Company Quick10K Filing
Domino's Pizza
Price245.00 EPS9
Shares42 P/E27
MCap10,329 P/FCF32
Net Debt3,094 EBIT540
TEV13,423 TEV/EBIT25
TTM 2019-09-08, in MM, except price, ratios
10-Q 2020-03-22 Filed 2020-04-23
10-K 2019-12-29 Filed 2020-02-20
10-Q 2019-09-08 Filed 2019-10-08
10-Q 2019-06-16 Filed 2019-07-16
10-Q 2019-03-24 Filed 2019-04-24
10-K 2018-12-30 Filed 2019-02-21
10-Q 2018-09-09 Filed 2018-10-16
10-Q 2018-06-17 Filed 2018-07-19
10-Q 2018-03-25 Filed 2018-04-26
10-K 2017-12-31 Filed 2018-02-20
10-Q 2017-09-10 Filed 2017-10-12
10-Q 2017-06-18 Filed 2017-07-25
10-Q 2017-03-26 Filed 2017-04-27
10-K 2017-01-01 Filed 2017-02-28
10-Q 2016-09-11 Filed 2016-10-18
10-Q 2016-06-19 Filed 2016-07-21
10-Q 2016-03-27 Filed 2016-04-28
10-K 2016-01-03 Filed 2016-02-25
10-Q 2015-09-06 Filed 2015-10-08
10-Q 2015-06-14 Filed 2015-07-16
10-Q 2015-03-22 Filed 2015-04-23
10-K 2014-12-28 Filed 2015-02-24
10-Q 2014-09-07 Filed 2014-10-14
10-Q 2014-06-15 Filed 2014-07-22
10-Q 2014-03-23 Filed 2014-05-01
10-K 2013-12-29 Filed 2014-02-25
10-Q 2013-09-08 Filed 2013-10-15
10-Q 2013-06-16 Filed 2013-07-23
10-Q 2013-03-24 Filed 2013-04-30
10-K 2012-12-30 Filed 2013-02-28
10-Q 2012-09-09 Filed 2012-10-16
10-Q 2012-06-17 Filed 2012-07-24
10-Q 2012-03-25 Filed 2012-05-01
10-K 2012-01-01 Filed 2012-02-28
10-Q 2011-09-11 Filed 2011-10-18
10-Q 2011-06-19 Filed 2011-07-26
10-Q 2011-03-27 Filed 2011-05-05
10-K 2011-01-02 Filed 2011-03-01
10-Q 2010-09-12 Filed 2010-10-19
10-Q 2010-06-20 Filed 2010-07-27
10-Q 2010-03-28 Filed 2010-05-04
10-K 2010-01-03 Filed 2010-03-02
8-K 2020-05-26
8-K 2020-04-23
8-K 2020-04-23
8-K 2020-04-21
8-K 2020-03-30
8-K 2020-02-20
8-K 2020-02-20
8-K 2019-11-19
8-K 2019-11-06
8-K 2019-10-30
8-K 2019-10-22
8-K 2019-10-08
8-K 2019-07-31
8-K 2019-07-16
8-K 2019-04-29
8-K 2019-04-24
8-K 2019-04-23
8-K 2019-02-25
8-K 2019-02-21
8-K 2018-10-25
8-K 2018-10-16
8-K 2018-07-26
8-K 2018-07-19
8-K 2018-07-18
8-K 2018-04-27
8-K 2018-04-26
8-K 2018-04-24
8-K 2018-04-24
8-K 2018-04-09
8-K 2018-02-22
8-K 2018-02-20
8-K 2018-01-05

DPZ 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II. Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-10.1 d914156dex101.htm
EX-31.1 d914156dex311.htm
EX-31.2 d914156dex312.htm
EX-32.1 d914156dex321.htm
EX-32.2 d914156dex322.htm

Domino's Pizza Earnings 2020-03-22

Balance SheetIncome StatementCash Flow
1.30.4-0.5-1.3-2.2-3.12012201420172020
Assets, Equity
1.10.90.70.40.20.02012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.1-0.2-0.32012201420172020
Ops, Inv, Fin

