UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the Quarterly Period Ended September 24, 2008
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
|
(I.R.S.
Employer
|
|
|
incorporation
or organization
|
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)
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
[X] No
[ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated
filer ¨ Accelerated
filer þ
Non-accelerated
filer ¨
(Do not check if a smaller reporting
company) Smaller reporting company
¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
[
] No
[X]
As of
October 24, 2008, 95,713,102 shares of the registrant’s common stock, par
value $.01 per share, were outstanding.
TABLE
OF CONTENTS
2
Denny’s
Corporation and Subsidiaries
(Unaudited)
|
Quarter
Ended
|
Three
Quarters Ended
|
|||||||||||||||
|
September
24, 2008
|
September
26, 2007
|
September
24, 2008
|
September
26, 2007
|
|||||||||||||
|
(In
thousands, except per share amounts)
|
||||||||||||||||
|
Revenue:
|
||||||||||||||||
|
Company
restaurant sales
|
$
|
160,608
|
$
|
216,792
|
$
|
493,434
|
$
|
650,909
|
||||||||
|
Franchise
and license revenue
|
28,667
|
24,617
|
82,109
|
68,193
|
||||||||||||
|
Total
operating revenue
|
189,275
|
241,409
|
575,543
|
719,102
|
||||||||||||
|
Costs
of company restaurant sales:
|
||||||||||||||||
|
Product
costs
|
38,811
|
55,520
|
119,790
|
166,969
|
||||||||||||
|
Payroll
and benefits
|
65,582
|
88,341
|
208,331
|
273,141
|
||||||||||||
|
Occupancy
|
9,475
|
13,193
|
30,003
|
39,345
|
||||||||||||
|
Other
operating expenses
|
25,384
|
33,842
|
75,322
|
95,937
|
||||||||||||
|
Total
costs of company restaurant sales
|
139,252
|
190,896
|
433,446
|
575,392
|
||||||||||||
|
Costs
of franchise and license revenue
|
8,757
|
6,858
|
25,448
|
20,266
|
||||||||||||
|
General
and administrative expenses
|
14,894
|
15,974
|
46,046
|
49,067
|
||||||||||||
|
Depreciation
and amortization
|
9,977
|
12,117
|
30,110
|
37,475
|
||||||||||||
|
Operating
gains, losses and other charges, net
|
(4,294
|
)
|
(316
|
)
|
(9,980
|
)
|
(14,890
|
)
|
||||||||
|
Total
operating costs and expenses
|
168,586
|
225,529
|
525,070
|
667,310
|
||||||||||||
|
Operating
income
|
20,689
|
15,880
|
50,473
|
51,792
|
||||||||||||
|
Other
expenses:
|
||||||||||||||||
|
Interest
expense, net
|
8,761
|
10,489
|
26,845
|
32,783
|
||||||||||||
|
Other
nonoperating expense (income), net
|
677
|
34
|
4,436
|
(391
|
)
|
|||||||||||
|
Total
other expenses, net
|
9,438
|
10,523
|
31,281
|
32,392
|
||||||||||||
|
Net
income before income taxes
|
11,251
|
5,357
|
19,192
|
19,400
|
||||||||||||
|
Provision
for income taxes
|
689
|
407
|
1,355
|
2,780
|
||||||||||||
|
Net
income
|
$
|
10,562
|
$
|
4,950
|
$
|
17,837
|
$
|
16,620
|
||||||||
|
Net
income per share:
|
||||||||||||||||
|
Basic net
income per share
|
$
|
0.11
|
$
|
0.05
|
$
|
0.19
|
$
|
0.18
|
||||||||
|
Diluted
net income per share
|
$
|
0.11
|
$
|
0.05
|
$
|
0.18
|
$
|
0.17
|
||||||||
|
Weighted
average shares outstanding:
|
||||||||||||||||
|
Basic
|
95,333
|
93,915
|
95,059
|
93,674
|
||||||||||||
|
Diluted
|
98,332
|
98,605
|
99,191
|
98,770
|
||||||||||||
See
accompanying notes to unaudited condensed consolidated financial
statements.
3
Denny’s
Corporation and Subsidiaries
(Unaudited)
|
September
24, 2008
|
December
26, 2007
|
|||||||
|
(In
thousands)
|
||||||||
|
Assets
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
and cash equivalents
|
$
|
21,422
|
$
|
21,565
|
||||
|
Receivables,
net
|
11,408
|
13,585
|
||||||
|
Inventories
|
5,419
|
6,485
|
||||||
|
Assets
held for sale
|
3,032
|
6,712
|
||||||
|
Prepaid
and other current assets
|
12,893
|
9,526
|
||||||
|
Total
Current Assets
|
54,174
|
57,873
|
||||||
|
Property,
net of accumulated depreciation of $293,770 and $307,047,
respectively
|
167,910
|
184,610
|
||||||
|
Other
Assets:
|
||||||||
|
Goodwill
|
40,634
|
42,439
|
||||||
|
Intangible
assets, net
|
59,770
|
62,657
|
||||||
|
Deferred
financing costs, net
|
4,188
|
5,078
|
||||||
|
Other
assets
|
31,003
|
24,699
|
||||||
|
Total
Assets
|
$
|
357,679
|
$
|
377,356
|
||||
|
Liabilities
and Shareholders' Deficit
|
||||||||
|
Current
Liabilities:
|
||||||||
|
Current
maturities of notes and debentures
|
$
|
4,555
|
$
|
2,085
|
||||
|
Current
maturities of capital lease obligations
|
3,637
|
4,051
|
||||||
|
Accounts
payable
|
31,041
|
43,262
|
||||||
|
Other
|
73,202
|
82,069
|
||||||
|
Total
Current Liabilities
|
112,435
|
131,467
|
||||||
|
Long-Term
Liabilities:
|
||||||||
|
Notes
and debentures, less current maturities
|
307,504
|
325,971
|
||||||
|
Capital
lease obligations, less current maturities
|
22,252
|
20,845
|
||||||
|
Liability
for insurance claims, less current portion
|
24,480
|
27,148
|
||||||
|
Deferred
income taxes
|
12,115
|
11,579
|
||||||
|
Other
noncurrent liabilities and deferred credits
|
38,573
|
42,578
|
||||||
|
Total
Long-Term Liabilities
|
404,924
|
428,121
|
||||||
|
Total
Liabilities
|
517,359
|
559,588
|
||||||
|
Commitments
and contingencies
|
||||||||
|
Total
Shareholders’ Deficit
|
(159,680
|
)
|
(182,232
|
)
|
||||
|
Total
Liabilities and Shareholders’ Deficit
|
$
|
357,679
|
$
|
377,356
|
||||
See
accompanying notes to unaudited condensed consolidated financial
statements.
