10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________ 

Form 10-Q

(Mark one)
	þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended October 28, 2012
OR
	o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from                 to

Commission file number 001-16485
KRISPY KREME DOUGHNUTS, INC.
(Exact name of registrant as specified in its charter)

North Carolina	56-2169715
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
370 Knollwood Street	27103
Winston-Salem, North Carolina	(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:
(336) 725-2981

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  þ No  o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o	Accelerated filer  þ
Non-accelerated filer  o	Smaller reporting company  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o No  þ

Number of shares of Common Stock, no par value, outstanding as of November 23, 2012: 65,223,895.

1

TABLE OF CONTENTS

		Page
FORWARD-LOOKING STATEMENTS		3
PART I - FINANCIAL INFORMATION		4
Item 1.	FINANCIAL STATEMENTS	4
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
	RESULTS OF OPERATIONS	23
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	53
Item 4.	CONTROLS AND PROCEDURES	53
PART II - OTHER INFORMATION		54
Item 1.	LEGAL PROCEEDINGS	54
Item 1A.	RISK FACTORS	54
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	54
Item 3.	DEFAULTS UPON SENIOR SECURITIES	54
Item 4.	MINE SAFETY DISCLOSURES	54
Item 5.	OTHER INFORMATION	54
Item 6.	EXHIBITS	54
	SIGNATURES	55
	EXHIBIT INDEX	56

2

     As used herein, unless the context otherwise requires, “Krispy Kreme,” the “Company,” “we,” “us” and “our” refer to Krispy Kreme Doughnuts, Inc. and its subsidiaries. References to fiscal 2013 and fiscal 2012 mean the fiscal years ending February 3, 2013 and January 29, 2012, respectively.

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that relate to our plans, objectives, estimates and goals. Statements expressing expectations regarding our future and projections relating to products, sales, revenues, expenditures, costs and earnings are typical of such statements, and are made under 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 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 new 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;
   
• increased costs or other effects of new government regulations relating to healthcare benefits; and
   
• other factors discussed in Krispy Kreme’s periodic reports and other information filed with the United States Securities and Exchange Commission (the “SEC”), including under Part I, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29,2012 (the “2012 Form 10-K”).

All such factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. 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 we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

We caution you that any forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to differ materially from the facts, results, performance or achievements we have anticipated in such forward-looking statements except as required by the federal securities laws.

3

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS.

	Page
Index to Financial Statements
Consolidated statement of income for the three and nine months ended October 28, 2012 and October 30, 2011	5
Consolidated statement of comprehensive income for the three and nine months ended October 28, 2012 and October 30, 2011	6
Consolidated balance sheet as of October 28, 2012 and January 29, 2012	7
Consolidated statement of cash flows for the nine months ended October 28, 2012 and October 30, 2011	8
Consolidated statement of changes in shareholders’ equity for the nine months ended October 28, 2012 and October 30, 2011	9
Notes to financial statements	10

4

KRISPY KREME DOUGHNUTS, INC.

CONSOLIDATED STATEMENT OF INCOME
(Unaudited)

	Three Months Ended						Nine Months Ended
	October 28,			October 30,			October 28,			October 30,
	2012			2011			2012			2011
	(In thousands, except per share amounts)
Revenues	$	107,087		$	98,708		$	317,698		$	301,260
Operating expenses:
Direct operating expenses (exclusive of depreciation
expense shown below)		90,220			85,874			264,568			258,554
General and administrative expenses		5,083			4,941			16,311			15,515
Depreciation expense		2,357			2,208			7,238			6,233
Impairment charges and lease termination costs		216			135			302			680
Operating income		9,211			5,550			29,279			20,278
Interest income		14			30			102			131
Interest expense		(384	)		(385	)		(1,202	)		(1,276	)
Equity in losses of equity method franchisees		(47	)		(72	)		(150	)		(69	)
Gain on sale of interest in equity method franchisee		-			-			-			6,198
Other non-operating income and (expense), net		80			89			237			261
Income before income taxes		8,874			5,212			28,266			25,523
Provision for income taxes		3,830			495			12,267			2,796
Net income	$	5,044		$	4,717		$	15,999		$	22,727
Earnings per common share:
Basic	$	0.08		$	0.07		$	0.24		$	0.33
Diluted	$	0.07		$	0.07		$	0.23		$	0.32

The accompanying notes are an integral part of the financial statements.

5

KRISPY KREME DOUGHNUTS, INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended					Nine Months Ended
	October 28,		October 30,			October 28,			October 30,
	2012		2011			2012			2011
	(In thousands)
Net income	$	5,044	$	4,717		$	15,999		$	22,727
Other comprehensive income (loss):
Foreign currency translation adjustment		-		-			-			57
Less income taxes		-		-			-			(23	)
		-		-			-			34
Unrealized loss on cash flow hedge		-		(77	)		(14	)		(459	)
Less income taxes		-		30			5			181
		-		(47	)		(9	)		(278	)
Total other comprehensive loss		-		(47	)		(9	)		(244	)
Comprehensive income	$	5,044	$	4,670		$	15,990		$	22,483

The accompanying notes are an integral part of the financial statements.

6

KRISPY KREME DOUGHNUTS, INC.

CONSOLIDATED BALANCE SHEET
(Unaudited)

	October 28,			January 29,
	2012			2012
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	49,903		$	44,319
Receivables		23,436			21,616
Receivables from equity method franchisees		774			655
Inventories		16,677			16,497
Deferred income taxes		17,685			10,540
Other current assets		6,991			3,613
Total current assets		115,466			97,240
Property and equipment		76,132			75,466
Investments in equity method franchisees		-			-
Goodwill and other intangible assets		24,219			23,776
Deferred income taxes		103,910			129,053
Other assets		12,153			9,413
Total assets	$	331,880		$	334,948
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	2,162		$	2,224
Accounts payable		12,047			10,494
Accrued liabilities		28,280			28,800
Total current liabilities		42,489			41,518
Long-term debt, less current maturities		23,750			25,369
Other long-term obligations		24,878			18,935
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; Shares issued and outstanding:        October 28, 2012 - 65,224 and January 29, 2012 - 68,092		353,186			377,539
Accumulated other comprehensive loss		(345	)		(336	)
Accumulated deficit		(112,078	)		(128,077	)
Total shareholders’ equity		240,763			249,126
Total liabilities and shareholders’ equity	$	331,880		$	334,948

The accompanying notes are an integral part of the financial statements.

7

KRISPY KREME DOUGHNUTS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

	Nine Months Ended
	October 28,			October 30,
	2012			2011
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	15,999		$	22,727
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		7,238			6,233
Deferred income taxes		10,824			159
Accrued rent expense		369			389
Loss on disposal of property and equipment		468			348
Gain on sale of interest in equity method franchisee		-			(6,198	)
Share-based compensation		3,570			3,437
Provision for doubtful accounts		65			(397	)
Amortization of deferred financing costs		300			320
Equity in losses of equity method franchisees		150			69
Other		(1,075	)		956
Change in assets and liabilities:
Receivables		(1,467	)		(1,794	)
Inventories		(169	)		(2,313	)
Other current and non-current assets		(1,499	)		(595	)
Accounts payable and accrued liabilities		690			1,767
Other long-term obligations		2,515			(2,196	)
Net cash provided by operating activities		37,978			22,912
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(9,480	)		(8,222	)
Proceeds from disposals of property and equipment		66			26
Acquisition of stores from franchisee		(915	)		-
Proceeds from sale of interest in equity method franchisee		-			7,723
Escrow deposit recovery		-			1,600
Other investing activities		347			(52	)
Net cash provided by (used for) investing activities		(9,982	)		1,075
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt		(1,652	)		(8,437	)
Deferred financing costs		(11	)		(23	)
Proceeds from exercise of stock options		-			1,036
Proceeds from exercise of warrants		9			-
Repurchase of common shares		(20,758	)		(954	)
Net cash used for financing activities		(22,412	)		(8,378	)
Net increase in cash and cash equivalents		5,584			15,609
Cash and cash equivalents at beginning of period		44,319			21,970
Cash and cash equivalents at end of period	$	49,903		$	37,579

The accompanying notes are an integral part of the financial statements.

8

KRISPY KREME DOUGHNUTS, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)

						Accumulated
	Common					Other
	Shares		Common			Comprehensive			Accumulated
	Outstanding		Stock			Income (Loss)			Deficit			Total
	(In thousands)
Balance at January 29, 2012	68,092		$	377,539		$	(336	)	$	(128,077	)	$	249,126
Comprehensive income (loss) for the nine months
ended October 28, 2012							(9	)		15,999			15,990
Write-off of deferred tax asset related to the
expiration of unexercised stock warrants	-			(7,174	)								(7,174	)
Exercise of warrants	1			9									9
Share-based compensation	344			3,570									3,570
Repurchase of common shares	(3,213	)		(20,758	)								(20,758	)
Balance at October 28, 2012	65,224		$	353,186		$	(345	)	$	(112,078	)	$	240,763
Balance at January 30, 2011	67,527		$	370,808		$	(34	)	$	(294,346	)	$	76,428
Comprehensive income (loss) for the nine months
ended October 30, 2011							(244	)		22,727			22,483
Exercise of stock options	397			1,036									1,036
Cancelation of restricted shares	(8	)		-									-
Share-based compensation	280			3,437									3,437
Repurchase of common shares	(121	)		(954	)								(954	)
Balance at October 30, 2011	68,075		$	374,327		$	(278	)	$	(271,619	)	$	102,430

The accompanying notes are an integral part of the financial statements.

9

KRISPY KREME DOUGHNUTS, INC.

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

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 derives revenue from franchise and development fees and royalties from franchisees. Additionally, the Company sells doughnut mix, other ingredients and supplies and doughnut-making equipment to franchisees.

Significant Accounting Policies

BASIS OF PRESENTATION. The consolidated financial statements contained herein should be read in conjunction with the Company’s 2012 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 2012 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 January 29, 2012 were derived from the Company’s audited financial statements but do not include all disclosures required by GAAP.

BASIS OF CONSOLIDATION. The financial statements include the accounts of KKDI and its subsidiaries, the most significant of which is KKDI’s principal operating subsidiary, Krispy Kreme Doughnut Corporation.

Investments in entities over which the Company has the ability to exercise significant influence but which the Company does not control, and whose financial statements are not otherwise required to be consolidated, are accounted for using the equity method. These entities typically are 25% to 35% owned and are hereinafter sometimes referred to as “Equity Method Franchisees.”

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 warrants and the vesting of currently unvested shares of restricted stock and restricted stock units.

The following table sets forth amounts used in the computation of basic and diluted earnings per share:

	Three Months Ended				Nine Months Ended
	October 28,		October 30,		October 28,		October 30,
	2012		2011		2012		2011
	(In thousands)
Numerator: net income	$	5,044	$	4,717	$	15,999	$	22,727
Denominator:
Basic earnings per share - weighted average shares outstanding		66,668		69,384		67,897		69,013
Effect of dilutive securities:
Stock options and warrants		1,719		1,654		1,663		1,796
Restricted stock and restricted stock units		416		509		481		665
Diluted earnings per share - weighted average shares
outstanding plus dilutive potential common shares		68,803		71,547		70,041		71,474

The sum of the quarterly earnings per share amounts does not necessarily equal earnings per share for the year to date.

Stock options and warrants with respect to 3.1 million and 7.4 million shares for the three months ended October 28, 2012 and October 30, 2011, respectively, as well as 340,000 unvestedshares of restricted stock and unvested restricted stock units for the three months ended October 30, 2011, have been excluded from the computation of the number of shares used to compute diluted earnings per share because their inclusion would be antidilutive.

10

     Stock options and warrants with respect to 3.2 million and 7.4 million shares, as well as 58,000 and 158,000 unvested shares of restricted stock and unvested restricted stock units, have been excluded from the computation of the number of shares used to compute diluted earnings per share for the nine months ended October 28, 2012 and October 30, 2011, respectively, because their inclusion would be antidilutive.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (the “FASB”) issued an Accounting Standards Update (“ASU”) related to fair value measurements. The ASU clarifies some existing concepts, eliminates wording differences between GAAP and International Financial Reporting Standards (“IFRS”), and in some limited cases, changes some principles to achieve convergence between GAAP and IFRS. The ASU also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The Company adopted the new standards in the first quarter of fiscal 2013; such adoption had no effect on the Company’s financial condition or results of operations.

In June 2011, the FASB issued new accounting standards which require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. The new accounting rules eliminate the option to present components of other comprehensive income as part of the statement of changes in shareholders’ equity. The Company adopted the new standards in the first quarter of fiscal 2013 by presenting a separate consolidated statement of comprehensive income in addition to the consolidated statement of income.

In July 2012, the FASB issued amended accounting guidance regarding indefinite-lived intangible asset impairment testing and whether it is necessary to perform the quantitative impairment test currently required. This guidance is effective for the Company in fiscal 2014, with early adoption permitted. The Company does not expect that this new guidance with have a material impact on its consolidated financial statements.

Note 2 — Segment Information

The Company’s reportable segments are Company Stores, Domestic Franchise, International Franchise and KK Supply Chain. The Company Stores segment is comprised of the stores operated by the Company. These stores sell doughnuts and complementary products through both on-premises and wholesale 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. Expenses for these segments include costs to recruit new franchisees, to assist in store openings, 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 nine months ended October 28, 2012 and October 30, 2011. Segment operating income is consolidated operating income before unallocated general and administrative expenses and impairment charges and lease termination costs.

11

	Three Months Ended						Nine Months Ended
	October 28,			October 30,			October 28,			October 30,
	2012			2011			2012			2011
	(In thousands)
Revenues:
Company Stores	$	72,493		$	67,606		$	215,172		$	203,073
Domestic Franchise		2,498			2,327			7,561			7,045
International Franchise		6,024			5,374			17,832			16,362
KK Supply Chain:
Total revenues		52,825			50,277			158,075			154,501
Less – intersegment sales elimination		(26,753	)		(26,876	)		(80,942	)		(79,721	)
External KK Supply Chain revenues		26,072			23,401			77,133			74,780
Total revenues	$	107,087		$	98,708		$	317,698		$	301,260
Operating income (loss):
Company Stores	$	1,985		$	(574	)	$	5,271		$	551
Domestic Franchise		1,174			1,114			4,072			2,477
International Franchise		4,301			3,313			12,957			10,893
KK Supply Chain		7,312			6,987			24,181			23,074
Total segment operating income		14,772			10,840			46,481			36,995
Unallocated general and administrative expenses		(5,345	)		(5,155	)		(16,900	)		(16,037	)
Impairment charges and lease termination costs		(216	)		(135	)		(302	)		(680	)
Consolidated operating income	$	9,211		$	5,550		$	29,279		$	20,278
Depreciation expense:
Company Stores	$	1,880		$	1,756		$	5,921		$	4,982
Domestic Franchise		40			55			150			165
International Franchise		3			-			9			4
KK Supply Chain		172			183			569			560
Corporate administration		262			214			589			522
Total depreciation expense	$	2,357		$	2,208		$	7,238		$	6,233

     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.

Note 3 — Income Taxes

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 Company had valuation allowances against deferred tax assets of $10.7 million at October 28, 2012 and January 29, 2012, representing the portion of such deferred tax assets which, as of such dates, management estimated would not be realized in future periods. Under GAAP, future realization of deferred tax assets is evaluated under a “more likely than not” standard. Realization of net deferred tax assets generally is dependent on generation of taxable income in future periods. From fiscal 2005 until the fourth quarter of fiscal 2012, the Company maintained valuation allowances on deferred tax assets equal to the entire excess of those assets over the Company’s deferred income tax liabilities because of the uncertainty surrounding the realization of those assets. Such uncertainty arose principally from the substantial losses incurred by the Company from fiscal 2005 through fiscal 2009.

The Company reported a pretax profit of $418,000 in fiscal 2010 and $8.9 million in fiscal 2011. In fiscal 2012, the Company’s pretax profit increased to $30.4 million, inclusive of a $6.2 million non-recurring gain on the Company’s sale of its 30% interest in Krispy Kreme Mexico, S. de R.L. de C.V. (“KK Mexico”), the Company’s franchisee in Mexico. After considering all relevant factors and objectively verifiable evidence having an impact on the likelihood of future realization of the Company’s deferred tax assets, in the fourth quarter of fiscal 2012 management concluded that it was more likely than not that a substantial portion of the Company’s deferred tax assets will be realized in future years. Accordingly, the Company reversed $139.6 million of the valuation allowance on deferred tax assets, with an offsetting credit to the provision for income taxes, in the fourth quarter of fiscal 2012.  

12

     The remaining valuation allowance of $10.7 million at October 28, 2012 and January 29, 2012 represents the portion of the Company’s deferred tax assets management estimates will not be realized in the future. Such assets are associated principally with state net operating loss and state credit carryforwards having relatively short carryforward periods which are forecasted to expire unused, as well as federal foreign tax credits and federal jobs credit carryforwards forecasted to expire unused.

The realization of deferred income tax assets is dependent on future events. 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.

