Good morning, and welcome to the Fourth Quarter and Full Year Earnings Results Conference Call. [Operator Instructions] Lynn Liddle, with Investor Relations. You may begin your conference.

Thanks, Amber. I appreciate it. Welcome everybody this morning. A couple of housekeeping notes, in the event that we do have any forward-looking statements, I will turn your attention to our Safe Harbor statement, which is listed on both 8-Ks. And then also, to members of the media, please listen-only mode this morning. And we're going to do our usual start with Michael Lawton, our Chief Financial Officer; and then turn it over to Patrick Doyle, our CEO, and then follow up with some questions. So with that, I'll turn it over to Mike.

Thanks, Lynn and good morning, everyone. Before I discuss the results for the fourth quarter I'd like make a brief comment on our announcement today regarding the proposed refinancing of our existing debt. As you can see in the press release we issued today, we have announced the intention to engage in the refinancing of our existing securitized debt with a new securitized debt facility. Due to securities law restrictions, we will not be discussing the refinancing or answering questions regarding it on the call today. And our Investor Relations team will be implementing a quiet period until the transaction closes. All of your questions regarding the refinancing will be answered after the closing, when we plan to hold another conference call. We appreciate you respecting these guidelines in the Q&A session. So now let's dive into our fourth quarter results. The fourth quarter was another outstanding period as we posted solid domestic and international same-store sales growth and continued strong international store growth. We used our cash to benefit our shareholders through our share repurchase program and continue to drive shareholder value with 30% adjusted EPS growth in the quarter. Now let's look at our system revenue for the quarter. Our global retail sales, which are the total retail sales at franchised and company-owned stores worldwide, grew 9.9% during the quarter, excluding the impact of foreign currency. When including the negative currency impact, our global retail sales grew 8.8%. Looking at the drivers of the global retail sales growth. First, our domestic same-store sales grew 6.8% in the fourth quarter, lapping into a strong quarter in 2010, when we were up 6.3%. This yielded a very strong 13.1% 2-year sales comp for the quarter. Broken down, franchise same-store sales were up 6.6% for the quarter, while company-owned stores were…

Thanks, Mike. Last year, during this time, I told you that we faced a big task in 2011 to exceed our 2010 results that we had a strategic plan in place that our team could execute. I reminded you that we built a new sales base to grow from and we had a new level of customer loyalty in the U.S, and we built some very strong brand equity around the world. I said that we expected continued growth in 2011, and I'm happy to report that we had a great year. We ended it with positive annual sales domestically and internationally, exceptional global store growth and overall positive results. We're not the same company we were even 2 years ago. We really are a different Domino's. Domestically, we had higher levels of consumer engagement online and we upgraded our food quality versus the past. We strategically launched 3 new products last year, Improved Chicken, Artisan Pizza's and Stuffed Cheesy Bread, which together brought our overall food quality even higher. In the U.S., we lapped our 2010 plus 9.9% annual sales comp with a 3.5% increase this year. We opened more new stores internationally than ever before, and we are one of the top performing stocks in the restaurant industry, up 113%. Our excellent results in 2011 came not only from our tremendous international sales momentum or our strong domestic sales at a higher level of consumer engagement, but also from our technology. For example, Domino's Pizza in the U.S. processed over 1 million orders during the week of Cyber Monday alone, our best week of digital sales ever to that point. In fact, we estimate that we did over $1.8 billion in online sales globally in 2011 or about $34 million a week around the world. We're also very…

[Operator Instructions] Your first question comes from Brian Bittner with Oppenheimer.

I just got 2 questions on the domestic business and then just a quick follow-up, if I may. Just wondering if you can elaborate on how the rollout of new products in the fourth quarter, such as the Artisans and the Cheesy Bread, inflates with your comp momentum versus how well the core products performed?

