Domino's Pizza Announces 2012 Financial Results

               Domino's Pizza Announces 2012 Financial Results

Delivers 23% EPS Growth in Fourth Quarter; Initiates Regular Dividend

PR Newswire

ANN ARBOR, Mich., Feb. 28, 2013

ANN ARBOR, Mich., Feb. 28, 2013 /PRNewswire/ --Domino's Pizza, Inc. (NYSE:
DPZ),the recognized world leader in pizza delivery, today announced results
for the fourth quarter and fiscal 2012, comprised of strong EPS and global
store count growth, and positive same store sales. Historically consistent
cash generation also enabled the Board of Directors to declare a regular
dividend. Domestic same store sales grew 4.7% during the fourth quarter versus
the year-ago period, and 3.1% for the full year, continuing the positive sales
momentum in the Company's domestic business. International also posted strong
results with same store sales growth of 5.2% for both the quarter and full
year periods. The fourth quarter marked the 76^th quarter – or 19^th full year
– of consecutive quarterly international same store sales growth for the
division. The Company also had global net store growth of 513 stores in 2012,
led by a record 492 net new stores internationally, along with 21 net new
domestic stores.

(Logo: http://photos.prnewswire.com/prnh/20120814/DE55948LOGO-b )

Fourth quarter diluted EPS was 64 cents, up 23.1% over the Company's EPS in
the prior year quarter. Diluted EPS, as reported, was $1.91 for fiscal 2012,
up 12% over the as reported EPS in the prior year. Diluted EPS, as adjusted,
was $2.02 for fiscal 2012, up nearly 20% over the as adjusted diluted EPS in
the prior year. The Company also repurchased and retired 1,136,648 shares of
its common stock for $45.5 million during the quarter and repurchased and
retired 2,472,863 shares of its common stock for $88.2 million in fiscal 2012.

On February 27, 2013 the Board of Directors declared a 20-cent quarterly
dividend for shareholders of record as of March 15, 2013 to be paid on March
29, 2013.

J. Patrick Doyle, Domino's President and Chief Executive Officer, said: "Our
performance in 2012 was yet another example of the consistent results we have
delivered to our shareholders. Our strong global brand is driving a robust
record of same store sales growth, new store openings and technological
innovation that is building our business globally."

Doyle continued, "The Board's initiation of a regular quarterly dividend, in
addition to our intention to continue share repurchases, are further evidence
of our commitment to return value to our shareholders."

Fourth Quarter and Fiscal 2012 Highlights:
(dollars in millions, except    Fourth      Fourth      Fiscal      Fiscal
per share data)                 Quarter of  Quarter of
                                2012        2011        2012       2011
Net income                      $ 37.6     $ 30.9     $ 112.4     $ 105.4
Weighted average diluted shares 58,487,618  59,764,693  58,997,476  61,653,519
Diluted earnings per share, as  $ 0.64     $ 0.52     $ 1.91     $ 1.71
reported
Items affecting comparability*  -           -           0.11        (0.02)
Diluted earnings per share, as  $ 0.64     $ 0.52     $ 2.02     $ 1.69
adjusted
*Refer to the items affecting comparability section on Page Four for
additional details.



  oRevenues were up 7.5% for the fourth quarter versus the prior-year period,
    due primarily to higher volumes in domestic supply chain, higher same
    store sales in both domestic and international stores and store count
    growth in international markets.
  oNet Income was up 21.6% for the fourth quarter versus the prior-year
    period, primarily driven by domestic and international same store sales
    growth, international store growth and improved operating margins
  oDiluted EPS was 64 cents for the fourth quarter versus 52 cents in the
    prior-year quarter – an increase of 12 cents, or 23.1%. This increase in
    diluted EPS was primarily due to higher net income and lower weighted
    average diluted shares outstanding. There were no items that affected
    comparability in the fourth quarter of 2012 compared to the fourth quarter
    of 2011.
  oGlobal Retail Sales were up 9.7% in the fourth quarter, or up 9.4% when
    excluding the impact of foreign currency. For fiscal 2012, global retail
    sales were up 6.5%, or up 8.3% when excluding the impact of foreign
    currency.

