2014

Krispy Kreme Reports Financial Results For The Second Quarter Of Fiscal 2014

WINSTON-SALEM, N.C., Aug. 29, 2013 /PRNewswire/ -- Krispy Kreme Doughnuts, Inc. (NYSE:  KKD) (the "Company") today reported financial results for the second quarter of fiscal 2014, ended August 4, 2013.  The Company also reaffirmed its adjusted earnings per share guidance in the range of $0.59 to $0.63 per share for the full year.

Second Quarter Fiscal 2014 Highlights Compared to the Year-Ago Period:

  • Revenues increased 10.4% to $112.7 million from $102.1 million
  • Company same store sales rose 10.0%, the nineteenth consecutive quarterly increase
  • Operating income rose 14.8% to $10.6 million from $9.2 million
  • Adjusted net income rose 17.2% to $9.6 million ($0.14 per share) from $8.2 million ($0.12 per share); adjusted net income and adjusted EPS reflect income tax expense only to the extent currently payable in cash and, in the second quarter of fiscal 2014, exclude a charge of $1.0 million for the refinancing of the Company's credit facilities and the retirement of the remaining balance of the Company's term loan; adjusted net income and adjusted EPS are non-GAAP measures (see the reconciliation of GAAP to adjusted earnings in the table accompanying this release)
  • The GAAP income tax provision for the quarter includes a non-cash charge of approximately $685,000 ($0.01 per share) to reduce the carrying value of deferred income tax assets as a result of the enactment in the second quarter of lower corporate income tax rates in North Carolina
  • Net income was $4.7 million ($0.07 per share) compared to $4.9 million ($0.07 per share) in the second quarter last year
  • Cash provided by operating activities was $13.1 million compared to $12.6 million in the second quarter last year

Chairman, President and Chief Executive Officer James H. Morgan commented:  "This was an outstanding quarter for us, and results exceeded our expectations, despite unusual items that in the aggregate negatively affected our earnings by about $0.01 per adjusted share. Those items, combined with a $0.02 adverse swing in gains and losses on derivative positions, penalized the year-over-year comparison by $0.03 per adjusted share.

"Our dramatic same store sales gain was driven primarily through higher traffic counts as customers found more reasons to treat themselves to our unique products, while improvements in our Company Stores and Supply Chain segments drove an increase in consolidated operating margin.  Fiscal 2014 is proving to be an exciting year for our business, and we continue to forecast year-over-year growth in adjusted earnings per share approaching or exceeding 30%. Attaining the high end of our forecasted earnings guidance appears increasingly achievable.

"Of particular significance, we are very pleased with the initial sales and operating results from the five new small factories we have opened since January.  While we are looking forward to gaining additional experience with these shops and the four to five small factories we plan to open in the remainder of fiscal 2014, we are now sufficiently confident about the model to encourage our franchisees, new and old, to incorporate this format into their expansion plans.  We expect the success of this new smaller and more efficient model will greatly enhance our long-term global expansion potential.

"In July, we were delighted to sign a 15-store development agreement for the Dallas market with an experienced multi-concept operator, which included the sale of our three existing stores in the market.  This agreement represents a key step in our previously announced plan to significantly increase the pace of our U.S. store expansion.

"During the second quarter, we took advantage of a robust credit market and our steadily improving results to refinance our credit facilities and retire our $22 million term loan balance.  We ended the quarter with over $60 million in cash and basically no debt, and reduced our interest expense going forward.  We also announced a $50 million common stock buyback authorization.  We are very gratified to have the resources to implement and expand the scope of our growth plans, further strengthen our balance sheet, and potentially complement this cash deployment with other ways to enhance shareholder returns.

Morgan concluded:  "We accomplished much this past quarter.  While continuing to execute on our strategic vision, we made investments in our long-term future and, at the same time, delivered strong operating and financial results for our shareholders."

Second Quarter Fiscal 2014 Results

Consolidated Results

For the second quarter ended August 4, 2013, revenues increased 10.4% to $112.7 million from $102.1 million.

Direct operating expenses increased to $93.8 million from $85.7 million, but as a percentage of total revenues fell to 83.2% from 83.9%.  General and administrative expenses rose to $5.7 million from $4.8 million in the year-ago period and, as a percentage of total revenues, increased to 5.0% from 4.7%.

