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~~

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September ~~6, 2020~~

12, 2021

☐	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

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)~~

(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	~~Trading~~ ~~Symbol~~	Name of Each Exchange on Which Registered
Domino’s Pizza, Inc. Common Stock, $0.01 par value	DPZ	~~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.

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 October ~~1, 2020,~~7, 2021, Domino’s Pizza, Inc. had

~~39,399,906~~

36,386,777 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.	FINANCIAL INFORMATION

Item 1.	Financial Statements		3

	Condensed Consolidated Balance Sheets (Unaudited) – As of September ~~6, 2020~~12, 2021 and ~~December 29, 2019~~January 3, 2021		3

	Condensed Consolidated Statements of Income (Unaudited) – Fiscal quarters and three fiscal quarters ended September ~~6, 2020~~12, 2021 and September ~~8, 2019~~6, 2020		4

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) – Fiscal quarters and three fiscal quarters ended September ~~6, 2020~~12, 2021 and September ~~8, 2019~~6, 2020		5

	Condensed Consolidated Statements of Cash Flows (Unaudited) ~~– Three~~–Three fiscal quarters ended September ~~6, 2020~~12, 2021 and September ~~8, 2019~~6, 2020		6

	Notes to Condensed Consolidated Financial Statements (Unaudited)		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		24	27

Item 4.	Controls and Procedures		24	27

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		25	28

Item 1A.	Risk Factors		25	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		26	28

Item 3.	Defaults Upon Senior Securities		26	28

Item 4.	Mine Safety Disclosures		26	28

Item 5.	Other Information		26	28

Item 6.	Exhibits		26	29

SIGNATURES			27	30

~~Table of Contents~~

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Domino’s Pizza, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

September 6, 2020

December 29, 2019 (1)

Assets

Current assets:

Cash and cash equivalents
   $ 330,719 $ 190,615
Restricted cash and cash equivalents
   160,330 209,269
Accounts receivable, net
   229,403 210,260
Inventories
   65,499 52,955
Prepaid expenses and other
   26,288 19,129
Advertising fund assets, restricted
   144,282 105,389


Total current assets
   956,521 787,617


Property, plant and equipment:

Land and buildings
   65,581 44,845
Leasehold and other improvements
   181,556 164,071
Equipment
   274,337 243,708
Construction in progress
   14,784 42,705


   536,258 495,329
Accumulated depreciation and amortization
   (273,994 ) (252,448 )


Property, plant and equipment, net
   262,264 242,881


Other assets:

Operating lease
right-of-use
assets
   229,653 228,785
Goodwill
   15,061 15,093
Capitalized software, net
   78,632 73,140
Other assets
   72,787 24,503
Deferred income taxes
   6,030 10,073


Total other assets
   402,163 351,594


Total assets
   $ 1,620,948 $ 1,382,092


Liabilities and stockholders’ deficit

Current liabilities:

Current portion of long-term debt
   $ 43,662 $ 43,394
Accounts payable
   88,188 111,101
Operating lease liabilities
   36,508 33,318
Insurance reserves
   23,816 23,735
Dividends payable
   31,258 471
Advertising fund liabilities
   138,348 101,921
Other accrued liabilities
   126,745 139,891


Total current liabilities
   488,525 453,831


Long-term liabilities:

Long-term debt, less current portion
   4,062,175 4,071,055
Operating lease liabilities
   201,981 202,731
Insurance reserves
   37,428 34,675
Other accrued liabilities
   42,370 35,559


Total long-term liabilities
   4,343,954 4,344,020


Stockholders’ deficit:

Common stock
   394 389
Additional
paid-in
capital
   34,124 243
Retained deficit
   (3,242,627 ) (3,412,649 )
Accumulated other comprehensive loss
   (3,422 ) (3,742 )


Total stockholders’ deficit
   (3,211,531 ) (3,415,759 )


Total liabilities and stockholders’ deficit
   $ 1,620,948 $ 1,382,092


(In thousands)	September 12, 2021			January 3, 2021 (1)
Assets
Current assets:
Cash and cash equivalents	$	295,352		$	168,821
Restricted cash and cash equivalents		206,274			217,453
Accounts receivable, net		238,906			244,560
Inventories		64,563			66,683
Prepaid expenses and other		34,094			24,169
Advertising fund assets, restricted		186,807			147,698
Total current assets		1,025,996			869,384
Property, plant and equipment:
Land and buildings		95,111			88,063
Leasehold and other improvements		189,499			186,456
Equipment		309,811			292,456
Construction in progress		10,289			13,014
		604,710			579,989
Accumulated depreciation and amortization		(311,335	)		(282,625	)
Property, plant and equipment, net		293,375			297,364
Other assets:
Operating lease right-of-use assets		218,172			228,268
Goodwill		15,034			15,061
Capitalized software, net		91,371			81,306
Investments		82,500			40,000
Other assets		36,324			33,881
Deferred income taxes		1,584			1,904
Total other assets		444,985			400,420
Total assets	$	1,764,356		$	1,567,168
Liabilities and stockholders' deficit
Current liabilities:
Current portion of long-term debt	$	54,846		$	2,855
Accounts payable		111,780			94,499
Operating lease liabilities		37,093			35,861
Insurance reserves		27,900			26,377
Dividends payable		35,066			729
Advertising fund liabilities		178,539			141,175
Other accrued liabilities		151,130			169,323
Total current liabilities		596,354			470,819
Long-term liabilities:
Long-term debt, less current portion		5,014,705			4,116,018
Operating lease liabilities		193,024			202,268
Insurance reserves		40,218			37,125
Other accrued liabilities		36,958			35,244
Deferred income taxes		10,610			6,099
Total long-term liabilities		5,295,515			4,396,754
Stockholders' deficit:
Common stock		366			389
Additional paid-in capital		115			5,122
Retained deficit		(4,125,582	)		(3,303,492	)
Accumulated other comprehensive loss		(2,412	)		(2,424	)
Total stockholders' deficit		(4,127,513	)		(3,300,405	)
Total liabilities and stockholders' deficit	$	1,764,356		$	1,567,168

(1) The condensed consolidated balance sheet at ~~December 29, 2019~~January 3, 2021 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.

~~Table of Contents~~

Domino’s Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)

Fiscal Quarter Ended

Three Fiscal Quarters Ended

(In thousands, except per share data)
September 6,
2020

September 8,
2019

September 6,
2020

September 8,
2019

Revenues:

U.S. Company-owned stores
   $ 113,254 $ 94,575 $ 329,820 $ 323,026
U.S. franchise royalties and fees
   118,054 97,047 335,898 289,349
Supply chain
   573,661 485,110 1,625,502 1,424,787
International franchise royalties and fees
   54,602 54,586 160,202 164,145
U.S. franchise advertising
   108,148 89,494 309,422 267,115


Total revenues
   967,719 820,812 2,760,844 2,468,422


Cost of sales:

U.S. Company-owned stores
   90,788 71,610 258,007 247,516
Supply chain
   514,950 432,951 1,443,608 1,265,695


Total cost of sales
   605,738 504,561 1,701,615 1,513,211


Operating margin
   361,981 316,251 1,059,229 955,211


General and administrative
   91,652 83,728 268,209 262,640
U.S. franchise advertising
   108,148 89,494 309,422 267,115


Income from operations
   162,181 143,029 481,598 425,456
Interest income
   197 968 1,769 2,583
Interest expense
   (38,605 ) (33,752 ) (117,802 ) (102,672 )


Income before provision for income taxes
   123,773 110,245 365,565 325,367
Provision for income taxes
   24,644 23,872 26,166 53,985


Net income
   $ 99,129 $ 86,373 $ 339,399 $ 271,382


Earnings per share:

Common stock - basic
   $ 2.53 $ 2.11 $ 8.70 $ 6.63
Common stock - diluted
   2.49 2.05 8.54 6.44


	Fiscal Quarter Ended						Three Fiscal Quarters Ended
	September 12,			September 6,			September 12,			September 6,
(In thousands, except per share data)	2021			2020			2021			2020
Revenues:
U.S. Company-owned stores	$	108,416		$	113,254		$	337,749		$	329,820
U.S. franchise royalties and fees		121,624			118,054			372,946			335,898
Supply chain		588,819			573,661			1,760,119			1,625,502
International franchise royalties and fees		70,553			54,602			207,068			160,202
U.S. franchise advertising		108,578			108,148			336,278			309,422
Total revenues		997,990			967,719			3,014,160			2,760,844
Cost of sales:
U.S. Company-owned stores		86,932			90,788			260,693			258,007
Supply chain		525,858			514,950			1,571,426			1,443,608
Total cost of sales		612,790			605,738			1,832,119			1,701,615
Operating margin		385,200			361,981			1,182,041			1,059,229
General and administrative		96,342			91,652			288,043			268,209
U.S. franchise advertising		108,578			108,148			336,278			309,422
Income from operations		180,280			162,181			557,720			481,598
Other income		0			0			2,500			0
Interest income		48			197			138			1,769
Interest expense		(45,523	)		(38,605	)		(130,822	)		(117,802	)
Income before provision for income taxes		134,805			123,773			429,536			365,565
Provision for income taxes		14,403			24,644			74,754			26,166
Net income	$	120,402		$	99,129		$	354,782		$	339,399
Earnings per share:
Common stock - basic	$	3.29		$	2.53		$	9.43		$	8.70
Common stock - diluted		3.24			2.49			9.30			8.54

The accompanying notes are an integral part of these condensed consolidated statements.

~~Table of Contents~~

Domino’s Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

Fiscal Quarter Ended

Three Fiscal Quarters Ended

(In thousands)
September 6,
2020

September 8,
2019

September 6,
2020

September 8,
2019

Net income
   $ 99,129    $ 86,373    $ 339,399    $ 271,382
Currency translation adjustment
   1,113    270    320    491








Comprehensive income
   $ 100,242    $ 86,643    $ 339,719    $ 271,873


	Fiscal Quarter Ended					Three Fiscal Quarters Ended
	September 12,			September 6,		September 12,		September 6,
(In thousands)	2021			2020		2021		2020
Net income	$	120,402		$	99,129	$	354,782	$	339,399
Currency translation adjustment		(404	)		1,113		12		320
Comprehensive income	$	119,998		$	100,242	$	354,794	$	339,719

The accompanying notes are an integral part of these condensed consolidated statements.

~~Table of Contents~~

Domino’s Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Three Fiscal Quarters Ended

(In thousands)
September 6,
2020

September 8,
2019

Cash flows from operating activities:

Net income
   $ 339,399 $ 271,382
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
   44,116 40,982
Loss on sale/disposal of assets
   1,530 3,141
Amortization of debt issuance costs
   3,853 3,288
Provision for deferred income taxes
   3,681 1,627
Non-cash
equity-based
compensation expense
   14,934 13,269
Excess tax benefits from equity-based compensation
   (56,862 ) (19,670 )
Provision for losses on accounts and notes receivable
   1,536 774
Changes in operating assets and liabilities
   (14,146 ) 16,214
Changes in advertising fund assets and liabilities, restricted
   32,358 (6,411 )


Net cash provided by operating activities
   370,399 324,596


Cash flows from investing activities:

Capital expenditures
   (51,163 ) (42,676 )
Purchase of investments (Note 9)
   (40,000 ) –
Proceeds from sale of assets
   11 9,738
Maturities of advertising fund investments, restricted
   – 30,152
Other
   83 (351 )


Net cash used in investing activities
   (91,069 ) (3,137 )


Cash flows from financing activities:

Proceeds from issuance of long-term debt
   158,000 –
Repayments of long-term debt and finance lease obligations
   (190,843 ) (91,860 )
Proceeds from exercise of stock options
   26,526 10,122
Purchases of common stock
   (79,590 ) (105,149 )
Tax payments for restricted stock upon vesting
   (6,584 ) (5,820 )
Payments of common stock dividends and equivalents
   (61,093 ) (53,598 )


Net cash used in financing activities
   (153,584 ) (246,305 )


Effect of exchange rate changes on cash
   243 139


Change in cash and cash equivalents, restricted cash and cash equivalents
   125,989 75,293


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
   330,719 66,706
Restricted cash and cash equivalents, end of period
   160,330 177,292
Cash and cash equivalents included in advertising fund assets, restricted, end of period
   118,864 68,714


Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, end of period
   $ 609,913 $ 312,712


	Three Fiscal Quarters Ended
	September 12,			September 6,
(In thousands)	2021			2020
Cash flows from operating activities:
Net income	$	354,782		$	339,399
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		50,219			44,116
Loss on sale/disposal of assets		493			1,530
Amortization of debt issuance costs		5,770			3,853
Provision for deferred income taxes		4,831			3,681
Non-cash equity-based compensation expense		19,453			14,934
Excess tax benefits from equity-based compensation		(18,258	)		(56,862	)
Provision for losses on accounts and notes receivable		532			1,536
Unrealized gain on investments		(2,500	)		—
Changes in operating assets and liabilities		20,212			(14,146	)
Changes in advertising fund assets and liabilities, restricted		49,067			32,358
Net cash provided by operating activities		484,601			370,399
Cash flows from investing activities:
Capital expenditures		(50,652	)		(51,163	)
Purchase of investments		(40,000	)		(40,000	)
Other		306			94
Net cash used in investing activities		(90,346	)		(91,069	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		1,850,000			158,000
Repayments of long-term debt and finance lease obligations		(896,193	)		(190,843	)
Proceeds from exercise of stock options		15,948			26,526
Purchases of common stock		(1,104,687	)		(79,590	)
Tax payments for restricted stock upon vesting		(6,817	)		(6,584	)
Payments of common stock dividends and equivalents		(71,218	)		(61,093	)
Cash paid for financing costs		(14,938	)		—
Other		(244	)		—
Net cash used in financing activities		(228,149	)		(153,584	)
Effect of exchange rate changes on cash		58			243
Change in cash and cash equivalents, restricted cash and cash equivalents		166,164			125,989

Cash and cash equivalents, beginning of period		168,821			190,615
Restricted cash and cash equivalents, beginning of period		217,453			209,269
Cash and cash equivalents included in advertising fund assets, restricted, beginning of period		115,872			84,040
Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, beginning of period		502,146			483,924

Cash and cash equivalents, end of period		295,352			330,719
Restricted cash and cash equivalents, end of period		206,274			160,330
Cash and cash equivalents included in advertising fund assets, restricted, end of period		166,684			118,864
Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, end of period	$	668,310		$	609,913

The accompanying notes are an integral part of these condensed consolidated statements.

~~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)

September ~~6, 2020~~

12, 2021

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~~January 3, 2021 included in the Company’s ~~2019~~2020 Annual Report on Form

10-K,

filed with the Securities and Exchange Commission on February ~~20, 2020~~25, 2021 (the ~~“2019~~“2020 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 September ~~6, 2020~~12, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending January ~~3, 2021.~~2, 2022.

~~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 10 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 allowances 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 had or is likely to have a material effect on the Company’s results of operations, financial condition, revenues, expenses or liquidity.

~~During the second quarter of 2020, a subsidiary of the Company acquired a~~

~~non-controlling~~

interest in Dash Brands Ltd., a privately-held business company limited by shares incorporated with limited liability under the laws of the British Virgin Islands (“Dash Brands”), for $40.0 million. Through its subsidiaries, Dash Brands serves as the Company’s master franchisee in China that owns and operates Domino’s Pizza stores in that market. As a result of the investment, the Company’s significant accounting policy related to equity investments without readily determinable fair values is stated below. Refer to Note 9 for information related to this investment and its impact on the Company’s condensed consolidated financial statements.

~~Equity investments without readily determinable fair values~~

Equity investments without readily determinable fair values are recorded at cost with adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investment of the same issuer or impairments and are classified as long-term other assets in the Company’s condensed consolidated balance sheet. Any adjustments to the carrying amount are recognized in other income (expense), net in the Company’s condensed consolidated statement of income.

The Company evaluates the potential impairment of its investments based on various analyses including financial results and operating trends, implied values from recent similar transactions and other relevant available information. If the carrying amount of the investment exceeds the estimated fair value of the investment, an impairment loss is recognized, and the investment is written down to its estimated fair value.

~~Table of Contents~~

2. Segment Information

The following ~~table summarizes~~tables summarize 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. Intersegment revenues are comprised of sales of food, equipment and supplies from the supply chain segment to the Company-owned stores in the U.S. stores segment. Intersegment sales prices are market based. The “Other” column as it relates to Segment Income below primarily includes corporate administrative costs that are not allocable to a reportable segment, including labor, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs.


	Fiscal Quarters Ended September 12, 2021 and September 6, 2020
	U.S.		Supply		International		Intersegment
	Stores		Chain		Franchise		Revenues			Other			Total
Revenues
2021	$	338,618	$	619,840	$	70,553	$	(31,021	)	$	—		$	997,990
2020		339,456		605,481		54,602		(31,820	)		—			967,719
Segment Income
2021	$	101,968	$	53,579	$	57,311	N/A			$	(10,010	)	$	202,848
2020		101,513		51,114		44,461	N/A				(13,689	)		183,399


	Three Fiscal Quarters Ended September 12, 2021 and September 6, 2020
	U.S.		Supply		International		Intersegment
	Stores		Chain		Franchise		Revenues			Other			Total
Revenues
2021	$	1,046,973	$	1,854,609	$	207,068	$	(94,490	)	$	—		$	3,014,160
2020		975,140		1,717,225		160,202		(91,723	)		—			2,760,844
Segment Income
2021	$	321,252	$	164,723	$	168,145	N/A			$	(25,726	)	$	628,394
2020		292,724		159,455		124,375	N/A				(34,376	)		542,178

Fiscal Quarters Ended September 6, 2020 and September 8, 2019


U.S.
Stores

Supply
Chain

International
Franchise

Intersegment
Revenues

Other

Total

Revenues

2020
   $ 339,456    $ 605,481    $ 54,602    $ (31,820 ) $ —   $ 967,719
2019
   281,116    511,709    54,586    (26,599 ) —   820,812
Income from operations

2020
   $ 98,743    $ 46,356    $ 44,420    N/A $ (27,338 ) $ 162,181
2019
   80,188    40,513    42,281    N/A (19,953 ) 143,029
Segment Income

2020
   $ 101,513    $ 51,114    $ 44,461    N/A $ (13,689 ) $ 183,399
2019
   82,556    44,432    42,337    N/A (8,172 ) 161,153

Three Fiscal Quarters Ended September 6, 2020 and September 8, 2019


U.S.
Stores

Supply
Chain

International
Franchise

Intersegment
Revenues

Other

Total

Revenues

2020
   $ 975,140    $ 1,717,225    $ 160,202    $ (91,723 ) $ —   $ 2,760,844
2019
   879,490    1,513,380    164,145    (88,593 ) —   2,468,422
Income from operations

2020
   $ 284,324    $ 146,193    $ 124,252    N/A $ (73,171 ) $ 481,598
2019
   237,852    123,840    126,467    N/A (62,703 ) 425,456
Segment Income

2020
   $ 292,724    $ 159,455    $ 124,375    N/A $ (34,376 ) $ 542,178
2019
   248,160    135,861    126,628    N/A (27,801 ) 482,848

The following table reconciles Total Segment Income to consolidated income before provision for income taxes.


