UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 28, 2022~~March 29, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ________________

Commission File Number 0-18051

DENNY’S CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		13-3487402
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

203 East Main Street
Spartanburg,	South Carolina	29319-0001
(Address of principal executive offices)		(Zip Code)

(864) 597-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

$.01 Par Value, Common Stock

DENN

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

ý☐

Accelerated Filer

☐ý

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ý

As of ~~October~~April 27, ~~2022, 57,233,274~~2023, 56,043,779 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Denny’s Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)


		September 28, 2022		December 29, 2021			March 29, 2023		December 28, 2022
		(In thousands, except per share amounts)					(In thousands, except per share amounts)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	4,346	$	30,624	Cash and cash equivalents	$	8,895	$	3,523
Investments	Investments	1,763		2,551		Investments	3,051		1,746
Receivables, net	Receivables, net	24,513		19,621		Receivables, net	23,443		25,576
Inventories	Inventories	9,018		5,060		Inventories	3,253		5,538
Assets held for sale	Assets held for sale	1,061		—		Assets held for sale	2,312		1,403
Prepaid and other current assets	Prepaid and other current assets	9,709		11,393		Prepaid and other current assets	9,877		12,529
Total current assets	Total current assets	50,410		69,249		Total current assets	50,831		50,315
Property, net of accumulated depreciation of $151,797 and $151,836, respectively		95,547		91,176
Finance lease right-of-use assets, net of accumulated amortization of $9,464 and $11,210, respectively		6,879		7,709
Property, net of accumulated depreciation of $155,429 and $153,334, respectively						Property, net of accumulated depreciation of $155,429 and $153,334, respectively	92,205		94,469
Finance lease right-of-use assets, net of accumulated amortization of $10,194 and $9,847, respectively						Finance lease right-of-use assets, net of accumulated amortization of $10,194 and $9,847, respectively	6,117		6,499
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	130,650		128,727		Operating lease right-of-use assets, net	123,013		126,065
Goodwill	Goodwill	72,740		36,884		Goodwill	72,142		72,740
Intangible assets, net	Intangible assets, net	95,465		50,226		Intangible assets, net	94,622		95,034
Deferred financing costs, net	Deferred financing costs, net	2,496		2,971		Deferred financing costs, net	2,179		2,337
Deferred income taxes, net		—		11,502

Other noncurrent assets	Other noncurrent assets	43,481		37,083		Other noncurrent assets	39,338		50,876
Total assets	Total assets	$	497,668	$	435,527	Total assets	$	480,447	$	498,335
Liabilities	Liabilities					Liabilities
Current liabilities:	Current liabilities:					Current liabilities:
Current finance lease liabilities	Current finance lease liabilities	$	1,833	$	1,952	Current finance lease liabilities	$	1,514	$	1,683
Current operating lease liabilities	Current operating lease liabilities	15,831		15,829		Current operating lease liabilities	15,230		15,310
Accounts payable	Accounts payable	12,248		15,595		Accounts payable	18,251		19,896
Other current liabilities	Other current liabilities	62,768		64,146		Other current liabilities	50,407		56,762
Total current liabilities	Total current liabilities	92,680		97,522		Total current liabilities	85,402		93,651
Long-term liabilities:	Long-term liabilities:					Long-term liabilities:
Long-term debt	Long-term debt	266,500		170,000		Long-term debt	264,000		261,500
Noncurrent finance lease liabilities	Noncurrent finance lease liabilities	9,884		10,744		Noncurrent finance lease liabilities	9,237		9,555
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	127,620		126,296		Noncurrent operating lease liabilities	120,140		123,404
Liability for insurance claims, less current portion	Liability for insurance claims, less current portion	7,514		8,438		Liability for insurance claims, less current portion	7,138		7,324
Deferred income taxes, net	Deferred income taxes, net	7,890		—		Deferred income taxes, net	7,673		7,419
Other noncurrent liabilities	Other noncurrent liabilities	30,210		87,792		Other noncurrent liabilities	31,859		32,598
Total long-term liabilities	Total long-term liabilities	449,618		403,270		Total long-term liabilities	440,047		441,800
Total liabilities	Total liabilities	542,298		500,792		Total liabilities	525,449		535,451
Shareholders' deficit	Shareholders' deficit					Shareholders' deficit
Common stock $0.01 par value; 135,000 shares authorized; September 28, 2022: 64,998 shares issued and 57,501 outstanding; December 29, 2021: 64,200 shares issued and 62,210 shares outstanding		$	650	$	642
Common stock $0.01 par value; 135,000 shares authorized; March 29, 2023: 65,468 shares issued and 56,392 outstanding; December 28, 2022: 64,998 shares issued and 56,728 shares outstanding						Common stock $0.01 par value; 135,000 shares authorized; March 29, 2023: 65,468 shares issued and 56,392 outstanding; December 28, 2022: 64,998 shares issued and 56,728 shares outstanding	$	655	$	650
Paid-in capital	Paid-in capital	140,234		135,596		Paid-in capital	142,258		142,136
Deficit	Deficit	(54,500)		(116,441)		Deficit	(41,132)		(41,729)
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(43,303)		(54,470)		Accumulated other comprehensive loss, net	(42,340)		(42,697)
Treasury stock, at cost, 7,497 and 1,990 shares, respectively		(87,711)		(30,592)
Treasury stock, at cost, 9,076 and 8,270 shares, respectively						Treasury stock, at cost, 9,076 and 8,270 shares, respectively	(104,443)		(95,476)
Total shareholders' deficit	Total shareholders' deficit	(44,630)		(65,265)		Total shareholders' deficit	(45,002)		(37,116)
Total liabilities and shareholders' deficit	Total liabilities and shareholders' deficit	$	497,668	$	435,527	Total liabilities and shareholders' deficit	$	480,447	$	498,335

See accompanying notes

Denny’s Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)


		Quarter Ended				Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021		September 28, 2022		September 29, 2021				March 29, 2023		March 30, 2022
		(In thousands, except per share amounts)										(In thousands, except per share amounts)
Revenue:	Revenue:									Revenue:
Company restaurant sales	Company restaurant sales	$	52,211	$	46,470	$	145,354	$	127,611	Company restaurant sales		$	53,452	$	43,976
Franchise and license revenue	Franchise and license revenue	65,245		57,324		190,226		162,924		Franchise and license revenue		64,019		59,131
Total operating revenue	Total operating revenue	117,456		103,794		335,580		290,535		Total operating revenue		117,471		103,107
Costs of company restaurant sales, excluding depreciation and amortization:	Costs of company restaurant sales, excluding depreciation and amortization:									Costs of company restaurant sales, excluding depreciation and amortization:
Product costs	Product costs	14,462		11,430		38,874		31,149		Product costs		14,039		11,244
Payroll and benefits	Payroll and benefits	20,176		17,404		55,598		47,339		Payroll and benefits		20,240		17,086
Occupancy	Occupancy	4,294		3,013		11,316		8,707		Occupancy		4,094		3,240
Other operating expenses	Other operating expenses	9,519		6,722		26,116		19,351		Other operating expenses		8,119		7,055
Total costs of company restaurant sales, excluding depreciation and amortization	Total costs of company restaurant sales, excluding depreciation and amortization	48,451		38,569		131,904		106,546		Total costs of company restaurant sales, excluding depreciation and amortization		46,492		38,625
Costs of franchise and license revenue, excluding depreciation and amortization	Costs of franchise and license revenue, excluding depreciation and amortization	34,579		27,469		100,513		79,962		Costs of franchise and license revenue, excluding depreciation and amortization		32,387		30,669
General and administrative expenses	General and administrative expenses	16,607		16,497		50,188		50,992		General and administrative expenses		20,118		16,958
Depreciation and amortization	Depreciation and amortization	3,914		3,822		11,052		11,380		Depreciation and amortization		3,656		3,548
Operating (gains), losses and other charges, net	Operating (gains), losses and other charges, net	(1,897)		(215)		(1,051)		204		Operating (gains), losses and other charges, net		(1,329)		—
Total operating costs and expenses, net	Total operating costs and expenses, net	101,654		86,142		292,606		249,084		Total operating costs and expenses, net		101,324		89,800
Operating income	Operating income	15,802		17,652		42,974		41,451		Operating income		16,147		13,307
Interest expense, net	Interest expense, net	3,691		3,671		9,529		12,014		Interest expense, net		4,505		2,960
Other nonoperating income, net		(10,461)		(2,368)		(49,871)		(16,165)
Other nonoperating expense (income), net										Other nonoperating expense (income), net		10,093		(19,615)
Income before income taxes	Income before income taxes	22,572		16,349		83,316		45,602		Income before income taxes		1,549		29,962
Provision for income taxes	Provision for income taxes	5,489		4,084		21,375		10,984		Provision for income taxes		952		8,107
Net income	Net income	$	17,083	$	12,265	$	61,941	$	34,618	Net income		$	597	$	21,855

Net income per share - basic	Net income per share - basic	$	0.29	$	0.19	$	1.01	$	0.53	Net income per share - basic		$	0.01	$	0.35
Net income per share - diluted	Net income per share - diluted	$	0.29	$	0.19	$	1.00	$	0.53	Net income per share - diluted		$	0.01	$	0.34

Basic weighted average shares outstanding	Basic weighted average shares outstanding	59,020		65,447		61,558		65,413		Basic weighted average shares outstanding		57,638		63,343
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	59,040		65,829		61,686		65,814		Diluted weighted average shares outstanding		57,840		63,580

See accompanying notes

Denny’s Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

Quarter Ended Three Quarters Ended
September 28, 2022 September 29, 2021 September 28, 2022 September 29, 2021
(In thousands)
Net income $ 17,083 $ 12,265 $ 61,941 $ 34,618
Other comprehensive income, net of tax:
Minimum pension liability adjustment, net of tax of $8, $10, $23 and $31, respectively 23 30 69 89
Changes in the fair value of cash flow hedges, net of tax of $956, $14, $3,242 and $585, respectively 2,868 43 9,723 1,697
Reclassification of cash flow hedges to interest expense, net of tax of $27, $259, $455 and $771, respectively 80 751 1,363 2,239
Amortization of unrealized losses related to dedesignated swaps to interest expense, net of tax of $3, $0, $4 and $42, respectively 7 — 12 124
Other comprehensive income 2,978 824 11,167 4,149
Total comprehensive income $ 20,061 $ 13,089 $ 73,108 $ 38,767


	Quarter Ended
		March 29, 2023		March 30, 2022
		(In thousands)
Net income		$	597	$	21,855
Other comprehensive income (loss), net of tax:
Minimum pension liability adjustment, net of tax of $22 and $8, respectively		67		24
Changes in the fair value of cash flow hedges, net of tax of $321 and $1,673, respectively		942		5,015
Reclassification of cash flow hedges to interest expense, net of tax of $(236) and $248, respectively		(694)		742

Amortization of unrealized losses related to interest rate swaps to interest expense, net of tax of $14 and $0, respectively		42		—
Other comprehensive income		357		5,781
Total comprehensive income		$	954	$	27,636

See accompanying notes

Denny’s Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Deficit

For the Quarter Ended ~~September 28,~~March 29, 2023 and March 30, 2022 ~~and September 29, 2021~~

(Unaudited)


		Common Stock			Treasury Stock			Paid-in Capital				Deficit			Accumulated Other Comprehensive Loss, Net				Total Shareholders’ Deficit				Common Stock						Treasury Stock			Paid-in Capital			Deficit			Accumulated Other Comprehensive Loss, Net			Total Shareholders’ Deficit
		Shares	Amount		Shares	Amount								Shares								Amount			Shares			Amount
		(In thousands)																					(In thousands)
Balance, June 29, 2022		64,998	$	650	(6,654)	$	(79,841)			$	138,347						$	(71,583)			$	(46,281)		(58,708)
Balance, December 28, 2022																						Balance, December 28, 2022	64,998			$	650		(8,270)	$	(95,476)		$	142,136		$	(41,729)		$	(42,697)		(37,116)

Net income	Net income	—	—		—	—		—				17,083			—				17,083			Net income	—			—			—	—		—			597			—			597
Other comprehensive income	Other comprehensive income	—	—		—	—		—				—			2,978				2,978			Other comprehensive income	—			—			—	—		—			—			357			357

Share-based compensation on equity classified awards, net of withholding tax	Share-based compensation on equity classified awards, net of withholding tax	—	—		—	—		1,887				—			—				1,887			Share-based compensation on equity classified awards, net of withholding tax	—			—			—	—		127			—			—			127
Purchase of treasury stock	Purchase of treasury stock	—	—		(843)	(7,870)		—				—			—				(7,870)			Purchase of treasury stock	—			—			(806)	(8,967)		—			—			—			(8,967)

Issuance of common stock for share-based compensation																						Issuance of common stock for share-based compensation	470			5			—	—		(5)			—			—			—

Balance, September 28, 2022		64,998	$	650	(7,497)	$	(87,711)	$	140,234			$	(54,500)		$	(43,303)			$	(44,630)
Balance, March 29, 2023																						Balance, March 29, 2023	65,468			$	655		(9,076)	$	(104,443)	$	142,258		$	(41,132)		$	(42,340)		$	(45,002)


		Common Stock			Treasury Stock			Paid-in Capital				Deficit			Accumulated Other Comprehensive Loss, Net				Total Shareholders’ Deficit				Common Stock						Treasury Stock			Paid-in Capital			Deficit			Accumulated Other Comprehensive Loss, Net			Total Shareholders’ Deficit
		Shares	Amount		Shares	Amount								Shares								Amount			Shares			Amount
		(In thousands)																					(In thousands)
Balance, June 30, 2021		64,200	$	642	—	$	—			$	129,176						$	(172,161)			$	(57,080)		$	(99,423)
Balance, December 29, 2021																						Balance, December 29, 2021	64,200			$	642		(1,990)	$	(30,592)		$	135,596		$	(116,441)		$	(54,470)		$	(65,265)

Net income	Net income	—	—		—	—		—				12,265			—				12,265			Net income	—			—			—	—		—			21,855			—			21,855
Other comprehensive income	Other comprehensive income	—	—		—	—		—				—			824				824			Other comprehensive income	—			—			—	—		—			—			5,781			5,781

Share-based compensation on equity classified awards, net of withholding tax	Share-based compensation on equity classified awards, net of withholding tax	—	—		—	—		3,260				—			—				3,260			Share-based compensation on equity classified awards, net of withholding tax	—			—			—	—		1,739			—			—			1,739
Purchase of treasury stock	Purchase of treasury stock	—	—		(405)	(6,563)		—				—			—				(6,563)			Purchase of treasury stock	—			—			(754)	(11,865)		—			—			—			(11,865)

Issuance of common stock for share-based compensation																						Issuance of common stock for share-based compensation	257			3			—	—		(3)			—			—			—

