Exhibit

DENNY’S CORPORATION REPORTS RESULTS FOR FOURTH QUARTER AND FULL YEAR 2019

SPARTANBURG, S.C., February 11, 2020 - Denny’s Corporation (NASDAQ: DENN), franchisor and operator of one of America's largest franchised full-service restaurant chains, today reported results for its fourth quarter and full year ended December 25, 2019.

Fourth Quarter 2019 Highlights


•	Sold nine company restaurants to franchisees.


•	Total Operating Revenue was $113.8 million.


•	Domestic system-wide same-store sales** grew 1.7%, including an increase of 1.8% at domestic franchised restaurants and an increase of 0.5% at company restaurants.


•	Completed 27 remodels, including 26 at franchised restaurants.


•	Operating Income was $26.6 million.


•	Franchise Operating Margin* was $31.8 million, or 48.9% of franchise and license revenue, and Company Restaurant Operating Margin* was $8.7 million, or 17.7% of company restaurant sales.


•	Net Income was $18.6 million, or $0.31 per diluted share.


•	Adjusted Net Income* was $14.0 million, or $0.23 per diluted share.


•	Adjusted EBITDA* was $24.9 million.


•	Adjusted Free Cash Flow* was $12.1 million.


•	Repurchased $45.4 million of common stock.

Full Year 2019 Highlights


•	Sold 105 company restaurants to franchisees.


•	Total Operating Revenue was $541.4 million.


•	Domestic system-wide same-store sales** grew 2.0%, including an increase of 2.0% at domestic franchised restaurants and an increase of 1.9% at company restaurants.


•	Completed 144 remodels, including 141 at franchised restaurants.


•	Operating Income was $165.0 million.


•	Franchise Operating Margin* was $114.7 million, or 48.8% of franchise and license revenue, and Company Restaurant Operating Margin* was $48.0 million, or 15.7% of company restaurant sales.


•	Net Income was $117.4 million, or $1.90 per diluted share.


•	Adjusted Net Income* was $47.9 million, or $0.77 per diluted share.


•	Adjusted EBITDA* was $96.8 million.


•	Adjusted Free Cash Flow* was $29.8 million.


•	Repurchased $96.2 million of common stock.

John Miller, Chief Executive Officer, stated, “Denny's delivered its ninth consecutive year of domestic system-wide same-store sales** growth and substantially completed its refranchising strategy. With the proceeds from these transactions combined with strong cash flows generated by our business, we returned over $96 million to shareholders through our ongoing share repurchase program. As we look ahead, we will continue our efforts to upgrade the quality of our real estate portfolio and execute on our commitment of being the world's largest, most admired, and beloved family of local restaurants. This focus, along with the substantial completion of our refranchising strategy, should result in a higher quality, more asset-light business model and the sustainable creation of additional stakeholder value in the coming years."

Fourth Quarter Results

Denny’s total operating revenue was $113.8 million compared to $159.5 million in the prior year quarter. Franchise and license revenue was $65.0 million compared to $55.2 million in the prior year quarter. Company restaurant sales were $48.8 million compared to $104.4 million in the prior year quarter. These changes were primarily due to the Company's refranchising and development strategy.

Franchise Operating Margin* was $31.8 million, or 48.9% of franchise and license revenue, compared to $26.6 million, or 48.3%, in the prior year quarter. This margin rate expansion was primarily driven by the Company's refranchising and development strategy which yielded an increase in royalty revenue and an improved occupancy margin.

Company Restaurant Operating Margin* was $8.7 million, or 17.7% of company restaurant sales, compared to $16.9 million, or 16.2%, in the prior year quarter. This margin rate change was primarily due to the decrease in payroll and benefits costs and other operating costs from the leveraging benefit of refranchising restaurants. Offsetting these cost improvements was an increase in occupancy related expenses, including higher property insurance costs and the impact of refranchising restaurants.

Total general and administrative expenses were $15.4 million, compared to $15.7 million in the prior year quarter. This change was primarily due to a decrease in share-based compensation expense in addition to a reduction in personnel costs, partially offset by market valuation changes in the Company's deferred compensation plan liabilities and an increase in performance-based incentive compensation.

Interest expense, net was $3.6 million, compared to $5.4 million in the prior year quarter primarily due to a lower credit facility balance. Denny’s ended the quarter with $256.5 million of total debt outstanding, including $240.0 million of borrowings under its revolving credit facility.