4
Denny’s
Corporation and Subsidiaries
(Unaudited)
|
Common
Stock
|
Accumulated
Other Comprehensive
|
Total
Shareholders'
|
||||||||||||||||||||||
|
Shares
|
Amount
|
Paid-in
Capital
|
Deficit
|
Loss,
Net
|
Deficit
|
|||||||||||||||||||
|
(In
thousands)
|
||||||||||||||||||||||||
|
Balance,
December 26, 2007
|
94,626
|
$
|
946
|
$
|
533,612
|
$
|
(700,284
|
)
|
$
|
(13,144
|
)
|
$
|
(178,870
|
)
|
||||||||||
|
Goodwill
adjustment (Note 3)
|
—
|
—
|
—
|
(3,362
|
)
|
—
|
(3,362
|
)
|
||||||||||||||||
|
Balance,
December 26, 2007
|
94,626
|
$
|
946
|
$
|
533,612
|
$
|
(703,646
|
)
|
$
|
(13,144
|
)
|
$
|
(182,232
|
)
|
||||||||||
|
Comprehensive
income:
|
||||||||||||||||||||||||
|
Net
income
|
—
|
—
|
—
|
17,837
|
—
|
17,837
|
||||||||||||||||||
|
Recognition
of unrealized loss on hedge
transactions,
net of tax
|
—
|
—
|
—
|
—
|
852 | 852 | ||||||||||||||||||
|
Comprehensive
income
|
—
|
—
|
—
|
17,837
|
852
|
18,689
|
||||||||||||||||||
|
Share-based
compensation on equity classified
awards
|
—
|
—
|
2,591
|
—
|
—
|
2,591
|
||||||||||||||||||
|
Issuance
of common stock for share-based
compensation
|
385
|
4
|
288
|
—
|
—
|
292
|
||||||||||||||||||
|
Exercise
of common stock options
|
675
|
7
|
973
|
—
|
—
|
980
|
||||||||||||||||||
|
Balance,
September 24, 2008
|
95,686
|
$
|
957
|
$
|
537,464
|
$
|
(685,809
|
)
|
$
|
(12,292
|
)
|
$
|
(159,680
|
)
|
||||||||||
See
accompanying notes to unaudited condensed consolidated financial
statements.
5
Denny’s
Corporation and Subsidiaries
(Unaudited)
|
Three
Quarters Ended
|
||||||||
|
September
24, 2008
|
September
26, 2007
|
|||||||
|
(In
thousands)
|
||||||||
|
Cash
Flows from Operating Activities:
|
||||||||
|
Net
income
|
$
|
17,837
|
$
|
16,620
|
||||
|
Adjustments
to reconcile net income to cash flows provided by operating
activities:
|
||||||||
|
Depreciation
and amortization
|
30,110
|
37,475
|
||||||
|
Operating
gains, losses and other charges, net
|
(9,980
|
)
|
(14,890
|
)
|
||||
|
Amortization
of deferred financing costs
|
827
|
886
|
||||||
|
Loss
(gain) on early extinguishment of debt
|
(30
|
)
|
207
|
|||||
|
Loss
on change in the fair value of interest rate swap
|
3,094
|
—
|
||||||
|
Deferred
income tax expense
|
565
|
2,381
|
||||||
|
Share-based
compensation
|
2,511
|
3,000
|
||||||
|
Changes
in assets and liabilities, net of effects of acquisitions and
dispositions:
|
||||||||
|
Decrease
(increase) in assets:
|
||||||||
|
Receivables
|
3,009
|
3,216
|
||||||
|
Inventories
|
1,066
|
506
|
||||||
|
Other
current assets
|
(3,367
|
)
|
(495
|
)
|
||||
|
Other
assets
|
(2,909
|
)
|
(2,644
|
)
|
||||
|
Increase
(decrease) in liabilities:
|
||||||||
|
Accounts
payable
|
(9,416
|
)
|
(2,530
|
)
|
||||
|
Accrued
salaries and vacations
|
(8,225
|
)
|
(5,696
|
)
|
||||
|
Accrued
taxes
|
794
|
119
|
||||||
|
Other
accrued liabilities
|
(8,310
|
)
|
2,991
|
|||||
|
Other
noncurrent liabilities and deferred credits
|
(9,622
|
)
|
(5,702
|
)
|
||||
|
Net
cash flows provided by operating activities
|
7,954
|
35,444
|
||||||
|
Cash
Flows from Investing Activities:
|
||||||||
|
Purchase
of property
|
(21,173
|
)
|
(18,807
|
)
|
||||
|
Proceeds
from disposition of property
|
31,391
|
35,017
|
||||||
|
Acquisition
of restaurant units
|
—
|
(2,208
|
)
|
|||||
|
Net
cash flows provided by investing activities
|
10,218
|
14,002
|
||||||
|
Cash
Flows from Financing Activities:
|
||||||||
|
Long-term
debt payments
|
(19,208
|
)
|
(46,468
|
)
|
||||
|
Deferred
financing costs paid
|
—
|
(401
|
)
|
|||||
|
Proceeds
from exercise of stock options
|
980
|
918
|
||||||
|
Net
bank overdrafts
|
(87
|
)
|
(646
|
)
|
||||
|
Net
cash flows used in financing activities
|
(18,315
|
)
|
(46,597
|
)
|
||||
|
Increase
(decrease) in cash and cash equivalents
|
(143
|
)
|
2,849
|
|||||
|
Cash
and Cash Equivalents at:
|
||||||||
|
Beginning
of period
|
21,565
|
26,226
|
||||||
|
End
of period
|
$
|
21,422
|
$
|
29,075
|
||||
See
accompanying notes to unaudited condensed consolidated financial
statements.