Balance, September 29, 2021		64,200	$	642	(405)	$	(6,563)	$	132,436			$	(159,896)		$	(56,256)			$	(89,637)
Balance, March 30, 2022																						Balance, March 30, 2022	64,457			$	645		(2,744)	$	(42,457)	$	137,332		$	(94,586)		$	(48,689)		$	(47,755)

See accompanying notes

~~Denny’s Corporation and Subsidiaries~~

~~Consolidated Statements of Shareholders’ Deficit~~

~~For the Three Quarters Ended September 28, 2022 and September 29, 2021~~

~~(Unaudited)~~

Common Stock Treasury Stock Paid-in Capital Deficit Accumulated
Other
Comprehensive Loss, Net Total
Shareholders’
Deficit
Shares Amount Shares Amount
(In thousands)
Balance, December 29, 2021 64,200 $ 642 (1,990) $ (30,592) $ 135,596 $ (116,441) $ (54,470) $ (65,265)
Net income — — — — — 61,941 — 61,941
Other comprehensive income — — — — — — 11,167 11,167
Share-based compensation on equity classified awards, net of withholding tax — — — — 4,646 — — 4,646
Purchase of treasury stock — — (5,507) (57,119) — — — (57,119)
Issuance of common stock for share-based compensation 798 8 — — (8) — — —
Balance, September 28, 2022 64,998 $ 650 (7,497) $ (87,711) $ 140,234 $ (54,500) $ (43,303) $ (44,630)

Common Stock Treasury Stock Paid-in Capital Deficit Accumulated
Other
Comprehensive Loss, Net Total
Shareholders’
Deficit
Shares Amount Shares Amount
(In thousands)
Balance, December 30, 2020 63,962 $ 640 — $ — $ 123,833 $ (194,514) $ (60,405) $ (130,446)
Net income — — — — — 34,618 — 34,618
Other comprehensive income — — — — — — 4,149 4,149
Share-based compensation on equity classified awards, net of withholding tax — — — — 8,489 — — 8,489
Purchase of treasury stock — — (405) (6,563) — — — (6,563)
Issuance of common stock for share-based compensation 208 2 — — (2) — — —
Exercise of common stock options 30 — — — 116 — — 116
Balance, September 29, 2021 64,200 $ 642 (405) $ (6,563) $ 132,436 $ (159,896) $ (56,256) $ (89,637)

~~See accompanying notes~~

Denny’s Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)


		Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021			March 29, 2023		March 30, 2022
		(In thousands)					(In thousands)
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	61,941	$	34,618	Net income	$	597	$	21,855
Adjustments to reconcile net income to cash flows provided by operating activities:
Adjustments to reconcile net income to cash flows provided by (used in) operating activities:						Adjustments to reconcile net income to cash flows provided by (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	11,052		11,380		Depreciation and amortization	3,656		3,548
Operating (gains), losses and other charges, net	Operating (gains), losses and other charges, net	(1,051)		204		Operating (gains), losses and other charges, net	(1,329)		—
Gains and amortization on dedesignated interest rate swaps, net		(52,678)		(14,771)
Losses (gains) and amortization on interest rate swaps, net						Losses (gains) and amortization on interest rate swaps, net	10,662		(20,253)
Amortization of deferred financing costs	Amortization of deferred financing costs	475		946		Amortization of deferred financing costs	159		158
Losses (gains) on investments	Losses (gains) on investments	289		(11)		Losses (gains) on investments	(5)		65
Gains on early termination of debt and leases	Gains on early termination of debt and leases	(29)		(52)		Gains on early termination of debt and leases	—		24
Deferred income tax expense	Deferred income tax expense	15,669		3,713		Deferred income tax expense	133		4,436
Share-based compensation expense	Share-based compensation expense	9,467		10,212		Share-based compensation expense	3,094		4,015
Changes in assets and liabilities, excluding acquisitions and dispositions:	Changes in assets and liabilities, excluding acquisitions and dispositions:					Changes in assets and liabilities, excluding acquisitions and dispositions:
Receivables	Receivables	(4,788)		4,182		Receivables	1,814		(3,567)
Inventories	Inventories	(3,866)		(49)		Inventories	2,284		(4,768)
Prepaids and other current assets	Prepaids and other current assets	1,683		4,296		Prepaids and other current assets	2,652		3,451
Other noncurrent assets	Other noncurrent assets	3,189		(1,021)		Other noncurrent assets	1,119		4,085
Operating lease assets and liabilities	Operating lease assets and liabilities	(560)		(1,150)		Operating lease assets and liabilities	(246)		(244)
Accounts payable	Accounts payable	(3,115)		6,360		Accounts payable	(1,131)		(2,405)
Accrued payroll		(3,385)		1,462
Accrued taxes		1,926		1,253
Other accrued liabilities	Other accrued liabilities	(2,024)		5,890		Other accrued liabilities	(6,534)		(14,964)
Other noncurrent liabilities	Other noncurrent liabilities	(9,245)		(4,233)		Other noncurrent liabilities	(772)		(2,500)
Net cash flows provided by operating activities		24,950		63,229
Net cash flows provided by (used in) operating activities						Net cash flows provided by (used in) operating activities	16,153		(7,064)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(10,146)		(5,321)		Capital expenditures	(1,304)		(2,778)
Acquisition of restaurant		(750)		—
Acquisition of Keke's Breakfast Cafe		(81,500)		—

Proceeds from sales of restaurants, real estate and other assets	Proceeds from sales of restaurants, real estate and other assets	4,114		1,785		Proceeds from sales of restaurants, real estate and other assets	1,715		108
Investment purchases	Investment purchases	(1,200)		—		Investment purchases	(1,300)		(1,200)
Proceeds from sale of investments		1,700		200
Refund of deposits for real estate acquisitions		3,624		—

Collections on notes receivable	Collections on notes receivable	184		539		Collections on notes receivable	320		67
Issuance of notes receivable		—		(115)

Net cash flows used in investing activities	Net cash flows used in investing activities	(83,974)		(2,912)		Net cash flows used in investing activities	(569)		(3,803)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Revolver borrowings	Revolver borrowings	156,325		181,000		Revolver borrowings	35,000		13,825
Revolver payments	Revolver payments	(59,825)		(221,000)		Revolver payments	(32,500)		(12,325)
Repayments of finance leases	Repayments of finance leases	(1,513)		(1,583)		Repayments of finance leases	(506)		(503)
Proceeds from exercise of stock options		—		116

Tax withholding on share-based payments	Tax withholding on share-based payments	(4,781)		(1,377)		Tax withholding on share-based payments	(2,846)		(2,165)
Deferred financing costs		—		(1,809)

Purchase of treasury stock	Purchase of treasury stock	(57,460)		(6,228)		Purchase of treasury stock	(9,041)		(12,498)

Net bank overdrafts	Net bank overdrafts	—		(3,125)		Net bank overdrafts	(319)		—
Net cash flows provided by (used in) financing activities		32,746		(54,006)
Net cash flows used in financing activities						Net cash flows used in financing activities	(10,212)		(13,666)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	(26,278)		6,311		Increase (decrease) in cash and cash equivalents	5,372		(24,533)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	30,624		3,892		Cash and cash equivalents at beginning of period	3,523		30,624
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	4,346	$	10,203	Cash and cash equivalents at end of period	$	8,895	$	6,091

See accompanying notes

Denny’s Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Introduction and Basis of Presentation

Denny’s Corporation, or the Company, is one of America’s largest full-service restaurant chains based on number of restaurants. As of ~~September 28, 2022,~~March 29, 2023, the Company consisted of ~~1,666~~1,648 restaurants, ~~1,592~~1,574 of which were franchised/licensed restaurants and 74 of which were company operated.

The Company consists of the Denny’s brand ("Denny's") and the Keke’s Breakfast Café brand (“Keke’s”). Keke’s was acquired on July 20, ~~2022, see Note 3 for details.~~2022. As of ~~September 28, 2022,~~March 29, 2023, the Denny's brand consisted of ~~1,613~~1,594 restaurants, ~~1,547~~1,528 of which were franchised/licensed restaurants and 66 of which were company operated. At ~~September 28, 2022,~~March 29, 2023, the Keke's brand consisted of 5354 restaurants, 4546 of which were franchised restaurants and eight of which were company operated.

We manage our restaurant brands, Denny’s and Keke’s as operating segments. We aggregate our operating segments into one reportable segment based on similar economic characteristics, nature of products and services, methods to provide services, and types of customers between the brands.

The global crisis resulting from the spread of coronavirus ("COVID-19") has had a substantial impact on our restaurant operations starting in the quarter ended March 25, 2020 with continuing impacts intoThrough the current quarter ended ~~September 28, 2022, including impacts on labor and commodity costs and the ability of~~March 29, 2023, many ~~franchise~~Denny’s restaurants have not returned to ~~return~~full operating hours, since closing or reducing hours in 2020 due to ~~24/7 operations. While we have seen improvements compared to earlier periods during~~ the COVID-19 pandemic, weparticularly at the late night daypart. Additionally, our restaurant operations have been negatively impacted by a tight labor market and inflated commodity costs. Our operating results substantially depend upon the sales volumes, restaurant profitability, and financial stability of our company and franchised and licensed restaurants.

We cannot currently estimate the duration or future negative financial impact of ~~the COVID-19 pandemic~~these economic conditions on our business. Ongoing material adverse effects of ~~the COVID-19 pandemic~~these economic conditions for an extended period could negatively affect our business, results of operations, liquidity and financial condition and could impact our impairment assessments of accounts receivable, ~~property, right-of-use ("ROU")~~intangible assets, ~~goodwill~~long-lived assets and ~~intangible assets.~~goodwill.

Our unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information. Therefore, certain information and notes normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. In our opinion, all adjustments considered necessary for a fair presentation of the interim periods presented have been included. Such adjustments are of a normal and recurring nature. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates are reasonable.

These interim consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto as of and for the fiscal year ended December ~~29, 2021~~28, 2022 which are contained in our audited Annual Report on Form 10-K for the fiscal year ended December ~~29, 2021.~~28, 2022. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire fiscal year ending December ~~28, 2022.~~27, 2023. Our significant interim accounting policies include the recognition of advertising and marketing costs, generally in proportion to revenue, and the recognition of income taxes using an estimated annual effective rate.

Note 2. Summary of Significant Accounting Policies

Newly Adopted Accounting Standards

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which was later clarified in January 2021 by ASU 2021-01, “Reference Rate Reform (Topic 848): Scope”. Additionally, in December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848):Deferral of the Sunset Date of Topic 848”, which allows ASU 2020-04 to be adopted and applied prospectively to contract modifications made on or before December 31, 2024. The guidance provides optional guidance, for a limited time, to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The Company adopted ASU 2020-04 on March 12, 2020. The adoption of and future elections under this new guidance did not and are not expected to have a material impact on the Company’s consolidated financial position or results of operations. The guidance is effective through December 31, ~~2022.~~2024.

Accounting Standards to be Adopted

We reviewed all other newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on our consolidated financial statements as a result of future adoption.

Note 3. ~~Acquisition of Keke's Breakfast Cafe~~

On July 20, 2022, the Company completed its acquisition of Keke's pursuant to that certain Asset Purchase Agreement (the "Purchase Agreement"), dated May 3, 2022, which was subsequently amended by the First Amendment to Asset Purchase Agreement (the "First Amendment"), dated July 11, 2022, by and between the Company, as purchaser, and K2 Restaurants, Inc. together with the other sellers and principals party thereto, for the acquisition of certain assets and assumption of certain liabilities of the franchise business, consisting of 44 franchised restaurants, and eight company owned and operated restaurants.

Pursuant to the Purchase Agreement, we agreed to purchase Keke's for an aggregate purchase price of $82.5 million. Of the aggregate purchase price, $81.5 million was funded by utilizing cash on hand as well as funds from the Company's revolving credit facility, with the remaining $1.0 million to be paid as part of the post closing adjustments.

The acquisition was accounted for as a business combination using the acquisition method of accounting. The preliminary allocation of the purchase price is based on management's analysis, including work performed by third party valuation specialists. We will continue to obtain information to assist in determining the fair value of net assets acquired during the measurement period.

~~The components of the preliminary purchase price allocation were as follows:~~


	~~(In thousands)~~
~~Gross cash consideration~~	$	~~81,500~~
~~Payable to seller (included in other current liabilities)~~	~~1,000~~
~~Total consideration paid~~	~~82,500~~
~~Assets:~~
~~Property~~	~~2,015~~
~~Operating lease ROU assets~~	~~7,908~~
~~Franchise agreements~~	~~10,700~~
~~Trade name~~	~~35,600~~
~~Liabilities:~~
~~Operating lease liabilities~~	~~7,908~~
~~Deferred franchise revenue~~	~~992~~
~~Other liabilities~~	36
~~Net assets acquired, excluding goodwill~~	~~47,287~~
~~Goodwill~~	$	~~35,213~~

The Keke's trade name has been assigned an indefinite life, and therefore, will not be amortized, but rather tested annually for impairment. Franchise agreements have a weighted average useful life of 14.9 years. Goodwill attributable to the Keke's acquisition will be amortized and deductible for tax purposes. Goodwill is considered to represent the value associated with the workforce and synergies anticipated to be realized as a combined company.

Acquisition transaction costs totaling approximately $0.6 million during the year-to-date period ended September 28, 2022 were recorded in general and administrative expenses in the accompanying Consolidated Statements of Operations.

Results of operations starting from the date of acquisition of Keke's have been included in our unaudited Consolidated Financial Statements for the quarter and year-to-date periods ended September 28, 2022. The Keke's acquisition is not material to our unaudited Consolidated Financial Statements, and therefore, supplemental pro forma financial information for the quarter and year-to-date periods ended September 28, 2022 and the respective prior year periods related to the acquisition is not included herein.