In fiscal 2008, the Company issued warrants to acquire shares of the Company’s common stock at a price of $12.21 per share in connection with the settlement of certain litigation. Such warrants expired worthless in March 2012 and, accordingly, the Company will not receive any income tax deduction related to them. Deferred tax assets at January 29, 2012 included approximately $7.2 million related to these warrants. In accordance with GAAP, the write-off of this deferred tax asset was charged to common stock in the first quarter of fiscal 2013 and reduced the Company’s pool of windfall tax benefits.

In fiscal 2006, the Company issued warrants to purchase 1.2 million shares of the Company’s common stock at a price of $7.75 per share as compensation for services provided to the Company. Such warrants have a term of seven years expiring on January 31, 2013. The Company will be entitled to an income tax deduction equal to the amount of income, if any, recognized by the holder of the warrants upon their exercise. The amount of income recognized by the holder upon the exercise of the warrants is equal to the excess, if any, of the fair value of one share of the Company’s common stock on the date of exercise over $7.75 per share, multiplied by the number of shares exercised. To the extent that the income tax deduction, if any, available to the Company upon any exercise of the warrants is less than $6.7 million (which was the fair value of the warrants at its issuance date), then some or all of the $2.6 million deferred tax asset related to the warrants will not be realized. Any such unrealized amount will be charged to common stock in the fourth quarter of fiscal 2013 and will reduce the Company’s pool of windfall tax benefits. As of November 30, 2012, the price of the Company’s common stock was $9.10 per share. If the price of the Company’s common stock on the date of any exercise of the warrants is $9.10 per share, and the warrants are fully exercised, then approximately $2.0 million of the deferred tax asset will not be realized.

Note 4 — Receivables

The components of receivables are as follows:

	October 28,			January 29,
	2012			2012
	(In thousands)
Receivables:
Wholesale customers	$	10,485		$	10,169
Unaffiliated franchisees		11,611			11,405
Other receivables		1,081			1,015
Current portion of notes receivable		553			185
		23,730			22,774
Less — allowance for doubtful accounts:
Wholesale customers		(254	)		(349	)
Unaffiliated franchisees		(40	)		(809	)
		(294	)		(1,158	)
	$	23,436		$	21,616
Receivables from Equity Method Franchisees (Note 6):
Trade	$	774		$	655

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The changes in the allowance for doubtful accounts are summarized as follows:

	Nine Months Ended
	October 28,			October 30,
	2012			2011
	(In thousands)
Allowance for doubtful accounts related to receivables:
Balance at beginning of period	$	1,158		$	1,334
Provision for doubtful accounts		130			15
Net recoveries (chargeoffs)		(994	)		(212	)
Balance at end of period	$	294		$	1,137
Allowance for doubtful accounts related to receivables from Equity Method Franchisees:
Balance at beginning of period	$	-		$	-
Provision for doubtful accounts		(59	)		-
Net recoveries (chargeoffs)		59			-
Balance at end of period	$	-		$	-

     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.

	October 28,			January 29,
	2012			2012
	(In thousands)
Notes receivable:
Notes receivable from franchisees, net of deferred gain of $1.7 million in fiscal 2013 (Note 12)	$	2,014		$	777
Less — portion due within one year included in receivables		(553	)		(185	)
Less — allowance for doubtful accounts		(62	)		(68	)
	$	1,399		$	524

     The changes in the allowance for doubtful accounts related to notes receivable are summarized as follows:

	Nine Months Ended
	October 28,			October 30,
	2012			2011
	(In thousands)
Balance at beginning of period	$	68		$	538
Provision for doubtful accounts		(6	)		(412	)
Net recoveries (chargeoffs)		-			(58	)
Balance at end of period	$	62		$	68

     In addition to the foregoing notes receivable, the Company had promissory notes totaling approximately $3.3 million at October 28, 2012 and January 29, 2012 representing principally royalties and fees due to the Company which, as a result of doubt about their collection, the Company had not yet recorded as revenues. No payments were required to be made currently on any of these amounts. During the quarter ended May 1, 2011, the Company recognized approximately $375,000 of previously unrecognized revenues related to KK Mexico which were received on May 5, 2011 in connection with the Company’s sale of its 30% equity interest in the franchisee, as more fully described in Note 6. During the quarter ended May 1, 2011, the Company also reversed an allowance for doubtful notes receivable of $391,000 related to KK Mexico; such note also was paid in full on May 5, 2011.

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Note 5 — Inventories

The components of inventories are as follows:

	October 28,		January 29,
	2012		2012
	(In thousands)
Raw materials	$	5,818	$	5,306
Work in progress		46		89
Finished goods and purchased merchandise		10,813		11,102
	$	16,677	$	16,497

Note 6 — Investments in Franchisees

     As of October 28, 2012, the Company had investments in three franchisees. These investments have been made in the form of capital contributions and, in certain instances, loans evidenced by promissory notes. These investments are reflected as “Investments in equity method franchisees” in the consolidated balance sheet.

The Company’s financial exposures related to franchisees in which the Company has an investment are summarized in the tables below.

	October 28, 2012
	Company		Investment
	Ownership		and					Loan
	Percentage		Advances			Receivables		Guarantees
	(Dollars in thousands)
Kremeworks, LLC	25.0	%	$	900		$	330	$	534
Kremeworks Canada, LP	24.5	%		-			28		-
Krispy Kreme of South Florida, LLC	35.3	%		-			416		1,709
				900			774	$	2,243
Less: reserves and allowances				(900	)		-
			$	-		$	774
	January 29, 2012
	Company		Investment
	Ownership		and					Loan
	Percentage		Advances			Receivables		Guarantees
	(Dollars in thousands)
Kremeworks, LLC	25.0	%	$	900		$	308	$	739
Kremeworks Canada, LP	24.5	%		-			20		-
Krispy Kreme of South Florida, LLC	35.3	%		-			327		1,946
				900			655	$	2,685
Less: reserves and allowances				(900	)		-
			$	-		$	655

     The Company has guaranteed loans from third-party lenders on behalf of certain Equity Method Franchisees, primarily to assist the franchisees in obtaining financing. The loans are collateralized by certain assets of the franchisee, generally the Krispy Kreme store and related equipment. The loan guarantee amounts represent the portion of the principal amount outstanding under the related loan that is subject to the Company’s guarantee.

     The Company has a 25% interest in Kremeworks, LLC (“Kremeworks”), and has guaranteed 20% of the outstanding principal balance of certain of Kremeworks’ bank indebtedness, which, as amended, matures in October 2013. The aggregate amount of such indebtedness was approximately $2.7 million at October 28, 2012. There was no liability reflected in the financial statements for the guarantee of Kremeworks’ debt because the Company did not believe it was probable that the Company would be required to perform under that guarantee.

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     Current liabilities at October 28, 2012 and January 29, 2012 include accruals for potential payments under loan guarantees of approximately $1.7 million and $1.9 million, respectively, related to Krispy Kreme of South Florida, LLC (“KKSF”). The underlying indebtedness related to approximately $1.6 million of the Company’s KKSF guarantee exposure matured by its terms in October 2009. Such maturity had been extended on a month-to-month basis pursuant to an informal agreement between KKSF and the original lender. In October 2012, KKSF received notice that the original lender had sold the loan to a new lender. The new lender has advised KKSF that the entire balance due under the loan is currently due and owing, but has not made demand for payment on KKSF. KKSF intends to seek modifications of the loan agreement from the new lender to extend the maturity of the loan and, as an alternative, is seeking replacement financing from other lenders to refinance the balance of the loan.

On May 5, 2011, the Company sold its 30% equity interest in KK Mexico to KK Mexico’s majority shareholder. The Company received cash proceeds of approximately $7.7 million in exchange for its equity interest and, after deducting costs of the transaction, realized a gain of approximately $6.2 million on the disposition. After provision for payment of Mexican income taxes related to the sale of approximately $1.5 million, the Company reported an after tax gain on the disposition of approximately $4.7 million in the quarter ending July 31, 2011. The net after tax proceeds of the sale of approximately $6.2 million were used to prepay a portion of the outstanding balance of the 2011 Term Loan.

In connection with the Company’s sale of its KK Mexico interest, KK Mexico paid approximately $765,000 of amounts due to the Company which were evidenced by promissory notes, relating principally to past due royalties and fees due to the Company. As a consequence of this payment, in the quarter ended May 1, 2011, the Company reversed an allowance for doubtful notes receivable of $391,000 and recorded royalty and franchise fee income of approximately $280,000 and $95,000, respectively. The reserve had previously been established, and the royalties and fees had not previously been recognized as revenue, because of uncertainty surrounding the collection of these amounts.

Note 7 — Commitments and Contingencies

Except as described below, there have been no significant changes in the status of matters disclosed in Note 14 to the Company’s consolidated financial statements in the 2012 Form 10-K.

On January 27, 2012, Colchester Security II, LLC, the Company's former landlord in Lorton, Virginia, filed a suit against the Company in the Circuit Court of Fairfax County, Virginia alleging breach of the lease and negligence resulting in property damage at a commissary facility previously operated by the Company. The plaintiff seeks $2.7 million in damages. The Company denies the allegations and intends to pursue counterclaims of approximately $3 million relating to indemnity claims and breach of the lease. No liability has been recorded with respect to this matter because management does not believe it is probable that a loss has been incurred. During the third quarter of fiscal 2013, the Court scheduled this matter for trial beginning March 25, 2013.

Note 8 — Shareholders’ Equity

Share-Based Compensation for Employees and Directors

On June 12, 2012, the Company’s shareholders approved the Krispy Kreme Doughnuts, Inc. 2012 Stock Incentive Plan (the “2012 Plan”). The 2012 Plan, which expires on June 11, 2022, replaces the Company’s 2000 Stock Incentive Plan, which expired on June 30, 2012. The 2012 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, stock awards, performance unit awards, performance share awards, stock appreciation rights and phantom stock awards.

The 2012 Plan limits the issuance of shares of Company common stock under the 2012 Plan to approximately 3,550,000 shares. Any shares that are subject to options or stock appreciation rights awarded under the 2012 Plan will be counted against the 2012 Plan limit as one share for every one share granted, and any shares that are subject to 2012 Plan awards other than options or stock appreciation rights will be counted against this limit as one and thirty three-hundredths (1.33) shares for every one share granted. The 2012 Plan provides that options may be granted with exercise prices not less than the closing sale price of the Company’s common stock on the date of grant.

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 nine months ended October 28, 2012 and October 30, 2011 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 or restricted stock units during any of the periods.

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	Three Months Ended				Nine Months Ended
	October 28,		October 30,		October 28,		October 30,
	2012		2011		2012		2011
	(In thousands)
Costs charged to earnings related to:
Stock options	$	234	$	375	$	1,295	$	1,145
Restricted stock and restricted stock units		1,188		1,256		2,275		2,292
Total costs	$	1,422	$	1,631	$	3,570	$	3,437
Costs included in:
Direct operating expenses	$	864	$	1,096	$	1,591	$	2,061
General and administrative expenses		558		535		1,979		1,376
Total costs	$	1,422	$	1,631	$	3,570	$	3,437

Repurchases of Common Stock

     Pursuant to the authorization of its Board of Directors, from March 27, 2012 through June 28, 2012, the Company repurchased $20 million of its common stock.

The Company generally permits holders of restricted stock and 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 nine months ended October 28, 2012 and October 30, 2011:

	Three Months Ended
	October 28,			October 30,
	2012			2011
		Common			Common
	Shares	Stock		Shares	Stock
	(In thousands)
Shares repurchased under share repurchase authorization	-	$	-	-	$	-
Shares surrendered in reimbursement for withholding taxes	100		758	105		829
	100	$	758	105	$	829

	Nine Months Ended
	October 28,			October 30,
	2012			2011
		Common			Common
	Shares	Stock		Shares	Stock
	(In thousands)
Shares repurchased under share repurchase authorization	3,113	$	20,000	-	$	-
Shares surrendered in reimbursement for withholding taxes	100		758	121		954
	3,213	$	20,758	121	$	954

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Note 9 — Impairment Charges and Lease Termination Costs

     The components of impairment charges and lease termination costs are as follows:

	Three Months Ended				Nine Months Ended
	October 28,		October 30,		October 28,		October 30,
	2012		2011		2012		2011
	(In thousands)
Impairment of long-lived assets	$	-	$	-	$	-	$	-
Lease termination costs		216		135		302		680
Total impairment charges and lease termination costs	$	216	$	135	$	302	$	680

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, 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.

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 are 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.

The transactions reflected in the accrual for lease termination costs are summarized as follows:

	Three Months Ended						Nine Months Ended
	October 28,			October 30,			October 28,			October 30,
	2012			2011			2012			2011
	(In thousands)
Balance at beginning of period	$	679		$	1,152		$	709		$	1,995
Provision for lease termination costs:
Adjustments to previously recorded provisions resulting from
settlements with lessors and adjustments of previous estimates		209			119			279			611
Accretion of discount		7			16			23			69
Total provision		216			135			302			680
Payments on unexpired leases, including settlements with
lessors		(48	)		(563	)		(164	)		(1,951	)
Balance at end of period	$	847		$	724		$	847		$	724

Note 10 — 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.

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• 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 October 28, 2012 and January 29, 2012.

	October 28, 2012
	Level 1		Level 2		Level 3
	(In thousands)
Assets:
401(k) mirror plan assets	$	1,656	$	-	$	-
Agricultural commodity futures contracts		60		-		-
Interest rate derivative		-		20		-
Total assets	$	1,716	$	20	$	-
	January 29, 2012
	Level 1		Level 2		Level 3
	(In thousands)
Assets:
401(k) mirror plan assets	$	1,039	$	-	$	-
Agricultural commodity futures contracts		21		-		-
Interest rate derivative		-		53		-
Total assets	$	1,060	$	53	$	-

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

       There were no nonrecurring fair value measurements recorded during the three and nine months ended October 28, 2012 and October 30, 2011.

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Fair Values of Financial Instruments at the Balance Sheet Dates

       The carrying values and approximate fair values of certain financial instruments as of October 28, 2012 and January 29, 2012 were as follows:

	October 28, 2012				January 29, 2012
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
	(In thousands)
Assets:
Cash and cash equivalents	$	49,903	$	49,903	$	44,319	$	44,319
Receivables		23,436		23,436		21,616		21,616
Receivables from Equity Method Franchisees		774		774		655		655
Agricultural commodity futures contracts		60		60		21		21
Interest rate derivatives		20		20		53		53
Liabilities:
Accounts payable		12,047		12,047		10,494		10,494
Long-term debt (including current maturities)		25,912		25,912		27,593		27,593

     The fair value of the term loan is estimated based on an indicative bid price, valuation input Level 2, under GAAP.

Note 11 — 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 and interest rate 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 10.

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 October 28, 2012, the Company had commodity derivatives with an aggregate contract volume of 130,000 bushels of wheat. Other than the requirement to meet minimum margin requirements with respect to the commodity derivatives, there are no collateral requirements related to such contracts.

Interest Rate Risk

All of the borrowings under the Company’s secured credit facilities bear interest at variable rates based upon either the lenders’ prime rate, the Fed funds rate or LIBOR. The interest cost of the Company’s debt may be affected by changes in these short-term interest rates and increases in those rates may adversely affect the Company’s results of operations.

On March 3, 2011, the Company entered into an interest rate derivative contract having an aggregate notional principal amount of $17.5 million. The derivative contract entitles the Company to receive from the counterparty the excess, if any, of the three-month LIBOR rate over 3.00% for each of the calendar quarters in the period beginning April 2012 and ending December 2015. The Company is accounting for this derivative contract as a cash flow hedge.

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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 October 28, 2012 and January 29, 2012:

		Asset Derivatives
		Fair Value
		October 28,		January 29,
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	2012		2012
			(In thousands)
Agricultural commodity futures contracts	Other current assets	$	60	$	21
		Asset Derivatives
		Fair Value
		October 28,		January 29,
Derivatives Designated as a Cash Flow Hedge	Balance Sheet Location	2012		2012
		(In thousands)
Interest rate derivative	Other assets	$	20	$	53

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     The effect of derivative instruments on the consolidated statement of income for the three and nine months ended October 28, 2012 and October 30, 2011, was as follows:

		Amount of Derivative Gain or (Loss)
		Recognized in Income
		Three Months Ended						Nine Months Ended
Derivatives Not Designated as	Location of Derivative Gain or (Loss)	October 28,			October 30,			October 28,			October 30,
Hedging Instruments	Recognized in Income	2012			2011			2012			2011
		(In thousands)
Agricultural commodity futures
contracts	Direct operating expenses	$	(110	)	$	176		$	1,007		$	(422	)
Gasoline commodity futures
contracts	Direct operating expenses		-			(35	)		-			(44	)
Total		$	(110	)	$	141		$	1,007		$	(466	)
		Amortization of Derivative Asset
		Recognized in Income
		Three Months Ended						Nine Months Ended
Derivatives Designated as a Cash	Location of Amortization of Derivative	October 28,			October 30,			October 28,			October 30,
Flow Hedge	Asset Recognized in Income	2012			2011			2012			2011
		(In thousands)
Interest rate derivative	Interest expense	$	(10	)	$	-		$	(19	)	$	-
		Amount of Derivative Gain or (Loss)
		Recognized in Income
		Three Months Ended						Nine Months Ended
Derivatives Designated as a Cash	Location of Derivative Gain or (Loss)	October 28,			October 30,			October 28,			October 30,
Flow Hedge	Recognized in OCI	2012			2011			2012			2011
		(In thousands)
Interest rate derivative	Change in fair value of derivative	$	-		$	(77	)	$	(14	)	$	(459	)
	Less - income tax effect		-			30			5			181
	Net change in amount recognized
	in OCI	$	-		$	(47	)	$	(9	)	$	(278	)

Note 12 — Acquisitions and Divestitures

   Business Combination

     On August 30, 2012, the Company acquired the assets and operations of one of its franchisees in exchange for $915,000 cash. The acquired assets consisted principally of two Krispy Kreme stores. The preliminary allocation of the purchase price was as follows: $464,000 to property and equipment, $8,000 to other assets, and the balance of $443,000 to intangibles. The Company has not yet finalized its allocation of the $443,000 portion of the purchase price allocated to intangibles to specific intangible assets. The results of operations of the acquired business have been included with those of the Company from the acquisition date.

