Krispy Kreme Doughnuts, Inc. (NYSE: KKD) (the “Company”) today reported
financial results for the third quarter of fiscal 2015, ended November
2, 2014. The Company also reaffirmed its adjusted earnings guidance for
the full year.
Third Quarter Fiscal 2015 Highlights Compared to the Year-Ago Period:
-
Systemwide store count rose 4.6% in the quarter (11.7% year-to-date)
to 925 Company and franchise shops worldwide
-
Systemwide domestic same store sales rose 3.7%, including a 3.3% gain
at Company shops; constant-currency international franchise same store
sales declined 2.9%
-
Revenues increased 7.6% to $122.9 million from $114.2 million
-
Operating income rose 9.8% to $12.9 million from $11.7 million
-
Adjusted net income was $12.1 million ($0.18 per share) compared to
$11.2 million ($0.16 per share); adjusted net income and adjusted EPS
are non-GAAP measures (see the reconciliation of GAAP to adjusted
earnings in the table accompanying this release)
-
Net income was $8.1 million ($0.12 per share) compared to $6.8 million
($0.09 per share) last year
-
Cash provided by operating activities was $18.0 million compared to
$13.5 million last year
President and Chief Executive Officer Tony Thompson commented: “We
successfully engaged with Krispy Kreme fans and grew traffic during the
third quarter through effective limited-time offers and other
promotional and marketing incentives. Now that we have regained traffic
momentum, in the fourth quarter we are working to balance top line
growth with improved shop operating margins. Looking ahead, we intend to
bolster customer connectivity, strengthen existing relationships and
build new ones through, among other things, the implementation of a new
consumer engagement platform. The initial version of the platform,
including our ‘My Krispy Kreme Treats’ loyalty program, is currently in
limited testing in three markets, with a domestic rollout planned for
later next year.”
Thompson continued: “Leveraging consumers’ love of our brand means more
than just increasing doughnut purchases, as our coffee and other
specialty beverages can and should play a larger role in our total sales
mix over time. Our goal is to achieve a higher beverage attachment rate
within our stores and greater beverage consumption at home, at work and
on-the-go. We are encouraged by the growing popularity of our in-shop
coffee and espresso offerings, along with early traction of our Krispy
Kreme packaged ground coffee, ready-to-drink beverages and K-Cup® packs
introduced over the past several quarters. And as our store footprint
grows, we will become more accessible as a retail beverage destination,
which should promote more visits to Krispy Kreme not only by frequent
beverage consumers but also by our core Krispy Kreme doughnut fans.”
Thompson concluded: “Krispy Kreme is well positioned for continued
domestic and international growth. We are pursuing growth opportunities
in a prudent and sustainable way by opening new Company shops,
refranchising certain markets and signing new agreements with
established and new franchise partners. Systemwide store development
this year will be slightly above our earlier expectations due to more
international store openings than originally planned. Given the enormous
growth opportunity ahead of us, we are pleased with our progress in
providing more consumers with the joy of experiencing our delicious,
one-of-a-kind doughnuts and coffee and complementary products throughout
the world.”
Third Quarter Fiscal 2015 Results
Consolidated Results
Revenues increased 7.6% to $122.9 million from $114.2 million.
Direct operating expenses were $101.2 million compared to $92.5 million,
representing 82.3% of revenues compared to 80.9% of revenues last year.
General and administrative expenses were $5.6 million (4.5% of revenues)
compared to $5.7 million (5.0% of revenues) in the year-ago period.
Impairment and lease termination costs in last year’s third quarter
included a $1.5 million charge related to the settlement of litigation.
Operating income was $12.9 million compared to $11.7 million last year,
while adjusted net income was $12.1 million ($0.18 per share) compared
to $11.2 million ($0.16 per share).
Segment Results
Company Stores’ revenues increased 10.3% to $82.6 million. Same store
sales at Company shops rose 3.3% compared to an increase of 4.4% in the
third quarter last year. Company Stores operating income was $2.2
million compared to $2.6 million last year.
Domestic Franchise revenues increased 8.2% to $3.3 million. Total sales
by domestic franchisees rose 5.2%, while same store sales at Domestic
Franchise shops increased 3.9%. Exclusive of a $1.7 million gain from
the sale of leasehold interests in the third quarter last year, Domestic
Franchise segment operating income improved to $2.0 million from $1.5
million.
International Franchise revenues increased 10.4% to $6.9 million, driven
principally by higher royalties. Sales by international franchise stores
rose 10.9% to $120 million (12.4% excluding the effects of foreign
exchange rate changes). Constant currency same store sales at
international franchise stores fell 2.9% in the quarter. International
Franchise segment operating income was $5.0 million compared to $4.4
million in the third quarter last year.