~~Note 4.~~ Receivables

Receivables consisted of the following:

September 28, 2022 December 29, 2021
(In thousands)
Receivables, net:
Trade accounts receivable from franchisees $ 12,393 $ 13,430
Financing receivables from franchisees 9,296 1,027
Vendor receivables 1,637 4,041
Credit card receivables 596 747
Other 1,140 950
Allowance for doubtful accounts (549) (574)
Total receivables, net $ 24,513 $ 19,621
Other noncurrent assets:
Financing receivables from franchisees $ 6 $ 293


	March 29, 2023		December 28, 2022
	(In thousands)
Receivables, net:
Trade accounts receivable from franchisees	$	14,863	$	13,314
Other receivables from franchisees	4,469		6,731

Vendor receivables	2,070		3,466
Credit card receivables	707		896
Other	1,621		1,545
Allowance for doubtful accounts	(287)		(376)
Total receivables, net	$	23,443	$	25,576

Note 5.4. Goodwill and Intangible Assets

The following ~~table reflects~~tables reflect the changes in carrying ~~amount~~amounts of ~~goodwill:~~goodwill and goodwill by segment:


	~~(In thousands)~~
~~Balance, December 29, 2021~~	$	~~36,884~~
~~Addition related to the acquisition of Keke's~~	~~35,213~~
~~Addition related to the acquisition of a Denny's franchise unit~~	~~643~~
~~Balance, September 28, 2022~~	~~72,740~~


			March 29, 2023
			(In thousands)
Balance, beginning of year			$	72,740

Reclassifications to assets held for sale			(598)

Balance, end of period			$	72,142

	March 29, 2023		December 28, 2022
	(In thousands)
Goodwill by segment
Denny’s	$	37,527	$	37,527
Other	34,615		35,213
Total goodwill	$	72,142	$	72,740

Intangible assets consisted of the following:

September 28, 2022 December 29, 2021
Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization
(In thousands)
Intangible assets with indefinite lives:
Trade names (1)
$ 79,687 $ — $ 44,087 $ —
Liquor licenses 120 — 120 —
Intangible assets with definite lives:
Reacquired franchise rights 11,801 6,739 12,218 6,199
Franchise agreements (1)
10,700 104 — —
Intangible assets, net $ 102,308 $ 6,843 $ 56,425 $ 6,199

~~(1) The increases in trade names and franchise agreements is a result of the Keke's acquisition. See Note 3 for details on the Keke's acquisition.~~


	March 29, 2023				December 28, 2022
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Intangible assets with indefinite lives:
Trade names	$	79,687	$	—	$	79,687	$	—
Liquor licenses	120		—		120		—
Intangible assets with definite lives:
Reacquired franchise rights	10,489		5,947		10,489		5,697
Franchise agreements	10,700		427		10,700		265
Intangible assets, net	$	100,996	$	6,374	$	100,996	$	5,962

Amortization expense for intangible assets with definite lives totaled $0.4 million and ~~$1.1~~$0.3 million for the ~~quarter~~quarters ended March 29, 2023 and ~~year-to-date periods ended September 28,~~March 30, 2022, ~~respectively. Amortization expense for intangible assets with definite lives totaled $0.3 million and $1.0 million for the quarter and year-to-date period ended September 29, 2021,~~ respectively.

~~As of September 28, 2022, estimated amortization expense for intangible assets with definite lives in the next five years is as follows:~~

(In thousands)
Remainder of 2022 $ 429
2023 1,536
2024 1,466
2025 1,410
2026 1,242

Note 6.5. Other Current Liabilities

Other current liabilities consisted of the following:


		September 28, 2022		December 29, 2021			March 29, 2023		December 28, 2022
		(In thousands)					(In thousands)
Accrued payroll	Accrued payroll	$	17,348	$	20,676	Accrued payroll	$	13,546	$	17,903
Current portion of liability for insurance claims	Current portion of liability for insurance claims	3,951		4,285		Current portion of liability for insurance claims	3,415		3,492
Accrued taxes	Accrued taxes	6,459		4,533		Accrued taxes	4,035		4,452
Accrued advertising	Accrued advertising	13,825		15,355		Accrued advertising	5,820		6,069
Gift cards	Gift cards	5,512		7,170		Gift cards	6,286		7,675
Accrued legal settlements	Accrued legal settlements	5,465		3,173		Accrued legal settlements	5,538		5,446
Other	Other	10,208		8,954		Other	11,767		11,725
Other current liabilities	Other current liabilities	$	62,768	$	64,146	Other current liabilities	$	50,407	$	56,762

Note 7.6. Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:


		Total		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(In thousands)									(In thousands)
Fair value measurements as of September 28, 2022:
Deferred compensation plan investments (1)		$	10,445	$	10,445	$	—	$	—
Interest rate swaps, net (2)		17,563		—		17,563		—
Investments (3)		1,763		—		1,763		—
Total		$	29,771	$	10,445	$	19,326	$	—

Fair value measurements as of December 29, 2021:
Fair value measurements as of March 29, 2023:										Fair value measurements as of March 29, 2023:
Deferred compensation plan investments (1)	Deferred compensation plan investments (1)	$	13,726	$	13,726	$	—	$	—	Deferred compensation plan investments (1)	$	10,742	$	10,742	$	—	$	—
Interest rate swaps (2)	Interest rate swaps (2)	(52,121)		—		(52,121)		—		Interest rate swaps (2)	7,988		—		7,988		—
Investments (3)	Investments (3)	2,551		—		2,551		—		Investments (3)	3,051		—		3,051		—
Total	Total	$	(35,844)	$	13,726	$	(49,570)	$	—	Total	$	21,781	$	10,742	$	11,039	$	—

Fair value measurements as of December 28, 2022:										Fair value measurements as of December 28, 2022:
Deferred compensation plan investments (1)										Deferred compensation plan investments (1)	$	10,818	$	10,818	$	—	$	—
Interest rate swaps (2)										Interest rate swaps (2)	20,047		—		20,047		—
Investments (3)										Investments (3)	1,746		—		1,746		—
Total										Total	$	32,611	$	10,818	$	21,793	$	—

(1) The fair values of our deferred compensation plan investments are based on the closing market prices of the elected investments and are included in other noncurrent assets in our Consolidated Balance Sheets.

(2) The fair values of our interest rate swaps are based upon Level 2 inputs, which include valuation models. The key inputs for the valuation models are quoted market prices, interest rates, ~~and~~ forward yield ~~curves. See~~curves and credit risk adjustments that are necessary to reflect the probability of default by the counterparty or us. For disclosures about the fair value measurements of our derivative instruments, see Note ~~8 for details on the interest rate swaps.~~7.

(3) The fair values of our investments are valued using a readily determinable net asset value per share based on the fair value of the underlying securities. There are no significant redemption restrictions associated with these investments.

1210

Those assets and liabilities measured at fair value on a non-recurring basis are summarized below:

Significant Unobservable Inputs
(Level 3) Impairment Charges
(In thousands)
Fair value measurements for the year-to-date period ended September 28, 2022:
Assets held and used (1)
$ 753 $ 963


		Significant Unobservable Inputs (Level 2)		Impairment Charges
	(In thousands)
Fair value measurements for the year-to-date period ended March 29, 2023:
Assets held for sale (1)		$	100	$	129

(1)As of ~~September 28, 2022, impaired~~March 29, 2023, assets held for sale were written down to their estimated fair value. ~~To determine~~The fair value ~~we used the income approach,~~of assets held for sale is based on Level 2 inputs, which assumes that the future cash flows reflect current market expectations. These fair value measurements require significant judgment using Level 3 inputs, such as discounted cash flows from operations, which are not observable from the market, directly or indirectly. There is uncertainty in the projected future cash flows used in the Company's impairment analysis, which requires the use of estimates and assumptions. If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods.include anticipated sales agreements.

Assets that are measured at fair value on a non-recurring basis include property, operating ~~ROU~~right-of-use assets, finance ~~ROU~~right-of-use assets, goodwill and ~~reacquired franchise rights.~~intangible assets. During the ~~year-to-date period~~quarter ended ~~September 28, 2022,~~March 29, 2023, we recognized impairment charges of ~~$1.0~~$0.1 million related to certain of these assets. See Note ~~10.~~

~~Additionally, assets measured at fair value on a non-recurring basis as part of the Keke’s acquisition include franchise agreements, trade name and goodwill. See Note 3 for more details.~~9.

The carrying amounts of cash and cash equivalents, accounts receivables, accounts payable and accrued expenses are deemed to approximate fair value due to the immediate or short-term maturity of these instruments. The fair value of notes receivable approximates the carrying value after consideration of recorded allowances and related risk-based interest rates. The ~~outstanding senior secured revolver is~~liabilities under our credit facility are carried at historical cost, which approximates fair value. The fair value of our senior secured revolver approximates its carrying value since it is a variable rate facility (Level 2).

Note 8.7. Long-Term Debt

The Company and certain of its subsidiaries have a credit facility consisting of a five-year $400 million senior secured revolver (with a $25 million letter of credit sublimit). The maturity date for the credit facility is August 26, 2026. The credit facility includes an accordion feature that would allow us to increase the size of the facility to $450 million. Borrowings bear a tiered interest rate, which is based on the Company's consolidated leverage ratio. The ~~maturity date for~~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. Subsequent to March 29, 2023, the credit facility ~~is August 26, 2026.~~was amended to change the benchmark interest rate from LIBOR to Adjusted Daily Simple SOFR. See Note 17.

The credit facility is available for working capital, capital expenditures and other general corporate purposes. The credit facility is guaranteed by the Company and its material subsidiaries and is secured by assets of the Company 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 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 ~~September 28, 2022.~~March 29, 2023.

As of ~~September 28, 2022,~~March 29, 2023, we had outstanding revolver loans of ~~$266.5~~$264.0 million and outstanding letters of credit under the credit facility of $12.3 million. These balances resulted in unused commitments of ~~$121.2~~$123.7 million as of ~~September 28, 2022~~March 29, 2023 under the credit facility.

As of ~~September 28, 2022,~~March 29, 2023, borrowings under the credit facility bore interest at a rate of LIBOR plus ~~1.75%~~2.25%, and the commitment fee, paid on the unused portion of the credit facility, was set to ~~0.25%~~0.35%.

Prior to considering the impact of our interest rate swaps, described below, the weighted-average interest rate on outstanding revolver loans was ~~4.45%~~6.90% and ~~2.09%~~6.37% as of ~~September~~March 29, 2023 and December 28, 2022, ~~and December 29, 2021,~~ 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 ~~4.40%~~5.34% and ~~4.44%~~5.31% as of ~~September~~March 29, 2023 and December 28, 2022, ~~and December 29, 2021,~~ respectively.

1311

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 ~~September 28, 2022~~March 29, 2023 is as follows:


Trade Date	Trade Date	Effective Date	Maturity Date	Notional Amount			Fair Value		Fixed Rate		Trade Date	Effective Date	Maturity Date	Notional Amount			Fair Value		Fixed Rate
				(In thousands)										(In thousands)
Swaps designated as cash flow hedges	Swaps designated as cash flow hedges										Swaps designated as cash flow hedges
March 20, 2015	March 20, 2015	March 29, 2018	March 31, 2025	$	120,000		$	4,748	2.44	%	March 20, 2015	March 29, 2018	March 31, 2025	$	120,000		$	3,969	2.44	%
October 1, 2015	October 1, 2015	March 29, 2018	March 31, 2026	$	50,000		$	2,402	2.46	%	October 1, 2015	March 29, 2018	March 31, 2026	$	50,000		$	1,926	2.46	%
Dedesignated swaps
February 15, 2018	February 15, 2018	March 31, 2020	December 31, 2033	$	120,000	(1)	$	10,413	3.19	%	February 15, 2018	March 31, 2020	December 31, 2033	$	26,000	(1)	$	2,093	3.19	%
Total	Total			$	290,000		$	17,563			Total			$	196,000		$	7,988

(1) The notional amounts of the swaps entered into on February 15, 2018 increase periodically until they reach the maximum notional amount of ~~$425.0~~$335 million on ~~September 28, 2029.~~August 31, 2033.

Termination and Designation of Certain Interest Rate Swaps

In addition, during the quarter, we designated the remaining 2018 Swaps as cash flow hedges of our exposure to variability in future cash flows attributable to variable rate interest payments due on forecasted notional amounts. The fair value of $0.4 million related to the 2018 Swaps at the date of designation will be amortized into our Consolidated Statements of Operations as a component of interest expense, net over the remaining term of the 2018 Swaps. For the quarter ended March 29, 2023, we amortized less than $0.1 million of designation date fair value to interest expense, net related to the designation of the 2018 Swaps. At March 29, 2023, $0.3 million of designation date fair value was included in accumulated other comprehensive loss, net in our Consolidated Statements of Shareholders' Deficit. We expect to amortize $0.1 million of the designation date fair value to interest expense, net in our Consolidated Statements of Operations during the next 12 months.

See PreviouslyDedesignated Interest Rate Swaps below for information on the 2018 Swaps prior to their designation as cash flow hedges.

Interest Rate 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 other comprehensive ~~income.~~income (loss). The interest rate swaps entered into in 2015 and 2018 are designated as cash flow hedges with unrealized gains and losses recorded as a component of accumulated other comprehensive loss, net.

As of ~~September 28, 2022,~~March 29, 2023, the fair value of the swaps designated as cash flow hedges was an asset of ~~$7.1~~$8.0 million, recorded as a component of other noncurrent assets. The designated swaps have an offsetting amount (before taxes) recorded as a component of accumulated other comprehensive loss, net in our Consolidated Balance Sheets. See Note 1413 for amounts recorded in accumulated other comprehensive loss related to interest rate swaps. We expect to reclassify ~~approximately $1.1~~$4.9 million from accumulated other comprehensive loss, net as a reduction to interest expense, net in our Consolidated Statements of Operations related to swaps designated as cash flow hedges during the next 12 months.

Previously Dedesignated Interest Rate Swaps

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”)~~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.~~Swaps in 2020. As a result, we reclassified a portion of losses from accumulated other comprehensive loss, net to other nonoperating ~~income,~~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. For the ~~quarter and three~~ quarters ended ~~September 28,~~March 29, 2023 and March 30, 2022, unrealized losses of less than $0.1 million were reclassified to interest expense, net related to the 2018 Swaps. For the quarter and three quarters ended September 29, 2021, no unrealized losses and approximately $0.2 million of unrealized losses, respectively, were reclassified to interest expense, net related to thededesignated 2018 Swaps. At ~~September 28, 2022, $64.2~~March 29, 2023, $64.1 million (before taxes) of unrealized losses remained in accumulated other comprehensive loss, net. These amounts will continue to amortize from accumulated other comprehensive loss, net subsequent to the redesignation of the 2018 Swaps. See Termination and Designation of Certain Interest Rate Swaps above. We expect to amortize ~~approximately $0.2~~$0.3 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 12 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~~were recorded as a component of other nonoperating ~~income,~~expense (income), net in our Consolidated Statements of ~~Operations.~~Operations for the periods prior to their designation as cash flow hedges during the quarter ended March 29, 2023. See Termination and Designation of Certain Interest Rate Swaps above. For the quarter ended March 29, 2023, we recorded expense of $10.6 million, and ~~three quarters~~for the quarter ended ~~September 28,~~March 30, 2022, we recorded income of ~~approximately $10.8~~$20.3 million, ~~and $52.7 million, respectively,~~ as a component of other nonoperating ~~income,~~expense (income), net related to the 2018 Swaps resulting from changes in fair value. For the quarter and three quarters ended September 29, 2021, we recorded income of approximately $2.3 million and $14.9 million, respectively, as a component of other nonoperating income, net related to the 2018 Swaps resulting from changes in fair value. As of September 28, 2022, the fair value of the dedesignated interest rate swaps was an asset of $10.4 million, which was recorded as a component of other noncurrent assets in our Consolidated Balance Sheets.

