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imperialism & war

Krispy Kreme Closes In On Conquering U.S. And Canada

After reporting an annual systemwide sales advance of 24 percent on May 25, only a handful of states and provinces are yet to be conquered by Krispy Kreme Donuts and Coffee (Green colored states and provinces have been taken over by Krispy Kreme, yellow colored states and provinces are awaiting their first Krispy Kreme store and their liberation).
Krispy Kreme Announces First Quarter Results

Systemwide Sales Advanced 24%

WINSTON-SALEM, N.C., May 25 /PRNewswire-FirstCall/ -- Krispy Kreme Doughnuts, Inc. (NYSE: KKD) today reported financial results for the three months ended May 2, 2004, the Company's first quarter of fiscal 2005.

(Logo:  http://www.newscom.com/cgi-bin/prnh/19991216/NYTH146 )

First quarter systemwide sales including sales of company and franchise stores advanced 24.2%. Total revenues for the quarter, which includes sales from company stores, franchise operations and Krispy Kreme Manufacturing and Distribution (KKM&D) increased 24.0% to $184.4 million compared with $148.7 million in the first quarter of last year. Revenues from franchise operations grew 40.2% to $7.1 million; KKM&D revenues increased 27.5% to $52.7 million and company store sales advanced 21.8% to $124.5 million. On a comparable store basis, systemwide sales increased 4.0% and company store sales advanced 5.2%.

Income from continuing operations for the first quarter of fiscal 2005 decreased to $9.8 million, or $0.16 diluted earnings per share, compared with $13.1 million in the first quarter last year. For the quarter, income from continuing operations and before an impairment charge, increased 11.9% to $14.3 million, or $0.23 per diluted share, compared with $12.8 million, or $0.21 per diluted share, in the first quarter last year, excluding the $0.5 million pre-tax benefit related to the arbitration award.

First quarter earnings include an asset impairment charge primarily related to stores that had closed or were scheduled to close. The non-cash, pre-tax asset impairment charge was $7.5 million, or $0.07 per diluted share. Subsequent to quarter-end, seven stores were closed, comprised of four factory stores that did not represent the current prototype and three doughnut and coffee shops located in in-line strip malls.

Also during the first quarter of fiscal 2005, the Company reported a loss from discontinued operations of approximately $34.3 million, or $0.54 per diluted share, related to the pending divestiture of the existing Montana Mills operation.

Commenting on the Company's financial performance, Scott Livengood, Chairman, President and Chief Executive Officer of Krispy Kreme Doughnuts, Inc. said, "In spite of the changing industry dynamics, we delivered 24% systemwide sales and revenue growth for the quarter. We are focused on our core business and improving company store operations. We remain excited about our growth prospects, both domestically and internationally."

During the quarter the Company opened 16 new factory stores. These stores are located in Waco, TX; Albuquerque, NM; Little Rock, AK; Delta, British Columbia; Latham, NY; Quebec City, Quebec; Phoenix, AZ (2); Dedham and Boston, MA; Langhorne, PA; Seattle, WA; Calgary, Alberta; Grand Junction, CO; Littleton, CO and Montreal, Canada. Three satellites also opened during the quarter in Santa Monica, CA; Las Vegas, NV and Toronto, Canada. This brings the total number of stores at quarter-end to 401, including 372 factory stores and 29 satellites.

The Company signed its fifth international development agreement with the Lotte Group to develop 25 stores over five years throughout the Republic of South Korea. The Lotte Group operates a leading hamburger chain and is one the largest convenience store operators in South Korea.

"We are focused on the Krispy Kreme brand and are committed to elevating the customer experience," stated Livengood. "We have sales and operational initiatives underway and several new products in the pipeline. We expect to realize the benefits from these initiatives in the second half of the year. We are confident that these efforts will serve to create value for our employees, customers and shareholders."

The Company estimates fiscal 2005 earnings per diluted share from continuing operations of between $1.04 and $1.06. The Company now estimates that fiscal 2005 systemwide sales will increase approximately 20% to 25% and systemwide comparable store sales growth will be in the low- to mid-single digits. The Company revised its fiscal 2005 development plans and estimates opening approximately 100 new stores systemwide, including approximately 80 factory and 20 satellite stores.

The Company will hold a conference call today at 9:00 a.m. Eastern Time, which will be hosted by Scott Livengood, Chairman, President and Chief Executive Officer, John Tate, Chief Operating Officer and Mike Phalen, Chief Financial Officer. The call will be broadcast live over the Internet and can be accessed at  http://www.krispykreme.com/investorrelations.html. A replay of the call will be available until 6:00 p.m. Eastern Time, Tuesday, June 1, 2004 by dialing 800.839.1189 (domestic) or 402.998.1225 (international), and entering passcode 1564.