KK Supply Chain revenues (including sales to Company stores) rose 5.6%
to $61.6 million; external KK Supply Chain revenues rose slightly to
$30.2 million. KK Supply Chain generated operating income of $9.5
million in the third quarter of fiscal 2015 compared to $9.1 million
last year. KK Supply Chain operating income in the third quarter of
fiscal 2015 includes approximately $0.7 million of realized and
unrealized losses on agricultural derivative positions.
Outlook
Based on year-to-date results and other current information, management
is reaffirming its forecast of adjusted net income for fiscal 2015 of
between $48 million and $51 million ($0.69 to $0.74 per share).
Achievement of this forecast would represent a year-over-year increase
in adjusted earnings per share of between 13% and 21% from the $0.61
reported for fiscal 2014 which was, in turn, up 30% from fiscal 2013.
Adjusted net income, adjusted income tax expense and adjusted EPS are
non-GAAP measures (see the reconciliation of GAAP to adjusted earnings
in the table accompanying this release).
Conference Call
The Company will host a conference call to review results for the third
quarter as well as management’s outlook for the balance of the year this
afternoon at 4:30 p.m. (ET). A 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)
407-0784 or, for international callers, by dialing (201) 689-8560. An
archived replay of the call will be available shortly after its
conclusion by dialing (877) 870-5176, or (858) 384-5517 for
international callers; the passcode is 13595411. The audio replay will
be available through December 16, 2014. A transcript of the conference
call also will be available on the Company’s 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, there are
over 925 Krispy Kreme shops in more than 20 countries around the world.
Connect with Krispy Kreme at www.krispykreme.com.
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
domestic and international growth strategies; 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 the use and
implementation of information technology. 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.
|
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CONSOLIDATED STATEMENT OF INCOME
|
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|
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|
|
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|
|
|
|
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Three Months Ended
|
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Nine Months Ended
|
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November 2,
|
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November 3,
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November 2,
|
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November 3,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
122,871
|
|
|
$
|
114,231
|
|
|
$
|
364,967
|
|
|
$
|
347,585
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct operating expenses (exclusive of depreciation and
amortization expense shown below)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,165
|
|
|
|
92,466
|
|
|
|
297,421
|
|
|
|
282,830
|
|
|
General and administrative expenses
|
|
|
5,553
|
|
|
|
5,730
|
|
|
|
19,337
|
|
|
|
17,440
|
|
|
Depreciation and amortization expense
|
|
|
3,280
|
|
|
|
2,788
|
|
|
|
9,486
|
|
|
|
8,272
|
|
|
Impairment charges and lease termination costs
|
|
|
4
|
|
|
|
1,531
|
|
|
|
50
|
|
|
|
1,543
|
|
Operating income
|
|
|
12,869
|
|
|
|
11,716
|
|
|
|
38,673
|
|
|
|
37,500
|
|
Interest income
|
|
|
62
|
|
|
|
341
|
|
|
|
297
|
|
|
|
472
|
|
Interest expense
|
|
|
(230
|
)
|
|
|
(131
|
)
|
|
|
(535
|
)
|
|
|
(922
|
)
|
Loss on retirement of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(967
|
)
|
Equity in losses of equity method franchisees
|
|
|
(53
|
)
|
|
|
(61
|
)
|
|
|
(171
|
)
|
|
|
(174
|
)
|
Other non-operating income and (expense), net
|
|
|
91
|
|
|
|
29
|
|
|
|
411
|
|
|
|
23
|
|
Income before income taxes
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|
|
12,739
|
|
|
|
11,894
|
|
|
|
38,675
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|
|
|
35,932
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|
Provision for income taxes
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|
|
4,633
|
|
|
|
5,114
|
|
|
|
15,161
|
|
|
|
16,436
|
|
Net income
|
|
$
|
8,106
|
|
|
$
|
6,780
|
|
|
$
|
23,514
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|
|
$
|
19,496
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
Earnings per common share:
|
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Basic
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|
$
|
0.12
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|
|
$
|
0.10
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|
|
$
|
0.35
|
|
|
$
|
0.29
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|
Diluted
|
|
$
|
0.12
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|
|
$
|
0.09
|
|
|
$
|
0.34
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|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Weighted average shares outstanding:
|
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Basic
|
|
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66,407
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|
|
|
67,543
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|
|
|
66,313
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|
|
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67,274
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Diluted
|
|
|
68,654
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|
|
|
71,506
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|
|
|
69,042
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|
|
|
71,058
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|
KRISPY KREME DOUGHNUTS, INC.
