QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) |
(Zip Code) |
Title of Each Class |
Trading Symbol |
Name of Each Exchange on Which Registered | ||
Domino’s Pizza, Inc. |
☒ |
Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ |
Smaller reporting company |
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Emerging growth company |
Page No. |
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PART I. |
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Item 1. |
3 |
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3 |
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4 |
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5 |
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6 |
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7 |
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Item 2. |
14 |
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Item 3. |
21 |
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Item 4. |
21 |
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PART II. |
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Item 1. |
22 |
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Item 1A. |
22 |
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Item 2. |
23 |
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Item 3. |
23 |
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Item 4. |
23 |
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Item 5. |
23 |
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Item 6. |
23 |
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24 |
(In thousands) |
March 22, 2020 |
December 29, 2019 (1) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | |
$ | |
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Restricted cash and cash equivalents |
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Accounts receivable, net |
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Inventories |
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Prepaid expenses and other |
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Advertising fund assets, restricted |
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Total current assets |
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Property, plant and equipment: |
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Land and buildings |
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Leasehold and other improvements |
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Equipment |
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Construction in progress |
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Accumulated depreciation and amortization |
( |
) | ( |
) | ||||
Property, plant and equipment, net |
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Other assets: |
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Operating lease right-of-use assets |
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Goodwill |
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Capitalized software, net |
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Other assets |
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Deferred income taxes |
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Total other assets |
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Total assets |
$ | |
$ | |
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Liabilities and stockholders’ deficit |
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Current liabilities: |
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Current portion of long-term debt |
$ | |
$ | |
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Accounts payable |
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Operating lease liabilities |
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Insurance reserves |
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Dividends payable |
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Advertising fund liabilities |
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Other accrued liabilities |
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Total current liabilities |
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Long-term liabilities: |
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Long-term debt, less current portion |
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|
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Operating lease liabilities |
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|
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Insurance reserves |
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Other accrued liabilities |
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Total long-term liabilities |
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Stockholders’ deficit: |
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Common stock |
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|
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Additional paid-in capital |
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|
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Retained deficit |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Total stockholders’ deficit |
( |
) | ( |
) | ||||
Total liabilities and stockholders’ deficit |
$ | |
$ | |
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(1) | The balance sheet at December 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. |
Fiscal Quarter Ended |
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March 22, |
March 24, |
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(In thousands, except per share data) |
2020 |
2019 |
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Revenues: |
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U.S. Company-owned stores |
$ | |
$ | |
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U.S. franchise royalties and fees |