Note 9.8. Revenues

~~Our revenues are derived primarily from two sales channels: company restaurants and franchised and licensed restaurants.~~ The following table disaggregates our revenue by sales channel and type of good or service:


		Quarter Ended				Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021		September 28, 2022		September 29, 2021				March 29, 2023		March 30, 2022
		(In thousands)										(In thousands)
Company restaurant sales	Company restaurant sales	$	52,211	$	46,470	$	145,354	$	127,611	Company restaurant sales		$	53,452	$	43,976
Franchise and license revenue:	Franchise and license revenue:									Franchise and license revenue:
Royalties	Royalties	28,992		27,336		84,276		75,297		Royalties		30,027		26,525
Advertising revenue	Advertising revenue	18,950		18,215		56,642		50,926		Advertising revenue		19,668		18,206
Initial and other fees	Initial and other fees	7,749		1,442		20,035		5,346		Initial and other fees		4,990		4,507
Occupancy revenue	Occupancy revenue	9,554		10,331		29,273		31,355		Occupancy revenue		9,334		9,893
Franchise and license revenue	Franchise and license revenue	65,245		57,324		190,226		162,924		Franchise and license revenue		64,019		59,131
Total operating revenue	Total operating revenue	$	117,456	$	103,794	$	335,580	$	290,535	Total operating revenue		$	117,471	$	103,107

Franchise occupancy revenue consisted of the following:


		Quarter Ended				Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021		September 28, 2022		September 29, 2021				March 29, 2023		March 30, 2022
		(In thousands)										(In thousands)
Operating lease revenue	Operating lease revenue	$	7,074	$	7,594	$	21,745	$	23,175	Operating lease revenue		$	6,871	$	7,418
Variable lease revenue	Variable lease revenue	2,480		2,737		7,528		8,180		Variable lease revenue		2,463		2,475
Total occupancy revenue	Total occupancy revenue	$	9,554	$	10,331	$	29,273	$	31,355	Total occupancy revenue		$	9,334	$	9,893

Balances related to contracts with customers ~~consist~~consists of receivables, contract assets, deferred franchise revenue and deferred gift card revenue. See Note 43 for details on our receivables.

~~The components of the change in deferred franchise revenue are as follows:~~


	~~(In thousands)~~
~~Balance, December 29, 2021~~	$	~~19,896~~
~~Fees received from franchisees~~	~~2,853~~
~~Acquired deferred franchise revenue~~	~~992~~
~~Franchisee deferred costs~~ ~~(1)~~	~~(3,845)~~
~~Revenue recognized, net~~ ~~(2)~~	~~(2,184)~~
~~Balance, September 28, 2022~~	~~17,712~~
~~Less current portion included in other current liabilities~~	~~1,881~~
~~Deferred franchise revenue included in other noncurrent liabilities~~	$	~~15,831~~

~~(1) Deferred costs are contract assets consisting of incentives given to franchisees related to the rollout of kitchen equipment to all franchise locations.~~

~~(2) Of this amount $1.9 million was included in the deferred franchise revenue balance as of December 29, 2021.~~

Deferred franchise revenue consists primarily of the unamortized portion of initial franchise fees that are currently being amortized into revenue and amounts related to development agreements and unopened restaurants that we will begin amortizing into revenue when the related restaurants are ~~opened net of certain deferred costs.~~opened. Deferred franchise revenue represents our remaining performance obligations to our franchisees, excluding amounts of variable consideration related to sales-based royalties and advertising.

The ~~Company has purchased equipment~~components of the change in deferred franchise revenue are as follows:


	(In thousands)
Balance, December 28, 2022	$	20,751
Fees received from franchisees	455

Revenue recognized (1)	(745)
Balance, March 29, 2023	20,461
Less current portion included in other current liabilities	2,210
Deferred franchise revenue included in other noncurrent liabilities	$	18,251

(1) Of this amount $0.7 million was included in the deferred franchise revenue balance as of December 28, 2022.

We record contract assets related to ~~the rollout of kitchen~~incentives and subsidies provided to franchisees related to new unit openings and/or equipment for franchise restaurants which is billed to the franchisee and recognized as revenue as the equipment is installed, less a total of $5.4 million in commitments from the Company, $3.9 million of which has been deferred as contract assets as of September 28, 2022. Amounts committed from the Company are contract assets that have been netted against deferred revenue andupgrades. These amounts will be recognized as a component of franchise and license revenue over the remaining term of the related franchise agreements. ~~For~~

The components of the ~~quarter~~change in contract assets are as follows:


	(In thousands)
Balance, December 28, 2022	$	5,361
Franchisee deferred costs	942
Contract asset amortization	(291)
Balance, March 29, 2023	6,012
Less current portion included in other current assets	839
Contract assets included in other noncurrent assets	$	5,173

During 2021, 2022 and ~~three quarters ended September 28, 2022, we~~2023, the Company purchased equipment related to a kitchen modernization program for franchise restaurants. We bill our franchisees and recognize revenue when the related equipment is installed, less amounts contributed from the Company, which have been deferred as contract assets in the table above. We recognized ~~$5.6 million and $13.5~~$2.2 million of revenue related to the sale of kitchen equipment to franchisees during the quarters ended March 29, 2023 and March 30, 2022, respectively. As of ~~September 28, 2022,~~March 29, 2023, we had ~~approximately $7.6~~$1.3 million in inventory and ~~$8.6~~$4.7 million in receivables related to the kitchen equipment rollout. As of December ~~29, 2021,~~28, 2022, we had ~~approximately $3.7~~$3.6 million in inventory and ~~$0.4~~$6.6 million in receivables related to the kitchen equipment rollout.

Deferred gift card liabilities consist of the unredeemed portion of gift cards sold in company restaurants and at third party locations. The balance of deferred gift card liabilities represents our remaining performance obligations to our customers. The balance of deferred gift card liabilities as of ~~September~~March 29, 2023 and December 28, 2022 ~~and December 29, 2021~~ was ~~$5.5~~$6.3 million and ~~$7.2~~$7.7 million, respectively. During the ~~year-to-date period~~quarter ended ~~September 28, 2022,~~March 29, 2023, we recognized revenue of ~~$0.4~~$0.2 million from gift card redemptions at company restaurants.

Note ~~10.~~9. Operating (Gains), Losses and Other Charges, Net

Operating (gains), losses and other charges, net consisted of the following:

Quarter Ended Three Quarters Ended
September 28, 2022 September 29, 2021 September 28, 2022 September 29, 2021
(In thousands)
Gains on sales of assets and other, net $ (3,066) $ (93) $ (3,311) $ (1,100)
Restructuring charges and exit costs 472 (122) 1,297 1,304
Impairment charges 697 — 963 —
Operating (gains), losses and other charges, net $ (1,897) $ (215) $ (1,051) $ 204


	Quarter Ended
		March 29, 2023		March 30, 2022
		(In thousands)
Gains on sales of assets and other, net		$	(1,522)	$	(146)
Restructuring charges and exit costs		64		146
Impairment charges		129		—
Operating (gains), losses and other charges, net		$	(1,329)	$	—

We recorded impairment charges of $0.1 million related to property during the quarter ended March 29, 2023, resulting from assets being classified as held for sale. As of ~~September~~March 29, 2023, we had recorded assets held for sale at the lesser of carrying value or fair value amount of $2.3 million (consisting of property of $1.4 million, goodwill of $0.6 million and other assets of $0.3 million) related to three parcels of real estate and three Keke's restaurants. As of December 28, 2022, we had recorded assets held for sale at their carrying amount of ~~$1.1~~$1.4 million (consisting of property of ~~$0.9~~$1.1 million and other assets of ~~$0.2~~$0.3 million) related to ~~three~~four parcels of real estate. ~~There were no assets held for sale as of December 29, 2021.~~

Restructuring charges and exit costs consisted of the following:


		Quarter Ended				Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021		September 28, 2022		September 29, 2021				March 29, 2023		March 30, 2022
		(In thousands)										(In thousands)
Exit costs	Exit costs	$	38	$	101	$	88	$	324	Exit costs		$	—	$	12
Severance and other restructuring charges	Severance and other restructuring charges	434		(223)		1,209		980		Severance and other restructuring charges		64		134
Total restructuring charges and exit costs	Total restructuring charges and exit costs	$	472	$	(122)	$	1,297	$	1,304	Total restructuring charges and exit costs		$	64	$	146

Exit costs primarily consist of costs related to closed restaurants. Exit cost liabilities related to lease costs are included as a component of operating lease liabilities in our Consolidated Balance Sheets.

As of ~~September~~March 29, 2023 and December 28, 2022, ~~and December 29, 2021,~~ we had accrued severance and other restructuring charges of ~~$0.9~~$0.4 million and ~~$0.1~~$0.7 million, respectively. The balance as of ~~September 28, 2022~~March 29, 2023 is expected to be paid during the next 12 months.

We recorded impairment charges of $0.7 million and $1.0 million (consisting of property and ROU assets) during the quarter and year-to-date period ended September 28, 2022, respectively, resulting from our assessment of underperforming restaurants and recoverability of ROU assets. The $0.7 million included $0.4 million related to property and $0.3 million related to operating lease ROU assets. The $1.0 million included $0.6 million related to property, $0.3 million related to operating lease ROU assets and $0.1 million related to finance lease ROU assets.

Note ~~11.~~10. Share-Based Compensation

Total share-based compensation included as a component of general and administrative expenses was as follows:


		Quarter Ended				Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021		September 28, 2022		September 29, 2021				March 29, 2023		March 30, 2022
		(In thousands)										(In thousands)
Employee share awards	Employee share awards	$	1,706	$	3,127	$	8,784	$	9,544	Employee share awards		$	2,847	$	3,794
Restricted stock units for board members	Restricted stock units for board members	241		225		683		668		Restricted stock units for board members		247		221
Total share-based compensation	Total share-based compensation	$	1,947	$	3,352	$	9,467	$	10,212	Total share-based compensation		$	3,094	$	4,015

Employee Share Awards

During the quarter ended March ~~30, 2022,~~29, 2023, we granted certain employees ~~approximately 233,000~~0.3 million performance share units ("PSUs") with a weighted average grant date fair value of ~~$24.51~~$18.36 per share that vest based on the total shareholder return (“TSR”) of our common stock compared to the TSRs of a group of peer companies and ~~approximately 233,000~~0.3 million PSUs with a weighted average grant date fair value of ~~$15.59~~$11.92 per share that vest based on our Adjusted EPS growth rate versus plan, as defined under the terms of the award. As the TSR based PSUs contain a market condition, a Monte Carlo valuation was used to determine the grant date fair value. The performance period for these PSUs is the three year fiscal period beginning December ~~30, 2021~~29, 2022 and ending December ~~25, 2024.~~31, 2025. The PSUs will completely vest and be earned at the end of the performance period at which point the relative TSR and Adjusted EPS growth rate achievement percentages will be applied to the vested units (from 0% to 200% of the target award). We recognize compensation cost associated with ~~approximately 312,000~~0.5 million of these PSU awards over the entire performance period on a straight-line basis, with compensation cost for the remaining ~~154,000~~0.1 million PSU awards recognized on a graded-vesting basis due to the accelerated vesting terms for certain retirement eligible individuals.

During the quarter ended March ~~30, 2022,~~29, 2023, we also granted certain employees ~~approximately 310,000~~0.7 million restricted stock units ("RSUs") with a weighted average grant date fair value of ~~$15.59~~$11.85 per share. ~~The~~These RSUs generally vest evenly over the three year fiscal period beginning December ~~30, 2021~~29, 2022 and ending December ~~25, 2024.~~31, 2025. We recognize compensation cost associated with these RSU awards on a straight-line basis over the entire performance period of the award.

Additionally, during the quarters ended June 29, 2022 and September 28, 2022, we granted PSUs and RSUs to certain employees. The grants included approximately 78,000 PSUs with a weighted average grant date fair value of $12.18 per share that vest based on the TSR of our common stock compared to the TSRs of a group of peer companies and approximately 78,000 PSUs with a weighted average grant date fair value of $9.93 per share that vest based on our Adjusted EPS growth rate versus plan, as defined under the terms of the award. As the TSR based PSUs contain a market condition, a Monte Carlo valuation was used to determine the grant date fair value. The performance period and application of achievement percentages for these PSUs are the same as mentioned above. We recognize compensation cost associated with these PSU awards on a straight-line basis. In addition, the grants included approximately 104,000 RSUs with a weighted average grant date fair value of $9.93 per share.

During the ~~three quarters~~quarter ended ~~September 28, 2022,~~March 29, 2023, we issued ~~approximately 768,000~~0.5 million shares of common stock related to vested PSUs and RSUs. In addition, ~~approximately 24,000 shares of common stock were deferred and approximately 407,000~~0.3 million shares of common stock were withheld in lieu of taxes related to vested PSUs and RSUs.

As of ~~September 28, 2022,~~March 29, 2023, we had ~~approximately $11.5~~$24.1 million of unrecognized compensation cost related to unvested PSU awards and RSU awards outstanding, which have a weighted average remaining contractual term of ~~1.9~~2.3 years.

Restricted Stock Units for Board Members

During the quarter and three quarters ended September 28, 2022, we granted less than 0.1 million RSUs (which are equity classified) with a weighted average grant date fair value of $9.93 per unit to non-employee members of our Board of Directors. The RSUs vest after a one year service period. A director may elect to convert these awards into shares of common stock either on a specific date in the future (while still serving as a member of our Board of Directors), upon termination as a member of our Board of Directors, or in three equal annual installments commencing after termination of service as a member of our Board of Directors.

~~During the quarter and three quarters ended September 28, 2022, less than 0.1 million RSUs were converted into shares of common stock.~~

As of ~~September 28, 2022,~~March 29, 2023, we had ~~approximately $0.6~~$0.1 million of unrecognized compensation cost related to ~~these~~ unvested RSU awards outstanding, which have a weighted average remaining contractual term of ~~0.6~~0.1 years.

Note ~~12.~~11. Income Taxes

The effective income tax rate was ~~24.3%~~61.5% for the quarter ~~and 25.7% for the year-to-date period~~ ended ~~September 28, 2022,~~March 29, 2023, compared to ~~25.0% and 24.1%~~27.1% for the prior year ~~periods, respectively.~~period. The effective income tax rate for the quarter ended March 29, 2023 included a 36.6% discrete item relating to share-based compensation.