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CONSOLIDATED BALANCE SHEET
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|
|
|
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|
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November 2,
|
|
February 2,
|
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|
|
|
|
|
|
2014
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|
|
2014
|
|
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|
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|
|
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|
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|
(In thousands)
|
|
ASSETS
|
CURRENT ASSETS:
|
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|
|
|
|
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Cash and cash equivalents
|
|
|
|
|
|
|
|
$
|
44,471
|
|
|
$
|
55,748
|
|
Receivables
|
|
|
|
|
|
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|
|
28,272
|
|
|
|
25,268
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|
Receivables from equity method franchisees
|
|
|
|
|
|
|
|
|
787
|
|
|
|
675
|
|
Inventories
|
|
|
|
|
|
|
|
|
17,163
|
|
|
|
16,750
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|
Deferred income taxes
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|
|
|
|
|
|
|
|
23,774
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|
|
|
23,847
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|
Other current assets
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7,220
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|
|
|
5,199
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|
Total current assets
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|
121,687
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|
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|
127,487
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Property and equipment
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|
108,381
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|
|
|
92,823
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|
Investments in equity method franchisees
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|
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|
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-
|
|
|
|
-
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Goodwill and other intangible assets
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|
30,251
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|
|
|
24,097
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|
Deferred income taxes
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|
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|
|
|
|
|
|
70,153
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|
|
|
83,461
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|
Other assets
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|
|
|
|
|
|
|
|
11,006
|
|
|
|
10,678
|
|
|
Total assets
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|
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|
$
|
341,478
|
|
|
$
|
338,546
|
|
|
|
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LIABILITIES AND SHAREHOLDERS’ EQUITY
|
CURRENT LIABILITIES:
|
|
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|
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|
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|
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|
Current portion of lease obligations
|
|
|
|
|
|
|
|
$
|
336
|
|
|
$
|
344
|
|
Accounts payable
|
|
|
|
|
|
|
|
|
17,801
|
|
|
|
16,788
|
|
Accrued liabilities
|
|
|
|
|
|
|
|
|
27,641
|
|
|
|
29,276
|
|
|
Total current liabilities
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|
|
|
|
|
|
|
|
45,778
|
|
|
|
46,408
|
|
Lease obligations, less current portion
|
|
|
|
|
|
|
|
|
8,303
|
|
|
|
1,659
|
|
Other long-term obligations and deferred credits
|
|
|
|
|
|
|
|
|
26,494
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|
|
|
25,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
|
SHAREHOLDERS’ EQUITY:
|
|
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|
|
|
|
|
|
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|
|
Preferred stock, no par value
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Common stock, no par value
|
|
|
|
|
|
|
|
|
310,431
|
|
|
|
338,135
|
|
Accumulated other comprehensive income
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Accumulated deficit
|
|
|
|
|
|
|
|
|
(49,528
|
)
|
|
|
(73,042
|
)
|
|
Total shareholders’ equity
|
|
|
|
|
|
|
|
|
260,903
|
|
|
|
265,093
|
|
|
|
Total liabilities and shareholders’ equity
|
|
|
|
|
|
|
|
$
|
341,478
|
|
|
$
|
338,546
|
|
KRISPY KREME DOUGHNUTS, INC.
