All other schedules required by Section 2520.103-10 of the Department of Labors Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.
The
accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
December 31, 2016 and 2015
Note 1 Description of Plan
General
The following description of the Dominos Pizza (the Company and the Plan Administrator)
401(k) Savings Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plans provisions. The Plan is a defined contribution plan for the benefit of
certain employees of the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Participants should refer to the Plan document for a complete description of the
Plans provisions. Fidelity Management Trust Company (the Trustee) administers and invests the assets of the Plan and the income therefrom for the benefit of the Plans participants.
Eligibility
A person may become a participant in the Plan on the first day he or she meets the following requirements:
|
1.
|
The person is employed by the Company or an affiliated company which has adopted the Plan for the persons job classifications and/or location.
|
|
2.
|
The person has completed at least 1,000 hours of service.
|
|
3.
|
The person is not employed in a bargaining unit covered by a collective bargaining agreement unless it provides for Plan coverage of bargaining unit members.
|
|
4.
|
The person has attained age 21.
|
|
5.
|
The person is a citizen or resident of the United States.
|
Contributions
Each
year, participants may contribute up to 50% of eligible wages, as defined in the Plan document, not to exceed the maximum amount allowed annually under the provisions of the Internal Revenue Code (the Code). Participants who have
attained age 50 before the end of the year are eligible to make catch-up contributions. The Company provides a matching contribution in the amount of 100% of the first 3% of each employees elective deferrals and 50% of the next 2% of each
employees elective deferrals. The Company may also make discretionary contributions, including profit-sharing contributions, to the Plan. There were no discretionary contributions made by the Company during the year ended December 31,
2016. The Companys matching contributions were made in cash and were based on the participants investment allocation in the participants accounts in 2016.
Vesting
Participants contributions, the Companys matching contributions, and income earned thereon are immediately
fully vested. The vesting schedule for discretionary profit-sharing contributions is graded over five years. A participant is 100% vested in discretionary profit-sharing contributions after five years of continuous service.
4
Dominos Pizza 401(k) Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Note 1 Description of Plan (Continued)
Forfeitures
Forfeitures are created when participants terminate employment
before becoming entitled to their full benefits under the Plan. Any forfeited amounts may be used to reduce future Company contributions and administrative expenses. During the year ended December 31, 2016, $10,436 was utilized to reduce
Company contributions and administrative expenses. As of December 31, 2016 and 2015, the Plan had outstanding forfeitures of $60,480 and $69,059, respectively, available to reduce future Company contributions and administrative expenses.
Participant Accounts
Each participants account is credited with the participants voluntary contributions, the
participants specific fund earnings, the Companys matching contributions and, if any, an allocation of discretionary contributions, and charged with an allocation of Plan administrative expenses. Allocations are based on participant
earnings or account balances or compensation, as defined in the Plan document. The benefit to which a participant is entitled is the benefit that can be provided from the participants vested account.
Payment of Plan Benefits
Distribution of Plan benefits begins when the earliest of the following have occurred: (1) within
60 days of the close of the Plan year in which the participant attains age 70
1
⁄
2
or (2) the participant terminates service with the Company. Participants
may also elect to make withdrawals at age 59
1
⁄
2
without tax penalty.
Plan benefits are distributed in the form of either a series of payments or a lump-sum payment as elected by the participant.
Participant Withdrawals
Participants may withdraw funds from their accounts if the Trustee determines that a withdrawal is
necessary to avoid certain financial hardships, as permitted under the Code, or death, disability or for any reason after reaching age 59
1
⁄
2
.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right to amend, modify, terminate,
withdraw from, or suspend contributions to the Plan at any time under the provisions of ERISA. In the event of termination of the Plan all participant accounts become fully vested and are distributed to the participants in accordance with the Plan
document.
Notes Receivable from Participants
Participants may borrow funds from their account balance. A note may not be
less than $1,000 and may not exceed the lesser of 50% of the vested portion of the participants total account balance or $50,000. The Plan Administrator establishes the terms of the note agreement, secured by the balance in the
participants account. The note agreement bears interest at rates that range from 4.25% to 11.00%, which are commensurate with local prevailing rates as determined by the Plan Administrator. Notes must be repaid within five years. Principal and
interest is paid ratably through bi-weekly payroll deductions.
