SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
September 27, 2001
KRISPY KREME DOUGHNUTS, INC.
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(Exact name of registrant as specified in its charter)
North Carolina 000-30209 56-2169715
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
370 Knollwood Street
Winston-Salem, North Carolina 27103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (336) 725-2981
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Item 5. Other Events
a) On September 27, 2001, Krispy Kreme Doughnuts, Inc. (the "Company") announced
the development of a new proprietary doughnut technology which has the potential
to substantially increase the number of stores featuring its signature "hot
doughnuts now" experience. The Company is calling this technology the "Krispy
Kreme Hot Doughnut Machine."
On October 10, 2001, the Company announced the location of three new
outlets that will be used to test the Company's new Hot Doughnut Machine
technology as well as introduce a new store design that has been developed to
reflect and enhance the brand's core values. In addition, these stores will
feature the Company's new expanded beverage program.
Copies of the press releases issued by the Company on September 27, 2001
and October 10, 2001 respectively are attached hereto as exhibits 99.1 and 99.2
and are incorporated herein by reference.
b) On October 1, 2001, the Company was notified that a demand for arbitration,
relating to a legal proceeding which was previously disclosed in the Company's
filings with the Securities and Exchange Commission, had been filed with the
American Arbitration Association.
Set forth below is the updated disclosure relating to this matter:
On March 9, 2000, we, our Chairman, President and Chief Executive Officer
and other persons were named as defendants in a lawsuit (Kevin L. Boylan
and Bruce Newberg v. Golden Gate Doughnuts, LLC, Krispy Kreme Doughnuts
Corporation, Krispy Kreme Doughnuts, Inc., Scott Livengood, Brad Bruckman,
and Does 1 through 20, Superior Court for the County of Los Angeles,
California, Case No. RC226214). The plaintiffs allege that we and other
defendants breached an agreement regarding plaintiffs' participation in a
franchise operation in Northern California. The complaint, which asserts
breach of contract, promissory estoppel, intentional interference with
contract and business relations and breach of fiduciary duty claims, seeks
unspecified money damages in an amount to be proven at trial, but not less
than $10 million. The complaint also seeks punitive damages. Although we
had been in discussions with the plaintiffs with respect to their
participation in the Northern California franchise, numerous material
differences regarding the terms and conditions of their participation were
never resolved. As a result, no oral agreement was ever reached and no
written agreement was executed. On September 22, 2000, after the case was
transferred to the Sacramento Superior Court, that court granted our motion
to compel arbitration of the action and stayed the action pending the
outcome
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of arbitration. On November 3, 2000, the plaintiffs petitioned for a writ
of mandate overruling the Superior Court. On December 21, 2000, the Court
of Appeals summarily denied the writ petition. Plaintiffs failed to
petition the California Supreme Court for review of the lower Court's
decision within the time permitted by law. On October 1, 2001, plaintiffs
filed a demand for arbitration with the American Arbitration Association,
requesting the arbitration be held in Charlotte, North Carolina. We believe
the plaintiffs' claims have no merit and will vigorously defend this matter
before the arbitrator. The lawsuit against Mr. Livengood was dismissed by
the California court for lack of personal jurisdiction. Plaintiffs have not
appealed this judgment.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description
99.1 Press release dated September 27, 2001
99.2 Press release dated October 10, 2001
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KRISPY KREME DOUGHNUTS, INC.
Dated: November 1, 2001 By: /s/ John W. Tate
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Name: John W. Tate
Title: Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
99.1 Press release dated September 27, 2001
99.2 Press release dated October 10, 2001
EXHIBIT 99.1
KRISPY KREME ANNOUNCES DEVELOPMENT OF NEW HOT DOUGHNUT TECHNOLOGY
WINSTON-SALEM, N.C., Sept. 27 -- Krispy Kreme Doughnuts, Inc. (NYSE: KKD)
today announced the development of a new proprietary doughnut technology which
has the potential to substantially increase the number of stores featuring its
signature "hot doughnut now" experience. The Company is calling this technology
the "Krispy Kreme Hot Doughnut Machine." The new machine, a conveyor oven and
glazing system, closely resembles Krispy Kreme's current doughnut production
equipment, which the Company also manufactures. The Hot Doughnut Machine,
however, is designed to finish cooking and glazing doughnuts that have been
prepared to a certain point at a factory store and delivered fresh to a store
employing this technology. The result is a hot doughnut virtually identical to
that experienced in Krispy Kreme's traditional factory stores. Since this system
is only finishing the doughnut making process, it requires much less space,
direct labor and investment than the full production process.
An additional benefit of the new system is the ability to offer multiple
varieties of hot doughnuts throughout the day. "Hot doughnuts are the essence of
the Krispy Kreme brand and our company is committed to strategically pursuing
opportunities to extend the hot doughnut experience to our customers. This new
technology accomplishes that through a patented process integrating the key
variables of time, temperature and humidity. It is the result of two years of
intensive research and development efforts within Krispy Kreme and reflects our
commitment to improve the customer experience through innovation," said Krispy
Kreme's Chairman, President and Chief Executive Officer, Scott Livengood.