The provision for income taxes was $5.1 million, reflecting an effective tax rate of 21.5%. Approximately $6.3 million in cash taxes was paid during the quarter.

Net income was $18.6 million, or $0.31 per diluted share, compared to $11.5 million, or $0.18 per diluted share, in the prior year quarter. Adjusted Net Income Per Share* was $0.23 compared to $0.18 in the prior year quarter.

Adjusted Free Cash Flow* and Capital Allocation

Denny’s generated $12.1 million of Adjusted Free Cash Flow* in the quarter after investing $3.2 million in cash capital expenditures, including real estate acquisitions and facilities maintenance.

During the quarter, the Company allocated $45.4 million to share repurchases. Between the end of the fourth quarter and February 10, 2020, the Company allocated an additional $22.2 million to share repurchases. As of February 10, 2020, the Company had approximately $260 million remaining in authorized share repurchases.

Adoption of Topic 842 and Lease Accounting Impact

Effective December 27, 2018, the first day of fiscal 2019, the Company 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 (“ROU”) model that requires lessees to recognize a ROU asset and a lease liability for all leases with terms greater than 12 months. Denny's elected to apply the modified retrospective transition approach as of the date of initial application without restating comparative period financial statements.

Upon adoption of Topic 842, operating lease liabilities of $101.3 million and ROU assets of $94.2 million related to existing operating leases were recorded. In addition, the Company recorded a cumulative effect adjustment increasing the 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.

Refranchising and Development Strategy

Following a refranchising strategy announced in October 2018, the Company has been migrating from a 90% franchised business model to one that is between 96% and 97% franchised and is substantially complete as of the end of 2019.

In addition to refranchising, the Company plans to upgrade the quality of its real estate portfolio through a series of like-kind exchanges. The use of refranchising proceeds and a moderate increase in leverage are expected to generate more compelling returns for stakeholders, including the return of capital.

The table below summarizes the Company's refranchising and development strategy results as of December 25, 2019, compared to the previously announced expectations.



Strategy to Date Refranchising and Development Summary
(Unaudited)

($ millions)
Metric	Anticipated Result	Strategy to Date
Restaurants to be Refranchised	115 - 125	113
Percent Franchised	96% - 97%	96%
Development Commitments	70 - 80	78
Multiple	4.5x - 5.5x	4.8x
Pre-Tax Refranchising Proceeds	$125 - $135	$128

Real Estate Sold:Purchased	25% - 30% of approximately 95 properties	6:5
Real Estate Proceeds	Approximately $30	$11

During the quarter ended December 25, 2019, nine company restaurants were sold to franchisees. Additionally, the Company purchased one piece of real estate for $1.9 million related to a series of like-kind exchange transactions.

The following table summarizes the current quarter and full year activity related to the Company's current refranchising and development strategy.



	Quarter Ended						Year Ended
	December 25, 2019			December 26, 2018			December 25, 2019			December 26, 2018
	(Dollars in thousands)
Restaurants sold to franchisees	9			8			105			8
Gains (losses) on sales of company restaurants:
Cash proceeds	$	11,353		$	1,777		$	118,964		$	1,777
Receivables	(2,526		)	—			920			—
Less: Property sold	(2,527		)	(2,448		)	(30,511		)	(2,448		)
Less: Goodwill	(188		)	(62		)	(2,897		)	(62		)
Less: Intangibles	(35		)	(13		)	(2,260		)	(13		)
Less: Deferred gain	—			—			(1,350		)	—
Total gains (losses) on sales of company restaurants	$	6,077		$	(746	)	$	82,866		$	(746	)

Real estate parcels sold	—			—			6			—
Gains on sales of real estate:
Cash proceeds	$	—		$	—		$	10,680		$	—
Noncash consideration	$	—		$	—		$	3,000		$	—
Less: Property sold	$	—		$	—		$	(1,686	)	$	—
Less: Other assets	$	—		$	—		$	(120	)	$	—
Total gains on sales of real estate	$	—		$	—		$	11,874		$	—

Gains on the sales of company restaurants and real estate are included as a component of operating (gains), losses and other charges, net. In addition to the proceeds noted above, the Company also received front end fees and other transaction fees related to company restaurants sold to franchisees of approximately $0.4 million and $5.6 million during the quarter and full year, respectively.