I mean, it gets hard to really pull that apart. I guess, that's what I'd say, because, obviously, it's all happening at the same time. But I guess what I would say is the new products certainly helped. We were rolling over a little bit easier comp in the fourth quarter of 2010. So if you look at our kind of 2-year comp number for the fourth quarter, it was pretty much in line with what we've been doing on a 2-year comp over the course of the year. But the new products performed very well, we're very pleased with both of them. But the more important story continues to be higher levels of retention and customer satisfaction and frequency from customers, which is really that new base of business that we've been talking about.

And the second question on these comps, just the GAAP between the company-owned and franchise comp, I know it's been asked before, but it's still pretty large and just wondering if this has anything to do with company-owned stores being test markets and therefore, possibly being a forward indicator of the franchise comp? Or, really, do you think it's just a geographic impact or are you guys just better managing those company-owned stores?

First of all, if you look at the fourth quarter of 2010 number, it was actually, I think, a point the other way. So franchisees beat team USA by about a percentage. So probably you just got a little bit better of a flip-flop going on quarter-over-quarter over the years, but I wouldn't read a lot into it. We're very happy with how the team is running the corporate stores. But if you look at it on a longer-term view, I think the answer is both sides are doing very, very well and I don't know that I would read a lot into kind of the specifics of the team USA versus the franchise stores.

Okay and then just the last question. I mean, rather than asking anything about the debt, just wondering if you could elaborate on really how you decide whether to use excess cash that you have for special dividends or share repurchases as far as that value creation equation. I mean, how do you just think about that?

Yes, Brian, I can't really go into that as you'd expect. I guess what I'd say is what we said before, which is we run the numbers, I think the same way that our investors do. And we look for what's going to generate the best return for our shareholders. And apart from that, until we've kind of gotten through this process, I can't say a lot more.

Your next question comes from Mitch Speiser with Buckingham Research.

First on store margins. In the U.S., the labor leverage was pretty significant in the quarter. You did mention carry out and online ordering were a driver of that. I believe your labor was down 170 bps. Can you give us a sense of how much that was from, from the shift to carryout and online ordering?

Yes. It's hard to pull that apart in any kind of a short-term basis, but I would tell you that we're definitely seeing some of the leverage on labor from both of those, and fourth quarter was better. I mean, even when I talk about the pressure on store-level margins. It was better for our corporate stores and fourth quarter was better for our franchisees, as well, than the first 3 quarters were. So nice forward progress there. It's a trend that we need to keep going. But you're right on the labor leverage. It's definitely there. We've got a newer, higher level of sales, the stores, as they're adjusting to that higher level of sales, figure out how to get more efficient over time as we kind of settled into that new higher base and kind of continue to grow from it. But while I can't really give you a specific answer on how much of it comes from just higher sales versus carryout, versus online ordering, what I can tell you with confidence is, it's sum of all 3 of those.

And it sounds like it should be ongoing as these percentages continue to rise?

We would certainly hope so.

Okay, great. And separately, your Chief Marketing Officer has talked about the -- what you call the french fries factor, adding up lower-priced items on to your current marketing programs. Can you discuss that a little more in detail and how that is maybe different from the way that marketing in the past?

Sure. Yes, what Russell was talking about on that is, if you look at what generates orders, in the hamburger business or in the pizza business, it's kind of the center of plate items, right? It's -- you generate orders by selling more pizzas or sandwiches or pasta, but you generate orders by selling kind of the main items. But what makes those profits more profitable, what makes those orders more profitable, is to get good add-ons to those orders and to have kind of the right selection of those things. French fries are very profitable for the hamburger companies. And so, for instance, we kind of soft launched Parmesan Bread Bites in the fourth quarter and we have since launched them in the first quarter and are out there, it's our current campaign. And in the fourth quarter, we had launched the Stuffed Cheesy Bread. Great products and very good margins. So the extent to which we can add those onto the orders, it's going to make each order more profitable and some of that plays into the margin gains you saw on the corporate source side and as I've talked about, in the franchise side in the fourth quarter.

Great, and if I can slip one more in, this one's probably for Mike. The international revenues, I noticed the supply chain revenues outside the U.S. was down 0.9, was there a ForEx factor in there or have you done anything different with your distribution centers, perhaps in Canada, if you can explain the decline in revenues for international supply chain?

