ANN ARBOR, Mich., April 29 /PRNewswire-FirstCall/ — Domino’s Pizza, Inc. (NYSE: DPZ), the recognized world leader in pizza delivery, today announced results for the first quarter ended March 23, 2008. Net income was up 68% versus the prior year, due primarily to recapitalization expenses incurred during the first quarter of 2007, offset in part by continued challenges in the domestic environment and resulting domestic supply chain volume decreases. The International division continued its strong performance, posting its 57th consecutive quarter of same store sales growth, up 8.8% during the first quarter of 2008.

David A. Brandon, Domino’s Chairman and Chief Executive Officer, said: “Reversing the negative traffic trends in our domestic business is our highest priority. We’re taking aggressive action to create a stronger value positioning for our brand, while testing a number of additions to our menu that will allow us to compete more effectively in dayparts other than just dinner. We’re also implementing pricing strategies to attract lower ticket customers — a segment we’ve left behind in the recent past as we dramatically increased our prices. And, we’re upgrading our franchisee system by identifying weak operators and facilitating the sale of their stores to stronger operators. Our activity level is high…as is our passion for restoring our positive sales trends in our domestic business.”

Brandon added, “We continue to be very pleased with the growth and expansion of our international business. And, I am also proud of the work we have done to reduce our G&A spending during this difficult period of cost inflation and soft domestic sales. The bottom line: despite numerous negative influences hitting our business all at once, our ability to produce plentiful free cash flow remains strong — $16.8 million in the first quarter. We continue to use this cash to fund an aggressive share repurchase program, which we currently feel provides the greatest benefit to our shareholders.”

Conference Call Information

The Company plans to file its quarterly report on Form 10-Q this morning. Additionally, as previously announced, Domino’s Pizza, Inc. will hold a conference call today at 11 a.m. (Eastern) to review its first quarter 2008 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 web cast at www.dominos.com. If you are unable to participate on the call, a replay will be available for thirty days by dialing (800) 642-1687 (U.S./Canada) or (706) 645-9291 (International), Conference ID 20162114. The web cast will also be archived for 30 days on www.dominosbiz.com.

Share Repurchases

During the first quarter of 2008, the Company repurchased and retired approximately 1.4 million shares of its common stock under an open market share repurchase program for $18.4 million, or an average price of $13.05 per share. The Company has used approximately 36% of the total amount authorized under its open market share repurchase program.

Sale of Certain Company-Owned Stores

During the first quarter of 2008, the Company announced it had agreements in place to sell approximately 60 Company-owned stores in California and Georgia in a series of transactions primarily with current franchisees. During the first quarter of 2008, the Company completed the sale of 29 of these stores. The Company recognized a pre-tax gain on the sale of the related assets of approximately $4.2 million. This pre-tax gain was recorded in general and administrative expense. The Company anticipates that the sale of nearly all of the remaining stores will be completed by the end of the second quarter of 2008.

Restructuring Action

During the first quarter of 2008, the Company announced and executed a plan to eliminate approximately 55 positions that were primarily administrative in nature. In connection with this plan, and other restructuring actions related to the sale of the aforementioned stores, the Company incurred expenses of approximately $1.4 million during the first quarter of 2008, which were included in general and administrative expense.

Items Affecting Comparability

The Company’s reported financial results for the first quarter of 2008 are not comparable to the reported financial results in the prior year period. The table below presents certain items that affect comparability between our 2008 and 2007 financial results. Management believes that including such information is critical to the understanding of our financial results for the first quarter of 2008 as compared to the same period in 2007 (See the Comments on Regulation G section).

In addition to the items noted in the table below, the Company’s 2007 recapitalization had a significant impact on ongoing interest expense as a result of higher debt levels. This impacts comparability to periods in the prior year. The increase in ongoing interest expense resulted in a decrease in diluted EPS of approximately $0.14 in the first quarter of 2008 versus the first quarter of 2007.

The Company’s cash borrowing rate for the first quarter of 2008 was 6.1%. The Company incurred $3.5 million in capital expenditures during the first quarter of 2008 versus $3.6 million in the first quarter of the prior year.

The Company’s free cash flow, as reconciled below to cash flows from operations as determined under generally accepted accounting principles, was $16.8 million in the first quarter of 2008.

Filed under: Restaurant