	Fiscal Quarter Ended						Three Fiscal Quarters Ended
	September 12,			September 6,			September 12,			September 6,
	2021			2020			2021			2020
Total Segment Income	$	202,848		$	183,399		$	628,394		$	542,178
Depreciation and amortization		(16,578	)		(15,327	)		(50,219	)		(44,116	)
Loss on sale/disposal of assets		(37	)		(986	)		(493	)		(1,530	)
Non-cash equity-based compensation expense		(5,953	)		(4,905	)		(19,453	)		(14,934	)
Recapitalization-related expenses		—			—			(509	)		—
Income from operations		180,280			162,181			557,720			481,598
Other income		—			—			2,500			—
Interest income		48			197			138			1,769
Interest expense		(45,523	)		(38,605	)		(130,822	)		(117,802	)
Income before provision for income taxes	$	134,805		$	123,773		$	429,536		$	365,565

Fiscal Quarter Ended

Three Fiscal Quarters Ended


September 6,
2020

September 8,
2019

September 6,
2020

September 8,
2019

Total Segment Income
   $ 183,399    $ 161,153    $ 542,178    $ 482,848
Depreciation and amortization
   (15,327 )    (13,132 )    (44,116 )    (40,982 )
Loss on sale/disposal of assets
   (986 )    (312 )    (1,530 )    (3,141 )
Non-cash

equity-based
compensation expense
   (4,905 )    (4,680 )    (14,934 )    (13,269 )








Income from operations
   162,181    143,029    481,598    425,456
Interest income
   197    968    1,769    2,583
Interest expense
   (38,605 )    (33,752 )    (117,802 )    (102,672 )








Income before provision for income taxes
   $ 123,773    $ 110,245    $ 365,565    $ 325,367

3. Earnings Per Share


	Fiscal Quarter Ended				Three Fiscal Quarters Ended
	September 12,		September 6,		September 12,		September 6,
	2021		2020		2021		2020
Net income available to common stockholders - basic and diluted	$	120,402	$	99,129	$	354,782	$	339,399
Basic weighted average number of shares		36,627,660		39,246,231		37,639,418		38,990,149
Earnings per share – basic	$	3.29	$	2.53	$	9.43	$	8.70
Diluted weighted average number of shares		37,130,209		39,791,805		38,144,509		39,724,289
Earnings per share – diluted	$	3.24	$	2.49	$	9.30	$	8.54

Fiscal Quarter Ended

Three Fiscal Quarters Ended


September 6,
2020

September 8,
2019

September 6,
2020

September 8,
2019

Net income available to common stockholders - basic and diluted
   $ 99,129    $ 86,373    $ 339,399    $ 271,382








Basic weighted average number of shares
   39,246,231    40,954,279    38,990,149    40,947,693
Earnings per share – basic
   $ 2.53    $ 2.11    $ 8.70    $ 6.63
Diluted weighted average number of shares
   39,791,805    42,040,291    39,724,289    42,158,447
Earnings per share – diluted
   $ 2.49    $ 2.05    $ 8.54    $ 6.44

~~Table~~

The denominators used in calculating diluted earnings per share for the third quarter and three fiscal quarters of ~~Contents~~

2021 did not include 625 and 80,103 options to purchase common stock, respectively, as the effect of including these options would have been anti-dilutive. The denominator used in calculating diluted earnings per share for the three fiscal quarters of 2021 did not include 5,641 restricted stock units, as the effect of including these units would have been anti-dilutive. The denominators used in calculating diluted earnings per share for the third quarter and three fiscal quarters of 2021 each did not include 62,131 restricted performance shares, as the performance targets for these awards had not yet been met.

The denominators used in calculating diluted earnings per share for the third quarter and three fiscal quarters of 2020 did not include 52,390 and 53,130 options to purchase common stock, respectively, as the effect of including these options would have been anti-dilutive. The denominators used in calculating diluted earnings per share for the third quarter and three fiscal quarters of 2020 each did not include 118,518 restricted performance shares, as the performance targets for these awards had not yet been met.

The denominators used in calculating diluted earnings per share for the third quarter and three fiscal quarters of 2019 each did not include 161,670 options to purchase common stock, as the effect of including these options would have been anti-dilutive. The denominators used in calculating diluted earnings per share for the third quarter and three fiscal quarters of 2019 each did not include 142,477 restricted performance shares, as the performance targets for these awards had not yet been met.

4. ~~Changes in~~ Stockholders’ Deficit

The following table summarizes changes in stockholders’ deficit for the third quarter of ~~2020.~~

Additional

Paid-in

Capital

Retained

Deficit

Accumulated

Other

Comprehensive

Loss



Common Stock


Shares

Amount

Balance at June 14, 2020
   39,347,213 $ 393    $ 32,251 $ (3,311,015 ) $ (4,535 )
Net income
   —   —      —   99,129 —
Dividends declared on common stock and equivalents

($
0.78
per share)
   —   —      —   (30,741 ) —
Issuance and cancellation of stock awards, net
   32,676 1    —   —   —
Tax payments for restricted stock upon vesting
   (12,195 ) —      (4,757 ) —   —
Exercise of stock options
   24,781 —      1,725 —   —
Non-cash

equity-based
compensation expense
   —   —      4,905 —   —
Currency translation adjustment
   —   —      —   —   1,113




Balance at September 6, 2020
   39,392,475 $ 394    $ 34,124 $ (3,242,627 ) $ (3,422 )

2021.


													Accumulated
							Additional						Other
	Common Stock						Paid-in			Retained			Comprehensive
	Shares			Amount			Capital			Deficit			Loss
Balance at June 20, 2021		36,853,571		$	369		$	7,771		$	(4,146,702	)	$	(2,008	)
Net income		—			—			—			120,402			—
Dividends declared on common stock and equivalents ($0.94 per share)		—			—			—			(34,400	)		—
Issuance and cancellation of stock awards, net		938			—			—			—			—
Tax payments for restricted stock upon vesting		(11,918	)		—			(5,730	)		—			—
Purchases of common stock		(391,007	)		(4	)		(14,801	)		(64,882	)		—
Exercise of stock options		113,903			1			6,922			—			—
Non-cash equity-based compensation expense		—			—			5,953			—			—
Currency translation adjustment		—			—			—			—			(404	)
Balance at September 12, 2021		36,565,487		$	366		$	115		$	(4,125,582	)	$	(2,412	)

The following table summarizes changes in stockholders’ deficit for the three fiscal quarters of ~~2020.~~2021.


													Accumulated
							Additional						Other
	Common Stock						Paid-in			Retained			Comprehensive
	Shares			Amount			Capital			Deficit			Loss
Balance at January 3, 2021		38,868,350		$	389		$	5,122		$	(3,303,492	)	$	(2,424	)
Net income		—			—			—			354,782			—
Dividends declared on common stock and equivalents ($2.82 per share)		—			—			—			(105,555	)		—
Issuance and cancellation of stock awards, net		(980	)		—			—			—			—
Tax payments for restricted stock upon vesting		(14,819	)		—			(6,817	)		—			—
Purchases of common stock		(2,469,473	)		(25	)		(33,345	)		(1,071,317	)		—
Exercise of stock options		182,409			2			15,946			—			—
Non-cash equity-based compensation expense		—			—			19,453			—			—
Other		—			—			(244	)		—			—
Currency translation adjustment		—			—			—			—			12
Balance at September 12, 2021		36,565,487		$	366		$	115		$	(4,125,582	)	$	(2,412	)

Additional

Paid-in

Capital

Retained

Deficit

Accumulated

Other

Comprehensive

Loss



Common Stock


Shares

Amount

Balance at December 29, 2019
   38,934,009 $ 389 $ 243 $ (3,412,649 ) $ (3,742 )
Net income
   —   —   —   339,399 —
Dividends declared on common stock and equivalents ($2.34 per share)
   —   —   —   (91,880 ) —
Issuance and cancellation of stock awards, net
   38,389 1 —   —   —
Tax payments for restricted stock upon vesting
   (18,215 ) —   (6,584 ) —   —
Purchases of common stock
   (271,064 ) (3 ) (988 ) (78,599 ) —
Exercise of stock options
   709,356 7 26,519 —   —
Non-cash

equity-based
compensation expense
   —   —   14,934 —   —
Adoption of ASC 326 (Note 10)
   —   —   —   1,102 —
Currency translation adjustment
   —   —   —   —   320


Balance at September 6, 2020
   39,392,475 $ 394 $ 34,124 $ (3,242,627 ) $ (3,422 )

On April 30, 2021, the Company entered into a $1.0 billion accelerated share repurchase agreement (the “ASR Agreement”) with a counterparty. Refer to Note 5 for additional information related to this transaction.

On July 20, 2021, the Company’s Board of Directors authorized a new share repurchase program to repurchase up to $1.0 billion of the Company’s common stock. This repurchase program replaced the Company’s previously approved $1.0 billion share repurchase program, which was fully utilized in connection with the ASR Agreement. During the third quarter of 2021, the Company repurchased and retired 391,007 shares of its common stock, including 238,190 shares received at settlement of the ASR Agreement and 152,817 shares of its common stock under this Board of Directors-approved share repurchase program for a total of approximately $79.7 million. During the three fiscal quarters of 2021, the Company repurchased and retired 2,469,473 shares of its common stock, including the 2,250,786 shares of common stock repurchased under the ASR Agreement and 218,687 shares of common stock repurchased under the Company's Board of Directors-approved share repurchase program for a total of approximately $1.1 billion. As of September 12, 2021, the end of the third quarter, the Company had a total remaining authorized amount for share repurchases of approximately $920.3 million. Subsequent to the end of the third quarter and through October 12, 2021, the Company repurchased and retired an additional 205,145 shares of common stock for a total of approximately $100.1 million.

Subsequent to the end of the third quarter, on October ~~6, 2020,~~12, 2021, the Company’s Board of Directors declared a ~~$0.78~~$0.94 per share quarterly dividend on its outstanding common stock for shareholders of record as of December 15, ~~2020~~2021, to be paid on December 30, ~~2020.~~

2021.

~~Table of Contents~~

The following table summarizes changes in stockholders’ deficit for the third quarter of ~~2019.~~

Additional

Paid-in

Capital

Retained

Deficit

Accumulated

Other

Comprehensive

Loss



Common Stock


Shares

Amount

Balance at June 16, 2019
   41,232,358 $ 412 $ 10,788 $ (2,911,278 ) $ (4,208 )
Net income
   —   —   —   86,373 —
Dividends declared on common stock and equivalents ($0.65 per share)
   —   —   —   (26,569 ) —
Issuance and cancellation of stock awards, net
   45,479 —   —   —   —
Tax payments for restricted stock upon vesting
   (12,603 ) —   (3,253 ) —   —
Purchases of common stock
   (384,338 ) (3 ) (12,972 ) (80,721 ) —
Exercise of stock options
   18,100 —   832 —   —
Non-cash

equity-based
compensation expense
   —   —   4,680 —   —
Currency translation adjustment
   —   —   —   —   270


Balance at September 8, 2019
   40,898,996 $ 409 $ 75 $ (2,932,195 ) $ (3,938 )

2020.


												Accumulated
						Additional						Other
	Common Stock					Paid-in			Retained			Comprehensive
	Shares			Amount		Capital			Deficit			Loss
Balance at June 14, 2020		39,347,213		$	393	$	32,251		$	(3,311,015	)	$	(4,535	)
Net income		—			—		—			99,129			—
Dividends declared on common stock and equivalents ($0.78 per share)		—			—		—			(30,741	)		—
Issuance and cancellation of stock awards, net		32,676			1		—			—			—
Tax payments for restricted stock upon vesting		(12,195	)		—		(4,757	)		—			—
Exercise of stock options		24,781			—		1,725			—			—
Non-cash equity-based compensation expense		—			—		4,905			—			—
Currency translation adjustment		—			—		—			—			1,113
Balance at September 6, 2020		39,392,475		$	394	$	34,124		$	(3,242,627	)	$	(3,422	)

The following table summarizes changes in stockholders’ deficit for the three fiscal quarters of ~~2019.~~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		—			—			—			339,399			—
Dividends declared on common stock and equivalents ($2.34 per share)		—			—			—			(91,880	)		—
Issuance and cancellation of stock awards, net		38,389			1			—			—			—
Tax payments for restricted stock upon vesting		(18,215	)		—			(6,584	)		—			—
Purchases of common stock		(271,064	)		(3	)		(988	)		(78,599	)		—
Exercise of stock options		709,356			7			26,519			—			—
Non-cash equity-based compensation expense		—			—			14,934			—			—
Adoption of credit losses standard		—			—			—			1,102			—
Currency translation adjustment		—			—			—			—			320
Balance at September 6, 2020		39,392,475		$	394		$	34,124		$	(3,242,627	)	$	(3,422	)

5. Recapitalization

On April 16, 2021 (the “closing date”), the Company completed a recapitalization transaction (the “2021 Recapitalization”) in which certain of the Company’s subsidiaries issued new notes pursuant to an asset-backed securitization. The new notes consist of $850.0 million Series 2021-1 2.662% Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated term of 7.5 years (the “2021 A-2-I Fixed Rate Notes”) and $1.0 billion Series 2021-1 3.151% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of 10 years (collectively with the 2021 A-2-I Fixed Rate Notes, the “2021 Notes”) in an offering exempt from registration under the Securities Act of 1933, as amended. As of September 12, 2021, the 2021 Notes had scheduled principal payments of $4.6 million in 2021, $18.5 million in each of 2022 through 2027, $804.8 million in 2028, $10.0 million in each of 2029 and 2030 and $905.0 million in 2031. Gross proceeds from the issuance of the 2021 Notes were $1.85 billion.

Concurrently, certain of the Company’s subsidiaries also issued a new variable funding note facility which allows for advances of up to $200.0 million of Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 Notes and certain other credit instruments, including letters of credit (the “2021 Variable Funding Notes”). The 2021 Variable Funding Notes were undrawn on the closing date. In connection with the issuance of the 2021 Variable Funding Notes, the Company’s previous $200.0 million variable funding note facility was canceled.

A portion of proceeds from the 2021 Recapitalization was used to repay the remaining $291.0 million in outstanding principal under the Company’s 2017 five-year floating rate notes and $582.0 million in outstanding principal under the Company’s 2017 five-year fixed rate notes, prefund a portion of the interest payable on the 2021 Notes and pay transaction fees and expenses. In connection with the repayment of the 2017 five-year floating rate notes and 2017 five-year fixed rate notes, the Company expensed approximately $2.0 million for the remaining unamortized debt issuance costs associated with these notes. Additionally, in connection with the 2021 Recapitalization, the Company capitalized $14.9 million of debt issuance costs, which are being amortized into interest expense over the 7.5 and 10-year expected terms of the 2021 Notes.

As of the fourth quarter of 2020, the Company had a leverage ratio of less than 5.0x, and accordingly, did not make the previously scheduled debt amortization payment for its then-outstanding notes beginning in the first quarter of 2021. Accordingly, all principal amounts of the Company’s outstanding notes were classified as long-term debt in the condensed consolidated balance sheet as of January 3, 2021. Subsequent to the closing of the 2021 Recapitalization, the Company had a leverage ratio of greater than 5.0x and, accordingly, the Company resumed making the scheduled amortization payments on its notes in the second quarter of 2021.

On April 30, 2021, the Company entered into the $1.0 billion ASR Agreement. Pursuant to the terms of the ASR Agreement, on May 3, 2021, the Company used a portion of the proceeds from the 2021 Recapitalization to pay the counterparty $1.0 billion in cash and received and retired 2,012,596 shares of its common stock. Final settlement of the ASR Agreement occurred on July 21, 2021. In connection with the ASR Agreement, the Company received and retired a total of 2,250,786 shares of its common stock at an average price of $444.29.

Additional

Paid-in

Capital

Retained

Deficit

Accumulated

Other

Comprehensive

Loss



Common Stock


Shares

Amount

Balance at December 30, 2018
   40,977,561 $ 410 $ 569 $ (3,036,471 ) $ (4,429 )
Net income
   —   —   —   271,382 —
Dividends declared on common stock and equivalents ($1.95 per share)
   —   —   —   (80,023 ) —
Issuance and cancellation of stock awards, net
   50,640 —   —   —   —
Tax payments for restricted stock upon vesting
   (22,044 ) —   (5,820 ) —   —
Purchases of common stock
   (430,182 ) (4 ) (18,062 ) (87,083 ) —
Exercise of stock options
   323,021 3 10,119 —   —
Non-cash

equity-based
compensation expense
   —   —   13,269 —   —
Currency translation adjustment
   —   —   —   —   491


Balance at September 8, 2019
   40,898,996 $ 409 $ 75 $ (2,932,195 ) $ (3,938 )

6. 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.

Fair Value of Cash Equivalents and Investments

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 fair value of the Company’s Level 3 investment ~~(Note 9)~~ is not readily determinable. The fair value represents its cost with adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investment of the same issuer or impairments.

The following tables summarize the carrying amounts and ~~estimated~~ fair values of certain assets at September 6,12, 2021 and January 3, 2021:


	At September 12, 2021
			Fair Value Estimated Using
	Carrying		Level 1		Level 2		Level 3
	Amount		Inputs		Inputs		Inputs
Cash equivalents	$	247,009	$	247,009	$	—	$	—
Restricted cash equivalents		131,725		131,725		—		—
Investments in marketable securities		15,103		15,103		—		—
Advertising fund cash equivalents, restricted		151,763		151,763		—		—
Investments		82,500		—		—		82,500


	At January 3, 2021
			Fair Value Estimated Using
	Carrying		Level 1		Level 2		Level 3
	Amount		Inputs		Inputs		Inputs
Cash equivalents	$	151,502	$	151,502	$	—	$	—
Restricted cash equivalents		126,595		126,595		—		—
Investments in marketable securities		13,251		13,251		—		—
Advertising fund cash equivalents, restricted		104,197		104,197		—		—
Investments		40,000		—		—		40,000

During the second quarter of 2020, a subsidiary of the Company acquired a non-controlling interest in Dash Brands Ltd., a privately-held business company limited by shares incorporated with limited liability under the laws of the British Virgin Islands (“Dash Brands”), for $40.0 million. Through its subsidiaries, Dash Brands serves as the Company’s master franchisee in China that owns and ~~December 29, 2019:~~

At September 6, 2020


Fair Value Estimated Using


Carrying
Amount

Level 1
Inputs

Level 2
Inputs

Level 3
Inputs

Cash equivalents
   $ 276,905    $ 276,905    $ —      $ —
Restricted cash equivalents
   102,763    102,763    —      —
Investments in marketable securities
   12,043    12,043    —      —
Advertising fund cash equivalents, restricted
   97,190    97,190    —      —
Investments (Note 9)
   40,000    —      —      40,000

~~Table~~operates Domino’s Pizza stores in that market. The Company’s investment in Dash Brands’ senior ordinary shares, which are not in-substance common stock, represents an equity investment without a readily determinable fair value and is recorded at cost with adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investment of ~~Contents~~

At December 29, 2019


Fair Value Estimated Using


Carrying
Amount

Level 1
Inputs

Level 2
Inputs

Level 3
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    —      —

the same issuer or impairments.

