Winston-Salem, N.C., /PRNewswire-FirstCall via COMTEX News Network/ -- Krispy Kreme Doughnuts, Inc. (NYSE: KKD) (the "Company") today reported financial results for the first quarter of fiscal 2010, ended May 3, 2009.
First Quarter Highlights:
"We continue to make progress in executing our strategic plans," said Jim Morgan, Chairman, President and Chief Executive Officer. "Our operating profit improved from the first quarter of last year despite the effects of $2.4 million of lease termination costs in this year's quarter, and we reported a bottom line profit of $1.9 million despite those charges and $1.1 million of charges related to amendments to our secured credit facilities. While we are pleased with the improvement in our operating results for the quarter, we are not satisfied with them, and we remain focused on rebuilding the Company for the long term." First quarter accomplishments include:
In addition, we have devoted increased attention to marketing in preparation for the traditionally slower summer months, which are now upon us. We are focusing on our mini doughnuts, iced beverages and Kool Kreme soft serve product with its complementary fresh fruit bar.
During the quarter, we prepaid $20 million of principal on our term loan, reducing its balance to $54 million. Even after this significant use of cash for debt reduction, we finished the quarter with $21 million of cash and $9 million of unused revolving credit. As previously announced, we reached an agreement with our lenders on amendments to our credit facilities that should enable us to remain in compliance with the agreements and enable these facilities to continue to provide backup sources of liquidity.
"Our employees have been the key to the results we have achieved so far," Morgan concluded. "While much remains to be done, our entire Krispy Kreme team is highly focused on executing our strategies, and we look forward to seeing the benefits of these strategies more fully reflected in our financial results in the years ahead."
Management will host a conference call to review first quarter results this afternoon at 4:30 p.m. (ET). To access an archived audio replay of the call, dial 888-203-1112 and enter the passcode 3624608. International callers may access the replay by dialing 719-457-0820 and entering passcode 3624608. The audio replay will be available through June 11, 2009.
Krispy Kreme is a leading branded retailer and wholesaler of high-quality doughnuts and packaged sweets, including its Original Glazed(R) 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 can be found in over 525 locations around the world.
Information contained in this press release, other than historical information, should be considered forward-looking. Forward-looking statements are 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 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 new domestic operating model; currency, economic, political and other risks associated with our international operations; the price and availability of raw materials needed to produce doughnut mixes and other ingredients; compliance with government regulations relating to food products and franchising; our relationships with wholesale customers; our ability to protect our trademarks and trade secrets; risks associated with our high levels of indebtedness; restrictions on our operations and compliance with covenants contained in our secured credit facilities; changes in customer preferences and perceptions; risks associated with competition; and other factors discussed in Krispy Kreme's periodic reports filed with the Securities and Exchange Commission.
KRISPY KREME DOUGHNUTS, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(In thousands)
May 3, Feb. 1,
2009 2009
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $21,184 $35,538
Receivables 19,095 19,229
Accounts and notes receivable - equity method
franchisees 1,253 1,019
Inventories 15,080 15,587
Deferred income taxes 106 106
Other current assets 4,751 4,327
----- -----
Total current assets 61,469 75,806
Property and equipment 84,088 85,075
Investments in equity method franchisees 1,276 1,187
Goodwill and other intangible assets 23,856 23,856
Other assets 9,632 9,002
----- -----
Total assets $180,321 $194,926
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $1,077 $1,413
Accounts payable 7,627 8,981
Accrued liabilities 31,515 29,222
------ ------
Total current liabilities 40,219 39,616
Long-term debt, less current maturities 53,403 73,454
Deferred income taxes 106 106
Other long-term obligations 25,667 23,995
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Preferred stock, no par value - -
Common stock, no par value 362,901 361,801
Accumulated other comprehensive loss (710) (913)
Accumulated deficit (301,265) (303,133)
--------- ---------
Total shareholders' equity 60,926 57,755
------ ------
Total liabilities and shareholders' equity $180,321 $194,926
======== ========
KRISPY KREME DOUGHNUTS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
------------------
May 3, May 4,
2009 2008
---- ----
Revenues $93,420 $103,641
Operating expenses:
Direct operating expenses (exclusive of
depreciation and amortization shown below) 76,968 89,479
General and administrative expenses 6,314 6,847
Depreciation and amortization expense 1,993 2,236
Impairment charges and lease termination costs 2,357 (645)
Other operating (income) and expense, net 10 111
--- ---
Operating income 5,778 5,613
Interest income 14 126
Interest expense (3,817) (2,063)
Equity in income (losses) of equity method
franchisees 101 (268)
