Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Aug. 02, 2015 | Aug. 28, 2015 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Aug. 2, 2015 | |
Amendment Flag | false | |
Entity Registrant Name | KRISPY KREME DOUGHNUTS INC | |
Entity Central Index Key | 1,100,270 | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock Shares Outstanding | 62,912,961 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | KKD |
CONSOLIDATED STATEMENT OF INCOM
CONSOLIDATED STATEMENT OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
CONSOLIDATED STATEMENT OF INCOME [Abstract] | ||||
Revenues | $ 127,336 | $ 120,516 | $ 259,810 | $ 242,096 |
Operating expenses: | ||||
Direct operating expenses (exclusive of depreciation and amortization expense shown below) | 104,145 | 99,067 | 207,917 | 195,457 |
General and administrative expenses | 6,718 | 6,737 | 14,272 | 13,784 |
Depreciation and amortization expense | 4,074 | 3,033 | 8,067 | 6,206 |
Impairment charges and lease termination costs | 304 | 38 | 308 | 46 |
Pre-opening costs related to Company Stores | 515 | 245 | 838 | 471 |
(Gains) and losses on commodity derivatives, net | $ 841 | 1,341 | 394 | (103) |
(Gain) on refranchisings, net of business acquisition charges | 431 | 431 | ||
Operating income | $ 10,739 | 9,624 | 28,014 | 25,804 |
Interest income | 72 | 64 | 219 | 235 |
Interest expense | $ (387) | (162) | $ (764) | (305) |
Equity in losses of equity method franchisees | (61) | (118) | ||
Other non-operating income and (expense), net | $ 89 | 152 | $ 273 | 320 |
Income before income taxes | 10,513 | 9,617 | 27,742 | 25,936 |
Provision for income taxes | 4,595 | 3,865 | 11,158 | 10,528 |
Net income | $ 5,918 | $ 5,752 | $ 16,584 | $ 15,408 |
Earnings per common share: | ||||
Basic | $ 0.09 | $ 0.09 | $ 0.25 | $ 0.23 |
Diluted | $ 0.09 | $ 0.08 | $ 0.24 | $ 0.22 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME [Abstract] | ||||
Net income | $ 5,918 | $ 5,752 | $ 16,584 | $ 15,408 |
Other comprehensive income | ||||
Comprehensive income | $ 5,918 | $ 5,752 | $ 16,584 | $ 15,408 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Thousands | Aug. 02, 2015 | Feb. 01, 2015 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 44,105 | $ 50,971 |
Receivables | 28,704 | 27,799 |
Receivables from equity method franchisees | 945 | 782 |
Inventories | 18,319 | 18,194 |
Deferred income taxes | 23,155 | 23,245 |
Other current assets | 8,418 | 6,856 |
Total current assets | 123,646 | 127,847 |
Property and equipment | $ 120,021 | $ 115,758 |
Investments in equity method franchisees | ||
Goodwill and other intangible assets | $ 29,838 | $ 30,070 |
Deferred income taxes | 58,490 | 68,278 |
Other assets | 10,054 | 10,760 |
Total assets | 342,049 | 352,713 |
CURRENT LIABILITIES: | ||
Current portion of lease obligations | 328 | 333 |
Accounts payable | 18,929 | 17,095 |
Accrued liabilities | 32,214 | 32,530 |
Total current liabilities | 51,471 | 49,958 |
Lease obligations, less current portion | 11,252 | 9,354 |
Other long-term obligations and deferred credits | $ 25,506 | $ 25,615 |
Commitments and contingencies | ||
SHAREHOLDERS' EQUITY: | ||
Preferred stock, no par value; 10,000 shares authorized; none issued and outstanding | ||
Common stock, no par value; 300,000 shares authorized; 63,545 shares and 64,926 shares outstanding, respectively | $ 280,218 | $ 310,768 |
Accumulated deficit | (26,398) | (42,982) |
Total shareholders equity | 253,820 | 267,786 |
Total liabilities and shareholders' equity | $ 342,049 | $ 352,713 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parentheticals) - $ / shares shares in Thousands, None in scaling factor is -9223372036854775296 | Aug. 02, 2015 | Feb. 01, 2015 |
CONSOLIDATED BALANCE SHEET [Abstract] | ||
Preferred stock, par value per share | ||
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | ||
Common stock, shares authorized | 300,000 | 300,000 |
Common stock, shares issued | 63,545 | 64,926 |
Common stock, shares outstanding | 63,545 | 64,926 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 02, 2015 | Aug. 03, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 16,584 | $ 15,408 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 8,067 | 6,206 |
Deferred income taxes | 9,878 | $ 9,388 |
Impairment charges | 343 | |
Accrued rent expense | 268 | $ 324 |
Loss on disposal of property and equipment | 87 | 99 |
Share-based compensation | 3,662 | 2,207 |
Provision for doubtful accounts | (3) | 174 |
Amortization of deferred financing costs | $ 54 | 54 |
Equity in losses of equity method franchisees | 118 | |
Unrealized (gains) losses on commodity derivative positions | $ (532) | 121 |
Other | 23 | 6 |
Change in assets and liabilities: | ||
Receivables | (1,730) | (4,197) |
Inventories | (98) | (80) |
Other current and non-current assets | (1,442) | (2,259) |
Accounts payable and accrued liabilities | 264 | 229 |
Other long-term obligations and deferred credits | 13 | (111) |
Net cash provided by operating activities | 35,438 | 27,687 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (10,158) | (13,063) |
Proceeds from disposals of property and equipment | 216 | 196 |
Acquisition of stores from franchisees | (312) | (7,152) |
Other investing activities | 917 | 427 |
Net cash used for investing activities | (9,337) | (19,592) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of lease obligations | (166) | (200) |
Proceeds from exercise of stock options | 519 | 6,655 |
Repurchase of common shares | (33,320) | (34,618) |
Net cash used for financing activities | (32,967) | (28,163) |
Net decrease in cash and cash equivalents | (6,866) | (20,068) |
Cash and cash equivalents at beginning of period | 50,971 | 55,748 |
Cash and cash equivalents at end of period | 44,105 | 35,680 |
Supplemental schedule of non-cash investing and financing activities: | ||
Assets acquired under leasing arrangements | $ 2,035 | $ 3,781 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Accumulated Deficit [Member] |
Beginning Balance at Feb. 02, 2014 | $ 265,093 | $ 338,135 | $ (73,042) |
Balance, shares at Feb. 02, 2014 | 64,940 | ||
Comprehensive income | 15,408 | $ 15,408 | |
Exercise of stock options | 6,655 | $ 6,655 | |
Exercise of stock options, shares | 1,245 | ||
Share-based compensation | 2,207 | $ 2,207 | |
Share-based compensation, shares | 60 | ||
Repurchase of common shares | $ (32,773) | $ (32,773) | |
Repurchase of common shares, shares | (1,861) | (1,861) | |
Ending Balance at Aug. 03, 2014 | $ 256,590 | $ 314,224 | $ (57,634) |
Balance, shares at Aug. 03, 2014 | 64,384 | ||
Beginning Balance at Feb. 01, 2015 | $ 267,786 | $ 310,768 | (42,982) |
Balance, shares at Feb. 01, 2015 | 64,926 | 64,926 | |
Comprehensive income | $ 16,584 | $ 16,584 | |
Exercise of stock options | 519 | $ 519 | |
Exercise of stock options, shares | 81 | ||
Share-based compensation | 3,662 | $ 3,662 | |
Share-based compensation, shares | 447 | ||
Repurchase of common shares | $ (34,731) | $ (34,731) | |
Repurchase of common shares, shares | (1,909) | (1,909) | |
Ending Balance at Aug. 02, 2015 | $ 253,820 | $ 280,218 | $ (26,398) |
Balance, shares at Aug. 02, 2015 | 63,545 | 63,545 |
Accounting Policies
Accounting Policies | 6 Months Ended |
Aug. 02, 2015 | |
Accounting Policies [Abstract] | |
Accounting Policies | Note 1 Accounting Policies Krispy Kreme Doughnuts, Inc. (KKDI) and its subsidiaries (collectively, the Company) are engaged in the sale of doughnuts and complementary products through Company-owned stores. The Company also licenses the Krispy Kreme business model and certain of its intellectual property to franchisees in the United States and over 20 Significant Accounting Policies BASIS OF PRESENTATION. The consolidated financial statements contained herein should be read in conjunction with the Company's 2015 Form 10-K. The accompanying interim consolidated financial statements are presented in accordance with the requirements of Article 10 of Regulation S-X and, accordingly, do not include all the disclosures required by generally accepted accounting principles in the United States of America (GAAP) with respect to annual financial statements. The interim consolidated financial statements have been prepared in accordance with the Company's accounting practices described in the 2015 Form 10-K, but have not been audited. In management's opinion, the financial statements include all adjustments, which consist only of normal recurring adjustments, necessary for a fair statement of the Company's results of operations for the periods presented. The consolidated balance sheet data as of February 1, 2015 were derived from the Company's audited financial statements. BASIS OF CONSOLIDATION. The financial statements include the accounts of KKDI and its subsidiaries. CHANGE IN PRESENTATION. In the first quarter of fiscal 2016, the Company changed the presentation of the Consolidated Statement of Income and segment financial information. Pre-opening costs related to Company Stores; gains and losses on commodity derivatives, net and gain on refranchisings, net of business acquisition charges are now separate line items on the Consolidated Statement of Income and are no longer in the respective business segments' operating income in Note 2. Such changes were made to provide more clarity and visibility to the Company's operations and to conform to new management reporting. The Company furnished a Current Report on Form 8-K on June 10, 2015 providing the Consolidated Statement of Income and segment financial information for the quarterly and annual periods in fiscal 2014 and fiscal 2015 conformed to the fiscal 2016 presentation. The Company has made no changes to its reportable segments. These presentation changes had no impact on the Company's consolidated operating income or consolidated net income. EARNINGS PER SHARE. The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period. The computation of diluted earnings per share reflects the additional common shares that would have been outstanding if dilutive potential common shares had been issued, computed using the treasury stock method. Such potential common shares consist of shares issuable upon the exercise of stock options and the vesting of currently unvested restricted stock units. Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 2015 2014 2015 2014 (In thousands) Numerator: net income $ 5,918 $ 5,752 $ 16,584 $ 15,408 Denominator: Basic earnings per share - weighted average shares outstanding 65,502 66,008 66,053 66,265 Effect of dilutive securities: Stock options 1,546 2,097 1,594 2,352 Restricted stock units 321 620 324 619 Diluted earnings per share - weighted average shares outstanding plus dilutive potential common shares 67,369 68,725 67,971 69,236 Stock options with respect to 285,000 295,000 214,000 110,000 August 2, 2015 and August 3, 2014, respectively Stock options with respect to 294,000 234,000 192,000 55,000 August 2, 2015 and August 3, 2014 , respectively . Recent Accounting Pronouncements The Financial Accounting Standards Board (the FASB) Accounting Standards Codification is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update ("ASU") to communicate changes to the codification. The Company considers the applicability and impact of all ASU's. The followings are those ASU's that are relevant to the Company. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which changes guidance for subsequent measurement of inventory within the scope of the update from the lower of cost or market to the lower of cost and net realizable value. This update is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted. The Company will evaluate the effects of adoption of this guidance on the Company's consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. This guidance states that given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to the line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the costs ratably over the term of the arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit. As all of the Company's debt issuance costs are related to line-of-credit arrangements and are currently classified as assets, this update will not have any impact on the Company's financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, to clarify the principles used to recognize revenue for all entities. This guidance was deferred by ASU 2015-14, issued by the FASB in August 2015, and is now effective for fiscal years beginning on or after December 15, 2017 with early adoption permitted as of the original effective date. The Company will evaluate the effects, if any, of adoption of this guidance on the Company's consolidated financial statements. |
Segment Information
Segment Information | 6 Months Ended |
Aug. 02, 2015 | |
Segment Information [Abstract] | |
Segment Information | Note 2 Segment Information The Company's operating and reportable segments are Company Stores, Domestic Franchise, International Franchise and KK Supply Chain. The Company Stores segment is comprised of the stores owned and operated by the Company. These stores sell doughnuts and complementary products through both on-premises and consumer packaged goods - wholesale (CPG) sales channels, although some stores serve only one of these distribution channels. The Domestic Franchise and International Franchise segments consist of the Company's franchise operations. Under the terms of franchise agreements, domestic and international franchisees pay royalties and fees to the Company in return for the use of the Krispy Kreme name and ongoing brand and operational support. Revenues and costs related to licensing certain Krispy Kreme trademarks to domestic third parties other than franchisees also are included in the Domestic Franchise segment. Expenses for these segments include costs to recruit new franchisees, to assist in store openings, and to support franchisee operations and marketing efforts, as well as allocated corporate costs. The majority of the ingredients and materials used by Company stores are purchased from the KK Supply Chain segment, which supplies doughnut mix, other ingredients and supplies and doughnut-making equipment to both Company and franchisee-owned stores. All intercompany sales by the KK Supply Chain segment to the Company Stores segment are at prices intended to reflect an arms-length transfer price and are eliminated in consolidation. Operating income for the Company Stores segment does not include any profit earned by the KK Supply Chain segment on sales of doughnut mix and other items to the Company Stores segment; such profit is included in KK Supply Chain operating income. The following table presents the results of operations of the Company's operating segments for the three and six months ended August 2, 2015 and August 3, 2014. Segment operating income is consolidated operating income before general and administrative expenses, corporate depreciation and amortization expense, impairment charges and lease termination costs, pre-opening costs related to Company Stores, gains and losses on commodity derivatives, net and gain on refranchisings, net of business acquisition charges. Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 2015 2014 2015 2014 (In thousands) Revenues: Company Stores $ 84,117 $ 78,535 $ 174,834 $ 158,983 Domestic Franchise 3,936 3,296 7,645 6,795 International Franchise 7,314 7,534 14,042 14,115 KK Supply Chain: Total revenues 63,469 59,503 126,986 119,815 Less intersegment sales elimination (31,500 ) (28,352 ) (63,697 ) (57,612 ) External KK Supply Chain revenues 31,969 31,151 63,289 62,203 Total revenues $ 127,336 $ 120,516 $ 259,810 $ 242,096 Operating income: Company Stores $ 1,592 $ 1,937 $ 8,949 $ 6,579 Domestic Franchise 2,440 1,900 4,534 4,056 International Franchise 5,487 5,111 10,391 9,391 KK Supply Chain 10,144 9,830 21,093 21,140 Total segment operating income 19,663 18,778 44,967 41,166 General and administrative expenses (6,718 ) (6,737 ) (14,272 ) (13,784 ) Corporate depreciation and amortization expense (546 ) (362 ) (1,141 ) (733 ) (304 ) (38 ) (308 ) (46 ) (515 ) (245 ) (838 ) (471 ) (841 ) (1,341 ) (394 ) 103 Gain on refranchisings, net of business acquisition charges - (431 ) - (431 ) Consolidated operating income $ 10,739 $ 9,624 $ 28,014 $ 25,804 Depreciation and amortization expense: Company Stores $ 3,261 2,457 6,430 $ 5,041 Domestic Franchise 16 49 33 95 International Franchise - 2 - 3 KK Supply Chain 251 163 463 334 Corporate 546 362 1,141 733 Total depreciation and amortization expense $ 4,074 3,033 8,067 $ 6,206 Segment information for total assets and capital expenditures is not presented as such information is not used in measuring segment performance or allocating resources among segments. |
Receivables
Receivables | 6 Months Ended |
Aug. 02, 2015 | |
Receivables [Abstract] | |
Receivables | Note 3 Receivables The components of receivables are as follows: August 2, February 1, 2015 2015 (In thousands) Receivables: Consumer packaged goods - wholesale customers $ 9,697 $ 9,557 Unaffiliated franchisees 14,157 12,743 Third-party distributors 2,980 4,075 Other receivables 1,228 867 Current portion of notes receivable from franchisees 1,036 1,052 29,098 28,294 Less allowance for doubtful accounts: Consumer packaged goods - wholesale customers (146 ) (204 ) Unaffiliated franchisees (248 ) (291 ) (394 ) (495 ) $ 28,704 $ 27,799 Receivables from equity method franchisees (Note 5): Trade $ 945 $ 782 The changes in the allowance for doubtful accounts are summarized as follows: Six Months Ended August 2, August 3, 2015 2014 (In thousands) Allowance for doubtful accounts related to receivables: Balance at beginning of period $ 495 $ 241 Provision for doubtful accounts (41 ) 260 Net recoveries (chargeoffs) (60 ) 24 Balance at end of period $ 394 $ 525 The Company also has notes receivable from franchisees included in Other assets in the accompanying consolidated balance sheet, which are summarized in the following table. August 2, February 1, 2015 2015 (In thousands) Notes receivable: Notes receivable from franchisees $ 4,289 $ 4,534 Less portion due within one year included in receivables (1,036 ) (1,052 ) $ 3,253 $ 3,482 Notes receivable at August 2, 2015 and February 1, 2015 consist principally of amounts payable to the Company related to a refranchising transaction, to the sale of certain leasehold interests to a franchisee and to sales of equipment. In addition to the foregoing notes receivable, the Company had promissory notes totaling approximately $ 1.2 1.9 700,000 900,000 Finally, the Company has a promissory note receivable from Krispy Kreme of South Florida, LLC (KKSF) totaling approximately $ 720,000 1.0 1.6 90,000 150,000 260,000 320,000 |
Inventories
Inventories | 6 Months Ended |
Aug. 02, 2015 | |
Inventories [Abstract] | |
Inventories | Note 4 Inventories The components of inventories are as follows: August 2, February 1, 2015 2015 (In thousands) Raw materials $ 7,202 $ 6,779 Work in progress 81 115 Finished goods and purchased merchandise 11,036 11,300 $ 18,319 $ 18,194 |
Investments in Franchisees
Investments in Franchisees | 6 Months Ended |
Aug. 02, 2015 | |
Investments in Franchisees [Abstract] | |
Investment in Franchisees | Note 5 Investments in Franchisees As of August 2, 2015, the Company had an ownership interest in three zero August 2, 2015 Company Investment Ownership and Percentage Advances Receivables (Dollars in thousands) Kremeworks, LLC 25.0 % $ 900 $ 487 Kremeworks Canada, LP 24.5 % 667 43 Krispy Kreme of South Florida, LLC 35.3 % - 415 1,567 945 Less: reserves and allowances (1,567 ) - $ - $ 945 February 1, 2015 Company Investment Ownership and Percentage Advances Receivables (Dollars in thousands) Kremeworks, LLC 25.0 % $ 900 $ 353 Kremeworks Canada, LP 24.5 % 667 30 Krispy Kreme of South Florida, LLC 35.3 % - 399 1,567 782 Less: reserves and allowances (1,567 ) - $ - $ 782 The carrying values of the Company's investments and advances in Kremeworks, LLC (Kremeworks) and Kremeworks Canada, LP (Kremeworks Canada) were zero at August 2, 2015 and February 1, 2015. In addition, the Company had reserved all of the balance of its advances to Kremeworks and Kremeworks Canada at such dates; accrued but uncollected interest on such advances of approximately $ 375,000 |
Credit Facility and Lease Oblig
Credit Facility and Lease Obligations | 6 Months Ended |
Aug. 02, 2015 | |
Credit Facility and Lease Obligations [Abstract] | |
