Shareholders' Equity

12 Months Ended

Dec. 25, 2019

Shareholders’ Equity

Share Repurchases

Our credit facility permits the purchase of Denny’s stock and the payment of cash dividends subject to certain limitations. Over the past several years, our Board of Directors has approved share repurchase programs authorizing us to repurchase up to a set amount of shares or dollar amount of our common stock. Under the programs, we may, from time to time, purchase shares in the open market (including pre-arranged stock trading plans in accordance with 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. During 2019, 2017 and 2016, the Board approved share repurchase programs for $250 million, $200 million and $100 million of our common stock, respectively.

In recent years, as part of our previously authorized share repurchase programs, we have entered into variable term, capped accelerated share repurchase (“ASR”) agreements to repurchase our common stock. Pursuant to the terms of these ASR agreements, we pay cash, receive an initial delivery of shares of our common stock (which represents the minimum shares to be delivered based on the cap price) and record treasury stock related to these shares. The remaining balance is recorded as an equity forward contract. When settled, the final delivery of shares is received and treasury stock is recorded related to the additional shares. The total number of shares repurchased is based on a combined discounted volume-weighted average price (“VWAP”) per share, which is determined based on the average of the daily VWAP of our common stock, less a fixed discount, over the term of the ASR agreement.

In November 2016, we entered into a $25 million ASR agreement with MUFG Securities EMEA plc (“MUFG”) (the “2016 ASR”). We paid $25 million in cash and received approximately 1.5 million shares of our common stock (which represents the minimum shares to be delivered based on the cap price) and recorded $18.1 million of treasury stock related to these shares. The remaining balance of $6.9 million was recorded as additional paid-in capital in shareholders’ deficit as of December 28, 2016 as an equity forward contract. During 2017, we settled the 2016 ASR agreement, recording $6.9 million of treasury stock related to the final delivery of an additional 0.5 million shares of our common stock based on a combined discounted VWAP of $12.36 per share.

In November 2018, we entered into a $25 million ASR agreement with MUFG (the “2018 ASR”). We paid $25 million in cash and received approximately 1.1 million shares of our common stock (which represents the minimum shares to be delivered based on the cap price) and recorded $18.2 million of treasury stock related to these shares. The remaining balance of $6.8 million was recorded as additional paid-in capital in shareholders’ deficit as of December 26, 2018 as an equity forward contract. During 2019, we settled the 2018 ASR agreement, recording $6.8 million of treasury stock related to the final delivery of an additional 0.4 million shares of our common stock based on a combined discounted VWAP of $17.04 per share.

During 2019, including the settlement of the 2018 ASR agreement, we repurchased a total of 5.3 million shares of our common stock for approximately $103.0 million. During 2018, including shares repurchased under the 2018 ASR, we repurchased a total of 3.9 million shares of our common stock for $61.2 million. In addition to the settlement of the 2016 ASR agreement, during 2017, we repurchased a total of 6.8 million shares for $82.9 million, thus completing the 2016 repurchase program. As of December 25, 2019, there was $282.2 million remaining under the 2017 and 2019 repurchase programs.

Repurchased shares are included as treasury stock in our Consolidated Balance Sheets and our Consolidated Statements of Shareholders’ Deficit.

Accumulated Other Comprehensive Loss

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



	Pensions			Derivatives			Accumulated Other Comprehensive Loss
	(In thousands)
Balance as of December 28, 2016	$	(945	)	$	(462	)	$	(1,407	)
Benefit obligation actuarial loss	(172		)	—			(172		)
Amortization of net loss ⁽¹⁾	92			—			92
Settlement loss recognized	21			—			21
Net change in fair value of derivatives	—			(1,359		)	(1,359		)
Reclassification of derivatives to interest expense⁽²⁾	—			(72		)	(72		)
Income tax benefit	22			559			581
Balance as of December 27, 2017	$	(982	)	$	(1,334	)	$	(2,316	)
Benefit obligation actuarial gain	96			—			96
Amortization of net loss ⁽¹⁾	112			—			112
Net change in fair value of derivatives	—			(2,595		)	(2,595		)
Reclassification of derivatives to interest expense ⁽²⁾	—			307			307
Income tax (expense) benefit	(53		)	303			250
Balance as of December 26, 2018	$	(827	)	$	(3,319	)	$	(4,146	)
Benefit obligation actuarial loss	(25		)	—			(25		)
Amortization of net loss ⁽¹⁾	86			—			86
Net change in fair value of derivatives	—			(40,486		)	(40,486		)
Reclassification of derivatives to interest expense ⁽²⁾	—			291			291
Income tax (expense) benefit	(15		)	10,335			10,320
Balance as of December 25, 2019	$	(781	)	$	(33,179	)	$	(33,960	)


(1)	Before-tax amount that was reclassified from accumulated other comprehensive loss and included as a component of pension expense within general and administrative expenses in our Consolidated Statements of Income. See Note 13 for additional details.

(2)

Amounts reclassified from accumulated other comprehensive loss into income represent payments made to the counterparty for the effective portions of the interest rate swaps. These amounts are included as a component of interest expense in our Consolidated Statements of Income. We expect to reclassify approximately $1.2 million from accumulated other comprehensive loss related to our interest rate swaps during the next twelve months. See Note 11 for additional details.