10-Q
false0001286681Q12020DOMINOS PIZZA INC--01-03The balance sheet at December 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. 0001286681 2019-12-30 2020-03-22 0001286681 2020-03-22 0001286681 2019-12-29 0001286681 2018-12-31 2019-03-24 0001286681 2018-12-31 2019-12-29 0001286681 2020-04-16 0001286681 2018-12-30 0001286681 2019-03-24 0001286681 us-gaap:FairValueInputsLevel1Member 2020-03-22 0001286681 dpz:ClassA-2-IISeriesOneFourPointFourSevenFourPercentageFixedRateSeniorSecuredNoteMember 2020-03-22 0001286681 dpz:ClassA2IiSeriesOneThreePointZeroEightTwoPercentageFixedRateSeniorSecuredNotesMember 2020-03-22 0001286681 dpz:ClassA2IiiSeriesOneFourPointOneOneEightPercentageFixedRateSeniorSecuredNotesMember 2020-03-22 0001286681 dpz:TwoThousandSeventeenFiveYearFloatingRateNotesMember 2020-03-22 0001286681 dpz:TwoThousandEighteenSevenPointFiveYearFixedRateNotesMember 2020-03-22 0001286681 dpz:TwoThousandEighteenNinePointTwoFiveYearFixedRateNotesMember 2020-03-22 0001286681 dpz:TwoThousandNineteenTenYearFixedRateNotesMember 2020-03-22 0001286681 dpz:DomesticStoresMember dpz:DomesticFranchiseMember dpz:CashAndInvestmentsMember 2020-03-22 0001286681 dpz:DomesticStoresMember dpz:DomesticFranchiseMember us-gaap:AccountsReceivableMember 2020-03-22 0001286681 dpz:DomesticStoresMember dpz:DomesticFranchiseMember dpz:PrepaidExpensesMember 2020-03-22 0001286681 dpz:DomesticStoresMember dpz:DomesticCompanyOwnedStoresMember 2020-03-22 0001286681 dpz:OperatingLeaseMember 2020-03-22 0001286681 dpz:VariableFundingNoteMember us-gaap:FairValueInputsLevel2Member 2020-03-22 0001286681 us-gaap:FairValueInputsLevel1Member 2019-12-29 0001286681 dpz:ClassA-2-IISeriesOneFourPointFourSevenFourPercentageFixedRateSeniorSecuredNoteMember 2019-12-29 0001286681 dpz:ClassA2IiSeriesOneThreePointZeroEightTwoPercentageFixedRateSeniorSecuredNotesMember 2019-12-29 0001286681 dpz:ClassA2IiiSeriesOneFourPointOneOneEightPercentageFixedRateSeniorSecuredNotesMember 2019-12-29 0001286681 dpz:TwoThousandSeventeenFiveYearFloatingRateNotesMember 2019-12-29 0001286681 dpz:TwoThousandEighteenSevenPointFiveYearFixedRateNotesMember 2019-12-29 0001286681 dpz:TwoThousandEighteenNinePointTwoFiveYearFixedRateNotesMember 2019-12-29 0001286681 dpz:TwoThousandNineteenTenYearFixedRateNotesMember 2019-12-29 0001286681 dpz:DomesticStoresMember dpz:DomesticFranchiseMember dpz:CashAndInvestmentsMember 2019-12-29 0001286681 dpz:DomesticStoresMember dpz:DomesticFranchiseMember us-gaap:AccountsReceivableMember 2019-12-29 0001286681 dpz:DomesticStoresMember dpz:DomesticFranchiseMember dpz:PrepaidExpensesMember 2019-12-29 0001286681 dpz:DomesticStoresMember dpz:DomesticCompanyOwnedStoresMember 2019-12-29 0001286681 us-gaap:FairValueInputsLevel2Member dpz:VariableFundingNoteMember 2019-12-29 0001286681 us-gaap:OperatingSegmentsMember dpz:USStoresMember 2019-12-30 2020-03-22 0001286681 us-gaap:OperatingSegmentsMember dpz:SupplyChainMember 2019-12-30 2020-03-22 0001286681 us-gaap:OperatingSegmentsMember dpz:InternationalFranchiseMember 2019-12-30 2020-03-22 0001286681 us-gaap:IntersegmentEliminationMember 2019-12-30 2020-03-22 0001286681 us-gaap:EmployeeStockOptionMember 2019-12-30 2020-03-22 0001286681 us-gaap:PerformanceSharesMember 2019-12-30 2020-03-22 0001286681 us-gaap:MaterialReconcilingItemsMember 2019-12-30 2020-03-22 0001286681 us-gaap:RetainedEarningsMember 2019-12-30 2020-03-22 0001286681 us-gaap:CommonStockMember 2019-12-30 2020-03-22 0001286681 us-gaap:AdditionalPaidInCapitalMember 2019-12-30 2020-03-22 0001286681 dpz:DomesticCompanyOwnedStoresMember dpz:USStoresMember 2019-12-30 2020-03-22 0001286681 dpz:SupplyChainMember 2019-12-30 2020-03-22 0001286681 dpz:DomesticFranchiseMember dpz:USStoresMember 2019-12-30 2020-03-22 0001286681 dpz:InternationalFranchiseMember dpz:InternationalFranchiseRoyaltiesAndFeesMember 2019-12-30 2020-03-22 0001286681 dpz:DomesticFranchiseAdvertisingMember dpz:USStoresMember 2019-12-30 2020-03-22 0001286681 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-30 2020-03-22 0001286681 us-gaap:OperatingSegmentsMember dpz:USStoresMember 2018-12-31 2019-03-24 0001286681 us-gaap:OperatingSegmentsMember dpz:SupplyChainMember 2018-12-31 2019-03-24 0001286681 us-gaap:OperatingSegmentsMember dpz:InternationalFranchiseMember 2018-12-31 2019-03-24 0001286681 us-gaap:IntersegmentEliminationMember 2018-12-31 2019-03-24 0001286681 us-gaap:EmployeeStockOptionMember 2018-12-31 2019-03-24 0001286681 us-gaap:RestrictedStockMember 2018-12-31 2019-03-24 0001286681 us-gaap:PerformanceSharesMember 2018-12-31 2019-03-24 0001286681 us-gaap:MaterialReconcilingItemsMember 2018-12-31 2019-03-24 0001286681 us-gaap:RetainedEarningsMember 2018-12-31 2019-03-24 0001286681 us-gaap:CommonStockMember 2018-12-31 2019-03-24 0001286681 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 2019-03-24 0001286681 dpz:DomesticCompanyOwnedStoresMember dpz:USStoresMember 2018-12-31 2019-03-24 0001286681 dpz:SupplyChainMember 2018-12-31 2019-03-24 0001286681 dpz:DomesticFranchiseMember dpz:USStoresMember 2018-12-31 2019-03-24 0001286681 dpz:InternationalFranchiseMember dpz:InternationalFranchiseRoyaltiesAndFeesMember 2018-12-31 2019-03-24 0001286681 dpz:DomesticFranchiseAdvertisingMember dpz:USStoresMember 2018-12-31 2019-03-24 0001286681 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 2019-03-24 0001286681 us-gaap:SubsequentEventMember 2020-04-21 2020-04-21 0001286681 us-gaap:NewAccountingPronouncementMember srt:RestatementAdjustmentMember 2018-12-31 2019-12-29 0001286681 srt:ScenarioPreviouslyReportedMember 2019-12-30 0001286681 us-gaap:NewAccountingPronouncementMember dpz:AdjustmentsDueToAsc326Member 2019-12-30 0001286681 dpz:ScenarioAsRestatedMember 2019-12-30 0001286681 us-gaap:NewAccountingPronouncementMember 2019-12-30 0001286681 us-gaap:CommonStockMember 2019-12-29 0001286681 us-gaap:AdditionalPaidInCapitalMember 2019-12-29 0001286681 us-gaap:RetainedEarningsMember 2019-12-29 0001286681 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-29 0001286681 us-gaap:CommonStockMember 2020-03-22 0001286681 us-gaap:AdditionalPaidInCapitalMember 2020-03-22 0001286681 us-gaap:RetainedEarningsMember 2020-03-22 0001286681 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-22 0001286681 us-gaap:CommonStockMember 2018-12-30 0001286681 us-gaap:AdditionalPaidInCapitalMember 2018-12-30 0001286681 us-gaap:RetainedEarningsMember 2018-12-30 0001286681 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-30 0001286681 us-gaap:CommonStockMember 2019-03-24 0001286681 us-gaap:AdditionalPaidInCapitalMember 2019-03-24 0001286681 us-gaap:RetainedEarningsMember 2019-03-24 0001286681 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-24 iso4217:USD xbrli:shares xbrli:pure iso4217:USD xbrli:shares
Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM
10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 22, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
                    