Note ~~13.~~12. Net Income Per Share

The amounts used for the basic and diluted net income per share calculations are summarized below:


		Quarter Ended				Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021		September 28, 2022		September 29, 2021				March 29, 2023		March 30, 2022
		(In thousands, except per share amounts)										(In thousands, except per share amounts)
Net income	Net income	$	17,083	$	12,265	$	61,941	$	34,618	Net income		$	597	$	21,855

Weighted average shares outstanding - basic	Weighted average shares outstanding - basic	59,020		65,447		61,558		65,413		Weighted average shares outstanding - basic		57,638		63,343
Effect of dilutive share-based compensation awards	Effect of dilutive share-based compensation awards	20		382		128		401		Effect of dilutive share-based compensation awards		202		237
Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	59,040		65,829		61,686		65,814		Weighted average shares outstanding - diluted		57,840		63,580

Net income per share - basic	Net income per share - basic	$	0.29	$	0.19	$	1.01	$	0.53	Net income per share - basic		$	0.01	$	0.35
Net income per share - diluted	Net income per share - diluted	$	0.29	$	0.19	$	1.00	$	0.53	Net income per share - diluted		$	0.01	$	0.34

Anti-dilutive share-based compensation awards	Anti-dilutive share-based compensation awards	641		365		737		445		Anti-dilutive share-based compensation awards		807		829

Note ~~14.~~13. Shareholders' Deficit

Share Repurchases

Our credit facility permits the repurchase of the Company's stock and the payment of cash dividends subject to certain limitations. Our Board of Directors approves share repurchases of our common stock. Under these authorizations, we may, from time to time, purchase shares in the open market (including pre-arranged stock trading plans in accordance with the guidelines specified in Rule 10b5-1 under the Securities Exchange Act of 1934, as amended) or in privately negotiated transactions, subject to market and business conditions. Currently, we are operating under a $250 million share repurchase authorization approved by the Board of Directors in December 2019.

During the ~~three quarters~~quarter ended ~~September 28, 2022,~~March 29, 2023, we repurchased a total of ~~5.5~~0.8 million shares of our common stock for ~~approximately $57.1 million.~~$9.0 million under the current authorization. This brings the total amount repurchased under the current authorization to ~~approximately $89.7~~$106.4 million, leaving ~~approximately $160.3~~$143.6 million that can be used to repurchase our common stock under this authorization as of ~~September 28, 2022.~~March 29, 2023. Repurchased shares are included as treasury stock in our Consolidated Balance Sheets and our Consolidated Statements of Shareholders' Deficit.

As of ~~September 28, 2022, 7.5~~March 29, 2023, 9.1 million shares were held in treasury stock.

1816

Accumulated Other Comprehensive Loss, Net

The components of the change in accumulated other comprehensive loss, net were as follows:

Defined Benefit Plans Derivatives Accumulated Other Comprehensive Loss, Net
(In thousands)
Balance as of December 29, 2021 $ (900) $ (53,570) $ (54,470)
Amortization of net loss (1)
92 — 92
Changes in the fair value of cash flow hedges — 12,965 12,965
Reclassification of cash flow hedges to interest expense, net (2)
— 1,818 1,818
Amortization of unrealized losses related to dedesignated swaps to interest expense, net — 16 16
Income tax expense related to items of other comprehensive income (23) (3,701) (3,724)
Balance as of September 28, 2022 $ (831) $ (42,472) $ (43,303)


	Defined Benefit Plans		Derivatives		Accumulated Other Comprehensive Loss, Net
	(In thousands)
Balance as of December 28, 2022	$	(555)	$	(42,142)	$	(42,697)

Amortization of net loss (1)	89		—		89

Changes in the fair value of cash flow hedges	—		1,263		1,263
Reclassification of cash flow hedges to interest expense, net (2)	—		(930)		(930)

Amortization of unrealized losses related to interest rate swaps to interest expense, net	—		56		56
Income tax expense related to items of other comprehensive income (loss)	(22)		(99)		(121)
Balance as of March 29, 2023	$	(488)	$	(41,852)	$	(42,340)

(1) Before-tax amount related to our defined benefit plans that was reclassified from accumulated other comprehensive loss, net and included as a component of pension expense within general and administrative expenses in our Consolidated ~~Statements~~Statement of Operations during the ~~three quarters~~quarter ended ~~September 28, 2022.~~March 29, 2023.

(2) Amounts reclassified from accumulated other comprehensive loss, net into interest expense, net in our Consolidated ~~Statements~~Statement of Operations represent payments either ~~received from~~(received from) or made to the counterparty for the interest rate hedges. See Note 87 for additional details.

Note ~~15.~~14. Commitments and Contingencies

Legal Proceedings

There are various claims and pending legal actions against or indirectly involving us, incidental to and arising out of the ordinary course of the business. In the opinion of management, based upon information currently available, the ultimate liability with respect to these proceedings and claims will not materially affect our consolidated results of operations or financial position.

Note ~~16.~~15. Supplemental Cash Flow Information


		Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021			March 29, 2023		March 30, 2022
		(In thousands)					(In thousands)
Income taxes paid, net	Income taxes paid, net	$	6,161	$	5,638	Income taxes paid, net	$	489	$	449
Interest paid	Interest paid	$	9,117	$	11,189	Interest paid	$	4,253	$	2,849

Noncash investing and financing activities:	Noncash investing and financing activities:					Noncash investing and financing activities:

Business acquisition payable		$	1,000	$	—

Issuance of common stock, pursuant to share-based compensation plans	Issuance of common stock, pursuant to share-based compensation plans	$	9,547	$	3,087	Issuance of common stock, pursuant to share-based compensation plans	$	5,257	$	4,081
Receipt of real estate receivable		$	3,000	$	—

Execution of finance leases	Execution of finance leases	$	506	$	992	Execution of finance leases	$	14	$	133
Treasury stock payable	Treasury stock payable	$	292	$	335	Treasury stock payable	$	468	$	—

Accrued deferred financing costs		$	—	$	36

Note 16. Segment Information

We manage our business by brand and as a result have identified two operating segments, Denny’s and Keke’s. In addition, we have identified Denny’s as a reportable segment. The Denny’s reportable segment includes the results of all company and franchised and licensed Denny’s restaurants. Our Keke’s operating segment, which includes the results of all company and franchise restaurants, is included in Other.

The primary sources of revenues for all operating segments are the sale of food and beverages at our company restaurants and the collection of royalties, advertising revenue, initial and other fees, including occupancy revenue, from restaurants operated by our franchisees. We do not rely on any major customer as a source of sales and the customers and assets of all operating segments are located predominantly in the United States. There are no material transactions between segments.

Management’s measure of segment income is restaurant-level operating margin. The Company defines restaurant-level 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. The Company excludes general and administrative expenses, which include primarily non restaurant-level costs associated with support of company and franchised restaurants and other activities at their corporate office. The Company excludes 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. The Company excludes operating (gains), losses and other charges, net, to provide a clearer perspective of its ongoing operating performance. Restaurant-level operating margin is used by our chief operating decision maker (“CODM”) to evaluate restaurant-level operating efficiency and performance.

The following tables present revenues by segment and a reconciliation of restaurant-level operating margin to operating income:


	Quarter Ended
		March 29, 2023		March 30, 2022
Revenues by operating segment:		(In thousands)
Denny’s		$	112,230	$	103,107
Other		5,241		—
Total operating revenue		$	117,471	$	103,107

Segment income:
Denny’s		$	36,640	$	33,813
Other		1,952		—
Total restaurant-level operating margin		$	38,592	$	33,813

General and administrative expenses		$	20,118	$	16,958
Depreciation and amortization		3,656		3,548
Operating (gains), losses and other charges, net		(1,329)		—
Total other operating expenses		22,445		20,506
Operating income		16,147		13,307
Interest expense, net		4,505		2,960
Other nonoperating expense (income), net		10,093		(19,615)
Net income before income taxes		1,549		29,962
Provision for income taxes		952		8,107
Net income		$	597	$	21,855


	March 29, 2023		December 28, 2022
Segment assets:	(In thousands)
Denny’s	$	377,616	$	394,051
Other	102,831		104,284
Total assets	$	480,447	$	498,335

Note 17. Subsequent Event

On March 31, 2023, the Company entered into an amendment of its credit facility. The amendment transitions our credit facility benchmark interest rate from LIBOR to Adjusted Daily Simple SOFR. The conversion to Adjusted Daily Simple SOFR is not expected to have a material impact on the Company's consolidated financial position or results of operations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company urges caution in considering its current trends and any outlook on its operations and financial results disclosed in this report. In addition, certain matters discussed in this report may constitute forward-looking statements. These forward-looking statements, which reflect management's 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”, "will" 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 report 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 evolving COVID-19 pandemic and related containment measures, including the potential for further operational disruption from government mandates affecting restaurants; economic, public health and political conditions that impact consumer confidence and spending, including COVID-19; commodity and labor inflation; the ability to effectively staff restaurants; our ability to maintain adequate levels of liquidity for our cash needs, including debt obligations, payment of dividends, planned share repurchases and capital expenditures as well as the ability of our customers, suppliers, franchisees and lenders to access sources of liquidity to provide for their own cash needs; competitive pressures from within the restaurant industry; our ability to integrate and derive the expected benefits from our acquisition of Keke's; 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, 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 and geopolitical events (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 fiscal year ended December ~~29, 2021,~~28, 2022, this report on Form 10-Q and in the Company's subsequent quarterly reports on Form 10-Q.

~~Recent Events:~~ Acquisition of Keke's

On July 20, 2022, the Company completed its ~~previously announced~~ acquisition of Keke's. At ~~September 28, 2022,~~March 29, 2023, the Keke's brand consisted of 5354 restaurants, 4546 of which were franchised restaurants and eight of which were company operated. For further details, refer to Note 3 to our ~~unaudited~~ Consolidated Financial Statements in Part I,IV, Item 115 of ~~this report.~~our Form 10-K for the fiscal year ended December 28, 2022.

2019

Statements of Operations

The following table contains information derived from our Consolidated Statements of Operations expressed as a percentage of total operating revenue, except as noted below. Percentages may not add due to rounding.


		Quarter Ended								Three Quarters Ended									Quarter Ended
		September 28, 2022				September 29, 2021				September 28, 2022				September 29, 2021						March 29, 2023	March 30, 2022
		(In thousands)																			(In thousands)
Revenue:	Revenue:																	Revenue:
Company restaurant sales	Company restaurant sales	$	52,211	44.5	%	$	46,470	44.8	%	$	145,354	43.3	%	$	127,611	43.9	%	Company restaurant sales			$	53,452	45.5	%	$	43,976	42.7	%
Franchise and license revenue	Franchise and license revenue	65,245		55.5	%	57,324		55.2	%	190,226		56.7	%	162,924		56.1	%	Franchise and license revenue			64,019		54.5	%	59,131		57.3	%
Total operating revenue	Total operating revenue	117,456		100.0	%	103,794		100.0	%	335,580		100.0	%	290,535		100.0	%	Total operating revenue			117,471		100.0	%	103,107		100.0	%
Costs of company restaurant sales, excluding depreciation and amortization (a):	Costs of company restaurant sales, excluding depreciation and amortization (a):																	Costs of company restaurant sales, excluding depreciation and amortization (a):
Product costs	Product costs	14,462		27.7	%	11,430		24.6	%	38,874		26.7	%	31,149		24.4	%	Product costs			14,039		26.3	%	11,244		25.6	%
Payroll and benefits	Payroll and benefits	20,176		38.6	%	17,404		37.5	%	55,598		38.3	%	47,339		37.1	%	Payroll and benefits			20,240		37.9	%	17,086		38.9	%
Occupancy	Occupancy	4,294		8.2	%	3,013		6.5	%	11,316		7.8	%	8,707		6.8	%	Occupancy			4,094		7.7	%	3,240		7.4	%
Other operating expenses	Other operating expenses	9,519		18.2	%	6,722		14.5	%	26,116		18.0	%	19,351		15.2	%	Other operating expenses			8,119		15.2	%	7,055		16.0	%
Total costs of company restaurant sales, excluding depreciation and amortization	Total costs of company restaurant sales, excluding depreciation and amortization	48,451		92.8	%	38,569		83.0	%	131,904		90.7	%	106,546		83.5	%	Total costs of company restaurant sales, excluding depreciation and amortization			46,492		87.0	%	38,625		87.8	%
Costs of franchise and license revenue, excluding depreciation and amortization (a)	Costs of franchise and license revenue, excluding depreciation and amortization (a)	34,579		53.0	%	27,469		47.9	%	100,513		52.8	%	79,962		49.1	%	Costs of franchise and license revenue, excluding depreciation and amortization (a)			32,387		50.6	%	30,669		51.9	%
General and administrative expenses	General and administrative expenses	16,607		14.1	%	16,497		15.9	%	50,188		15.0	%	50,992		17.6	%	General and administrative expenses			20,118		17.1	%	16,958		16.4	%
Depreciation and amortization	Depreciation and amortization	3,914		3.3	%	3,822		3.7	%	11,052		3.3	%	11,380		3.9	%	Depreciation and amortization			3,656		3.1	%	3,548		3.4	%
Operating (gains), losses and other charges, net	Operating (gains), losses and other charges, net	(1,897)		(1.6)	%	(215)		(0.2)	%	(1,051)		(0.3)	%	204		0.1	%	Operating (gains), losses and other charges, net			(1,329)		(1.1)	%	—		—	%
Total operating costs and expenses, net	Total operating costs and expenses, net	101,654		86.5	%	86,142		83.0	%	292,606		87.2	%	249,084		85.7	%	Total operating costs and expenses, net			101,324		86.3	%	89,800		87.1	%
Operating income	Operating income	15,802		13.5	%	17,652		17.0	%	42,974		12.8	%	41,451		14.3	%	Operating income			16,147		13.7	%	13,307		12.9	%
Interest expense, net	Interest expense, net	3,691		3.1	%	3,671		3.5	%	9,529		2.8	%	12,014		4.1	%	Interest expense, net			4,505		3.8	%	2,960		2.9	%
Other nonoperating income, net		(10,461)		(8.9)	%	(2,368)		(2.3)	%	(49,871)		(14.9)	%	(16,165)		(5.6)	%
Other nonoperating expense (income), net																		Other nonoperating expense (income), net			10,093		8.6	%	(19,615)		(19.0)	%
Income before income taxes	Income before income taxes	22,572		19.2	%	16,349		15.8	%	83,316		24.8	%	45,602		15.7	%	Income before income taxes			1,549		1.3	%	29,962		29.1	%
Provision for income taxes	Provision for income taxes	5,489		4.7	%	4,084		3.9	%	21,375		6.4	%	10,984		3.8	%	Provision for income taxes			952		0.8	%	8,107		7.9	%
Net income	Net income	$	17,083	14.5	%	$	12,265	11.8	%	$	61,941	18.5	%	$	34,618	11.9	%	Net income			$	597	0.5	%	$	21,855	21.2	%

(a)Costs of company restaurant sales percentages are as a percentage of company restaurant sales. Costs of franchise and license revenue percentages are as a percentage of franchise and license revenue. All other percentages are as a percentage of total operating revenue.

