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Domino's Pizza Announces 2004 Earnings and Increased Annual Dividend

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ANN ARBOR, Mich., Feb. 22 /PRNewswire-FirstCall/ -- Domino's Pizza, Inc. (NYSE: DPZ), the recognized world leader in pizza delivery, today announced results for the fourth quarter and fiscal 2004, ended January 2, 2005. Diluted earnings per share were $0.38 for the fourth quarter, after a $0.02 per share charge relating to a change in accounting for leases. Pro forma diluted earnings per share were $1.12 for the full year 2004, after a $0.03 per share charge relating to the change in accounting for leases. Global retail sales were up 14.4% for the fourth quarter of 2004 and 10.5% for the full year, driven by increases in global store growth and strong international same store sales results.

Included in the fourth quarter of 2004 was an extra week (or 53rd week) compared to 2003 which favorably impacted global retail sales by approximately 6 percentage points in the fourth quarter and 2 percentage points for the full year. The Company's 53rd week in 2004 benefited diluted EPS approximately 4 cents per share for both the fourth quarter and full year periods.

Fourth Quarter 2004 Highlights (versus 2003)

* Diluted EPS was $0.38, on net income of $27.0 million and weighted average outstanding shares of 71.4 million.

* Global retail sales, comprised of all retail sales at Company-owned and franchise stores worldwide, increased 14.4% driven by increased store counts and international same store sales, and the impact of the 53rd week.

* Domestic same store sales decreased 0.2%, comprised of flat domestic franchise same store sales and a domestic Company-owned same store sales decrease of 2.0%.

* International same store sales increased 5.9% on a constant dollar basis, marking the 44th consecutive quarter of same store sales growth internationally.

* Worldwide store counts increased by a net 154 stores. At the end of 2004, there were 7,757 Domino's Pizza stores in operation worldwide.

* The Company paid its first dividend on December 15, 2004 (6.5 cents per share).

Full Year 2004 Highlights (versus 2003)

* Pro forma diluted EPS was $1.12, on pro forma net income of $80.0 million. See page six and seven of this release for a discussion of this pro forma measure.

* Global retail sales increased 10.5%, driven by increased store counts and same store sales, and the impact of the 53rd week.

* Domestic same store sales increased 1.8%, comprised of a domestic franchise same store sales increase of 2.1% and a domestic Company-owned same store sales increase of 0.1%.

* International same store sales increased 5.9% on a constant dollar basis.

* Worldwide store counts increased by a net 330 stores, which represented the largest increase in store growth since 2000.

David A. Brandon, Domino's Chairman and Chief Executive Officer, said: "The ultimate test of any company is how it performs in a tough business environment. We generated almost $88 million in free cash flow in 2004, despite extraordinary cost pressures, significant competitive challenges and the distractions associated with executing a large IPO in the middle of the year."

Domino's Pizza: FY04 Earnings Release, Page Two

Dividends to Increase by 54% in 2005

Following its IPO, the Company instituted its first dividend for the partial year 2004 of 6.5 cents per quarter, or 26 cents on an annualized basis. Based on the Company's strong cash flow characteristics, management has consistently stated their intention to deploy an appropriate portion of free cash flow towards paying a meaningful dividend to its shareholders. The first dividend declaration was simply an effort to begin this process.

After posting successful results for the full year 2004, and reviewing its 2005 outlook, the Company approved an increase in its annual dividend to 10 cents per quarter, or 40 cents per year. This 54% increase in the annual dividend will be effective for the next dividend to be paid on March 30, 2005 to shareholders of record on March 15, 2005. The Company's resulting dividend yield is approximately 2.3% using the Company's current market price per share of $17.11 per share.

Brandon commented on the dividend increase: "We are comfortable raising our dividend payment because of the strength of our business model and the free cash flow it generates. We are now one of the highest dividend-yielding companies in the QSR industry, with significant remaining free cash flow to invest in the growth of our core business while also paying down our debt. We plan to review our dividend payout ratio at this time each year, and consider increasing our dividend as appropriate."

