Document and Entity Information
Document and Entity Information - shares | 8 Months Ended | |
Sep. 11, 2016 | Oct. 11, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 11, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | DPZ | |
Entity Registrant Name | DOMINOS PIZZA INC | |
Entity Central Index Key | 1,286,681 | |
Current Fiscal Year End Date | --01-03 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,078,847 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 11, 2016 | Jan. 03, 2016 | [1] |
Current assets: | |||
Cash and cash equivalents | $ 29,981 | $ 133,449 | |
Restricted cash and cash equivalents | 123,569 | 180,940 | |
Accounts receivable | 138,107 | 131,582 | |
Inventories | 38,834 | 36,861 | |
Prepaid expenses and other | 26,865 | 20,646 | |
Advertising fund assets, restricted | 115,234 | 99,159 | |
Total current assets | 472,590 | 602,637 | |
Property, plant and equipment: | |||
Land and buildings | 29,105 | 29,064 | |
Leasehold and other improvements | 116,893 | 111,071 | |
Equipment | 197,107 | 186,405 | |
Construction in progress | 6,409 | 9,633 | |
Property, plant and equipment, Gross, Total | 349,514 | 336,173 | |
Accumulated depreciation and amortization | (216,913) | (204,283) | |
Property, plant and equipment, net | 132,601 | 131,890 | |
Other assets: | |||
Goodwill | 16,097 | 16,097 | |
Capitalized software | 36,028 | 28,505 | |
Other assets | 16,467 | 14,851 | |
Deferred income taxes | 2,824 | 5,865 | |
Total other assets | 71,416 | 65,318 | |
Total assets | 676,607 | 799,845 | |
Current liabilities: | |||
Current portion of long-term debt | 73,877 | 59,333 | |
Accounts payable | 103,994 | 106,927 | |
Dividends payable | 18,547 | 557 | |
Insurance reserves | 18,371 | 17,597 | |
Advertising fund liabilities | 115,234 | 99,159 | |
Other accrued liabilities | 80,494 | 92,410 | |
Total current liabilities | 410,517 | 375,983 | |
Long-term liabilities: | |||
Long-term debt, less current portion | 2,156,884 | 2,181,460 | |
Insurance reserves | 24,629 | 23,314 | |
Other accrued liabilities | 20,723 | 19,339 | |
Total long-term liabilities | 2,202,236 | 2,224,113 | |
Stockholders' deficit: | |||
Common stock | 481 | 498 | |
Additional paid-in capital | 138 | 6,942 | |
Retained deficit | (1,934,177) | (1,804,143) | |
Accumulated other comprehensive loss | (2,588) | (3,548) | |
Total stockholders' deficit | (1,936,146) | (1,800,251) | |
Total liabilities and stockholders' deficit | $ 676,607 | $ 799,845 | |
[1] | The balance sheet at January 3, 2016 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. |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 11, 2016 | Sep. 06, 2015 | Sep. 11, 2016 | Sep. 06, 2015 | |
Revenues: | ||||
Revenue | $ 566,677 | $ 484,696 | $ 1,653,193 | $ 1,475,345 |
Cost of sales: | ||||
Cost of sales | 392,774 | 342,742 | 1,140,236 | 1,023,653 |
Operating margin | 173,903 | 141,954 | 512,957 | 451,692 |
General and administrative | 72,992 | 61,411 | 209,632 | 184,665 |
Income from operations | 100,911 | 80,543 | 303,325 | 267,027 |
Interest income | 83 | 64 | 556 | 203 |
Interest expense | (25,180) | (19,979) | (76,533) | (59,142) |
Income before provision for income taxes | 75,814 | 60,628 | 227,348 | 208,088 |
Provision for income taxes | 28,582 | 22,796 | 85,403 | 78,058 |
Net income | $ 47,232 | $ 37,832 | $ 141,945 | $ 130,030 |
Earnings per share: | ||||
Common stock - basic | $ 0.98 | $ 0.69 | $ 2.90 | $ 2.37 |
Common stock - diluted | 0.96 | 0.67 | 2.82 | 2.30 |
Dividends declared per share | $ 0.38 | $ 0.31 | $ 1.14 | $ 0.93 |
Domestic Stores [Member] | Domestic Company Owned Stores [Member] | ||||
Revenues: | ||||
Revenue | $ 100,966 | $ 86,456 | $ 295,243 | $ 267,625 |
Cost of sales: | ||||
Cost of sales | 77,221 | 70,032 | 223,771 | 204,266 |
Domestic Stores [Member] | Domestic Franchise [Member] | ||||
Revenues: | ||||
Revenue | 70,637 | 59,385 | 208,463 | 181,986 |
Supply Chain [Member] | ||||
Revenues: | ||||
Revenue | 355,036 | 303,591 | 1,029,990 | 918,150 |
Cost of sales: | ||||
Cost of sales | 315,553 | 272,710 | 916,465 | 819,387 |
International Franchise [Member] | ||||
Revenues: | ||||
Revenue | $ 40,038 | $ 35,264 | $ 119,497 | $ 107,584 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 11, 2016 | Sep. 06, 2015 | Sep. 11, 2016 | Sep. 06, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 47,232 | $ 37,832 | $ 141,945 | $ 130,030 |
Other comprehensive income (loss), before tax: | ||||
Currency translation adjustment | (186) | (961) | 927 | (1,694) |
Tax attributes of items in other comprehensive income (loss): | ||||
Currency translation adjustment | 173 | 409 | 33 | 874 |
Other comprehensive income (loss), net of tax | (13) | (552) | 960 | (820) |
Comprehensive income | $ 47,219 | $ 37,280 | $ 142,905 | $ 129,210 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 8 Months Ended | ||