Operating income increased to $10.6 million from $9.2 million.  Operating income in the second quarter last year included gains related to agricultural derivatives of approximately $1.1 million compared to losses in the current year of $410,000.

Adjusted net income was $9.6 million ($0.14 per share) compared to $8.2 million ($0.12 per share) in the second quarter last year.

As previously announced, on July 12, 2013, the Company refinanced its secured credit facilities.  In connection with the refinancing, the Company retired in full the $22 million remaining balance of its term loan and increased the size of its revolving credit commitments from $25 million to $40 million.  The refinancing and the retirement of the term loan are expected to result in a decrease in interest expense of approximately $1.0 million in the first twelve months following the transaction.  The Company recorded a non-cash charge for the transaction of $1.0 million in the second quarter, consisting principally of the write-off of the deferred financing costs related to the retired term loan and the termination of a related interest rate hedge.

The GAAP effective tax rate for the second quarter was 49%.  Included in GAAP income tax expense for the quarter is a charge of approximately $685,000 to revalue the Company's North Carolina deferred income tax assets to reflect a reduction in the corporate income tax rate enacted by the state legislature during the quarter.

Net income was $4.7 million ($0.07 per share) compared to $4.9 million ($0.07 per share), in the second quarter last year.

Segment Results

Company Stores revenues increased 9.2% to $75.7 million from $69.3 million.  Same store sales at Company stores rose 10.0%, the nineteenth consecutive quarterly increase, driven principally by higher traffic.  The Company Stores segment posted operating income of $1.8 million compared to $338,000 in the second quarter last year.

As previously announced, during the second quarter the Company completed the refranchising of the Dallas market.  The refranchising included the sale to the new franchisee of three Company shops and the execution of a development agreement pursuant to which the new franchisee has agreed to develop an additional 15 Krispy Kreme shops in the market over the next five years.  The Company realized a gain of approximately $880,000 on the refranchising transaction, which is included in the Company Stores segment's results for the second quarter.  For the 52 weeks ended January 27, 2013, the three refranchised stores had sales of approximately $6.9 million, and for fiscal 2014 prior to the refranchising the stores had sales of approximately $3.4 million.  Approximately 45% of those amounts represented wholesale sales.  The franchise agreements entered into with the new Dallas franchisee do not include wholesale distribution rights.

Domestic Franchise revenues rose 15.2% to $2.8 million from $2.4 million, reflecting higher royalties.  Total sales by domestic franchisees rose 13.1%; approximately 2.7 percentage points of the increase reflects the refranchising in fiscal 2014 of a total of six stores in Kansas, Missouri and Texas.  Same store sales at Domestic Franchise shops increased 11.5%.  Domestic Franchise segment operating income improved to $1.5 million from $1.3 million in the second quarter last year.

International Franchise revenues increased 4.8% to $6.1 million from $5.8 million, driven by higher royalties.  Sales by international franchise stores rose 0.5%.  Changes in the rates of exchange between the U.S. dollar and the foreign currencies in which the Company's international franchisees do business decreased sales by international franchisees measured in U.S. dollars by approximately $4.8 million in the second quarter of fiscal 2014 compared to last year, which adversely affected international royalty revenues by approximately $290,000.  Excluding the effects of exchange rate changes, sales by international franchisees rose 5.2%.  International Franchise segment revenue for the quarter included approximately $320,000 of royalties collected in the quarter related to franchisee sales in prior periods which had not previously been recorded due to uncertainty surrounding their collection.  Adjusted to eliminate the effects of changes in foreign exchange rates, same store sales at international franchise stores fell 8.6%, reflecting, among other things, honeymoon effects from the substantial number of international store openings in recent years, as well as cannibalization as markets develop.  The slight degradation in currency adjusted comps compared to the first quarter appears to have been influenced by a change in the timing of observance of a major holiday in many of our markets relative to last year, as well as by unseasonably warm weather in the United Kingdom in July.  The International Franchise segment generated operating income of $4.2 million, unchanged from the second quarter last year, reflecting the deployment of increased resources to support current and anticipated future international growth.