    Long Range and 2005 Outlook
    The Company reaffirmed its long range outlook as follows:


                                               Year-over-Year
                                                   Growth
     Domestic same store sales                     1% - 3%

     International same store sales                3% - 5%

     Net unit growth                              200 - 250

     Global retail sales                           4% - 6%

     Net income                                   11% - 13%

David Brandon commented on the Company's 2005 outlook: "Based on our current business outlook and budget assumptions, we expect our 2005 EPS growth to be consistent with our long-range outlook of 11%-13%, after adjusting for the 53rd week in 2004 and the impact of the one-time lease charge we took in the fourth quarter of 2004."

Brandon concluded: "We will continue our EPS growth by driving both domestic and international store growth, increasing our same stores sales, improving the operating margins of our Company-owned stores, and further debt reductions."

Management noted that the 53rd week positively impacted EPS by 4 cents, while the lease charge negatively affected EPS by 3 cents. Adjusting for both, the 2004 comparable baseline would be $1.11 EPS.

    Domino's Pizza:  FY04 Earnings Release, Page Three

    Conference Call Information

Domino's Pizza, Inc. will hold a conference call today at 11 a.m. (Eastern) to review its 2004 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 simulcast at http://www.dominos.com . If you are unable to participate on the call, a replay will be available through midnight March 22, 2005 by dialing (800) 642-1687 (U.S./Canada) or (706)645-9291 (International), Conference ID 3420932. The web cast will be archived for 30 days on http://www.dominos.com .

Change in Accounting for Leases

The Company recently undertook a comprehensive review of its accounting practices for leases, as a result of the recent changes announced by other companies in the restaurant industry related to lease accounting policies. As a result of this review, the Company made an accounting correction that resulted in an acceleration of rent expense under certain leases that contain fixed escalations in rental payments. The Company recorded a cumulative rent expense adjustment relating to this matter of approximately $2.8 million in the fourth quarter of 2004, or 3 cents per diluted share for full year 2004. This accounting adjustment does not affect the Company's historical or future cash flows or the timing or amounts of rental payments. Additionally, this correction is not material to prior periods.



                         SUMMARY OF FINANCIAL RESULTS

     Global Retail Sales Growth

Global retail sales include all retail sales worldwide at Company-owned and franchise stores (see Definitions).

     (versus the prior year)                   Fourth
                                               Quarter          Fiscal
                                                2004             2004

     Domestic Stores                           + 8.5%           + 5.7%
     International stores                     + 28.9%          + 22.7%

     Total                                    + 14.4%          + 10.5%



     Same Stores Sales Growth

     See Definitions.

     (versus the prior year)                   Fourth
                                               Quarter          Fiscal
                                                2004             2004

     Domestic Company-owned stores              (2.0%)          + 0.1%
     Domestic franchise stores                   0.0%           + 2.1%
     Total Domestic Stores                      (0.2%)          + 1.8%

     International stores                      + 5.9%           + 5.9%



    Domino's Pizza:  FY04 Earnings Release, Page Four


     Store Counts and Net Unit Growth

                                                      Net Unit Growth
                                                     Fourth
                                   Store Counts      Quarter   Fiscal   Fiscal
                                   at Year End        2004      2004     2003

     Domestic Company-owned stores     580              2         3        -
     Domestic franchise stores       4,428             61       101       56
     Total Domestic Stores           5,008             63       104       56

     International stores            2,749             91       226      141

     Total                           7,757            154       330      197



    Revenues

                             Fourth Quarter               Full Year
     (in thousands)      2004      2003     %         2004        2003     %
                                         Change                         Change

     Domestic Company-
      owned stores    $122,960  $117,185   4.9%    $382,458    $375,421   1.9%
     Domestic
      franchise         51,426    46,295  11.1%     155,030     144,458   7.3%
     Domestic
      distribution     262,827   237,300  10.8%     792,026     717,057  10.5%
     International      41,314    32,226  28.2%     116,983      96,386  21.4%
     Total
      revenues (1)    $478,527  $433,006  10.5%  $1,446,497  $1,333,322   8.5%

(1) Total revenues include retail sales at Company-owned stores, royalties from franchise stores, and related sales from distribution operations, which sell food and equipment to all Company-owned stores and certain franchise stores. Company-owned store and franchise store revenues may vary significantly from period to period due to changes in store count mix, while distribution revenues may vary significantly as a result of fluctuations in food prices, primarily cheese prices.