5
Dominos Pizza 401(k) Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Note 2
Summary of Significant Accounting Policies
Basis of Accounting
The financial statements have been prepared under the accrual method of accounting in conformity with
accounting principles generally accepted in the United States of America (GAAP).
Investment Valuation and Income
Recognition
The Plans investments are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. The reported value of the common collective trust fund is at the Net Asset Value (NAV), which is calculated by the fund based on net assets, which includes fully benefit responsive contracts at contract value. This NAV represents
the Plans fair value since this is the amount at which the Plan transacts with the fund. Shares of mutual funds are valued at the net asset value of shares held by the Plan based on quoted prices at year end. Shares of employer securities are
valued based on quoted prices at year end.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is
recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plans gains and losses on investments bought and sold as well as held during the year.
The common collective trust fund investment (the Managed Income Portfolio or MIP), is comprised of public investment
securities valued at NAV, and a participants ownership of the MIP is represented by units. Units are issued and redeemed daily at the MIPs constant NAV of $1 per unit. The MIP allows for daily liquidity with no additional notice required
for redemption. Although it is the policy of the MIP to use its best efforts to maintain a stable NAV of $1 per unit, there is no guarantee that the MIP will be able to maintain that value.
There are no unfunded commitments. The redemption frequency for participants would be daily with no notice period for participant initiated
transactions. Withdrawals initiated by the Plan Administrator will normally be provided at contract value as soon as practicable within twelve months following written notice to the MIP trustee. The MIP imposes certain restrictions on the Plan.
6
Dominos Pizza 401(k) Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Note 2
Summary of Significant Accounting Policies (Continued)
The following employer-initiated events may limit the MIPs ability to transact at fair
value:
|
|
|
The Plans failure to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA.
|
|
|
|
Any communication given to Plan participants designed to influence participants to transfer assets out of the MIP or not to invest in the MIP.
|
|
|
|
Any change in law, regulation, or administrative ruling applicable to the Plan that could have a material adverse effect on the MIPs cash flow.
|
|
|
|
Any transfer of assets from the MIP directly into a competing investment option.
|
|
|
|
The establishment of a defined contribution plan that competes with the Plan for employee contributions.
|
|
|
|
Complete or partial termination of the Plan or its merger with another plan.
|
|
|
|
Any substantive modifications of the MIP or the administration of the MIP that is not consented to by the wrap issuer.
|
|
|
|
Any change in law, regulation, or administrative ruling applicable to a plan that could have a material adverse effect on the MIPs cash flow.
|
The MIP is unlikely to maintain a stable NAV if, for any reason, it cannot obtain or maintain wrap contracts covering all of its underlying
assets that are not otherwise invested in money market funds. For example, this could result from the MIPs inability to promptly find a replacement wrap contract following termination of a wrap contract. The wrap issuers ability to meet
its contractual obligations under the wrap contracts may be affected by future economic and regulatory developments. In the event that an issuer of a wrap contract fails to perform as intended, the MIPs NAV may decline if the market value of
its assets declines.
Plan management believes the occurrence of events and circumstances that would cause the MIP to transact at less
than fair value is not probable.
The SSgA S&P 400 MidCap Index Fund (Mid Cap Fund) and the Winslow Large Cap Growth Fund
(Large Cap Fund) are valued based on the underlying investments at fair value (NAV), which are primarily common stock and collective investment funds. Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. By its nature, a fair value price is a good faith estimate of the valuation in a current sale and does not reflect an actual market price, which may
be different by a material amount.
7
Dominos Pizza 401(k) Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Note 2
Summary of Significant Accounting Policies (Continued)
Both the Mid Cap Fund and the Large Cap Fund allow for daily liquidity with no additional
days notice required for redemption for participant directed transactions. Were the Plan to initiate a full redemption of the Mid Cap Fund or the Large Cap Fund, the investment advisor reserves the right to temporarily delay withdrawal from the
trust in order to ensure that securities liquidations will be carried out in an orderly manner. There are no unfunded commitments.
Notes Receivable from Participants
The notes receivable from participants are valued at their outstanding balances plus any
accrued but unpaid interest, which approximate fair value. Interest income is recorded on the accrual basis. Delinquent notes receivable are reclassified as participant withdrawals based upon terms of the Plan document.