As of December 25, 2019, the Company's assets held for sale balance included four company restaurants and two pieces of real estate at their carrying amounts of $1.9 million.

Business Outlook

The following full year 2020 (53 operating weeks) estimates are based on management's expectations at this time:


•	Domestic system-wide same-store sales** growth between 0% and 2%.


•	30 to 40 new restaurant openings, with a net system change of between (5) and 5 restaurants.


•	Total operating revenue between $453 and $459 million, including franchise and license revenue between $260 and $263 million.


•	Franchise Operating Margin* between 48.0% and 49.0% and Company Restaurant Operating Margin* between 18.0% and 19.0%.


•	Total general and administrative expenses between $66 and $69 million, including approximately $10 million related to share-based compensation expense.


•	Adjusted EBITDA* between $97 and $100 million.


•	Net interest expense between $17 and $19 million.


•	Effective income tax rate between 22% and 25% with cash taxes between $9 and $12 million.


•	Cash capital expenditures between $28 and $33 million, including between $13 and $18 million of anticipated real estate acquisitions through like-kind exchanges.


•	Adjusted Free Cash Flow* between $39 and $42 million.

Please refer to the Reconciliation of Net Income to Non-GAAP Financial Measures, as well as the Reconciliation of Operating Income to Non-GAAP Financial Measures included in the following tables. The Company is not able to reconcile the forward-looking non-GAAP estimates set forth above to their most directly comparable GAAP estimates without unreasonable efforts because it is unable to predict, forecast or determine the probable significance of the items impacting these estimates, including gains, losses and other charges, with a reasonable degree of accuracy. Accordingly, the most directly comparable forward-looking GAAP estimates are not provided.

** Same-store sales include sales at company restaurants and non-consolidated franchised and licensed restaurants that were open the same period in the prior year. Total operating revenue is limited to company restaurant sales and royalties, advertising revenue, fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic franchise same-store sales and domestic system-wide same-store sales should be considered as a supplement to, not a substitute for, our results as reported under GAAP.

Conference Call and Webcast Information

Denny’s will provide further commentary on the results for the fourth quarter ended December 25, 2019 on its quarterly investor conference call today, Tuesday, February 11, 2020 at 4:30 p.m. Eastern Time. Interested parties are invited to listen to a live broadcast of the conference call accessible through the investor relations section of Denny’s website at investor.dennys.com. A replay of the call may be accessed at the same location later in the day and will remain available for 30 days.

About Denny’s

Denny's Corporation is the franchisor and operator of one of America's largest franchised full-service restaurant chains, based on the number of restaurants. As of December 25, 2019, Denny’s had 1,703 franchised, licensed, and company restaurants around the world including 144 restaurants in Canada, Puerto Rico, Mexico, the Philippines, New Zealand, Honduras, the United Arab Emirates, Costa Rica, Guam, Guatemala, the United Kingdom, El Salvador, Aruba, and Indonesia. For further information on Denny's, including news releases, links to SEC filings, and other financial information, please visit the Denny's investor relations website at investor.dennys.com.

The Company urges caution in considering its current trends and any outlook on earnings disclosed in this press release. In addition, certain matters discussed in this release may constitute forward-looking statements. These forward-looking statements, which reflect its best judgment based on factors currently known, are intended to speak only as of the date such statements are made and involve risks, uncertainties, and other factors that may cause the actual performance of Denny’s Corporation, its subsidiaries, and underlying restaurants to be materially different from the performance indicated or implied by such statements. Words such as “expect”, “anticipate”, “believe”, “intend”, “plan”, “hope”, and variations of such words and similar expressions are intended to identify such forward-looking statements. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Factors that could cause actual performance to differ materially from the performance indicated by these forward-looking statements include, among others: competitive pressures from within the restaurant industry; the level of success of our operating initiatives and advertising and promotional efforts; adverse publicity; health concerns arising from food-related pandemics, outbreaks of flu viruses, such as avian flu, or other diseases; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy (including with regard to energy costs), particularly at the retail level; political environment (including acts of war and terrorism); and other factors from time to time set forth in the Company’s SEC reports and other filings, including but not limited to the discussion in Management’s Discussion and Analysis and the risks identified in Item 1A. Risk Factors contained in the Company’s Annual Report on Form 10-K for the year ended December 26, 2018 (and in the Company’s subsequent quarterly reports on Form 10-Q).