6
Denny’s
Corporation and Subsidiaries
(Unaudited)
Note
1. Introduction and Basis of Presentation
Denny’s
Corporation, through its wholly owned subsidiaries, Denny’s Holdings, Inc. and
Denny’s, Inc., owns and operates the Denny’s restaurant brand, or
Denny’s.
Our
unaudited condensed consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Therefore, certain information and notes normally included in financial
statements prepared in accordance with U.S. generally accepted accounting
principles 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, including those for the
above-described items, are reasonable.
These
interim condensed consolidated financial statements should be read in
conjunction with our consolidated financial statements and notes thereto for the
year ended December 26, 2007 and the related Management’s Discussion and
Analysis of Financial Condition and Results of Operations, both of which are
contained in our Annual Report on Form 10-K for the fiscal year ended December
26, 2007. The results of operations for the interim periods presented are not
necessarily indicative of the results for the entire fiscal year ending December
31, 2008.
Note
2. Summary of Significant Accounting Policies
Effective
December 27, 2007, the first day of fiscal 2008, we adopted Statement of
Financial Accounting Standards No. 159 ("SFAS 159"), “The Fair Value Option for
Financial Assets and Financial Liabilities.” SFAS 159 permits entities to choose
to measure many financial instruments and certain other items at fair value. We
did not elect the fair value reporting option for any assets and liabilities not
previously recorded at fair value.
Effective
December 27, 2007, the first day of fiscal 2008, we adopted the provisions of
Statement of Financial Accounting Standards No. 157 ("SFAS 157"), “Fair Value
Measurements” for financial assets and liabilities, as well as any other assets
and liabilities that are carried at fair value on a recurring basis in financial
statements. SFAS 157 defines fair value, establishes a framework for measuring
fair value and expands disclosures about fair value measurements. SFAS 157
applies under other accounting pronouncements that require or permit fair value
measurements, the Financial Accounting Standards Board ("FASB") having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, SFAS 157 does not require any new
fair value measurements. We also applied the provisions of FSP FAS 157-2,
"Effective Date of FASB Statement 157," which defers the provisions of SFAS 157
for nonfinancial assets and liabilities to the first fiscal period
beginning after November 15, 2008. The deferred nonfinancial assets and
liabilities include items such as goodwill and other nonamortizable intangibles.
We are required to adopt SFAS 157 for nonfinancial assets and liabilities in the
first quarter of fiscal 2009 and are still evaluating the impact on our
Condensed Consolidated Financial Statements.
Financial assets and liabilities
measured at fair value on a recurring basis are summarized below:
|
Fair
Value Measurements as of September 24, 2008
|
|||||||||||||||||
|
September
24, 2008
|
Quoted
Prices in Active Markets for Identical Assets/Liabilities
(Level
1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Unobservable Inputs
(Level
3)
|
Valuation
Technique
|
|||||||||||||
|
(In
thousands)
|
|||||||||||||||||
|
Deferred
compensation plan
investments
|
$
|
6,132
|
$
|
6,132
|
$
|
—
|
$
|
—
|
market
approach
|
||||||||
|
Interest
rate swap liability
|
(2,603
|
)
|
—
|
(2,603
|
)
|
—
|
income
approach
|
||||||||||
|
Total
|
$
|
3,529
|
$
|
6,132
|
$
|
(2,603
|
)
|
$
|
—
|
||||||||
There
have been no other material changes to our significant accounting policies and
estimates from the information provided in Note 2 of our Consolidated Financial
Statements included in our Form 10-K for the fiscal year ended December 26,
2007, except as noted in Note 3.
Note
3. Adjustments Related to Goodwill
In March
2008, we recorded adjustments to correct an error in accounting for goodwill in
relation to the sale of restaurant operations during the quarters ending March
28, 2007, June 27 2007, September 26, 2007 and December 26, 2007. Historically,
we did not write-off goodwill when we sold restaurant units to franchisees.
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" requires that a portion of the entity level goodwill
should be written off based on the relative fair values of the restaurant unit
being sold and the remaining value of the entity, in our case, Denny's. The
adjustments had no impact on previously reported cash flows.
The
following line items on the Consolidated Statements of Operations for the
quarter and three quarters ended September 26, 2007 and the fiscal year
ended December 26, 2007 were impacted by the adjustments:
|
Quarter
Ended
September
26, 2007
|
Three
Quarters Ended
September
26, 2007
|
Fiscal
Year Ended
December
26, 2007
|
||||||||||||||||||||||||||||||||||
|
Unadjusted
|
Adjustment
|
Adjusted
|
Unadjusted
|
Adjustment
|
Adjusted
|
Unadjusted
|
Adjustment
|
Adjusted
|
||||||||||||||||||||||||||||
|
(In
thousands, except per share amounts)
|
||||||||||||||||||||||||||||||||||||
|
Operating
gains, losses and other charges, net
|
$
|
(747
|
)
|
$
|
431
|
$
|
(316
|
)
|
$
|
(16,427
|
)
|
$
|
1,537
|
$
|
(14,890
|
)
|
$
|
(34,828
|
)
|
3,746
|
(31,082
|
)
|
||||||||||||||
|
Total
operating costs and expenses
|
225,098
|
431
|
225,529
|
665,773
|
1,537