Sep. 11, 2016 | Sep. 06, 2015 | ||
Cash flows from operating activities: | |||
Net income | $ 141,945 | $ 130,030 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 25,460 | 22,695 | |
Loss (gain) on sale/disposal of assets | 473 | (73) | |
Amortization of debt issuance costs | 4,562 | 3,825 | |
Provision for deferred income taxes | 2,657 | 959 | |
Non-cash compensation expense | 12,344 | 11,188 | |
Tax impact from equity-based compensation | (41,479) | (15,745) | |
Other | (406) | (1,216) | |
Changes in operating assets and liabilities | 17,061 | 15,645 | |
Net cash provided by operating activities | 162,617 | 167,308 | |
Cash flows from investing activities: | |||
Capital expenditures | (38,254) | (33,834) | |
Proceeds from sale of assets | 4,658 | 10,464 | |
Changes in restricted cash | 57,371 | 29,933 | |
Other | (1,669) | 1,304 | |
Net cash provided by investing activities | 22,106 | 7,867 | |
Cash flows from financing activities: | |||
Proceeds from issuance of long-term debt | 63,000 | 5,000 | |
Repayments of long-term debt and capital lease obligations | (77,592) | (5,198) | |
Proceeds from exercise of stock options | 12,324 | 4,459 | |
Tax impact from equity-based compensation | 41,479 | 15,745 | |
Purchases of common stock | (283,858) | (138,550) | |
Tax payments for restricted stock upon vesting | (5,605) | (7,442) | |
Payments of common stock dividends and equivalents | (37,548) | (48,141) | |
Net cash used in financing activities | (287,800) | (174,127) | |
Effect of exchange rate changes on cash and cash equivalents | (391) | 603 | |
Change in cash and cash equivalents | (103,468) | 1,651 | |
Cash and cash equivalents, at beginning of period | 133,449 | [1] | 30,855 |
Cash and cash equivalents, at end of period | $ 29,981 | $ 32,506 | |
[1] | The balance sheet at January 3, 2016 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. |
Basis of Presentation
Basis of Presentation | 8 Months Ended |
Sep. 11, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. Basis of Presentation 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, 2016 included in our annual report on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair statement have been included. Operating results for the fiscal quarter ended September 11, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending January 1, 2017. |
Segment Information
Segment Information | 8 Months Ended |
Sep. 11, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | 2. Segment Information The following table summarizes revenues, income from operations and earnings before interest, taxes, depreciation, amortization and other, which is the measure by which the Company allocates resources to its segments and which we refer to as Segment Income, for each of our reportable segments. Fiscal Quarters Ended September 11, 2016 and September 6, 2015 Domestic Supply International Intersegment Stores Chain Franchise Revenues Other Total Revenues 2016 $ 171,603 $ 383,719 $ 40,038 $ (28,683 ) $ — $ 566,677 2015 145,841 327,885 35,264 (24,294 ) — 484,696 Income from operations 2016 $ 59,251 $ 31,401 $ 31,036 N/A $ (20,777 ) $ 100,911 2015 45,482 23,729 27,922 N/A (16,590 ) 80,543 Segment Income 2016 $ 61,683 $ 33,756 $ 31,100 N/A $ (12,971 ) $ 113,568 2015 47,566 26,061 27,954 N/A (9,760 ) 91,821 Three Fiscal Quarters Ended September 11, 2016 and September 6, 2015 Domestic Supply International Intersegment Stores Chain Franchise Revenues Other Total Revenues 2016 $ 503,706 $ 1,114,096 $ 119,497 $ (84,106 ) $ — $ 1,653,193 2015 449,611 993,015 107,584 (74,865 ) — 1,475,345 Income from operations 2016 $ 176,401 $ 89,044 $ 92,981 N/A $ (55,101 ) $ 303,325 2015 153,732 76,937 86,205 N/A (49,847 ) 267,027 Segment Income 2016 $ 183,088 $ 96,110 $ 93,110 N/A $ (30,706 ) $ 341,602 2015 159,118 83,832 86,211 N/A (28,324 ) 300,837 The following table reconciles Total Segment Income to consolidated income before provision for income taxes. Fiscal Quarter Ended Three Fiscal Quarters Ended September 11, September 6, September 11, September 6, 2016 2015 2016 2015 Total Segment Income $ 113,568 $ 91,821 $ 341,602 $ 300,837 Depreciation and amortization (8,704 ) (7,667 ) (25,460 ) (22,695 ) (Loss) gain on sale/disposal of assets (226 ) (199 ) (473 ) 73 Non-cash compensation expense (3,727 ) (3,412 ) (12,344 ) (11,188 ) Income from operations 100,911 80,543 303,325 267,027 Interest income 83 64 556 203 Interest expense (25,180 ) (19,979 ) (76,533 ) (59,142 ) Income before provision for income taxes $ 75,814 $ 60,628 $ 227,348 $ 208,088 |
Earnings Per Share
Earnings Per Share | 8 Months Ended |