2120

~~Statistical Data~~


		Quarter Ended						Three Quarters Ended
Statistical Data														Statistical Data	Quarter Ended
		September 28, 2022			September 29, 2021			September 28, 2022			September 29, 2021					March 29, 2023			March 30, 2022
		(Dollars in thousands)													(Dollars in thousands)
Denny's	Denny's													Denny's
Company average unit sales	Company average unit sales	$	766		$	717		$	2,209		$	1,974		Company average unit sales		$	762		$	682
Franchise average unit sales	Franchise average unit sales	$	435		$	424		$	1,281		$	1,166		Franchise average unit sales		$	452		$	404
Company equivalent units (a)	Company equivalent units (a)	65			65			64			65			Company equivalent units (a)		65			64
Franchise equivalent units (a)	Franchise equivalent units (a)	1,560			1,578			1,566			1,581			Franchise equivalent units (a)		1,529			1,572
Company same-store sales increase vs. prior year (b)(c)	Company same-store sales increase vs. prior year (b)(c)	7.1		%	67.7		%	12.1		%	54.1		%	Company same-store sales increase vs. prior year (b)(c)		11.4		%	30.6		%
Domestic franchise same-store sales increase vs. prior year (b)(c)	Domestic franchise same-store sales increase vs. prior year (b)(c)	1.1		%	48.9		%	7.6		%	37.2		%	Domestic franchise same-store sales increase vs. prior year (b)(c)		8.1		%	22.8		%

Keke's (d)	Keke's (d)													Keke's (d)
Company average unit sales	Company average unit sales	$	334		$	—		$	334		$	—		Company average unit sales		$	466		$	—
Franchise average unit sales	Franchise average unit sales	$	349		$	—		$	349		$	—		Franchise average unit sales		$	491		$	—
Company equivalent units (a)	Company equivalent units (a)	6			—			2			—			Company equivalent units (a)		8			—
Franchise equivalent units (a)	Franchise equivalent units (a)	34			—			11			—			Franchise equivalent units (a)		46			—

(a)Equivalent units are calculated as the weighted average number of units outstanding during a defined time period.

(b)Same-store sales include sales from company restaurants or non-consolidated franchised and licensed restaurants that were open during the comparable periods noted.

(c)Prior year amounts have not been restated for ~~2022~~2023 comparable units.

(d)Same-store sales data for Keke's is not reported due to the acquisition being completed during the quarter ended September 28, 2022.

~~Unit Activity~~


Unit Activity	Quarter Ended
		March 29, 2023	March 30, 2022
Denny's
Company restaurants, beginning of period		66	65
Units opened		—	—


Units closed		—	—
End of period		66	65

Franchised and licensed restaurants, beginning of period		1,536	1,575
Units opened		5	5


Units closed		(13)	(11)
End of period		1,528	1,569
Total restaurants, end of period		1,594	1,634

Quarter Ended Three Quarters Ended
September 28, 2022 September 29, 2021 September 28, 2022 September 29, 2021
Denny's
Company restaurants, beginning of period 65 65 65 65
Units acquired from franchisees 1 — 1 —
End of period 66 65 66 65
Franchised and licensed restaurants, beginning of period 1,566 1,580 1,575 1,585
Units opened 7 7 16 13
Units acquired by Company (1) — (1) —
Units closed (25) (5) (43) (16)
End of period 1,547 1,582 1,547 1,582
Total restaurants, end of period 1,613 1,647 1,613 1,647




Keke's
Company restaurants, beginning of period	8	—
Units opened	—	—

Units closed	—	—
End of period	8	—

Franchised restaurants, beginning of period	46	—
Units opened	—	—

Units closed	—	—
End of period	46	—
Total restaurants, end of period	54	—

2221

Quarter Ended Three Quarters Ended
September 28, 2022 September 29, 2021 September 28, 2022 September 29, 2021
Keke's
Company restaurants, beginning of period — — — —
Units acquired 8 — 8 —
End of period 8 — 8 —
Franchised restaurants, beginning of period — — — —
Units opened 1 — 1 —
Units acquired 44 — 44 —
End of period 45 — 45 —
Total restaurants, end of period 53 — 53 —

Company Restaurant Operations

Company restaurant sales increased ~~$5.7~~$9.5 million, or ~~12.4%~~21.5%, for the quarter ended ~~September 28, 2022 and $17.7 million, or 13.9%, year-to-date~~March 29, 2023 compared to the prior year ~~periods.~~period. The ~~increases~~increase in sales ~~include $2.7 million in sales from Keke's for the quarter and three quarters ended September 28, 2022. The remaining increases in sales were~~was primarily driven by increases in Denny's guest check average resulting from price increases to partially offset inflationary ~~costs and from changes in product mix.~~costs. Denny's company same-store sales increased ~~7.1%~~11.4% for the current year quarter ~~and 12.1% year-to-date~~ as compared to the prior year ~~periods.~~period. The increase in sales also includes $3.7 million in sales from Keke's during the quarter ended March 29, 2023.

Total costs of company restaurant sales as a percentage of company restaurant sales were ~~92.8%~~87.0% for the quarter ended ~~September 28, 2022 and 90.7% year-to-date~~March 29, 2023 compared to ~~83.0% and 83.5%~~87.8% for the prior year ~~periods, respectively.~~period.

Product costs as a percentage of company restaurant sales were ~~27.7%~~26.3% for the quarter ended ~~September 28, 2022 and 26.7% year-to-date~~March 29, 2023 compared to ~~24.6% and 24.4%~~25.6% for the prior year ~~periods, respectively,~~period, primarily due to increased commodity costs.

Payroll and benefits as a percentage of company restaurant sales were ~~38.6%~~37.9% for the quarter ended ~~September 28, 2022 and 38.3% year-to-date~~March 29, 2023 compared to ~~37.5% and 37.1%~~38.9% in the prior year ~~periods, respectively.~~period. The ~~current quarter increase~~decrease as a percentage of sales was primarily due to the leveraging effect of higher sales and a ~~1.3~~0.6 percentage point decrease in incentive compensation. These decreases were offset by a 1.2 percentage point increase in ~~payroll costs and a 0.7 percentage point increase in workers'~~workers’ compensation costs ~~partially offset by a 0.4 percentage point decrease~~primarily resulting from positive claims development in management bonuses and a 0.4 percentage point decrease in group insurance. The year-to-date increase was primarily due to a 1.4 percentage point increase in payroll costs and a 0.2 percentage point increase in workers' compensation costs, partially offset by a 0.2 percentage point decrease in management bonuses and a 0.3 percentage point decrease in group insurance costs.the prior year period.

Occupancy costs as a percentage of company restaurant sales were ~~8.2%~~7.7% for the quarter ended ~~September 28, 2022 and 7.8% year-to-date~~March 29, 2023 compared to ~~6.5% and 6.8%~~7.4% in the prior year ~~periods, respectively.~~period. The ~~increases~~increase as a percentage of sales ~~were~~was primarily due to a 0.4 percentage point increase in general liability ~~insurance cost increases of 1.4 percentage points for the quarter and 0.9 percentage points year-to-date~~costs primarily resulting from ~~negative~~positive claims development in the ~~current periods and positive developments in the prior year periods. Additionally, current quarter and year-to-date costs were impacted by higher rents as compared to the respective~~ prior year period.

Other operating expenses consist of the following amounts and percentages of company restaurant sales:

Quarter Ended Three Quarters Ended
September 28, 2022 September 29, 2021 September 28, 2022 September 29, 2021
(In thousands)
Utilities $ 1,984 3.8 % $ 1,660 3.6 % $ 5,211 3.6 % $ 4,275 3.4 %
Repairs and maintenance 1,089 2.1 % 722 1.6 % 2,803 1.9 % 1,890 1.5 %
Marketing 1,340 2.6 % 1,239 2.7 % 3,877 2.7 % 3,571 2.8 %
Legal settlements 1,567 3.0 % 237 0.5 % 4,223 2.9 % 1,144 0.9 %
Other direct costs 3,539 6.8 % 2,864 6.2 % 10,002 6.9 % 8,471 6.6 %
Other operating expenses $ 9,519 18.2 % $ 6,722 14.5 % $ 26,116 18.0 % $ 19,351 15.2 %

~~Legal settlement costs were higher as a percentage of sales as compared to the prior year primarily due to unfavorable developments in certain claims.~~


	Quarter Ended
		March 29, 2023	March 30, 2022
			(In thousands)
Utilities			$	2,057	3.8	%	$	1,577	3.6	%
Repairs and maintenance			889		1.7	%	825		1.9	%
Marketing			1,395		2.6	%	1,207		2.7	%
Legal settlements			109		0.2	%	277		0.6	%
Other direct costs			3,669		6.9	%	3,169		7.2	%
Other operating expenses			$	8,119	15.2	%	$	7,055	16.0	%

Franchise Operations

Franchise and license revenue and costs of franchise and license revenue consisted of the following amounts and percentages of franchise and license revenue for the periods indicated:

Quarter Ended Three Quarters Ended
September 28, 2022 September 29, 2021 September 28, 2022 September 29, 2021
(In thousands)
Royalties $ 28,992 44.4 % $ 27,336 47.7 % $ 84,276 44.3 % $ 75,297 46.2 %
Advertising revenue 18,950 29.0 % 18,215 31.8 % 56,642 29.8 % 50,926 31.3 %
Initial and other fees 7,749 11.9 % 1,442 2.5 % 20,035 10.5 % 5,346 3.3 %
Occupancy revenue 9,554 14.6 % 10,331 18.0 % 29,273 15.4 % 31,355 19.2 %
Franchise and license revenue $ 65,245 100.0 % $ 57,324 100.0 % $ 190,226 100.0 % $ 162,924 100.0 %
Advertising costs $ 18,950 29.0 % $ 18,216 31.8 % $ 56,642 29.8 % $ 50,927 31.3 %
Occupancy costs 5,910 9.1 % 6,445 11.2 % 18,351 9.6 % 19,863 12.2 %
Other direct costs 9,719 14.9 % 2,808 4.9 % 25,520 13.4 % 9,172 5.6 %
Costs of franchise and license revenue $ 34,579 53.0 % $ 27,469 47.9 % $ 100,513 52.8 % $ 79,962 49.1 %


	Quarter Ended
		March 29, 2023	March 30, 2022
			(In thousands)
Royalties			$	30,027	46.9	%	$	26,525	44.9	%
Advertising revenue			19,668		30.7	%	18,206		30.8	%
Initial and other fees			4,990		7.8	%	4,507		7.6	%
Occupancy revenue			9,334		14.6	%	9,893		16.7	%
Franchise and license revenue			$	64,019	100.0	%	$	59,131	100.0	%

Advertising costs			$	19,668	30.7	%	$	18,206	30.8	%
Occupancy costs			5,672		8.9	%	6,377		10.8	%
Other direct costs			7,047		11.0	%	6,086		10.3	%
Costs of franchise and license revenue			$	32,387	50.6	%	$	30,669	51.9	%

Franchise and license revenue increased ~~$7.9~~$4.9 million, or ~~13.8%~~8.3%, for the quarter ended ~~September 28, 2022 and $27.3 million, or 16.8%, year-to-date~~March 29, 2023 compared to the prior year ~~periods.~~period. Royalties increased ~~$1.7~~$3.5 million, or ~~6.1%, and $9.0 million, or 11.9%~~13.2%, for the current quarter ~~and year-to-date period, respectively,~~ compared to the prior year ~~periods.~~period. Denny's domestic franchise same-store sales increased 8.1% for the current year quarter as compared to the prior year period. The ~~increases~~increase in royalties ~~include $0.9~~also includes $1.3 million from Keke's 46 franchised restaurants for the quarter ~~and three quarters~~ ended ~~September 28, 2022.~~March 29, 2023. These increases were partially offset by a 43 unit reduction in Denny's franchise equivalent units during the current quarter.

Advertising revenue increased ~~$0.7~~$1.5 million, or ~~4.0%~~8.0%, for the current quarter ~~and $5.7 million, or 11.2%, year-to-date~~ compared to the prior year ~~periods.~~period. The ~~increases~~increase in royalty and advertising revenue ~~were~~was supported by the ~~1.1% and 7.6% increases~~8.1% increase in Denny's franchise domestic same-store sales for the ~~respective periods. These increases were~~quarter compared to the prior year period. This increase was partially offset by the ~~impacts~~impact of fewer Denny's franchise equivalent units ~~for~~during the ~~quarter and year-to-date period.~~current quarter.

Initial and other fees increased ~~$6.3~~$0.5 million, or ~~437.6%~~10.7%, for the quarter ended ~~September 28, 2022 and $14.7 million, or 274.8%, year-to-date~~March 29, 2023 compared to the prior year ~~periods.~~period. The ~~increases~~increase in initial and other fees primarily resulted from ~~the recognition of $5.6 million and $13.5 million of~~an increase in revenue ~~for the quarter and year-to-date period, respectively,~~ from the sale of equipment and ~~installation of kitchen equipment purchased by~~menus to franchisees. The revenue recorded related to the sale of equipment and menus has an equal and offsetting expense recorded in other direct costs as described below. Occupancy revenue decreased ~~$0.8~~$0.6 million, or ~~7.5%~~5.7%, for the current quarter ~~and decreased $2.1 million, or 6.6%, year-to-date~~ compared to the prior year ~~periods. The decreases in occupancy revenue~~period, primarily ~~resulted from~~due to lease terminations.

Costs of franchise and license revenue increased ~~$7.1~~$1.7 million, or ~~25.9%~~5.6%, for the quarter ended ~~September 28, 2022 and $20.6 million, or 25.7%, year-to-date~~March 29, 2023 compared to the prior year ~~periods.~~period. Advertising costs increased ~~$0.7~~$1.5 million, or ~~4.0%~~8.0%, for the current quarter, ~~and $5.7 million, or 11.2%, year-to-date,~~ which corresponds to the related advertising revenue ~~increases~~increase noted above. Occupancy costs decreased ~~$0.5~~$0.7 million, or ~~8.3%~~11.1%, for the current quarter ~~and $1.5 million, or 7.6%, year-to-date~~ compared to the prior year ~~periods. The decreases in occupancy costs for the current quarter and year-to-date~~ period, primarily ~~resulted from~~due to lease terminations, which corresponds to the related occupancy revenue ~~decreases~~decrease noted above. Other direct franchise costs increased ~~$6.9~~$1.0 million, or ~~246.0%~~15.8%, for the current quarter ~~and $16.3 million, or 178.2%, year-to-date~~ compared to the prior year ~~periods.~~period. The ~~increases~~increase in other direct franchise costs ~~were primarily~~was partially due to ~~$5.6~~an increase of $0.6 million of expense ~~for~~related to the ~~quarter~~costs of equipment and ~~$13.5 million of expense year-to-date as part of the sale and installation of kitchen equipment purchased by~~menus sold to franchisees as mentioned above. Additionally, other direct franchise costs included ~~increases~~an increase of ~~$0.5 million and $1.3~~$0.3 million in franchise administrative costs for the ~~quarter and year-to-date period, respectively.~~quarter. As a result of the increases in franchise and license revenue discussed above, costs of franchise and license revenue ~~increased~~decreased to ~~53.0%~~50.6% of franchise and ~~52.8%~~license revenue for the ~~respective~~ quarter ~~and year-to-date period~~ ended ~~September 28, 2022~~March 29, 2023 from ~~47.9% and 49.1%~~51.9% for the ~~respective~~ prior year ~~periods~~period.