KK Supply Chain revenues (including sales to Company stores) rose 11.1% to $57.2 million from $51.5 million in the same period last year, driven principally by higher doughnut mix volume and higher mix selling prices compared to last year.  External KK Supply Chain revenues rose 14.7% to $28.2 million from $24.6 million in the year-ago period.  KK Supply Chain generated operating income of $9.0 million in the second quarter of fiscal 2014, up from $8.4 million in the second quarter last year.  KK Supply Chain's results of operations for the second quarter last year included gains on agricultural derivatives of approximately $1.1 million compared to losses in the current year of $410,000.

Outlook

Based on year-to-date results and other current information, management is reaffirming its forecast of adjusted net income for fiscal 2014 of between $42 million and $45 million, or between $0.59 and $0.63 per share.  Achievement of this forecast would represent a year-over-year increase in adjusted earnings per share of between 26% to 34% from the $0.47 per share reported on a 52-week basis for fiscal 2013.

Conference Call

The Company will host a conference call to review financial results for the second quarter of fiscal 2014 as well as its outlook this afternoon at 4:30 p.m. (ET).

A live webcast of the conference call will be available at www.krispykreme.com.  The conference call also can be accessed over the phone by dialing (877) 280-4954 or, for international callers, by dialing (857) 244-7311.  An archived replay of the call will be available shortly after its conclusion by dialing (888) 286-8010, or (617) 801-6888 for international callers; the passcode is 39406842.  The audio replay will be available through September 5, 2013.  A transcript of the conference call also will be available on the Company website.

About Krispy Kreme

Krispy Kreme is a leading branded specialty retailer and wholesaler of premium quality sweet treats and complementary products, including its signature Original Glazed® doughnut.  Headquartered in Winston-Salem, NC, the Company has offered the highest quality doughnuts and great tasting coffee since it was founded in 1937.  Today, Krispy Kreme shops can be found in over 790 locations in 22 countries around the world.  Connect with Krispy Kreme at www.krispykreme.com and on Facebook, Foursquare, Twitter and YouTube.

Information contained in this press release, other than historical information, should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are based on management's beliefs, assumptions and expectations of our future economic performance, considering the information currently available to management.  These statements are not statements of historical fact.  Forward-looking statements involve risks and uncertainties that may cause our actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements.  The words "believe," "may," "forecast," "could," "will," "should," "would," "anticipate," "estimate," "expect," "intend," "objective," "seek," "strive" or similar words, or the negative of these words, identify forward-looking statements.  Factors that could contribute to these differences include, but are not limited to:  the quality of Company and franchise store operations; our ability, and our dependence on the ability of our franchisees, to execute on our and their business plans; our relationships with our franchisees; our ability to implement our international growth strategy; our ability to implement our domestic small shop operating model; political, economic, currency and other risks associated with our international operations; the price and availability of raw materials needed to produce doughnut mixes and other ingredients, and the price of motor fuel; our relationships with wholesale customers; our ability to protect our trademarks and trade secrets; changes in customer preferences and perceptions; risks associated with competition; risks related to the food service industry, including food safety and protection of personal information; compliance with government regulations relating to food products and franchising; increased costs or other effects of new government regulations relating to healthcare benefits; and risks associated with implementation of new technology platforms.  These and other risks and uncertainties, which are described in more detail in the Company's most recent Annual Report on Form 10-K and other reports and statements filed with the United States Securities and Exchange Commission, are difficult to predict, involve uncertainties that may materially affect actual results and may be beyond the Company's control, and could cause actual results, performance or achievements to be materially different from those expressed or implied by any of these forward-looking statements.  New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on the Company.  Any forward-looking statement speaks only as of the date on which such statement is made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

 


KRISPY KREME DOUGHNUTS, INC.















CONSOLIDATED STATEMENT OF INCOME



















Three Months Ended


Six Months Ended




August 4,


July 29,


August 4,


July 29,




2013


2012


2013


2012




(In thousands, except per share amounts)















Revenues

$

112,729


$

102,115


$

233,354


$

210,611

Operating expenses:













Direct operating expenses (exclusive of depreciation and














amortization expense shown below)


93,806



85,657



190,364



174,348


General and administrative expenses 


5,655



4,770



11,710



11,228


Depreciation and amortization expense 


2,664



2,399



5,484



4,881


Impairment charges and lease termination costs 


4



55



12



86

Operating income 


10,600



9,234



25,784



20,068

Interest income 


70



61



131



88

Interest expense 


(354)



(420)



(791)



(818)

Loss on refinancing of debt


(967)



-



(967)



-

Equity in losses of equity method franchisees 


(60)



