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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-Q



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(Mark One)



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



For the quarterly period ended March 21, 2004



OR



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



For the transition period from:  to



Commission file number: 333-107774



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Dominos, Inc.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 38-3025165                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



30 Frank Lloyd
Wright Drive

Ann Arbor, Michigan 48106

(Address of principal executive offices)



(734) 930-3030

(Registrants telephone number, including area code)



---



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  x    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act):    Yes ̈No  x



The number of shares outstanding of the registrants common stock as of April 26, 2004
was 10 shares.



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##### Table of Contents

Dominos, Inc.



INDEX



|           |  |                                                                                                                      |  |         
|---------- |  | -------------------------------------------------------------------------------------------------------------------- |  | --------
|           |  |                                                                                                                      |  | Page No.
|PART I.    |  | FINANCIAL INFORMATION                                                                                                |  |         
|           |  |                                                                                                                     
|Item 1.    |  | Financial Statements                                                                                                 |  |         
|           |  |                                                                                                                     
|           |  | Condensed Consolidated Balance Sheets  March 21, 2004 (Unaudited) and December 28, 2003                             |  | 3       
|           |  |                                                                                                                     
|           |  | Condensed Consolidated Statements of Income (Unaudited)  Fiscal quarter ended March 21, 2004 and March 23, 2003     |  | 4       
|           |  |                                                                                                                     
|           |  | Condensed Consolidated Statements of Cash Flows (Unaudited)  Fiscal quarter ended March 21, 2004 and March 23, 2003 |  | 5       
|           |  |                                                                                                                     
|           |  | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                     |  | 6       
|           |  |                                                                                                                     
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                |  | 12      
|           |  |                                                                                                                     
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                           |  | 19      
|           |  |                                                                                                                     
|Item 4.    |  | Controls and Procedures                                                                                              |  | 19      
|           |  |                                                                                                                     
|PART II.   |  | OTHER INFORMATION                                                                                                    |  |         
|           |  |                                                                                                                     
|Item 5.    |  | Other Information                                                                                                    |  | 20      
|           |  |                                                                                                                     
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                                     |  | 20      
|           | 
|SIGNATURES |  | 20                                                                                                                  



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements



Dominos, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets



|                                            |  |                |          |   |                   |   |          |  
|------------------------------------------- |  | -------------- | -------- | - | ----------------- | - | -------- | -
|(In thousands)                              |  | March 21, 2004 |          |   | December 28, 2003 |  
|                                            |  | (Unaudited)    |          |   | (Note)            |  
|Assets                                      |  |                |          |   |                   |   |          |  
|Current assets:                             |  |                |          |   |                   |   |          |  
|Cash and cash equivalents                   |  | $              | 36,611   |   |                   | $ | 42,726   |  
|Accounts receivable                         |  |                | 60,297   |   |                   |   | 64,571   |  
|Inventories                                 |  |                | 23,045   |   |                   |   | 19,480   |  
|Notes receivable                            |  |                | 3,402    |   |                   |   | 3,785    |  
|Prepaid expenses and other                  |  |                | 12,519   |   |                   |   | 16,040   |  
|Advertising fund assets, restricted         |  |                | 21,345   |   |                   |   | 30,544   |  
|Deferred income taxes                       |  |                | 5,732    |   |                   |   | 5,730    |  
|                                            |  |                |          |   |                   |   |          |  
|Total current assets                        |  |                | 162,951  |   |                   |   | 182,876  |  
|                                            |  |                |          |   |                   |   |          |  
|Property, plant and equipment:              |  |                |          |   |                   |   |          |  
|Land and buildings                          |  |                | 21,809   |   |                   |   | 21,849   |  
|Leasehold and other improvements            |  |                | 64,803   |   |                   |   | 61,433   |  
|Equipment                                   |  |                | 162,308  |   |                   |   | 158,286  |  
|Construction in progress                    |  |                | 3,503    |   |                   |   | 6,133    |  
|                                            |  |                |          |   |                   |   |          |  
|                                            |  |                | 252,423  |   |                   |   | 247,701  |  
|Accumulated depreciation and amortization   |  |                | 124,676  |   |                   |   | 120,634  |  
|                                            |  |                |          |   |                   |   |          |  
|Property, plant and equipment, net          |  |                | 127,747  |   |                   |   | 127,067  |  
|                                            |  |                |          |   |                   |   |          |  
|Other assets:                               |  |                |          |   |                   |   |          |  
|Deferred financing costs                    |  |                | 18,149   |   |                   |   | 18,847   |  
|Goodwill                                    |  |                | 23,305   |   |                   |   | 23,432   |  
|Capitalized software                        |  |                | 26,282   |   |                   |   | 27,197   |  
|Other assets                                |  |                | 17,340   |   |                   |   | 16,988   |  
|Deferred income taxes                       |  |                | 49,205   |   |                   |   | 52,042   |  
|                                            |  |                |          |   |                   |   |          |  
|Total other assets                          |  |                | 134,281  |   |                   |   | 138,506  |  
|                                            |  |                |          |   |                   |   |          |  
|Total assets                                |  | $              | 424,979  |   |                   | $ | 448,449  |  
|                                            |  |                |          |   |                   |   |          |  
|Liabilities and stockholders deficit       |  |                |          |   |                   |   |          |  
|Current liabilities:                        |  |                |          |   |                   |   |          |  
|Current portion of long-term debt           |  | $              | 286      |   |                   | $ | 18,572   |  
|Accounts payable                            |  |                | 49,098   |   |                   |   | 53,388   |  
|Insurance reserves                          |  |                | 9,893    |   |                   |   | 9,432    |  
|Advertising fund liabilities                |  |                | 21,345   |   |                   |   | 30,544   |  
|Other accrued liabilities                   |  |                | 59,057   |   |                   |   | 72,327   |  
|                                            |  |                |          |   |                   |   |          |  
|Total current liabilities                   |  |                | 139,679  |   |                   |   | 184,263  |  
|                                            |  |                |          |   |                   |   |          |  
|Long-term liabilities:                      |  |                |          |   |                   |   |          |  
|Long-term debt, less current portion        |  |                | 942,035  |   |                   |   | 941,165  |  
|Insurance reserves                          |  |                | 16,045   |   |                   |   | 15,941   |  
|Other accrued liabilities                   |  |                | 26,748   |   |                   |   | 25,169   |  
|                                            |  |                |          |   |                   |   |          |  
|Total long-term liabilities                 |  |                | 984,828  |   |                   |   | 982,275  |  
|                                            |  |                |          |   |                   |   |          |  
|Stockholders deficit:                      |  |                |          |   |                   |   |          |  
|Common stock                                |  |                |         |   |                   |   |         |  
|Additional paid-in capital                  |  |                | 124,494  |   |                   |   | 124,210  |  
|Retained deficit                            |  |                | (824,125 | ) |                   |   | (842,308 | )
|Deferred stock compensation                 |  |                | (218     | ) |                   |   |         |  
|Accumulated other comprehensive income      |  |                | 321      |   |                   |   | 9        |  
|                                            |  |                |          |   |                   |   |          |  
|Total stockholders deficit                 |  |                | (699,528 | ) |                   |   | (718,089 | )
|                                            |  |                |          |   |                   |   |          |  
|Total liabilities and stockholders deficit |  | $              | 424,979  |   |                   | $ | 448,449  |  
|                                            |  |                |          |   |                   |   |          |  

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Note: The balance sheet at December 28, 2003 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.



See accompanying notes.