In the first quarter of 2021, the Company ~~management~~invested an additional $40.0 million in Dash Brands based on Dash Brands’ achievement of certain pre-established performance conditions. In the first quarter of 2021, the Company recorded a positive adjustment of $2.5 million to the original carrying amount of $40.0 million resulting from the observable change in price from the valuation of the additional investment. This amount was recorded in other income in the Company’s condensed consolidated statements of income. The Company did not record any adjustments to the carrying amount of $82.5 million in the second or third quarter of 2021.

The following table summarizes the reconciliation of the carrying amount of the Company’s investment in Dash Brands from the opening balance at January 3, 2021 to the closing balance at September 12, 2021.


	Three Fiscal Quarters of 2021
	Carrying Amount						Carrying Amount
	January 3,				Unrealized		September 12,
	2021		Purchases		Gain		2021
Investments	$	40,000	$	40,000	$	2,500	$	82,500

Fair Value of Debt

The 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:~~

September 6, 2020

December 29, 2019


Principal Amount

Fair Value

Principal Amount

Fair Value

2015
Ten-Year
Fixed Rate Notes
   $ 768,000    $ 821,760    $ 774,000    $ 804,960
2017 Five-Year Fixed Rate Notes
   583,500    585,251    588,000    588,588
2017
Ten-Year
Fixed Rate Notes
   972,500    1,046,410    980,000    1,017,240
2017 Five-Year Floating Rate Notes
   291,750    291,458    294,000    294,000
2018
7.5-Year
Fixed Rate Notes
   416,500    443,156    419,688    431,439
2018
9.25-Year
Fixed Rate Notes
   392,000    425,320    395,000    414,355
2019
Ten-Year
Fixed Rate Notes
   669,938    706,114    675,000    675,675

~~The~~Company’s 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.~~

below.

~~The Company’s variable funding~~

Management estimated the approximate fair values of the 2015 fixed rate notes, ~~are a variable~~the 2017 fixed and floating rate ~~loan~~notes, the 2018 fixed rate notes, the 2019 fixed rate notes and the ~~fair value of this loan approximates book value based on the borrowing rates currently available for variable~~2021 fixed rate ~~loans obtained from third party lending institutions. This fair value represents a Level 2 measurement.~~notes as follows:


	September 12, 2021				January 3, 2021
	Principal Amount		Fair Value		Principal Amount		Fair Value
2015 Ten-Year Fixed Rate Notes	$	762,000	$	794,766	$	766,000	$	809,662
2017 Five-Year Fixed Rate Notes		—		—		582,000		582,582
2017 Ten-Year Fixed Rate Notes		965,000		1,028,690		970,000		1,035,960
2017 Five-Year Floating Rate Notes		—		—		291,000		291,000
2018 7.5-Year Fixed Rate Notes		413,313		429,018		415,438		437,456
2018 9.25-Year Fixed Rate Notes		389,000		420,898		391,000		422,280
2019 Ten-Year Fixed Rate Notes		664,875		715,406		668,250		712,355
2021 7.5-Year Fixed Rate Notes		847,875		880,094		—		—
2021 Ten-Year Fixed Rate Notes		997,500		1,053,360		—		—

The Company ~~borrowed $158.0 million under its variable funding notes in the second quarter of 2020. The Company repaid $100.0 million of these borrowings in the second quarter of 2020 and~~

~~approximately~~

~~$58.0 million in the third quarter of 2020.~~

~~The Company had less than $0.1 million of~~did not have any outstanding borrowings under its variable funding notes at September ~~6, 2020. The Company did 0t have any outstanding borrowings under its variable funding notes as of December 29, 2019.~~

12, 2021 or January 3, 2021.

~~The fair values in the table above represent the fair value of such notes at September 6, 2020 and December 29, 2019. In light of the~~

~~COVID-19~~

pandemic (discussed further in Note 11) and its impact on financial markets, these fair values fluctuated significantly during the three fiscal quarters of 2020 and may continue to fluctuate based on market conditions and other factors.

7. Revenue Disclosures

Contract Liabilities

Contract liabilities primarily consist of deferred franchise fees and deferred development fees. Deferred franchise fees and deferred development fees of $4.8 million and $4.1 million were included in current other accrued liabilities as of September 12, 2021 and January 3, 2021, respectively. Deferred franchise fees and deferred development fees of $15.1 million and $15.0 million were included in long-term other accrued liabilities as of September 12, 2021 and January 3, 2021, respectively.

Changes in deferred franchise fees and deferred development fees for the three fiscal quarters of 2021 and the three fiscal quarters of 2020 were as follows:


	Three Fiscal Quarters Ended
	September 12,			September 6,
	2021			2020
Deferred franchise fees and deferred development fees at beginning of period	$	19,090		$	20,463
Revenue recognized during the period		(3,944	)		(4,302	)
New deferrals due to cash received and other		4,784			3,937
Deferred franchise fees and deferred development fees at end of period	$	19,930		$	20,098

Three Fiscal Quarters Ended


September 6,
2020

September 8,
2019

Deferred franchise fees and deferred development fees at beginning of period
   $ 20,463    $ 19,900
Revenue recognized during the period
   (4,302 )    (3,923 )
New deferrals due to cash received and other
   3,937    4,613




Deferred franchise fees and deferred development fees at end of period
   $ 20,098    $ 20,590

~~Table of Contents~~

Advertising Fund Assets

As of September ~~6, 2020,~~12, 2021, advertising fund assets, restricted of ~~$144.3~~$186.8 million consisted of ~~$118.9~~$166.7 million of cash and cash equivalents, ~~$20.5~~$18.7 million of accounts receivable and ~~$4.9~~$1.4 million of prepaid expenses. As of September ~~6, 2020,~~12, 2021, advertising fund cash and cash equivalents included ~~$6.0 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$8.3 million of cash contributed from U.S. Company-owned stores that had not yet been expended.

As of January 3, 2021, advertising fund assets, restricted of $147.7 million consisted of $115.9 million of cash and cash equivalents, $27.0 million of accounts receivable and $4.8 million of prepaid expenses. As of January 3, 2021, advertising fund cash and cash equivalents included $6.5 million of cash contributed from U.S. Company-owned stores that had not yet been expended.

8. Leases

The Company leases certain retail store and supply chain center locations, supply chain vehicles, equipment and its corporate headquarters with expiration dates through 2041.

The components of operating and finance lease cost for the third quarter and three fiscal quarters of ~~2020~~2021 and the third quarter and three fiscal quarters of ~~2019~~2020 were as follows:


	Fiscal Quarter Ended				Three Fiscal Quarters Ended
	September 12,		September 6,		September 12,		September 6,
	2021		2020		2021		2020
Operating lease cost	$	10,451	$	10,267	$	31,201	$	30,099
Finance lease cost:
Amortization of right-of-use assets		1,022		548		2,944		1,248
Interest on lease liabilities		1,050		794		2,798		2,066
Total finance lease cost	$	2,072	$	1,342	$	5,742	$	3,314

Fiscal Quarter Ended

Three Fiscal Quarters Ended


September 6,
2020

September 8,
2019

September 6,
2020

September 8,
2019

Operating lease cost
   $ 10,267    $ 9,150    $ 30,099    $ 29,464
Finance lease cost:

Amortization of
right-of-use
assets
   548    254    1,248    763
Interest on lease liabilities
   794    473    2,066    1,269








Total finance lease cost
   $ 1,342    $ 727    $ 3,314    $ 2,032

Rent expense totaled ~~$17.4~~$18.3 million and ~~$50.0~~$54.4 million in the third quarter and three fiscal quarters of 2021, respectively. Rent expense totaled $17.4 million and $50.0 million in the third quarter and three fiscal quarters of 2020, ~~respectively, and totaled $16.1 million and $48.4 million in the third quarter and three fiscal quarters of 2019,~~ respectively. Rent expense 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 for the third quarter and three fiscal quarters of 2021 and 2020, ~~and 2019,~~ respectively.

Supplemental balance sheet information related to the Company’s finance leases as of September ~~6, 2020~~12, 2021 and ~~December 29, 2019~~January 3, 2021 was as follows:

September 6,
2020

December 29,
2019

Land and buildings
   $ 45,992    $ 25,476
Accumulated depreciation and amortization
   (9,208 )    (7,846 )




Finance lease assets, net
   $ 36,784    $ 17,630




Current portion of long-term debt
   $ 1,662    $ 1,394
Long-term debt, less current portion
   36,986    18,263




Total principal payable on finance leases
   $ 38,648    $ 19,657


	September 12,			January 3,
	2021			2021
Land and buildings	$	74,085		$	68,084
Accumulated depreciation and amortization		(12,991	)		(10,049	)
Finance lease assets, net	$	61,094		$	58,035

Current portion of long-term debt	$	3,346		$	2,855
Long-term debt, less current portion		61,180			57,700
Total principal payable on finance leases	$	64,526		$	60,555

As of September ~~6, 2020~~12, 2021 and ~~December 29, 2019,~~January 3, 2021, the weighted average remaining lease term and weighted average discount rate for the Company’s operating and finance leases were as follows:


	September 12, 2021		January 3, 2021
	Operating	Finance	Operating	Finance
	Leases	Leases	Leases	Leases
Weighted average remaining lease term	7 years	15 years	7 years	16 years
Weighted average discount rate	3.7%	6.5%	3.7%	6.8%

September 6, 2020

December 29, 2019


Operating
Leases

Finance
Leases

Operating
Leases

Finance
Leases

Weighted average remaining lease term
   7 years 17 years 8 years 14 years
Weighted average discount rate
   3.8 % 8.9 % 3.8 % 11.7 %

~~Table of Contents~~

Supplemental cash flow information related to leases for the third quarter and three fiscal quarters of ~~2020~~2021 and the third quarter and three fiscal quarters of ~~2019 was~~2020 were as follows:


	Fiscal Quarter Ended				Three Fiscal Quarters Ended
	September 12,		September 6,		September 12,		September 6,
	2021		2020		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	10,236	$	9,288	$	29,528	$	29,455
Operating cash flows from finance leases		1,050		794		2,798		2,066
Financing cash flows from finance leases		771		348		2,068		1,388
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		7,785		10,719		19,138		26,297
Finance leases		390		1,717		6,050		20,463

Fiscal Quarter Ended

Three Fiscal Quarters Ended


September 6,

September 8,

September 6,

September 8,


2020

2019

2020

2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases
   $ 9,288    $ 9,968    $ 29,455    $ 30,056
Operating cash flows from finance leases
   794    473    2,066    1,269
Financing cash flows from finance leases
   348    161    1,388    422
Right-of-use
assets obtained in exchange for new lease obligations:

Operating leases
   10,719    23,434    26,297    49,802
Finance leases
   1,717    —      20,463    —

Maturities of lease liabilities as of September ~~6, 2020~~12, 2021 were as follows:


	Operating			Finance
	Leases			Leases
2021	$	16,203		$	2,394
2022		44,458			7,197
2023		39,019			6,759
2024		37,769			7,216
2025		31,375			7,018
Thereafter		92,261			74,509
Total future minimum rental commitments		261,085			105,093
Less – amounts representing interest		(30,968	)		(40,567	)
Total lease liabilities	$	230,117		$	64,526

Operating

Finance


Leases

Leases

2020
   $ 15,170    $ 1,275
2021
   42,865    4,965
2022
   40,942    5,016
2023
   35,519    5,075
2024
   34,148    4,870
Thereafter
   106,034    53,491




Total future minimum rental commitments
   274,678    74,692
Less – amounts representing interest
   (36,189 )    (36,044 )




Total lease liabilities
   $ 238,489    $ 38,648

As of September ~~6, 2020,~~12, 2021, the Company has additional leases for one supply chain center and certain supply chain tractors and trailers that had not yet commenced with estimated future minimum rental commitments of approximately ~~$28.8~~$66.6 million. These leases are expected to commence in ~~2020~~2021 and 2022 with lease terms of up to ~~15 years.~~16 years. These undiscounted amounts are not included in the table above.

The Company has guaranteed lease payments related to certain franchisees’ lease arrangements. The maximum amount of potential future payments under these guarantees

~~$13.9~~ was $10.3 million and $12.6 million as of September ~~6, 2020.~~12, 2021 and January 3, 2021, respectively. The Company does not believe these arrangements have or are likely to have a material effect on its results of operations, financial condition, revenues, expenses or liquidity.

9. Supplemental Disclosures of Cash Flow Information

The Company had

non-cash

investing activities related to accruals for capital expenditures of ~~$5.1~~$4.0 million at September ~~6, 2020~~12, 2021 and ~~$6.9~~

$4.3 million at ~~December 29, 2019.~~

~~9. Investment in Dash Brands~~

~~In the second quarter of 2020, a subsidiary of the Company acquired a~~

~~non-controlling~~

interest in Dash Brands for $40.0 million. This investment is an equity investment without a readily determinable fair value and is recorded at cost with adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investment of the same issuer or impairments within long-term other assets in the Company’s condensed consolidated balance sheet.January 3, 2021. The Company ~~did not record any adjustments~~also had less than $0.1 million of non-cash investing activities related to ~~the carrying amount of $40.0 million~~lease incentives in the ~~third quarter or~~ three fiscal quarters of ~~2020.~~ 2021.

10. Equity Incentive Plans

The ~~Company is contractually required to invest an additional $40.0 million in Dash Brands in~~Company’s current equity incentive plan, named the ~~first quarter~~Domino’s Pizza, Inc. 2004 Equity Incentive Plan (the “2004 Equity Incentive Plan”), benefits certain of the Company’s employees and members of the Company’s Board of Directors. In the three fiscal quarters of 2021, ~~assuming~~the Company granted non-qualified stock options, restricted stock awards, restricted stock units and performance-based restricted stock units to certain ~~performance conditions are satisfied. If such performance conditions are not satisfied,~~employees and members of its Board of Directors under the 2004 Equity Incentive Plan. As a result of the changes to the characteristics and types of awards granted to date in 2021 under the 2004 Equity Incentive Plan, the Company has included disclosure of the nature and terms of these awards granted in the three fiscal quarters of 2021, as well as the methods used to estimate their fair values below.

The cost of all employee stock options, as well as other equity-based compensation arrangements, is reflected in the condensed consolidated statements of income based on the estimated fair value of the awards and is amortized over the requisite service period of each award. All non-cash compensation expense amounts are recorded in general and administrative expense.

Stock Options

Stock options granted in fiscal 2021 were granted with an exercise price equal to the market price of the Company’s common stock at the date of the grant, expire ten years from the date of grant and generally vest over three years from the date of grant, generally subject to the holder’s continued employment. Additionally, all stock options granted become fully exercisable upon vesting. These awards also contain provisions for accelerated vesting upon the retirement eligibility of holders that have achieved specified service and age requirements. Management estimated the fair value of each option grant using the Black-Scholes option pricing method. The risk-free interest rate is based on the estimated expected life and is estimated based on U.S. Treasury Bond rates as of the grant date. The expected life is based on several factors, including, among other things, the vesting term and contractual term as well as historical experience. The expected volatility is based principally on the historical volatility of the Company’s share price.

Other Equity-Based Compensation Arrangements

Restricted stock awards granted to ~~make such additional investment~~

~~its discretion.~~

~~Table~~members of ~~Contents~~the Company’s Board of Directors in fiscal 2021 were granted with a fair value equal to the market price of the Company’s common stock on the grant date and vest one year from the date of grant, generally subject to the director’s continued service. These awards also contain provisions for accelerated vesting upon the retirement eligibility of holders that have achieved specified service and age requirements.

Restricted stock units granted in fiscal 2021 were granted with a fair value equal to the market price of the Company’s common stock on the grant date. These restricted stock units are separated into 2 or 3 tranches and have time-based ratable vesting conditions with the last tranche of the award vesting three years from the grant date, generally subject to the holder’s continued employment. These awards generally also contain provisions for accelerated vesting upon the retirement eligibility of holders that have achieved specified service and age requirements.

Performance-based restricted stock units granted in fiscal 2021 were granted with a fair value equal to the market price of the Company’s common stock on the grant date, adjusted for the estimated fair value of the market condition included in the award. These performance-based restricted stock units may vest three years from the date of grant, generally subject to the holder’s continued employment, and have time and performance-based vesting conditions which provide for potential payouts of the target award amount between 0 percent and 200 percent, based on the Company’s three-year cumulative achievement as compared to the specified target performance conditions. The performance-based restricted stock units also include provisions for a potential modifier (upward or downward) based on the Company’s cumulative three-year common stock performance relative to that of a pre-established peer group. These awards also contain provisions for accelerated vesting of the time-based vesting condition upon the retirement eligibility of holders that have achieved specified service and age requirements. Management estimated the fair value of each performance-based restricted stock unit using a Monte-Carlo simulation pricing method. The risk-free interest rate is based on the estimated expected life and is estimated based on U.S. Treasury Bond rates as of the grant date. The Monte-Carlo simulation also includes assumptions for expected volatility based principally on the historical volatility of the Company’s share price, as well as the correlation of the Company’s share price as compared to that of the pre-established peer group.

~~10.~~

11. New Accounting Pronouncements

Recently Adopted Accounting Standard

~~ASU~~

~~2016-13,~~

~~Financial Instruments~~

Accounting Standards Update (“ASU”) 2019-12, Income Taxes – ~~Credit Losses~~Simplifying the Accounting for Income Taxes (Topic ~~326)~~

740)

In ~~June 2016,~~December 2019, the Financial Accounting Standards Board (“FASB”) issued

ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting ~~Standard Update~~for Income Taxes (“~~ASU”~~ASU 2019-12”)

~~2016-13,~~

~~Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~

. ASC 326 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates., which simplifies the accounting for income taxes. ASU 2019-12 was effective for fiscal years beginning after December 15, 2020, including applicable interim periods. The Company adopted this accounting standard ~~as of December 30, 2019,~~in the first ~~day~~quarter of ~~its 2020 fiscal year, using the modified retrospective approach~~2021, and it did not have a material impact on its condensed consolidated financial statements.

