UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005.
Commission file number 0-18051
A. Full title of the plans and the address of the plans, if different from that
of the issuer named below:
DENNY'S SALARIED 401(k) PLAN
DENNY'S HOURLY/HCE 401(k) PLAN
B. Name of issuer of the securities held pursuant to the plans and the address
of its principal executive office:
DENNY'S CORPORATION
203 E. MAIN STREET
SPARTANBURG, SC 29319-0001
DENNY'S SALARIED 401(k) PLAN
Financial Statements
December 31, 2005 and 2004
(With Report of Independent Registered Public Accounting Firm Thereon)
DENNY'S SALARIED 401(k) PLAN
Financial Statements
December 31, 2005 and 2004
Index
Page
Report of Independent Registered Public Accounting Firm 2
Statements of Net Assets Available for Benefits -
December 31, 2005 and 2004 3
Statements of Changes in Net Assets Available for Benefits -
Years ended December 31, 2005 and 2004 4
Notes to Financial Statements 5-9
Note: The accompanying financial statements have been prepared for the
purpose of filing with the Department of Labor's Form 5500.
Supplemental schedules required by 29 CFR 2520.103-10 of the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 are omitted because of
the absence of the conditions under which they are required.
1
Report of Independent Registered Public Accounting Firm
Retirement Plan Committee
Denny's Salaried 401(k) Plan
We have audited the accompanying statements of net assets available for benefits
of the Denny's Salaried 401(k) Plan (the Plan) as of December 31, 2005 and 2004,
and the related statements of changes in net assets available for benefits for
the years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2005 and 2004, and the changes in net assets available for benefits
for the years then ended in conformity with U.S. generally accepted accounting
principles.
/s/ KPMG LLP
Greenville, South Carolina
June 29, 2006
2
DENNY'S SALARIED 401(k) PLAN
Statements of Net Assets Available for Benefits
December 31, 2005 and 2004
2005 2004
------------ ----------
Assets:
Investments - plan interest in Denny's 401(k) Plans
Master Trust (notes 1, 2, 3, and 4) $ 41,201,349 44,562,233
------------ ----------
Total assets 41,201,349 44,562,233
------------ ----------
Liabilities:
Accrued expenses 24,582 46,939
Excess contributions refundable (note 1) 3,957 ---
------------ ----------
Total liabilities 28,539 46,939
------------ ----------
Net assets available for benefits $ 41,172,810 44,515,294
============ ==========
See accompanying notes to financial statements.
3
DENNY'S SALARIED 401(k) PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2005 and 2004
2005 2004
------------ -----------
Additions:
Investment gain - plan interest in Denny's 401(k) Plans
Master Trust investment gain (notes 1, 2, and 3) $ 1,866,787 4,305,950
------------ -----------
Contributions:
Employer's 818,000 881,524
Participants' 2,186,525 2,168,782
------------ -----------
Total contributions 3,004,525 3,050,306
------------ -----------
Total additions, net 4,871,312 7,356,256
------------ ------------
Deductions:
Benefits paid to participants 4,346,604 4,472,919
Administrative expenses (note 4) 76,451 122,356
------------ ----------
Total deductions 4,423,055 4,595,275
------------ ----------
Transfers (to) from Denny's Hourly/HCE 401(k) Plan (note 1) (3,790,741) 580,333
------------ ----------
Net (decrease) increase in net assets available for benefits (3,342,484) 3,341,314
Net assets available for benefits:
Beginning of year 44,515,294 41,173,980
------------ -----------
End of year $ 41,172,810 44,515,294
============ ===========
See accompanying notes to financial statements.
4
DENNY'S SALARIED 401(k) PLAN
Notes to Financial Statements
December 31, 2005 and 2004
(1) Description of the Plan
The following brief description of the Denny's Salaried 401(k) Plan (the
Plan) is provided for general information purposes only. Participants
should refer to the Plan document for more complete information.