Investor Contact:

Curt Nichols

877-784-7167

Media Contact:

Hadas Streit, Allison+Partners

646-428-0629



DENNY’S CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands)				12/25/19			12/26/18
Assets
	Current assets
		Cash and cash equivalents		$	3,372		$	5,026
		Investments		3,649			1,709
		Receivables, net		27,488			26,283
		Assets held for sale		1,925			723
		Other current assets		16,299			13,859
			Total current assets	52,733			47,600
	Property, net			97,626			117,251
	Financing lease right-of-use assets, net			11,720			22,753
	Operating lease right-of-use assets, net			158,550			—
	Goodwill			36,832			39,781
	Intangible assets, net			53,956			59,067
	Deferred income taxes			14,718			17,333
	Other noncurrent assets, net			34,252			31,564
			Total assets	$	460,387		$	335,349

Liabilities
	Current liabilities
		Current finance lease liabilities		$	1,674		$	3,410
		Current operating lease liabilities		16,344			—
		Accounts payable		20,256			29,527
		Other current liabilities		57,307			61,790
			Total current liabilities	95,581			94,727
	Long-term liabilities
		Long-term debt		240,000			286,500
		Noncurrent finance lease liabilities		14,779			27,181
		Noncurrent operating lease liabilities		152,750			—
		Other		95,341			60,286
			Total long-term liabilities	502,870			373,967
			Total liabilities	598,451			468,694

Shareholders' deficit
		Common stock		1,094			1,086
		Paid-in capital		603,980			592,944
		Deficit		(189,398		)	(306,414		)
		Accumulated other comprehensive loss, net of tax		(33,960		)	(4,146		)
		Treasury stock		(519,780		)	(416,815		)
			Total shareholders' deficit	(138,064		)	(133,345		)
			Total liabilities and shareholders' deficit	$	460,387		$	335,349

Debt Balances
(In thousands)				12/25/19			12/26/18
Credit facility revolver due 2022				$	240,000		$	286,500
Finance lease liabilities				16,453			30,591
	Total debt			$	256,453		$	317,091



DENNY’S CORPORATION
Condensed Consolidated Statements of Income
(Unaudited)

			Quarter Ended
(In thousands, except per share amounts)			12/25/19			12/26/18
Revenue:
	Company restaurant sales		$	48,803		$	104,389
	Franchise and license revenue		65,033			55,160
		Total operating revenue	113,836			159,549
Costs of company restaurant sales, excluding depreciation and amortization			40,147			87,503
Costs of franchise and license revenue, excluding depreciation and amortization			33,261			28,517
General and administrative expenses			15,359			15,690
Depreciation and amortization			4,227			7,074
Operating (gains), losses and other charges, net			(5,721		)	1,005
		Total operating costs and expenses, net	87,273			139,789
Operating income			26,563			19,760
Interest expense, net			3,570			5,421
Other nonoperating (income) expense, net			(652		)	1,496
Income before income taxes			23,645			12,843
Provision for income taxes			5,086			1,340
Net income			$	18,559		$	11,503


Basic net income per share			$	0.32		$	0.19
Diluted net income per share			$	0.31		$	0.18

Basic weighted average shares outstanding			58,406			62,135
Diluted weighted average shares outstanding			60,343			64,301

Comprehensive income			$	26,506		$	4,816

General and Administrative Expenses			Quarter Ended
(In thousands)			12/25/19			12/26/18
Corporate administrative expenses			$	12,923		$	13,187
Share-based compensation			(448		)	2,377
Incentive compensation			2,096			1,650
Deferred compensation valuation adjustments			788			(1,524		)
	Total general and administrative expenses		$	15,359		$	15,690



DENNY’S CORPORATION
Condensed Consolidated Statements of Income
(Unaudited)

			Fiscal Year Ended
(In thousands, except per share amounts)			12/25/19			12/26/18
Revenue:
	Company restaurant sales		$	306,377		$	411,932
	Franchise and license revenue		235,012			218,247
		Total operating revenue	541,389			630,179
Costs of company restaurant sales, excluding depreciation and amortization			258,396			348,782
Costs of franchise and license revenue, excluding depreciation and amortization			120,326			114,296
General and administrative expenses			69,018			63,828
Depreciation and amortization			19,846			27,039
Operating (gains), losses and other charges, net			(91,180		)	2,620
		Total operating costs and expenses, net	376,406			556,565
Operating income			164,983			73,614
Interest expense, net			18,547			20,745
Other nonoperating (income) expense, net			(2,763		)	619
Income before income taxes			149,199			52,250
Provision for income taxes			31,789			8,557
Net income			$	117,410		$	43,693