Sep. 11, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 3. Earnings Per Share Fiscal Quarter Ended Three Fiscal Quarters Ended September 11, September 6, September 11, September 6, 2016 2015 2016 2015 Net income available to common stockholders - basic and diluted $ 47,232 $ 37,832 $ 141,945 $ 130,030 Basic weighted average number of shares 48,043,379 54,463,073 48,984,734 54,834,627 Earnings per share - basic $ 0.98 $ 0.69 $ 2.90 $ 2.37 Diluted weighted average number of shares 49,242,182 56,115,670 50,309,217 56,584,913 Earnings per share - diluted $ 0.96 $ 0.67 $ 2.82 $ 2.30 The denominators used in calculating diluted earnings per share for common stock for the third quarter of 2016 and three fiscal quarters of 2016 do not include 95,475 and 306,855 options to purchase common stock, respectively, as the effect of including these options would have been anti-dilutive. The denominators used in calculating diluted earnings per share for the third quarter of 2016 and three fiscal quarters of 2016 do not include 58,030 and 84,320 restricted performance shares, respectively, as the effect of including these shares would have been anti-dilutive. The denominators used in calculating diluted earnings per share for common stock for both the third quarter and three fiscal quarters of 2015 do not include 188,080 options to purchase common stock, as the effect of including these options would have been anti-dilutive. The denominators used in calculating diluted earnings per share for the third quarter of 2015 and three fiscal quarters of 2015 do not include 60,770 and 65,840 restricted performance shares, respectively, as the effect of including these shares would have been anti-dilutive. |
Stockholders' Deficit
Stockholders' Deficit | 8 Months Ended |
Sep. 11, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stockholders' Deficit | 4. Stockholders’ Deficit The following table summarizes changes in Stockholders’ Deficit for the three fiscal quarters of 2016. Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Amount Capital Deficit Loss Balance at January 3, 2016 49,838,221 $ 498 $ 6,942 $ (1,804,143 ) $ (3,548 ) Net income — — — 141,945 — Common stock dividends and equivalents — — — (55,511 ) — Issuance of common stock, net 74,331 1 — — — Tax payments for restricted stock upon vesting (47,252 ) — (5,605 ) — — Purchases of common stock (2,714,322 ) (27 ) (67,363 ) (216,468 ) — Exercise of stock options 926,390 9 12,315 — — Tax impact from equity-based compensation — — 41,479 — — Non-cash compensation expense — — 12,344 — — Other — — 26 — — Currency translation adjustment, net of tax — — — — 960 Balance at September 11, 2016 48,077,368 $ 481 $ 138 $ (1,934,177 ) $ (2,588 ) On March 14, 2016, the Company received and retired 456,936 shares of its common stock in connection with the final settlement of its previously announced $600.0 million accelerated share repurchase (“ASR”) program. At the commencement of the program, in the fourth quarter of 2015, the Company paid $600.0 million to a counterparty and received and retired a portion of the shares from the ASR program, based on the terms of the related ASR agreement. |
Dividends
Dividends | 8 Months Ended |
Sep. 11, 2016 | |
Statement of Stockholders' Equity [Abstract] | |
Dividends | 5. Dividends During the third quarter of 2016, on July 20, 2016, the Company’s Board of Directors declared a $0.38 per share quarterly dividend on its outstanding common stock for shareholders of record as of September 15, 2016 which was paid on September 30, 2016. The Company had approximately $18.5 million accrued for common stock dividends at September 11, 2016. Subsequent to the third quarter, on October 14, 2016, the Company’s Board of Directors declared a $0.38 per share quarterly dividend on its outstanding common stock for shareholders of record as of December 15, 2016 to be paid on December 30, 2016. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 8 Months Ended |
Sep. 11, 2016 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | 6. Accumulated Other Comprehensive Loss The approximately $2.6 million of accumulated other comprehensive loss at September 11, 2016 and the approximately $3.5 million of accumulated other comprehensive loss at January 3, 2016 represent currency translation adjustments, net of tax. There were no reclassifications out of accumulated other comprehensive loss to net income in the three fiscal quarters of 2016 or the three fiscal quarters of 2015. |
Open Market Share Repurchase Pr
Open Market Share Repurchase Program | 8 Months Ended |
Sep. 11, 2016 | |
Equity [Abstract] | |
