##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



---



FORM 10-Q



(Mark One)



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

| | SECURITIES EXCHANGE ACT OF 1934
| | -------------------------------



For the quarterly period ended September 7, 2003



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- 74797



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Dominos, Inc.

(Exact name of registrant as specified in its charter)



|Delaware                                                      |  | 38-3025165                            
|------------------------------------------------------------- |  | --------------------------------------
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification 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
October 13, 2003 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  September 7, 2003 (Unaudited) and December 29, 2002                                                          |  | 3       
|           |  |                                                                                                                                                     
|           |  | Condensed Consolidated Statements of Operations (Unaudited)  Fiscal quarter and three fiscal quarters ended September 7, 2003 and September 8, 2002 |  | 4       
|           |  |                                                                                                                                                     
|           |  | Condensed Consolidated Statements of Cash Flows (Unaudited)  Three fiscal quarters ended September 7, 2003 and September 8, 2002                    |  | 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                                                                                           |  | 18      
|           |  |                                                                                                                                                     
|Item 4.    |  | Controls and Procedures                                                                                                                              |  | 18      
|           |  |                                                                                                                                                     
|PART II.   |  | OTHER INFORMATION                                                                                                                                    |  |         
|           |  |                                                                                                                                                     
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                                                                     |  | 19      
|           | 
|SIGNATURES |  | 19                                                                                                                                                  



2



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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)                              |  | September 7, 2003(Unaudited) |          |   | December 29, 2002(Note) |  
|------------------------------------------- |  | ---------------------------- | -------- | - | ----------------------- | -
|Assets                                      |  |                              |          |   |                         |  
|Current assets:                             |  |                              |          |   |                         |  
|Cash and cash equivalents                   |  | $                            | 25,010   |   |                         | $
|Accounts receivable                         |  |                              | 60,339   |   |                         |  
|Inventories                                 |  |                              | 22,470   |   |                         |  
|Notes receivable                            |  |                              | 3,455    |   |                         |  
|Prepaid expenses and other                  |  |                              | 13,440   |   |                         |  
|Advertising fund assets, restricted         |  |                              | 28,005   |   |                         |  
|Deferred income taxes                       |  |                              | 7,141    |   |                         |  
|                                            |  |                              |          |   |                         |  
|Total current assets                        |  |                              | 159,860  |   |                         |  
|                                            |  |                              |          |   |                         |  
|Property, plant and equipment:              |  |                              |          |   |                         |  
|Land and buildings                          |  |                              | 15,669   |   |                         |  
|Leasehold and other improvements            |  |                              | 59,892   |   |                         |  
|Equipment                                   |  |                              | 152,461  |   |                         |  
|Construction in progress                    |  |                              | 5,952    |   |                         |  
|                                            |  |                              |          |   |                         |  
|                                            |  |                              | 233,974  |   |                         |  
|Accumulated depreciation and amortization   |  |                              | 115,139  |   |                         |  
|                                            |  |                              |          |   |                         |  
|Property, plant and equipment, net          |  |                              | 118,835  |   |                         |  
|                                            |  |                              |          |   |                         |  
|Other assets:                               |  |                              |          |   |                         |  
|Deferred financing costs                    |  |                              | 19,770   |   |                         |  
|Goodwill                                    |  |                              | 27,533   |   |                         |  
|Capitalized software                        |  |                              | 26,976   |   |                         |  
|Other assets                                |  |                              | 14,550   |   |                         |  
|Deferred income taxes                       |  |                              | 54,911   |   |                         |  
|                                            |  |                              |          |   |                         |  
|Total other assets                          |  |                              | 143,740  |   |                         |  
|                                            |  |                              |          |   |                         |  
|Total assets                                |  | $                            | 422,435  |   |                         | $
|                                            |  |                              |          |   |                         |  
|Liabilities and stockholders deficit       |  |                              |          |   |                         |  
|Current liabilities:                        |  |                              |          |   |                         |  
|Current portion of long-term debt           |  | $                            | 22,091   |   |                         | $
|Accounts payable                            |  |                              | 48,955   |   |                         |  
|Insurance reserves                          |  |                              | 8,638    |   |                         |  
|Advertising fund liabilities                |  |                              | 28,005   |   |                         |  
|Other accrued liabilities                   |  |                              | 61,418   |   |                         |  
|                                            |  |                              |          |   |                         |  
|Total current liabilities                   |  |                              | 169,107  |   |                         |  
|                                            |  |                              |          |   |                         |  
|Long-term liabilities:                      |  |                              |          |   |                         |  
|Long-term debt, less current portion        |  |                              | 949,480  |   |                         |  
|Insurance reserves                          |  |                              | 16,356   |   |                         |  
|Other accrued liabilities                   |  |                              | 28,928   |   |                         |  
|                                            |  |                              |          |   |                         |  
|Total long-term liabilities                 |  |                              | 994,764  |   |                         |  
|                                            |  |                              |          |   |                         |  
|Stockholders deficit:                      |  |                              |          |   |                         |  
|Common stock                                |  |                              |         |   |                         |  
|Additional paid-in capital                  |  |                              | 124,019  |   |                         |  
|Retained deficit                            |  |                              | (863,509 | ) |                         |  
|Accumulated other comprehensive loss        |  |                              | (1,946   | ) |                         |  
|                                            |  |                              |          |   |                         |  
|Total stockholders deficit                 |  |                              | (741,436 | ) |                         |  
|                                            |  |                              |          |   |                         |  
|Total liabilities and stockholders deficit |  | $                            | 422,435  |   |                         | $
|                                            |  |                              |          |   |                         |  

---

Note: The balance sheet at December 29, 2002 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 Operations