Basic net income per share			$	1.96		$	0.69
Diluted net income per share			$	1.90		$	0.67

Basic weighted average shares outstanding			59,944			63,364
Diluted weighted average shares outstanding			61,833			65,562

Comprehensive income			$	87,596		$	41,863

General and Administrative Expenses			Fiscal Year Ended
(In thousands)			12/25/19			12/26/18
Corporate administrative expenses			$	50,319		$	52,439
Share-based compensation			6,694			6,038
Incentive compensation			9,425			6,388
Deferred compensation valuation adjustments			2,580			(1,037		)
	Total general and administrative expenses		$	69,018		$	63,828



DENNY’S CORPORATION
Reconciliation of Net Income to Non-GAAP Financial Measures
(Unaudited)

The Company believes that, in addition to GAAP measures, certain other non-GAAP financial measures are appropriate indicators to assist in the evaluation of operating performance on a period-to-period basis. The Company uses Adjusted EBITDA, Adjusted Free Cash Flow, Adjusted Net Income and Adjusted Net Income Per Share internally as performance measures for planning purposes, including the preparation of annual operating budgets, and for compensation purposes, including bonuses for certain employees. Adjusted EBITDA is also used to evaluate the ability to service debt because the excluded charges do not have an impact on prospective debt servicing capability and these adjustments are contemplated in our credit facility for the computation of our debt covenant ratios. We define Adjusted Free Cash Flow for a given period as Adjusted EBITDA less the cash portion of interest expense net of interest income, capital expenditures, and cash taxes. Management believes that the presentation of Adjusted Free Cash Flow provides useful information to investors because it represents a liquidity measure used to evaluate, among other things, operating effectiveness and is used in decisions regarding the allocation of resources. However, each of these non-GAAP financial measures should be considered as a supplement to, not a substitute for, operating income, net income or other financial performance measures prepared in accordance with U.S. generally accepted accounting principles.



	Quarter Ended						Fiscal Year Ended
(In thousands, except per share amounts)	12/25/19			12/26/18			12/25/19			12/26/18
Net income	$	18,559		$	11,503		$	117,410		$	43,693
Provision for income taxes	5,086			1,340			31,789			8,557
Operating (gains), losses and other charges, net	(5,721		)	1,005			(91,180		)	2,620
Other nonoperating (income) expense, net	(652		)	1,496			(2,763		)	619
Share-based compensation	(448		)	2,377			6,694			6,038
Deferred compensation plan valuation adjustments	788			(1,524		)	2,580			(1,037		)
Interest expense, net	3,570			5,421			18,547			20,745
Depreciation and amortization	4,227			7,074			19,846			27,039
Cash payments for restructuring charges and exit costs	(529		)	(249		)	(2,581		)	(1,050		)
Cash payments for share-based compensation	—			—			(3,559		)	(1,934		)
Adjusted EBITDA	$	24,880		$	28,443		$	96,783		$	105,290

Cash interest expense, net	(3,332		)	(5,127		)	(17,551		)	(19,595		)
Cash paid for income taxes, net	(6,294		)	(907		)	(24,147		)	(3,254		)
Cash paid for capital expenditures	(3,193		)	(4,731		)	(25,295		)	(32,441		)
Adjusted Free Cash Flow	$	12,061		$	17,678		$	29,790		$	50,000

	Quarter Ended						Fiscal Year Ended
(In thousands, except per share amounts)	12/25/19			12/26/18			12/25/19			12/26/18
Net income	$	18,559		$	11,503		$	117,410		$	43,693
Gains on sales of assets and other, net	(6,111		)	246			(93,608		)	(513		)
Impairment charges	—			—			—			1,558
Tax effect ⁽¹⁾	1,571			(40		)	24,057			(171		)
Adjusted Net Income	$	14,019		$	11,709		$	47,859		$	44,567

Diluted weighted average shares outstanding	60,343			64,301			61,833			65,562

Diluted Net Income Per Share	$	0.31		$	0.18		$	1.90		$	0.67
Adjustments Per Share	$	(0.08	)	$	—		$	(1.13	)	$	0.01
Adjusted Net Income Per Share	$	0.23		$	0.18		$	0.77		$	0.68



(1)	Tax adjustments for the gains on sales of assets and other, net for the three months and year ended December 25, 2019 are calculated using an effective rate of 25.7%. Tax adjustments for the three months and year ended December 26, 2018 are calculated using the Company's 2018 year-to-date effective tax rate of 16.4%.