~~The effects of the changes made to the Company’s condensed consolidated balance sheet as of December~~

~~2019~~

~~for the adoption of ASC~~

~~326~~

~~were as follows:~~

Balance at
December 29,
2019

Adjustments

Due to ASC

326

Balance at
December 30,
2019

Assets

Current assets:

Accounts receivable, net
   $ 210,260    $ 1,435    $ 211,695
Prepaid expenses and other
   19,129    4    19,133
Other assets:

Other assets
   12,521    27    12,548
Deferred income taxes
   10,073    (364 )    9,709
Liabilities and stockholders’ deficit

Stockholders’ deficit:

Retained deficit
   (3,412,649 )    1,102    (3,411,547 )

The Company recognized the cumulative effect of initially applying ASC 326 as an adjustment to the opening balance of retained deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for that period. An adjustment to beginning retained deficit and a corresponding adjustment to the allowance for doubtful accounts and notes receivable of approximately $1.5 million was recorded on the date of adoption, representing the remeasurement of these accounts to the Company’s estimate for current expected credit losses. The adjustment to beginning retained deficit was also net of a $0.4 million adjustment to deferred income taxes.

Accounting Standards Not Yet Adopted

The Company has considered all new accounting standards issued by the FASB. The Company has not yet completed its assessment of the following ~~standards.~~

standard.

ASU

~~2019-12,~~

~~Income Taxes – Simplifying the Accounting for Income Taxes (Topic 740)~~

~~In December 2019, the FASB issued~~

~~ASU~~

~~2019-12,~~

~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~

~~(ASU~~

~~2019-12),~~

~~which simplifies the accounting for income taxes. ASU~~

~~2019-12~~

is effective for fiscal years beginning after December 15, 2020, including applicable interim periods. The Company is currently assessing the impact of adopting this standard but does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

~~ASU~~

2020-04,

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

In March 2020, the FASB issued

ASU

2020-04,

Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

(“ASU 2020-04”), which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform. ~~The~~Subsequent to the closing of the 2021 Recapitalization, the Company’s ~~floating rate notes and variable funding notes~~2021 Variable Funding Notes bear interest at fluctuating interest rates based on LIBOR. IfHowever, the associated loan documents contemplate a transition from LIBOR to secured overnight financing rate (“SOFR”) in the event that LIBOR ceases to ~~exist,~~exist. If the Company ~~may need~~further needs to renegotiate its loan documents, ~~and~~ the Company cannot predict what alternative index would be negotiated with its lenders. ASU

2020-04

is may currently ~~effective~~be adopted and ~~upon adoption~~ may be applied prospectively to contract modifications made on or before December 31, 2022. The Company is currently assessing the impact of adopting this standard but does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements.

~~Table of Contents~~

~~11.~~

~~COVID-19~~

~~Pandemic~~

~~In December 2019, a novel coronavirus disease~~

~~(“COVID-19”)~~

~~was reported and in January 2020, the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the~~

~~COVID-19~~

~~threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized~~

~~COVID-19~~

~~as a pandemic. During the second and third fiscal quarters of 2020 in the midst of the~~

~~COVID-19~~

~~pandemic, the Company continued to increase its U.S. Stores revenues. Supply Chain also remained operational, with minimal interruptions due to~~

~~COVID-19~~

~~and experienced higher volumes as a result of the increases in store sales. The~~

~~COVID-19~~

pandemic negatively impacted the Company’s International Franchise revenues during the second quarter of 2020 due to temporary store closures in certain markets as well as changes in operating procedures and store hours resulting from actions taken to increase social distancing across the Company’s international franchise markets. In the third quarter of 2020, these negative impacts lessened due to the reopening and resumption of normal store hours at the majority of the Company’s international franchised stores that had been temporarily closed for portions of the prior quarter. The Company also made certain investments during the

~~COVID-19~~

pandemic related to safety and cleaning equipment, enhanced sick pay and compensation for frontline team members and support for the Company’s franchisees and their communities. The Company is closely monitoring the impact of the pandemic on all aspects of its business and is unable at this time to predict the continued impact that

~~COVID-19~~

~~will have on its business, financial position and operating results in future periods due to numerous uncertainties.~~

~~Table of Contents~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(Unaudited; tabular amounts in millions, except percentages and store data)

The ~~2020~~2021 and ~~2019~~2020 third quarters referenced herein represent the twelve-week periods ended September 12, 2021 and September 6, 2020, ~~and September 8, 2019,~~ respectively. The ~~2020~~2021 and ~~2019~~2020 three fiscal quarters referenced herein represent the

thirty-six-week

periods ended September 12, 2021 and September 6, 2020, respectively. In this section, we discuss the results of our operations for the third quarter and ~~September 8, 2019, respectively.~~

~~Overview~~

three fiscal quarters of 2021 as compared to the respective periods of 2020.

Description of the Business

Domino’s is the largest pizza company in the world, ~~based on global retail sales,~~ with a significant business in both delivery and carryout, and more than ~~17,200~~18,300 locations in over 90 ~~markets.~~markets around the world as of September 12, 2021. Founded in 1960, our roots are in convenient pizza delivery, while a significant amount of our sales also come from carryout customers. We are a highly recognized global brand, and we focus on serving neighborhoods locally through our large worldwide network of franchise owners and U.S. Company-owned stores. We are primarily a franchisor, with approximately 98% of Domino’s stores currently owned and operated by our independent franchisees. Franchising enables an individual to be his or her own employer and maintain control over all employment-related matters and pricing decisions, while also benefiting from the strength of the Domino’s global brand and operating system with limited capital investment by us.

The Domino’s business model is straightforward: Domino’s stores handcraft and serve quality food at a competitive price, with easy ordering access and efficient service, enhanced by our technological innovations. Our hand-tossed dough is made fresh and distributed to stores around the world by us and our franchisees.

Domino’s generates revenues and earnings by charging royalties and fees to our ~~independent~~ franchisees. ~~The Company~~Royalties are ongoing percent-of-sales fees for use of the Domino’s® brand marks. We also ~~generates~~generate revenues and earnings by selling food, equipment and supplies to franchisees through our supply chain operations, primarily in the U.S. and Canada, and by operating a number of ~~our own~~Company-owned stores in the U.S. Franchisees profit by selling pizza and other complementary items to their local customers. In our international markets, we generally grant geographical rights to the Domino’s Pizza

brand to master franchisees. These master franchisees are charged with developing their geographical area, and they ~~can~~may profit by

sub-franchising

and selling ~~ingredients~~food and equipment to those

sub-franchisees,

as well as by running pizza ~~stores directly.~~stores. We believe that everyone in the system can benefit, including the end consumer, who can ~~feed their family~~purchase Domino’s menu items for themselves and their family conveniently and economically.

The Domino’s business model can yield strong returns for our franchise owners and our Company-owned stores. It can also yield significant cash flows to us, through a consistent franchise royalty payment and supply chain revenue stream, with moderate capital expenditures. We have historically returned cash to shareholders through dividend payments and share repurchases. These factors emphasize our focus on our stakeholders, including our customers, team members, franchisees, communities and shareholders.

Third Quarter of 2021 Highlights



~~Our financial results are driven largely by~~Global retail sales, excluding foreign currency impact (which includes total retail sales at ~~our franchise~~Company-owned and ~~Company-owned stores. Changes in~~franchised stores worldwide), increased 8.5% as compared to 2020. U.S. retail sales ~~are driven by changes in same~~increased 1.1% and international retail sales, excluding foreign currency impact, increased 16.5% as compared to 2020.



Same store sales decreased 1.9% in our U.S. stores and ~~store counts. We monitor both of these metrics very closely, as they directly impact~~increased 8.8% in our revenues and profits, and we strive to consistently increase both metrics. Retail sales drive royalty payments from franchisees, as well as Company-owned store and supply chain revenues. Retail sales are primarily impacted by the strength of the Domino’s Pizza

brand, the results of our extensive advertising through various media channels, the impact of technological innovation and digital ordering, our ability to execute our strong and proven business model and the overall global economic environment.international stores.



Third Quarter

Third Quarter

Three Fiscal

Three Fiscal


of 2020

of 2019

Quarters of 2020

Quarters of 2019

Global retail sales growth (versus prior year period, excluding foreign currency impact)
   +14.8 % +7.5 % +9.6 % +8.1 %
Same store sales growth (1):

U.S. Company-owned stores
   +16.6 % +1.7 % +12.4 % +2.3 %
U.S. franchise stores
   +17.5 % +2.5 % +11.6 % +3.2 %


U.S. stores
   +17.5 % +2.4 % +11.7 % +3.1 %
International stores (excluding foreign
currency impact)
   +6.2 % +1.7 % +3.0 % +2.0 %
Store counts (at end of period):

U.S. Company-owned stores
   348 333
U.S. franchise stores
   5,891 5,652


U.S. stores
   6,239 5,985
International stores
   11,017 10,543


Total stores (2)
   17,256 16,528


Income statement data:

Total revenues
   $ 967.7 100.0 % $ 820.8 100.0 % $ 2,760.8 100.0 % $ 2,468.4 100.0 %
Cost of sales
   605.7 62.6 % 504.6 61.5 % 1,701.6 61.7 % 1,513.2 61.3 %
General and administrative
   91.7 9.4 % 83.7 10.2 % 268.2 9.7 % 262.6 10.7 %
U.S. franchise advertising
   108.1 11.2 % 89.5 10.9 % 309.4 11.2 % 267.1 10.8 %


Income from operations
   162.2 16.8 % 143.0 17.4 % 481.6 17.4 % 425.5 17.2 %
Interest expense, net
   (38.4 ) (4.0 )% (32.8 ) (4.0 )% (116.0 ) (4.2 )% (100.1 ) (4.0 )%


Income before provision for income taxes
   123.8 12.8 % 110.2 13.4 % 365.6 13.2 % 325.4 13.2 %
Provision for income taxes
   24.6 2.6 % 23.9 2.9 % 26.2 0.9 % 54.0 2.2 %


Net income
   $ 99.1 10.2 % $ 86.4 10.5 % $ 339.4 12.3 % $ 271.4 11.0 %

~~(1)~~

Same store sales growth is calculated for a given period by including only sales from stores that had sales in the comparable weeks of both years. International same store sales growth is calculated similarly to U.S. same store sales growth. Changes in international same store sales are reported excluding foreign currency impacts, which reflect changes in international local currency sales.

~~(2)~~

~~Temporary store closures are not treated as store closures and affected stores are included in the ending store count.~~

Revenues increased 3.1%.



Income from operations increased 11.2%.



Net income increased 21.5%.

~~Table~~

Diluted earnings per share increased 30.1%.

Three Fiscal Quarters of ~~Contents~~2021 Highlights



Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide), increased 13.1% as compared to 2020. U.S. retail sales increased 7.6% and international retail sales, excluding foreign currency impact, increased 19.2% as compared to 2020.



Same store sales increased 4.6% in our U.S. stores and increased 11.4% in our international stores.

~~During~~

Revenues increased 9.2%.



Income from operations increased 15.8%.



Net income increased 4.5%.



Diluted earnings per share increased 8.9%.

Overview

Domino's experienced global retail sales growth during both the third quarter and three fiscal quarters of ~~2020, we experienced global retail sales growth and U.S. and international same store sales growth. Our~~2021. We believe our commitment to value, convenience, quality and new products continues to keep consumers engaged with the brand. ~~During~~We continued our strong international same store sales performance with 111 straight quarters of positive international same store sales. Although U.S. same store sales were positive for the three fiscal quarters of 2021, U.S. same store sales declined 1.9% in the third quarter ~~we launched three new products in the U.S., including chicken wings and two new specialty pizzas, each~~ of ~~which have been positively received by consumers. Beginning at the end of the first quarter of 2020 and through the date of this filing, customer ordering behavior during the~~

~~COVID-19~~

~~pandemic has resulted in a significant~~2021, rolling over an increase in U.S. same store ~~sales. We did not experience significant temporary closures~~sales of 17.5% in ~~our U.S. business. Additionally, our supply chain experienced minimal disruptions due to~~

~~COVID-19~~

~~and experienced higher volumes from~~ the ~~increases in store sales. The~~

~~COVID-19~~

~~pandemic negatively impacted our international franchise revenues during the second~~third quarter of ~~2020 due~~2020. This decrease in U.S. same store sales was attributable in part to ~~temporary~~labor shortages affecting store ~~closures~~hours and staffing levels in ~~certain~~many of our markets, as well as ~~changes~~a waning in ~~operating procedures and store hours resulting from actions taken to increase social distancing across our international franchise markets. In~~the level of economic stimulus activity in the U.S in the third quarter of ~~2020, these negative impacts lessened due~~2021. Same store sales in the U.S. continue to be positively affected by changes in consumer ordering behavior observed since the onset of the COVID-19 pandemic. Internationally, we continued to experience sustained increases in retail sales during the third quarter and three fiscal quarters of 2021 resulting from evolving consumer trends, as well as the reopening and resumption of normal store hours and operating procedures at ~~the majority~~certain of our international franchised stores that had been temporarily closed or affected by changes in operating procedures and store hours for portions of the ~~prior quarter.~~second and third quarters of 2020 as a result of the COVID-19 pandemic. Our U.S. and international same store sales ~~growth was also partially offset~~results continue to be pressured by our ~~current~~fortressing strategy, ~~to increase~~which includes increasing store concentration in certain markets where we ~~compete.~~

compete, as well as from aggressive competitive activity.

We ~~also~~ continued our global expansion with the opening of 83323 net ~~new~~ stores in the third quarter of ~~2020,~~2021, bringing our

year-to-date

total to ~~236.~~736 net store openings. We had 4445 net ~~new~~ stores open in the U.S. and 278 net stores open internationally during the third quarter of ~~2020. Although 162 gross new stores opened internationally, 123 stores closed, primarily in India. The~~

~~COVID-19~~

~~pandemic has had a negative impact on anticipated store openings in our international business~~

~~to-date~~

~~due to delays in approvals and government restrictions in certain of the markets that our master franchisees operate.~~ 2021.

Overall, we believe ~~this~~our continued global store growth, along with our ~~strong~~ sales growth, emphasis on technology, operations, and marketing initiatives, have combined to strengthen our brand.

Statistical Measures

The tables below outline certain statistical measures we utilize to analyze our performance. This historical data is not necessarily indicative of results to be expected for any future period.

Global Retail Sales Growth (excluding foreign currency impact)

Global retail sales growth (excluding foreign currency impact) is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Global retail sales refers to total worldwide retail sales at Company-owned and franchise stores. We believe global retail sales information is useful in analyzing revenues because franchisees pay royalties and, in the U.S., advertising fees that are based on a percentage of franchise retail sales. We review comparable industry global retail sales information to assess business trends and to track the growth of the Domino’s Pizza brand. In addition, supply chain revenues are directly impacted by changes in franchise retail sales in the U.S. and Canada. Retail sales for franchise stores are reported to us by our franchisees and are not included in our revenues. Global retail sales growth, excluding foreign currency impact, ~~which includes total~~is calculated as the change of international local currency global retail sales ~~at franchise and Company-owned stores worldwide, increased 14.8% in~~against the ~~third quarter~~comparable period of ~~2020 and increased 9.6% in~~ the ~~three fiscal quarters of 2020. These increases were driven by U.S. and international same~~prior year.


	Third Quarter of 2021	Third Quarter of 2020	Three Fiscal Quarters of 2021	Three Fiscal Quarters of 2020
U.S. stores	+1.1%	+21.3%	+7.6%	+15.3%
International stores (excluding foreign currency impact)	+16.5%	+8.5%	+19.2%	+4.0%
Total (excluding foreign currency impact)	+8.5%	+14.8%	+13.1%	+9.6%

Same Store Sales Growth

Same store sales growth ~~as well as an increase in store counts during the trailing four quarters. The negative impact of changes in foreign currency exchange rates partially offset this increase, resulting from~~is a ~~generally stronger U.S. dollar when compared to the currencies~~commonly used statistical measure in the ~~international markets in which we compete. U.S. same~~quick-service restaurant industry that is important to understanding performance. Same store sales growth ~~reflected~~is calculated by including only sales from stores that also had sales in the ~~sustained positive sales trends and the continued success~~comparable weeks of ~~our products, marketing and technology platforms, as well as shifts in consumer behavior across the restaurant industry toward delivery and larger order sizes throughout the~~

~~COVID-19~~

~~pandemic.~~both years. International same store sales growth ~~also reflected continued positive performance but has been adversely affected by temporary~~is calculated similarly to U.S. same store sales growth. Changes in international same store sales are reported on a constant dollar basis which reflects changes in international local currency sales.


	Third Quarter of 2021	Third Quarter of 2020	Three Fiscal Quarters of 2021	Three Fiscal Quarters of 2020
U.S. Company-owned stores	(8.9)%	+16.6%	(2.0)%	+12.4%
U.S. franchise stores	(1.5)%	+17.5%	+5.1%	+11.6%
U.S. stores	(1.9)%	+17.5%	+4.6%	+11.7%
International stores (excluding foreign currency impact)	+8.8%	+6.2%	+11.4%	+3.0%

Store Growth Activity

Store counts and net store growth are commonly used statistical measures in the quick-service restaurant industry that are important to understanding performance.


	U.S. Company- owned Stores		U.S. Franchise Stores			Total U.S. Stores			International Stores			Total
Store count at June 20, 2021		366		6,060			6,426			11,631			18,057
Openings		1		45			46			287			333
Closings (1)		—		(1	)		(1	)		(9	)		(10	)
Store count at September 12, 2021		367		6,104			6,471			11,909			18,380
Third quarter 2021 net store growth		1		44			45			278			323
Trailing four quarters net store growth		19		213			232			892			1,124

(1) Temporary store closures are not treated as store closures and affected stores are included in ~~certain of our international markets as discussed above.~~the ending store count. Based on information reported to us by our master franchisees, we estimate that as of September ~~6, 2020,~~12, 2021, there were fewer than ~~400~~175 international stores temporarily closed.

Total revenues increased $146.9 million, or 17.9%, in the third quarter of 2020 and increased $292.4 million, or 11.8%, in the three fiscal quarters of 2020. These increases were due primarily to higher U.S. retail sales, which resulted in higher supply chain and U.S. franchise revenues. U.S. Company-owned stores revenues increased in the third quarter of 2020 and three fiscal quarters of 2020 due to same store sales growth, but were partially offset in the three fiscal quarters of 2020 due to the sale of 59 Company-owned stores to certain of our existing U.S. franchisees during the second quarter of 2019 (the “2019 Store Sale”). International franchise revenues in the third quarter and three fiscal quarters of 2020 were pressured by the negative impact of changes in foreign currency exchange rates and targeted financial relief provided to certain of our master franchisees. These changes in revenues are described in more detail below.

Income from operations increased $19.2 million, or 13.4%, in the third quarter of 2020 and increased $56.1 million, or 13.2%, in the three fiscal quarters of 2020. These increases were primarily driven by higher royalty revenues from our U.S. franchised stores, as well as higher supply chain margins. Higher general and administrative expenses partially offset these increases.

