Business Outlook

Mark Wolfinger, Executive Vice President, Chief Administrative Officer and Chief Financial Officer, stated, “The continuous improvements we are making to our franchised-focused business model are reflected in our results where we have been able to generate new unit growth, positive same-store sales, and growing profitability. Our franchise-focused business model provides financial stability and flexibility enabling us to navigate the challenging environment while continuing to return value to shareholders through debt repayment and share repurchases.”

Based on year-to-date results and management’s expectations at this time, Denny’s is updating its full-year 2012 financial guidance to reflect the third quarter results and current thinking for the fourth quarter. The Company anticipates that the system will achieve its second consecutive year of positive same-store sales. Despite the challenging consumer economic environment, the company expects Adjusted Income Before Taxes* to grow more than 20% this year while generating around $50 million of Free Cash Flow*.
Component   Full Year 2012 Guidance

Previous **

Franchise Same-Store Sales 1.0% to 3.0% 1.0% to 1.5%
Company Same-Store Sales 0.0% to 2.0% 0.0% to 0.5%
New System Units 45 – 50

(includes 1 company-owned unit)
46 – 48

(includes 1 company-owned unit)
Adjusted EBITDA* $80M to $84M $77M to $80M
Adjusted Income Before Taxes* $45M to $49M $45M to $48M
Interest Expense, net $12.5M to $13.5M

(includes $10.5M to $11.5M of net cash interest expense)
No Change
Cash Capital Expenditure $15M to $16M No Change
Cash Taxes $3M to $4M $2M to $2.5M
Free Cash Flow* $51M to $55M $49M to $52M

* Please refer to the historical reconciliation of net income to Adjusted Income Before Taxes, Adjusted EBITDA, and Free Cash Flow included in the tables below.

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