DENNY’S CORPORATION
Reconciliation of Operating Income to Non-GAAP Financial Measures
(Unaudited)

The Company believes that, in addition to GAAP measures, certain other non-GAAP financial measures are appropriate indicators to assist in the evaluation of restaurant-level operating efficiency and performance of ongoing restaurant-level operations. The Company uses Total Operating Margin, Company Restaurant Operating Margin and Franchise Operating Margin internally as performance measures for planning purposes, including the preparation of annual operating budgets, and these three non-GAAP measures are used to evaluate operating effectiveness.

We define Total Operating Margin as operating income excluding the following three items: general and administrative expenses, depreciation and amortization, and operating (gains), losses and other charges, net. We present Total Operating Margin as a percent of total operating revenue. We exclude general and administrative expenses, which includes primarily non-restaurant-level costs associated with support of company and franchised restaurants and other activities at our corporate office. We exclude depreciation and amortization expense, substantially all of which is related to company restaurant-level assets, because such expenses represent historical sunk costs which do not reflect current cash outlays for the restaurants. We exclude special items, included within operating (gains), losses and other charges, net, to provide investors with a clearer perspective of the Company’s ongoing operating performance and a more relevant comparison to prior period results.

Total Operating Margin is the total of Company Restaurant Operating Margin and Franchise Operating Margin. We define Company Restaurant Operating Margin as company restaurant sales less costs of company restaurant sales (which include product costs, company restaurant level payroll and benefits, occupancy costs, and other operating costs including utilities, repairs and maintenance, marketing and other expenses) and present it as a percent of company restaurant sales. We define Franchise Operating Margin as franchise and license revenue (which includes franchise royalties and other non-food and beverage revenue streams such as initial franchise fees, advertising revenue and occupancy revenue) less costs of franchise and license revenue and present it as a percent of franchise and license revenue.

These non-GAAP financial measures provide a meaningful comparison between periods and enable investors to focus on the performance of restaurant-level operations by excluding revenues and costs unrelated to food and beverage sales in addition to corporate general and administrative expense, depreciation and amortization, and other gains and charges. However, each of these non-GAAP financial measures should be considered as a supplement to, not a substitute for, operating income, net income or other financial performance measures prepared in accordance with U.S. generally accepted accounting principles. Total Operating Margin, Company Restaurant Operating Margin and Franchise Operating Margin do not accrue directly to the benefit of shareholders because of the aforementioned excluded costs, and are not indicative of the overall results for the Company.



	Quarter Ended					Fiscal Year Ended
(In thousands)	12/25/19			12/26/18		12/25/19			12/26/18
Operating income	$	26,563		$	19,760	$	164,983		$	73,614
General and administrative expenses	15,359			15,690		69,018			63,828
Depreciation and amortization	4,227			7,074		19,846			27,039
Operating (gains), losses and other charges, net	(5,721		)	1,005		(91,180		)	2,620
Total Operating Margin	$	40,428		$	43,529	$	162,667		$	167,101

Total Operating Margin consists of:
Company Restaurant Operating Margin ⁽¹⁾	$	8,656		$	16,886	$	47,981		$	63,150
Franchise Operating Margin ⁽²⁾	31,772			26,643		114,686			103,951
Total Operating Margin	$	40,428		$	43,529	$	162,667		$	167,101



(1)	Company Restaurant Operating Margin is calculated as operating income plus general and administrative expenses; depreciation and amortization; operating (gains), losses and other charges; and costs of franchise and license revenue; less franchise and license revenue.
(2)	Franchise Operating Margin is calculated as operating income plus general and administrative expenses; depreciation and amortization; operating (gains), losses and other charges; and costs of company restaurant sales; less company restaurant sales.