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##### Table of Contents

Dominos, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)



|                                         |  |                      |         |   |                |   |         |  
|---------------------------------------- |  | -------------------- | ------- | - | -------------- | - | ------- | -
|                                         |  | Fiscal Quarter Ended |        
|(In thousands)                           |  | March 21, 2004       |         |   | March 23, 2003 |  
|Revenues:                                |  |                      |         |   |                |   |         |  
|Domestic Company-owned stores            |  | $                    | 87,964  |   |                | $ | 89,942  |  
|Domestic franchise                       |  |                      | 34,637  |   |                |   | 34,404  |  
|Domestic distribution                    |  |                      | 170,850 |   |                |   | 167,436 |  
|International                            |  |                      | 25,303  |   |                |   | 20,470  |  
|                                         |  |                      |         |   |                |   |         |  
|Total revenues                           |  |                      | 318,754 |   |                |   | 312,252 |  
|                                         |  |                      |         |   |                |   |         |  
|Operating expenses:                      |  |                      |         |   |                |   |         |  
|Cost of sales                            |  |                      | 237,643 |   |                |   | 231,804 |  
|General and administrative               |  |                      | 37,640  |   |                |   | 37,358  |  
|                                         |  |                      |         |   |                |   |         |  
|Total operating expenses                 |  |                      | 275,283 |   |                |   | 269,162 |  
|                                         |  |                      |         |   |                |   |         |  
|Income from operations                   |  |                      | 43,471  |   |                |   | 43,090  |  
|Interest income                          |  |                      | 86      |   |                |   | 103     |  
|Interest expense                         |  |                      | (13,985 | ) |                |   | (12,333 | )
|Other                                    |  |                      |        |   |                |   | (1,743  | )
|                                         |  |                      |         |   |                |   |         |  
|Income before provision for income taxes |  |                      | 29,572  |   |                |   | 29,117  |  
|Provision for income taxes               |  |                      | 11,164  |   |                |   | 10,773  |  
|                                         |  |                      |         |   |                |   |         |  
|Net income                               |  | $                    | 18,408  |   |                | $ | 18,344  |  
|                                         |  |                      |         |   |                |   |         |  



See accompanying notes.



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Dominos, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                             |  |                      |         |   |                |   |         |  
|------------------------------------------------------------ |  | -------------------- | ------- | - | -------------- | - | ------- | -
|                                                             |  | Fiscal Quarter Ended |        
|(In thousands)                                               |  | March 21, 2004       |         |   | March 23, 2003 |  
|Cash flows from operating activities:                        |  |                      |         |   |                |   |         |  
|Net cash provided by operating activities                    |  | $                    | 18,729  |   |                | $ | 32,599  |  
|                                                             |  |                      |         |   |                |   |         |  
|Cash flows from investing activities:                        |  |                      |         |   |                |   |         |  
|Capital expenditures                                         |  |                      | (6,795  | ) |                |   | (5,219  | )
|Other                                                        |  |                      | 553     |   |                |   | 1,002   |  
|                                                             |  |                      |         |   |                |   |         |  
|Net cash used in investing activities                        |  |                      | (6,242  | ) |                |   | (4,217  | )
|                                                             |  |                      |         |   |                |   |         |  
|Cash flows from financing activities:                        |  |                      |         |   |                |   |         |  
|Repayments of debt                                           |  |                      | (18,371 | ) |                |   | (20,500 | )
|Distributions to Parent                                      |  |                      | (225    | ) |                |   | (114    | )
|                                                             |  |                      |         |   |                |   |         |  
|Net cash used in financing activities                        |  |                      | (18,596 | ) |                |   | (20,614 | )
|                                                             |  |                      |         |   |                |   |         |  
|Effect of exchange rate changes on cash and cash equivalents |  |                      | (6      | ) |                |   | (2      | )
|                                                             |  |                      |         |   |                |   |         |  
|Increase (decrease) in cash and cash equivalents             |  |                      | (6,115  | ) |                |   | 7,766   |  
|Cash and cash equivalents, at beginning of period            |  |                      | 42,726  |   |                |   | 22,472  |  
|                                                             |  |                      |         |   |                |   |         |  
|Cash and cash equivalents, at end of period                  |  | $                    | 36,611  |   |                | $ | 30,238  |  
|                                                             |  |                      |         |   |                |   |         |  



See accompanying notes.



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Dominos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited; tabular amounts in thousands)



March 21, 2004



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
Article 10 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. In the opinion of management, all
adjustments, consisting of normal recurring items, considered necessary for a fair presentation have been included. Operating results for the fiscal quarter ended March 21, 2004 are not necessarily indicative of the results that may be expected for
the fiscal year ending January 2, 2005. For further information, refer to the consolidated financial statements and footnotes thereto for the fiscal year ended December 28, 2003 included in our Form 10-K.



2. Comprehensive Income



|                                                                          |  |                      |        |   |                |   |        |  
|------------------------------------------------------------------------- |  | -------------------- | ------ | - | -------------- | - | ------ | -
|                                                                          |  | Fiscal Quarter Ended |       
|                                                                          |  | March 21, 2004       |        |   | March 23, 2003 |  
|Net income                                                                |  | $                    | 18,408 |   |                | $ | 18,344 |  
|Unrealized losses on derivative instruments, net of tax                   |  |                      | (193   | ) |                |   | (101   | )
|Reclassification adjustment for losses included in net income, net of tax |  |                      | 649    |   |                |   | 1,048  |  
|Currency translation adjustment                                           |  |                      | (144   | ) |                |   | 111    |  
|                                                                          |  |                      |        |   |                |   |        |  
|Comprehensive income                                                      |  | $                    | 18,720 |   |                | $ | 19,402 |  
|                                                                          |  |                      |        |   |                |   |        |  



3. Segment Information



The following table summarizes revenues, income from operations and earnings
before interest, taxes, depreciation, amortization, gains (losses) on sale/disposal of assets and other, which is the measure in which management allocates resources to its segments and which we refer to throughout this document as Segment Income,
for each of the Companys reportable segments.



|                         |  |                                                        |         |                      |   |               |  |                      |        |  |       |         |   |       |   |        |   |  |   |        
|------------------------ |  | ------------------------------------------------------ | ------- | -------------------- | - | ------------- |  | -------------------- | ------ |  | ----- | ------- | - | ----- | - | ------ | - |  | - | -------
|                         |  | Fiscal Quarter Ended March 21, 2004 and March 23, 2003
|                         |  | DomesticStores                                         |         | DomesticDistribution |   | International |  | IntersegmentRevenues |        |  | Other |         |   | Total
|Revenues                |  |                                                        |         |                      |   |               |  |                      |        |  |       |         |   |       |   |        |   |  |   |        
|2004                     |  | $                                                      | 122,601 |                      | $ | 193,940       |  | $                    | 25,303 |  | $     | (23,090 | ) |       | $ |       |   |  | $ | 318,754
|2003                     |  |                                                        | 124,346 |                      |   | 192,528       |  |                      | 20,470 |  |       | (25,092 | ) |       |   |       |   |  |   | 312,252
|Income from operations  |  |                                                        |         |                      |   |               |  |                      |        |  |       |         |   |       |   |        |   |  |   |        
|2004                     |  | $                                                      | 31,774  |                      | $ | 10,932        |  | $                    | 7,510  |  |       | N/A     |   |       | $ | (6,745 | ) |  | $ | 43,471 
|2003                     |  |                                                        | 31,614  |                      |   | 11,924        |  |                      | 5,675  |  |       | N/A     |   |       |   | (6,123 | ) |  |   | 43,090 
|Segment Income          |  |                                                        |         |                      |   |               |  |                      |        |  |       |         |   |       |   |        |   |  |   |        
|2004                     |  | $                                                      | 34,827  |                      | $ | 13,137        |  | $                    | 7,746  |  |       | N/A     |   |       | $ | (5,265 | ) |  | $ | 50,445 
|2003                     |  |                                                        | 34,581  |                      |   | 13,595        |  |                      | 5,876  |  |       | N/A     |   |       |   | (4,221 | ) |  |   | 49,831 



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##### Table of Contents

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



|                                         |  |                      |         |   |                |   |         |  
|---------------------------------------- |  | -------------------- | ------- | - | -------------- | - | ------- | -
|                                         |  | Fiscal Quarter Ended |        
|                                         |  | March 21, 2004       |         |   | March 23, 2003 |  
|Total Segment Income                     |  | $                    | 50,445  |   |                | $ | 49,831  |  
|Depreciation and amortization            |  |                      | (6,945  | ) |                |   | (6,738  | )
|Losses on sale/disposal of assets        |  |                      | (18     | ) |                |   | (3      | )
|Non-cash stock compensation expense      |  |                      | (11     | ) |                |   |        |  
|                                         |  |                      |         |   |                |   |         |  
|Income from operations                   |  |                      | 43,471  |   |                |   | 43,090  |  
|Interest income                          |  |                      | 86      |   |                |   | 103     |  
|Interest expense                         |  |                      | (13,985 | ) |                |   | (12,333 | )
|Other                                    |  |                      |        |   |                |   | (1,743  | )
|                                         |  |                      |         |   |                |   |         |  
|Income before provision for income taxes |  | $                    | 29,572  |   |                | $ | 29,117  |  
|                                         |  |                      |         |   |                |   |         |  



