Delaware
|
|
13-3487402
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(State
or other jurisdiction of
|
|
(I.R.S.
Employer
|
incorporation
or organization
|
|
Identification
No.)
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Page
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3
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3
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4
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5
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6
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7
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13
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21
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21
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22
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Item 4. Submission of Matters to a Vote of Security Holders |
22
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22
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23
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Quarter
Ended
|
Two
Quarters
Ended
|
||||||||||||||
|
June
27, 2007
|
June
28, 2006
|
June
27, 2007
|
June
28, 2006
|
||||||||||||
|
(In
thousands, except per share
amounts)
|
|||||||||||||||
Revenue:
|
|
|
|
|
||||||||||||
Company
restaurant sales
|
$ |
218,316
|
$ |
221,008
|
$ |
434,117
|
$ |
446,030
|
||||||||
Franchise
and license revenue
|
22,626
|
22,483
|
43,576
|
45,446
|
||||||||||||
Total
operating revenue
|
240,942
|
243,491
|
477,693
|
491,476
|
||||||||||||
Costs
of company restaurant sales:
|
||||||||||||||||
Product
costs
|
56,323
|
54,981
|
111,449
|
110,710
|
||||||||||||
Payroll
and benefits
|
91,932
|
91,862
|
184,800
|
185,870
|
||||||||||||
Occupancy
|
13,024
|
12,589
|
26,152
|
25,726
|
||||||||||||
Other
operating expenses
|
31,782
|
35,882
|
62,095
|
68,326
|
||||||||||||
Total
costs of company restaurant sales
|
193,061
|
195,314
|
384,496
|
390,632
|
||||||||||||
Costs
of franchise and license revenue
|
6,933
|
7,235
|
13,408
|
14,448
|
||||||||||||
General
and administrative expenses
|
17,167
|
15,590
|
33,093
|
32,819
|
||||||||||||
Depreciation
and amortization
|
12,480
|
14,120
|
25,358
|
28,185
|
||||||||||||
Operating
gains, losses and other charges, net
|
(13,047 | ) | (5,938 | ) | (15,680 | ) | (6,788 | ) | ||||||||
Total
operating costs and expenses
|
216,594
|
226,321
|
440,675
|
459,296
|
||||||||||||
Operating
income
|
24,348
|
17,170
|
37,018
|
32,180
|
||||||||||||
Other
expenses:
|
||||||||||||||||
Interest
expense, net
|
10,953
|
14,847
|
22,294
|
29,490
|
||||||||||||
Other
nonoperating expense (income), net
|
(228
|
) |
138
|
(425 | ) | (24 | ) | |||||||||
Total
other expenses, net
|
10,725
|
14,985
|
21,869
|
29,466
|
||||||||||||
Net
income before income taxes and cumulative effect of change in
accounting
principle
|
13,623
|
2,185
|
15,149
|
2,714
|
||||||||||||
Provision
for income taxes
|
2,123
|
331
|
2,486
|
380
|
||||||||||||
Net
income before cumulative effect of change in accounting
principle
|
11,500
|
1,854
|
12,663
|
2,334
|
||||||||||||
Cumulative
effect of change in
accounting principle, net of tax
|
—
|
—
|
—
|
232
|
||||||||||||
Net
income
|
$ |
11,500
|
$ |
1,854
|
$ |
12,663
|
$ |
2,566
|
||||||||
|
||||||||||||||||
Basic
net income per share:
|
||||||||||||||||
Basic net
income before cumulative effect of change in accounting
principle,
net of tax
|
$ |
0.12
|
$ |
0.02
|
$ |
0.14
|
$ |
0.03
|
||||||||
Cumulative
effect of change in accounting principle, net of tax
|
—
|
—
|
—
|
0.00
|
||||||||||||
Basic net
income per
share
|
$ |
0.12
|
$ |
0.02
|
$ |
0.14
|
$ |
0.03
|
||||||||
|
||||||||||||||||
Diluted
net income per share:
|
||||||||||||||||
Diluted
net income before cumulative effect of change in accounting principle,
net of tax
|
$ |
0.12
|
$ |
0.02
|
$ |
0.13
|
$ |
0.02
|
||||||||
Cumulative
effect of change in accounting principle, net of tax
|
—
|
—
|
—
|
0.01
|
||||||||||||
Diluted
net income per share
|
$ |
0.12
|
$ |
0.02
|
$ |
0.13
|
$ |
0.03
|
||||||||