|
667,310
|
855,838
|
3,746
|
859,584
|
|||||||||||||||||||||||||||
|
Operating
income
|
16,311
|
(431
|
)
|
15,880
|
53,329
|
(1,537
|
)
|
51,792
|
83,530
|
(3,746
|
)
|
79,784
|
||||||||||||||||||||||||
|
Net
income before taxes
|
5,788
|
(431
|
)
|
5,357
|
20,937
|
(1,537
|
)
|
19,400
|
39,905
|
(3,746
|
)
|
36,159
|
||||||||||||||||||||||||
|
Provision
for income taxes
|
451
|
(44
|
)
|
407
|
2,937
|
(157
|
)
|
2,780
|
5,192
|
(384
|
)
|
4,808
|
||||||||||||||||||||||||
|
Net
income
|
5,337
|
(387
|
)
|
4,950
|
18,000
|
(1,380
|
)
|
16,620
|
34,713
|
(3,362
|
)
|
31,351
|
||||||||||||||||||||||||
|
Basic
net income per share
|
$
|
0.06
|
$
|
(0.01
|
)
|
$
|
0.05
|
$
|
0.19
|
$
|
(0.01
|
)
|
$
|
0.18
|
$
|
0.37
|
$
|
(0.04
|
)
|
$
|
0.33
|
|||||||||||||||
|
Diluted
net income per share
|
$
|
0.05
|
$
|
(0.00
|
)
|
$
|
0.05
|
$
|
0.18
|
$
|
(0.01
|
)
|
$
|
0.17
|
$
|
0.35
|
$
|
(0.03
|
)
|
$
|
0.32
|
|||||||||||||||
7
The
following line items on the Consolidated Balance Sheet as of December 26, 2007
were impacted by the adjustments:
|
December
26, 2007
|
Adjustment
|
Adjusted
December
26, 2007
|
||||||||||
|
(In
thousands)
|
||||||||||||
|
Goodwill
|
$
|
46,185
|
$
|
(3,746
|
)
|
$
|
42,439
|
|||||
|
Total
assets
|
381,102
|
(3,746
|
)
|
377,356
|
||||||||
|
Deferred
income taxes
|
11,963
|
(384
|
)
|
11,579
|
||||||||
|
Total
long-term liabilities
|
428,505
|
(384
|
)
|
428,121
|
||||||||
|
Total
liabilities
|
559,972
|
(384
|
)
|
559,588
|
||||||||
|
Total
shareholders' deficit
|
(178,870
|
)
|
(3,362
|
)
|
(182,232
|
)
|
||||||
|
Total
liabilities and shareholders' deficit
|
381,102
|
(3,746
|
)
|
377,356
|
||||||||
The
following reflects the adjusted quarterly data for fiscal 2007:
|
Fiscal
Year Ended December 26, 2007
|
||||||||||||||||
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|||||||||||||
|
(In
thousands, except per share data)
|
||||||||||||||||
|
Company
restaurant sales
|
$
|
215,801
|
$
|
218,316
|
$
|
216,792
|
$
|
193,712
|
||||||||
|
Franchise
and licensing revenue
|
20,950
|
22,626
|
24,617
|
26,554
|
||||||||||||
|
Total
operating revenue
|
236,751
|
240,942
|
241,409
|
220,266
|
||||||||||||
|
Total
operating costs and expenses
|
224,165
|
217,616
|
225,529
|
192,274
|
||||||||||||
|
Operating
income
|
$
|
12,586
|
$
|
23,326
|
$
|
15,880
|
$
|
27,992
|
||||||||
|
Net
income
|
$
|
1,087
|
$
|
10,583
|
$
|
4,950
|
$
|
14,731
|
||||||||
|
Basic
net income per share (a)
|
$
|
0.01
|
$
|
0.11
|
$
|
0.05
|
$
|
0.16
|
||||||||
|
Diluted
net income per share (a)
|
$
|
0.01
|
$
|
0.11
|
$
|
0.05
|
$
|
0.15
|
||||||||
|
(a)
|
Per
share amounts do not necessarily sum to the total year amounts due to
changes in shares outstanding and
rounding.
|
Note
4. Assets Held for Sale
Assets
held for sale of $3.0 million and $6.7 million, as of September 24, 2008 and
December 26, 2007, respectively, include restaurants to be sold to
franchisees and certain real estate properties. We expect to sell each of
these assets within 12 months. Our Credit Facility (defined in Note 7) requires
us to make mandatory prepayments to reduce outstanding indebtedness with the net
cash proceeds from the sale of specified real estate properties and
restaurant operations to franchisees. As a result, we classified a corresponding
$3.0 million and $0.4 million of our
long-term debt as a current liability in our Consolidated Balance Sheet as
of September 24, 2008 and December 26, 2007, respectively. This amount
represents the net book value of the specified properties as of the balance
sheet date.
Note
5. Goodwill and Other Intangible Assets
The
changes in carrying amounts of goodwill for the three quarters ended September
24, 2008 are as follows:
|
(In
thousands)
|
||||
|
Balance
at December 26, 2007
|
$
|
42,439
|
||
|
Write-offs
associated with sale of restaurants
|
(1,777
|
)
|
||
|
Reversal
of valuation allowance related to deferred tax assets (Note
11)
|
(28
|
)
|
||
|
Balance
at September 24, 2008
|
$
|
40,634
|
||
The
following table reflects goodwill and intangible assets as of September 24, 2008
and December 26, 2007:
|
September
24, 2008
|
December
26, 2007
|
|||||||||||||||
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
|||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Goodwill
|
$
|
40,634
|
$
|
—
|
$
|
42,439
|
$
|
—
|
||||||||
|
Intangible
assets with indefinite lives:
|
||||||||||||||||
|
Trade
names
|
$
|
42,432
|
$
|
—
|
$
|
42,395
|
$
|
—
|
||||||||
|
Liquor
licenses
|
262
|
—
|
279
|
—
|
||||||||||||
|
Intangible
assets with definite lives:
|
||||||||||||||||
|
Franchise
and license agreements
|
55,551
|
38,581
|
61,903
|
42,036
|
||||||||||||
|
Foreign
license agreements
|
241
|
135
|
241
|
125
|
||||||||||||
|
Intangible
assets
|
$
|
98,486
|
$
|
38,716
|
$
|
104,818
|
$
|
42,161
|
||||||||
|
Other
assets with definitive lives:
|
||||||||||||||||
|
Software
development costs
|
$
|
31,845
|
$
|
25,974
|
$
|
30,853
|
$
|
24,560
|
||||||||
Note
6. Operating Gains, Losses and Other Charges, Net
Operating
gains, losses and other charges, net are comprised of the
following:
|
Quarter
Ended
|
Three
Quarters Ended
|
|||||||||||||||
|
September
24, 2008
|
September
26, 2007
|
September
24, 2008
|
September
26, 2007
|
|||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Gains
on sales of assets and other, net
|
$
|
(5,290
|
)
|
$
|
(4,197
|
)
|
$
|
(18,214
|
)
|
$
|
(20,841
|
)
|
||||
|
Restructuring
charges and exit costs
|
752
|
3,701
|
7,506
|
5,531
|