(53)



(113)



(103)

Other non-operating income and (expense), net 


(1)



79



(6)



157

Income before income taxes 


9,288



8,901



24,038



19,392

Provision for income taxes 


4,571



3,972



11,322



8,437

Net income

$

4,717


 

$

4,929


$

12,716


 

$

10,955















Earnings per common share:













Basic 

$

0.07


$

0.07


$

0.19


$

0.16


Diluted  

$

0.07


$

0.07


$

0.18


$

0.16















Weighted average shares outstanding:













Basic 


67,267



67,461



67,139



68,511


Diluted  


71,089



69,432



70,833



70,660

 


KRISPY KREME DOUGHNUTS, INC.









CONSOLIDATED BALANCE SHEET













August 4,


February 3,



2013


2013




(In thousands)

ASSETS






CURRENT ASSETS:






Cash and cash equivalents 

$

60,319


$

66,332

Receivables 


26,002



25,627

Receivables from equity method franchisees 


752



705

Inventories 


15,086



12,358

Deferred income taxes


23,152



23,323

Other current assets 


7,490



6,439


Total current assets 


132,801



134,784

Property and equipment 


84,940



78,024

Investments in equity method franchisees 


-



-

Goodwill and other intangible assets 


24,126



24,195

Deferred income taxes


83,210



93,088

Other assets 


9,896



11,847


Total assets 

$

334,973


 

$

341,938



LIABILITIES AND SHAREHOLDERS' EQUITY






CURRENT LIABILITIES:






Current maturities of long-term debt 

$

213


$

2,148

Accounts payable 


14,197



12,198

Accrued liabilities 


29,927



32,330


Total current liabilities 


44,337



46,676

Long-term debt, less current maturities 


1,113



23,595

Other long-term obligations and deferred credits


26,484



25,235









Commitments and contingencies














SHAREHOLDERS' EQUITY:






Preferred stock, no par value 


-



-

Common stock, no par value 


357,621



354,068

Accumulated other comprehensive loss 


-



(338)

Accumulated deficit 


(94,582)



(107,298)


Total shareholders' equity 


263,039



246,432



Total liabilities and shareholders' equity                        

$

334,973


 

$

341,938










 


KRISPY KREME DOUGHNUTS, INC.


CONSOLIDATED STATEMENT OF CASH FLOWS




Six Months Ended


August 4,


July 29,


2013


2012



(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:






Net income

$

12,716


$

10,955

Adjustments to reconcile net income to net cash provided by operating activities:







Depreciation and amortization expense


5,484



4,881


Deferred income taxes


10,050



7,524


Accrued rent expense


411



257


Loss on refinancing of debt


967



-


(Gain) loss on disposal of property and equipment


(62)



389


Gain on refranchising


(876)



-


Share-based compensation


1,867



2,148


Provision for doubtful accounts


(63)



(73)


Amortization of deferred financing costs


231



202


Equity in losses of equity method franchisees


113



103


Other


202



(1,258)

Change in assets and liabilities:







Receivables


(464)



(134)


Inventories


(2,889)



234


Other current and non-current assets


918



(1,968)


Accounts payable and accrued liabilities


(2,378)



(1,859)


Other long-term obligations and deferred credits


1,241



1,592



Net cash provided by operating activities 


27,468



22,993

CASH FLOWS FROM INVESTING ACTIVITIES:






Purchase of property and equipment


(12,362)



(5,233)

Proceeds from disposals of property and equipment


623



49

Proceeds from refranchising


681



-

Other investing activities


433



(24)



Net cash used for investing activities


(10,625)



(5,208)

CASH FLOWS FROM FINANCING ACTIVITIES:






Repayment of long-term debt


(24,455)



(1,100)

Deferred financing costs


(87)



(11)

Proceeds from exercise of stock options


1,686



-

Proceeds from exercise of warrants


-



9

Repurchase of common shares


-



(20,000)



Net cash used for financing activities


(22,856)



(21,102)

Net decrease in cash and cash equivalents


(6,013)



(3,317)

Cash and cash equivalents at beginning of period


66,332



44,319

Cash and cash equivalents at end of period

$

60,319


 

$

41,002

 

KRISPY KREME DOUGHNUTS, INC.