The increases in fourth quarter and fiscal 2004 total revenues versus prior year were due to increases in distribution revenues, driven primarily by higher commodity costs, including cheese, increased royalty revenues relating to increases in retail sales both domestically and internationally, and the inclusion of the 53rd week in 2004. The published cheese block price-per- pound averaged $1.61 and $1.64 in the fourth quarter and fiscal 2004, respectively, up from $1.53 and $1.31 in the comparable periods in 2003.


    Operating Margin

                                              Fourth Quarter
     (in thousands)                        % of               % of
                                 2004    Revenues    2003    Revenues

     Domestic Company-owned
      stores                   $20,566     16.7%   $23,202    19.8%
     Domestic franchise (1)     51,426    100.0%    46,295   100.0%
     Domestic distribution      23,572      9.0%    22,501     9.5%
     International              20,121     48.7%    14,881    46.2%
     Total operating margin   $115,685     24.2%  $106,879    24.7%

                                                 Full Year
     (in thousands)                        % of               % of
                                 2004    Revenues    2003    Revenues

     Domestic Company-owned
      stores                   $68,872     18.0%   $73,412    19.6%
     Domestic franchise (1)    155,030    100.0%   144,458   100.0%
     Domestic distribution      73,089      9.2%    73,436    10.2%
     International              56,690     48.5%    44,314    46.0%
     Total operating margin   $353,681     24.4%  $335,620    25.2%

(1) Domestic franchise operations do not have a cost of sales component. Accordingly, the domestic franchise operating margin equals domestic franchise revenues.

Domino's Pizza: FY04 Earnings Release, Page Five

The increases in the fourth quarter and fiscal 2004 total operating margin versus prior year were due primarily to increases in retail sales from both international and domestic franchise operations, which drove higher royalty revenues, as well as the inclusion of the 53rd week in fiscal 2004. Total operating margin was negatively impacted by margin pressures at Company-owned stores, primarily due to higher commodity costs, as well as lower domestic Company-owned stores same store sales in the fourth quarter. The domestic Company-owned stores and domestic distribution operating margins were also negatively affected by approximately $2.4 million and $0.8 million, respectively, relating to the change in accounting for leases.

The total operating margin as a percentage of total revenues decreased 0.5 and 0.8 percentage points during the fourth quarter and fiscal 2004, respectively. Operating margins as a percentage of total revenues were negatively impacted during these periods as a result of higher commodity costs, which impacted both Company-owned store and distribution margins, as well as the change in accounting for leases and lower Company-owned same store sales in the fourth quarter. These decreases were offset in part by increases in domestic and international franchise royalty revenues as well as the inclusion of the 53rd week in fiscal 2004.

For further discussion of operating margins, see "Items Affecting Comparability" on pages eight and nine of this release.

General and Administrative Expenses

General and administrative expenses increased $3.6 million, or 6.9%, during the fourth quarter of 2004 versus the prior year, and increased $6.2 million, or 3.5%, during fiscal 2004 versus the prior year. The increase in general and administrative expenses during the fourth quarter was due primarily to the impact of the 53rd week in fiscal 2004.

General and administrative expenses during fiscal 2004 were negatively impacted by a $10.0 million management agreement termination fee paid to an affiliate in connection with our IPO, as well as a $3.8 million year-over-year decrease in gains on the sale/disposal of assets. In addition, the Company recognized a credit of $1.7 million in 2003 relating to the collection of a previously fully reserved note receivable. General and administrative expenses were also negatively impacted by higher administrative labor and office rents as well as the impact related to the 53rd week in fiscal 2004. Offsetting these increases in general and administrative expenses was approximately $15.7 million of expenses incurred in connection with the Company's June 2003 recapitalization.

Income from Operations

Income from operations increased $5.2 million, or 9.5%, during the fourth quarter of 2004 versus the prior year, and increased $11.9 million, or 7.5%, during fiscal 2004 versus the prior year. Income from operations was positively impacted by increases in royalty revenues from international and domestic franchise stores and the impact from the 53rd week in 2004. These gains were offset in part by higher food costs at our Company-owned stores and the negative impact of the change in accounting for leases.