||||||||||||
|
Impairment
charges
|
244
|
180
|
728
|
420
|
||||||||||||
|
Operating
gains, losses and other charges, net
|
$
|
(4,294
|
)
|
$
|
(316
|
)
|
$
|
(9,980
|
)
|
$
|
(14,890
|
)
|
||||
8
Gains
on Sales of Assets
Proceeds
and gains on sales of assets for the quarters ended September 24, 2008 and
September 26, 2007 were comprised of the following:
|
Quarter
Ended September 24, 2008
|
Quarter
Ended September 26, 2007
|
|||||||||||||||
|
Net
Proceeds
|
Gains
|
Net
Proceeds
|
Gains
|
|||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Sales
of restaurant operations and related real estate
to
franchisees
|
$
|
8,242
|
$
|
3,496
|
$
|
8,748
|
$
|
2,394
|
||||||||
|
Sales
of other real estate assets
|
2,198
|
1,764
|
353
|
353
|
||||||||||||
|
Recognition
of deferred gains
|
—
|
30
|
—
|
1,450
|
||||||||||||
|
Total
|
$
|
10,440
|
$
|
5,290
|
$
|
9,101
|
$
|
4,197
|
||||||||
Proceeds
and gains on sales of assets for the three quarters ended September 24, 2008 and
September 26, 2007 were comprised of the following:
|
Three
Quarters Ended September 24, 2008
|
Three
Quarters Ended September 26, 2007
|
|||||||||||||||
|
Net
Proceeds
|
Gains
|
Net
Proceeds
|
Gains
|
|||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Sales
of restaurant operations and related real estate
to
franchisees
|
$
|
30,241
|
$
|
15,439
|
$
|
30,601
|
$
|
15,350
|
||||||||
|
Sales
of other real estate assets
|
3,820
|
2,683
|
5,388
|
3,495
|
||||||||||||
|
Recognition
of deferred gains
|
—
|
92
|
—
|
1,996
|
||||||||||||
|
Total
|
$
|
34,061
|
$
|
18,214
|
$
|
35,989
|
$
|
20,841
|
||||||||
Restructuring
Charges and Exit Costs
Restructuring
charges and exit costs were comprised of the following:
|
Quarter
Ended
|
Three
Quarters Ended
|
|||||||||||||||
|
September
24, 2008
|
September
26, 2007
|
September
24, 2008
|
September
26, 2007
|
|||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Exit
costs
|
$
|
821
|
$
|
276
|
$
|
2,476
|
$
|
1,011
|
||||||||
|
Severance
and other restructuring charges
|
(69
|
)
|
3,425
|
5,030
|
4,520
|
|||||||||||
|
Total
restructuring and exit costs
|
$
|
752
|
$
|
3,701
|
$
|
7,506
|
$
|
5,531
|
||||||||
Severance
and other restructuring charges of $5.0 million for the three quarters ended
September 24, 2008 primarily resulted from severance costs of $4.3 million
recognized during the second quarter related to the reorganization to support
our ongoing transition to a franchise-focused business model, which led to the
elimination of approximately 50 positions.
The
components of the change in accrued exit cost liabilities are as
follows:
|
(In
thousands)
|
||||
|
Balance,
beginning of year
|
$
|
8,339
|
||
|
Provisions
for units closed during the year (1)
|
728
|
|||
|
Changes
in estimates of accrued exit costs, net (1)
|
1,748
|
|||
|
Payments,
net
|
(2,533
|
)
|
||
|
Interest
accretion
|
615
|
|||
|
Balance,
end of quarter
|
8,897
|
|||
|
Less
current portion included in other current
liabilities
|
2,038
|
|||
|
Long-term
portion included in other noncurrent liabilities
|
$
|
6,859
|
||
|
(1)
|
Included
as a component of operating gains, losses and other charges,
net.
|
Estimated
net cash payments related to exit cost liabilities in the next five years are as
follows:
|
(In
thousands)
|
||||
|
Remainder
of 2008
|
$
|
843
|
||
|
2009
|
2,499
|
|||
|
2010
|
1,768
|
|||
|
2011
|
1,458
|
|||
|
2012
|
1,153
|
|||
|
Thereafter
|
3,101
|
|||
|
Total
|
10,822
|
|||
|
Less
imputed interest
|
1,925
|
|||
|
Present
value of exit cost liabilities
|
$
|
8,897
|
||
As of
September 24, 2008 and December 26, 2007, we had accrued severance and other
restructuring charges of $1.5 million and $1.3 million, respectively. The
balance as of September 24, 2008 is expected to be paid during the next 12
months.
Note
7. Long-Term Debt
Credit
Facility
Our
subsidiaries, Denny's, Inc. and Denny's Realty, LLC (the "Borrowers"), have a
senior secured credit agreement consisting of a $50 million revolving credit
facility (including up to $10 million for a revolving letter of credit
facility), a $136.7 million term loan and an additional $37 million letter of
credit facility (together, the "Credit Facility"). At September 24,
2008, we had outstanding letters of credit of $35.4 million (comprised of
$35.2 million under our letter of credit facility and $0.2 million under our
revolving facility). There were no revolving loans outstanding at September 24,
2008. These balances result in availability of $1.8 million under our letter of
credit facility and $49.8 million under the revolving facility.
9
The
revolving facility matures on December 15, 2011. The term loan and the $37
million letter of credit facility mature on March 31, 2012. The term loan
amortizes in equal quarterly installments at a rate equal to approximately 1%
per annum with all remaining amounts due on the maturity date. The Credit
Facility is available for working capital, capital expenditures and other
general corporate purposes. We will be required to make mandatory prepayments
under certain circumstances (such as required payments related to asset sales)
typical for this type of credit facility and may make certain optional
prepayments under the Credit Facility. We believe that our estimated cash flows
from operations for 2008, combined with our capacity for additional borrowings
under our Credit Facility, will enable us to meet our anticipated cash
requirements and fund capital expenditures over the next twelve months.