to
                    
Commission file number:
001-32242
 
Domino’s Pizza, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
 
38-2511577
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
     
30 Frank Lloyd Wright Drive
Ann Arbor, Michigan
 
48105
(Address of Principal Executive Offices)
 
(Zip Code)
(734)
930-3030
(Registrant’s Telephone Number, Including Area Code)
 
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each Class
 
Trading
Symbol
 
Name of Each Exchange
on Which Registered
Domino’s Pizza, Inc. Common Stock, $0.01 par value
 
DPZ
 
New York Stock Exchange
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
Large accelerated filer
 
 
Accelerated filer
 
             
Non-accelerated filer
 
 
Smaller reporting company
 
             
Emerging growth company
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes 
    No  
As of April 16, 2020, Domino’s Pizza, Inc. had 39,117,878 shares of common stock, par value $0.01 per share, outstanding.
 
 

Table of Contents
Domino’s Pizza, Inc.
TABLE OF CONTENTS
 
 
Page No.
 
PART I.
     
 
             
Item 1.
     
3
 
             
     
3
 
             
     
4
 
             
     
5
 
             
     
6
 
             
     
7
 
             
Item 2.
     
14
 
             
Item 3.
     
21
 
             
Item 4.
     
21
 
             
PART II.
     
 
             
Item 1.
     
22
 
             
Item 1A.
     
22
 
             
Item 2.
     
23
 
             
Item 3.
     
23
 
             
Item 4.
     
23
 
             
Item 5.
     