(Unaudited)



|                                                          |  | Fiscal Quarter Ended |         |   | Three Fiscal Quarters Ended |  
|--------------------------------------------------------- |  | -------------------- | ------- | - | --------------------------- | -
|(In thousands)                                            |  | September 7, 2003    |         |   | September 8, 2002           |  
|                                                          |  |                      |        
|Revenues:                                                 |  |                      |         |   |                             |  
|Domestic Company-owned stores                             |  | $                    | 82,419  |   |                             | $
|Domestic franchise                                        |  |                      | 31,411  |   |                             |  
|Domestic distribution                                     |  |                      | 157,689 |   |                             |  
|International                                             |  |                      | 21,329  |   |                             |  
|                                                          |  |                      |         |   |                             |  
|Total revenues                                            |  |                      | 292,848 |   |                             |  
|                                                          |  |                      |         |   |                             |  
|Operating expenses:                                       |  |                      |         |   |                             |  
|Cost of sales                                             |  |                      | 220,066 |   |                             |  
|General and administrative                                |  |                      | 50,857  |   |                             |  
|                                                          |  |                      |         |   |                             |  
|Total operating expenses                                  |  |                      | 270,923 |   |                             |  
|                                                          |  |                      |         |   |                             |  
|Income from operations                                    |  |                      | 21,925  |   |                             |  
|                                                          |  |                      |         |  
|Interest income                                           |  |                      | 124     |   |                             |  
|Interest expense                                          |  |                      | (30,967 | ) |                             |  
|Other                                                     |  |                      | (20,422 | ) |                             |  
|                                                          |  |                      |         |   |                             |  
|Income (loss) before provision (benefit) for income taxes |  |                      | (29,340 | ) |                             |  
|                                                          |  |                      |         |  
|Provision (benefit) for income taxes                      |  |                      | (11,002 | ) |                             |  
|                                                          |  |                      |         |   |                             |  
|Net income (loss)                                         |  | $                    | (18,338 | ) |                             | $
|                                                          |  |                      |         |   |                             |  



See
accompanying notes.



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##### Table of Contents

Dominos, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                             |  | Three Fiscal Quarters Ended |          
|------------------------------------------------------------ |  | --------------------------- | ---------
|(In thousands)                                               |  | September 7,2003            |          
|Cash flows from operating activities:                        |  |                             |          
|Net cash provided by operating activities                    |  | $                           | 52,094   
|                                                             |  |                             |          
|Cash flows from investing activities:                        |  |                             |          
|Capital expenditures                                         |  |                             | (17,567  
|Acquisitions of franchise operations                         |  |                             |         
|Other                                                        |  |                             | 7,653    
|                                                             |  |                             |          
|Net cash used in investing activities                        |  |                             | (9,914   
|                                                             |  |                             |          
|Cash flows from financing activities:                        |  |                             |          
|Proceeds from issuance of long-term debt                     |  |                             | 1,010,090
|Repayments of long-term debt                                 |  |                             | (640,426 
|Cash paid for financing costs                                |  |                             | (20,048  
|Capital contribution                                         |  |                             |         
|Distributions to Parent                                      |  |                             | (389,263 
|                                                             |  |                             |          
|Net cash used in financing activities                        |  |                             | (39,647  
|                                                             |  |                             |          
|Effect of exchange rate changes on cash and cash equivalents |  |                             | 5        
|                                                             |  |                             |          
|Increase (decrease) in cash and cash equivalents             |  |                             | 2,538    
|Cash and cash equivalents, at beginning of period            |  |                             | 22,472   
|                                                             |  |                             |          
|Cash and cash equivalents, at end of period                  |  | $                           | 25,010   
|                                                             |  |                             |          



See
accompanying notes.



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##### Table of Contents

Dominos, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited; tabular amounts in thousands)



September 7, 2003



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
and three fiscal quarters ended September 7, 2003 are not necessarily indicative of the results that may be expected for the fiscal year ending December 28, 2003. For further information, refer to the consolidated financial statements and footnotes
thereto for the fiscal year ended December 29, 2002 included in our Form 10-K.



2. Comprehensive Income



|                                                                                 |  | Fiscal Quarter Ended |         |   | Three Fiscal Quarters Ended |  
|-------------------------------------------------------------------------------- |  | -------------------- | ------- | - | --------------------------- | -
|                                                                                 |  | September 7, 2003    |         |   | September 8,2002            |  
|Net income (loss)                                                                |  | $                    | (18,338 | ) |                             | $
|Unrealized gain (loss) on derivative instruments, net of tax                     |  |                      | 576     |   |                             |  
|Reclassification adjustment for losses included in net income (loss), net of tax |  |                      | 906     |   |                             |  
|Currency translation adjustment                                                  |  |                      | (679    | ) |                             |  
|                                                                                 |  |                      |         |   |                             |  
|Comprehensive income (loss)                                                      |  | $                    | (17,535 | ) |                             | $
|                                                                                 |  |                      |         |   |                             |  



3.
Segment Information



The following table summarizes revenues,
income from operations and earnings before interest, taxes, depreciation and amortization, calculated in the manner required by SFAS No. 131 and which we refer to throughout this document as EBITDA, as adjusted, for each of the Companys
reportable segments.



|                         |  | Fiscal Quarter Ended September 7, 2003 and September 8, 2002
|------------------------ |  | ------------------------------------------------------------
|                         |  | DomesticStores                                              
|Revenues                |  |                                                             
|2003                     |  | $                                                           
|2002                     |  |                                                             
|Income from operations  |  |                                                             
|2003                     |  | $                                                           
|2002                     |  |                                                             
|EBITDA, as adjusted     |  |                                                             
|2003                     |  | $                                                           
|2002                     |  |                                                             



|                         |  | Three Fiscal Quarters Ended September 7, 2003 and September 8, 2002
|------------------------ |  | -------------------------------------------------------------------
|                         |  | DomesticStores                                                     
|Revenues                |  |                                                                    
|2003                     |  | $                                                                  
|2002                     |  |                                                                    
|Income from operations  |  |                                                                    
|2003                     |  | $                                                                  
|2002                     |  |                                                                    
|EBITDA, as adjusted     |  |                                                                    
|2003                     |  | $                                                                  
|2002                     |  |                                                                    



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The following table reconciles EBITDA, as adjusted to consolidated income (loss) before provision
(benefit) for income taxes.



|                                                          |  | Fiscal Quarter Ended |         |   | Three Fiscal Quarters Ended |  
|--------------------------------------------------------- |  | -------------------- | ------- | - | --------------------------- | -
|                                                          |  | September 7,2003     |         |   | September 8,2002            |  
|EBITDA, as adjusted                                       |  | $                    | 25,798  |   |                             | $
|Depreciation and amortization                             |  |                      | (6,668  | ) |                             |  
|Interest expense                                          |  |                      | (30,967 | ) |                             |  
|Interest income                                           |  |                      | 124     |   |                             |  
|Gains (losses) on sale/disposal of assets                 |  |                      | 2,795   |   |                             |  
|Loss on debt extinguishments                              |  |                      | (20,422 | ) |                             |  
|                                                          |  |                      |         |   |                             |  
|Income (loss) before provision (benefit) for income taxes |  | $                    | (29,340 | ) |                             | $
|                                                          |  |                      |         |   |                             |  



