852772--3/9/2007--DENNYS_CORP

related topics
{debt, indebtedness, cash}
{competitive, industry, competition}
{condition, economic, financial}
{financial, litigation, operation}
{personnel, key, retain}
{operation, natural, condition}
{regulation, government, change}
{cost, regulation, environmental}
Risks Related to Our Business The restaurant business is highly competitive, and if we are unable to compete effectively, our business will be adversely affected. Our business may be adversely affected by changes in consumer tastes, economic conditions, demographic trends, bad publicity, regional weather conditions and increased supply and labor costs. The locations where we have restaurants may cease to be attractive as demographic patterns change. A majority of Denny's restaurants are owned and operated by independent franchisees, and as a result the financial performance of franchisees can negatively impact our business. A majority of Denny's restaurants are owned and operated by independent franchisees, and as a result the financial performance of franchisees can negatively impact our business. Numerous government regulations impact our business, and our failure to comply with them could adversely affect our business. Negative publicity generated by incidents at a few restaurants can adversely affect the operating results of our entire chain and the Denny s brand. As holding companies, Denny s Corporation and Denny s Holdings depend on upstream payments from their operating subsidiaries. Our ability to repay our indebtedness depends on the performance of those subsidiaries and their ability to make distributions to us. If we lose the services of any of our key management personnel, our business could suffer. Risks Related to our Indebtedness Our substantial indebtedness could have a material adverse effect on our financial condition and operations. Despite our current level of indebtedness, we may still be able to incur substantially more debt, which could further exacerbate the risks associated with our substantial leverage. Our ability to generate cash depends on many factors beyond our control, and we may not be able to generate the cash required to service or repay our indebtedness. Restrictive covenants in our debt instruments restrict or prohibit our ability to engage in or enter into a variety of transactions, which could adversely affect us. A breach of a covenant in our debt instruments could cause acceleration of a significant portion of our outstanding indebtedness. We may not be able to repurchase the 10% Senior Notes due 2012 upon a change of control.

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