Credit Facility and Lease Obligations | Note 6 Credit Facility and Lease Obligations Lease obligations consist of the following: August 2, February 1, 2015 2015 (In thousands) Capital lease obligations $ 2,784 $ 2,940 Financing obligations 8,796 6,747 11,580 9,687 Less: current portion (328 ) (333 ) $ 11,252 $ 9,354 Lease Obligations The Company acquires equipment and facilities under capital and operating leases and build-to-suit arrangements. In certain build-to-suit leasing arrangements, the Company is involved in the construction of leased stores and is deemed the owner of the leased stores for accounting purposes during the construction period. The Company records the related assets and liabilities for construction costs incurred under these build-to-suit leasing arrangements during the construction period. Upon completion of the leased store, the Company considers whether the assets and liabilities qualify for derecognition under the sale-leaseback accounting guidance. These leasing arrangements entered into to date do not qualify for sale-leaseback treatment and, accordingly, the Company records the transactions as financing obligations. A portion of the lease payments is allocated to land and is classified as an operating lease. The remainder of the lease payments is allocated between interest expense and amortization of the financing obligations. The assets are depreciated over their estimated useful lives. At the end of the lease term, the carrying value of the leased asset and of the remaining financing obligation are expected to be equal, at which time the Company may either surrender the leased assets as settlement of the remaining financing obligation or enter into a new arrangement for the continued use of the asset. At August 2, 2015, the Company had property and lease obligations related to build-to-suit leasing arrangements of approximately $ 8.8 2013 Revolving Credit Facility On July 12, 2013, the Company entered into a $ 40 million revolving secured credit facility (the 2013 Revolving Credit Facility) which matures in July 2018. The 2013 Revolving Credit Facility is secured by a first lien on substantially all of the personal property assets of the Company and certain of its domestic subsidiaries. No borrowings were made on the 2013 Revolving Credit Facility on the closing date . Interest on borrowings under the 2013 Revolving Credit Facility is payable either at LIBOR or the Base Rate (which is the greatest of the prime rate, the Fed funds rate plus 0.50 %, or the one-month LIBOR rate plus 1.00 % ), in each case plus the Applicable Percentage. The Applicable Percentage for LIBOR loans ranges from 1.25 % to 2.15 %, and for Base Rate loans ranges from 0.25 % to 1.15 %, in each case depending on the Company's leverage ratio. As of August 2, 2015, the Applicable Percentage was 1.25 %. The 2013 Revolving Credit Facility contains provisions which permit the Company to obtain letters of credit, issuance of which constitutes usage of the lending commitments and reduces the amount available for cash borrowings. At closing, $ 9.2 million of letters of credit were issued under the 2013 Revolving Credit Facility to replace letters of credit issued under the terminated credit facilities, substantially all of which secure the Company's reimbursement obligations to insurers under the Company's self-insurance programs. At August 2, 2015, the Company had approximately $ 8.7 million of letters of credits outstanding. The Company is required to pay a fee equal to the Applicable Percentage for LIBOR-based loans on the outstanding amount of letters of credit. There also is a fee on the unused portion of the 2013 Revolving Credit Facility lending commitment, ranging from 0.15 % to 0.35 %, depending on the Company's leverage ratio. As of August 2, 2015, the fee on the unused portion of the 2013 Revolving Credit Facility was 0.15 . The 2013 Revolving Credit Facility requires the Company to meet certain financial tests, including a maximum leverage ratio and a minimum fixed charge coverage ratio. The leverage ratio is required to be not greater than 2.25 to 1.0 and the fixed charge coverage ratio is required to be not less than 1.3 to 1.0. As of August 2, 2015, the Company's leverage ratio was 0.3 to 1.0 and the fixed charge coverage ratio was 3.8 to 1.0. The operation of the restrictive financial covenants described above may limit the amount the Company may borrow under the 2013 Revolving Credit Facility. The restrictive covenants did not limit the Company's ability to borrow the full $ 31.3 million of unused credit under the 2013 Revolving Credit Agreement as of August 2, 2015. The 2013 Revolving Credit Facility also contains covenants which, among other things, generally limit (with certain exceptions): liquidations, mergers, and consolidations; the incurrence of additional indebtedness (including guarantees); the incurrence of additional liens; the sale, assignment, lease, conveyance or transfer of assets; certain investments; dividends and stock redemptions or repurchases in excess of certain amounts; transactions with affiliates; engaging in materially different lines of business; certain sale-leaseback transactions; and other activities customarily restricted in such agreements. The 2013 Revolving Credit Facility also prohibits the transfer of cash or other assets to the Parent Company, whether by dividend, loan or otherwise, but provides for exceptions to enable the Parent Company to pay taxes, directors' fees and operating expenses, as well as exceptions to permit dividends in respect of the Company's common stock and stock redemptions and repurchases, to the extent permitted by the 2013 Revolving Credit Facility. The 2013 Revolving Credit Facility also contains customary events of default including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other indebtedness in excess of $ 5 million, certain events of bankruptcy and insolvency, judgment defaults in excess of $ 5 million and the occurrence of a change of control. Borrowings and issuances of letters of credit under the 2013 Revolving Credit Facility are subject to the satisfaction of usual and customary conditions, including the accuracy of representations and warranties and the absence of defaults. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Aug. 02, 2015 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 7 Commitments and Contingencies Except as disclosed below, the Company currently is not a party to any material legal proceedings. Pending Litigation K 2 Asia Litigation On April 7, 2009, a Cayman Islands corporation, K 2 The Company does not believe it is probable that a loss has been incurred with respect to this matter, and accordingly no liability related to it has been reflected in the accompanying financial statements. Other Legal Matters The Company also is engaged in various legal proceedings arising in the normal course of business. The Company maintains insurance policies against certain kinds of such claims and suits, including insurance policies for workers' compensation and personal injury, all of which are subject to deductibles. While the ultimate outcome of these matters could differ from management's expectations, management currently does not believe their resolution will have a material adverse effect on the Company's consolidated financial statements. Other Commitments and Contingencies The Company's primary bank had issued letters of credit on behalf of the Company totaling $ 8.7 million at August 2, 2015, substantially all of which secure the Company's reimbursement obligations to insurers under the Company's self-insurance arrangements. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Aug. 02, 2015 | |
Shareholders' Equity [Abstract] | |
Shareholders' Equity | Note 8 Shareholders' Equity Share-Based Compensation for Employees and Directors The Company measures and recognizes compensation expense for share-based payment (SBP) awards based on their fair values. The fair value of SBP awards for which employees and directors render the requisite service necessary for the award to vest is recognized over the related vesting period. The aggregate cost of SBP awards charged to earnings for the three and six months ended August 2, 2015 and August 3, 2014 is set forth in the following table. The Company did not realize any excess tax benefits from the exercise of stock options or the vesting of restricted stock units during any of the periods. Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 2015 2014 2015 2014 (In thousands) Costs charged to earnings related to: Stock options $ 295 $ 226 $ 618 $ 561 Restricted stock units 1,370 814 3,044 1,646 Total costs $ 1,665 $ 1,040 $ 3,662 $ 2,207 Costs included in: Direct operating expenses $ 767 $ 460 $ 1,795 $ 1,163 General and administrative expenses 898 580 1,867 1,044 Total costs $ 1,665 $ 1,040 $ 3,662 $ 2,207 Repurchases of Common Stock In fiscal 2014, the Company's Board of Directors authorized the repurchase of up to $ 50 $ 155 . The Company generally permits holders of restricted stock unit awards to satisfy their obligations to reimburse the Company for the minimum required statutory withholding taxes arising from the vesting of such awards by surrendering vested common shares in lieu of reimbursing the Company in cash. The following table summarizes repurchases of common stock for the three and six months ended August 2, 2015 and August 3, 2014. Three Months Ended August 2, August 3, 2015 2014 Common Common Shares Stock Shares Stock (In thousands) Shares repurchased under share repurchase authorization 1,494 $ 26,883 403 $ 7,304 Shares surrendered in reimbursement for withholding taxes 13 223 21 334 1,507 $ 27,106 424 $ 7,638 Six Months Ended August 2, August 3, 2015 2014 Common Common Shares Stock Shares Stock (In thousands) Shares repurchased under share repurchase authorization 1,885 $ 34,311 1,840 $ 32,439 Shares surrendered in reimbursement for withholding taxes 24 420 21 334 1,909 $ 34,731 1,861 $ 32,773 Through August 2, 2015, the Company repurchased 5,307,149 18.07 95.9 32.9 34.6 $ 59.1 155 |
Impairment Charges and Lease Te
Impairment Charges and Lease Termination Costs | 6 Months Ended |
Aug. 02, 2015 | |
Impairment Charges and Lease Termination Costs [Abstract] | |
Impairment Charges and Lease Termination Costs | Note 9 Impairment Charges and Lease Termination Costs The components of impairment charges and lease termination costs are as follows: Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 2015 2014 2015 2014 (In thousands) Impairment of long-lived assets $ 343 $ - $ 343 $ - Lease termination costs: Provision for lease termination costs 71 40 75 48 Less - reversal of previously recorded accrued rent expense (110 ) (2 ) (110 ) (2 ) Net provision (39 ) 38 (35 ) 46 Total impairment charges and lease termination costs $ 304 $ 38 $ 308 $ 46 The Company tests long-lived assets for impairment when events or changes in circumstances indicate that their carrying value may not be recoverable. These events and changes in circumstances include store closing and refranchising decisions, the effects of changing costs on current results of operations, unfavorable observed trends in operating results, and evidence of changed circumstances observed as a part of periodic reforecasts of future operating results and as part of the Company's annual budgeting process. When the Company concludes that the carrying value of long-lived assets is not recoverable (based on future projected undiscounted cash flows), the Company records impairment charges to reduce the carrying value of those assets to their estimated fair values. During the three and six months ended August 2, 2015, the Company recorded impairment charges related to long-lived assets for one Company store that closed during the second quarter of fiscal 2016 to reduce the carrying value of those assets to their estimated fair values. Substantially all of such long-lived assets were real properties, the fair values of which were estimated based on an independent appraisal and are included in other current assets as assets held for sale. Lease termination costs represent the estimated fair value of liabilities related to unexpired leases, after reduction by the amount of accrued rent expense, if any, related to the leases, and are recorded when the lease contracts are terminated or, if earlier, the date on which the Company ceases use of the leased property. The fair value of these liabilities is estimated as the excess, if any, of the contractual payments required under the unexpired leases over the current market lease rates for the properties, discounted at a credit-adjusted risk-free rate over the remaining term of the leases. The provision for lease termination costs also includes adjustments to liabilities recorded in prior periods arising from changes in estimated sublease rentals and from settlements with landlords. During the three and six months ended August 2, 2015, the Company recorded lease termination costs related to a store closed during the second quarter of fiscal 2016. The transactions reflected in the accrual for lease termination costs are summarized as follows: Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 2015 2014 2015 2014 (In thousands) Balance at beginning of period $ 85 $ 167 $ 116 $ 178 Provision for lease termination costs: Provisions associated with leased properties, net of estimated sublease rentals 57 44 57 44 Adjustments to previously recorded provisions resulting from settlements with lessors and adjustments of previous estimates 12 (10 ) 13 (5 ) Accretion of discount 2 6 5 9 Total provision 71 40 75 48 Payments on unexpired leases, including settlements with lessors (35 ) (31 ) (70 ) (50 ) Balance at end of period $ 121 $ 176 $ 121 $ 176 The lease termination accrual at August 2, 2015 of $ 121,000 |