Domino's Pizza: FY04 Earnings Release, Page Six

Interest Expense, net

Interest expense, net decreased $4.6 million, or 22.5%, during the fourth quarter of 2004 versus the prior year, and decreased $13.8 million, or 18.6%, during fiscal 2004 versus the prior year.

The average outstanding debt balance, excluding capital lease obligations, decreased $160.7 million to $793.2 million in the fourth quarter, from $953.9 million in the prior year. The Company's effective borrowing rate decreased 0.6 percentage points to 5.3% during the fourth quarter, from 5.9% in the prior year. Included in interest expense in the fourth quarter of 2004 and 2003 was deferred financing fee and debt discount expense of $1.3 million and $2.1 million, respectively. Interest expense for the quarter was also negatively affected by the inclusion of the 53rd week.

The average outstanding debt balance, excluding capital lease obligations, increased $94.9 million to $880.4 million in fiscal 2004, from $785.5 million in the prior year. The Company's effective borrowing rate decreased 0.9 percentage points to 5.8% during fiscal 2004, from 6.7% in the prior year. Included in interest expense in 2004 and 2003 was deferred financing fee and debt discount expense of $7.8 million and $20.8 million, respectively.

Other

Other expense increased $0.5 million during the fourth quarter of 2004 versus the prior year, and decreased $11.9 million during fiscal 2004 versus the prior year. The 2004 other amounts were comprised of losses incurred in connection with debt retirements, including $9.0 million incurred in connection with the redemption of $109.1 million of Domino's, Inc.'s senior subordinated notes in August 2004. The 2003 other amounts were comprised of losses incurred in connection with debt retirements, including $20.4 million of bond tender fees associated with the 2003 recapitalization.

Net Income

Net income increased $5.7 million to $27.0 million during the fourth quarter of 2004 versus the prior year, and increased $23.3 million to $62.3 million during fiscal 2004 versus the prior year. These increases in net income were due primarily to the aforementioned increases in income from operations and decreases in interest expense, and decreases in other expense for the full year.

Pro Forma EPS

Pro forma diluted earnings per share for fiscal 2004 were $1.12. Diluted earnings per share data, as reported, for the 2004 and 2003 fiscal years are disclosed in the accompanying condensed consolidated statements of income.

Management believes it is helpful to investors to be presented with a pro forma EPS number which is based on its new capital structure and anticipated ongoing financing and related costs following the completion of the Company's initial public offering. As a result, the Company is providing pro forma EPS amounts for full year 2004, assuming that the following transactions occurred at the beginning of 2004:

Domino's Pizza: FY04 Earnings Release, Page Seven

(i) the reclassification of previously outstanding Class A Common Stock and Class L Common Stock into Common Stock; and

(ii) the issuance of the 9,375,000 shares issued in the IPO and the redemption of $109.1 million of senior subordinated notes, resulting in a reduction of interest expense of approximately $2.1 million ($1.3 million after-tax) in each of the first two fiscal quarters of 2004 and $1.6 million ($1.0 million after-tax) in the third fiscal quarter of 2004.

Further, for pro forma purposes, the Company has eliminated certain non- recurring costs recognized in the third quarter of 2004 related to IPO including:

(i) the $10.0 million payment made to an affiliate of our former majority shareholder to terminate the management agreement between that affiliate and the Company; and

(ii) the $9.0 million premium on the redemption of the senior subordinated notes and the $3.7 million write-off of related debt discount and deferred financing costs.

The following table reconciles net income, as reported to pro forma net income, and also presents the diluted weighted average shares of common stock outstanding used to determine pro forma diluted earnings per share. The denominator in the pro forma diluted EPS calculations below assumes that the capital structure in place after our IPO was in place for all of fiscal 2004.


