10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM

10-Q

(Mark One)

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

For the quarterly period ended March 28, 2021

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

For the transition period from

Commission file number:

001-32242

Domino’s Pizza, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		38-2511577
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

30 Frank Lloyd Wright Drive Ann Arbor, Michigan		48105
(Address of Principal Executive Offices)		(Zip Code)

(734)

930-3030

(Registrant’s Telephone Number, Including Area Code)

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


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Domino’s Pizza, Inc. Common Stock, $0.01 par value	DPZ	New York Stock Exchange

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ No ☒

As of April 22, 2021, Domino’s Pizza, Inc. had 38,828,393 shares of common stock, par value $0.01 per share, outstanding.

Domino’s Pizza, Inc.

TABLE OF CONTENTS


		Page No.
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements		3

	Condensed Consolidated Balance Sheets (Unaudited) – As of March 28, 2021 and January 3, 2021		3

	Condensed Consolidated Statements of Income (Unaudited) – Fiscal quarters ended March 28, 2021 and March 22, 2020		4

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) – Fiscal quarters ended March 28, 2021 and March 22, 2020		5

	Condensed Consolidated Statements of Cash Flows (Unaudited) – Fiscal quarters ended March 28, 2021 and March 22, 2020		6

	Notes to Condensed Consolidated Financial Statements (Unaudited)		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		23

Item 4.	Controls and Procedures		23

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		24

Item 1A.	Risk Factors		24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		24

Item 3.	Defaults Upon Senior Securities		24

Item 4.	Mine Safety Disclosures		24

Item 5.	Other Information		24

Item 6.	Exhibits		25

SIGNATURES			26

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Domino’s Pizza, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)


(In thousands)	March 28, 2021			January 3, 2021 (1)
Assets
Current assets:
Cash and cash equivalents	$	267,719		$	168,821
Restricted cash and cash equivalents		176,029			217,453
Accounts receivable, net		235,789			244,560
Inventories		63,775			66,683
Prepaid expenses and other		20,372			24,169
Advertising fund assets, restricted		162,118			147,698

Total current assets		925,802			869,384

Property, plant and equipment:
Land and buildings		88,468			88,063
Leasehold and other improvements		187,896			186,456
Equipment		299,287			292,456
Construction in progress		9,792			13,014

		585,443			579,989
Accumulated depreciation and amortization		(292,074	)		(282,625	)

Property, plant and equipment, net		293,369			297,364

Other assets:
Operating lease right-of-use assets		224,359			228,268
Goodwill		15,034			15,061
Capitalized software, net		84,694			81,306
Investments (Note 6)		82,500			40,000
Other assets		35,376			33,881
Deferred income taxes		1,698			1,904

Total other assets		443,661			400,420

Total assets	$	1,662,832		$	1,567,168

Liabilities and stockholders’ deficit
Current liabilities:
Current portion of long-term debt	$	2,931		$	2,855
Accounts payable		95,042			94,499
Operating lease liabilities		36,058			35,861
Insurance reserves		26,971			26,377
Dividends payable		37,140			729
Advertising fund liabilities		154,963			141,175
Other accrued liabilities		148,730			169,323

Total current liabilities		501,835			470,819

Long-term liabilities:
Long-term debt, less current portion		4,116,858			4,116,018
Operating lease liabilities		198,640			202,268
Insurance reserves		38,975			37,125
Other accrued liabilities		35,129			35,244
Deferred income taxes		7,475			6,099

Total long-term liabilities		4,397,077			4,396,754

Stockholders’ deficit:
Common stock		388			389
Additional paid-in capital		6,612			5,122
Retained deficit		(3,240,842	)		(3,303,492	)
Accumulated other comprehensive loss		(2,238	)		(2,424	)

Total stockholders’ deficit		(3,236,080	)		(3,300,405	)

Total liabilities and stockholders’ deficit	$	1,662,832		$	1,567,168

(1)	The balance sheet at January 3, 2021 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

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

Domino’s Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)


