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Domino's, Inc. announced February 14 its record operating results for the fourth quarter and fiscal 1999, which ended January 2, 2000.
The following are highlights of the fourth quarter and fiscal 1999 compared to the same periods in 1998. The earnings highlight excludes restructuring charges in fiscal 1999 and system wide sales exclude a 53rd week of sales in 1998 (1999 contained a standard 52 weeks).
- Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 47.0%, to a record of $139.6 million for fiscal 1999 and the fourth quarter increased 33.1% to $44.3 million.
- Domestic same store sales increased 2.8% for fiscal 1999 and 1.9% for the fourth quarter, marking our 26th consecutive quarter of positive same store sales.
- System wide sales increased 6.7% for fiscal 1999 and 4.5% for the fourth quarter.
- The number of Domino's stores increased by 340 in fiscal 1999, bringing the total to 6,559 stores worldwide.
The fourth quarter and fiscal 1999 operating income and EBITDA, as reported, benefited from increased same store sales and new stores, improved corporate operations gross profit, reduced overheads and increased distribution profits. Additionally, the fourth quarter and fiscal 1999 operating income increases discussed above were offset by $9.4 million and $32.5 million, respectively, in covenant not to compete amortization expense, which resulted from the 1998 recapitalization.
Net income decreased in the fourth quarter and fiscal 1999, compared to the same period in 1998, due primarily to increases in interest expense, income taxes and restructuring charges, partially offset by improved EBITDA performance. Interest expense increased $18.7 million during the fourth quarter and $67.1 million for fiscal 1999, resulting from Domino's December 1998 borrowings of $722.1 million to fund the recapitalization. In connection with the 1998 S to C Corporation conversion and corporate reorganization pursuant to the recapitalization, the Company recorded a net tax benefit of $17.9 million in the fourth quarter of 1998. In the fourth quarter of 1999, the Company adjusted these net tax benefits, which resulted in $1.0 million of additional income tax expense.
Total revenues for the fourth quarter and fiscal 1999, as reported, decreased primarily due to the late 1998 store rationalization program, under which 142 under-performing stores were sold to franchisees or closed, and revenues for the fourth quarter of 1998 included 17 weeks, compared to the standard 16 weeks in 1999. This decrease was offset by increased revenues from domestic franchise royalties, distribution and international operations.
Domestic same store sales increased 1.9% and 2.8% in the fourth quarter and fiscal 1999, respectively, as compared to the same periods in 1998. During fiscal 1999, store count increased by 140, bringing the total to 4,629 domestic stores.
International same store sales, on a constant dollar basis, increased 3.6% for both the fourth quarter and fiscal 1999, respectively, as compared to the same periods in 1998. During fiscal 1999, store count increased by 200, bringing the total to 1,930 international stores.
David A. Brandon, Chairman and CEO, commented, "We are pleased to report that Domino's annual 1999 results, before restructuring charges, reflect record EBITDA of $139.6 million, a 47% increase over 1998. Our 1998 store rationalization program and commitment to reducing costs, both in operations and administration, have had a significantly positive impact on our financial performance.
"Among the important initiatives for Domino's in 1999 was the restructuring of our Company to focus on the three core competencies we feel are critical to driving our business: Building our Brand, Maintaining High Standards and Flawless Execution," Brandon said. "We have reallocated our resources and made a total commitment to future growth and expansion."
Founded in 1960, Domino's, Inc. operates a network of 6,559 owned and franchised stores in the United States and 64 international markets.