23
 
             
Item 6.
     
23
 
         
   
24
 
2

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Domino’s Pizza, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
                 
(In thousands)
 
March 22, 2020
 
 
December 29, 2019 (1)
 
Assets
   
     
 
Current assets:
   
     
 
Cash and cash equivalents
  $
200,801
    $
190,615
 
Restricted cash and cash equivalents
   
189,370
     
209,269
 
Accounts receivable, net
   
219,199
     
210,260
 
Inventories
   
49,010
     
52,955
 
Prepaid expenses and other
   
26,025
     
19,129
 
Advertising fund assets, restricted
   
109,969
     
105,389
 
                 
Total current assets
   
794,374
     
787,617
 
                 
Property, plant and equipment:
   
     
 
Land and buildings
   
44,732
     
44,845
 
Leasehold and other improvements
   
165,843
     
164,071
 
Equipment
   
249,467
     
243,708
 
Construction in progress
   
39,806
     
42,705
 
                 
   
499,848
     
495,329
 
Accumulated depreciation and amortization
   
(259,131
)    
(252,448
)
                 
Property, plant and equipment, net
   
240,717
     
242,881
 
                 
Other assets:
   
     
 
Operating lease
right-of-use
assets
   
228,940
     
228,785
 
Goodwill
   
15,061
     
15,093
 
Capitalized software, net
   
74,203
     
73,140
 
Other assets
   
27,539
     
24,503
 
Deferred income taxes
   
9,042
     
10,073
 
                 
Total other assets
   
354,785
     
351,594
 
                 
Total assets
  $
1,389,876
    $
1,382,092
 
                 
Liabilities and stockholders’ deficit
   
     
 
Current liabilities:
   
     
 
Current portion of long-term debt
  $
43,390
    $
43,394
 
Accounts payable
   
94,502
     
111,101
 
Operating lease liabilities
   
36,914
     
33,318
 
Insurance reserves
   
23,453
     
23,735
 
Dividends payable
   
30,985
     
471
 
Advertising fund liabilities
   
106,832
     
101,921
 
Other accrued liabilities
   
116,093
     
139,891
 
                 
Total current liabilities
   
452,169
     
453,831
 
                 
Long-term liabilities:
   
     
 
Long-term debt, less current portion
   
4,061,198
     
4,071,055
 
Operating lease liabilities
   
199,304
     
202,731
 
Insurance reserves
   
35,362
     
34,675
 
Other accrued liabilities
   
34,033
     
35,559
 
                 
Total long-term liabilities
   
4,329,897
     
4,344,020
 
                 
Stockholders’ deficit:
   
     
 
Common stock
   
390
     
389
 
Additional
paid-in
capital
   
12,474
     
243
 
Retained deficit
   
(3,398,986
)    
(3,412,649
)
Accumulated other comprehensive loss
   
(6,068
)    
(3,742
)
                 
Total stockholders’ deficit
   
(3,392,190
)    
(3,415,759
)
                 
Total liabilities and stockholders’ deficit
  $
1,389,876
    $
1,382,092
 
                 
 
 
(1) The balance sheet at December 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
 
 
The accompanying notes are an integral part of these condensed consolidated statements.
3

Table of Contents
Domino’s Pizza, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
                 
 
Fiscal Quarter Ended
 
 
March 22,
 
 
March 24,
 
(In thousands, except per share data)
 
2020
 
 
2019
 
Revenues:
   
     
 
U.S. Company-owned stores
  $
102,326
    $
123,450
 
U.S. franchise royalties and fees
   
104,746
     
96,708
 
Supply chain
   
512,700
     
472,100
 
International franchise royalties and fees
   
57,496
     
54,584
 
U.S. franchise advertising
   
95,834
     
89,121
 
                 
Total revenues
   
873,102
     
835,963
 
                 
Cost of sales:
   
     
 
U.S. Company-owned stores
   
79,388
     
95,540
 
Supply chain
   
453,557
     
418,134
 
                 
Total cost of sales
   
532,945
     
513,674
 
                 
Operating margin
   
340,157
     
322,289
 
                 
General and administrative
   
88,489
     
89,664
 
U.S. franchise advertising
   
95,834
     
89,121
 
                 
Income from operations
   
155,834
     
143,504
 
Interest income
   
932
     
693
 
Interest expense
   
(39,470
)    
(35,054
)
                 
Income before (benefit) provision for income taxes
   
117,296
     
109,143
 
(Benefit) provision for income taxes
   
(4,306
)    
16,493
 
                 
Net income
  $
121,602
    $
92,650
 
                 
Earnings per share:
   
     
 
Common stock - basic
  $
3.14
    $
2.27
 
Common stock - diluted
   
3.07
     
2.20
 
The accompanying notes are an integral part of these condensed consolidated statements.
4

Table of Contents
Domino’s Pizza, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
                 