NON-GAAP FINANCIAL INFORMATION

As of February 3, 2013, the Company had net deferred income tax assets of approximately $116 million, of which approximately $76 million related to federal and state net operating loss carryovers.  The Company's federal net operating loss carryovers totaled approximately $206 million.

The Company has reported cumulative pretax income of approximately $100 million since the beginning of fiscal 2010, and the Company also has generated significant taxable income during this period.  However, because of the Company's utilization of its federal and state net operating loss carryovers and other deferred tax assets, the Company's cash payments for income taxes have been relatively insignificant during this period.  As a result, the Company's provisions for income tax expense have substantially exceeded its cash payments for income taxes.  Until such time as the Company's net operating loss carryovers are exhausted or expire, GAAP income tax expense is expected to continue to substantially exceed the amount of cash income taxes payable by the Company.

The Company's fiscal year ends on the Sunday closest to January 31, which periodically results in a 53-week year.  Fiscal 2013 contained 53 weeks, while fiscal 2014 will contain 52 weeks.

In the second quarter of fiscal 2014, the Company recorded a charge of $1.0 million related to the refinancing of its secured credit facilities, consisting principally of the writeoff of deferred financing costs related to the Company's term loan, which was retired in full, and the termination of an interest rate hedge related to the term loan.  Charges of this nature are not expected to recur on a regular basis.

The following non-GAAP financial information and related reconciliation to GAAP measures are provided to assist the reader in understanding the effects of the above facts and transactions on the Company's results of operations.  In addition, the non-GAAP financial information is intended to illustrate the material difference between the Company's income tax expense and income taxes currently payable.  These non-GAAP performance measures are consistent with other measurements made by management in the operation of the business which do not consider income taxes except to the extent to which those taxes currently are payable, for example, capital allocation decisions and incentive compensation measurements that are made on a pretax basis.

 



















Historical Periods




Three Months Ended


Six Months Ended




August 4,


July 29,


August 4,


July 29,




2013


2012


2013


2012




(In thousands, except per share amounts)















Net income, as reported

$

4,717


 

$

4,929


$

12,716


$

10,955

Loss on refinancing of debt


967



-



967



-

Provision for deferred income taxes


3,945



3,290



10,050



7,524

Adjusted net income

$

9,629


$

8,219


$

23,733


$

18,479















Adjusted earnings per common share:












      Basic

$

0.14


$

0.12


$

0.35


$

0.27

      Diluted

$

0.14


$

0.12


$

0.34


$

0.26















Weighted average shares outstanding:












      Basic


67,267



67,461



67,139



68,511

      Diluted


71,089



69,432



70,833



70,660

 




Management's Earnings Guidance


Historical  Period



Year Ending February 2, 2014


Year Ended



From


To


February 3, 2013



(In thousands, except per share amounts)











Net income, as reported

$

24,500


 

$

26,500


$

20,779

Loss on refinancing of debt


1,000



1,000



-

Provision for deferred income taxes


16,500



17,500



13,413

Adjusted net income


42,000



45,000



34,192

Earnings for the 53rd week


-



-



(1,273)

Adjusted net income - 52 week basis

$

42,000


$

45,000


$

32,919











Adjusted earnings per common share:









      Basic

$

0.62


$

0.66


$

0.51

      Diluted

$

0.59


$

0.63


$

0.49











Adjusted earnings per common share - 52 week basis:









      Basic

$

0.62


$

0.66


$

0.49

      Diluted

$

0.59


$

0.63


$

0.47











Weighted average shares outstanding:









      Basic


68,000



68,000



67,624

      Diluted


71,000



71,000



69,896

 

KRISPY KREME DOUGHNUTS, INC.



















SEGMENT INFORMATION

















Three Months Ended


Six Months Ended








August 4,


July 29,


August 4,


July 29,








2013


2012


2013


2012








(In thousands)

Revenues:













Company Stores: 














On-premises sales:















Retail sales

$

33,581


$

29,062


$

69,598


$

59,658




Fundraising sales


2,559



2,651



7,336



7,531





Total on-premises sales


36,140



31,713



76,934



67,189



Wholesale sales


39,549



37,625



80,676



75,490






 Company Stores revenues 


75,689



69,338



157,610



142,679


Domestic Franchise 


2,799



2,430



5,670



5,063


International Franchise 


6,057



5,781



12,502



11,808


KK Supply Chain:
