4.
New Accounting Pronouncement



In January 2003, the FASB issued
FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51 (FIN 46). FIN 46 addresses the consolidation of entities whose equity holders have either (a) not provided sufficient
equity at risk to allow the entity to finance its own activities or (b) do not possess certain characteristics of a controlling financial interest. FIN 46 requires the consolidation of these entities, known as variable interest entities
(VIEs), by the primary beneficiary of the entity. FIN 46 applies immediately to variable interests in VIEs created or obtained after January 31, 2003. For variable interests of a non-public equity company in a VIE created before February
1, 2003, FIN 46 is applied to the VIE no later than the end of the first annual reporting period beginning after June 15, 2003, which is the end of our fiscal 2004. We have concluded that we have not created or obtained any VIEs subsequent to
January 31, 2003 that would require consolidation. We are assessing FIN 46 as it relates to VIEs created before February 1, 2003 and, although we have not completed our analysis, we currently do not expect adoption to have a material effect on our
financial statements.



5. Balance Sheet
Presentation of Advertising Fund



The Company has presented on
a gross basis approximately $28.0 million of assets and liabilities of our advertising fund (the Advertising Fund) in the condensed consolidated balance sheet as of September 7, 2003 and has reclassified approximately $28.2 million of
assets and liabilities of the Advertising Fund in the condensed consolidated balance sheet as of December 29, 2002. The Company had previously presented these assets and liabilities on a net basis. As the related assets, consisting primarily of cash
and accounts receivable, held by the Advertising Fund can only be used for activities that promote the Dominos Pizza brand, all assets held by the Advertising Fund are considered restricted.



6. 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 (loss) 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 |         |   | Three Fiscal Quarters Ended |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------- | - | --------------------------- | -
|                                                                                                                                          |  | September 7,2003     |         |   | September 8,2002            |  
|Net income (loss), as reported                                                                                                            |  | $                    | (18,338 | ) |                             | $
|Add: Stock-based employee compensation expense included in reported net income (loss), net of related tax effects                         |  |                      | 2,060   |   |                             |  
|Deduct: Total stock-based employee compensation expense determined under the fair value method for all awards, net of related tax
effects |  |                      | (2,806  | ) |                             |  
|                                                                                                                                          |  |                      |         |   |                             |  
|Net income (loss), pro forma                                                                                                              |  | $                    | (19,084 | ) |                             | $
|                                                                                                                                          |  |                      |         |   |                             |  



7



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##### Table of Contents

7. Recapitalization



On June 25, 2003, the Company, together with its parent consummated a recapitalization transaction whereby the Company:



| | (1) | issued and sold $403.0 million aggregate principal amount at maturity of 81/4% Senior Subordinated Notes due 2011 (the 2011 Notes) at a discount resulting in gross proceeds of $400.1 million;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | borrowed $610.0 million in term loans and secured a $125.0 million revolving credit facility (collectively the 2003 Senior Credit Facility); and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | used the proceeds from the 2011 Notes, borrowings under the 2003 Senior Credit Facility and cash from operations to:
| | --- | --------------------------------------------------------------------------------------------------------------------



| |  |  | purchase an aggregate of $206.7 million principal amount of its 103/8% Senior Subordinated Notes due 2009 for an aggregate purchase price, including $20.4 million of bond tender fees recorded in other expense and $9.6 million of accrued interest, of approximately $236.7 million; losses on
debt extinguishments for all periods presented have been reclassified from general and administrative expenses to other expense to conform with the income statement presentation of the aforementioned bond tender fees.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | repay all amounts outstanding under the previous senior credit facility;
| | - |  | ------------------------------------------------------------------------



| |  |  | distribute amounts to its parent to redeem all of its outstanding 11.5% Cumulative Preferred Stock for an aggregate redemption price of approximately $200.5 million;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | distribute amounts to its parent to pay a dividend on its outstanding common stock in the aggregate amount of approximately $188.3 million;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | make compensatory make-whole payments to specified parent shareholders and Company officers, directors and employees who hold parent stock options in the aggregate amount of
approximately $12.4 million; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | pay related transaction fees and expenses.
| | - |  | ------------------------------------------



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 2011 Notes, 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 2011 Notes. Each of the
guarantor subsidiaries is jointly, severally, fully and unconditionally liable under the related guarantee.



Dominos, Inc.

Supplemental Condensed Consolidating Statements of
Operations



|                                                          |  | Fiscal Quarter Ended September 7, 2003 |        
|--------------------------------------------------------- |  | -------------------------------------- | -------
|                                                          |  | Dominos, Inc.                         |        
|Revenues                                                  |  | $                                      |       
|                                                          |  |                                        |        
|Cost of sales                                             |  |                                        |       
|General and administrative                                |  |                                        |       
|                                                          |  |                                        |        
|Total operating expenses                                  |  |                                        |       
|                                                          |  |                                        |        
|Income (loss) from operations                             |  |                                        |       
|                                                          |  |                                        |        
|Equity earnings in subsidiaries                           |  |                                        | 13,736 
|Interest income (expense), net                            |  |                                        | (30,916
|Other                                                     |  |                                        | (20,422
|                                                          |  |                                        |        
|Income (loss) before provision (benefit) for income taxes |  |                                        | (37,602
|                                                          |  |                                        |        
|Provision (benefit) for income taxes                      |  |                                        | (19,264
|                                                          |  |                                        |        
|Net income (loss)                                         |  | $                                      | (18,338
|                                                          |  |                                        |        