4. Stock-Based Compensation



The Company accounts for our parent companys stock
option plan under the recognition and measurement principles of APB Opinion No. 25 Accounting for Stock Issued to Employees, and related interpretations. The following table illustrates the effect on net income if the Company had applied
the fair value recognition provisions of SFAS No. 123 Accounting for Stock-Based Compensation to the stock-based employee compensation.



|                                                                                                                                          |  |                      |        |   |                |   |        |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------ | - | -------------- | - | ------ | -
|                                                                                                                                          |  | Fiscal Quarter Ended |       
|                                                                                                                                          |  | March 21, 2004       |        |   | March 23, 2003 |  
|Net income, as reported                                                                                                                   |  | $                    | 18,408 |   |                | $ | 18,344 |  
|Add: Stock-based employee compensation expense included in reported net income, net of related tax effects                                |  |                      | 7      |   |                |   |       |  
|Deduct: Total stock-based employee compensation expense determined under the fair value method for all awards, net of related tax
effects |  |                      | (81    | ) |                |   | (50    | )
|                                                                                                                                          |  |                      |        |   |                |   |        |  
|Net income, pro forma                                                                                                                     |  | $                    | 18,334 |   |                | $ | 18,294 |  
|                                                                                                                                          |  |                      |        |   |                |   |        |  



5. Subsequent Event



On April 13, 2004, our parent company and one of its subsidiaries filed a
Form S-1 Registration Statement with the Securities and Exchange Commission relating to a proposed initial public common stock offering. As part of the proposed offering, the Company would redeem a material portion of its senior subordinated notes
due 2011. The Company also anticipates that it will amend and restate its senior credit facility to, among other amendments, allow for the use of proceeds as described in the aforementioned Form S-1.



6. New Accounting Pronouncements



In December 2003, the Financial Accounting Standards Board (FASB) issued a
revised interpretation of FASB Interpretation 46, Consolidation of Variable Interest Entities - an interpretation of ARB No. 51 (FIN 46R). FIN 46R requires the consolidation of a variable interest entity (VIE) by an enterprise if the
enterprise is determined to be the primary beneficiary, as defined in FIN 46R. The Company is required to apply this interpretation immediately for all entities created after December 31, 2003. The Company is required to adopt FIN 46R for all
variable interest entities created on or prior to December 31, 2003 by the beginning of the first annual period beginning after December 15, 2004, which is the beginning of the Companys fiscal 2005. The Company is assessing FIN 46R and related
guidance as it relates to VIEs, and is unable to predict the impact, if any, of this interpretation on its results of operations or financial condition.



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In March 2004, the FASB issued an exposure draft of a proposed standard that, if adopted, will
significantly change the accounting for employee stock options and other equity-based compensation. The proposed standard would require companies to expense the fair value of stock options on the grant date and would be effective at the beginning of
the Companys fiscal 2005. The Company will evaluate the requirements of the final standard, which is expected to be finalized in late 2004, to determine the impact on our results of operations.



7. Supplemental Guarantor Condensed Consolidating Financial Statements



The tables below present condensed consolidating financial information for
the applicable periods for: (1) Dominos, Inc.; (2) on a combined basis, the guarantor subsidiaries of the Companys senior subordinated notes due 2011, which includes most of the domestic subsidiaries of the Company and one foreign
subsidiary of the Company; and (3) on a combined basis, the non-guarantor subsidiaries of the Companys senior subordinated notes due 2011. Each of the guarantor subsidiaries is jointly, severally, fully and unconditionally liable under the
related guarantee.



Dominos, Inc.

Supplemental Guarantor Condensed Consolidating Balance Sheets



|                                                     |  |                      |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|---------------------------------------------------- |  | -------------------- | -------- | - | --------------------- | - | ------------------------- |  | ------------ | ------ |  | ------------ | -------- | - |  | - | -------- | -
|                                                     |  | As of March 21, 2004 |         
|                                                     |  | Dominos, Inc.       |          |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  | Eliminations |        |  | Consolidated |         
|Cash and cash equivalents                            |  | $                    |         |   |                       | $ | 36,062                    |  | $            | 549    |  | $            |         |   |  | $ | 36,611   |  
|Accounts receivable                                  |  |                      |         |   |                       |   | 53,794                    |  |              | 6,503  |  |              |         |   |  |   | 60,297   |  
|Advertising fund assets, restricted                  |  |                      |         |   |                       |   |                          |  |              | 21,345 |  |              |         |   |  |   | 21,345   |  
|Other current assets                                 |  |                      | 7,960    |   |                       |   | 34,331                    |  |              | 2,407  |  |              |         |   |  |   | 44,698   |  
|                                                     |  |                      |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Current assets                                       |  |                      | 7,960    |   |                       |   | 124,187                   |  |              | 30,804 |  |              |         |   |  |   | 162,951  |  
|Property, plant and equipment, net                   |  |                      |         |   |                       |   | 123,458                   |  |              | 4,289  |  |              |         |   |  |   | 127,747  |  
|Other assets                                         |  |                      | 243,616  |   |                       |   | 76,748                    |  |              | 740    |  |              | (186,823 | ) |  |   | 134,281  |  
|                                                     |  |                      |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Total assets                                         |  | $                    | 251,576  |   |                       | $ | 324,393                   |  | $            | 35,833 |  | $            | (186,823 | ) |  | $ | 424,979  |  
|                                                     |  |                      |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Current portion of long-term debt                    |  | $                    |         |   |                       | $ | 221                       |  | $            | 65     |  | $            |         |   |  | $ | 286      |  
|Accounts payable                                     |  |                      |         |   |                       |   | 37,032                    |  |              | 12,066 |  |              |         |   |  |   | 49,098   |  
|Advertising fund liabilities                         |  |                      |         |   |                       |   |                          |  |              | 21,345 |  |              |         |   |  |   | 21,345   |  
|Other current liabilities                            |  |                      | 14,953   |   |                       |   | 52,631                    |  |              | 1,366  |  |              |         |   |  |   | 68,950   |  
|                                                     |  |                      |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Current liabilities                                  |  |                      | 14,953   |   |                       |   | 89,884                    |  |              | 34,842 |  |              |         |   |  |   | 139,679  |  
|Long-term debt                                       |  |                      | 935,874  |   |                       |   | 5,877                     |  |              | 284    |  |              |         |   |  |   | 942,035  |  
|Other long-term liabilities                          |  |                      | 277      |   |                       |   | 42,251                    |  |              | 265    |  |              |         |   |  |   | 42,793   |  
|                                                     |  |                      |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Long-term liabilities                                |  |                      | 936,151  |   |                       |   | 48,128                    |  |              | 549    |  |              |         |   |  |   | 984,828  |  
|Stockholders equity (deficit)                       |  |                      | (699,528 | ) |                       |   | 186,381                   |  |              | 442    |  |              | (186,823 | ) |  |   | (699,528 | )
|                                                     |  |                      |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Total liabilities and stockholders equity (deficit) |  | $                    | 251,576  |   |                       | $ | 324,393                   |  | $            | 35,833 |  | $            | (186,823 | ) |  | $ | 424,979  |  
|                                                     |  |                      |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  



