(Source: PRNewswire-FirstCall)
ANN ARBOR, Mich., July 22 /PRNewswire-FirstCall/ -- Domino's Pizza, Inc. , the recognized world leader in pizza delivery, today announced results for the second quarter ended June 14, 2009. Domestic same store sales were down 0.7% and international same store sales grew 4.1%. The international division continued its strong performance, posting its 62nd consecutive quarter of same store sales growth. Net income as-reported was down 22.4% versus the prior year, due primarily to the negative impacts of foreign currency, gains on the sale of Company-owned stores in 2008 and expenses incurred in connection with changes made to the Company's stock option plans, offset in part by gains on the extinguishment of debt.
Second Quarter Highlights: (dollars in millions, Second Second First Two First Two except per share data) Quarter Quarter Quarters Quarters of 2009 of 2008 of 2009 of 2008 --------- --------- --------- --------- Net income $14.5 $18.7 $38.3 $32.8 Weighted average diluted shares 57,737,247 58,789,987 57,524,565 59,443,922 Diluted earnings per share, as-reported $0.25 $0.32 $0.67 $0.55 Items affecting comparability (see section below) $(0.04) $(0.10) $(0.26) $(0.13) ------ ------ ------ ------ Diluted earnings per share, as adjusted $0.21 $0.22 $0.41 $0.43 ===== ===== ===== ===== -- Diluted EPS was $0.25 on an as-reported basis for the second quarter, down $0.07 from the as-reported diluted EPS in the prior year period, due primarily to the aforementioned decrease in net income. However, excluding items affecting comparability, diluted EPS declined $0.01, primarily due to the negative impact of foreign currency exchange rates on international royalty revenues and lower operating income from domestic store operations, offset in part by improvements in operating performance in the Company's international and supply chain business units. (See the Items Affecting Comparability section and the Comments on Regulation G section.) -- Global Retail Sales were down 4.7% in the second quarter, or up 3.8% when excluding the impact of foreign currency. Second Second Quarter Quarter of 2009 of 2008 --------- --------- Same store sales growth: (versus prior year period) Domestic Company-owned stores (3.3)% (1.1)% Domestic franchise stores (0.4)% (5.9)% ----- ----- Domestic stores (0.7)% (5.4)% ===== ===== International stores + 4.1% + 7.0% ===== ===== Global retail sales growth: (versus prior year period) Domestic stores (2.0)% (5.0)% International stores (8.0)% +19.6% ----- ----- Total (4.7)% + 4.7% ===== ===== Global retail sales growth: (versus prior year period and excluding foreign currency impact) Domestic stores (2.0)% (5.0)% International stores +11.0 % +13.9% ----- ----- Total + 3.8% + 2.5% ===== ===== Domestic Domestic Total Company- Franchise Domestic International owned Stores Stores Stores Stores(1) Total ------------ --------- -------- ------------- ----- Store counts: Store count at March 22, 2009 489 4,498 4,987 3,742 8,729 Openings - 22 22 172 194 Closings (5) (37) (42) (8) (50) Transfers (1) 1 - - - -- - - - - Store count at 483 4,484 4,967 3,906 8,873 June 14, 2009 === ===== ===== ===== ===== Second quarter 2009 net growth (6) (14) (20) 164 144 == === === === === Trailing four (32) (108) (140) 342 202 quarters net growth === ==== ==== === === (1) The International Stores openings reported in the above table benefited from the conversion of 86 stores in Spain to Domino's Pizza stores in the second quarter of 2009.
David A. Brandon, Domino's Chairman and Chief Executive Officer, said: "I'm putting this quarter in the "win" column for Domino's Pizza. I'm proud of my team and our accomplishment of emerging as a leader during tough times. Our franchisees are engaged and have embraced the expansion of our products and day parts. The predictability of our model continues to be a plus in an unpredictable landscape."
Brandon added, "Our international business continues to thrive despite the dampening effect of foreign exchange. We are driving positive sales at a robust rate...and we've done so for more than the past fifteen years. We are consistently opening new stores and new markets, driving future growth for Domino's Pizza."
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 second quarter 2009 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 http://www.dominosbiz.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 66298423. The web cast will also be archived for 30 days on http://www.dominosbiz.com/.
Debt Repurchases
During the second quarter, the Company repurchased and retired $25.0 million of principal of its outstanding fixed rate senior notes; and approximately $68.3 million for the first two quarters of 2009, for a total purchase price of approximately $12.3 million and $34.6 million, respectively, including $0.2 million and $0.5 million of accrued interest for each of the periods. These activities resulted in pre-tax gains of approximately $12.9 million in the second quarter and $34.1 million in the first two quarters of 2009, which were recorded in "Other" in the Company's consolidated statements of income.
Subsequent to the second quarter of 2009, the Company repurchased and retired $20.0 million of additional principal of its outstanding fixed rate senior notes for a total purchase price of approximately $15.6 million, including $0.2 million of accrued interest, resulting in a pre-tax gain of approximately $4.6 million which will be recorded in the third quarter of 2009. The Company has classified the $20.0 million of outstanding fixed rate senior notes as a current liability in the consolidated balance sheet as of June 14, 2009.
Stock Option Plan Changes
As previously announced, the Company's shareholders approved a stock option exchange program at the 2009 Annual Meeting of Shareholders, held on April 28, 2009, and the Company executed the program during the second quarter of 2009. The incremental value to the option holders created as a result of the modification will be recognized as additional compensation expense over the remaining service period. This amount has been calculated to be approximately $1.3 million (after-tax), of which approximately $0.6 million (after-tax) was recognized during the second quarter of 2009.
Separately and as previously announced, the Company's Board of Directors authorized management to amend existing stock option agreements to allow for accelerated vesting and extended exercise periods upon the retirement of option holders who have achieved specified service and age requirements. The amended terms of the relevant stock option agreements became effective in the second quarter of 2009. The incremental value to option holders created as a result of the modification will be recognized as additional compensation expense over the remaining service period. This amount has been calculated to be approximately $0.3 million (after-tax), of which approximately $0.2 million (after-tax) was recognized during the second quarter of 2009. The Company is required to accelerate previously unrecognized compensation expense that it would have been required to expense in future periods for these stock options. This resulted in the acceleration of approximately $2.1 million (after-tax) of compensation expense in the second quarter of 2009 for certain employees who elected to receive the aforementioned amendment and who will meet the specified service and age requirements prior to the original vesting date. The $2.1 million (after-tax) of compensation expense recognized in the second quarter of 2009 was not incremental expense, but merely an acceleration of expense that would have been recognized in future periods.
Items Affecting Comparability
The Company's reported financial results for the second quarter and first two quarters of 2009 are not comparable to the reported financial results for the prior year comparable periods. The table below presents certain items that affect comparability between our 2009 and 2008 financial results. Management believes that including such information is critical to the understanding of the Company's financial results for the second quarter and first two quarters of 2009 as compared to the same periods in 2008 (See the Comments on Regulation G section).