	Fiscal Quarter Ended
(In thousands, except per share data)	March 28, 2021			March 22, 2020
Revenues:
U.S. Company-owned stores	$	112,744		$	102,326
U.S. franchise royalties and fees		124,486			104,746
Supply chain		568,338			512,700
International franchise royalties and fees		66,770			57,496
U.S. franchise advertising		111,360			95,834

Total revenues		983,698			873,102

Cost of sales:
U.S. Company-owned stores		85,742			79,388
Supply chain		508,805			453,557

Total cost of sales		594,547			532,945

Operating margin		389,151			340,157

General and administrative		91,253			88,489
U.S. franchise advertising		111,360			95,834

Income from operations		186,538			155,834
Other income		2,500			—
Interest income		22			932
Interest expense		(39,422	)		(39,470	)

Income before provision (benefit) for income taxes		149,638			117,296
Provision (benefit) for income taxes		31,877			(4,306	)

Net income	$	117,761		$	121,602

Earnings per share:
Common stock - basic	$	3.04		$	3.14
Common stock - diluted		3.00			3.07

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

Domino’s Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Fiscal Quarter Ended
(In thousands)	March 28, 2021		March 22, 2020
Net income	$	117,761	$	121,602
Currency translation adjustment		186		(2,326	)

Comprehensive income	$	117,947	$	119,276

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

Domino’s Pizza, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Fiscal Quarter Ended
(In thousands)	March 28, 2021			March 22, 2020
Cash flows from operating activities:
Net income	$	117,761		$	121,602
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,465			14,032
Loss on sale/disposal of assets		161			306
Amortization of debt issuance costs		1,203			1,291
Provision for deferred income taxes		1,578			702
Non-cash equity-based compensation expense		5,204			4,914
Excess tax benefits from equity-based compensation		(914	)		(30,449	)
Provision for losses on accounts and notes receivable		180			1,589
Unrealized gain on investments		(2,500	)		—
Changes in operating assets and liabilities		(1,634	)		(23,119	)
Changes in advertising fund assets and liabilities, restricted		15,347			4,490

Net cash provided by operating activities		152,851			95,358

Cash flows from investing activities:
Capital expenditures		(16,561	)		(17,467	)
Purchase of investments (Note 6)		(40,000	)		—
Other		121			(426	)

Net cash used in investing activities		(56,440	)		(17,893	)

Cash flows from financing activities:
Repayments of long-term debt and finance lease obligations		(704	)		(10,849	)
Proceeds from exercise of stock options		3,693			10,105
Purchases of common stock		(25,000	)		(79,590	)
Tax payments for restricted stock upon vesting		(1,044	)		(1,796	)
Payments of common stock dividends and equivalents		(64	)		(80	)
Other		—			152

Net cash used in financing activities		(23,119	)		(82,058	)

Effect of exchange rate changes on cash		161			(961	)

Change in cash and cash equivalents, restricted cash and cash equivalents		73,453			(5,554	)

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

Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, beginning of period		502,146			483,924

Cash and cash equivalents, end of period		267,719			200,801
Restricted cash and cash equivalents, end of period		176,029			189,370
Cash and cash equivalents included in advertising fund assets, restricted, end of period		131,851			88,199

Cash and cash equivalents, restricted cash and cash equivalents and cash and cash equivalents included in advertising fund assets, restricted, end of period	$	575,599		$	478,370

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

Domino’s Pizza, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited; tabular amounts in thousands, except percentages, share and per share amounts)

March 28, 2021

1. Basis of Presentation and Updates to Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form

10-Q

and Rule

10-01

of Regulation

S-X.

Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. For further information, refer to the consolidated financial statements and footnotes for the fiscal year ended January 3, 2021 included in the Company’s 2020 Annual Report on Form

10-K,

filed with the Securities and Exchange Commission on February 25, 2021 (the “2020 Form

10-K”).

In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair statement have been included. Operating results for the fiscal quarter ended March 28, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending January 2, 2022.

2. Segment Information

The following table summarizes revenues and earnings before interest, taxes, depreciation, amortization and other, which is the measure by which the Company allocates resources to its segments and which the Company refers to as Segment Income, for each of its reportable segments. Intersegment revenues are comprised of sales of food, equipment and supplies from the supply chain segment to the Company-owned stores in the U.S. stores segment. Intersegment sales prices are market based. The “Other” column as it relates to Segment Income below primarily includes corporate administrative costs that are not allocable to a reportable segment, including labor, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs.