Open Market Share Repurchase Program | 7. Open Market Share Repurchase Program During the first quarter of 2016, the Company received and retired 456,936 shares of its common stock in connection with the final settlement of its previously announced $600.0 million ASR program. During the third quarter of 2016, the Company repurchased and retired 412,260 shares of its common stock under its Board of Directors approved open market share repurchase program for a total of approximately $59.7 million. During the three fiscal quarters of 2016, the Company received and retired 456,936 shares of its common stock in connection with its ASR program and repurchased and retired 2,257,386 shares of its common stock for approximately $283.9 million. As of September 11, 2016, the end of the third quarter, the Company had a total remaining authorized amount for share repurchases of approximately $165.5 million. During the third quarter of 2015, the Company repurchased and retired 365,460 shares of its common stock for approximately $40.9 million; during the three fiscal quarters of 2015, the Company repurchased and retired 1,293,924 shares of its common stock for approximately $138.6 million. |
Fair Value Measurements
Fair Value Measurements | 8 Months Ended |
Sep. 11, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 8. 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 following tables summarize the carrying amounts and fair values of certain assets at September 11, 2016 and January 3, 2016: At September 11, 2016 Fair Value Estimated Using Carrying Level 1 Level 2 Level 3 Amount Inputs Inputs Inputs Cash equivalents $ 12,051 $ 12,051 $ — $ — Restricted cash equivalents 69,451 69,451 — — Investments in marketable securities 7,558 7,558 — — At January 3, 2016 Fair Value Estimated Using Carrying Level 1 Level 2 Level 3 Amount Inputs Inputs Inputs Cash equivalents $ 108,766 $ 108,766 $ — $ — Restricted cash equivalents 128,554 128,554 — — Investments in marketable securities 6,054 6,054 — — At September 11, 2016, management estimates that the approximately $923.0 million in principal amount of outstanding fixed rate notes from its 2012 recapitalization had a fair value of approximately $945.2 million; and at January 3, 2016, management estimates that the approximately $962.7 million in principal amount of outstanding fixed rate notes from its 2012 recapitalization had a fair value of approximately $991.6 million. At September 11, 2016, management estimates that the $496.3 million in principal amount of outstanding five-year fixed rate notes from its 2015 recapitalization had a fair value of approximately $501.2 million; and at January 3, 2016, management estimates that the $500.0 million in principal amount of outstanding five-year fixed rate notes from its 2015 recapitalization had a fair value of approximately $489.5 million. At September 11, 2016, management estimates that the $794.0 million in principal amount of outstanding ten-year fixed rate notes from its 2015 recapitalization had a fair value of approximately $801.1 million; and at January 3, 2016, management estimates that the $800.0 million in principal amount of outstanding ten-year fixed rate notes from its 2015 recapitalization had a fair value of approximately $781.6 million. The fixed rate notes are classified as a Level 2 measurement, 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 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. |
Legal Matters
Legal Matters | 8 Months Ended |
Sep. 11, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters | 9. Legal Matters 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 jury returned a $10.1 million judgment for the plaintiff where the Company and Mr. Kidd were found to be 90% liable (after certain offsets and other deductions the final verdict was $8.9 million). In the second quarter of 2016, the trial court ruled on all post-judgment motions and entered the judgment. The Company denies liability and in the third quarter of 2016 filed an appeal of the verdict on a variety of grounds. On September 11, 2012, Domino’s Pizza LLC was named as a defendant in a lawsuit along with MAC Pizza Management, Inc., a large franchisee, and Joshua Balka, the franchisee’s delivery driver, filed by Raghurami Reddy, the plaintiff. The case involved a traffic accident in which the franchisee’s delivery driver collided with another vehicle, where the driver of the other vehicle sustained head injuries and the passenger of the other vehicle sustained fatal injuries. The jury delivered a $32.0 million judgment for the plaintiff where the Company was found to be 60% liable. The Company denied liability and filed an appeal of the verdict on a variety of grounds. In the first quarter of 2015, the appellate court reversed the trial court’s decision and dismissed the claims against the Company. The plaintiff filed a Petition for Review with the Supreme Court of the State of Texas. The Company filed opposition to the writ of review and asserted that the claims were appropriately dismissed by the Court of Appeals of the State of Texas. In the second quarter of 2016, the Texas Supreme Court rejected the plaintiffs’ writ of certiorari, leaving the appellate court’s favorable decision to stand. During the fourth quarter of 2016, the Plaintiff filed a petition for writ of certiorari with the U.S. Supreme Court. The Company continues to assert that the claims were appropriately dismissed by the Court of Appeals of the State of Texas. |