|
||||||||||||||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
|
93,692
|
92,045
|
93,554
|
91,915
|
||||||||||||
Diluted
|
98,967
|
97,741
|
98,796
|
97,435
|
June
27, 2007
|
December
27, 2006
|
|||||||
(In
thousands)
|
||||||||
Assets
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ |
47,263
|
$ |
26,226
|
||||
Receivables,
net
|
13,626
|
14,564
|
||||||
Inventories
|
8,065
|
8,199
|
||||||
Assets
held for sale
|
4,178
|
4,735
|
||||||
Prepaid
and other current assets
|
6,740
|
9,072
|
||||||
Total
Current Assets
|
79,872
|
62,796
|
||||||
Property,
net
|
216,224
|
236,264
|
||||||
Other
Assets:
|
||||||||
Goodwill
|
48,124
|
50,064
|
||||||
Intangible
assets, net
|
64,873
|
66,882
|
||||||
Deferred
financing costs, net
|
5,980
|
6,311
|
||||||
Other
assets
|
23,570
|
21,595
|
||||||
Total
Assets
|
$ |
438,643
|
$ |
443,912
|
||||
Liabilities
and Shareholders' Deficit
|
||||||||
Current
Liabilities:
|
||||||||
Current
maturities of notes and debentures
|
$ |
3,941
|
$ |
5,532
|
||||
Current
maturities of capital lease obligations
|
6,716
|
6,979
|
||||||
Accounts
payable
|
36,637
|
42,148
|
||||||
Other
|
86,721
|
81,143
|
||||||
Total
Current Liabilities
|
134,015
|
135,802
|
||||||
Long-Term
Liabilities:
|
||||||||
Notes
and debentures, less current maturities
|
402,252
|
415,801
|
||||||
Capital
lease obligations, less current maturities
|
21,828
|
24,948
|
||||||
Liability
for insurance claims, less current portion
|
28,015
|
28,784
|
||||||
Deferred
income taxes
|
11,759
|
12,126
|
||||||
Other
noncurrent liabilities and deferred credits
|
47,988
|
50,469
|
||||||
Total
Long-Term Liabilities
|
511,842
|
532,128
|
||||||
Total
Liabilities
|
645,857
|
667,930
|
||||||
Total
Shareholders’ Deficit
|
(207,214 | ) | (224,018 | ) | ||||
Total
Liabilities and Shareholders’ Deficit
|
$ |
438,643
|
$ |
443,912
|
Common
Stock
|
Accumulated
Other Comprehensive
|
Total
Shareholders'
|
||||||||||||||||||||||
Shares
|
Amount
|
Paid-in
Capital
|
Deficit
|
Loss,
Net
|
Deficit
|
|||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||
Balance,
December 27, 2006
|
93,186
|
$ |
932
|
$ |
527,911
|
$ | (735,438 | ) | $ | (17,423 | ) | $ | (224,018 | ) | ||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||
Net
income
|
—
|
—
|
—
|
12,663
|
—
|
12,663
|
||||||||||||||||||
Recognition
of unrealized gain on hedged
transactions,
net of tax
|
—
|
|
—
|
—
|
—
|
1,475 | 1,475 | |||||||||||||||||
Comprehensive
income
|
—
|
—
|
—
|
12,663
|
1,475
|
14,138
|
||||||||||||||||||
Share-based
compensation on equity classified
awards
|
—
|
—
|
1,637
|
—
|
—
|
1,637
|
||||||||||||||||||
Issuance
of common stock for share-based
compensation
|
44
|
—
|
222
|
—
|
—
|
222
|
||||||||||||||||||
Exercise
of common stock options
|
487
|
5
|
802
|
—
|
—
|
807
|
||||||||||||||||||
Balance,
June 27, 2007
|
93,717
|
$ |
937
|
$ |
530,572
|
$ | (722,775 | ) | $ | (15,948 | ) | $ | (207,214 | ) |
Two
Quarters Ended
|
||||||||
June
27, 2007
|
June
28, 2006
|
|||||||
(In
thousands)
|
||||||||
Cash
Flows from Operating Activities:
|
||||||||
Net
income
|
$ |
12,663
|
$ |
2,566
|
||||
Adjustments
to reconcile net income to cash flows provided by operating
activities:
|
||||||||
Cumulative
effect of change in accounting principle, net of tax
|
—
|
(232
|
) | |||||
Depreciation
and amortization
|
25,358
|
28,185
|
||||||
Operating
gains, losses and other charges, net
|
(15,680
|
) |
(6,788
|
) | ||||
Amortization
of deferred financing costs
|
585
|
1,747
|
||||||
Loss
on early extinguishment of debt
|
67 |
—
|
||||||
Deferred
income tax expense
|
2,161 | — | ||||||
Share-based
compensation
|
2,319
|
3,673
|
||||||
Changes
in assets and liabilities, net of effects of acquisitions and
dispositions:
|
||||||||
Decrease
(increase) in assets:
|
||||||||
Receivables
|
938
|
1,552
|
||||||
Inventories
|
134 |
(606
|
) | |||||
Other
current assets
|
2,333
|
1,270
|
||||||
Other
assets
|
(1,728 | ) | (2,280 | ) | ||||
Increase
(decrease) in liabilities:
|
||||||||
Accounts
payable
|
(826 | ) | (5,744 | ) | ||||
Accrued