8



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##### Table of Contents

|                                                          |  | Three Fiscal Quarters Ended September 7, 2003 |        
|--------------------------------------------------------- |  | --------------------------------------------- | -------
|                                                          |  | Dominos, Inc.                                |        
|Revenues                                                  |  | $                                             |       
|                                                          |  |                                               |        
|Cost of sales                                             |  |                                               |       
|General and administrative                                |  |                                               |       
|                                                          |  |                                               |        
|Total operating expenses                                  |  |                                               |       
|                                                          |  |                                               |        
|Income (loss) from operations                             |  |                                               |       
|                                                          |  |                                               |        
|Equity earnings in subsidiaries                           |  |                                               | 65,545 
|Interest income (expense), net                            |  |                                               | (54,169
|Other                                                     |  |                                               | (22,164
|                                                          |  |                                               |        
|Income (loss) before provision (benefit) for income taxes |  |                                               | (10,788
|                                                          |  |                                               |        
|Provision (benefit) for income taxes                      |  |                                               | (28,335
|                                                          |  |                                               |        
|Net income (loss)                                         |  | $                                             | 17,547 
|                                                          |  |                                               |        
|                                                          | 
|                                                          |  | Fiscal Quarter Ended September 8, 2002        |        
|                                                          |  | Dominos, Inc.                                |        
|Revenues                                                  |  | $                                             |       
|                                                          |  |                                               |        
|Cost of sales                                             |  |                                               |       
|General and administrative                                |  |                                               |       
|                                                          |  |                                               |        
|Total operating expenses                                  |  |                                               |       
|                                                          |  |                                               |        
|Income (loss) from operations                             |  |                                               |       
|                                                          |  |                                               |        
|Equity earnings in subsidiaries                           |  |                                               | 21,641 
|Interest income (expense), net                            |  |                                               | (17,007
|Other                                                     |  |                                               | (301   
|                                                          |  |                                               |        
|Income (loss) before provision (benefit) for income taxes |  |                                               | 4,333  
|                                                          |  |                                               |        
|Provision (benefit) for income taxes                      |  |                                               | (6,468 
|                                                          |  |                                               |        
|Net income (loss)                                         |  | $                                             | 10,801 
|                                                          |  |                                               |        
|                                                          | 
|                                                          |  | Three Fiscal Quarters Ended September 8, 2002 |        
|                                                          |  | Dominos, Inc.                                |        
|Revenues                                                  |  | $                                             |       
|                                                          |  |                                               |        
|Cost of sales                                             |  |                                               |       
|General and administrative                                |  |                                               |       
|                                                          |  |                                               |        
|Total operating expenses                                  |  |                                               |       
|                                                          |  |                                               |        
|Income (loss) from operations                             |  |                                               |       
|                                                          |  |                                               |        
|Equity earnings in subsidiaries                           |  |                                               | 65,902 
|Interest income (expense), net                            |  |                                               | (44,061
|Other                                                     |  |                                               | (1,217 
|                                                          |  |                                               |        
|Income (loss) before provision (benefit) for income taxes |  |                                               | 20,624 
|                                                          |  |                                               |        
|Provision (benefit) for income taxes                      |  |                                               | (16,890
|                                                          |  |                                               |        
|Net income (loss)                                         |  | $                                             | 37,514 
|                                                          |  |                                               |        



9



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##### Table of Contents

Dominos, Inc.

Supplemental Condensed Consolidating Balance Sheets



|                                                     |  | As of September 7, 2003 |         
|---------------------------------------------------- |  | ----------------------- | --------
|                                                     |  | Dominos, Inc.          |         
|Cash and cash equivalents                            |  | $                       |        
|                                                     |  |                         |         
|Accounts receivable                                  |  |                         |        
|Advertising fund assets, restricted                  |  |                         |        
|Other current assets                                 |  |                         | 3,316   
|                                                     |  |                         |         
|Current assets                                       |  |                         | 3,316   
|                                                     |  |                         |         
|Property, plant and equipment, net                   |  |                         |        
|                                                     |  |                         |         
|Other assets                                         |  |                         | 246,673 
|                                                     |  |                         |         
|Total assets                                         |  | $                       | 249,989 
|                                                     |  |                         |         
|Current portion of long-term debt                    |  | $                       | 21,987  
|Accounts payable                                     |  |                         |        
|Advertising fund liabilities                         |  |                         |        
|Other current liabilities                            |  |                         | 16,990  
|                                                     |  |                         |         
|Current liabilities                                  |  |                         | 38,977  
|                                                     |  |                         |         
|Long-term debt                                       |  |                         | 949,193 
|Other long-term liabilities                          |  |                         | 3,255   
|                                                     |  |                         |         
|Long-term liabilities                                |  |                         | 952,448 
|                                                     |  |                         |         
|Stockholders equity (deficit)                       |  |                         | (741,436
|                                                     |  |                         |         
|Total liabilities and stockholders equity (deficit) |  | $                       | 249,989 
|                                                     |  |                         |         
|                                                     | 
|                                                     |  | As of December 29, 2002 |         
|                                                     |  | Dominos, Inc.          |         
|Cash and cash equivalents                            |  | $                       |        
|Accounts receivable                                  |  |                         |        
|Advertising fund assets, restricted                  |  |                         |        
|Other current assets                                 |  |                         |        
|                                                     |  |                         |         
|Current assets                                       |  |                         |        
|                                                     |  |                         |         
|Property, plant and equipment, net                   |  |                         |        
|                                                     |  |                         |         
|Other assets                                         |  |                         | 246,053 
|                                                     |  |                         |         
|Total assets                                         |  | $                       | 246,053 
|                                                     |  |                         |         
|Current portion of long-term debt                    |  | $                       | 2,738   
|Accounts payable                                     |  |                         |        
|Advertising fund liabilities                         |  |                         |        
|Other current liabilities                            |  |                         | 18,858  
|                                                     |  |                         |         
|Current liabilities                                  |  |                         | 21,596  
|                                                     |  |                         |         
|Long-term debt                                       |  |                         | 598,877 
|Other long-term liabilities                          |  |                         | 1,161   
|                                                     |  |                         |         
|Long-term liabilities                                |  |                         | 600,038 
|                                                     |  |                         |         
|Stockholders equity (deficit)                       |  |                         | (375,581
|                                                     |  |                         |         
|Total liabilities and stockholders equity (deficit) |  | $                       | 246,053 
|                                                     |  |                         |         



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##### Table of Contents

Dominos, Inc.