Risks and Uncertainties
The Plan provides for investments in various investment options that are, in general, exposed to various
risks, such as interest rate, credit, and overall market volatility risks. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the values of investments will occur in the near term and
that such changes could materially affect the participants account balances and the amounts reported in the Statements of Net Assets Available for Plan Benefits.
Benefit Payments
Benefits are recorded when paid.
Plan Administrative Expenses
Expenses attributable to investments earmarked to a participants account and fees associated
with specific participant transactions, including loan application fees, are charged to that account to the extent specified by the Plan Administrator. Various administrative costs of maintaining the Plan are paid by the Company.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements, the changes in net assets available for benefits during the reporting period, and the disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results could differ from those estimates.
8
Dominos Pizza 401(k) Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Note 2
Summary of Significant Accounting Policies (continued)
Adoption of New Accounting Standards
During the year
ended December 31, 2016, the Company adopted Accounting Standards Update No. 2015-07 related to fair value measurement and the disclosures for investments in certain entities that calculate net asset value (NAV) per share (or
its equivalent). The updated guidance applies to reporting entities that elect to measure the fair value of certain investments using the NAV per share (or its equivalent) of the investment as a practical expedient. Currently, investments valued
using the practical expedient are categorized within the fair value hierarchy on the basis of when the investment is redeemable with the investee at NAV. The amendment removes the requirement to categorize within the fair value hierarchy all
investments for which fair value is measured using the NAV per share practical expedient. The total amount of the investment measured at NAV is disclosed so that total investments in the fair value tables can be reconciled to total investments at
fair value on the statements of net assets.
The Company also adopted Accounting Standards Update No. 2015-12, Plan Accounting: Plan
Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965): Part (I) Fully Benefit-Responsive Investment Contracts, Part (II) Plan Investment
Disclosures, Part (III) Measurement Date Practical Expedient. The guidance issued a three-part update to simplify plan accounting of employee benefit plans. The update simplifies employee benefit plan reporting as outlined in Part (I) for fully
benefit-responsive investment contracts and in Part (II) for plan investment disclosures. Part (III) provides for a measurement date practical expedient. Part (III) does not apply to the Plan.
As required, Parts (I) and (II) of the guidance were adopted for the year ended December 31, 2016. Accordingly, for Part (I), the
adjustment from fair value to contract value on the statements of net assets has been removed. In accordance with Part (II), in the Fair Value Measurements note the level of disaggregation of investments that are measured at fair value has been
simplified by disaggregating investments by general type instead of disaggregating by nature, characteristics and risks and the investment strategy for the investment measured at NAV has been removed as that fund files an annual report on Form 5500
as a direct-filing entity. In addition, the disclosure of individual investments greater than 5% of net assets and the net appreciation or depreciation in fair value of investments by general type have been removed from the former Investments note.
This guidance requires that amendments are applied retrospectively to all periods presented. Information presented for the year ended
December 31, 2015 has been reclassified to reflect this updated guidance.
Other accounting standards that have been issued by the
FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.
9
Dominos Pizza 401(k) Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Note 3
Tax Status
The Plan obtained its latest tax determination letter dated September 25, 2014, applicable for amendments adopted through January 1,
2014, in which the Internal Revenue Service stated that the Plan and the related trust, as then designed, were in compliance with the applicable requirements of the Code if certain additional amendments were adopted. Those additional amendments were
made on October 1, 2014. In the opinion of the Plan Administrator, the Plan is currently designed and being operated in all material respects, in compliance with the applicable requirements of the Code and, therefore, the Plan is qualified and
the related trust is tax-exempt.
Accounting principles generally accepted in the United States of America require plan management to
evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the organization has taken an uncertain tax position that more likely than not would not be sustained upon examination by the Internal Revenue Service. Management
is not aware of any uncertain tax positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The plan is subject to routine audits by taxing jurisdictions; however,
there are currently no audits for any tax periods in progress.
Note 4
Party-in-interest Transactions
The Company, the participants, and the Trustee have all been identified as parties-in-interest. The Plan invests in shares of mutual funds, a
common collective trust fund managed by the Trustee, as well as shares of the Companys common stock. Transactions in such investments qualify as party-in-interest transactions, which are exempt from the prohibited transaction rules.