Supplemental Disclosures of Cas
Supplemental Disclosures of Cash Flow Information | 8 Months Ended |
Sep. 11, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Disclosures of Cash Flow Information | 10. Supplemental Disclosures of Cash Flow Information The Company had non-cash investing activities related to accruals for capital expenditures of $0.5 million at September 11, 2016 and $1.0 million at September 6, 2015. During the first quarter of 2015, the Company renewed the capital lease of a supply chain center building and extended the term of the lease through August 2028. As a result of the new lease, the Company recorded non-cash financing activities of $3.4 million for the increase in capital lease assets and liabilities during the first quarter of 2015. During the third quarter of 2015, the Company entered into a capital lease for a Company-owned store. As a result, the Company recorded non-cash financing activities of $0.6 million for the increase in capital lease assets and liabilities during the third quarter of 2015. |
New Accounting Pronouncements
New Accounting Pronouncements | 8 Months Ended |
Sep. 11, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | 11. New Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2016-02, Leases (Topic 842) In March 2016, the FASB issued ASU 2016-04, Liabilities – Extinguishment of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products Revenues from Contracts with Customers In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting Revenue from Contracts with Customers (Topic 606) The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. ASU 2016-10 clarifies the following two aspects of ASU 2014-09: identifying performance obligations and licensing implementation guidance. ASU 2016-11 rescinds several SEC Staff Announcements that are codified in Topic 605, including, among other items, guidance relating to accounting for consideration given by a vendor to a customer, as well as accounting for shipping and handling fees and freight services. ASU 2016-12 provides clarification to Topic 606 on how to assess collectability, present sales tax, treat noncash consideration, and account for completed and modified contracts at the time of transition. In addition, ASU 2016-12 clarifies that an entity retrospectively applying the guidance in Topic 606 is not required to disclose the effect of the accounting change in the period of adoption. The effective date and transition requirements for these amendments are the same as the effective date and transition requirements of ASU 2014-09, which is effective for fiscal years, and for interim periods within those years, beginning after December 15, 2017. The Company is currently assessing the impact of these ASUs on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments |
Segment Information (Tables)
Segment Information (Tables) | 8 Months Ended |
Sep. 11, 2016 | |
Segment Reporting [Abstract] | |
Revenues, Income from Operations and Earnings Before Interest, Taxes, Depreciation, Amortization and Other, for each of Reportable Segments | The following table summarizes revenues, income from operations and earnings before interest, taxes, depreciation, amortization and other, which is the measure by which the Company allocates resources to its segments and which we refer to as Segment Income, for each of our reportable segments. Fiscal Quarters Ended September 11, 2016 and September 6, 2015 Domestic Supply International Intersegment Stores Chain Franchise Revenues Other Total Revenues 2016 $ 171,603 $ 383,719 $ 40,038 $ (28,683 ) $ — $ 566,677 2015 145,841 327,885 35,264 (24,294 ) — 484,696 Income from operations 2016 $ 59,251 $ 31,401 $ 31,036 N/A $ (20,777 ) $ 100,911 2015 45,482 23,729 27,922 N/A (16,590 ) 80,543 Segment Income 2016 $ 61,683 $ 33,756 $ 31,100 N/A $ (12,971 ) $ 113,568 2015 47,566 26,061 27,954 N/A (9,760 ) 91,821 Three Fiscal Quarters Ended September 11, 2016 and September 6, 2015 Domestic Supply International Intersegment Stores Chain Franchise Revenues Other Total Revenues 2016 $ 503,706 $ 1,114,096 $ 119,497 $ (84,106 ) $ — $ 1,653,193 2015 449,611 993,015 107,584 (74,865 ) — 1,475,345 Income from operations 2016 $ 176,401 $ 89,044 $ 92,981 N/A $ (55,101 ) $ 303,325 2015 153,732 76,937 86,205 N/A (49,847 ) 267,027 Segment Income 2016 $ 183,088 $ 96,110 $ 93,110 N/A $ (30,706 ) $ 341,602 2015 159,118 83,832 86,211 N/A (28,324 ) 300,837 |