                                                        Fourth      Fiscal

                                                        Quarter of  2012
                                                        2012
Same store sales growth: (versus prior year period)
 Domestic Company-owned stores                         + 2.5%      + 1.3%
 Domestic franchise stores                             + 4.9%      + 3.2%
 Domestic stores                                       + 4.7%      + 3.1%
 International stores (constant dollar basis)          + 5.2%      + 5.2%
Global retail sales growth: (versus prior year period)
 Domestic stores                                       + 5.0%     + 3.3%
 International stores (constant dollar basis)          +14.1%      + 9.7%
 Total                                                 + 9.7%     + 6.5%
Global retail sales growth: (versus prior year period,

 excluding foreign currency impact)
 Domestic stores                                       + 5.0%     + 3.3%
 International stores                                  +13.6%      +13.3%
 Total                                                 + 9.4%     + 8.3%



The table above describes non-GAAP measures. Refer to our comments on
non-GAAP measures on page five for additional details.



                      Domestic                 Total                   
                                    Domestic
                      Company-      Franchise  Domestic  International  
                      owned Stores  Stores     Stores    Stores
                                                                        Total
Store counts:
 Store count at      387           4,509      4,896     5,144          10,040
September 9, 2012
 Openings            2             49         51        223            274
 Closings            (1)           (18)       (19)      (40)           (59)
 Transfers           -             -          -         -              -
 Store count at      388           4,540      4,928     5,327          10,255
December 30, 2012
 Fourth quarter 2012 1             31         32        183            215
net growth
 Fiscal 2012 net     (6)           27         21        492            513
growth

Conference Call Information

The Company will file its annual report on Form 10-K this morning.
Additionally, as previously announced, Domino's Pizza, Inc. will hold a
conference call today at 11 a.m. (Eastern) to review its fiscal 2012 financial
results. The call can be accessed by dialing (888) 306-6182 (U.S./Canada) or
(706) 634-4947 (International). Ask for the Domino's Pizza conference call.
The call will also be webcast at www.dominosbiz.com. If you are unable to
participate on the call, a replay will be available for thirty days by dialing
(855) 859-2056 (U.S./Canada) or (404) 537-3406 (International), Conference ID
86136427. The webcast will also be archived for 30 days on
www.dominosbiz.com.

Share Repurchases

During the fourth quarter of 2012, the Company repurchased and retired
1,136,648 shares of its common stock under its open market share repurchase
program for approximately $45.5 million, or an average price of $40.05 per
share. For fiscal 2012, the Company repurchased and retired 2,472,863 shares
of its common stock for approximately $88.2 million, or an average price of
$35.68 per share. The Company has used approximately 24% of the total amount
authorized under its open market share repurchase program and has
approximately $152.4 million remaining under the program, which the Company's
Board of Directors reset for a second time at $200.0 million during the third
quarter of 2012.

Dividends

Due to the Company's strong financial performance and consistent free cash
flow generation, the Board of Directors initiated a quarterly dividend of 20
cents per share. This dividend payment will be paid to shareholders of record
as of March 15, 2013 with a payment date of March 29, 2013.

The vast majority of the Company's currently outstanding vested and unvested
stock options are held by the Company's senior management as a key
compensation component and tool for both management retention and aligning the
interests of management with shareholders. However, these stock options are
not eligible to receive ordinary dividends. In recognition of this lost
economic value to management option holders, and due to the Board's desire to
appropriately reward and retain its proven management team for creating value
for the Company's stakeholders, the Compensation Committee approved additional
equity grants for management option holders. As a further retention mechanism,
the Compensation Committee also lengthened the vesting period applicable to
stock options and performance-based restricted shares from three years to four
years beginning with equity awards made in 2013. The Company estimates that it
will incur an additional charge to its general and administrative expense over
four years with the 2013 expense expected to be approximately $5 million as a
result of this special grant.