Asset Divestiture

On September 27, 2012, the Company sold to one of its franchisees the leasehold interests and certain other assets, including rights under franchise agreements, for three Krispy Kreme stores operated by the franchisee. The Company acquired the leasehold interests and other assets related to the three stores from the franchisee in August 2006 for $2.9 million cash. Since that time, the franchisee has continued to operate the stores for its own account pursuant to an operating agreement between the Company and the franchisee. The aggregate purchase price of the three stores and the related assets was approximately $3.6 million, of which approximately $360,000 was paid in cash at closing. The balance of the purchase price was evidenced by a promissory note in the approximate amount of $3.2 million, payable in monthly installments of approximately $51,000, including interest at 8%, beginning in November 2012, and a final installment of the remaining principal balance on October 1, 2017. The carrying value of the divested assets was approximately $1.9 million. Because the initial investment made by the franchisee to acquire the assets was less than the minimum amount necessary to recognize a gain on the sale, the Company deferred recognition of the $1.7 million gain, and such deferred gain is reflected as a reduction in the carrying value of the note receivable. The Company will report the principal and interest payments received from the franchisee as a reduction of the carrying value of the note until such time as the franchisee’s investment exceeds 20% of the purchase price, at which time the Company will reconsider whether recognition of a gain on the transaction is then appropriate.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

     The following discussion of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere herein.

Comparability of Results of Operations

The Company’s net income and earnings per share for the third quarter and the first nine months of fiscal 2013 are not comparable to the corresponding amounts for the third quarter and the first nine months of fiscal 2012 as a result of the reversal of valuation allowances on deferred tax assets in the fourth quarter of fiscal 2012 and the resulting increase in income tax expense in periods after the reversal. See “Results of Operations - Three Months Ended October 28, 2012 Compared to Three Months Ended October 30, 2011 - Provision for Income Taxes” and “Results of Operations - Nine Months Ended October 28, 2012 Compared to Nine Months Ended October 30, 2011 - Provision for Income Taxes” below.

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Results of Operations

The following table sets forth operating metrics for the three and nine months ended October 28, 2012 and October 30, 2011.

	Three Months Ended								Nine Months Ended
	October 28,				October 30,				October 28,				October 30,
	2012				2011				2012				2011
Change in Same Store Sales (on-premises sales only):
Company stores		6.8		%		4.0		%		4.7		%		4.2		%
Domestic Franchise stores		5.0		%		7.9		%		5.8		%		6.2		%
International Franchise stores		(8.3	)	%		(8.5	)	%		(9.6	)	%		(5.4	)	%
International Franchise stores, in constant dollars(1)		(7.7	)	%		(12.2	)	%		(8.4	)	%		(11.3	)	%
Change in Same Store Customer Count - Company stores
(retail sales only)		8.4		%		(1.3	)	%		5.3		%		(0.4	)	%
Average guest check - Company stores (retail sales only)	$	7.43			$	7.49			$	7.33			$	7.34
Wholesale Metrics (Company stores only):
Average weekly number of doors served:
Grocery/mass merchants		5,644				5,811				5,611				5,851
Convenience stores		4,466				4,675				4,512				4,889
Average weekly sales per door:
Grocery/mass merchants	$	311			$	291			$	316			$	293
Convenience stores		247				236				247				226
Systemwide Sales (in thousands):(2)
Company stores	$	71,884			$	67,126			$	213,399			$	201,629
Domestic Franchise stores		68,950				64,976				210,454				196,502
International Franchise stores		103,536				91,928				310,893				279,188
International Franchise stores, in constant dollars(3)		103,536				91,457				310,893				275,138
Average Weekly Sales Per Store (in thousands):(4) (5)
Company stores:
Factory stores:
Commissaries — wholesale	$	179.9			$	203.0			$	180.6			$	201.6
Dual-channel stores:
On-premises		34.3				32.0				33.3				32.0
Wholesale		43.5				45.1				44.8				46.1
Total		77.8				77.1				78.1				78.1
On-premises only stores		34.4				32.0				34.3				32.0
All factory stores		69.8				69.3				70.3				69.7
Satellite stores		19.6				19.4				19.8				19.7
All stores		58.8				58.9				59.3				59.9
Domestic Franchise stores:
Factory stores	$	46.7			$	42.8			$	47.2			$	43.8
Satellite stores		15.7				16.8				16.7				16.8
International Franchise stores:
Factory stores	$	39.9			$	41.3			$	40.7			$	44.0
Satellite stores		10.7				10.5				11.2				10.5

(1)	Represents the change in International Franchise same store sales computed by reconverting franchise store sales in each foreign currency to U.S. dollars at a constant rate of exchange for each period.
(2)	Excludes sales among Company and franchise stores.
(3)	Represents International Franchise store sales computed by reconverting International Franchise store sales for the three and nine months ended October 30, 2011 to U.S. dollars based upon the weighted average of the exchange rates prevailing in the three and nine months ended October 28, 2012.
(4)	Includes sales between Company and franchise stores.
(5)	Metrics for the three and nine months ended October 28, 2012 and October 30, 2011 include only stores open at the respective period end.

24

     The change in “same store sales” is computed by dividing the aggregate on-premises sales (including fundraising sales) during the current year period for all stores which had been open for more than 56 consecutive weeks during the current year (but only to the extent such sales occurred in the 57^th or later week of each store’s operation) by the aggregate on-premises sales of such stores for the comparable weeks in the preceding year. Once a store has been open for at least 57 consecutive weeks, its sales are included in the computation of same store sales for all subsequent periods. In the event a store is closed temporarily (for example, for remodeling) and has no sales during one or more weeks, such store’s sales for the comparable weeks during the earlier or subsequent period are excluded from the same store sales computation. The change in same store customer count is similarly computed, but is based upon the number of retail transactions reported in the Company’s point-of-sale system.

For wholesale sales, “average weekly number of doors” represents the average number of customer locations to which product deliveries were made during a week, and “average weekly sales per door” represents the average weekly sales to each such location.

Systemwide sales, a non-GAAP financial measure, include sales by both Company and franchise stores. The Company believes systemwide sales data are useful in assessing the overall performance of the Krispy Kreme brand and, ultimately, the performance of the Company. The Company’s consolidated financial statements appearing elsewhere herein include sales by Company stores, sales to franchisees by the KK Supply Chain business segment, and royalties and fees received from franchise stores based on their sales, but exclude sales by franchise stores to their customers.

The following table sets forth data about the number of systemwide stores as of October 28, 2012 and October 30, 2011.

	October 28,	October 30,
	2012	2011
Number of Stores Open At Period End:
Company stores:
Factory:
Commissaries	7	6
Dual-channel stores	37	35
On-premises only stores	31	29
Satellite stores	21	19
Total Company stores	96	89
Domestic Franchise stores:
Factory stores	101	103
Satellite stores	41	38
Total Domestic Franchise stores	142	141
International Franchise stores:
Factory stores	119	112
Satellite stores	374	336
Total International Franchise stores	493	448
Total systemwide stores	731	678

25

     The following table sets forth data about the number of store operating weeks for the three and nine months ended October 28, 2012 and October 30, 2011.

	Three Months Ended		Nine Months Ended
	October 28,	October 30,	October 28,	October 30,
	2012	2011	2012	2011
Store Operating Weeks:
Company stores:
Factory stores:
Commissaries	91	78	273	234
Dual-channel stores	477	455	1,413	1,365
On-premises only stores	395	377	1,156	1,131
Satellite stores	269	237	789	662
Domestic Franchise stores:(1)
Factory stores	1,303	1,331	3,887	3,921
Satellite stores	518	491	1,531	1,370
International Franchise stores:(1)
Factory stores	1,331	1,163	3,902	3,413
Satellite stores	4,655	4,159	13,190	11,978

(1) Metrics for the three and nine months ended October 28, 2012 and October 30, 2011 include only stores open at the respective period end.

The following table sets forth the types and locations of Company stores as of October 28, 2012.

	Number of Company Stores
	Factory
State	Stores	Hot Shops	Fresh Shops	Total
Alabama	3	-	-	3
District of Columbia	-	1	-	1
Florida	4	-	-	4
Georgia	7	5	-	12
Indiana	3	1	-	4
Kansas	3	-	-	3
Kentucky	3	1	-	4
Louisiana	1	-	-	1
Maryland	2	-	-	2
Michigan	3	-	-	3
Mississippi	1	-	-	1
Missouri	4	-	-	4
New York	-	-	1	1
North Carolina	13	4	-	17
Ohio	6	-	-	6
South Carolina	3	3	-	6
Tennessee	9	3	-	12
Texas	3	-	-	3
Virginia	6	2	-	8
West Virginia	1	-	-	1
Total	75	20	1	96

26

     Changes in the number of Company stores during the three and nine months ended October 28, 2012 and October 30, 2011 are summarized in the table below.

	Number of Company Stores
	Factory
	Stores	Hot Shops		Fresh Shops	Total
Three months ended October 28, 2012
July 29, 2012	73	19		1	93
Opened	1	-		-	1
Closed	-	-		-	-
Transferred	1	1		-	2
October 28, 2012	75	20		1	96
Nine months ended October 28, 2012
January 29, 2012	72	19		1	92
Opened	2	-		-	2
Closed	-	-		-	-
Transferred	1	1		-	2
October 28, 2012	75	20		1	96
Three months ended October 30, 2011
July 31, 2011	70	17		1	88
Opened	-	1		-	1
Closed	-	-		-	-
October 30, 2011	70	18		1	89
Nine months ended October 30, 2011
January 30, 2011	69	15		1	85
Opened	-	4		-	4
Closed	-	-		-	-
Change in store type	1	(1	)	-	-
October 30, 2011	70	18		1	89

27

     The following table sets forth the types and locations of domestic franchise stores as of October 28, 2012.

	Number of Domestic Franchise Stores
	Factory
State	Stores	Hot Shops	Fresh Shops	Total
Alabama	5	3	-	8
Arizona	1	1	-	2
Arkansas	2	-	-	2
California	14	1	4	19
Colorado	2	-	-	2
Connecticut	1	-	3	4
Florida	12	6	1	19
Georgia	5	3	-	8
Hawaii	1	-	-	1
Idaho	1	-	-	1
Illinois	4	-	-	4
Iowa	1	-	-	1
Louisiana	3	-	-	3
Mississippi	3	1	-	4
Missouri	2	1	-	3
Nebraska	1	-	1	2
Nevada	3	-	2	5
New Jersey	-	1	-	1
New Mexico	1	1	1	3
North Carolina	7	1	-	8
Oklahoma	3	-	-	3
Oregon	2	-	-	2
Pennsylvania	4	3	1	8
South Carolina	6	2	1	9
Tennessee	1	-	-	1
Texas	7	2	-	9
Utah	2	-	-	2
Washington	6	-	-	6
Wisconsin	1	1	-	2
Total	101	27	14	142

28

     Changes in the number of domestic franchise stores during the three and nine months ended October 28, 2012 and October 30, 2011 are summarized in the table below.

	Number of Domestic Franchise Stores
	Factory
	Stores		Hot Shops		Fresh Shops		Total
Three months ended October 28, 2012
July 29, 2012	101		26		14		141
Opened	1		2		-		3
Closed	-		-		-		-
Transferred	(1	)	(1	)	-		(2	)
October 28, 2012	101		27		14		142
Nine months ended October 28, 2012
January 29, 2012	102		25		15		142
Opened	2		4		-		6
Closed	(2	)	(1	)	(1	)	(4	)
Transferred	(1	)	(1	)	-		(2	)
October 28, 2012	101		27		14		142
Three months ended October 30, 2011
July 31, 2011	103		22		23		148
Opened	1		1		-		2
Closed	(1	)	-		(8	)	(9	)
October 30, 2011	103		23		15		141
Nine months ended October 30, 2011
January 30, 2011	102		17		25		144
Opened	3		7		1		11
Closed	(2	)	(1	)	(11	)	(14	)
October 30, 2011	103		23		15		141

29

     The types and locations of international franchise stores as of October 28, 2012 are summarized in the table below.

	Number of International Franchise Stores
	Fiscal
	Year First	Factory
Country	Store Opened	Stores	Hot Shops	Fresh Shops	Kiosks	Total
Australia	2004	5	1	7	6	19
Bahrain	2009	1	-	1	-	2
Canada	2002	4	-	2	-	6
China	2010	1	-	1	-	2
Dominican Republic	2011	1	-	2	-	3
Indonesia	2007	3	-	3	6	12
Japan	2007	17	-	22	-	39
Kuwait	2007	2	-	5	6	13
Lebanon	2009	2	-	6	1	9
Malaysia	2010	2	1	1	4	8
Mexico	2004	7	1	31	46	85
Philippines	2007	6	3	24	6	39
Puerto Rico	2009	4	-	-	-	4
Qatar	2008	2	-	-	-	2
Saudi Arabia	2008	9	-	63	20	92
South Korea	2005	33	-	30	-	63
Thailand	2011	3	2	-	1	6
Turkey	2010	1	-	10	4	15
United Arab Emirates	2008	2	-	13	5	20
United Kingdom	2004	14	3	28	9	54
Total		119	11	249	114	493

30

     Changes in the number of international franchise stores during the three and nine months ended October 28, 2012 and October 30, 2011 are summarized in the table below.

	Number of International Franchise Stores
	Factory
	Stores		Hot Shops	Fresh Shops		Kiosks		Total
Three months ended October 28, 2012
July 29, 2012	118		11	234		114		477
Opened	3		-	18		5		26
Closed	(2	)	-	(3	)	(5	)	(10	)
October 28, 2012	119		11	249		114		493
Nine months ended October 28, 2012
January 29, 2012	118		11	226		105		460
Opened	7		-	46		17		70
Closed	(5	)	-	(17	)	(15	)	(37	)
Change in store type	(1	)	-	(6	)	7		-
October 28, 2012	119		11	249		114		493
Three months ended October 30, 2011
July 31, 2011	111		11	229		82		433
Opened	3		2	11		4		20
Closed	(2	)	-	(2	)	(1	)	(5	)
October 30, 2011	112		13	238		85		448
Nine months ended October 30, 2011
January 30, 2011	106		11	222		78		417
Opened	10		2	27		14		53
Closed	(4	)	-	(11	)	(7	)	(22	)
October 30, 2011	112		13	238		85		448

Three months ended October 28, 2012 compared to three months ended October 30, 2011

Overview

Total revenues rose by 8.5% to $107.1 million for the three months ended October 28, 2012 compared to $98.7 million for the three months ended October 30, 2011.

Consolidated operating income increased to $9.2 million from $5.6 million and consolidated net income was $5.0 million compared to $4.7 million. Net income and earnings per share for the third quarter of fiscal 2013 are not comparable to the corresponding amounts for the third quarter of fiscal 2012 as a result of the reversal of valuation allowances on deferred tax assets in the fourth quarter of fiscal 2012 and the resulting increase in income tax expense after the reversal; see “Provision for Income Taxes” below.

31

Revenues by business segment (expressed in dollars and as a percentage of total revenues) are set forth in the table below (percentage amounts may not add to totals due to rounding).

	Three Months Ended
	October 28,				October 30,
	2012				2011
	(Dollars in thousands)
Revenues by business segment:
Company Stores	$	72,493			$	67,606
Domestic Franchise		2,498				2,327
International Franchise		6,024				5,374
KK Supply Chain:
Total revenues		52,825				50,277
Less - intersegment sales elimination		(26,753	)			(26,876	)
External KK Supply Chain revenues		26,072				23,401
Total revenues	$	107,087			$	98,708
Segment revenues as a percentage of total revenues:
Company Stores		67.7		%		68.5		%
Domestic Franchise		2.3				2.4
International Franchise		5.6				5.4
KK Supply Chain (external sales)		24.3				23.7
		100.0		%		100.0		%
Operating income (loss):
Company Stores	$	1,985			$	(574	)
Domestic Franchise		1,174				1,114
International Franchise		4,301				3,313
KK Supply Chain		7,312				6,987
Total segment operating income		14,772				10,840
Unallocated general and administrative expenses		(5,345	)			(5,155	)
Impairment charges and lease termination costs		(216	)			(135	)
Consolidated operating income	$	9,211			$	5,550

     A discussion of the revenues and operating results of each of the Company’s four business segments follows, together with a discussion of income statement line items not associated with specific segments.