(a) General
The Plan is a qualified deferred compensation plan, subject to
the Employee Retirement Income Security Act of 1974 (ERISA). Any
non-highly compensated salaried employee of Denny's Corporation
(Denny's or the Company), who has attained age 21 and has
completed 6 months of service with the Company is eligible to
participate in the Plan. The Plan's committee and plan
administrator control and manage the operation and administration
of the Plan. Ameriprise Financial (formerly known as American
Express Trust Company) serves as the Plan's trustee.
On an annual basis, assets of employees who have changed status,
as defined in the plan document, are transferred between the
Denny's Salaried 401(k) Plan and the Denny's Hourly/HCE 401(k)
Plan. During 2005 and 2004, transfers from (to) the Denny's
Hourly/HCE 401(k) Plan due to change in status totaled
$(3,790,741) and $580,333, respectively.
(b) Interest in Master Trust
The Plan's investments are held in the Denny's 401(k) Plans Master
Trust (the Master Trust) which was established for the investment
of assets of the Plan and the Denny's Hourly/HCE 401(k) Plan.
(c) Contributions
Each year, participants may make pre-tax contributions of up to
25% of eligible compensation. Participants may also contribute
amounts representing distributions from other qualified defined
benefit or defined contribution plans.
In 2005 and 2004, the Company matched 100% of employee pre-tax
contributions, up to 3% of compensation for all participating
employees of the Company.
Contributions are subject to certain Internal Revenue Code (IRC)
limitations. Excess contributions to be returned to participants
are shown as a liability in the accompanying statements of net
assets available for benefits.
(d) Participant Accounts
Individual accounts are maintained for each plan participant. Each
participant's account is credited with the participant's
contribution and allocations of the Company's contributions and
earnings, and is charged with allocations of plan losses and
administrative expenses and benefit payments, if applicable.
Allocations are based on participant earnings or account balances,
as defined. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested account.
(e) Vesting
All participants are immediately vested in their contributions
plus actual earnings thereon. Vesting in the Company's matching
and discretionary contribution portion of their accounts plus
actual earnings thereon is based on years of continuous service.
For each employee whose initial date of employment is on or after
January 1, 2002, the Company's contribution portion of his/her
5
account plus actual earnings thereon will be 100% vested after
three years of continuous service unless the following terms
provide for more accelerated vesting. For certain employees who
were initially employed by the Company or its predecessor
companies before January 1, 1999, participants are immediately
vested in their contributions and employer contributions plus
actual earnings thereon.
(f) Investment Options
Participants direct both participant and employer contributions in
1% increments in a combination of any of 12 investment options
currently offered by the Plan. Participants may change their
investment options at any time via telephone.
(g) Participant Loans
Participants may borrow from their fund accounts up to the lesser
of 50% of the vested portion of their account balance, or the
amount of $50,000 less the highest outstanding loan balance during
the prior 12-month period. The minimum loan amount is $1,000, and
each participant may have only one loan outstanding at any time.
The plan document indicates that a reasonable borrowing rate will
be assessed, typically evidenced by the prime rate charged by the
Plan's trustee. The loans are secured by the balance in the
participant's account. The participant also bears any loan
administration costs incurred. Loans are repaid through payroll
deductions in equal installments with the loan terms ranging from
6 to 54 months. Loan repayments cannot exceed 30% of the
participant's salary. If an employee who has a loan outstanding
terminates employment, no benefit will be paid from the Plan to
the participant until the outstanding loan balance and accrued
interest is paid in full. Loans outstanding at December 31, 2005
have a range of interest rates from 4.00% to 7.00%.
(h) Payment of Benefits
On termination of service due to death, disability, or retirement,
a participant may elect to receive either a lump-sum amount equal
to the value of the participant's vested interest in his or her
account, or annual installments over a 10-year period. For
termination of service due to other reasons, a participant may
receive the value of the vested interest in his or her account as
a lump-sum distribution.
(i) Administrative Expenses
Administrative expenses of the Plan are paid by the Plan.
(j) Withdrawals
Withdrawals during employment are permitted only under hardship
circumstances that are determined by the Internal Revenue Service
"Safe Harbor" rules. Participants who are age 59-1/2 or older may
withdraw from their account at any time, for any reason allowed by
law.