|
|
|
|
|
|
|
|
|
|
|
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CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
(In thousands)
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
|
$
|
23,514
|
|
|
$
|
19,496
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
9,486
|
|
|
|
8,272
|
|
|
Deferred income taxes
|
|
|
13,381
|
|
|
|
14,438
|
|
|
Accrued rent expense
|
|
|
597
|
|
|
|
578
|
|
|
Loss on retirement of debt
|
|
|
-
|
|
|
|
967
|
|
|
(Gain) loss on disposal of property and equipment
|
|
|
212
|
|
|
|
(1,930
|
)
|
|
(Gain) on refranchising
|
|
|
(1,247
|
)
|
|
|
(876
|
)
|
|
Share-based compensation
|
|
|
3,397
|
|
|
|
3,160
|
|
|
Provision for doubtful accounts
|
|
|
5
|
|
|
|
(82
|
)
|
|
Amortization of deferred financing costs
|
|
|
81
|
|
|
|
258
|
|
|
Equity in losses of equity method franchisees
|
|
|
171
|
|
|
|
174
|
|
|
Unrealized (gains) losses on commodity derivative positions
|
|
|
593
|
|
|
|
(131
|
)
|
|
Other
|
|
|
14
|
|
|
|
22
|
|
Change in assets and liabilities:
|
|
|
|
|
|
|
|
Receivables
|
|
|
(4,156
|
)
|
|
|
(2,523
|
)
|
|
Inventories
|
|
|
(312
|
)
|
|
|
(2,621
|
)
|
|
Other current and non-current assets
|
|
|
(2,366
|
)
|
|
|
1,393
|
|
|
Accounts payable and accrued liabilities
|
|
|
1,967
|
|
|
|
(947
|
)
|
|
Other long-term obligations and deferred credits
|
|
|
381
|
|
|
|
1,363
|
|
|
|
|
Net cash provided by operating activities
|
|
|
45,718
|
|
|
|
41,011
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(21,254
|
)
|
|
|
(18,089
|
)
|
Proceeds from disposals of property and equipment
|
|
|
2,222
|
|
|
|
1,681
|
|
Proceeds from refranchising
|
|
|
1,847
|
|
|
|
681
|
|
Business acquisition, net of cash acquired
|
|
|
(7,152
|
)
|
|
|
-
|
|
Other investing activities
|
|
|
584
|
|
|
|
305
|
|
|
|
|
Net cash used for investing activities
|
|
|
(23,753
|
)
|
|
|
(15,422
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Repayment of long-term debt and lease obligations
|
|
|
(296
|
)
|
|
|
(24,546
|
)
|
Deferred financing costs
|
|
|
-
|
|
|
|
(132
|
)
|
Proceeds from exercise of stock options
|
|
|
9,921
|
|
|
|
2,155
|
|
Repurchase of common shares
|
|
|
(42,867
|
)
|
|
|
(2,653
|
)
|
|
|
|
Net cash used for financing activities
|
|
|
(33,242
|
)
|
|
|
(25,176
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(11,277
|
)
|
|
|
413
|
|
Cash and cash equivalents at beginning of period
|
|
|
55,748
|
|
|
|
66,332
|
|
Cash and cash equivalents at end of period
|
|
$
|
44,471
|
|
|
$
|
66,745
|
|
KRISPY KREME DOUGHNUTS, INC.
NON-GAAP FINANCIAL INFORMATION
As of February 2, 2014, the Company had net deferred income tax assets
of approximately $107 million, of which approximately $58 million
related to federal and state net operating loss carryovers. The
Company’s federal net operating loss carryovers totaled approximately
$174 million.
The Company has reported cumulative pretax income of over $120 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 provision for income tax expense has substantially
exceeded 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.
In the second quarter of fiscal 2014, the Company recorded a charge of
$1.0 million related to the retirement 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
of adjusted net income to GAAP net income 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
|
|
Nine Months Ended
|
|
|
|
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, as reported
|
|
$
|
8,106
|
|
$
|
6,780
|
|
$
|
23,514
|
|
$