Nothing different with the supply chains. There was certainly a little bit of a currency impact in there.

Your next question comes from Joe Buckley with Bank of America Merrill Lynch.

I just had a couple of questions. First on the G&A, Mike, are you still expecting a $2 million to $3 million offset for franchisee contributions to some of the additional services like the call centers?

Yes, we are.

Okay. And then technically, just on international, and I know as you have some publicly-traded branch or franchisees out there, but can you give us a sense of the relative strength of same-store sales by some of the major markets?

Yes, I guess, what I'd say Joe, is it's still very broad. And if you look at the fourth quarter on a 2-year basis, it was exactly equal to the 2-year number for the full year for international. I think it was 13 -- was it 13.7, I believe, on a 2-year basis both for the quarter and for the year. So the answer on it is pretty consistent with what we've been saying for a while, which is even as there are kind of some concerns out there around kind of global economic growth, we just haven't been seeing signs of it, except we've clearly felt that a bit in Greece. But as we look overall in our major markets, and as you've seen some of them have already released their fourth quarter or second half of the calendar year numbers, they've all continued to hold up quite well.

And just one last one. With gas prices rising again, can you remind us where the system is in terms of delivery surcharges and whether or not you put royalty on those if they are implemented?

Yes we do. I mean, they're part of the sales side of the stores, so we do collect a royalty on that. And the answer is typically it's in the $1.75 to $2 range per order is kind of the average on that. There hasn't been a lot of movement on that. And I think given a little broader answer on it, as we look at grass prices, there are really 3 ways in which it can affect us. One is kind of the direct reimbursement to our drivers or for the franchisees to their drivers. And that's a direct riddle that at some point, you've got to deal with the cost on that. But on order of magnitude on that, overall is relatively small. You've got potential changes in consumer behavior and our experience with that in the past is that we just don't see that much direct change in consumer behavior shifts back or forth between carryout or delivery. We've scrubbed that data up, down and sideways. And honestly, just have not seen a whole lot on that front. The bigger medium-term to longer-term concern is it doesn't start to flow through food cost, doesn't start to flow through commodities. And that's the one that's potentially big enough that it could turn into a headwind if oil prices continue to move up materially. But so far, commodities are looking pretty good and our outlook is still for pretty modest increases for 2012 over 2011.

Your next question comes from John Ivankoe with JPMorgan.

2 separate things, if I may. Firstly, could you discuss or just remind me in a little bit more detail what the little bit of the increase in CapEx is? What type of return that you think you got from that and whether that's kind of a longer-term level or it migrates back down over time or possibly even migrate itself over time?

No. I mean, that's why we increased our outlook is we think that's something that we're going to see on an ongoing basis, particularly as we look at technology. It continues to be a real differentiator for us and for our brands with consumers, and it's an area where we're going to continue to invest going forward. So that's -- we raised our range for our outlook by $5 million on both top and bottom ends and we think that's where it's going to be for the near term.

And separately, based on what I think is deserved confidence in terms of your consistent free cash flow generation. I mean, have you thought about maybe pursuing some of the work perhaps even exceeding some big markets like China or Brazil, for example, what you may be co-investing with master franchisees that might potentially exist in those markets. In other words, does the company feel or does the company feel like you have an opportunity to actually take more risk in developing markets in terms of place in order of capital to work?

I think the answer, John, is the model has worked incredibly well. We're generating better growth than anybody, I think our percentage store growth now, going back over the last few years, is better than any of the major international players. So we love the model. I would never say never. If we hit a point where we look at a market and say, you know what, we're convinced that our getting directly involved will make a material difference, we would certainly leave that open as an option. But as you've seen to this point, we haven't felt the need to do that or frankly seen the opportunity that we think it's going to generate the kind of return that we want.

Your next question comes from Jeffery Bernstein with Barclays Capital.