Reconciliation of Total Segment Income to Consolidated Income Before Provision for Income Taxes | The following table reconciles Total Segment Income to consolidated income before provision for income taxes. Fiscal Quarter Ended Three Fiscal Quarters Ended September 11, September 6, September 11, September 6, 2016 2015 2016 2015 Total Segment Income $ 113,568 $ 91,821 $ 341,602 $ 300,837 Depreciation and amortization (8,704 ) (7,667 ) (25,460 ) (22,695 ) (Loss) gain on sale/disposal of assets (226 ) (199 ) (473 ) 73 Non-cash compensation expense (3,727 ) (3,412 ) (12,344 ) (11,188 ) Income from operations 100,911 80,543 303,325 267,027 Interest income 83 64 556 203 Interest expense (25,180 ) (19,979 ) (76,533 ) (59,142 ) Income before provision for income taxes $ 75,814 $ 60,628 $ 227,348 $ 208,088 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 8 Months Ended |
Sep. 11, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Fiscal Quarter Ended Three Fiscal Quarters Ended September 11, September 6, September 11, September 6, 2016 2015 2016 2015 Net income available to common stockholders - basic and diluted $ 47,232 $ 37,832 $ 141,945 $ 130,030 Basic weighted average number of shares 48,043,379 54,463,073 48,984,734 54,834,627 Earnings per share - basic $ 0.98 $ 0.69 $ 2.90 $ 2.37 Diluted weighted average number of shares 49,242,182 56,115,670 50,309,217 56,584,913 Earnings per share - diluted $ 0.96 $ 0.67 $ 2.82 $ 2.30 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 8 Months Ended |
Sep. 11, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Changes in Stockholders' Deficit | The following table summarizes changes in Stockholders’ Deficit for the three fiscal quarters of 2016. Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Amount Capital Deficit Loss Balance at January 3, 2016 49,838,221 $ 498 $ 6,942 $ (1,804,143 ) $ (3,548 ) Net income — — — 141,945 — Common stock dividends and equivalents — — — (55,511 ) — Issuance of common stock, net 74,331 1 — — — Tax payments for restricted stock upon vesting (47,252 ) — (5,605 ) — — Purchases of common stock (2,714,322 ) (27 ) (67,363 ) (216,468 ) — Exercise of stock options 926,390 9 12,315 — — Tax impact from equity-based compensation — — 41,479 — — Non-cash compensation expense — — 12,344 — — Other — — 26 — — Currency translation adjustment, net of tax — — — — 960 Balance at September 11, 2016 48,077,368 $ 481 $ 138 $ (1,934,177 ) $ (2,588 ) On March 14, 2016, the Company received and retired 456,936 shares of its common stock in connection with the final settlement of its previously announced $600.0 million accelerated share repurchase (“ASR”) program. At the commencement of the program, in the fourth quarter of 2015, the Company paid $600.0 million to a counterparty and received and retired a portion of the shares from the ASR program, based on the terms of the related ASR agreement. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 8 Months Ended |
Sep. 11, 2016 | |
Fair Value Disclosures [Abstract] | |
Carrying Amounts and Fair Values of Certain Assets | The following tables summarize the carrying amounts and fair values of certain assets at September 11, 2016 and January 3, 2016: At September 11, 2016 Fair Value Estimated Using Carrying Level 1 Level 2 Level 3 Amount Inputs Inputs Inputs Cash equivalents $ 12,051 $ 12,051 $ — $ — Restricted cash equivalents 69,451 69,451 — — Investments in marketable securities 7,558 7,558 — — At January 3, 2016 Fair Value Estimated Using Carrying Level 1 Level 2 Level 3 Amount Inputs Inputs Inputs Cash equivalents $ 108,766 $ 108,766 $ — $ — Restricted cash equivalents 128,554 128,554 — — Investments in marketable securities 6,054 6,054 — — |
Revenues, Income from Operation
Revenues, Income from Operations and Earnings Before Interest, Taxes, Depreciation, Amortization and Other, for each of Reportable Segments (Detail) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 11, 2016 | Sep. 06, 2015 | Sep. 11, 2016 | Sep. 06, 2015 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 566,677 | $ 484,696 | $ 1,653,193 | $ 1,475,345 |
Income from operations | 100,911 | 80,543 | 303,325 | 267,027 |
Segment Income | 113,568 | 91,821 | 341,602 | 300,837 |
Supply Chain [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 355,036 | 303,591 | 1,029,990 | 918,150 |
International Franchise [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 40,038 | 35,264 | 119,497 | 107,584 |
Operating Segments [Member] | Domestic Stores [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 171,603 | 145,841 | 503,706 | 449,611 |
Income from operations | 59,251 | 45,482 | 176,401 | 153,732 |
Segment Income | 61,683 | 47,566 | 183,088 | 159,118 |
Operating Segments [Member] | Supply Chain [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 383,719 | 327,885 | 1,114,096 | 993,015 |
Income from operations | 31,401 | 23,729 | 89,044 | 76,937 |
Segment Income | 33,756 | 26,061 | 96,110 | 83,832 |
Operating Segments [Member] | International Franchise [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 40,038 | 35,264 | 119,497 | 107,584 |
Income from operations | 31,036 | 27,922 | 92,981 | 86,205 |