salaries and vacations
|
(469 | ) | (2,461 | ) | ||||
Accrued
taxes
|
(731 | ) |
(26
|
) | ||||
Other
accrued liabilities
|
6,231 |
(744
|
) | |||||
Other
noncurrent liabilities and deferred credits
|
(4,505 | ) |
(1,914
|
) | ||||
Net
cash flows provided by operating activities
|
28,850
|
18,198
|
||||||
Cash
Flows from Investing Activities:
|
||||||||
Purchase
of property
|
(10,992 | ) | (17,794 | ) | ||||
Proceeds
from disposition of property
|
26,888
|
11,765
|
||||||
Acquisition
of restaurant units
|
(2,208 | ) |
(825
|
) | ||||
Collection
of note receivable payments from former subsidiary
|
—
|
1,239
|
||||||
Net
cash flows provided by (used in) investing
activities
|
13,688 | (5,615 | ) | |||||
Cash
Flows from Financing Activities:
|
||||||||
Long-term
debt payments
|
(18,996 | ) | (4,445 | ) | ||||
Deferred
financing costs paid
|
(321
|
) |
—
|
|||||
Proceeds
from exercise of stock options
|
807
|
588
|
||||||
Net
bank overdrafts
|
(2,991 | ) | (1,209 | ) | ||||
Net
cash flows used in financing activities
|
(21,501 | ) | (5,066 | ) | ||||
Increase
in cash and cash equivalents
|
21,037
|
7,517
|
||||||
Cash
and Cash Equivalents at:
|
||||||||
Beginning
of period
|
26,226
|
28,236
|
||||||
End
of period
|
$ |
47,263
|
$ |
35,753
|
(In
thousands)
|
||||
Balance at December 27, 2006 | $ | 50,064 | ||
Reversal of valuation allowance related to deferred tax assets | (2,528 | ) | ||
Goodwill related to acquisition of restaurant unit | 588 | |||
Balance at June 27, 2007 | $ | 48,124 |
June
27, 2007
|
December
27, 2006
|
|||||||||||||||
Gross
Carrying Amount
|
Accumulated
Amortization
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Goodwill | $ | 48,124 | $ | — | $ | 50,064 | $ | — | ||||||||
Intangible assets with indefinite lives: | ||||||||||||||||
Trade
names
|
$ | 42,375 | $ | — | $ | 42,323 | $ | — | ||||||||
Liquor
licenses
|
279 | — | 279 | — | ||||||||||||
Intangible
assets with definite lives:
|
||||||||||||||||
Franchise
and license agreements
|
62,477 | 40,258 | 65,602 | 41,322 | ||||||||||||
Intangible assets | $ | 105,131 | $ | 40,258 | $ | 108,204 | $ | 41,322 |
Quarter
Ended
|
Two
Quarters Ended
|
|||||||||||||||
June
27, 2007
|
June
28, 2006
|
June
27, 2007
|
June
28, 2006
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Gains
on sales of assets and other, net
|
$ |
(14,479
|
) | $ | (7,098 | ) | $ |
(17,750
|
) | $ | (8,669 | ) | ||||
Restructuring
charges and exit costs
|
1,192
|
1,160
|
1,830
|
1,881
|
||||||||||||
Impairment
charges
|
240 | — | 240 | — | ||||||||||||
Operating
gains, losses and other charges, net
|
$ |
(13,047
|
) | $ | (5,938 | ) | $ |
(15,680
|
) | $ | (6,788 | ) |
Quarter
Ended June 27, 2007
|
Quarter
Ended June 28, 2006
|
|||||||||||||||
Net
Proceeds
|
Gains
|
Net
Proceeds
|
Gains
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Sales
of restaurant operations and related real estate to
franchisees
|
$ | 20,241 | $ | 13,659 | $ | — | $ | — | ||||||||
Sales of other real estate assets | 911 | 305 | 8,692 | 7,067 | ||||||||||||
Recognition of deferred gains | — | 515 | — | 31 | ||||||||||||
Total | $ | 21,152 | $ | 14,479 | $ | 8,692 | $ | 7,098 |
Two
Quarters Ended June 27, 2007
|
Two
Quarters Ended June 28, 2006
|
|||||||||||||||
Net
Proceeds
|
Gains
|
Net
Proceeds
|
Gains
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Sales
of restaurant operations and related real estate to
franchisees
|
$ | 21,853 | $ | 14,062 | $ | — | $ | — | ||||||||
Sales of other real estate assets | 5,035 | 3,142 | 11,765 | 8,607 | ||||||||||||
Recognition of deferred gains | — | 546 | — | 62 | ||||||||||||
Total | $ | 26,888 | $ | 17,750 | $ | 11,765 | $ | 8,669 |
Quarter
Ended
|
Two
Quarters Ended
|
|||||||||||||||
June
27, 2007
|
June
28, 2006
|
June
27, 2007
|
June
28, 2006
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Exit
costs
|
$ |
588
|
$ | 275 | $ |
735
|
$ |
486
|
||||||||
Severance
and other restructuring charges
|
604
|
885
|
1,095
|
1,395
|
||||||||||||
Total
restructuring and exit costs
|
$ |
1,192
|
$ |
1,160
|
$ |
1,830
|
$ |
1,881