Income Taxes
Income Taxes | 6 Months Ended |
Aug. 02, 2015 | |
Income Taxes [Abstract] | |
Income Taxes | Note 10 Income Taxes The Company accounts for its provision for income taxes in accordance with GAAP, which requires management to estimate the annual effective income tax rate for the full year to be applied to the respective interim period taking into account year-to-date amounts and projected results for the full year. For the three and six months ended August 2, 2015, the Company's effective income tax rate was 43.7 40.2 40.2 40.6 The increase in the effective income tax rate in the quarter was due primarily to the revaluation of the Company's deferred tax assets, principally attributable to state net operating loss (NOL) carryforwards, resulting from the decrease in the North Carolina (NC) corporate income tax rate. Specifically, in the second quarter of fiscal 2016, the North Carolina state legislature announced it surpassed its revenue estimates and these increased tax revenues triggered an automatic reduction to the state corporate income tax rate, which caused the Company to revalue its deferred income tax assets to reflect the lower corporate income tax rate. The net effect of the NC tax rate reduction and associated revaluation of the Company's deferred tax assets resulted in the reduction in net deferred tax assets of $ 467,000 The Company recognizes deferred income tax assets and liabilities based upon management's expectation of the future tax consequences of temporary differences between the income tax and financial reporting bases of assets and liabilities. Deferred tax liabilities generally represent tax expense recognized for which payment has been deferred, or expenses which have been deducted in the Company's tax returns but which have not yet been recognized as an expense in the financial statements. Deferred tax assets generally represent tax deductions or credits that will be reflected in future tax returns for which the Company has already recorded a tax benefit in its consolidated financial statements. The Company establishes valuation allowances for deferred income tax assets in accordance with GAAP, which provides that such valuation allowances shall be established unless realization of the income tax benefits is more likely than not. The valuation allowance of $ 2.5 2.6 Realization of net deferred tax assets generally is dependent on generation of taxable income in future periods. While management believes its forecast of future taxable income is reasonable, actual results inevitably will vary from management's forecasts. Such variances could result in adjustments to the valuation allowance on deferred tax assets in future periods, and such adjustments could be material to the financial statements. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Aug. 02, 2015 | |
Fair Value Measurements [Abstract] | |
Fair-Value Measurements | Note 11 Fair Value Measurements The accounting standards for fair value measurements define fair value as the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The accounting standards for fair value measurements establish a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 - Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. Level 2 - Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value measurement of the assets or liabilities. These include certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis at August 2, 2015 and February 1, 2015. August 2, 2015 (1) Level 1 Level 2 Level 3 (In thousands) Assets: 401(k) mirror plan assets $ 2,335 $ - $ - Liabilities: Agricultural commodity futures contracts $ 502 $ - $ - Gasoline commodity futures contracts 777 - - Total liabilities $ 1,279 $ - $ - February 1, 2015 (1) Level 1 Level 2 Level 3 (In thousands) Assets: 401(k) mirror plan assets $ 2,496 $ - $ - Liabilities: Agricultural commodity futures contracts $ 874 $ - $ - Gasoline commodity futures contracts 937 - - Total liabilities $ 1,811 $ - $ - (1) There were no transfers of financial assets or liabilities among the levels within the fair value hierarchy during the three and six months ended August 2, 2015 or during the year ended February 1, 2015 Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis The following table presents the nonrecurring fair value measurements recorded during the three and six months ended August 2, 2015. There were no material nonrecurring fair value measurements recorded during the three and six months ended August 3, 2014. Three Months Ended August 2, 2015 Level 1 Level 2 Level 3 Total gain (loss) (In thousands) Long-lived assets $ - $ 94 $ - $ (343) Six Months Ended August 2, 2015 Level 1 Level 2 Level 3 Total gain (loss) (In thousands) Long-lived assets $ - $ 94 $ - $ (343) Long-Lived Assets During the three and six months ended August 2, 2015, long-lived assets having an aggregate carrying value of $ 437,000 94,000 343,000 Fair Values of Financial Instruments at the Balance Sheet Dates The carrying values and approximate fair values of certain financial instruments as of August 2, 2015 and February 1, 2015 were as follows: August 2, 2015 February 1, 2015 Carrying Fair Carrying Fair Value Value Value Value (In thousands) Assets: Cash and cash equivalents $ 44,105 $ 44,105 $ 50,971 $ 50,971 Receivables 28,704 28,704 27,799 27,799 945 945 782 782 Liabilities: Accounts payable 18,929 18,929 17,095 17,095 Agricultural commodity futures contracts 502 502 874 874 Gasoline commodity futures contracts 777 777 937 937 Lease obligations (including current portion) 11,580 11,580 9,687 9,687 The carrying values of all financial instruments approximate their fair values at August 2, 2015 and February 1, 2015. |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Aug. 02, 2015 | |
Derivative Instruments [Abstract] | |
Derivative Instruments | Note 12 Derivative Instruments The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are commodity price risk. The Company does not hold or issue derivative instruments for trading purposes. The Company is exposed to credit-related losses in the event of non-performance by the counterparties to its derivative instruments. The Company mitigates this risk of nonperformance by dealing with highly rated counterparties. Additional disclosure about the fair value of derivative instruments is included in Note 11. Commodity Price Risk The Company is exposed to the effects of commodity price fluctuations in the cost of ingredients of its products, of which flour, sugar and shortening are the most significant. In order to bring greater stability to the cost of ingredients, from time to time the Company purchases exchange-traded commodity futures contracts, and options on such contracts, for raw materials which are ingredients of its products or which are components of such ingredients, including wheat and soybean oil. The Company is also exposed to the effects of commodity price fluctuations in the cost of gasoline used by its delivery vehicles. To mitigate the risk of fluctuations in the price of its gasoline purchases, the Company may purchase exchange-traded commodity futures contracts and options on such contracts. The difference between the cost, if any, and the fair value of commodity derivatives is reflected in earnings because the Company has not designated any of these instruments as hedges. Gains and losses on these contracts are intended to offset losses and gains on the hedged transactions in an effort to reduce the earnings volatility resulting from fluctuating commodity prices. The settlement of commodity derivative contracts is reported in the consolidated statement of cash flows as a cash flow from operating activities. At August 2, 2015, the Company had commodity derivatives with an aggregate contract volume of 880,000 1.5 2.6 . Interest Rate Risk The Company is exposed to market risk from increases in interest rates on any borrowings outstanding under its 2013 Revolving Credit Facility. Quantitative Summary of Derivative Positions and Their Effect on Results of Operations The following table presents the fair values of derivative instruments included in the consolidated balance sheet as of August 2, 2015 and February 1, 2015: Liability Derivatives Fair Value August 2, February 1, Derivatives Not Designated as Hedging Instruments Balance Sheet Location 2015 2015 (In thousands) Agricultural commodity futures contracts Accrued liabilities $ 502 $ 874 Gasoline commodity futures contracts Accrued liabilities 777 937 Total $ 1,279 $ 1,811 The effects of derivative instruments on the consolidated statement of income for the three and six months ended August 2, 2015 and August 3, 2014 were as follows: Amount of Derivative Gain or (Loss) Recognized in Income Three Months Ended August 2, August 3, Derivatives Not Designated as Hedging Instruments Location of Derivative Gain or (Loss) Recognized in Income 2015 2014 (In thousands) Agricultural commodity futures contracts Gains and losses on commodity derivatives, net $ (71 ) $ (1,341 ) Gasoline commodity futures contracts Gains and losses on commodity derivatives, net (770 ) - Total $ (841 ) $ (1,341 ) Amount of Derivative Gain or (Loss) Recognized in Income Six Months Ended August 2, August 3, Derivatives Not Designated as Hedging Instruments Location of Derivative Gain or (Loss) Recognized in Income 2015 2014 (In thousands) Agricultural commodity futures contracts Gains and losses on commodity derivatives, net $ (406 ) $ 103 Gasoline commodity futures contracts Gains and losses on commodity derivatives, net 12 - Total $ (394 ) $ 103 |