32

Company Stores

The components of Company Stores revenues and expenses (expressed in dollars and as a percentage of total revenues) are set forth in the table below (percentage amounts may not add to totals due to rounding).

						Percentage of Total Revenues
	Three Months Ended					Three Months Ended
	October 28,		October 30,			October 28,		October 30,
	2012		2011			2012		2011
	(In thousands)
Revenues:
On-premises sales:
Retail sales	$	31,039	$	27,190		42.8	%	40.2		%
Fundraising sales		4,260		4,157		5.9		6.1
Total on-premises sales		35,299		31,347		48.7		46.4
Wholesale sales:
Grocery/mass merchants		22,555		21,716		31.1		32.1
Convenience stores		13,803		13,793		19.0		20.4
Other wholesale		836		750		1.2		1.1
Total wholesale sales		37,194		36,259		51.3		53.6
Total revenues		72,493		67,606		100.0		100.0
Operating expenses:
Cost of sales:
Food, beverage and packaging		26,995		26,360		37.2		39.0
Shop labor		12,940		12,436		17.8		18.4
Delivery labor		5,880		5,731		8.1		8.5
Employee benefits		4,672		4,717		6.4		7.0
Total cost of sales		50,487		49,244		69.6		72.8
Vehicle costs(1)		4,416		4,258		6.1		6.3
Occupancy(2)		2,443		2,237		3.4		3.3
Utilities expense		1,568		1,610		2.2		2.4
Depreciation expense		1,880		1,756		2.6		2.6
Other operating expenses		5,201		4,675		7.2		6.9
Total store level costs		65,995		63,780		91.0		94.3
Store operating income		6,498		3,826		9.0		5.7
Other segment operating costs(3)		3,438		3,275		4.7		4.8
Allocated corporate overhead		1,075		1,125		1.5		1.7
Segment operating income (loss)	$	1,985	$	(574	)	2.7	%	(0.8	)	%

(1)	Includes fuel, maintenance and repairs, rent, taxes and other costs of operating the delivery fleet, exclusive of depreciation.
(2)	Includes rent, property taxes, common area maintenance charges, insurance, building maintenance and other occupancy costs, exclusive of utilities and depreciation.
(3)	Includes marketing costs not charged to stores, segment management costs, wholesale selling expenses and support functions.

A reconciliation of Company Stores segment sales from the third quarter of fiscal 2012 to the third quarter of fiscal 2013 follows:

	On-Premises		Wholesale		Total
	(In thousands)
Sales for the three months ended October 30, 2011	$	31,347	$	36,259	$	67,606
Increase in sales at established stores (open stores only)		2,091		779		2,870
Increase in sales at stores opened in fiscal 2012		613		-		613
Sales at stores opened in fiscal 2013		824		-		824
Sales at stores acquired in fiscal 2013		424		156		580
Sales for the three months ended October 28, 2012	$	35,299	$	37,194	$	72,493

33

     The following table presents sales metrics for Company stores:

	Three Months Ended
	October 28,				October 30,
	2012				2011
On-premises:
Change in same store sales		6.8		%		4.0		%
Change in same store customer count (retail sales only)		8.4		%		(1.3	)	%
Average guest check (retail sales only)	$	7.43			$	7.49
Wholesale:
Grocery/mass merchants:
Change in average weekly number of doors		(2.9	)	%		1.4		%
Change in average weekly sales per door		6.9		%		15.9		%
Convenience stores:
Change in average weekly number of doors		(4.5	)	%		(9.3	)	%
Change in average weekly sales per door		4.7		%		14.0		%

   On-premises sales

     The components of the change in same store sales at Company stores are as follows:

	Three Months Ended
	October 28,			October 30,
	2012			2011
Change in same store sales:
Retail pricing	0.0		%	7.4		%
Guest check average (exclusive of the effects of pricing)	(0.3	)		(2.4	)
Customer count	7.1			(1.1	)
Other	0.0			0.1
Total	6.8		%	4.0		%

     On-premises sales increased 12.6% to $35.3 million in the third quarter of fiscal 2013 from $31.3 million in the third quarter of fiscal 2012, driven by higher customer traffic. The Company is developing and implementing new and enhanced marketing programs designed to increase guest visit frequency. In addition to improved marketing programs, management believes that customer traffic has been positively affected by ongoing store remodelings, an emphasis on hospitality, and continued use of creative limited time doughnut offerings.

The Company believes that the expected cannibalization and honeymoon effects of new stores in expansion markets adversely affected same store customer count in the third quarter of fiscal 2013. “Cannibalization effect” means the tendency for new stores to become successful, in part or in whole, by “shifting” sales from existing stores in the same market. “Honeymoon effect” means the common pattern for many start-up restaurants in which a flurry of activity due to start-up publicity and natural curiosity is followed by a decline during which a steady repeat customer base develops.

Wholesale distribution

Sales to wholesale accounts increased 2.6% to $37.2 million in the third quarter of fiscal 2013 from $36.3 million in the third quarter of fiscal 2012. Higher unit volumes accounted for the majority of the increase.

Sales to grocers and mass merchants increased 3.9% to $22.6 million, with a 6.9% increase in average weekly sales per door partially offset by a 2.9% decline in the average number of doors served. The Company believes that average weekly sales per door in the grocery/mass merchant channel have grown as a result of, among other things, improved customer service, introduction of additional price points, and the addition of new relatively higher volume doors. The decline in the average number of doors served in the grocery/mass merchant channel reflects store closures by a regional grocery store customer as well as the elimination of loose doughnut sales at another regional grocer, although the Company continues to sell packaged products to this customer. Sales of loose unpackaged products comprised approximately 2% of sales to grocery/mass merchant customers for the three months ended October 28, 2012, with the balance comprised of packaged products.

Convenience store sales were relatively unchanged, reflecting a 4.7% increase in the average weekly sales per door and a 4.5% decline in the average number of doors served. The decline in the average number of doors served in the convenience store channel reflects a reduction in the number of stops at relatively low volume doors, as well as the loss of a regional convenience store account. Sales of loose unpackaged products comprised approximately 80% of sales to convenience store customers for the three months ended October 28, 2012, with the balance comprised of sales of packaged products.

34

   Costs and expenses

     Total cost of sales as a percentage of revenues decreased by 3.2 percentage points from the third quarter of fiscal 2012 to 69.6% of revenues in the third quarter of fiscal 2013.

The cost of food, beverage and packaging as a percentage of revenues decreased by 1.8 percentage points in the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012. Lower aggregate costs for doughnut mixes, sugar, shortening, other ingredients and packaging accounted for approximately 1.0 percentage point of the improvement, with the remainder principally reflecting operating improvements and a greater percentage of sales derived from on-premises customers compared to the third quarter of fiscal 2012. Lower aggregate costs for ingredients and packaging reflect generally lower input costs at KK Supply Chain.

KK Supply Chain has fixed the prices on all of its major raw materials for the remainder of fiscal 2013. Except for sugar, the Company currently anticipates the aggregate cost of doughnut mix, shortening and other ingredients to be slightly lower in the fourth quarter of fiscal 2013 compared to the third quarter, and compared to the fourth quarter of fiscal 2012. For fiscal 2014, the Company has entered into contracts to purchase approximately half of its shortening requirements, approximately 10% of its flour requirements, and substantially all of its estimated sugar requirements. Based upon current market forecasts, the Company expects its aggregate cost of ingredients and packaging to rise modestly in fiscal 2014 compared to fiscal 2013, and expects to recover these higher costs through price increases or cost reduction measures. The Company’s contracts for sugar also cover substantially all of its estimated fiscal 2015 requirements.

Shop labor and employee benefits as a percentage of revenues both declined by 0.6 percentage points from the third quarter of fiscal 2012 to the third quarter of fiscal 2013, principally due to higher revenues and improved labor cost management.

Vehicle costs as a percentage of revenues decreased from 6.3% of revenues in the third quarter of fiscal 2012 to 6.1% of revenues in the third quarter of fiscal 2013, principally as a result of lower fuel costs due to a reduction in mileage due to account rationalization.

Other operating expenses as a percentage of revenues increased by 0.3 percentage points from the third quarter of fiscal 2012 to the third quarter of fiscal 2013 reflecting, among other things, higher store-level marketing expenses.

Many segment operating costs are fixed or semi-fixed in nature and, accordingly, segment profit margins are sensitive to changes in sales volumes.

The Patient Protection and Affordable Care Act (the “Act”) requires businesses employing fifty or more full-time equivalent employees to offer health care benefits to those full-time employees beginning in January 2014, or be subject to an annual penalty. Those benefits must be provided under a health care plan which provides a certain minimum scope of health care services. The Act limits the portion of the cost of the benefits which the Company can require employees to pay.

The Company currently employs approximately 1,300 persons (approximately 35% of the Company’s total number of employees) to whom the Company does not currently provide health care benefits but who could be entitled to receive health care benefits under the Act. The Company does not know the amount by which its costs will increase assuming the above provisions of the Act are implemented in January 2014 because, among other reasons, many of the specifics relating to implementation, including many of the specifics of the coverage required to be offered, are to be contained in regulations which have not yet been drafted. In addition, the Company does not know how many of the potentially newly-eligible employees will elect to obtain coverage under the Act.

However, based on information currently available to the Company and the Company’s analyses to-date and its current cost estimates, management currently does not expect that the aggregate incremental cost of providing health care coverage prescribed by the Act will exceed its current costs by more than approximately $5 million annually. The Company currently believes its incremental costs will be less than such amount, and may be substantially less. Such estimate does not reflect any mitigating actions the Company might take in order to reduce the cost of the benefits required to be offered or reduce the number of employees subject to the new requirements. The Company is continuing to study and evaluate the requirements of the Act, and the Company’s estimate of the additional cost of providing benefits mandated by the Act is expected to change as the Company gains additional information and makes decisions affecting its implementation of the Act’s requirements.

35

Domestic Franchise

	Three Months Ended
	October 28,		October 30,
	2012		2011
	(In thousands)
Revenues:
Royalties	$	2,307	$	2,144
Development and franchise fees		100		75
Other		91		108
Total revenues		2,498		2,327
Operating expenses:
Segment operating expenses		1,184		1,058
Depreciation expense		40		55
Allocated corporate overhead		100		100
Total operating expenses		1,324		1,213
Segment operating income	$	1,174	$	1,114

     Domestic Franchise revenues increased 7.3% to $2.5 million in the third quarter of fiscal 2013 from $2.3 million in the third quarter of fiscal 2012. The increase reflects higher domestic royalty revenues resulting from an increase in sales by domestic franchise stores from $65 million in the third quarter of fiscal 2012 to $69 million in the third quarter of fiscal 2013. Domestic Franchise same store sales rose 5.0% in the third quarter of fiscal 2013.

Domestic Franchise operating expenses include costs to recruit new domestic franchisees, to assist in domestic store openings, and to monitor and aid in the performance of domestic franchise stores, as well as allocated corporate costs. Domestic Franchise operating expenses in the third quarter of fiscal 2012 reflect the reversal of a previously recorded accrual of $110,000 related to a franchisee lease guarantee as a result of the Company receiving a release from the guarantee. The Company intends to add additional human resources to the Domestic Franchise segment and incur other additional franchise marketing costs in coming quarters in connection with management’s plan to reengage in franchise marketing efforts to drive domestic franchise growth.

Domestic franchisees opened three stores during the third quarter of fiscal 2013. On August 30, 2012, the Company acquired two stores from one of its domestic franchisees as more fully described in Note 12 to the consolidated financial statements appearing elsewhere herein. As of October 28, 2012, existing development and franchise agreements for territories in the United States provide for the development of approximately 50 additional stores through fiscal 2018. Royalty revenues are directly related to sales by franchise stores and, accordingly, the success of franchisees’ operations has a direct effect on the Company’s revenues, results of operations and cash flows.

International Franchise

	Three Months Ended
	October 28,		October 30,
	2012		2011
	(In thousands)
Revenues:
Royalties	$	5,574	$	4,990
Development and franchise fees		450		384
Total revenues		6,024		5,374
Operating expenses:
Segment operating expenses		1,420		1,736
Depreciation expense		3		-
Allocated corporate overhead		300		325
Total operating expenses		1,723		2,061
Segment operating income	$	4,301	$	3,313

International Franchise royalties increased 11.7%, driven by an increase in sales by international franchise stores from $92 million in the third quarter of fiscal 2012 to $104 million in the third quarter of fiscal 2013. Changes in the rates of exchange between the U.S. dollar and the foreign currencies in which the Company’s international franchisees do business had no significant impact on sales by international franchisees measured in U.S. dollars in the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012.

36

     International Franchise same store sales, measured on a constant currency basis to remove the effects of changing exchange rates between foreign currencies and the U.S. dollar (“constant dollar same store sales”), fell 7.7%. The decline in International Franchise same store sales reflects, among other things, waning honeymoon effects from the large number of new stores opened internationally in recent years and the cannibalization effects on initial stores in new markets of additional store openings in those markets. Over the past three years, constant dollar same store sales have improved from the 21.1% decline reported for fiscal 2010. Management believes the improvement reflects reduced cannibalization as store density grows in established markets, as well as waning honeymoon effects from a decrease in the number of new stores as a percentage of the total international store count.

Constant dollar same store sales in established markets fell 2.4% in the third quarter of fiscal 2013 and fell 12.4% in new markets. “Established markets” means countries in which the first Krispy Kreme store opened before fiscal 2007. Sales at stores in established markets comprised approximately 50% of aggregate constant dollar same store sales for the third quarter of fiscal 2013. While the Company considers countries in which Krispy Kreme first opened before fiscal 2007 to be established markets, franchisees in those markets continue to develop their businesses; these franchisees opened 233 of the 581 international stores opened since the beginning of fiscal 2007.

International Franchise operating expenses include costs to recruit new international franchisees, to assist in international store openings, and to monitor and aid in the performance of international franchise stores, as well as allocated corporate costs. International Franchise operating expenses decreased to $1.4 million compared to $1.7 million in the third quarter of fiscal 2012, principally reflecting a shift in the timing of recognition of share-based compensation related to a retirement-eligible officer. Management expects International Franchise operating expenses to rise in fiscal 2014 due to human resource additions to support international franchise growth, as well as anticipated fiscal 2014 shop openings in new markets which typically require a greater level of franchisor support than openings in existing markets.

International franchisees opened 26 stores and closed ten stores in the third quarter of fiscal 2013. As of October 28, 2012, existing development and franchise agreements for territories outside the United States provide for the development of approximately 380 additional stores through fiscal 2019. Royalty revenues are directly related to sales by franchise stores and, accordingly, the success of franchisees’ operations has a direct effect on the Company’s revenues, results of operations and cash flows.

37

KK Supply Chain

The components of KK Supply Chain revenues and expenses (expressed in dollars and as a percentage of total revenues before intersegment sales elimination) are set forth in the table below (percentage amounts may not add to totals due to rounding).

						Percentage of Total Revenues
						Before Intersegment
						Sales Elimination
	Three Months Ended					Three Months Ended
	October 28,		October 30,			October 28,		October 30,
	2012		2011			2012		2011
	(In thousands)
Revenues:
Doughnut mixes	$	18,226	$	16,650		34.5	%	33.1		%
Other ingredients, packaging and supplies		31,560		31,357		59.7		62.4
Equipment		2,340		1,660		4.4		3.3
Fuel surcharge		699		610		1.3		1.2
Total revenues before intersegment sales elimination		52,825		50,277		100.0		100.0
Operating expenses:
Cost of sales:
Cost of goods produced and purchased		36,646		34,281		69.4		68.2
(Gain) loss on agricultural derivatives		110		(176	)	0.2		(0.4	)
Inbound freight		1,471		1,082		2.8		2.2
Total cost of sales		38,227		35,187		72.4		70.0
Distribution costs		3,582		4,100		6.8		8.2
Other segment operating costs		3,232		3,545		6.1		7.1
Depreciation expense		172		183		0.3		0.4
Allocated corporate overhead		300		275		0.6		0.5
Total operating costs		45,513		43,290		86.2		86.1
Segment operating income	$	7,312	$	6,987		13.8	%	13.9		%

     KK Supply Chain revenues before intersegment sales elimination increased 5.1% in the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012.

Sales of doughnut mixes rose 9.5% year over year in the third quarter of fiscal 2013, reflecting higher unit volumes offset by lower selling prices resulting from a reduction in raw materials costs.

Sales of other ingredients, packaging and supplies, made principally to Company and Domestic Franchise stores, rose 0.6% year-over-year in the third quarter of fiscal 2013 due to higher unit volumes partially offset by lower selling prices. While systemwide sales at Company and Domestic Franchise stores rose in the third quarter of fiscal 2013 compared to the third quarter of the preceding fiscal year, a greater percentage of such sales was to on-premises customers compared to wholesale customers. On-premises sales at Company and Domestic Franchise stores generate proportionately lower KK Supply Chain sales than do sales to wholesale customers. In addition, the Company outsourced distribution to its International Franchise stores in fiscal 2012, which resulted in a reduction in sales of non-mix products to those franchisees.