(k) Forfeited Accounts
Forfeitures are used to reduce future employer contributions to
the Plan. In 2005 and 2004, forfeitures of $44,502 and $10,156,
respectively, were forfeited and will be used to reduce employer
contributions.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements have been prepared on the
accrual basis of accounting and in accordance with accounting
principles generally accepted in the United States of America.
6
(b) Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of additions and
deductions during the reporting period. Actual results could
differ from those estimates.
(c) Investment Valuation and Income Recognition
The Plan's interest in Denny's 401(k) Plans Master Trust is
presented at fair value, which has been determined based on the
fair value of the underlying investments of the Master Trust. The
fair value of mutual funds and Denny's Corporation common stock is
determined by quoted market prices. The collective trust funds do
not have quoted market prices. The fair value of the collective
trust funds is determined based on the net asset value of the
respective funds, which are based on the estimated fair value of the
underlying investments in each fund. Such underlying investments
are generally valued based on quoted market prices.
Purchases and sales of securities are recorded on a trade-date
basis. Dividends are recorded on the ex-dividend date.
(d) Payment of Benefits
Benefit payments to participants are recorded upon distribution.
(e) Investment Risk
The Trust provides for investments that are exposed to risk, such
as interest rate, credit, and market volatility risk. Due to the
level of risk associated with certain investment securities, it is
possible that changes in the value of investment securities may
occur in the near future and that changes could materially affect
the amounts reported in the statement of net assets available for
benefits.
(3) Master Trust
All of the Plan's investment assets are held in a trust account at
Ameriprise Financial and consist of an undivided interest in an
investment account of the Denny's 401(k) Plans Master Trust, a master
trust established by the Company and administered by Ameriprise
Financial, the Plan's trustee. Use of the Master Trust permits the
commingling of trust assets with the assets of the Denny's Hourly/HCE
401(k) plan for investment and administrative purposes. Although assets
of both plans are commingled in the Master Trust, the trustee maintains
supporting records for the purpose of allocating the net gain or loss of
the investment account to the participating plans. The net investment
income or loss of the investment assets is allocated by the trustee to
each participating plan based on the relationship of the interest of
each plan to the total of the interest of the participating plans.
7
Investments of the Master Trust at December 31, 2005 and 2004 are summarized
as follows:
2005 2004
------------ -----------
Collective trust funds, at estimated fair value:
RiverSource Emerging Growth Fund II $ 6,071,327 5,999,754
RiverSource Equity Index Fund II 9,901,657 9,883,738
RiverSource Income Fund II 46,217,907 46,985,680
RiverSource International Equity Index Fund II 573,466 367,445
RiverSource Money Market Fund I 51,614 84,676
RiverSource Small Cap Equity Index Fund II 798,922 721,580
------------ -----------
Total 63,614,893 64,042,873
------------ -----------
Mutual funds, at quoted market price:
RiverSource New Dimensions Fund Y 1,429,753 1,407,951
Allianz NFJ Small Capital Value Fund 6,318,756 6,253,842
Spartan Total Money Market Index Fund --- 378,049
Templeton Foreign Fund 6,711,541 6,393,383
Vanguard Total Stock Market Index Fund I 763,104 107,745
Washington Mutual Investors Fund 1,427,704 1,407,526
------------ -----------
Total 16,650,858 15,948,496
------------ -----------
Denny's Corporation common stock at quoted market price 1,716,055 2,111,180
Loans to participants, at estimated fair value 1,037,611 893,047
Uninvested cash --- 190,371
------------ -----------
Total investments $ 83,019,417 83,185,967
============ ===========
Plan's investment in the Master Trust $ 41,201,349 44,562,233
============ ===========
Plan's investment in the Master Trust as a percentage of total 49.63% 53.57%
============ ===========
The net investment gain for the Master Trust for the years ended December 31,
2005 and 2004 is summarized below:
2005 2004
------------ -----------
Net appreciation (depreciation) in fair value of investments:
Collective trust funds $ 2,460,850 3,158,333
Mutual funds 1,407,996 2,491,802
Common Stock (159,888) 1,792,563
------------ -----------
3,708,958 7,442,698
Interest and dividend income 44,950 32,232
------------ -----------
Total investment gain $ 3,753,908 7,474,930
============ ===========
Effective August 1, 2005, American Express Retirement Services changed
its name to Ameriprise Financial. As a result, the American Express Trust
collective fund families were renamed RiverSource. Effective April 1,
2005 PIMCO Advisors changed its name to Allianz Global Investors. As a
result, the name of the PIMCO NFJ Small Capital Value Fund was changed to
Allianz NFJ Small Capital Value Fund.