We have disclosed above systemwide sales growth as well as systemwide comparable store sales information. Systemwide sales data are non-GAAP financial measures that include sales at all company and franchise stores. We believe systemwide sales information is useful in assessing our market share and concept growth.

Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme is a leading branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. Krispy Kreme currently operates 402 stores (comprised of 373 factory stores and 29 satellites) in 44 U.S. states, Australia, Canada, Mexico and the United Kingdom. Krispy Kreme can be found on the World Wide Web at  http://www.krispykreme.com.

Information contained in this press release, other than historical information, may be considered forward-looking in nature and is subject to various risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. Among the key factors that may have a direct bearing on Krispy Kreme's operating results, performance or financial condition are its dependence on franchisees to execute its store expansion strategy, supply issues, competition and numerous other factors discussed in Krispy Kreme's periodic reports, proxy statement and other information statements filed with the Securities and Exchange Commission.


Krispy Kreme Doughnuts, Inc.
Summary Financial Results
For the First Quarter Ended May 2, 2004
(All dollar amounts in thousands except per share data)
(Unaudited)

Impairment
Charge
Quarter and Quarter
Ended Discontinued Ended
May 2, 2004 Operations May 2, 2004
As Reported Adjustments Pro Forma

Total revenues $184,356 $ - $184,356
Operating expenses 141,383 - 141,383
General and administrative expenses 10,664 - 10,664
Depreciation and amortization expenses 6,130 - 6,130
Impairment charge 7,543 7,543 -
Arbitration award - - -
Income from operations 18,636 7,543 26,179
Interest income 176 - 176
Interest expense 1,433 - 1,433
Loss from joint ventures 575 - 575
Minority interest in consolidated
joint ventures 126 - 126
Other expense, net 156 - 156
Income from continuing operations
before income taxes 16,522 7,543 24,065
Provision for income taxes 6,675 (3,047) 9,722
Income from continuing operations 9,847 4,496 14,343
Discontinued operations (34,285) 34,285 -
Net income (loss) $(24,438) $38,781 $14,343

Diluted earnings (loss) per share:
Income from continuing operations $0.16 $0.07 $0.23
Discontinued operations (0.54) 0.54 -
Net income (loss) $(0.38) $0.61 $0.23
Diluted shares outstanding 63,573 63,573 63,573

Segment Information
Revenues
Company store operations $124,540 $ - $124,540
Franchise operations (1) 7,105 - 7,105
KKM&D 52,711 - 52,711
Total revenues $184,356 $ - $184,356

Operating Income
Company store operations $19,279 $ - $19,279
Franchise operations 5,413 - 5,413
KKM&D 12,593 - 12,593
Unallocated G&A expenses (11,106) - (11,106)
Impairment charge (7,543) 7,543 -
Arbitration award - - -
Total operating income $18,636 $7,543 $26,179

Operating Margins
Company store operations 15.5% - 15.5%
Franchise operations 76.2% - 76.2%
KKM&D 23.9% - 23.9%
Unallocated G&A expenses -6.0% - -6.0%
Impairment charge -4.1% 4.1% -
Arbitration award - - -
Total operating income 10.1% 4.1% 14.2%

Depreciation and Amortization Expenses
Company store operations $4,863 $ - $4,863
Franchise operations 43 - 43
KKM&D 781 - 781
Corporate administration 443 - 443
Total depreciation and amortization
expenses $6,130 $ - $6,130

Increase in Systemwide Sales
Total Krispy Kreme stores 24.2%

Comparable Store Sales
Company stores 5.2%
Systemwide 4.0%


Quarter Quarter
Ended Arbitration Ended
May 4, 2003 Award May 4, 2003
As Reported Adjustment Pro Forma
Total revenues $148,660 $ - $148,660
Operating expenses 112,480 - 112,480
General and administrative expenses 8,902 - 8,902
Depreciation and amortization expenses 4,101 - 4,101
Impairment charge - - -
Arbitration award (525) (525) -
Income from operations 23,702 (525) 23,177
Interest income 227 - 227
Interest expense 866 - 866
Loss from joint ventures 694 - 694
Minority interest in consolidated
joint ventures 616 - 616
Other expense, net 25 - 25
Income from continuing operations
before income taxes 21,728 (525) 21,203
Provision for income taxes 8,588 207 8,381
Income from continuing operations 13,140 (318) 12,822
Discontinued operations - - -
Net income (loss) $13,140 $(318) $12,822