8



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##### Table of Contents

|                                                     |  |                         |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|---------------------------------------------------- |  | ----------------------- | -------- | - | --------------------- | - | ------------------------- |  | ------------ | ------ |  | ------------ | -------- | - |  | - | -------- | -
|                                                     |  | As of December 28, 2003 |         
|                                                     |  | Dominos, Inc.          |          |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  | Eliminations |        |  | Consolidated |         
|Cash and cash equivalents                            |  | $                       |         |   |                       | $ | 41,123                    |  | $            | 1,603  |  | $            |         |   |  | $ | 42,726   |  
|Accounts receivable                                  |  |                         |         |   |                       |   | 59,109                    |  |              | 5,462  |  |              |         |   |  |   | 64,571   |  
|Advertising fund assets, restricted                  |  |                         |         |   |                       |   |                          |  |              | 30,544 |  |              |         |   |  |   | 30,544   |  
|Other current assets                                 |  |                         | 7,664    |   |                       |   | 35,243                    |  |              | 2,128  |  |              |         |   |  |   | 45,035   |  
|                                                     |  |                         |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Current assets                                       |  |                         | 7,664    |   |                       |   | 135,475                   |  |              | 39,737 |  |              |         |   |  |   | 182,876  |  
|Property, plant and equipment, net                   |  |                         |         |   |                       |   | 122,815                   |  |              | 4,252  |  |              |         |   |  |   | 127,067  |  
|Other assets                                         |  |                         | 248,660  |   |                       |   | 81,897                    |  |              | 805    |  |              | (192,856 | ) |  |   | 138,506  |  
|                                                     |  |                         |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Total assets                                         |  | $                       | 256,324  |   |                       | $ | 340,187                   |  | $            | 44,794 |  | $            | (192,856 | ) |  | $ | 448,449  |  
|                                                     |  |                         |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Current portion of long-term debt                    |  | $                       | 18,234   |   |                       | $ | 221                       |  | $            | 117    |  | $            |         |   |  | $ | 18,572   |  
|Accounts payable                                     |  |                         |         |   |                       |   | 41,832                    |  |              | 11,556 |  |              |         |   |  |   | 53,388   |  
|Advertising fund liabilities                         |  |                         |         |   |                       |   |                          |  |              | 30,544 |  |              |         |   |  |   | 30,544   |  
|Other current liabilities                            |  |                         | 20,944   |   |                       |   | 59,721                    |  |              | 1,094  |  |              |         |   |  |   | 81,759   |  
|                                                     |  |                         |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Current liabilities                                  |  |                         | 39,178   |   |                       |   | 101,774                   |  |              | 43,311 |  |              |         |   |  |   | 184,263  |  
|Long-term debt                                       |  |                         | 934,914  |   |                       |   | 5,931                     |  |              | 320    |  |              |         |   |  |   | 941,165  |  
|Other long-term liabilities                          |  |                         | 321      |   |                       |   | 40,521                    |  |              | 268    |  |              |         |   |  |   | 41,110   |  
|                                                     |  |                         |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Long-term liabilities                                |  |                         | 935,235  |   |                       |   | 46,452                    |  |              | 588    |  |              |         |   |  |   | 982,275  |  
|Stockholders equity (deficit)                       |  |                         | (718,089 | ) |                       |   | 191,961                   |  |              | 895    |  |              | (192,856 | ) |  |   | (718,089 | )
|                                                     |  |                         |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  
|Total liabilities and stockholders equity (deficit) |  | $                       | 256,324  |   |                       | $ | 340,187                   |  | $            | 44,794 |  | $            | (192,856 | ) |  | $ | 448,449  |  
|                                                     |  |                         |          |   |                       |   |                           |  |              |        |  |              |          |   |  |   |          |  



Dominos, Inc.

Supplemental Guarantor Condensed Consolidating Statements of Income



|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  
|--------------------------------------------------------- |  | ----------------------------------- | ------- | - | --------------------- | - | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                          |  | Fiscal Quarter Ended March 21, 2004 |        
|                                                          |  | Dominos, Inc.                      |         |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Revenues                                                  |  | $                                   |        |   |                       | $ | 312,473                   |  | $ | 6,281        |   |  | $            |        |   |  | $ | 318,754 |  
|Cost of sales                                             |  |                                     |        |   |                       |   | 232,912                   |  |   | 4,731        |   |  |              |        |   |  |   | 237,643 |  
|General and administrative                                |  |                                     |        |   |                       |   | 35,858                    |  |   | 1,782        |   |  |              |        |   |  |   | 37,640  |  
|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Total operating expenses                                  |  |                                     |        |   |                       |   | 268,770                   |  |   | 6,513        |   |  |              |        |   |  |   | 275,283 |  
|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Income (loss) from operations                             |  |                                     |        |   |                       |   | 43,703                    |  |   | (232         | ) |  |              |        |   |  |   | 43,471  |  
|Equity earnings in subsidiaries                           |  |                                     | 26,859  |   |                       |   |                          |  |   |             |   |  |              | (26,859 | ) |  |   |        |  
|Interest income (expense), net                            |  |                                     | (13,787 | ) |                       |   | 5                         |  |   | (117         | ) |  |              |        |   |  |   | (13,899 | )
|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Income (loss) before provision (benefit) for income taxes |  |                                     | 13,072  |   |                       |   | 43,708                    |  |   | (349         | ) |  |              | (26,859 | ) |  |   | 29,572  |  
|Provision (benefit) for income taxes                      |  |                                     | (5,336  | ) |                       |   | 16,500                    |  |   |             |   |  |              |        |   |  |   | 11,164  |  
|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Net income (loss)                                         |  | $                                   | 18,408  |   |                       | $ | 27,208                    |  | $ | (349         | ) |  | $            | (26,859 | ) |  | $ | 18,408  |  
|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  



9



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##### Table of Contents

|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  
|--------------------------------------------------------- |  | ----------------------------------- | ------- | - | --------------------- | - | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                          |  | Fiscal Quarter Ended March 23, 2003 |        
|                                                          |  | Dominos, Inc.                      |         |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Revenues                                                  |  | $                                   |        |   |                       | $ | 307,614                   |  | $ | 4,638        |   |  | $            |        |   |  | $ | 312,252 |  
|Cost of sales                                             |  |                                     |        |   |                       |   | 228,165                   |  |   | 3,639        |   |  |              |        |   |  |   | 231,804 |  
|General and administrative                                |  |                                     |        |   |                       |   | 36,209                    |  |   | 1,149        |   |  |              |        |   |  |   | 37,358  |  
|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Total operating expenses                                  |  |                                     |        |   |                       |   | 264,374                   |  |   | 4,788        |   |  |              |        |   |  |   | 269,162 |  
|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Income (loss) from operations                             |  |                                     |        |   |                       |   | 43,240                    |  |   | (150         | ) |  |              |        |   |  |   | 43,090  |  
|Equity earnings in subsidiaries                           |  |                                     | 27,108  |   |                       |   |                          |  |   |             |   |  |              | (27,108 | ) |  |   |        |  
|Interest income (expense), net                            |  |                                     | (12,292 | ) |                       |   | 119                       |  |   | (57          | ) |  |              |        |   |  |   | (12,230 | )
|Other                                                     |  |                                     | (1,743  | ) |                       |   |                          |  |   |             |   |  |              |        |   |  |   | (1,743  | )
|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Income (loss) before provision (benefit) for income taxes |  |                                     | 13,073  |   |                       |   | 43,359                    |  |   | (207         | ) |  |              | (27,108 | ) |  |   | 29,117  |  
|Provision (benefit) for income taxes                      |  |                                     | (5,271  | ) |                       |   | 16,044                    |  |   |             |   |  |              |        |   |  |   | 10,773  |  
|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Net income (loss)                                         |  | $                                   | 18,344  |   |                       | $ | 27,315                    |  | $ | (207         | ) |  | $            | (27,108 | ) |  | $ | 18,344  |  
|                                                          |  |                                     |         |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |         |  



|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|------------------------------------------------------------ |  | ----------------------------------- | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - | ------------ | - | - |  | - | ------- | -
|                                                             |  | Fiscal Quarter Ended March 21, 2004 |        
|                                                             |  | Dominos, Inc.                      |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   | Consolidated |  
|Net cash flows provided by (used in) operating activities    |  | $                                   | (19,691 | ) |                       | $ | 39,118  |                           |  | $ | (698         | ) |              | $ |  |  | $ | 18,729  |  
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Capital expenditures                                         |  |                                     |        |   |                       |   | (6,526  | )                         |  |   | (269         | ) |              |   |  |  |   | (6,795  | )
|Other                                                        |  |                                     |        |   |                       |   | 553     |                           |  |   |             |   |              |   |  |  |   | 553     |  
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Net cash flows used in investing activities                  |  |                                     |        |   |                       |   | (5,973  | )                         |  |   | (269         | ) |              |   |  |  |   | (6,242  | )
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Repayments of debt                                           |  |                                     | (18,234 | ) |                       |   | (54     | )                         |  |   | (83          | ) |              |   |  |  |   | (18,371 | )
|Other                                                        |  |                                     | 37,925  |   |                       |   | (38,150 | )                         |  |   |             |   |              |   |  |  |   | (225    | )
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Net cash flows provided by (used in) financing activities    |  |                                     | 19,691  |   |                       |   | (38,204 | )                         |  |   | (83          | ) |              |   |  |  |   | (18,596 | )
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Effect of exchange rate changes on cash and cash equivalents |  |                                     |        |   |                       |   | (2      | )                         |  |   | (4           | ) |              |   |  |  |   | (6      | )
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Decrease in cash and cash equivalents                        |  |                                     |        |   |                       |   | (5,061  | )                         |  |   | (1,054       | ) |              |   |  |  |   | (6,115  | )
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Cash and cash equivalents, at beginning of period            |  |                                     |        |   |                       |   | 41,123  |                           |  |   | 1,603        |   |              |   |  |  |   | 42,726  |  
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Cash and cash equivalents, at end of period                  |  | $                                   |        |   |                       | $ | 36,062  |                           |  | $ | 549          |   |              | $ |  |  | $ | 36,611  |  
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  