The Plan's share of the Master Trust investment gain for the years ended
December 31, 2005 and 2004 was 49.7% and 57.6%, respectively.
8
(4) Party-in-Interest Transactions
The RiverSource collective trust funds and RiverSource New Dimensions
Fund Y mutual fund are managed by Ameriprise Financial. Ameriprise
Financial serves as trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions. Fees paid by the
Plan to Ameriprise Financial for the years ended December 31, 2005 and
2004 amounted to approximately $47,000 and $56,000, respectively.
The Master Trust also invests in common stock of the Plan's sponsor.
These transactions also qualify as party-in-interest transactions.
(5) Plan Termination
Although it has not expressed any intention to do so, the Company has the
right under the Plan to terminate the Plan subject to the provisions set
forth in ERISA. In the event that the Plan is terminated participants
would become 100% vested in their accounts.
(6) Tax Status
The Internal Revenue Service has issued a favorable determination letter
dated January 17, 2003, indicating that the Plan qualifies under the
applicable section of the IRC and is, therefore, not subject to tax under
present income tax laws. A Plan is required to operate in conformity with
the IRC in order to maintain its qualification. The Plan's management is
not aware of any course of action or series of events that have occurred
that might adversely affect the Plan's qualified status.
(7) Subsequent Event
On February 1, 2006, the Company transitioned its 401(k) record keeping
and trustee duties from Ameriprise Financial to Wells Fargo. Also on this
date the Plan was merged with the Denny's Hourly/HCE 401(k) Plan to form
the Denny's 401(k) Plan. In conjunction with this, Denny's Corporation
common stock was removed as an investment option. This transaction was
overseen and approved by the Plan's committee.
9
DENNY'S HOURLY/HCE 401(k) PLAN
Financial Statements
December 31, 2005 and 2004
(With Report of Independent Registered Public Accounting Firm Thereon)
10
DENNY'S HOURLY/HCE 401(k) PLAN
Financial Statements
December 31, 2005 and 2004
Index
Page
Report of Independent Registered Public Accounting Firm 12
Statements of Net Assets Available for Benefits -
December 31, 2005 and 2004 13
Statements of Changes in Net Assets Available for Benefits -
Years ended December 31, 2005 and 2004 14
Notes to Financial Statements 15-19
Note: The accompanying financial statements have been prepared for the
purpose of filing with Department of Labor's Form 5500. Supplemental
schedules required by 29 CFR 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 are omitted because of the
absence of the conditions under which they are required.
11
Report of Independent Registered Public Accounting Firm
Retirement Plan Committee
Denny's Hourly / HCE 401(k) Plan
We have audited the accompanying statements of net assets available for benefits
of the Denny's Hourly / HCE 401(k) Plan (the Plan) as of December 31, 2005 and
2004, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2005 and 2004, and the changes in net assets available for benefits
for the years then ended in conformity with U.S. generally accepted accounting
principles.
/s/ KPMG LLP
Greenville, South Carolina
June 29, 2006
12
DENNY'S HOURLY/HCE 401(k) PLAN
Statements of Net Assets Available for Benefits
December 31, 2005 and 2004
2005 2004
------------ -----------
Assets:
Investments - plan interest in Denny's 401(k) Plans
Master Trust (notes 1, 2, 3, and 4) $ 41,818,067 38,623,734
------------ -----------
Total assets 41,818,067 38,623,734
------------ -----------
Liabilities:
Accrued expenses 24,582 45,098
Excess contributions refundable (note 1) 150,290 43,960
------------ -----------
Total liabilities 174,872 89,058
------------ -----------
Net assets available for benefits $ 41,643,195 38,534,676
============ ===========
See accompanying notes to financial statements.