|
19,496
|
Loss on retirement of debt
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
967
|
Provision for deferred income taxes
|
|
|
3,993
|
|
|
4,388
|
|
|
13,381
|
|
|
14,438
|
Adjusted net income
|
|
$
|
12,099
|
|
$
|
11,168
|
|
$
|
36,895
|
|
$
|
34,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.18
|
|
$
|
0.17
|
|
$
|
0.56
|
|
$
|
0.52
|
|
Diluted
|
|
$
|
0.18
|
|
$
|
0.16
|
|
$
|
0.53
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
66,407
|
|
|
67,543
|
|
|
66,313
|
|
|
67,274
|
|
Diluted
|
|
|
68,654
|
|
|
71,506
|
|
|
69,042
|
|
|
71,058
|
|
|
|
|
Management's Earnings Guidance
|
|
Historical Period
|
|
|
|
|
Year Ending February 1, 2015
|
|
Year Ended
|
|
|
|
|
From
|
|
To
|
|
February 2, 2014
|
|
|
|
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, as reported
|
|
$
|
29,900
|
|
$
|
31,900
|
|
$
|
34,256
|
Loss on retirement of debt
|
|
|
-
|
|
|
-
|
|
|
967
|
Provision for deferred income taxes
|
|
|
17,600
|
|
|
18,800
|
|
|
8,014
|
Adjusted net income
|
|
$
|
47,500
|
|
$
|
50,700
|
|
$
|
43,237
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.72
|
|
$
|
0.77
|
|
$
|
0.64
|
|
Diluted
|
|
$
|
0.69
|
|
$
|
0.74
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
66,200
|
|
|
66,200
|
|
|
67,261
|
|
Diluted
|
|
|
68,900
|
|
|
68,900
|
|
|
71,054
|
|
|
|
|
|
KRISPY KREME DOUGHNUTS, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
|
|
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Stores:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On-premises sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail sales
|
|
$
|
37,490
|
|
|
$
|
32,733
|
|
|
$
|
109,721
|
|
|
$
|
102,331
|
|
|
|
|
Fundraising sales
|
|
|
4,902
|
|
|
|
4,473
|
|
|
|
12,577
|
|
|
|
11,809
|
|
|
|
|
|
Total on-premises sales
|
|
|
42,392
|
|
|
|
37,206
|
|
|
|
122,298
|
|
|
|
114,140
|
|
|
|
Wholesale sales
|
|
|
40,187
|
|
|
|
37,680
|
|
|
|
119,264
|
|
|
|
118,356
|
|
|
|
|
|
|
Company Stores revenues
|
|
|
82,579
|
|
|
|
74,886
|
|
|
|
241,562
|
|
|
|
232,496
|
|
|
Domestic Franchise
|
|
|
3,274
|
|
|
|
3,026
|
|
|
|
10,069
|
|
|
|
8,696
|
|
|
International Franchise
|
|
|
6,852
|
|
|
|
6,205
|
|
|
|
20,967
|
|
|
|
18,707
|
|
|
KK Supply Chain:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
61,581
|
|
|
|
58,304
|
|
|
|
181,396
|
|
|
|
175,316
|
|
|
|
|
|
Less – intersegment sales elimination
|
|
|
(31,415
|
)
|
|
|
(28,190
|
)
|
|
|
(89,027
|
)
|
|
|
(87,630
|
)
|
|
|
|
|
|
External KK Supply Chain revenues
|
|
|
30,166
|
|
|
|
30,114
|
|
|
|
92,369
|
|
|
|
87,686
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
122,871
|
|
|
$
|
114,231
|
|
|
$
|
364,967
|
|
|
$
|
347,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Stores
|
|
$
|
2,233
|
|
|
$
|
2,599
|
|
|
$
|
7,910
|
|
|
$
|
9,703
|
|
|
Domestic Franchise
|
|
|
1,989
|
|
|
|
3,156
|
|
|
|
6,045
|
|
|
|
6,121
|
|
|
International Franchise
|
|
|
5,048
|
|
|
|
4,449
|
|
|
|
14,439
|
|
|
|
13,219
|
|
|
KK Supply Chain
|
|
|
9,529
|
|
|
|
9,098
|
|
|
|
30,772
|
|
|
|
28,336
|
|
|
|
|
|
Total segment operating income
|
|
|
18,799
|
|
|
|
19,302
|
|
|
|
59,166
|
|
|
|
57,379
|
|
|
General and administrative expenses
|
|
|
(5,553
|
)
|
|
|
(5,730
|
)
|
|
|
(19,337
|
)
|
|
|
(17,440
|
)
|
|
Corporate depreciation and amortization expense
|
|
|
(373
|
)
|
|
|
(325
|
)
|
|
|
(1,106
|
)
|
|
|
(896
|
)
|
|
Impairment charges and lease termination costs
|
|
|
(4
|
)
|
|
|
(1,531
|
)
|
|
|
(50
|
)
|
|
|
(1,543
|
)
|
|
|
|
|
Consolidated operating income