The Company utilizes a fuel surcharge program to recoup additional freight costs resulting from increases in fuel costs. Charges under the program are based upon the price of diesel fuel.

KK Supply Chain input costs increased to 69.4% of revenues in third quarter of fiscal 2013 compared to 68.2% of revenues in the third quarter of the preceding fiscal year, principally as a result of a reduction in the gross margin on sugar. While the Company raised selling prices to recover higher sugar costs, the Company did not mark up such higher costs, which resulted in an increase in the overall cost of goods produced and purchased as a percentage of revenues.

Inbound freight increased 0.6 percentage points from the third quarter of fiscal 2012 to 2.8% of revenues in the third quarter of fiscal 2013 as a result of outsourcing product distribution for stores east of the Mississippi to a third party provider beginning in fiscal 2012. These increased inbound freight costs were substantially offset by a reduction in distribution costs and other segment operating costs, which include segment management, purchasing, customer service and support, laboratory and quality control costs, and research and development expenses, associated with the outsourcing of product distribution. Other segment operating expenses in the third quarter of fiscal 2012 also included charges of approximately $330,000 recorded to the KK Supply Chain segment for the settlement of certain sales tax litigation.

38

     Franchisees opened 29 stores and closed 10 stores in the third quarter of fiscal 2013. A substantial portion of KK Supply Chain’s revenues are directly related to sales by franchise stores and, accordingly, the success of franchisees’ operations has a direct effect on the Company’s revenues, results of operations and cash flows.

An increasing percentage of franchise store sales is attributable to sales by franchisees outside North America. The Company sells doughnut mixes and concentrates to its international franchisees. These franchisees purchase substantially all other ingredients, packaging and supplies from vendors approved by the Company. Accordingly, KK Supply Chain revenues are less correlated with sales by international franchisees than with sales by domestic franchisees.

General and Administrative Expenses

General and administrative expenses increased slightly to $5.1 million in the third quarter of fiscal 2013 from $4.9 million in the third quarter of fiscal 2012, but as a percentage of total revenues decreased to 4.7% from 5.0%, respectively. The Company is seeking to minimize general and administrative expenses in order to gain operating leverage as its revenues rise.

Impairment Charges and Lease Termination Costs

Impairment charges and lease termination costs were $216,000 in the third quarter of fiscal 2013 compared to $135,000 in the third quarter of fiscal 2012. The components of these charges are set forth in the following table:

	Three Months Ended
	October 28,		October 30,
	2012		2011
		(In thousands)
Impairment of long-lived assets	$	-	$	-
Lease termination costs		216		135
	$	216	$	135

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, 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. Impairment charges generally relate to Company stores expected to be closed or refranchised, as well as to stores management believes will not generate sufficient future cash flows to enable the Company to recover the carrying value of the stores’ assets, but which management has not yet decided to close. 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. The fair values of these assets are estimated based on the present value of estimated future cash flows, on independent appraisals and, in the case of assets the Company currently is negotiating to sell, based on the Company’s negotiations with unrelated third-party buyers.

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 were 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.

In the third quarter of fiscal 2013 and 2012, the Company recorded lease termination charges of $216,000 and $135,000, respectively, principally reflecting a change in estimated sublease rentals and settlements with landlords on stores previously closed.

The Company intends to refranchise certain geographic markets, expected to consist principally of, but not necessarily limited to, markets outside the Company’s traditional base in the Southeastern United States. The franchise rights and other assets in many of these markets were acquired by the Company in business combinations in prior years.

Since the beginning of fiscal 2009, the Company has refranchised a total of 11 stores and received consideration totaling $2.5 million in connection with those transactions. During this period, the Company recorded impairment charges totaling approximately $490,000 related to completed and anticipated refranchisings. The Company cannot predict the likelihood of refranchising any additional stores or markets or the amount of proceeds, if any, which might be received therefrom, including the amounts which might be realized from the sale of store assets and the execution of any related franchise agreements. Asset dispositions associated with future refranchisings could result in the recognition of impairment losses on the related assets.

39

   Interest Expense

     The components of interest expense are as follows:

	Three Months Ended
	October 28,		October 30,
	2012		2011
	(In thousands)
Interest accruing on outstanding term loan indebtedness	$	171	$	180
Letter of credit and unused revolver fees		74		79
Amortization of cost of interest rate derivatives		10		-
Amortization of deferred financing costs		98		102
Other		31		24
	$	384	$	385

Equity in Income (Losses) of Equity Method Franchisees

The Company recorded equity in the losses of equity method franchisees of $47,000 in the third quarter of fiscal 2013 compared to losses of $72,000 in the third quarter of fiscal 2012. This caption represents the Company’s share of operating results of equity method franchisees which develop and operate Krispy Kreme stores.

Provision for Income Taxes

The provision for income taxes was $3.8 million in the third quarter of fiscal 2013 compared to $495,000 in the third quarter of fiscal 2012.

The Company establishes valuation allowances for deferred tax assets in accordance with GAAP, which provides that such valuation allowances shall be established unless realization of the deferred tax assets is more likely than not. From fiscal 2005 until the fourth quarter of fiscal 2012, the Company maintained a valuation allowance on deferred tax assets equal to the entire excess of those assets over the Company’s deferred tax liabilities because of the uncertainty surrounding the realization of those assets. Such uncertainty arose principally from the substantial losses incurred by the Company from fiscal 2005 through fiscal 2009.

Realization of net deferred tax assets generally is dependent on generation of taxable income in future periods. The Company reported a pretax profit of $418,000 in fiscal 2010 and $8.9 million in fiscal 2011. In fiscal 2012, the Company’s pretax profit increased to $30.4 million, inclusive of a $6.2 million non-recurring gain on the Company’s sale of its 30% interest in KK Mexico. After considering all relevant factors and objectively verifiable evidence having an impact on the likelihood of future realization of the Company’s deferred tax assets, in the fourth quarter of fiscal 2012 management concluded that it was more likely than not that a substantial portion of the Company’s deferred tax assets will be realized in future years. Accordingly, in the fourth quarter of fiscal 2012, the Company reversed $139.6 million of the valuation allowance on deferred tax assets, with an offsetting credit to the provision for income taxes, representing the amount of deferred tax assets management believes is more likely than not to be realized.

While the reversal of a portion of the valuation allowances increased the Company’s earnings by $139.6 million in fiscal 2012, the reversal has the effect of increasing the provision for income taxes, and therefore decreasing net income, beginning in fiscal 2013. This negative effect on earnings occurs because the reversal of the valuation allowances resulted in the recognition in fiscal 2012 of income tax benefits expected to be realized in later years. Absent the reversal of the valuation allowances, such tax benefits would have been recognized when realized in future periods upon the generation of taxable income. Accordingly, beginning in fiscal 2013, the Company’s effective income tax rate, which in fiscal 2012 and earlier years bore little or no relationship to pretax income, more closely reflects the blended federal and state income tax rates in jurisdictions in which the Company operates. The reversal of the valuation allowance had no effect on the Company’s cash payments for income taxes.

Because of the increase in the Company’s effective income tax rate as described above, the Company’s income tax expense in the third quarter of fiscal 2013 is not comparable to income tax expense in the third quarter of fiscal 2012. In addition, until such time as the Company’s net operating loss carryforwards are exhausted or expire, GAAP income tax expense is expected to substantially exceed the amount of cash income taxes payable by the Company, which are expected to remain insignificant for the foreseeable future.

40

     The portion of the income tax provision representing taxes estimated to be payable currently was approximately $530,000 and $460,000 in the third quarter of fiscal 2013 and fiscal 2012, respectively, consisting principally of foreign withholding taxes related to royalties and franchise fees paid to the Company by international franchisees.

The Company’s estimated effective income tax rate on GAAP ordinary income for fiscal 2013 is 45%. The actual effective income tax rate for fiscal 2013 will be known in the fourth quarter when the Company’s annual pretax income and income tax expense are known.

The following non-GAAP financial information and related reconciliation to GAAP measures are provided to assist the reader in understanding the effect of the fiscal 2012 reversal of the valuation allowance on the Company’s results of operations for fiscal 2013. This non-GAAP information is intended to facilitate comparisons of fiscal 2013 results with the Company’s results for fiscal 2012, and to illustrate the material difference between the Company’s income tax expense and income taxes currently payable. Adjusted net income and adjusted earnings per common share reflect income tax expense only to the extent such expense is currently payable in cash. These non-GAAP performance measures are consistent with other measurements made by management in the operation of the business which do not consider income taxes except to the extent to which those taxes currently are payable, for example, capital allocation decisions and incentive compensation measurements that are made on a pretax basis.

	Three Months Ended
	October 28,		October 30,
	2012		2011
	(In thousands, except per share amounts)
Net income, as reported	$	5,044	$	4,717
Provision for deferred income taxes		3,300		31
Adjusted net income	$	8,344	$	4,748
Adjusted earnings per common share:
Basic	$	0.13	$	0.07
Diluted	$	0.12	$	0.07
Weighted average shares outstanding:
Basic		66,668		69,384
Diluted		68,803		71,547

Nine months ended October 28, 2012 compared to nine months ended October 30, 2011

   Overview

     Total revenues rose by 5.5% to $317.7 million for the nine months ended October 28, 2012 compared to $301.3 million for the nine months ended October 30, 2011.

Consolidated operating income increased to $29.3 million from $20.3 million, and consolidated net income was $16.0 million compared to $22.7 million. Net income and earnings per share for the nine months ended October 28, 2012 are not comparable to the corresponding amounts for the nine months ended October 30, 2011 as a result of the reversal of valuation allowances on deferred tax assets in the fourth quarter of fiscal 2012 and the resulting increase in income tax expense after the reversal; see “Provision for Income Taxes” below.

41

Revenues by business segment (expressed in dollars and as a percentage of total revenues) are set forth in the table below (percentage amounts may not add to totals due to rounding).

	Nine Months Ended
	October 28,				October 30,
	2012				2011
	(Dollars in thousands)
Revenues by business segment:
Company Stores	$	215,172			$	203,073
Domestic Franchise		7,561				7,045
International Franchise		17,832				16,362
KK Supply Chain:
Total revenues		158,075				154,501
Less - intersegment sales elimination		(80,942	)			(79,721	)
External KK Supply Chain revenues		77,133				74,780
Total revenues	$	317,698			$	301,260
Segment revenues as a percentage of total revenues:
Company Stores		67.7		%		67.4		%
Domestic Franchise		2.4				2.3
International Franchise		5.6				5.4
KK Supply Chain (external sales)		24.3				24.8
		100.0		%		100.0		%
Operating income (loss):
Company Stores	$	5,271			$	551
Domestic Franchise		4,072				2,477
International Franchise		12,957				10,893
KK Supply Chain		24,181				23,074
Total segment operating income		46,481				36,995
Unallocated general and administrative expenses		(16,900	)			(16,037	)
Impairment charges and lease termination costs		(302	)			(680	)
Consolidated operating income	$	29,279			$	20,278

     A discussion of the revenues and operating results of each of the Company’s four business segments follows, together with a discussion of income statement line items not associated with specific segments.

42

Company Stores

The components of Company Stores revenues and expenses (expressed in dollars and as a percentage of total revenues) are set forth in the table below (percentage amounts may not add to totals due to rounding).

					Percentage of Total Revenues
	Nine Months Ended				Nine Months Ended
	October 28,		October 30,		October 28,		October 30,
	2012		2011		2012		2011
	(In thousands)
Revenues:
On-premises sales:
Retail sales	$	90,697	$	81,720	42.2	%	40.2	%
Fundraising sales		11,791		11,431	5.5		5.6
Total on-premises sales		102,488		93,151	47.6		45.9
Wholesale sales:
Grocery/mass merchants		68,309		66,197	31.7		32.6
Convenience stores		41,877		41,472	19.5		20.4
Other wholesale		2,498		2,253	1.2		1.1
Total wholesale sales		112,684		109,922	52.4		54.1
Total revenues		215,172		203,073	100.0		100.0
Operating expenses:
Cost of sales:
Food, beverage and packaging		81,416		78,335	37.8		38.6
Shop labor		38,465		37,521	17.9		18.5
Delivery labor		17,663		17,382	8.2		8.6
Employee benefits		14,763		13,890	6.9		6.8
Total cost of sales		152,307		147,128	70.8		72.5
Vehicle costs(1)		13,046		13,065	6.1		6.4
Occupancy(2)		7,246		6,822	3.4		3.4
Utilities expense		4,522		4,449	2.1		2.2
Depreciation expense		5,921		4,982	2.8		2.5
Other operating expenses		14,565		13,487	6.8		6.6
Total store level costs		197,607		189,933	91.8		93.5
Store operating income		17,565		13,140	8.2		6.5
Other segment operating costs(3)		9,069		9,214	4.2		4.5
Allocated corporate overhead		3,225		3,375	1.5		1.7
Segment operating income	$	5,271	$	551	2.4	%	0.3	%

(1)	Includes fuel, maintenance and repairs, rent, taxes and other costs of operating the delivery fleet, exclusive of depreciation.
(2)	Includes rent, property taxes, common area maintenance charges, insurance, building maintenance and other occupancy costs, exclusive of utilities and depreciation.
(3)	Includes marketing costs not charged to stores, segment management costs, wholesale selling expenses and support functions.

     A reconciliation of Company Stores segment sales from the nine months ended October 30, 2011 to the nine months ended October 28, 2012 follows:

	On-Premises		Wholesale		Total
	(In thousands)
Sales for the nine months ended October 30, 2011	$	93,151	$	109,922	$	203,073
Increase in sales at established stores (open stores only)		4,471		2,606		7,077
Increase in sales at stores opened in fiscal 2012		3,226		-		3,226
Sales at stores opened in fiscal 2013		1,216		-		1,216
Sales at stores acquired in fiscal 2013		424		156		580
Sales for the nine months ended October 28, 2012	$	102,488	$	112,684	$	215,172

Selling price increases in the on-premises and wholesale distribution channels accounted for approximately 1.6 percentage points of the increase in sales, exclusive of the effects of higher pricing on unit volumes; such effects are difficult to measure reliably. As with all consumer products, however, higher prices may negatively affect sales. The Company believes this phenomenon is more pronounced in the wholesale channel where competing products are merchandised alongside those of the Company.

43

The following table presents sales metrics for Company stores:

	Nine Months Ended
	October 28,				October 30,
	2012				2011
On-premises:
Change in same store sales		4.7		%		4.2		%
Change in same store customer count (retail sales only)		5.3		%		(0.4	)	%
Average guest check (retail sales only)	$	7.33			$	7.34
Wholesale:
Grocery/mass merchants:
Change in average weekly number of doors		(4.1	)	%		3.7		%
Change in average weekly sales per door		7.8		%		13.1		%
Convenience stores:
Change in average weekly number of doors		(7.7	)	%		(4.4	)	%
Change in average weekly sales per door		9.3		%		9.2		%

On-premises sales

The components of the change in same store sales at Company stores are as follows:

	Nine Months Ended
	October 28,			October 30,
	2012			2011
Change in same store sales:
Retail pricing	0.9		%	7.1		%
Guest check average (exclusive of the effects of pricing)	(0.8	)		(2.5	)
Customer count	4.6			(0.4	)
Other	0.0			0.0
Total	4.7		%	4.2		%

On-premises sales increased 10.0% to $102.5 million in the first nine months of fiscal 2013 from $93.2 million in the first nine months of fiscal 2012, driven principally by higher customer traffic. The Company is developing and implementing new and enhanced marketing programs designed to increase guest visit frequency. In addition to improved marketing programs, management believes that customer traffic has been positively affected by ongoing store remodelings, an emphasis on hospitality, and continued use of creative limited time doughnut offerings. Additionally, approximately 0.9 percentage points of the sales increase reflects retail price increases implemented in the first quarter of fiscal 2012. On March 7, 2011, the Company implemented price increases at substantially all its stores designed to help offset the rising costs of doughnut mixes, other ingredients and fuel resulting from higher commodity prices. These price increases affected items comprising approximately 60% of on-premises sales, and the average price increase on these items was approximately 14%.

Higher customer traffic and retail price increases implemented in fiscal 2012 contributed to the improvement in same store sales, partially offset by coffee and doughnut promotional pricing which reduced the average guest check compared to last year. Also, the Company believes that the expected cannibalization and honeymoon effects of new stores in expansion markets adversely affected same store customer count in the first nine months of fiscal 2013.

Wholesale sales

     Sales to wholesale accounts increased 2.5% to $112.7 million in the first nine months of fiscal 2013 from $109.9 million in the first nine months of fiscal 2012. Approximately 1.8 percentage points of the increase is due to price increases. The Company began implementing price increases for some products offered in the wholesale channel late in the first quarter of fiscal 2012, and substantially completed implementing the increases during the second quarter. Those price increases affected products comprising approximately 60% of wholesale sales, and the average price increase on those products was approximately 11%. Higher selling prices and higher unit volumes accounted for the majority of the increase.

