2011-06-14 Krispy Kreme - Presentation at AGM

8/3/2019 2011-06-14 Krispy Kreme - Presentation at AGM

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Annual Meeting of Shareholders

Tuesday, June 14, 2011

V55v5


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Agenda Call to Order Director Introductions

Management Introductions

Report on Notice of Meeting, Appointment

of Inspector of Election and Quorum Election of Directors

Advisory Vote on Executive Compensation

Advisory Vote on the Frequency of Future Advisory

Votes on Executive Compensation Ratification of Appointment of Independent Registered

Public Accounting Firm

Report on the Business

Report on Results of Voting Adjournment

Question and Answer Period


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Board of Directors

Robert S. McCoy, Jr., Lead Independent Director

Charles A. Blixt

Lynn Crump-Caine

C. Stephen Lynn

Andrew J. Schindler

Michael H. Sutton

Lizanne Thomas

Togo D. West, Jr.

James H. Morgan, Chairman


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Agenda

Call to Order

Director Introductions


Election of Directors Advisory Vote on Executive Compensation

Advisory Vote on the Frequency of Future AdvisoryVotes on Executive Compensation

Ratification of Appointment of Independent RegisteredPublic Accounting Firm


Report on Results of Voting

Adjournment



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Senior Management Group

Jim Morgan President & CEO

Doug Muir EVP & Chief Financial Officer

Cindy Bay SVP Company Store Operations

Dwayne Chambers SVP & Chief Marketing Officer

Ken Hudson SVP Human Resources

Steve Lineberger SVP Corporate Strategy &

President US Franchise

Operations

Darryl Marsch SVP & General Counsel

Brad Wall SVP Supply Chain & Off-PremisesOperations

Jeff Welch SVP & President International


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Voting Rules

Shareholders who have already sent in proxies, andwho do not wish to change their votes, do NOTneed to vote by ballot today.

If you are voting by proxy for someone else, and didnot turn in your proxy at the registration desk,please hand it to one of the ushers at this time.

If any shareholder or proxy wishes to vote in person,please raise your hand at this time and an usher willbring you a ballot.


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Election of Directors

TermClass Nominees To Expire

Class III Stephen Lynn 2014

Class III Michael H. Sutton 2014

Class III Lizanne Thomas 2014


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Advisory Vote on the Executive Compensation








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Advisory Vote on the Executive Compensation








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Forward-Looking Statements

Some of the information in this presentation represents forward-lookingstatements that are protected under the Private Securities LitigationReform Act of 1995. Such statements may reflect our expectations orbeliefs about the future, including, without limitation, expectations or

beliefs regarding our financial performance. We cannot assure you thatwe will achieve or realize these expectations. Like any such statements,they are subject to a number of factors, risks and uncertainties that couldcause actual results to differ materially from our expectations or beliefs.These factors include items discussed in our SEC filings, including our

annual report on Form 10-K for the year ended January 30, 2011. Newfactors emerge from time to time, and it is not possible for us to predictall such factors or assess the impact of each such factor on KrispyKreme. If we do make forward-looking statements, we undertake noobligation to update those statements in the future in light of subsequent

events. Please note that all of our SEC filings, along with othershareholder relevant information, can be found on the IR portion of ourwebsite at www.krispykreme.com.


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Our Mission and Vision

Mission:

To touch and enhance lives through the

joy that is Krispy Kreme

Vision:

To be the worldwide leader in sharing

delicious tastes and creating joyful memories


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Fiscal 2011 Highlights

Revenue decline reversed

First gain since fiscal 2005

Domestic business growing again

First year over year store growth gain since fiscal 2005

International growth continues

Net income of $7.6 million First profit since 2004

Refinancing of credit facilities andsignificantly lowered interest rate

Set the stage for continued progress in FY12


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Going Forward


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Strategic Initiatives Refine small shop format Improve shop operations and execution

Continue renovation of older locations

Develop and deploy new products

Improve off-premises economics through

new products and better management andmarketing

Increase franchisee support and reduce

logistics costs Continue building domestic and

international new store pipeline


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Company-owned Small Shop Potential

Opportunity to build over 65 Company-owned small shops in currentlytargeted Southeast markets

Development pipeline includes:

Raleigh

Charlotte Louisville

Columbia

Nashville Virginia Beach


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Small Hot Shop Example


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Small Factory Shop Example


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Fiscal 2012 Development Plans

Ongoing new small shop expansion 5 to 10Company stores in the Southeast

5 to 15 new domestic franchise stores

More than new 30 international franchisestores


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Expand Our Worldwide PresenceAustralia - 29 Philippines - 21