|
(In
thousands)
|
||||
Balance,
beginning of year
|
$
|
11,934
|
||
Provisions
for units closed during the year
|
50
|
|||
Changes
in estimate of accrued exit costs, net
|
685
|
|||
Payments,
net
|
(2,509
|
)
|
||
Accretion
expense
|
486
|
|||
Balance,
end of quarter
|
10,646
|
|||
Less
current portion included in other current
liabilities
|
2,536
|
|||
Long-term
portion included in other noncurrent liabilities
|
$
|
8,110
|
|
(In
thousands)
|
|||
Remainder
of 2007
|
$
|
1,833
|
||
2008
|
2,633
|
|||
2009
|
2,069
|
|||
2010
|
1,713
|
|||
2011
|
1,469
|
|||
Thereafter
|
3,627
|
|||
Total
|
13,344
|
|||
Less
imputed interest
|
2,698
|
|||
Present
value of exit cost liabilities
|
$
|
10,646
|
Two
Quarters
Ended
|
||||||||
June
27,
2007
|
June
28, 2006
|
|||||||
(In
thousands)
|
||||||||
Net
interest (income) expense recognized as a result of interest rate
swap
|
$ | (170 | ) | $ |
(370
|
) | ||
Unrealized
gain (loss) for changes in fair value of interest swap
rates
|
1,645
|
739
|
||||||
Net
increase in Accumulated Other Comprehensive Income, net of
tax
|
$ |
1,475
|
$ |
369
|
Pension
Plan
|
Other
Defined Benefit Plans
|
|||||||||||||||
Quarter
Ended
|
Quarter
Ended
|
|||||||||||||||
June
27, 2007
|
June
28, 2006
|
June
27, 2007
|
June
28, 2006
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Service
cost
|
$ |
88
|
$ |
92
|
$ |
—
|
$ |
—
|
||||||||
Interest
cost
|
789
|
770
|
47
|
48
|
||||||||||||
Expected
return on plan assets
|
(879 | ) | (814 | ) |
—
|
—
|
||||||||||
Amortization
of net loss
|
224
|
252
|
6
|
6
|
||||||||||||
Net
periodic benefit cost
|
$ |
222
|
$ |
300
|
$ |
53
|
$ |
54
|
Pension
Plan
|
Other
Defined Benefit Plans
|
|||||||||||||||
Two
Quarters
Ended
|
Two
Quarters Ended
|
|||||||||||||||
June
27,
2007
|
June
28,
2006
|
June
27,
2007
|
June
28, 2006
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Service
cost
|
$ |
175
|
$ |
183
|
$ |
—
|
$ |
—
|
||||||||
Interest
cost
|
1,572
|
1,541
|
95
|
96
|
||||||||||||
Expected
return on plan assets
|
(1,764 | ) | (1,628 | ) |
—
|
—
|
||||||||||
Amortization
of net loss
|
441
|
503
|
12
|
12
|
||||||||||||
Net
periodic benefit cost
|
$ |
424
|
$ |
599
|
$ |
107
|
$ |
108
|
Quarter
Ended
|
Two
Quarters Ended
|
|||||||||||||||
June
27,
2007
|
June
28,
2006
|
June
27,
2007
|
June
28, 2006
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Share-based
compensation related to liability classified restricted stock
units
|
$ |
209
|
$ |
(248
|
) | $ |
682
|
$ |
818
|
|||||||
Share
based compensation related to equity classified
awards:
|
|
|
|
|
||||||||||||
Stock
options
|
$ | 421 | $ | 862 | $ | 619 | $ | 1,654 | ||||||||
Restricted
stock units
|
426 | 546 | 858 | 1,033 | ||||||||||||
Board
deferred stock units
|
79 | 81 |
160
|
168
|
||||||||||||
Total
share-based compensation related to equity classified
awards
|
926
|
1,489
|
1,637
|
2,855
|
||||||||||||
Total
share-based compensation
|
$ |
1,135
|
$ |
1,241
|
$ |
2,319
|
$ |
3,673
|
Two
Quarters Ended
|
||||
June
27, 2007
|
||||
Dividend yield | 0.0 | % | ||
Expected volatility | 68 | % | ||
Risk-free interest rate | 4.5 | % | ||
Weighted-average expected term |
6.0
years
|
June
27, 2007
|
December
27, 2006
|
|||||||
(In
thousands)
|
||||||||
Liability classified restricted stock units: | ||||||||
Other
current liabilities
|
$ | 1,202 | $ | 848 | ||||
Other
noncurrent liabilities
|
$ | 3,003 | $ | 2,675 | ||||
Equity classified restricted stock units: | ||||||||
Additional
paid-in capital
|
$ | 4,028 | $ | 3,170 |
June
27, 2007
|
December
27, 2006
|
|||||||
(In
thousands)
|
||||||||
Additional
minimum pension liability
|
$ | (17,423 | ) | $ | (17,423 | ) | ||
Unrealized
gain on hedged transaction
|
1,475
|
—
|
||||||
Accumulated
other comprehensive income (loss)
|
$ | (15,948 | ) | $ | (17,423 | ) |
Quarter
Ended
|
Two
Quarters Ended
|
|||||||||||||||
June
27, 2007
|
June
28, 2006
|
June
27, 2007
|
June
28, 2006
|
|||||||||||||
(In
thousands, except for per
share amounts)
|
||||||||||||||||
Numerator:
|
||||||||||||||||
Numerator
for basic and diluted net income per share - net income from