Net income increased $12.8 million, or 14.8%, in the third quarter of 2020 and increased $68.0 million, or 25.1%, in the three fiscal quarters of 2020, driven by higher income from operations, partially offset by higher interest expense resulting from a higher average debt balance following our recapitalization transaction completed on November 19, 2019 (the “2019 Recapitalization”) and, to a lesser extent, borrowings under our variable funding notes in 2020. Net income in the three fiscal quarters of 2020 also benefited from lower tax expense resulting primarily from higher excess tax benefits from equity-based compensation.

Statement Data


	Third Quarter of 2021		Third Quarter of 2020			Three Fiscal Quarters of 2021			Three Fiscal Quarters of 2020
U.S. Company-owned stores	$108.4		$113.3		$337.7			$329.8
U.S. franchise royalties and fees	121.6		118.1		372.9			335.9
Supply chain	588.8		573.7		1,760.1			1,625.5
International franchise royalties and fees	70.6		54.6		207.1			160.2
U.S. franchise advertising	108.6		108.1		336.3			309.4
Total revenues	998.0	100.0%	967.7	100.0%	3,014.2		100.0%	2,760.8		100.0%
U.S. Company-owned stores	86.9		90.8		260.7			258.0
Supply chain	525.9		515.0		1,571.4			1,443.6
Total cost of sales	612.8	61.4%	605.7	62.6%	1,832.1		60.8%	1,701.6		61.7%
Operating margin	385.2	38.6%	362.0	37.4%	1,182.0		39.2%	1,059.2		38.4%
General and administrative	96.3	9.6%	91.7	9.4%	288.0		9.6%	268.2		9.7%
U.S. franchise advertising	108.6	10.9%	108.1	11.2%	336.3		11.1%	309.4		11.2%
Income from operations	180.3	18.1%	162.2	16.8%	557.7		18.5%	481.6		17.4%
Other income	—	0.0%	—	0.0%	2.5		0.1%	—		0.0%
Interest expense, net	(45.5)	(4.6)%	(38.4)	(4.0)%	(130.7)		(4.3)%	(116.0)		(4.2)%
Income before provision for income taxes	134.8	13.5%	123.8	12.8%	429.5		14.3%	365.6		13.2%
Provision for income taxes	14.4	1.4%	24.6	2.6%	74.8		2.5%	26.2		0.9%
Net income	$120.4	12.1%	$99.1	10.2%	$354.80		11.8%	$339.4		12.3%

Revenues

Third Quarter

Third Quarter

Three Fiscal

Three Fiscal


of 2020

of 2019

Quarters of 2020

Quarters of 2019

U.S. Company-owned stores
   $ 113.3    11.7 % $ 94.6    11.5 % $ 329.8    11.9 % $ 323.0    13.1 %
U.S. franchise royalties and fees
   118.1    12.2 % 97.0    11.8 % 335.9    12.2 % 289.3    11.7 %
Supply chain
   573.7    59.3 % 485.1    59.1 % 1,625.5    58.9 % 1,424.8    57.8 %
International franchise royalties and fees
   54.6    5.6 % 54.6    6.7 % 160.2    5.8 % 164.1    6.6 %
U.S. franchise advertising
   108.1    11.2 % 89.5    10.9 % 309.4    11.2 % 267.1    10.8 %










Total revenues
   $ 967.7    100.0 % $ 820.8    100.0 % $ 2,760.8    100.0 % $ 2,468.4    100.0 %

~~Table of Contents~~


	Third Quarter of 2021				Third Quarter of 2020				Three Fiscal Quarters of 2021				Three Fiscal Quarters of 2020
U.S. Company-owned stores	$	108.4	10.8	%	$	113.3	11.7	%	$	337.7	11.2	%	$	329.8	11.9	%
U.S. franchise royalties and fees		121.6	12.2	%		118.1	12.2	%		372.9	12.4	%		335.9	12.2	%
Supply chain		588.8	59.0	%		573.7	59.3	%		1,760.1	58.4	%		1,625.5	58.9	%
International franchise royalties and fees		70.6	7.1	%		54.6	5.6	%		207.1	6.9	%		160.2	5.8	%
U.S. franchise advertising		108.6	10.9	%		108.1	11.2	%		336.3	11.1	%		309.4	11.2	%
Total revenues	$	998.0	100.0	%	$	967.7	100.0	%	$	3,014.2	100.0	%	$	2,760.8	100.0	%

Revenues primarily consist of retail sales from our Company-owned stores, royalties, advertising contributions ~~royalties~~ and fees from our U.S. franchised stores, royalties and fees from our international franchised stores and sales of food, equipment and supplies from our supply chain centers to substantially all of our U.S. franchised stores and certain international franchised stores. Company-owned store and franchised store revenues may vary from period to period due to changes in store count mix. Supply chain revenues may vary significantly from period to period as a result of fluctuations in commodity prices as well as the mix of products we sell.

U.S. Stores Revenues

Third Quarter

Third Quarter

Three Fiscal

Three Fiscal


of 2020

of 2019

Quarters of 2020

Quarters of 2019

U.S. Company-owned stores
   $ 113.3    33.4 % $ 94.6    33.6 % $ 329.8    33.8 % $ 323.0    36.7 %
U.S. franchise royalties and fees
   118.1    34.8 % 97.0    34.5 % 335.9    34.5 % 289.3    32.9 %
U.S. franchise advertising
   108.1    31.8 % 89.5    31.9 % 309.4    31.7 % 267.1    30.4 %










U.S. stores
   $ 339.5    100.0 % $ 281.1    100.0 % $ 975.1    100.0 % $ 879.5    100.0 %


	Third Quarter of 2021				Third Quarter of 2020				Three Fiscal Quarters of 2021				Three Fiscal Quarters of 2020
U.S. Company-owned stores	$	108.4	32.0	%	$	113.3	33.4	%	$	337.7	32.3	%	$	329.8	33.8	%
U.S. franchise royalties and fees		121.6	35.9	%		118.1	34.8	%		372.9	35.6	%		335.9	34.5	%
U.S. franchise advertising		108.6	32.1	%		108.1	31.8	%		336.3	32.1	%		309.4	31.7	%
U.S. stores	$	338.6	100.0	%	$	339.5	100.0	%	$	1,047.0	100.0	%	$	975.1	100.0	%

U.S. ~~Company-Owned~~Company-owned Stores

Revenues from U.S. Company-owned store operations decreased $4.8 million, or 4.3%, in the third quarter of 2021 due to a decrease in U.S. Company-owned same store sales. This decrease was partially offset by an increase in the average number of U.S. Company-owned stores open during the period resulting from net store growth. Revenues from U.S. Company-owned store operations increased ~~$18.7~~$7.9 million, or ~~19.8%, in the third quarter of 2020 and increased $6.8 million, or 2.1%~~2.4%, in the three fiscal quarters of ~~2020~~2021 due ~~primarily~~ to an increase in the average number of U.S. Company-owned stores open during the period resulting from net store growth, partially offset by a decrease in U.S. Company-owned same store sales.

U.S. Company-owned same store sales ~~growth. The increase~~decreased 8.9% in ~~revenues~~the third quarter of 2021 and decreased 2.0% in the three fiscal quarters of ~~2020 was partially offset by lower revenues resulting from the 2019 Store Sale.~~2021. U.S. Company-owned same store sales increased 16.6% in the third quarter of 2020 and increased 12.4% in the three fiscal quarters of 2020. ~~Company-owned same store sales increased 1.7% in the third quarter of 2019 and increased 2.3% in the three fiscal quarters of 2019.~~

U.S. Franchise Royalties and Fees

Revenues from U.S. franchise royalties and fees increased ~~$21.1~~$3.6 million, or ~~21.6%~~3.0%, in the third quarter of ~~2020~~2021 due primarily to an increase in the average number of U.S. franchised stores open during the period resulting from net store growth. The decrease in U.S. franchise same store sales partially offset the increase in U.S. franchise royalties and fee revenues. Revenues from U.S. franchise royalties and fees increased ~~$46.6~~$37.0 million, or ~~16.1%~~11.0%, in the three fiscal quarters of ~~2020~~2021 due primarily to higher same store sales and an increase in the average number of U.S. franchised stores open during the period ~~due to~~resulting from net store growth. U.S. franchise royalties were also negatively impacted by $3.0 million in the three fiscal quarters of 2020 ~~related to~~as a result of funding we provided to our franchisees ~~for~~as part of an effort to donate 10 million slices of pizza to people and organizations at the frontlines of the

COVID-19

pandemic in the franchisees’ local communities. U.S. franchise royalties and fees further benefited in both the third quarter and three fiscal quarters of 2021 from an increase in revenues from fees paid by franchisees for the use of our technology platforms.

U.S. franchise same store sales decreased 1.5% in the third quarter of 2021 and increased 5.1% in the three fiscal quarters of 2021. U.S. franchise same store sales increased 17.5% in the third quarter of 2020 and increased 11.6% in the three fiscal quarters of 2020. U.S. franchise same store sales increased 2.5% in the third quarter of 2019 and increased 3.2% in the three fiscal quarters of 2019. U.S. franchise royalties and fees further benefited in both the third quarter and the three fiscal quarters of 2020 from an increase in revenues from fees paid by franchisees for the use of our technology platforms.

U.S. Franchise Advertising

Revenues from U.S. franchise advertising increased ~~$18.6~~$0.4 million, or ~~20.8%~~0.4%, in the third quarter of ~~2020 and~~2021 due primarily to an increase in the average number of U.S. franchised stores open during the period, resulting from net store growth. This increase was partially offset by a decrease in U.S. franchise same store sales as well as approximately $2.8 million in advertising incentives related to the Domino’s Surprise FreesTM promotion. Revenues from U.S. franchise advertising increased ~~$42.3~~$26.9 million, or ~~15.8%~~8.7%, in the three fiscal quarters of ~~2020~~2021, due primarily to ~~higher~~ same store sales growth and an increase in the average number of U.S. franchised stores open during the period, ~~due to~~resulting from net store growth.

These increases were partially offset by the advertising incentives referenced above.

Supply Chain

Supply chain revenues increased ~~$88.6~~$15.2 million, or ~~18.3%~~2.6%, in the third quarter of ~~2020~~2021, due primarily to higher market basket pricing to stores and higher revenues from sales of equipment to U.S. franchised stores. Supply chain revenues increased ~~$200.7~~$134.6 million, or ~~14.1%~~8.3%, in the three fiscal quarters of ~~2020. These increases were~~2021, due primarily ~~due~~ to higher volumes from increased orders ~~resulting from U.S. franchise retail sales growth.~~and higher market basket pricing to stores. Our market basket pricing to stores increased ~~3.8%~~2.1% during the third quarter of ~~2020,~~2021, which resulted in an estimated ~~$19.7~~$6.3 million increase in supply chain revenues. Our market basket pricing to stores increased ~~1.9%~~2.6% during the three fiscal quarters of ~~2020,~~2021, which resulted in an estimated ~~$28.1~~$38.0 million increase in supply chain revenues.

International Franchise Royalties and Fee Revenues

Revenues from international franchise royalties and fees ~~were flat~~increased $16.0 million, or 29.2%, in the third quarter of ~~2020~~2021, and ~~decreased $3.9~~increased $46.9 million, or ~~2.4%~~29.3%, in the three fiscal quarters of ~~2020.~~2021 due primarily to higher retail sales resulting from same store sales growth and an increase in the average number of international franchised stores open during the period, resulting from net store growth. These increases in retail sales were benefited by the reopening and resumption of normal store hours and operating procedures at certain of the Company’s international franchised stores that had been temporarily closed or affected by changes in operating procedures and store hours for portions of the second and third quarters of 2020 as a result of the COVID-19 pandemic. The positive impact of changes in foreign currency exchange rates ~~negatively impacted revenue from international royalties~~of $1.3 million and ~~fees by $0.7~~$7.4 million in the third quarter of ~~2020~~2021 and ~~$4.3 million~~three fiscal quarters of 2021, respectively, also contributed to the increases in international franchise royalties and fees revenues.

Excluding the impact of foreign currency exchange rates, international franchise same store sales increased 8.8% in the third quarter of 2021, and increased 11.4% in the three fiscal quarters of 2020. Temporary store closures in certain markets and changes in operating procedures and store hours resulting from actions taken to increase social distancing across certain of the markets in which we operate, as well as targeted financial relief provided to certain of our master franchisees due to the

~~COVID-19~~

~~pandemic, also had a negative impact on international franchise revenues in the third quarter and three fiscal quarters of 2020. These pressures were partially offset by same store sales growth.~~2021. Excluding the impact of ~~changes in~~ foreign currency exchange rates, international franchise same store sales increased 6.2% in the third quarter of 2020, and increased 3.0% in the three fiscal quarters of 2020. Excluding the impact of changes in foreign currency exchange rates, international franchise same store sales increased 1.7% in the third quarter of 2019 and increased 2.0% in the three fiscal quarters of 2019.

~~Table of Contents~~

Cost of Sales / Operating Margin

Third Quarter

Third Quarter

Three Fiscal

Three Fiscal


of 2020

of 2019

Quarters of 2020

Quarters of 2019

Consolidated revenues
   $ 967.7    100.0 % $ 820.8    100.0 % $ 2,760.8    100.0 % $ 2,468.4    100.0 %
Consolidated cost of sales
   605.7    62.6 % 504.6    61.5 % 1,701.6    61.6 % 1,513.2    61.3 %










Consolidated operating margin
   $ 362.0    37.4 % $ 316.3    38.5 % $ 1,059.2    38.4 % $ 955.2    38.7 %

~~Cost~~


	Third Quarter of 2021				Third Quarter of 2020				Three Fiscal Quarters of 2021				Three Fiscal Quarters of 2020
Consolidated revenues	$	998.0	100.0	%	$	967.7	100.0	%	$	3,014.2	100.0	%	$	2,760.8	100.0	%
Consolidated cost of sales		612.8	61.4	%		605.7	62.6	%		1,832.1	60.8	%		1,701.6	61.6	%
Consolidated operating margin	$	385.2	38.6	%	$	362.0	37.4	%	$	1,182.0	39.2	%	$	1,059.2	38.4	%

Consolidated cost of sales consists primarily of U.S. Company-owned store and supply chain costs incurred to generate related revenues. Components of consolidated cost of sales primarily include food, labor, delivery and occupancy costs.

Consolidated operating margin (which we define as revenues less cost of sales) increased ~~$45.7~~$23.2 million, or ~~14.5%~~6.4%, in the third quarter of ~~2020~~2021, and increased ~~$104.0~~$122.8 million, or ~~10.9%~~11.6%, in the three fiscal quarters of ~~2020~~2021, due primarily to higher ~~U.S.~~global franchise ~~revenues and higher supply chain volumes.~~revenues. Franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on the operating margin.

As a percentage of revenues, the consolidated operating margin ~~decreased 1.1~~increased 1.2 percentage points in the third quarter of ~~2020~~2021 and ~~decreased 0.3~~increased 0.8 percentage points in the three fiscal quarters of ~~2020.~~2021. U.S. Company-owned store operating margin ~~decreased 4.5~~remained consistent in the third quarter of 2021 and increased 1.0 percentage point in the three fiscal quarters of 2021. Supply chain operating margin increased 0.5 percentage points in the third quarter of ~~2020~~2021 and decreased ~~1.6~~0.5 percentage points in the three fiscal quarters of ~~2020. Supply chain operating margin decreased 0.6 percentage points in the third quarter of 2020 and remained flat in the three fiscal quarters of 2020.~~2021. These changes in operating margin are ~~more fully discussed~~described below.

U.S. Company-Owned ~~Stores~~Store Operating Margin

Third Quarter

Third Quarter

Three Fiscal

Three Fiscal


of 2020

of 2019

Quarters of 2020

Quarters of 2019

Revenues
   $ 113.3    100.0 % $ 94.6    100.0 % $ 329.8    100.0 % $ 323.0    100.0 %
Cost of sales
   90.8    80.2 % 71.6    75.7 % 258.0    78.2 % 247.5    76.6 %










Store operating margin
   $ 22.5    19.8 % $ 23.0    24.3 % $ 71.8    21.8 % $ 75.5    23.4 %

~~The~~


	Third Quarter of 2021				Third Quarter of 2020				Three Fiscal Quarters of 2021				Three Fiscal Quarters of 2020
Revenues	$	108.4	100.0	%	$	113.3	100.0	%	$	337.7	100.0	%	$	329.8	100.0	%
Cost of sales		86.9	80.2	%		90.8	80.2	%		260.7	77.2	%		258.0	78.2	%
Store operating margin	$	21.5	19.8	%	$	22.5	19.8	%	$	77.0	22.8	%	$	71.8	21.8	%

U.S. Company-owned store operating margin (which does not include certain store-level costs such as royalties and advertising) decreased ~~$0.5~~$1.0 million, or ~~2.2%~~4.4%, in the third quarter of ~~2020~~2021, due primarily to ~~higher labor costs,~~lower same store sales, partially offset by ~~higher same store sales. The~~lower labor costs. U.S. Company-owned store operating margin ~~decreased $3.7~~increased $5.2 million, or ~~4.9%~~7.3%, in the three fiscal quarters of ~~2020~~2021, due primarily to ~~the 2019 Store Sale~~lower labor costs and higher retail sales due to ~~a lesser extent, higher labor costs,~~net store growth, but these increases were partially offset by lower same store ~~sales growth.~~sales. As a percentage of store revenues, the U.S. Company-owned store operating margin ~~decreased 4.5 percentage points~~remained consistent in the third quarter of ~~2020~~2021 and ~~decreased 1.6~~increased 1.0 percentage ~~points~~point in the three fiscal quarters of ~~2020.~~2021. These changes in operating margin as a percentage of revenues are discussed in ~~more~~additional detail below.



Food costs increased ~~0.1~~0.9 percentage points to ~~27.5%~~28.4% in the third quarter of ~~2020 due to higher food prices, partially offset by the leveraging of higher same store sales. Food costs decreased 0.1~~2021, and increased 0.6 percentage points to ~~27.0% in the first three fiscal quarters of 2020 due to the leveraging of higher same store sales.~~

~~Labor costs increased 3.7 percentage points to 31.8% in the third quarter of 2020 and increased 1.4 percentage points to 31.0%~~27.6% in the three fiscal quarters of ~~2020 due primarily to additional compensation expense for frontline team members during the~~

~~COVID-19~~

~~pandemic. In the three fiscal quarters of 2020, these increases were partially offset by reduced labor costs as a percentage of store revenues resulting from the 2019 Store Sale~~2021 due to ~~the~~ higher ~~labor rates in the market in which the sold stores operated.~~food basket prices.