DENNY’S CORPORATION
Operating Margins
(Unaudited)

				Quarter Ended
(In thousands)				12/25/19					12/26/18
Company restaurant operations: ⁽¹⁾
	Company restaurant sales			$	48,803		100.0	%	$	104,389	100.0	%
	Costs of company restaurant sales:
		Product costs		11,849			24.3	%	25,240		24.2	%
		Payroll and benefits		18,331			37.6	%	40,982		39.3	%
		Occupancy		3,030			6.2	%	6,063		5.8	%
		Other operating costs:
			Utilities	1,443			3.0	%	3,657		3.5	%
			Repairs and maintenance	1,050			2.2	%	2,114		2.0	%
			Marketing	1,838			3.8	%	3,741		3.6	%
			Other direct costs	2,606			5.3	%	5,706		5.5	%
	Total costs of company restaurant sales			$	40,147		82.3	%	$	87,503	83.8	%
	Company restaurant operating margin (non-GAAP) ⁽²⁾			$	8,656		17.7	%	$	16,886	16.2	%

Franchise operations: ⁽³⁾
	Franchise and license revenue:
	Royalties			$	29,071		44.7	%	$	25,682	46.6	%
	Advertising revenue			21,562			33.2	%	19,922		36.1	%
	Initial and other fees			2,291			3.5	%	1,780		3.2	%
	Occupancy revenue			12,109			18.6	%	7,776		14.1	%
	Total franchise and license revenue			$	65,033		100.0	%	$	55,160	100.0	%

	Costs of franchise and license revenue:
	Advertising costs			$	21,561		33.2	%	$	19,923	36.1	%
	Occupancy costs			7,788			12.0	%	5,226		9.5	%
	Other direct costs			3,912			6.0	%	3,368		6.1	%
	Total costs of franchise and license revenue			$	33,261		51.1	%	$	28,517	51.7	%
	Franchise operating margin (non-GAAP) ⁽²⁾			$	31,772		48.9	%	$	26,643	48.3	%

Total operating revenue ⁽⁴⁾				$	113,836		100.0	%	$	159,549	100.0	%
Total costs of operating revenue ⁽⁴⁾				73,408			64.5	%	116,020		72.7	%
Total operating margin (non-GAAP) ⁽⁴⁾⁽²⁾				$	40,428		35.5	%	$	43,529	27.3	%

Other operating expenses: ⁽⁴⁾⁽²⁾
	General and administrative expenses			$	15,359		13.5	%	$	15,690	9.8	%
	Depreciation and amortization			4,227			3.7	%	7,074		4.4	%
	Operating (gains), losses and other charges, net			(5,721		)	(5.0	)%	1,005		0.6	%
	Total other operating expenses			$	13,865		12.2	%	$	23,769	14.9	%

Operating income ⁽⁴⁾				$	26,563		23.3	%	$	19,760	12.4	%

(1)		As a percentage of company restaurant sales.
(2)		Other operating expenses such as general and administrative expenses and depreciation and amortization relate to both company and franchise operations and are not allocated to costs of company restaurant sales and costs of franchise and license revenue. As such, operating margin is considered a non-GAAP financial measure. Operating margins should be considered as a supplement to, not as a substitute for, operating income, net income or other financial measures prepared in accordance with U.S. generally accepted accounting principles.
(3)		As a percentage of franchise and license revenue.
(4)		As a percentage of total operating revenue.



DENNY’S CORPORATION
Operating Margins
(Unaudited)

				Fiscal Year Ended
(In thousands)				12/25/19					12/26/18
Company restaurant operations: ⁽¹⁾
	Company restaurant sales			$	306,377		100.0	%	$	411,932	100.0	%
	Costs of company restaurant sales:
		Product costs		74,720			24.4	%	100,532		24.4	%
		Payroll and benefits		118,806			38.8	%	164,314		39.9	%
		Occupancy		18,613			6.1	%	23,228		5.6	%
		Other operating costs:
			Utilities	10,359			3.4	%	14,347		3.5	%
			Repairs and maintenance	6,792			2.2	%	7,761		1.9	%
			Marketing	11,195			3.7	%	15,008		3.6	%
			Other direct costs	17,911			5.8	%	23,592		5.7	%
	Total costs of company restaurant sales			$	258,396		84.3	%	$	348,782	84.7	%
	Company restaurant operating margin (non-GAAP) ⁽²⁾			$	47,981		15.7	%	$	63,150	15.3	%

Franchise operations: ⁽³⁾
	Franchise and license revenue:
	Royalties			$	108,813		46.3	%	$	101,557	46.5	%
	Advertising revenue			81,144			34.5	%	78,308		35.9	%
	Initial and other fees			6,541			2.8	%	6,422		2.9	%
	Occupancy revenue			38,514			16.4	%	31,960		14.6	%
	Total franchise and license revenue			$	235,012		100.0	%	$	218,247	100.0	%