continuing
operations before cumulative effect of change in accounting
principle
|
$ |
11,500
|
$ |
1,854
|
$ |
12,663
|
$ |
2,334
|
||||||||
Numerator
for basic and diluted net income per share - net
income
|
$ |
11,500
|
$ |
1,854
|
$ |
12,663
|
$ |
2,566
|
||||||||
Denominator:
|
||||||||||||||||
Denominator
for basic net income per share – weighted average
shares
|
93,692
|
92,045
|
93,554
|
91,915
|
||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Options
|
4,159
|
4,636
|
4,131
|
4,585
|
||||||||||||
Restricted
stock units and awards
|
1,116
|
1,060
|
1,111
|
935
|
||||||||||||
Denominator
for diluted net income per share - adjusted weighted average
shares
and assumed conversions of dilutive securities
|
98,967
|
97,741
|
98,796
|
97,435
|
||||||||||||
Basic
net income per share before cumulative effect of change in accounting
principle
|
$ |
0.12
|
$ |
0.02
|
$ |
0.14
|
$ |
0.03
|
||||||||
Diluted
net income per share before cumulative effect of change in
accounting
principle
|
$ |
0.12
|
$ |
0.02
|
$ |
0.13
|
$ |
0.02
|
||||||||
Basic net income per share | $ | 0.12 | $ | 0.02 | $ | 0.14 | $ | 0.03 | ||||||||
Diluted
net income per share
|
$ |
0.12
|
$ |
0.02
|
$ |
0.13
|
$ |
0.03
|
||||||||
Stock
options excluded (1)
|
1,853
|
1,580
|
1,799
|
1,378
|
||||||||||||
Restricted
stock units and awards excluded (1)
|
—
|
—
|
—
|
—
|
Two
Quarters Ended
|
||||||||
June
27, 2007
|
June
28, 2006
|
|||||||
(In
thousands)
|
||||||||
Income
taxes paid, net
|
$ |
1,231
|
$ |
671
|
||||
Interest
paid
|
$ |
18,144
|
$ |
26,964
|
||||
Noncash
financing activities:
|
||||||||
Issuance
of common stock, pursuant to share-based compensation
plans
|
$ |
222
|
$ |
209
|
||||
Execution
of capital leases
|
$ |
597
|
$ |
1,884
|
|
|
Quarter
Ended
|
|
|
Two
Quarters Ended
|
|
|||||||||||||||||||||
|
|
June
27, 2007
|
|
|
June
28, 2006
|
|
|
June
27, 2007
|
|
June
28, 2006
|
|
||||||||||||||||
|
|
(Dollars
in thousands)
|
|
|
(Dollars
in thousands)
|
|
|||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurant sales
|
|
$
|
218,316
|
|
|
90.6
|
%
|
|
$
|
221,008
|
|
|
90.8
|
%
|
|
$
|
434,117
|
|
|
90.9
|
%
|
$
|
446,030
|
|
|
90.8
|
%
|
Franchise
and license revenue
|
|
|
22,626
|
|
|
9.4
|
%
|
|
|
22,483
|
|
|
9.2
|
%
|
|
|
43,576
|
|
|
9.1
|
%
|
|
45,446
|
|
|
9.2
|
%
|
Total
operating revenue
|
|
|
240,942
|
|
|
100.0
|
%
|
|
|
243,491
|
|
|
100.0
|
%
|
|
|
477,693
|
|
|
100.0
|
%
|
|
491,476
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
of company restaurant sales (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Product
costs
|
|
|
56,323
|
|
|
25.8
|
%
|
|
|
54,981
|
|
|
24.9
|
%
|
|
|
111,449
|
|
|
25.7
|
%
|
|
110,710
|
|
|
24.8
|
%
|
Payroll
and benefits
|
|
|
91,932
|
|
|
42.1
|
%
|
|
|
91,862
|
|
|
41.6
|
%
|
|
|
184,800
|
|
|
42.6
|
%
|
|
185,870
|
|
|
41.7
|
%
|
Occupancy
|
|
|
13,024
|
|
|
6.0
|
%
|
|
|
12,589
|
|
|
5.7
|
%
|
|
|
26,152
|
|
|
6.0
|
%
|
|
25,726
|
|
|
5.8
|
%
|
Other
operating expenses
|
|
|
31,782
|
|
|
14.6
|
%
|
|
|
35,882
|
|
|
16.2
|
%
|
|
|
62,095
|
|
|
14.3
|
%
|
|
68,326
|
|
|
15.3
|
%
|
Total
costs of company restaurant
sales
|
|
|
193,061
|
|
|
88.4
|
%
|
|
|
195,314
|
|
|
88.4
|
%
|
|
|
384,496
|
|
|
88.6
|
%
|
|
390,632
|
|
|
87.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
of franchise and license revenue (a)
|
|
|
6,933
|
|
|
30.6
|
%
|
|
|
7,235
|
|
|
32.2
|
%
|
|
|
13,408
|
|
|
30.8
|
%
|
|
14,448
|
|
|
31.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
|
17,167
|
|
|
7.1
|
%
|
|
|
15,590
|
|
|
6.4
|
%
|
|
|
33,093
|
|
|
6.9
|
%
|
|
32,819
|
|
|
6.7
|
%
|
Depreciation
and amortization
|
|
|
12,480
|
|
|
5.2
|
%
|
|
|
14,120
|
|
|
5.8
|
%
|
|
|
25,358
|
|
|
5.3
|
%
|
|
28,185
|
|
|
5.7
|
%
|
Operating
gains, losses and other charges
|
|
|
(13,047
|
)
|
|
(5.4
|
%)
|
(5,938
|
)
|
|
(2.4
|
%)
|
|
(15,680
|
)
|
|
(3.3
|
%)
|
|
(6,788
|
)
|
|
(1.4
|
%)
|
|||
Total
operating costs and expenses
|
|
|
216,594
|
|
|
89.9
|
%
|
|
|
226,321
|
|
|
92.9
|
%
|
|
|
440,675
|
|
|
92.3
|
%
|
|
459,296
|
|
|
93.5
|
