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Krispy Kreme Reaches Agreement Regarding New England Market
Freedom Rings Closes Remaining Locations
WINSTON-SALEM, N.C., Dec. 27 /PRNewswire-FirstCall/ -- Krispy Kreme
Doughnuts, Inc. (NYSE: KKD) announced today that its wholly-owned subsidiary,
Krispy Kreme Doughnut Corporation ("KKDC"), reached an agreement with Jan
Dough, LLC, KKDCs joint venture partner in New England Dough, LLC, regarding
the distribution of New England Doughs assets. New England Dough is KKDCs
franchisee in the New England market. Prior to this transaction, KKDC owned a
60% interest in New England Dough.
Under the agreement, New England Dough will distribute approximately
$1.5 million to KKDC, as well as the development rights for the New England
territory, which includes Massachusetts, Connecticut and Rhode Island. New
England Dough will transfer its stores located in Milford, Connecticut;
Cranston, Rhode Island; and Dedham, Massachusetts to Northeast Doughnuts, LLC,
a wholly-owned subsidiary of KKDC. Jan Dough will receive from New England
Dough all of its interest in the store located at Mohegan Sun. New England
Doughs three remaining stores were closed and the affairs of New England
Dough will be wound down.
"This transaction represents another step forward in Krispy Kremes
restructuring process," said Steve Panagos, President and Chief Operating
Officer of Krispy Kreme. "We believe that the New England region has
significant growth potential and we look forward to continuing to serve this
important market."
The Company also announced today that Freedom Rings, LLC, KKDCs wholly-
owned subsidiary and franchisee in the Philadelphia region, has closed its
remaining four locations. Freedom Rings has been operating under Chapter 11
bankruptcy protection since October 16, 2005.
Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme is a
leading branded specialty retailer of premium quality doughnuts, including its
signature Hot Original Glazed. There are currently approximately 330 Krispy
Kreme stores and 80 satellites operating systemwide in 44 U.S. states,
Australia, Canada, Mexico, the Republic of South Korea 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, 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 Kremes operating results, performance or financial
condition are the outcome of the pending formal investigation by the United
States Securities and Exchange Commission and the investigation by the United
States Attorneys Office for the Southern District of New York, the pending
shareholder class action, the pending shareholder derivative action, the
pending ERISA class action, further actions by the Special Committee, our
auditors ongoing review of our financial statements, actions taken by lenders
to the Company and its joint ventures and actions taken by our franchisees,
dependence on the ability of our franchisees to execute on their business
plans, supply issues, changes in consumer preferences and perceptions, the
failure of new products or cost saving initiatives to contribute to financial
results in the timeframe or amount currently estimated and numerous other
factors discussed in Krispy Kremes periodic reports and proxy statements
filed with the Securities and Exchange Commission.
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