	Fiscal Quarters Ended March 28, 2021 and March 22, 2020
	U.S. Stores		Supply Chain		International Franchise		Intersegment Revenues			Other			Total
Revenues
2021	$	348,590	$	599,177	$	66,770	$	(30,839	)	$	—		$	983,698
2020		302,906		541,639		57,496		(28,939	)		—			873,102
Segment Income
2021	$	107,436	$	52,552	$	54,468		N/A		$	(6,088	)	$	208,368
2020		88,277		51,437		43,504		N/A			(8,132	)		175,086

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


	Fiscal Quarter Ended
	March 28, 2021			March 22, 2020
Total Segment Income	$	208,368		$	175,086
Depreciation and amortization		(16,465	)		(14,032	)
Loss on sale/disposal of assets		(161	)		(306	)
Non-cash equity-based compensation expense		(5,204	)		(4,914	)

Income from operations		186,538			155,834
Other income		2,500			—
Interest income		22			932
Interest expense		(39,422	)		(39,470	)

Income before provision (benefit) for income taxes	$	149,638		$	117,296

3. Earnings Per Share


	Fiscal Quarter Ended
	March 28, 2021		March 22, 2020
Net income available to common stockholders - basic and diluted	$	117,761	$	121,602

Basic weighted average number of shares		38,700,225		38,665,924
Earnings per share – basic	$	3.04	$	3.14
Diluted weighted average number of shares		39,208,383		39,633,404
Earnings per share – diluted	$	3.00	$	3.07

The denominator used in calculating diluted earnings per share for the first quarter of 2021 does not include 51,490 options to purchase common stock as the effect of including these options would have been anti-dilutive. The denominator used in calculating diluted earnings per share for the first quarter of 2021 does not include 65,967 restricted performance shares, as the performance targets for these awards had not yet been met.

The denominator used in calculating diluted earnings per share for the first quarter of 2020 does not include 128,280 options to purchase common stock as the effect of including these options would have been anti-dilutive. The denominator used in calculating diluted earnings per share for the first quarter of 2020 does not include 84,765 restricted performance shares, as the performance targets for these awards had not yet been met.

4. Stockholders’ Deficit

The following table summarizes changes in stockholders’ deficit for the first quarter of 2021.


	Common Stock						Additional Paid-in			Retained			Accumulated Other Comprehensive
	Shares			Amount			Capital			Deficit			Loss
Balance at January 3, 2021		38,868,350		$	389		$	5,122		$	(3,303,492	)	$	(2,424	)
Net income		—			—			—			117,761			—
Dividends declared on common stock and equivalents ($0.94 per share)		—			—			—			(36,475	)		—
Issuance and cancellation of stock awards, net		(2,755	)		—			—			—			—
Tax payments for restricted stock upon vesting		(2,791	)		—			(1,044	)		—			—
Purchases of common stock		(65,870	)		(1	)		(6,363	)		(18,636	)		—
Exercise of stock options		21,263			—			3,693			—			—
Non-cash equity-based compensation expense		—			—			5,204			—			—
Currency translation adjustment		—			—			—			—			186

Balance at March 28, 2021		38,818,197		$	388		$	6,612		$	(3,240,842	)	$	(2,238	)

Subsequent to the first quarter, on April 27, 2021, the Company’s Board of Directors declared a $0.94 per share quarterly dividend on its outstanding common stock for shareholders of record as of June 15, 2021

to be paid on June 30, 2021.