|
|
$
|
12,869
|
|
|
$
|
11,716
|
|
|
$
|
38,673
|
|
|
$
|
37,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Stores
|
|
$
|
2,711
|
|
|
$
|
2,255
|
|
|
$
|
7,752
|
|
|
$
|
6,783
|
|
|
Domestic Franchise
|
|
|
26
|
|
|
|
36
|
|
|
|
121
|
|
|
|
72
|
|
|
International Franchise
|
|
|
1
|
|
|
|
2
|
|
|
|
4
|
|
|
|
6
|
|
|
KK Supply Chain
|
|
|
169
|
|
|
|
170
|
|
|
|
503
|
|
|
|
515
|
|
|
Corporate
|
|
|
373
|
|
|
|
325
|
|
|
|
1,106
|
|
|
|
896
|
|
|
|
|
|
Total depreciation and amortization expense
|
|
$
|
3,280
|
|
|
$
|
2,788
|
|
|
$
|
9,486
|
|
|
$
|
8,272
|
|
KRISPY KREME DOUGHNUTS, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED OPERATING STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 2,
|
|
August 3,
|
|
May 4,
|
|
February 2,
|
|
|
|
|
|
|
|
2014
|
2014
|
|
2014
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systemwide Store Count:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company stores
|
|
|
104
|
|
|
|
|
103
|
|
|
|
|
97
|
|
|
|
|
95
|
|
|
|
Domestic Franchise stores
|
|
|
165
|
|
|
|
|
160
|
|
|
|
|
163
|
|
|
|
|
159
|
|
|
|
International Franchise stores
|
|
|
656
|
|
|
|
|
621
|
|
|
|
|
595
|
|
|
|
|
574
|
|
|
|
|
|
|
|
|
|
|
925
|
|
|
|
|
884
|
|
|
|
|
855
|
|
|
|
|
828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
|
|
|
|
|
|
2014
|
2013
|
|
2014
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systemwide Sales (in thousands):(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company stores
|
|
$
|
81,860
|
|
|
|
$
|
74,227
|
|
|
|
$
|
239,484
|
|
|
|
$
|
230,241
|
|
|
|
Domestic Franchise stores
|
|
|
81,769
|
|
|
|
|
77,725
|
|
|
|
|
253,576
|
|
|
|
|
237,327
|
|
|
|
International Franchise stores
|
|
|
119,597
|
|
|
|
|
107,827
|
|
|
|
|
348,814
|
|
|
|
|
321,053
|
|
|
|
International Franchise stores, in constant dollars(2)
|
|
|
119,597
|
|
|
|
|
106,435
|
|
|
|
|
348,814
|
|
|
|
|
319,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Same Store Sales (on-premises sales only):(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company stores
|
|
|
3.3
|
|
%
|
|
|
4.4
|
|
%
|
|
|
1.0
|
|
%
|
|
|
9.1
|
|
%
|
|
Domestic Franchise stores
|
|
|
3.9
|
|
%
|
|
|
11.0
|
|
%
|
|
|
4.1
|
|
%
|
|
|
11.6
|
|
%
|
|
International Franchise stores
|
|
|
(4.1
|
)
|
%
|
|
|
(6.4
|
)
|
%
|
|
|
(3.3
|
)
|
%
|
|
|
(8.5
|
)
|
%
|
|
International Franchise stores, in constant dollars(2)
|
|
|
(2.9
|
)
|
%
|
|
|
(0.9
|
)
|
%
|
|
|
(2.5
|
)
|
%
|
|
|
(4.2
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Stores - change in same store sales attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail menu pricing
|
|
|
1.7
|
|
%
|
|
|
3.3
|
|
%
|
|
|
2.0
|
|
%
|
|
|
3.3
|
|
%
|
|
Guest check average (exclusive of menu pricing)
|
|
|
(3.4
|
)
|
|
|
|
(1.4
|
)
|
|
|
|
(1.8
|
)
|
|
|
|
(0.8
|
)
|
|
|
Customer count
|
|
|
4.9
|
|
|
|
|
1.8
|
|
|
|
|
0.6
|
|
|
|
|
6.3
|
|
|
|
Fundraising pricing
|
|
|
0.9
|
|
|
|
|
-
|
|
|
|
|
0.6
|
|
|
|
|
-
|
|
|
|
Other
|
|
|
(0.8
|
)
|
|
|
|
0.7
|
|
|
|
|
(0.4
|
)
|
|
|
|
0.3
|
|
|
|
|
Total
|
|
|
3.3
|
|
%
|
|
|
4.4
|
|
%
|
|
|
1.0
|
|
%
|
|
|
9.1
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Same Store Customer Count - Company stores
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(retail sales only)
|
|
|
5.7
|
|
%
|
|
|
2.0
|
|
%
|
|
|
0.7
|
|
%
|
|
|
7.2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average guest check - Company stores (retail sales only)
|
|
$
|
7.45
|
|
|
|
$
|
7.59
|
|
|
|
$
|
7.52