Long Range Outlook

The Company does not provide quarterly or annual earnings estimates. The
following long range outlook does not constitute specific earnings guidance,
but the Company believes these ranges to be appropriate and achievable over
the long term. The Company has recently adjusted portions of this long range
outlook, as noted below:



                                      Current        Prior

                                      Outlook        Outlook
Domestic same store sales growth      1% – 3%        1% – 3%
International same store sales growth 3% – 6%        3% – 6%
Net unit growth                       4% – 6%        350 – 450 net stores
Global retail sales growth            6% – 10%       5% – 8%
Capital expenditures (in millions)    $25 – $35      $25 – $35
Tax rate                              37.5% – 38.5%  38% – 39%

Items Affecting Comparability

The Company's reported financial results for fiscal 2012 are not comparable to
the reported financial results for the equivalent prior-year period. The table
below presents certain items that affect comparability between 2012 and 2011
financial results. The Company believes that including such information is
critical to the understanding of its financial results for fiscal 2012 as
compared to the same period in 2011 (See the Comments on Non-GAAP Measures
section).

In addition to the items noted in the table below, the Company had lower
weighted average diluted shares outstanding that resulted in an increase in
diluted EPS of approximately one cent in the fourth quarter of 2012 and nine
cents in fiscal 2012.



                   Fourth Quarter                Full Year

                                                         
                                       Diluted                        Diluted
                                      EPS                          EPS
(in thousands,                          Impact                         Impact
except per share   Pre-tax   After-tax           Pre-tax    After-tax
data)
2012 items
affecting
comparability:
Recapitalization
expenses:
 General and
administrative                                   $  
                   $   -  $   -   $   -  (293)      $  (182)  $(0.00)
 expenses
(1)
 Additional
interest expense   -         -          -        (10,222)   (6,348)    (0.11)
(2)
 Subtotal    -         -          -        (10,515)   (6,530)    (0.11)
Deferred tax asset
valuation
                   -         -          -        -          (868)      (0.01)
 allowance
(3)
Tax benefit for
increased tax
basis in        -         -          -        -          735        0.01

 certain
assets (4)
Total of 2012      $   -  $   -    $  -   $(10,515)  $(6,663)   $(0.11)
items
2011 items affecting comparability:
Impact related to                                                  
the sale of        $   -
Company-owned                $    -  $  -   $1,560     $  962    $0.02
stores (5)
Gain on
Netherlands        -         -          -        678        417        0.01
operations (6)
Total of 2011      $   -   $   -   $  -   $2,238     $1,379     $0.02
items

(1) Primarily includes stock compensation expenses, payroll taxes related
to the payments made to certain stock option holders, and legal and
professional fees incurred in connection with the Company's 2012
recapitalization.
(2) Primarily includes the write-off of deferred financing fees related to
the extinguishment of the 2007 debt in connection with the Company's 2012
recapitalization. Additionally, the Company incurred $2.1 million of interest
expense on the 2007 borrowings subsequent to the closing of the 2012
recapitalization but prior to the repayment of the 2007 borrowings, resulting
in the payment of interest on both the 2007 and 2012 facilities for a short
period of time.
(3) Represents a valuation allowance recorded on a deferred tax asset
related to a capital loss that resulted from a write-off of the tax basis
goodwill associated with the sale of the six remaining Company-owned stores in
a certain market in the first quarter of 2012.
(4) Represents a tax benefit of $0.7 million that was recorded to reflect
an increased tax basis in certain assets due to the issuance of final tax
rules in the third quarter of 2012.
(5) The income recognized primarily relates to the sale of 30
Company-owned stores during the third quarter of 2011 and 56 stores during the
three fiscal quarters of 2011. The income in the third quarter is net of
related expenses of approximately $0.3 million and net of a reduction in
goodwill of approximately $0.3 million. The income during the three fiscal
quarters is net of related expenses of approximately $0.3 million and net of a
reduction in goodwill of approximately $0.7 million.
(6) Relates to the recognition of a contingent gain in connection with the
previous sale of the Netherlands operations to the current master franchisee.
The amount was received by the Company during the first quarter of 2011 as a
portion of the contingency was finalized.

Liquidity

As of December 30, 2012, the Company had approximately:

  o$54.8 million of unrestricted cash and cash equivalents,
  o$1.56 billion in total debt, and
  o$56.5 million of available borrowings under its $100.0 million variable
    funding notes, net of letters of credits issued of $43.5 million.