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


	Common Stock						Additional Paid-in			Retained			Accumulated Other Comprehensive
	Shares			Amount			Capital			Deficit			Loss
Balance at December 29, 2019		38,934,009		$	389		$	243		$	(3,412,649	)	$	(3,742	)
Net income		—			—			—			121,602			—
Dividends declared on common stock and equivalents ($0.78 per share)		—			—			—			(30,442	)		—
Issuance and cancellation of stock awards, net		1,645			—			—			—			—
Tax payments for restricted stock upon vesting		(5,929	)		—			(1,796	)		—			—
Purchases of common stock		(271,064	)		(3	)		(988	)		(78,599	)		—
Exercise of stock options		380,938			4			10,101			—			—
Non-cash equity-based compensation expense		—			—			4,914			—			—
Adoption of credit losses standard		—			—			—			1,102			—
Currency translation adjustment		—			—			—			—			(2,326	)

Balance at March 22, 2020		39,039,599		$	390		$	12,474		$	(3,398,986	)	$	(6,068	)

5. Recapitalization

Subsequent to the end of the first quarter of 2021, on April 16, 2021 (the “closing date”), the Company completed a recapitalization (the “2021 Recapitalization”) in which certain of the Company’s subsidiaries issued new notes pursuant to an asset-backed securitization. The new notes consist of

850.0

million Series

2021-1

2.662

% Fixed Rate Senior Secured Notes,

Class A-2-I

with an anticipated term of

7.5

years (the “

2021

A-2-I

Fixed Rate Notes”), and $

1.0

billion Series

2021-1

3.151

% Fixed Rate Senior Secured Notes,

Class A-2-II

with an anticipated term of

years (the “

2021

A-2-II

Fixed Rate Notes” and, collectively with the

2021

A-2-I

Fixed Rate Notes, the “

2021

Notes”) in an offering exempt from registration under the Securities Act of

1933

, as amended. The

2021

Notes have scheduled principal payments of $

9.3

million in

2021

, $

18.5

million in each of

2022

through

2027

, $

804.8

million in

2028

, $

10.0

million in each of

2029

and

2030

and $

905.0

million in

2031

. Gross proceeds from the issuance of the

2021

Notes were $

1.85

billion.

Concurrently, certain of the Company’s subsidiaries also issued a new variable funding note facility which allows for advances of up to

200.0

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

A portion of proceeds from the

2021

Recapitalization was used to repay the remaining $

291.0

million in outstanding principal under the Company’s

2017

five-year floating

rate notes and $

582.0

million in outstanding principal under the Company’s

2017

five

-year fixed rate notes, prefund a portion of the interest payable on the

2021

Notes and pay transaction fees and expenses. In connection with the repayment of the

2017

five-year floating

rate notes and

2017

five

-year fixed rate notes, the Company expensed approximately $

2.0

million for the remaining unamortized debt issuance costs associated with these notes. Additionally, in connection with the

2021

Recapitalization, the Company capitalized $

14.9

million of debt issuance costs, which are being amortized into interest expense over the

7.5

and

10-year

expected terms of the

2021

Notes.

As of the first quarter of

2021

and the fourth quarter of

2020

, the Company had a leverage ratio of less than

5.0

and accordingly, did not make the previously scheduled debt amortization payment for its then outstanding notes beginning in the first quarter of 2021. Accordingly, all principal amounts of the Company’s outstanding notes have been classified as long-term debt in the consolidated balance sheet as of March 28, 2021 and January 3, 2021. Subsequent to the closing of the 2021 Recapitalization, the Company had a leverage ratio of greater than

5.0

x and, accordingly, the Company resumed making the scheduled amortization payments on its notes in the second quarter of

2021

6. Fair Value Measurements

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

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Fair Value of Cash Equivalents and Investments

The fair values of the Company’s cash equivalents and investments in marketable securities are based on quoted prices in active markets for identical assets. The fair value of the Company’s Level 3 investment is not readily determinable. The fair value represents its cost with adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investment of the same issuer or impairments. The following tables summarize the carrying amounts and fair values of certain assets at March 28, 2021 and January 3, 2021:


	At March 28, 2021
			Fair Value Estimated Using
	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Cash equivalents	$	194,325	$	194,325	$	—	$	—
Restricted cash equivalents		104,232		104,232		—		—
Investments in marketable securities		13,384		13,384		—		—
Advertising fund cash equivalents, restricted		113,384		113,384		—		—
Investments		82,500		—		—		82,500


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

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

non-controlling

interest in Dash Brands Ltd., a privately-held business company limited by shares incorporated with limited liability under the laws of the British Virgin Islands (“Dash Brands”), for $40.0 million. Through its subsidiaries, Dash Brands serves as the Company’s master franchisee in China that owns and 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.

