Exhibit 99.1
Investor Contact: Alex Lewis
877-784-7167
Media Contact: Debbie Atkins NEWS RELEASE
864-597-8361
DENNY'S UPDATES FINANCIAL GUIDANCE
Spartanburg, S.C., October 11, 2005 - Denny's Corporation (Nasdaq:DENN)
today updated its guidance for fiscal year 2005 based on recent events and
year-to-date results.
In an 8-K filed earlier today, Denny's announced a settlement with the
State of California's Division of Labor Standards Enforcement ("DLSE") regarding
a previously disclosed lawsuit. In order to avoid the time, expense and
uncertainty of litigation, the parties agreed to settle all disputes and Denny's
has agreed to pay a sum of approximately $7.75 million to former employees.
In the second quarter of 2005, Denny's accrued $1.0 million of liabilities
related to this litigation bringing the total reserve to $3.0 million. Pursuant
to this settlement, Denny's will take an additional $4.75 million charge to
legal settlement costs in the third quarter of 2005.
In addition, Denny's will incur approximately $1.2 million of
restructuring expense in the third quarter due to severance related costs.
As recently announced, Denny's company restaurants reported same-store
sales growth of 1.0% for the month of September and 1.5% for the third quarter
of 2005.
Six company restaurants remain closed as a result of the recent
hurricanes. At this time we cannot determine when these units will reopen. If
all six units remained closed through year end the aggregate revenue loss in
2005 would be approximately $2.9 million.
Commenting on the recent news, Nelson J. Marchioli, President and Chief
Executive Officer, said, "We have worked hard to reach a final resolution to
this dispute with the DLSE. The settlement will allow us to focus all of our
energy on further strengthening the Denny's brand.
"As for ongoing operations, we are encouraged by our performance
compared with much of the restaurant industry, as we have benefited from a
strong value message that is particularly compelling in this challenging
economic environment. While same-store sales at company units increased a solid
1.5% in the third quarter, our franchisees continued their strong performance
with preliminary sales estimates of 3.8% growth for the quarter. With franchised
units accounting for two-thirds of the Denny's brand, we believe their
performance is compelling evidence of the continued operational improvements
across the chain. We expect our sales momentum will continue and that we will
post positive same-store sales for the fourth quarter of 2005.
"Our updated guidance for 2005 reflects our sales outlook in addition
to the one-time expenses announced today. Considering the impact of
approximately $5.75 million in year-to-date legal settlement costs related to
the case in California, we have revised our 2005 Adjusted EBITDA guidance to
$115 to $119 million, compared with our initial guidance estimate of $120 to
$125 million," Marchioli concluded.
Updated 2005 Guidance
($ in millions) 1H05 3Q05 4Q05 2005
Actual Estimate Estimate Estimate
------ ----------- ----------- ------------
Company Unit Same-Store Sales 5.2% 1.5% 0.0 to 1.5% 3.0 to 3.4%
Franchise Unit Same-Store Sales 6.6% 3.8% 2.0 to 3.5% 4.7 to 5.1%
Company Unit Openings 0 1 2 3
Franchise Unit Openings 13 2 2 to 4 17 to 19
Total Operating Revenue $487 $246 to 248 $242-245 $975-980
Reported EBITDA $55 $22 to 23 $31 to 34 $108 to 112
Adjusted EBITDA $59 $25 to 26 $31 to 34 $115 to 119
Capital Spending $15 $13 to 15 $25 to 30 $53 to 60
Denny's is America's largest full-service family restaurant chain,
consisting of 546 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 at www.dennys.com.
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).