                                                                   Fiscal
                                                                    2004
    (In thousands, except per share data)
    Net income, as reported                                       $62,287
    Adjustments (pre-tax):
      Elimination of payment to terminate management fee           10,000
      Elimination of bond premium                                   9,001
      Write-off of deferred financing fees and bond discount        3,748
      Reduction in interest expense from debt retirement            5,775
    Total Adjustments (pre-tax)                                    28,524
      Tax effect                                                  (10,767)
    Total Adjustments (net of tax)                                 17,757
    Pro forma net income                                          $80,044

    Weighted average shares outstanding - diluted                  71,287
    Pro forma earnings per share - diluted                          $1.12

    The following table reconciles diluted EPS, as reported to pro forma
diluted EPS.

                                                                   Fiscal
                                                                    2004

    Earnings per share - diluted, as reported                       $0.81
    Impact of pro forma adjustments                                  0.25
    Impact of the reclassification of the Class L conversion
     and issuance of common stock assuming the IPO
     occurred at the beginning of the year                           0.06

    Pro forma earnings per share - diluted                          $1.12

    See Comments on Regulation G.


    Domino's Pizza:  FY04 Earnings Release, Page Eight

Items Affecting Comparability

The Company's reported operating margin amounts in 2004 are not comparable to the amounts reported in 2003 due to the estimated effect of the 53rd week in 2004, the inclusion of a charge relating to a correction in accounting for leases and the effect of the "pass-through" nature of changes in cheese prices on the consolidated and domestic distribution operating margins as a percentage of related revenues. The tables below present operating margin information adjusted for these items. Management believes that including such information is critical to the understanding of our results for the fourth quarter and full year 2004 as compared to similar periods in 2003.


                                   Fourth Quarter 2004
    (in thousands)
                 Domestic
                 Company-
                  owned   Domestic     Domestic
                  Stores  Franchise  Distribution  International  Consolidated

    Revenues,
     as
     reported   $122,960   $51,426     $262,827       $41,314       $478,527
      53rd week
       adjustment (7,400)   (3,030)     (16,690)       (2,510)       (29,630)
    Revenues,
     as
     adjusted   $115,560   $48,396     $246,137       $38,804       $448,897

    Cost of
     sales, as
     reported   $102,394       $ -     $239,255       $21,193       $362,842
      53rd week
       adjustment (5,020)        -      (15,330)       (1,350)       (21,700)
      Change in
       lease
       accounting (2,379)        -         (848)            -         (3,227)
    Cost of
     sales, as
     adjusted    $94,995      $  -     $223,077       $19,843       $337,915

    2004 operating
     margin, as
     adjusted    $20,565   $48,396      $23,060       $18,961       $110,982

    2004 operating
     margin as a
     percentage
     of revenues    17.8%    100.0%         9.4%         48.9%          24.7%

    2003 operating
     margin as a
     percentage of
     revenues (1)   19.8%    100.0%         9.3%         46.2%          24.5%



                                         Full Year 2004

    (in thousands)
                 Domestic
                 Company-
                  owned   Domestic     Domestic
                  Stores  Franchise  Distribution  International  Consolidated

    Revenues,
     as
     reported   $382,458  $155,030     $792,026      $116,983     $1,446,497
      53rd week
       adjustment (7,400)   (3,030)     (16,690)       (2,510)       (29,630)
    Revenues,
     as
     adjusted   $375,058  $152,000     $775,336      $114,473     $1,416,867

    Cost of
     sales, as
     reported   $313,586       $ -     $718,937       $60,293     $1,092,816
      53rd week
       adjustment (5,020)        -      (15,330)       (1,350)       (21,700)
      Change in
       lease
       accounting (2,379)        -         (848)            -         (3,227)
    Cost of
     sales, as
     adjusted   $306,187       $ -     $702,759       $58,943     $1,067,889

    2004 operating
     margin, as
     adjusted    $68,871  $152,000      $72,577       $55,530       $348,978

    2004 operating
     margin as a
     percentage of
     revenues       18.4%    100.0%         9.4%         48.5%          24.6%

    2003 operating
     margin as a
     percentage of
     revenues (1)   19.6%    100.0%         9.6%         46.0%          24.4%

(1) The consolidated and domestic distribution 2003 operating margin as a percentage of related revenues presented above have been adjusted to eliminate the impact of fluctuations in cheese prices.

