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Krispy Kreme approves $50M share repurchase

July 14, 2013

Krispy Kreme Doughnuts Inc.'s board of directors has approved the repurchase of up to $50 million of the company's common stock, effective immediately. The company also announced that it has refinanced its secured credit facilities and retired in full the $22 million outstanding balance of its term loan.

The $50 million share repurchase program will be implemented, as market conditions permit, through purchases made from time to time in either open market or private transactions, in accordance with Securities and Exchange Commission requirements. As of July 12, the company had approximately 66 million shares outstanding.

"Having completed a $20 million share repurchase program last year, we view this $50 million additional repurchase authorization as a further indication of Krispy Kreme's financial strength, our outstanding said James H. Morgan, chairman, president and CEO. "The substantial improvements we have made to operating results and the balance sheet over the past several years make us confident we have the capital resources to both implement and potentially expand the scope of our growth plans."

As previously announced, the company forecasts generating adjusted net income for fiscal 2014, ending Feb. 2, 2014, in the range of $42 to $45 million. If achieved, this would represent an increase of between 28 and 37 percent over the $32.9 million of adjusted net income earned on a 52-week basis in fiscal 2013.

Also, on July 12, Krispy Kreme refinanced its secured credit facilities. In connection with the refinancing, the company retired in full the $22 million balance of its term loan and increased the size of its revolving credit commitments from $25 to $40 million.

The refinancing and the retirement of the term loan are expected to result in a decrease in interest expense of approximately $1 million in the first 12 months following the transaction, principally reflecting the elimination of interest on the term loan, lower costs for outstanding letters of credit, and elimination of the amortization of the cost of an interest rate hedge and the amortization of deferred financing costs related to the retired term loan.

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