The
Credit Facility is guaranteed by Denny's Corporation and its other subsidiaries
and is secured by substantially all of the assets of Denny's and its
subsidiaries. In addition, the Credit Facility is secured by first-priority
mortgages on 118 company-owned real estate assets. The Credit Facility
contains certain financial covenants (i.e., maximum total debt to EBITDA (as
defined under the Credit Facility) ratio requirements, maximum senior secured
debt to EBITDA ratio requirements, minimum fixed charge coverage ratio
requirements and limitations on capital expenditures), negative covenants,
conditions precedent, material adverse change provisions, events of default and
other terms, conditions and provisions customarily found in credit agreements
for facilities and transactions of this type. We were in compliance with the
terms of the Credit Facility as of September 24, 2008.
A
commitment fee of 0.5% is paid on the unused portion of the revolving credit
facility. Interest on loans under the revolving facility is payable at per annum
rates equal to LIBOR plus 250 basis points and will adjust over time based on
our leverage ratio. Interest on the term loan and letter of credit facility
is payable at per annum rates equal to LIBOR plus 200 basis points. Prior
to considering the impact of the interest rate swap described below, the
weighted-average interest rate under the term loan was 4.8% and 7.1% as of
September 24, 2008 and September 26, 2007, respectively.
Interest
Rate Swap
During
the second quarter of fiscal 2007, we entered into an interest rate swap with a
notional amount of $150 million to hedge a portion of the cash flows of our
variable rate debt. We designated the interest rate swap as a cash flow hedge of
our exposure to variability in future cash flows attributable to interest
payments on the first $150 million of floating rate debt. Under the terms of the
swap, we pay a fixed rate of 4.8925% on the $150 million notional amount
and receive payments from the counterparties based on the 3-month LIBOR
rate for a term ending on March 30, 2010, effectively resulting in a fixed rate
of 6.8925% on the $150 million notional amount at the inception of the swap.
Interest rate differentials paid or received under the swap agreement are
recognized as adjustments to interest expense.
Prior to
December 26, 2007, to the extent the swap was effective in offsetting the
variability of the hedged cash flows, changes in the fair value of the swap were
not included in current earnings, but were reported as adjustments to other
comprehensive income. At December 26, 2007, we determined that a portion of the
underlying cash flows related to the swap (i.e., interest payments on $150
million of floating rate debt) were no longer probable of occurring over the
term of the interest rate swap as a result of the probability of paying the debt
down below $150 million through scheduled repayments and prepayments with cash
from the sale of company-owned restaurant operations to franchisees. As a
result, we discontinued hedge accounting treatment. The losses
related to the fair value of the swap included in accumulated other
comprehensive income as of December 26, 2007 will be amortized to other
nonoperating expense over the remaining term of the interest rate swap.
Additionally, changes in the fair value of the swap are recorded in other
nonoperating expense.
The
changes in accumulated other comprehensive income related to the swap for the
quarter and three quarters ended September 24, 2008 are as follows:
|
Quarter
Ended
September
24, 2008
|
Three
Quarters Ended
September
24, 2008
|
|||||||
|
(In
thousands)
|
||||||||
|
Accumulated
Other Comprehensive Income, beginning of period
|
$
|
(1,794
|
)
|
$
|
(2,353
|
)
|
||
|
Amortization
of unrealized losses related to the interest rate swap (recorded in
other
nonoperating
expense)
|
293
|
852
|
||||||
|
Accumulated
Other Comprehensive Income, end of period
|
$
|
(1,501
|
)
|
$
|
(1,501
|
)
|
||
The
changes in fair value of the interest rate swap for the quarter and three
quarters ended September 24, 2008 are as follows:
|
Quarter
Ended
September
24, 2008
|
Three
Quarters Ended
September
24, 2008
|
|||||||
|
(In
thousands)
|
||||||||
|
Fair
value of the interest rate swap, beginning of period
|
$ | (2,850 | ) | $ | (2,753 | ) | ||
|
Change
in the fair value of the interest rate swap (recorded in other
nonoperating expense)
|
247 | (2,242 | ) | |||||
|
Termination
of a portion of the swap
|
— | 2,392 | ||||||
|
Fair
value of the interest rate swap, end of period
|
$ | (2,603 | ) | $ | (2,603 | ) | ||
On March
26, 2008, we terminated $50 million notional amount of the interest rate swap.
The termination resulted in a $2.4 million cash payment, which was made during
the quarter ended June 25, 2008.
By using
a derivative instrument to hedge exposures to changes in interest rates, we
expose ourselves to credit risk. Credit risk is the failure of the counterparty
to perform under the terms of the derivative contract. We minimize the credit
risk by entering into transactions with high-quality counterparties whose credit
rating is evaluated on a quarterly basis.