A couple of questions. Just, first, when you look at the U.S., you talked about the unit pipeline now accelerating in '11, I guess, because in part due to the spike in commodities. I know you mentioned you're hopeful for a return and that opens in '12. I'm just wondering, is that feedback you're getting from the franchisees that those short-term spikes were the primary drivers? And I'm just wondering, you talk about initiatives to help them perform better so that they accelerate their growth, I'm wondering what that might entail? Would you consider incentivizing U.S. franchisees with some financing help or discount to royalty or add contributions? Just trying to size up the re-acceleration, causing the inter growth being more stable and comp growth longer term. I'm just trying to size up that U.S. unit growth.

Yes -- no, absolutely. I mean, the answer is we look at all those things. But it really comes down to a couple of things. One is what you mentioned and what I mentioned, which is the spike in the summer in commodities hurt the profits in kind of a near-term basis more than we had expected. We hadn't forecast the spike to be as big as it was. And in our franchisees, a rationale about making their investment decisions. And so when the near-term profit picture isn't as good, then they're going to slow down some of their investments. That did get better in the fourth quarter, which gives us some more confidence and commodities are so far staying pretty well under control in 2012. But the second part of it is -- and this goes back now really 4 years is, we decided to focus very hard on improving the overall performance of our system in a number of different ways, one of which was people who weren't operating their stores at the level that we felt that they needed to be operated at, were going to be asked to sell or, in some cases, moved out of the system directly. And that's resulted in something approaching 200 franchisees leaving the system over the course of the last 4 years. And the bulk of those stores, some of them closed back in '09 and '08, but the bulk of those stores have been purchased by the stronger, better franchisees. And again, being rational investors, there is a period of time where the best return they could get was to buy some underperforming stores from franchisees, who were leaving the system. As the system is performing better, those sorts of opportunities start to disappear, and people who want to grow are going to need to build new stores. So we've got a plan around it, we've got a new team working on it, but we think there are a couple of other things that have played into it. Certainly, our goal is to continue to grow the system going forward and certainly we hope to get back to that.

Okay, but no plans for any help or financial aid to the franchisees that do so?

We've always got some incentives out there and those have changed from time to time, but nothing we'll talk about today.

Okay. And then the basket, you talked about the commodity spike and it sounds good that the basket's only going to be up 1% to 2% in '12. I'm just wondering what is the cheese assumption versus the $1.76 in the fourth quarter of '11 and everything other than cheese, should we assume the majority's locked and therefore, we're not going to see much movement in that basket?

Now we're about 25% locked on the basket for the rest of the year. The assumption on cheese is it will average a little bit lower than last year. And as you can see, if you look at the block price today, we are at the $1.47, $1.48, we've already seen the cheese price come down pretty significantly. We do expect meat prices will run a little higher than last year, but we think that'll be offset by the fact that cheese is expected to be lower.

And then just lastly, it's kind of an anomaly, I guess, for the pizza players. But we've heard from your restaurant peers that favorable weather has been a big benefit in the first quarter. I know you don't give current quarter trends, I'm just wondering if you could talk theoretically on the pizza delivery business. Would that have a negative impact, favorable weather being negative for delivery, I guess, or how do you think about weather at all in the first quarter of '12 and how that impacts you guys?

Yes, the broad answer is on the quarter-to-quarter basis, weather moves. While we've looked at them and kind of analyze the effect, they may hurt or help you in kind of a short-term basis. We've never seen big movements on a quarterly basis. And we do, do almost 40% of our orders now are carryout. So there's kind of some offsetting effect on the delivery versus the carry out. Net-net, in the very short term, 2 or 3 inches of snow was a good thing for the business. Big downpours of rain is pretty good for the delivery business. But on a quarterly basis, you're just not going to see that big a move from weather to really adjust -- to really change the numbers materially.

Next question comes from Brad Ludington with KeyBanc Capital Market.

I wanted to ask on the rollout of the Parmesan Bread Bites, you've been introducing those with a pretty compelling $1 add-on price point. I think at the Analyst Day, you talked about starting out at $2.99, which I know they're still on the menu at that price if you don't do it as an add-on to the deal. Was that $1 add-on the original plan or were you having some trouble going as that initially -- what drove that price?