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|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|------------------------------------------------------------ |  | ----------------------------------- | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - | ------------ | - | - |  | - | ------- | -
|                                                             |  | Fiscal Quarter Ended March 23, 2003 |        
|                                                             |  | Dominos, Inc.                      |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   | Consolidated |  
|Net cash flows provided by (used in) operating activities    |  | $                                   | (8,441  | ) |                       | $ | 40,765  |                           |  | $ | 275          |   |              | $ |  |  | $ | 32,599  |  
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Capital expenditures                                         |  |                                     |        |   |                       |   | (4,960  | )                         |  |   | (259         | ) |              |   |  |  |   | (5,219  | )
|Other                                                        |  |                                     |        |   |                       |   | 1,002   |                           |  |   |             |   |              |   |  |  |   | 1,002   |  
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Net cash flows used in investing activities                  |  |                                     |        |   |                       |   | (3,958  | )                         |  |   | (259         | ) |              |   |  |  |   | (4,217  | )
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Repayments of debt                                           |  |                                     | (20,500 | ) |                       |   |        |                           |  |   |             |   |              |   |  |  |   | (20,500 | )
|Other                                                        |  |                                     | 28,941  |   |                       |   | (29,055 | )                         |  |   |             |   |              |   |  |  |   | (114    | )
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Net cash flows provided by (used in) financing activities    |  |                                     | 8,441   |   |                       |   | (29,055 | )                         |  |   |             |   |              |   |  |  |   | (20,614 | )
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Effect of exchange rate changes on cash and cash equivalents |  |                                     |        |   |                       |   | (5      | )                         |  |   | 3            |   |              |   |  |  |   | (2      | )
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Increase in cash and cash equivalents                        |  |                                     |        |   |                       |   | 7,747   |                           |  |   | 19           |   |              |   |  |  |   | 7,766   |  
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Cash and cash equivalents, at beginning of period            |  |                                     |        |   |                       |   | 21,522  |                           |  |   | 950          |   |              |   |  |  |   | 22,472  |  
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  
|Cash and cash equivalents, at end of period                  |  | $                                   |        |   |                       | $ | 29,269  |                           |  | $ | 969          |   |              | $ |  |  | $ | 30,238  |  
|                                                             |  |                                     |         |   |                       |   |         |                           |  |   |              |   |              |   |   |  |   |         |  





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

(Unaudited; tabular
amounts in millions, except percentages and store data)



The 2004 and 2003 first quarters referenced herein represent the twelve-week periods ended March 21, 2004 and March 23, 2003, respectively.



Overview



During the first quarter of 2004, we grew our total system-wide sales 6.8% and achieved record income from operations, despite an intensely competitive
landscape and an environment of rising costs negatively affecting most of our key expense items.



System-wide sales, which include retail sales at both our franchise and Company-owned stores, benefited from strong international same store sales growth
(constant dollar), an increase in our worldwide store counts and the positive effect of a weaker U.S. dollar in the key international markets in which we compete. The first quarter marked the 41stconsecutive quarter that we have grown our international same store sales and our worldwide store counts have increased 220 stores from year-ago levels, led
by our international operations. These positive movements more than offset the effect of a slight decrease in domestic same store sales results.



Income from operations was a record $43.5 million in the first quarter, up 0.9% from the comparable period in 2003. The Company achieved record income
from operations despite increases in our food costs as well as increases in occupancy and insurance costs. Our Company-owned stores successfully managed this increase in food costs, actually driving food costs as a percentage of revenues down from
year-ago levels, as a result of operational efficiencies and changes in product mix. Cheese costs as of the end of the first quarter were at very high levels and, subsequent to quarter-end, reached all-time highs of well over $2.00 per pound. These
sudden and unprecedented cheese price movements may negatively impact the unit economics at our Company-owned stores and domestic franchise stores in the near term. Domestic distribution volumes declined in the first quarter, tied to the decrease in
domestic same store sales. Net income was negatively impacted by increased debt levels as a result of our June 2003 recapitalization as well as increased income tax expense as a result of an increased effective rate.



Same Store Sales Growth



The following is a summary of the Companys same store sales growth
first quarter of 2004.



|                              |  |                      |   
|----------------------------- |  | -------------------- | --
|                              |  | First Quarterof 2004 |   
|Domestic Company-owned stores |  | (1.6                 | )%
|Domestic franchise stores     |  | (0.8                 | )%
|                              |  |                      |   
|Domestic stores               |  | (0.9                 | )%
|International stores          |  | 6.4                  | % 



Store Growth Activity



The following is a summary of the Companys
store growth activity for the first quarter of 2004.



|                                 |  |                              |   |  |                         |   |  |                |   |  |                     |   |  |       |  
|-------------------------------- |  | ---------------------------- | - |  | ----------------------- | - |  | -------------- | - |  | ------------------- | - |  | ----- | -
|                                 |  | First Quarter of 2004        |  
|                                 |  | Domestic Company-ownedStores |   |  | DomesticFranchiseStores |   |  | DomesticStores |   |  | InternationalStores |   |  | Total |  
|Store count at December 28, 2003 |  | 577                          |   |  | 4,327                   |   |  | 4,904          |   |  | 2,523               |   |  | 7,427 |  
|Openings                         |  |                             |   |  | 28                      |   |  | 28             |   |  | 36                  |   |  | 64    |  
|Closings                         |  | (1                           | ) |  | (11                     | ) |  | (12            | ) |  | (6                  | ) |  | (18   | )
|Transfers                        |  |                             |   |  |                        |   |  |               |   |  |                    |   |  |      |  
|                                 |  |                              |   |  |                         |   |  |                |   |  |                     |   |  |       |  
|Store count at March 21, 2004    |  | 576                          |   |  | 4,344                   |   |  | 4,920          |   |  | 2,553               |   |  | 7,473 |  
|                                 |  |                              |   |  |                         |   |  |                |   |  |                     |   |  |       |  



12



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System-wide Sales



Retail sales, which generate royalty payments by our franchisees, revenues from our Company-owned stores and revenues to our distribution business, are
driven by same store sales growth and store counts. The following table sets forth worldwide retail sales for our franchise and Company-owned stores for the first quarter of 2004 and 2003. We refer to total worldwide retail sales, including retail
sales at both our franchise and Company-owned stores, as system-wide sales. Franchise retail sales are reported to us by our franchisees and are not included in our revenues.



|                             |  |                       |       |  |                       |   |  |   |       |  |       |  
|---------------------------- |  | --------------------- | ----- |  | --------------------- | - |  | - | ----- |  | ----- | -
|                             |  | First Quarter of 2004 |       |  | First Quarter of 2003 |  
|Franchise retail sales:      |  |                       |       |  |                       |   |  |   |       |  |       |  
|Domestic                     |  | $                     | 633.6 |  | 66.5                  | % |  | $ | 627.9 |  | 70.9  | %
|International                |  |                       | 319.6 |  | 33.5                  | % |  |   | 257.2 |  | 29.1  | %
|                             |  |                       |       |  |                       |   |  |   |       |  |       |  
|Total franchise retail sales |  | $                     | 953.2 |  | 100.0                 | % |  | $ | 885.1 |  | 100.0 | %
|                             |  |                       |       |  |                       |   |  |   |       |  |       |  



|                                 |  |                       |      |  |                       |   |  |   |      |  |       |  
|-------------------------------- |  | --------------------- | ---- |  | --------------------- | - |  | - | ---- |  | ----- | -
|                                 |  | First Quarter of 2004 |      |  | First Quarter of 2003 |  
|Company-owned retail sales:      |  |                       |      |  |                       |   |  |   |      |  |       |  
|Domestic                         |  | $                     | 88.0 |  | 98.2                  | % |  | $ | 89.9 |  | 98.7  | %
|International                    |  |                       | 1.6  |  | 1.8                   | % |  |   | 1.2  |  | 1.3   | %
|                                 |  |                       |      |  |                       |   |  |   |      |  |       |  
|Total Company-owned retail sales |  | $                     | 89.6 |  | 100.0                 | % |  | $ | 91.2 |  | 100.0 | %
|                                 |  |                       |      |  |                       |   |  |   |      |  |       |  