Other Operating Costs and Expenses

Other operating costs and expenses such as general and administrative expenses and depreciation and amortization expense relate to both company and franchise operations.

General and administrative expenses consisted of the following:


		Quarter Ended				Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021		September 28, 2022		September 29, 2021				March 29, 2023		March 30, 2022
		(In thousands)										(In thousands)
Corporate administrative expenses	Corporate administrative expenses	$	13,758	$	11,157	$	38,303	$	32,374	Corporate administrative expenses		$	14,179	$	11,383
Share-based compensation	Share-based compensation	1,947		3,352		9,467		10,212		Share-based compensation		3,094		4,015
Incentive compensation	Incentive compensation	1,187		1,893		4,945		7,011		Incentive compensation		2,387		2,119
Deferred compensation valuation adjustments	Deferred compensation valuation adjustments	(285)		95		(2,527)		1,395		Deferred compensation valuation adjustments		458		(559)
Total general and administrative expenses	Total general and administrative expenses	$	16,607	$	16,497	$	50,188	$	50,992	Total general and administrative expenses		$	20,118	$	16,958

Corporate administrative expenses increased ~~$2.6 million and $5.9~~$2.8 million for the quarter ~~and year-to-date period~~ ended ~~September 28, 2022, respectively.~~March 29, 2023. The ~~increases were~~increase was primarily due to compensation increases ~~in the current year~~ and ~~temporary cost reductions in the prior year~~administrative costs related to ~~the COVID-19 pandemic.~~Keke's. Share-based compensation decreased ~~$1.4~~$0.9 million for the current quarter ~~and $0.7 million year-to-date~~ primarily due to ~~the 2020 long-term incentive plan fully vesting in May 2022.~~forfeitures. Incentive compensation ~~decreased $0.7~~increased $0.3 million for the current quarter, ~~and $2.1 million year-to-date,~~ primarily ~~resulting from our performance against plan metrics.~~related to the addition of Keke's. Changes in deferred compensation valuation adjustments have offsetting gains or losses on the underlying nonqualified deferred plan investments included as a component of other non-operating expense (income), net, for the corresponding periods.

Depreciation and amortization consisted of the following:


		Quarter Ended				Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021		September 28, 2022		September 29, 2021				March 29, 2023		March 30, 2022
		(In thousands)										(In thousands)
Depreciation of property and equipment	Depreciation of property and equipment	$	2,944	$	2,758	$	8,293	$	8,411	Depreciation of property and equipment		$	2,699	$	2,647
Amortization of finance lease ROU assets	Amortization of finance lease ROU assets	414		556		1,293		1,412		Amortization of finance lease ROU assets		395		442
Amortization of intangible and other assets	Amortization of intangible and other assets	556		508		1,466		1,557		Amortization of intangible and other assets		562		459
Total depreciation and amortization expense	Total depreciation and amortization expense	$	3,914	$	3,822	$	11,052	$	11,380	Total depreciation and amortization expense		$	3,656	$	3,548

Depreciation and amortization expense increased during the quarter ended ~~September 28, 2022~~March 29, 2023 resulting ~~primarily~~ from the acquisition of Keke's. ~~The year-to-date decrease was primarily due to certain assets becoming fully depreciated.~~

Operating (gains), losses and other charges, net consisted of the following:


		Quarter Ended				Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021		September 28, 2022		September 29, 2021				March 29, 2023		March 30, 2022
		(In thousands)										(In thousands)
Gains on sales of assets and other, net	Gains on sales of assets and other, net	$	(3,066)	$	(93)	$	(3,311)	$	(1,100)	Gains on sales of assets and other, net		$	(1,522)	$	(146)
Restructuring charges and exit costs	Restructuring charges and exit costs	472		(122)		1,297		1,304		Restructuring charges and exit costs		64		146
Impairment charges	Impairment charges	697		—		963		—		Impairment charges		129		—
Operating (gains), losses and other charges, net	Operating (gains), losses and other charges, net	$	(1,897)	$	(215)	$	(1,051)	$	204	Operating (gains), losses and other charges, net		$	(1,329)	$	—

Gains on sales of assets and other, net for the quarter ~~and three quarters~~ ended ~~September 28, 2022 were primarily related to the sale of two parcels of real estate. Gains on sales of assets and other, net for the three quarters ended September~~March 29, ~~2021~~2023 were primarily related to the sale of one parcel of real estate.

Impairment charges for the quarter ended March 29, 2023 were related to a unit which is expected to be sold in the next twelve months.

Restructuring charges and exit costs consisted of the following:

Quarter Ended Three Quarters Ended
September 28, 2022 September 29, 2021 September 28, 2022 September 29, 2021
(In thousands)
Exit costs $ 38 $ 101 $ 88 $ 324
Severance and other restructuring charges 434 (223) 1,209 980
Total restructuring and exit costs $ 472 $ (122) $ 1,297 $ 1,304

Total restructuring and exit costs increased $0.6 million for the current quarter and remained flat year-to-date compared to the prior year periods. The current quarter increase was primarily due to severance costs and reversals of estimated relocation cost accruals in the prior period associated with moving certain employees to our support center in the Dallas, Texas area. The current year-to-date severance and other restructuring charges primarily consist of severance costs and the prior year-to-date costs primarily relate to moving certain employees to our support center in the Dallas, Texas area.


	Quarter Ended
		March 29, 2023		March 30, 2022
		(In thousands)
Exit costs		$	—	$	12
Severance and other restructuring charges		64		134
Total restructuring and exit costs		$	64	$	146

Operating income was ~~$15.8~~$16.1 million for the current quarter ~~and $43.0 million year-to-date~~ compared to ~~$17.7 million and $41.5~~$13.3 million for the prior year ~~periods, respectively.~~period.

Interest expense, net consisted of the following:


		Quarter Ended				Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021		September 28, 2022		September 29, 2021				March 29, 2023		March 30, 2022
		(In thousands)										(In thousands)
Interest on credit facility	Interest on credit facility	$	2,637	$	1,286	$	4,666	$	4,541	Interest on credit facility		$	4,513	$	899
Interest on interest rate swaps		106		1,009		1,817		3,010
Interest (income) expense on interest rate swaps										Interest (income) expense on interest rate swaps		(930)		990
Interest on finance lease liabilities	Interest on finance lease liabilities	581		738		1,783		2,252		Interest on finance lease liabilities		551		607
Letters of credit and other fees	Letters of credit and other fees	224		384		812		1,116		Letters of credit and other fees		196		309
Interest income	Interest income	(26)		(5)		(42)		(20)		Interest income		(40)		(4)
Total cash interest, net	Total cash interest, net	3,522		3,412		9,036		10,899		Total cash interest, net		4,290		2,801
Amortization of deferred financing costs	Amortization of deferred financing costs	158		258		475		946		Amortization of deferred financing costs		159		158
Amortization of interest rate swap losses	Amortization of interest rate swap losses	10		—		16		167		Amortization of interest rate swap losses		56		—
Interest accretion on other liabilities	Interest accretion on other liabilities	1		1		2		2		Interest accretion on other liabilities		—		1
Total interest expense, net	Total interest expense, net	$	3,691	$	3,671	$	9,529	$	12,014	Total interest expense, net		$	4,505	$	2,960

Total cash interest expense, net increased by ~~$0.1~~$1.5 million for the current quarter ~~and decreased $1.9 million year-to-date~~ compared to the prior year ~~periods.~~period. The current quarter increase was primarily due to increased average borrowings and higher average interest rates, ~~mostly~~partially offset by our effective interest rate swaps. ~~The year-to-date decrease was primarily a result of less interest due on our effective interest rate swaps due to current year increases in LIBOR.~~

Other nonoperating ~~income,~~expense (income), net was ~~$10.5~~an expense of $10.1 million for the current quarter ~~and $49.9 million year-to-date,~~ compared to ~~$2.4 million and $16.2~~income of $19.6 million for the prior year ~~periods, respectively.~~period. Other nonoperating ~~income, net~~expense for the current quarter primarily consisted of ~~$10.8~~$10.6 million of ~~gains~~losses related to valuation adjustments for dedesignated interest rate hedges, partly offset by ~~losses~~gains of ~~$0.3~~$0.5 million ~~on deferred compensation plan investments. The year-to-date period primarily consisted of $52.7 million of gains on interest rate swap valuation adjustments, partially offset by $2.6 million of losses~~ on deferred compensation plan investments. Prior year other nonoperating income for the quarter primarily consisted of ~~$2.3~~$20.3 million of gains related to ~~interest rate swap valuation adjustments. The prior year-to-date period primarily consisted of $14.9 million of gains on~~dedesignated interest rate swap valuation adjustments, ~~in addition to $1.5~~partially offset by losses of $0.6 million ~~of gains~~ on deferred compensation plan investments.

During the quarter ended March 29, 2023, we terminated a portion of our hedging relationship entered into in 2018 (“2018 Swaps”), reducing the previous maximum notional amount of $425 million on August 31, 2033 to $335 million. As a result, we expect our total swaps to approximate 80% of our outstanding debt prospectively. In addition, during the quarter, we designated the remaining 2018 Swaps as cash flow hedges of our exposure to variability in future cash flows attributable to variable rate interest payments due on forecasted notional amounts. As a result, subsequent to the designation of the 2018 Swaps, gains and losses related to these cash flow hedges have been and will be recorded as a component of accumulated other comprehensive loss, net.

Provision for income taxes was ~~$5.5~~$1.0 million for the quarter ended ~~September 28, 2022 and $21.4 million year-to-date,~~March 29, 2023 compared to ~~$4.1 million and $11.0~~$8.1 million for the prior year ~~periods, respectively.~~period. The effective tax rate was ~~24.3%~~61.5% for the current quarter ~~and 25.7% year-to-date,~~ compared to ~~25.0% and 24.1%~~27.1% for the prior year ~~periods, respectively.~~period. The effective income tax rate for the quarter ended March 29, 2023 included a 36.6% discrete item relating to share-based compensation. We expect the 2023 fiscal year effective tax rate to be between 26% and 30%. The annual effective tax rate cannot be determined until the end of the fiscal year; therefore, the actual rate could differ from our current estimates.

Net income was ~~$17.1~~$0.6 million for the quarter ended ~~September 28, 2022 and $61.9 million year-to-date~~March 29, 2023 compared to ~~$12.3 million and $34.6~~$21.9 million for the prior year ~~periods, respectively.~~period.

Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash generated from operations and borrowings under our credit facility (as described below). Principal uses of cash are operating expenses, acquisitions and capital expenditures and the repurchase of shares of our common stock.

The following table presents a summary of our sources and uses of cash and cash equivalents for the periods indicated:


		Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021			March 29, 2023		March 30, 2022
		(In thousands)					(In thousands)
Net cash provided by operating activities		$	24,950	$	63,229
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	$	16,153	$	(7,064)
Net cash used in investing activities	Net cash used in investing activities	(83,974)		(2,912)		Net cash used in investing activities	(569)		(3,803)
Net cash provided by (used in) financing activities		32,746		(54,006)
Net cash used in financing activities						Net cash used in financing activities	(10,212)		(13,666)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	$	(26,278)	$	6,311	Increase (decrease) in cash and cash equivalents	$	5,372	$	(24,533)

Net cash flows provided by operating activities were ~~$25.0~~$16.2 million for the ~~three quarters~~quarter ended ~~September 28, 2022~~March 29, 2023 compared to ~~$63.2~~a usage of $7.1 million for the ~~three quarters~~quarter ended ~~September 29, 2021.~~March 30, 2022. The ~~decrease~~increase in cash flows provided by operating activities was primarily due to ~~increased operating costs at Company restaurants,~~ the timing of ~~prior year accrual payments and~~inventory purchases, receivable collections, and ~~purchases of inventory for~~accrual payments related to our franchise kitchen equipment ~~project.~~project over the past two years. We believe that our estimated cash flows from operations for ~~2022,~~2023, combined with our capacity for additional borrowings under our credit facility and cash on hand, will enable us to meet our anticipated cash requirements and fund capital expenditures over the next 12 months.

Net cash flows used in investing activities were ~~$84.0~~$0.6 million for the ~~three quarters~~quarter ended ~~September 28, 2022.~~March 29, 2023. These cash flows included ~~$81.5 million for the acquisition of Keke's, $0.8 million for the acquisition of one Denny's franchised restaurant, and~~ capital expenditures of ~~$10.1~~$1.3 million and investment purchases of $1.3 million, partially offset by net proceeds from the sale of ~~two parcels~~a parcel of real estate ~~of $4.1 million, real estate deposit refunds of $3.6 million and net investment proceeds of $0.5~~for $1.7 million. Net cash flows used in investing activities were ~~$2.9~~$3.8 million for the ~~three quarters~~quarter ended ~~September 29, 2021.~~March 30, 2022. These cash flows primarily consisted of capital expenditures of ~~$5.3 million, partially offset by proceeds from sales of real estate and other assets of $1.8 million, collections on notes receivable of $0.5~~$2.8 million and ~~proceeds from sales~~investment purchases of ~~investments of $0.2~~$1.2 million.

Our principal capital requirements have been largely associated with the following:


		Three Quarters Ended					Quarter Ended
		September 28, 2022		September 29, 2021			March 29, 2023		March 30, 2022
		(In thousands)					(In thousands)
Facilities	Facilities	$	3,618	$	2,262	Facilities	$	1,009	$	913
New construction	New construction	29		—		New construction	16		—
Remodeling	Remodeling	3,738		818		Remodeling	138		1,310
Information technology	Information technology	2,246		1,276		Information technology	50		214
Other	Other	515		965		Other	91		341
Capital expenditures	Capital expenditures	$	10,146	$	5,321	Capital expenditures	$	1,304	$	2,778

Net cash flows ~~provided by~~used in financing activities were ~~$32.7~~$10.2 million for the ~~three quarters~~quarter ended ~~September 28, 2022,~~March 29, 2023, including ~~net long-term debt borrowings of $95.0 million primarily for funding the Keke's acquisition, partially offset by~~ cash payments for stock repurchases of ~~$57.5~~$9.0 million and payments of tax withholding on share-based compensation of ~~$4.8~~$2.8 million, partially offset by net long-term debt borrowings of $2.0 million. Net cash flows used in financing activities were ~~$54.0~~$13.7 million for the ~~three quarters~~quarter ended ~~September 29, 2021,~~March 30, 2022, which included ~~net long-term debt repayments of $41.6 million, in addition to~~ cash payments for stock repurchases of ~~$6.2~~$12.5 million ~~net bank overdraft~~and payments of ~~$3.1~~tax withholding on share-based compensation of $2.2 million, ~~and deferred financing costs~~partially offset by net long-term borrowings of ~~$1.8~~$1.0 million.