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

achievement of certain preestablished performance conditions.

In the first quarter of 2021, the Company recorded a positive adjustment of $2.5 million to the original carrying amount of $40.0 million resulting from the observable change in price from the valuation of the

additional investment. This amount was recorded in other income in the Company’s condensed consolidated statements of income.

The following table summarizes the reconciliation of the carrying amount of the Company’s investment in Dash Brands from the opening balance at January 3, 2021 to the closing balance at March 28, 2021.


	First Quarter of 2021
	Carrying Amount						Carrying Amount
	January 3, 2021		Purchases		Unrealized Gain		March 28, 2021
Investments	$	40,000	$	40,000	$	2,500	$	82,500

Fair Value of Debt

The estimated fair values of the Company’s fixed and floating rate notes are classified as Level 2 measurements, as the Company estimates the fair value amount by using available market information. The Company obtained quotes from two separate brokerage firms that are knowledgeable about the Company’s fixed and floating rate notes and, at times, trade these notes. The Company also performed its own internal analysis based on the information gathered from public markets, including information on notes that are similar to those of the Company. However, considerable judgment is required to interpret market data to estimate fair value. Accordingly, the fair value estimates presented are not necessarily indicative of the amount that the Company or the debtholders could realize in a current market exchange. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair values stated above.

Management estimated the approximate fair values of the 2015 fixed rate notes, the 2017 fixed and floating rate notes, the 2018 fixed rate notes and the 2019 fixed rate notes as follows:


	March 28, 2021				January 3, 2021
	Principal Amount		Fair Value		Principal Amount		Fair Value
2015 Ten-Year Fixed Rate Notes	$	766,000	$	808,896	$	766,000	$	809,662
2017 Five-Year Fixed Rate Notes		582,000		583,164		582,000		582,582
2017 Ten-Year Fixed Rate Notes		970,000		1,034,020		970,000		1,035,960
2017 Five-Year Floating Rate Notes		291,000		291,291		291,000		291,000
2018 7.5-Year Fixed Rate Notes		415,438		436,625		415,438		437,456
2018 9.25-Year Fixed Rate Notes		391,000		422,671		391,000		422,280
2019 Ten-Year Fixed Rate Notes		668,250		703,667		668,250		712,355

The Company’s variable funding notes are a variable rate loan, and the fair value of this loan approximates book value based on the borrowing rates currently available for variable rate loans obtained from third party lending institutions. This fair value represents a Level 2 measurement. The Company did not have any outstanding borrowings under its variable funding notes at March 28, 2021 or January 3, 2021.

7. Revenue Disclosures

Contract Liabilities

Contract liabilities primarily consist of deferred franchise fees and deferred development fees. Changes in deferred franchise fees and deferred development fees for the first quarter of 2021 and the first quarter of 2020 were as follows:


	Fiscal Quarter Ended
	March 28, 2021			March 22, 2020
Deferred franchise fees and deferred development fees at beginning of period	$	19,090		$	20,463
Revenue recognized during the period		(1,390	)		(1,417	)
New deferrals due to cash received and other		803			724

Deferred franchise fees and deferred development fees at end of period	$	18,503		$	19,770

Advertising Fund Assets

As of March 28, 2021, advertising fund assets, restricted of $162.1 million consisted of $131.9 million of cash and cash equivalents, $28.8 million of accounts receivable and $1.4 million of prepaid expenses. As of March 28, 2021, advertising fund cash and cash equivalents included $7.2

million of cash contributed from U.S. Company-owned stores that had not yet been expended.

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

8. Leases

The Company leases certai

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

The components of operating and finance lease cost for the first quarter of 2021 and the first quarter of 2020 were as follows:


		Fiscal Quarter Ended
		March 28, 2021				March 22, 2020

SEC Form 10-Q filed by Domino&#39;s Pizza Inc

SEC Form 10-Q filed by Domino's Pizza Inc