The Company's cash borrowing rate averaged 5.3% for the fourth quarter and
5.5% for fiscal 2012. It invested $29.3 million in capital expenditures
during fiscal 2012 versus $24.3 million in fiscal 2011.

Free cash flow, as reconciled below to cash flows from operations as
determined under generally accepted accounting principles (GAAP), was
approximately $147.1 million in fiscal 2012.



                                                        Fiscal
(in thousands)
                                                        2011
Net cash provided by operating activities (as reported) $176,320
Capital expenditures (as reported)                      (29,267)
Free cash flow                                          $147,053

Comments on Non-GAAP Measures

In addition to the GAAP financial measures set forth in this press release,
the Company has included non-GAAP financial measures within the meaning of
Regulation G due to items affecting comparability between fiscal quarters.
The Company has also included metrics such as global retail sales growth and
same store sales growth, which are commonly used statistical measures in the
quick-service restaurant industry that are important to understanding Company
performance.

The Company uses "Diluted EPS, as adjusted," which is calculated as reported
Diluted EPS adjusted for the items that affect comparability to the prior year
period discussed above. The most directly comparable financial measure
calculated and presented in accordance with GAAP is Diluted EPS. Management
believes that the Diluted EPS, as adjusted measure is important and useful to
investors and other interested persons and that such persons benefit from
having a consistent basis for comparison between reporting periods.
Management uses Diluted EPS, as adjusted to internally evaluate operating
performance, to evaluate itself against its peers and to determine future
performance targets and long-range planning.

Additionally, the Company believes that analysts covering the Company's stock
performance generally eliminate these items affecting comparability when
preparing their financial models, when determining their published EPS
estimates and when benchmarking the Company against its competitors. 

The Company uses "Global retail sales" to refer to total worldwide retail
sales at Company-owned and franchise stores. Management believes global retail
sales information is useful in analyzing revenues because franchisees pay
royalties that are based on a percentage of franchise retail sales. Management
reviews comparable industry global retail sales information to assess business
trends and to track the growth of the Domino's Pizza^® brand. In addition,
domestic supply chain revenues are directly impacted by changes in domestic
franchise retail sales. Retail sales for franchise stores are reported to the
Company by its franchisees and are not included in Company revenues. 

The Company uses "Same store sales growth," calculated by including only sales
from stores that also had sales in the comparable period of the prior year.
International same store sales growth is calculated similarly to domestic same
store sales growth. Changes in international same store sales are reported on
a constant dollar basis, which reflects changes in international local
currency sales.

The Company uses "Free cash flow," calculated as cash flows from operations
less capital expenditures, both as reported under GAAP. Management believes
that the free cash flow measure is important to investors and other interested
persons, and that such persons benefit from having a measure which
communicates how much cash flow is available for working capital needs or to
be used for repurchasing debt, making acquisitions, repurchasing common stock,
paying dividends or other similar uses of cash.

About Domino's Pizza^®

Founded in 1960, Domino's Pizza is the recognized world leader in pizza
delivery, with a significant business in carryout pizza. It ranks among the
world's top public restaurant brands with its global enterprise of more than
10,200 stores in over 70 international markets. Domino's had global retail
sales of over $7.4 billion in 2012, comprised of over $3.5 billion in the U.S.
and nearly $3.9 billion internationally. In the fourth quarter of 2012,
Domino's had global retail sales of nearly $2.4 billion, comprised of
approximately $1.1 billion in the U.S. and $1.3 billion internationally. Its
system is largely made up of franchise owner-operators who accounted for over
96% of the company's stores as of the fourth quarter 2012. Domino's reached
the unprecedented $1 billion mark in U.S. digital sales during a one-year time
period from April 2011 to April 2012. Its emphasis on new technology has
helped drive the emergence of Domino's ordering apps for Kindle Fire,
Android^™ and iPhone® – which now cover over 80% of the smartphone market.
Continuing its focus on menu enhancement, Domino's established itself as a
player in the Pan Pizza market with the launch of its Handmade Pan Pizza,
featuring fresh, never-frozen dough, in October 2012.