Acquisitions and Divestitures
Acquisitions and Divestitures | 6 Months Ended |
Aug. 02, 2015 | |
Acquisitions and Divestitures [Abstract] | |
Acquisitions and Divestitures | Note 13 Acquisitions and Divestitures Acquisition of Krispy Kreme Shops On April 23, 2015, the Company entered into several legal arrangements with a franchisee, which included an asset purchase agreement and management agreement, whereby the Company agreed to operate the franchisee's Krispy Kreme shop in Little Rock, Arkansas as a Company store. 312,000 2.7 252,000 27,000 137,000 104,000 On June 17, 2014, the Company acquired the business and operating assets of its franchisee in Birmingham, Alabama, consisting of four 9 13 7.5 three The Company recorded charges to earnings related to the acquisition of $ 431,000 343,000 88,000 The cost of the acquired business was allocated as follows: (In thousands) Purchase price allocated to: Working capital, exclusive of cash $ (5 ) Property and equipment 710 Reacquired franchise rights associated with the Company Stores segment 3,853 Goodwill associated with the Company Stores segment 2,594 $ 7,152 Amounts allocated to reacquired franchise rights are being amortized by charges to earnings on a straight-line basis through March 2020, which was the expiration date of the terminated franchise agreement. All of the goodwill recognized in the acquisition for financial reporting purposes is expected to be deductible for income tax purposes. The results of operations of the acquired business subsequent to the acquisition had no material effect on the Company's consolidated results of operations. The Company's results of operations for the year ended February 2, 2014, computed on a pro basis assuming the acquisition had been consummated at the beginning of those periods, would not be materially different from the Company's historical results of operations and, accordingly, have been omitted. In December 2013, the Company acquired the land, building and doughnut-making equipment at a facility in Illinois that had fiscal 2014 sales of approximately $ 3 1.6 million cash, all of which was allocated to property and equipment. The facility was being operated as a Krispy Kreme shop pursuant to a management agreement approved by the Company between the facility's former owner and one of the Company's franchisees. The management agreement was terminated in connection with the Company's acquisition of the facility, and was replaced by an operating agreement between the Company and the franchisee. Pursuant to the operating agreement, the Company agreed to permit the franchisee to continue to operate the facility for its account through June 2014 in exchange for monthly rental payments, and the payment of amounts based on the facility's sales equivalent to the amounts that would be payable to the Company if the facility were subject to a franchise agreement. The Company assumed operation of the facility for its own account in July 2014 Asset Divestitures On September 9, 2014, the Company refranchised its retail Krispy Kreme shop in Rockville, Maryland to a new franchisee for approximately $ 1.8 1.2 million on the refranchising transaction. The refranchising included the execution of a development agreement pursuant to which the new franchisee has agreed to develop an additional 20 seven |
Accounting Policies (Policies)
Accounting Policies (Policies) | 6 Months Ended |
Aug. 02, 2015 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION. The consolidated financial statements contained herein should be read in conjunction with the Company's 2015 Form 10-K. The accompanying interim consolidated financial statements are presented in accordance with the requirements of Article 10 of Regulation S-X and, accordingly, do not include all the disclosures required by generally accepted accounting principles in the United States of America (GAAP) with respect to annual financial statements. The interim consolidated financial statements have been prepared in accordance with the Company's accounting practices described in the 2015 Form 10-K, but have not been audited. In management's opinion, the financial statements include all adjustments, which consist only of normal recurring adjustments, necessary for a fair statement of the Company's results of operations for the periods presented. The consolidated balance sheet data as of February 1, 2015 were derived from the Company's audited financial statements. |
BASIS OF CONSOLIDATION | BASIS OF CONSOLIDATION. The financial statements include the accounts of KKDI and its subsidiaries. |
CHANGE IN PRESENTATION | CHANGE IN PRESENTATION. In the first quarter of fiscal 2016, the Company changed the presentation of the Consolidated Statement of Income and segment financial information. Pre-opening costs related to Company Stores; gains and losses on commodity derivatives, net and gain on refranchisings, net of business acquisition charges are now separate line items on the Consolidated Statement of Income and are no longer in the respective business segments' operating income in Note 2. Such changes were made to provide more clarity and visibility to the Company's operations and to conform to new management reporting. The Company furnished a Current Report on Form 8-K on June 10, 2015 providing the Consolidated Statement of Income and segment financial information for the quarterly and annual periods in fiscal 2014 and fiscal 2015 conformed to the fiscal 2016 presentation. The Company has made no changes to its reportable segments. These presentation changes had no impact on the Company's consolidated operating income or consolidated net income. |
EARNINGS PER SHARE | EARNINGS PER SHARE. The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period. The computation of diluted earnings per share reflects the additional common shares that would have been outstanding if dilutive potential common shares had been issued, computed using the treasury stock method. Such potential common shares consist of shares issuable upon the exercise of stock options and the vesting of currently unvested restricted stock units. Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 2015 2014 2015 2014 (In thousands) Numerator: net income $ 5,918 $ 5,752 $ 16,584 $ 15,408 Denominator: Basic earnings per share - weighted average shares outstanding 65,502 66,008 66,053 66,265 Effect of dilutive securities: Stock options 1,546 2,097 1,594 2,352 Restricted stock units 321 620 324 619 Diluted earnings per share - weighted average shares outstanding plus dilutive potential common shares 67,369 68,725 67,971 69,236 Stock options with respect to 285,000 295,000 214,000 110,000 August 2, 2015 and August 3, 2014, respectively Stock options with respect to 294,000 234,000 192,000 55,000 August 2, 2015 and August 3, 2014 , respectively . |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Financial Accounting Standards Board (the FASB) Accounting Standards Codification is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update ("ASU") to communicate changes to the codification. The Company considers the applicability and impact of all ASU's. The followings are those ASU's that are relevant to the Company. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which changes guidance for subsequent measurement of inventory within the scope of the update from the lower of cost or market to the lower of cost and net realizable value. This update is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted. The Company will evaluate the effects of adoption of this guidance on the Company's consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. This guidance states that given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to the line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the costs ratably over the term of the arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit. As all of the Company's debt issuance costs are related to line-of-credit arrangements and are currently classified as assets, this update will not have any impact on the Company's financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, to clarify the principles used to recognize revenue for all entities. This guidance was deferred by ASU 2015-14, issued by the FASB in August 2015, and is now effective for fiscal years beginning on or after December 15, 2017 with early adoption permitted as of the original effective date. The Company will evaluate the effects, if any, of adoption of this guidance on the Company's consolidated financial statements. |
Accounting Policies (Tables)
Accounting Policies (Tables) | 6 Months Ended |
Aug. 02, 2015 | |
Accounting Policies [Abstract] | |
Schedule of Computation of Earnings Per Share | Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 2015 2014 2015 2014 (In thousands) Numerator: net income $ 5,918 $ 5,752 $ 16,584 $ 15,408 Denominator: Basic earnings per share - weighted average shares outstanding 65,502 66,008 66,053 66,265 Effect of dilutive securities: Stock options 1,546 2,097 1,594 2,352 Restricted stock units 321 620 324 619 Diluted earnings per share - weighted average shares outstanding plus dilutive potential common shares 67,369 68,725 67,971 69,236 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Aug. 02, 2015 | |
Segment Information [Abstract] | |
Schedule of Operations by Reporting Segment | Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 2015 2014 2015 2014 (In thousands) Revenues: Company Stores $ 84,117 $ 78,535 $ 174,834 $ 158,983 Domestic Franchise 3,936 3,296 7,645 6,795 International Franchise 7,314 7,534 14,042 14,115 KK Supply Chain: Total revenues 63,469 59,503 126,986 119,815 Less intersegment sales elimination (31,500 ) (28,352 ) (63,697 ) (57,612 ) External KK Supply Chain revenues 31,969 31,151 63,289 62,203 Total revenues $ 127,336 $ 120,516 $ 259,810 $ 242,096 Operating income: Company Stores $ 1,592 $ 1,937 $ 8,949 $ 6,579 Domestic Franchise 2,440 1,900 4,534 4,056 International Franchise 5,487 5,111 10,391 9,391 KK Supply Chain 10,144 9,830 21,093 21,140 Total segment operating income 19,663 18,778 44,967 41,166 General and administrative expenses (6,718 ) (6,737 ) (14,272 ) (13,784 ) Corporate depreciation and amortization expense (546 ) (362 ) (1,141 ) (733 ) (304 ) (38 ) (308 ) (46 ) (515 ) (245 ) (838 ) (471 ) (841 ) (1,341 ) (394 ) 103 Gain on refranchisings, net of business acquisition charges - (431 ) - (431 ) Consolidated operating income $ 10,739 $ 9,624 $ 28,014 $ 25,804 Depreciation and amortization expense: Company Stores $ 3,261 2,457 6,430 $ 5,041 Domestic Franchise 16 49 33 95 International Franchise - 2 - 3 KK Supply Chain 251 163 463 334 Corporate 546 362 1,141 733 Total depreciation and amortization expense $ 4,074 3,033 8,067 $ 6,206 |