~~Occupancy~~Labor costs decreased ~~0.8~~1.9 percentage points to ~~7.5%~~29.9% in the third quarter of ~~2020~~2021, and decreased ~~0.4~~2.4 percentage points to ~~7.4%~~28.6% in the three fiscal quarters of ~~2020~~2021, due primarily to additional bonus pay incurred during the ~~leveraging~~second and third quarters of ~~higher same store sales.~~

~~Repairs~~2020 for frontline team members, as well as lower team member headcount in the third quarter and ~~maintenance cost increased 0.9 percentage points to 1.8%~~three fiscal quarters of 2021. These decreases in labor costs were partially offset by continued investments in frontline team member wage rates in our U.S. Company-owned stores in the third quarter of ~~2020~~2021.



Occupancy costs, which include rent, telephone, utilities and depreciation, increased ~~0.4~~1.2 percentage points to ~~1.2%~~8.7% in the third quarter of 2021, and increased 0.5 percentage points to 7.9% in the three fiscal quarters of ~~2020~~2021, due primarily to ~~preventative maintenance in our stores.~~lower sales leverage.

Supply Chain Operating Margin

Third Quarter

Third Quarter

Three Fiscal

Three Fiscal


of 2020

of 2019

Quarters of 2020

Quarters of 2019

Revenues
   $ 573.7    100.0 % $ 485.1    100.0 % $ 1,625.5    100.0 % $ 1,424.8    100.0 %
Cost of sales
   515.0    89.8 % 433.0    89.2 % 1,443.6    88.8 % 1,265.7    88.8 %










Supply chain operating margin
   $ 58.7    10.2 % $ 52.2    10.8 % $ 181.9    11.2 % $ 159.1    11.2 %

~~Table of Contents~~


	Third Quarter of 2021				Third Quarter of 2020				Three Fiscal Quarters of 2021				Three Fiscal Quarters of 2020
Revenues	$	588.8	100.0	%	$	573.7	100.0	%	$	1,760.1	100.0	%	$	1,625.5	100.0	%
Cost of sales		525.9	89.3	%		515.0	89.8	%		1,571.4	89.3	%		1,443.6	88.8	%
Supply chain operating margin	$	62.9	10.7	%	$	58.7	10.2	%	$	188.7	10.7	%	$	181.9	11.2	%

Supply chain operating margin increased ~~$6.5~~$4.2 million, or ~~12.6%~~7.2%, in the third quarter of 2021, primarily due to higher equipment revenues as well as lower supply cost. As a percentage of supply chain revenues, the supply chain operating margin increased 0.5 percentage points in the third quarter of 2021. While the market basket pricing to stores increased 2.1% during the third quarter of 2021, we incurred additional supply costs during the third quarter of 2020 as a result of certain expenses related to the provision of safety and cleaning equipment in connection with the COVID-19 pandemic. Higher labor cost as a percentage of revenues in the third quarter of 2021 partially offset the effect of the lower supply costs. Supply chain operating margin increased ~~$22.8~~$6.8 million, or ~~14.3%~~3.6%, in the three fiscal quarters of ~~2020,~~2021, primarily ~~driven by~~due to higher equipment revenues as well as lower supply cost and higher volumes from increased store orders. As a percentage of supply chain revenues, the supply chain operating margin decreased ~~0.6~~0.5 percentage points ~~in the third quarter of 2020 and remained flat~~ in the three fiscal quarters of ~~2020~~2021 primarily due ~~primarily~~ to higher food ~~costs, partially offset in the third quarter of 2020~~ and ~~fully offset in the three fiscal quarters of 2020 by lower~~ labor ~~and delivery costs as a percentage of revenues.~~

cost.

General and Administrative Expenses

General and administrative expenses increased ~~$8.0~~$4.7 million, or ~~9.5%~~5.1%, in the third quarter of ~~2020~~2021, and increased ~~$5.6~~$19.8 million, or ~~2.1%~~7.4%, in the three fiscal quarters of ~~2020,~~2021, driven primarily by higher ~~variable performance-based~~labor costs, including non-cash equity-based compensation expense as well as higher travel expense.

The increases in general and administrative expenses were partially offset by lower professional fees in both the third quarter and three fiscal quarters of 2021.

U.S. Franchise Advertising Expenses

U.S. franchise advertising expenses increased ~~$18.6~~$0.4 million, or ~~20.8%~~0.4%, in the third quarter of ~~2020~~2021, and increased ~~$42.3~~$26.9 million, or ~~15.8%~~8.7%, in the three fiscal quarters of ~~2020 due to higher~~2021, consistent with the increase in U.S. franchise advertising revenues. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized, as our consolidated

not-for-profit

advertising fund is obligated to expend such revenues on advertising and these revenues cannot be used for general corporate purposes.

Other Income

Other income was $2.5 million in the three fiscal quarters of 2021, representing the unrealized gain recorded on the Company’s investment in Dash Brands (Note 6) resulting from the observable change in price from the valuation of the additional $40.0 million investment made in the first quarter of 2021.

Interest Expense, Net

Interest expense, net increased ~~$5.6~~$7.1 million, or ~~17.2%~~18.4%, in the third quarter of ~~2020~~2021, and increased ~~$15.9~~$14.7 million, or ~~15.9%~~12.6%, in the three fiscal quarters of ~~2020~~2021. These increases were driven ~~primarily~~ by higher average ~~debt balances~~borrowings resulting from our recapitalization transaction completed on April 16, 2021 (the “2021 Recapitalization”). In connection with the ~~2019~~2021 Recapitalization, ~~and borrowings under the Company’s variable funding notes~~we recorded $2.3 million of incremental interest expense in the ~~three fiscal quarters~~second quarter of ~~2020.~~

2021, primarily representing the expense for $2.0 million of the remaining unamortized debt issuance costs associated with the 2017 five-year fixed rate notes and 2017 five-year floating rate notes, and $0.3 million of additional interest expense incurred on the 2017 five-year fixed rate notes and 2017 five-year floating rate notes subsequent to the closing of the 2021 Recapitalization but prior to the repayment of the 2017 five-year fixed rate notes and 2017 five-year floating rate notes, resulting in the payment of interest on both the 2017 five-year fixed rate notes and 2017 five-year floating rate notes and the 2021 Notes (as defined in the "2021 Recapitalization" section below) for a short period of time.

The Company’s weighted average borrowing rate decreased to ~~3.9%~~3.8% in ~~both~~ the third quarter ~~and the three fiscal quarters~~ of ~~2020,~~2021 from ~~4.1%~~3.9% in ~~both~~ the third quarter ~~and the three fiscal quarters~~ of ~~2019,~~2020, resulting from the lower interest rates on the debt outstanding ~~in 2020 as compared~~due to the ~~same periods~~2021 Recapitalization. The Company's weighted average borrowing rate was 3.9% in ~~2019.~~

the three fiscal quarters of both 2021 and 2020.

Provision for Income Taxes

~~Provision for income taxes increased $0.8~~

Income tax expense decreased $10.2 million, or ~~3.2%~~41.6%, in the third quarter of ~~2020~~2021, and increased $48.6 million, or 185.7%, in the three fiscal quarters of 2021, due to ~~higher~~

~~pre-tax~~

~~income, partially offset by higher~~changes in excess tax benefits on non-cash equity-based compensation, which are recorded as a reduction to the income tax ~~provision. Provision for~~provision, as well as higher pre-tax income ~~taxes decreased $27.8 million, or 51.5%,~~ in the ~~three fiscal quarters~~respective periods of ~~2020 due primarily to higher excess tax benefits on equity-based compensation, partially offset by higher~~

~~pre-tax~~

~~income.~~2021. The Company recognized ~~$3.4~~$14.0 million in excess tax benefits in the third quarter of ~~2020~~2021 as compared to ~~$1.2~~$3.4 million in the third quarter of ~~2019~~2020, and ~~recognized $56.9~~$18.3 million in excess tax benefits in the three fiscal quarters of ~~2020~~2021 as compared to ~~$19.7~~$56.9 million in the three fiscal quarters of ~~2019, resulting~~2020. These changes in excess tax benefits from ~~a significant increase in~~non-cash equity-based compensation resulted primarily from the timing of stock options exercised in ~~2020~~the third quarter and three fiscal quarters of 2021 as compared to ~~2019.~~the same periods in 2020. The effective tax rate decreased to 10.7% during the third quarter of 2021 as compared to 19.9% in the third quarter of ~~2020 and decreased~~2020. The effective tax rate increased to 17.4% during the three fiscal quarters of 2021 as compared to 7.2% in the three fiscal quarters of ~~2020~~2020.

Segment Income

We evaluate the performance of our reportable segments and allocate resources to them based on earnings before interest, taxes, depreciation, amortization and other, referred to as ~~compared~~Segment Income. Segment Income for each of our reportable segments is summarized in the table below. Other Segment Income primarily includes corporate administrative costs that are not allocable to ~~21.7%~~a reportable segment, including labor, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs.


	Third Quarter of 2021			Third Quarter of 2020			Three Fiscal Quarters of 2021			Three Fiscal Quarters of 2020
U.S. Stores	$	102.0		$	101.5		$	321.3		$	292.7
Supply Chain		53.6			51.1			164.7			159.5
International Franchise		57.3			44.5			168.1			124.4
Other		(10.0	)		(13.7	)		(25.7	)		(34.4	)

U.S. Stores

U.S. stores Segment Income increased $0.5 million, or 0.4%, in the third quarter of ~~2019~~2021, primarily due to the $3.6 million increase in U.S. franchise royalties and ~~16.6%~~fees revenues, partially offset by the $1.0 million decrease in U.S. Company-owned store operating margin, as discussed above. U.S. stores Segment Income increased $28.5 million, or 9.7%, in the three fiscal quarters of ~~2019.~~

~~COVID-19~~

~~Impact~~

As2021, primarily due to the $37.0 million increase in U.S. franchise royalties and fees revenues and the $5.2 million increase in U.S. Company-owned store operating margin, as discussed above. U.S. franchise revenues do not have a cost of ~~September 6, 2020, nearly all of our~~sales component, so changes in these revenues have a disproportionate effect on U.S. stores ~~remained open, with~~Segment Income. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized and had no impact on U.S. stores ~~deploying contactless delivery and carryout solutions. Based on information reported to us~~Segment Income. These increases in U.S. stores Segment Income were partially offset by ~~our master franchisees, we estimate that as of September 6, 2020, there were fewer than 400 international stores temporarily closed.~~

~~As discussed further~~increased investments in ~~“Liquidity and Capital Resources”, given~~technological initiatives for the ~~market uncertainty arising from~~

~~COVID-19,~~

~~we took a precautionary measure and borrowed $158.0~~respective periods.

Supply Chain

Supply chain Segment Income increased $2.5 million, ~~under our variable funding notes during the second quarter of 2020. We repaid $100.0 million of these borrowings during the second quarter of 2020 and $58.0 million~~or 4.8%, in the third quarter of ~~2020. As~~2021, primarily due to the $4.2 million increase in operating margin described above. Supply chain Segment Income increased $5.3 million, or 3.3%, in the three fiscal quarters of ~~September 6,~~2021, primarily due to the $6.8 million increase in operating margin described above.

International Franchise

International franchise Segment Income increased $12.9 million or 28.9%, in the third quarter of 2021, due primarily to the $16.0 million increase in international franchise royalties and fees revenues discussed above. International franchise Segment Income increased $43.8 million or 35.2%, in the three fiscal quarters of 2021, due primarily to the $46.9 million increase in international franchise royalties and fees revenues discussed above. International franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on international franchise Segment Income. The increases in international franchise Segment Income were partially offset by increased investments in technological initiatives in the third quarter and three fiscal quarters of 2021.

Other

Other Segment Income increased $3.7 million, or 26.9%, in the third quarter of 2021, and increased $8.7 million, or 25.2%, in the three fiscal quarters of 2021, due primarily to higher corporate administrative costs allocated to our segments as compared to 2020, ~~we had less than $0.1 million outstanding under our variable funding notes.~~

~~During~~as well as lower professional fees. The increase in allocated costs in the

~~COVID-19~~

~~pandemic, we also made certain~~ third quarter and three fiscal quarters of 2021 was due primarily to higher investments ~~related~~in technological initiatives to ~~safety and cleaning equipment, enhanced sick pay and compensation for frontline team members and~~ support technology for our ~~franchisees~~U.S. and ~~their communities. While it is not possible at this time to estimate~~international franchise stores. Higher labor and travel costs partially offset the ~~full continued impact that~~

~~COVID-19~~

~~could have on our business, the continued spread of~~

~~COVID-19~~

and the measures taken by the governments of countries affected could disrupt our continuing operations and supply chain and, as a result, could adversely impact our business, financial condition or results of operations.

increases in other Segment Income.

~~Table of Contents~~

Liquidity and Capital Resources

Historically, we have operated with minimal positive working capital or negative working capital, primarily because our receivable collection periods and inventory turn rates are faster than the normal payment terms on our current liabilities. We generally collect our receivables within three weeks from the date of the related sale and we generally experience ~~35 to 45~~multiple inventory turns per ~~year.~~month. In addition, our sales are not typically seasonal, which further limits our working capital requirements. ~~The~~These factors, coupled with the use of our ongoing cash flows from operations to service our debt obligations, invest in our business, pay dividends and repurchase our common stock, ~~reduces~~reduce our working capital amounts. As of September ~~6, 2020,~~12, 2021, we had working capital of ~~$301.7~~$215.1 million, excluding restricted cash and cash equivalents of ~~$160.3~~$206.3 million, advertising fund assets, restricted, of ~~$144.3~~$186.8 million and advertising fund liabilities of ~~$138.3~~$178.5 million. Working capital includes total unrestricted cash and cash equivalents of ~~$330.7~~$295.4 million.

Our primary source of liquidity is cash flows from operations and availability of borrowings under our variable funding notes. During the third quarter and three fiscal quarters of ~~2020,~~2021, we experienced increases in ~~both U.S. and~~ international same store sales versus the comparable periods in the prior year. While our U.S. same store sales declined in the third quarter of 2021, same store sales increased during the three fiscal quarters of 2021. Additionally, both our U.S. and international businesses grew store counts in the third quarter and ~~the~~ three fiscal quarters of ~~2020.~~2021. These factors contributed to our global retail sales growth realized in both the third quarter and three fiscal quarters of 2021 which resulted in our continued ability to generate positive operating cash flows. As of September 12, 2021, we had a variable funding note facility which allowed for advances of up to $200.0 million of Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 Notes and certain other credit instruments, including letters of credit (the “2021 Variable Funding Notes”). The letters of credit are primarily related to our casualty insurance programs and certain supply chain center leases. As of September 12, 2021, we had no outstanding borrowings and $157.5 million of available borrowing capacity under our 2021 Variable Funding Notes, net of letters of credit issued of $42.5 million.

We expect to continue to use our unrestricted cash and cash equivalents, cash flows from operations, excess cash from our recapitalization transactions and available borrowings under our variable funding notes to, among other things, fund working capital requirements, invest in our core business, service our indebtedness, pay dividends and repurchase shares of our common stock. ~~We did not have any material commitments for capital expenditures as of September 6, 2020.~~

Based upon our current level of operations and anticipated growth, we believe that the cash generated from operations, our current unrestricted cash and cash equivalents and amounts available under our variable funding note facility will be adequate to meet our anticipated debt service requirements, capital expenditures and working capital needs for at least the next twelve months.

Our ability to continue to fund these items and continue to ~~reduce~~service our debt could be adversely affected by the occurrence of any of the events described under “Risk Factors” in our filings with the Securities and Exchange Commission. There can be no assurance that our business will generate sufficient cash flows from operations or that future borrowings will be available under the variable funding notes or otherwise to enable us to service our indebtedness, or to make anticipated capital expenditures. Our future operating performance and our ability to service, extend or refinance our ~~fixed and floating rate~~outstanding senior notes and to service, extend or refinance our variable funding notes will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

Restricted Cash

As of September ~~6, 2020,~~12, 2021, we had ~~approximately $113.6~~$158.6 million of restricted cash held for future principal and interest payments and other working capital requirements of our asset-backed securitization structure, ~~$46.1~~$47.5 million of restricted cash held in a three-month interest reserve as required by the related debt agreements and ~~$0.6~~$0.2 million of other restricted cash for a total of ~~$160.3~~$206.3 million of restricted cash and cash equivalents. As of September ~~6, 2020,~~12, 2021, we also held ~~$118.9~~$166.7 million of advertising fund restricted cash and cash equivalents, which can only be used for activities that promote the Domino’s ~~Pizza~~ brand.

Long-Term Debt

As of September ~~6, 2020,~~12, 2021, we had approximately ~~$4.11~~$5.07 billion of ~~total~~long-term debt, of which ~~$43.7~~$54.8 million was classified as a current liability. ~~Our~~As of September 12, 2021, our fixed ~~and floating~~ rate notes from the recapitalizations we completed in 2021, 2019, 2018, 2017 and 2015 ~~have~~had original scheduled principal payments of ~~$10.5~~$12.9 million in the remainder of ~~2020, $42.0 million in~~ 2021, ~~$897.0 million in 2022, $33.0~~$51.5 million in each of 2022, 2023 and 2024, ~~$1.15~~$1.17 billion in 2025, ~~$20.8~~$39.3 million in 2026, ~~$1.28~~$1.31 billion in 2027, ~~$6.8~~$811.5 million in 2028, ~~and $614.3~~$625.9 million in ~~2029.~~2029, $10.0 million in 2030 and $905.0 million in 2031.

In accordance with our debt agreements, the payment of principal on the outstanding senior notes may be suspended if our leverage ratio is less than or equal to 5.0x total debt to adjusted EBITDA, as defined in the related agreements, and no catch-up provisions are applicable. As of the fourth quarter of 2020, we had a leverage ratio of less than 5.0x, and accordingly, did not make the previously scheduled debt amortization payment on our then-outstanding notes beginning in the first quarter of 2021. Accordingly, all principal amounts of our outstanding notes were classified as long-term debt in the condensed consolidated balance sheet as of January 3, 2021. Subsequent to the closing of the 2021 Recapitalization, we had a leverage ratio of greater than 5.0x, and accordingly, resumed making the previously scheduled debt amortization payment on our outstanding notes beginning in the second quarter of 2021.

2021 Recapitalization

During the second quarter of 2021, on April 16, 2021 (the “closing date”), we completed the 2021 Recapitalization in which certain of our subsidiaries issued new notes pursuant to our asset-backed securitization structure. The new notes consist of $850.0 million Series 2021-1 2.662% Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated term of 7.5 years (the “2021 A-2-I Fixed Rate Notes”), and $1.0 billion Series 2021-1 3.151% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of 10 years (collectively with the 2021 A-2-I Fixed Rate Notes, the “2021 Notes”) in an offering exempt from registration under the Securities Act of 1933, as amended. As of September ~~6, 2020, we~~12, 2021, the 2021 Notes had ~~less than $0.1~~scheduled principal payments of $4.6 million in 2021, $18.5 million in each of 2022 through 2027, $804.8 million in 2028, $10.0 million in each of 2029 and 2030 and $905.0 million in 2031. Gross proceeds from the issuance of the 2021 Notes were $1.85 billion.