%
|
Operating
income
|
|
|
24,348
|
|
|
10.1
|
%
|
|
|
17,170
|
|
|
7.1
|
%
|
|
|
37,018
|
|
|
7.7
|
%
|
|
32,180
|
|
|
6.5
|
%
|
Other
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net
|
|
|
10,953
|
|
|
4.5
|
%
|
|
|
14,847
|
|
|
6.1
|
%
|
|
|
22,294
|
|
|
4.7
|
%
|
|
29,490
|
|
|
6.0
|
%
|
Other
nonoperating expense (income),
net
|
|
|
(228
|
)
|
|
(0.1
|
%)
|
|
|
138
|
|
|
0.1
|
%
|
|
|
(425
|
)
|
|
(0.1
|
%)
|
|
(24
|
)
|
|
(0.0
|
%)
|
Total
other expenses, net
|
|
|
10,725
|
|
|
4.5
|
%
|
|
|
14,985
|
|
|
6.2
|
%
|
|
|
21,869
|
|
|
4.6
|
%
|
|
29,466
|
|
|
6.0
|
%
|
Net
income before income taxes and
cumulative
effect of change in accounting principle
|
|
|
13,623
|
|
|
5.7
|
%
|
|
|
2,185
|
|
|
0.9
|
%
|
|
|
15,149
|
|
|
3.2
|
%
|
|
2,714
|
|
|
0.6
|
%
|
Provision
for income taxes
|
|
|
2,123
|
|
|
0.9
|
%
|
|
|
331
|
|
|
0.1
|
%
|
|
|
2,486
|
|
|
0.5
|
%
|
|
380
|
|
|
0.1
|
%
|
Net
income before cumulative effect of
change
in accounting principle
|
|
|
11,500
|
|
|
4.8
|
%
|
|
|
1,854
|
|
|
0.8
|
%
|
|
|
12,663
|
|
|
2.7
|
%
|
|
2,334
|
|
|
0.5
|
%
|
Cumulative
effect of change in accounting
principle,
net of tax
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
232
|
|
|
0.0
|
%
|
Net
income
|
|
$
|
11,500
|
|
|
4.8
|
%
|
|
$
|
1,854
|
|
|
0.8
|
%
|
|
$
|
12,663
|
|
|
2.7
|
%
|
$
|
2,566
|
|
|
0.5
|
%
|
Other
Data:
|
|||||||||||||||||||||||||||
Company-owned
average unit sales
|
$
|
427.7
|
$
|
412.5
|
$
|
843.7
|
$
|
832.1
|
|||||||||||||||||||
Franchise
average units sales
|
379.8
|
362.0
|
746.3
|
727.7
|
|||||||||||||||||||||||
Same-store
sales increase (decrease)
(company-owned)
(b) (c)
|
2.8
|
%
|
(0.4)
|
%
|
0.5
|
%
|
2.1
|
%
|
|||||||||||||||||||
Guest
check average increase (c)
|
3.6
|
%
|
4.0
|
%
|
3.1
|
%
|
6.0
|
%
|
|||||||||||||||||||
Guest
count decrease (c)
|
(0.8
|
)%
|
(4.2)
|
%
|
(2.6
|
)%
|
(3.6)
|
%
|
|||||||||||||||||||
Same-store
sales increase (franchised and
licensed
units) (b) (c)
|
4.0
|
%
|
1.4
|
%
|
1.6
|
%
|
3.7
|
%
|
Quarter
Ended
|
||||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
Company-owned
restaurants, beginning of period
|
517
|
545
|
||||||
Units
opened
|
—
|
—
|
||||||
Units
acquired from franchisees
|
—
|
—
|
||||||
Units
sold to franchisees
|
(28 | ) |
—
|
|||||
Units
closed
|
(1
|
) | (2 | ) | ||||
End
of period
|
488
|
543
|
||||||
|
||||||||
Franchised
and licensed restaurants, beginning of period
|
1,028
|
1,030
|
||||||
Units
opened
|
2
|
3
|
||||||
Units
acquired by Company
|
—
|
—
|
||||||
Units
purchased from Company
|
28
|
—
|
||||||
Units
closed
|
(7 | ) | (10 | ) | ||||
End
of period
|
1,051
|
1,023
|
||||||
Total
company-owned, franchised and licensed restaurants, end of
period
|
1,539
|
1,566
|
|
Quarter
Ended
|
|||||||||||||||
|
June
27, 2007
|
June
28, 2006
|
||||||||||||||
|
(Dollars
in
thousands)
|
|||||||||||||||
Utilities
|
$ |
10,032
|
4.6 | % | $ |
10,674
|
4.8 | % | ||||||||
Repairs
and maintenance
|
4,818
|
2.2 | % |
4,755
|
2.2 | % | ||||||||||
Marketing
|
7,315
|
3.4 | % |
7,525
|
3.4 | % | ||||||||||
Legal
|
985
|
0.4 | % |
3,185
|
1.4 | % | ||||||||||
Other
|
8,632
|
4.0 | % |
9,743
|
4.4 | % | ||||||||||
Other
operating expenses
|
$ |
31,782
|
14.6 | % | $ |
35,882
|
16.2 | % |
|
Quarter
Ended
|
|||||||||||||||
|
June
27, 2007
|
June
28, 2006
|
||||||||||||||
|
(Dollars
in thousands)
|
|||||||||||||||
Royalties
and initial fees
|
$ |
16,778
|
74.2 | % | $ |
14,979
|
66.6 | % | ||||||||
Occupancy
revenue
|
5,848
|
25.8 | % |
7,504
|
33.4 | % | ||||||||||
Franchise
and license revenue
|
22,626
|
100.0 | % |
22,483
|
100.0 | % | ||||||||||
|
||||||||||||||||
Occupancy
costs
|
4,932
|
21.8 | % |
5,113
|
22.7 | % | ||||||||||
Other
direct costs
|
2,001
|
8.8 | % |
2,122
|
9.5 | % | ||||||||||
Costs
of franchise and license revenue
|
$ |
6,933
|
30.6 | % | $ |
7,235
|
32.2 | % |
|
Quarter
Ended
|
|||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
|
(In
thousands)
|
|||||||
Share-based
compensation
|
$ |
1,135
|
$ |
1,241
|
||||
General
and administrative expenses
|
16,032
|
14,349
|
||||||