Receivables (Tables)
Receivables (Tables) | 6 Months Ended |
Aug. 02, 2015 | |
Receivables [Abstract] | |
Schedule of Components of Receivables | August 2, February 1, 2015 2015 (In thousands) Receivables: Consumer packaged goods - wholesale customers $ 9,697 $ 9,557 Unaffiliated franchisees 14,157 12,743 Third-party distributors 2,980 4,075 Other receivables 1,228 867 Current portion of notes receivable from franchisees 1,036 1,052 29,098 28,294 Less allowance for doubtful accounts: Consumer packaged goods - wholesale customers (146 ) (204 ) Unaffiliated franchisees (248 ) (291 ) (394 ) (495 ) $ 28,704 $ 27,799 Receivables from equity method franchisees (Note 5): Trade $ 945 $ 782 August 2, February 1, 2015 2015 (In thousands) Notes receivable: Notes receivable from franchisees $ 4,289 $ 4,534 Less portion due within one year included in receivables (1,036 ) (1,052 ) $ 3,253 $ 3,482 |
Schedule of Changes in the Allowances for Doubtful Accounts | The changes in the allowance for doubtful accounts are summarized as follows: Six Months Ended August 2, August 3, 2015 2014 (In thousands) Allowance for doubtful accounts related to receivables: Balance at beginning of period $ 495 $ 241 Provision for doubtful accounts (41 ) 260 Net recoveries (chargeoffs) (60 ) 24 Balance at end of period $ 394 $ 525 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Aug. 02, 2015 | |
Inventories [Abstract] | |
Schedule of Inventory | August 2, February 1, 2015 2015 (In thousands) Raw materials $ 7,202 $ 6,779 Work in progress 81 115 Finished goods and purchased merchandise 11,036 11,300 $ 18,319 $ 18,194 |
Investments in Franchisees (Tab
Investments in Franchisees (Tables) | 6 Months Ended |
Aug. 02, 2015 | |
Investments in Franchisees [Abstract] | |
Schedule of Investments in Franchisees | August 2, 2015 Company Investment Ownership and Percentage Advances Receivables (Dollars in thousands) Kremeworks, LLC 25.0 % $ 900 $ 487 Kremeworks Canada, LP 24.5 % 667 43 Krispy Kreme of South Florida, LLC 35.3 % - 415 1,567 945 Less: reserves and allowances (1,567 ) - $ - $ 945 February 1, 2015 Company Investment Ownership and Percentage Advances Receivables (Dollars in thousands) Kremeworks, LLC 25.0 % $ 900 $ 353 Kremeworks Canada, LP 24.5 % 667 30 Krispy Kreme of South Florida, LLC 35.3 % - 399 1,567 782 Less: reserves and allowances (1,567 ) - $ - $ 782 |
Credit Facility and Lease Obl27
Credit Facility and Lease Obligations (Tables) | 6 Months Ended |
Aug. 02, 2015 | |
Credit Facility and Lease Obligations [Abstract] | |
Schedule of Lease Obligations | August 2, February 1, 2015 2015 (In thousands) Capital lease obligations $ 2,784 $ 2,940 Financing obligations 8,796 6,747 11,580 9,687 Less: current portion (328 ) (333 ) $ 11,252 $ 9,354 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Aug. 02, 2015 | |
Shareholders' Equity [Abstract] | |
Schedule of Share-Based Compensation | Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 2015 2014 2015 2014 (In thousands) Costs charged to earnings related to: Stock options $ 295 $ 226 $ 618 $ 561 Restricted stock units 1,370 814 3,044 1,646 Total costs $ 1,665 $ 1,040 $ 3,662 $ 2,207 Costs included in: Direct operating expenses $ 767 $ 460 $ 1,795 $ 1,163 General and administrative expenses 898 580 1,867 1,044 Total costs $ 1,665 $ 1,040 $ 3,662 $ 2,207 |
Schedule of Repurchase of Common Stock | Three Months Ended August 2, August 3, 2015 2014 Common Common Shares Stock Shares Stock (In thousands) Shares repurchased under share repurchase authorization 1,494 $ 26,883 403 $ 7,304 Shares surrendered in reimbursement for withholding taxes 13 223 21 334 1,507 $ 27,106 424 $ 7,638 Six Months Ended August 2, August 3, 2015 2014 Common Common Shares Stock Shares Stock (In thousands) Shares repurchased under share repurchase authorization 1,885 $ 34,311 1,840 $ 32,439 Shares surrendered in reimbursement for withholding taxes 24 420 21 334 1,909 $ 34,731 1,861 $ 32,773 |
Impairment Charges and Lease 29
Impairment Charges and Lease Termination Costs (Tables) | 6 Months Ended |
Aug. 02, 2015 | |
Impairment Charges and Lease Termination Costs [Abstract] | |
Schedule of Impairment Charges and Lease Termination Costs | Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 2015 2014 2015 2014 (In thousands) Impairment of long-lived assets $ 343 $ - $ 343 $ - Lease termination costs: Provision for lease termination costs 71 40 75 48 Less - reversal of previously recorded accrued rent expense (110 ) (2 ) (110 ) (2 ) Net provision (39 ) 38 (35 ) 46 Total impairment charges and lease termination costs $ 304 $ 38 $ 308 $ 46 |
Schedule of Lease Termination Liability | Three Months Ended Six Months Ended August 2, August 3, August 2, August 3, 2015 2014 2015 2014 (In thousands) Balance at beginning of period $ 85 $ 167 $ 116 $ 178 Provision for lease termination costs: Provisions associated with leased properties, net of estimated sublease rentals 57 44 57 44 Adjustments to previously recorded provisions resulting from settlements with lessors and adjustments of previous estimates 12 (10 ) 13 (5 ) Accretion of discount 2 6 5 9 Total provision 71 40 75 48 Payments on unexpired leases, including settlements with lessors (35 ) (31 ) (70 ) (50 ) Balance at end of period $ 121 $ 176 $ 121 $ 176 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Aug. 02, 2015 | |
Fair Value Measurements [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | August 2, 2015 (1) Level 1 Level 2 Level 3 (In thousands) Assets: 401(k) mirror plan assets $ 2,335 $ - $ - Liabilities: Agricultural commodity futures contracts $ 502 $ - $ - Gasoline commodity futures contracts 777 - - Total liabilities $ 1,279 $ - $ - February 1, 2015 (1) Level 1 Level 2 Level 3 (In thousands) Assets: 401(k) mirror plan assets $ 2,496 $ - $ - Liabilities: Agricultural commodity futures contracts $ 874 $ - $ - Gasoline commodity futures contracts 937 - - Total liabilities $ 1,811 $ - $ - (1) There were no transfers of financial assets or liabilities among the levels within the fair value hierarchy during the three and six months ended August 2, 2015 or during the year ended February 1, 2015 |
Schedule of Non-Recurring Measurements | Three Months Ended August 2, 2015 Level 1 Level 2 Level 3 Total gain (loss) (In thousands) Long-lived assets $ - $ 94 $ - $ (343) Six Months Ended August 2, 2015 Level 1 Level 2 Level 3 Total gain (loss) (In thousands) Long-lived assets $ - $ 94 $ - $ (343) |
Schedule of Fair Values of Financial Instruments | August 2, 2015 February 1, 2015 Carrying Fair Carrying Fair Value Value Value Value (In thousands) Assets: Cash and cash equivalents $ 44,105 $ 44,105 $ 50,971 $ 50,971 Receivables 28,704 28,704 27,799 27,799 945 945 782 782 Liabilities: Accounts payable 18,929 18,929 17,095 17,095 Agricultural commodity futures contracts 502 502 874 874 Gasoline commodity futures contracts 777 777 937 937 Lease obligations (including current portion) 11,580 11,580 9,687 9,687 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Aug. 02, 2015 | |
Derivative Instruments [Abstract] | |
Schedule of Derivative Fair Value | Liability Derivatives Fair Value August 2, February 1, Derivatives Not Designated as Hedging Instruments Balance Sheet Location 2015 2015 (In thousands) Agricultural commodity futures contracts Accrued liabilities $ 502 $ 874 Gasoline commodity futures contracts Accrued liabilities 777 937 Total $ 1,279 $ 1,811 |
Schedule of Derivative Gain (Loss) | Amount of Derivative Gain or (Loss) Recognized in Income Three Months Ended August 2, August 3, Derivatives Not Designated as Hedging Instruments Location of Derivative Gain or (Loss) Recognized in Income 2015 2014 (In thousands) Agricultural commodity futures contracts Gains and losses on commodity derivatives, net $ (71 ) $ (1,341 ) Gasoline commodity futures contracts Gains and losses on commodity derivatives, net (770 ) - Total $ (841 ) $ (1,341 ) Amount of Derivative Gain or (Loss) Recognized in Income Six Months Ended August 2, August 3, Derivatives Not Designated as Hedging Instruments Location of Derivative Gain or (Loss) Recognized in Income 2015 2014 (In thousands) Agricultural commodity futures contracts Gains and losses on commodity derivatives, net $ (406 ) $ 103 Gasoline commodity futures contracts Gains and losses on commodity derivatives, net 12 - Total $ (394 ) $ 103 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 6 Months Ended |
Aug. 02, 2015 | |
Birmingham, Alabama Store Acquisition [Member] | |
Business Acquisition [Line Items] | |
Summary of Purchase Price Allocation | (In thousands) Purchase price allocated to: Working capital, exclusive of cash $ (5 ) Property and equipment 710 Reacquired franchise rights associated with the Company Stores segment 3,853 Goodwill associated with the Company Stores segment 2,594 $ 7,152 |
Accounting Policies (Schedule o
Accounting Policies (Schedule of Computation of Earnings Per Share) (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Accounting Policies [Abstract] | ||||
Net income | $ 5,918 | $ 5,752 | $ 16,584 | $ 15,408 |
Basic earnings per share - weighted average shares outstanding | 65,502 | 66,008 | 66,053 | 66,265 |
Diluted earnings per share - weighted average shares outstanding plus dilutive potential common shares | 67,369 | 68,725 | 67,971 | 69,236 |
Stock Options [Member] | ||||
Effect of dilutive securities: | ||||
Share-based payment arrangement | 1,546 | 2,097 | 1,594 | 2,352 |
Restricted Stock Units [Member] | ||||
Effect of dilutive securities: | ||||
Share-based payment arrangement | 321 | 620 | 324 | 619 |
Accounting Policies (Narrative)
Accounting Policies (Narrative) (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Stock options [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities | 285,000 | 295,000 | 294,000 | 234,000 |
Restricted Stock Units [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities | 214,000 | 110,000 | 192,000 | 55,000 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 127,336 | $ 120,516 | $ 259,810 | $ 242,096 |
General and administrative expenses | (6,718) | (6,737) | (14,272) | (13,784) |
Depreciation and amortization expense | (4,074) | (3,033) | (8,067) | (6,206) |
Impairment charges and lease termination costs | (304) | (38) | (308) | (46) |
Pre-opening costs related to Company Stores | (515) | (245) | (838) | (471) |
Gains and (losses) on commodity derivatives, net | $ (841) | (1,341) | (394) | 103 |
Gain on refranchisings, net of business acquisition charges | (431) | (431) | ||
Operating income | $ 10,739 | 9,624 | 28,014 | 25,804 |
Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | 19,663 | 18,778 | 44,967 | 41,166 |
Corporate [Member] | ||||
Segment Reporting Information [Line Items] | ||||
General and administrative expenses | (6,718) | (6,737) | (14,272) | (13,784) |
Depreciation and amortization expense | (546) | (362) | (1,141) | (733) |