 
Fiscal Quarter Ended
 
 
March 22,
 
 
March 24,
 
(In thousands)
 
2020
 
 
2019
 
Net income
  $
121,602
    $
92,650
 
Currency translation adjustment
   
(2,326
)    
237
 
                 
Comprehensive income
  $
119,276
    $
92,887
 
                 
The accompanying notes are an integral part of these condensed consolidated statements.
5

Table of Contents
Domino’s Pizza, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
                 
 
Fiscal Quarter Ended
 
 
March 22,
 
 
March 24,
 
(In thousands)
 
2020
 
 
2019
 
Cash flows from operating activities:
   
     
 
Net income
  $
121,602
    $
92,650
 
Adjustments to reconcile net income to net cash provided by operating
activities:
   
     
 
Depreciation and amortization
   
14,032
     
13,790
 
Loss on sale/disposal of assets
   
306
     
149
 
Amortization of debt issuance costs
   
1,291
     
1,101
 
Provision for deferred income taxes
   
702
     
1,467
 
Non-cash
compensation expense
   
4,914
     
4,608
 
Excess tax benefits from equity-based compensation
   
(30,449
)    
(8,663
)
Provision for losses on accounts and notes receivable
   
1,589
     
94
 
Changes in operating assets and liabilities
   
(23,119
)    
1,974
 
Changes in advertising fund assets and liabilities, restricted
   
4,490
     
(10,172
)
                 
Net cash provided by operating activities
   
95,358
     
96,998
 
                 
Cash flows from investing activities:
   
     
 
Capital expenditures
   
(17,467
)    
(12,222
)
Other
   
(426
)    
262
 
                 
Net cash used in investing activities
   
(17,893
)    
(11,960
)
                 
Cash flows from financing activities:
   
     
 
Repayments of long-term debt and finance lease obligations
   
(10,849
)    
(48,968
)
Proceeds from exercise of stock options
   
10,105
     
4,537
 
Purchases of common stock
   
(79,590
)    
(8,144
)
Tax payments for restricted stock upon vesting
   
(1,796
)    
(2,467
)
Payments of common stock dividends and equivalents
   
(80
)    
(90
)
Other
   
152
     
 
                 
Net cash used in financing activities
   
(82,058
)    
(55,132
)
                 
Effect of exchange rate changes on cash
   
(961
)    
124
 
                 
Change in cash and cash equivalents, restricted cash and cash equivalents
   
(5,554
)    
30,030
 
                 
Cash and cash equivalents, beginning of period
   
190,615
     
25,438
 
Restricted cash and cash equivalents, beginning of period
   
209,269
     
166,993
 
Cash and cash equivalents included in advertising fund assets, restricted, beginning of period
   
84,040
     
44,988
 
                 
Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, beginning of period
   
483,924
     
237,419
 
                 
Cash and cash equivalents, end of period
   
200,801
     
83,114
 
Restricted cash and cash equivalents, end of period
   
189,370
     
150,055
 
Cash and cash equivalents included in advertising fund assets, restricted, end of period
   
88,199
     
34,280
 
                 
Cash and cash equivalents, restricted cash and cash equivalents and cash and
cash equivalents included in advertising fund assets, restricted, end of period
  $
478,370
    $
267,449
 
                 
 
 
The accompanying notes are an integral part of these condensed consolidated statements.
6

Table of Contents
Domino’s Pizza, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited; tabular amounts in thousands, except percentages, share and per share amounts)
March 22, 2020
1. Basis of Presentation and Updates to Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form
10-Q
and Rule
10-01
of Regulation
S-X.
Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. For further information, refer to the consolidated financial statements and footnotes for the fiscal year ended December 29, 2019 included in the Company’s 2019 Annual Report on Form
10-K,
filed with the Securities and Exchange Commission on February 20, 2020 (the “2019 Form
10-K”).
In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair statement have been included. Operating results for the fiscal quarter ended March 22, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending January 3, 202
1
.
Updates to Significant Accounting Policies
The Company adopted Accounting Standards Codification 326,
Financial Instruments – Credit Losses
(“ASC 326”) in the first quarter of 2020. As a result, the Company updated its significant accounting policies for the measurement of credit losses below. Refer to Note
9
for
information related
to
 
the impact of the adoption of ASC 326 on the Company’s condensed consolidated financial statements.
Allowances for Credit Losses
The Company closely monitors accounts and notes receivable balances and estimates the allowance for credit losses. These estimates are based on historical collection experience and other factors, including those related to current market conditions and events. The Company’s allowance
s
for accounts and notes receivable have not historically been material.
The Company also monitors its
off-balance
sheet exposures under its letters of credit, surety bonds and lease guarantees. None of these arrangements has or is likely to have a material effect on the Company’s results of operations, financial condition, revenues, expenses or liquidity.
2. Segment Information
The following table summarizes revenues, income from operations and earnings before interest, taxes, depreciation, amortization and other, which is the measure by which the Company allocates resources to its segments and which the Company refers to as Segment Income, for each of its reportable segments.
 