It's at trial price. The goal is to get people to try it and love it and then you get them to come back. So absolutely part of the plan.

Then just back on the domestic franchisees and where you talked about opportunities to improve unit economics with them. Of course, like you said, commodities will help if they come in. Are there any specific opportunities that you have in mind where you can help them that maybe you're doing at the company stores? I mean, where do you see opportunities to help them on even economics?

Yes. I mean, there are lots of them. I mean, as we look at variability in labor spends, variability in food spends, energy opportunities, there are just -- there are a lot of places. And we're doing a lot of work, we've got teams kind of around each of the initiatives. And some of that is kind of ongoing in nature, but we've got some very specific efforts that we're putting against some of those areas and we see some fairly meaningful opportunities.

Your next question comes from Alvin Concepcion with Citi.

You brushed on the topic of consumer behavior earlier, so I just wanted to follow-up on that. Did you see any changes in the consumer spending pattern from fourth quarter into January and February? And on that, I mean, are you seeing any mixed changes for value items versus premium?

Can't get in to talk about the first quarter. But my answer is what it's been in the past, which is employed people buy more pizza than unemployed people. And net-net, if the economy improves, that's probably a net positive for us. But I can't get into specifics around the first quarter.

And then just to sort of on menu mix in the fourth quarter, have you seen any changes there, value versus premium?

No. I mean with the launch of Stuffed Cheesy Bread, we clearly were selling a few more sides in the fourth quarter. But otherwise, nothing notable.

Your next question comes from Steve Anderson with Miller Taback.

I just wanted to go clarify with you in terms of the unit growth, have you set a numerical goal for domestic in your growth as you have for the overseas units? And can you say -- can you talk about how credit conditions if there's been any changes with regard to the franchisees if they've been able to either purchase additional locations or build new ones as the economy has improved for that in recent months?

Yes. I mean, the answer is we've only set a global outlook for store growth. So we haven't split that apart into international and domestic. All I'd say is similar to what I said in the past. It's certainly going to be overwhelmingly around the international side, but we would like to get back to some growth domestically, as well. And I think the financing market has gotten both marginally better but it's clearly better for larger franchisees that have potentially bigger needs and longer relationships with the financing companies, still pretty tough for the smaller players.

Next question comes from Mark Smith with Feltl and Company.

Mike, a quick question. Your 1% to 2% increase in your commodity basket, is that including, I guess, what expectation on fuel prices?

There's not a specific expectation on fuel built in the commodity. Obviously, as Patrick mentioned earlier, if fuel was to dramatically spike up at some point, we do think that passes through the commodities. So we're expecting that we're not going to see a huge jump in gas price build.

Okay. Second, did you guys give your kind of mix on the call center, both on orders as well as on kind of how many restaurants are in that?

We haven't. The majority of our stores are not on the call center. And most of our call center's really aimed at call overflow. So while it's important to us to provide good customer service and reduce the number of calls that are made to stores that ring too many times, this is not a key component to answering most of the order or taking most of the orders that go into our system.

And then lastly, just looking at the tax rate. Near term, it looks like you and a lot of your peers are definitely getting some benefit near term on taxes. Should we expect that to continue into the first half of '12, kind of excluding your long-term guidance, near term, could we see it maybe come in lower?

I think the long-term guidance is still right. I think you may be referring to the YZ credits and the higher acts, some of the labor credits that are out there. We certainly are trying to take advantage of those, primarily in our corporate stores, but we've provided long-term estimates because we think that those are probably the best thing to go with.

You can predict the longer-term tax rates at the federal level, that'd be helpful for us.

Your next question comes from Peter Saleh with Telsey Advisory Group.

Just a quick question on the -- actually the iPhone app and what your expectations are for the Android app. For the iPhone app, when you launched it last year, did you see a significant adoption, a significant downloads early on, or were your downloads more consistent as we went throughout the year? And I guess what are your expectations for the Android app?