|
|
|
|
$
|
7.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company stores - store operating weeks
|
|
|
1,346
|
|
|
|
|
1,210
|
|
|
|
|
3,869
|
|
|
|
|
3,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale Metrics - Company stores:(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grocers/mass merchants:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in average weekly number of doors
|
|
|
5.2
|
|
%
|
|
|
(8.8
|
)
|
%
|
|
|
0.8
|
|
%
|
|
|
(6.1
|
)
|
%
|
|
|
Change in average weekly sales per door
|
|
|
0.9
|
|
%
|
|
|
10.0
|
|
%
|
|
|
(0.3
|
)
|
%
|
|
|
12.0
|
|
%
|
|
Convenience stores:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in average weekly number of doors
|
|
|
2.7
|
|
%
|
|
|
0.8
|
|
%
|
|
|
3.2
|
|
%
|
|
|
(0.4
|
)
|
%
|
|
|
Change in average weekly sales per door
|
|
|
-
|
|
%
|
|
|
3.6
|
|
%
|
|
|
(3.1
|
)
|
%
|
|
|
5.7
|
|
%
|
(1) Systemwide sales, a non-GAAP financial measure, include sales by
both Company and franchise Krispy Kreme stores. The Company believes
systemwide sales data are useful in assessing consumer demand for the
Company’s products, the overall success of the Krispy Kreme brand and,
ultimately, the performance of the Company. All of the Company’s royalty
revenues are computed as percentages of sales made by the Company’s
domestic and international franchisees, and substantially all of KK
Supply Chain’s external sales of doughnut mixes and other ingredients
ultimately are determined by demand for the Company’s products at
franchise stores. Accordingly, sales by the Company’s franchisees have a
direct effect on the Company’s royalty and KK Supply Chain revenues, and
therefore on the Company’s profitability. 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 78 consecutive
weeks during the current year period (but only to the extent such sales
occurred in the 79th 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 79 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 November 2, 2014
|
|
|
|
|
|
|
|
|
August 3, 2014
|
|
82
|
|
|
20
|
|
|
1
|
|
103
|
|
Opened
|
|
2
|
|
|
-
|
|
|
-
|
|
2
|
|
Closed
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
Transferred to Domestic Franchise
|
|
(1
|
)
|
|
-
|
|
|
-
|
|
(1
|
)
|
November 2, 2014
|
|
83
|
|
|
20
|
|
|
1
|
|
104
|
|
|
|
|
|
|
|
|
|
|
Nine months ended November 2, 2014
|
|
|
|
|
|
|
|
|
February 2, 2014
|
|
76
|
|
|
18
|
|
|
1
|
|
95
|
|
Opened
|
|
5
|
|
|
-
|
|
|
-
|
|
5
|
|
Closed
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
Change in store type
|
|
1
|
|
|
(1
|
)
|
|
-
|
|
-
|
|
Transferred to Domestic Franchise
|
|
(1
|
)
|
|
-
|
|
|
-
|
|
(1
|
)
|
Transferred from Domestic Franchise
|
|
2
|
|
|
3
|
|
|
-
|
|
5
|
|
November 2, 2014
|
|
83
|
|
|
20
|
|
|
1
|
|
104
|
|
|
|
|
|
|
|
|
|
|
Three months ended November 3, 2013
|
|
|
|
|
|
|
|
|
August 4, 2013
|
|
72
|
|
|
20
|
|
|
1
|
|
93
|
|
Opened
|
|
2
|
|
|
-
|
|
|
-
|
|
2
|
|
Closed
|
|
-
|
|
|
(1
|
)
|
|
-
|
|
(1
|
)
|
Change in store type
|
|
1
|
|
|
(1
|
)
|
|
-
|
|
-
|
|
November 3, 2013
|
|
75
|
|
|
18
|
|
|
1
|
|
94
|
|
|
|
|
|
|
|
|
|
|
Nine months ended November 3, 2013
|
|
|
|
|
|
|
|
|
February 3, 2013
|
|
76
|
|
|
20
|
|
|
1
|
|
97
|
|
Opened
|
|
5
|
|
|
-
|
|
|
-
|
|
5
|
|
Closed
|
|
(1
|
)
|
|
(1
|
)
|
|
-
|
|
(2
|
)
|
Change in store type
|
|
1
|
|
|
(1
|
)
|
|
-
|
|
-
|
|
Transferred to Domestic Franchise
|
|
(6
|
)
|
|
-
|
|
|
-
|
|
(6
|
)
|
November 3, 2013
|
|
75
|
|
|
18
|
|
|
1
|
|
94
|
|
KRISPY KREME DOUGHNUTS, INC.