Note
8. Defined Benefit Plans
The
components of net pension cost of our pension plan and other defined benefit
plans as determined under Statement of Financial Accounting Standards No. 87,
“Employers’ Accounting for Pensions,” as amended by Statement of Financial
Accounting Standards No. 158, "Employer's Accounting for Defined Benefit
Pension and Other Postretirement Plans," are as follows:
|
Pension
Plan
|
Other
Defined Benefit Plans
|
|||||||||||||||
|
Quarter
Ended
|
Quarter
Ended
|
|||||||||||||||
|
September
24, 2008
|
September
26, 2007
|
September
24, 2008
|
September
26, 2007
|
|||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Service
cost
|
$
|
88
|
$
|
88
|
$
|
—
|
$
|
—
|
||||||||
|
Interest
cost
|
847
|
786
|
49
|
48
|
||||||||||||
|
Expected
return on plan assets
|
(969
|
)
|
(883
|
)
|
—
|
—
|
||||||||||
|
Amortization
of net loss
|
151
|
221
|
4
|
5
|
||||||||||||
|
Net
periodic benefit cost
|
$
|
117
|
$
|
212
|
$
|
53
|
$
|
53
|
||||||||
10
|
Pension
Plan
|
Other
Defined Benefit Plans
|
|||||||||||||||
|
Three
Quarters Ended
|
Three
Quarters Ended
|
|||||||||||||||
|
September
24, 2008
|
September
26, 2007
|
September
24, 2008
|
September
26, 2007
|
|||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Service
cost
|
$
|
263
|
$
|
263
|
$
|
—
|
$
|
—
|
||||||||
|
Interest
cost
|
2,541
|
2,358
|
146
|
143
|
||||||||||||
|
Expected
return on plan assets
|
(2,908
|
)
|
(2,647
|
)
|
—
|
—
|
||||||||||
|
Amortization
of net loss
|
451
|
662
|
14
|
17
|
||||||||||||
|
Net
periodic benefit cost
|
$
|
347
|
$
|
636
|
$
|
160
|
$
|
160
|
||||||||
We made
contributions of $1.3 million and $2.8 million to our qualified pension plan
during the three quarters ended September 24, 2008 and September 26, 2007,
respectively. We made contributions of $0.7 million and $0.2 million to our other
defined benefit plans during the three quarters ended September 24, 2008 and
September 26, 2007, respectively. We expect to contribute $0.1 million to our
qualified pension plan and $0.1 million to our other
defined benefit plans during the remainder of fiscal 2008.
Additional
minimum pension liability of $10.8 million is reported as a component of
accumulated other comprehensive loss in the Condensed Consolidated
Statement of Shareholders’ Deficit and Comprehensive Loss as of September 24,
2008 and December 26, 2007.
Note
9. Share-Based Compensation
Total
share-based compensation included as a component of net income was as
follows:
|
Quarter
Ended
|
Three
Quarters Ended
|
|||||||||||||||
|
September
24, 2008
|
September
26, 2007
|
September
24, 2008
|
September
26, 2007
|
|||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Share-based
compensation related to liability
classified
restricted
stock units
|
$
|
(119
|
)
|
$
|
(24
|
)
|
$
|
(80
|
)
|
$
|
658
|
|||||
|
Share
based compensation related to equity
classified
awards:
|
||||||||||||||||
|
Stock
options
|
$
|
396
|
$
|
448
|
$
|
1,321
|
$
|
1,067
|
||||||||
|
Restricted
stock units
|
511
|
176
|
1,086
|
1,034
|
||||||||||||
|
Board
deferred stock units
|
61
|
81
|
184
|
241
|
||||||||||||
|
Total
share-based compensation related to
equity
classified
awards
|
968
|
705
|
2,591
|
2,342
|
||||||||||||
|
Total
share-based compensation
|
$
|
849
|
$
|
681
|
$
|
2,511
|
$
|
3,000
|
||||||||
Additionally,
during the three quarters ended September 24, 2008, we issued approximately
97,000 shares of common stock in lieu of cash to pay approximately $0.3 million
of incentive compensation.
Stock
Options
During
the three quarters ended September 24, 2008, we granted approximately 1.5
million stock options to certain employees and approximately 0.2 million stock
options to the non-employee members of our Board of Directors. These
stock options vest evenly over 3 years and have a 10-year contractual
life.
The
weighted average fair value per option of options granted during the three
quarters ended September 24, 2008 was $1.18. The fair value of the stock options
granted in the period ended September 24, 2008 was estimated at the date of
grant using the Black-Scholes option pricing model. Use of this option pricing
model requires the input of subjective assumptions. These assumptions include
estimating the length of time employees will retain their vested stock options
before exercising them (“expected term”), the estimated volatility of our common
stock price over the expected term and the number of options that will
ultimately not complete their vesting requirements (“forfeitures”). Changes in
the subjective assumptions can materially affect the estimate of the fair value
of share-based compensation and consequently, the related amount recognized in
the Consolidated Statements of Operations.
We used
the following weighted average assumptions for the stock option grants for the
three quarters ended September 24, 2008:
|
Dividend
yield
|
0.0
|
%
|
||
|
Expected
volatility
|
50.1
|
%
|
||
|
Risk-free
interest rate
|
2.7
|
%
|
||
|
Weighted-average
expected term
|
4.6
years
|
|||
The
dividend yield assumption was based on our dividend payment history and
expectations of future dividend payments. The expected volatility was based on
the historical volatility of our stock for a period approximating the expected
life. The risk-free interest rate was based on published U.S. Treasury spot
rates in effect at the time of grant with terms approximating the expected life
of the option. The weighted average expected term of the options represents the
period of time the options are expected to be outstanding based on historical
trends.
As of
September 24, 2008, there was approximately $2.4 million of unrecognized
compensation cost related to unvested stock option awards outstanding, which is
expected to be recognized over a weighted average of 2.0 years.
Restricted
Stock Units
In
July 2008, we granted approximately 0.3 million restricted stock units under the
2004 Omnibus Plan and approximately 0.9 million restricted stock units under the
2008 Omnibus Plan to certain employees. The awards (which are equity
classified) have a grant date fair value of $2.57 per share. These restricted
units will be earned and vest in 1/3 increments (from 50% to 120% of the target
award for each such increment) based on the appreciation/(depreciation) of our
common stock from the date of grant to each of three vesting periods (July
16, 2009, July 16, 2010 and July 16, 2011). Subsequent to the vesting
periods, the earned restricted stock units will be paid to the holder in shares
of common stock, provided the holder is then still employed with Denny’s or an
affiliate. As these restricted stock units contain a market condition, the
compensation expense is based on the Monte Carlo valuation method, which
utilizes multiple input variables to determine the probability of the Company
achieving the market condition and the fair value of the award. The awards
granted to our named executive officers also contain a performance condition
based on certain operating measures for the four fiscal quarters ending
prior to July 16, 2009.
During
the quarter ended September 24, 2008, we made payments of $0.5 million (before
taxes) in cash and issued 0.2 million shares of common stock related to the
restricted stock unit awards that vested as of June 30, 2008. In
addition, we made payments of less than $0.1 million (before taxes) in cash
related to the restricted stock unit awards that vested as of July 9, 2008.
During
the first quarter of 2008,
we made payments of $0.4 million (before taxes) in cash and issued 0.1 million
shares of common stock related to the restricted stock unit awards that vested
as of December
26, 2007.