Segment Income | 31,100 | 27,954 | 93,110 | 86,211 |
Intersegment Revenues [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | (28,683) | (24,294) | (84,106) | (74,865) |
Segment Reconciling [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Income from operations | (20,777) | (16,590) | (55,101) | (49,847) |
Segment Income | $ (12,971) | $ (9,760) | $ (30,706) | $ (28,324) |
Reconciliation of Total Segment
Reconciliation of Total Segment Income to Consolidated Income Before Provision for Income Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 11, 2016 | Sep. 06, 2015 | Sep. 11, 2016 | Sep. 06, 2015 | |
Segment Reconciliation [Abstract] | ||||
Total Segment Income | $ 113,568 | $ 91,821 | $ 341,602 | $ 300,837 |
Depreciation and amortization | (8,704) | (7,667) | (25,460) | (22,695) |
(Loss) gain on sale/disposal of assets | (226) | (199) | (473) | 73 |
Non-cash compensation expense | (3,727) | (3,412) | (12,344) | (11,188) |
Income from operations | 100,911 | 80,543 | 303,325 | 267,027 |
Interest income | 83 | 64 | 556 | 203 |
Interest expense | (25,180) | (19,979) | (76,533) | (59,142) |
Income before provision for income taxes | $ 75,814 | $ 60,628 | $ 227,348 | $ 208,088 |
Earnings Per Share (Detail)
Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 11, 2016 | Sep. 06, 2015 | Sep. 11, 2016 | Sep. 06, 2015 | |
Earnings Per Share [Abstract] | ||||
Net income available to common stockholders - basic and diluted | $ 47,232 | $ 37,832 | $ 141,945 | $ 130,030 |
Basic weighted average number of shares | 48,043,379 | 54,463,073 | 48,984,734 | 54,834,627 |
Earnings per share - basic | $ 0.98 | $ 0.69 | $ 2.90 | $ 2.37 |
Diluted weighted average number of shares | 49,242,182 | 56,115,670 | 50,309,217 | 56,584,913 |
Earnings per share - diluted | $ 0.96 | $ 0.67 | $ 2.82 | $ 2.30 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares | 3 Months Ended | 8 Months Ended | ||
Sep. 11, 2016 | Sep. 06, 2015 | Sep. 11, 2016 | Sep. 06, 2015 | |
Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities Excluded from Computation of Earnings Per Share | 95,475 | 188,080 | 306,855 | 188,080 |
Restricted Performance Shares [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities Excluded from Computation of Earnings Per Share | 58,030 | 60,770 | 84,320 | 65,840 |
Changes in Stockholders' Defici
Changes in Stockholders' Deficit (Detail) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | |||
Sep. 11, 2016 | Sep. 06, 2015 | Sep. 11, 2016 | Sep. 06, 2015 | ||
Stockholders' Deficit [Line Items] | |||||
Beginning Balance | [1] | $ (1,800,251) | |||
Net income | $ 47,232 | $ 37,832 | 141,945 | $ 130,030 | |
Tax payments for restricted stock upon vesting | (5,605) | (7,442) | |||
Non-cash compensation expense | (3,727) | $ (3,412) | (12,344) | $ (11,188) | |
Ending Balance | $ (1,936,146) | $ (1,936,146) | |||
Common Stock [Member] | |||||
Stockholders' Deficit [Line Items] | |||||
Beginning Balance, (in shares) | 49,838,221 | ||||
Beginning Balance | $ 498 | ||||
Issuance of common stock, net, (in shares) | 74,331 | ||||
Issuance of common stock, net | $ 1 | ||||
Tax payments for restricted stock upon vesting, (in shares) | (47,252) | ||||
Purchases of common stock, (in shares) | (2,714,322) | ||||
Purchases of common stock | $ (27) | ||||
Exercise of stock options, (in shares) | 926,390 | ||||
Exercise of stock options | $ 9 | ||||
Ending Balance, (in shares) | 48,077,368 | 48,077,368 | |||
Ending Balance | $ 481 | $ 481 | |||
Additional Paid-in Capital [Member] | |||||
Stockholders' Deficit [Line Items] | |||||
Beginning Balance | 6,942 | ||||
Tax payments for restricted stock upon vesting | (5,605) | ||||
Purchases of common stock | (67,363) | ||||
Exercise of stock options | 12,315 | ||||
Tax impact from equity-based compensation | 41,479 | ||||
Non-cash compensation expense | 12,344 | ||||
Other | 26 | ||||
Ending Balance | 138 | 138 | |||
Retained Deficit [Member] | |||||
Stockholders' Deficit [Line Items] | |||||
Beginning Balance | (1,804,143) | ||||
Net income | 141,945 | ||||
Common stock dividends and equivalents | (55,511) | ||||
Purchases of common stock | (216,468) | ||||
Ending Balance | (1,934,177) | (1,934,177) | |||
Accumulated Other Comprehensive Loss [Member] | |||||
Stockholders' Deficit [Line Items] | |||||
Beginning Balance | (3,548) | ||||
Currency translation adjustment, net of tax | 960 | ||||
Ending Balance | $ (2,588) | $ (2,588) | |||
[1] | The balance sheet at January 3, 2016 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. |
Stockholders' Deficit - Additio
Stockholders' Deficit - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 14, 2016 | Sep. 11, 2016 | Jan. 03, 2016 | Sep. 06, 2015 | Sep. 11, 2016 | Sep. 06, 2015 |
Stockholders' Deficit [Line Items] | ||||||
Common stock repurchased and retired (in shares) | 456,936 | 412,260 | 365,460 | 1,293,924 | ||