Participant loans also qualify as party-in-interest transactions, which are exempt from the prohibited transaction rules. Certain administrative expenses of the Plan are paid by the Company and qualify as party-in-interest transactions. The Company
has a Master Service Agreement with the Trustee. The plan pays for the services of the Trustee through net fees charged to the participants in the plan.
10
Dominos Pizza 401(k) Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Note 5
Differences Between Financial Statements and Form 5500
The differences between the amounts presented on pages 2 and 3 of these financial statements and the related Form 5500 filed with the
Department of Labor are attributable to adjustments made by the Plan Administrator to adjust from fair value to contract value for fully benefit-responsive investment contracts on the statement of changes in net assets available for plan benefits.
The following is a reconciliation of net assets available for plan benefits per the financial statements at December 31, 2016 and
2015 to Form 5500:
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
Net assets available for plan benefits per
the financial statements
|
|
$
|
233,064,643
|
|
|
$
|
205,047,193
|
|
|
|
|
Adjustment to fair value for Fidelity
Managed Income Portfolio Fund
|
|
|
37,684
|
|
|
|
104,676
|
|
|
|
|
|
|
|
|
|
|
Net assets available for plan benefits per
Form 5500
|
|
$
|
233,102,327
|
|
|
$
|
205,151,869
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of the net increase in net assets available for plan benefits per the
financial statements for the year ended December 31, 2016 to Form 5500:
|
|
|
|
|
Net increase in net assets available for plan benefits
per the financial statements
|
|
$
|
28,017,450
|
|
|
|
Add: Adjustments from contract value to fair value for fully
benefit-responsive investment
contract at December 31, 2016
|
|
|
37,684
|
|
|
|
Less: Adjustments from contract value to fair value for fully
benefit-responsive investment
contracts at December 31, 2015
|
|
|
(104,676
|
)
|
|
|
|
|
|
Total net increase in net assets available for plan
benefits per the Form 5500
|
|
$
|
27,950,458
|
|
|
|
|
|
|
11
Dominos Pizza 401(k) Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Note 6
Fair Value
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 asset or liabilitys fair value measurements level within the fair value hierarchy is based on the lowest level of any input that is
significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. For details on the procedures used to value our investments in common collective trust
funds, refer to our disclosures in Note 2.
The following table sets forth by level, within the fair value hierarchy, the Plans
assets at fair value as of December 31, 2016, and 2015. Classification within the fair value hierarchy table is based on the lowest level of any input that is significant to the fair value measurement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Balance at
December 31,
2016
|
|
Mutual funds
|
|
$
|
108,219,637
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
108,219,637
|
|
Dominos Pizza, Inc. Stock Fund:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominos Pizza common stock
|
|
|
60,209,852
|
|
|
|
|
|
|
|
|
|
|
|
60,209,852
|
|
Interest bearing cash account
|
|
|
2,702,542
|
|
|
|
|
|
|
|
|
|
|
|
2,702,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
171,132,031
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
171,132,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments measured at NAV Common collective trust
|
|
|
|
|
|
|
|
57,667,571
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
228,799,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
Dominos Pizza 401(k) Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Note 6
Fair Value (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Balance at
December 31,
2015
|
|
Mutual funds
|
|
$
|
92,459,325
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
92,459,325
|
|
Dominos Pizza, Inc. Stock Fund:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominos Pizza common stock
|
|
|
48,882,619
|
|
|
|
|
|
|
|
|
|
|
|
48,882,619
|
|
Interest bearing cash account
|
|
|
1,872,981
|
|
|
|
|
|
|
|
|
|
|
|
1,872,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
143,214,925
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
143,214,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments measured at NAV Common collective trust
|
|
|
|
|
|
|
|
57,299,678
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
200,514,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For years ended December 31, 2016, and 2015, there were no transfers between Levels 1 and 2 and no
transfers in or out of Level 3.
Note 7 Subsequent Events
The Plan evaluated its December 31, 2016 financial statements for subsequent events through the date the financial statements were
available to be issued. The Plan is not aware of any subsequent events which would require recognition or disclosure in the financial statements.
13