Total revenues 


57,201



51,465



117,012



105,250





Less – intersegment sales elimination 


(29,017)



(26,899)



(59,440)



(54,189)






 External KK Supply Chain revenues 


28,184



24,566



57,572



51,061







Total revenues 

$

112,729


 

$

102,115


 

$

233,354


 

$

210,611



















Operating income:













Company Stores 

$

1,790


$

338


$

7,104


$

3,286


Domestic Franchise 


1,526



1,329



2,965



2,898


International Franchise 


4,239



4,162



8,770



8,656


KK Supply Chain 


8,999



8,392



19,238



16,869





Total segment operating income 


16,554



14,221



38,077



31,709


Unallocated general and administrative expenses 


(5,655)



(4,770)



(11,710)



(11,228)


Corporate administration depreciation and amortization














 expense


(295)



(162)



(571)



(327)


Impairment charges and lease termination costs 


(4)



(55)



(12)



(86)





Consolidated operating income 

$

10,600


 

$

9,234


 

$

25,784


 

$

20,068



















Depreciation and amortization expense:













Company Stores 

$

2,174


$

1,944


$

4,528


$

4,041


Domestic Franchise 


22



55



36



110


International Franchise 


1



3



4



6


KK Supply Chain 


172



235



345



397


Corporate administration 


295



162



571



327





Total depreciation and amortization expense 

$

2,664


 

$

2,399


 

$

5,484


 

$

4,881

 


KRISPY KREME DOUGHNUTS, INC.






















SELECTED OPERATING STATISTICS






















Three Months Ended


Six Months Ended







August 4,


July 29,


August 4,


July 29,






2013

2012

2013

2012

















Systemwide Sales (in thousands):(1)

















Company stores 

$

74,893



$

68,710



$

156,014



$

141,515



Domestic Franchise stores 


78,616




69,532




159,602




141,504



International Franchise stores 


102,971




102,437




213,226




207,357



International Franchise stores, in constant dollars(2)


102,971




97,914




213,226




199,447























Change in Same Store Sales (on-premises sales only):(3)

















Company stores


10.0

%



5.4

%



10.8

%



3.7

%


Domestic Franchise stores 


11.5

%



6.7

%



11.4

%



6.2

%


International Franchise stores 


(13.0)

%



(12.7)

%



(12.0)

%



(10.3)

%


International Franchise stores, in constant dollars(2)


(8.6)

%



(10.0)

%



(7.9)

%



(8.7)

%






















Company Stores - Change in Same Store Sales:

















Retail pricing


3.8

%



0.0

%



3.3

%



1.4

%


Guest check average (exclusive of pricing)


(0.5)




(0.7)




(0.4)




(1.2)



Customer count


6.8




5.9




7.8




3.3



Other


(0.1)




0.2




0.1




0.2




Total


10.0

%



5.4

%



10.8

%



3.7

%






















Change in Same Store Customer Count - Company stores

















(retail sales only)


7.5

%



6.6

%



9.0

%



3.8

%






















Average guest check - Company stores (retail sales only)

$

7.68



$

7.43



$

7.49



$

7.27























Company stores - store operating weeks


1,221




1,203




2,439




2,399























Wholesale Metrics - Company stores:(4)

















Grocers/mass merchants: 


















Change in average weekly number of doors


(5.4)

%



(4.9)

%



(4.8)

%



(4.7)

%



Change in average weekly sales per door


9.6

%



8.4

%



12.5

%



8.5

%


Convenience stores: 


















Change in average weekly number of doors


0.7

%



(7.8)

%



(0.9)

%



(9.2)

%



Change in average weekly sales per door


6.5

%



8.4

%



6.9

%



11.8

%

1)

Systemwide sales, a non-GAAP financial measure, include the sales by both Company and franchise stores but excludes sales among Company and franchise stores.  The Company believes systemwide sales data are useful in assessing the overall performance of the Krispy Kreme brand and, ultimately, the performance of the Company.  The Company's consolidated financial statements appearing elsewhere herein include sales by Company stores, sales to franchisees by the KK Supply Chain business segment, and royalties and fees received from franchise stores based on their sales, but exclude sales by franchise stores to their customers.

2)

Computed on a pro forma basis assuming the average rate of exchange between the U.S. dollar and each of the foreign currencies in which the Company's international franchisees conduct business had been the same in the comparable prior year period. 