Supplemental Condensed Consolidating Statements of Cash Flows



|                                                             |  | Three Fiscal Quarters Ended September 7, 2003 |          
|------------------------------------------------------------ |  | --------------------------------------------- | ---------
|                                                             |  | Dominos, Inc.                                |          
|Net cash flows provided by (used in) operating activities    |  | $                                             | (57,872  
|                                                             |  |                                               |          
|Capital expenditures                                         |  |                                               |         
|Other                                                        |  |                                               |         
|                                                             |  |                                               |          
|Net cash flows used in investing activities                  |  |                                               |         
|                                                             |  |                                               |          
|Proceeds from issuance of long-term debt                     |  |                                               | 1,010,090
|Repayments of long-term debt                                 |  |                                               | (640,381 
|Other                                                        |  |                                               | (311,837 
|                                                             |  |                                               |          
|Net cash flows provided by (used in) financing activities    |  |                                               | 57,872   
|                                                             |  |                                               |          
|Effect of exchange rate changes on cash and cash equivalents |  |                                               |         
|                                                             |  |                                               |          
|Increase (decrease) in cash and cash equivalents             |  |                                               |         
|                                                             |  |                                               |          
|Cash and cash equivalents, at beginning of period            |  |                                               |         
|                                                             |  |                                               |          
|Cash and cash equivalents, at end of period                  |  | $                                             |         
|                                                             |  |                                               |          
|                                                             | 
|                                                             |  | Three Fiscal Quarters Ended September 8, 2002 |          
|                                                             |  | Dominos, Inc.                                |          
|Net cash flows provided by (used in) operating activities    |  | $                                             | (43,861  
|                                                             |  |                                               |          
|Capital expenditures                                         |  |                                               |         
|Other                                                        |  |                                               |         
|                                                             |  |                                               |          
|Net cash flows used in investing activities                  |  |                                               |         
|                                                             |  |                                               |          
|Proceeds from issuance of long-term debt                     |  |                                               | 365,000  
|Repayments of long-term debt                                 |  |                                               | (408,202 
|Other                                                        |  |                                               | 87,063   
|                                                             |  |                                               |          
|Net cash flows provided by (used in) financing activities    |  |                                               | 43,861   
|                                                             |  |                                               |          
|Effect of exchange rate changes on cash and cash equivalents |  |                                               |         
|                                                             |  |                                               |          
|Decrease in cash and cash equivalents                        |  |                                               |         
|                                                             |  |                                               |          
|Cash and cash equivalents, at beginning of period            |  |                                               |         
|                                                             |  |                                               |          
|Cash and cash equivalents, at end of period                  |  | $                                             |         
|                                                             |  |                                               |          



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##### Table of Contents

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 2003 and 2002 third quarters referenced herein represent the twelve-week periods ended September 7, 2003 and September 8, 2002, respectively. The 2003 and 2002 first three quarters referenced herein represent the thirty-six week periods
ended September 7, 2003 and September 8, 2002, respectively.



Store
Growth Activity



The following is a summary of the
Companys store growth activity for the third quarter and first three quarters of 2003.



|                              |  | Third Quarter of 2003       
|----------------------------- |  | ----------------------------
|                              |  | Beginningof Period          
|Domestic Company-owned stores |  | 579                         
|Domestic franchise            |  | 4,283                       
|                              |  |                             
|Domestic stores               |  | 4,862                       
|International                 |  | 2,429                       
|                              |  |                             
|Total                         |  | 7,291                       
|                              |  |                             
|                              | 
|                              |  | First Three Quarters of 2003
|                              |  | Beginningof Period          
|Domestic Company-owned stores |  | 577                         
|Domestic franchise            |  | 4,271                       
|                              |  |                             
|Domestic stores               |  | 4,848                       
|International                 |  | 2,382                       
|                              |  |                             
|Total                         |  | 7,230                       
|                              |  |                             



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 $15.7 million or 5.7% to $292.8 million in the third quarter of 2003, from $277.1 million in
the comparable period in 2002, and increased $21.1 million or 2.4% to $900.3 million in the first three quarters of 2003, from $879.2 million in the comparable period in 2002. These increases in revenues were due primarily to increases in domestic
distribution revenues and, to a lesser extent, increases in international revenues. These increases were offset in part by decreases in domestic stores revenues. These results are more fully described below.



Domestic Stores



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



|Domestic Stores                |  | Third Quarterof 2003 |       |  | Third Quarterof 2002 |   |  | FirstThree Quartersof 2003 |       |  | FirstThree Quartersof 2002 |  
|------------------------------ |  | -------------------- | ----- |  | -------------------- | - |  | -------------------------- | ----- |  | -------------------------- | -
|Domestic Company-owned stores  |  | $                    | 82.4  |  | 72.4                 | % |  | $                          | 84.4  |  | 73.4                       | %
|Domestic franchise             |  |                      | 31.4  |  | 27.6                 | % |  |                            | 30.6  |  | 26.6                       | %
|                               |  |                      |       |  |                      |   |  |                            |       |  |                            |  
|Total domestic stores revenues |  | $                    | 113.8 |  | 100.0                | % |  | $                          | 115.1 |  | 100.0                      | %
|                               |  |                      |       |  |                      |   |  |                            |       |  |                            |  



Domestic stores
revenues decreased $1.3 million or 1.1% to $113.8 million in the third quarter of 2003, from $115.1 million in the comparable period in 2002, and decreased $3.6 million or 1.0% to $356.4 million in the first three quarters of 2003, from $360.0
million in the comparable period in 2002. These decreases in revenues were due primarily to decreases in same store sales at our domestic Company-owned stores during 2003, offset in part by increases in same store sales at our domestic franchise
stores, and are more fully described below. Same store sales for domestic stores increased 0.5% in the third quarter of 2003 and decreased 0.4% in the first three quarters of 2003, compared to the same periods in 2002.



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##### Table of Contents

Domestic Company-Owned Stores



Revenues from domestic Company-owned store operations decreased $2.0 million
or 2.4% to $82.4 million in the third quarter of 2003, from $84.4 million in the comparable period in 2002, and decreased $4.6 million or 1.7% to $258.2 million in the first three quarters of 2003, from $262.8 million in the comparable period in
2002. These decreases in revenues were due to decreases in same store sales. Same store sales for domestic Company-owned stores decreased 2.4% and 3.7% in the third quarter and first three quarters of 2003, respectively, compared to the same periods
in 2002. There were 579 and 584 domestic Company-owned stores in operation as of September 7, 2003, and September 8, 2002, respectively.



Domestic Franchise



Revenues from domestic franchise operations increased $0.8 million or 2.6% to $31.4 million in the third quarter of 2003, from $30.6 million in the
comparable period in 2002, and increased $1.0 million or 1.0% to $98.2 million in the first three quarters of 2003, from $97.2 in the comparable period in 2002. These increases in revenues were due to increases in the average number of domestic
franchise stores open during 2003 and increases in same store sales. There were 4,296 and 4,227 domestic franchise stores in operation as of September 7, 2003 and September 8, 2002, respectively. Same store sales for domestic franchise stores
increased 0.9% and 0.1% in the third quarter and first three quarters of 2003, respectively, compared to the same periods in 2002.