Impairment charges and lease termination costs | (304) | (38) | (308) | (46) |
Pre-opening costs related to Company Stores | (515) | (245) | (838) | (471) |
Gains and (losses) on commodity derivatives, net | $ (841) | (1,341) | $ (394) | 103 |
Gain on refranchisings, net of business acquisition charges | (431) | (431) | ||
Company Stores [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 84,117 | 78,535 | $ 174,834 | 158,983 |
Depreciation and amortization expense | (3,261) | (2,457) | (6,430) | (5,041) |
Operating income | 1,592 | 1,937 | 8,949 | 6,579 |
Domestic Franchise [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 3,936 | 3,296 | 7,645 | 6,795 |
Depreciation and amortization expense | (16) | (49) | (33) | (95) |
Operating income | 2,440 | 1,900 | 4,534 | 4,056 |
International Franchise [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 7,314 | 7,534 | 14,042 | 14,115 |
Depreciation and amortization expense | (2) | (3) | ||
Operating income | $ 5,487 | 5,111 | 10,391 | 9,391 |
KK Supply Chain [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 31,969 | 31,151 | 63,289 | 62,203 |
Depreciation and amortization expense | (251) | (163) | (463) | (334) |
Operating income | 10,144 | 9,830 | 21,093 | 21,140 |
KK Supply Chain [Member] | Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 63,469 | 59,503 | 126,986 | 119,815 |
KK Supply Chain [Member] | Intersegment Elimination [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ (31,500) | $ (28,352) | $ (63,697) | $ (57,612) |
Receivables (Components of Rece
Receivables (Components of Receivables) (Details) - USD ($) $ in Thousands | Aug. 02, 2015 | Feb. 01, 2015 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Other receivables | $ 1,228 | $ 867 |
Current portion of notes receivable | 1,036 | 1,052 |
Receivables | 29,098 | 28,294 |
Less - allowance for doubtful accounts: | (394) | (495) |
Receivables, net | 28,704 | 27,799 |
Receivables from equity method franchisees | 945 | 782 |
Consumer Packaged Goods - Wholesale Customers [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade receivables | 9,697 | 9,557 |
Less - allowance for doubtful accounts: | (146) | (204) |
Unaffiliated Franchisees [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade receivables | 14,157 | 12,743 |
Less - allowance for doubtful accounts: | (248) | (291) |
Third Party Distributors [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade receivables | $ 2,980 | $ 4,075 |
Receivables (Allowance for Doub
Receivables (Allowance for Doubtful Accounts) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 02, 2015 | Aug. 03, 2014 | |
Allowance For Doubtful Accounts Receivable [Roll Forward] | ||
Balance at beginning of period | $ 495 | |
Provision for doubtful accounts | (3) | $ 174 |
Balance at end of period | 394 | |
Trade Accounts Receivable [Member] | ||
Allowance For Doubtful Accounts Receivable [Roll Forward] | ||
Balance at beginning of period | 495 | 241 |
Provision for doubtful accounts | (41) | 260 |
Net recoveries (chargeoffs) | (60) | 24 |
Balance at end of period | $ 394 | $ 525 |
Receivables (Schedule of Other
Receivables (Schedule of Other Notes Receivables) (Details) - USD ($) $ in Thousands | Aug. 02, 2015 | Feb. 01, 2015 |
Receivables [Abstract] | ||
Note receivable from franchisees | $ 4,289 | $ 4,534 |
Less - portion due within one year included in receivables | (1,036) | (1,052) |
Non-current portion of notes receivable | $ 3,253 | $ 3,482 |
Receivables (Narrative) (Detail
Receivables (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | Feb. 01, 2015 | Nov. 01, 2013 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unrecognized franchise revenue | $ 1,200,000 | $ 1,200,000 | $ 1,900,000 | |||
Collection of previously unrecognized franchise revenue | 700,000 | $ 900,000 | 700,000 | $ 900,000 | ||
Krispy Kreme South Florida LLC [Member] | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unrecognized notes receivable | 720,000 | 720,000 | $ 1,000,000 | $ 1,600,000 | ||
Collection of notes receivable | $ 90,000 | $ 150,000 | $ 260,000 | $ 320,000 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Aug. 02, 2015 | Feb. 01, 2015 |
Inventories [Abstract] | ||
Raw materials | $ 7,202 | $ 6,779 |
Work in progress | 81 | 115 |
Finished goods and purchased merchandise | 11,036 | 11,300 |
Inventories, Net, Total | $ 18,319 | $ 18,194 |
Investments in Franchisees (Fin
Investments in Franchisees (Financial Exposure Related to Franchisee Investments) (Details) - USD ($) $ in Thousands | Aug. 02, 2015 | Feb. 01, 2015 |
Schedule of Equity Method Investments [Line Items] | ||
Investment and advances | $ 1,567 | $ 1,567 |
Reserves and allowances | $ (1,567) | $ (1,567) |
Investment and advances | ||
Receivables | $ 945 | $ 782 |
Reserves and allowances | ||
Receivables | $ 945 | $ 782 |
Kremeworks LLC [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Company Ownership Percentage | 25.00% | 25.00% |
Investment and advances | $ 900 | $ 900 |
Receivables | $ 487 | $ 353 |
Kremeworks Canada LP [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Company Ownership Percentage | 24.50% | 24.50% |
Investment and advances | $ 667 | $ 667 |
Receivables | $ 43 | $ 30 |
Krispy Kreme South Florida LLC [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Company Ownership Percentage | 35.30% | 35.30% |
Investment and advances | ||
Receivables | $ 415 | $ 399 |
Investments in Franchisees (Nar
Investments in Franchisees (Narrative) (Details) - Aug. 02, 2015 | USD ($)franchises |
Schedule of Equity Method Investments [Line Items] | |
Number of investments in franchisees | 3 |
Kremeworks, LLC and Kremeworks Canada, LP [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Accrued but uncollected interest on advances | $ | $ 375,000 |
Credit Facility and Lease Obl43
Credit Facility and Lease Obligations (Schedule of Lease Obligations) (Details) - USD ($) $ in Thousands | Aug. 02, 2015 | Feb. 01, 2015 |
Lease obligations: | ||
Lease obligations | $ 11,580 | $ 9,687 |
Less: current portion | (328) | (333) |
Lease obligations, less current portion | 11,252 | 9,354 |
Capital lease obligations [Member] | ||
Lease obligations: | ||
Lease obligations | 2,784 | 2,940 |
Assets Under Financing Obligations [Member] | ||
Lease obligations: | ||
Lease obligations | $ 8,796 | $ 6,747 |
Credit Facility and Lease Obl44
Credit Facility and Lease Obligations (2013 Revolving Credit Facility) (Details) $ in Millions | 6 Months Ended | |
Aug. 02, 2015USD ($) | Jul. 12, 2013USD ($) | |
Credit Facility and Lease Obligations [Abstract] | ||
Letters of credit outstanding | $ 8.7 | $ 9.2 |
2013 Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Issuance date | Jul. 12, 2013 | |
Debt maturity date | Jul. 12, 2018 | |
Maximum borrowing capacity | $ 40 | |
Available borrowing capacity | $ 31.3 | |
Spread over variable rate | 1.25% | |
Description of variable rate basis | greatest of the prime rate, the Fed funds rate plus 0.50%, or the one-month LIBOR rate plus 1.00% | |
Fee on unused portion | 0.15% | |
Leverage ratio | 0.3 | |
Fixed charge coverage ratio | 3.8 | |
Default triggering event | $ 5 | |
2013 Revolving Credit Facility [Member] | Minimum [Member] | ||
Line of Credit Facility [Line Items] | ||
Fee on unused portion | 0.15% | |
Fixed charge coverage ratio | 1.3 | |
2013 Revolving Credit Facility [Member] | Minimum [Member] | LIBOR [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over variable rate | 1.25% | |
2013 Revolving Credit Facility [Member] | Minimum [Member] | Base Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over variable rate | 0.25% | |
2013 Revolving Credit Facility [Member] | Maximum [Member] | ||
Line of Credit Facility [Line Items] | ||
Fee on unused portion | 0.35% | |
Leverage ratio | 2.25 | |
2013 Revolving Credit Facility [Member] | Maximum [Member] | LIBOR [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over variable rate | 2.15% | |
2013 Revolving Credit Facility [Member] | Maximum [Member] | Base Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over variable rate | 1.15% |
Commitments and Contingencies (
Commitments and Contingencies (Narratives) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Aug. 02, 2015 | Jul. 12, 2013 | |
Loss Contingencies [Line Items] | ||
Letters of Credit Outstanding, Amount | $ 8.7 | $ 9.2 |
K2 Asia Litigation [Member] | ||
Loss Contingencies [Line Items] | ||
Loss Contingency, Actions Taken by Plaintiff | On April 7, 2009, a Cayman Islands corporation, K2 Asia Ventures, and its owners filed a lawsuit in Forsyth County, North Carolina Superior Court against the Company, its franchisee in the Philippines, and other persons associated with the franchisee. The suit alleges that the Company and the other defendants conspired to deprive the plaintiffs of claimed “exclusive rights” to negotiate franchise and development agreements with prospective franchisees in the Philippines, and seeks unspecified damages. The Company therefore does not know the amount or range of possible loss related to this matter. The Company believes that these allegations are false and intends to vigorously defend against the lawsuit. On July 26, 2013, the Superior Court dismissed the Philippines-based defendants for lack of personal jurisdiction, and the plaintiffs noticed an appeal of that decision. On January 22, 2015, the North Carolina Supreme Court denied the plaintiffs’ request to review the case. The Company moved for summary judgment on May 7, 2015 and is awaiting a decision by the Superior Court. |
Shareholders' Equity (Allocatio
Shareholders' Equity (Allocation of Share-based Compensation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation | $ 1,665 | $ 1,040 | $ 3,662 | $ 2,207 |
Direct Operating Expense [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation | 767 | 460 | 1,795 | 1,163 |
General and Administration Expenses [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation | 898 | 580 | 1,867 | 1,044 |
Stock Options [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation | 295 | 226 | 618 | 561 |
Restricted Stock Units [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation | $ 1,370 | $ 814 | $ 3,044 | $ 1,646 |
Shareholders' Equity (Repurchas
Shareholders' Equity (Repurchases of Common Stock) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 25 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | |
Shareholders' Equity [Abstract] | |||||
Shares repurchased under share repurchase authorizations, shares | 1,494,000 | 403,000 | 1,885,000 | 1,840,000 | 5,307,149 |
Shares surrendered in reimbursement for withholding taxes, shares | 13,000 | 21,000 | 24,000 | 21,000 | |
Repurchases of common shares, shares | 1,507,000 | 424,000 | 1,909,000 | 1,861,000 | |
Shares repurchased under share repurchase authorizations | $ 26,883 | $ 7,304 | $ 34,311 | $ 32,439 | $ 95,900 |
Shares surrendered in reimbursement for withholding taxes | 223 | 334 | 420 | 334 | |