Other non-operating income and (expense), net - 924
--- ---
Income before income taxes 2,076 4,332
Provision for income taxes 208 298
--- ---
Net income $1,868 $4,034
====== ======
Income per common share:
Basic $.03 $.06
==== ====
Diluted $.03 $.06
==== ====
Basic - weighted average shares outstanding 67,100 64,703
Diluted - weighted average shares outstanding 67,473 66,101
KRISPY KREME DOUGHNUTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
------------------
May 3, May 4,
2009 2008
---- ----
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $1,868 $4,034
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,993 2,236
Deferred income taxes (134) (36)
Impairment charges 162 158
Accrued rent expense (44) 157
Loss on disposal of property and equipment 85 40
Gain on disposal of interest in equity method
franchisee - (931)
Unrealized (gain) loss on interest rate
derivatives 187 (597)
Share-based compensation 1,116 1,223
Provision for doubtful accounts (82) (760)
Amortization of deferred financing costs 326 452
Equity in (income) losses of equity method
franchisees (101) 268
Other (1) 139
Change in assets and liabilities:
Receivables (54) 541
Inventories 507 (476)
Other current and non-current assets 1,090 1,609
Accounts payable and accrued liabilities 1,358 (533)
Other long-term obligations 1,075 (1,019)
----- ------
Net cash provided by operating activities 9,351 6,505
----- -----
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,370) (718)
Proceeds from disposals of property and equipment 24 125
Other investing activities (2) 4
--- ---
Net cash used for investing activities (2,348) (589)
------ ----
CASH FLOW FROM FINANCING ACTIVITIES:
Repayment of long-term debt (20,387) (1,050)
Deferred financing costs (954) (434)
Proceeds from exercise of stock options - 52
Repurchase of common shares (16) (20)
---- ---
Net cash used for financing activities (21,357) (1,452)
------- ------
Effect of exchange rate changes on cash - (12)
--- ---
Net increase (decrease) in cash and cash
equivalents (14,354) 4,452
Cash and cash equivalents at beginning of period 35,538 24,735
------ ------
Cash and cash equivalents at end of period $21,184 $29,187
========== ==========
KRISPY KREME DOUGHNUTS, INC.
SEGMENT INFORMATION
(In thousands)
Three Months Ended
------------------
May 3, May 4,
2009 2008
---- ----
Revenues:
Company Stores $65,857 $72,182
Domestic Franchise 2,051 2,046
International Franchise 3,878 4,466
KK Supply Chain:
Total revenues 44,858 50,719
Less- intersegment sales elimination (23,224) (25,772)
------- -------
External KK Supply Chain revenues 21,634 24,947
------ ------
Total revenues $93,420 $103,641
======= ========
Operating income:
Company Stores $2,944 $(294)
Domestic Franchise 1,180 1,120
International Franchise 2,435 3,322
KK Supply Chain 8,139 7,992
Unallocated general and administrative expenses (6,563) (7,172)
Impairment charges and lease termination costs (2,357) 645
------ ---
Total operating income $5,778 $5,613
====== ======
Depreciation and amortization expense:
Company Stores $1,496 $1,628
Domestic Franchise 21 21
International Franchise - -
KK Supply Chain 227 262
Corporate administration 249 325
--- ---
Total depreciation and amortization
expense $1,993 $2,236
========== ==========
KRISPY KREME DOUGHNUTS, INC.
STORE COUNT
NUMBER OF STORES
----------------
DOMESTIC INTERNATIONAL TOTAL
-------- ------------- -----
Number of Stores at May 3, 2009:
Company:
Factory 80 - 80
Satellite 11 - 11
--- --- ---
Total Company 91 - 91
--- --- ---
Franchise:
Factory 102 95 197
Satellite 28 220 248
--- --- ---
Total Franchise 130 315 445
--- --- ---
Total Systemwide 221 315 536
=== === ===
NUMBER OF STORES
----------------
FACTORY SATELLITE TOTAL
------- --------- -----
Three Months Ended May 3, 2009:
FEBRUARY 1, 2009 281 242 523
Opened 4 22 26
Closed (8) (5) (13)
--- --- ----
MAY 3, 2009 277 259 536
=== === ===
KRISPY KREME DOUGHNUTS, INC.
SELECTED OPERATING STATISTICS
(Dollars in thousands)
Three Months Ended
------------------
May 3, May 4,
2009 2008
---- ----
Year over year percentage change in systemwide
sales (1) (8.0)% 2.4%
Year over year percentage change in systemwide
sales, exclusive of the effects of changes in
foreign currency rates (2) (2.3)% NA
Average weekly sales per store (3):
Company $54.3 $53.7
Systemwide $28.3 $35.3
Systemwide, exclusive of the effects of
changes in foreign currency rates (2) $30.1 $35.3
Store operating weeks (4):
Company 1,209 1,339
Systemwide 6,543 5,699
Change in Company same store sales (5) 2.1% 1.2%
Company off-premises sales (6):
Change in average weekly number of doors (9.4)% (6.7)%
Change in average weekly sales per door (1.2)% (8.6)%
(1) Systemwide sales, a non-GAAP financial measure, include the sales
by both 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.
(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 conducts business had been
the same in the first quarter of fiscal 2010 as in the first quarter
of fiscal 2009.
(3) Represents, on a Company and systemwide basis, total sales of all
stores divided by the number of operating weeks for both factory and
satellite stores.
(4) Represents, on a Company and systemwide basis, the aggregate number
of weeks in a period that both factory and satellite stores were in
operation.
(5) 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.
(6) For Company off-premises 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.
SOURCE Krispy Kreme Doughnuts, Inc.
Krispy Kreme is a global retailer of premium-quality sweet treats, including its signature Original Glazed® doughnut.