Consolidated operating margins as adjusted improved 0.2 percentage points in both the fourth quarter and full year 2004 compared to the prior periods in 2003. These increases were due primarily to increases in royalty revenues resulting from strong global retail sales, offset in part by margin pressures at our Company-owned stores as described below.

Domestic Company-owned store operating margins as adjusted decreased 2.0 percentage points and 1.2 percentage points in the fourth quarter and full year 2004, respectively, compared to the prior periods in 2003. The decrease in the fourth quarter operating margin was due primarily to increases in food costs as a result of higher commodity prices, as well as the effect of a decrease in same store sales. The decrease in operating margin for the full year was due primarily to increases in commodity costs as well as increases in occupancy costs.

Domino's Pizza: FY04 Earnings Release, Page Nine

Domestic distribution operating margins as adjusted increased 0.1 percentage points for the fourth quarter of 2004 and decreased 0.2 percentage points for the full year 2004, each compared to the comparable period in 2003. Operating margins were positively impacted by volumes and negatively impacted by delivery and insurance costs.

Due to the fact that changes in cheese prices are a "pass-through" in domestic distribution revenues and cost of sales, such changes have no impact on income. However, cheese price changes do impact operating margin as a percentage of revenues. Had the 2004 cheese prices been in effect during 2003, the total operating margin as a percentage of total revenues would have been approximately 24.5% and 24.4% for the quarter and full year in 2003. Similarly, had the 2004 cheese prices been in effect during 2003, the domestic distribution operating margin as a percentage of domestic distribution revenues would have been approximately 9.3% and 9.6% for the quarter and full year in 2003. These amounts are presented in the table above.

Liquidity

At the end of 2004, the Company had $780.7 million in total debt and $40.4 million of cash and cash equivalents. Approximately 71% of outstanding borrowings were contractually fixed at the end of fiscal 2004. During 2004, the Company repaid $180.7 million of outstanding borrowings, including the $109.1 million of senior subordinated notes that were retired in August 2004 as part of the IPO. During the fourth quarter, the Company repaid $25.1 million of borrowings, primarily comprised of $15.0 million of term loans and $10.0 million of senior subordinated notes. The Company is currently not required to pay down principal on its senior subordinated notes until 2011. The next scheduled principal amortization payment of $1.2 million on its senior credit facility is due on March 31, 2006. As of January 2, 2005, the Company had no borrowings under its $125.0 million revolving credit facility. Letters of credit issued under the revolving credit facility were $25.5 million at January 2, 2005.

Management believes it is helpful to investors to be presented with a free cash flow number which assists the investor in determining how much operating cash flow, adjusted for capital expenditure investments, is available to be used for de-levering, making acquisitions, paying dividends, repurchasing shares or similar uses of cash. The Company's free cash flow, as reconciled below to cash flows from operations as determined under generally accepted accounting principles, was $87.7 million in 2004.

     (in thousands)                                         Fiscal
                                                             2004
     Cash flows from operations, as reported              $113,462
     Capital expenditures, as reported                     (39,763)
     Pro forma IPO expenses, excluding non-cash items,
      as disclosed and discussed on page seven
      of this release                                       14,009

     Free cash flow                                        $87,708



    Domino's Pizza:  FY04 Earnings Release, Page Ten

Definitions

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(R) brand. In addition, distribution 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 including only sales from stores that also had sales in the comparable period of the prior year, but excluding sales from certain seasonal locations such as stadiums and concert arenas. 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.

Comments on Regulation G

In addition to the GAAP financial measures set forth in this Press Release, the Company has included certain non-GAAP financial measures within the meaning of Regulation G as a result of the significant changes in the Company's capital structure resulting from our 2003 recapitalization and IPO. The Company has included "Pro Forma EPS," calculated based on "Pro Forma Net Income," which are both non-GAAP financial measures. The Company's management believes that these measurements are important to investors and other interested persons and that such persons benefit from having a consistent basis for comparison between quarters and for comparison with other companies in the industry. While management believes that these non-GAAP financial measures will be helpful to investors in understanding and evaluating the Company's performance in the periods immediately following the IPO, management does not expect to continue to provide such non-GAAP financial measures once the effects of the significant changes to the Company's capital structure are able to be fully reflected in the Company's financial statements.