	Costs of franchise and license revenue:
	Advertising costs			$	81,144		34.5	%	$	78,309	35.9	%
	Occupancy costs			25,806			11.0	%	22,285		10.2	%
	Other direct costs			13,376			5.7	%	13,702		6.3	%
	Total costs of franchise and license revenue			$	120,326		51.2	%	$	114,296	52.4	%
	Franchise operating margin (non-GAAP) ⁽²⁾			$	114,686		48.8	%	$	103,951	47.6	%

Total operating revenue ⁽⁴⁾				$	541,389		100.0	%	$	630,179	100.0	%
Total costs of operating revenue ⁽⁴⁾				378,722			70.0	%	463,078		73.5	%
Total operating margin (non-GAAP) ⁽⁴⁾⁽²⁾				$	162,667		30.0	%	$	167,101	26.5	%

Other operating expenses: ⁽⁴⁾⁽²⁾
	General and administrative expenses			$	69,018		12.7	%	$	63,828	10.1	%
	Depreciation and amortization			19,846			3.7	%	27,039		4.3	%
	Operating gains, losses and other charges, net			(91,180		)	(16.8	)%	2,620		0.4	%
	Total other operating (income) expenses			$	(2,316	)	(0.4	)%	$	93,487	14.8	%

Operating income ⁽⁴⁾				$	164,983		30.5	%	$	73,614	11.7	%

(1)		As a percentage of company restaurant sales.
(2)		Other operating expenses such as general and administrative expenses and depreciation and amortization relate to both company and franchise operations and are not allocated to costs of company restaurant sales and costs of franchise and license revenue. As such, operating margin is considered a non-GAAP financial measure. Operating margins should be considered as a supplement to, not as a substitute for, operating income, net income or other financial measures prepared in accordance with U.S. generally accepted accounting principles.
(3)		As a percentage of franchise and license revenue.
(4)		As a percentage of total operating revenue.



DENNY’S CORPORATION
Statistical Data
(Unaudited)

Changes in Same-Store Sales ⁽¹⁾			Quarter Ended						Fiscal Year Ended
(increase vs. prior year)			12/25/19			12/26/18			12/25/19			12/26/18
	Company Restaurants		0.5		%	2.1		%	1.9		%	1.8		%
	Domestic Franchised Restaurants		1.8		%	1.2		%	2.0		%	0.6		%
	Domestic System-wide Restaurants		1.7		%	1.4		%	2.0		%	0.8		%

Average Unit Sales			Quarter Ended						Fiscal Year Ended
(In thousands)			12/25/19			12/26/18			12/25/19			12/26/18
	Company Restaurants		$	695		$	584		$	2,477		$	2,300
	Franchised Restaurants		$	427		$	408		$	1,669		$	1,615

						Franchised
Restaurant Unit Activity			Company			& Licensed			Total
Ending Units September 25, 2019			77			1,629			1,706
	Units Opened		—			9			9
	Units Refranchised		(9		)	9			—
	Units Closed		—			(12		)	(12		)
		Net Change	(9		)	6			(3		)
Ending Units December 25, 2019			68			1,635			1,703

Equivalent Units
	Fourth Quarter 2019		70			1,634			1,704
	Fourth Quarter 2018		179			1,531			1,710
		Net Change	(109		)	103			(6		)

						Franchised
Restaurant Unit Activity			Company			& Licensed			Total
Ending Units December 26, 2018			173			1,536			1,709
	Units Opened		—			30			30
	Units Refranchised		(105		)	105			—
	Units Closed		—			(36		)	(36		)
		Net Change	(105		)	99			(6		)
Ending Units December 25, 2019			68			1,635			1,703

Equivalent Units
	Year-to-Date 2019		124			1,578			1,702
	Year-to-Date 2018		179			1,538			1,717
		Net Change	(55		)	40			(15		)

(1)		Same-store sales include sales at company restaurants and non-consolidated franchised and licensed restaurants that were open the same period in the prior year. Total operating revenue is limited to company restaurant sales and royalties, advertising revenue, fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic franchise same-store sales and domestic system-wide same-store sales should be considered as a supplement to, not a substitute for, our results as reported under GAAP.