Krispy Kreme is announcing the development of the Hot Doughnut Machine at
this time because they are preparing to open stores to test the concept. Test
stores utilizing the new equipment will allow Krispy Kreme to further understand
and refine the technology. "If the tests are successful, we have the potential
to substantially increase the number of Krispy Kreme stores and hot doughnut
experiences available to our customers," commented Livengood. "Stores that
utilize the Hot Doughnut Machine technology will complement, not replace our
traditional factory stores. This technology provides us with the versatility we
need to enter market areas which before were not practical, including certain
urban locations, smaller markets, and confined locations such as airports and
malls. We also will be able to take advantage of existing stores' production
capacity, creating efficiencies and greater profitability. In fact, the factory
store leverage which this technology could generate might actually cost-justify
additional factory stores beyond the 750 we have previously estimated in the
United States."
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The 64-year old North Carolina-based company is a leading branded specialty
retailer of premium quality doughnuts, including the Company's signature Hot
Original Glazed. Krispy Kreme currently operates 196 stores in 31 states.
Krispy Kreme can be found on the World Wide Web at www.krispykreme.com.
Information contained in this press release, other than historical
information, may be considered forward-looking in nature and is subject to
various risks, uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
expected. Among the key factors that may have a direct bearing on Krispy Kreme's
operating results, performance or financial condition are its dependence on
franchisees to execute its store expansion strategy, supply issues, competition
and numerous other factors discussed in Krispy Kreme's periodic reports, proxy
statement and other information statements filed with the Securities and
Exchange Commission.
EXHIBIT 99.2
KRISPY KREME ANNOUNCES STORES FEATURING NEW HOT DOUGHNUT TECHNOLOGY, NEW STORE
DESIGN, AND NEW BEVERAGE PROGRAM
WINTSON-SALEM, N.C., Oct. 10-- Krispy Kreme Doughnuts, Inc. (NYSE: KKD)
today announced the location of three new outlets that will be used to test the
Company's new Hot Doughnut Machine technology as well as introduce a new store
design that has been developed to reflect and enhance the brand's core values.
In addition, these stores will feature Krispy Kreme's new expanded beverage
program.
The new stores testing the Hot Doughnut Machine technology are scheduled to
open in Winston-Salem, North Carolina, near the Company's corporate
headquarters, in mid November; and in Greensboro and Charlotte, North Carolina
by the end of the year. These test stores will allow Krispy Kreme to further
understand and refine the Hot Doughnut Machine technology. If the tests are
successful, the Company has the potential to substantially increase the number
of Krispy Kreme stores and hot doughnut experiences available to customers.
Stores that utilize the Hot Doughnut Machine technology will complement, not
replace traditional factory stores. This technology provides Krispy Kreme with
the versatility to enter market areas which before were not practical, including
certain urban locations, smaller markets, and confined locations such as
airports and malls.
The new look that has been developed for Krispy Kreme stores combines
historical references such as copies of 50-year-old company posters (which are
archived in the Smithsonian Institution) with modern elements including
stainless steel and light woods. In its totality, the design celebrates Krispy
Kreme's long heritage while also creating a warm, inviting and updated
environment. Colorful menu boards and employee uniforms compliment the decor.
"The core elements of the Krispy Kreme brand like our Hot Original Glazed
doughnuts and the doughnut-making theater are still very much a part of the
store design. However, the overall look and feel of the store has been updated
and we feel that the new look captures the true essence of our unique brand in a
very distinct way," said Scott Livengood, Chairman, President, and CEO.
Krispy Kreme's expanded beverage program will feature three drip coffees
ranging from light and smooth to deeper, more intense blends. It will also
include espresso beverages, frozen coffee beverages, and other frozen beverages
prepared with a variety of proprietary flavors. In addition, there will be a
line of flavored milks. These new beverages will be featured in the Hot Doughnut
Machine test stores and also in the new factory store in Issaquah, Washington,
just outside of Seattle, which is currently scheduled to open on October 30,
2001. After further testing and refinement, the Company will begin a rollout of
the expanded line of beverages in all Krispy Kreme stores.
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The 64-year old North Carolina-based Company is a leading branded specialty
retailer of premium quality doughnuts, including the company's signature Hot
Original Glazed. Krispy Kreme currently operates 196 stores in 31 states.
Krispy Kreme can be found on the World Wide Web at www.krispykreme.com.
Information contained in this press release, other than historical
information, may be considered forward-looking in nature and is subject to
various risks, uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
expected. Among the key factors that may have a direct bearing on Krispy Kreme's
operating results, performance or financial condition are its dependence on
franchisees to execute its store expansion strategy, supply issues, competition
and numerous other factors discussed in Krispy Kreme's periodic reports, proxy
statement and other information statements filed with the Securities and
Exchange Commission.