The Company has also included "Free cash flow", calculated using cash flows from operations and capital expenditures, both as reported, as well as certain pro forma expenses, net of tax used to arrive at Pro Forma Net Income discussed above. The Company's 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 flows are available to be used for de-levering, making acquisitions, paying dividends, repurchasing shares or similar uses of cash.

Domino's Pizza: FY04 Earnings Release, Page Eleven

About Domino's Pizza

Founded in 1960, Domino's Pizza is the recognized world leader in pizza delivery. Domino's is listed on the NYSE under the symbol "DPZ." Through its primarily franchised system, Domino's operates a network of 7,757 franchised and Company-owned stores in the United States and more than 50 countries. The Domino's Pizza(R) brand, named a Megabrand by Advertising Age magazine, had global retail sales of more than $4.6 billion in 2004, comprised of nearly $3.2 billion domestically and more than $1.4 billion internationally. Domino's Pizza was named "Chain of the Year" by Pizza Today magazine, the leading publication of the pizza industry and is the "Official Pizza of NASCAR." More information on the Company, in English and Spanish, can be found on the web at http://www.dominos.com .

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relating to our anticipated profitability and operating performance 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 can cause actual results to differ materially include: the uncertainties relating to litigation; consumer preferences, spending patterns and demographic trends; the effectiveness of our advertising, operations and promotional initiatives; our ability to retain key personnel; new product and concept developments by Domino's and other food-industry competitors; the ongoing profitability of our franchisees and the ability of Domino's and our franchisees to open new restaurants; 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 in which 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 and changes in accounting policies. Further information about factors that could affect Domino's financial and other results is included in the Company's filings with the Securities and Exchange Commission. 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:  FY04 Earnings Release, Page Twelve


                    Domino's Pizza, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Income


                                            Fiscal Quarter Ended
                                             % of                      % of
                               January 2,    Total     December 28,    Total
                                  2005      Revenues       2003       Revenues
    (In thousands,
     except per share data)
    Revenues:
       Domestic Company-owned
        stores                 $122,960                 $117,185
       Domestic franchise        51,426                   46,295
       Domestic distribution    262,827                  237,300
       International             41,314                   32,226
    Total revenues              478,527      100.0%      433,006       100.0%

    Cost of sales:
       Domestic Company-owned
        stores                  102,394                   93,983
       Domestic distribution    239,255                  214,799
       International             21,193                   17,345
    Total cost of sales         362,842       75.8%      326,127        75.3%
    Operating margin            115,685       24.2%      106,879        24.7%

    General and
     administrative              55,478       11.6%       51,905        12.0%
    Income from operations       60,207       12.6%       54,974        12.7%

    Interest expense, net        15,725        3.3%       20,291         4.7%
    Other                         1,081        0.2%          582         0.1%
    Income before provision
     for income taxes            43,401        9.1%       34,101         7.9%

    Provision for income taxes   16,384        3.4%       12,772         3.0%
    Net income                  $27,017        5.7%      $21,329         4.9%

    Earnings per share:
       Class L common
        stock - diluted             N/A                    $2.64
       Common stock - diluted     $0.38                    $0.33


    Domino's Pizza:  FY04 Earnings Release, Page Thirteen


                    Domino's Pizza, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Income

                                              Fiscal Year Ended
                                             % of                      % of
                               January 2,    Total     December 28,    Total
                                  2005      Revenues       2003       Revenues
    (In thousands,
     except per share data)
    Revenues:
       Domestic Company-owned
        stores                 $382,458                 $375,421
       Domestic franchise       155,030                  144,458
       Domestic distribution    792,026                  717,057
       International            116,983                   96,386
    Total revenues            1,446,497      100.0%    1,333,322       100.0%

    Cost of sales:
       Domestic Company-owned
        stores                  313,586                  302,009
       Domestic distribution    718,937                  643,621
       International             60,293                   52,072
    Total cost of sales       1,092,816       75.6%      997,702        74.8%
    Operating margin            353,681       24.4%      335,620        25.2%