Income Statement Data



The following table sets forth income statement data
for the first quarter of 2004 and 2003.



|                                         |  |                       |       |   |                       |       |    |  |   |       |   |  |       |   
|---------------------------------------- |  | --------------------- | ----- | - | --------------------- | ----- | -- |  | - | ----- | - |  | ----- | --
|                                         |  | First Quarter of 2004 |       |   | First Quarter of 2003 |      
|Revenues:                                |  |                       |       |   |                       |       |    |  |   |       |   |  |       |   
|Domestic Company-owned stores            |  | $                     | 88.0  |   |                       | 27.6  | %  |  | $ | 89.9  |   |  | 28.8  | % 
|Domestic franchise                       |  |                       | 34.6  |   |                       | 10.9  | %  |  |   | 34.4  |   |  | 11.0  | % 
|Domestic distribution                    |  |                       | 170.9 |   |                       | 53.6  | %  |  |   | 167.4 |   |  | 53.6  | % 
|International                            |  |                       | 25.3  |   |                       | 7.9   | %  |  |   | 20.5  |   |  | 6.6   | % 
|                                         |  |                       |       |   |                       |       |    |  |   |       |   |  |       |   
|Total revenues                           |  |                       | 318.8 |   |                       | 100.0 | %  |  |   | 312.3 |   |  | 100.0 | % 
|                                         |  |                       |       |   |                       |       |    |  |   |       |   |  |       |   
|Operating expenses:                      |  |                       |       |   |                       |       |    |  |   |       |   |  |       |   
|Cost of sales                            |  |                       | 237.6 |   |                       | 74.6  | %  |  |   | 231.8 |   |  | 74.2  | % 
|General and administrative               |  |                       | 37.6  |   |                       | 11.8  | %  |  |   | 37.4  |   |  | 12.0  | % 
|                                         |  |                       |       |   |                       |       |    |  |   |       |   |  |       |   
|Income from operations                   |  |                       | 43.5  |   |                       | 13.6  | %  |  |   | 43.1  |   |  | 13.8  | % 
|                                         |  |                       |       |  
|Interest expense, net                    |  |                       | (13.9 | ) |                       | (4.4  | )% |  |   | (12.2 | ) |  | (3.9  | )%
|Other                                    |  |                       |      |   |                       |      |    |  |   | (1.7  | ) |  | (0.6  | )%
|                                         |  |                       |       |   |                       |       |    |  |   |       |   |  |       |   
|Income before provision for income taxes |  |                       | 29.6  |   |                       | 9.3   | %  |  |   | 29.1  |   |  | 9.3   | % 
|Provision for income taxes               |  |                       | 11.2  |   |                       | 3.5   | %  |  |   | 10.8  |   |  | 3.5   | % 
|                                         |  |                       |       |   |                       |       |    |  |   |       |   |  |       |   
|Net income                               |  | $                     | 18.4  |   |                       | 5.8   | %  |  | $ | 18.3  |   |  | 5.9   | % 
|                                         |  |                       |       |   |                       |       |    |  |   |       |   |  |       |   



Revenues



Revenues include retail sales by Company-owned stores, royalties and fees
from domestic and international franchise stores, and sales of food, equipment and supplies by our distribution centers to certain domestic and international franchise stores.



Consolidated revenues increased $6.5 million or 2.1% to $318.8 million in the first quarter
of 2004, from $312.3 million in the comparable period in 2003. This increase in revenues was due primarily to increases in international and domestic distribution revenues, offset in part by a decrease in domestic Company-owned stores revenues.
These results are more fully described below.



Domestic Stores



Domestic stores revenues are comprised of revenues
from our domestic Company-owned store operations and domestic franchise operations, as summarized in the following table.



|                               |  |                       |       |  |                       |   |  |   |       |  |       |  
|------------------------------ |  | --------------------- | ----- |  | --------------------- | - |  | - | ----- |  | ----- | -
|Domestic Stores                |  | First Quarter of 2004 |       |  | First Quarter of 2003 |  
|Domestic Company-owned stores  |  | $                     | 88.0  |  | 71.7                  | % |  | $ | 89.9  |  | 72.3  | %
|Domestic franchise             |  |                       | 34.6  |  | 28.3                  | % |  |   | 34.4  |  | 27.7  | %
|                               |  |                       |       |  |                       |   |  |   |       |  |       |  
|Total domestic stores revenues |  | $                     | 122.6 |  | 100.0                 | % |  | $ | 124.3 |  | 100.0 | %
|                               |  |                       |       |  |                       |   |  |   |       |  |       |  



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##### Table of Contents

Domestic stores revenues decreased $1.7 million or 1.4% to $122.6 million in the first quarter of 2004,
from $124.3 million in the comparable period in 2003. This decrease in revenues was due primarily to a 0.9% decrease in same store sales in the first quarter of 2004, compared to the comparable period in 2003, offset in part by an increase in the
average number of domestic franchise stores in operation during 2004. This decrease in domestic stores revenues is more fully described below.



Domestic Company-Owned Stores



Revenues from domestic Company-owned store operations decreased $1.9 million or 2.2% to $88.0 million in the first quarter of 2004, from $89.9 million in
the comparable period in 2003. This decrease in revenues was due to a 1.6% decrease in same store sales in the first quarter of 2004, compared to the comparable period in 2003. There were 576 and 578 domestic Company-owned stores in operation as of
March 21, 2004 and March 23, 2003, respectively.



Domestic Franchise



Revenues from
domestic franchise operations increased $0.2 million or 0.7% to $34.6 million in the first quarter of 2004, from $34.4 million in the comparable period in 2003. This increase in revenues was due primarily to an increase in the average number of
domestic franchise stores open during 2004, offset in part by a decrease in same store sales. There were 4,344 and 4,274 domestic franchise stores in operation as of March 21, 2004 and March 23, 2003, respectively. Same store sales for domestic
franchise stores decreased 0.8% in the first quarter of 2004, compared to the comparable period in 2003.



Domestic Distribution



Revenues from domestic distribution operations increased $3.5 million or 2.0% to $170.9 million in the first quarter of 2004, from $167.4 million in the comparable period in 2003. This increase in revenues was due
primarily to an increase in overall food prices, including higher cheese prices, offset in part by lower volumes relating to a decrease in domestic franchise same store sales. The cheese block price per pound averaged $1.34 in the first quarter of
2004, compared to $1.12 in the comparable period in 2003.



International



Revenues from
international operations increased $4.8 million or 23.6% to $25.3 million in the first quarter of 2004, from $20.5 million in the comparable period in 2003. This increase in revenues was due primarily to an increase in same store sales, an increase
in the average number of international stores open during 2004, and a related increase in revenues from our international distribution operations. On a constant dollar basis, same store sales increased 6.4% in the first quarter of 2004, compared to
the comparable period in 2003. On a historical dollar basis, same store sales increased 16.7% in the first quarter of 2004, compared to the comparable period in 2003, reflecting a generally weaker U.S. Dollar in those markets in which we compete.
There were 2,553 and 2,401 international stores in operation as of March 21, 2004 and March 23, 2003, respectively.



Cost of Sales / Operating Margin



Consolidated cost of sales is comprised primarily of domestic Company-owned store and domestic distribution costs incurred to generate related revenues.
Components of consolidated cost of sales primarily include food, labor and occupancy costs.