13
DENNY'S HOURLY/HCE 401(k) PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2005 and 2004
2005 2004
------------ -----------
Additions:
Investment gain - plan interest in Denny's 401(k) Plans
Master Trust investment gain (notes 1, 2, and 3) $ 1,887,121 3,168,980
Contributions:
Employers' 588,926 518,744
Participants' 1,977,296 1,597,310
------------ -----------
Total contributions 2,566,222 2,116,054
------------ -----------
Total additions, net 4,453,343 5,285,034
------------ -----------
Deductions:
Benefits paid to participants 5,048,144 4,567,739
Administrative expenses (note 4) 87,421 107,482
------------ -----------
Total deductions 5,135,565 4,675,221
------------ -----------
Transfers from (to) Denny's Salaried 401(k) Plan (note 1) 3,790,741 (580,333)
------------ -----------
Net increase in net assets available for benefits 3,108,519 29,480
Net assets available for benefits:
Beginning of year 38,534,676 38,505,196
------------ -----------
End of year $ 41,643,195 38,534,676
============ ===========
See accompanying notes to financial statements.
14
DENNY'S HOURLY/HCE 401(k) PLAN
Notes to Financial Statements
December 31, 2005 and 2004
(1) Description of the Plan
The following brief description of the Denny's Hourly/HCE 401(k) Plan
(the Plan) is provided for general information purposes only.
Participants should refer to the Plan document for more complete
information.
(a) General
The Plan is a qualified deferred compensation plan, subject to the
Employee Retirement Income Security Act of 1974 (ERISA). Any
hourly employee or highly compensated employee of Denny's
Corporation (Denny's or the Company), who has attained age 21 and
has completed 6 months of service with the Company is eligible to
participate in the Plan. The Plan's committee and plan
administrator control and manage the operation and administration
of the Plan. Ameriprise Financial (formerly known as American
Express Trust Company) serves as the Plan's trustee.
On an annual basis, assets of employees who have changed status,
as defined in the Plan document, are transferred between the
Denny's Hourly/HCE 401(k) Plan and the Denny's Salaried 401(k)
Plan. During 2005 and 2004, transfers from (to) the Denny's
Salaried 401(k) Plan due to change in status totaled $3,790,741
and $(580,333), respectively.
(b) Interest in Master Trust
The Plan's investments are held in the Denny's 401(k) Plans Master
Trust (Master Trust) which was established for the investment of
assets of the Plan and the Denny's Salaried 401(k) Plan.
(c) Contributions
Each year, participants may make pre-tax contributions of up to
25% of eligible compensation. Participants may also contribute
amounts representing distributions from other qualified defined
benefit or defined contribution plans.
In 2005 and 2004, the Company matched 100% of employee pre-tax
contributions, up to 3% of compensation for all eligible
participating employees of the Company. Highly compensated employees
are not eligible for the employer match.
Contributions are subject to certain Internal Revenue Code (IRC)
limitations. Excess contributions to be returned to participants
are shown as a liability in the accompanying statements of net
assets available for benefits.
(d) Participant Accounts
Individual accounts are maintained for each plan participant. Each
participant's account is credited with the participant's
contribution and allocations of the Company's contributions (for
hourly employees) and earnings, and is charged with allocations of
plan losses, administrative expenses, and benefit payments, if
applicable. Allocations are based on earnings and participant
account balances, as defined. The benefit to which a participant
is entitled is the benefit that can be provided from the
participant's vested account.
15
(e) Vesting
All participants are immediately vested in their contributions
plus actual earnings thereon. Vesting in the Company's matching
and discretionary contribution portion of their accounts plus
actual earnings thereon is based on years of continuous service.