3)

The change in "same store sales" represents the aggregate on-premises sales (including fundraising sales) during the current year period for all stores which had been open for more than 56 consecutive weeks during the current year period (but only to the extent such sales occurred in the 57th or later week of each store's operation) divided by the aggregate on-premises sales of such stores for the comparable weeks in the preceding year period.  Once a store has been open for at least 57 consecutive weeks, its sales are included in the computation of same stores sales for all subsequent periods.  In the event a store is closed temporarily (for example, for remodeling) and has no sales during one or more weeks, such store's sales for the comparable weeks during the earlier or subsequent period are excluded from the same store sales computation.  The change in "same store customer count" is similarly computed, but is based upon the number of retail transactions reported in the Company's point-of-sale system.

4)

For Company wholesale sales, "average weekly number of doors" represents the average number of customer locations to which product deliveries are made during a week by Company Stores, and "average weekly sales per door" represents the average weekly sales to each such location by Company Stores.

 

KRISPY KREME DOUGHNUTS, INC.










STORE COUNT












Number of Company Stores



Factory









Stores

Hot Shops

Fresh Shops

Total










Three months ended August 4, 2013









May 5, 2013


74


20


1


95

Opened 


2


-


-


2

Closed 


(1)


-


-


(1)

Transferred to Domestic Franchise


(3)


-


-


(3)

August 4, 2013


72


20


1


93










Six months ended August 4, 2013









February 3, 2013


76


20


1


97

Opened 


3


-


-


3

Closed 


(1)


-


-


(1)

Transferred to Domestic Franchise


(6)


-


-


(6)

August 4, 2013


72


20


1


93










Three months ended July 29, 2012









April 29, 2012


72


19


1


92

Opened 


1


-


-


1

Closed 


-


-


-


-

July 29, 2012


73


19


1


93










Six months ended July 29, 2012









January 29, 2012


72


19


1


92

Opened 


1


-


-


1

Closed 


-


-


-


-

July 29, 2012


73


19


1


93










 

KRISPY KREME DOUGHNUTS, INC.










STORE COUNT












Number of Domestic Franchise Stores



Factory









Stores

Hot Shops

Fresh Shops

Total










Three months ended August 4, 2013









May 5, 2013


102


30


14


146

Opened 


-


1


-


1

Closed 


-


-


-


-

Transferred from Company Stores


3


-


-


3

August 4, 2013


105


31


14


150










Six months ended August 4, 2013









February 3, 2013


99


29


14


142

Opened 


-


2


-


2

Closed 


-


-


-


-

Transferred from Company Stores


6


-


-


6

August 4, 2013


105


31


14


150










Three months ended July 29, 2012









April 29, 2012


102


26


14


142

Opened 


-


-


-


-

Closed 


(1)


-


-


(1)

July 29, 2012


101


26


14


141










Six months ended July 29, 2012









January 29, 2012


102


25


15


142

Opened 


1


2


-


3

Closed 


(2)


(1)


(1)


(4)

July 29, 2012


101


26


14


141










 

KRISPY KREME DOUGHNUTS, INC.












STORE COUNT














Number of International Franchise Stores



Factory










Stores


Hot Shops


Fresh Shops


Kiosks


Total












Three months ended August 4, 2013











May 5, 2013


121


9


271


131


532

Opened 


1


-


11


7


19

Closed 


(2)


-


(3)


-


(5)

Change in store type


(1)


-


1


-


-

August 4, 2013


119


9


280


138


546












Six months ended August 4, 2013











February 3, 2013


120


9


257


123


509

Opened 


4


-


27


15


46

Closed 


(4)


-


(5)


-


(9)

Change in store type


(1)


-


1


-


-

August 4, 2013


119


9


280


138


546












Three months ended July 29, 2012











April 29, 2012


115


11


223


109


458

Opened 


4


-


14


6


24

Closed 


-


-


(4)


(1)


(5)

Change in store type


(1)


-


1


-


-

July 29, 2012


118


11


234


114


477












Six months ended July 29, 2012











January 29, 2012


118


11


226


105


460

Opened 


4


-


28


12


44

Closed 


(3)


-


(14)


(10)


(27)

Change in store type


(1)


-


(6)


7


-

July 29, 2012


118


11


234


114


477























 

SOURCE Krispy Kreme Doughnut Corporation



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