11
Accrued
compensation expense included as a component of the Condensed Consolidated
Balance Sheet was as follows:
|
September
24, 2008
|
December
26, 2007
|
|||||||
|
(In
thousands)
|
||||||||
|
Liability
classified restricted stock units:
|
||||||||
|
Other
current
liabilities
|
$
|
2,042
|
$
|
1,170
|
||||
|
Other
noncurrent liabilities
|
$
|
924
|
$
|
2,828
|
||||
|
Equity
classified restricted stock units:
|
||||||||
|
Additional
paid-in capital
|
$
|
4,179
|
$
|
3,925
|
||||
As of
September 24, 2008, we had approximately $4.7 million of unrecognized
compensation cost (approximately $0.7 million for liability classified units and
approximately $4.0 million for equity classified units) related to all unvested
restricted stock unit awards outstanding, which is expected to be recognized
over a weighted average of 1.7 years.
Board
Deferred Stock Units
During
the three quarters ended September 24, 2008, we granted approximately 0.1
million deferred stock units (which are equity classified) with a
weighted-average grant date fair value of $3.27 per unit to non-employee members
of our Board of Directors. These awards are restricted in that they may not be
converted to shares until the recipient has ceased serving as a member of
the Board of Directors for Denny's Corporation at which time the awards
automatically convert to shares. During the second quarter of 2008, one board
member did not stand for reelection. As a result, the board
member's deferred stock units were converted into shares of common
stock.
Note
10. Accumulated Other Comprehensive Income (Loss)
Total
comprehensive income was $18.7 million and $19.2 million for the three quarters
ended September 24, 2008 and September 26, 2007, respectively.
The
components of Accumulated Other Comprehensive Income (Loss) in the Condensed
Consolidated Statement of Shareholder’s Deficit are as follows:
|
September
24, 2008
|
December
26, 2007
|
|||||||
|
(In
thousands)
|
||||||||
|
Additional
minimum pension liability
|
$
|
(10,791
|
)
|
$
|
(10,791
|
)
|
||
|
Unrealized
gain on hedged transaction
|
(1,501
|
)
|
(2,353
|
)
|
||||
|
Accumulated
other comprehensive income (loss)
|
$
|
(12,292
|
)
|
$
|
(13,144
|
)
|
||
Note
11. Income Taxes
The
provision for income taxes was $0.7 million and $1.4 million for the
quarter and three quarters ended September 24, 2008, respectively, compared with
$0.4 million and $2.8 million for the quarter and three
quarters ended September 26, 2007, respectively. The provision for income taxes
for the first three quarters of 2008 and 2007 was determined using our effective
rate estimated for the entire fiscal year. The quarter and three quarters ended
September 24, 2008 also included the recognition of $0.6 million of current tax
benefits. This item resulted from the enactment of certain federal laws that
benefited us during the third quarter of 2008. The three quarters
ended September 26, 2007 also included the recognition of $0.3 million of
current tax benefits and a $0.6 million reduction to the valuation allowance.
These items resulted from the enactment of certain federal and state laws that
benefited us during the second quarter of 2007.
We have
provided valuation allowances related to any benefits from income taxes
resulting from the application of a statutory tax rate to our net operating
losses (“NOL”) generated in previous periods. In addition, during 2008 and 2007,
we utilized certain federal and state NOL carryforwards whose
valuation allowances were established in connection with fresh start
reporting on January 7, 1998. Accordingly, federal and state deferred tax
expense was recorded in connection with fresh start reporting on January 7, 1998
with a corresponding adjustment to
goodwill. The amounts recognized were an increase of
approximately $0.1 million and a decrease of approximately $0.0 million for the
quarter and three quarters ended September 24, 2008, respectively, and
decreases of $0.4 million and $2.9 million for the quarter and three quarters
ended September 26, 2007, respectively.
The
reduction in our effective tax rate for the three quarters ended September 24,
2008 was due primarily to the utilization of federal net operating loss
carryforwards from periods prior to fresh start reporting on January 7,
1998. These federal net operating loss carryforwards were fully utilized during
fiscal 2007. We still have certain state net operating loss carryforwards from
periods prior to fresh start reporting that have been utilized in both fiscal
2007 and 2008.
Note
12. Net Income Per Share
|
Quarter
Ended
|
Three
Quarters Ended
|
|||||||||||||||
|
September
24, 2008
|
September
26, 2007
|
September
24, 2008
|
September
26, 2007
|
|||||||||||||
|
(In
thousands, except for per share amounts)
|
||||||||||||||||
|
Numerator:
|
||||||||||||||||
|
Numerator
for basic and diluted net income per
share -
net
income
|
$
|
10,562
|
$
|
4,950
|
$
|
17,837
|
$
|
16,620
|
||||||||
|
Denominator:
|
||||||||||||||||
|
Denominator
for basic net income per share –
weighted
average
shares
|
95,333
|
93,915
|
95,059
|
93,674
|
||||||||||||
|
Effect
of dilutive securities:
|
||||||||||||||||
|
Options
|
2,056
|
3,737
|
2,517
|
4,073
|
||||||||||||
|
Restricted
stock units and awards
|
943
|
953
|
1,615
|
1,023
|
||||||||||||
|
Denominator
for diluted net income per share -
adjusted
weighted
average shares and assumed
conversions
of dilutive
securities
|
98,332
|
98,605
|
99,191
|
98,770
|
||||||||||||
|
Basic
net income per share
|
$
|
0.11
|
$
|
0.05
|
$
|
0.19
|
$
|
0.18
|
||||||||
|
Diluted
net income per share
|
$
|
0.11
|
$
|
0.05
|
$
|
0.18
|
$
|
0.17
|
||||||||
|
Stock
options excluded (1)
|
3,670
|
2,109
|
3,409
|
1,861
|
||||||||||||
| (1) | Excluded from diluted weighted-average shares outstanding as the impact would have been antidilutive. |
12
Note
13. Supplemental Cash Flow Information
|
Three
Quarters Ended
|
||||||||
|
September
24, 2008
|
||||||||