- Revenues were down 2.4% for the first quarter, due primarily to lower international revenues and lower domestic distribution revenues. Although international same store sales were up 3.8%, revenues from international operations decreased 14.0% due to the third quarter 2006 sale of Company-owned operations in France and the Netherlands to an existing master franchisee. Distribution revenues decreased 1.4% on lower volumes due to a decrease in domestic franchise same store sales.
- Net income was down 67.9% for the first quarter, driven primarily by expenses incurred in connection with the Company's recapitalization as well as lower domestic franchise same store sales growth, offset in part by continued strong performance in our international operations.
- Diluted EPS was $0.13 on an as-reported basis for the first quarter, which reflected $0.25 per share of recapitalization-related expenses, and, as a result, was down $0.26 from the as-reported amount in the prior year period. However, excluding the effect of the recapitalization related expenses, diluted EPS declined by $0.01. (See the Recapitalization Summary section and the Comments on Regulation G section.) Diluted EPS benefited from reduced diluted shares outstanding.
David A. Brandon, Domino's Chairman and Chief Executive Officer, said: "We are very pleased with the outcome of our recent recapitalization and resulting $13.50 per share special cash dividend. Shareholders have voiced strong support for our new capital structure and our subsequent plans regarding the special dividend and an open market share repurchase program. We believe that this was the correct corporate finance decision for our Company, as we leveraged our strong cash flows and created an exceptional return of capital event for our shareholders."
Brandon continued: "Turning to the results of our first quarter, we are still in the process of regaining the positive domestic sales momentum we lost in 2006. I am encouraged by the sales trend throughout the quarter, as the programs we have implemented in our Team USA Company-owned stores are creating some needed traffic and sales momentum. We expect our franchisees will continue to implement similar programs and return to positive same store sales very soon. We are working harder at the store level to both operate and market more effectively. We are competing in an environment where consumers are more demanding and more value conscious. Traditional media channels are not as effective as they have been in the past. We are addressing these environmental issues aggressively. On a very positive note, our international segment continues to perform very well. This quarter marked their 53rd consecutive quarter of positive same store sales comparisons, again solidifying their position as a strong and steady growth engine for our business."