The consolidated operating margin, which we define as revenues less cost of sales, increased $0.7 million or 0.8% to $81.1 million in the first quarter of 2004, from $80.4 million in the comparable period in 2003, as
summarized in the following table.



|                              |  |                       |       |  |                       |   |  |   |       |  |       |  
|----------------------------- |  | --------------------- | ----- |  | --------------------- | - |  | - | ----- |  | ----- | -
|                              |  | First Quarter of 2004 |       |  | First Quarter of 2003 |  
|Consolidated revenues         |  | $                     | 318.8 |  | 100.0                 | % |  | $ | 312.3 |  | 100.0 | %
|Consolidated cost of sales    |  |                       | 237.6 |  | 74.6                  | % |  |   | 231.8 |  | 74.2  | %
|                              |  |                       |       |  |                       |   |  |   |       |  |       |  
|Consolidated operating margin |  | $                     | 81.1  |  | 25.4                  | % |  | $ | 80.4  |  | 25.8  | %
|                              |  |                       |       |  |                       |   |  |   |       |  |       |  



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##### Table of Contents

The $0.7 million increase in the consolidated operating margin was due primarily to increases in the
operating margins from both our domestic franchise and international operations, offset in part by decreases in the operating margins at both our domestic Company-owned stores and domestic distribution operations. Franchise revenues do not have a
cost of sales component and, as a result, increases in related franchise revenues have a disproportionate effect on the consolidated operating margin.



As a percentage of total revenues, the consolidated operating margin decreased primarily as a result of increased costs at our domestic distribution
operations, offset in part by the aforementioned increases in domestic franchise and international operations margins. Changes in the operating margins at domestic Company-owned store operations and domestic distribution operations are more fully
described below.



Domestic Company-Owned Stores



The domestic Company-owned store operating margin
decreased $0.3 million or 1.7% to $17.9 million in the first quarter of 2004, from $18.2 million in the comparable period in 2003, as summarized in the following table.



|                              |  |                       |      |  |                       |   |  |   |      |  |       |  
|----------------------------- |  | --------------------- | ---- |  | --------------------- | - |  | - | ---- |  | ----- | -
|Domestic Company-Owned Stores |  | First Quarter of 2004 |      |  | First Quarter of 2003 |  
|Revenues                      |  | $                     | 88.0 |  | 100.0                 | % |  | $ | 89.9 |  | 100.0 | %
|Cost of sales                 |  |                       | 70.1 |  | 79.7                  | % |  |   | 71.8 |  | 79.8  | %
|                              |  |                       |      |  |                       |   |  |   |      |  |       |  
|Store operating margin        |  | $                     | 17.9 |  | 20.3                  | % |  | $ | 18.2 |  | 20.2  | %
|                              |  |                       |      |  |                       |   |  |   |      |  |       |  



The $0.3 million
decrease in the domestic Company-owned store operating margin was due primarily to a decrease in same store sales.



As a percentage of store revenues, the store operating margin for the first quarter of 2004 increased 0.1 percentage points to 20.3%, from 20.2% in the
comparable period in 2003. As a percentage of store revenues, food costs decreased 0.7 percentage points to 26.3% in the first quarter of 2004, from 27.0% in the comparable period in 2003. This decrease in food costs as a percentage of store
revenues was due primarily to a change in product mix per order primarily as a result of more aggressive promotions in the first quarter of 2003, offset in part by a market increase in overall food prices, including cheese. Offsetting these
favorable food margin improvements were increases in occupancy, labor and health insurance costs.



As a percentage of store revenues, occupancy costs, which include rent, telephone, utilities and depreciation, increased 0.6 percentage points to 11.1% in
the first quarter of 2004, from 10.5% in the comparable period in 2003, due primarily to increases in rent and depreciation. As a percentage of store revenues, labor costs increased 0.2 percentage points to 30.8% in the first quarter of 2004, from
30.6% in the comparable period in 2003.



Domestic
Distribution



The domestic distribution operating
margin decreased $2.0 million or 11.0% to $16.7 million in the first quarter of 2004, from $18.7 million in the comparable period in 2003, as summarized in the following table.



|                              |  |                       |       |  |                       |   |  |   |       |  |       |  
|----------------------------- |  | --------------------- | ----- |  | --------------------- | - |  | - | ----- |  | ----- | -
|Domestic Distribution         |  | First Quarter of 2004 |       |  | First Quarter of 2003 |  
|Revenues                      |  | $                     | 170.9 |  | 100.0                 | % |  | $ | 167.4 |  | 100.0 | %
|Cost of sales                 |  |                       | 154.2 |  | 90.2                  | % |  |   | 148.7 |  | 88.8  | %
|                              |  |                       |       |  |                       |   |  |   |       |  |       |  
|Distribution operating margin |  | $                     | 16.7  |  | 9.8                   | % |  | $ | 18.7  |  | 11.2  | %
|                              |  |                       |       |  |                       |   |  |   |       |  |       |  



The $2.0 million
decrease in the domestic distribution operating margin was due primarily to a decrease in volumes, offset in part by efficiencies in the areas of operations and purchasing.



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##### Table of Contents

As a percentage of distribution revenues, the distribution operating margin for the first quarter of 2004
decreased 1.4 percentage points to 9.8%, from 11.2% in the comparable period in 2003. This decrease was due primarily to increased food prices, including cheese, and a decrease in volumes. Increases in certain food prices, including cheese, have a
negative effect on the distribution operating margin due to the fixed dollar margin earned by domestic distribution on the sale of certain food items. Had the 2004 food prices been in effect during the first quarter of 2003, the distribution
operating margin for the first quarter of 2003 would have been approximately 10.6% of distribution revenues, or 0.6 percentage points lower than the reported 2003 amounts.



General and Administrative Expenses



General and administrative expenses increased $0.2 million or 0.8% to $37.6 million in the first quarter of 2004, from $37.4 million in the comparable
period in 2003. As a percentage of revenues, general and administrative expenses decreased 0.2 percentage points to 11.8% in the first quarter of 2004, from 12.0% in the comparable period in 2003. This decrease in general and administrative expenses
as a percentage of revenues was due in part to managements continued focus on controlling overhead costs.



Interest Expense



Interest expense increased $1.7 million or 13.4% to $14.0 million in the first quarter of 2004, from $12.3 million in the comparable period in 2003. This
increase in interest expense was due primarily to increased debt levels as a result of the Companys June 2003 recapitalization, offset in part by more favorable interest rates.



Other



Other expense decreased $1.7 million from the first quarter in 2003. This decrease was due to losses incurred in connection with the Company retiring
$20.5 million of its senior subordinated notes in the first quarter of 2003.



Provision for Income Taxes



Provision
for income taxes increased $0.4 million to $11.2 million in the first quarter of 2004, from $10.8 million in the comparable period in 2003. The increase in the effective tax rate was due primarily to increases in state tax rates and the impact of
losses in certain foreign subsidiaries.



Segment Income



The following table summarizes earnings before
interest, taxes, deprecation, amortization, gains (losses) on sale/disposal of assets and other, which is the measure in which management allocates resources to its segments and, as required by SFAS No. 131, is disclosed in the notes to the
condensed consolidated financial statements included in this filing. Management refers to this measure as Segment Income. Segment Income for each of the Companys reportable segments for the first quarter of 2004 and 2003 are summarized in the
following table.



|                      |  |                      |      |                      |   |     
|--------------------- |  | -------------------- | ---- | -------------------- | - | ----
|                      |  | First Quarterof 2004 |      | First Quarterof 2003
|Domestic stores       |  | $                    | 34.8 |                      | $ | 34.6
|Domestic distribution |  |                      | 13.1 |                      |   | 13.6
|International         |  |                      | 7.7  |                      |   | 5.9 



Domestic
Stores



Domestic stores Segment Income increased
$0.2 million or 0.7% to $34.8 million in the first quarter of 2004, from $34.6 million in the comparable period in 2003. This increase was due primarily to an increase in domestic franchise royalties as described more fully in the revenues
discussion above and a decrease in general and administrative expenses at our domestic stores. These increases were offset in part by a decrease in the operating margin at our Company-owned stores as described more fully in the cost of
sales/operating margin discussion above.



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##### Table of Contents

Domestic Distribution



Domestic distribution Segment Income decreased $0.5 million or 3.4% to $13.1 million in the first quarter of 2004, from
$13.6 million in the comparable period in 2003. This decrease was due primarily to a decrease in volumes and a decrease in the operating margin at our distribution centers as described more fully in the cost of sales/operating margin discussion
above. These increases were offset in part by a decrease in general and administrative expenses, including administrative labor.