Domestic Distribution



Revenues from domestic distribution operations increased $14.1 million or 9.8% to $157.7 million in the third quarter of 2003, from $143.6 million in the
comparable period in 2002, and increased $15.7 million or 3.4% to $479.8 million in the first three quarters of 2003, from $464.1 million in the comparable period in 2002. These increases in revenues were due primarily to an increase in overall food
basket prices, including higher cheese prices, and to a lesser extent, an increase in volumes. The cheese block price per pound averaged $1.38 and $1.21 in the third quarter and first three quarters of 2003, respectively, compared to $1.12 and $1.20
in the comparable periods in 2002.



International



Revenues from international operations increased $2.9
million or 16.0% to $21.3 million in the third quarter of 2003, from $18.4 million in the comparable period in 2002, and increased $9.1 million or 16.5% to $64.2 million in the first three quarters of 2003, from $55.1 million in the comparable
period in 2002. These increases in revenues were due in part to increases in same store sales and in the average number of international stores open during 2003. On a constant dollar basis, same store sales increased 4.8% and 4.0% in the third
quarter and first three quarters of 2003, respectively, compared to the same periods in 2002. On a historical dollar basis, same store sales increased 7.8% and 6.8% in the third quarter and first three quarters of 2003, respectively, compared to the
same periods in 2002. The 2003 same store sales results indicate that the U.S. Dollar was generally weaker against the currencies of those countries in which we compete, as compared to the same periods in 2002. There were 2,457 and 2,327
international stores in operation as of September 7, 2003 and September 8, 2002, respectively.



Cost of Sales / Operating Margin



The consolidated operating margin, which we define as revenues less cost of sales, decreased $0.8 million or 1.1% to $72.8 million in the third quarter of 2003, from $73.6 million in the comparable period in 2002, and
decreased $1.0 million or 0.4% to $233.6 million in the first three quarters of 2003, from $234.6 million in the comparable period in 2002, as summarized in the following table.



|                              |  | Third Quarterof 2003 |       |  | Third Quarterof 2002 |   |  | First Three Quarters of 2003 |       |  | First Three Quarters of 2002 |  
|----------------------------- |  | -------------------- | ----- |  | -------------------- | - |  | ---------------------------- | ----- |  | ---------------------------- | -
|Revenues                      |  | $                    | 292.8 |  | 100.0                | % |  | $                            | 277.1 |  | 100.0                        | %
|Cost of sales                 |  |                      | 220.1 |  | 75.1                 | % |  |                              | 203.5 |  | 73.4                         | %
|                              |  |                      |       |  |                      |   |  |                              |       |  |                              |  
|Consolidated operating margin |  | $                    | 72.8  |  | 24.9                 | % |  | $                            | 73.6  |  | 26.6                         | %
|                              |  |                      |       |  |                      |   |  |                              |       |  |                              |  



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.



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##### Table of Contents

Consolidated cost of sales increased $16.6 million or 8.2% to $220.1 million in the third quarter of
2003, from $203.5 million in the comparable period in 2002, and increased $22.1 million or 3.4% to $666.7 million in the first three quarters of 2003, from $644.6 million in the comparable period in 2002. These net increases in consolidated cost of
sales were driven in part by cost of sales changes at domestic Company-owned stores and domestic distribution, as more fully described below.



Domestic Company-Owned Stores



The domestic Company-owned store operating margin decreased $3.4 million or 18.7% to $15.0 million in the third quarter of 2003, from $18.4 million in the
comparable period in 2002, and decreased $9.8 million or 15.8% to $52.1 million in the first three quarters of 2003, from $61.9 million in the comparable period in 2002, as summarized in the following table.



|Domestic Company-Owned Stores |  | Third Quarterof 2003 |      |  | Third Quarterof 2002 |   |  | First Three Quarters of 2003 |      |  | First Three Quarters of 2002 |  
|----------------------------- |  | -------------------- | ---- |  | -------------------- | - |  | ---------------------------- | ---- |  | ---------------------------- | -
|Revenues                      |  | $                    | 82.4 |  | 100.0                | % |  | $                            | 84.4 |  | 100.0                        | %
|Cost of sales                 |  |                      | 67.4 |  | 81.8                 | % |  |                              | 66.0 |  | 78.2                         | %
|                              |  |                      |      |  |                      |   |  |                              |      |  |                              |  
|Store operating margin        |  | $                    | 15.0 |  | 18.2                 | % |  | $                            | 18.4 |  | 21.8                         | %
|                              |  |                      |      |  |                      |   |  |                              |      |  |                              |  



Cost of sales
increased as a percentage of store revenues in the third quarter and first three quarters of 2003, compared to the comparable period in 2002, due primarily to increases in food and occupancy costs.



As a percentage of store revenues, food costs increased 1.9% to 27.7% in the
third quarter of 2003, from 25.8% in the comparable period in 2002, and increased 1.3% to 27.1% in the first three quarters of 2003, from 25.8% in the comparable period in 2002. These increases in food costs as a percentage of store revenues were
due primarily to a market increase in overall food prices, including cheese, and a change in product mix per order as a result of certain promotions and new product introductions. As a percentage of store revenues, occupancy costs, which include
rent, telephone, utilities and depreciation, increased 1.1% to 11.0% in the third quarter of 2003, from 9.9% in the comparable period in 2002, and increased 1.3% to 10.5% in the first three quarters of 2003, from 9.2% in the comparable period in
2002. These increases in occupancy costs were due primarily to increases in depreciation. These increases in depreciation are primarily a result of recent investments in our stores including the implementation of a new point of sale system.