Total
general and administrative expenses
|
$ |
17,167
|
$ |
15,590
|
|
Quarter
Ended
|
|||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
|
(In
thousands)
|
|||||||
Depreciation
of property and equipment
|
$ |
9,632
|
$ |
11,139
|
||||
Amortization
of capital lease assets
|
1,216
|
1,295
|
||||||
Amortization
of intangible assets
|
1,632
|
1,686
|
||||||
Total
depreciation and amortization expense
|
$ |
12,480
|
$ |
14,120
|
|
Quarter
Ended
|
|||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
|
(In
thousands)
|
|||||||
Gains
on sales of assets and other, net
|
$ | (14,479 | ) | $ | (7,098 | ) | ||
Restructuring
charges and exit costs
|
1,192
|
1,160
|
||||||
Impairment
charges
|
240
|
—
|
||||||
Operating
gains, losses and other charges, net
|
$ | (13,047 | ) | $ | (5,938 | ) |
Quarter
Ended
|
||||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
|
(In
thousands)
|
|||||||
Exit
costs
|
$ |
588
|
$ |
275
|
||||
Severance
and other restructuring charges
|
604
|
885
|
||||||
Total
restructuring and exit costs
|
$ |
1,192
|
$ |
1,160
|
|
Quarter
Ended
|
|||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
|
(In
thousands)
|
|||||||
Interest
on senior notes
|
$ |
4,363
|
$ |
4,363
|
||||
Interest
on credit facilities
|
4,201
|
7,386
|
||||||
Interest
on capital lease liabilities
|
995
|
1,099
|
||||||
Letters
of credit and other fees
|
590
|
730
|
||||||
Interest
income
|
(321 | ) | (480 | ) | ||||
Total
cash interest
|
9,828
|
13,098
|
||||||
Amortization
of deferred financing costs
|
297
|
874
|
||||||
Interest
accretion on other liabilities
|
828
|
875
|
||||||
Total
interest expense, net
|
$ |
10,953
|
$ |
14,847
|
Two
Quarters Ended
|
||||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
Company-owned
restaurants, beginning of period
|
521
|
543
|
||||||
Units
opened
|
1
|
1
|
||||||
Units
acquired from franchisees
|
1
|
1
|
||||||
Units
sold to franchisees
|
(34 | ) |
—
|
|||||
Units
closed
|
(1
|
) | (2 | ) | ||||
End
of period
|
488
|
543
|
||||||
|
||||||||
Franchised
and licensed restaurants, beginning of period
|
1,024
|
1,035
|
||||||
Units
opened
|
5
|
7
|
||||||
Units
acquired by Company
|
(1 | ) | (1 | ) | ||||
Units
purchased from Company
|
34
|
—
|
||||||
Units
closed
|
(11 | ) | (18 | ) | ||||
End
of period
|
1,051
|
1,023
|
||||||
Total
company-owned, franchised and licensed restaurants, end of
period
|
1,539
|
1,566
|
|
Two
Quarters Ended
|
|||||||||||||||
|
June
27, 2007
|
June
28, 2006
|
||||||||||||||
|
(Dollars
in
thousands)
|
|||||||||||||||
Utilities
|
$ |
20,795
|
4.8 | % | $ |
22,322
|
5.0 | % | ||||||||
Repairs
and maintenance
|
8,765
|
2.0 | % |
9,067
|
2.0 | % | ||||||||||
Marketing
|
14,468
|
3.3 | % |
14,988
|
3.4 | % | ||||||||||
Legal
|
1,530
|
0.4 | % |
3,160
|
0.7 | % | ||||||||||
Other
|
16,537
|
3.8 | % |
18,789
|
4.2 | % | ||||||||||
Other
operating expenses
|
$ |
62,095
|
14.3 | % | $ |
68,326
|
15.3 | % |
|
Two
Quarters Ended
|
|||||||||||||||
|
June
27, 2007
|
June
28, 2006
|
||||||||||||||
|
(Dollars
in
thousands)
|
|||||||||||||||
Royalties
and initial fees
|
$ |
32,095
|
73.7 | % | $ |
30,152
|
66.3 | % | ||||||||
Occupancy
revenue
|
11,481
|
26.3 | % |
15,294
|
33.7 | % | ||||||||||
Franchise
and license revenue
|
43,576
|
100.0 | % |
45,446
|
100.0 | % | ||||||||||
|
||||||||||||||||
Occupancy
costs
|
9,534
|
21.9 | % |
10,238
|
22.5 | % | ||||||||||
Other
direct costs
|
3,874
|
8.9 | % |
4,210
|
9.3 | % | ||||||||||
Costs
of franchise and license revenue
|
$ |
13,408
|
30.8 | % | $ |
14,448
|
31.8 | % |
|
Two
Quarters Ended
|
|||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
|
(In
thousands)
|
|||||||
Share-based
compensation
|
$ |
2,319
|
$ |
3,673
|
||||
General
and administrative expenses
|
30,774
|
29,146
|
||||||
Total
general and administrative expenses
|
$ |
33,093
|
$ |
32,819
|
|
Two
Quarters Ended
|
|||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
|
(In
thousands)
|
|||||||
Depreciation
of property and equipment
|
$ |
19,436
|
$ |
22,386
|
||||
Amortization
of capital lease assets
|
2,425
|
2,569