    General and
     administrative             182,302       12.6%      176,147        13.2%
    Income from operations      171,379       11.8%      159,473        12.0%

    Interest expense, net        60,487        4.2%       74,291         5.6%
    Other                        10,832        0.7%       22,747         1.7%
    Income before provision
     for income taxes           100,060        6.9%       62,435         4.7%

    Provision for income taxes   37,773        2.6%       23,398         1.8%
    Net income                  $62,287        4.3%      $39,037         2.9%

    Earnings per share:
      Pro forma:
       Common stock - diluted     $1.12                      N/A

      As reported:
       Class L common
        stock - diluted           $5.57                   $10.25
       Common stock - diluted     $0.81                   $(1.26)


    Domino's Pizza:  FY04 Earnings Release, Page Fourteen


                    Domino's Pizza, Inc. and Subsidiaries
                    Condensed Consolidated Balance Sheets



                                          January 2, 2005    December 28, 2003
    (In thousands)
    Assets
    Current assets:
        Cash and cash equivalents             $40,396              $46,391
        Accounts receivable                    73,138               64,571
        Inventories                            21,505               19,480
        Advertising fund assets, restricted    32,817               30,544
        Other assets                           21,635               25,555
    Total current assets                      189,491              186,541

    Property, plant and equipment, net        136,883              127,067

    Other assets                              120,973              138,506

    Total assets                             $447,347             $452,114

    Liabilities and stockholders' deficit
    Current liabilities:
        Current portion of long-term debt     $25,295              $18,572
        Accounts payable                       55,350               56,928
        Advertising fund liabilities           32,817               30,544
        Other accrued liabilities              76,205               81,758
    Total current liabilities                 189,667              187,802

    Long-term liabilities:
        Long-term debt, less current portion  755,405              941,165
        Other accrued liabilities              52,155               41,110
    Total long-term liabilities               807,560              982,275

    Total stockholders' deficit              (549,880)            (717,963)

    Total liabilities and
     stockholders' deficit                   $447,347             $452,114




    Domino's Pizza:  FY04 Earnings Release, Page Fifteen


                    Domino's Pizza, Inc. and Subsidiaries
               Condensed Consolidated Statements of Cash Flows


                                                     Fiscal Year Ended
                                              January 2,         December 28,
                                                 2005                2003
    (In thousands)
    Cash flows from operating activities:
      Net income                              $62,287              $39,037
      Adjustments to reconcile net income
       to net cash flows provided by
       operating activities:
          Depreciation and amortization        31,705               29,822
          Amortization of deferred financing
           costs and debt discount              7,808               20,756
          Provision for deferred income taxes   8,761                7,799
          Other, net                            2,685                  220
          Changes in operating assets
           and liabilities                        216                5,573
    Net cash provided by
     operating activities                     113,462              103,207

    Cash flows from investing activities:
      Capital expenditures                    (39,763)             (29,161)
      Other, net                                3,493                9,597
    Net cash used in investing activities     (36,270)             (19,564)

    Cash flows from financing activities:
      Proceeds from the issuance of
       long-term debt                              92            1,010,090
      Repayments of long-term debt and
       capital lease obligation              (180,708)            (662,492)
      Cash paid for financing costs            (1,254)             (21,142)
      Proceeds from issuance of
       common stock, net                      119,779                    -
      Purchase of cumulative preferred stock        -             (200,557)
      Distributions                           (16,880)                   -
      Dividends                                (4,464)            (188,333)
      Other                                      (468)                (447)
    Net cash used in financing activities     (83,903)             (62,881)

    Effect of exchange rate changes on
     cash and cash equivalents                    716                  178

    Increase (decrease) in cash and
     cash equivalents                          (5,995)              20,940

    Cash and cash equivalents,
     at beginning of period                    46,391               25,451

    Cash and cash equivalents,
     at end of period                         $40,396              $46,391

SOURCE Domino's Pizza
02/22/2005
CONTACT: Lynn Liddle, Executive Vice President of Communications and
Investor Relations of Domino's Pizza, Inc., +1-734-930-3008
Web site: http://www.dominos.com
(DPZ)