|
|
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Supply chain |
|
|
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International franchise royalties and fees |
|
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U.S. franchise advertising |
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Total revenues |
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|
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Cost of sales: |
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U.S. Company-owned stores |
|
|
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Supply chain |
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Total cost of sales |
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|
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Operating margin |
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General and administrative |
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|
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U.S. franchise advertising |
|
|
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Income from operations |
|
|
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Interest income |
|
|
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Interest expense |
( |
) | ( |
) | ||||
Income before (benefit) provision for income taxes |
|
|
||||||
(Benefit) provision for income taxes |
( |
) | |
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Net income |
$ | |
$ | |
||||
Earnings per share: |
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Common stock - basic |
$ | |
$ | |
||||
Common stock - diluted |
|
|
Fiscal Quarter Ended |
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March 22, |
March 24, |
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(In thousands) |
2020 |
2019 |
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Net income |
$ | |
$ | |
||||
Currency translation adjustment |
( |
) | |
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Comprehensive income |
$ | |
$ | |
||||
Fiscal Quarter Ended |
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March 22, |
March 24, |
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(In thousands) |
2020 |
2019 |
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Cash flows from operating activities: |
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Net income |
$ | |
$ | |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
|
|
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Loss on sale/disposal of assets |
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Amortization of debt issuance costs |
|
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Provision for deferred income taxes |
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Non-cash compensation expense |
|
|
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Excess tax benefits from equity-based compensation |
( |
) | ( |
) | ||||
Provision for losses on accounts and notes receivable |
|
|
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Changes in operating assets and liabilities |
( |
) | |
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Changes in advertising fund assets and liabilities, restricted |
|
( |
) | |||||
Net cash provided by operating activities |
|
|
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Cash flows from investing activities: |
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Capital expenditures |
( |
) | ( |
) | ||||
Other |
( |
) | |
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Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities: |
||||||||
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 |
( |
) | ( |
) | ||||
Other |
|
— |
||||||
Net cash used in financing activities |
( |
) | ( |
) | ||||
Effect of exchange rate changes on cash |
( |
) | |
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Change in cash and cash equivalents, restricted cash and cash equivalents |
( |
) | |
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Cash and cash equivalents, beginning of period |
|
|
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Restricted cash and cash equivalents, beginning of period |
|
|
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Cash and cash equivalents included in advertising fund assets, restricted, beginning of period |
|
|
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Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, beginning of period |
|
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Cash and cash equivalents, end of period |
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Restricted cash and cash equivalents, end of period |
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|
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Cash and cash equivalents included in advertising fund assets, restricted, end of period |
|
|
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Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, end of period |
$ | |
$ | |
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Fiscal Quarters Ended March 22, 2020 and March 24, 2019 |
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U.S. |
Supply |
International |
Intersegment |
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Stores |
Chain |
Franchise |
Revenues |
Other |
Total |
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Revenues |
||||||||||||||||||||||||
2020 |
$ | $ | $ | $ | ( |
) | $ | — |
$ | |||||||||||||||
2019 |
( |
) | — |
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Income from operations |
||||||||||||||||||||||||
2020 |
$ | $ | $ | N/A |
$ | ( |
) | $ | ||||||||||||||||
2019 |
N/A |
( |
) | |||||||||||||||||||||
Segment Income |
||||||||||||||||||||||||
2020 |
$ | $ | $ | N/A |
$ | ( |
) | $ | ||||||||||||||||
2019 |
N/A |
( |
) |
Fiscal Quarter Ended |