|
||||||
Amortization
of intangible assets
|
3,497
|
3,230
|
||||||
Total
depreciation and amortization expense
|
$ |
25,358
|
$ |
28,185
|
|
Two
Quarters Ended
|
|||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
|
(In
thousands)
|
|||||||
Gains
on sales of assets and other, net
|
$ | (17,750 | ) | $ | (8,669 | ) | ||
Restructuring
charges and exit costs
|
1,830
|
1,881
|
||||||
Impairment
charges
|
240
|
—
|
||||||
Operating
gains, losses and other charges, net
|
$ | (15,680 | ) | $ | (6,788 | ) |
|
Two
Quarters Ended
|
|||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
|
(In
thousands)
|
|||||||
Exit
costs
|
$ |
735
|
$ |
486
|
||||
Severance
and other restructuring charges
|
1,095
|
1,395
|
||||||
Total
restructuring and exit costs
|
$ |
1,830
|
$ |
1,881
|
|
Two
Quarters Ended
|
|||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
|
(In
thousands)
|
|||||||
Interest
on senior notes
|
$ |
8,726
|
$ |
8,726
|
||||
Interest
on credit facilities
|
8,853
|
14,451
|
||||||
Interest
on capital lease liabilities
|
1,999
|
2,228
|
||||||
Letters
of credit and other fees
|
1,183
|
1,496
|
||||||
Interest
income
|
(672 | ) | (916 | ) | ||||
Total
cash interest
|
20,089
|
25,985
|
||||||
Amortization
of deferred financing costs
|
585
|
1,747
|
||||||
Interest
accretion on other liabilities
|
1,620
|
1,758
|
||||||
Total
interest expense, net
|
$ |
22,294
|
$ |
29,490
|
|
Two
Quarters Ended
|
|||||||
|
June
27, 2007
|
June
28, 2006
|
||||||
|
(In
thousands)
|
|||||||
Net
cash provided by operating activities
|
$ |
28,850
|
$ |
18,198
|
||||
Net
cash provided by (used in) investing activities
|
13,688 | (5,615 | ) | |||||
Net
cash used in financing activities
|
(21,501 | ) | (5,066 | ) | ||||
Net
increase in cash and cash equivalents
|
$ |
21,037
|
$ |
7,517
|
(i)
|
|
Election
of Directors
|
||||
|
|
Name
|
|
Votes
For
|
|
Votes
Against or Withheld
|
|
|
|
|
|
|
|
|
|
Vera
K.
Farris
|
|
89,020,362
|
|
390,573
|
|
|
Brenda
J. Lauderback
|
|
84,349,117
|
|
5,061,818
|
|
|
Nelson
J. Marchioli
|
|
89,167,011
|
|
243,924
|
|
|
Robert
E. Marks
|
|
89,142,581
|
|
268,354
|
|
|
Michael
Montelongo
|
|
89,157,497
|
|
253,438
|
|
|
Henry
Nasella
|
|
89,145,190
|
|
265,745
|
|
|
Donald
R. Shepherd
|
|
89,093,630
|
|
317,305
|
|
|
Debra
Smithart-Oglesby
|
|
89,148,001
|
|
262,934
|
(ii)
|
|
Ratification
of the Selection of KPMG LLP as the independent registered public
accounting firm for the 2007 fiscal year
|
||||
|
Votes
For
|
|
Votes
Against
|
|
Votes
Abstaining
|
|
|
|
|
|
|
|
|
|
|
88,746,305
|
|
621,569
|
|
43,061
|
(iii)
|
|
Stockholder
Proposal requesting a report on the use of controlled-atmosphere
killing
by poultry suppliers
|
||||
|
Votes
For
|
|
Votes
Against
|
|
Votes
Abstaining
|
|
|
|
|
|
|
|
|
|
|
1,809,184
|
|
65,653,653
|
|
4,675,478
|
Exhibit
No.
|
|
Description
|
|
|
|
31.1
|
|
Certification
of Nelson J. Marchioli, President and Chief Executive Officer of
Denny’s
Corporation, pursuant to Rule 13a-14(a), as adopted pursuant to
Section
302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification
of F. Mark Wolfinger, Executive Vice President, Growth Initiatives
and
Chief Financial Officer of Denny’s Corporation, pursuant to Rule
13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of
2002.
|
|
|
|
32.1
|
|
Certification
of Nelson J. Marchioli, President and Chief Executive Officer of
Denny’s
Corporation and F. Mark Wolfinger, Executive Vice President, Growth
Initiatives and Chief Financial Officer of Denny’s Corporation, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the
Sarbanes-Oxley Act of 2002.
|
DENNY'S CORPORATION | |||
Date:
July 31, 2007
|
By:
|
/s/ Rhonda J. Parish | |
Rhonda J. Parish | |||
Executive
Vice President,
Chief Legal Officer and
Secretary
|
|||
Date:
July 31, 2007
|
By:
|
/s/ F. Mark Wolfinger | |
F. Mark Wolfinger | |||
Executive
Vice President,
Growth Initiatives and
Chief Financial Officer
|
|||
Date:
July 31, 2007
|
By:
|
/s/ Jay C. Gilmore | |
Jay C. Gilmore | |||
Vice
President,
Chief Accounting Officer and
Corporate Controller
|
|||