|
|
|
|
|
|
|
|
|
|
STORE COUNT
|
|
|
|
|
|
|
|
|
|
|
|
Number of Domestic Franchise Stores
|
|
|
Factory
|
|
|
|
|
|
|
|
|
Stores
|
Hot Shops
|
Fresh Shops
|
Total
|
|
|
|
|
|
|
|
|
|
Three months ended November 2, 2014
|
|
|
|
|
|
|
|
|
August 3, 2014
|
|
109
|
|
|
38
|
|
|
13
|
|
|
160
|
|
Opened
|
|
3
|
|
|
1
|
|
|
-
|
|
|
4
|
|
Closed
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Transferred from Company Stores
|
|
1
|
|
|
-
|
|
|
-
|
|
|
1
|
|
November 2, 2014
|
|
113
|
|
|
39
|
|
|
13
|
|
|
165
|
|
|
|
|
|
|
|
|
|
|
Nine months ended November 2, 2014
|
|
|
|
|
|
|
|
|
February 2, 2014
|
|
107
|
|
|
37
|
|
|
15
|
|
|
159
|
|
Opened
|
|
7
|
|
|
5
|
|
|
-
|
|
|
12
|
|
Closed
|
|
-
|
|
|
-
|
|
|
(2
|
)
|
|
(2
|
)
|
Transferred from Company Stores
|
|
1
|
|
|
-
|
|
|
-
|
|
|
1
|
|
Transferred to Company Stores
|
|
(2
|
)
|
|
(3
|
)
|
|
-
|
|
|
(5
|
)
|
November 2, 2014
|
|
113
|
|
|
39
|
|
|
13
|
|
|
165
|
|
|
|
|
|
|
|
|
|
|
Three months ended November 3, 2013
|
|
|
|
|
|
|
|
|
August 4, 2013
|
|
105
|
|
|
31
|
|
|
14
|
|
|
150
|
|
Opened
|
|
1
|
|
|
4
|
|
|
-
|
|
|
5
|
|
Closed
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
November 3, 2013
|
|
106
|
|
|
35
|
|
|
14
|
|
|
155
|
|
|
|
|
|
|
|
|
|
|
Nine months ended November 3, 2013
|
|
|
|
|
|
|
|
|
February 3, 2013
|
|
99
|
|
|
29
|
|
|
14
|
|
|
142
|
|
Opened
|
|
1
|
|
|
6
|
|
|
-
|
|
|
7
|
|
Closed
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Transferred from Company Stores
|
|
6
|
|
|
-
|
|
|
-
|
|
|
6
|
|
November 3, 2013
|
|
106
|
|
|
35
|
|
|
14
|
|
|
155
|
|
KRISPY KREME DOUGHNUTS, INC.
|
|
|
|
|
|
|
|
|
|
|
|
STORE COUNT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of International Franchise Stores
|
|
|
Factory
|
|
|
|
|
|
|
|
|
|
Stores
|
|
Hot Shops
|
|
Fresh Shops
|
|
Kiosks
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended November 2, 2014
|
|
|
|
|
|
|
|
|
|
|
August 3, 2014
|
|
128
|
|
|
9
|
|
327
|
|
|
157
|
|
|
621
|
|
Opened
|
|
7
|
|
|
-
|
|
23
|
|
|
11
|
|
|
41
|
|
Closed
|
|
(2
|
)
|
|
-
|
|
(2
|
)
|
|
(2
|
)
|
|
(6
|
)
|
November 2, 2014
|
|
133
|
|
|
9
|
|
348
|
|
|
166
|
|
|
656
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended November 2, 2014
|
|
|
|
|
|
|
|
|
|
|
February 2, 2014
|
|
125
|
|
|
9
|
|
296
|
|
|
144
|
|
|
574
|
|
Opened
|
|
12
|
|
|
-
|
|
57
|
|
|
25
|
|
|
94
|
|
Closed
|
|
(4
|
)
|
|
-
|
|
(5
|
)
|
|
(3
|
)
|
|
(12
|
)
|
November 2, 2014
|
|
133
|
|
|
9
|
|
348
|
|
|
166
|
|
|
656
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended November 3, 2013
|
|
|
|
|
|
|
|
|
|
|
August 4, 2013
|
|
119
|
|
|
9
|
|
280
|
|
|
138
|
|
|
546
|
|
Opened
|
|
5
|
|
|
-
|
|
11
|
|
|
8
|
|
|
24
|
|
Closed
|
|
(1
|
)
|
|
-
|
|
(5
|
)
|
|
(1
|
)
|
|
(7
|
)
|
Change in store type
|
|
-
|
|
|
-
|
|
1
|
|
|
(1
|
)
|
|
-
|
|
November 3, 2013
|
|
123
|
|
|
9
|
|
287
|
|
|
144
|
|
|
563
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended November 3, 2013
|
|
|
|
|
|
|
|
|
|
|
February 3, 2013
|
|
120
|
|
|
9
|
|
257
|
|
|
123
|
|
|
509
|
|
Opened
|
|
9
|
|
|
-
|
|
38
|
|
|
23
|
|
|
70
|
|
Closed
|
|
(5
|
)
|
|
-
|
|
(10
|
)
|
|
(1
|
)
|
|
(16
|
)
|
Change in store type
|
|
(1
|
)
|
|
-
|
|
2
|
|
|
(1
|
)
|
|
-
|
|
November 3, 2013
|
|
123
|
|
|
9
|
|
287
|
|
|
144
|
|
|
563
|
|
Copyright Business Wire 2014