Long-Term Debt

12 Months Ended

Dec. 29, 2021

Long-term debt consisted of the following:


	December 29, 2021		December 30, 2020
	(In thousands)
Revolving loans	$	170,000	$	210,000
Finance lease obligations	12,696		15,369
Total long-term debt	182,696		225,369
Less current maturities	1,952		1,839
Noncurrent portion of long-term debt	$	180,744	$	223,530

There are no scheduled maturities of our revolving loans due in 2022 through 2025. The $170.0 million of revolving loans are due August 26, 2026.

Refinancing of Credit Facility

On August 26, 2021, the Company and certain of its subsidiaries refinanced the existing credit facility (the “Old Credit Facility”) and entered into a new five-year $400 million senior secured revolver (with a $25 million letter of credit sublimit) (the “New Credit Facility”). The New Credit Facility includes an accordion feature that would allow us to increase the size of the revolver to $450 million. Borrowings bear a tiered interest rate, which is based on the Company's consolidated leverage ratio and was initially set at LIBOR plus 2.25%. The New Credit Facility contains provisions specifying alternative interest rate calculations to be used at such time LIBOR ceases to be available as a benchmark due to reference rate reform. The maturity date for the New Credit Facility is August 26, 2026.

The New Credit Facility was used to refinance the Old Credit Facility and is available for working capital, capital expenditures and other general corporate purposes. The New Credit Facility is guaranteed by Denny's and its material subsidiaries and is secured by assets of Denny's and its subsidiaries, including the stock of its subsidiaries (other than its insurance captive subsidiary). It includes negative covenants that are usual for facilities and transactions of this type. The New Credit Facility also includes certain financial covenants with respect to a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. We were in compliance with all financial covenants as of December 29, 2021.

As of December 29, 2021, we had outstanding revolver loans of $170.0 million and outstanding letters of credit under the New Credit Facility of $15.7 million. These balances resulted in availability of $214.3 million as of December 29, 2021 under the New Credit Facility.

As of December 29, 2021, borrowings under the New Credit Facility bore interest at a rate of LIBOR plus 2.00% and the commitment fee, paid on the unused portion of the New Credit Facility, was set to 0.30%.

During 2020, we executed amendments to our Old Credit Facility on May 13, 2020 and on December 15, 2020. As a result of the amendments, the interest rate of the Old Credit Facility was increased to LIBOR plus 3.00% and the commitment fee, paid on the unused portion of the credit facility, was increased to 0.40%. The amendments required supplemental monthly reporting obligations to our lenders and we were prohibited from paying dividends and making stock repurchases and other general investments. Additionally, capital expenditures were restricted and certain financial covenants were waived for a period. The amendments also added a monthly minimum liquidity covenant. As of December 15, 2020, the accordion feature was removed, and the total credit facility commitment was reduced from $400 million to $375 million and to $350 million on July 1, 2021.

Prior to considering the impact of our interest rate swaps, described below, the weighted-average interest rate on outstanding revolver loans was 2.09% and 3.15% as of December 29, 2021 and December 30, 2020, respectively. Taking into consideration our interest rate swaps that are designated as cash flow hedges, the weighted-average interest rate of outstanding revolver loans was 4.44% and 5.01% as of December 29, 2021 and December 30, 2020, respectively.

Interest Rate Hedges

We have receive-variable, pay-fixed interest rate swaps to hedge the forecasted cash flows of our floating rate debt. We initially

designated the interest rate swaps as cash flow hedges of our exposure to variability in future cash flows attributable to variable

interest payments due on forecasted notional amounts. A summary of our interest rate swaps as of December 29, 2021 is as follows:


Trade Date	Effective Date	Maturity Date	Notional Amount			Fair Value		Fixed Rate
			(In thousands)
Swaps designated as cash flow hedges
March 20, 2015	March 29, 2018	March 31, 2025	$	120,000		$	5,074	2.44	%
October 1, 2015	March 29, 2018	March 31, 2026	$	50,000		$	2,558	2.46	%
Dedesignated swaps
February 15, 2018	March 31, 2020	December 31, 2033	$	120,000	(1)	$	44,489	3.19	%
Total			$	290,000		$	52,121

(1) The notional amount of the swaps entered into on February 15, 2018 increase periodically until they reach the maximum notional amount of $425.0 million on September 28, 2029.

Swaps Designated as Cash Flow Hedges

To the extent the swaps are highly effective in offsetting the variability of the hedged cash flows, changes in the fair value of the swaps are not included in the Consolidated Statements of Operations but are reported as a component of accumulated other comprehensive loss, net. The interest rate swaps entered into in 2015 are designated as cash flow hedges with unrealized gain and losses recorded as a component of accumulated other comprehensive loss, net.

As of December 29, 2021, the fair value of swaps designated as cash flow hedges was a liability of $7.6 million and was recorded as a component of other noncurrent liabilities with an offsetting amount (before taxes) recorded as a component of accumulated other comprehensive loss, net in our Consolidated Balance Sheets. See Note 17 for the amounts recorded in accumulated other comprehensive loss related to the interest rate swaps. We expect to reclassify approximately $4.0 million from accumulated other comprehensive loss, net to interest expense, net in our Consolidated Statements of Operations related to swaps designated as cash flow hedges during the next twelve months.

Dedesignated Interest Rate Hedges

During the year ended December 30, 2020, we determined that a portion of the underlying cash flows related to our hedging relationship entered into in 2018 (“2018 Swaps”) were no longer probable of occurring over the term of the interest rate swaps. Accordingly, we dedesignated the cash flow relationship and discontinued hedge accounting treatment for the 2018 Swaps. As a result, we reclassified approximately $7.4 million of losses from accumulated other comprehensive loss, net to other nonoperating expense (income), net in our Consolidated Statements of Operations and began amortizing the remaining amounts of unrealized losses related to the 2018 Swaps from accumulated other comprehensive loss, net into our Consolidated Statements of Operations as a component of interest expense, net over the remaining term of the 2018 Swaps. We reclassified unrealized losses of approximately $0.2 million and $0.8 million to interest expense, net related to the 2018 Swaps, for the years ended December 29, 2021 and December 30, 2020, respectively. At December 29, 2021, approximately $64.2 million (before taxes) of unrealized losses remained in accumulated other comprehensive loss, net. We expect to amortize less than $0.1 million from accumulated other comprehensive loss, net to interest expense, net in our Consolidated Statements of Operations related to dedesignated interest rate swaps during the next twelve months.

As a result of the dedesignated cash flow relationship related to the 2018 Swaps, changes in the fair value of the 2018 Swaps are recorded as a component of other nonoperating expense (income), net in our Consolidated Statements of Operations. We recorded income of approximately $12.8 million and $10.3 million as a component of nonoperating expense (income) related to the 2018 Swaps resulting from changes in fair value for the years ended December 29, 2021 and December 30, 2020, respectively. As of December 29, 2021, the fair value of the dedesignated interest rate swaps was $44.5 million, $0.3 million of which was recorded as a component of other current liabilities and $44.2 million of which was recorded as a component of other noncurrent liabilities in our Consolidated Balance Sheets.