Diluted earnings (loss) per share:
Income from continuing operations $0.22 $(0.01) $0.21
Discontinued operations - - -
Net income (loss) $0.22 $(0.01) $0.21
Diluted shares outstanding 60,689 60,689 60,689

Segment Information
Revenues
Company store operations $102,243 $ - $102,243
Franchise operations (1) 5,066 - 5,066
KKM&D 41,351 - 41,351
Total revenues $148,660 $ - $148,660

Operating Income
Company store operations $21,559 $ - $21,559
Franchise operations 3,697 - 3,697
KKM&D 7,212 - 7,212
Unallocated G&A expenses (9,291) - (9,291)
Impairment charge - - -
Arbitration award 525 (525) -
Total operating income $23,702 $(525) $23,177

Operating Margins
Company store operations 21.1% - 21.1%
Franchise operations 73.0% - 73.0%
KKM&D 17.4% - 17.4%
Unallocated G&A expenses -6.2% - -6.2%
Impairment charge - - -
Arbitration award 0.4% -0.4% -
Total operating income 15.9% -0.4% 15.6%

Depreciation and Amortization Expenses
Company store operations $2,934 $ - $2,934
Franchise operations 43 - 43
KKM&D 734 - 734
Corporate administration 390 - 390
Total depreciation and amortization
expenses $4,101 $ - $4,101


As As
Reported Reported Pro Forma Pro Forma
$ % $ %
Change Change Change Change
Total revenues $35,696 24.0% $35,696 24.0%
Operating expenses 28,903 25.7% 28,903 25.7%
General and administrative
expenses 1,762 19.8% 1,762 19.8%
Depreciation and
amortization expenses 2,029 49.5% 2,029 49.5%
Impairment charge 7,543 100.0% - -
Arbitration award 525 -100.0% - -
Income from operations (5,066) -21.4% 3,002 13.0%
Interest income (51) -22.5% (51) -22.5%
Interest expense 567 65.5% 567 65.5%
Loss from joint ventures (119) -17.1% (119) -17.1%
Minority interest in
consolidated
joint ventures (490) -79.5% (490) -79.5%
Other expense, net 131 524.0% 131 524.0%
Income from continuing
operations
before income taxes (5,206) -24.0% 2,862 13.5%
Provision for income taxes (1,913) -22.3% 1,341 16.0%
Income from continuing
operations (3,293) -25.1% 1,521 11.9%
Discontinued operations (34,285) 100.0% - 100.0%
Net income (loss) $(37,578) -286.0% $1,521 11.9%

Diluted earnings
(loss) per share:
Income from continuing
operations $(0.06) -28.6% $0.02 7.6%
Discontinued operations (0.54) - - -
Net income (loss) $(0.60) -277.4% $0.02 7.6%
Diluted shares outstanding 2,884 4.8% 2,884 4.8%

Segment Information
Revenues
Company store operations $22,297 21.8% $22,297 21.8%
Franchise operations (1) 2,039 40.2% 2,039 40.2%
KKM&D 11,360 27.5% 11,360 27.5%
Total revenues $35,696 24.0% $35,696 24.0%

Operating Income
Company store operations $(2,280) -10.6% $(2,280) -10.6%
Franchise operations 1,716 46.4% 1,716 46.4%
KKM&D 5,381 74.6% 5,381 74.6%
Unallocated G&A expenses (1,815) 19.5% (1,815) 19.5%
Impairment charge (7,543) 100.0% - -
Arbitration award (525) -100.0% - -
Total operating income $(5,066) -21.4% $3,002 13.0%

Operating Margins
Company store operations -5.6% -5.6%
Franchise operations 3.2% 3.2%
KKM&D 6.5% 6.5%
Unallocated G&A expenses 0.2% 0.2%
Impairment charge -4.1% -
Arbitration award 0.4% -
Total operating income -5.8% -1.4%

Depreciation and
Amortization Expenses
Company store operations $1,929 65.7% $1,929 65.7%
Franchise operations - - - -
KKM&D 47 6.4% 47 6.4%
Corporate administration 53 13.6% 53 13.6%
Total depreciation and
amortization expenses $2,029 49.5% $2,029 49.5%


Note: Operating results for the first quarter of fiscal 2005 include a
pre-tax asset impairment charge of $7,543 primarily related to stores
that had closed or were scheduled to close and a loss from discontinued
operations of $34,285 resulting from the company's decision to divest the
existing Montana Mills operation. Operating results for the first quarter
of fiscal 2004 include the reversal of the $525 accrual remaining after
settlement of an arbitration award against the Company, as discussed in
the Company's Form 8-K filing dated February 10, 2003. This schedule
compares results for the first quarter of fiscal 2005, both before and
after the impairment charge and the loss from discontinued operations,
with the results of the first quarter of fiscal 2004, both before and
after adjusting for the reversal of the arbitration award.