Concurrently, certain of our subsidiaries also issued the 2021 Variable Funding Notes, which allow for advances of up to $200.0 million of Series 2021-1 Variable Funding Senior Secured Notes, Class A-1 Notes and certain other credit instruments, including letters of credit. The 2021 Variable Funding Notes were undrawn on the closing date. In connection with the issuance of our 2021 Variable Funding Notes, our previous variable funding note facility was canceled.

A portion of proceeds from the 2021 Recapitalization was used to repay the remaining $291.0 million in outstanding ~~borrowings~~principal under our ~~variable funding~~2017 five-year floating rate notes and $582.0 million in outstanding principal under our 2017 five-year fixed rate notes. The proceeds were also used to pre-fund a portion of the interest payable on the 2021 Notes and pay transaction fees and expenses. In connection with the repayment of the 2017 five-year floating rate notes and 2017 five-year fixed rate notes, we expensed approximately ~~$160.0~~$2.0 million ~~available~~ for ~~borrowing, net~~the remaining unamortized debt issuance costs associated with these notes. Additionally, in connection with the 2021 Recapitalization, we capitalized $14.9 million of ~~letters~~debt issuance costs, which are being amortized into interest expense over the 7.5 and 10-year expected terms of ~~credit issued of $40.0 million. The letters of credit are primarily related to our casualty insurance programs and supply chain center leases. Borrowings under~~ the ~~variable funding notes are available to fund our working capital requirements, capital expenditures and, subject to other limitations, other~~2021 Notes. We used the remaining proceeds for general corporate purposes, ~~including dividend payments and~~which primarily included a $1.0 billion accelerated share ~~repurchases.~~

repurchase agreement (the “ASR Agreement”) with a counterparty. The ASR Agreement is described in additional detail below.

Share Repurchase Programs

Our share repurchase programs have historically been funded by excess operating cash flows, excess proceeds from our recapitalization transactions and borrowings under our variable funding notes. ~~The Company’s Board of Directors authorized a share repurchase program to repurchase up to $1.0 billion of the Company’s common stock on October 4, 2019.~~

During ~~the first week of~~ the first quarter of ~~2020,~~2021, we repurchased and retired ~~271,064~~65,870 shares of our common stock under our Board of Directors-approved share repurchase program for a total of approximately ~~$79.6~~$25.0 million. ~~We did not~~Our Board of Directors authorized a new share repurchase program to repurchase up to $1.0 billion of our common stock on February 24, 2021.

On April 30, 2021, we entered into the ASR Agreement. Pursuant to the terms of the ASR Agreement, on May 3, 2021, we used a portion of the proceeds from the 2021 Recapitalization to pay the counterparty $1.0 billion in cash and ~~retire any~~received and retired 2,012,596 shares of our common stock. Final settlement of the ASR Agreement occurred on July 21, 2021. In connection with the ASR Agreement, we received and retired a total of 2,250,786 shares of our common stock ~~during~~at an average price of $444.29, including the ~~remainder~~2,012,596 shares of ~~the first quarter or~~our common stock received and retired during the second ~~or third quarters~~quarter of ~~2020. As~~2021.

On July 20, 2021, our Board of ~~September 6, 2020,~~Directors authorized a new share repurchase program to repurchase up to $1.0 billion of our common stock. This repurchase program replaced our previously approved $1.0 billion share repurchase program, which was fully utilized in connection with the ~~Company had a total remaining authorized amount for share repurchases of approximately $326.6 million.~~

~~Table of Contents~~

ASR Agreement.

During the third quarter of ~~2019,~~2021, we repurchased and retired ~~384,338~~152,817 shares of our common stock under our Board of Directors-approved share repurchase program for a total of approximately ~~$93.7~~$79.7 million. During the three fiscal quarters of ~~2019,~~2021, we repurchased and retired ~~430,182~~2,469,473 shares of our common stock (including 2,250,786 shares of common stock repurchased under the ASR Agreement and 218,687 shares of common stock repurchased under our Board of Directors-approved share repurchase ~~program~~program) for a total of approximately ~~$105.1~~$1.1 billion. As of September 12, 2021, we had a total remaining authorized amount for share repurchases of approximately $920.3 million.

~~Dividends~~

~~On June 30, 2020,~~ Subsequent to the ~~Company paid a $0.78 dividend to its shareholders~~end of ~~record as of June 15, 2020. During~~ the third quarter and through October 12, 2021, we repurchased and retired an additional 205,145 shares of ~~2020, on~~common stock for a total of approximately $100.1 million.

Dividends

On July ~~15, 2020, the Company’s~~20, 2021, our Board of Directors declared a ~~$0.78~~$0.94 per share quarterly dividend on ~~its~~our outstanding common stock for shareholders of record as of September 15, ~~2020,~~2021, which was paid on September 30, ~~2020.~~

2021. We had approximately $35.1 million accrued for common stock dividends at September 12, 2021. Subsequent to the end of the third quarter, on October ~~6, 2020, the Company’s~~12, 2021, our Board of Directors declared a ~~$0.78~~$0.94 per share quarterly dividend on ~~its~~our outstanding common stock for shareholders of record as of December 15, ~~2020~~2021, to be paid on December 30, ~~2020.~~

2021.

Sources and Uses of Cash

The following table illustrates the main components of our cash flows:

(In millions)
Three Fiscal Quarters

of 2020

Three Fiscal Quarters

of 2019

Cash Flows Provided By (Used In)

Net cash provided by operating activities
   $ 370.4    $ 324.6
Net cash used in investing activities
   (91.1 )    (3.1 )
Net cash used in financing activities
   (153.6 )    (246.3 )
Exchange rate changes
   0.2    0.1




Change in cash and cash equivalents, restricted cash and cash equivalents
   $ 126.0    $ 75.3


(In millions)	Three Fiscal Quarters of 2021			Three Fiscal Quarters of 2020
Cash flows provided by (used in)
Net cash provided by operating activities	$	484.6		$	370.4
Net cash used in investing activities		(90.3	)		(91.1	)
Net cash used in financing activities		(228.1	)		(153.6	)
Effect of exchange rate changes on cash		0.1			0.2
Change in cash and cash equivalents, restricted cash and cash equivalents	$	166.2		$	126.0

Operating Activities

Cash provided by operating activities increased ~~$45.8~~$114.2 million in the three fiscal quarters of ~~2020~~2021 primarily due to ~~an increase in net income of $68.0 million and higher~~

~~non-cash~~

~~amounts of $6.6 million. These increases were partially offset by a $28.8 million negative~~the positive impact of changes in operating assets and liabilities of $73.0 million. The positive impact of changes in ~~2020 as compared to 2019, which primarily~~operating assets and liabilities related to ~~an increase in our inventory~~the timing of payments on accounts payable and ~~accounts receivable balances,~~accrued liabilities, income tax payments as well as the timing of ~~payments~~collections on accounts ~~payable. These~~receivable in 2021 as compared to 2020. The increase in net income, adjusted for the impact of non-cash transactions, of $24.5 million in the three fiscal quarters of 2021 also contributed to the increase in cash provided by operating ~~asset and liability~~activities. The increase in cash provided by operating activities was also due to a $16.7 million positive impact of changes ~~were partially offset by an increase~~ in advertising fund assets and liabilities, restricted, in ~~2020~~2021 as compared to ~~2019~~2020 due to ~~lower spending~~the receipt of ~~fund assets.~~

advertising contributions outpacing payments for advertising activities.

Investing Activities

Cash used in investing activities was ~~$91.1~~$90.3 million in the three fiscal quarters of ~~2020,~~2021, which primarily consisted ~~primarily~~of $50.7 million of capital expenditures ~~of $51.2 million~~ (driven primarily by investments in technological initiatives, supply chain centers and corporate ~~stores)~~store operations) and ~~the~~an additional investment in Dash Brands (Note 6) of $40.0 million.

Financing Activities

Cash used in ~~investing~~financing activities was ~~$3.1~~$228.1 million in the three fiscal quarters of 2019. We used $42.7 million of cash for capital expenditures (driven primarily by investments in technological initiatives and supply chain centers). This use of cash was partially offset by maturities of advertising fund investments, restricted of $30.2 million and proceeds from the sale of assets of $9.7 million, which 2021,primarily related to the ~~2019 Store Sale.~~

~~Financing Activities~~

~~Cash used in financing activities was $153.6 million in the three fiscal quarters~~repurchase of ~~2020. We borrowed $158.0 million under our variable funding notes during the three fiscal quarters of 2020 and repaid $190.8 million of long-term debt (of which~~ approximately ~~$158.0 million related to the repayment of borrowings under our variable funding notes). We also repurchased approximately $79.6 million~~$1.1 billion in common stock under our Board of Directors-approved share repurchase program in(including $1.0 billion under the ~~first week~~ASR Agreement), repayments of ~~2020, made~~long-term debt and finance lease obligations of $896.2 million, dividend payments ~~to our shareholders~~ of ~~$61.1~~$71.2 million, cash paid for financing costs as part of the 2021 Recapitalization of $14.9 million and ~~made~~ tax payments for the vesting of restricted stock ~~upon vesting~~ of ~~$6.6~~$6.8 million. Of the total amount of repayments of long-term debt and finance lease obligations, $873.0 million represents the repayment of the remaining principal under our then-outstanding 2017 five-year floating rate notes and 2017 five-year fixed rate notes as part of the 2021 Recapitalization. These uses of cash were partially offset by proceeds from ~~the exercise~~our 2021 Recapitalization of ~~stock options of $26.5 million.~~

Cash used in financing activities was $246.3 million in the three fiscal quarters of 2019, primarily related to purchases of common stock of $105.1 million under our Board of Directors-approved share repurchase program, repayments of long-term debt of $91.9 million (of which $65.0 million related to the repayment of borrowings under our variable funding notes), dividend payments to our shareholders of $53.6 million$1.85 billion and ~~tax payments for restricted stock upon vesting of $5.8 million. These uses of cash were partially offset by~~ proceeds from the exercise of stock options of ~~$10.1~~$15.9 million.

~~Table~~

Critical Accounting Policies and Estimates

For a description of ~~Contents~~

the Company’s critical accounting policies and estimates, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2020 Form 10-K. The Company considers its most significant accounting policies and estimates to be revenue recognition, long-lived assets, insurance and legal matters, share-based payments and income taxes. There have been no material changes to the Company’s critical accounting policies and estimates since January 3, 2021.

Forward-Looking Statements

This filing contains various forward-looking statements about the Company within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) that are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. The following cautionary statements are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the “safe harbor” provisions of the Act. You can identify forward-looking statements by the use of words such as “anticipates,” “believes,” “could,” “should,” “estimates,” “expects,” “intends,” “may,” “will,” “plans,” “predicts,” “projects,” “seeks,” “approximately,” “potential,” “outlook” and similar terms and phrases that concern our strategy, plans or intentions, including references to assumptions. These forward-looking statements address various matters including information concerning future results of operations and business strategy, our anticipated profitability, estimates in same store sales growth, the growth of our U.S. and international business, our ability to service our indebtedness, our future cash flows, our operating performance, trends in our business and other descriptions of future events reflect the Company’s expectations based upon currently available information and data. While we believe these expectations and projections are based on reasonable assumptions, such forward-looking statements are inherently subject to risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from our expectations are more fully described under the section headed “Risk Factors” in this filing and in our other filings with the Securities and Exchange Commission, including under the section headed “Risk Factors” in our ~~2019~~2020 Form

~~10-K~~

~~and in our Quarterly Reports on Form~~

~~10-Q~~

~~for the quarterly periods ended March 22, 2020 and June 14, 2020.~~ 10-K. Actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including but not limited to: our substantial increased indebtedness as a result of our recapitalization transactions and our ability to incur additional indebtedness or refinance or renegotiate key terms of that indebtedness in the future; the impact a downgrade in our credit rating may have on our business, financial condition and results of operations; our future financial performance and our ability to pay principal and interest on our indebtedness; our ability to manage difficulties associated with or related to the COVID-19 pandemic and the effects of COVID-19 on our business and supply chain; the effectiveness of our advertising, operations and promotional initiatives; the strength of our brand, including our ability to compete in the U.S. and internationally in our intensely competitive industry, including the food service and food delivery markets; ~~our ability to manage difficulties associated with or related to the~~

~~COVID-19~~

~~pandemic and the effects of~~

~~COVID-19~~

~~on our business and supply chain;~~ the impact of social media and other consumer-oriented technologies on our business, brand and reputation; ~~new product, digital ordering and concept developments by us, and other food-industry competitors;~~ the impact of new or improved technologies and alternative methods of delivery on consumer behavior; new product, digital ordering and concept developments by us, and other food-industry competitors; our ability to maintain good relationships with and attract new franchisees, and franchisees’ ability to ~~profitably~~successfully manage their operations without negatively impacting our royalty payments and fees or our brand’s reputation; our ability to successfully implement cost-saving strategies; our ability and that of our franchisees to successfully operate in the current and future credit environment; changes in the level of consumer spending given general economic conditions, including interest rates, energy prices and consumer confidence; our ability and that of our franchisees to open new restaurants and keep existing restaurants in operation; changes in operating expenses resulting from changes in prices of food (particularly cheese), fuel and other commodity costs, labor, utilities, insurance, employee benefits and other operating costs; the impact that widespread illness, health epidemics or general health concerns, severe weather conditions and natural disasters may have on our business and the economies of the countries where we operate; changes in foreign currency exchange rates; changes in income tax rates; our ability to retain or replace our executive officers and other key members of management and our ability to adequately staff our stores and supply chain centers with qualified personnel; our ability to find and/or retain suitable real estate for our stores and supply chain centers; changes in government legislation and regulations, including changes in laws and regulations regarding information privacy, payment methods consumer protection and social media; adverse legal judgments or settlements; food-borne illness or contamination of products; data breaches, power loss, technological failures, user error or other cyber risks threatening us or our franchisees; the effect of war, terrorism, catastrophic events or climate change; our ability to pay dividends and repurchase shares; changes in consumer ~~preferences,~~tastes, spending and traffic patterns and demographic trends; actions by activist investors; changes in accounting policies; and adequacy of our insurance coverage. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this filing might not occur. All forward-looking statements speak only as of the date of this filing and should be evaluated with an understanding of their inherent uncertainty. Except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission, or other applicable law, we will not undertake, and specifically disclaim, any obligation to publicly update or revise any forward-looking statements to reflect events or circumstances arising after the date of this filing, whether as a result of new information, future events or otherwise. You are cautioned not to place undue reliance on the forward-looking statements included in this filing or that may be made elsewhere from time to time by, or on behalf of, us. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

We do not engage in speculative transactions nor do we hold or issue financial instruments for trading purposes. In connection with the recapitalizations of our business, we have issued fixed ~~and floating~~ rate notes and entered into variable funding notes and, at September ~~6, 2020,~~12, 2021, we are exposed to interest rate risk on borrowings under our ~~floating rate notes and~~ variable funding notes. As of September ~~6, 2020,~~12, 2021, we had ~~less than $0.1 million of~~no outstanding borrowings under our ~~variable funding notes.~~ 2021 Variable Funding Notes.

Our ~~floating rate notes and our variable funding notes~~2021 Variable Funding Notes bear interest at fluctuating interest rates based on LIBOR.

There is currently uncertainty around whether LIBOR will continue to exist after ~~2021. If~~2023. Our 2021 Variable Funding Notes loan documents contemplate a transition from LIBOR to secured overnight financing rate (“SOFR”) in the event that LIBOR ceases to ~~exist, we may need to renegotiate our loan documents~~exist. Because the composition and ~~we cannot predict what alternative index~~characteristics of SOFR are not the same as those of LIBOR, in such event, there can be no assurance that SOFR will perform the same way LIBOR would ~~be negotiated with our lenders.~~have at any given time or for any applicable period. As a result, our interest expense could increase, in which event we may have difficulties making interest payments and funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected.

Our fixed rate debt exposes the Company to changes in market interest rates reflected in the fair value of the debt and to the risk that the Company may need to refinance maturing debt with new debt at a higher rate.

We are exposed to market risks from changes in commodity prices. During the normal course of business, we purchase cheese and certain other food products that are affected by changes in commodity prices and, as a result, we are subject to volatility in our food costs. We may periodically enter into financial instruments to manage this ~~risk.~~risk, although we have not done so historically. We do not engage in speculative transactions or hold or issue financial instruments for trading purposes. In instances when we use fixed pricing agreements with our suppliers, these agreements cover our physical commodity needs, are not

net-settled

and are accounted for as normal purchases.

We have exposure to various foreign currency exchange rate fluctuations for revenues generated by our operations outside the U.S., which can adversely impact our net income and cash flows. Approximately 7.1% of our total revenues in the third quarter of 2021, approximately 6.9% of our total revenues in the three fiscal quarters of 2021, approximately 5.6% of our total revenues in the third quarter of 2020 and approximately 5.8% of our total revenues in the three fiscal quarters of 2020 ~~approximately 6.7% of our total revenues in the third quarter of 2019 and approximately 6.6% of our total revenues in the three fiscal quarters of 2019~~ were derived from our international franchise segment, a majority of which were denominated in foreign currencies. We also operate dough manufacturing and distribution facilities in Canada, which generate revenues denominated in Canadian dollars. We do not enter into financial instruments to manage this foreign currency exchange ~~rate~~ risk. A hypothetical 10% adverse change in the foreign currency ~~exchange~~ rates for our international markets would have resulted in a negative impact on royalty revenues of approximately ~~$14.1~~$18.4 million in the three fiscal quarters of ~~2020.~~

2021.

Item 4. Controls and Procedures.

Management, with the participation of the Company’s Chief Executive Officer (who is also serving as the Company’s interim principal financial officer), Richard E. Allison, Jr., ~~and Executive Vice President and Chief Financial Officer, Stuart A. Levy,~~ performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as that term is defined in

Rules 13a-15(e) and 15d-15(e) under

the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, Mr. Allison ~~and Mr. Levy~~ concluded that the Company’s disclosure controls and procedures were effective.

During the quarterly period ended September ~~6, 2020,~~12, 2021, there were no changes in the Company’s internal ~~controls~~control over financial reporting as defined in

Rules 13a-15(f) and 15d-15(f) ~~under~~

~~the Securities and Exchange Act of 1934, as amended,~~ that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

~~Table of Contents~~

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are a party to lawsuits, revenue agent reviews by taxing authorities and administrative proceedings in the ordinary course of business which include, without limitation, workers’ compensation, general liability, automobile and franchisee claims. We are also subject to suits related to employment ~~practices as well as intellectual property, including patents.~~

On February 14, 2011, Domino’s Pizza LLC was named as a defendant in a lawsuit along with Fischler Enterprises of C.F., Inc., a franchisee, and Jeffrey S. Kidd, the franchisee’s delivery driver, filed by Yvonne Wiederhold, the plaintiff, as Personal Representative of the Estate of Richard E. Wiederhold, deceased. The case involved a traffic accident in which the franchisee’s delivery driver is alleged to have caused an accident involving a vehicle driven by Richard Wiederhold. Mr. Wiederhold sustained spinal injuries resulting in quadriplegia and passed away several months after the accident. The case went to trial in 2016 and the Company was found liable, but the verdict was reversed by the Florida Fifth District Court of Appeals in May 2018 and was remanded to the Ninth Judicial Circuit Court of Florida for a new trial. The case was tried again in June 2019 and the jury returned a $9.0 million judgment for the plaintiff where the Company and Mr. Kidd were found to be 100% liable (after certain offsets and other deductions the final verdict was $8.0 million). The Company continues to deny liability and has filed an appeal.

practices.

While we may occasionally be party to large claims, including class action suits, we do not believe that any existing matters, individually or in the aggregate, will materially affect our financial position, results of operations or cash flows.

Item 1A. Risk Factors.

~~Our operations~~

There have been ~~and are expected~~no material changes with respect to ~~continue to be adversely affected by~~

~~the COVID-19 pandemic,~~

~~which could adversely affect our business, financial condition and results of operations as well.~~

~~The COVID-19~~

~~pandemic has spread across the globe and is impacting worldwide economic activity. A public health pandemic such~~

~~as COVID-19 poses~~

~~the~~those risk that we and/or our employees, franchisees, supply chain centers, suppliers, customers and other partners may be, or may continue to be, prevented from conducting business activities for an indefinite period of time, including due to shutdowns, travel restrictions, social distancing requirements, stay at home orders and advisories and other restrictions that have been or may be suggested or mandated by governmental authorities, or due to the impact of the disease itself on the business’ workforces. In

~~addition, COVID-19 may~~

~~impact the willingness of customers to purchase food prepared outside of the home.~~

~~The COVID-19 pandemic~~

~~may also have the effect of heightening many of the other risks described~~factors previously disclosed in ~~the ‘‘Risk Factors’’ section~~Item 1A “Risk Factors” in Part I of our ~~2019~~

2020 Form ~~10-K, including~~

but not limited to those relating to our growth strategy, our supply chain and increased food and labor costs, disruption in operations, loss of key employees, our indebtedness, general economic conditions and our international operations.

~~In response to governmental requirements, we and our franchisees have, among other measures, temporarily closed certain of our stores, modified certain stores’ hours and closed locations~~

~~to in-store dining,~~

~~and continue to monitor additional developments. We have also made additional operating changes to respond to changes in consumer behavior resulting~~

~~from COVID-19, including~~

~~offering contactless delivery and carryout options to our customers. While it is not possible at this time to estimate the full impact~~

~~that COVID-19 could~~

have on our business going forward, the continued spread of the virus and the measures taken by governments or by us in response have disrupted our operations and could disrupt our supply chain, including our access to face coverings and gloves for use in our operations, which could adversely impact our business, financial condition and results of operations.

~~The COVID-19 pandemic~~

and mitigation measures have also had an adverse impact on global economic conditions, which could have an adverse effect on our business and financial condition. The Company’s sales and operating results may be affected by uncertain or changing economic and market conditions arising in connection with and in response to

~~the COVID-19 pandemic,~~

including inflation, deflation, prolonged weak consumer demand, political instability or other changes. The significance of the operational and financial impact to the Company will depend on how long and widespread the disruptions caused

~~by COVID-19, and~~

~~the corresponding response to contain the virus and treat those affected by it, prove to be.~~

~~Table of Contents~~

10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

c. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

Maximum
Approximate Dollar


Total Number of Shares

Value of Shares that


Total Number

Purchased as Part of

May Yet Be Purchased


of Shares

Average Price Paid

Publicly Announced

Under the Program

Period

Purchased (1)

Per Share

Program (2)

(in thousands)

Period #7 (June 15, 2020 to July 12, 2020)
   1,040    $ 374.76    —      $ 326,552
Period #8 (July 13, 2020 to August 9, 2020)
   1,548    394.08    —      326,552
Period #9 (August 10, 2020 to September 6, 2020)
   1,540    410.67    —      326,552








Total
   4,128    $ 395.40    —      $ 326,552


							Maximum Approximate Dollar
					Total Number of Shares		Value of Shares that
	Total Number				Purchased as Part of		May Yet Be Purchased
	of Shares		Average Price Paid		Publicly Announced		Under the Program
Period	Purchased (1)		Per Share		Program (2)		(in thousands)
Period #7 (June 21, 2021 to July 18, 2021)		913	$	475.82		—	$	—
Period #8 (July 19, 2021 to August 15, 2021)		300,483		530.80		299,265		967,586
Period #9 (August 16, 2021 to September 12, 2021)		93,194		515.30		91,742		920,312
Total		394,590	$	521.24		391,007	$	920,312

~~(1)~~

~~4,128~~

(1)

3,583 shares in the third quarter of ~~2020~~2021 were purchased as part of the Company’s employee stock payroll deduction ~~plan~~plan. During the third quarter, the shares were purchased at an average price of ~~$395.40.~~$511.95.

(2)

~~As of September 6, 2020,~~

On April 30, 2021, the Company ~~had~~entered into the ASR Agreement. Pursuant to the terms of the ASR Agreement, on May 3, 2021, the Company received and retired 2,012,596 shares of its common stock. Final settlement of the ASR Agreement occurred on July 21, 2021. The total number of shares purchased in Period 8, 2021 (July 19, 2021 to August 15, 2021) includes 238,190 shares received at final settlement of the ASR Agreement. In connection with the ASR Agreement, the Company received and retired a total of 2,250,786 shares of its common stock at an average price of $444.29.

On July 20, 2021, the Company’s Board of ~~Directors-approved~~Directors authorized a new share repurchase program ~~for~~to repurchase up to $1.0 billion of ~~our~~the Company’s common ~~stock,~~stock. As of ~~which $326.6~~September 12, 2021, $920.3 million remained available for future purchases of ~~our~~the Company’s common ~~stock.~~ stock under this share repurchase program.

Subsequent to the end of the third quarter and through October 12, 2021, the Company repurchased and retired an additional 205,145 shares of common stock for a total of approximately $100.1 million, or an average price of $487.90 per share.

Authorization for the repurchase program may be modified, suspended, or discontinued at any time. The repurchase of shares in any particular period and the actual amount of such purchases remain at the discretion of the Board of Directors, and no assurance can be given that shares will be repurchased in the future.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.


Exhibit Number		Description
10.1		Form of Restricted Stock Unit Award Agreement under the Amended Domino’s Pizza, Inc. 2004 Equity Incentive Plan.
~~10.1~~ 31.1		~~Employment Agreement dated as of August 3, 2020 between Domino’s Pizza LLC and Stuart A. Levy.~~

~~31.1~~		Certification by Richard E. Allison, Jr. pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, relating to Domino’s Pizza, Inc.
32.1
~~31.2~~		~~Certification by Stuart A. Levy pursuant to Rule~~ ~~13a-14(a)~~ ~~and~~ ~~15d-14(a),~~ ~~as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, relating to Domino’s Pizza, Inc.~~

~~32.1~~		Certification by Richard E. Allison, Jr. pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, relating to Domino’s Pizza, Inc.
101.INS
~~32.2~~		Certification by Stuart A. Levy pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, relating to Domino’s Pizza, Inc.

~~101.INS~~		XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
~~101.SCH~~		Inline XBRL Taxonomy Extension Schema Document.
101.CAL
~~101.CAL~~		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB
~~101.LAB~~		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
~~101.PRE~~		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF
~~101.DEF~~		Inline XBRL Taxonomy Extension Definition Linkbase Document.
104
~~104~~		Cover page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101).

~~Table of Contents~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


			DOMINO’S PIZZA, INC. (Registrant)
Date: October 14, 2021			/s/ Richard E. Allison, Jr.
~~Date: October 8, 2020~~	~~/s/ Stuart A. Levy~~		Richard E. Allison, Jr.
	~~Stuart A. Levy~~
		Chief Executive ~~Vice President, Chief Financial~~ Officer (Principal Executive Officer and Principal Financial Officer)


(In thousands)	September 6, 2020			December 29, 2019 (1)
Assets
Current assets:
Cash and cash equivalents	$	330,719		$	190,615
Restricted cash and cash equivalents		160,330			209,269
Accounts receivable, net		229,403			210,260
Inventories		65,499			52,955
Prepaid expenses and other		26,288			19,129
Advertising fund assets, restricted		144,282			105,389

Total current assets		956,521			787,617

Property, plant and equipment:
Land and buildings		65,581			44,845
Leasehold and other improvements		181,556			164,071
Equipment		274,337			243,708
Construction in progress		14,784			42,705

		536,258			495,329
Accumulated depreciation and amortization		(273,994	)		(252,448	)

Property, plant and equipment, net		262,264			242,881

Other assets:
Operating lease right-of-use assets		229,653			228,785
Goodwill		15,061			15,093
Capitalized software, net		78,632			73,140
Other assets		72,787			24,503
Deferred income taxes		6,030			10,073

Total other assets		402,163			351,594

Total assets	$	1,620,948		$	1,382,092

Liabilities and stockholders’ deficit
Current liabilities:
Current portion of long-term debt	$	43,662		$	43,394
Accounts payable		88,188			111,101
Operating lease liabilities		36,508			33,318
Insurance reserves		23,816			23,735
Dividends payable		31,258			471
Advertising fund liabilities		138,348			101,921
Other accrued liabilities		126,745			139,891

Total current liabilities		488,525			453,831

Long-term liabilities:
Long-term debt, less current portion		4,062,175			4,071,055
Operating lease liabilities		201,981			202,731
Insurance reserves		37,428			34,675
Other accrued liabilities		42,370			35,559

Total long-term liabilities		4,343,954			4,344,020

Stockholders’ deficit:
Common stock		394			389
Additional paid-in capital		34,124			243
Retained deficit		(3,242,627	)		(3,412,649	)
Accumulated other comprehensive loss		(3,422	)		(3,742	)

Total stockholders’ deficit		(3,211,531	)		(3,415,759	)

Total liabilities and stockholders’ deficit	$	1,620,948		$	1,382,092


	Three Fiscal Quarters Ended
(In thousands)	September 6, 2020			September 8, 2019
Cash flows from operating activities:
Net income	$	339,399		$	271,382
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		44,116			40,982
Loss on sale/disposal of assets		1,530			3,141
Amortization of debt issuance costs		3,853			3,288
Provision for deferred income taxes		3,681			1,627
Non-cash equity-based compensation expense		14,934			13,269
Excess tax benefits from equity-based compensation		(56,862	)		(19,670	)
Provision for losses on accounts and notes receivable		1,536			774
Changes in operating assets and liabilities		(14,146	)		16,214
Changes in advertising fund assets and liabilities, restricted		32,358			(6,411	)

Net cash provided by operating activities		370,399			324,596

Cash flows from investing activities:
Capital expenditures		(51,163	)		(42,676	)
Purchase of investments (Note 9)		(40,000	)		–
Proceeds from sale of assets		11			9,738
Maturities of advertising fund investments, restricted		–			30,152
Other		83			(351	)

Net cash used in investing activities		(91,069	)		(3,137	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		158,000			–
Repayments of long-term debt and finance lease obligations		(190,843	)		(91,860	)
Proceeds from exercise of stock options		26,526			10,122
Purchases of common stock		(79,590	)		(105,149	)
Tax payments for restricted stock upon vesting		(6,584	)		(5,820	)
Payments of common stock dividends and equivalents		(61,093	)		(53,598	)

Net cash used in financing activities		(153,584	)		(246,305	)

Effect of exchange rate changes on cash		243			139

Change in cash and cash equivalents, restricted cash and cash equivalents		125,989			75,293

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		330,719			66,706
Restricted cash and cash equivalents, end of period		160,330			177,292
Cash and cash equivalents included in advertising fund assets, restricted, end of period		118,864			68,714

Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, end of period	$	609,913		$	312,712


	Fiscal Quarters Ended September 6, 2020 and September 8, 2019
	U.S. Stores		Supply Chain		International Franchise		Intersegment Revenues			Other			Total
Revenues
2020	$	339,456	$	605,481	$	54,602	$	(31,820	)	$	—		$	967,719
2019		281,116		511,709		54,586		(26,599	)		—			820,812
Income from operations
2020	$	98,743	$	46,356	$	44,420		N/A		$	(27,338	)	$	162,181
2019		80,188		40,513		42,281		N/A			(19,953	)		143,029
Segment Income
2020	$	101,513	$	51,114	$	44,461		N/A		$	(13,689	)	$	183,399
2019		82,556		44,432		42,337		N/A			(8,172	)		161,153


						Additional Paid-in Capital			Retained Deficit			Accumulated Other Comprehensive Loss

	Common Stock
	Shares			Amount
Balance at June 14, 2020		39,347,213		$	393	$	32,251		$	(3,311,015	)	$	(4,535	)
Net income		—			—		—			99,129			—
Dividends declared on common stock and equivalents ($ 0.78 per share)		—			—		—			(30,741	)		—
Issuance and cancellation of stock awards, net		32,676			1		—			—			—
Tax payments for restricted stock upon vesting		(12,195	)		—		(4,757	)		—			—
Exercise of stock options		24,781			—		1,725			—			—
Non-cash equity-based compensation expense		—			—		4,905			—			—
Currency translation adjustment		—			—		—			—			1,113

Balance at September 6, 2020		39,392,475		$	394	$	34,124		$	(3,242,627	)	$	(3,422	)


	At September 6, 2020
			Fair Value Estimated Using
	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Cash equivalents	$	276,905	$	276,905	$	—	$	—
Restricted cash equivalents		102,763		102,763		—		—
Investments in marketable securities		12,043		12,043		—		—
Advertising fund cash equivalents, restricted		97,190		97,190		—		—
Investments (Note 9)		40,000		—		—		40,000


	At December 29, 2019
			Fair Value Estimated Using
	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 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		—		—


	September 6, 2020				December 29, 2019
	Principal Amount		Fair Value		Principal Amount		Fair Value
2015 Ten-Year Fixed Rate Notes	$	768,000	$	821,760	$	774,000	$	804,960
2017 Five-Year Fixed Rate Notes		583,500		585,251		588,000		588,588
2017 Ten-Year Fixed Rate Notes		972,500		1,046,410		980,000		1,017,240
2017 Five-Year Floating Rate Notes		291,750		291,458		294,000		294,000
2018 7.5-Year Fixed Rate Notes		416,500		443,156		419,688		431,439
2018 9.25-Year Fixed Rate Notes		392,000		425,320		395,000		414,355
2019 Ten-Year Fixed Rate Notes		669,938		706,114		675,000		675,675


	September 6, 2020			December 29, 2019
Land and buildings	$	45,992		$	25,476
Accumulated depreciation and amortization		(9,208	)		(7,846	)

Finance lease assets, net	$	36,784		$	17,630

Current portion of long-term debt	$	1,662		$	1,394
Long-term debt, less current portion		36,986			18,263

Total principal payable on finance leases	$	38,648		$	19,657


	September 6, 2020						December 29, 2019
	Operating Leases			Finance Leases			Operating Leases			Finance Leases
Weighted average remaining lease term		7 years			17 years			8 years			14 years
Weighted average discount rate		3.8	%		8.9	%		3.8	%		11.7	%


	Balance at December 29, 2019			Adjustments Due to ASC 326			Balance at December 30, 2019
Assets
Current assets:
Accounts receivable, net	$	210,260		$	1,435		$	211,695
Prepaid expenses and other		19,129			4			19,133
Other assets:
Other assets		12,521			27			12,548
Deferred income taxes		10,073			(364	)		9,709
Liabilities and stockholders’ deficit
Stockholders’ deficit:
Retained deficit		(3,412,649	)		1,102			(3,411,547	)


	Third Quarter					Third Quarter					Three Fiscal					Three Fiscal
	of 2020					of 2019					Quarters of 2020					Quarters of 2019
Global retail sales growth (versus prior year period, excluding foreign currency impact)				+14.8	%				+7.5	%				+9.6	%				+8.1	%
Same store sales growth (1):
U.S. Company-owned stores				+16.6	%				+1.7	%				+12.4	%				+2.3	%
U.S. franchise stores				+17.5	%				+2.5	%				+11.6	%				+3.2	%

U.S. stores				+17.5	%				+2.4	%				+11.7	%				+3.1	%
International stores (excluding foreign currency impact)				+6.2	%				+1.7	%				+3.0	%				+2.0	%
Store counts (at end of period):
U.S. Company-owned stores				348					333
U.S. franchise stores				5,891					5,652

U.S. stores				6,239					5,985
International stores				11,017					10,543

Total stores (2)				17,256					16,528

Income statement data:
Total revenues	$	967.7		100.0	%	$	820.8		100.0	%	$	2,760.8		100.0	%	$	2,468.4		100.0	%
Cost of sales		605.7		62.6	%		504.6		61.5	%		1,701.6		61.7	%		1,513.2		61.3	%
General and administrative		91.7		9.4	%		83.7		10.2	%		268.2		9.7	%		262.6		10.7	%
U.S. franchise advertising		108.1		11.2	%		89.5		10.9	%		309.4		11.2	%		267.1		10.8	%

Income from operations		162.2		16.8	%		143.0		17.4	%		481.6		17.4	%		425.5		17.2	%
Interest expense, net		(38.4	)	(4.0	)%		(32.8	)	(4.0	)%		(116.0	)	(4.2	)%		(100.1	)	(4.0	)%

Income before provision for income taxes		123.8		12.8	%		110.2		13.4	%		365.6		13.2	%		325.4		13.2	%
Provision for income taxes		24.6		2.6	%		23.9		2.9	%		26.2		0.9	%		54.0		2.2	%

Net income	$	99.1		10.2	%	$	86.4		10.5	%	$	339.4		12.3	%	$	271.4		11.0	%


(In millions)	Three Fiscal Quarters of 2020			Three Fiscal Quarters of 2019
Cash Flows Provided By (Used In)
Net cash provided by operating activities	$	370.4		$	324.6
Net cash used in investing activities		(91.1	)		(3.1	)
Net cash used in financing activities		(153.6	)		(246.3	)
Exchange rate changes		0.2			0.1

Change in cash and cash equivalents, restricted cash and cash equivalents	$	126.0		$	75.3

Large accelerated filer

Accelerated filer

Non-accelerated filer

~~Non-accelerated~~
~~filer~~

Smaller reporting company

Emerging growth company