44

     Sales to grocers and mass merchants increased 3.2% to $68.3 million, with a 7.8% increase in average weekly sales per door partially offset by a 4.1% decline in the average number of doors served. In addition to pricing, the Company believes that average weekly sales per door in the grocer/mass merchant channel have grown as a result of, among other things, improved customer service, introduction of additional price points, and the addition of new relatively higher volume doors. The decline in the average number of doors served in the grocery/mass merchant channel reflects store closures by a regional grocery store customer as well as the elimination of loose doughnut sales at another regional grocer, although the Company continues to sell packaged products to this customer. Sales of loose unpackaged products comprised approximately 2% of sales to grocery/mass merchant customers for the nine months ended October 28, 2012, with the balance comprised of sales of packaged products.

Convenience store sales rose 1.0% to $41.9 million, reflecting a 9.3% increase in the average weekly sales per door, partially offset by a 7.7% decline in the average number of doors served. The decline in the average number of doors served in the convenience store channel reflects a reduction in the number of stops at relatively low volume doors, as well as the loss of a regional convenience store account. Sales of loose unpackaged products comprised approximately 80% of sales to convenience store customers for the nine months ended October 28, 2012, with the balance comprised of sales of packaged products.

Costs and expenses

Total cost of sales as a percentage of revenues decreased by 1.7 percentage points from the first nine months of fiscal 2012 to 70.8% of revenues in the first nine months of fiscal 2013.

The cost of food, beverage and packaging as a percentage of revenues decreased by 0.8 percentage points in the first nine months of fiscal 2013 compared to the first nine months of fiscal 2012. Higher aggregate costs for food, beverage and packaging increased costs by 0.4 percentage points, most of which was the result of higher sugar costs. This increase was more than offset by improved materials consumption and a greater percentage of sales derived from on-premises customers compared to the first nine months of fiscal 2012.

KK Supply Chain has fixed the prices on all of its major raw materials for the remainder of fiscal 2013. Except for sugar, the Company currently anticipates the cost of doughnut mix, shortening and other ingredients to be slightly lower in the fourth quarter of fiscal 2013 compared to the third quarter, and compared to the fourth quarter of fiscal 2012. For fiscal 2014, the Company has entered into contracts to purchase approximately half of its shortening requirements, approximately 10% of its flour requirements, and substantially all of its estimated sugar requirements. Based upon current market forecasts, the Company expects its aggregate cost of ingredients and packaging to rise modestly in fiscal 2014 compared to fiscal 2013, and expects to recover these higher costs through price increases or cost reduction measures. The Company’s contracts for sugar also cover substantially all of its estimated fiscal 2015 requirements.

Shop labor as a percentage of revenues declined by 0.6 percentage points from the first nine months of fiscal 2012 to 17.9% of revenues in the first nine months of fiscal 2013, principally due to higher revenues and improved labor cost management.

Vehicle costs as a percentage of revenues decreased from 6.4% of revenues in the first nine months of fiscal 2012 to 6.1% of revenues in the first nine months of fiscal 2013, principally due to higher sales resulting from price increases and lower fuel costs due to a reduction in mileage due to account rationalization.

Many segment operating costs are fixed or semi-fixed in nature and, accordingly, segment profit margins are sensitive to changes in sales volumes.

The Company is self-insured for workers’ compensation, vehicle and general liability claims, but maintains stop-loss coverage for individual claims exceeding certain amounts. The Company provides for claims under these self-insured programs using actuarial methods as described in the 2012 Form 10-K, and periodically updates actuarial valuations of its self-insurance reserves. Such periodic actuarial valuations result in changes over time in the estimated amounts which ultimately will be paid for claims under these programs to reflect the Company’s actual claims experience for each policy year as well as trends in claims experience over multiple years. Such claims, particularly workers’ compensation claims, often are paid over a number of years following the year in which the insured events occur, and the estimated ultimate cost of each year’s claims accordingly is adjusted over time as additional information becomes available. As a result of the Company’s periodic update of its actuarial valuation, the Company recorded favorable adjustments to its self-insurance claims liabilities related to prior policy years of approximately $370,000 in the second quarter of fiscal 2013 and $500,000 in the second quarter of fiscal 2012. The $370,000 favorable adjustment recorded in the second quarter of fiscal 2013 includes an unfavorable adjustment relating to workers’ compensation liability claims of approximately $20,000 included in employee benefits in the table above, a favorable adjustment relating to vehicle liability claims of approximately $210,000 included in vehicle costs, and a favorable adjustment relating to general liability claims of approximately $180,000 included in other operating costs. Substantially all of the $500,000 in favorable adjustments recorded in the second quarter of fiscal 2012 related to workers’ compensation liability claims.

45

     Depreciation expense increased in the first nine months of fiscal 2013 to 2.8% of revenues from 2.5% in the first nine months of fiscal 2012 due to increased capital expenditures in fiscal 2012 and 2013 including construction of new stores, store refurbishment efforts on existing stores and investments in information technology systems.

Domestic Franchise

	Nine Months Ended
	October 28,		October 30,
	2012		2011
	(In thousands)
Revenues:
Royalties	$	7,065	$	6,466
Development and franchise fees		188		255
Other		308		324
Total revenues		7,561		7,045
Operating expenses:
Segment operating expenses		3,039		4,103
Depreciation expense		150		165
Allocated corporate overhead		300		300
Total operating expenses		3,489		4,568
Segment operating income	$	4,072	$	2,477

Domestic Franchise revenues increased 7.3% to $7.6 million in the first nine months of fiscal 2013 from $7.0 million in the first nine months of fiscal 2012. The increase reflects higher domestic royalty revenues resulting from an increase in sales by domestic franchise stores from approximately $197 million in the first nine months of fiscal 2012 to $210 million in the first nine months of fiscal 2013. Domestic Franchise same store sales rose 5.8% in the first nine months of fiscal 2013.

Domestic Franchise operating expenses include costs to recruit new domestic franchisees, to assist in domestic store openings, and to monitor and aid in the performance of domestic franchise stores, as well as allocated corporate costs. Domestic Franchise operating expenses in the first nine months of fiscal 2012 reflect a provision of $820,000 for payments under a lease guarantee associated with a franchisee whose franchise agreements the Company terminated during the period. Segment operating expenses in fiscal 2013 also reflect a reduction in legal costs compared to fiscal 2012. Fiscal 2012 operating expenses also reflect the reversal of a previously recorded accrual of $110,000 related to a franchisee lease guarantee as a result of the Company receiving a release from the guarantee. The Company intends to add additional human resources to the Domestic Franchise segment and incur other additional franchise marketing costs in coming quarters in connection with management’s plan to reengage in franchise marketing efforts to drive domestic franchise growth.

Domestic franchisees opened six stores and closed four stores in the first nine months of fiscal 2013. On August 30, 2012, the Company acquired two Krispy Kreme stores from one of its domestic franchisees as more fully described in Note 12 to the consolidated financial statements appearing elsewhere herein. As of October 28, 2012, existing development and franchise agreements for territories in the United States provide for the development of approximately 50 additional stores through fiscal 2018. Royalty revenues are directly related to sales by franchise stores and, accordingly, the success of franchisees’ operations has a direct effect on the Company’s revenues, results of operations and cash flows.

46

International Franchise

	Nine Months Ended
	October 28,		October 30,
	2012		2011
	(In thousands)
Revenues:
Royalties	$	16,807	$	15,407
Development and franchise fees		1,025		955
Total revenues		17,832		16,362
Operating expenses:
Segment operating expenses		3,966		4,490
Depreciation expense		9		4
Allocated corporate overhead		900		975
Total operating expenses		4,875		5,469
Segment operating income	$	12,957	$	10,893

     International Franchise royalties rose 9.1%, driven by an increase in sales by international franchise stores from $279 million in the first nine months of fiscal 2012 to $311 million in the first nine months of fiscal 2013. Changes in the rates of exchange between the U.S. dollar and the foreign currencies in which the Company’s international franchisees do business decreased sales by international franchisees measured in U.S. dollars by approximately $4.6 million in the first nine months of fiscal 2013 compared to the first nine months of fiscal 2012, which negatively affected international royalty revenues by approximately $270,000.

Royalties and franchise fees for the first nine months of fiscal 2012 included approximately $280,000 and $95,000, respectively, of amounts relating to the Company’s franchisee in Mexico which accrued in prior periods but which had not previously been reported as revenue because of uncertainty surrounding their collection. Such amounts were reported as revenue in recognition of the payment of such amounts to the Company on May 5, 2011, in connection with the Company’s sale of its 30% equity interest in the franchisee as more fully described in Note 6 to the consolidated financial statements appearing elsewhere herein.

International Franchise same store sales, measured on a constant currency basis to remove the effects of changing exchange rates between foreign currencies and the U.S. dollar, fell 8.4%. The decline in International Franchise same store sales reflects, among other things, waning honeymoon effects from the large number of new stores opened internationally in recent years and the cannibalization effects on initial stores in new markets of additional store openings in those markets. Over the past three years, constant dollar same store sales have improved from the 21.1% decline reported for fiscal 2010. Management believes the improvement reflects reduced cannibalization as store density grows in established markets, as well as waning honeymoon effects from a decrease in the number of new stores as a percentage of the total international store count.

Constant dollar same store sales in established markets fell 1.0% in the first nine months of fiscal 2013 and fell 14.4% in new markets. Sales at stores in established markets comprised approximately 49% of aggregate constant dollar same store sales for the first nine months of fiscal 2013. While the Company considers countries in which Krispy Kreme first opened before fiscal 2007 to be established markets, franchisees in those markets continue to develop their business; these franchisees opened 233 of the 581 international stores opened since the beginning of fiscal 2007.

International Franchise operating expenses include costs to recruit new international franchisees, to assist in international store openings, and to monitor and aid in the performance of international franchise stores, as well as allocated corporate costs. International Franchise operating expenses decreased in the first nine months of fiscal 2013 to $4.0 million compared to $4.5 million in the first nine months of fiscal 2012. International Franchise operating expenses reflect decreases in legal fees associated with certain litigation and lower share-based compensation expense in the first nine months of fiscal 2013 compared to the first nine months of fiscal 2012. In addition, in the first nine months of fiscal 2012, the Company recorded a credit of $391,000 to the bad debt provision principally related to the Mexican franchisee discussed above. Management expects International Franchise operating expenses to rise in fiscal 2014 due to human resource additions to support international franchise growth, as well as anticipated fiscal 2014 shop openings in new markets which typically require a greater level of franchisor support than openings in existing markets.

International franchisees opened 70 stores and closed 37 stores in the first nine months of fiscal 2013. As of October 28, 2012, existing development and franchise agreements for territories outside the United States provide for the development of approximately 380 additional stores through fiscal 2019. Royalty revenues are directly related to sales by franchise stores and, accordingly, the success of franchisees’ operations has a direct effect on the Company’s revenues, results of operations and cash flows.

47

KK Supply Chain

     The components of KK Supply Chain revenues and expenses (expressed in dollars and as a percentage of total revenues before intersegment sales elimination) are set forth in the table below (percentage amounts may not add to totals due to rounding).

						Percentage of Total Revenues
						Before Intersegment
						Sales Elimination
	Nine Months Ended					Nine Months Ended
	October 28,			October 30,		October 28,			October 30,
	2012			2011		2012			2011
	(In thousands)
Revenues:
Doughnut mixes	$	54,050		$	51,580	34.2		%	33.4	%
Other ingredients, packaging and supplies		95,805			95,008	60.6			61.5
Equipment		6,175			6,087	3.9			3.9
Fuel surcharge		2,045			1,826	1.3			1.2
Total revenues before intersegment sales elimination		158,075			154,501	100.0			100.0
Operating expenses:
Cost of sales:
Cost of goods produced and purchased		109,466			105,441	69.2			68.2
(Gain) loss on agricultural derivatives		(1,007	)		422	(0.6	)		0.3
Inbound freight		4,449			3,178	2.8			2.1
Total cost of sales		112,908			109,041	71.4			70.6
Distribution costs		10,631			11,489	6.7			7.4
Other segment operating costs		8,886			9,512	5.6			6.2
Depreciation expense		569			560	0.4			0.4
Allocated corporate overhead		900			825	0.6			0.5
Total operating costs		133,894			131,427	84.7			85.1
Segment operating income	$	24,181		$	23,074	15.3		%	14.9	%

KK Supply Chain revenues before intersegment sales elimination increased 2.3% in the first nine months of fiscal 2013 compared to the first nine months of fiscal 2012.

Sales of doughnut mixes rose 4.8% year-over-year in the first nine months of fiscal 2013, reflecting higher unit volumes partially offset by lower selling prices resulting from a reduction in raw materials costs.

Sales of other ingredients, packaging and supplies, made principally to Company and Domestic Franchise stores, rose 0.8% year-over-year in the first nine months of fiscal 2013 due to higher selling prices of sugar partially offset by lower unit volumes. While systemwide sales at Company and Domestic Franchise stores rose in the first nine months of fiscal 2013 compared to the first nine months of the preceding fiscal year, a greater percentage of such sales was to on-premises customers compared to wholesale customers. On-premises sales at Company and Domestic Franchise stores generate proportionately lower KK Supply Chain sales than do sales to wholesale customers. In addition, the Company outsourced distribution to its International Franchise stores in fiscal 2012, which resulted in a reduction in sales of non-mix products to those franchisees.

The Company utilizes a fuel surcharge program to recoup additional freight costs resulting from increases in fuel costs. Charges under the program are based upon the price of diesel fuel.

KK Supply Chain input costs increased to 69.2% of revenues in the first nine months of fiscal 2013 compared to 68.2% of revenues in the first nine months of the preceding fiscal year, principally as a result of an approximate 15% increase in the cost of sugar. While the Company raised selling prices to recover higher sugar costs, the Company did not mark up such higher costs, which resulted in an increase in the overall cost of goods produced and purchased as a percentage of revenues.

Inbound freight increased 0.7 percentage points from the first nine months of fiscal 2012 to 2.8% of revenues in the first nine months of fiscal 2013 as a result of outsourcing product distribution for stores east of the Mississippi to a third party provider beginning in fiscal 2012. These increased inbound freight costs were substantially offset by a reduction in distribution costs and other segment operating costs, which include segment management, purchasing, customer service and support, laboratory and quality control costs, and research and development expenses, associated with the outsourcing of product distribution. Other segment operating expenses in the first nine months of fiscal 2012 also included charges of approximately $330,000 recorded to the KK Supply Chain segment for the settlement of certain sales tax litigation.

48

     Franchisees opened 76 stores and closed 41 stores in the first nine months of fiscal 2013. A substantial portion of KK Supply Chain’s revenues are directly related to sales by franchise stores and, accordingly, the success of franchisees’ operations has a direct effect on the Company’s revenues, results of operations and cash flows.

An increasing percentage of franchise store sales is attributable to sales by franchisees outside North America. The Company sells doughnut mixes and concentrates to its international franchisees. These franchisees purchase substantially all other ingredients, packaging and supplies from vendors approved by the Company. Accordingly, KK Supply Chain revenues are less correlated with sales by international franchisees than with sales by domestic franchisees.

General and Administrative Expenses

General and administrative expenses increased to $16.3 million, or 5.1% of total revenues, in the first nine months of fiscal 2013 from $15.5 million or 5.2% of total revenues, in the first nine months of fiscal 2012. The increase is due principally to an increase in share-based compensation as a result of a grant to an executive officer who attained retirement eligibility during the first quarter of fiscal 2013 and the resulting acceleration in the recognition of share-based compensation expense compared to prior periods.

Impairment Charges and Lease Termination Costs

Impairment charges and lease termination costs were $302,000 in the first nine months of fiscal 2013 compared to $680,000 in the first nine months of fiscal 2012.

	Nine Months Ended
	October 28,		October 30,
	2012		2011
	(In thousands)
Impairment of long-lived assets	$	-	$	-
Lease termination costs		302		680
	$	302	$	680

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, 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. Impairment charges generally relate to Company stores expected to be closed or refranchised, as well as to stores management believes will not generate sufficient future cash flows to enable the Company to recover the carrying value of the stores’ assets, but which management has not yet decided to close. 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. The fair values of these assets are estimated based on the present value of estimated future cash flows, on independent appraisals and, in the case of assets the Company currently is negotiating to sell, based on the Company’s negotiations with unrelated third-party buyers

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 were 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.

In the first nine months of fiscal 2013 and 2012, the Company recorded lease termination charges of $302,000 and $680,000, respectively, principally reflecting a change in estimated sublease rentals and settlements with landlords on stores previously closed.

The Company intends to refranchise certain geographic markets, expected to consist principally of, but not necessarily limited to, markets outside the Company’s traditional base in the Southeastern United States. The franchise rights and other assets in many of these markets were acquired by the Company in business combinations in prior years.

49

     Since the beginning of fiscal 2009, the Company has refranchised a total of 11 stores and received consideration totaling $2.5 million in connection with those transactions. During this period, the Company recorded impairment charges totaling approximately $490,000 related to completed and anticipated refranchisings. The Company cannot predict the likelihood of refranchising any additional stores or markets or the amount of proceeds, if any, which might be received therefrom, including the amounts which might be realized from the sale of store assets and the execution of any related franchise agreements. Asset dispositions associated with future refranchisings could result in the recognition of impairment losses on the related assets.