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March 22, |
March 24, |
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2020 |
2019 |
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Total Segment Income |
$ | $ | ||||||
Depreciation and amortization |
( |
) | ( |
) | ||||
Loss on sale/disposal of assets |
( |
) | ( |
) | ||||
Non-cash compensation expense |
( |
) | ( |
) | ||||
Income from operations |
||||||||
Interest income |
||||||||
Interest expense |
( |
) | ( |
) | ||||
Income before (benefit) provision for income taxes |
$ | $ | ||||||
Fiscal Quarter Ended |
||||||||
March 22, |
March 24, |
|||||||
2020 |
2019 |
|||||||
Net income available to common stockholders - basic and diluted |
$ | $ | ||||||
Basic weighted average number of shares |
||||||||
Earnings per share – basic |
$ | $ | ||||||
Diluted weighted average number of shares |
||||||||
Earnings per share – diluted |
$ | $ |
Accumulated |
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Additional |
Other |
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Common Stock |
Paid-in |
Retained |
Comprehensive |
|||||||||||||||||
Shares |
Amount |
Capital |
Deficit |
Loss |
||||||||||||||||
Balance at December 29, 2019 |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
Net income |
— |
— |
— |
— |
||||||||||||||||
Dividends declared on common stock and equivalents ($ |
— |
— |
— |
( |
) | — |
||||||||||||||
Issuance and cancellation of stock awards, net |
— |
— |
— |
— |
||||||||||||||||
Tax payments for restricted stock upon vesting |
( |
) | — |
( |
) | — |
— |
|||||||||||||
Purchases of common stock |
( |
) | ( |
) | ( |
) | ( |
) | — |
|||||||||||
Exercise of stock options |
— |
— |
||||||||||||||||||
Non-cash compensation expense |
— |
— |
— |
— |
||||||||||||||||
Adoption of ASC 326 (Note 9 ) |
— |
— |
— |
— |
||||||||||||||||
Currency translation adjustment |
— |
— |
— |
— |
( |
) | ||||||||||||||
Balance at March 22, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
Accumulated |
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Additional |
Other |
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Common Stock |
Paid-in |
Retained |
Comprehensive |
|||||||||||||||||
Shares |
Amount |
Capital |
Deficit |
Loss |
||||||||||||||||
Balance at December 30, 2018 |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
Net income |
— |
— |
— |
— |
||||||||||||||||
Dividends declared on common stock and equivalents ($ |
— |
— |
— |
( |
) | — |
||||||||||||||
Issuance and cancellation of stock awards, net |
— |
— |
— |
— |
||||||||||||||||
Tax payments for restricted stock upon vesting |
( |
) | — |
( |
) | — |
— |
|||||||||||||
Purchases of common stock |
( |
) | — |
( |
) | ( |
) | — |
||||||||||||
Exercise of stock options |
— |
— |
||||||||||||||||||
Non-cash compensation expense |
— |
— |
— |
— |
||||||||||||||||
Currency translation adjustment |
— |
— |
— |
— |
||||||||||||||||
Balance at March 24, 2019 |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
At March 22, 2020 |
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Fair Value Estimated Using |
||||||||||||||||
Carrying |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Amount |
Inputs |
Inputs |
Inputs |
|||||||||||||
Cash equivalents |
$ | $ | $ | — |
$ | — |
||||||||||
Restricted cash equivalents |
— |
— |
||||||||||||||
Investments in marketable securities |
— |
— |
||||||||||||||
Advertising fund cash equivalents, restricted |
— |
— |
At December 29, 2019 |
||||||||||||||||
Fair Value Estimated Using |
||||||||||||||||
Carrying |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Amount |
Inputs |
Inputs |
Inputs |
|||||||||||||
Cash equivalents |
$ | $ | $ | — |
$ | — |
||||||||||
Restricted cash equivalents |
— |
— |
||||||||||||||
Investments in marketable securities |
— |
— |
||||||||||||||
Advertising fund cash equivalents, restricted |
— |
— |
March 22, 2020 |
December 29, 2019 |
|||||||||||||||
Principal Amount |
Fair Value |
Principal Amount |
Fair Value |
|||||||||||||
2015 Ten-Year Fixed Rate Notes |
$ | $ | $ | $ | ||||||||||||
2017 Five-Year Fixed Rate Notes |
||||||||||||||||
2017 Ten-Year Fixed Rate Notes |
||||||||||||||||
2017 Five-Year Floating Rate Notes |
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2018 7.5-Year Fixed Rate Notes |
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2018 9.25-Year Fixed Rate Notes |
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2019 Ten-Year Fixed Rate Notes |
Fiscal Quarter Ended |
||||||||
March 22, |
March 24, |
|||||||
2020 |
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 |
$ | $ | ||||||
Fiscal Quarter Ended |
||||||||
March 22, |
March 24, |
|||||||
2020 |
2019 |
|||||||
Operating lease cost |
$ | |
$ | |
||||
Finance lease cost: |
||||||||
Amortization of right-of-use assets |
|
|
||||||
Interest on lease liabilities |
|
|
||||||
Total finance lease cost |
$ | |
$ | |
||||
March 22, |
December 29, |
|||||||
2020 |
2019 |
|||||||
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 |
$ | |
$ | |
||||
March 22, 2020 |
December 29, 2019 |
|||||||||||||||
Operating |
Finance |
Operating |
Finance |
|||||||||||||
Leases |
Leases |
Leases |
Leases |
|||||||||||||
Weighted average remaining lease term |
|
|
|
|
||||||||||||
Weighted average discount rate |
|
% | |
% | |
% | |
% |
Fiscal Quarter Ended |
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March 22, |
March 2 4 , |
|||||||
2020 |
2019 |
|||||||
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 lease obligations: |
||||||||
Operating leases |
|
|
||||||
Finance leases |
|
|
Operating |
Finance |
|||||||
Leases |
Leases |
|||||||
2020 |
$ | |
$ | |
||||
2021 |
|
|
||||||
2022 |
|
|
||||||
2023 |
|
|
||||||
2024 |
|
|
||||||
Thereafter |
|
|
||||||
Total future minimum rental commitments |
|
|
||||||
Less – amounts representing interest |
( |
) | ( |
) | ||||
Total lease liabilities |
$ | |
$ | |
||||