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ITEM
19
EARNINGS CLAIMS |
Exhibit
P includes information
concerning the average
weekly units, sales and
other financial data of
Domino's Pizza Stores,
Domino's Pizza Pizzazz
Stores and Domino's C
Stores. We or our affiliates
also may furnish data
concerning specific proposed
store locations or Delivery
Service Areas ("DSA")
that are prepared using
Domino's Hawkeye Store
Siting Model, which is
a computer-based process
by which we simulate the
probable sales activity
of a hypothetical Domino's
Pizza store at an identified
location or within a specified
DSA (the "Hawkeye
Model'). The Hawkeye Model
utilizes demographic and
store financial information
from Domino's Pizza stores,
as well as a variety of
national databases, to
estimate the sales performance
and cash flow from a Domino's
store within a DSA or
at a site identified by
Domino's or by you. If
data generated by the
Hawkeye Model is furnished
to you, you will be provided
with a Supplemental Earnings
Claim explaining the Hawkeye
Model in greater detail
and the way in which the
information differs from
the information contained
in this disclosure concerning
average weekly unit sales
and other financial data
of Domino's Pizza stores.
Except for the information
contained in Exhibit P
and any Supplemental Earnings
claim and data to substantiate
and support the information
contained in Exhibit P
and any Supplemental Earnings
claim, we do not furnish
or authorize our salespersons
or sales agents to furnish
any oral or written information
concerning the actual
or potential sales, costs,
income or profits of a
Domino's Pizza Store,
Domino's Pizzazz Store
or Domino's C Stores.
Actual results may vary
from store to store, and
we cannot estimate the
results of any particular
franchise..
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EXHIBIT
P |
EARNINGS
CLAIMS |
AVERAGE
WEEKLY UNIT SALES
AND OTHER FINANCIAL DATA
OF
STORES
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AWUS
The AWUS
of franchised and corporately
owned Stores for the past
5 calendar years is set
forth below. These Stores
include Domino's Pizza Stores,
Domino's Pizzazz Stores
and Domino's C Stores. AWUS
means the average weekly
unit sales (i.e., average
weekly royalty sales). AWUS
is calculated by dividing
the total royalty sales
reported by all Stores operating
during the year by the number
of weeks reported.
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AWUS
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2001 |
2002 |
2003 |
2004 |
2005 |
Corporate |
$12,611 |
$12,708 |
$12,473 |
$12,537 |
$13,445 |
Franchised |
$11,284 |
$11,649 |
$11,871 |
$12,192 |
$12,712 |
Combined |
$11,353 |
$11,733 |
$11,943 |
$12,233 |
$12,797 |
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STORE
COUNTS
(YEAR-END)
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2001 |
2002 |
2003 |
2004 |
2005 |
Corporate |
516 |
577 |
577 |
580 |
581 |
Franchised |
4,243 |
4,271 |
4,327 |
4,428 |
4,511 |
Combined |
4,759 |
4,848 |
4,904 |
5,008 |
5,092 |
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NUMBER
OF STORES IN OPERATION
AT YEAR-END WHICH ACHIEVED
OR EXCEEDED AWUS
FOR THE YEAR
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2001 |
2002 |
2003 |
2004 |
2005 |
Corporate |
207 |
220 |
218 |
216 |
231 |
Franchised |
1,871 |
1,803 |
1,832 |
1,625 |
1,881 |
Combined |
2,136 |
2,064 |
2,050 |
1,836 |
2,118 |
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The
average annual growth in the
AWUS over the 5 year period
was 2.92%.
The
AWUS for Domino's Pizza
Stores (including Domino's
Pizza Pizzazz Stores) for
2005 was approximately $12,797.
The average number of households
in the delivery areas of
these Domino's Pizza Stores
was 14,311, and the average
dollar per household was
approximately $0.89.
The
AWUS for C Stores for 2005
was approximately $10,787.
This calculation was based
upon reports submitted by
106 C Stores. This number
represents all of the C
Stores in operation in 2005
other than those from which
we did not have complete
information. The average
number of households in
the delivery areas of those
Domino's C Stores was 6787
and the dollar per household
was approximately $1.59.