For each hourly employee whose initial date of employment is on or
after January 1, 2002, the Company's contribution portion of their
account plus actual earnings thereon will be 100% vested after
three years of continuous service unless the following terms
provide for more accelerated vesting. For certain employees who
were initially employed by the Company or its predecessor
companies before January 1, 1999, participants are immediately
vested in their contributions and employer contributions, plus
actual earnings thereon.
(f) Investment Options
Participants direct both participant and employer contributions in
1% increments in a combination of any of 12 investment options
currently offered by the Plan. Participants may change their
investment options at any time via telephone.
(g) Payment of Benefits
On termination of service due to death, disability, or retirement,
a participant may elect to receive either a lump-sum amount equal
to the value of the participant's vested interest in his or her
account, or annual installments over a 10-year period. For
termination of service due to other reasons, a participant may
receive the value of the vested interest in his or her account as
a lump-sum distribution.
(h) Administrative Expenses
Administrative expenses of the Plan are paid by the Plan.
(i) Withdrawals
Withdrawals during employment are permitted only under hardship
circumstances that are determined by the Internal Revenue Service
"Safe Harbor" rules. Participants who are age 59-1/2 or older may
withdraw from their account at any time, for any reason allowed by
law.
(j) Forfeited Accounts
Forfeitures are used to reduce future employer contributions to
the Plan. In 2005 and 2004, forfeitures of $14,286 and $8,852,
respectively, were forfeited and will be used to reduce employer
contributions.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements have been prepared on the
accrual basis of accounting and in accordance with accounting
principles generally accepted in the United States of America.
(b) Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of additions and
deductions during the reporting period. Actual results could
differ from those estimates.
16
(c) Investment Risk
The Trust provides for investments that are exposed to risk, such
as interest rate, credit, and market volatility risk. Due to the
level of risk associated with certain investment securities, it is
possible that changes in the value of investment securities may
occur in the near future and that changes could materially affect
the amounts reported in the statement of net assets available for
benefits.
(d) Investment Valuation and Income Recognition
The Plan's interest in Denny's 401(k) Plans Master Trust is
presented at fair value which has been determined based on the
fair value of the underlying investments of the Master Trust. The
fair value of mutual funds and Denny's Corporation common stock is
determined by quoted market prices. The collective trust funds do
not have quoted market prices. The fair value of the collective
trust funds is determined based on the net asset value of the
respective funds, which are based on the estimated fair value of the
underlying investments in each fund. Such underlying investments
are generally valued based on quoted market prices.
Purchases and sales of securities are recorded on a trade-date
basis. Dividends are recorded on the ex-dividend date.
(e) Payment of Benefits
Benefit payments to participants are recorded upon distribution.
(3) Master Trust
All of the Plans' investment assets are held in a trust account at
Ameriprise Financial and consist of an undivided interest in an
investment account of the Denny's 401(k) Plans Master Trust, a master
trust established by the Company and administered by Ameriprise
Financial, the Plan's trustee. Use of the Master Trust permits the
commingling of trust assets with the assets of the Denny's Salaried
401(k) Plan for investments and administrative purposes. Although
assets of both plans are commingled in the Master Trust, the trustee
maintains supporting records for the purpose of allocating the net gain
or loss of the investment account to the participating plans. The net
investment income or loss of the investment assets is allocated by the
trustee to each participating plan based on the relationship of the
interest of each plan to the total of the interests of the
participating plans.