(1) Revenues from franchise operations consist of franchise fees and
royalties on sales of our franchised stores, as reported by our
franchisees. Sales of franchised stores for the first quarter of
fiscal 2005 and fiscal 2004 were $158,503 and $125,562, respectively.


Krispy Kreme Doughnuts, Inc.
Condensed Consolidated Balance Sheets
As of May 2, 2004
(All dollar amounts in thousands)



May 2, February 1,
2004 2004(1) $ Change % Change
Cash and cash equivalents $13,715 $20,300 $(6,585) -32.4%
Receivables 78,735 76,195 2,540 3.3%
Inventories 32,974 28,573 4,401 15.4%
Property and equipment, net 301,160 281,103 20,057 7.1%
Investments in unconsolidated joint
ventures 10,728 12,426 (1,698) -13.7%
Other assets 215,547 205,211 10,336 5.0%
Assets of discontinued operations 1,624 36,856 (35,232) -95.6%
Total assets $654,483 $660,664 $(6,181) -0.9%


Payables $31,536 $26,907 $4,629 17.2%
Accrued expenses 26,391 23,358 3,033 13.0%
Debt 135,432 137,898 (2,466) -1.8%
Other long-term obligations 29,728 19,781 9,947 50.3%
Liabilities of discontinued
operations 745 513 232 45.2%
Shareholders' equity 430,651 452,207 (21,556) -4.8%
Total liabilities and
shareholders' equity $654,483 $660,664 $(6,181) -0.9%


(1) Restated to reflect amounts associated with Montana Mills Bread Co.,
Inc. as assets and liabilities of discontinued operations.


Krispy Kreme Doughnuts, Inc.
Store Count Recap

Factory Stores

Consolidated Total
Company JVs Company Associate
Total End Q4 FY04 117 24 141 57

Opened - 3 3 -
Closed - - - (1)
Transferred - - - -
Reclassification - 8 8 -
Q1 Net - 11 11 (1)

Total End Q1 FY05 117 35 152 56


Factory Stores

Joint Total Total
AD Ventures AD Franchise Total
Total End Q4 FY04 93 66 159 216 357

Opened 5 8 13 13 16
Closed - - - (1) (1)
Transferred - - - - -
Reclassification - (8) (8) (8) -
Q1 Net 5 0 5 4 15

Total End Q1 FY05 98 66 164 220 372


Krispy Kreme Doughnuts, Inc.
Average Sales per Week
Dollars in Thousands

FY 2005 FY 2004 FY 2004
Q1 Q4 Q1
Company Stores $67.9 $69.1 $77.4

Area Developers $59.2 $58.7 $58.0

Associates $46.7 $42.6 $52.4

Total Franchise $56.0 $54.3 $56.2

Systemwide $60.7 $60.1 $64.1



Krispy Kreme Doughnuts, Inc.
Total Operating Weeks


FY 2005 FY 2004 FY 2004
Q1 Q4 Q1
Company Stores 1,847 1,735 1,336

Area Developers 2,104 1,909 1,505

Associates 728 726 732

Total Franchise 2,832 2,635 2,237

Systemwide 4,679 4,370 3,573


SOURCE Krispy Kreme Doughnuts, Inc.

homepage: homepage: http://ir.thomsonfn.com/InvestorRelations/PubNewsStory.aspx?partner=6012&storyId=114754


wait a minute 11.Jun.2004 03:22

.

er, classified under 'imperialism and war' on the newswire? Are they using F-16s to bomb rival outlets for donuts? Are they selling cocaine on the side to fund guerrilla forces firebombing other donut houses? No.

Sure it's a donut war, though that is stretching the category into mere anaolgies.

Let's eat Krispy Kreme and die 11.Jun.2004 15:13

Ms.Atkins is also bad

I heard Krispy Kreme is losing money because of the Atkins craze. Is that a good thing or a bad thing?

Bad cop 11.Jun.2004 20:35

K.C.Roberts

Bad cop!! No Donut!!

Metta,
K.C.