Accelerated share repurchase, agreement amount | $ 600,000 | |||||
Payment to counterparty | $ 59,700 | $ 40,900 | $ 283,858 | $ 138,550 | ||
Counterparty [Member] | ||||||
Stockholders' Deficit [Line Items] | ||||||
Payment to counterparty | $ 600,000 |
Dividends - Additional Informat
Dividends - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | Oct. 14, 2016 | Sep. 11, 2016 | Sep. 06, 2015 | Sep. 11, 2016 | Sep. 06, 2015 | Jan. 03, 2016 | [1] |
Dividends Payable [Line Items] | |||||||
Dividends declared per share | $ 0.38 | $ 0.31 | $ 1.14 | $ 0.93 | |||
Common stock dividends accrued | $ 18,547 | $ 18,547 | $ 557 | ||||
Dividend declared date | Jul. 20, 2016 | ||||||
Record date of dividend | Sep. 15, 2016 | ||||||
Dividend payable date | Sep. 30, 2016 | ||||||
Subsequent Event [Member] | |||||||
Dividends Payable [Line Items] | |||||||
Dividends declared per share | $ 0.38 | ||||||
Record date of dividend | Dec. 15, 2016 | ||||||
Dividend payable date | Dec. 30, 2016 | ||||||
[1] | The balance sheet at January 3, 2016 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. |
Accumulated Other Comprehensi28
Accumulated Other Comprehensive Loss - Additional Information (Detail) - USD ($) | 8 Months Ended | |||
Sep. 11, 2016 | Sep. 06, 2015 | Jan. 03, 2016 | [1] | |
Equity [Abstract] | ||||
Accumulated other comprehensive loss | $ (2,588,000) | $ (3,548,000) | ||
Reclassification losses from accumulated other comprehensive loss to net income | $ 0 | $ 0 | ||
[1] | The balance sheet at January 3, 2016 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. |
Open Market Share Repurchase 29
Open Market Share Repurchase Program - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 14, 2016 | Sep. 11, 2016 | Mar. 27, 2016 | Sep. 06, 2015 | Sep. 11, 2016 | Sep. 06, 2015 |
Share Repurchases [Line Items] | ||||||
Accelerated share repurchase agreement | $ 600,000 | |||||
Common stock repurchased and retired (in shares) | 456,936 | 412,260 | 365,460 | 1,293,924 | ||
Common stock repurchased and retired | $ 59,700 | $ 40,900 | $ 283,858 | $ 138,550 | ||
Stock repurchase program, amount remaining | $ 165,500 | $ 165,500 | ||||
Accelerated Share Repurchase Program [Member] | ||||||
Share Repurchases [Line Items] | ||||||
Common stock repurchased and retired (in shares) | 456,936 | 456,936 |
Carrying Amounts and Fair Value
Carrying Amounts and Fair Values of Certain Assets (Detail) - USD ($) $ in Thousands | Sep. 11, 2016 | Jan. 03, 2016 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents, carrying amount | $ 12,051 | $ 108,766 |
Restricted cash equivalents, carrying amount | 69,451 | 128,554 |
Investments in marketable securities, carrying amount | 7,558 | 6,054 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents, fair value | 12,051 | 108,766 |
Restricted cash equivalents, fair value | 69,451 | 128,554 |
Investments in marketable securities, carrying amount | $ 7,558 | $ 6,054 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions | 8 Months Ended | |
Sep. 11, 2016 | Jan. 03, 2016 | |
Fixed Rate Senior Notes [Member] | 2012 Recapitalization [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Principal amount of outstanding debt | $ 923 | $ 962.7 |
Fair value of debt outstanding | 945.2 | 991.6 |
Five Year Fixed Rate Notes [Member] | 2015 Recapitalization [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Principal amount of outstanding debt | 496.3 | 500 |
Fair value of debt outstanding | $ 501.2 | 489.5 |
Debt instrument, term | 5 years | |
Ten Year Fixed Rate Notes [Member] | 2015 Recapitalization [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Principal amount of outstanding debt | $ 794 | 800 |
Fair value of debt outstanding | $ 801.1 | $ 781.6 |
Debt instrument, term | 10 years |
Legal Matters - Additional Info
Legal Matters - Additional Information (Detail) - USD ($) $ in Millions | Sep. 11, 2012 | Feb. 14, 2011 |
Yvonne Wiederhold [Member] | ||
Legal Settlement By Party [Line Items] | ||
Amount delivered for plaintiff | $ 10.1 | |
Percentage liable by company for plaintiff | 90.00% | |
Litigation settlement, amount | $ 8.9 | |
Raghurami Reddy [Member] | ||
Legal Settlement By Party [Line Items] | ||
Amount delivered for plaintiff | $ 32 | |
Percentage liable by company for plaintiff | 60.00% |
Supplemental Disclosures of C33
Supplemental Disclosures of Cash Flow Information - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 8 Months Ended | ||
Sep. 06, 2015 | Mar. 22, 2015 | Sep. 11, 2016 | Sep. 06, 2015 | |
Supplemental Cash Flow Elements [Abstract] | ||||
Accruals for capital expenditures related to non-cash investing activities | $ 0.5 | $ 1 | ||
Extended lease agreement expiration date | 2028-08 | |||
Increase in capital lease assets and liabilities related to non-cash financing activities | $ 0.6 | $ 3.4 |