Domestic Distribution



The domestic distribution operating margin decreased $0.3 million or 1.6% to
$16.2 million in the third quarter of 2003, from $16.5 million in the comparable period in 2002, and increased $2.5 million or 4.8% to $53.9 million in the first three quarters of 2003, from $51.4 million in the comparable period in 2002, as
summarized in the following table.



|Domestic Distribution         |  | Third Quarterof 2003 |       |  | Third Quarterof 2002 |   |  | First Three Quarters of 2003 |       |  | First Three Quarters of 2002 |  
|----------------------------- |  | -------------------- | ----- |  | -------------------- | - |  | ---------------------------- | ----- |  | ---------------------------- | -
|Revenues                      |  | $                    | 157.7 |  | 100.0                | % |  | $                            | 143.6 |  | 100.0                        | %
|Cost of sales                 |  |                      | 141.5 |  | 89.7                 | % |  |                              | 127.1 |  | 88.5                         | %
|                              |  |                      |       |  |                      |   |  |                              |       |  |                              |  
|Distribution operating margin |  | $                    | 16.2  |  | 10.3                 | % |  | $                            | 16.5  |  | 11.5                         | %
|                              |  |                      |       |  |                      |   |  |                              |       |  |                              |  



Cost of sales as a
percentage of distribution revenues for the third quarter of 2003 was negatively impacted by increases in certain commodity prices, including cheese, as well as increases in fuel and insurance costs. Increases in certain food prices, including
cheese, have a negative effect on the distribution operating margin as a percentage of distribution revenues due to the fixed dollar margin earned by domestic distribution on sales of these food items to stores. Had cheese prices remained constant
with 2002 levels, the domestic distribution operating margin for the third quarter of 2003 would have been approximately 10.8% of distribution revenues, or 0.5% higher than the reported amounts for the third quarter of 2003. These increases in cost
of sales as a percentage of distribution revenues were offset in part by a slight increase in volumes.



Cost of sales as a percentage of distribution revenues for the first three quarters of 2003 was positively impacted by increases in volumes and
efficiencies in the areas of operations and purchasing, offset in part by increases in certain commodity prices.



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##### Table of Contents

General and Administrative Expenses



General and administrative expenses increased $11.8 million or 30.0% to $50.9 million in the third quarter of 2003, from
$39.1 million in the comparable period in 2002, and decreased $0.4 million or 0.4% to $129.4 million in the first three quarters of 2003, from $129.8 million in the comparable period in 2002. The increase in general and administrative expenses for
the third quarter of 2003 was due primarily to approximately $16.4 million of general and administrative expenses in connection with the Companys June 2003 recapitalization, which primarily included $12.4 million of certain make-whole payments
and $4.0 million of other charges, offset in part by managements continued focus on controlling overhead costs, including decreases in administrative labor. The decrease in general and administrative expenses for the first three quarters of
2003 was due primarily to managements continued focus on controlling overhead costs, including decreases in administrative labor. Additionally, in the second quarter of 2002, the Company expensed approximately $5.3 million of certain
capitalized software costs. These decreases were offset in part by the aforementioned expenses incurred in connection with the Companys June 2003 recapitalization.



Interest Expense



Interest expense increased $13.9 million or 81.1% to $31.0 million in the third quarter of 2003, from $17.1 million in the comparable period in 2002, and
increased $10.0 million or 22.6% to $54.3 million in the first three quarters of 2003, from $44.3 million in the comparable period in 2002. These increases in interest expense were due primarily to a $15.6 million write-off of financing fees through
interest expense in connection with the Companys June 2003 recapitalization. These increases were offset in part by decreases in related variable interest rates on our senior credit facility borrowings, as well as reduced debt levels in the
first two quarters of 2003. Additionally, in the third quarter of 2002, the Company recorded a $4.5 million write-off of financing fees through interest expense in connection with the refinancing of its senior credit facility.



Other



Other expenses increased $20.1 million to $20.4 million in the third quarter of 2003, from $0.3 million in the comparable
period in 2002, and increased $21.0 million to $22.2 million in the first three quarters of 2003, from $1.2 million in the comparable period in 2002. These increases were due primarily to $20.4 million of bond tender fees incurred in connection with
the Companys June 2003 recapitalization.



Provision (Benefit) for
Income Taxes



Provision (benefit) for income taxes
decreased $17.3 million to a benefit of $11.0 million in the third quarter of 2003, from a provision of $6.3 million in the comparable period in 2002, and decreased $11.5 million to a provision of $10.5 million in the first three quarters of 2003,
from a provision of $22.0 million in the comparable period in 2002. These decreases were primarily due to lower income related to the aforementioned expenses incurred as part of the Companys June 2003 recapitalization.



Liquidity and Capital Resources



We had negative working capital of $9.2 million and cash and cash
equivalents of $25.0 million at September 7, 2003. 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 long-term 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 September 7, 2003.



15



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##### Table of Contents

As of September 7, 2003, we had $971.6 million of long-term debt, of which $22.1 million was classified
as a current liability. Of the $22.1 million classified as a current liability, $22.0 million was paid subsequent to the third quarter. There were no borrowings under our $125 million revolving credit facility. Letters of credit issued under the
revolving credit facility were $23.4 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 $52.1 million and $66.0 million in the first three quarters of 2003 and 2002, respectively. The $13.9 million decrease was due primarily to a $20.0 million decrease in net
income and a $6.0 million non-cash change in loss (gain) on sale/disposal of assets. The change in loss (gain) on sale/disposal of assets is due primarily to the Company expensing $5.3 million of certain capitalized software costs in 2002 offset in
part by an increase in non-cash income from deferred gains recognized when the related notes receivable were collected. These decreases were offset in part by a $10.0 million increase in amortization of deferred financing costs and a $3.3 million
increase in non-cash compensation expenses both related to the Companys June 2003 recapitalization.



Cash used in investing activities was $9.9 million and $59.1 million in the first three quarters of 2003 and 2002, respectively. The $49.2 million
decrease was due primarily to a $21.9 million decrease in acquisitions of franchise operations, a $20.8 million decrease in capital expenditures and a $7.7 million increase in repayments of notes receivable. The decrease in acquisitions of franchise
operations is due primarily to the Companys purchase of our franchise operations in Arizona in the first quarter of 2002. The decrease in capital expenditures was due in part to significant investments in 2002 in connections with the
implementation of a new point of sale system and the related hardware in our Company-owned stores.



Cash used in financing activities was $39.6 million and $57.2 million in the first three quarters of 2003 and 2002, respectively. The $17.5 million
decrease was due primarily to activity relating to the Companys June 2003 recapitalization, including a $231.5 million increase in repayments of long-term debt, a $379.1 million increase in distributions to parent and a $16.4 million increase
in cash paid for financing costs. These decreases were offset by a $645.1 million increase in proceeds from the issuance of debt.