Interest Expense

The components of interest expense are as follows:

	Nine Months Ended
	October 28,		October 30,
	2012		2011
	(In thousands)
Interest accruing on outstanding term loan indebtedness	$	534	$	624
Letter of credit and unused revolver fees		223		282
Amortization of cost of interest rate derivatives		19		-
Amortization of deferred financing costs		300		320
Other		126		50
	$	1,202	$	1,276

The decrease in interest accruing on outstanding indebtedness and in letter of credit and unused revolver fees reflects the reduction in the principal outstanding under the Company’s term loan and a reduction in the lender’s interest margin due to a decrease in the Company’s leverage ratio.

Equity in Income (Losses) of Equity Method Franchisees

The Company recorded equity in the losses of equity method franchisees of $150,000 in the first nine months of fiscal 2013 compared to losses of $69,000 in the first nine months of fiscal 2012. This caption represents the Company’s share of operating results of equity method franchisees which develop and operate Krispy Kreme stores. On May 5, 2011, the Company sold its 30% equity interest in KK Mexico, the Company’s franchisee in Mexico, to KK Mexico’s majority shareholder as more fully described in Note 6 to the consolidated financial statements appearing elsewhere herein. The Company’s equity in the earnings of KK Mexico was approximately $110,000 for the nine months ended October 30, 2011.

Gain on Sale of Interest in Equity Method Franchisee

In the first nine months of fiscal 2012, the Company realized a gain of approximately $6.2 million arising from the sale of the Company’s investment in KK Mexico as more fully described in Note 6 to the consolidated financial statements appearing elsewhere herein.

Provision for Income Taxes

The provision for income taxes was $12.3 million in the first nine months of fiscal 2013 compared to $2.8 million in the first nine months of fiscal 2012.

The Company establishes valuation allowances for deferred tax assets in accordance with GAAP, which provides that such valuation allowances shall be established unless realization of the deferred tax assets is more likely than not. From fiscal 2005 until the fourth quarter of fiscal 2012, the Company maintained a valuation allowance on deferred tax assets equal to the entire excess of those assets over the Company’s deferred tax liabilities because of the uncertainty surrounding the realization of those assets. Such uncertainty arose principally from the substantial losses incurred by the Company from fiscal 2005 through fiscal 2009.

Realization of net deferred tax assets generally is dependent on generation of taxable income in future periods. The Company reported a pretax profit of $418,000 in fiscal 2010 and $8.9 million in fiscal 2011. In fiscal 2012, the Company’s pretax profit increased to $30.4 million, inclusive of a $6.2 million non-recurring gain on the Company’s sale of its 30% interest in KK Mexico. After considering all relevant factors and objectively verifiable evidence having an impact on the likelihood of future realization of the Company’s deferred tax assets, in the fourth quarter of fiscal 2012 management concluded that it was more likely than not that a substantial portion of the Company’s deferred tax assets will be realized in future years. Accordingly, in the fourth quarter of fiscal 2012, the Company reversed $139.6 million of the valuation allowance on deferred tax assets, with an offsetting credit to the provision for income taxes, representing the amount of deferred tax assets management believes is more likely than not to be realized.

50

     While the reversal of a portion of the valuation allowances increased the Company’s earnings by $139.6 million in fiscal 2012, the reversal has the effect of increasing the provision for income taxes, and therefore decreasing net income, beginning in fiscal 2013. This negative effect on earnings occurs because the reversal of the valuation allowances resulted in the recognition in fiscal 2012 of income tax benefits expected to be realized in later years. Absent the reversal of the valuation allowances, such tax benefits would have been recognized when realized in future periods upon the generation of taxable income. Accordingly, beginning in fiscal 2013, the Company’s effective income tax rate, which in fiscal 2012 and earlier years bore little or no relationship to pretax income, more closely reflects the blended federal and state income tax rates in jurisdictions in which the Company operates. The reversal of the valuation allowance had no effect on the Company’s cash payments for income taxes.

Because of the increase in the Company’s effective income tax rate as described above, the Company’s income tax expense in the first nine months of fiscal 2013 is not comparable to income tax expense in the first nine months of fiscal 2012. In addition, until such time as the Company’s net operating loss carryforwards are exhausted or expire, GAAP income tax expense is expected to substantially exceed the amount of cash income taxes payable by the Company, which are expected to remain insignificant for the foreseeable future.

The portion of the income tax provision representing taxes estimated to be payable currently was approximately $1.4 million and $2.6 million in the first nine months of fiscal 2013 and fiscal 2012, respectively, consisting principally of foreign withholding taxes related to royalties and franchise fees paid to the Company by international franchisees and, in fiscal 2012, $1.5 million of Mexican income taxes payable on the KK Mexico gain, partially offset by reversals of liabilities for uncertain tax positions and related interest and penalties due principally to the expiration of statutes of limitation.

The Company’s estimated effective income tax rate on GAAP ordinary income for fiscal 2013 is 45%. The actual effective income tax rate for fiscal 2013 will be known in the fourth quarter when the Company’s annual pretax income and income tax expense are known.

The following non-GAAP financial information and related reconciliation to GAAP measures are provided to assist the reader in understanding (1) the effect of the fiscal 2012 reversal of the valuation allowance on the Company’s results of operations for fiscal 2013, and (2) the effect of the non-recurring gain on the sale of the interest in KK Mexico on the Company’s results of operations for fiscal 2012. This non-GAAP information is intended to facilitate comparisons of fiscal 2013 results with the Company’s results for fiscal 2012, and to illustrate the material difference between the Company’s income tax expense and income taxes currently payable. Adjusted net income and adjusted earnings per common share reflect income tax expense only to the extent such expense is currently payable in cash and, in fiscal 2012, exclude the gain on the sale of the equity interest in KK Mexico. These non-GAAP performance measures are consistent with other measurements made by management in the operation of the business which do not consider income taxes except to the extent to which those taxes currently are payable, for example, capital allocation decisions and incentive compensation measurements that are made on a pretax basis.

	Nine Months Ended
	October 28,		October 30,
	2012		2011
	(In thousands, except per share
	amounts)
Net income, as reported	$	15,999	$	22,727
Provision for deferred income taxes		10,824		159
Gain on sale of interest in KK Mexico
(net of income taxes of $1,492)		-		(4,706	)
Adjusted net income	$	26,823	$	18,180
Adjusted earnings per common share:
Basic	$	0.40	$	0.26
Diluted	$	0.38	$	0.25
Weighted average shares outstanding:
Basic		67,897		69,013
Diluted		70,041		71,474

51

LIQUIDITY AND CAPITAL RESOURCES

The following table presents a summary of the Company’s cash flows from operating, investing and financing activities for the first nine months of fiscal 2013 and fiscal 2012.

	Nine Months Ended
	October 28,			October 30,
	2012			2011
	(In thousands)
Net cash provided by operating activities	$	37,978		$	22,912
Net cash provided by (used for) investing activities		(9,982	)		1,075
Net cash used for financing activities		(22,412	)		(8,378	)
Net increase in cash and cash equivalents	$	5,584		$	15,609

Cash Flows from Operating Activities

Net cash provided by operating activities was $38.0 million and $22.9 million in the first nine months of fiscal 2013 and fiscal 2012, respectively. Higher operating income accounted for a majority of the improvement. Cash provided by operating activities in the first nine months of fiscal 2012 was adversely affected by a temporary increase in inventories associated with the outsourcing of distribution of doughnut mixes and other KK Supply Chain products for international and certain domestic stores to a third party vendor. In addition, payments on leases related to closed stores were approximately $1.8 million higher in the in the first nine months of fiscal 2012 than in the first nine months of fiscal 2013, principally due to settlements with landlords on terminated leases in the fiscal 2012 period. The remainder of the change in cash flows from operating activities principally reflects normal fluctuations in working capital.

Cash Flows from Investing Activities

Net cash used for investing activities was $10.0 million in the first nine months of fiscal 2013 compared to net cash provided by investing activities of $1.1 million in the first nine months of fiscal 2012.

Cash used for capital expenditures increased to $9.5 million in the first nine months of fiscal 2013 from $8.2 million in the first nine months of fiscal 2012. In addition, the Company acquired two stores from a franchisee for $915,000 during fiscal 2013. The Company currently expects capital expenditures to be approximately $5 million for the fourth quarter fiscal 2013. The Company intends to fund these capital expenditures from cash provided by operating activities, from existing cash balances and, to a lesser extent, through leases.

In the first nine months of fiscal 2012, the Company received proceeds of approximately $7.7 million from the sale of the Company’s 30% equity interest in KK Mexico as more fully described in Note 6 to the consolidated financial statements appearing elsewhere herein.

In connection with the refinancing of the Company’s Secured Credit Facilities in January 2011 as more fully described in Note 12 to the consolidated financial statements in the 2012 Form 10-K, the Company deposited into escrow $1.8 million related to properties with respect to which the Company agreed to furnish to the lenders certain documentation on or before January 31, 2012, with amounts to be released from escrow upon the Company’s furnishing such documentation. In fiscal 2012, the entire $1.8 million was released from escrow, including $1.6 million in the first nine months of fiscal 2012.

Cash Flows from Financing Activities

Net cash used by financing activities was $22.4 million in the first nine months of fiscal 2013, compared to $8.4 million in the first nine months of fiscal 2012.

During the first nine months of fiscal 2013, the Company repaid approximately $1.7 million of scheduled principal amortization of outstanding term loan and capitalized lease indebtedness.

52

During the first nine months of fiscal 2012, the Company repaid approximately $8.4 million of outstanding term loan and capitalized lease indebtedness, consisting of approximately $1.7 million of scheduled principal amortization, $6.2 million of prepayments from the sale of the Company’s interest in KK Mexico as more fully described in Note 6 to the consolidated financial statements appearing elsewhere herein, and $520,000 of prepayments from the proceeds of the exercise of stock options.

On March 27, 2012, the Company’s Board of Directors authorized the repurchase of up to $20 million of the Company’s common stock. The Company completed the share repurchase during the second quarter of fiscal 2013, purchasing 3,113,000 shares in the first nine months of fiscal 2013 at an average cost of $6.42 per share, for a total cost of $20 million.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (the “FASB”) issued an Accounting Standards Update (“ASU”) related to fair value measurements. The ASU clarifies some existing concepts, eliminates wording differences between GAAP and International Financial Reporting Standards (“IFRS”), and in some limited cases, changes some principles to achieve convergence between GAAP and IFRS. The ASU also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The Company adopted the new standards in the first quarter of fiscal 2013; such adoption had no effect on the Company’s financial condition or results of operations.

In June 2011, the FASB issued new accounting standards which require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. The new accounting rules eliminate the option to present components of other comprehensive income as part of the statement of changes in shareholders’ equity. The Company adopted the new standards in the first quarter of fiscal 2013 by presenting a separate consolidated statement of comprehensive income in addition to the consolidated statement of income.

     In July 2012, the FASB issued amended accounting guidance regarding indefinite-lived intangible asset impairment testing and whether it is necessary to perform the quantitative impairment test currently required. This guidance is effective for the Company in fiscal 2014, with early adoption permitted. The Company does not expect that this new guidance with have a material impact on its consolidated financial statements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     There have been no material changes from the disclosures in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in the 2012 Form 10-K.

Item 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

     As of October 28, 2012, the end of the period covered by this Quarterly Report on Form 10-Q, management performed, under the supervision and with the participation of the Company’s chief executive officer and chief financial officer, an evaluation of the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures. Based on this evaluation, the Company’s chief executive officer and chief financial officer have concluded that, as of October 28, 2012, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

     During the quarter ended October 28, 2012, there were no changes in the Company’s internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

53

PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

     Except as described below, there have been no material changes in the status of matters disclosed in Part 1, Item 3, “Legal Proceedings,” in the 2012 Form 10-K.

On January 27, 2012, Colchester Security II, LLC, the Company's former landlord in Lorton, Virginia, filed a suit against the Company in the Circuit Court of Fairfax County, Virginia alleging breach of the lease and negligence resulting in property damage at a commissary facility previously operated by the Company. The plaintiff seeks $2.7 million in damages. The Company denies the allegations and intends to pursue counterclaims of approximately $3 million relating to indemnity claims and breach of the lease. During the third quarter of fiscal 2013, the Court scheduled this matter for trial beginning March 25, 2013.

Item 1A. RISK FACTORS.

There have been no material changes from the risk factors disclosed in Part I, Item 1A, “Risk Factors,” in the 2012 Form 10-K.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES.

None.

Item 4. MINE SAFETY DISCLOSURES.

Not applicable.

Item 5. OTHER INFORMATION.

None.

Item 6. EXHIBITS.

The exhibits filed with this Quarterly Report on Form 10-Q are set forth in the Exhibit Index on page 56 and are incorporated herein by reference.

54

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 thereunto duly authorized.

	Krispy Kreme Doughnuts, Inc.
Date: December 7, 2012	By:	/s/ Douglas R. Muir
	Name:	Douglas R. Muir
	Title:	Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

55

Exhibit Index

3.1	—	Amended Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K filed on April 15, 2010)
3.2	—	Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed December 15, 2008)
10.1	—	Form of Nonqualified Stock Option Agreement under the 2012 Stock Incentive Plan*
10.2	—	Form of Incentive Stock Option Agreement under the 2012 Stock Incentive Plan*
10.3	—	Form of Restricted Stock Award Agreement under the 2012 Stock Incentive Plan*
10.4	—	Form of Restricted Stock Unit Agreement under the 2012 Stock Incentive Plan*
10.5	—	Form of Director Restricted Stock Unit Agreement under the 2012 Stock Incentive Plan*
10.6	—	Form of Director Nonqualified Stock Option Agreement under the 2012 Stock Incentive Plan*
31.1	—	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
31.2	—	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1	—	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	—	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		The following materials from our Quarterly Report on Form 10-Q for the quarter ended October 28, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statement of Income for the three and nine months ended October 28, 2012, and October 30, 2011; (ii) the Consolidated Statement of Comprehensive Income for the three and nine months ended October 28, 2012, and October 30, 2011; (iii) the Consolidated Balance Sheet as of October 28, 2012 and January 29, 2012; (iv) the Consolidated Statement of Cash Flows for the nine months ended October 28, 2012 and October 30, 2011; (v) the Consolidated Statement of Changes in Shareholders’ Equity for the nine months ended October 28, 2012 and October 30, 2011; and (vi) the Notes to the Condensed Consolidated Financial Statements**

* Executive compensation plan or agreement.

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

Our SEC file number for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 001-16485

56

EX-10.1

[FORM OF]
KRISPY KREME DOUGHNUTS, INC.
2012 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT

     THIS NONQUALIFIED STOCK OPTION AGREEMENT (the “Agreement”) is made as of [_____] (the “Grant Date”), by and between Krispy Kreme Doughnuts, Inc., a North Carolina corporation (the “Company”), and [_____] (the “Participant”).

W I T N E S S E T H:

WHEREAS, the Board of Directors and shareholders of the Company have approved the Krispy Kreme Doughnuts, Inc. 2012 Stock Incentive Plan, as it may be amended (the “Plan”), for the purposes and subject to the provisions set forth in the Plan; and

WHEREAS, pursuant to authority granted to it in the Plan, the Compensation Committee of the Board of Directors of the Company (the “Committee”) has, on behalf of the Company, granted to the Participant a nonqualified stock option to purchase shares of Common Stock of the Company as set forth below; and

WHEREAS, this Agreement evidences the grant of such option pursuant to the Plan.

     NOW, THEREFORE, in consideration of the foregoing, of the mutual promises set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1. Summary of Grant

Number of Shares: [_____]
Option Price: [$_____]
Date of Grant: [_____]
Expiration Date: [_____]

2. Grant of Option

This Agreement sets forth the terms of a nonqualified option (the “Option”) granted to the Participant to purchase from the Company, during the period specified in Sections 3 and 4 of this Agreement, a total of [_____] shares of Common Stock (the “Shares”), at the purchase price of [_____] per share (the “Option Price”), in accordance with the terms and conditions stated in this Agreement.

3. Vesting and Exercise of Option

(a)The Option shall vest and become exercisable in increments in accordance with the schedule set forth below, provided that the Option shall vest and become exercisable with respect to an increment as specified only if the Participant has not incurred a Termination of Employment prior to the vesting date with respect to such increment:

          (i)no portion of the Option shall vest or become exercisable prior to the first anniversary of the Grant Date;

(ii)on the first anniversary of the Grant Date, the Option shall vest and become exercisable with respect to 25% of the number of Shares subject to the Option (as indicated in Section 1);

(iii)on the second anniversary of the Grant Date, the Option shall vest and become exercisable with respect to an additional 25% of the number of Shares subject to the Option (for a total of 50% of the number of Shares subject to the Option);

(iv)on the third anniversary of the Grant Date, the Option shall vest and become exercisable with respect to an additional 25% of the number of Shares subject to the Option (for a total of 75% of the number of Shares subject to the Option); and

(v)on the fourth anniversary of the Grant Date, the Option shall vest and become exercisable with respect to the remaining 25% of the number of Shares subject to the Option (for a total of 100% of the number of Shares subject to the Option).