Repurchase of common shares | $ 27,106 | $ 7,638 | $ 34,731 | $ 32,773 |
Shareholders' Equity (Narrative
Shareholders' Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 25 Months Ended | |||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Feb. 02, 2014 | |
Equity Disclosure [Line Items] | ||||||
Authorization amount for repurchases of common stock | $ 155,000 | $ 155,000 | $ 155,000 | $ 50,000 | ||
Shares repurchased under share repurchase authorizations, shares | 1,494,000 | 403,000 | 1,885,000 | 1,840,000 | 5,307,149 | |
Shares repurchased under share repurchase authorization, average price per share | $ 18.07 | |||||
Value of shares repurchased under share repurchase authorization | $ 26,883 | $ 7,304 | $ 34,311 | $ 32,439 | $ 95,900 | |
Repurchases settled during the period | 32,900 | $ 34,600 | ||||
Amount remaining under repurchase authorization | $ 59,100 | $ 59,100 | $ 59,100 |
Impairment Charges and Lease 49
Impairment Charges and Lease Termination Costs (Schedule of Impairment Charges and Lease Termination Costs) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Impairment Charges and Lease Termination Costs [Abstract] | ||||
Impairment of long-lived assets | $ 343 | $ 343 | ||
Lease termination costs: | ||||
Provision for lease termination costs | 71 | $ 40 | 75 | $ 48 |
Less - reversal of previously recorded accrued rent expense | (110) | (2) | (110) | (2) |
Net provision | (39) | 38 | (35) | 46 |
Total impairment charges and lease termination costs | $ 304 | $ 38 | $ 308 | $ 46 |
Impairment Charges and Lease 50
Impairment Charges and Lease Termination Costs (Narrative) (Details) | Aug. 02, 2015USD ($) |
Loss Contingencies [Line Items] | |
Current portion of lease termination costs | $ 121,000 |
Impairment Charges and Lease 51
Impairment Charges and Lease Termination Costs (Schedule of Lease Termination Liability) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Lease Termination Costs [Roll Forward] | ||||
Balance at beginning of period | $ 85 | $ 167 | $ 116 | $ 178 |
Provision for lease termination costs: | ||||
Provisions associated with leased properties, net of estimated sublease rentals | 57 | 44 | 57 | 44 |
Adjustments to previously recorded provisions resulting from settlements with lessors and adjustments of previous estimates | 12 | (10) | 13 | (5) |
Accretion of discount | 2 | 6 | 5 | 9 |
Total provision | 71 | 40 | 75 | 48 |
Payments on unexpired leases, including settlements with lessors | (35) | (31) | (70) | (50) |
Balance at end of period | $ 121 | $ 176 | $ 121 | $ 176 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | Feb. 01, 2015 | |
Income Taxes [Abstract] | |||||
Effective income tax rate | 43.70% | 40.20% | 40.20% | 40.60% | |
Tax effect of change in tax rate | $ 467,000 | ||||
Valuation allowance | $ 2,500,000 | $ 2,500,000 | $ 2,600,000 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands | Aug. 02, 2015 | Feb. 01, 2015 |
Liabilities: | ||
Commodity futures contracts | $ 1,279 | $ 1,811 |
Recurring [Member] | Level 1 [Member] | ||
Assets: | ||
401(k) mirror plan assets | 2,335 | 2,496 |
Liabilities: | ||
Total liabilities | 1,279 | 1,811 |
Recurring [Member] | Level 1 [Member] | Agricultural Commodity Futures Contracts [Member] | ||
Liabilities: | ||
Commodity futures contracts | 502 | 874 |
Recurring [Member] | Level 1 [Member] | Gasoline Commodity Futures Contracts [Member] | ||
Liabilities: | ||
Commodity futures contracts | $ 777 | $ 937 |
Recurring [Member] | Level 2 [Member] | ||
Assets: | ||
401(k) mirror plan assets | ||
Liabilities: | ||
Total liabilities | ||
Recurring [Member] | Level 2 [Member] | Agricultural Commodity Futures Contracts [Member] | ||
Liabilities: | ||
Commodity futures contracts | ||
Recurring [Member] | Level 2 [Member] | Gasoline Commodity Futures Contracts [Member] | ||
Liabilities: | ||
Commodity futures contracts | ||
Recurring [Member] | Level 3 [Member] | ||
Assets: | ||
401(k) mirror plan assets | ||
Liabilities: | ||
Total liabilities | ||
Recurring [Member] | Level 3 [Member] | Agricultural Commodity Futures Contracts [Member] | ||
Liabilities: | ||
Commodity futures contracts | ||
Recurring [Member] | Level 3 [Member] | Gasoline Commodity Futures Contracts [Member] | ||
Liabilities: | ||
Commodity futures contracts |
Fair Value Measurements (Asse54
Fair Value Measurements (Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Assets, Fair Value Disclosure [Abstract] | ||||
Total gain (loss) | $ (343) | $ (343) | ||
Fair Value, Measurements, Nonrecurring [Member] | Carrying Value [Member] | ||||
Assets, Fair Value Disclosure [Abstract] | ||||
Long-lived assets | $ 437 | $ 437 | ||
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value [Member] | ||||
Assets, Fair Value Disclosure [Abstract] | ||||
Long-lived assets | ||||
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value [Member] | ||||
Assets, Fair Value Disclosure [Abstract] | ||||
Long-lived assets | $ 94 | $ 94 | ||
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value [Member] | ||||
Assets, Fair Value Disclosure [Abstract] | ||||
Long-lived assets |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Values of Financial Instruments at Balance Sheet Dates) (Details) - USD ($) $ in Thousands | Aug. 02, 2015 | Feb. 01, 2015 |
Liabilities: | ||
Commodity futures contracts | $ 1,279 | $ 1,811 |
Carrying Value [Member] | ||
Assets: | ||
Cash and cash equivalents | 44,105 | 50,971 |
Receivables | 28,704 | 27,799 |
Receivables from equity method franchisees | 945 | 782 |
Liabilities: | ||
Accounts payable | 18,929 | 17,095 |
Lease obligations (including current portion) | 11,580 | 9,687 |
Carrying Value [Member] | Agricultural Commodity Futures Contracts [Member] | ||
Liabilities: | ||
Commodity futures contracts | 502 | 874 |
Carrying Value [Member] | Gasoline Commodity Futures Contracts [Member] | ||
Liabilities: | ||
Commodity futures contracts | 777 | 937 |
Fair Value [Member] | ||
Assets: | ||
Cash and cash equivalents | 44,105 | 50,971 |
Receivables | 28,704 | 27,799 |
Receivables from equity method franchisees | 945 | 782 |
Liabilities: | ||
Accounts payable | 18,929 | 17,095 |
Lease obligations (including current portion) | 11,580 | 9,687 |
Fair Value [Member] | Agricultural Commodity Futures Contracts [Member] | ||
Liabilities: | ||
Commodity futures contracts | 502 | 874 |
Fair Value [Member] | Gasoline Commodity Futures Contracts [Member] | ||
Liabilities: | ||
Commodity futures contracts | $ 777 | $ 937 |
Derivative Instruments (Narrati
Derivative Instruments (Narrative) (Details) - 6 months ended Aug. 02, 2015 lb in Millions, gal in Millions | lbbugal |
Wheat Commodity Contracts [Member] | |
Derivative [Line Items] | |
Aggregate contract volume | 880,000 |
Soybean Oil Contracts [Member] | |
Derivative [Line Items] | |
Aggregate contract mass | lb | 1.5 |
Gasoline Commodity Futures Contracts [Member] | |
Derivative [Line Items] | |
Aggregate contract volume | gal | 2.6 |
Derivative Instruments (Fair Va
Derivative Instruments (Fair Value by Balance Sheet Location) (Details) - USD ($) $ in Thousands | Aug. 02, 2015 | Feb. 01, 2015 |
Derivatives, Fair Value [Line Items] | ||
Commodity futures contracts | $ 1,279 | $ 1,811 |
Accrued Liabilities [Member] | Agricultural Commodity Futures Contracts [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity futures contracts | 502 | 874 |
Accrued Liabilities [Member] | Gasoline Commodity Futures Contracts [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Commodity futures contracts | $ 777 | $ 937 |
Derivative Instruments (Effect
Derivative Instruments (Effect of Derivative Instuments by Income Statement Location) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Derivative Gain or (Loss) Recognized in Income | $ (841) | $ (1,341) | $ (394) | $ 103 |
Not Designated as Hedging Instrument [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income | (841) | (1,341) | (394) | 103 |
Gains and Losses on Commodity Derivatives, Net [Member] | Agricultural Commodity Futures Contracts [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income | (71) | $ (1,341) | (406) | $ 103 |
Gains and Losses on Commodity Derivatives, Net [Member] | Gasoline Commodity Futures Contracts [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income | $ (770) | $ 12 |
Acquisitions and Divestitures59
Acquisitions and Divestitures (Acquisition of Krispy Kreme Shops) (Details) | Apr. 23, 2015USD ($) | Jun. 17, 2014USD ($)stores | Dec. 31, 2013USD ($)stores | Aug. 03, 2014USD ($) | Aug. 02, 2015USD ($) | Aug. 03, 2014USD ($) | Feb. 01, 2015USD ($) | Feb. 02, 2014USD ($) |
Business Acquisition [Line Items] | ||||||||
Payments to acquire businesses, net of cash acquired | $ 312,000 | $ 7,152,000 | ||||||
Little Rock Acquisition [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Net sales | $ 2,700,000 | |||||||
Payments to acquire businesses, net of cash acquired | $ 312,000 | |||||||
Property and equipment | 252,000 | |||||||
Inventory | 27,000 | |||||||
Reacquired franchise rights | 137,000 | |||||||
Unfavorable lease liability | $ 104,000 | |||||||
Illinois Store Acquisition [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Net sales | $ 3,000,000 | |||||||
Number of stores acquired | stores | 1 | |||||||
Payments to acquire businesses, net of cash acquired | $ 1,600,000 | |||||||
Birmingham, Alabama Store Acquisition [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Net sales | $ 9,000,000 | |||||||
Number of stores acquired | stores | 4 | |||||||
Acquisition expenses | $ 431,000 | 431,000 | ||||||
Settlement of pre-existing franchise agreement | 343,000 | 343,000 | ||||||
Acquisition-related transaction costs | 88,000 | 88,000 | ||||||
Cash consideration for acquisition | $ 7,500,000 | |||||||
Property and equipment | 710,000 | 710,000 | ||||||
Birmingham, Alabama Store Acquisition [Member] | Company Stores [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Reacquired franchise rights | $ 3,853,000 | $ 3,853,000 |
Acquisitions and Divestitures60
Acquisitions and Divestitures (Schedule of Acquired Business) (Details) - Birmingham, Alabama Store Acquisition [Member] $ in Thousands | Aug. 03, 2014USD ($) |
Purchase price allocated to: | |
Working capital, exclusive of cash | $ (5) |
Property and equipment | 710 |
Purchase price | 7,152 |
Company Stores [Member] | |
Purchase price allocated to: | |
Reacquired franchise rights | 3,853 |
Goodwill | $ 2,594 |
Acquisitions and Divestitures61
Acquisitions and Divestitures (Asset Divestitures) (Details) $ in Thousands | Sep. 09, 2014USD ($)stores | Aug. 02, 2015USD ($) | Aug. 03, 2014USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Gain (loss) on sale of equipment | $ (87) | $ (99) | |
Maryland Divestiture [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Proceeds from refranchising | $ 1,800 | ||
Gain on refranchising transaction | $ 1,200 | ||
Future store locations required | stores | 20 |