While
the AWUS of Stores were
generally higher for Stores
whose delivery service areas
had a larger number of households,
Stores with delivery service
areas containing households
substantially lower than
the national average still
experienced, on the average,
AWUS exceeding $10,653.
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OTHER
FINANCIAL DATA
Set
forth below are calculations
of pre-tax profit as a percentage
of royalty sales and other
financial indicators based
upon AWUS of $9,000, $12,000
and $15,000. These pro forma
statements have been derived
from profit and loss statements
submitted by franchised
Stores in operation as of
the end of calendar year
2005. Stores which did not
submit profit and loss statements
or whose profit and loss
statements were considered
incomplete or not properly
prepared were excluded from
these calculations.
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Average
Weekly Unit Sales |
$9,000 |
$12,000 |
$15,000 |
Total
Variable Costs |
74.92% |
74.21% |
74.48% |
Contribution
Margin |
25.08% |
25.79% |
25.52% |
Total
Cash Fixed Costs |
18.59% |
16.13% |
14.08% |
EBITDA |
6.49% |
9.66% |
11.44% |
Total
non-Cash and Non-Operating
Cost |
6.18% |
6.04% |
5.49% |
Pre-tax
Profit |
.31% |
3.62% |
5.95% |
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Explanatory
Notes:
Average
Weekly Unit Sales "AWUS":
Total royalty sales reported
divided by the number of
weeks reported; (AWUS) total
royalty sales reported.
Total
Variable Costs: Includes
operating expenses that
vary proportionately with
a change in sales. These
expenses include food costs,
variable labor cost (excluding
manager salary), bonus,
payroll taxes, worker's
compensation insurance,
Group Health Insurance,
mileage reimbursement and
related delivery expenses,
advertising expenses, royalty
expense and operating supplies.
Contribution
Margin: Contribution margin
is calculated as follows:
Royalty Sales minus Variable
Expenses.
Total
Cash Fixed Costs: Includes
operating expenses that
do not vary proportionately
with a change in sales.
These expenses include telephone
and utilities, rent, repairs
and maintenance, professional
fees, small equipment and
computer expenses, other
taxes (real and personal
property taxes and business
taxes), insurance (excluding
worker's compensation and
Group Health insurance),
manager salary, and miscellaneous
operating expenses.
EBITDA:
Earnings before interest,
taxes, depreciation and
amortization. EBITDA is
calculated as follows: Contribution
Margin minus Total Cash
Fixed Costs.
Total
Non-Cash and Non-Operating
Costs: Expenses that are
not direct operating expenses
or are non-cash in nature.
These expenses include depreciation
and amortization, interest
expense, loss or gain on
sale, administrative and
overhead costs, and other
income.
Pretax
Profit: Pretax profit is
calculated as follows: EBITDA
minus Non-cash and non-operating
costs.
Calculation
of Return on Investment:
After tax cash flow evaluated
against initial equity investment.
After tax cash flow is calculated
as follows: EBITDA and other
Income minus Debt Service
Payment and Income Taxes.
Individual
stores may experience expense
variations from the figures
specified in each of the
categories. Additionally,
accounting, operational
and management methods employed
by a store, different geographic
areas of the country, number
of households in the delivery
service area and menu price
variations, among other
factors, may significantly
affect profitability in
any given operation.
THESE
SALES, PROFITS OR EARNINGS
ARE AVERAGES OF SPECIFIC
FRANCHISES AND SHOULD NOT
BE CONSIDERED AS THE ACTUAL
OR POTENTIAL SALES, PROFITS
OR EARNINGS THAT WILL BE
REALIZED BY ANY FRANCHISE.
DOMINO'S DOES NOT REPRESENT
THAT ANY FRANCHISEE CAN
EXPECT TO ATTAIN THESE SALES,
PROFITS OR EARNINGS. A NEW
FRANCHISEE'S FINANCIAL RESULTS
ARE LIKELY TO DIFFER FROM
THE RESULTS STATED.
SUBSTANTIATION
OF THE DATA USED IN PREPARING
THE EARNINGS CLAIM WILL
BE MADE AVAILABLE TO A PROSPECTIVE
FRANCHISEE ON REASONABLE
REQUEST.
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