Krispy Kreme Doughnuts, Inc. Adopts Tax Asset Protection Plan
WINSTON-SALEM, N.C., Jan. 15, 2013
WINSTON-SALEM, N.C., Jan. 15, 2013 /PRNewswire/ --Krispy Kreme Doughnuts,
Inc. (NYSE: KKD) (the "Company") announced that yesterday its Board of
Directors adopted a tax asset protection plan ("Plan") intended to preserve
the long-term value of the Company's federal net operating loss and other tax
carryforwards, which represent a substantial asset to the Company and its
shareholders. The Plan is similar to tax protection plans adopted by other
public companies with significant tax carryforwards. As of January 2012, the
Company had a federal net operating loss carryforward of approximately $240
million, as well as state net operating loss carryforwards and federal and
state tax credits that can be carried forward to future years.
"The Plan should protect the Company's valuable tax assets by reducing the
likelihood of an unintended 'ownership change' under technical IRS rules,"
said James H. Morgan, the Company's President and Chief Executive
Officer.Under Section 382 of the Internal Revenue Code, the use of the
Company's net operating loss and other carryforwards would be limited in the
event of an "ownership change," which is defined as a cumulative change of
more than 50% during any three year period by shareholders owning 5% or more
of the Company's stock. Certain Company actions, including share repurchases,
would add to the cumulative ownership change under Section 382.
The Plan is designed to discourage any person from becoming a 5% shareholder,
thereby reducing the risk of such an ownership change. There is no guarantee,
however, that the Plan will prevent the Company from experiencing an ownership
change, and the Company may pursue additional means of protecting this
Existing shareholders holding 4.99% or more of the Company's outstanding
shares of common stock are exempt from the provisions of the Plan unless they
make additional purchases.The Board of Directors considered a number of
factors in establishing the term of the Plan, including anticipated use of the
net operating loss carryforwards, governance matters and efficiency. The
Company does not anticipate exhausting its net operating loss carryforwards
prior to the expiration of the term; nevertheless, the Plan will expire if the
value of any unused carryforwards is no longer material. The Plan will also
expire upon redemption or exchange of the rights. Otherwise, the Plan will
expire no later than the close of business on January 14, 2019, unless
extended by the Board of Directors.
Additional information regarding the Plan will be contained in a Current
Report on Form 8-K and in a Registration Statement on Form 8-A that the
Company will file with the Securities and Exchange Commission. In addition,
the Company's registered shareholders of record as of January24, 2013 will be
mailed a summary of the Plan.
Separately, the Company noted that the Shareholder Protection Rights Agreement
dated as of January 14, 2010, and the related rights, expired as of the close
of business on January 14, 2013.
About Krispy Kreme
Krispy Kreme is a leading branded specialty retailer and wholesaler of premium
quality sweet treats and complementary products, including its signature
Original Glazed^® doughnut. Headquartered in Winston-Salem, NC, the Company
has offered the highest quality doughnuts and great tasting coffee since it
was founded in 1937. Today, Krispy Kreme shops can be found in over 730
locations in 21 countries around the world. Connect with Krispy Kreme at
www.krispykreme.com and on Facebook, Foursquare, Twitter and YouTube.
Information contained in this press release, other than historical
information, should be considered forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on management's beliefs, assumptions and
expectations of our future economic performance, considering the information
currently available to management. These statements are not statements of
historical fact. Forward-looking statements involve risks and uncertainties
that may cause our actual results, performance or financial condition to
differ materially from the expectations of future results, performance or
financial condition we express or imply in any forward-looking statements.
The words "believe," "may," "could," "will," "should," "would," "anticipate,"
"estimate," "expect," "intend," "objective," "seek," "strive" or similar
words, or the negative of these words, identify forward-looking statements.
Factors that could contribute to these differences include, but are not
limited to: The effectiveness of the Plan as a deterrent to transactions that
might affect the Company's ability to utilize its NOLs; the quality of Company
and franchise store operations; our ability, and our dependence on the ability
of our franchisees, to execute on our and their business plans; our
relationships with our franchisees; our ability to implement our international
growth strategy; our ability to implement our domestic small shop operating
model; political, economic, currency and other risks associated with our
international operations; the price and availability of raw materials needed
to produce doughnut mixes and other ingredients, and the price of motor fuel;
our relationships with wholesale customers; our ability to protect our
trademarks and trade secrets; changes in customer preferences and perceptions;
risks associated with competition; risks related to the food service industry,
including food safety and protection of personal information; compliance with
government regulations relating to food products and franchising; and
increased costs or other effects of new government regulations relating to
healthcare benefits. These and other risks and uncertainties, which are
described in more detail in the Company's most recent Annual Report on Form
10-K and other reports and statements filed with the United States Securities
and Exchange Commission, are difficult to predict, involve uncertainties that
may materially affect actual results and may be beyond the Company's control,
and could cause actual results and developments to be materially different
from those expressed or implied by any of these forward-looking statements.
New factors emerge from time to time, and it is not possible for management to
predict all such factors or to assess the impact of each such factor on the
Company. Any forward-looking statement speaks only as of the date on which
such statement is made, and the Company does not undertake any obligation to
update any forward-looking statement to reflect events or circumstances after
the date on which such statement is made.
SOURCE Krispy Kreme Doughnuts, Inc.
Contact: Media, Brian K. Little, +1-336-726-8825, blittle@KrispyKreme.com; or
Investor Relations, Anita K. Booe, +1-336-703-6902, abooe@KrispyKreme.com
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