SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 13, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from: to
Commission file numbers:
| Domino’s Pizza, Inc. | 333-114442 | |||||
| Domino’s, Inc. | 333-107774 |
Domino’s Pizza, Inc.
Domino’s, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 38-2511577 | |
| Delaware | 38-3025165 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
30 Frank Lloyd Wright Drive
Ann Arbor, Michigan 48106
(Address of principal executive offices)
(734) 930-3030
(Registrant’s telephone number, including area code)
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 x
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act): Yes ¨ No x
As of July 19, 2004, Domino’s Pizza, Inc. had 68,653,626 shares of common stock, par value $0.01 per share, outstanding. As of July 19, 2004, Domino’s, Inc. had 10 shares of common stock, par value $0.01 per share, outstanding. All of the stock of Domino’s, Inc. was held by Domino’s Pizza, Inc.
This Quarterly Report on Form 10-Q is a combined quarterly report being filed separately by two registrants: Domino’s Pizza, Inc. and Domino’s, Inc. Except where the context clearly indicates otherwise, any references in this report to Domino’s Pizza, Inc. includes all subsidiaries of Domino’s Pizza, Inc., including Domino’s, Inc. Domino’s, Inc. makes no representation as to the information contained in this report in relation to Domino’s Pizza, Inc. and its subsidiaries, other than Domino’s, Inc. and its subsidiaries.
Domino’s, Inc.
TABLE OF CONTENTS
| Page No. | ||||
| PART I. |
FINANCIAL INFORMATION | |||
| Item 1. |
||||
| Condensed Consolidated Balance Sheets (Unaudited) – June 13, 2004 and December 28, 2003 |
3 | |||
| 4 | ||||
| 5 | ||||
| Notes to Condensed Consolidated Financial Statements (Unaudited) |
6 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 | ||
| Item 3. |
20 | |||
| Item 4. |
20 | |||
| PART II. |
OTHER INFORMATION | |||
| Item 1. |
21 | |||
| Item 2. |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
21 | ||
| Item 3. |
21 | |||
| Item 4. |
21 | |||
| Item 5. |
22 | |||
| Item 6. |
22 | |||
| 24 | ||||
2
Domino’s Pizza, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
| (In thousands) | June 13, 2004 |
December 28, 2003 (Note) |
||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 51,303 | $ | 42,852 | ||||
| Accounts receivable |
67,136 | 64,571 | ||||||
| Inventories |
20,541 | 19,480 | ||||||
| Notes receivable |
3,428 | 3,785 | ||||||
| Prepaid expenses and other |
11,556 | 16,040 | ||||||
| Advertising fund assets, restricted |
22,929 | 30,544 | ||||||
| Deferred income taxes |
5,732 | 5,730 | ||||||
| Total current assets |
182,625 | 183,002 | ||||||
| Property, plant and equipment: |
||||||||
| Land and buildings |
22,033 | 21,849 | ||||||
| Leasehold and other improvements |
65,202 | 61,433 | ||||||
| Equipment |
163,366 | 158,286 | ||||||
| Construction in progress |
8,575 | 6,133 | ||||||
| 259,176 | 247,701 | |||||||
| Accumulated depreciation and amortization |
127,540 | 120,634 | ||||||
| Property, plant and equipment, net |
131,636 | 127,067 | ||||||
| Other assets: |
||||||||
| Deferred financing costs |
17,981 | 18,847 | ||||||
| Goodwill |
23,776 | 23,432 | ||||||
| Capitalized software |
25,783 | 27,197 | ||||||
| Other assets |
23,205 | 16,988 | ||||||
| Deferred income taxes |
44,451 | 52,042 | ||||||
| Total other assets |
135,196 | 138,506 | ||||||
| Total assets |
$ | 449,457 | $ | 448,575 | ||||
| Liabilities and stockholders’ deficit |
||||||||
| Current liabilities: |
||||||||
| Current portion of long-term debt |
$ | 306 | $ | 18,572 | ||||
| Accounts payable |
49,485 | 53,388 | ||||||
| Insurance reserves |
10,643 | 9,432 | ||||||
| Advertising fund liabilities |
22,929 | 30,544 | ||||||
| Other accrued liabilities |
66,763 | 72,327 | ||||||
| Total current liabilities |
150,126 | 184,263 | ||||||
| Long-term liabilities: |
||||||||
| Long-term debt, less current portion |
928,905 | 941,165 | ||||||
| Insurance reserves |
17,086 | 15,941 | ||||||
| Other accrued liabilities |
30,028 | 25,169 | ||||||
| Total long-term liabilities |
976,019 | 982,275 | ||||||
| Stockholders’ deficit: |
||||||||
| Class L common stock |
36 | 36 | ||||||
| Common stock |
327 | 327 | ||||||
| Additional paid-in capital |
181,976 | 181,897 | ||||||
| Retained deficit |
(865,941 | ) | (900,232 | ) | ||||
| Deferred stock compensation |
(229 | ) | — | |||||
| Accumulated other comprehensive income |
7,143 | 9 | ||||||
| Total stockholders’ deficit |
(676,688 | ) | (717,963 | ) | ||||
| Total liabilities and stockholders’ deficit |
$ | 449,457 | $ | 448,575 | ||||
Note: The balance sheet at December 28, 2003 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.
See accompanying notes.
3
Domino’s Pizza, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
| Fiscal Quarter Ended |
Two Fiscal Quarters Ended |
|||||||||||||||
| (In thousands, except per share data) | June 13, 2004 |
June 15, 2003 |
June 13, 2004 |
June 15, 2003 |
||||||||||||
| Revenues: |
||||||||||||||||
| Domestic Company-owned stores |
$ | 84,062 | $ | 85,875 | $ | 172,027 | $ | 175,817 | ||||||||
| Domestic franchise |
33,767 | 32,349 | 68,405 | 66,753 | ||||||||||||
| Domestic distribution |
180,927 | 154,632 | 351,776 | 322,068 | ||||||||||||
| International |
25,480 | 22,360 | 50,783 | 42,830 | ||||||||||||
| Total revenues |
324,236 | 295,216 | 642,991 | 607,468 | ||||||||||||
| Cost of sales: |
||||||||||||||||
| Domestic Company-owned stores |
68,970 | 68,400 | 139,073 | 140,172 | ||||||||||||
| Domestic distribution |
164,482 | 137,743 | 318,681 | 286,469 | ||||||||||||
| International and other |
13,183 | 12,280 | 26,524 | 23,586 | ||||||||||||
| Total cost of sales |
246,635 | 218,423 | 484,278 | 450,227 | ||||||||||||
| Operating margin |
77,601 | 76,793 | 158,713 | 157,241 | ||||||||||||
| General and administrative |
38,280 | 37,654 | 75,920 | 75,144 | ||||||||||||
| Income from operations |
39,321 | 39,139 | 82,793 | 82,097 | ||||||||||||
| Interest income |
96 | 92 | 183 | 195 | ||||||||||||
| Interest expense |
(13,904 | ) | (11,020 | ) | (27,891 | ) | (23,353 | ) | ||||||||
| Other |
— | — | — | (1,743 | ) | |||||||||||
| Income before provision for income taxes |
25,513 | 28,211 | 55,085 | 57,196 | ||||||||||||
| Provision for income taxes |
9,631 | 10,725 | 20,794 | 21,449 | ||||||||||||
| Net income |
$ | 15,882 | $ | 17,486 | $ | 34,291 | $ | 35,747 | ||||||||
| Net income available to common stockholders – basic and diluted |
$ | 15,882 | $ | 12,882 | $ | 34,291 | $ | 26,680 | ||||||||
| Earnings per share: |
||||||||||||||||
| Class L common stock – basic |
$ | 2.57 | $ | 3.10 | $ | 5.07 | $ | 5.84 | ||||||||
| Class L common stock – diluted |
2.57 | 3.09 | 5.06 | 5.83 | ||||||||||||
| Common stock – basic |
$ | 0.20 | $ | 0.05 | $ | 0.49 | $ | 0.17 | ||||||||
| Common stock – diluted |
0.18 | 0.05 | 0.43 | 0.15 | ||||||||||||
See accompanying notes.
4
Domino’s Pizza, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Two Fiscal Quarters Ended |
||||||||
| (In thousands) | June 13, 2004 |
June 15, 2003 |
||||||
| Cash flows from operating activities: |
||||||||
| Net cash provided by operating activities |
$ | 52,536 | $ | 60,438 | ||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(17,639 | ) | (11,556 | ) | ||||
| Other |
389 | 1,992 | ||||||
| Net cash used in investing activities |
(17,250 | ) | ||||||