Bahrain - 7 Puerto Rico - 4

Canada - 5 Qatar - 6

China - 1 Saudi Arabia- 83

Dominican Republic - 1 South Korea - 44

Indonesia - 10 Thailand - 2

Japan - 26 Turkey - 13

Kuwait - 26 UAE - 21

Lebanon - 10 United Kingdom - 48

Malaysia - 5 United States - 231

Mexico - 59 652 stores in 21 countries


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Continue Building Domestic and International Pipeline

Dominican Republic


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Develop and Deploy New Products

Limited Time Offerings -currently featuring KrispyKreme Cookies & Kreme

Doughnut

Krispy Kreme BakedCreations

Kool Kreme


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Financial Review


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Fiscal 2011 Highlights

Systemwide sales in constant dollars +9.1%

Company same store sales +4.0%

Added a net 64 Krispy Kreme stores

Net income of $7.6 million was a dramaticimprovement from net loss in fiscal 2010

Reduced debt

Q1 FY12 C i d P


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Q1 FY12 Continued Progress

Revenues increased +14% to $105 MM

Operating income rose + 62% to $10 MM

Net income of $9.2 MM vs. $4.5 MM EPS of $0.13

T t l St t P i d E d


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Total Stores at Period End

207

127

68

FY06 Q1 FY12

DomesticFranchise

Domestic

Franchise

InternationalFranchise

InternationalFranchise

CompanyOwned

CompanyOwned

402 Stores

68% Franchised652 Stores

87% Franchised

145

86421

402 Stores

68% Franchised652 Stores

87% Franchised

D ti St


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334

272

245225 224 229 231

245

FY06 FY07 FY08 FY09 FY10 FY11 Q1 FY12 FY12E

Domestic Stores

Domestic Growth Beginning Anew

Domestic Stores

I t ti l St


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International Stores

68

123

204

298

358

417 421435

FY06 FY07 FY08 FY09 FY10 FY11 Q1 FY12 FY12E

Continue to Build the Global Franchise Network

R


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Revenues

$543

$461

$430$386

$347$362

$92 $105

FY06 FY07 FY08 FY09 FY10 FY11 Q1 FY11 Q1 FY12

($ in millions)

Operating Income


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Operating Income

($117)

($28)

($43)

$5 $12

$15

$6 $10

$23

FY06 FY07 FY08 FY09 FY10 FY11 Q1 FY11 Q1 FY12 FY12E

($ in millions)

Interest Expense


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Interest Expense

$20.2 $20.3

$9.8$10.7 $10.7

$6.4

$1.9

$0.5$2.0


($ in millions)

Net Income


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Net Income

($136)

($42)

($67)

($4)

$0

$8 $5$9

$19


($ in millions)

FY12E excludes estimated after tax gain of $4.4 MM on sale of 30% interest in KK Mexico.

Assumes achievement of midpoint of estimated operating income ex. impairment charges

and lease termination costs of $22-24 MM.

Total Debt & Contingent Liabilities


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Total Debt & Contingent Liabilities

$123

$108$77

$75

$43 $35 $28

$30

$23

$18$9

$4 $3$3

FY06 FY07 FY08 FY09 FY10 FY11 Today

($ in millions)


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$12

$25

$33

$17

Liquidity Capital Expenditures

Revolving Credit Availabi lity Cash on Hand Free Cash Flow

Sources of Funding for Business Development

($ in millions)


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Conclusion


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Conclusion

Continued progress on strategic initiatives

Positioned for accelerated growth in both

revenue and earnings over the long-term Small store development and economics will

be a driving force behind success

Strong cash flow Low debt



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Mission:To touch and enhance lives through the


Vision:



What Our Brand Means


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What Our Brand Means

The Joy that is Krispy Kreme


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Agenda


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Agenda

Call to Order Director Introductions









Report on Results of Voting

Adjournment



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Questions


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Please approach the microphone attendant located in the aisle. Once you are in line to ask a question, the microphone attendant will give

you a card to fill out, so we can introduce you.

On the card, please print your name, and state whether you are ashareholder or a proxy holder.

If you are a proxy holder, please also identify the shareholder whom you arerepresenting.

When your turn comes, please hand the attendant the card and theattendant will announce you.

As a courtesy to everyone present, we ask that shareholders limit theirquestions to no more than two minutes each.

Once you have asked your question and have received an answer, the nextshareholder in line will be given a chance to ask a question. If you have afollow-up question or a new question, please return to the end of the line.

When everyone else has had a chance to speak, and if we still have time,you may have another turn at the microphone.

Quest o s



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Mission:To touch and enhance lives through the


Vision:



2011-06-14 Krispy Kreme - Presentation at AGM

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