Fiscal Quarters Ended March 22, 2020 and March 24, 2019
 
 
U.S.
 
 
Supply
 
 
International
 
 
Intersegment
 
 
 
 
 
 
Stores
 
 
Chain
 
 
Franchise
 
 
Revenues
 
 
Other
 
 
Total
 
Revenues
   
     
     
     
     
     
 
2020
  $
302,906
    $
541,639
    $
57,496
    $
(28,939
)   $
 —  
    $
873,102
 
2019
   
309,279
     
505,681
     
54,584
     
(33,581
)    
—  
     
835,963
 
Income from operations
   
     
     
     
     
     
 
2020
  $
85,410
    $
47,375
    $
43,460
     
N/A
    $
(20,411
)   $
155,834
 
2019
   
80,615
     
42,021
     
42,754
     
N/A
     
(21,886
)    
143,504
 
Segment Income
   
     
     
     
     
     
 
2020
  $
88,277
    $
51,437
    $
43,504
     
N/A
    $
(8,132
)   $
175,086
 
2019
   
83,598
     
46,047
     
42,800
     
N/A
     
(10,394
)    
162,051
 
7

Table of Contents
The following table reconciles Total Segment Income to consolidated income before (benefit) provision for income taxes.
 
Fiscal Quarter Ended
 
 
March 22,
 
 
March 24,
 
 
2020
 
 
2019
 
Total Segment Income
  $
175,086
    $
162,051
 
Depreciation and amortization
   
(14,032
)    
(13,790
)
Loss on sale/disposal of assets
   
(306
)    
(149
)
Non-cash
compensation expense
   
(4,914
)    
(4,608
)
                 
Income from operations
   
155,834
     
143,504
 
Interest income
   
932
     
693
 
Interest expense
   
(39,470
)    
(35,054
)
                 
Income before (benefit) provision for income taxes
  $
117,296
    $
109,143
 
                 
3. Earnings Per Share
 
Fiscal Quarter Ended
 
 
March 22,
 
 
March 24,
 
 
2020
 
 
2019
 
Net income available to common stockholders - basic and diluted
  $
121,602
    $
92,650
 
                 
Basic weighted average number of shares
   
38,665,924
     
40,865,532
 
Earnings per share – basic
  $
3.14
    $
2.27
 
Diluted weighted average number of shares
   
39,633,404
     
42,202,429
 
Earnings per share – diluted
  $
3.07
    $
2.20
 
The denominator used in calculating diluted earnings per share for the first quarter of 2020 does not include 128,280 options to purchase common stock as the effect of including these options would have been anti-dilutive. The denominator used in calculating diluted earnings per share for the first quarter of 2020 does not include 84,765 restricted performance shares, as the performance targets for these awards had not yet been met.
The denominator used in calculating diluted earnings per share for the first quarter of 2019 does not include 71,880 options to purchase common stock as the effect of including these options would have been anti-dilutive. The denominator used in calculating diluted earnings per share for the first quarter of 2019 does not include 1,800 shares subject to restricted stock awards, as the effect of including these shares would have been anti-dilutive. The denominator used in calculating diluted earnings per share for the first quarter of 2019 does not include 96,712 restricted performance shares, as the performance targets for these awards had not yet been met.
4. Stockholders’ Deficit
The following table summarizes changes in stockholders’ deficit for the first quarter of 2020.
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
Additional
 
 
 
 
Other
 
 
Common Stock
   
Paid-in
 
 
Retained
 
 
Comprehensive
 
 
Shares
 
 
Amount
 
 
Capital
 
 
Deficit
 
 
Loss
 
Balance at December 29, 2019
   
38,934,009
    $
389
    $
243
    $
(3,412,649
)   $
(3,742
)
Net income
   
—  
     
     
—  
     
121,602
     
—  
 
Dividends declared on common stock and equivalents ($0.78 per share)
   
—  
     
—  
     
—  
     
(30,442
)    
—  
 
Issuance and cancellation of stock awards, net
   
1,645
     
     
—  
     
—  
     
—  
 
Tax payments for restricted stock upon vesting
   
(5,929
)    
     
(1,796
)    
—  
     
—  
 
Purchases of common stock
   
(271,064
)    
(3
)    
(988
)    
(78,599
)    
—  
 
Exercise of stock options
   
380,938
     
4
     
10,101
     
—  
     
—  
 
Non-cash
compensation expense
   
—  
     
—  
     
4,914
     
—  
     
—  
 
Adoption of ASC 326 (Note
9
)
   
—  
     
—  
     
—  
     
1,102
     
—  
 
Currency translation adjustment
   
—  
     
—  
     
—  
     
—  
     
(2,326
)
                                         