We saw a continued number of downloads of the iPhone app as the year progressed, we got off to a good start and it just continued to grow. We expect that the Android has the potential to actually exceed the iPhone, given that there are more Android users out there. And so far we're getting very good customer reviews of the Android app.

Your next question comes from Jon Tower with Morgan Stanley.

Just a couple of things. On the incremental CapEx spend, you've mentioned that a good amount of that's going to tech investments. I was curious to know if that is corporate-related or you're going to push that down to the store level or is there something in the distribution side that you're going to be investing into that? Separately, seeing that the distribution sales are pretty much the largest part of your overall revenue, are there any opportunities on the cost side to make some investments for the next few years to improve margins over time?

The first question, as far as where we'll spend the CapEx and you've got within technology, there are a number of areas that we continue to invest. We've done a lot with online ordering and with the iPhone and android, obviously. There's still a lot going on with the customer interface side that we can do to make it better. There are going to be more venues that we need to look at and investigate and potentially invest in. We're also doing funds to improve our proprietary point-of-sale system, this affects the store level. We have a great point-of-sale system, we think it gives us some competitive advantages. But there's still an opportunity to make that better than it is. As far as improvements on the commissary side, we have fairly large commissaries, we use 17 of them, supply the whole country. We're continually looking for technological advancements. We've made some over the years in different facilities as they're rebuilt, we'll continue to look for those opportunities. But I would not expect to see a particularly meaningful improvement in the margin as a result of those.

I guess, the only thing I'd add on it is the way we go through our budgeting process every year is the first thing we're always looking at is every opportunity to reinvest in the business that's going to generate a good return, and that's always going to be more interesting than other uses of free cash. But the net answer is if that gets us into kind of the range that we've been in. So it's not like we're kind of setting the number and then figuring out what's the best way to spend those dollars. The answer is we go out and look at every area that we could be investing into the business that would generate a good return. And after we've done that, then we start looking at other ways to distribute cash.

Our next question comes from Mitch Speiser with Buckingham Research.

On the international comp, which was up 4.7%, it definitely was solid versus a year ago. We do know what the top franchisees reported and if you do a little bit of math, it does and correct me if I'm wrong, maybe like the rest of the world excluding the big franchisees, the comp may have been down, maybe 1% or so. I guess my question is was there any areas in the world that were weak besides Greece in the fourth quarter? If you can give us a little more comment on that.

We definitely weren't down in the other markets. And so, no. I mean, overall there was pretty broad strength around the world. And so, no -- I mean, I mentioned Greece, obviously, because it's been getting a lot of press. But overall, the answer for the year was good and pretty broad strength.

Okay. Next on U.S. unit growth. As you look at the 2012 pipeline for your U.S. franchisees, do you see an increase in the number of stores? I believe about 66 gross were opened in 2011. Just given what you're seeing today, should we expect more in 2012?

I guess, all I can say is our goal is to get back to something at least modestly positive in 2012 on kind of net stores. And we think the environment is better than it was in 2011, barring big moves in commodities. But the fact is, if you look at the other side of the equation, which is kind of the availability of stores that are up for sale and/or weaker franchisees looking to move, those numbers have been going down, which means people who want to grow are going to need to look more at opening stores.

And my last question is just on the dividend. It's been talked about in prior quarters. When you think about a special dividend versus an ongoing dividend, can you give us just how you view that difference and can a special dividend be followed by an ongoing dividend? Just any thoughts on how you look at the dividend policy.

I'm getting a flag thrown on that question. I think the answer is all I can tell you is what I've said before, which is we look at what's going to generate the best returns. And until we've got this done, saying anything more than that is going to get me in trouble with our general counsel.

I would now like to turn the call back over to Patrick Doyle. Please go ahead.

So I want to thank you again for your interest. It was a terrific year last year, and appreciate your participating in today's call. And I look forward to speaking with all of you when we conclude our recap. Thanks, everybody.

Thank you for participating you may now disconnect.