Order - www.dominos.com
Mobile – http://mobile.dominos.com
Info - www.dominosbiz.com
Twitter - http://twitter.com/dominos
Facebook - http://www.facebook.com/Dominos

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:

This press release contains forward-looking statements. You can identify
forward-looking statements because they contain words such as "believes,"
"expects," "may," "will," "should," "seeks," "approximately," "intends,"
"plans," "estimates," or "anticipates" or similar expressions that concern our
strategy, plans or intentions. These forward-looking statements relating to
our anticipated profitability, estimates in same store sales growth, the
growth of our international business, ability to service our indebtedness, our
operating performance, trends in our business and other descriptions of future
events reflect management's expectations based upon currently available
information and data. However, actual results are subject to future risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. The risks and
uncertainties that could cause actual results to differ materially include:
the level of our long-term and other indebtedness; uncertainties relating to
litigation; consumer preferences, spending patterns and demographic trends;
the effectiveness of our advertising, operations and promotional initiatives;
the strength of our brand in the markets in which we compete; our ability to
retain key personnel; new product and concept developments by us, and other
food-industry competitors; the ongoing level of profitability of our
franchisees; and our ability and that of our franchisees to open new
restaurants and keep existing restaurants in operation; changes in food
prices, particularly cheese, labor, utilities, insurance, employee benefits
and other operating costs; the impact that widespread illness or general
health concerns may have on our business and the economy of the countries
where we operate; severe weather conditions and natural disasters; changes in
our effective tax rate; changes in government legislation and regulations;
adequacy of our insurance coverage; costs related to future financings; our
ability and that of our franchisees to successfully operate in the current
credit environment; changes in the level of consumer spending given the
general economic conditions including interest rates, energy prices and weak
consumer confidence; availability of borrowings under our variable funding
notes and our letters of credit; and changes in accounting policies. Important
factors that could cause actual results to differ materially from our
expectations are more fully described in our other filings with the Securities
and Exchange Commission, including under the section headed "Risk Factors" in
our annual report on Form 10-K. Except as required by applicable securities
laws, we do not undertake to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.

TABLES TO FOLLOW





Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Income


                                   Fiscal Quarter Ended
                                                % of      January 1,  % of
                                   December 30, Total                 Total
                                   2012                   2012
                                                Revenues              Revenues
(In thousands, except per share
data)
Revenues:
 Domestic Company-owned stores   $ 99,907              $ 98,470
 Domestic franchise              61,479                 57,965
 Domestic supply chain           305,316                282,718
 International                   72,948                 62,595
Total revenues                     539,650      100.0%    501,748     100.0%
Cost of sales:
 Domestic Company-owned stores   76,066                 77,250
 Domestic supply chain           273,852                254,402
 International                   29,056                 25,239
Total cost of sales                378,974      70.2%     356,891     71.1%
Operating margin                   160,676      29.8%     144,857     28.9%
General and administrative         72,637       13.5%     68,725      13.7%
Income from operations             88,039       16.3%     76,132      15.2%
Interest expense, net              (27,734)     (5.1)%    (28,067)    (5.6)%
Income before provision for                                        

 income taxes                    60,305       11.2%     48,065      9.6%
Provision for income taxes         22,727       4.2%      17,154      3.4%
Net income                         $ 37,578    7.0%      $ 30,911   6.2%
Earnings per share:
 Common stock – diluted          $   0.64            $   0.52





Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Income


                                Fiscal Year Ended
                                December 30,  % of      January 1,    % of
                                              Total                   Total
                                2012                    2012
                                              Revenues                Revenues
(In thousands, except per share
data)
Revenues:
 Domestic Company-owned       $ 323,652              $ 336,349
stores
 Domestic franchise           195,000                 187,007
 Domestic supply chain        942,219                 927,904
 International                217,568                 200,933
Total revenues                  1,678,439     100.0%    1,652,193     100.0%
Cost of sales:
 Domestic Company-owned       247,391                 267,066
stores
 Domestic supply chain        843,329                 831,665
 International                86,381                  82,946
Total cost of sales             1,177,101     70.1%     1,181,677     71.5%
Operating margin                501,338       29.9%     470,516       28.5%
General and administrative      219,007       13.1%     211,371       12.8%
Income from operations          282,331       16.8%     259,145       15.7%
Interest expense, net           (101,144)     (6.0)%    (91,339)      (5.5)%
Income before provision for                                        

 income taxes                 181,187       10.8%     167,806       10.2%
Provision for income taxes      68,795        4.1%      62,445        3.8%
Net income                      $ 112,392    6.7%      $ 105,361    6.4%
Earnings per share:
 Common stock – diluted       $    1.91           $    1.71





Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


                                                      December 30, January 1,
                                                      2012         2012
(In thousands)
Assets
Current assets:
 Cash and cash equivalents      $        $     
                                                      54,813      50,292
 Restricted cash and cash equivalents      60,015       92,612
 Accounts receivable    94,103       87,200
                                               31,061       30,702
Inventories
 Advertising fund assets, restricted      37,917       36,281
 Other assets       28,358       29,756
Total current                                         306,267      326,843
assets
Property, plant and equipment,                        91,445       92,400
net
Other assets          80,485       61,300
Total assets                 $         $    
                                                      478,197     480,543
Liabilities and stockholders' deficit
Current liabilities:
 Current portion of long-term debt     $        $     
                                                      24,349         904
 Accounts                                      77,414       69,714
payable
 Advertising fund                              37,917       36,281
liabilities
 Other accrued liabilities       89,818       90,276
Total current liabilities     229,498      197,175
Long-term liabilities:
 Long-term debt, less current portion   1,536,443    1,450,369
 Other accrued liabilities   47,779       42,738
Total long-term liabilities         1,584,222    1,493,107
Total stockholders' deficit           (1,335,523)  (1,209,739)
Total liabilities and stockholders' deficit         $         $    
                                                      478,197     480,543







Domino's Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows


                                                Fiscal Year Ended
                                                December 30,    January 1,

                                                2012            2012
(In thousands)
Cash flows from operating activities:
 Net income                                    $   112,392  $   105,361
 Adjustments to reconcile net income to net

 cash flows provided by operating activities:
 Depreciation and amortization             23,171          24,042
 (Gains) losses on sale/disposal of assets 540             (2,436)
 Amortization of deferred financing costs, 14,596          6,190
debt discount and other
 Provision for deferred income taxes       4,193           8,169
 Non-cash compensation expense             17,621          13,954
 Tax impact from equity-based compensation (16,220)        (15,589)
 Other                                     (69)            1,428
 Changes in operating assets and           20,096          11,954
liabilities
Net cash provided by operating activities       176,320         153,073
Cash flows from investing activities:
 Capital expenditures                          (29,267)        (24,349)
 Proceeds from sale of assets                  2,988           6,031
 Changes in restricted cash                    32,597          (7,082)
 Other                                         1,030           (1,541)
Net cash provided by (used in) investing        7,348           (26,941)
activities
Cash flows from financing activities:
 Proceeds from issuance of long-term debt      1,575,000       -
 Repayments of long-term debt and capital      (1,465,509)     (890)
lease obligations
 Proceeds from issuance of common stock        -               563
 Proceeds from exercise of stock options       8,945           33,524
 Tax impact from equity-based compensation     16,220          15,589
 Purchase of common stock                      (88,238)        (165,007)
 Common stock dividends and equivalents        (185,484)       -
 Tax payments for restricted stock             (5,845)         (3,504)
 Cash paid for financing costs                 (32,538)        (3,760)
Net cash used in financing activities           (177,449)       (123,485)
Effect of exchange rate changes on cash and     (1,698)         (300)
cash equivalents
Change in cash and cash equivalents             4,521           2,347
Cash and cash equivalents, at beginning of      50,292          47,945
period
Cash and cash equivalents, at end of period     $    54,813  $    50,292



SOURCE Domino's Pizza, Inc.

Website: http://www.dominos.com
Contact: Lynn Liddle, Executive Vice President, Communications, Investor
Relations and Legislative Affairs, +1-734-930-3008
 
Press spacebar to pause and continue. Press esc to stop.