Balance at March 22, 2020
   
39,039,599
    $
390
    $
12,474
    $
(3,398,986
)   $
(6,068
)
                                         
Subsequent to the first quarter, on April 21, 2020, the Company’s Board of Directors declared a $0.78 per share quarterly dividend on its outstanding common stock for shareholders of record as of June 15, 2020 to be paid on June 30, 2020.
8

Table of Contents
The following table summarizes changes in stockholders’ deficit for the first quarter of 2019.
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
Additional
 
 
 
 
Other
 
 
Common Stock
   
Paid-in
 
 
Retained
 
 
Comprehensive
 
 
Shares
 
 
Amount
 
 
Capital
 
 
Deficit
 
 
Loss
 
Balance at December 30, 2018
   
40,977,561
    $
410
    $
569
    $
(3,036,471
)   $
(4,429
)
Net income
   
—  
     
—  
     
—  
     
92,650
     
—  
 
Dividends declared on common stock and equivalents ($0.65 per share)
   
—  
     
—  
     
—  
     
(26,665
)    
—  
 
Issuance and cancellation of stock awards, net
   
8,240
     
—  
     
—  
     
—  
     
—  
 
Tax payments for restricted stock upon vesting
   
(9,064
)    
—  
     
(2,467
)    
—  
     
—  
 
Purchases of common stock
   
(33,549
)    
—  
     
(1,782
)    
(6,362
)    
—  
 
Exercise of stock options
   
140,702
     
1
     
4,536
     
—  
     
—  
 
Non-cash
compensation expense
   
—  
     
—  
     
4,608
     
—  
     
—  
 
Currency translation adjustment
   
—  
     
—  
     
—  
     
—  
     
237
 
                                         
Balance at March 24, 2019
   
41,083,890
    $
411
    $
5,464
    $
(2,976,848
)   $
(4,192
)
                                         
5. Fair Value Measurements
Fair value measurements enable the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The fair values of the Company’s cash equivalents and investments in marketable securities are based on quoted prices in active markets for identical assets. The following tables summarize the carrying amounts and fair values of certain assets at March 22, 2020 and December 29, 2019:
 
At March 22, 2020
 
 
 
 
Fair Value Estimated Using
 
 
Carrying
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Amount
 
 
Inputs
 
 
Inputs
 
 
Inputs
 
Cash equivalents
  $
173,317
    $
173,317
    $
 —  
    $
 —  
 
Restricted cash equivalents
   
106,225
     
106,225
     
—  
     
—  
 
Investments in marketable securities
   
10,989
     
10,989
     
—  
     
—  
 
Advertising fund cash equivalents, restricted
   
78,134
     
78,134
     
—  
     
—  
 
 
At December 29, 2019
 
 
 
 
Fair Value Estimated Using
 
 
Carrying
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Amount
 
 
Inputs
 
 
Inputs
 
 
Inputs
 
Cash equivalents
  $
180,459
    $
180,459
    $
 —  
    $
 —  
 
Restricted cash equivalents
   
126,963
     
126,963
     
—  
     
—  
 
Investments in marketable securities
   
11,982
     
11,982
     
—  
     
—  
 
Advertising fund cash equivalents, restricted
   
67,851
     
67,851
     
—  
     
—  
 
9

Table of Contents
Management estimated the approximate fair values of the 2015 fixed rate notes, the 2017 fixed and floating rate notes, the 2018 fixed rate notes and the 2019 fixed rate notes as follows:
 
March 22, 2020
   
December 29, 2019
 
 
Principal Amount
 
 
Fair Value
 
 
Principal Amount
 
 
Fair Value
 
2015
Ten-Year
Fixed Rate Notes
  $
772,000
    $
711,784
    $
774,000
    $
804,960
 
2017 Five-Year Fixed Rate Notes
   
586,500
     
549,551
     
588,000
     
588,588
 
2017
Ten-Year
Fixed Rate Notes
   
977,500
     
825,010
     
980,000
     
1,017,240
 
2017 Five-Year Floating Rate Notes
   
293,250
     
251,315
     
294,000
     
294,000
 
2018
7.5-Year
Fixed Rate Notes
   
418,625
     
387,228
     
419,688
     
431,439
 
2018
9.25-Year
Fixed Rate Notes
   
394,000
     
351,054
     
395,000
     
414,355
 
2019
Ten-Year
Fixed Rate Notes
   
673,313
     
544,037
     
675,000
     
675,675
 
The Company’s variable funding notes are a variable rate loan and the fair value of this loan approximates book value based on the borrowing rates currently available for variable rate loans obtained from third party lending institutions. This fair value represents a Level 2 measurement. The Company did not have any outstanding borrowings under its variable funding notes at March 22, 2020 or December 29, 2019. Subsequent to the first quarter of 2020, the Company borrowed $158.0 million under its variable funding notes
.
 