International



International Segment Income increased $1.8 million or 31.8% to $7.7 million in the first quarter of 2004, from $5.9 million in the comparable period in
2003. This increase was due primarily to an increase in royalty revenues, as more fully described in the revenues discussion above.



Liquidity and Capital Resources



We had working capital of $23.3 million and cash and cash equivalents of $36.6 million at March 21, 2004. Historically, we have operated with minimal
positive or negative working capital primarily because our receivable collection periods and inventory turn rates are faster than the normal payment terms on our current liabilities. We generally collect our receivables within three weeks from the
date of the related sale and we generally experience 40 to 50 inventory turns per year. In addition, our sales are not typically seasonal, which further limits our working capital requirements. These factors, coupled with significant and ongoing
cash flows from operations, which are primarily used to repay debt and invest in long-term assets, reduce our working capital amounts. Our primary sources of liquidity are cash flows from operations and availability of borrowings under our revolving
credit facility. We expect to fund planned capital expenditures and debt repayments from these sources. We did not have any material commitments for capital expenditures as of March 21, 2004.



As of March 21, 2004, we had $942.3 million of debt, of which $0.3 million
was classified as a current liability. There were no borrowings under our $125.0 million revolving credit facility. Letters of credit issued under the revolving credit facility were $23.0 million. These letters of credit are primarily related to our
casualty insurance programs and distribution center leases. Borrowings under the revolving credit facility are available to fund our working capital requirements, capital expenditures and other general corporate purposes.



Cash provided by operating activities was $18.7 million and $32.6 million in
the first quarter of 2004 and 2003, respectively. The $13.9 million decrease was due primarily to a $13.7 million net change in operating assets and liabilities.



Cash used in investing activities was $6.2 million and $4.2 million in the first quarter of 2004 and 2003, respectively. The
$2.0 million increase was due primarily to a $1.6 million increase in capital expenditures.



Cash used in financing activities was $18.6 million and $20.6 million in the first quarter of 2004 and 2003, respectively. The $2.0 million decrease was due primarily to a $2.1 million decrease in repayments of debt.



On April 13, 2004, our parent company and one of its
subsidiaries filed a Form S-1 Registration Statement with the Securities and Exchange Commission relating to a proposed initial public common stock offering. As part of the proposed offering, the Company would redeem a material portion of its senior
subordinated notes due 2011. The Company also anticipates that it will amend and restate its senior credit facility to, among other amendments, allow for the use of proceeds as described in the aforementioned Form S-1.



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##### Table of Contents

Based upon the current level of operations and anticipated growth, we believe that the cash generated
from operations and amounts available under the revolving credit facility will be adequate to meet our anticipated debt service requirements, capital expenditures and working capital needs for the next several years. Our ability to continue to fund
these items and continue to reduce debt could be adversely affected by the occurrence of any of the events described under Risk Factors in our Form 10-K for the year ended December 28, 2003. There can be no assurance, however, that our
business will generate sufficient cash flows from operations or that future borrowings will be available under the senior credit facility or otherwise to enable us to service our indebtedness, including the senior credit facility and the senior
subordinated notes, or to make anticipated capital expenditures. Our future operating performance and our ability to service or refinance the senior subordinated notes and to service, extend or refinance the senior credit facility will be subject to
future economic conditions and to financial, business and other factors, many of which are beyond our control. Additionally, the Company may be requested to provide funds to our parent company, TISM, Inc. (TISM), for stock dividends, distributions
and/or other cash needs of TISM.



Forward-Looking Statements



Certain statements contained in this filing relating to capital spending
levels and the adequacy of our capital resources are forward-looking. Also, statements that contain words such as believes, expects, anticipates, intends, estimates or similar expressions
are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Among these risks and uncertainties
are competitive factors, increases in our operating costs, ability to retain our key personnel, our substantial leverage, ability to implement our growth and cost-saving strategies, industry trends and general economic conditions, adequacy of
insurance coverage and other factors, all of which are described in the Form 10-K for the year ended December 28, 2003 and our other filings with the Securities and Exchange Commission. We do not undertake to publicly update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise.



18



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##### Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk



Market Risk



The
Company is exposed to market risks from interest rate changes on our variable rate debt. Management actively monitors this exposure. The Company does not engage in speculative transactions nor does it hold or issue financial instruments for trading
purposes.



Interest Rate Derivatives



The Company enters into interest rate swaps, collars or similar instruments
with the objective of reducing volatility relating to our borrowing costs.



The Company is party to three interest rate swap agreements which effectively convert the variable LIBOR component of the effective interest rate on a portion of the Companys debt under its senior credit
facility to various fixed rates over various terms. The Company is also party to two interest rate swap agreements which effectively convert the fixed component of the Companys debt under its senior subordinated notes to variable LIBOR rates
over the term of the senior subordinated notes.



Subsequent to
the first quarter of 2004, the Company entered into two additional interest rate swap agreements which effectively convert the variable LIBOR component of the effective interest rate on a portion of the Companys debt under its senior credit
facility to various fixed rates over various terms.



All of
these agreements are summarized in the following table.



|                   |  |                       |  |                                 |  |                            
|------------------ |  | --------------------- |  | ------------------------------- |  | ---------------------------
|Derivative         |  | Total Notional Amount |  | Term                            |  | Rate                       
|Interest Rate Swap |  | $60.0 million         |  | June 2001  June 2004           |  | 4.90%                      
|Interest Rate Swap |  | $30.0 million         |  | September 2001  September 2004 |  | 3.69%                      
|Interest Rate Swap |  | $75.0 million         |  | August 2002  June 2005         |  | 3.25%                      
|Interest Rate Swap |  | $50.0 million         |  | August 2003  July 2011         |  | LIBOR plus 319 basis points
|Interest Rate Swap |  | $50.0 million         |  | August 2003  July 2011         |  | LIBOR plus 324 basis points
|Interest Rate Swap |  | $300.0 million        |  | June 2004  June 2005           |  | 1.62%                      
|Interest Rate Swap |  | $350.0 million        |  | June 2005  June 2007           |  | 3.21%                      



Interest Rate Risk



The Companys variable interest expense is
sensitive to changes in the general level of interest rates. At March 21, 2004, the weighted average interest rate on our $466.0 million of variable interest debt was 3.9%.



The Company had total interest expense of approximately $14.0 million in the first quarter of 2004. The estimated increase
in interest expense for this period from a hypothetical 200 basis point adverse change in applicable variable interest rates would be approximately $2.2 million.



Item 4. Controls and Procedures



a. Within 90 days
prior to the date of the filing of this report, the Companys Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to
Exchange Act Rules 13a-14 and 15d-14. Based upon that evaluation such officers concluded that our disclosure controls and procedures are effective to ensure that information is gathered, analyzed and disclosed on a timely basis.



b. There have been no significant changes in the Companys internal controls or in other
factors that could significantly affect these controls subsequent to the date of the evaluation referred to above.



19



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##### Table of Contents

PART II. OTHER INFORMATION



Item 5. Other Information



Robert
Ruggiero, Jr. has resigned from our Board of Directors and that of our parent, TISM, Inc., effective April 21, 2004. Mr. Ruggiero is a partner of J.P. Morgan Partners, LLC, which is an affiliate of J.P. Morgan Securities Inc., one of the joint
book-running managers of our parent companys proposed initial public offering.



Item 6. Exhibits and Reports on Form 8-K



|a. | Exhibits
|-- | --------



|              |  |                                                                                                                                                                                
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                    
|31.1          |  | Certification by David A. Brandon pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                              
|              | 
|31.2          |  | Certification by Harry J. Silverman pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                            
|              | 
|32.1          |  | Certification by David A. Brandon pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  
|              | 
|32.2          |  | Certification by Harry J. Silverman pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



The following Current Reports on Form
8-K were filed with or furnished to the SEC during the period covered in this report:



Current Report on Form 8-K dated March 4, 2004 which included a press release announcing the Companys 2003 annual sales results.



SIGNATURES



Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized officer.



|                  |  |                        
|----------------- |  | -----------------------
|                  |  | DOMINOS, INC.         
|                  |  | (Registrant)           
|                  | 
|Date: May 4, 2004 |  | /s/ Harry J. Silverman 
|                  |  | Harry J. Silverman     
|                  |  | Chief Financial Officer



20