Our working capital deficit was ~~$42.3~~$34.6 million at ~~September 28, 2022~~March 29, 2023 compared to ~~$28.3~~$43.3 million at December 28, 2022, primarily due to an increase in cash and cash equivalents at the end of the quarter ended March 29, ~~2021.~~2023. We are able to operate with a substantial working capital deficit because (1) restaurant operations and most food service operations are conducted primarily on a cash (and cash equivalent) basis with a low level of accounts receivable, (2) rapid turnover allows for a limited investment in inventories, and (3) accounts payable for food, beverages and supplies usually becomes due after the receipt of cash from the related sales.

Credit Facility

The Company and certain of its subsidiaries have a credit facility consisting of a five-year $400 million senior secured revolver (with a $25 million letter of credit sublimit). The credit facility includes an accordion feature that would allow us to increase the size of the facility to $450 million. Borrowings bear a tiered interest rate, which is based on the Company's consolidated leverage ratio. The maturity date for the credit facility is August 26, 2026.

As of ~~September 28, 2022,~~March 29, 2023, borrowings under the credit facility bore interest at a rate of LIBOR plus ~~1.75%~~2.25% and the commitment fee, paid on the unused portion of the credit facility, was set to ~~0.25%~~0.35%. Subsequent to March 29, 2023, the credit facility was amended to change the benchmark interest rate from LIBOR to Adjusted Daily Simple SOFR. The conversion to Adjusted Daily Simple SOFR is not expected to have a material impact on the Company's consolidated financial position or results of operations. For additional information, see the First Amendment to Fourth Amended and Restated Credit Agreement, dated as of March 31, 2023 (attached hereto as Exhibit 10.1), which is hereby incorporated by reference.

~~Kitchen Modernization and~~ Technology Transformation Initiatives

The Company is currently in the process of upgrading and improving kitchen equipment throughout the domestic system. The rollout began during the first quarter of 2022 and is expected to be substantially complete by the end of 2022. This investment is expected to yield long-term benefits through menu enhancements across all dayparts, but especially the dinner daypart, with

~~new and improved food offerings. The new equipment is also expected to provide immediate benefits through increased kitchen efficiency and productivity while also reducing food waste.~~

~~The Company intends to initiate the rollout of~~rolling out a new cloud-based restaurant technology platform throughout the domestic system which will lay the foundation for future technology initiatives to further enhance the guest experience. The rollout is expected to ~~begin in 2023 and~~ continue into 2024.

The Company has committed to investing ~~nearly $10~~approximately $4 million ~~towards the cost and installation of the kitchen equipment package (approximately $5.4 million) and~~toward the new cloud-based restaurant technology platform ~~(approximately $4.3 million)~~ in domestic franchise restaurants. As of September 28, 2022, we have recorded $3.9 million of contract assets related to the kitchen equipment rollout. Additionally, the Company has negotiated favorable financing terms on behalf of its franchisees for the remaining cost.

Contractual Obligations

Our future contractual obligations relating to long-term debt and related interest obligations as of ~~September 28, 2022~~March 29, 2023 are as follows:


		Payments Due by Period											Payments Due by Period
		Total		Less than 1 Year		1-2 Years		3-4 Years		5 Years and Thereafter			Total		Less than 1 Year		1-2 Years		3-4 Years		5 Years and Thereafter
		(In thousands)											(In thousands)
Long-term debt	Long-term debt	$	266,500	$	—	$	—	$	266,500	$	—	Long-term debt	$	264,000	$	—	$	—	$	264,000	$	—
Interest obligations (a)	Interest obligations (a)	45,882		2,929		23,429		19,524		—		Interest obligations (a)	47,954		10,529		27,854		9,571		—
Total	Total	$	312,382	$	2,929	$	23,429	$	286,024	$	—	Total	$	311,954	$	10,529	$	27,854	$	273,571	$	—

(a)Interest obligations represent payments related to our long-term debt outstanding at ~~September 28, 2022.~~March 29, 2023. For long-term debt with variable rates, we have used the rate applicable at ~~September 28, 2022~~March 29, 2023 to project interest over the periods presented in the table above, taking into consideration the impact of the interest rate swaps that are designated as cash flow hedges for the applicable periods.

See Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December ~~29, 2021~~28, 2022 for information concerning other future contractual obligations and commitments.

2927

Critical Accounting Policies and Estimates

For information regarding our Critical Accounting Policies and Estimates, see the "Critical Accounting Policies and Estimates" section in Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December ~~29, 2021.~~28, 2022.

In addition to the critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 29, 2021, due to recent transactions and events, we also consider the following to be part of our critical accounting policies and estimates due to the high degree of judgment and complexity in its application.

~~Business Combinations~~

The acquisition of Keke's was accounted for using the acquisition method of accounting, or acquisition accounting, in accordance with ASC Topic 805, Business Combinations. The acquisition method of accounting involved the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. This allocation process involves the use of estimates and assumptions made in connection with estimating the fair value of assets acquired and liabilities assumed including cash flows expected to be derived from the use of the asset including revenue growth, the timing of such cash flows, the remaining useful life of assets, royalty rates and applicable discount rates. Inputs used are generally obtained from historical data supplemented by current and anticipated market conditions and growth rates. If the actual results differ from the estimates and judgements used in these fair values, the amounts recorded in the Consolidated Financial Statements could result in a possible impairment of the intangible assets and goodwill or require acceleration of the amortization expense of finite-lived intangible assets. Acquisition accounting allows for up to one year to obtain the information necessary to finalize the fair value of all assets acquired and liabilities assumed at July 20, 2022. As of September 28, 2022, we have recorded a preliminary allocation of consideration to net tangible and intangible assets acquired, which is subject to revision as we obtain additional information necessary to complete the fair value studies and acquisition accounting. For additional information regarding our recent business combination, refer to Note 3 to our unaudited Consolidated Financial Statements in Part I, Item 1 of this report.

Implementation of New Accounting Standards

Information regarding the implementation of new accounting standards is incorporated by reference from Note 2 to our unaudited Consolidated Financial Statements set forth in Part I, Item 1 of this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We have exposure to interest rate risk related to certain instruments entered into for other than trading purposes. Specifically, as of ~~September 28, 2022,~~March 29, 2023, borrowings under our credit facility bore interest at variable rates based on LIBOR plus ~~1.75%~~2.25% per annum. Subsequent to March 29, 2023, the credit facility was amended to change the benchmark interest rate from LIBOR to Adjusted Daily Simple SOFR. The conversion to Adjusted Daily Simple SOFR is not expected to have a material impact on the credit facility's interest rate.

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

A summary of our interest rate swaps as of ~~September 28, 2022~~March 29, 2023 is as follows:


Trade Date	Trade Date	Effective Date	Maturity Date	Notional Amount			Fair Value		Fixed Rate		Trade Date	Effective Date	Maturity Date	Notional Amount			Fair Value		Fixed Rate
				(In thousands)										(In thousands)
Swaps designated as cash flow hedges	Swaps designated as cash flow hedges										Swaps designated as cash flow hedges
March 20, 2015	March 20, 2015	March 29, 2018	March 31, 2025	$	120,000		$	4,748	2.44	%	March 20, 2015	March 29, 2018	March 31, 2025	$	120,000		$	3,969	2.44	%
October 1, 2015	October 1, 2015	March 29, 2018	March 31, 2026	$	50,000		$	2,402	2.46	%	October 1, 2015	March 29, 2018	March 31, 2026	$	50,000		$	1,926	2.46	%
Dedesignated swaps
February 15, 2018	February 15, 2018	March 31, 2020	December 31, 2033	$	120,000	(1)	$	10,413	3.19	%	February 15, 2018	March 31, 2020	December 31, 2033	$	26,000	(1)	$	2,093	3.19	%
Total	Total			$	290,000		$	17,563			Total			$	196,000		$	7,988

As of ~~September 28, 2022, the~~March 29, 2023, our swaps effectively increased our ratio of fixed rate debt from 4% of total ~~notional amount~~debt to 75% of ~~our interest rate swaps was in excess of 100% of our floating rate~~total debt. Based on the ~~portion~~levels of borrowings under the ~~swaps in excess of our floating rate debt as of September 28, 2022, a hypothetical change of~~credit facility at March 29, 2023, if interest rates changed by 100 basis points, ~~in LIBOR would change~~ our annual cash flow and income before taxes would change by ~~approximately $0.2~~$0.6 million. This computation is determined by considering the impact of hypothetical interest rates on the credit facility at March 29, 2023, taking into consideration the interest rate swaps that will be in effect during the next twelve months. However, the nature and amount of our borrowings may vary as a result of future business requirements, market conditions and other factors.

Depending on market considerations, fluctuations in the fair values of our interest rate swaps could be significant. With the exception of these changes in the fair value of our interest rate swaps and in the levels of borrowings under our credit facility, there have been no material changes in our quantitative and qualitative market risks since the prior reporting period. For additional information related to our interest rate swaps, including changes in the fair value, refer to Note 7,6, Note 87 and Note 1413 to our unaudited Consolidated Financial Statements in Part I, Item 1 of this report.

Item 4. Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, our management conducted an evaluation (under the supervision and with the participation of our Chief Executive Officer, Kelli A.F. Valade, and our Executive Vice President and Chief Financial Officer, Robert P. Verostek) as of the end of the period covered by this Quarterly Report on Form 10-Q, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act. Based on that evaluation, Ms. Valade and Mr. Verostek each concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) is accumulated and communicated to our management, including Ms. Valade and Mr. Verostek, as appropriate to allow timely decisions regarding required disclosure.

On July 20, 2022, we closed on the acquisition of substantially all of the assets of Keke’s. As permitted by SEC guidance for newly acquired businesses, we intend to exclude Keke's operations from the scope of our Sarbanes-Oxley Section 404 report on internal control over financial reporting for the year ending December 28, 2022. We are in the process of integrating Keke's into our internal control structure and expect that this effort will be completed in fiscal 2023.

Other than as discussed above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during our fiscal quarter ended ~~September 28, 2022~~March 29, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding legal proceedings is incorporated by reference from Note 1514 to our unaudited Consolidated Financial Statements set forth in Part I, Item 1 of this report.

Item 1A. Risk Factors

There have been no material changes in the risk factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December ~~29, 2021 (the “Annual Report”) and the Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2022 (the "Quarterly Report").~~28, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer

The table below provides information concerning repurchases of shares of our common stock during the quarter ended ~~September 28, 2022.~~March 29, 2023.

Period
Total Number of Shares Purchased
Average Price Paid Per Share (1)
Total Number of Shares Purchased as Part of Publicly Announced Programs (2)
Approximate Dollar Value of Shares that May Yet be Purchased Under the Programs (2)
(In thousands, except per share amounts)
June 30, 2022 - July 27, 2022 415 $ 8.86 415 $ 164,482
July 28, 2022 - August 24, 2022 168 9.72 168 $ 162,841
August 25, 2022 - September 28, 2022 260 9.76 260 $ 160,293
Total 843 $ 9.31 843


Period	Total Number of Shares Purchased	Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Programs (2)	Dollar Value of Shares that May Yet be Purchased Under the Programs (2)
	(In thousands, except per share amounts)
December 29, 2022 - January 25, 2023	282	$	10.49	282	$	149,562
January 26, 2023 - February 22, 2023	120	12.21		120	$	148,090
February 23, 2023 - March 29, 2023	404	11.13		404	$	143,561
Total	806	$	11.07	806

(1)Average price paid per share excludes ~~commissions.~~commissions and any excise taxes paid.

(2)On December 2, 2019, we announced that our Board of Directors approved a share repurchase program, authorizing us to repurchase up to an additional $250 million of our common stock (in addition to prior authorizations). Such repurchases may take place from time to time in the open market (including pre-arranged stock trading plans in accordance with the guidelines specified in Rule 10b5-1 under the Exchange Act) or in privately negotiated transactions, subject to market and business conditions. During the quarter ended ~~September 28, 2022,~~March 29, 2023, we purchased 0.8 million shares of our common stock for an aggregate consideration of ~~approximately $7.9~~$9.0 million pursuant to the share repurchase program.

3229

Item 6. Exhibits

The following are included as exhibits to this report:


Exhibit No.						Description
~~2.1~~10.1						First Amendment to ~~Asset Purchase~~Fourth Amended and Restated Credit Agreement, dated as of ~~July 11, 2022, by and between~~March 31, 2023, among Denny's, Inc., as the Borrower, Denny's Corporation, as ~~purchaser,~~Parent, and Certain Subsidiaries of Parent, as Guarantors, Wells Fargo Bank, National Association, as Administrative Agent on behalf of the Lenders under the Credit Agreement, and the ~~sellers and principals party thereto (incorporated by reference to Exhibit 2.1 to the Current Report on~~ Lenders.

10.2						Form ~~8-K~~ of ~~Denny's Corporation filed with the Securities and Exchange Commission on July 14, 2022).~~2023 Long-Term Incentive Program Restricted Stock Unit Award Certificate.

10.3						Form of 2023 Long-Term Incentive Program Performance Share Unit Award Certificate.

31.1						Certification of Kelli A.F. Valade, 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 Robert P. Verostek, Executive Vice President 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 Kelli A.F. Valade, Chief Executive Officer of Denny's Corporation, and Robert P. Verostek, Executive Vice President 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.

101.INS						Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

3330

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DENNY'S CORPORATION

Date:

~~November 1, 2022~~May 2, 2023

By:

/s/ Robert P. Verostek

Robert P. Verostek

Executive Vice President and
Chief Financial Officer

Date:

~~November 1, 2022~~May 2, 2023

By:

/s/ Jay C. Gilmore

Jay C. Gilmore

Senior Vice President,
Chief Accounting Officer and
Corporate Controller

3431


			Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets			3
Consolidated Statements of Operations			4
Consolidated Statements of Comprehensive Income ~~(Loss)~~			5
Consolidated Statements of Shareholders' Deficit			6
Consolidated Statements of Cash Flows			87
Notes to Consolidated Financial Statements			98
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2019
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3028
Item 4. Controls and Procedures			3129

PART II - OTHER INFORMATION

Item 1. Legal Proceedings			3129
Item 1A. Risk Factors			3129
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3229
Item 6. Exhibits			3330
Signatures			3431


	(In thousands)
Remainder of 2022	$	429
2023	1,536
2024	1,466
2025	1,410
2026	1,242