The fair values in the table above represent the fair value of such notes at March 22, 2020 and December 29, 2019. In light of the
COVID-19
pandemic (discussed further in Note 10), these fair values fluctuated significantly during the first quarter and may continue to fluctuate based on market conditions and other factors.
The fixed and floating rate notes are classified as Level 2 measurements, as the Company estimates the fair value amount by using available market information. The Company obtained quotes from two separate brokerage firms that are knowledgeable about the Company’s fixed and floating rate notes and, at times, trade these notes. The Company also performed its own internal analysis based on the information gathered from public markets, including information on notes that are similar to those of the Company. However, considerable judgment is required to interpret market data to estimate fair value. Accordingly, the fair value estimates presented are not necessarily indicative of the amount that the Company or the debtholders could realize in a current market exchange. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair values stated above.
6. Revenue Disclosures
Contract Liabilities
Contract liabilities
primarily
consist of deferred franchise fees and deferred development fees. Changes in deferred franchise fees and deferred development fees for the first quarter of 2020 and the first quarter of 2019 were as follows:
 
Fiscal Quarter Ended
 
 
March 22,
 
 
March 24,
 
 
2020
 
 
2019
 
Deferred franchise fees and deferred development fees at beginning of period
  $
20,463
    $
19,900
 
Revenue recognized during the period
   
(1,417
)    
(1,361
)
New deferrals due to cash received and other
   
724
     
900
 
                 
Deferred franchise fees and deferred development fees at end of period
  $
19,770
    $
19,439
 
                 
Advertising Fund Assets
As of March 22, 2020, advertising fund assets, restricted of $110.0 million consisted of $88.2 million of cash and cash equivalents, $19.5 million of accounts receivable and $2.3 million of prepaid expenses. As of March 22, 2020, advertising fund cash, cash equivalents and investments included $3.2 million of cash contributed from Company-owned stores that had not yet been expended.
As of December 29, 2019, advertising fund assets, restricted of $105.4 million consisted of $84.0 million of cash and cash equivalents, $15.3 million of accounts receivable and $6.1 million of prepaid expenses. As of December 29, 2019, advertising fund cash and cash equivalents included $3.5 million of cash contributed from U.S. Company-owned stores that had not yet been expended.
10

Table of Contents
7. Leases
The Company leases certain retail store and supply chain center locations, supply chain vehicles and its corporate headquarters with expiration dates through 2041.
The components of operating and finance lease cost for the first quarter of 2020 and the first quarter of 2019 were as follows:
                 
 
Fiscal Quarter Ended
 
 
March 22,
 
 
March 24,
 
 
2020
 
 
2019
 
Operating lease cost
  $
9,582
    $
10,796
 
Finance lease cost:
   
     
 
Amortization of
right-of-use
assets
   
249
     
254
 
Interest on lease liabilities
   
375
     
479
 
                 
Total finance lease cost
  $
624
    $
733
 
                 
 
 
 
 
Rent expense totaled $16.4 
million
in both the first quarter of 2020 and the first quarter of 2019, and includes operating lease cost, as well as expense for
non-lease
components including common area maintenance, real estate taxes and insurance for the Company’s real estate leases. Rent expense also includes the variable rate per mile driven and fixed maintenance charges for the Company’s supply chain center tractors and trailers and expense for short-term rentals. Variable rent expense and rent expense for short-term leases were immaterial in both the first quarter of 2020 and the first quarter of 2019.
Supplemental balance sheet information related to the Company’s finance leases as of March 22, 2020 and December 29, 2019 was as follows:
                 
 
March 22,
 
 
December 29,
 
 
2020
 
 
2019
 
Land and buildings
  $
25,167
    $
25,476
 
Accumulated depreciation and amortization
   
(8,083
)    
(7,846
)
                 
Finance lease assets, net
  $
17,084
    $
17,630
 
                 
Current portion of long-term debt
  $
1,390
    $
1,394
 
Long-term debt, less current portion
   
17,616
     
18,263
 
                 
Total principal payable on finance leases
  $
19,006
    $
19,657
 
                 
 
 
 
 
As of March 22, 2020 and December 29, 2019, the weighted average remaining lease term and weighted average discount rate for the Company’s operating and finance leases were as follows:
                                 
 
March 22, 2020
   
December 29, 2019
 
 
Operating
 
 
Finance
 
 
Operating
 
 
Finance
 
 
Leases
 
 
Leases
 
 
Leases
 
 
Leases
 
Weighted average remaining lease term
   
8 years
     
14 years
     
8 years
     
14 years
 
Weighted average discount rate
   
3.8
%    
11.7
%    
3.8
%    
11.7
%
 
 
 
 
Supplemental cash flow information related to leases for the first quarter of 2020 and the first quarter of 2019 was as follows: