Domino’s Annual Report 2020

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FY2020 Annual Report · Domino’s

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FRONT COVER

Domino’s Team Member,
Dearborn, Michigan

INSIDE FRONT COVER

Domino’s Team Member,
Dearborn, Michigan

New Chicken Taco and
Cheeseburger Specialty Pizzas

Fernando Salido,
2020 Chairman’s Circle Inductee

EPIX NOW Promotion

INSIDE BACK COVER

Domino’s Wings

Domino’s Team Member,
Michigan Supply Chain Center

Domino’s Contactless Delivery

Domino’s Team Member,
Trenton, Ohio

DOMINO’S PIZZA
30 Frank Lloyd Wright Drive
P.O. Box 997
Ann Arbor, MI 48106-0997
(734) 930-3030 • dominos.com

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TWO- TO THREE-YEAR OUTLOOK *

Global Net Units:
+6% to +8%

Global Retail Sales:**
+6% to +10%

FINANCIAL HIGHLIGHTS
$ in millions, except per share data

20201

20191

20181

Net Unit Growth
U.S. Franchise
U.S. Company-owned
International
Total

Year End Store Counts
U.S. Franchise
U.S. Company-owned
International
Total

Revenues
U.S. Franchise Royalties and Fees
U.S. Company-owned
U.S. Franchise Advertising
Supply Chain
International Franchise Royalties and Fees
Total

Same Store Sales Growth2
U.S.
International

Global Retail Sales3
U.S.
International
Total

Income from Operations
Net Income
Diluted Earnings Per Share
Diluted Earnings Per Share4 (as adjusted)
Weighted Average Diluted Shares

1 The 2020 ﬁ scal year included 53 weeks and the 2019 and 2018

ﬁ scal years each included 52 weeks.

2 Performance vs. ﬁ scal years 2019, 2018 and 2017, respectively.

International same store sales growth excludes changes in foreign
currency exchange rates.

3 Global Retail Sales represent sales by our Company-owned and

franchised stores. Franchised store sales are reported to us from
our franchisees and are not our revenues. International growth
reﬂ ects change in local currencies.

208
21
395
624

5,992
363
11,289
17,644

$503.2
485.6
462.2
2,416.7
249.8
$4,117.4

+11.5%
+4.4%

239
11
856
1,106

5,784
342
10,894
17,020

$428.5
453.6
390.8
2,104.9
241.0
$3,618.8

246
12
800
1,058

5,486
390
10,038
15,914

$391.5
514.8
358.5
1,943.3
224.7
$3,432.9

+3.2%
+1.9%

+6.6%
+3.5%

$8,287.1
7,818.6
$16,105.7

$725.6
$491.3
$12.39
$12.01
39,640,791

$7,044.4
7,276.1
$14,320.5

$629.4
$400.7
$9.56
$9.57
41,923,062

$6,591.6
6,953.6
$13,545.2

$571.7
$362.0
$8.35
$8.42
43,331,278

4 Diluted Earnings Per Share (as adjusted) excludes items affecting
comparability, as detailed in the respective Company Earnings
Release for each of 2020, 2019 and 2018.

* Outlook does not constitute speciﬁ c earnings or performance

guidance. Domino’s does not provide quarterly or annual earnings
guidance.

** Excluding foreign currency impact

SHAREHOLDER INFORMATION

BOARD OF DIRECTORS

LEADERSHIP TEAM

Investor Information
Current and prospective investors can have an
annual report sent to them by going to our website,
biz.dominos.com. From the home page, click on
“Investors,” then “Contacts,” then “Request Info” and
ﬁ ll out the form. You can also request a report via
email to investorrelations@dominos.com.

Stock Trading Information
Domino’s Pizza common stock trades on the New York
Stock Exchange under the ticker symbol DPZ.

Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
500 Woodward Ave., Suite 3300
Detroit, MI 48226-3416
(313) 394-6000

Transfer Agent and Registrar
Computershare maintains our shareholder records.
For assistance on matters such as lost stock certiﬁ cates,
name changes or transfer of ownership, please contact:

Computershare
P.O. Box 505000
Louisville, KY 40233-5000
Toll Free: (877) 272-9616
Outside U.S.: (201) 680-6578

Shareholder website:
www.computershare.com/investor

ANNUAL MEETING

2021 Annual Meeting of Shareholders (VIRTUAL ONLY)
Attend our virtual shareholder meeting online and have
the option to view materials, vote and submit questions
during the meeting.

When: Tuesday, April 27, 2021 at 10 a.m. Eastern Time

Where: www.virtualshareholdermeeting.com/DPZ2021

How: Use the personal control number provided
on your proxy card, voter instruction form
or Notice of Internet Availability to enter
the meeting.

David A. Brandon
Chairman of the Board of Directors

Richard E. Allison, Jr.
Chief Executive Ofﬁ cer

C. Andrew Ballard
Chair of the Inclusion & Diversity
Committee
Member of the Compensation
Committee

Andrew B. Balson
Chair of the Compensation
Committee

Corie S. Barry
Member of the Audit Committee
Member of the Inclusion & Diversity
Committee

Diana F. Cantor
Chair of the Audit Committee

Richard L. Federico
Member of the Compensation
Committee
Member of the Nominating and
Corporate Governance Committee

James A. Goldman
Chair of the Nominating and
Corporate Governance Committee
Member of the Audit Committee

Patricia E. Lopez
Member of the Inclusion & Diversity
Committee
Member of the Nominating and
Corporate Governance Committee

Russell J. Weiner
Chief Operating Ofﬁ cer
and President-Domino’s U.S.

Thomas B. Curtis
Executive Vice President,
U.S. Operations and Support

Arthur P. D’Elia
Executive Vice President,
Chief Marketing Ofﬁ cer

Kelly E. Garcia
Executive Vice President,
Chief Technology Ofﬁ cer

Cynthia A. Headen
Executive Vice President,
Supply Chain Services

Joseph H. Jordan
Executive Vice President,
International

Stuart A. Levy
Executive Vice President,
Chief Financial Ofﬁ cer

Timothy P. McIntyre
Executive Vice President,
Communications and
Legislative Affairs

Kevin S. Morris
Executive Vice President,
General Counsel and
Corporate Secretary

Lisa V. Price
Executive Vice President,
Chief Human Resources Ofﬁ cer

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TO OUR SHAREHOLDERS:

Dear Fellow Shareholders,

2020 was Domino’s 60th year in business, and what
a year it was. We witnessed a global pandemic that
took so many lives; economic turmoil that rapidly threw
millions of people into unemployment; and waves of
social and political unrest that swept across the U.S.
and around the world.

It was a year that many of us would like to forget, but it
was also one that made me so incredibly proud of the
many thousands of dedicated individuals who make the
Domino’s brand the world leader that it is. Throughout
2020, despite all these challenges, our team stayed
focused on our stakeholders: our customers, team
members, franchisees, communities and shareholders.

From the onset of COVID-19, we adapted quickly to
remain open and operating throughout the pandemic.
We faced this challenge with profound determination
to remain deserving of the trust placed in us by our
customers by doing our best to safely operate our
stores and supply chain centers. We strove to ensure
our customers could be confident about the safety
and quality of the food we were making for them and
their families.

This required us to essentially rewrite 60 years
of standard operating procedures in mere weeks,
introducing innovations like contactless delivery
(and the unique Pizza Pedestal) and Domino’s Carside
Delivery for carryout orders. We supported these
operational changes with innovative technology placed
in our stores and in our customers’ hands.

We continued our focus on providing great products
and service to our customers worldwide and launched
two delicious new pizzas in the U.S. (my personal
favorite is the Chicken Taco Pizza, with jalapenos).
We also stayed focused on value when our customers
needed it most.

We took care of our team members by investing in their
safety and well-being. In our U.S. corporate stores and
supply chain centers, we paid two rounds of “thank
you” bonuses and provided enhanced sick leave to
ensure that no team member had to choose between
their health and a paycheck.

We reinforced our relationship with our franchisees
worldwide, partnering together to ensure that the
Domino’s brand would get through the crisis and
come back stronger than ever. We opened new lines of
communication and we all shared best practices as we
confronted significant, ever-confounding issues related
to the pandemic.

Despite the pandemic, we continued to invest in the
capacity required to support the long-term growth
for the brand. We opened two new Supply Chain
Centers and a Thin Crust production line to enable our
franchisees to continue building stores and growing
their businesses.

We took care of our communities, as nearly all
Domino’s stores worldwide donated pizza to frontline
workers, hospitals, grocery store employees, first
responders, and families in need. In the U.S. we worked
to provide more than 30,000 new jobs for people who
were displaced from theirs.

In addition to working through the issues caused by
the pandemic, we confronted social justice issues and
committed $3 million to support the Black community
in the U.S., including $1 million to establish the
Domino’s Black Franchisee Opportunity Fund. We also
partnered with a third-party organization to assess our
environmental footprint so that we can set meaningful
targets to help protect our planet from climate change.
There will be more to come on this important topic.

This emphasis on customers, team members,
franchisees and our communities allowed us to once
again deliver outstanding results for our shareholders.

In the U.S., we marked our 39th consecutive quarter
of positive same store sales and our 27th consecutive
year of positive international same store sales. Despite
having nearly 2,400 stores closed at the initial peak of
the pandemic, our resilient franchisees persevered and
once again achieved strong double-digit global retail
sales growth.

Store growth was more challenging than ever, but the
result was that we and our global franchise partners
opened a net 624 new stores in 2020. Per store EBITDA
reached record levels in the U.S. and many franchisees
are eager to continue building new stores.

We could not have achieved any of this if it were not
for our incredible team members, store managers,
franchisees, international master franchisees and
supplier partners. I cannot thank them enough for their
drive, resilience, creativity and commitment to the
Domino’s brand.

I have said this before, and l still believe it’s true:
Domino’s has the best franchisees in the world. They
stepped up in the crisis, just as I knew they would. I am
honored and humbled to serve this incredible group of
entrepreneurs.

For me, the year we wanted to forget will remain forever
unforgettable.

Richard E. Allison, Jr.
Chief Executive Officer

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Domino’s Pizza 10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 3, 2021

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

Commission File Number 001-32242
Domino’s Pizza, Inc.
(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization)

30 Frank Lloyd Wright Drive
Ann Arbor, Michigan
(Address of principal executive offices)

38-2511577
(I.R.S. Employer
Identification No.)

48105
(Zip Code)

Registrant’s telephone number, including area code (734) 930-3030

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol Name of Each Exchange on Which Registered

Domino’s Pizza, Inc. Common Stock, $0.01 par value

DPZ

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:
Yes [X] No [ ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act:

Yes [ ] No [X]

Indicate by check mark whether the 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 [X] 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 [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [X]
Non-accelerated filer [ ]
Emerging growth company [ ]
If 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. [ ]

Accelerated filer [ ]
Smaller reporting company [ ]

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes [ ] No [X]

The aggregate market value of the voting and non-voting common stock held by non-affiliates of Domino’s Pizza, Inc. as of June 14, 2020
computed by reference to the closing price of Domino’s Pizza, Inc.’s common stock on the New York Stock Exchange on such date was
$14,785,755,999.

As of February 18, 2021, Domino’s Pizza, Inc. had 38,803,504 shares of common stock, par value $0.01 per share, outstanding.

Portions of the definitive proxy statement to be furnished to shareholders of Domino’s Pizza, Inc. in connection with the annual meeting of
shareholders to be held on April 27, 2021 are incorporated by reference into Part III.

Documents incorporated by reference:

TABLE OF CONTENTS

Part I

Page No.

Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 4A.

Business.
Risk Factors.
Unresolved Staff Comments.
Properties.
Legal Proceedings.
Mine Safety Disclosures.
Executive Officers of the Registrant.

Item 5.

Item 6.
Item 7.

Item 7A.
Item 8.
Item 9.

Item 9A.
Item 9B.

Item 10.
Item 11.
Item 12.

Item 13.

Part II

Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.
Selected Financial Data.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
Quantitative and Qualitative Disclosures About Market Risk.
Financial Statements and Supplementary Data.
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
Controls and Procedures.
Other Information.

Part III

Directors, Executive Officers and Corporate Governance.
Executive Compensation.
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
Certain Relationships and Related Transactions,

and Director Independence.

Item 14.

Principal Accountant Fees and Services.

Part IV

Item 15.
Item 16.

Exhibits, Financial Statement Schedules.
Form 10-K Summary.

SIGNATURES

2
11
24
24
24
24
24

25
27

27
42
43

75
75
75

76
79

79
79

80
91

Throughout this document, Domino’s Pizza, Inc. (NYSE: DPZ) is referred to as the “Company,” “Domino’s,”
“Domino’s Pizza” or in the first-person notations of “we,” “us” and “our.”

In this document, we rely on and refer to information regarding the U.S. quick service restaurant, or QSR, sector and
the U.S. QSR pizza category from CREST® ongoing foodservice market research (years ending November)
prepared by The NPD Group, as well as market research reports, analyst reports and other publicly-available
information. Although we believe this information to be reliable, we have not independently verified it. U.S. sales
information relating to the U.S. QSR sector and the U.S. QSR pizza category represent reported consumer spending
obtained by The NPD Group’s CREST® ongoing foodservice market research from consumer surveys. This
information relates to both our Company-owned and franchised stores.

Part I
Item 1. Business.

Overview

Domino’s is the largest pizza company in the world based on global retail sales, with more than 17,600 locations in
over 90 markets around the world as of January 3, 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 global 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 franchisees. Royalties are ongoing
percent-of-sales fees for use of the Domino’s® brand marks. We also 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 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 may profit by sub-franchising and selling food and equipment to those sub-franchisees,
as well as by running pizza stores. We believe that everyone in the system can benefit, including the end consumer,
who can 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.

Our History

We pioneered the pizza delivery business and have been delivering quality, affordable food to our customers since
1960. We became “Domino’s Pizza” in 1965 and opened our first franchised store in 1967. Over the last 60 years,
we have built Domino’s into one of the most widely-recognized consumer brands in the world. We believe our
commitment to value, convenience, quality and new products continues to keep consumers engaged with the brand.

During 2020, in the midst of the uncertain environment created by the novel coronavirus (“COVID-19”) pandemic,
we continued to increase global retail sales, and our supply chain operations experienced higher volumes as a result
of the increase in U.S. retail sales. We also launched three new products in the U.S., including new and improved
chicken wings and the new chicken taco and cheeseburger specialty pizzas, each of which has been positively
received by consumers. Additionally, emphasis on technological innovation helped us achieve more than half of all
global retail sales in 2020 from digital channels. In the U.S., we have developed several innovative ordering
platforms, including those for Google Home, Facebook Messenger, Apple Watch, Amazon Echo, Twitter and more.
In 2019, we announced a partnership with Nuro to further our exploration and testing of autonomous pizza delivery.
In 2020, we added GPS to our Domino’s Tracker®, which allows customers to monitor the progress of their food,
from the preparation stages to the time it is in the oven to the time it arrives at their doors. Most recently, we
launched a new way to order contactless carryout nationwide – via Domino’s Carside Delivery™, which customers
can choose when placing a prepaid online order. This new service method emphasizes our commitment to serving
hot and delicious pizza in a convenient, contactless manner.

Since 1998, the Company has been structured with a leveraged balance sheet and has completed a number of
recapitalization transactions. The Company’s most recent recapitalization transaction in 2019 (the “2019
Recapitalization”) primarily consisted of the issuance of $675.0 million of fixed rate notes. As of January 3, 2021,
the Company had $4.12 billion in total debt, which included debt from its 2019 Recapitalization and its previous
recapitalization transactions in 2018, 2017 and 2015 (the “2018 Recapitalization,” “2017 Recapitalization” and the
“2015 Recapitalization,” respectively, and together with the 2019 Recapitalization, the “2019, 2018, 2017 and 2015
Recapitalizations”).

Our Industry

The U.S. QSR pizza category is large and fragmented. From 2015 through 2020, the U.S. QSR pizza category has
grown from $36.0 billion to $38.2 billion. It is the second-largest category within the $272.0 billion U.S. QSR
sector. The U.S. QSR pizza category is primarily comprised of delivery, dine-in and carryout, with carryout and
delivery comprising the two largest segments.

In the U.S., we compete primarily in the delivery and carryout segments of the pizza industry, and we are the dollar
market share leader for delivery and a growing leader in carryout. Delivery segment dollars of $14.0 billion in 2020
(up from $10.4 billion in 2015) account for approximately 37% of total U.S. QSR pizza. The four industry leaders,
including Domino’s, account for over 63% of U.S. pizza delivery, based on reported consumer spending, with the
remaining dollars going to regional chains and independent establishments. From 2015 to 2020, the carryout
segment grew from $17.5 billion to $20.3 billion. The four industry leaders, including Domino’s, account for
approximately 48% of the carryout segment. (Source: The NPD Group/CREST®, year ending November 2020).

In contrast to the U.S., international pizza delivery is relatively underdeveloped, with only Domino’s and two other
competitors having a significant global presence. We believe that demand for pizza delivery and pizza carryout is
large and growing throughout the world, driven by international consumers’ increasing emphasis on convenience,
and our proven success of more than 35 years of conducting business abroad.

Our Competition

The global pizza delivery and carryout segments, as well as the broader QSR sector, are highly competitive. In the
U.S., we compete against regional and local companies as well as national chains Pizza Hut®, Papa John’s® and
Little Caesars Pizza®. Internationally, we compete primarily with Pizza Hut®, Papa John’s® and country-specific
national and local pizzerias. We generally compete on the basis of product quality, location, image, service,
technology, convenience and price. Our business and those of our competitors can be affected by changes in
consumer tastes, economic conditions, demographic trends, marketing, advertising, pricing and consumers’
disposable income. We also compete with other food, food delivery and order and delivery aggregation companies,
which have continued to grow in size and scale in recent years. We compete not only for customers, but also for
management and hourly employees, including store team members, drivers and qualified franchisees, as well as
suitable real estate sites.

Our Customers

The Company’s business is not dependent upon a single retail customer or small group of customers, including
franchisees. No customer accounted for more than 10% of total consolidated revenues in 2020, 2019 or 2018. As of
January 3, 2021, our largest franchisee based on store count, Domino’s Pizza Enterprises (DMP: ASX), operated
2,797 stores in nine international markets, and accounted for 16% of our total store count. Revenues from this
master franchisee accounted for 1.5% of our consolidated revenues in 2020. Our international franchise segment
only requires a modest amount of general and administrative expenses to support its markets and does not have a
cost of sales component. Therefore, the vast majority of these royalty revenues result in profits to us.

Our Menu

We offer a menu designed to present an attractive, quality offering to customers, while keeping it simple enough to
minimize order errors and expedite order-taking and food preparation. Our basic menu features pizza products with
varying sizes and crust types. Our typical store also offers oven-baked sandwiches, pasta, boneless chicken and
chicken wings, bread side items, desserts and soft drink products. International markets vary toppings by country
and culture, such as the Indi Tandoori Paneer pizza in India, featuring spicy paneer, peppers and mint mayo, or the
Octopus Bomb Shrimp in Korea, featuring shrimp, octopus, vegetables, feta cream and horseradish sauce.

Store Image and Operations

We have been focused on pizza delivery for 60 years, and we also emphasize carryout as a significant component of
our business. The majority of our U.S. and international stores are constructed in the carryout-friendly Pizza Theater
design. Many of these stores offer casual seating and enable customers to watch the preparation of their orders, but
do not offer a full-service dine-in experience. As a result, our stores generally do not require expensive restaurant
facilities and staffing.

Our Business Segments

We operate, and report, three business segments: U.S. stores, international franchise and supply chain.

U.S. Stores

During 2020, our U.S. stores segment accounted for $1.45 billion, or 35% of our consolidated revenues. Our U.S.
stores segment consists primarily of our franchise operations, which consisted of 5,992 franchised stores located in
the United States as of January 3, 2021. We also operated a network of 363 U.S. Company-owned stores as of
January 3, 2021.

Directly operating Domino’s stores contributes significantly to our ability to act as a credible franchisor. We also
use our Company-owned stores as test sites for technological innovation and promotions as well as operational
improvements. We also use them for training new store managers and operations team members, as well as
developing prospective franchisees. While we are primarily a franchised business, we continuously evaluate our mix
of U.S. Company-owned and franchise stores. As of January 3, 2021, franchised stores represented approximately
94% of our total store count within our U.S. stores segment.

U.S. Franchise Profile

As of January 3, 2021, our network of 5,992 U.S. franchise stores was owned and operated by 762 independent U.S.
franchisees. Our franchise formula enables franchisees to benefit from our brand recognition with a relatively low
initial capital investment. As of January 3, 2021, the average U.S. franchisee owned and operated approximately
seven stores and had been in our franchise system for over 18 years. Additionally, 19 of our U.S. franchisees
operated more than 50 stores (including our largest U.S. franchisee who operated 178 stores) and 228 of our U.S.
franchisees each operated one store, each as of that date.

We apply rigorous standards to prospective U.S. franchisees. We generally require them to manage a store for at
least one year and graduate from our franchise management school program before being granted the right to
franchise. This enables us to observe the operational and financial performance of a potential franchisee prior to
entering into a long-term agreement. Substantially all of our independent U.S. franchise owners started their careers
with us as delivery drivers or in other in-store positions, which we believe offers advantages in terms of familiarity
with our business and store operations. In addition, we generally restrict the ability of U.S. franchisees to be
involved in other businesses, which we believe helps focus our franchisees’ attention on operating their stores. We
believe these characteristics and standards are largely unique within the franchise industry and have resulted in
qualified and focused franchisees operating Domino’s stores. We maintain a productive relationship with our
independent franchise owners through regional franchise teams, distributing materials that help franchise stores
comply with our standards and using franchise advisory groups that facilitate communications between us and our
franchisees. We consider our relationship with our U.S. franchisees to be good.

U.S. Franchise Agreements

We enter into franchise agreements with U.S. franchisees under which the franchisee is generally granted the right to
operate a store in a particular location for a term of ten years, with an ability to renew for an additional term of ten
years. We had a franchise agreement renewal rate of approximately 99% in 2020. Under the current standard
franchise agreement, we assign an exclusive area of primary responsibility to each franchised store. Each franchisee
is generally required to pay a 5.5% royalty fee on sales, as well as certain technology fees. In certain instances, we
will collect lower rates based on certain incentives.

Our stores in the United States currently contribute 6% of their sales to fund national marketing and advertising
campaigns (subject, in certain instances, to lower rates based on certain incentives and waivers). These funds are
administered by Domino’s National Advertising Fund Inc. (“DNAF”), our consolidated not-for-profit advertising
subsidiary. The funds are primarily used to purchase media for advertising, and also to support market research,
field communications, public relations, commercial production, talent payments and other activities to promote the
Domino’s brand. In addition to the national and market-level advertising contributions, U.S. stores generally spend
additional funds on local store marketing activities.

We have the contractual right, subject to state law, to terminate a franchise agreement for a variety of reasons,
including, but not limited to, a franchisee’s failure to adhere to the Company’s franchise agreement, failure to make
required payments, or failure to adhere to specified Company policies and standards.

International Franchise

During 2020, our international franchise segment accounted for $249.8 million, or 6% of our consolidated revenues.
This segment is comprised of a network of franchised stores in more than 90 international markets. At January 3,
2021, we had 11,289 international franchise stores. The principal sources of revenues from those operations are
royalty payments generated by retail sales from franchised stores, as well as certain technology fees.

Our international franchisees employ our basic standard operating model and adapt it to satisfy the local eating
habits and consumer preferences of various regions outside the U.S. Currently, the vast majority of our international
stores operate under master franchise agreements.

We believe Domino’s appeals to potential international franchisees because of our recognized brand name and
technological leadership, the moderate capital expenditures required to open and operate the stores and the system’s
desirable store-level profitability. Stores in seven of our ten largest international markets in terms of store count are
operated by master franchise companies that are publicly traded on stock exchanges as noted in the below table. The
following table shows our store count as of January 3, 2021 in our ten largest international markets, which
accounted for approximately 62% of our international stores as of that date.

Market
India (JUBLFOOD: NS)
United Kingdom (DOM: L)
Mexico (ALSEA: MX)
Japan (DMP: ASX)
Australia (DMP: ASX)
Turkey (DPEU: L)
Canada
South Korea
France (DMP: ASX)
China

International Franchisee Profile

Number of stores

1,313
1,144
779
742
709
560
541
466
431
363

The vast majority of our markets outside of the U.S. are operated by master franchisees with franchise and
distribution rights for entire regions or countries. In a few select markets, we franchise directly to individual store
operators. Prospective master franchisees are required to possess local market knowledge to establish and develop
Domino’s stores, with the ability to identify and access targeted real estate sites, as well as expertise in local laws,
customs, culture and consumer behavior. We also seek candidates that have access to sufficient capital to meet
growth and development plans. We consider our relationship with our international franchisees to be good.

International Master Franchise and Other Agreements

Our international master franchise agreements generally grant the franchisee exclusive rights to develop and sub-
franchise stores, and the right to operate supply chain centers in particular geographic areas. Agreements are
generally for a term of ten years, with options to renew for additional terms. The agreements typically contain
growth clauses requiring franchisees to open a minimum number of stores within a specified period. The master
franchisee is generally required to pay an initial, one-time franchise fee as well as an additional franchise fee upon
the opening of each new store. The master franchisee is also required to pay a continuing royalty fee as a percentage
of sales, which varies among international markets and may also differ based on certain incentives and concessions,
and averaged approximately 2.9% in 2020. We also have agreements with certain of our international master
franchisees with respect to certain technology fees.

Supply Chain

During 2020, our supply chain segment accounted for $2.42 billion, or 59% of our consolidated revenues. We
operate 21 regional dough manufacturing and supply chain centers in the U.S., two thin crust manufacturing
facilities and one vegetable processing center in the U.S. and five dough manufacturing and supply chain centers in
Canada. Our supply chain segment leases a fleet of approximately 900 tractors and trailers. We plan to continue
investing in additional supply chain capacity in the future. Our centers produce fresh dough and purchase, receive,
store and deliver quality food and other complementary items to substantially all of our U.S. stores and most of our
Canadian franchised stores. We regularly supply over 6,800 stores with various food and supplies.

We believe our franchisees voluntarily choose to obtain food, supplies and equipment from us because we offer the
most efficient, convenient and cost-effective alternative, while also offering both quality and consistency. Our
supply chain segment offers profit-sharing arrangements to U.S. and Canadian franchisees who purchase all of their
food for their stores from our centers. These profit-sharing arrangements generally offer participating franchisees
and Company-owned stores with 50% (or a higher percentage in the case of Company-owned stores and certain
franchisees who operate a larger number of stores) of the pre-tax profit from our supply chain center operations. We
believe these arrangements strengthen our ties to and provide aligned benefits with franchisees.

Third-Party Suppliers

A significant amount of our annual food spend is with suppliers with whom we maintain long-standing partnerships.
Our supply partners are required to meet strict quality standards to ensure food safety. We review and evaluate these
partners’ quality assurance programs through (among other actions) on-site visits, third-party audits and product
evaluations designed to ensure compliance with our standards. We believe the length and quality of our relationships
with third-party suppliers provides us with priority service and quality products at competitive prices.

Cheese is our largest food cost. The price we charge to our U.S. franchisees for cheese is formula-based, with the
Chicago Mercantile Exchange cheddar block price as the primary component, plus a supply chain markup. As
cheese prices fluctuate, our revenues and margin percentages in our supply chain segment also fluctuate; however,
actual supply chain dollar margins remain unchanged. We currently purchase our U.S. pizza cheese from a single
supplier. Under our September 2017 agreement, our U.S. supplier agreed to provide the Company with an
uninterrupted supply of cheese and the Company agreed to a seven-year pricing schedule to purchase all of its U.S.
pizza cheese from this supplier. While we expect to meet the terms of this agreement, if we do not, we will be
required to repay certain negotiated cost savings as provided in the agreement. The majority of our meat toppings in
the U.S. come from a single supplier under a contract that expires in June 2022. We have the right to terminate these
arrangements for quality failures and for certain uncured breaches.

We have entered into a multi-year agreement with Coca-Cola® for the U.S. This contract, renegotiated in June 2019,
provides for Coca-Cola to continue to be our exclusive beverage supplier and expires on December 31, 2023 or at
such time as a minimum number of cases of Coca-Cola products are purchased by Domino’s, whichever occurs
later.

We believe alternative third-party suppliers are available for all of these referenced products. While we may incur
additional costs if we are required to replace any of our supply partners, we do not believe such additional costs
would have a material adverse effect on our business. We continually evaluate each supply category to determine
the optimal sourcing strategy.

We have not experienced any significant shortages of supplies or delays in receiving our inventories or products.
Prices charged to us by our supply partners are subject to fluctuation, and we have historically been able to pass
increased costs and savings on to stores. We periodically enter into supplier contracts to manage the risk from
changes in commodity prices. We do not engage in speculative transactions, nor do we hold or issue financial
instruments for trading purposes.

Our Strengths

Strong Brand Equity

We are the largest pizza company in the world based on global retail sales. We believe our Domino’s brand is one of
the most widely-recognized consumer brands in the world. We are the recognized world leader in pizza delivery and
have a significant business in carryout. We believe consumers associate our brand with the timely delivery of
quality, affordable food and technological innovation.

Over the past five years, our U.S. franchise and Company-owned stores have invested an estimated $2.2 billion in
national, co-operative and local advertising. Our international franchisees also invest significant amounts in
advertising efforts in their markets. We continue to reinforce our brand with extensive advertising through various
media channels. We have also enhanced the strength of our brand through marketing affiliations with brands such as
Coca-Cola.

We are the number one pizza delivery company in the U.S. with a 36% share of pizza delivery based on consumer
spending data for the year ending November 2020. For the same period, we are also a growing leader in carryout
with a 15% share of carryout pizza consumer spending (Source: The NPD Group/CREST®, year ending November
2020). With 6,355 stores located in the U.S., our store delivery areas cover a majority of U.S. households. Our share
position and scale allow us to leverage our purchasing power, supply chain strength and marketing investments. We
believe our scale and market coverage allow us to effectively serve our customers’ demands for convenience and
timely delivery. Outside the U.S., we have significant market share positions in many of the markets in which we
compete.

Strong and Proven Business Model

Our business model generates U.S. and international franchise royalties and fees, supply chain revenue and retail
sales at Company-owned stores. We have developed this model over our many years of operation, and it is anchored
by strong store-level economics, which provide an entrepreneurial incentive for our franchisees and historically has
generated demand for new stores. Over the past ten years, average U.S. store profitability in the Domino’s system
has increased meaningfully, resulting in higher profitability for our franchise owners. Our franchise system, in turn,
has produced strong and consistent earnings for us through royalty payments and through supply chain revenues.

We developed a cost-efficient store model, characterized by a delivery- and carryout-oriented store design, with
moderate capital requirements and a menu of quality, affordable items. At the store level, we believe the simplicity
and efficiency of our operations give us significant advantages over our competitors, who, in many cases, also focus
on dine-in or have broader menu offerings. At the supply chain level, we believe we provide quality, good value and
consistency for our franchise customers while also driving profits for us, which we share with our franchisees under
the profit-sharing arrangements described above.

Our menu simplifies and streamlines production and delivery processes and maximizes economies of scale on
purchases of our principal food items. In addition, our stores, including those in our Pizza Theater image, are
generally smaller and less expensive to build, furnish and maintain as compared to many other restaurant concepts,
and they create a positive experience for our carryout customers. The combination of this efficient store model and
strong sales volume has resulted in strong store-level economics and, we believe, makes Domino’s an attractive
business opportunity for existing and prospective franchisees around the world. We and our franchisees are
continuing to focus on growing our global store count. In recent years, we have focused specifically on increasing
our presence in our existing markets to provide better service to our customers, including shrinking our delivery
areas to provide better delivery service and adding locations that are closer to our carryout customers. We call this
approach our fortressing strategy.

We believe our store financial returns have led to a strong, well-diversified franchise system. This established
franchise system has produced strong cash flows and earnings for us, enabling us to invest in the Domino’s brand,
stores, technology and supply chain centers, pay dividends, repurchase and retire shares of our common stock and
service our debt obligations.

Technological Innovation

Technological innovation is vital to our brand and our long-term success, and digital ordering is critical to
competing in the global pizza and broader QSR industries. Emphasis on technological innovation helped us achieve
more than half of all global retail sales in 2020 from digital channels. In the U.S., we have developed several
innovative ordering platforms, including those for Google Home, Facebook Messenger, Apple Watch, Amazon
Echo, Twitter and more. In 2019, we announced a partnership with Nuro to further our exploration and testing of
autonomous pizza delivery. In 2020, we added GPS to our Domino’s Tracker, which allows customers to monitor
the progress of their food, from the preparation stages to the time it is in the oven to the time it arrives at their doors.
In mid-2020, we launched a new way to order contactless carryout nationwide – via Domino’s Carside Delivery™,
which customers can choose when placing a prepaid online order.

Our Piece of the Pie Rewards® loyalty program is meant to reward customers with a program that is simple to
understand and easy to use. Upon signing up for the program, customers become rewards members and can earn
points for online orders. When rewards members reach a certain amount of points, they can redeem their points for
free pizza. Rewards members may also receive exclusive members-only discounts and bonus offers. We may also
occasionally provide additional opportunities for participating customers to benefit under the Piece of the Pie
Rewards program.

This improved functionality has been developed to work seamlessly with our Domino’s PULSE™ point-of-sale
system. Our Domino’s PULSE system is designed to drive operating efficiencies for our franchisees and our
corporate management and assist franchisees in independently managing their business. As of January 3, 2021,
Domino’s PULSE is being used in every Company-owned store in the U.S., in more than 99% of our U.S.
franchised stores and in approximately 77% of our international stores. We believe utilizing Domino’s PULSE with
our integrated technology solutions throughout our system provides us with competitive advantages over other
concepts. We intend to continue to enhance and grow our online ordering, digital marketing and technological
capabilities.

Product Innovation

We believe our core hand-tossed pizza recipe has contributed to long-term growth in customer reorder rates,
consumer traffic and increased sales. This recipe is now in use in other markets around the world. Our 60 years of
innovation have resulted in numerous new product developments. During 2020, we launched three new products in
the U.S., including new and improved chicken wings and the new chicken taco and cheeseburger specialty pizzas,
each of which has been positively received by consumers. Product innovation is also present in our global markets,
where our master franchisees have the ability to recommend products to suit their local market tastes. Products
include the Mayo Jaga in Japan (bacon, potatoes and sweet mayonnaise) and the Saumoneta in France (light cream,
potatoes, onions, smoked salmon and dill).

Internal Dough Manufacturing and Supply Chain System

In addition to generating significant revenues and earnings in the U.S. and Canada, we believe our vertically
integrated dough manufacturing and supply chain system enhances the quality and consistency of our products,
enhances our relationships with franchisees and leverages economies of scale to offer lower costs to our stores. It
also allows store managers to focus on store operations and customer service by relieving them of the responsibility
of mixing dough in the stores and sourcing other ingredients. Many of our international master franchisees also
profit from running supply chain businesses in their respective markets.

Human Capital

As of January 3, 2021, we had approximately 14,400 employees, including 10,400 employees supporting our U.S.
Company-owned stores and U.S. franchise operations (our U.S. stores segment), approximately 2,900 employees
supporting our U.S. and Canadian supply chain operations (our supply chain segment), approximately 100
employees supporting our international franchise operations (our international franchise segment) and approximately
1,000 corporate employees. Approximately 7,500 of our employees are part-time and approximately 6,900 are full-
time equivalent. None of our employees are covered by a collective bargaining agreement. We consider our
relationship with our employees to be good.

Environmental Responsibility

We believe in being strong stewards of the environment through initiatives to reduce the impact of energy,
wastewater, land use and waste, both in packaging and food. Since 2015, we have sourced 100% sustainable mass
balance palm oil, which is used in some of our products. We have also recently increased the recycled content of our
pizza boxes and launched a nationwide campaign to educate municipalities on the recyclability of pizza boxes. We
also introduced eBikes for delivery in certain markets around the world, helping us to reduce our carbon footprint.
Domino’s is also a member of the Dairy Sustainability Alliance, the Recycling Partnership and the Food Waste
Reduction Alliance. You can find more information about these initiatives at stewardship.dominos.com.

Community Involvement

We believe in supporting the communities we serve through donating our time, money and pizza. Our national
philanthropic partner is St. Jude Children’s Research Hospital®. St. Jude is internationally recognized for its
pioneering work in finding cures and saving children with cancer and other catastrophic diseases. Through a variety
of internal and consumer-based activities, including a national fundraising campaign called St. Jude Thanks and
Giving®, the Domino’s system has contributed $82.0 million to St. Jude since our partnership began in 2004,
including raising $13.3 million in 2020. In 2020, we announced a 10-year, $100 million campaign to raise funds to
build Domino’s Village at St. Jude, a planned housing complex that will accommodate up to 140 patient families
during long-term stays at the hospital.

We also support the Domino’s Pizza Partners Foundation (the “Partners Foundation”). Founded in 1986, the mission
of the Partners Foundation is “Team Members Helping Team Members.” Primarily funded by team member and
franchise contributions, the Partners Foundation is a separate, not-for-profit organization that has disbursed $8.2
million over the past five years. The Partners Foundation is committed to meeting the needs of Domino’s team
members facing crisis situations, such as fire, illness, natural disasters or other personal tragedies. In 2020,
Domino’s made a $500,000 donation to the Partners Foundation.

Also in 2020, Domino’s announced a pledge of $3.0 million to support the Black community in the U.S., including
$1.0 million to create the Company’s first Black Franchise Opportunity Fund. You can find more information about
our community involvement at stewardship.dominos.com.

Additional Disclosures

Working Capital

Information about the Company’s working capital is included in Management’s Discussion and Analysis of
Financial Condition and Results of Operations in Part II, Item 7., pages 27 through 41.

Government Regulation

We, along with our franchisees, are subject to various federal, state and local laws affecting the operation of our
business. Each store is subject to licensing and regulation by a number of governmental authorities, which include
zoning, health, safety, sanitation, building and fire agencies in the jurisdiction in which the store is located. In
connection with maintaining our stores, we may be required to expend funds to meet certain federal, state and local
regulations, including regulations requiring that remodeled or altered stores be accessible to persons with
disabilities. Difficulties in obtaining, or the failure to obtain, required licenses or approvals could delay or prevent
the opening of a new store in a particular area or cause an existing store to cease operations. Our supply chain
facilities are also licensed and subject to similar regulations by federal, state and local health and fire codes.

We are also subject to the Fair Labor Standards Act and various other federal and state laws governing such matters
as minimum wage requirements, overtime and other working conditions and citizenship requirements. A significant
number of both our and our franchisees’ food service personnel are paid at rates related to the applicable minimum
wage, and past increases in the minimum wage have increased labor costs, as would future increases.

We are subject to the rules and regulations of the Federal Trade Commission (“FTC”) and various state laws
regulating the offer and sale of franchises. The FTC and various state laws require that we furnish a franchise
disclosure document containing certain information to prospective franchisees, and a number of states require
registration of the franchise disclosure document with state authorities. We are operating under exemptions from
registration in several states based on the net worth of our subsidiary, Domino’s Pizza Franchising LLC, and
experience. We believe our franchise disclosure document, together with any applicable state versions or
supplements, and franchising procedures comply in all material respects with both the FTC guidelines and all
applicable state laws regulating franchising in those states in which we have offered franchises.

Internationally, our franchise stores are subject to national and local laws and regulations that are often similar to
those affecting our U.S. stores, including laws and regulations concerning franchises, labor, health, sanitation and
safety. Our international stores are also often subject to tariffs and regulations on imported commodities and
equipment, and laws regulating foreign investment. We believe our international disclosure statements, franchise
offering documents and franchising procedures comply in all material respects with the laws of the foreign countries
in which we have offered franchises.

Privacy and Data Protection

We are subject to a number of privacy and data protection laws and regulations both in the U.S. and globally. The
legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an
increase in attention given to privacy and data protection issues with the potential to directly affect our business.
This includes recently-enacted laws and regulations in the U.S. and internationally requiring notification to
individuals and government authorities of security breaches involving certain categories of personal information.
We have a privacy policy posted on our website at www.dominos.com. The security of our financial data, customer
information and other personal information is a priority for us.

Trademarks

We have many registered trademarks and believe that the Domino’s mark and Domino’s Pizza names and logos, in
particular, have significant value and are important to our business. Our policy is to pursue registration of our
trademarks and to vigorously oppose the infringement of any of our trademarks. We license the use of our registered
marks to franchisees through franchise agreements.

Environmental Matters

We are not aware of any federal, state or local environmental laws or regulations that we would expect to materially
affect our earnings or competitive position or result in material capital expenditures. However, we cannot predict the
effect of possible future environmental legislation or regulations. During 2020, there were no material
environmental compliance-related capital expenditures, and no such material expenditures are anticipated in 2021.

Seasonal Operations

The Company’s business is not typically seasonal.

Backlog Orders

The Company had no backlog orders as of January 3, 2021.

Government Contracts

No material portion of the Company’s business is subject to renegotiation of profits or termination of contracts or
subcontracts at the election of the U.S. government.

Available Information

The Company makes available, free of charge, through its internet website biz.dominos.com, its Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to
those reports filed or furnished pursuant to Section 13(a), 15(d), or 16 of the Securities Exchange Act of 1934, as
amended, as soon as reasonably practicable after electronically filing such material with the Securities and Exchange
Commission. Materials filed with the Securities and Exchange Commission are available at www.sec.gov. Retail
orders from Domino’s stores can be made through its internet website www.dominos.com. The reference to these
website addresses anywhere in this Annual Report on Form 10-K (the “Form 10-K”) does not constitute
incorporation by reference of the information contained on the websites and information appearing on those
websites, including biz.dominos.com, stewardship.dominos.com and www.dominos.com, should not be considered
a part of this document.

Item 1A. Risk Factors.

For a business as large and globally diverse as the Company, a wide range of factors could materially affect future
developments and performance. In addition to the factors affecting specific business operations identified in
connection with the description of these operations and the financial results of these operations elsewhere in this
report and our other filings with the SEC, we believe the most significant risk factors affecting our business include
the following:

Business, Operational and Industry Risks

The quick service restaurant pizza category and the food service and food delivery markets in general are highly
competitive and such competition could adversely affect our operating results.

In the U.S., we compete primarily against regional and local companies as well as national chains Pizza Hut®, Papa
John’s® and Little Caesars Pizza®. Internationally, we compete primarily with Pizza Hut®, Papa John’s® and
country-specific national and local companies. We could experience increased competition from existing or new
companies in the delivery and carryout pizza category that could create increasing pressures to grow our business in
order to maintain our market share. Additionally, we face growing competition from the supermarket industry and
meal kit and food delivery providers, with the improvement of prepared food and meal kit offerings, expansion in
meal delivery platforms and services and the trend towards convergence in grocery, deli, retail and restaurant
services.

We also compete on a broader scale with quick service and other international, national, regional and local
restaurants. Competition from order and delivery aggregators and other food delivery services has also increased in
recent years and order and delivery aggregators have continued to grow in size and scale. The overall food service
market, food delivery market and the quick service restaurant market are intensely competitive with respect to food
quality, price, service, image, convenience and concept, and are often affected by changes in:

consumer tastes;
international, national, regional or local economic conditions;
disposable purchasing power;

•
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• marketing, advertising and pricing, including discounting;
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demographic trends; and
currency fluctuations related to international operations.

We compete within the food service market and the quick service restaurant market not only for customers, but also
for management and hourly employees, including store team members, drivers and qualified franchisees, as well as
suitable real estate sites. Our supply chain segment is also subject to competition from outside suppliers. While
substantially all U.S. franchisees purchased food, equipment and supplies from us in 2020, U.S. franchisees are not
required to purchase food, equipment or supplies from us and they may choose to purchase from outside suppliers. If
other suppliers who meet our qualification standards were to offer lower prices or better service to our franchisees
for their ingredients and supplies and, as a result, our franchisees chose not to purchase from our U.S. supply chain
centers, our financial condition, business and results of operations would be adversely affected.

If we are unable to maintain our competitive position, we could experience downward pressure on prices, lower
demand for our products, reduced margins, loss of management or hourly employees, disruption in our supply chain
centers, the inability to take advantage of new business opportunities and the loss of market share, all of which
would have an adverse effect on our operating results and could cause our stock price to decline.

Worldwide economic activity has been and is expected to continue to be adversely affected by the COVID-19
pandemic, the scale and scope of which is ultimately unknown, which could adversely affect our business,
financial condition and results of operations.

The global COVID-19 pandemic continues to impact worldwide economic activity. A public health pandemic such
as COVID-19 poses the 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 a 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 throughout this report, 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 implemented a number of measures,
including, among others, temporarily closing certain of our stores, modifying certain stores’ hours and closing
locations to in-store dining, and we continue to monitor additional developments. We have also made additional
operating changes in response to changes in consumer behavior and preferences 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 in response have disrupted our operations and could disrupt our supply chain, including our
access to face coverings 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. While the Company has seen an increase in sales in
certain markets, including within the U.S., during the COVID-19 pandemic, including increased sales related to
heightened reliance on delivery and carry-out businesses, future sales are not possible to estimate and it is unclear
whether and to what extent sales will return to more normalized levels if and when consumer behavior and general
economic and business activity return to pre-pandemic levels. 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.

If we fail to successfully implement our growth strategy, which includes opening new U.S. and international
stores, our ability to increase our revenues and operating profits could be adversely affected.

A significant component of our growth strategy includes the opening of new U.S. (both Company-owned as well as
franchised stores) and international franchised stores. We and our franchisees face many challenges in opening new
stores, including, among others:

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•
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•

construction, permitting or development delays relating to the COVID-19 pandemic;
availability of financing with acceptable terms;
selection and availability of suitable new store sites and the ability to renew leases in quality locations;
negotiation of acceptable lease or financing terms;
securing required U.S. or foreign governmental permits, licenses and approvals;
employment and training of qualified personnel; and
general economic and business conditions.

The opening of additional franchise stores also depends, in part, upon the availability of prospective franchisees who
meet our criteria. Our failure to add a significant number of new stores would adversely affect our ability to increase
revenues and operating income. Additionally, our growth strategy and the success of new stores depend in large part
on the availability of suitable store sites. If we and our franchisees are not able to secure leases in desired locations
on favorable terms, or to renew such leases, our business and results of operations may be adversely affected.

We and our franchisees are currently planning to expand our U.S. and international operations in many of the
markets where we currently operate and in select new markets. This may require considerable management time as
well as start-up expenses for market development before any significant revenues and earnings are generated.
Operations in new foreign markets may achieve low margins or may be unprofitable, and expansion in existing
markets may be affected by local economic and market conditions. In addition, we expect to continue our strategy of
building additional stores in markets and regions where we have existing stores, a strategy we refer to as
“fortressing,” which may negatively impact sales at existing stores. Therefore, as we continue to expand, we or our
franchisees may not experience the operating margins we expect, our results of operations may be negatively
impacted, and our common stock price may decline. Additionally, we have an equity investment in Dash Brands
Ltd. (“Dash Brands”), as further discussed elsewhere in this report. 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. These types
of investments are inherently risky. If Dash Brands does not succeed or is unable to successfully execute its growth
strategy, we may be forced to record impairment charges and could lose some or all of our investment.

We may also pursue strategic acquisitions as part of our business. If we are able to identify acquisition candidates,
such acquisitions may be financed, to the extent permitted under our debt agreements, with substantial debt or with
potentially dilutive issuances of equity securities.

The food service market is affected by consumer preferences and perceptions. Changes in these preferences and
perceptions may reduce the demand for our products, which would reduce sales and harm our business.

Food service businesses are affected by changes in consumer tastes, international, national, regional and local
economic conditions, marketing, advertising, pricing, including discounting, and demographic trends. For instance,
if prevailing health or dietary preferences cause consumers to avoid pizza and other products we offer in favor of
foods that are perceived as healthier, our business and operating results would be harmed. Moreover, because we are
primarily dependent on a single product, if consumer demand for pizza should decrease, our business would suffer
more than if we had a more diversified menu, as many other food service businesses do. The preferences of
customers also may change as a result of advances in technology or alternative delivery methods or channels. If we
are not able to respond to these changes, or our competitors respond to these changes more effectively, our business
and operating results could be adversely affected.

Reports of food-borne illness or food tampering could reduce sales and harm our business.

Reports, whether true or not, of food-borne illnesses (such as E. coli, avian flu, bovine spongiform encephalopathy,
hepatitis A, trichinosis or salmonella) and injuries caused by food tampering have in the past severely injured the
reputations of participants in the quick service restaurant market and could in the future as well. The potential for
acts of terrorism affecting our global food supply also exists and, if such an event occurs, could have a negative
impact on us and could severely hurt sales and profits. In addition, our reputation is an important asset; as a result,
anything that damages our reputation could immediately and severely affect our sales and profits. Media reports of
illnesses and injuries, whether accurate or not, could force some stores to close or otherwise reduce sales at such
stores. Moreover, as described above, social media has dramatically increased the rate at which negative publicity,
including as it relates to food-borne illness, can be disseminated before there is any meaningful opportunity to
respond to or address an issue. Even reports of food-borne illnesses or food tampering occurring solely at the
restaurants of competitors could, by resulting in negative publicity about the restaurant industry in general, adversely
affect us on a local, regional, national or international basis. Further, the occurrence of a widespread illness, health
epidemic or pandemic, such as COVID-19, or other general health concern could adversely affect us on a local,
regional or international basis. A decrease in global retail sales as a result of these health concerns or negative
publicity or as a result of the closure of any Domino’s stores could have a material adverse effect on our results of
operations.

We do not have long-term contracts with certain of our suppliers, and as a result they could seek to significantly
increase prices or fail to deliver.

We do not have long-term contracts or arrangements with certain of our suppliers. Although in the past we have not
experienced significant problems with our suppliers, our suppliers may implement significant price increases or may
not meet our requirements, including those that may result from increases in volume, in a timely fashion or at all.
The occurrence of any of the foregoing could have a material adverse effect on the ability of our supply chain
centers to deliver necessary products to our stores and on our results of operations.

Shortages, interruptions or disruptions in the supply or delivery of fresh food products could adversely affect our
operating results.

We and our franchisees are dependent on frequent deliveries of food products that meet our specifications. In
addition, we have single suppliers or a limited number of suppliers for certain of our ingredients, including pizza
cheese and meat toppings. While we believe there are adequate reserve quantities and potential alternative suppliers,
shortages, interruptions or disruptions in the supply of food products caused by increased demand, capacity
constraints, problems in production or distribution, product recalls, financial or other difficulties of suppliers,
inclement weather or other conditions could adversely affect the availability, quality and cost of ingredients. We
have in the past experienced disruptions within our supply chain resulting from, among other things, capacity,
volume, staffing, operational and COVID-19-related challenges and may experience such supply chain disruptions
again in the future, which could adversely affect our business and operational results. Additionally, the effects of
climate change could increase the frequency and duration of weather impacts on our operations and could adversely
affect our operating results.

Increases in food, labor and other costs could adversely affect our profitability and operating results.

An increase in our operating costs could adversely affect our profitability and other operating results. Factors such
as inflation, increased food costs, increased labor and employee health and benefit costs, increased rent costs and
increased energy costs may adversely affect our operating costs. Most of the factors affecting costs are beyond our
control and, in many cases, we may not be able to pass along these increased costs to our customers or franchisees.
Most ingredients used in our pizza, particularly cheese, are subject to significant price fluctuations as a result of
seasonality, weather, demand and other factors. For example, we have experienced increased volatility in prices for
some ingredients during the COVID-19 pandemic, which may continue even if the pandemic recedes. Cheese is a
significant cost to us, representing approximately 25% of the market basket purchased by our Company-owned
stores.

Additionally, while we strive to engage in a competitive bidding process for our ingredients, because certain of these
ingredients, including meat products, may only be available from a limited number of vendors, we may not always
be able to do so effectively. Furthermore, if we need to seek new suppliers, we may be subject to pricing or other
terms less favorable to us than those reflected in our current supply arrangements. Labor costs are largely a function
of the minimum wage for a majority of our store personnel and certain supply chain center personnel and, generally,
are also a function of the availability of labor. Several jurisdictions in which we operate have recently approved
minimum wage increases. Federal, state and local proposals that increase minimum wage requirements or mandate
other employee matters could, to the extent implemented, materially increase our labor and other costs. As more
jurisdictions implement minimum wage increases, we expect our labor costs will continue to increase. The advent of
legislation aimed at predictive scheduling could impact labor for our stores and our franchisees’ stores. Additionally,
while we do not currently have any unionized employees, if a significant portion of our employees were to become
unionized, our labor costs could increase and our business could be negatively affected by other union requirements
that increase our costs, disrupt our business, reduce our flexibility and impact our employee culture. Labor costs and
food costs, including cheese, generally represent approximately 50% to 60% of the sales at a typical Company-
owned store.

Any prolonged disruption in the operations of any of our dough manufacturing and supply chain centers could
harm our business.

We operate 21 regional dough manufacturing and supply chain centers in the U.S., two thin crust manufacturing
facilities and one vegetable processing center in the U.S. and five dough manufacturing and supply chain centers in
Canada. We plan to continue investing in additional supply chain capacity in the future.

Our U.S. dough manufacturing and supply chain centers service all of our Company-owned and U.S. franchise
stores. As a result, any prolonged disruption in the operations of any of these facilities, whether due to technical,
operational or labor difficulties, destruction or damage to the facility, real estate issues, limited capacity or other
reasons, could adversely affect our business and operating results.

Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media
could adversely impact our business.

The use of social media platforms, including blogs, chat platforms, social media websites, and other forms of
internet-based communications that allow individuals access to a broad audience of consumers and other persons,
including to our customers and the general public, and other consumer-oriented technologies has increased the speed
and accessibility of information dissemination and given users the ability to more effectively organize collective
actions such as boycotts and other brand-damaging behaviors. Negative publicity related to our food products or
stores or negative publicity related to actions by our executives, team members or franchisees and their team
members could harm our business, brand, reputation, marketing partners, financial condition, and results of
operations, regardless of the accuracy of such negative publicity. Failure to use or respond to social media
campaigns effectively could lead to a decline in brand value and revenue.

In addition, a failure of us, our employees, our franchisees or third parties acting at our direction to abide by
applicable laws and regulations in the use of social media could adversely impact our brand, reputation, marketing
partners, financial condition, and results of operations or subject us or our franchisees to fines or other penalties.
Other risks associated with the use of social media include improper disclosure of proprietary information, exposure
of personally identifiable information, fraud, hoaxes or malicious dissemination of false information.

Our success depends in part upon effective advertising, and lower advertising funds may reduce our ability to
adequately market the Domino’s Pizza brand.

We have been routinely named a Leading National Advertiser by Advertising Age and our success depends in part
on continued effective advertising. Each Domino’s store located in the U.S. is obligated to contribute 6% of its sales
(subject, in certain instances, to lower rates based on certain incentives and waivers) to DNAF, which uses such fees
for national advertising in addition to contributions for local market-level advertising. We currently anticipate that
this 6% contribution rate will remain in place for the foreseeable future. While additional funds for advertising in the
past have been provided by us, our franchisees and other third parties, none of these additional funds are legally
required. The lack of continued financial support for advertising activities could significantly curtail our marketing
efforts, which may in turn materially and adversely affect our business and our operating results.

Loss of key employees or our inability to attract and retain new qualified employees could hurt our business and
inhibit our ability to operate and grow successfully.

Our success in the highly competitive pizza delivery and carryout business will continue to depend to a significant
extent on our leadership team and other key management personnel. Although we have entered into employment
agreements with Richard E. Allison Jr. and Russell J. Weiner, each of these executives may terminate his agreement
on ninety days’ notice. Our other executive officers may terminate their employment pursuant to their employment
agreements at any time. As a result, we may not be able to retain our executive officers and key personnel or attract
additional qualified management. While we do not have long-term employment agreements with our executive
officers, for all of our executive officers we have non-compete and non-solicitation agreements that extend for 24
months following the termination of such executive officer’s employment. Our success will also continue to depend
on our ability to attract and retain qualified personnel to operate our stores, dough manufacturing and supply chain
centers and international operations. The loss of these employees or our inability to recruit and retain qualified
personnel could have a material adverse effect on our operating results.

Our international operations subject us to additional risk. Such risks and costs may differ in each country in
which we and our franchisees do business and may cause our profitability to decline due to increased costs.

We conduct a significant and growing portion of our business outside the U.S. Our financial condition and results of
operations may be adversely affected if global markets in which our franchise stores compete are affected by
changes in political, economic or other factors. These factors, over which neither we nor our franchisees have
control, may include:

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recessionary or expansive trends in international markets;
changing labor conditions and difficulties in staffing and managing our foreign operations;
increases in the taxes we pay and other changes in applicable tax laws both in the U.S. and globally;
tariffs and trade barriers;
legal and regulatory changes, and the burdens and costs of our compliance with a variety of foreign laws;
changes in inflation rates;
changes in exchange rates and the imposition of restrictions on currency conversion or the transfer of
funds;
difficulty in collecting our royalties and longer payment cycles;
expropriation of private enterprises;
the inherent risk of doing business in China resulting from our equity investment in Dash Brands;
increases in anti-American sentiment and the identification of the Domino’s Pizza brand as an American
brand;
political and economic instability and uncertainty around the world, including uncertainty arising from the
COVID-19 pandemic; and
other external factors.

Our earnings and business growth strategy depend on the success of our franchisees, and we may be harmed by
actions taken by our franchisees, or employees of our franchisees, that are outside of our control.

A significant portion of our earnings comes from royalties and fees generated by our franchise stores. Franchisees
are independent operators, and their employees are not our employees. We provide tools that franchisees can
consider using in training their employees, but the quality of franchise store operations and our brand and branded
products may be diminished by any number of factors beyond our control. Consequently, franchisees may not
operate stores in a manner consistent with our standards and requirements or they or their employees may take other
actions that adversely affect the value of our brand. In such event, our business and reputation may suffer, and as a
result our revenues and stock price could decline.

While we try to ensure that franchisees maintain the quality of the Domino’s brand and branded products and
comply with their franchise agreements, franchisees may take actions that adversely affect the value of our
intellectual property or reputation or that are inconsistent with their contractual obligations. Although our franchise
arrangements permit the applicable franchisor to terminate a franchise agreement under certain circumstances,
including the failure by franchisees to uphold quality standards, there can be no assurance that such remedy will be
available or sufficient to prevent harm to our brand and protect our intellectual property.

As of January 3, 2021, we had 762 U.S. franchisees operating 5,992 U.S. stores. As of that same date, 19 of these
franchisees each owned and operated more than 50 U.S. stores, including our largest U.S. franchisee who owned and
operated 178 stores and the average U.S. franchisee owned and operated approximately seven stores.

Our international master franchisees are generally responsible for the development of significantly more stores than
our U.S. franchisees. As a result, our international operations are more closely tied to the success of a smaller
number of franchisees than our U.S. operations. As of January 3, 2021, our largest international master franchisee
operated 2,797 stores in nine markets, which accounted for approximately 25% of our total international store count.
Our U.S. and international franchisees may not operate their franchises successfully. If one or more of our key
franchisees were to become insolvent or otherwise were unable or unwilling to pay us our royalties or other amounts
owed, our business and results of operations would be adversely affected.

We may not be able to adequately protect our intellectual property, which could harm the value of our brand and
branded products and adversely affect our business.

We depend in large part on our brand and branded products and believe that they are very important to our business.
We rely on a combination of trademarks, copyrights, trade secrets and similar intellectual property rights to protect
our brand and branded products. The success of our business depends on our continued ability to use our existing
trademarks in order to capitalize on our name recognition, increase brand awareness and further develop our branded
products in both U.S. and international markets. We have registered certain trademarks and have other trademark
applications pending in the U.S. and foreign jurisdictions. Not all of the trademarks that we currently use have been
registered in all of the countries in which we do business, and they may never be registered in all of these countries.
Some countries’ laws do not protect unregistered trademarks at all, or make them more difficult to enforce, and third
parties may have filed for “Domino’s” or similar marks in countries where Domino’s has not registered its brand.
Accordingly, we may not be able to adequately protect our trademarks everywhere in the world and our use of these
trademarks may result in liability for trademark infringement, trademark dilution or unfair competition.
All of the steps we have taken to protect our intellectual property in the U.S. and in foreign countries may not be
adequate. In addition, the laws of some foreign countries do not protect intellectual property rights to the same
extent as the laws of the U.S.

We may, from time to time, be required to institute or defend litigation to enforce our trademarks or other
intellectual property rights, or to protect our trade secrets. Such litigation could result in substantial costs and
diversion of resources and could negatively affect our sales, profitability and prospects regardless of whether we are
able to successfully enforce our rights.

The occurrence of cyber incidents, or a deficiency in cybersecurity, could negatively impact our business by
causing a disruption to our operations, a compromise or corruption of confidential information, or damage to
our employee and business relationships, any of which could subject us to loss and harm our brand.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of
information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that can
include gaining unauthorized access to systems to disrupt operations, corrupt data or steal confidential information
about customers, franchisees, suppliers or employees. A number of retailers and other companies have recently
experienced serious cyber incidents and breaches of their information technology systems. As our reliance on
technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. We
could also be subject to negative impacts to our business caused by cyber incidents relating to our third-party service
providers.

The three primary risks that could directly result from the occurrence of a cyber incident include operational
interruption, damage to our relationships with customers, franchisees and employees and private data exposure,
including payment card or other financial data. In addition to maintaining insurance coverage to address cyber
incidents, we have also implemented processes, procedures and controls to help mitigate these risks. However, our
cyber insurance coverage may not fully cover all of the costs associated with a cyber incident and these measures, as
well as our increased awareness of the risk of a cyber incident, do not guarantee that our reputation and financial
results will not be materially and adversely affected by such an incident.

Our and our franchisees’ operations depend upon our ability and the ability of franchisees and third-party service
providers (as well as franchisees’ third-party service providers), to protect computer equipment and systems against
damage from theft, fire, power loss, telecommunications failure and other catastrophic or unanticipated events, as
well as internal and external security incidents, viruses, denial-of-service attacks, phishing attacks, ransomware
attacks and other intentional or unintentional disruptions. A significant portion of our retail sales depend on the
continuing operation of our information technology and communications systems, including but not limited to
Domino’s PULSE™, our online and mobile ordering platforms and our credit card processing systems. The failure
of these systems to operate effectively, stemming from maintenance problems, upgrading or transitioning to new
platforms, a compromise in our security or other unanticipated problems could result in interruptions to or delays in
our and our franchisees’ operations. Some of our systems are not fully redundant, and our system’s disaster recovery
planning cannot account for all eventualities. The occurrence of a natural disaster, intentional sabotage or other
unanticipated problems could result in lengthy interruptions in service. In addition, the implementation of
technology changes and upgrades to maintain and upgrade our systems, errors or vulnerabilities in our systems, or
damage to or failure of our systems, could result in interruptions in our services and non-compliance with certain
laws or regulations, which could reduce our sales, revenues and profits and damage our business and brand.
Furthermore, as a result of the COVID-19 pandemic, certain of our employees have been required to work from
home. The significant increase in remote working, particularly for an extended period of time, could exacerbate
certain risks to our business, including an increased risk of cyber incidents and improper dissemination of personal
or confidential information.

Because we and our franchisees accept electronic forms of payment from customers, our business requires the
collection and retention of customer data, including sensitive financial data and other personally identifiable
information in various information systems that we and our franchisees maintain and in those maintained by third
parties with whom we and our franchisees contract to provide payment processing. A weakness in such third party’s
systems or software products may provide a mechanism for a cyber threat. In recent years, a significant number of
companies have experienced security data breaches in which customer information was stolen through vendor
access channels. While we select our third-party suppliers carefully, cyber-attacks and security data breaches at a
payment processing contractor could compromise confidential information or adversely affect our ability to deliver
products and services to our customers. These problems could negatively affect our results of operations, and
remediation could result in significant, unplanned capital investments.

We also maintain important internal Company data, such as personally identifiable information about our employees
and franchisees and information relating to our operations. In addition, more than half of all global retail sales in
2020 were derived from digital channels, primarily through our online ordering website and mobile applications,
where customers enter personally identifiable information that we retain. Our use and retention of personally
identifiable information is regulated by foreign, federal and state laws and regulations, as well as by certain third-
party agreements. For example, the European Union adopted a new regulation that became effective in May 2018,
the European Union General Data Protection Regulation, and the State of California adopted the California
Consumer Privacy Act that became effective on January 1, 2020, both of which require companies to meet new
requirements regarding the handling of personal data. As privacy and information security laws and regulations
change, we may incur additional costs to ensure that we remain in compliance with those laws and regulations. If
our security and information systems are compromised or if we, our employees or franchisees fail to comply with
these laws, regulations or contract terms, or to successfully implement appropriate processes related to applicable
requirements, laws and regulations governing cyber incidents could require us to notify customers, employees or
other groups, and could result in adverse publicity, loss of sales and cash flows, increased fees payable to third
parties and fines, penalties or remediation and other costs that could adversely affect our reputation, business and
results of operations. Any other material disruption or other adverse event affecting one or more of our digital
ordering platforms, including, for instance, power loss, technological failures, user error or cyber-attacks, could
similarly result in adverse publicity, loss of sales and cash flows and other costs, which could in turn materially and
adversely affect our reputation, business and results of operations.

We cannot predict the impact that new or improved technologies, alternative methods of delivery, including
autonomous vehicle delivery, or changes in consumer behavior facilitated by these technologies and alternative
methods of delivery will have on our business.

Advances in technologies or alternative methods of delivery, including advances in digital ordering technology, or
certain changes in consumer behavior driven by these or other technologies and methods of delivery could have a
negative effect on our business and market position. Moreover, technology and consumer offerings continue to
develop, and we expect that new or enhanced technologies and consumer offerings will be available in the future.
We may pursue certain of those technologies and consumer offerings if we believe they offer a sustainable customer
proposition and can be successfully integrated into our business model. However, we cannot predict consumer
acceptance of these delivery channels or their impact on our business.

In addition, our competitors, some of whom have greater resources (financial or otherwise) than we do, may be able
to benefit from changes in technologies or consumer acceptance of alternative methods of delivery, which could
harm our competitive position. There can be no assurance that we will be able to successfully respond to changing
consumer preferences, including with respect to new technologies and alternative methods of delivery, or to
effectively adjust our product mix, service offerings, and marketing and merchandising initiatives for products and
services that address, and anticipate advances in, technology and market trends. If we are not able to successfully
respond to these challenges, our business, market share, financial condition, and operating results could be
materially and adversely affected.

We are subject to a variety of additional risks associated with our franchisees.

Our franchise system subjects us to a number of additional risks, any one of which may impact our ability to collect
royalty payments and fees from our franchisees, may harm the goodwill associated with our brand, and/or may
materially and adversely impact our business and results of operations. Such risks may also apply to us as owners of
stores. These risks include, but are not limited to:

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those relating to the application of local, state, federal and foreign bankruptcy laws and other applicable
laws governing creditors’ rights generally and the impact such laws could have on our ability to collect
payments and fees under applicable franchise agreements;
those relating to franchisees that are operating entities, which generally are not limited-purpose entities,
including business, credit, financial and other risks in addition to risks related to unions;
those relating to franchisee changes in control and succession in general and the ability to find acceptable
successors who would be able to perform a former franchisee’s obligations under applicable franchise
agreements or successfully operate impacted stores in the event of a change of control or other succession
event;
those relating to franchisee insurance, including the inadequacy of, or inability to obtain, insurance
coverage, losses in excess of policy limits or payments not being made on a timely basis, extraordinary
hazards not being subject to coverage (or only being subject to coverage at prohibitively high rates) or third
parties seeking to recover certain losses from us to the extent those losses experienced by such third parties
are either not covered by the franchisee’s insurance or exceed the policy limits of the franchisee’s
insurance;
those relating to instances of termination of or default under a franchisee’s franchise agreement or the non-
renewal thereof at the end of such agreement’s expiration date and the corresponding impact on the
franchisee’s or our operations;
those relating to product liability exposure or noncompliance with health and safety regulations and the
resulting impact such events could have on a franchisee’s ability to make payments under applicable
franchise agreements, on us if an aggrieved party seeks to recover their losses from us and on our brand’s
reputation;
the imposition of injunctive relief, fines, damage awards or capital expenditures under the Americans with
Disabilities Act of 1990, as amended, or other laws or regulations that could adversely affect the ability of a
franchisee to make payments under applicable franchise agreements;
litigation involving franchisees, including litigation involving us or litigation involving a third-party
directed at a franchisee, which could decrease the ability of a defendant-franchisee to make its royalty
payments and divert our resources regardless of whether the allegations in such litigation are valid or
whether we are liable; and
those relating to the reliance of a franchised store business on its franchisees and the nature of franchisees
in general, including the retention of franchisees (especially including our top-performing franchisees) in
the future or our ability to attract, retain, and motivate sufficient numbers of franchisees of the same caliber
in the future.

We are subject to a number of risks related to credit card and debit card payments we accept.

As store operators, we and our franchisees accept payments through credit card and debit card transactions. For
credit card and debit card payments, we and our franchisees pay interchange and other fees, which may increase
over time, potentially increasing our operating expenses and those of our franchisees and requiring an increase in the
prices charged for our products, either of which could harm our operating results. If there are malfunctions or other
problems with our or our franchisees’ processing vendors, billing software or payment processing systems, our or
our franchisees’ customer satisfaction may be adversely affected and one or more of the major payment networks
could disallow us or our franchisees’ continued use of their payment methods. If we or our franchisees fail to
adequately control fraudulent credit card and debit card transactions or to comply with the Payment Card Industry
Data Security Standards, we or our franchisees may face civil liability, diminished public perception of our or their
security measures, fines and assessments from the card brands, and significantly higher credit card and debit card
related costs, each of which could adversely affect our business, financial condition and results of operations.

The termination of our ability to process payments through any major payment network would significantly impair
our ability to operate our business. We and our franchisees may need to expand or change our or their information
systems to support different or emerging forms of payment methods, which may be time-consuming and expensive,
and we or they may not realize a return on the investment.

Our current insurance coverage may not be adequate, insurance premiums for such coverage may increase and
we may not be able to obtain insurance at acceptable rates, or at all.

For certain periods prior to December 1998 and for periods after December 2001, we maintain insurance coverage
for workers’ compensation, general liability and owned and non-owned automobile liabilities. We are generally
responsible for up to $2.0 million per occurrence under these retention programs for workers’ compensation and
general liability, depending on policy year and line of coverage. We are generally responsible for up to between
$500,000 and $5.5 million per occurrence under these retention programs for owned and non-owned automobile
liabilities, depending on policy year and line of coverage. Total insurance limits under these retention programs vary
depending upon the period covered and range up to $110.0 million per occurrence for general liability and owned
and non-owned automobile liabilities and up to the applicable statutory limits for workers’ compensation. These
insurance policies may not be adequate to protect us from liabilities that we incur in our business. In addition, in the
future our insurance premiums may increase, and we may not be able to obtain similar levels of insurance on
reasonable terms, or at all. Any such inadequacy of, or inability to obtain insurance coverage could have a material
adverse effect on our business, financial condition and results of operations.

Risks Related to Our Indebtedness

Our substantial indebtedness could adversely affect our business and limit our ability to plan for or respond to
changes in our business.

We have a substantial amount of indebtedness. As of January 3, 2021, our consolidated total indebtedness was
approximately $4.12 billion. We may also incur additional debt, which would not be prohibited under the terms of
our current securitized debt agreements. Our substantial indebtedness could have important consequences for our
business and our shareholders. For example, it could:

• make it more difficult for us to satisfy our obligations with respect to our debt agreements;
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increase our vulnerability to general adverse economic and industry conditions;
require us to dedicate a substantial portion of our cash flow from operations to payments on our
indebtedness, thereby reducing the availability of our cash flow for other purposes; and
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we
operate, thereby placing us at a competitive disadvantage compared to our peers that may have less debt.

•

Further, a portion of our indebtedness bears interest at fluctuating interest rates based on the London interbank
offered rate (“LIBOR”), and there is currently uncertainty around whether LIBOR will continue to exist after 2021.
If LIBOR ceases to exist, we may need to renegotiate certain loan documents and we cannot predict what alternative
index would be negotiated with our lenders. 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. The U.S. Federal Reserve, in conjunction with the Alternative
Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering
replacing LIBOR with a new index calculated by short-term repurchase agreements, backed by Treasury securities
called the Secured Overnight Financing Rate (“SOFR”). The first publication of SOFR was released in April 2018.
Whether or not SOFR attains market traction as a LIBOR replacement remains a question and the future of LIBOR
at this time is uncertain.

In addition, the financial and other covenants we agreed to with our lenders may limit our ability to incur additional
indebtedness, make investments, pay dividends and engage in other transactions, and the leverage may cause
potential lenders to be less willing to loan funds to us in the future. Our failure to comply with these covenants could
result in an event of default that, if not cured or waived, could result in the acceleration of repayment of all of our
indebtedness.

Downgrades in our credit ratings could impact our ability to access capital and materially adversely affect our
business, financial condition and results of operations.

Our debt is rated by credit rating agencies. These agencies may downgrade their credit ratings for us based on the
performance of our business, our capital strategies or their overall view of our industry. There can be no assurance
that any rating assigned to our currently outstanding indebtedness will remain in effect for any given period of time
or that any such ratings will not be lowered, suspended or withdrawn entirely by a rating agency if, in that agency’s
judgment, circumstances so warrant.

A downgrade of our credit ratings could, among other things, increase our cost of borrowing, limit our ability to
access capital, result in more restrictive covenants in agreements governing the terms of any future indebtedness that
we may incur, including restrictions on our ability to pay dividends or repurchase shares, or require us to provide
collateral for future borrowings, and thereby adversely impact our business, financial condition and results of
operations.

We may be unable to generate sufficient cash flow to satisfy our significant debt service obligations, which would
adversely affect our financial condition and results of operations.

Our ability to make principal and interest payments on and to refinance our indebtedness will depend on our ability
to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control. If our business does not generate sufficient cash
flow from operations, in the amounts projected or at all, or if future borrowings are not available to us under our
variable funding notes in amounts sufficient to fund our other liquidity needs, our financial condition and results of
operations may be adversely affected. If we cannot generate sufficient cash flow from operations to make scheduled
principal amortization and interest payments on our debt obligations in the future, we may need to refinance all or a
portion of our indebtedness on or before maturity, sell assets, delay capital expenditures or seek additional equity. If
we are unable to refinance any of our indebtedness on commercially reasonable terms or at all or to affect any other
action relating to our indebtedness on satisfactory terms or at all, our business may be harmed.

The terms of our securitized debt financing of certain of our wholly-owned subsidiaries have restrictive terms and
our failure to comply with any of these terms could put us in default, which would have an adverse effect on our
business and prospects.

Unless and until we repay all outstanding borrowings under our securitized debt, we will remain subject to the
restrictive terms of these borrowings. The securitized debt, under which certain of our wholly-owned subsidiaries
issued and guaranteed fixed rate notes and variable funding senior revolving notes, contain a number of covenants,
with the most significant financial covenant being a debt service coverage calculation. These covenants limit the
ability of certain of our subsidiaries to, among other things:

sell assets;
alter the business we conduct;
engage in mergers, acquisitions and other business combinations;
declare dividends or redeem or repurchase capital stock;
incur, assume or permit to exist additional indebtedness or guarantees;

•
•
•
•
•
• make loans and investments;
•
•

incur liens; and
enter into transactions with affiliates.

The securitized debt also requires us to maintain specified financial ratios at the end of each fiscal quarter. These
restrictions could affect our ability to pay dividends or repurchase shares of our common stock. Our ability to meet
these financial ratios can be affected by events beyond our control, and we may not satisfy such a test. A breach of
this covenant could result in a rapid amortization event or default under the securitized debt. If amounts owed under
the securitized debt are accelerated because of a default under the securitized debt and we are unable to pay such
amounts, the investors may have the right to assume control of substantially all of the securitized assets.

During the term following issuance, the outstanding senior notes will accrue interest in accordance with the terms of
the debt agreements. Additionally, our senior notes have original scheduled principal payments of $42.0 million in
2021, $897.0 million in 2022, $33.0 million in each of 2023 and 2024, $1.15 billion in 2025, $20.8 million in 2026,
$1.28 billion in 2027, $6.8 million in 2028 and $614.3 million in 2029. In accordance with our debt agreements, the
payment of principal on the outstanding senior notes may be suspended if the leverage ratios for the Company are
less than or equal to 5.0x total debt, as defined, to adjusted EBITDA, as defined in the indenture governing our
securitized debt, and no catch-up provisions are applicable. As of the fourth quarter of 2020, we met the leverage
ratio of less than 5.0x and, in accordance with our debt agreements, did not make the previously scheduled debt
payments beginning in the first quarter of 2021.

If we are unable to refinance or repay amounts under the securitized debt prior to the expiration of the term, our cash
flow would be directed to the repayment of the securitized debt and, other than a weekly management fee sufficient
to cover minimal selling, general and administrative expenses, would not be available for operating our business.

No assurance can be given that any refinancing or additional financing will be possible when needed or that we will
be able to negotiate acceptable terms. In addition, our access to capital is affected by prevailing conditions in the
financial and capital markets and other factors beyond our control. There can be no assurance that market conditions
will be favorable at the times that we require new or additional financing.

The indenture governing the securitized debt will restrict the cash flow from the entities subject to the securitization
to any of our other entities and upon the occurrence of certain events, cash flow would be further restricted.

In the event that a rapid amortization event occurs under the indenture (including, without limitation, upon an event
of default under the indenture or the failure to repay the securitized debt at the end of its term), the funds available to
us would be reduced or eliminated, which would in turn reduce our ability to operate or grow our business.

Regulatory, Legal and Compliance Risks

We face risks of litigation, investigations, enforcement actions and negative publicity from customers,
franchisees, suppliers, employees, regulators and others in the ordinary course of business, which could divert
our financial and management resources. Litigation, investigations, enforcement actions or publicity may
adversely impact our financial condition and results of operations.

Claims of illness or injury relating to food quality or food handling are common in the food service industry, and
vehicular accidents and injuries occur in the food delivery business. We are currently subject to these types of claims
and have been subject to these types of claims in the past. Claims within our industry of improper supplier actions
also occasionally arise that, if made against one of our suppliers, could potentially damage our brand image. In
addition, class action lawsuits have been filed, and may continue to be filed, against various quick service
restaurants alleging, among other things, that quick service restaurants have failed to disclose the health risks
associated with high-fat foods and that quick service restaurant marketing practices have encouraged obesity. State
attorney general offices or other regulators have initiated and may in the future initiate investigations or enforcement
actions against us.

In addition to decreasing our sales and profitability and diverting our management resources, adverse publicity
resulting from such allegations may materially and adversely affect us and our brand, regardless of whether such
allegations are valid or whether we are liable, and could result in a substantial settlement, fine, penalty or judgment
against us.

Further, we may be subject to employee, franchisee and other claims in the future based on, among other things,
discrimination, harassment, working and safety conditions, wrongful termination and wage, expense reimbursement,
rest break and meal break issues, including claims relating to overtime compensation. We have been and continue to
be subject to these types of claims. If one or more of these claims were to be successful or if there is a significant
increase in the number of these claims or if we receive significant negative publicity, our business, financial
condition and operating results could be harmed.

We and our franchisees are subject to extensive government regulation and requirements issued by other groups
and our failure to comply with existing or increased regulations could adversely affect our business and
operating results.

We are subject to numerous federal, state, local and foreign laws and regulations, as well as requirements issued by
other groups, including those relating to:

•
•
•
•

the preparation, sale and labeling of food;
building and zoning requirements;
environmental protection;
labor and employment, including minimum wage, overtime, insurance, discrimination and other labor
requirements;

• working and safety conditions;
•
•
•
•
•

franchise arrangements;
taxation;
antitrust;
payment card industry standards and requirements; and
information privacy and consumer protection.

We are subject to an FTC rule and to various state and foreign laws that govern the offer and sale of franchises.
These laws regulate various aspects of the franchise relationship, including terminations and the refusal to renew
franchises. The failure to comply with these laws and regulations in any jurisdiction or to obtain required
government approvals could result in a ban or temporary suspension on future franchise sales, fines or other
penalties or require us to make offers of rescission or restitution, any of which could adversely affect our business
and operating results.

In August 2015, the National Labor Relations Board adopted a new and broader standard for determining when two
or more otherwise unrelated employers may be found to be a joint employer of the same employees under the
National Labor Relations Act. The National Labor Relations Board issued a final rule which became effective April
27, 2020 that reinstates the standard that was in place before August 2015. In December 2019, the National Labor
Relations Board directed an administrative law judge to approve settlement agreements (rather than rejecting the
settlement and allowing the claims asserting that the franchisor should be the joint employer of its franchisees’
employees to proceed) in a decision related to another franchise system; however, an appeal of that decision is
pending. If the August 2015 standard is restored or is adopted by other government agencies and/or applied
generally to franchise relationships, it could cause us to be liable or held responsible for unfair labor practices and
other violations of our franchisees and subject us to other liabilities, and require us to conduct collective bargaining
negotiations regarding employees of totally separate, independent employers, most notably our franchisees. In such
event, our operating expenses may increase as a result of required modifications to our business practices, increased
litigation, governmental investigations or proceedings, administrative enforcement actions, fines and civil liability.
Additionally, depending upon legal developments in California, franchisors may be subject to claims that their
franchisees should be treated as employees and not as independent contractors in California and, potentially, certain
other states and localities with similar employment laws. If such misclassification claims are successful against a
franchisor, the franchisor could be liable to its franchisees (and potentially their employees) and, thereafter, have to
treat its franchisees (and their employees) as the franchisor’s employees under these laws.

We and our franchisees are subject to the Fair Labor Standards Act of 1938, as amended (the “Fair Labor Standards
Act”), which, along with the Family and Medical Leave Act, governs such matters as minimum wage and overtime
requirements and other working conditions and various family leave mandates, as well as a variety of other laws
enacted, or rules and regulations promulgated, by federal, state and local governmental authorities that govern these
and other employment matters. We and our franchisees have experienced and expect further increases in payroll
expenses as a result of government-mandated increases in the minimum wage, and although such increases are not
currently expected to be material, there may be material increases in the future. Enactment and enforcement of
various federal, state and local laws, rules and regulations on immigration and labor organizations may adversely
impact the availability and costs of labor for Domino’s and franchisees’ stores in a particular area or across the
United States. In addition, third-party suppliers may be affected by higher minimum wage standards, which may
increase the price of goods and services they supply to us. Such increased expenses may cause our franchisees to
exit the business or cause us to reduce the number of company-owned stores, or otherwise adversely affect the
amount of royalty payments and license fees we receive.

On January 12, 2020, the U.S. Department of Labor announced a final rule to update and clarify the definition of
joint employer under the Fair Labor Standards Act. Under the final rule, the general test for assessing whether a
party can be deemed a joint employer would be based upon whether that party (i) hires or fires the employee; (ii)
supervises and controls the employee’s work schedule or conditions of employment; (iii) determines the employee’s
rate and method of payment; and (iv) maintains the employee’s employment records. In the final rule, the
Department of Labor describes instances in which joint employment would not be more or less likely to be found to
exist under the Fair Labor Standards Act, which, according to the Department of Labor, includes the relationships
that exist under the typical franchise business model. This rule may reduce a franchisor’s risk of liability that
currently exists under the joint employer standard now in effect under the Fair Labor Standards Act (though
ultimately, the facts specific to the franchisor-franchisee model at issue would be considered when determining
liability). On September 8, 2020, a federal district court struck down a significant portion of the final rule, and an
appeal of that decision is currently pending. However, the U.S. Department of Labor rule is separate from the joint
employer standard under the National Labor Relations Act, the final rule issued by the National Labor Relations
Board, and, as described above, potential liability as a joint employer under the National Labor Relations Act.

Certain governmental authorities and private litigants have recently asserted claims against franchisors, including us,
for provisions in our prior franchise agreements that restrict franchisees from soliciting or hiring the employees of
other franchisees or the applicable franchisor. Claims against franchisors for such clauses include allegations that
these clauses violate state and federal antitrust and unfair practices laws by restricting the free movement of
employees of franchisees and/or franchisor (including the employees of company-owned stores), thereby depressing
the wages of those employees.

The Patient Protection and Affordable Care Act (as amended, the “Affordable Care Act”) requires employers such
as us to provide health insurance for all qualifying employees or pay penalties for not providing coverage. The
majority of the increases in these costs began in 2015, and while the incremental costs of this program have not been
material to us to date, we cannot predict what effect these costs will have on our results of operations and financial
position, or the effects of the Affordable Care Act on some of our larger franchisees. Modifications to, or repeal of,
all or certain provisions of the Affordable Care Act are possible, consistent with statements made by certain elected
officials.

Changes in tax laws or tax policy more broadly, increases in the enacted tax rates, adverse outcomes in connection
with tax audits in any jurisdiction or any change in the pronouncements relating to accounting for income taxes
could also impact our financial condition and results of operations.

There also has been increased public focus, including by U.S. and foreign governmental authorities, on
environmental sustainability matters, such as climate change, the reduction of greenhouse gases and water
consumption. Legislative, regulatory or other efforts to combat climate change or other environmental concerns
could result in future increases in taxes, restrictions on or increases in the costs of supplies, transportation and
utilities, any of which could increase our operating costs and those of our franchisees, and necessitate future
investments in facilities and equipment. These risks also include the increased pressure to make commitments, set
targets, or establish additional goals to take actions to meet them, which could expose us and our franchisees to
market, operational, execution and reputational costs or risks.

We may also become subject to legislation or regulation seeking to tax and/or regulate high-fat foods, foods with
high sugar and salt content, or foods otherwise deemed to be “unhealthy,” and our capital expenditures could
increase due to remediation and compliance measures related to these laws or regulations.

Adverse government regulations and enforcement efforts, including the examples mentioned above, or non-
compliance by us or our franchisees with any of the foregoing laws and regulations could lead to various claims or
governmental or judicial fines, sanctions or other enforcement measures, which could have a material adverse effect
on our business, financial condition and results of operations.

Market and General Risks

Adverse global economic conditions subject us to additional risk.

Our financial condition and results of operations are impacted by global markets and economic conditions over
which neither we nor our franchisees have control. An economic downturn, including deterioration in the economic
conditions in the U.S. or international markets where we compete, may result in a reduction in the demand for our
products, longer payment cycles, slower adoption of new technologies and increased price competition.

Poor economic conditions may adversely affect the ability of our franchisees to pay royalties or amounts owed and
could have a material adverse impact on our ability to pursue our growth strategy, which would reduce cash
collections and in turn, may materially and adversely affect our ability to service our debt obligations.

Fluctuations in the value of the U.S. dollar in relation to other currencies may lead to lower revenues and
earnings.

Exchange rate fluctuations could have an adverse effect on our results of operations. International franchise royalties
and fees represented approximately 6.1% of our total revenues in 2020, 6.7% of our total revenues in 2019 and 6.5%
of our total revenues in 2018, 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. Sales
made by franchise stores outside the U.S. are denominated in the currency of the country in which the store is
located, and this currency could become less valuable in U.S. dollars as a result of exchange rate fluctuations.
Unfavorable currency fluctuations could lead to increased prices to customers outside the U.S. or lower profitability
to our franchisees outside the U.S., or could result in lower revenues for us, on a U.S. dollar basis, from such
customers and franchisees. A hypothetical 10% adverse change in the foreign currency rates in our international
markets would have resulted in a negative impact on international royalty revenues of approximately $22.2 million
in 2020.

Our annual and quarterly financial results are subject to significant fluctuations depending on various factors,
many of which are beyond our control, and if we fail to meet the expectations of securities analysts or investors,
our share price may decline significantly or be subject to significant fluctuations.

Our sales and operating results can vary significantly from quarter-to-quarter and year-to-year depending on various
factors, many of which are beyond our control. These factors include, among other things:

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•
•
•
•

variations in the timing and volume of our sales and our franchisees’ sales;
the timing of expenditures in anticipation of future sales;
planned or actual changes to our capital or debt structure;
strategic actions by us or our competitors, such as sales promotions, acquisitions or restructurings;
changes in our dividend policy or any share repurchase program;
significant litigation;
legislation or other regulatory developments affecting us or our industry;

•
•
•
•

changes in competitive and economic conditions generally;
general market conditions;
changes in the cost or availability of our ingredients or labor; and
foreign currency exposure.

As a result, our operational performance may decline quickly and significantly in response to changes in order
patterns or rapid decreases in demand for our products. Any such decline may cause us and our franchisees to
experience lower sales revenue. We anticipate that fluctuations in operating results will continue in the future, and
such fluctuations may result in significant fluctuations or a significant decline in our share price.

Actions of activist investors could negatively impact our business and the value of our stock price.

Publicly-traded companies have increasingly become subject to activist investor campaigns. Responding to actions
of an activist investor may be a significant distraction for our management and staff and could require us to expend
significant time and resources, including legal fees and potential proxy solicitation expenses. Any of these
conditions could materially adversely affect our financial performance.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

We lease approximately 250,000 square feet for our World Resource Center located in Ann Arbor, Michigan under
an operating lease with Domino’s Farms Office Park, L.L.C., an unrelated company. Under an amendment to this
lease, Domino’s Farms Office Park, L.L.C. constructed a new 33,000 square foot building that was leased to the
Company upon completion in 2019. The lease, as amended, expires in 2029 and has two five-year renewal options.

We own five supply chain center buildings. All other U.S. and international supply chain centers are leased by us,
under leases ranging between five and 21 years with one or two five-year renewal options. All buildings for U.S.
Company-owned stores are leased by us, typically under ten-year leases with one or two five-year renewal options.
All other franchise stores are leased or owned directly by the respective franchisees. We believe that our existing
headquarters and other leased and owned facilities are adequate to meet our current requirements.

Item 3. 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.

Litigation is subject to many uncertainties, and the outcome of individual litigated matters is not predictable with
assurance. These matters referenced above could be decided unfavorably to us and could require us to pay damages
or make other expenditures in amounts or a range of amounts that cannot be estimated with accuracy. In
management’s opinion, these matters, individually and in the aggregate, should not have a significant adverse effect
on the financial condition of the Company, and the established accruals adequately provide for the estimated
resolution of such claims.

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 4. Mine Safety Disclosures.

Not applicable.

Item 4A. Executive Officers of the Registrant.

The listing of executive officers of the Company is set forth under Part III Item 10. Directors, Executive Officers
and Corporate Governance on pages 76 through 79, which is incorporated herein by reference.

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities.

As of February 18, 2021, Domino's Pizza, Inc. had 170,000,000 authorized shares of common stock, par value $0.01
per share, of which 38,803,504 were issued and outstanding. Domino’s Pizza, Inc.’s common stock is traded on the
New York Stock Exchange (“NYSE”) under the ticker symbol “DPZ.”

Our Board of Directors declared a quarterly dividend of $0.94 per common share on February 24, 2021 payable on
March 30, 2021 to shareholders of record at the close of business on March 15, 2021.

We currently anticipate continuing the payment of quarterly cash dividends. The actual amount of such dividends, if
any, will depend upon future earnings, results of operations, capital requirements, our financial condition and certain
other factors. There can be no assurance as to the amount of free cash flow that we will generate in future years and,
accordingly, dividends will be considered after reviewing returns to shareholders, profitability expectations and
financing needs and will be declared at the discretion of our Board of Directors.

As of February 18, 2021, there were 1,578 registered holders of record of Domino’s Pizza, Inc.’s common stock.

As of January 3, 2021, we had a Board of Directors-approved share repurchase program for up to $1.0 billion of our
common stock, of which $101.6 million remained available for future purchases of our common stock. Any future
purchases of our common stock would be funded by current cash amounts, available borrowings or future excess
cash flow. The following table summarizes our repurchase activity during the fourth quarter ended January 3, 2021:

Period
Period #10 (September 7, 2020 to
October 4, 2020)
Period #11 (October 5, 2020 to
November 1, 2020)
Period #12 (November 2, 2020 to
November 29, 2020)
Period #13 (November 30, 2020 to
January 3, 2021)
Total

Total
Number of
Shares
Purchased as
Part of
Publicly
Announced
Program
(2)

Average
Price Paid
per Share

Maximum
Approximate
Dollar Value
of Shares
that May Yet
Be Purchased
Under the
Program
(in thousands)

Total
Number
of Shares
Purchased
(1)

933 $

430.25

— $

326,552

503,202

398.39 501,956

126,552

65,851

379.64

65,851

101,552

835
570,821 $

—
391.53
396.27 567,807 $

101,552
101,552

(1) 3,014 shares were purchased as part of the Company’s employee stock purchase discount plan. During the fourth quarter,

the shares were purchased at an average price of $398.48.

(2) From January 4, 2021 through February 18, 2021, the Company repurchased and retired an additional 65,870 shares of

common stock for approximately $25.0 million, or an average price of $379.53 per share.

On February 24, 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 replaces the remaining availability of
approximately $76.6 million under the Company’s previously approved $1.0 billion share repurchase program.

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.

The following comparative stock performance line graph compares the cumulative shareholder return on the
common stock of Domino’s Pizza, Inc. (NYSE: DPZ) for the five-year period between December 31, 2015 and
December 31, 2020, with cumulative total return on (i) the Standard & Poor’s 500 Index (the “S&P 500”) and (ii)
the peer group, the Standard & Poor’s 400 Restaurant Index (the “S&P 400 Restaurant Index”). Management
believes that the companies included in the S&P 400 Restaurant Index appropriately reflect the scope of the
Company’s operations and match the competitive market in which the Company operates. The cumulative total
return computations set forth in the performance graph assume the investment of $100 in the Company’s common
stock, the S&P 500 Index and the S&P 400 Restaurant Index on December 31, 2015.

$400.00

$300.00

$200.00

$100.00

12/31/2015

12/31/2016

12/31/2017

12/31/2018

12/31/2019

12/31/2020

DPZ

S&P 500

S&P 400 Restaurant

Item 6. Selected Financial Data.

The Company has applied the amendment to Regulation S-K Item 301 which became effective on February 10,
2021.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview

Our fiscal year typically includes 52 weeks, comprised of three twelve-week quarters and one sixteen-week quarter.
Every five or six years our fiscal year includes an extra (or 53rd) week in the fourth quarter. Fiscal 2020 consisted of
53 weeks and fiscal 2019 and 2018 each consisted of 52 weeks.

In this section, we discuss the results of our operations for the year ended January 3, 2021 compared to the year
ended December 29, 2019. For a discussion of the year ended December 29, 2019 compared to the year ended
December 30, 2018, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition
and Results of Operations” in our Annual Report on Form 10-K for the year ended December 29, 2019.

Description of the Business

Domino’s is the largest pizza company in the world based on global retail sales, with more than 17,600 locations in
over 90 markets around the world. Founded in 1960, our roots are in convenient pizza delivery, while a significant
amount of our sales also come from carryout customers. Although we are a highly-recognized global brand, we
focus on serving neighborhoods locally through our large network of franchise owners and Company-owned stores.

Our 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. We also
generate revenues and earnings by selling food, equipment and supplies to franchisees primarily in the U.S. and
Canada, and by operating a number of 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 profit by sub-franchising and selling food and equipment to those sub-
franchisees, as well as by running pizza stores directly. Everyone in the system can benefit, including the end
consumer, who can feed their family conveniently and economically.

Our financial results are driven largely by retail sales at our franchise and Company-owned stores. Changes in retail
sales are driven by changes in same store sales and store counts. We monitor both of these metrics very closely, as
they directly impact 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.

Our business model can yield strong returns for our franchise owners and our Company-owned stores. It can also
yield significant cash flow 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 since becoming a publicly-traded company in 2004. These factors emphasize our focus on our
stakeholders, including our customers, team members, franchisees, communities and shareholders.

Critical accounting policies and estimates

The following discussion and analysis of financial condition and results of operations is based on our consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires our management to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of
contingent assets and liabilities. On an ongoing basis, our management evaluates its estimates, including those
related to revenue recognition, long-lived assets, insurance and legal matters, share-based payments and income
taxes. We base our estimates on historical experience and on various other assumptions that we believe are
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those
estimates. Changes in our accounting policies and estimates could materially impact our results of operations and
financial condition for any particular period. We believe that our most critical accounting policies and estimates are:

Revenue recognition. We earn revenues through our network of U.S. Company-owned and franchised stores, dough
manufacturing and supply chain centers and international operations. Retail sales from franchised stores are reported
to us by our franchisees and are not included in our revenues. Retail sales from Company-owned stores and royalty
revenues resulting from the retail sales from franchised stores are recognized as revenues when the items are
delivered to or carried out by customers. Retail sales are generally reported, and the related royalties paid to us based
on a percentage of retail sales, as specified in the related standard franchise agreement (generally 5.5% of U.S.
franchise retail sales and were on average, 2.9% of international franchise retail sales in 2020). U.S. and
international franchise fee revenue primarily relates to per-transaction technology fees that are recognized as the
related sales occur. We also generate revenues from U.S. franchise advertising contributions to DNAF, our
consolidated not-for-profit advertising fund (generally 6.0% of U.S. franchise retail sales). Although these revenues
are restricted to be used only for advertising and promotional activities to benefit franchised stores, we have
determined there are not performance obligations associated with the franchise advertising contributions received by
DNAF that are separate from our U.S. royalty payment stream and as a result, these franchise contributions and the
related expenses are presented gross in the consolidated statements of income. Revenues from Company-owned
stores and revenues from franchised stores (including U.S. franchise royalties and fees and U.S. franchise
advertising revenues) can fluctuate from time-to-time as a result of store count and sales level changes. Sales of food
from our supply chain centers are recognized as revenues upon delivery of the food to franchisees, while sales of
equipment and supplies are generally recognized as revenues upon shipment of the related products to franchisees.

Long-lived assets. We record long-lived assets, including property, plant and equipment and capitalized software, at
cost. For acquisitions of franchise operations, we estimate the fair values of the assets and liabilities acquired based
on physical inspection of assets, historical experience and other information available to us regarding the
acquisition. We depreciate and amortize long-lived assets using useful lives determined by us based on historical
experience and other information available to us. We evaluate the potential impairment of long-lived assets at least
annually or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be
recoverable. Our evaluation is based on various analyses, including the projection of undiscounted cash flows. For
Company-owned stores, we perform related impairment tests on an operating market basis, which we have
determined to be the lowest level for which identifiable cash flows are largely independent of other cash flows. If
the carrying amount of a long-lived asset exceeds the amount of the expected future undiscounted cash flows of that
asset, we estimate the fair value of the asset. If the carrying amount of the asset exceeds the estimated fair value of
the asset, an impairment loss is recognized, and the asset is written down to its estimated fair value.

We have not made any significant changes in the methodology used to project the future market cash flows of
Company-owned stores during the years presented. Same store sales fluctuations and the rates at which operating
costs will fluctuate in the future are key factors in evaluating recoverability of the related assets. If our same store
sales significantly decline or if operating costs increase and we are unable to recover these costs, the carrying value
of our Company-owned stores, by market, may be unrecoverable and we may be required to recognize an
impairment charge.

Insurance and legal matters. We are a party to lawsuits and legal proceedings arising in the ordinary course of
business. Management closely monitors these legal matters and estimates the probable costs for the resolution of
such matters. These estimates are primarily determined by consulting with both internal and external parties
handling the matters and are based upon an analysis of potential results, assuming a combination of litigation and
settlement strategies. Legal judgments can be volatile and difficult to predict. Accordingly, if our estimates relating
to legal matters proved inaccurate for any reason, we may be required to increase or decrease the related expense in
future periods. We had accruals for legal matters of approximately $1.3 million and $1.8 million at January 3, 2021
December 29, 2019, respectively.

For certain periods prior to December 1998 and for periods after December 2001, we maintain insurance coverage
for workers’ compensation, general liability and owned and non-owned auto liabilities. We are generally responsible
for up to $2.0 million per occurrence under these retention programs for workers’ compensation and general
liability, depending on policy year and line of coverage. We are generally responsible for up to between $500,000
and $5.5 million per occurrence under these retention programs for owned and non-owned automobile liabilities,
depending on policy year and line of coverage. The related insurance reserves are based on undiscounted
independent actuarial estimates, which are based on historical information along with assumptions about future
events. Analyses of historical trends and actuarial valuation methods are utilized to estimate the ultimate claim costs
for claims incurred as of the balance sheet date and for claims incurred but not yet reported. When estimating these
liabilities, several factors are considered, including the severity, duration and frequency of claims, legal cost
associated with claims, healthcare trends and projected inflation.

Our methodology for determining our exposure has remained consistent throughout the years presented.
Management believes that the various assumptions developed, and actuarial methods used to determine our
insurance reserves are reasonable and provide meaningful data that management uses to make its best estimate of
our exposure to these risks. Changes in assumptions for such factors as medical costs and legal actions, as well as
changes in actual experience, could cause our estimates to change in the near term which could result in an increase
or decrease in the related expense in future periods. A 10% change in our insurance liability at January 3, 2021
would have affected our income before provision for income taxes by approximately $6.4 million in 2020. We had
accruals for insurance matters of approximately $63.5 million and $58.4 million at January 3, 2021 and December
29, 2019, respectively.

Share-based payments. We recognize compensation expense related to our share-based compensation arrangements
over the requisite service period based on the grant date fair value of the awards. The grant date fair value of each
restricted stock and performance-based restricted stock award is equal to the market price of our stock on the date of
grant. The grant date fair value of each stock option award is estimated using the Black-Scholes option pricing
model. The pricing model requires assumptions, including the expected life of the stock option, the risk-free interest
rate, the expected dividend yield and expected volatility of our stock over the expected life, which significantly
impact the assumed fair value. We account for forfeitures as they occur. Additionally, our stock option, restricted
stock and performance-based restricted stock arrangements provide for accelerated vesting and the ability to
exercise during the remainder of the ten-year stock option life upon the retirement of individuals holding the awards
who have achieved specified service and age requirements. Management believes that the methods and various
assumptions used to determine compensation expense related to these arrangements are reasonable, but if the
assumptions change significantly for future grants, share-based compensation expense will fluctuate in future years.

Income taxes. We recognize deferred tax assets and liabilities based on the differences between the financial
statement carrying amounts and the tax basis of assets and liabilities. We measure deferred tax assets and liabilities
using current enacted tax rates that will apply in the years in which we expect the temporary differences to be
recovered or paid. Judgment is required in determining the provision for income taxes, related reserves and deferred
tax assets and liabilities. These include establishing a valuation allowance related to the ability to realize certain
deferred tax assets, if necessary. On an ongoing basis, management will assess whether it remains more likely than
not that the deferred tax assets will be realized. Our accounting for deferred tax assets and liabilities represents our
best estimate of future events. Our deferred tax assets assume that we will generate sufficient taxable income in
specific tax jurisdictions, based on our estimates and assumptions. Changes in our current estimates due to
unanticipated events could have a material impact on our financial condition and results of operations.

Fiscal 2020 Highlights

• Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned
and franchised stores worldwide) increased 13.2% as compared to 2019. U.S. retail sales increased 17.6%
and international retail sales, excluding foreign currency impact, increased 8.8% as compared to 2019.

• Same store sales increased 11.5% in our U.S. stores and increased 4.4% in our international stores.
• Our revenues increased 13.8%.
• Our income from operations increased 15.3%.
• Our net income increased 22.6%.
• Our diluted earnings per share increased 29.6%.
• The inclusion of the 53rd week in 2020 positively impacted our results.

During 2020, we experienced global retail sales growth and U.S. and international same store sales growth. We
believe our commitment to value, convenience, quality and new products continues to keep consumers engaged with
the brand. We launched three new products in the U.S., including new and improved chicken wings and the new
chicken taco and cheeseburger specialty pizzas, each of which has been positively received by consumers.

We also continued our strong U.S. and international same store sales performance with 39 straight quarters of
positive U.S. same store sales and 108 straight quarters of positive international same store sales. Beginning at the
end of the first quarter of 2020, changes in consumer ordering behavior due to the COVID-19 pandemic resulted in a
significant increase in U.S. same store sales. We did not experience significant temporary closures in our U.S.
business. Additionally, our U.S. supply chain experienced higher volumes from the increases in U.S. store sales. The
COVID-19 pandemic negatively impacted our 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 our international franchise markets. In the third and
fourth quarters of 2020, these negative impacts lessened due to the reopening and resumption of normal store hours
at the majority of our international franchised stores that had been temporarily closed for portions of the second
quarter. Our U.S. and international same store sales growth has also been pressured by our fortressing strategy,
which includes increasing store concentration in certain markets where we compete, as well as from aggressive
competitive activity.

During 2020, we continued our global expansion with the opening of 624 net stores. We had 229 net stores open in
the U.S and 395 net stores open internationally. Although 718 gross stores opened internationally, 323 stores closed,
primarily in India and South Africa. 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.

We remained focused on improving the customer experience through our technology initiatives, including the recent
launch of our GPS delivery tracking technology, which allows customers to monitor the progress of their food, from
the preparation stages to the time it is in the oven to the time it arrives at their doors. Additionally, in mid-2020, we
launched a new way to order contactless carryout nationwide – via Domino’s Carside Delivery™, which customers
can choose when placing a prepaid online order. Our emphasis on technological innovation helped the Domino’s
system generate more than half of global retail sales from digital channels in 2020.

Overall, we believe our global store growth, strong sales, 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 growth 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, is
calculated as the change of international local currency global retail sales against the comparable period of the prior
year. Global retail sales growth in 2020 includes the favorable impact of the 53rd week.

U.S. stores
International stores (excluding foreign currency impact)
Total (excluding foreign currency impact)

2020
17.6%
8.8%
13.2%

2019

6.9%
9.0%
8.0%

2018
11.2%
10.4%
10.8%

Same Store Sales Growth

Same store sales growth is a commonly used statistical measure in the quick-service restaurant industry that is
important to understanding performance. Same store sales growth is calculated for a given period by including only
sales from stores that also 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 on a
constant dollar basis which reflects changes in international local currency sales. The 53rd week in fiscal 2020 had
no impact on reported same store sales growth amounts.

U.S. Company-owned stores
U.S. franchise stores
U.S. stores
International stores (excluding foreign currency impact)

Store Growth Activity

2020

2019

2018

11.0 %
11.5 %
11.5 %

4.4 %

2.8 %
3.2 %
3.2 %

1.9 %

4.8 %
6.8 %
6.6 %

3.5 %

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

Store count at December 31, 2017
Openings
Closings
Transfers (1)
Store count at December 30, 2018
Openings
Closings
Transfers
Store count at December 29, 2019
Openings
Closings
Store count at January 3, 2021

392
12
—
(14 )
390
12
(1 )
(59 )
342
22
(1 )
363

5,195
255
(9 )
45
5,486
253
(14 )
59
5,784
218
(10 )
5,992

5,587
267
(9 )
31
5,876
265
(15 )
—
6,126
240
(11 )
6,355

916
(116 )
(31 )

Total
9,269 14,856
1,183
(125 )
—
10,038 15,914
1,204
(98 )
—
10,894 17,020
958
(334 )
11,289 17,644

939
(83 )
—

718
(323 )

(1)

In 2018, we began managing our franchised stores in Alaska and Hawaii as part of our U.S. Stores segment. Prior to 2018,
store counts from these franchised stores were included in our international stores in the table above.

Income Statement Data
(tabular amounts in millions, except percentages)

U.S. Company-owned stores
U.S. franchise royalties and fees
Supply chain
International franchise royalties and fees
U.S. franchise advertising

Total revenues

U.S. Company-owned stores
Supply chain

Total cost of sales
Operating margin

General and administrative
U.S. franchise advertising
Income from operations

Interest expense, net

Income before provision for income taxes

Provision for income taxes

Net income

2018
$ 514.8
391.5
1,943.3
224.7
358.5

2019
$ 453.6
428.5
2,104.9
241.0
390.8

2020
$ 485.6
503.2
2,416.7
249.8
462.2
4,117.4 100.0 % 3,618.8 100.0 % 3,432.9 100.0 %
379.6
2,143.3
2,522.9
1,594.5
406.6
462.2
725.6
(170.5 )
555.1
63.8
$ 491.3

346.2
1,870.1
61.3 % 2,216.3
38.7 % 1,402.5
9.9 % 382.3
11.2 % 390.8
17.6 % 629.4
(4.1 )% (146.8 )
13.5 % 482.6
81.9
1.6 %
11.9 % $ 400.7

398.2
1,732.0
61.2 % 2,130.2
38.8 % 1,302.7
10.6 % 372.5
10.8 % 358.5
17.4 % 571.7
(4.1 )% (143.0 )
13.3 % 428.7
66.7
2.3 %
11.1 % $ 362.0

62.1 %
37.9 %
10.8 %
10.4 %
16.7 %
(4.2 )%
12.5 %
2.0 %
10.5 %

2020 compared to 2019
(tabular amounts in millions, except percentages)

Revenues

U.S. Company-owned stores
U.S. franchise royalties and fees
Supply Chain
International franchise royalties and fees
U.S. franchise advertising

Total revenues

2020
485.6
503.2
2,416.7
249.8
462.2
$ 4,117.4

2019
453.6
11.8 % $
428.5
12.2 %
2,104.9
58.7 %
241.0
6.1 %
11.2 %
390.8
100.0 % $ 3,618.8

12.5 %
11.8 %
58.2 %
6.7 %
10.8 %
100.0 %

Revenues primarily consist of retail sales from our Company-owned stores, 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 as a result of fluctuations in
commodity prices as well as the mix of products we sell.

Consolidated revenues increased $498.6 million, or 13.8%, in 2020, due primarily to higher U.S. retail sales, which
resulted in higher supply chain and U.S. franchise revenues. The inclusion of the 53rd week in 2020 also positively
impacted revenues by an estimated $88.4 million. U.S. Company-owned stores revenues increased in 2020 due to
same store sales growth, but were partially offset by lower revenues 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”). These changes in
revenues are described in more detail below.

U.S. Stores Revenues

U.S. Company-owned stores
U.S. franchise royalties and fees
U.S. franchise advertising

Total U.S. stores revenues

U.S. Company-owned Stores

2020
485.6
503.2
462.2
$ 1,451.0

2019
453.6
33.4 % $
428.5
34.7 %
31.9 %
390.8
100.0 % $ 1,272.9

35.6 %
33.7 %
30.7 %
100.0 %

Revenues from U.S. Company-owned store operations increased $32.0 million, or 7.1%, in 2020, due primarily to
same store sales growth, as well as an estimated $10.6 million impact of the 53rd week. The increase in revenues was
partially offset by lower revenues resulting from the 2019 Store Sale. U.S. Company-owned same store sales
increased 11.0% in 2020 and increased 2.8% in 2019.

U.S. Franchise Royalties and Fees

Revenues from U.S. franchise royalties and fees increased $74.7 million, or 17.4%, in 2020, due primarily to higher
same store sales and an increase in the average number of U.S. franchised stores open during the period resulting
from net store growth, as well as an estimated $11.4 million impact of the 53rd week. U.S. franchise royalties were
negatively impacted by approximately $3.0 million related to funding we provided to our franchisees for 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 same store sales increased 11.5% in 2020 and increased 3.2% in
2019. U.S. franchise royalties and fees further benefited 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 $71.4 million, or 18.3%, in 2020, due primarily to higher same
store sales and an increase in the average number of U.S. franchised stores open during the year resulting from net
store growth, as well as an estimated $10.4 million impact of the 53rd week.

Supply Chain

Supply chain revenues increased $311.8 million, or 14.8%, in 2020, due primarily to higher volumes from increased
orders resulting from U.S. franchise retail sales growth, as well as an estimated $49.6 million impact of the 53rd
week. Our market basket pricing to stores increased 2.2% during 2020, which resulted in an estimated $42.5 million
increase in supply chain revenues.

International Franchise Royalties and Fees

Revenues from international franchise operations increased $8.8 million, or 3.6%, in 2020. This increase was due
primarily to an estimated $6.4 million impact of the 53rd week as well as same store sales growth and an increase in
the average number of international franchised stores open during the period due to net store growth. Excluding the
impact of foreign currency exchange rates, international same store sales increased 4.4% in 2020 and increased 1.9%
in 2019. The impact of changes in foreign currency exchange rates negatively impacted revenue from international
royalties and fees by approximately $3.9 million in 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 2020.

Cost of sales / Operating Margin

Consolidated revenues
Consolidated cost of sales

Consolidated operating margin

2020
$ 4,117.4
2,522.9
$ 1,594.5

2019
100.0 % $ 3,618.8
61.3 %
2,216.3
38.7 % $ 1,402.5

100.0 %
61.2 %
38.8 %

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. We estimate the 53rd week resulted in an increase of approximately $50.6 million on consolidated
cost of sales.

Consolidated operating margin (which we define as revenues less cost of sales) increased $192.0 million, or 13.7%,
in 2020, due primarily to higher global franchise revenues and higher supply chain volumes, as well as an estimated
$37.8 million impact of the 53rd week. 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 0.1 percentage points in 2020. Company-
owned store operating margin decreased 1.9 percentage points in 2020 and supply chain operating margin increased
0.1 percentage points in 2020. These changes in operating margin are more fully discussed below.

U.S. Company-owned Stores Operating Margin

Revenues
Cost of sales

Store operating margin

2020
485.6
379.6
106.0

100.0 % $
78.2 %
21.8 % $

2019
453.6
346.2
107.4

100.0 %
76.3 %
23.7 %

U.S. Company-owned store operating margin (which does not include other store-level costs such as royalties and
advertising) decreased $1.4 million, or 1.3%, in 2020, due primarily to higher labor costs, and to a lesser extent,
higher food costs. Lower revenues resulting from the 2019 Store Sale also contributed to the decrease in U.S.
Company-owned store operating margin. These decreases were partially offset by higher revenues resulting from
higher same store sales, as well as an estimated $3.2 million impact of the 53rd week. As a percentage of store
revenues, the store operating margin decreased 1.9 percentage points in 2020. These changes in operating margin as
a percentage of revenues are discussed in more detail below.

• Food costs decreased 0.1 percentage points to 27.0% in 2020, due primarily to the leveraging of higher

same store sales. This decrease was partially offset by higher food prices.

• Labor costs increased 1.9 percentage points to 30.9% in 2020, due primarily to additional compensation

expense for frontline team members during the COVID-19 pandemic. These increases were partially offset
by reduced labor costs as a percentage of store revenues resulting from the 2019 Store Sale due to the
higher labor rates in the market in which the sold stores operated.

Supply Chain Operating Margin

Revenues
Cost of sales

Supply chain operating margin

2020
$ 2,416.7
2,143.3
273.3

2019
100.0 % $ 2,104.9
1,870.1
88.7 %
234.8
11.3 % $

100.0 %
88.8 %
11.2 %

Supply chain operating margin increased $38.5 million, or 16.4%, in 2020, primarily driven by higher volumes from
increased orders, as well as an estimated $6.4 million impact of the 53rd week. As a percentage of supply chain
revenues, the supply chain operating margin increased 0.1 percentage points in 2020, due primarily to lower delivery
costs as a percentage of revenues as a result of leveraging of higher same store sales and lower fuel prices, partially
offset by higher food costs.

General and Administrative Expenses

General and administrative expenses increased $24.3 million, or 6.4%, in 2020, driven primarily by higher variable
performance-based compensation expense and professional fees, as well as an estimated $5.6 million impact of the
53rd week. These increases were partially offset by lower travel expenses resulting from travel restrictions associated
with the COVID-19 pandemic.

U.S. Franchise Advertising Expenses

U.S. franchise advertising expenses increased $71.4 million, or 18.3%, in 2020, due to higher U.S. franchise
advertising revenue, including an estimated $10.4 million impact of the 53rd week. 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.

Interest Expense, Net

Interest expense, net, increased $23.7 million, or 16.1%, in 2020 driven primarily by higher average debt balances
resulting from the 2019 Recapitalization and borrowings under the Company’s variable funding notes in 2020, as
well as an estimated $2.6 million impact of the 53rd week.

Our weighted average borrowing rate decreased to 3.9% in 2020, from 4.1% in 2019, resulting from the lower
interest rates on the debt outstanding in 2020 as compared to the same periods in 2019.

Provision for Income Taxes

Provision for income taxes decreased $18.1 million, or 22.1%, in 2020 and the effective tax rate decreased to 11.5%
in 2020 as compared to 17.0% in 2019 due primarily to higher excess tax benefits on equity-based compensation,
which are recorded as a reduction to the income tax provision. Excess tax benefits from equity-based compensation
were $60.4 million in 2020 and were $25.7 million in 2019. The increase in excess tax benefits resulted from a
significant increase in stock options exercised in 2020 as compared to 2019. The decrease in provision for income
taxes was partially offset by higher pre-tax income and, to a lesser extent, an increase in the valuation allowance
associated with foreign tax credits and interest deductibility in separately-filed states. We estimate the 53rd week
resulted in an increase of $4.0 million on the provision for income taxes.

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 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 an operating segment, including labor, computer expenses, professional
fees, travel and entertainment, rent, insurance and other corporate administrative costs.

U.S. Stores
Supply Chain
International Franchise
Other

2020

2019

435.1 $
238.4
197.6
(53.3 )

361.7
199.8
187.3
(36.7 )

U.S. Stores

U.S. stores Segment Income increased $73.4 million, or 20.3%, in 2020, primarily as a result of the increase in
revenues from U.S. franchise royalties and fees of $74.7 million discussed above. U.S. franchise revenues do not
have a cost of sales component, so changes in these revenues have a disproportionate effect on U.S. stores Segment
Income. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising
revenues are recognized and have no impact on U.S. stores Segment Income. The increase in U.S. stores Segment
Income was partially offset by the $1.4 million decrease in U.S. Company-owned store operating margin discussed
above.

Supply Chain

Supply chain Segment Income increased $38.6 million, or 19.3%, in 2020, due primarily to the $38.5 million
increase in operating margin described above.

International Franchise

International franchise Segment Income increased $10.3 million, or 5.5%, in 2020, due primarily to the $8.8 million
increase in international franchise 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. Lower travel expenses, primarily due to travel restrictions resulting from the COVID-19 pandemic, also
contributed to the increase in international franchise Segment Income.

Other

Other Segment Income decreased $16.6 million, or 45.1%, in 2020, due primarily to higher variable performance-
based compensation expense. The decrease in Other Segment Income was partially offset by higher corporate
administrative costs allocated to our segments as compared to 2019. The increase in allocated costs in 2020 was due
primarily to higher investments in technological initiatives to support technology for our U.S. and international
franchise stores.

New Accounting Pronouncements

The impact of new accounting pronouncements adopted and the estimated impact of new accounting
pronouncements that we will adopt in future years is included in Note 1 to the consolidated financial statements.

COVID-19 Impact

As of January 3, 2021, nearly all of our U.S. stores were open, with stores deploying contactless delivery and
carryout solutions. Based on information reported to us by our master franchisees, we estimate that as of January 3,
2021, there were fewer than 150 international stores temporarily closed.

Given the market uncertainty arising from COVID-19, we took a precautionary measure and borrowed
$158.0 million under our variable funding notes during the second quarter of 2020, which was fully repaid
throughout the remainder of 2020.

During the COVID-19 pandemic, we also made certain investments related to safety and cleaning equipment,
enhanced sick pay and compensation for frontline team members and support for our franchisees and their
communities. While we have seen an increase in sales in certain markets during the COVID-19 pandemic, including
increased sales related to heightened reliance on delivery and carry-out businesses, future sales are not possible to
estimate and it is unclear whether and to what extent sales will return to more normalized levels if and when
consumer behavior and general economic and business activity return to pre-pandemic levels. While it is not
possible at this time to estimate 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.

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 multiple inventory turns per month. In addition, our sales are not typically seasonal, which further limits
our working capital requirements. 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, reduce our
working capital amounts. As of January 3, 2021, we had working capital of $174.6 million, excluding restricted cash
and cash equivalents of $217.5 million, advertising fund assets, restricted, of $147.7 million and advertising fund
liabilities of $141.2 million. Working capital includes total unrestricted cash and cash equivalents of $168.8 million.

Our primary source of liquidity is cash flows from operations and availability of borrowings under our variable
funding notes. During 2020, we experienced increases in both U.S. and international same store sales versus the
comparable periods in the prior year. Additionally, our U.S. and international businesses grew store counts in 2020.
These factors contributed to our continued ability to generate positive operating cash flows. The Company has a
variable funding note facility which allows for advances of up to $200.0 million of Series 2019-1 Variable Funding
Senior Secured Notes, Class A-1 Notes and certain other credit instruments, including letters of credit (the “2019
Variable Funding Notes”). The letters of credit are primarily related to our casualty insurance programs and certain
supply chain center leases. Given the market uncertainty arising from COVID-19, we took a precautionary measure
and borrowed $158.0 million under the 2019 Variable Funding Notes during the second quarter of 2020, which was
fully repaid throughout the remainder of 2020. As of January 3, 2021, we had no outstanding borrowings and $157.5
million of available borrowing capacity under our 2019 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 2019 Variable Funding Notes to, among
other things, fund working capital requirements, invest in our core business, service our indebtedness, pay dividends
and repurchase our common stock.

Our ability to continue to fund these items and continue to service our debt could be adversely affected by the
occurrence of any of the events described in Item 1A. Risk Factors. There can be no assurance that our business will
generate sufficient cash flows from operations or that future borrowings will be available under the 2019 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 the 2019, 2018, 2017 and 2015
Notes and to service, extend or refinance the 2019 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 January 3, 2021, we had approximately $177.1 million of restricted cash and cash equivalents held for future
principal and interest payments and other working capital requirements of our asset-backed securitization structure,
$39.6 million of restricted cash equivalents held in a three-month interest reserve as required by the related debt
agreements and $0.8 million of other restricted cash for a total of $217.5 million of restricted cash and cash
equivalents. As of January 3, 2021, we also held $115.9 million of advertising fund restricted cash and cash
equivalents, which can only be used for activities that promote the Domino’s brand.

Long-Term Debt

2019 Recapitalization

On November 19, 2019, we completed the 2019 Recapitalization in which certain of our subsidiaries issued $675.0
million Series 2019-1 3.668% Fixed Rate Senior Secured Notes, Class A-2 with an anticipated term of 10 years (the
“2019 Fixed Rate Notes”) pursuant to an asset-backed securitization. Concurrently, we also issued the 2019 Variable
Funding Notes. Our previous variable funding note facility was canceled. Gross proceeds from the issuance of the
2019 Fixed Rate Notes was $675.0 million. Additional information related to the 2019 Recapitalization transaction
is included in Note 4 to our consolidated financial statements.

The proceeds from the 2019 Recapitalization were used to pre-fund a portion of the principal and interest payable on
the 2019 Fixed Rate Notes, pay transaction fees and expenses and repurchase and retire shares of our common stock.
In connection with the 2019 Recapitalization, we capitalized $8.1 million of debt issuance costs, which are being
amortized into interest expense over the expected term of the 2019 Fixed Rate Notes.

2018 Recapitalization

On April 24, 2018, we completed the 2018 Recapitalization in which certain of our subsidiaries issued notes
pursuant to an asset-backed securitization. The notes consisted of $425.0 million Series 2018-1 4.116% Fixed Rate
Senior Secured Notes, Class A-2-I with an anticipated term of 7.5 years (the “2018 7.5-Year Fixed Rate Notes”),
and $400.0 million Series 2018-1 4.328% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of
9.25 years (the “2018 9.25-Year Fixed Rate Notes” and, collectively with the 2018 7.5-Year Fixed Rate Notes, the
“2018 Notes”) in an offering exempt from registration under the Securities Act of 1933, as amended. Gross proceeds
from the issuance of the 2018 Notes were $825.0 million. Additional information related to the 2018
Recapitalization transaction is included in Note 4 to our consolidated financial statements.

A portion of the proceeds from the 2018 Recapitalization was used to repay the remaining $490.1 million in
outstanding principal and interest under the 2015 Five-Year Fixed Rate Notes, pre-fund a portion of the principal
and interest payable on the 2018 Notes, pay transaction fees and expenses and repurchase and retire shares of our
common stock. In connection with the repayment of the 2015 Five-Year Fixed Rate Notes, we expensed
approximately $3.2 million for the remaining unamortized debt issuance costs associated with these notes.
Additionally, in connection with the 2018 Recapitalization, we capitalized $8.2 million of debt issuance costs, which
are being amortized into interest expense over the expected terms of the 2018 Notes.

2017 Recapitalization

On July 24, 2017, we completed the 2017 Recapitalization in which certain of our subsidiaries issued notes pursuant
to an asset-backed securitization. The notes consisted of $300.0 million Series 2017-1 Floating Rate Senior Secured
Notes, Class A-2-I with an anticipated term of five years (the “2017 Five-Year Floating Rate Notes”), $600.0
million Series 2017-1 3.082% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of five years
(the “2017 Five-Year Fixed Rate Notes”), and $1.0 billion Series 2017-1 4.118% Fixed Rate Senior Secured Notes,
Class A-2-III with an anticipated term of 10 years (the “2017 Ten-Year Fixed Rate Notes” and, collectively with the
2017 Five-Year Floating Rate Notes and the 2017 Five-Year Fixed Rate Notes, the “2017 Notes”) in an offering
exempt from registration under the Securities Act of 1933, as amended. The interest rate on the 2017 Five-Year
Floating Rate Notes is payable at a rate equal to LIBOR plus 125 basis points. Gross proceeds from the issuance of
the 2017 Notes were $1.9 billion. Additional information related to the 2017 Recapitalization transaction is included
in Note 4 to our consolidated financial statements.

2015 Recapitalization

On October 21, 2015, we completed the 2015 Recapitalization in which certain of our subsidiaries issued notes
pursuant to an asset-backed securitization. The notes consisted of $500.0 million of Series 2015-1 3.484% Fixed
Rate Senior Secured Notes, Class A-2-I (the “2015 Five-Year Fixed Rate Notes”), $800.0 million Series 2015-1
4.474% Fixed Rate Senior Secured Notes, Class A-2-II (the “2015 Ten-Year Fixed Rate Notes” and collectively
with the 2015 Five-Year Fixed Rate Notes, the “2015 Notes”). Gross proceeds from the issuance of the 2015 Notes
were $1.3 billion. The 2015 Five-Year Fixed Rate Notes were repaid in connection with the 2018 Recapitalization.
Additional information related to the 2015 Recapitalization transaction is included in Note 4 to our consolidated
financial statements.

2019, 2018, 2017 and 2015 Notes

The “2019 Fixed Rate Notes,” “2018 Notes,” the “2017 Notes” and the “2015 Notes” are collectively referred to as
the “2019, 2018, 2017 and 2015 Notes.”

The 2019, 2018, 2017 and 2015 Notes have original scheduled principal payments of $42.0 million in 2021, $897.0
million in 2022, $33.0 million in each of 2023 and 2024, $1.15 billion in 2025, $20.8 million in 2026, $1.28 billion
in 2027, $6.8 million in 2028 and $614.3 million in 2029. However, 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, as defined, to adjusted EBITDA, as defined, 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 beginning in the first quarter of 2021. Accordingly, all principal
amounts of the outstanding 2019, 2018, 2017 and 2015 Notes have been classified as long-term debt in the
consolidated balance sheet as of January 3, 2021. As a result, we currently expect to make principal payments of
$873.0 million in 2022, $1.18 billion in 2025, $1.36 billion in 2027 and $668.3 million in 2029 on the 2019, 2018,
2017 and 2015 Notes.

During the third quarter of 2019, we had a leverage ratio of less than 5.0x, and accordingly, did not make the
previously scheduled debt amortization payment in the fourth quarter of 2019. Subsequent to the 2019
Recapitalization, our leverage ratios exceeded the leverage ratio of 5.0x and, accordingly, we resumed making the
scheduled amortization payments in the first quarter of 2020.

The 2019, 2018, 2017 and 2015 Notes are subject to certain financial and non-financial covenants, including a debt
service coverage calculation, as defined in the related agreements. In the event that certain covenants are not met,
the 2019, 2018, 2017 and 2015 Notes may become due and payable on an accelerated schedule.

Leases

We lease certain retail store and supply chain center locations, supply chain vehicles, various equipment and our
World Resource Center under leases with expiration dates through 2041. The adoption of Accounting Standards
Codification 842, Leases, on December 30, 2018 had a material impact our assets and liabilities due to the
recognition of operating lease right-of-use assets and lease liabilities on our consolidated balance sheet. Refer to
Note 5 to the consolidated financial statements for additional information regarding our leases, including future
minimum rental commitments.

Capital Expenditures

In the past three years, we have spent approximately $294.2 million for capital expenditures. In 2020, we invested
$88.8 million in capital expenditures which primarily related to investments in our supply chain centers, proprietary
internally developed point-of-sale system (Domino’s PULSE), our internal enterprise systems, our digital ordering
platform, new Company-owned stores and asset upgrades for our existing Company-owned stores. We did not have
any material commitments for capital expenditures as of January 3, 2021.

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. We used cash of approximately
$304.6 million in 2020, $699.0 million in 2019 and $591.2 million in 2018 for share repurchases. Our 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. We had approximately $101.6 million left under this share repurchase program as of January 3,
2021. From January 4, 2021 through February 18, 2021, we repurchased and retired 65,870 shares of common stock
for approximately $25.0 million. On February 24, 2021, our Board of Directors authorized a new share repurchase
program to repurchase up to $1.0 billion of our common stock. This repurchase program replaces the remaining
availability of approximately $76.6 million under our previously approved $1.0 billion share repurchase program.

Dividends

We declared dividends of approximately $122.2 million (or $3.12 per share) in 2020, approximately $105.6 million
(or $2.60 per share) in 2019 and approximately $92.2 million (or $2.20 per share) in 2018. We paid dividends of
approximately $121.9 million, $105.7 million and $92.2 million in 2020, 2019 and 2018, respectively.

On February 24, 2021, the Company’s Board of Directors declared a quarterly dividend of $0.94 per common share
payable on March 30, 2021 to shareholders of record at the close of business on March 15, 2021.

Sources and Uses of Cash

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

(In millions)
Cash Flows Provided By (Used In)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Exchange rate changes

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

Fiscal Year Ended

January 3,
2021

December 29,
2019

592.8 $
(128.9 )
(446.4 )
0.8
18.2 $

497.0
(27.9 )
(222.8 )
0.2
246.5

Operating Activities

Cash provided by operating activities increased $95.8 million in 2020, due to an increase in net income of $90.6
million and higher non-cash amounts of $29.4 million. These increases were partially offset by a $24.2 million
negative impact of changes in operating assets and liabilities in 2020 as compared to 2019, which primarily related
to timing of payments on accounts payable and accrued liabilities, as well as increases in our inventory and accounts
receivable balances associated with higher revenues. These operating asset and liability changes were partially offset
by an increase in net advertising fund assets and liabilities, restricted, in 2020 as compared to 2019 due to the receipt
of advertising contributions outpacing payments for advertising activities.

We are focused on continually improving our net income and cash flow from operations and management expects to
continue to generate positive cash flows from operating activities for the foreseeable future.

Investing Activities

Cash used in investing activities was $128.9 million in 2020, which consisted primarily of capital expenditures of
$88.8 million (driven primarily by investments in supply chain centers, technological initiatives and corporate
stores) and the investment in Dash Brands (Note 9) of $40.0 million.

Cash used in investing activities was $27.9 million in 2019, which consisted primarily of $85.6 million of capital
expenditures (driven primarily by investments in technological initiatives, supply chain centers and our Company-
owned stores) and $3.4 million of purchases of franchise operations and other assets. These uses of cash were
partially offset by maturities of restricted advertising fund investments of $50.2 million and the proceeds from the
sale of assets of $12.3 million.

Financing Activities

Cash used in financing activities was $446.4 million in 2020. We borrowed $158.0 million under the 2019 Variable
Funding Notes and repaid $202.1 million of long-term debt (of which $158.0 million related to the repayment of
borrowings under the 2019 Variable Funding Notes). We also repurchased approximately $304.6 million in common
stock under our Board of Directors-approved share repurchase program, made dividend payments to our
shareholders of $121.9 million and made tax payments for restricted stock upon vesting of $6.8 million. These uses
of cash were partially offset by proceeds from the exercise of stock options of $31.0 million.

Cash used in financing activities was $222.8 million in 2019, primarily related to repurchases of common stock of
$699.0 million under our Board of Directors-approved share repurchase program, dividend payments to our
shareholders of $105.7 million, repayments of long-term debt of $92.1 million (of which $65.0 million related to the
repayment of borrowings under our variable funding notes), payments for financing costs of $8.1 million and tax
payments for restricted stock upon vesting of $6.0 million. These uses of cash were partially offset by proceeds from
the issuance of $675.0 million of debt in connection with our 2019 Recapitalization and the exercise of stock options
of $13.1 million.

Impact of Inflation

Inflation did not have a material impact on our operations in 2020, 2019 and 2018. Severe increases in inflation,
however, could affect the global and U.S. economies and could have an adverse impact on our business, financial
condition and results of operations. Further discussion on the impact of commodities and other cost pressures is
included above, as well as in Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Form 10-K includes 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.

These forward-looking statements generally can be identified by the use of words such as “anticipate,” “believe,”
“could,” “should,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “predict,” “project,” “seek,”
“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, the expected demand for future pizza
delivery, our expectation that we will meet the terms of our agreement with our third-party supplier of pizza cheese,
our belief that alternative third-party suppliers are available for our key ingredients in the event we are required to
replace any of our supply partners, our intention to continue to enhance and grow online ordering, digital marketing
and technological capabilities, our expectation that there will be no material environmental compliance-related
capital expenditures, our plans to expand U.S. and international operations in many of the markets where we
currently operate and in selected new markets, our expectation that the contribution rate for advertising fees payable
to DNAF will remain in place for the foreseeable future, and the availability of our borrowings under the 2019
Variable Funding Notes for, among other things, funding working capital requirements, paying capital expenditures
and funding other general corporate purposes, including payment of dividends.

Forward-looking statements relating to our anticipated profitability, estimates in same store sales growth, the growth
of our U.S. and international business, ability to service our indebtedness, our future cash flows, our operating
performance, trends in our business and other descriptions of future events reflect management’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 about us, including the risk factors listed under Item 1A. Risk Factors, as well as other cautionary
language in this Form 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, the following:

•

•
•

•
•
•
•

•
•
•

•
•

•

our substantial increased indebtedness as a result of the 2019 Recapitalization, 2018 Recapitalization, 2017
Recapitalization and 2015 Recapitalization 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;
the impact of social media and other consumer-oriented technologies on our business, brand and reputation;
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
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 or regulation, including changes in laws and regulations regarding
information privacy, payment methods and 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 taste, 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 Form 10-K might
not occur. All forward-looking statements speak only as of the date of this Form 10-K 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, 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 Form 10-K, whether as a result of new information, future events or otherwise.

Readers are cautioned not to place undue reliance on the forward-looking statements included in this Form 10-K 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.

Item 7A. 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. We
are exposed to interest rate risk on borrowings under our 2017 Five-Year Floating Rate Notes and our 2019 Variable
Funding Notes. As of January 3, 2021, we did not have any outstanding borrowings under our 2019 Variable
Funding Notes. Our 2017 Five-Year Floating Rate Notes and our 2019 Variable Funding Notes bear interest at
fluctuating interest rates based on LIBOR. A hypothetical 1.0% adverse change in the LIBOR rate would have
resulted in higher interest expense of approximately $3.2 million in 2020.

There is currently uncertainty around whether LIBOR will continue to exist after 2021. If LIBOR ceases to exist, we
may need to renegotiate our loan documents and we cannot predict what alternative index would be negotiated with
our lenders. 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. We do not engage in speculative transactions nor do we 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.

Foreign currency exchange rate risk

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 6.1% of our total
revenues in 2020, 6.7% of our total revenues in 2019 and 6.5% of our total revenues in 2018 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 risk. A hypothetical 10% adverse
change in the foreign currency rates for our international markets would have resulted in a negative impact on
royalty revenues of approximately $22.2 million in 2020.

Item 8. Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
of Domino’s Pizza, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Domino’s Pizza, Inc. and its subsidiaries (the
“Company”) as of January 3, 2021 and December 29, 2019, and the related consolidated statements of income,
comprehensive income, stockholders’ deficit and cash flows for each of the three years in the period ended January
3, 2021, including the related notes and the schedule of condensed financial information of the registrant as of
January 3, 2021 and December 29, 2019 and for each of the three years in the period ended January 3, 2021
appearing under Item 15 (collectively referred to as the “consolidated financial statements”). We also have audited
the Company's internal control over financial reporting as of January 3, 2021, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of January 3, 2021 and December 29, 2019, and the results of its operations
and its cash flows for each of the three years in the period ended January 3, 2021 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of January 3, 2021, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it
accounts for leases in 2019 and the manner in which it accounts for revenue in 2018.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under
Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the
Company's internal control over financial reporting based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting
was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that (i)
relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.

Valuation of Insurance Reserves

As described in Note 1 to the consolidated financial statements, the Company has retention programs for workers’
compensation, general liability, and owned and non-owned automobile liabilities for certain periods prior to
December 1998 and for periods after December 2001. As of January 3, 2021, the Company had accruals for these
insurance matters of $54.6 million. The insurance reserves are based on undiscounted independent actuarial
estimates, which are based on historical information along with assumptions about future events. Management
utilizes various methods, including analyses of historical trends and actuarial valuation methods, to estimate the cost
to settle reported claims and claims incurred but not yet reported. The actuarial valuation methods develop estimates
of the future ultimate claim costs based on the claims incurred as of the balance sheet date. When estimating these
liabilities, several factors are considered, including the severity, duration and frequency of claims, legal cost
associated with claims, healthcare trends and projected inflation.

The principal considerations for our determination that performing procedures relating to the valuation of insurance
reserves is a critical audit matter are (i) the significant judgment by management when developing the estimated
reserves; (ii) a high degree of auditor judgment and effort in performing procedures relating to the actuarial
valuation methods used to develop future ultimate claim costs and actuarial assumptions related to the severity,
duration and frequency of claims, legal cost associated with claims, healthcare trends and projected inflation; and
(iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to the valuation of insurance reserves. These procedures also included, among others, obtaining and
evaluating the Company’s insurance program documents and testing the underlying historical claims data.
Professionals with specialized skill and knowledge were used to assist in testing management’s process for
estimating the valuation of insurance reserves, including evaluating the appropriateness of the actuarial valuation
methods and the reasonableness of actuarial assumptions related to the severity, duration and frequency of claims,
legal cost associated with claims, healthcare trends and projected inflation.

/s/ PricewaterhouseCoopers LLP

Detroit, Michigan
February 25, 2021

We have served as the Company’s auditor since 2002.

Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

January 3,
2021

December 29,
2019

Current assets:

Assets

Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable, net of reserves of $1,793 in 2020 and $2,856 in 2019
Inventories
Prepaid expenses and other
Advertising fund assets, restricted

Total current assets

Property, plant and equipment:

Land and buildings
Leasehold and other improvements
Equipment
Construction in progress

Accumulated depreciation and amortization
Property, plant and equipment, net

Other assets:

Operating lease right-of-use assets
Investments in marketable securities, restricted
Goodwill
Capitalized software, net of accumulated amortization of $124,043 in 2020
and $104,237 in 2019
Other assets
Deferred income taxes
Total other assets
Total assets

Liabilities and stockholders' deficit

Current liabilities:

Current portion of long-term debt
Accounts payable
Accrued compensation
Accrued interest
Operating lease liabilities
Insurance reserves
Advertising fund liabilities
Other accrued liabilities

Total current liabilities

Long-term liabilities:

Long-term debt, less current portion
Operating lease liabilities
Insurance reserves
Deferred income taxes
Other accrued liabilities

Total long-term liabilities
Total liabilities
Commitments and contingencies
Stockholders' deficit

168,821 $
217,453
244,560
66,683
24,169
147,698
869,384

88,063
186,456
292,456
13,014
579,989
(282,625 )
297,364

228,268
13,251
15,061

190,615
209,269
210,260
52,955
19,129
105,389
787,617

44,845
164,071
243,708
42,705
495,329
(252,448 )
242,881

228,785
11,982
15,093

81,306
60,630
1,904
400,420
1,567,168 $

73,140
12,521
10,073
351,594
1,382,092

2,855 $
94,499
58,520
31,695
35,861
26,377
141,175
79,837
470,819

4,116,018
202,268
37,125
6,099
35,244
4,396,754
4,867,573

43,394
111,101
46,214
27,881
33,318
23,735
101,921
66,267
453,831

4,071,055
202,731
34,675
—
35,559
4,344,020
4,797,851

Common stock, par value $0.01 per share; 170,000,000 shares authorized;
38,868,350 in 2020 and 38,934,009 in 2019 issued and outstanding
Preferred stock, par value $0.01 per share; 5,000,000 shares authorized,
none issued
Additional paid-in capital
Retained deficit
Accumulated other comprehensive loss

Total stockholders’ deficit
Total liabilities and stockholders’ deficit

389

—
5,122
(3,303,492 )
(2,424 )
(3,300,405 )
1,567,168 $

—
243
(3,412,649 )
(3,742 )
(3,415,759 )
1,382,092

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

Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)

Revenues:

U.S. Company-owned stores
U.S. franchise royalties and fees
Supply chain
International franchise royalties and fees
U.S. franchise advertising

Total revenues

Cost of sales:

U.S. Company-owned stores
Supply chain

Total cost of sales

Operating margin
General and administrative
U.S. franchise advertising
Income from operations
Interest income
Interest expense
Income before provision for income taxes
Provision for income taxes
Net income
Earnings per share:

Common Stock – basic
Common Stock – diluted

January 3,
2021

For the Years Ended
December 29, December 30,

2019

2018

485,569 $
503,196
2,416,651
249,757
462,238
4,117,411

453,560 $
428,504
2,104,936
240,975
390,799
3,618,774

514,804
391,493
1,943,297
224,747
358,526
3,432,867

379,598
2,143,320
2,522,918
1,594,493
406,613
462,238
725,642
1,654
(172,166 )
555,130
63,834
491,296 $

346,168
1,870,107
2,216,275
1,402,499
382,293
390,799
629,407
4,048
(150,818 )
482,637
81,928
400,709 $

398,158
1,732,030
2,130,188
1,302,679
372,464
358,526
571,689
3,334
(146,345 )
428,678
66,706
361,972

12.61 $
12.39 $

9.83 $
9.56 $

8.65
8.35

$
$

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

Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)

Net income
Currency translation adjustment
Comprehensive income

January 3,
2021
491,296 $
1,318
492,614 $

For the Years Ended
December 29, December 30,

2019
400,709 $
687
401,396 $

2018
361,972
(2,048 )
359,924

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

Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(In thousands, except share data)

Common Stock

Additional
Paid-in
Capital

Amount

Balance at December 31, 2017
Net income
Dividends declared on common stock and equivalents ($2.20)
Issuance and cancellation of stock awards, net
Tax payments for restricted stock upon vesting
Purchases of common stock
Exercises of stock options
Non-cash equity-based compensation expense
Adoption of ASC 606 (Note 1)
Currency translation adjustment
Reclassification adjustment for stranded taxes (Note 1)
Balance at December 30, 2018
Net income
Dividends declared on common stock and equivalents ($2.60)
Issuance and cancellation of stock awards, net
Tax payments for restricted stock upon vesting
Purchases of common stock
Exercises of stock options
Non-cash equity-based compensation expense
Currency translation adjustment
Balance at December 29, 2019
Net income
Dividends declared on common stock and equivalents ($3.12)
Issuance and cancellation of stock awards, net
Tax payments for restricted stock upon vesting
Purchases of common stock
Exercises of stock options
Non-cash equity-based compensation expense
Adoption of ASC 326 (Note 1)
Currency translation adjustment
Balance at January 3, 2021

Shares
42,898,329 $
—
—
79,868
(27,308 )
(2,387,430 )
414,102
—
—
—
—
40,977,561
—
—
46,913
(22,506 )
(2,493,560 )
425,601
—
—
38,934,009
—
—
35,210
(18,681 )
(838,871 )
756,683
—
—
—
38,868,350 $

Retained
Deficit
5,654 $ (2,739,437 ) $
361,972
—
(92,211 )
—
—
—
—
(6,962 )
(560,445 )
(30,743 )
—
9,828
—
22,792
(6,701 )
—
—
—
351
—
569 (3,036,471 )
400,709
—
(105,605 )
—
—
—
—
(5,951 )
(671,282 )
(27,700 )
—
13,060
—
20,265
—
—
243 (3,412,649 )
491,296
—
(122,183 )
—
—
—
—
(6,803 )
(261,058 )
(43,524 )
—
30,962
—
24,244
1,102
—
—
—
5,122 $ (3,303,492 ) $

Accumulated
Other
Comprehensive
Income (Loss)
(2,030 )
—
—
—
—
—
—
—
—
(2,048 )
(351 )
(4,429 )
—
—
—
—
—
—
—
687
(3,742 )
—
—
—
—
—
—
—
—
1,318
(2,424 )

429 $
—
—
1
—
(24 )
4
—
—
—
—
410
—
—
—
—
(25 )
4
—
—
389
—
—
—
—
(8 )
8
—
—
—
389 $

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

Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Cash flows from operating activities:

Net income
Adjustments to reconcile net income to net cash provided by
operating activities:

January 3,
2021

For the Years Ended
December 29, December 30,

2019

2018

491,296 $

400,709 $

361,972

Depreciation and amortization
Loss (gain) on sale/disposal of assets
Amortization of debt issuance costs
Provision (benefit) for deferred income taxes
Non-cash equity-based compensation expense
Excess tax benefits from equity-based compensation
Provision for losses on accounts and notes receivable
Changes in operating assets and liabilities:
Changes in accounts receivable
Changes in inventories, prepaid expenses and other
Changes in accounts payable and accrued liabilities
Changes in insurance reserves
Changes in operating lease assets and liabilities
Changes in advertising fund assets and liabilities, restricted

Net cash provided by operating activities
Cash flows from investing activities:

Capital expenditures
Purchase of investments (Note 9)
Proceeds from sale of assets
Maturities of advertising fund investments, restricted
Purchases of advertising fund investments, restricted
Purchases of franchise operations and other assets
Other

Net cash used in investing activities
Cash flows from financing activities:

Proceeds from issuance of long-term debt
Repayments of long-term debt and finance lease obligations
Proceeds from exercise of stock options
Purchases of common stock
Tax payments for restricted stock upon vesting
Payments of common stock dividends and equivalents
Cash paid for financing costs
Net cash used in financing activities
Effect of exchange rate changes on cash
Change in cash and cash equivalents, restricted cash and cash equivalents

Cash and cash equivalents, beginning of period
Restricted cash and cash equivalents, beginning of period
Cash and cash equivalents included in advertising fund assets, restricted,
beginning of period
Cash and cash equivalents, restricted cash and cash equivalents and
cash and cash equivalents included in advertising fund assets, restricted,
beginning of period

Cash and cash equivalents, end of period
Restricted cash and cash equivalents, end of period
Cash and cash equivalents included in advertising fund assets, restricted,
end of period
Cash and cash equivalents, restricted cash and cash equivalents and
cash and cash equivalents included in advertising fund assets, restricted,
end of period

65,038
2,922
5,526
14,424
24,244
(60,364 )
2,134

(33,334 )
(24,959 )
68,954
5,544
2,592
28,777
592,794

(88,768 )
(40,000 )
174
—
—
—
(333 )
(128,927 )

158,000
(202,058 )
30,970
(304,590 )
(6,803 )
(121,925 )
—
(446,406 )
761
18,222

59,930
2,023
4,748
(3,297 )
20,265
(25,735 )
1,195

(20,900 )
(6,741 )
66,137
5,322
3,302
(10,008 )
496,950

(85,565 )
—
12,258
50,152
—
(3,423 )
(1,276 )
(27,854 )

675,000
(92,085 )
13,064
(699,007 )
(5,951 )
(105,715 )
(8,098 )
(222,792 )
201
246,505

53,665
(4,737 )
8,033
(872 )
22,792
(23,786 )
899

(18,172 )
(12,455 )
10,010
2,174
—
(5,352 )
394,171

(119,888 )
—
8,367
94,007
(70,152 )
—
(591 )
(88,257 )

970,000
(604,088 )
9,832
(591,212 )
(6,962 )
(92,166 )
(8,207 )
(322,803 )
(538 )
(17,427 )

190,615
209,269

25,438
166,993

35,768
191,762

84,040

44,988

27,316

483,924

237,419

254,846

168,821
217,453

190,615
209,269

25,438
166,993

115,872

84,040

44,988

502,146 $

483,924 $

237,419

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

Domino’s Pizza, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Description of Business and Summary of Significant Accounting Policies

Description of Business

Domino’s Pizza, Inc. (“DPI”), a Delaware corporation, conducts its operations and derives substantially all of

its operating income and cash flows through its wholly-owned subsidiary, Domino’s, Inc. (“Domino’s”) and
Domino’s wholly-owned subsidiary, Domino’s Pizza LLC (“DPLLC”). DPI and its wholly-owned subsidiaries
(collectively, “the Company”) are primarily engaged in the following business activities: (i) retail sales of food
through Company-owned Domino’s Pizza stores; (ii) sales of food, equipment and supplies to Company-owned and
franchised Domino’s Pizza stores through Company-owned supply chain centers; (iii) receipt of royalties,
advertising contributions and fees from U.S. Domino’s Pizza franchisees; and (iv) receipt of royalties and fees from
international Domino’s Pizza franchisees.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of DPI and its subsidiaries. All

significant intercompany accounts and transactions have been eliminated.

Fiscal Year

The Company's fiscal year ends on the Sunday closest to December 31. The 2020 fiscal year ended on January

3, 2021, the 2019 fiscal year ended on December 29, 2019 and the 2018 fiscal year ended on December 30, 2018.
The 2020 fiscal year consisted of fifty-three weeks, and the 2019 and 2018 fiscal years each consisted of fifty-two
weeks.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with original maturities of three months or less at the

date of purchase. These investments are carried at cost, which approximates fair value.

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents at January 3, 2021 included approximately $177.1 million of restricted

cash and cash equivalents held for future principal and interest payments and other working capital requirements of
the Company’s asset-backed securitization structure, $39.6 million of restricted cash equivalents held in a three-
month interest reserve as required by the related debt agreements and $0.8 million of other restricted cash. As of
January 3, 2021, the Company also held $115.9 million of advertising fund restricted cash and cash equivalents,
which can only be used for activities that promote the Domino’s Pizza brand.

Restricted cash and cash equivalents at December 29, 2019 included $157.4 million of restricted cash and cash
equivalents held for future principal and interest payments and other working capital requirements of the Company’s
asset-backed securitization structure, $48.7 million of restricted cash equivalents held in a three-month interest
reserve as required by the related debt agreements and $3.2 million of other restricted cash. As of December 29,
2019, the Company also held $84.0 million of advertising fund restricted cash and cash equivalents, which can only
be used for activities that promote the Domino’s Pizza brand.

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 (Note 4), lease

guarantees (Note 5) and surety bonds. Total conditional commitments under surety bonds were $11.0 million as of
January 3, 2021 and $7.6 million as of December 29, 2019. 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.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Inventories

Inventories are valued at the lower of cost (on a first-in, first-out basis) or net realizable value. Inventories at

January 3, 2021 and December 29, 2019 were comprised of the following (in thousands):

Food
Equipment and supplies
Inventories

Other Assets

2020

2019

57,116 $
9,567
66,683 $

49,304
3,651
52,955

Current and long-term other assets primarily include prepaid expenses such as insurance, taxes, deposits, notes

receivable, software licenses, implementation costs for software as a service arrangements, equity investments
without readily determinable fair values, covenants not-to-compete and other intangible assets primarily arising
from franchise acquisitions. Other long-term assets included an amortizable intangible asset associated with the
acquisition of three U.S. franchise stores during 2019 (Note 13). This intangible asset had a net carrying value,
inclusive of accumulated amortization, of $0.9 million and $1.3 million as of January 3, 2021 and December 29,
2019, respectively.

Property, Plant and Equipment

Additions to property, plant and equipment are recorded at cost. Repair and maintenance costs are expensed as

incurred. Depreciation and amortization expense are provided using the straight-line method over the estimated
useful lives of the related assets. Estimated useful lives are generally as follows (in years):

Buildings
Leasehold and other improvements
Equipment

20
7 – 15
3 – 15

Depreciation and amortization expense on property, plant and equipment was approximately $42.0 million,

$37.1 million and $35.0 million in 2020, 2019 and 2018, respectively.

Impairments of Long-Lived Assets

The Company evaluates the potential impairment of long-lived assets at least annually based on various

analyses including the projection of undiscounted cash flows and whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. For Company-owned stores, the Company
performs this evaluation on an operating market basis, which the Company has determined to be the lowest level for
which identifiable cash flows are largely independent of other cash flows. If the carrying amount of a long-lived
asset exceeds the amount of the expected future undiscounted cash flows of that asset, the Company estimates the
fair value of the assets. If the carrying amount of the asset exceeds the estimated fair value of the asset, an
impairment loss is recognized, and the asset is written down to its estimated fair value. The Company did not record
any impairment losses on long-lived assets in 2020, 2019 and 2018.

Investments in Marketable Securities

Investments in marketable securities consist of investments in various mutual funds made by eligible

individuals as part of the Company’s deferred compensation plan (Note 8). These investments are stated at aggregate
fair value, are restricted and have been placed in a rabbi trust whereby the amounts are irrevocably set aside to fund
the Company’s obligations under the deferred compensation plan. The Company classifies and accounts for these
investments in marketable securities as trading securities.

Goodwill

The Company’s goodwill amounts primarily relate to franchise store acquisitions and are not amortized. The
Company performs its required impairment tests in the fourth quarter of each fiscal year and did not recognize any
goodwill impairment charges in 2020, 2019 and 2018.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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 consolidated balance sheet. Any
adjustments to the carrying amount are recognized in other income (expense), net in the Company’s consolidated
statements 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.

Capitalized Software

Capitalized software is recorded at cost and includes purchased, internally-developed and externally-developed

software used in the Company’s operations. Amortization expense is provided using the straight-line method over
the estimated useful lives of the software, which range from one to seven years. Capitalized software amortization
expense was approximately $23.0 million, $22.8 million and $18.7 million in 2020, 2019 and 2018, respectively.
As of January 3, 2021, scheduled amortization for capitalized software that has been placed in service is
approximately $20.5 million in 2021, $12.6 million in 2022, $4.3 million in 2023, $0.8 million in 2024, $0.5 million
in 2025 and $0.2 million thereafter. As of January 3, 2021, the Company also had $42.4 million of capitalized
software that had not yet been placed in service.

Debt Issuance Costs

Debt issuance costs are recorded as a reduction to the Company’s debt balance and primarily include the

expenses incurred by the Company as part of the 2019, 2018, 2017 and 2015 Recapitalizations. See Note 4 for a
description of the 2019, 2018, 2017 and 2015 Recapitalizations. Amortization is recorded on a straight-line basis
(which is materially consistent with the effective interest method) over the expected terms of the respective debt
instrument to which the costs relate and is included in interest expense.

In connection with the 2019, 2018, 2017 and 2015 Recapitalizations, the Company recorded $8.1 million, $8.2

million, $16.8 million and $17.4 million of debt issuance costs, respectively. In connection with the 2018
Recapitalization, the Company repaid the 2015 Five-Year Fixed Rate Notes and expensed approximately $3.2
million for the remaining unamortized debt issuance costs associated with these notes.

Debt issuance cost expense was approximately $5.5 million, $4.7 million and $8.0 million in 2020, 2019 and

2018, respectively.

Insurance Reserves

The Company has retention programs for workers’ compensation, general liability and owned and non-owned

automobile liabilities for certain periods prior to December 1998 and for periods after December 2001. The
Company is generally responsible for up to $2.0 million per occurrence under these retention programs for workers’
compensation and general liability exposures. The Company is also generally responsible for between $500,000 and
$5.5 million per occurrence under these retention programs for owned and non-owned automobile liabilities
depending on the year. Total insurance limits under these retention programs vary depending on the year covered
and range up to $110.0 million per occurrence for general liability and owned and non-owned automobile liabilities
and up to the applicable statutory limits for workers’ compensation.

Insurance reserves relating to our retention programs are based on undiscounted actuarial estimates. These

estimates are based on historical information and on certain assumptions about future events. Changes in
assumptions for such factors as medical costs and legal actions, as well as changes in actual experience, could cause
these estimates to change in the near term. The Company generally receives estimates of outstanding insurance
exposures from its independent actuary twice per year and differences between these estimated actuarial exposures
and the Company’s recorded amounts are adjusted as appropriate. The Company had reserves for these programs of
$54.6 million and $50.3 million as of January 3, 2021 and December 29, 2019, respectively.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

In addition, the Company maintains reserves for its share of employee health costs as part of the health care
benefits offered to its employees. Reserves are based on estimated claims incurred that have not yet been paid, based
on historical claims and payment lag times.

Contract Liabilities

Contract liabilities consist primarily of deferred franchise fees and deferred development fees. Deferred franchise

fees and deferred development fees of $4.1 million and $4.2 million were included in current other accrued
liabilities as of January 3, 2021 and December 29, 2019, respectively. Deferred franchise fees and deferred
development fees of $15.0 million and $16.3 million were included in long-term other accrued liabilities as of
January 3, 2021 and December 29, 2019, respectively.

Changes in deferred franchise fees and deferred development fees in 2020 and 2019 were as follows (in

thousands):

Fiscal Year Ended

January 3,
2021

December 29,
2019

Deferred franchise fees and deferred development fees at beginning of period $
Revenue recognized during the period
New deferrals due to cash received and other
Deferred franchise fees and deferred development fees at end of period

20,463 $
(6,205 )
4,832
19,090 $

19,900
(5,695 )
6,258
20,463

The Company expects to recognize revenue of $4.1 million in 2021, $3.0 million in 2022, $2.7 million in 2023,
$2.4 million in 2024, $2.0 million in 2025 and $4.9 million thereafter associated with the total deferred franchise fee
and deferred development fee amount above.

The Company has applied the sales-based royalty exemption which permits exclusion of variable consideration

in the form of sales-based royalties from the disclosure of remaining performance obligations.

Other Accrued Liabilities

Current and long-term other accrued liabilities primarily include accruals for income, sales, property and other

taxes, legal reserves, store operating expenses, dividends payable and deferred compensation liabilities.

Foreign Currency Translation

The Company's foreign entities use their local currency as the functional currency. For these entities, the
Company translates net assets into U.S. dollars at year end exchange rates, while income and expense accounts are
translated at average annual exchange rates. Currency translation adjustments are included in accumulated other
comprehensive income (loss) and foreign currency transaction gains and losses are included in determining net
income.

Revenue Recognition

U.S. Company-owned stores revenues are comprised of retail sales of food through Company-owned
Domino’s Pizza stores located in the U.S. and are recognized when the items are delivered to or carried out by
customers. Customer payments are generally due at the time of sale. Sales taxes related to these sales are collected
from customers and remitted to the appropriate taxing authority and are not reflected in the Company’s consolidated
statements of income as revenue.

U.S. franchise royalties and fees are primarily comprised of royalties and fees from Domino’s Pizza
franchisees with operations in the U.S. Each franchisee is generally required to pay a 5.5% royalty fee on sales. In
certain instances, the Company will collect lower rates based on area development agreements, sales initiatives,
store relocation incentives and new store incentives. Royalty revenues are based on a percentage of franchise retail
sales and are recognized when the items are delivered to or carried out by franchisees’ customers. U.S. franchise fee
revenue primarily relates to per-transaction technology fees that are recognized as the related sales occur. Payments
for U.S. royalties and fees are generally due within seven days of the prior week end date.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Supply chain revenues are primarily comprised of sales of food, equipment and supplies to franchised
Domino’s Pizza stores located in the U.S. and Canada. Revenues from the sale of food are recognized upon delivery
of the food to franchisees and payments for food purchases are generally due within 30 days of the shipping date.
Revenues from the sale of equipment and supplies are recognized upon delivery or shipment of the related products
to franchisees, based on shipping terms, and payments for equipment and supplies are generally due within 90 days
of the shipping date. The Company also offers profit sharing rebates and volume discounts to its franchisees.
Obligations for profit sharing rebates are calculated based on actual results of its supply chain centers and are
recognized as a reduction to revenue. Volume discounts are based on annual sales. The Company estimates the
amount that will be earned and records a reduction to revenue.

International franchise royalties and fees are primarily comprised of royalties and fees from Domino’s Pizza

franchisees outside of the U.S. Royalty revenues are recognized when the items are delivered to or carried out by
franchisees’ customers. Store opening fees received from international franchisees are recognized as revenue on a
straight-line basis over the term of each respective franchise store agreement, which is typically ten years.
Development fees received from international master franchisees are also deferred when amounts are received and
are recognized as revenue on a straight-line basis over the term of the respective master franchise agreement, which
is typically ten years. International franchise fee revenue primarily relates to per-transaction technology fees that are
recognized as the related sales occur. International franchise royalties and fees are invoiced at least quarterly and
payments are generally due within 60 days.

U.S. franchise advertising revenues are comprised of contributions from Domino’s Pizza franchisees with
operations in the U.S. to the Domino’s National Advertising Fund Inc. (“DNAF”), the Company’s consolidated not-
for-profit subsidiary that administers the Domino’s Pizza system’s national and market level advertising activities in
the U.S. Each franchisee is generally required to contribute 6% of their retail sales to fund national marketing and
advertising campaigns (subject, in certain instances, to lower rates based on certain incentives and waivers). These
revenues are recognized when items are delivered to or carried out by franchisees’ customers. Payments for U.S.
franchise advertising revenues are generally due within seven days of the prior week end date. Although these
revenues are restricted to be used only for advertising and promotional activities to benefit franchised stores, the
Company has determined there are not performance obligations associated with the franchise advertising
contributions received by DNAF that are separate from its U.S. royalty payment stream and as a result, these
franchise contributions and the related expenses are presented gross in the Company’s consolidated statements of
income.

Disaggregation of Revenue

Current accounting standards require that companies disaggregate revenue from contracts with customers into

categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by
economic factors. The Company has included its revenues disaggregated in its consolidated statements of income to
satisfy this requirement.

Supply Chain Profit-Sharing Arrangements

The Company enters into profit-sharing arrangements with U.S. and Canadian stores that purchase all of their
food from the Company’s supply chain centers. These profit-sharing arrangements generally offer Company-owned
stores and participating franchisees with 50% (or a higher percentage in the case of Company-owned stores and
certain franchisees who operate a larger number of stores) of the pre-tax profit from the Company’s supply chain
center operations. Profit-sharing obligations are recorded as a revenue reduction in supply chain in the same period
as the related revenues and costs are recorded, and were $169.0 million, $143.5 million and $132.7 million in 2020,
2019 and 2018, respectively.

Advertising

U.S. stores (Note 12) are generally required to contribute 6% of sales to DNAF. U.S. franchise advertising
costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized, as DNAF is
obligated to expend such revenues on advertising. U.S. franchise advertising costs expended by DNAF are included
in U.S. franchise advertising expenses in the Company’s consolidated statements of income. Advertising costs
funded by Company-owned stores are generally expensed as incurred and are included in general and administrative
expense. Contributions from Company-owned stores that have not yet been expended are included in advertising
fund assets, restricted on the Company’s consolidated balance sheet.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Advertising expense included $462.2 million, $390.8 million and $358.5 million of U.S. franchise advertising

expense in 2020, 2019 and 2018, respectively. Advertising expense also included $35.7 million, $37.6 million and
$43.4 million in 2020, 2019 and 2018, respectively, primarily related to advertising costs funded by U.S. Company-
owned stores which is included in general and administrative expense in the consolidated statements of income.

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.

As of December 29, 2019, advertising fund assets, restricted of $105.4 million consisted of $84.0 million of

cash and cash equivalents, $15.3 million of accounts receivable and $6.1 million of prepaid expenses. As of
December 29, 2019, advertising fund cash and cash equivalents included $3.5 million of cash contributed from U.S.
Company-owned stores that had not yet been expended.

Leases

The Company leases certain retail store and supply chain center locations, supply chain vehicles, equipment and

its corporate headquarters. The Company determines whether an arrangement is or contains a lease at contract
inception. The majority of the Company’s leases are classified as operating leases, which are included in operating
lease right-of-use assets and operating lease liabilities in the Company’s consolidated balance sheet. Finance leases
are included in property, plant and equipment, current portion of long-term debt and long-term debt on the
Company’s consolidated balance sheet.

Right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease
payments over the lease term at the commencement date for leases exceeding 12 months. Minimum lease payments
include only the fixed lease component of the agreement, as well as any variable rate payments that depend on an
index, initially measured using the index at the lease commencement date. Lease terms may include options to
renew when it is reasonably certain that the Company will exercise that option.

The Company estimates its incremental borrowing rate for each lease using a portfolio approach based on the
respective weighted average term of the agreements. This estimation considers the market rates of the Company’s
outstanding collateralized borrowings and interpolations of rates outside of the terms of the outstanding borrowings,
including comparisons to comparable borrowings of similarly rated companies with longer term borrowings.

Operating lease expense is recognized on a straight-line basis over the lease term and is included in cost of sales
or general and administrative expense. Amortization expense for finance leases is recognized on a straight-line basis
over the lease term and is included in cost of sales or general and administrative expense. Interest expense for
finance leases is recognized using the effective interest method. Variable lease payments that do not depend on a
rate or index, payments associated with non-lease components and short-term rentals (leases with terms less than 12
months) are expensed as incurred.

Common Stock Dividends

The Company declared dividends of approximately $122.2 million (or $3.12 per share) in 2020, approximately

$105.6 million (or $2.60 per share) in 2019 and approximately $92.2 million (or $2.20 per share) in 2018. The
Company paid dividends of approximately $121.9 million, $105.7 million and $92.2 million in 2020, 2019 and
2018, respectively.

On February 24, 2021, the Company’s Board of Directors declared a quarterly dividend of $0.94 per common

share payable on March 30, 2021 to shareholders of record at the close of business on March 15, 2021.

Stock Options and Other Equity-Based Compensation Arrangements

The cost of all of the Company’s stock options, as well as other equity-based compensation arrangements, is

reflected in the financial statements based on the estimated fair value of the awards (Note 10).

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Earnings Per Share

The Company discloses two calculations of earnings per share (“EPS”): basic EPS and diluted EPS (Note 2).
The numerator in calculating common stock basic and diluted EPS is consolidated net income. The denominator in
calculating common stock basic EPS is the weighted average shares outstanding. The denominator in calculating
common stock diluted EPS includes the additional dilutive effect of outstanding stock options, unvested restricted
stock grants and unvested performance-based restricted stock grants.

Supplemental Disclosures of Cash Flow Information

The Company paid interest of approximately $160.6 million, $142.3 million and $132.8 million during 2020,

2019 and 2018, respectively, on its Notes (Note 4). Cash paid for income taxes was approximately $60.4 million,
$80.3 million and $71.7 million in 2020, 2019 and 2018.

The Company had $4.3 million, $6.9 million and $3.8 million of non-cash investing activities related to
accruals for capital expenditures at January 3, 2021, December 29, 2019 and December 30, 2018, respectively. The
Company also had $0.7 million of non-cash investing activities related to lease incentives in 2020.

New Accounting Pronouncements

Recently Adopted Accounting Standards

Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326)

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments –
Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”). 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. The
Company adopted this standard as of December 30, 2019, the first day of its 2020 fiscal year, using the modified
retrospective approach and it did not have a material impact on its consolidated financial statements.

The effects of the changes made to the Company’s consolidated balance sheet as of December 30, 2019 for the

adoption of ASC 326 were as follows:

Assets
Current assets:

Accounts receivable, net
Prepaid expenses and other

Other assets:

Other assets
Deferred income taxes

Liabilities and stockholders’ deficit
Stockholders’ deficit:
Retained deficit

Balance at
December 29,
2019

Adjustments
Due to ASC
326

Balance at
December 30,
2019

210,260 $
19,129

1,435 $
4

211,695
19,133

12,521
10,073

27
(364 )

12,548
9,709

(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.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

ASU 2016-02, Leases (Topic 842)

In February 2016, the FASB issued ASU 2016-02, Leases (“ASC 842”) which requires a lessee to recognize
assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. On December 31, 2018,
the first day of its fiscal 2019 year, the Company adopted ASC 842 using the modified retrospective method. The
comparative information has not been restated and continues to be reported under the accounting standards in effect
for those periods.

The adoption of ASC 842 had a material impact on the Company’s assets and liabilities due to the recognition of

operating lease right-of-use assets and lease liabilities on its consolidated balance sheet. The Company elected the
optional transition package, including practical expedients that permitted it not to reassess whether any expired or
existing contracts are or contain leases, the classification of any expired or existing leases and initial direct costs of
any existing leases, and accordingly, the adoption of ASC 842 did not have a material effect on the Company’s
consolidated statement of income and consolidated statement of cash flows. Refer to Note 5 for additional disclosure
related to the Company’s lease arrangements.

On December 31, 2018, the Company recorded an adjustment of $226.8 million for operating lease right-of-use
assets and liabilities. The operating lease right-of-use assets recorded on the date of adoption were also net of a $7.9
million reclassification of other accrued liabilities and prepaid expenses representing previously deferred (prepaid)
rent and lease incentives. The Company also derecognized $1.9 million of construction in progress and other long-
term accrued liabilities associated with a new building that was completed and leased to the Company in the third
quarter of 2019. During the construction phase, this lease was previously accounted for as a build-to-suit
arrangement under prior lease accounting guidance.

ASU 2014-09, Revenue from Contracts with Customers (Topic 606)

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and has

since issued various amendments which provide additional clarification and implementation guidance. This standard
has been codified as ASC 606. This guidance outlines a single, comprehensive model for entities to use in
accounting for revenue arising from contracts with customers and superseded most revenue recognition guidance
issued by the FASB, including industry specific guidance. On January 1, 2018, the Company adopted ASC 606
using the modified retrospective method.

The Company recognized the cumulative effect of initially applying ASC 606 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.

The Company has determined that the store opening fees received from international franchisees do not relate

to separate and distinct performance obligations from the franchise right and those upfront fees will therefore be
recognized as revenue over the term of each respective franchise store agreement, which is typically 10 years. In the
past, the Company recognized such fees as revenue when the related store opened. An adjustment to beginning
retained deficit and a corresponding contract liability of approximately $15.0 million (of which $2.4 million was
current and $12.6 million was long-term) was established on the date of adoption associated with the fees received
through December 31, 2017 that would have been deferred and recognized over the term of each respective
franchise store agreement if the new guidance had been applied in the past. A deferred tax asset of $3.5 million
related to this contract liability was also established on the date of adoption.

The Company has also determined that ASC 606 requires a gross presentation on the consolidated statement

of income for franchisee contributions received by and related expenses of DNAF, the Company’s consolidated not-
for-profit subsidiary. DNAF exists solely for the purpose of promoting the Domino’s Pizza brand in the U.S. Under
prior accounting guidance, the Company had presented the restricted assets and liabilities of DNAF in its
consolidated balance sheets and had determined that it acted as an agent for accounting purposes with regard to
franchisee contributions and disbursements. As a result, the Company historically presented the activities of DNAF
net in its consolidated statements of income and consolidated statements of cash flows.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Under the requirements of ASC 606, the Company determined that there are not performance obligations
associated with the franchise advertising contributions received by DNAF that are separate from the Company’s
U.S. royalty payment stream and as a result, these franchise contributions and the related expenses are presented
gross in the Company’s consolidated statement of income and consolidated statement of cash flows. While this
change materially impacted the gross amount of reported franchise revenues and expenses, the impact is generally
expected to be an offsetting increase to both revenues and expenses such that the impact on income from operations
and net income is not expected to be material. An adjustment to beginning retained deficit and advertising fund
liabilities of approximately $6.4 million related to the timing of advertising expense recognition was recorded on the
date of adoption. A deferred tax liability of approximately $1.6 million related to this adjustment was also
established on the date of adoption.

ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220)

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income

(Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-
02”). The amendments in this updated standard allow a reclassification from accumulated other comprehensive
income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The Company
adopted ASU 2018-02 in 2018 and, as a result, recorded a $0.4 million reclassification from accumulated other
comprehensive loss to the beginning balance of retained deficit in 2018.

Accounting Standards Not Yet Adopted

The Company has considered all new accounting pronouncements issued by the FASB. The following
represent accounting pronouncements that are applicable to the Company, but for which the Company has not yet
completed its assessment or has not yet adopted as of January 3, 2021.

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 will adopt this
accounting standard in the first quarter of 2021 and does not expect that it will 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 Company’s floating rate notes and variable funding
notes bear interest at fluctuating interest rates based on LIBOR. If LIBOR ceases to exist, the Company may need to
renegotiate its loan documents and the Company cannot predict what alternative index would be negotiated with its
lenders. ASU 2020-04 is currently effective 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 consolidated financial
statements.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S.

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

(2) Earnings per Share

The computation of basic and diluted earnings per common share for 2020, 2019 and 2018 is as follows (in

thousands, except share and per share amounts):

Net income available to common stockholders – basic and diluted
Weighted average number of common shares
Earnings per common share – basic
Diluted weighted average number of common shares
Earnings per common share – diluted

2020
491,296 $

2019
400,709 $

2018
$
361,972
38,974,037 40,766,362 41,856,017
$
8.65
39,640,791 41,923,062 43,331,278
8.35
$

12.39 $

12.61 $

9.83 $

9.56 $

The denominators used in calculating diluted earnings per share for common stock do not include 52,330
options to purchase common stock in 2020, 160,980 options to purchase common stock in 2019 and 76,686 options
to purchase common stock in 2018, as the effect of including these options would be anti-dilutive. The denominator
used in calculating diluted earnings per share for common stock does not include 28,570 shares subject to restricted
stock awards in 2018, as the effect of including these shares would have been anti-dilutive. The denominators used
in calculating diluted earnings per share for common stock do not include 68,159 restricted performance shares in
2020, 82,647 restricted performance shares in 2019 and 81,545 restricted performance shares in 2018 as the
performance targets for these awards had not yet been met.

(3) Fair Value Measurements

Fair value measurements enable the reader of the financial statements to assess the inputs used to develop those
measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine
fair values. The Company classifies and discloses assets and liabilities carried at fair value in one of the following
three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.

The fair values of the Company’s cash equivalents and investments in marketable securities are based on
quoted prices in active markets for identical assets. The 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 table summarizes the carrying amounts and fair values of certain assets at January 3, 2021 (in thousands):

At January 3, 2021

Fair Value Estimated Using

Cash equivalents
Restricted cash equivalents
Investments in marketable securities
Advertising fund cash equivalents, restricted
Investments (Note 9)

Level 1
Inputs

Carrying
Amount
$ 151,502 $ 151,502 $
126,595 126,595
13,251
13,251
104,197 104,197
—
40,000

Level 2
Inputs

Level 3
Inputs

— $
—
—
—
—

—
—
—
—
40,000

The following table summarizes the carrying amounts and fair values of certain assets at December 29, 2019

(in thousands):

At December 29, 2019

Fair Value Estimated Using

Cash equivalents
Restricted cash equivalents
Investments in marketable securities
Advertising fund cash equivalents, restricted

Level 1
Inputs

Carrying
Amount
$ 180,459 $ 180,459 $
126,963
11,982
67,851

126,963
11,982
67,851

Level 2
Inputs

Level 3
Inputs

— $
—
—
—

—
—
—
—

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

(4) Recapitalizations and Financing Arrangements

2019 Recapitalization

On November 19, 2019, the Company completed a recapitalization (the “2019 Recapitalization”) in which

certain of the Company’s subsidiaries issued $675.0 million Series 2019-1 3.668% Fixed Rate Senior Secured
Notes, Class A-2 with an anticipated term of 10 years (the “2019 Fixed Rate Notes”) pursuant to an asset-backed
securitization. The Company also entered into a revolving financing facility on the Closing Date, which allows for
the issuance of up to $200.0 million Series 2019-1 Variable Funding Senior Secured Notes, Class A-1 (the “2019
Variable Funding Notes”) and certain other credit instruments, including letters of credit. The 2019 Fixed Rate
Notes and the 2019 Variable Funding Notes are referred to collectively as the “2019 Notes.” Gross proceeds from
the issuance of the 2019 Notes were $675.0 million.

The proceeds from the 2019 Recapitalization were used to pre-fund a portion of the principal and interest

payable on the 2019 Notes, pay transaction fees and expenses and repurchase and retire shares of the Company’s
common stock. Additionally, in connection with the 2019 Recapitalization, the Company capitalized $8.1 million of
debt issuance costs, which are being amortized into interest expense over the expected term of the 2019 Fixed Rate
Notes.

2018 Recapitalization

On April 24, 2018, the Company completed a recapitalization (the “2018 Recapitalization”) in which certain of

the Company’s subsidiaries issued notes pursuant to an asset-backed securitization. The notes consist of
$425.0 million Series 2018-1 4.116% Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated term of 7.5
years (the “2018 7.5-Year Fixed Rate Notes”), and $400.0 million Series 2018-1 4.328% Fixed Rate Senior Secured
Notes, Class A-2-II with an anticipated term of 9.25 years (the “2018 9.25-Year Fixed Rate Notes” and, collectively
with the 2018 7.5-Year Fixed Rate Notes, the “2018 Notes”). Gross proceeds from the issuance of the 2018 Notes
were $825.0 million.

The proceeds from the 2018 Recapitalization were used to repay the remaining $490.1 million in outstanding

principal and interest under the Company’s 2015 Five-Year Fixed Rate Notes, pre-fund a portion of the principal
and interest payable on the 2018 Notes, pay transaction fees and expenses and repurchase and retire shares of the
Company’s common stock. In connection with the repayment of the 2015 Five-Year Fixed Rate notes, the Company
expensed approximately $3.2 million for the remaining unamortized debt issuance costs associated with these notes.
Additionally, in connection with the 2018 Recapitalization, the Company capitalized $8.2 million of debt issuance
costs, which are being amortized into interest expense over the expected terms of the 2018 Notes.

2017 Recapitalization

On July 24, 2017, the Company completed a recapitalization (the “2017 Recapitalization”) in which certain of

the Company’s subsidiaries issued notes pursuant to an asset-backed securitization. The notes consist of $300.0
million Series 2017-1 Floating Rate Senior Secured Notes, Class A-2-I with an anticipated term of five years (the
“2017 Floating Rate Notes”), $600.0 million Series 2017-1 3.082% Fixed Rate Senior Secured Notes, Class A-2-II
with an anticipated term of five years (the “2017 Five-Year Fixed Rate Notes”) and $1.0 billion Series 2017-1
4.118% Fixed Rate Senior Secured Notes, Class A-2-III with an anticipated term of ten years (the “2017 Ten-Year
Fixed Rate Notes” and, collectively with the 2017 Floating Rate Notes and the 2017 Five-Year Fixed Rate Notes,
the “2017 Notes”). The interest rate on the 2017 Floating Rate Notes is payable at a rate equal to LIBOR plus 125
basis points. Gross proceeds from the issuance of the 2017 Notes were $1.9 billion.

2015 Recapitalization

On October 21, 2015, the Company completed a recapitalization transaction (the “2015 Recapitalization”) in

which certain of the Company’s subsidiaries issued notes pursuant to an asset-backed securitization. The notes
consisted of $500.0 million Series 2015-1 3.484% Fixed Rate Senior Secured Notes, Class A-2-I (the “2015 Five-
Year Fixed Rate Notes”) and $800.0 million Series 2015-1 4.474% Fixed Rate Senior Secured Notes, Class A-2-II
(the “2015 Ten-Year Fixed Rate Notes” and, together with the 2015 Five-Year Fixed Rate Notes, the “2015 Notes”).
Gross proceeds from the issuance of the 2015 Notes were $1.3 billion.

The 2019 Notes, 2018 Notes, 2017 Notes and 2015 Notes are collectively referred to as the “Notes.”

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

2019 Notes

The 2019 Fixed Rate Notes have original remaining scheduled principal payments of $6.8 million in each of

2021 through 2028 and $614.3 million in 2029. During 2020, the Company made principal payments of
approximately $6.8 million on the 2019 Fixed Rate Notes. As noted below with respect to guarantees and covenants
of the 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 beginning in the first quarter of 2021.

The legal final maturity date of the 2019 Fixed Rate Notes is October 2049, but it is anticipated that, unless

earlier prepaid to the extent permitted under the related debt agreements, the 2019 Fixed Rate Notes will be repaid
on or prior to the anticipated repayment date occurring in October 2029. If the Company has not repaid or
refinanced the 2019 Fixed Rate Notes prior to the applicable anticipated repayment dates, additional interest of at
least 5% per annum will accrue, as defined in the related agreements.

The 2019 Variable Funding Notes allow for advances of up to $200.0 million and issuance of certain other
credit instruments, including letters of credit. The letters of credit are primarily related to our casualty insurance
programs and certain supply chain center leases. Interest on the 2019 Variable Funding Notes is payable at a per
year rate equal to LIBOR plus 150 basis points. The 2019 Variable Funding Notes were undrawn at closing. The
unused portion of the 2019 Variable Funding Notes is subject to a commitment fee ranging from 50 to 100 basis
points depending on utilization. It is anticipated that any amounts outstanding on the 2019 Variable Funding Notes
will be repaid in full on or prior to October 2024, subject to two additional one-year extensions at the option of the
Company, subject to certain conditions. Following the anticipated repayment date (and any extensions thereof),
additional interest will accrue on the 2019 Variable Funding Notes equal to 5% per annum.

The Company borrowed and repaid $158.0 million under the 2019 Variable Funding Notes in 2020. As of

January 3, 2021, the Company had no outstanding borrowings and $157.5 million of available borrowing capacity
under its 2019 Variable Funding Notes, net of letters of credit issued of $42.5 million.

2018 Notes

The 2018 Notes have original remaining scheduled principal payments of $8.3 million in each of 2021 through

2024, $402.4 million in 2025, $4.0 million in 2026 and $367.0 million in 2027. During 2020, the Company made
principal payments of approximately $8.3 million on the 2018 Notes. As noted below with respect to guarantees and
covenants of the 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 beginning in the first quarter of
2021.

The legal final maturity date of the 2018 Notes is July 2048, but it is anticipated that, unless earlier prepaid to

the extent permitted under the related debt agreements, the 2018 7.5-Year Fixed Rate Notes will be repaid on or
prior to the anticipated repayment date occurring in October 2025, and the 2018 9.25-Year Fixed Rate Notes will be
repaid on or prior to the anticipated repayment date occurring in July 2027. If the Company has not repaid or
refinanced the 2018 Notes prior to the applicable anticipated repayment dates, additional interest of at least 5% per
annum will accrue, as defined in the related agreements.

2017 Notes

The 2017 Notes have original remaining scheduled principal payments of $19.0 million in 2021, $874.0

million in 2022, $10.0 million in each of 2023 through 2026, and $910.0 million in 2027. During 2020, the
Company made principal payments of approximately $19.0 million on the 2017 Notes. As noted below with respect
to guarantees and covenants of the 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 beginning in the first
quarter of 2021.

The legal final maturity date of the 2017 Notes is October 2047, but it is anticipated that, unless earlier prepaid

to the extent permitted under the related debt agreements, the 2017 Floating Rate Notes and 2017 Five-Year Fixed
Rate Notes will be repaid on or prior to the anticipated repayment date occurring in July 2022, and the 2017 Ten-
Year Fixed Rate Notes will be repaid on or prior to the anticipated repayment date occurring in July 2027. If the
Company has not repaid or refinanced the 2017 Notes prior to the applicable anticipated repayment dates, additional
interest of at least 5% per annum will accrue, as defined in the related agreements.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

2015 Notes

The 2015 Five-Year Fixed Rate Notes were repaid in connection with the 2018 Recapitalization. The 2015

Ten-Year Fixed Rate Notes have original remaining scheduled principal payments of $8.0 million in 2021 through
2024 and $734.0 million in 2025. During 2020, the Company made principal payments of approximately $8.0
million on the 2015 Ten-Year Fixed Rate Notes. As noted below with respect to guarantees and covenants of the
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 beginning in the first quarter of 2021.

The legal final maturity date of the 2015 Ten-Year Fixed Rate Notes is in October 2045, but it is anticipated

that, unless earlier prepaid to the extent permitted under the related debt agreements, the 2015 Ten-Year Fixed Rate
Notes will be repaid on or prior to the anticipated repayment date occurring in October 2025. If the Company has
not repaid or refinanced the 2015 Ten-Year Fixed Rate Notes prior to the applicable anticipated repayment date,
additional interest will accrue of at least 5% per annum, as defined in the related agreements.

Debt Issuance Costs and Transaction-Related Expenses

During 2019 and in connection with the 2019 Recapitalization, the Company incurred $0.5 million of net pre-

tax 2019 Recapitalization-related general and administrative expenses, including legal and professional fees. In
connection with the 2019 Recapitalization, the Company recorded $8.1 million of debt issuance costs, which are
being amortized into interest expense over the ten-year expected term of the 2019 Fixed Rate Notes.

During 2018 and in connection with the 2018 Recapitalization, the Company incurred approximately $3.8
million of net pre-tax expenses, primarily related to $3.2 million in expense related to the write-off of debt issuance
costs associated with the repayment of the 2015 Five-Year Fixed Rate Notes. The Company also incurred
approximately $0.1 million of interest expense on the 2015 Five-Year Fixed Rate Notes subsequent to the closing of
the 2018 Recapitalization but prior to the repayment of the 2015 Five-Year Fixed Rate Notes, resulting in the
payment of interest on both the full amount of the 2015 Five-Year Fixed Rate Notes and 2018 Notes for a short
period of time. Further, the Company incurred $0.5 million of other net 2018 Recapitalization-related general and
administrative expenses, including legal and professional fees. In connection with the 2018 Recapitalization, the
Company recorded $8.2 million of debt issuance costs, which are being amortized into interest expense over the 7.5
and 9.25-year expected terms of the 2018 Notes.

Guarantees and Covenants of the Notes

The Notes are guaranteed by certain subsidiaries of DPLLC and secured by a security interest in substantially
all of the assets of the Company, including royalty and certain other income from all U.S. and international stores,
U.S. supply chain income and intellectual property. The restrictions placed on the Company’s subsidiaries require
that the Company’s principal and interest obligations have first priority and amounts are segregated weekly to
ensure appropriate funds are reserved to pay the quarterly principal and interest amounts due. The amount of
weekly cash flow that exceeds the required weekly principal and interest reserve is generally remitted to the
Company in the form of a dividend. However, once the required obligations are satisfied, there are no further
restrictions, including payment of dividends, on the cash flows of the subsidiaries.

The Notes are subject to certain financial and non-financial covenants, including a debt service coverage ratio
calculation, as defined in the related agreements. The covenants, among other things, may limit the ability of certain
of the Company’s subsidiaries to declare dividends, make loans or advances or enter into transactions with affiliates.
In the event that certain covenants are not met, the Notes may become partially or fully due and payable on an
accelerated schedule. In addition, the Company may voluntarily prepay, in part or in full, the Notes at any time,
subject to certain make-whole interest obligations.

While the Notes are outstanding, scheduled payments of principal and interest are required to be made on a

quarterly basis. The payment of principal of the 2019 Fixed Rate Notes, 2018 Notes, the 2017 Notes and the 2015
Notes may be suspended if the leverage ratio for the Company is less than or equal to 5.0x total debt, as defined, to
adjusted EBITDA, as defined. Scheduled principal payments will resume upon failure to satisfy the aforementioned
leverage ratio on an ongoing basis and no catch-up provisions are applicable.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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 beginning in the first quarter of 2021, and the Company
does not intend to make any scheduled dept principal payments in 2021 while the leverage ratio is less than 5.0x.
Accordingly, all principal amounts of the outstanding 2019 Fixed Rate Notes, 2018 Notes, the 2017 Notes and the
2015 Notes have been classified as long-term debt in the consolidated balance sheet as of January 3, 2021.

During the third quarter of 2019, the Company had a leverage ratio of less than 5.0x, and, in accordance with

the Company’s debt agreements, ceased debt amortization payments in the fourth quarter of 2019. Subsequent to the
2019 Recapitalization, the Company’s leverage ratios exceeded the leverage ratio of 5.0x and, accordingly, the
Company resumed making the scheduled amortization payments on the Notes in the first quarter of 2020.

Consolidated Long-Term Debt

At January 3, 2021 and December 29, 2019, consolidated long-term debt consisted of the following (in

thousands):

2015 Ten-Year Fixed Rate Notes
2017 Five-Year Fixed Rate Notes
2017 Ten-Year Fixed Rate Notes
2017 Five-Year Floating Rate Notes
2018 7.5-Year Fixed Rate Notes
2018 9.25-Year Fixed Rate Notes
2019 Ten-Year Fixed Rate Notes
Finance lease obligations
Debt issuance costs, net of accumulated amortization
of $18.4 million in 2020 and $12.9 million in 2019
Total debt
Less – current portion
Consolidated long-term debt, net of debt issuance costs

2020

2019

766,000
$
582,000
970,000
291,000
415,438
391,000
668,250
60,555

774,000
588,000
980,000
294,000
419,688
395,000
675,000
19,657

(25,370 )
4,118,873
2,855
4,116,018 $

(30,896 )
4,114,449
43,394
4,071,055

At January 3, 2021, maturities of long-term debt and finance lease obligations are as follows (in thousands):

2021
2022
2023
2024
2025
Thereafter

Fair Value Disclosures

2,855
876,027
2,937
3,198
1,184,512
2,074,714
4,144,243

Management estimated the approximate fair values of the 2019 Fixed Rate Notes, 2018 Notes, 2017 Notes and

2015 Notes as follows (in thousands):

January 3, 2021

December 29, 2019

Principal
Amount

Fair Value

Principal
Amount

Fair Value

809,662 $ 774,000 $ 804,960
$ 766,000 $
588,588
588,000
582,582
582,000
980,000 1,017,240
970,000 1,035,960
294,000
294,000
291,000
291,000
431,439
419,688
437,456
415,438
414,355
395,000
422,280
391,000
675,675
675,000
712,355
668,250

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The 2019 Fixed Rate Notes, 2018 Notes, 2017 Notes and 2015 Notes are classified as a Level 2 measurement,

as the Company estimated the fair value amount by using available market information. The Company obtained
broker quotes from two separate brokerage firms that are knowledgeable about the Notes and, at times, trade these
notes. Further, the Company performs its own internal analysis based on the information it gathers from public
markets, including information on notes that are similar to those of the Company. However, considerable judgment
is required in interpreting market data to develop estimates of fair value. Accordingly, the fair value estimates
presented herein 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 calculated above.

At January 3, 2021 and December 29, 2019, the Company did not have any outstanding borrowings under its
2019 Variable Funding Notes. Borrowings under the 2019 Variable Funding Notes are a variable rate loan. The fair
value of this loan approximated book value based on the borrowing rates currently available for variable rate loans
obtained from third party lending institutions. This fair value represents a Level 2 measurement.

The fair values in the table above represent the fair value of such Notes at January 3, 2021 and December 29,

2019. In light of the novel coronavirus (“COVID-19”) pandemic (discussed further in Note 14) and its impact on
financial markets, these fair values fluctuated significantly during 2020 and may continue to fluctuate based on
market conditions and other factors.

(5) 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 2020 and 2019 were as follows (in thousands):

Operating lease cost

Finance lease cost:

Amortization of right-of-use assets
Interest on lease liabilities

Total finance lease cost

Fiscal Year Ended

January 3, 2021

December 29, 2019

44,679 $

42,903

2,186
3,340
5,526 $

1,167
1,952
3,119

Rent expense totaled $73.7 million, $69.7 million and $67.4 million in 2020, 2019 and 2018 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 2020 and 2019, respectively.

Supplemental balance sheet information related to the Company’s leases as of January 3, 2021 and December 29,

2019 was as follows (in thousands):

Land and buildings
Accumulated depreciation and amortization

Finance lease assets, net

Current portion of long-term debt
Long-term debt, less current portion

Total principal payable on finance leases

January 3,

December 29,

2021

2019

68,084 $
(10,049 )
58,035 $

2,855 $
57,700
60,555 $

25,476
(7,846 )
17,630

1,394
18,263
19,657

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

As of January 3, 2021 and December 29, 2019, the weighted average remaining lease term and weighted

average discount rate for the Company’s operating and finance leases were as follows:

January 3, 2021

December 29, 2019

Weighted average remaining lease term
Weighted average discount rate

Operating

Leases

7 years

Finance
Leases
16 years

Operating

Leases

8 years

Finance
Leases
14 years

3.7 %

6.8 %

3.8 %

11.7 %

Supplemental cash flow information related to leases for 2020 and 2019 was as follows (in thousands):

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

Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases

Right-of-use assets obtained in exchange for new lease obligations:

Operating leases
Finance leases

Fiscal Year Ended

January 3, 2021

December 29, 2019

43,679 $
3,340
2,058

37,375
42,894

43,608
1,952
647

63,685
3,255

During 2018, the Company renewed the leases of four supply chain center buildings and extended the terms of

the leases. As a result, the Company recorded non-cash financing activities of $12.0 million for the increase in
capital lease assets and liabilities during 2018. During 2018, the Company also recorded $1.9 million in non-cash
financing activities related to a build-to-suit arrangement, which was derecognized in connection with the
Company’s adoption of ASC 842 in 2019.

Maturities of lease liabilities as of January 3, 2021 were as follows (in thousands):

2021
2022
2023
2024
2025
Thereafter
Total future minimum rental commitments
Less – amounts representing interest
Total lease liabilities

Operating
Leases

Finance
Leases

45,143 $
42,441
36,879
35,466
28,758
84,440
273,127
(34,998 )
238,129 $

5,849
6,706
6,227
6,684
6,479
69,687
101,632
(41,077 )
60,555

As of January 3, 2021, the Company had additional leases for certain supply chain tractors and trailers that had
not yet commenced with estimated future minimum rental commitments of approximately $2.0 million. These leases
are expected to commence in 2021 with lease terms of up to 9 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 was $12.6 million and $16.7 million as of January 3,
2021 and December 29, 2019, 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 or expenses, capital expenditures or
liquidity.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

(6) Commitments and Contingencies

The Company is a party to lawsuits, revenue agent reviews by taxing authorities and legal proceedings, of
which the majority involve workers’ compensation, employment practices liability, general liability and automobile
and franchisee claims arising in the ordinary course of business. The Company records legal fees associated with
loss contingencies when they are probable and reasonably estimable.

Litigation is subject to many uncertainties, and the outcome of individual litigated matters is not predictable

with assurance. These matters referenced above could be decided unfavorably to us and could require us to pay
damages or make other expenditures in amounts or a range of amounts that cannot be estimated with accuracy. In
management’s opinion, these matters, individually and in the aggregate, should not have a significant adverse effect
on the financial condition of the Company, and the established accruals adequately provide for the estimated
resolution of such claims.

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). In October 2020, the Florida Fifth District Court of
Appeals issued a split two-judge majority with one dissent per curiam decision affirming the judgment entered by
the Ninth Judicial Circuit Court of Florida. With all viable appellate options exhausted, the decision was made by
the Company and its insurers to pay the verdict in the fourth quarter of 2020. This payment was subject to the
Company’s insurance retention programs for non-owned automobile liabilities described in Note 1. This payment
did not have a material impact on the Company’s results of operations.

(7)

Income Taxes

Income before provision for income taxes in 2020, 2019 and 2018 consists of the following (in thousands):

U.S.
Foreign
Income before provision for income taxes

2020
541,646 $
13,484
555,130 $

2019
468,467 $
14,170
482,637 $

2018
414,804
13,874
428,678

The differences between the U.S. Federal statutory income tax provision (using the statutory rate of 21%) and

the Company’s consolidated provision for income taxes for 2020, 2019 and 2018 are summarized as follows (in
thousands):

Federal income tax provision based on the statutory rate
$
State and local income taxes, net of related Federal income taxes
Non-resident withholding and foreign income taxes
Foreign tax and other tax credits
Foreign derived intangible income
Excess tax benefits from equity-based compensation
Non-deductible expenses, net
Unrecognized tax provision, net of related Federal income taxes
Other
Provision for income taxes

2020
116,577 $
16,660
18,741
(19,506 )
(12,390 )
(60,364 )
4,359
516
(759 )
63,834 $

2019
101,354 $
15,141
20,351
(20,090 )
(12,810 )
(25,735 )
3,090
694
(67 )
81,928 $

2018

90,022
14,233
21,369
(25,301 )
(11,760 )
(23,786 )
1,999
301
(371 )
66,706

Excess tax benefits or deficiencies from equity-based compensation activity resulted in a decrease in the
Company’s provision for income taxes of $60.4 million in 2020, $25.7 million in 2019 and $23.8 million in 2018,
primarily due to the recognition of excess tax benefits for options exercised and the vesting of equity awards.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The components of the 2020, 2019 and 2018 consolidated provision for income taxes are as follows (in

thousands):

Provision for Federal income taxes

Current provision
Deferred provision (benefit)

Total provision for Federal income taxes

Provision for state and local income taxes

Current provision
Deferred provision (benefit)

Total provision for state and local income taxes

Provision for non-resident withholding and foreign income taxes
$
Provision for income taxes

2020

2019

2018

19,894 $
14,301
34,195

49,539 $
(2,862 )
46,677

10,775
123
10,898
18,741
63,834 $

15,335
(435 )
14,900
20,351
81,928 $

33,558
(1,543 )
32,015

12,651
671
13,322
21,369
66,706

As of January 3, 2021 and December 29, 2019, the significant components of net deferred income taxes are as

follows (in thousands):

Deferred income tax assets
Operating lease liabilities
Accruals and reserves
Insurance reserves
Non-cash equity-based compensation expense
Foreign tax credit
Other

Deferred income tax assets before valuation allowance

Less: Valuation allowance

Total deferred income tax assets

Deferred income tax liabilities
Operating lease right-of-use assets

Depreciation, amortization and asset basis differences
Capitalized software

Total deferred income tax liabilities

Net deferred income taxes

Prior period amounts in the table above have been reclassified to conform to the current year presentation.

2020

2019

58,885 $
14,148
12,447
8,331
6,603
7,720
108,134
(7,600 )
100,534

56,446
18,687
29,596
104,729
(4,195 ) $

58,546
11,874
11,256
10,357
9,333
6,980
108,346
(4,280 )
104,066

56,744
9,919
27,330
93,993
10,073

Realization of the Company's deferred tax assets is dependent upon many factors, including, but not limited to,

the Company's ability to generate sufficient taxable income. Although realization of the Company's deferred tax
assets is not assured, on an ongoing basis, management assesses whether it remains more likely than not the deferred
tax assets will be realized.

As of January 3, 2021, the Company had total foreign tax credits of $6.6 million, which is fully offset with a

corresponding valuation allowance. As of January 3, 2021, the Company also had a $1.0 million valuation
allowance related to interest deductibility in separately filed states. As of December 29, 2019, the Company had
total foreign tax credits of $9.3 million, of which $5.6 million was carried back one year to be fully utilized. As of
December 29, 2019, the Company had a total valuation allowance of $4.3 million, related to expected limitations on
foreign tax credits and interest deductibility in separately filed states. Management believes the remaining deferred
tax assets will be realized.

For financial reporting purposes, the Company's investment in foreign subsidiaries does not exceed its tax

basis. Therefore, no deferred income taxes have been provided.

The Company recognizes the financial statement benefit of a tax position if it is more likely than not that the

position is sustainable, based solely on its technical merits and consideration of the relevant taxing authorities
widely understood administrative practices and precedents. For tax positions meeting the “more likely than not”
threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent
likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes
accrued interest related to unrecognized tax benefits in interest expense and recognizes penalties in income tax
expense.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

2020

2019

2018

Unrecognized tax benefits at beginning of period
Additions for tax positions of current year
Additions for tax positions of prior years
Reductions for changes in prior year tax positions
Reductions for lapses of applicable statute of limitations

Unrecognized tax benefits at end of period

2,802 $
494
506
(178 )
(306 )
3,318 $

1,964 $
468
789
(284 )
(135 )
2,802 $

1,837
425
115
(64 )
(349 )
1,964

As of January 3, 2021, the amount of unrecognized tax benefits was $3.3 million of which, if ultimately
recognized, $2.4 million would be recognized as an income tax benefit and reduce the Company's effective tax rate.
As of January 3, 2021, the Company had $0.2 million of accrued interest and no accrued penalties.

As of December 29, 2019, the amount of unrecognized tax benefits was $2.8 million of which, if ultimately
recognized, $2.2 million would be recognized as an income tax benefit and reduce the Company's effective tax rate.
As of December 29, 2019, the Company had $0.1 million of accrued interest and $0.2 million of accrued penalties.

There are currently no Internal Revenue Service audits in progress for the Company. The Company continues
to be under examination by certain states. The Company's Federal statute of limitation has expired for years prior to
2017, but it varies for state and foreign locations. The Company believes appropriate provisions for all outstanding
tax issues have been made for all jurisdictions and all open years.

(8) Employee Benefits

The Company has a retirement savings plan which qualifies under Internal Revenue Code Section 401(k). All
employees of the Company who have completed 1,000 hours of service and are at least 18 years of age are eligible
to participate in the plan. During 2020 and 2019, the plan required the Company to match 100% of the first 5% of
each employee’s elective deferrals. During 2018, the plan required the Company to match 100% of the first 3% of
each employee’s elective deferrals and 50% of the next 2% of each employee’s elective deferrals. The Company’s
matching contributions were made in the form of cash and vested immediately. The expenses incurred for Company
contributions to the plan were approximately $12.0 million, $10.8 million and $7.3 million in 2020, 2019 and 2018,
respectively.

The Company has established a non-qualified deferred compensation plan available for certain key employees.
Under this self-funding plan, the participants may defer up to 40% of their base salary and up to 80% of their bonus
compensation. The participants direct the investment of their deferred compensation within several investment
funds. The Company is not required to contribute and did not contribute to this plan during 2020, 2019 and 2018.

The Company has an employee stock payroll deduction plan (the “ESPDP”). Under the ESPDP, eligible
employees may deduct up to 15% of their eligible wages to purchase common stock at 85% of the market price of
the stock at the purchase date. The ESPDP requires employees to hold their purchased common stock for at least one
year. The Company purchases common stock on the open market for the ESPDP at the current market price. There
were 16,017 shares, 20,222 shares and 19,494 shares of common stock in 2020, 2019 and 2018, respectively,
purchased on the open market for participating employees at a weighted-average price of $357.54 in 2020, $257.12
in 2019 and $249.57 in 2018. The expenses incurred under the ESPDP were approximately $1.0 million, $0.8
million and $0.7 million in 2020, 2019 and 2018, respectively.

(9)

Investment in Dash Brands

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. 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 the
same issuer or impairments within long-term other assets in the Company’s consolidated balance sheet. The
Company did not record any adjustments to the carrying amount of $40.0 million in 2020.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

In the first quarter of 2021, the Company invested an additional $40.0 million in Dash Brands based on

Dash Brands’ achievement of certain 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.

(10) Equity Incentive Plans

The cost of all employee stock options, as well as other equity-based compensation arrangements, is reflected
in the consolidated statements of income based on the estimated fair value of the awards and is amortized over the
requisite service period of each award.

The Company’s current equity incentive plan benefits certain of the Company’s employees and directors and is

named the Domino’s Pizza, Inc. 2004 Equity Incentive Plan (the “2004 Equity Incentive Plan”). As of January 3,
2021, the maximum number of shares that may be granted under the 2004 Equity Incentive Plan is 15,600,000
shares of voting common stock of which 2,559,832 shares were authorized for grant but have not been granted.

The Company recorded total non-cash compensation expense of $24.2 million, $20.3 million and $22.8 million

in 2020, 2019 and 2018, respectively. All non-cash compensation expense amounts are recorded in general and
administrative expense. The Company recorded a deferred tax benefit related to non-cash compensation expense of
approximately $3.6 million in 2020 and $3.8 million in 2019.

Stock Options

As of January 3, 2021, the number of stock options granted and outstanding under the 2004 Equity Incentive
Plan was 832,666 options. Stock options granted in fiscal 2011 and fiscal 2012 were granted with an exercise price
equal to the market price at the date of the grant and expire ten years from the date of grant. Stock options granted in
fiscal 2013 through fiscal 2020 were granted with an exercise price equal to the market price at the date of the grant,
expire ten years from the date of grant and generally vest over four years from the date of grant. Additionally, all
stock options granted become fully exercisable upon vesting. These awards also contain provisions for accelerated
vesting upon the retirement of holders that have achieved specific service and age requirements.

Stock option activity related to the 2004 Equity Incentive Plan is summarized as follows:

Weighted
Average
Exercise
Price

Common Stock Options
Weighted
Average
Remaining
Life
(Years)

Aggregate
Intrinsic
Value
(In thousands)

Outstanding

Stock options at December 31, 2017

Stock options granted
Stock options cancelled
Stock options exercised

Stock options at December 30, 2018

Stock options granted
Stock options cancelled
Stock options exercised

Stock options at December 29, 2019

Stock options granted
Stock options cancelled
Stock options exercised
Stock options at January 3, 2021
Exercisable at January 3, 2021

2,238,114 $
96,580
(11,193 )
(414,102 )
1,909,399 $
96,280
(33,667 )
(425,601 )
1,546,411 $
52,730
(9,792 )
(756,683 )
832,666 $
687,570 $

55.94
266.11
174.63
23.74
72.86
272.64
196.47
30.70
94.21
413.80
268.94
40.93
160.82
127.50

5.3 $
4.6 $

186,974
176,053

The total intrinsic value of stock options exercised was approximately $249.7 million, $103.8 million and

$91.2 million in 2020, 2019 and 2018, respectively. Cash received from the exercise of stock options was
approximately $31.0 million, $13.1 million and $9.8 million in 2020, 2019 and 2018, respectively. The tax benefit
realized from stock options exercised was approximately $59.1 million, $24.9 million and $22.0 million in 2020,
2019 and 2018, respectively.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The Company recorded total non-cash compensation expense of $6.3 million, $4.0 million and $6.3 million in
2020, 2019 and 2018, respectively, related to stock option awards. As of January 3, 2021, there was $8.0 million of
total unrecognized compensation cost related to unvested stock options granted under the 2004 Equity Incentive
Plan which generally will be recognized on a straight-line basis over the related vesting period. This unrecognized
compensation cost is expected to be recognized over a weighted average period of 2.4 years.

Management estimated the fair value of each option grant made during 2020, 2019 and 2018 as of the date of

the grant using the Black-Scholes option pricing method. Weighted average assumptions are presented in the
following table. The risk-free interest rate is based on the estimated effective 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.

Risk-free interest rate
Expected life (years)
Expected volatility
Expected dividend yield
Weighted average fair value per stock option

2020

2019

2018

0.3 %
5.5
30.0 %
0.8 %
105.76 $

1.9 %
5.5
25.0 %
0.9 %
64.66 $

2.7 %
5.5
24.2 %
0.8 %

67.65

Option valuation models require the input of highly subjective assumptions. In management’s opinion, existing

models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options, as
changes in subjective input assumptions can significantly affect the fair value estimate.

Other Equity-Based Compensation Arrangements

The Company granted 3,630 shares, 3,780 shares and 3,790 shares of restricted stock in 2020, 2019 and 2018,

respectively, to members of its Board of Directors. These grants generally vest one year from the date of the grant
and have a fair value equal to the market price of the Company’s stock on the grant date. These awards also contain
provisions for accelerated vesting upon the retirement of holders that have achieved specific service and age
requirements. The Company recorded total non-cash compensation expense of $1.2 million, $1.0 million and $0.8
million in 2020, 2019 and 2018, respectively, related to these restricted stock awards. As of January 3, 2021, there
was $0.2 million of total unrecognized compensation cost related to these restricted stock grants.

In 2018, the Company granted 28,570 shares of restricted stock to two executives of the Company. These

grants will vest four years from the date of the grant and have a fair value equal to the market price of the
Company’s stock on the grant date. These awards also contain provisions for accelerated vesting upon the retirement
of holders that have achieved specific service and age requirements. The Company recorded total non-cash
compensation expense of $2.1 million, $2.1 million and $1.1 million in 2020, 2019 and 2018 related to these
restricted stock awards. As of January 3, 2021, there was $2.7 million of total unrecognized compensation cost
related to these restricted stock grants.

The Company granted 39,150 shares, 63,790 shares and 59,070 shares of performance-based restricted stock in
2020, 2019 and 2018, respectively, to certain employees of the Company. These performance-based restricted stock
awards are separated into four tranches and have time-based and performance-based vesting conditions with the last
tranche vesting four years from the issuance date. These awards also contain provisions for accelerated vesting upon
the retirement of holders that have achieved specific service and age requirements. These awards are considered
granted for accounting purposes when the performance target is established, which is generally in the fourth quarter
of each year. The Company recorded total non-cash compensation expense of $14.6 million, $13.2 million and $14.6
million in 2020, 2019 and 2018, respectively, related to these awards. As of January 3, 2021, there was an estimated
$30.8 million of total unrecognized compensation cost related to performance-based restricted stock.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Restricted stock and performance-based restricted stock activity related to the 2004 Equity Incentive Plan is

summarized as follows:

Nonvested at December 31, 2017

Shares granted
Shares cancelled
Shares vested

Nonvested at December 30, 2018

Shares granted
Shares cancelled
Shares vested

Nonvested at December 29, 2019

Shares granted
Shares cancelled
Shares vested

Nonvested at January 3, 2021

Weighted
Average
Grant Date
Fair Value (1)

194,604 $
91,430
(12,692 )
(82,963 )
190,379 $
67,570
(17,923 )
(68,956 )
171,070 $
42,780
(8,345 )
(58,743 )
146,762 $

147.94
271.33
178.06
128.57
213.57
275.06
230.60
175.84
251.29
398.08
273.70
221.58
304.69

(1) The weighted average grant date fair value for performance-based restricted shares granted was calculated based on the market price on the
grant dates. Certain tranches will ultimately be valued when the performance condition is established for each tranche, which generally
occurs in the fourth quarter of each fiscal year.

(11) Capital Structure

The Company’s Board of Directors approved a $1.0 billion program to repurchase the Company’s common
stock during the fourth quarter of 2019. The Company’s share repurchase programs have historically been funded by
excess operating cash flows, excess proceeds from the Company’s recapitalization transactions and borrowings
under the Company’s variable funding notes. The Company’s policy is to recognize the difference between the
purchase price and par value of the common stock in additional paid-in capital. In instances where there is no
additional paid-in capital, the difference is recognized in retained deficit.

During 2020, 2019 and 2018, the Company repurchased 838,871 shares, 2,493,560 shares and 2,387,430
shares for approximately $304.6 million, $699.0 million and $591.2 million, respectively. At January 3, 2021, the
Company had $101.6 million remaining under its $1.0 billion authorization. From January 4, 2021 through February
18, 2021, the Company repurchased and retired an additional 65,870 shares of common stock for approximately
$25.0 million.

On February 24, 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 replaces the remaining
availability of approximately $76.6 million under the Company’s previously approved $1.0 billion share repurchase
program.

As of January 3, 2021, authorized common stock consists of 160,000,000 voting shares and 10,000,000 non-

voting shares. The share components of outstanding common stock at January 3, 2021 and December 29, 2019 were
as follows:

Voting
Non-Voting
Total Common Stock

2020
38,865,160
3,190
38,868,350

2019
38,930,646
3,363
38,934,009

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

(12) Segment Information

The Company has three reportable segments: (i) U.S. stores; (ii) supply chain; and (iii) international franchise.

The Company’s operations are organized by management on the combined basis of line of business and
geography. The U.S. stores segment includes operations with respect to all franchised and Company-owned stores
throughout the U.S. The supply chain segment primarily includes the distribution of food, equipment and supplies to
stores from the Company’s supply chain center operations in the U.S. and Canada. The international franchise
segment primarily includes operations related to the Company’s franchising business in foreign markets. The
accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates
the performance of its segments and allocates resources to them based on earnings before interest, taxes,
depreciation, amortization and other, referred to as Segment Income.

The tables below summarize the financial information concerning the Company’s reportable segments for
fiscal 2020, 2019 and 2018. 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. The “Other” column as it relates to capital
expenditures primarily includes capitalized software, certain equipment and leasehold improvements for our
corporate offices. Tabular amounts presented below are in thousands.

U.S.
Stores

Supply
Chain

International
Franchise

Intersegment

Revenues Other

Total

Revenues-
2020
2019
2018

Segment Income-

2020
2019
2018

Capital Expenditures-

2020
2019
2018

$ 1,451,003 $ 2,552,795 $ 249,757 $ (136,144 )
1,272,863 2,231,838 240,975 (126,902 )
1,264,823 2,087,408 224,747 (144,111 )

— $ 4,117,411
— 3,618,774
— 3,432,867

$ 435,089 $ 238,420 $ 197,602 N/A
361,673 199,844 187,318 N/A
335,989 176,714 174,700 N/A

$ (53,265 ) $ 817,846
(36,701 ) 712,134
(43,462 ) 643,941

15,319 $
11,793
15,717

36,229
33,440
61,652

— N/A
131 N/A
134 N/A

86,919
$ 35,371 $
43,304
88,668
42,171 119,674

The following table reconciles total Segment Income to income before provision for income taxes (in

thousands):

Total Segment Income
Depreciation and amortization
(Loss) gain on sale/disposal of assets
Non-cash equity-based compensation expense
Recapitalization-related expenses
Income from operations
Interest income
Interest expense
Income before provision for income taxes

2020
817,846 $
(65,038 )
(2,922 )
(24,244 )
—
725,642
1,654
(172,166 )
555,130 $

2019
712,134 $
(59,930 )
(2,023 )
(20,265 )
(509 )
629,407
4,048
(150,818 )
482,637 $

2018
643,941
(53,665 )
4,737
(22,792 )
(532 )
571,689
3,334
(146,345 )
428,678

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The following table summarizes the Company’s identifiable asset information as of January 3, 2021 and

December 29, 2019 (in thousands):

U.S. stores
U.S. supply chain
Total U.S. assets
International franchise
International supply chain
Total international assets
Unallocated
Total assets

2020

308,088 $
488,983
797,071
41,408
31,060
72,468
697,629
1,567,168 $

2019

251,844
408,919
660,763
23,396
35,745
59,141
662,188
1,382,092

Unallocated assets primarily include cash and cash equivalents, restricted cash and cash equivalents, certain

accounts receivable and prepaid expenses, investments in equity securities without readily determinable fair values
and marketable securities, certain long-lived assets including certain property, plant and equipment and the
operating lease right-of-use asset for the Company’s corporate headquarters and deferred income taxes.

The following table summarizes the Company’s goodwill balance as of January 3, 2021 and December 29,

2019 (in thousands):

U.S. stores
Supply chain
Consolidated goodwill

2020

2019

13,994 $
1,067
15,061 $

14,026
1,067
15,093

(13) Company-owned Store Transactions

During 2019, the Company sold 62 U.S. Company-owned stores to certain of its existing U.S. franchisees for

proceeds of $12.3 million. In connection with the sale of the stores, the Company recorded a $0.3 million pre-tax
loss on the sale of the related assets and liabilities, which was net of a $1.5 million reduction in goodwill. The net
loss on these store sales was recorded in general and administrative expense in the Company’s consolidated
statements of income. During 2019, the Company also purchased three U.S. franchised stores from a U.S. franchisee
for $3.4 million, which included $1.7 million of goodwill, $1.3 million of intangibles and $0.4 million of leasehold
improvements and other assets.

During 2018, the Company sold 12 U.S. Company-owned stores to a former executive of the Company for

proceeds of $7.9 million. The former executive terminated his employment with the Company prior to the closing
date of the sale and became a franchisee. In connection with the sale of the stores, the Company recorded a
$5.9 million pre-tax gain on the sale of the related assets, which was net of a $0.4 million reduction in goodwill.
During 2018, the Company also sold two U.S. Company-owned stores to a franchisee for proceeds of $0.3 million.
In connection with the sale of the stores, the Company recorded a pre-tax gain of less than $0.1 million on the sale
of the related assets, which was net of a $0.1 million reduction in goodwill. The gains on these sales were recorded
in general and administrative expense in the Company’s consolidated statements of income.

Domino’s Pizza, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

(14) COVID-19 Pandemic

In December 2019, the COVID-19 disease 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 2020 in the midst of the COVID-19 pandemic, the Company continued to increase its U.S. stores revenues.
U.S. supply chain experienced higher volumes as a result of the increases in U.S. 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 and fourth quarters of 2020, these negative impacts lessened due to the reopening and resumption of normal
store hours at a majority of the Company’s international franchised stores that had been temporarily closed for
portions of the second quarter. The Company 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. Finally, given the market uncertainty arising from COVID-19, the
Company took a precautionary measure and borrowed $158.0 million under its 2019 Variable Funding Notes during
the second quarter of 2020, which was fully repaid throughout the remainder of 2020. 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.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures.

The Company carried out an evaluation as of the end of the period covered by this report, under the supervision and
with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and
procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Company’s disclosure controls and procedures are effective in ensuring that all information required in the
reports it files or submits under the Exchange Act was accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure and was recorded, processed, summarized and reported within the time
period required by the rules and regulations of the Securities and Exchange Commission.

(b) Changes in Internal Control over Financial Reporting.

There have been no changes in internal control over financial reporting that occurred during the last fiscal quarter
that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.

The management of Domino’s Pizza, Inc. is responsible for establishing and maintaining adequate internal control
over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the
Exchange Act, as a process designed by, or under the supervision of, the Company’s principal executive and
principal financial officers and effected by the Company’s board of directors, management and other personnel, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. Because of its
inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate. Under the supervision and with the participation of the Company’s management, including its Chief
Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its
internal control over financial reporting as of January 3, 2021 based on the framework in Internal Control —
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on that evaluation, management concluded that its internal control over financial reporting was effective as of
January 3, 2021. The effectiveness of the Company's internal control over financial reporting as of January 3, 2021,
has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in
their report which appears herein.

Item 9B. Other Information.

None.

Part III

Item 10. Directors, Executive Officers and Corporate Governance.

The following table sets forth information about our executive officers and directors.

Name

David A. Brandon
Richard E. Allison, Jr.
Stuart A. Levy
Russell J. Weiner
Thomas B. Curtis
Arthur P. D'Elia
Kelly E. Garcia
Cynthia A. Headen
Joseph H. Jordan
Timothy P. McIntyre
Kevin S. Morris
Lisa V. Price
C. Andrew Ballard
Andrew B. Balson
Corie S. Barry
Diana F. Cantor
Richard L. Federico
James A. Goldman
Patricia E. Lopez

Position

Age
68 Chairman of the Board of Directors
54 Chief Executive Officer and Director
49 Executive Vice President, Chief Financial Officer
52 Chief Operating Officer and President - Domino's U.S.
57 Executive Vice President, U.S. Operations and Support
43 Executive Vice President, Chief Marketing Officer
45 Executive Vice President, Chief Technology Officer
52 Executive Vice President, Supply Chain Services
47 Executive Vice President, International
58 Executive Vice President, Communications and Legislative Affairs
60 Executive Vice President, General Counsel and Corporate Secretary
48 Executive Vice President, Chief Human Resources Officer
48 Director
54 Director
45 Director
63 Director
66 Director
62 Director
59 Director

David A. Brandon has served as the Chairman of the Domino’s Board of Directors since March 1999. Mr. Brandon
most recently served as Chairman and Chief Executive Officer of Toys “R” Us, Inc., formerly the world’s largest
specialty retailer of toy and baby products, a position he held from July 2015 to December 2018. Previously, Mr.
Brandon was the Director of Athletics at the University of Michigan from March 2010 to October 2014. Mr.
Brandon served as Domino’s Chief Executive Officer from March 1999 to March 2010. Mr. Brandon was retained
by the Company as a Special Advisor from March 2010 to January 2011. Prior to joining Domino’s, Mr. Brandon
was President and Chief Executive Officer of Valassis, Inc., a company in the sales promotion and coupon
industries, from 1989 to 1998 and Chairman of the Board of Directors of Valassis, Inc. from 1997 to 1998. In
addition to serving on the Board of Directors of Domino’s, Mr. Brandon also serves on the Boards of Directors of
DTE Energy Co. and Herman Miller, Inc. He previously served on the Boards of Directors of Toys “R” Us, Inc.,
Burger King Corporation, Kaydon Corporation, Northwest Airlines and the TJX Companies, Inc.

Richard E. Allison, Jr. has served as Chief Executive Officer of Domino’s since July 2018. Mr. Allison oversees all
company operations, strategy and vision in his role as Chief Executive Officer. He previously served as President,
Domino’s International from October 2014 to July 2018, after joining the Company in March 2011 as Executive
Vice President of International. Prior to joining Domino’s, Mr. Allison worked at Bain & Company, Inc. for more
than 13 years, serving as a Partner from 2004 to December 2010, and as co-leader of Bain’s restaurant practice,
working with some of the world’s most well-known restaurant brands. Mr. Allison has served on Domino’s Board of
Directors since July 2018, when he was elected in conjunction with his appointment as Chief Executive Officer. Mr.
Allison also serves on the Board of Directors of Starbucks Corporation.

Stuart A. Levy has served as Domino’s Executive Vice President and Chief Financial Officer since August 2020.
Mr. Levy joined Domino's as Executive Vice President, Supply Chain Services in January 2019. Prior to joining
Domino’s, Mr. Levy served as Executive Vice President, Chief Transformation Officer for Republic Services, Inc.
from January 2015 to November 2017. Prior to joining Republic Services, Mr. Levy was employed by Bain &
Company from 2001 to 2014, serving most recently as a Partner from 2008 to 2014.

Russell J. Weiner has served as Chief Operating Officer and President, Domino's U.S. since July 2020 and as Chief
Operating Officer and President of the Americas from July 2018 to July 2020. He previously served as President,
Domino’s USA from October 2014 to July 2018. Mr. Weiner served as Executive Vice President and Chief
Marketing Officer, from September 2008 to October 2014. Prior to joining Domino’s, Mr. Weiner held various
marketing positions at PepsiCo, Inc. from 1998 to 2008, most recently serving as Vice President of Marketing, Colas
for Pepsi-Cola North America. Mr. Weiner serves on the Board of Directors of The Clorox Company.

Thomas B. Curtis has served as Domino’s Executive Vice President, U.S. Operations and Support since March
2020 and as Executive Vice President, Corporate Operations from July 2018 to March 2020. Prior to this, Mr. Curtis
served as Vice President of Franchise Relations and Operations Innovation from March 2017 to July 2018, after
serving as Vice President of Operations Support from August 2016 to March 2017 and as West Region Vice
President from November 2012 to August 2016. Mr. Curtis joined Domino’s in 2006, after being a Domino’s
franchisee since 1987.

Arthur P. D’Elia has served as Domino’s Executive Vice President, Chief Marketing Officer since July 2020 and as
Senior Vice President, Chief Marketing Officer from February 2020 to July 2020. Mr. D'Elia joined Domino's in
January 2018 as Senior Vice President, Chief Brand and Innovation Officer. Prior to Domino's, Mr. D'Elia served as
Chief Marketing Officer for Danone Dairy's UBN business unit from July 2017 to January 2018, after joining
Danone U.S. in 2010.

Kelly E. Garcia has served as Domino’s Executive Vice President, Chief Technology Officer since October 2020.
Prior to his current role, Mr. Garcia served as Senior Vice President, Chief Technology Officer from April 2020 to
October 2020. Mr. Garcia joined Domino’s in July 2012 as Vice President, eCommerce Development. Prior to
Domino's, Mr. Garcia was with R.L. Polk & Co. from 2004 to 2012, most recently as Vice President of Business
Intelligence and North American Operations.

Cynthia A. Headen has served as Domino’s Executive Vice President, Supply Chain Services since August 2020.
Ms. Headen previously served as Senior Vice President, Global Procurement and Supply Chain Operations from
January 2019 to August 2020, after joining Domino's as Vice President of Procurement and Product Management in
November 2015. Prior to Domino’s, Ms. Headen spent nearly 15 years with PepsiCo, where she was responsible for
global procurement.

Joseph H. Jordan has served as Domino’s Executive Vice President of International since April 2018. Prior to his
current role, Mr. Jordan had served as Senior Vice President and Chief Marketing Officer since May 2015, after
joining Domino’s as Vice President of Innovation in September 2011. Prior to joining Domino’s, Mr. Jordan served
as Senior Director of Marketing at Pepsi-Cola North America for six years, held marketing roles at Philips
Electronics and Unilever and was a consultant for Accenture.

Timothy P. McIntyre has served as Domino’s Executive Vice President, Communications and Legislative Affairs
since May 2016. Mr. McIntyre served as Vice President of Communication from August 1997 to May 2016. Mr.
McIntyre serves as Chair of the Domino’s Pizza Partners Foundation and as Chair of the American Pizza
Community. He also serves on the Communications Committee of the Innovation Center for U.S. Dairy. Mr.
McIntyre served on the Board of Food Gatherers from 2015 to December 2017. Mr. McIntyre joined Domino’s in
1985.

Kevin S. Morris has served as Domino’s Executive Vice President, General Counsel since January 2017 and also as
Corporate Secretary since October 2018. Prior to joining Domino’s, Mr. Morris served at New York-based Equinox
Holdings, Inc. and its various operating subsidiaries and affiliates from December 2012 to January 2017, most
recently as Senior Vice President, General Counsel and Corporate Secretary. Mr. Morris operated his own private
legal practice from July 2009 to November 2012. Prior to 2009, Mr. Morris served as Vice President and Associate
General Counsel at Global Hyatt Corporation (the predecessor in interest to Hyatt Hotels Corporation) from 1999 to
2008. Prior to 1999, Mr. Morris served as a Senior International Attorney and Staff Director at McDonald’s
Corporation after beginning his career as an attorney at Rudnick & Wolfe LLP.

Lisa V. Price has served as Domino’s Executive Vice President, Chief Human Resources Officer since September
2019. Prior to joining Domino’s, Ms. Price served as Senior Vice President of Human Resources at Nordstrom from
December 2015 to August 2019. Prior to her time at Nordstrom, she spent over 15 years at Starbucks Corporation in
a variety of human resources roles, most recently as Vice President of Partner Resources.

C. Andrew Ballard has served on Domino’s Board of Directors since July 2015. Mr. Ballard serves as the
Chairperson of the Inclusion and Diversity Committee and is a member of the Compensation Committee of the
Board of Directors. Mr. Ballard currently serves as the Chief Executive Officer and Co-Founder of Wiser Solutions,
Inc., a technology and data company, a position he has held since December 2012. Mr. Ballard is also Founder of
Figtree Partners, an investment firm focused on software and technology, and has served as its Managing Partner
since November 2012. He was previously a Senior Advisor at the private equity firm Hellman & Friedman LLC
from 2012 to 2019, where he also served as Managing Director from 2006 to 2012 and as a Director from 2004 to
2006. Prior to joining Hellman & Friedman in 2003, Mr. Ballard worked at Bain Capital, LLC in San Francisco and
Boston, as well as Bain & Company, Inc. from 1994 to 2002.

In addition to serving on Domino’s Board of Directors, Mr. Ballard is currently Chairman of Datacor, Inc. and Vice
Chairman of Zignal Labs, and has held previous board roles at Activant Solutions Inc., Catalina Marketing
Corporation, DoubleClick Inc., Getty Images, Inc., Internet Brands, Inc. and Vertafore, Inc. Mr. Ballard was the
Chair of the Board of Trustees and Chair of the Investment Committee of the San Francisco Foundation.

Andrew B. Balson has served on Domino’s Board of Directors since March 1999 and serves as the Chairperson of
the Compensation Committee of the Board of Directors. Mr. Balson is currently the Managing Partner of Cove Hill
Partners, L.P., a firm formed to make private equity investments. Previously, Mr. Balson was the Chief Executive
Officer of Match Beyond, an innovative college completion program that helps low-income young adults attain
college degrees and prepare for the workforce, a position he held from January 2015 to June 2016. Prior to
becoming the Chief Executive Officer of Match Beyond, Mr. Balson was a Managing Director at Bain Capital, LLC,
a global investment company, from 2001 to 2013. Mr. Balson became a Principal of Bain Capital in January 1998.
Mr. Balson previously served on the Boards of Directors of Bloomin’ Brands, Inc., FleetCor Technologies, Inc.,
Dunkin’ Brands, Inc., Skylark Co., Ltd., BELLSYSTEM24, Inc., Burger King Corporation and Bright Horizons
Family Solutions, Inc., as well as numerous private companies.

Corie S. Barry has served on Domino’s Board of Directors since July 2018 and is a member of the Audit
Committee and the Inclusion and Diversity Committee of the Board of Directors. Ms. Barry currently serves as
Chief Executive Officer and as a member of the Board of Directors of Best Buy Co., Inc., a specialty retailer of
consumer electronics, personal computers, entertainment software and appliances, roles held since June 2019. Prior
to becoming CEO, Ms. Barry served as Best Buy’s Senior Executive Vice President and Chief Financial and
Strategic Transformation Officer from June 2016 to June 2019, Chief Strategic Growth Officer from October 2015
to June 2016, Interim President of Geek Squad Services from March 2015 to May 2016, Senior Vice President of
Domestic Finance from May 2013 to October 2015 and in a variety of financial and operational roles, both in the
field and at the corporate campus, since joining Best Buy in 1999. Prior to Best Buy, Ms. Barry worked at Deloitte
Touche Tohmatsu Limited from 1997 to 1999.

Diana F. Cantor has served on Domino’s Board of Directors since October 2005 and serves as the Chairperson of
the Audit Committee of the Board of Directors. Ms. Cantor is currently a Partner at Alternative Investment
Management, LLC, a position she has held since January 2010, and is a past Chairman of the Virginia Retirement
System, where she served as a Trustee and a member of the Audit and Compliance Committee from 2010 through
2020. Ms. Cantor was a Managing Director with New York Private Bank and Trust from January 2008 to the end of
2009. Ms. Cantor served as the founding Chief Executive Officer of the Virginia College Savings Plan, the state’s
529 college savings program, from 1996 to January 2008. Ms. Cantor served as Vice President of Richmond
Resources, Ltd. from 1990 to 1996, and as Vice President of Goldman, Sachs & Co. from 1985 to 1990. In addition
to serving on Domino’s Board of Directors, Ms. Cantor serves on the Boards of Directors of Universal Corporation
(Chairman of the Nominating and Corporate Governance Committee) and VICI Properties Inc. (Chairman of the
Audit Committee), and she previously served on the Boards of Directors of Media General, Inc., Revlon, Inc., The
Edelman Financial Group Inc., Vistage International, Inc., Knowledge Universe Education LLC, Edelman Financial
Services, LLC and Service King Body and Paint LLC.

Richard L. Federico has served on Domino’s Board of Directors since February 2011 and is a member of the
Compensation Committee and the Nominating and Corporate Governance Committee of the Board of Directors. Mr.
Federico served as Non-Executive Chairman of P.F. Chang’s China Bistro, Inc. based in Scottsdale, AZ, from
February 2016 until its acquisition in March 2019. Mr. Federico previously served as Executive Chairman of P.F.
Chang’s from March 2015 to February 2016 and as Chief Executive Officer or Co-Chief Executive Officer from
September 1997 to March 2015. Mr. Federico joined P.F. Chang’s as President in 1996, when he also began his
service on its Board of Directors. Mr. Federico started his career in the restaurant industry as a Manager at Steak &
Ale, and later at Orville Beans and Bennigan’s restaurants. He went on to develop Grady’s Goodtimes, serving as
Co-Founder/Partner and Vice President of Operations until Brinker International, Inc. acquired Grady’s in 1989.
Upon joining Brinker International, Mr. Federico served as Senior Vice President and concept head for Macaroni
Grill before being promoted to President of the Italian Concept division. As President, he directed operations and
development for Macaroni Grill and Spageddies. In addition to serving on Domino’s Board of Directors, Mr.
Federico currently serves on the Boards of RPT Realty and Tastemaker Acquisition Corp. He also currently serves
of the Boards of Directors of Prime Steak Concepts, True Food Kitchen and Boqueria, all privately-held restaurant
concepts. Mr. Federico previously served as Chairman of the Board of Directors of Jamba, Inc. He is a Founding
Director of Chances for Children.

James A. Goldman has served on Domino’s Board of Directors since March 2010, serves as Chairperson of the
Nominating and Corporate Governance Committee and serves on the Audit Committee of the Board of Directors.
Mr. Goldman is currently a Senior Advisor at Eurazeo SE, a private equity firm listed on the Paris Stock Exchange,
and serves on the Boards of Directors of several of its portfolio companies: Q Mixers, a leading premium carbonated
mixer brand, Waterloo Sparkling Water Corp., a carbonated beverage company, and Dewey's Bakery, a premium
baked goods company. Mr. Goldman served as President and Chief Executive Officer and as a member of the Board
of Directors of Godiva Chocolatier, Inc. from 2004 to 2014. Mr. Goldman was President of the Food and Beverage
Division at Campbell Soup Company from 2001 to 2004 and served in various executive positions at Nabisco, Inc.
from 1992 to 2000. Prior to his work at Nabisco, Mr. Goldman was a senior consulting associate at McKinsey &
Company, Inc. In addition to serving on Domino’s Board of Directors, Mr. Goldman serves on the Board of
Directors of Abercrombie & Fitch Co. where he is a member of the Compensation Committee and Nominating and
Corporate Governance Committee. He is on the Executive Board of the International Tennis Hall of Fame in
Newport, RI and the Advisory Board of FEED Projects in New York, NY. Mr. Goldman previously served on the
Board of Directors of The Children’s Place, Inc. He also served on the Board of Trustees and Executive Committee
of Save the Children in Fairfield, CT and the Board of Trustees at the YMCA Camps Becket and Chimney Corners
in Becket, MA.

Patricia E. Lopez has served on Domino’s Board of Directors since July 2018 and is a member of the Nominating
and Corporate Governance Committee and the Inclusion and Diversity Committee of the Board of Directors. Ms.
Lopez most recently served as Chief Executive Officer and as a member of the Board of Directors of High Ridge
Brands Co. from July 2017 to March 2020. Ms. Lopez served as a Senior Vice President at Estée Lauder Companies
Inc. from January 2015 to July 2016, a Senior Vice President at Avon Products, Inc. from December 2012 to
November 2014 and previously held various positions at The Procter & Gamble Co. for 25 years, most recently
serving as a Vice President and General Manager overseeing its Eastern Europe business.

The remaining information required by this item is incorporated by reference from Domino's Pizza, Inc.'s definitive
proxy statement, which will be filed within 120 days of January 3, 2021.

Item 11. Executive Compensation.

Information regarding executive compensation is incorporated by reference from Domino’s Pizza, Inc.’s definitive
proxy statement, which will be filed within 120 days of January 3, 2021. However, no information set forth in the
proxy statement regarding the Audit Committee Report shall be deemed incorporated by reference into this Form
10-K.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters.

Information regarding security ownership of certain beneficial owners and management and related stockholder
matters is incorporated by reference from Domino’s Pizza, Inc.’s definitive proxy statement, which will be filed
within 120 days of January 3, 2021.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Information regarding certain relationships and related transactions is incorporated by reference from Domino’s
Pizza, Inc.’s definitive proxy statement, which will be filed within 120 days of January 3, 2021.

Item 14. Principal Accountant Fees and Services.

Information regarding principal accountant fees and services is incorporated by reference from Domino’s Pizza,
Inc.’s definitive proxy statement, which will be filed within 120 days of January 3, 2021.

Item 15. Exhibits, Financial Statement Schedules.

Part IV

(a)1. Financial Statements: The following financial statements for Domino’s Pizza, Inc. and subsidiaries are

included in Item 8, “Financial Statements and Supplementary Data”:

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of January 3, 2021 and December 29, 2019
Consolidated Statements of Income for the Years Ended January 3, 2021, December 29, 2019 and

December 30, 2018

Consolidated Statements of Comprehensive Income for the Years Ended January 3, 2021,

December 29, 2019 and December 30, 2018

Consolidated Statements of Stockholders’ Deficit for the Years Ended January 3, 2021, December

29, 2019 and December 30, 2018

Consolidated Statements of Cash Flows for the Years Ended January 3, 2021, December 29, 2019

and December 30, 2018

Notes to Consolidated Financial Statements

2. Financial Statement Schedules: The following financial statement schedule is attached to this report.

Schedule I – Condensed Financial Information of the Registrant

All other schedules are omitted because they are not applicable, not required, or the information is included
in the financial statements or the notes thereto.

3. Exhibits: Certain of the following Exhibits have been previously filed with the Securities and Exchange

Commission pursuant to the requirements of the Securities Act of 1933 and the Securities Exchange Act of
1934. Such exhibits are identified by the parenthetical references following the listing of each such exhibit
and are incorporated herein by reference.

Exhibit
Number

Description

3.1

3.2

3.3

4.1

10.1

10.2

10.3

10.4

10.5

Form of Second Restated Certificate of Incorporation of Domino’s Pizza, Inc. (Incorporated by
reference to Exhibit 3.1 to the Domino’s Pizza, Inc. registration statement on Form S-1 filed on April
13, 2004 (Reg. No. 333-114442) (the “S-1”)).

Certificate of Amendment to the Second Restated Certificate of Incorporation of Domino’s Pizza, Inc.
(Incorporated by reference to Exhibit 3.2 to the Form 10-Q for the quarter ended June 14, 2015).

Second Amended and Restated By-Laws of Domino’s Pizza, Inc. (Incorporated by reference to
Exhibit 3.3 to the registrant’s annual report on Form 10-K for the year ended January 3, 2016).

Description of Securities of the Registrant. (Incorporated by reference to Exhibit 4.1 to the
registrant’s annual report on Form 10-K for the year ended December 29, 2019 (the “2019 10-K”)).

Lease Agreement dated as of December 21, 1998 by and between Domino’s Farms Office Park
Limited Partnership and Domino’s, Inc. (Incorporated by reference to Exhibit 10.3 to the Domino’s,
Inc. registration statement on Form S-4 filed on March 22, 1999 (Reg. No. 333-74797)).

Fourth Amendment to the Lease Agreement between Domino’s Farms Office Park, L.L.C. and
Domino’s Pizza LLC, dated as of August 28, 2012 (Incorporated by reference to Exhibit 10.2 to the
registrant’s annual report on Form 10-K for the year ended December 30, 2012 (the “2012 10-K”)).

Fifth Amendment to a Lease Agreement between Domino’s Farms Office Park, L.L.C. and Domino’s
Pizza LLC, dated as of February 1, 2015 (Incorporated by reference to Exhibit 10.3 to the registrant’s
annual report on Form 10-K for the year ended January 1, 2017 (the “2016 10-K”)).

Sixth Amendment to a Lease Agreement between Domino’s Farms Office Park, L.L.C. and Domino’s
Pizza LLC, dated as of February 1, 2015 (Incorporated by reference to Exhibit 10.4 to the 2016 10-
K).

Seventh Amendment to a Lease Agreement between Domino’s Farms Office Park, L.L.C. and
Domino’s Pizza LLC, dated as of April 19, 2016 (Incorporated by reference to Exhibit 10.5 to the
2016 10-K).

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13*

Eighth Amendment to a Lease Agreement between Domino’s Farms Office Park, L.L.C. and
Domino’s Pizza LLC, dated as of November 4, 2016 (Incorporated by reference to Exhibit 10.6 to the
2016 10-K).

Ninth Amendment to a Lease Agreement between Domino’s Farms Office Park, L.L.C. and
Domino’s Pizza LLC, dated as of February 16, 2017 (Incorporated by reference to Exhibit 10.7 to the
2016 10-K).

Tenth Amendment to a Lease Agreement between Domino’s Farms Office Park, L.L.C. and
Domino’s Pizza LLC, dated as of November 7, 2017 (Incorporated by reference to Exhibit 10.8 to the
registrant’s annual report on Form 10-K for the year ended December 31, 2017).

Eleventh Amendment to a Lease Agreement between Domino’s Farms Office Park, L.L.C. and
Domino’s Pizza LLC, dated as of July 13, 2018 (Incorporated by reference to Exhibit 10.1 to the
registrant’s quarterly report on Form 10-Q for the quarter ended September 9, 2018 (the “September
2018 10-Q”)).

Twelfth Amendment to a Lease Agreement between Domino’s Farms Office Park, L.L.C. and
Domino’s Pizza LLC, dated as of July 13, 2018 (Incorporated by reference to Exhibit 10.2 to the
September 2018 10-Q).

Thirteenth Amendment to a Lease Agreement between Domino’s Farms Office Park, L.L.C. and
Domino’s Pizza LLC, dated as of May 14, 2019 (Incorporated by reference to Exhibit 10.1 to the
registrant's quarterly report on Form 10-Q for the quarter ended June 16, 2019 (the “June 2019 10-
Q”)).

Fourteenth Amendment to a Lease Agreement between Domino’s Farms Office Park, L.L.C. and
Domino’s Pizza LLC, dated as of May 31, 2019 (Incorporated by reference to Exhibit 10.1 to the June
2019 10-Q).

Domino’s Pizza, Inc. Deferred Compensation Plan adopted effective January 1, 2005 (Incorporated
by reference to Exhibit 10.9 to the registrant’s annual report on Form 10-K for the year ended January
1, 2006).

10.14*

First Amendment to the Domino’s Pizza Deferred Compensation Plan effective January 1, 2007
(Incorporated by reference to Exhibit 10.9 to the registrant’s annual report on Form 10-K for the year
ended December 31, 2006).

10.15*

10.16*

10.17*

10.18*

10.19*

10.20*

10.21*

Second Amendment to the Domino’s Pizza Deferred Compensation Plan effective February 8, 2013
(Incorporated by reference to Exhibit 10.5 to the 2012 10-K).

Amended Domino’s Pizza, Inc. 2004 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1
to the registrant’s quarterly report on Form 10-Q for the quarter ended March 22, 2009 (the “March
2009 10-Q”)).

Form of Employee Stock Option Agreement under the Amended Domino’s Pizza, Inc. 2004 Equity
Incentive Plan (Incorporated by reference to Exhibit 10.8 to the 2012 10-K).

Form of 2013 Special Employee Stock Option Agreement under the Amended Domino’s Pizza, Inc.
2004 Equity Incentive Plan (Incorporated by reference to Exhibit 10.9 to the 2012 10-K).

Form of Director Stock Option Agreement under the Amended Domino’s Pizza, Inc. 2004 Equity
Incentive Plan (Incorporated by reference to Exhibit 10.3 to the March 2009 10-Q).

Form of Amendment to Existing Director Stock Option Grants (Incorporated by reference to Exhibit
10.5 to the March 2009 10-Q).

Form of Performance-Based Restricted Stock Agreement (Incorporated by reference to Exhibit 10.12
to the 2012 10-K).

10.22*

Form of 2013 Special Performance-Based Restricted Stock Agreement (Incorporated by reference to
Exhibit 10.13 to the 2012 10-K).

10.23*

10.24*

10.25*

10.26*

10.27*

10.28*

10.29*

10.30*

10.31*

10.32*

10.33*

10.34*

10.35*

10.36*

10.37*

10.38*

10.39*

Form of Performance-Based Restricted Stock Unit Award Agreement (Incorporated by reference to
Exhibit 10.14 to the 2012 10-K).

Form of 2013 Special Performance-Based Restricted Stock Unit Award Agreement (Incorporated by
reference to Exhibit 10.15 to the 2012 10-K).

Form of Domino’s Pizza, Inc. 2004 Equity Incentive Plan Restricted Stock Agreement for Directors
(Incorporated by reference to Exhibit 10.19 to the registrant’s annual report on Form 10-K for the
year ended January 3, 2010).

Amended and Restated Domino’s Pizza Senior Executive Annual Incentive Plan (Incorporated by
reference to Exhibit 10.20 to the registrant’s annual report on Form 10-K for the year ended January
2, 2011).

Amended and Restated Domino’s Pizza, Inc. Employee Stock Payroll Deduction Plan (Incorporated
by reference to Exhibit 10.18 to the registrant’s annual report on Form 10-K for the year ended
December 29, 2013).

First Amendment to the Amended and Restated Domino's Pizza, Inc. Employee Stock Payroll
Deduction Plan Dated as of January 1, 2019 (Incorporated by reference to Exhibit 10.1 to the
registrant’s quarterly report on Form 10-Q for the quarter ended March 24, 2019).

Form of Domino’s Pizza, Inc. Dividend Reinvestment & Direct Stock Purchase and Sale Plan
(Incorporated by reference to Exhibit 10.32 to the S-1).

Form of 2018 Restricted Stock Agreement (Incorporated by reference to Exhibit 10.4 to the
registrant’s current report on Form 8-K filed on January 11, 2018 (the “January 2018 8-K”)).

Employment Agreement dated as of August 28, 2015 between Domino’s Pizza LLC and Jeffrey
Lawrence (Incorporated by reference to Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q
for the quarter ended September 6, 2015).

Employment Agreement dated as of September 2, 2008 between Domino’s Pizza LLC and Russell J.
Weiner (Incorporated by reference to Exhibit 1.01 to the registrant’s current report on Form 8-K filed
on September 4, 2008).

Amendment to the Employment agreement dated as of September 2, 2008 between Domino’s Pizza
LLC and Russell J. Weiner (Incorporated by reference to Exhibit 10.4 to the registrant’s current
report on Form 8-K filed on December 24, 2008).

Amendment to the Employment Agreement dated as of July 26, 2010 between Domino’s Pizza LLC
and Russell J. Weiner (Incorporated by reference to Exhibit 10.3 to the registrant’s quarterly report on
Form 10-Q for the quarter ended June 20, 2010).

Employment Agreement dated as of January 8, 2018 between Domino’s Pizza, Inc., Domino’s Pizza
LLC and Russell J. Weiner (Incorporated by reference to Exhibit 10.2 to the January 2018 8-K).

Employment Agreement dated as of March 14, 2011 between Domino’s Pizza LLC and Richard E.
Allison, Jr. (Incorporated by reference to Exhibit 10.1 to the registrant’s quarterly report on Form 10-
Q for the quarter ended March 27, 2011).

Employment Agreement dated as of January 8, 2018 between Domino’s Pizza, Inc., Domino’s Pizza
LLC and Richard E. Allison, Jr. (Incorporated by reference to Exhibit 10.1 to the January 2018 8-K).

Time Sharing Agreement dated as of January 8, 2018 between Domino’s Pizza LLC and Richard E.
Allison, Jr. (Incorporated by reference to Exhibit 10.3 to the January 2018 8-K).

Addendum to Amended and Restated Employment Agreement dated as of June 22, 2018 between
Domino’s Pizza LLC and David A. Brandon (Incorporated by reference to Exhibit 10.1 to the
registrant’s quarterly report on Form 10-Q for the quarter ended June 17, 2018).

10.40*

10.41*

10.42*

10.43*

10.44*

10.45*

Addendum to Amended and Restated Employment Agreement dated as of December 29, 2018
between Domino’s Pizza LLC and David A. Brandon (Incorporated by reference to Exhibit 10.39 to
the registrant’s annual report on Form 10-K for the year ended December 30, 2018 (the “2018 10-
K”)).

Addendum to Amended and Restated Employment Agreement dated as of January 30, 2020 between
Domino’s Pizza LLC and David A. Brandon (Incorporated by reference to Exhibit 10.1 to the
registrant’s quarterly report on Form 10-Q for the quarter ended March 22, 2020).

Employment Agreement dated as of February 11, 2012 between Domino’s Pizza LLC and J. Kevin
Vasconi (Incorporated by reference to Exhibit 10.39 to the 2018 10-K).

Separation Agreement dated as of October 2, 2020 between Domino’s Pizza LLC and J. Kevin
Vasconi.

Employment Agreement dated as of April 9, 2018 between Domino’s Pizza LLC and Joseph H.
Jordan (Incorporated by reference to Exhibit 10.39 to the 2018 10-K).

Employment Agreement effective as of August 20, 2020 between Domino’s Pizza LLC and Stuart A.
Levy (Incorporated by reference to Exhibit 10.1 to the registrant's quarterly report on Form 10-Q for
the quarter ended September 6, 2020).

10.46

Form of Indemnification Agreement between the Company and its officers and directors
(Incorporated by reference to Exhibit 10.33 to the S-1).

10.47 Amended and Restated Base Indenture dated March 15, 2012 among Domino’s Pizza Master Issuer

LLC, Domino’s Pizza Distribution LLC, Domino’s IP Holder LLC and Domino’s SPV Canadian
Holding Company Inc., each as Co-Issuer, and Citibank, N.A., as Trustee and Securities Intermediary
(Incorporated by reference to Exhibit 4.1 to the registrant’s current report on Form 8-K filed on
March 19, 2012 (the “March 2012 8-K”)).

10.48

10.49

10.50

10.51

10.52

First Supplement dated as of September 16, 2013 to the Amended and Restated Base Indenture dated
as of March 15, 2012 (Incorporated by reference to Exhibit 4.1 to the registrant’s current report on
Form 8-K filed on October 22, 2015 (the “October 2015 8-K”)).

Second Supplement dated as of October 21, 2015 to the Amended and Restated Base Indenture dated
as of March 15, 2012 (Incorporated by reference to Exhibit 4.2 to the October 2015 8-K).

Third Supplement dated as of October 21, 2015 to the Amended and Restated Base Indenture dated as
of March 15, 2012 (Incorporated by reference to Exhibit 4.3 to the October 2015 8-K).

Fourth Supplement dated as of July 24, 2017 to the Amended and Restated Base Indenture dated as of
March 15, 2012 by and among Domino’s Pizza Master Issuer LLC, Domino’s SPV Canadian Holding
Company Inc., Domino’s Pizza Distribution LLC and Domino’s IP Holder LLC, each as Co-Issuer,
and Citibank, N.A., as Trustee and Securities Intermediary (Incorporated by reference to Exhibit 4.1
to the Domino’s Pizza, Inc. Current Report on Form 8-K, filed on July 25, 2017 (the “July 2017 8-
K”)).

Fifth Supplement dated as of November 21, 2018 to the Amended and Restated Base Indenture dated
as of March 15, 2012 by and among Domino’s Pizza Master Issuer LLC, Domino’s SPV Canadian
Holding Company Inc., Domino’s Pizza Distribution LLC and Domino’s IP Holder LLC, each as Co-
Issuer, and Citibank, N.A., as Trustee and Securities Intermediary (Incorporated by reference to
Exhibit 10.49 to the 2019 10-K).

10.53 Series 2015-1 Supplement dated as of October 21, 2015 to the Amended and Restated Base Indenture
dated March 15, 2012 among Domino’s Pizza Master Issuer LLC, Domino’s Pizza Distribution LLC,
Domino’s IP Holder LLC and Domino’s SPV Canadian Holding Company Inc., each as a Co-Issuer
of the Series 2015-1 3.484% Fixed Rate Senior Secured Notes, Class A-2-I, the Series 2015-1 4.474%
Fixed Rate Senior Secured Notes, Class A-2-II and the Series 2015-1 Variable Funding Senior Notes,
Class A-1, and Citibank, N.A., as Trustee and Series 2015-1 Securities Intermediary (Incorporated by
reference to Exhibit 4.4 to the October 2015 8-K).

10.54

10.55

10.56

Series 2017-1 Supplement dated as of July 24, 2017 by and among Domino’s Pizza Master Issuer
LLC, Domino’s SPV Canadian Holding Company Inc., Domino’s Pizza Distribution LLC and
Domino’s IP Holder LLC, each as Co-Issuer, and Citibank, N.A., as Trustee, Series 2017-1 Securities
Intermediary and Calculation Agent (Incorporated by reference to Exhibit 4.2 to the July 2017 8-K).

Supplemental Indenture, dated as of April 24, 2018, among Domino’s Pizza Master Issuer LLC,
Domino’s SPV Canadian Holding Company Inc., Domino’s Pizza Distribution LLC and Domino’s IP
Holder LLC, each as Co-Issuer of Series 2018-1 4.116% Fixed Rate Senior Secured Notes, Class A-
2-I and Series 2018-1 4.328% Fixed Rate Senior Secured Notes, Class A-2-II, and Citibank, N.A., as
Trustee and Securities Intermediary (Incorporated by reference to Exhibit 4.1 to the registrant’s
current report on Form 8-K filed on April 25, 2018 (the “April 2018 8-K”)).

Supplemental Indenture, dated November 19, 2019, among Domino’s Pizza Master Issuer LLC,
Domino’s SPV Canadian Holding Company Inc., Domino’s Pizza Distribution LLC and Domino’s IP
Holder LLC, each as Co-Issuer of Series 2019-1 3.668% Fixed Rate Senior Secured Notes, Class A-2,
and Citibank, N.A., as Trustee and Securities Intermediary (Incorporated by reference to Exhibit 4.1
to the registrant’s current report on Form 8-K filed on November 19, 2019 (the “November 2019 8-
K”)).

10.57 Purchase Agreement dated as of October 14, 2015 among Domino’s Pizza Master Issuer LLC,

Domino’s IP Holder LLC, Domino’s Pizza Distribution LLC and Domino’s SPV Canadian Holding
Company Inc. for the Series 2015-1 3.484% Fixed Rate Senior Secured Notes, Class A-2-I and the
Series 2015-1 4.474% Fixed Rate Senior Secured Notes, Class A-2-II (Incorporated by reference to
Exhibit 10.1 to the October 2015 8-K).

10.58

10.59

10.60

Purchase Agreement dated as of June 12, 2017 among Domino’s Pizza Master Issuer LLC, Domino’s
SPV Canadian Holding Company Inc., Domino’s Pizza Distribution LLC and Domino’s IP Holder
LLC, each as Co-Issuer, Domino’s SPV Guarantor LLC, Domino’s Pizza Franchising LLC,
Domino’s Pizza International Franchising Inc., Domino’s Pizza Canadian Distribution ULC,
Domino’s RE LLC and Domino’s EQ LLC, each as Guarantor, Domino’s Pizza LLC, as manager,
Domino’s Pizza, Inc. and Domino’s Inc., as parent companies, and Guggenheim Securities, LLC and
Barclays Capital Inc., as initial purchasers (Incorporated by reference to Exhibit 10.1 to the Domino’s
Pizza, Inc. Current Report on Form 8-K, filed on June 14, 2017).

Purchase Agreement, dated April 18, 2018, by and among Domino’s Pizza Master Issuer LLC,
Domino’s SPV Canadian Holding Company Inc., Domino’s Pizza Distribution LLC, Domino’s IP
Holder LLC, Domino’s Pizza, Inc., Domino’s Pizza LLC, Domino’s, Inc., the guarantors party
thereto and Guggenheim Securities, LLC, as representative of the initial purchasers named in
Schedule I thereto (Incorporated by reference to Exhibit 1.1 to the April 2018 8-K).

Purchase Agreement, dated November 6, 2019, among Domino’s Pizza Master Issuer LLC, Domino’s
SPV Canadian Holding Company Inc., Domino’s Pizza Distribution LLC and Domino’s IP Holder
LLC, each as Co-Issuer, Domino’s SPV Guarantor LLC, Domino’s Pizza Franchising LLC,
Domino’s Pizza International Franchising Inc., Domino’s Pizza Canadian Distribution ULC,
Domino’s RE LLC and Domino’s EQ LLC, each as Guarantor, Domino’s Pizza LLC, as manager, the
Company and Domino’s Inc., as parent companies, and Guggenheim Securities, LLC and Barclays
Capital Inc., as initial purchasers (Incorporated by reference to Exhibit 99.1 to the Domino’s Pizza,
Inc. Current Report on Form 8-K, filed on November 7, 2019).

10.61 Class A-1 Note Purchase Agreement, dated November 19, 2019, among Domino’s Pizza Master

Issuer LLC, Domino’s SPV Canadian Holding Company Inc., Domino’s Pizza Distribution LLC and
Domino’s IP Holder LLC, each as Co-Issuer, Domino’s SPV Guarantor LLC, Domino’s Pizza
Franchising LLC, Domino’s Pizza International Franchising Inc., Domino’s Pizza Canadian
Distribution ULC, Domino’s RE LLC and Domino’s EQ LLC, each as Guarantor, Domino’s Pizza
LLC, as manager, certain conduit investors, financial institutions and funding agents, and
Coöperatieve Rabobank U.A., New York Branch, as provider of letters of credit, as swingline lender
and as administrative agent (Incorporated by reference to Exhibit 10.1 to the November 2019 8-K).

10.62 Amended and Restated Guarantee and Collateral Agreement dated as of March 15, 2012 among
Domino’s SPV Guarantor LLC, Domino’s Pizza Franchising LLC, Domino’s Pizza International
Franchising Inc., Domino’s Pizza Canadian Distribution ULC, Domino’s RE LLC and Domino’s EQ
LLC, each as a Guarantor, in favor of Citibank, N.A., as Trustee (Incorporated by reference to Exhibit
10.2 to the March 2012 8-K).

10.63 Amended and Restated Management Agreement dated as of March 15, 2012 among Domino’s Pizza

Master Issuer LLC, certain subsidiaries of Domino’s Pizza Master Issuer LLC party thereto,
Domino’s Pizza LLC, as Manager and in its individual capacity, Domino’s Pizza NS Co., and
Citibank, N.A. as Trustee (Incorporated by reference to Exhibit 10.3 to the March 2012 8-K).

10.64 Amendment No. 1 dated as of October 21, 2015 to the Amended and Restated Management

Agreement dated as of March 15, 2012 among Domino’s Pizza Master Issuer LLC, certain
subsidiaries of Domino’s Pizza Master Issuer LLC party thereto, Domino’s Pizza LLC, as Manager
and in its individual capacity, Domino’s Pizza NS Co., and Citibank, N.A. as Trustee (Incorporated
by reference to Exhibit 10.3 to the October 2015 8-K).

10.65

Amendment No. 2 dated as of July 24, 2017 to the Amended and Restated Management Agreement
dated as of March 15, 2012 by and among Domino’s Pizza Master Issuer LLC, certain subsidiaries of
Domino’s Pizza Master Issuer LLC party thereto, Domino’s SPV Guarantor LLC, Domino’s Pizza
LLC, as manager and in its individual capacity, Domino’s Pizza NS Co., and Citibank, N.A., as
Trustee (Incorporated by reference to Exhibit 10.1 to the July 2017 8-K)).

10.66 Parent Company Support Agreement dated as of March 15, 2012 made by Domino’s Pizza, Inc. in

favor of Citibank, N.A., as Trustee (Incorporated by reference to Exhibit 10.4 to the October 2015 8-
K).

10.67 Amendment No. 1 dated as of October 21, 2015 to the Parent Company Support Agreement dated as
of March 15, 2012 made by Domino’s Pizza, Inc. in favor of Citibank, N.A., as Trustee (Incorporated
by reference to Exhibit 10.5 to the October 2015 8-K).

10.68

Omnibus Amendment No. 1, dated December 15, 2017, among Domino’s Pizza Master Issuer LLC,
Domino’s SPV Canadian Holding Company Inc., Domino’s Pizza Distribution LLC and Domino’s IP
Holder LLC, each as Co-Issuer, Domino’s SPV Guarantor LLC, Domino’s Pizza Franchising LLC,
Domino’s Pizza International Franchising Inc., Domino’s Pizza Canadian Distribution ULC,
Domino’s RE LLC and Domino’s EQ LLC, each as Guarantor, Domino’s Pizza LLC, as manager,
certain conduit investors, financial institutions and funding agents, and Coöperatieve Rabobank U.A.,
New York Branch, as provider of letters of credit, as swingline lender and as administrative agent
(Incorporated by reference to Exhibit 10.1 to the Domino’s Pizza, Inc. Current Report on Form 8-K,
filed on December 19, 2017).

10.69

Agreement dated as of January 6, 2009 between Domino’s Pizza, Inc., Blue Harbour Strategic Value
Partners Master Fund, LP and Blue Harbour Institutional Partners Master Fund, L.P. (Incorporated by
reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed on January 9, 2009).

10.70

Board of Directors’ Compensation.

21.1

Subsidiaries of Domino’s Pizza, Inc.

23.1

31.1

31.2

32.1

32.2

Consent of PricewaterhouseCoopers LLP.

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
relating to Domino’s Pizza, Inc.

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
relating to Domino’s Pizza, Inc.

Certification of Chief Executive Officer 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.

Certification of Chief Financial Officer 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

Inline XBRL Taxonomy Extension Schema Document.

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

104

Cover page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101).

* A management contract or compensatory plan or arrangement required to be filed as an exhibit to this report

pursuant to Item 15(b) of Form 10-K.

SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

Domino’s Pizza, Inc.
PARENT COMPANY CONDENSED BALANCE SHEETS
(In thousands, except share and per share amounts)

ASSETS

ASSETS:
Cash

Total assets

LIABILITIES AND STOCKHOLDERS’ DEFICIT

LIABILITIES:

Equity in net deficit of subsidiaries
Due to subsidiary
Total liabilities

STOCKHOLDERS’ DEFICIT:

January 3,
2021

December 29,
2019

$
$

6 $
6 $

6
6

3,300,405 $
6
3,300,411

3,415,759
6
3,415,765

Total stockholders’ deficit
Total liabilities and stockholders’ deficit

389

—
5,122
(3,303,492 )
(2,424 )
(3,300,405 )
6 $

—
243
(3,412,649 )
(3,742 )
(3,415,759 )
6

See accompanying notes to the Schedule I.

Domino’s Pizza, Inc.
PARENT COMPANY CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except share and per share amounts)

REVENUES

Total revenues
OPERATING EXPENSES

Total operating expenses

INCOME FROM OPERATIONS
Equity earnings in subsidiaries

INCOME BEFORE PROVISION FOR INCOME TAXES
PROVISION FOR INCOME TAXES
NET INCOME
COMPREHENSIVE INCOME
EARNINGS PER SHARE:
Common Stock – basic
Common Stock – diluted

January 3,
2021

For the Years Ended
December 29, December 30,

2019

2018

—
—
—
—
—
491,296
491,296
—
491,296
492,614

$
$

— $
—
—
—
—
400,709
400,709
—
400,709 $
401,396 $

—
—
—
—
—
361,972
361,972
—
361,972
359,924

12.61
12.39

$
$

9.83 $
9.56 $

8.65
8.35

$
$

See accompanying notes to the Schedule I.

Domino’s Pizza, Inc.
PARENT COMPANY CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Dividends from subsidiaries

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of common stock dividends and equivalents
Purchases of common stock
Other

Net cash used in financing activities

CHANGE IN CASH
CASH, AT BEGINNING OF PERIOD
CASH, AT END OF PERIOD

January 3,
2021

For the Years Ended
December 29, December 30,

2019

2018

402,348 $

421,661 $

382,716

—
—

375,948
375,948

297,792
297,792

(121,925 )
(304,590 )
24,167
(402,348 )
—
6
6 $

(105,715 )
(699,007 )
7,113
(797,609 )
—
6
6 $

(92,166 )
(591,212 )
2,870
(680,508 )
—
6
6

See accompanying notes to the Schedule I.

Domino’s Pizza, Inc.
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

(1)

Introduction and Basis of Presentation

Domino’s Pizza, Inc., on a stand-alone basis, (the “Parent Company”) has accounted for majority-owned
subsidiaries using the equity method of accounting. The accompanying condensed financial statements of the Parent
Company should be read in conjunction with the consolidated financial statements of Domino’s Pizza, Inc. and its
subsidiaries (the “Company”) and the notes thereto included in Item 8 of this Form 10-K. These financial
statements have been provided to comply with Rule 4-08(e) of Regulation S-X.

Use of Estimates

The use of estimates is inherent in the preparation of financial statements in accordance with generally

accepted accounting principles. Actual results could differ from those estimates.

New Accounting Pronouncements

The Company has adopted the below new accounting pronouncements that impacted the Parent Company

financial statements.

Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326)

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial
Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”).
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. On December 30, 2019, the Company adopted ASC 326 using the modified retrospective method. The
Parent Company recorded a $1.1 million adjustment to equity in net deficit of subsidiaries and recorded a $1.1
million adjustment to retained deficit related to this new accounting standard in 2020. See Note 1 to the Company’s
consolidated financial statements as filed in this Form 10-K for additional information related to the adoption of this
new accounting standard.

ASU 2014-09, Revenue from Contracts with Customers (Topic 606)

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from

Contracts with Customers (Topic 606) and has since issued various amendments which provide additional
clarification and implementation guidance. This standard has been codified as ASC 606. This guidance outlines a
single, comprehensive model for entities to use in accounting for revenue arising from contracts with customers and
superseded most revenue recognition guidance issued by the FASB, including industry specific guidance. On
January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. The Parent Company
recorded a $6.7 million adjustment to equity in net deficit of subsidiaries and recorded a $6.7 million adjustment to
retained deficit related to this new accounting standard in 2018. See Note 1 to the Company’s consolidated financial
statements as filed in this Form 10-K for additional information related to the adoption of this new accounting
standard.

ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220)

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income

(Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The
amendments in this updated standard allow a reclassification from accumulated other comprehensive income to
retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The Parent Company
adopted this standard in 2018 and, as a result, recorded a $0.4 million reclassification from accumulated other
comprehensive loss to the beginning balance of retained deficit in 2018.

(2) Supplemental Disclosures of Cash Flow Information

During 2020, 2019 and 2018, the Parent Company received dividends from its subsidiaries primarily
consisting of amounts received to pay dividends and repurchase common stock in connection with the Company’s
recapitalization transactions. See Note 4 to the Company’s consolidated financial statements as filed in this Form
10-K for a description of these recapitalization transactions. In 2019 and 2018, the amount of dividends received
was in excess of current year equity in earnings from its subsidiaries, and thus a portion of these dividends was
considered to be a return of investment and is classified as a cash inflow from investing activities.

Item 16. Form 10-K Summary.

Not applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

DOMINO’S PIZZA, INC.

/s/ Stuart A. Levy
Stuart A. Levy
Executive Vice President, Chief Financial Officer
(Principal Financial Officer)
February 25, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrants and in the capacities and on the dates indicated.

/s/ Richard E. Allison, Jr.
Richard E. Allison, Jr.
February 25, 2021

/s/ Stuart A. Levy
Stuart A. Levy
February 25, 2021

/s/ Jessica L. Parrish
Jessica L. Parrish
February 25, 2021

/s/ David A. Brandon
David A. Brandon
February 25, 2021

/s/ C. Andrew Ballard
C. Andrew Ballard
February 25, 2021

/s/ Andrew B. Balson
Andrew B. Balson
February 25, 2021

/s/ Corie S. Barry
Corie S. Barry
February 25, 2021

/s/ Diana F. Cantor
Diana F. Cantor
February 25, 2021

/s/ Richard L. Federico
Richard L. Federico
February 25, 2021

/s/ James A. Goldman
James A. Goldman
February 25, 2021

/s/ Patricia E. Lopez
Patricia E. Lopez
February 25, 2021

Chief Executive Officer and Director
(Principal Executive Officer)

Executive Vice President, Chief Financial Officer
(Principal Financial Officer)

Vice President, Corporate Controller

Chairman of the Board of Directors

Director

CEO AND CFO CERTIFICATION

Richard E. Allison, Jr., Chief Executive Officer, and Stuart A. Levy, Executive Vice President and Chief Financial
Officer, have issued certificates required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 and applicable
Securities and Exchange Commission regulation with respect to the Company’s Annual Report on Form 10-K for the
year ended January 3, 2021 (the “2020 10-K”). The full text of the certifications is set forth in Exhibits 31.1, 31.2, 32.1
and 32.2 in the 2020 10-K.

In addition, Mr. Allison submitted his annual certification to the New York Stock Exchange (the “NYSE”) on May
18, 2020, stating that he was not aware of any violations by the company of the NYSE’s corporate governance listing
standards, as required by Section 303A.12(a) of the NYSE Listed Company Manual.