17
The investments of the Master Trust at December 31, 2005 and 2004, are
summarized as follows:
2005 2004
------------ -----------
Collective trust funds, at estimated fair value:
RiverSource Emerging Growth Fund II $ 6,071,327 5,999,754
RiverSource Equity Index Fund II 9,901,657 9,883,738
RiverSource Income Fund II 46,217,907 46,985,680
RiverSource International Equity Index Fund II 573,466 367,445
RiverSource Money Market Fund I 51,614 84,676
RiverSource Small Cap Equity Index Fund II 798,922 721,580
------------ -----------
Total 63,614,893 64,042,873
------------ -----------
Mutual funds, at quoted market price:
RiverSource New Dimensions Fund Y 1,429,753 1,407,951
Allianz NFJ Small Capital Value Fund 6,318,756 6,253,842
Spartan Total Money Market Index Fund --- 378,049
Templeton Foreign Fund 6,711,541 6,393,383
Vanguard Total Stock Market Index Fund I 763,104 107,745
Washington Mutual Investors Fund 1,427,704 1,407,526
------------ -----------
Total 16,650,858 15,948,496
------------ -----------
Denny's Corporation common stock at quoted market price 1,716,055 2,111,180
Loans to participants, at estimated fair value 1,037,611 893,047
Uninvested cash --- 190,371
------------ -----------
Total investments $ 83,019,417 83,185,967
============ ===========
Plan's investment in the Master Trust $ 41,818,067 38,623,734
============ ===========
Plan's investment in the Master Trust as a percentage of total 50.37% 46.43%
============ ===========
The net investment gain for the Master Trust for the years ended December 31,
2005 and 2004 is summarized below:
2005 2004
------------ -----------
Net appreciation (depreciation) in fair value of investments:
Collective trust funds $ 2,460,850 3,158,333
Mutual funds 1,407,996 2,491,802
Common Stock (159,888) 1,792,563
------------ -----------
3,708,958 7,442,698
Interest and dividend income 44,950 32,232
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Total investment gain $ 3,753,908 7,474,930
============ ===========
Effective August 1, 2005, American Express Retirement Services changed
its name to Ameriprise Financial. As a result, the American Express Trust
collective fund families were renamed RiverSource. Effective April 1,
2005 PIMCO Advisors changed its name to Allianz Global Investors. As a
result, the name of the PIMCO NFJ Small Capital Value Fund was changed to
Allianz NFJ Small Capital Value Fund.
The Plan's share of the Master Trust investment gain for the years ended
December 31, 2005 and 2004 was 50.3% and 42.4%, respectively.
18
(4) Party-In-Interest Transactions
The RiverSource collective trust funds and RiverSource New Dimensions Y
mutual fund are managed by Ameriprise Financial. Ameriprise Financial
serves as trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions. Fees paid by the
Plan to Ameriprise Financial for the years ended December 31, 2005 and
2004 amounted to approximately $47,000 and $56,000, respectively.
The Master Trust also invests in the common stock of the Plan's sponsor.
These transactions also qualify as party-in-interest transactions.
(5) Plan Termination
Although it has not expressed any intention to do so, the Company has the
right under the Plan to terminate the Plan subject to the provisions set
forth in ERISA. In the event that the Plan is terminated, participants
would become 100% vested in their accounts.
(6) Tax Status
The Internal Revenue Service has issued a favorable determination letter
dated January 17, 2003, indicating that the Plan qualifies under the
applicable sections of the IRC and is, therefore, not subject to tax
under present income tax laws. A Plan is required to operate in
conformity with the IRC in order to maintain its qualification. The
Plan's management is not aware of any course of action or series of
events that have occurred that might adversely affect the Plan's
qualified status.
(7) Subsequent Event
On February 1, 2006, the Company transitioned its 401(k) record keeping
and trustee duties from Ameriprise Financial to Wells Fargo. Also on this
date the Plan was merged with the Denny's Salaried 401(k) Plan to form
the Denny's 401(k) Plan. In conjunction with this, Denny's Corporation
common stock was removed as an investment option. This transaction was
overseen and approved by the Plan's committee.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plans) have
duly caused this annual report to be signed on its behalf by the undersigned,
hereunto duly authorized.
DENNY'S SALARIED 401(k) PLAN
DENNY'S HOURLY/HCE 401(k) PLAN
Dated: June 29, 2006 By: /s/ Rhonda J. Parish
----------------------------------------------
Rhonda J. Parish
Executive Vice President,
Chief Administrative Officer,
Chief Human Resources Officer,
General Counsel and Secretary and
As member of Retirement Plan Committee
(administrator of Denny's Salaried 401(k) Plan
and Denny's Hourly/HCE 401(k) Plan)
20
Exhibit No. Description
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23 Consent of KPMG LLP, Independent Registered Public Accounting
Firm
21