ ===============
DENNY'S CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands) 3/30/2005 12/29/2004
--------------- ---------------
ASSETS
Current Assets
Cash and cash equivalents $ 19,932 $ 15,561
Other 27,842 27,994
--------------- ---------------
47,774 43,555
--------------- ---------------
Property, net 277,611 285,401
Goodwill 50,186 50,186
Intangible assets, net 76,141 77,484
Other assets 44,634 43,867
--------------- ---------------
Total Assets $ 496,346 $ 500,493
=============== ===============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Current maturities of notes and debentures $ 2,420 $ 1,975
Current maturities of capital lease obligations 3,425 3,396
Accounts payable and other accrued liabilities 123,549 130,873
--------------- ---------------
129,394 136,244
--------------- ---------------
Long-Term Liabilities
Notes and debentures, less current maturities 518,630 519,236
Capital lease obligations, less current maturities 27,463 28,149
Other 83,739 82,294
--------------- ---------------
629,832 629,679
--------------- ---------------
Total Liabilities 759,226 765,923
Total Shareholders' Deficit (262,880) (265,430)
--------------- ---------------
Total Liabilities and Shareholders' Deficit $ 496,346 $ 500,493
=============== ===============
Long-Term Debt Balances
(In thousands) 3/30/2005 12/29/2004
--------------- ---------------
First lien revolver loans $ - $ -
First lien term loans 225,000 225,000
Second lien term loans 120,000 120,000
Capital leases and other debt 31,938 32,756
10.00% senior notes due 2012 175,000 175,000
--------------- ---------------
Total Debt $ 551,938 $ 552,756
=============== ===============
DENNY'S CORPORATION
Quarterly Operating Margins
(Unaudited)
13 Weeks 13 Weeks
Ended Ended
(In millions) 3/30/2005 3/31/2004
------------------------- -------------------------
Total operating revenue (1) $ 240.0 100.0% $ 229.4 100.0%
Company restaurant operations: (2)
Company restaurant sales 218.0 100.0% 207.8 100.0%
Costs of company restaurant sales:
Product costs 56.2 25.8% 53.1 25.5%
Payroll and benefits 91.7 42.0% 88.3 42.5%
Occupancy 13.1 6.0% 12.5 6.0%
Other operating costs:
Utilities 10.3 4.7% 9.8 4.7%
Repairs and maintenance 4.5 2.1% 3.3 1.6%
Marketing 7.3 3.3% 7.5 3.6%
Other 8.0 3.7% 7.4 3.6%
--------------- --------- -------------- ----------
Total costs of company restaurant sales 191.1 87.6% 181.9 87.6%
--------------- --------- -------------- ----------
Company restaurant operating margin (3) $ 26.9 12.4% $ 25.8 12.4%
--------------- --------- -------------- ----------
Franchise operations: (4)
Franchise and license revenue 22.0 100.0% 21.6 100.0%
Costs of franchise and license revenue 7.0 31.8% 7.2 33.1%
--------------- --------- -------------- ----------
Franchise operating margin (3) $ 15.0 68.2% $ 14.5 66.9%
--------------- --------- -------------- ----------
Total operating margin (1)(3) $ 42.0 17.5% $ 40.3 17.6%
Other operating expenses: (1)(3)
General and administrative expenses 16.1 6.7% 15.2 6.6%
Depreciation and amortization 13.3 5.5% 14.2 6.2%
Restructuring, exit costs and impairment 2.3 0.9% 0.1 0.0%
Gains on disposition of assets and other, (0.9) -0.4% (0.1) 0.0%
net
--------------- --------- -------------- ----------
Total other operating expenses $ 30.7 12.8% $ 29.4 12.8%
--------------- --------- -------------- ----------
Operating income (1) $ 11.2 4.7% $ 10.9 4.7%
=============== ========= ============== ==========
(1) As a percentage of total operating revenue
(2) As a percentage of company restaurant sales
(3) Other operating expenses such as general and administrative
expenses and depreciation and amortization relate to both company
and franchise operations and are not allocated to costs of company
restaurant sales and costs of franchise and license revenue. As
such, operating margins may be considered a non-GAAP financial
measure. Operating margins should be considered as a supplement
to, not as a substitute for, operating income, net income or other
financial measures prepared in accordance with accounting
principles generally accepted in the United States of America.
(4) As a percentage of franchise and license revenue
DENNY'S CORPORATION
EBITDA Reconciliation
(Unaudited)
13 Weeks 13 Weeks
(In millions) Ended Ended
3/30/2005 3/31/2004
---------------- ----------------
Net loss $ (1.5) $ (8.7)
Provision for (benefit from) income taxes (0.1) 0.2
Interest expense, net 13.2 19.5
Depreciation and amortization 13.3 14.2
---------------- -----------------
EBITDA (1) $ 24.9 $ 25.2
================ =================
(1) We believe that, in addition to other financial measures, EBITDA
is an appropriate indicator to assist in the evaluation of our
operating performance because it provides additional information
with respect to our ability to meet our future debt service,
capital expenditures and working capital needs. However, EBITDA
should be considered as a supplement to, not a substitute for,
operating income, net income or other financial performance
measures prepared in accordance with accounting principles
generally accepted in the United States of America.
13 Weeks 13 Weeks
Ended Ended
(In millions) 3/30/2005 3/31/2004
---------------- -----------------
Other financial data: (2)
Restructuring charges and exit costs $ 2.3 $ 0.1
Impairment charges - -
Gains on disposition of assets and other, net (0.9) (0.1)
Other nonoperating income, net (3) (0.4) (0.1)
General and administrative expenses:
Stock-based incentive compensation (4) $ 2.6 $ 0.3
Transaction costs (5) - 2.0
Other general and administrative expenses 13.5 12.9
---------------- -----------------
Total general and administrative expenses $ 16.1 $ 15.2
================ =================
(2) The line items in this section are components of both net income and
EBITDA as shown above.
(3) 2004 amounts include debt repurchase premiums and related costs
attributable to the financial recapitalization completed during the
third and fourth quarters.
(4) This compensation expense is attributable to options and restricted
stock units granted under Denny's 2002 and 2004 Omnibus Incentive Plans.
(5) These transactions costs are attributable to the financial
recapitalization completed in 2004.
DENNY'S CORPORATION
Statistical Data
(Unaudited)
13 Weeks 13 Weeks
Same-Store Sales Ended Ended
(increase/(decrease) vs. prior year) 3/30/2005 3/31/2004
--------------- ---------------
Company-Owned Same-Store Sales 6.3% 6.4%
Guest Check Average 3.2% 3.0%
Guest Counts 3.0% 3.3%
Franchised Same-Store Sales 7.1% 6.7%
13 Weeks 13 Weeks
Average Unit Sales Ended Ended
($ in thousands) 3/30/2005 3/31/2004
--------------- ---------------
Company-Owned Units $ 398.1 $ 373.1
Franchised Units $ 339.0 $ 313.9
Franchised
Restaurant Units Company & Licensed Total
--------------- --------------- ---------------
Ending Units 3/31/2004
558 1,064 1,622
Units Opened 1 11 12
Units Acquired/Reacquired 1 (1) -
Units Refranchised (1) 1 -
Units Closed (10) (39) (49)
--------------- --------------- ---------------
Net Change (9) (28) (37)
--------------- --------------- ---------------
Ending Units 3/30/2005
549 1,036 1,585
=============== =============== ===============