On June 25, 2003, Dominos, Inc., together with its parent and subsidiaries, consummated a recapitalization transaction which included, among other
things, the issuance by Dominos, Inc. of $403.0 million aggregate principal amount at maturity of 81/4%
Senior Subordinated Notes due 2011 (the 2011 Notes) and borrowings by Dominos, Inc. of $610.0 million in term loans. The Company also entered into a $125.0 million revolving credit facility (together with the term loans, the
2003 Senior Credit Facility).



The 2011
Notes accrue interest at a rate of 81/4% per annum and will be payable semi-annually in arrears on January 1 and
July 1, commencing on January 1, 2004. Prior to July 1, 2006, the Company may redeem, at a fixed price, up to 40% of the aggregate principal amount of the 2011 Notes with the proceeds of equity offerings, if any, by the Company or its parent. Prior
to July 1, 2007, the Company may also redeem the 2011 Notes, as a whole, but not in part, upon the occurrence of a change in control, as defined in the 2011 Notes. Beginning July 1, 2007, the Company may redeem all or a part of the 2011 Notes at
fixed redemption prices, ranging from 104.125% of par in 2007 to 100% of par in 2009 and thereafter. In the event of a change in control, as defined in the 2011 Notes, the Company will be obligated to repurchase the 2011 Notes tendered by the
holders at a fixed price. The 2011 Notes are guaranteed by most of the Companys domestic subsidiaries as well as one foreign subsidiary.



The 2003 Senior Credit Facility consists of $610.0 million in term loans expiring in June 2010 and a $125.0 million revolving credit facility expiring in
June 2009. The agreement requires annual amortization of the term loans, made in equal quarterly payments, of $10.0 million in 2003, $30.0 million in 2004, $45.0 million in 2005, $60.0 million in 2006, $75.0 million in 2007, $85.0 million in 2008,
$95.0 million in 2009 and $210.0 million in 2010. Pre-payments of principal are applied to future quarterly amortization payments, as defined in the 2003 Senior Credit Facility. The 2003 Senior Credit Facility contains certain financial and
non-financial covenants and is guaranteed by the Companys parent and most of the Companys domestic subsidiaries and one foreign subsidiary. The 2003 Senior Credit Facility is secured by a first priority lien on substantially all of the
assets of the Company. Borrowings under the 2003 Senior Credit Facility bear interest at LIBOR plus an applicable margin of between 275 and 300 basis points.



16



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##### Table of Contents

We believe that funds generated from operations and available borrowings under the revolving credit
facility will be adequate to meet our debt service requirements, capital expenditures and working capital requirements for the near future. 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 29, 2002. However, our business may not generate sufficient cash flows from operations or future borrowings available to us under
the revolving credit portion of our senior credit facility may not be sufficient to enable us to pay our indebtedness, or to fund our liquidity needs. Additionally, we may be requested to provide funds to TISM, Inc., our parent company
(TISM), for stock dividends, stock repurchases, distributions and/or other cash needs of TISM.



New Accounting Pronouncement



In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51 (FIN 46). FIN 46 addresses the consolidation of entities whose equity holders
have either (a) not provided sufficient equity at risk to allow the entity to finance its own activities or (b) do not possess certain characteristics of a controlling financial interest. FIN 46 requires the consolidation of these entities, known as
variable interest entities (VIEs), by the primary beneficiary of the entity. FIN 46 applies immediately to variable interests in VIEs created or obtained after January 31, 2003. For variable interests of a non-public equity company in a
VIE created before February 1, 2003, FIN 46 is applied to the VIE no later than the end of the first annual reporting period beginning after June 15, 2003, which is the end of our fiscal 2004. We have concluded that we have not created or obtained
any VIEs subsequent to January 31, 2003 that would require consolidation. We are assessing FIN 46 as it relates to VIEs created before February 1, 2003 and, although we have not completed our analysis, we currently do not expect adoption to have a
material effect on our financial statements.



Contractual Obligations



The Companys contractual debt obligations,
primarily relating to principal payment requirements under the 2011 Notes and the 2003 Senior Credit Facility, are summarized in the following table.



|               |  | 2003 |        | 2004 |   | 2005  |  | 2006 |        | 2007 |   | Thereafter |  | Total
|-------------- |  | ---- | ------ | ---- | - | ----- |  | ---- | ------ | ---- | - | ---------- |  | -----
|Long-term debt |  | $    | 22,091 |      | $ | 7,046 |  | $    | 41,957 |      | $ | 55,931     |  | $    



The Companys
other significant contractual obligations, including operating leases, have not changed significantly from December 29, 2002.



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 29, 2002 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.



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



The Company is party to four 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.



Additionally, in
the third quarter of 2003, the Company entered into two interest rate swap agreements which effectively convert the fixed component of the Companys debt under the 2011 Notes to variable LIBOR rates over the term of the 2011 Notes.



These agreements are summarized in the following table.



|Derivative         |  | TotalNotional Amount |  | Term                           |  | Rate                      
|------------------ |  | -------------------- |  | ------------------------------ |  | --------------------------
|Interest Rate Swap |  | $70.0 million        |  | June 2001 June 2004           |  | 4.90%                     
|Interest Rate Swap |  | $35.0 million        |  | September 2001 September 2003 |  | 3.645%                    
|Interest Rate Swap |  | $35.0 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 plus319 basis points
|Interest Rate Swap |  | $50.0 million        |  | August 2003  July 2011        |  | LIBOR plus324 basis points



Interest Rate Risk



The Companys variable interest expense is sensitive to changes in
the general level of interest rates. As of September 7, 2003, a portion of the Companys debt is borrowed at LIBOR rates plus a blended margin rate of 3.09%. As of September 7, 2003, the weighted average interest rate on our $455.0 million of
variable interest debt was 4.28%.



The Company had total
interest expense of approximately $54.3 million in the first three quarters of 2003. 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 $2.3 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.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

PART II. OTHER INFORMATION



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.



|b. | 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 June 25, 2003 which included a press
release stating that the Company accepted for purchase $206.7 million in principal amount of the outstanding Notes issued by the Company.



Current Report on Form 8-K dated June 25, 2003 stating that the Company, together with its parent and subsidiaries, consummated a recapitalization
transaction. Accompanying exhibits included the related indenture and credit agreement, as well as stock option plan amendment documentation and the employment agreement with the Companys Chief Executive Officer.



Current Report on Form 8-K dated July 29, 2003 which included a press
release announcing the Companys second quarter 2003 financial 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: October 22, 2003 |  | /s/ Harry J. Silverman 
|                       |  | Chief Financial Officer



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