(b)Notwithstanding the vesting provisions described above, the Option shall vest and become exercisable with respect to 100% of the Shares upon the Participant’s Termination of Employment if the Participant’s Termination of Employment is due to his or her Retirement, death, or Disability.

(c)In addition, the following provisions shall apply in the event of a Change in Control:

(i)To the extent the successor company does not assume or substitute for the Option (or the Company is the ultimate parent corporation and does not continue the Option) on substantially equivalent terms (as determined by the Committee), the Option will become vested and exercisable in full upon the effective date of the Change in Control.

(ii)Further, in the event that the Option is substituted, assumed or continued, the Option will become vested and exercisable in full if the Participant incurs a Termination of Employment within six months before (in which case vesting shall not occur until the effective date of the Change in Control) or two years after the effective date of a Change in Control if such Termination of Employment (A) is by the Company not for Cause or (B) is by the Participant for Good Reason. In the event that vesting of the Option is accelerated as a result of a Termination of Employment related to a Change in Control as provided herein, the Committee or the Board of Directors, in its discretion, may send the Participant prior written notice of the effectiveness of such event and the last day on which the Participant may exercise the Option. In such event, the Participant may, upon compliance with all of the terms of this Agreement and the Plan, purchase any or all of the Shares with respect to which the Option is vested and exercisable on or prior to the last day specified in such notice, and, to the extent the Option is not exercised, it shall (unless the Committee or the Board of Directors determines otherwise) terminate at 5:00 P.M., Winston-Salem, North Carolina time, on the last day specified in such notice. If no such notice is given, the Option shall terminate as provided in Section 4(f) herein. For the purposes herein, (X) “Good Reason” shall have the meaning set forth in Section 21(c) of the Agreement; and (Y) “Company” shall include the successor to the Company’s business or assets, or if all or substantially all of the voting stock of the Company is held by another public company, such public company.

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     The schedule set forth above is cumulative, so that Shares as to which the Option has become vested and exercisable pursuant to the provisions above may be purchased pursuant to exercise of the Option at any date subsequent to vesting but prior to termination of the Option. The Option may be exercised at any time and from time to time to purchase up to the number of Shares as to which it is then vested and exercisable.

4. Termination of Option

Unless adjusted by the Committee in its sole discretion, the Option shall remain exercisable as specified in Section 3 above until 5:00 p.m., Winston-Salem, North Carolina time, on the earliest to occur of the dates specified below, upon which date the Option shall terminate:

(a)the date all of the Shares are purchased pursuant to the terms of this Agreement;

(b)upon the expiration of three months following the Participant’s Termination of Employment for any reason other than his or her Retirement, death, Disability, or for Cause;

(c)upon the expiration of 360 days following the Participant’s Termination of Employment on account of his or her Disability;

(d)upon the expiration of 360 days following the Participant’s Termination of Employment on account of his or her death;

(e)immediately upon the Participant’s Termination of Employment for Cause;

(f)on the last date specified in the notice described in Section 3 above in the event of a Termination of Employment by the Participant for Good Reason or by the Company other than for Cause within six months before or two years after the effective date of a Change in Control; provided that, if no such notice is given, the Option shall terminate on the one year anniversary of the date of the Participant’s Termination of Employment;

(g)on the ten year anniversary of the Grant Date (the “Expiration Date”); or

(h)on the ten year anniversary of the Grant Date in the event of the Participant’s Termination of Employment on account of Retirement.

Notwithstanding the foregoing, the term of the Option shall (unless the Committee determines otherwise) automatically be extended if exercise at the end of the original term would violate Applicable Law (including but not limited to the Company’s Securities Trading Policy), but such extension may not exceed 30 days from the expiration of the period during which exercise is prohibited, and any such extension must be in accordance with Reg. Section. 1.409A-1(b)(5)(v)(C)(1). Upon its termination, the Option shall have no further force or effect and the Participant shall have no further rights under the Option or to any Shares which have not been purchased pursuant to the prior exercise of the Option.

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5. Manner of Exercise of Option

     (a)Exercise. The Option may be exercised only by (i) the Participant’s delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, (ii) the payment to the Company, pursuant to the terms of this Agreement, of an amount equal to the Option Price multiplied by the number of Shares being purchased as specified in the Participant’s notice of exercise (the “Purchase Price”). The Participant’s notice of exercise shall be given in the manner specified in Section 10 but any exercise of the Option shall be effective only when the items required by the preceding sentence are actually received by the Company. The notice of exercise shall be in the form attached to this Agreement or in another form provided by the Company. Notwithstanding anything to the contrary in this Agreement, the Option may be exercised only if compliance with Applicable Law can be effected, with the Committee being the final arbitrator thereof, in its sole and absolute discretion, in the event of any dispute between the Company and the Participant with regard to the interpretation of such laws.

(b)Form of Payment. Payment of the Purchase Price may be made by (i) cash or cash equivalent; (ii) authorizing a third party to sell a portion of the Shares acquired upon exercise of the Option and remit to the Company a sufficient portion of the sales proceeds to pay the full Purchase Price (that is, a broker-assisted cashless exercise); (iii) unless prohibited by the Committee, by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price or portion thereof, (iv) unless prohibited by the Committee, by withholding Shares subject to the Option having an aggregate Fair Market Value at the time of exercise equal to the Option Price or portion thereof, or (v) combining the above methods.

(c)Issuance and Delivery of Shares. As soon as practicable following receipt of such notice of exercise and payment, the Company shall notify the Participant of any payment required under subsection (d) below. The Company shall deliver a certificate or certificates for the Shares to the Participant (or provide other evidence of ownership of the Shares, such as tracking through book entry) as soon as practicable after the Participant has made any payment required under subsection (d) below. Shares issued pursuant to the exercise of the Option will be issued only in the name of the Participant and may not be transferred into the name of any agent of or nominee for the Participant until such time as the Participant has complied with the terms of this Agreement.

(d)Taxes and Withholding.

(i)The Participant shall be responsible for all federal, state, local, and foreign income taxes payable with respect to the Option and the exercise thereof. The Participant acknowledges that he or she may incur substantial tax liability arising out of the exercise of the Option and that the Company has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for the Participant.

(ii)The Company shall have the power and right to deduct or withhold, or require the Participant to remit to the Company in cash, an amount sufficient to satisfy federal, state, local, and foreign taxes (including but not limited to the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event arising in connection with the Option. In lieu of the payment specified in this paragraph, the Participant may satisfy the obligation, in whole or in part, by the methods specified in subsection (b)(i) and (ii) above. In addition, unless the Committee determines otherwise and subject to such conditions as may be established by the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares with a Fair Market Value equal to (but not in excess of) the minimum statutory tax required to be withheld. The right to satisfy this obligation by cashless exercise or the withholding of Shares may be withdrawn by the approval of the Committee.

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     (e)Delay In Issuance of Shares. Anything in this Agreement to the contrary notwithstanding, if, at any time specified herein for the issuance of Shares to the Participant, any law, or any regulation or requirement of the Securities and Exchange Commission or other governmental authority having jurisdiction over such matter, shall require either the Company or the Participant to take any action in connection with the Shares then to be issued, the issuance of such Shares shall be deferred until such action shall have been taken; the Company shall be under no obligation to take such action; and the Company shall have no liability whatsoever as a result of the non-issuance of such Shares, except to refund to the Participant any consideration tendered in respect of the Purchase Price.

(f)Stop Transfer Instructions. The Company may impose stop-transfer instructions with respect to any Shares (or other securities) subject to any restriction set forth in this Agreement until the restriction has been satisfied or terminates.

6. Nontransferability

The Option shall not be transferable (including by sale, assignment, pledge, or hypothecation) other than by will or the laws of intestate succession, except for transfers without consideration if and to the extent permitted by the Committee in a manner consistent with the registration provisions of the Securities Act. Except as may be permitted by the preceding sentence, the Option shall be exercisable during the Participant’s lifetime only by the Participant or by his or her guardian or legal representative. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.

7. No Rights as a Shareholder

The Participant shall not have any rights as a shareholder with respect to the Shares subject to his or her Option until the issuance of such Shares to the Participant pursuant to the exercise of the Option.

8. No Right to Employment or Future Grants; Compliance with Applicable Law

(a)Nothing in this Agreement shall be construed as constituting a commitment, guarantee, agreement, or understanding of any kind or nature that the Company, any Subsidiary, or other Affiliate shall continue to employ the Participant, nor shall this Agreement affect in any way the right of the Company, any Subsidiary, or other Affiliate to terminate the employment or other service of the Participant at any time and for any reason. By the Participant’s execution of this Agreement, the Participant acknowledges and agrees that the Participant’s employment or other service to the Company, any Subsidiary, or other Affiliate is “at will.” The Participant acknowledges and agrees that the award and acceptance of the Option pursuant to this Agreement does not entitle the Participant to future grants under the Plan or any other plan.

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     (b)The Company may impose such restrictions on the Option, the Shares, and any other benefits underlying the Option hereunder as it may deem advisable, including, without limitation, restrictions under the federal securities laws, the requirements of any securities exchange or similar organization, and any blue sky, state, or foreign securities laws applicable to such securities. The Company shall not be obligated to issue, deliver, or transfer Shares, make any other distribution of benefits under the Plan, or take any other action, unless such delivery, distribution, or action is in compliance with Applicable Law (including but not limited to the requirements of the Securities Act). The Company will be under no obligation to register Shares or other securities with the Securities and Exchange Commission or to effect compliance with the exemption, registration, qualification, or listing requirements of any state or foreign securities laws, or securities exchange or similar organization, and the Company will have no liability for any inability or failure to do so. The Company may cause a restrictive legend or legends to be placed on any certificate issued pursuant to the Option hereunder in such form as may be prescribed from time to time by Applicable Law or as may be advised by legal counsel.

9. Successors and Assigns

(a)This Agreement shall be binding upon and inure to the benefit of any assignee or successor in interest to the Company, whether by merger, consolidation, or the sale of all or substantially all of the Company’s assets.

(b)This Agreement shall be binding upon and inure to the benefit of the Participant and his or her legal representative and any person to whom the Option may be transferred by will, the applicable laws of intestate succession, or otherwise in accordance with the terms of the Plan.

10. Notices

Any and all notices under this Agreement shall be in writing, and sent by hand delivery or by certified or registered mail (return receipt requested and first-class postage prepaid), in the case of the Company, to its principal executive offices to the attention of the Chief Financial Officer, and, in the case of the Participant, to the Participant’s address as shown on the Company’s records.

11. Entire Agreement

The parties hereto agree that this Agreement sets forth all of the promises, agreements, conditions, understandings, warranties, and representations between the parties with respect to the Option and the Shares and that there are no promises, agreements, conditions, understandings, warranties, or representations, oral or written, express or implied between the parties with respect to the Option and the Shares other than as set forth in this Agreement and in the Plan.

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12. Amendment of Agreement

     This Agreement may be modified, amended, suspended, or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the parties hereto and otherwise in accordance with the Plan. Notwithstanding the foregoing, the Committee shall have unilateral authority to amend the Agreement (without the Participant’s consent) to the extent necessary to comply with Applicable Law or changes to Applicable Law (including but in no way limited to Code Section 409A and federal securities laws).

13. Severability

The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially unenforceable provision to the extent enforceable in any jurisdiction, shall nevertheless be binding and enforceable.

14. Waiver

The waiver by the Company of a breach of any provision of this Agreement by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.

15. Plan Controls

This Agreement and the Option are subject in all respects to the terms and conditions of the Plan (which are incorporated herein by reference), and the Participant agrees to be bound by the terms and conditions of the Plan. Except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. To the extent that any conflict may exist between any term or provision of this Agreement and any term or provision of the Plan, such term or provision of the Plan shall control, unless the Committee determines otherwise.

16. Agreement to be Bound by Plan

The Participant acknowledges that the Participant fully understands his or her rights under the Plan, and that the Participant agrees to be bound by all terms and conditions of the Plan. The Participant acknowledges that the Participant has received a copy of the Plan prospectus.

17. Authority of Committee

All determinations made by the Committee with respect to the interpretation, construction, and application of any provision of this Agreement shall be final, conclusive, and binding on the parties.

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18. Covenants and Representations of the Participant

The Participant represents, warrants, covenants, and agrees with the Company as follows:

     (a)The Participant has not relied upon the Company with respect to any tax consequences related to the Option or the Shares. The Participant assumes full responsibility for all such consequences and the filing of all tax returns and elections the Participant may be required or find desirable to file in connection therewith.

(b)The Participant will not distribute or resell any Shares (or other securities) issuable upon exercise of the Option granted hereby in violation of Applicable Law. The Participant shall comply with all provisions of the Company’s Securities Trading Policy, as in effect from time to time.

(c)The agreements, representations, warranties, and covenants made by the Participant herein with respect to the Option shall also extend and apply to all of the Shares issued to the Participant from time to time pursuant to exercise of the Option. Acceptance by the Participant of any certificate representing the Shares (or other evidence of beneficial ownership) shall constitute a confirmation by the Participant that all such agreements, representations, warranties, and covenants made herein continue to be true and correct at that time.

(d)As a condition to receiving this award, the Participant agrees to abide by the Company’s Equity Retention Policy, Compensation Recovery Policy, and Stock Ownership Guidelines and/or other similar policies, each as in effect from time to time and to the extent applicable to the Participant from time to time. In addition, the Participant shall be subject to such compensation recovery, recoupment, forfeiture, or other similar provisions as may apply to the Participant under Applicable Law.

19. Limitation of Liability

The liability of the Company under this Agreement and in the award of the Option hereunder is limited to the obligations set forth herein with respect to such award, and nothing herein contained shall be interpreted as imposing any liability in favor of the Participant or any others with respect to any loss, cost, or expense which the Participant or any others may incur in connection with or arising out of any transaction involving the Option or the Shares.

20. Governing Law

This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of North Carolina, without giving effect to the principles of conflicts of laws, and in accordance with applicable federal laws.

21. Definitions

(a)“Retirement” shall mean the Participant’s Termination of Employment at a time when the sum of the Participant’s age and years of employment with the Company, its Subsidiaries, or other Affiliates equals or exceeds 65, provided that the Participant shall have attained a minimum age of 55.

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(b)“Termination of Employment” means the discontinuance of the Participant’s service relationship with the Company, its Subsidiaries, or another Affiliate, including but not limited to service as an employee of the Company, its Subsidiaries, or another Affiliate, as a non-employee member of the Board of Directors of the Company, or as a consultant or advisor to the Company, its Subsidiaries, or another Affiliate. Except to the extent provided otherwise in an agreement or determined otherwise by the Committee, a Termination of Employment shall not be deemed to have occurred if the Participant transfers among the various entities constituting the Company and its Subsidiaries, so long as there is no interruption in the provision of service by the Participant to the Company and its Subsidiaries. The Participant shall not be deemed to have incurred a Termination of Employment if the Participant is on military leave, sick leave, or other bona fide leave of absence approved by the Company of 180 days or fewer (or any longer period during which the Participant is guaranteed reemployment by statute or contract). In the event the Participant’s leave of absence exceeds this period, he or she will be deemed to have incurred a Termination of Employment on the day following the expiration date of such period, unless determined otherwise by the Committee.

     (c)“Good Reason” shall have the meaning assigned to such term in the employment agreement, if any, between the Participant and the Company, a Subsidiary, or an Affiliate, provided, however that if there is no such employment agreement in which such term is defined, “Good Reason” shall mean any of the following acts by the Company, a Subsidiary, or an Affiliate within the six-month period before or the two-year period afterthe effective date of a Change in Control, without the consent of the Participant (in each case, other than an isolated, insubstantial, and inadvertent action not taken in bad faith and which is remedied by the Company, a Subsidiary, or an Affiliate promptly after receipt of notice thereof given by the Participant): (i) the assignment to the Participant of duties or responsibilities materially inconsistent with, or a material diminution in, the Participant’s position, authority, duties, or responsibilities as in effect on the date of the Change in Control, (ii) a material reduction in the Participant’s base salary as in effect on the date of the Change in Control, (iii) except with regard to international employees, the relocation, without consent, of the Participant’s principal place of employment more than 25 miles from the location at which the Participant was stationed immediately prior to the Change in Control, or (iv) any material breach of any employment agreement between the Participant and the Company, a Subsidiary, or an Affiliate; provided that any event described in clauses (i) through (iv) above shall constitute Good Reason only if the Company fails to rescind or cure such event within 30 days after receipt from the Participant of written notice of the event which constitutes Good Reason; and provided, further, that Good Reason shall cease to exist for an event or condition described in clauses (i) through (iv) above on the 60th day following the latter of its occurrence or the Participant’s knowledge thereof, unless the Participant has given the Company written notice thereof prior to such date.

22. [Forfeiture in the Event of Competition and/or Solicitation or other Detrimental Acts]¹

In return for granting the Option to the Participant, the Participant agrees to the following restrictions:

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¹ Section 22 is only included in the Nonqualified Stock Option Agreement for persons holding the title of Senior Vice President or above of the Company or of Krispy Kreme Doughnut Corporation, its wholly-owned subsidiary.

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     (a)The Participant expressly agrees and covenants that during the Restricted Period (as defined below), the Participant shall not, without the prior written consent of the Company, directly or indirectly:

(i)	own, manage, control, participate in, consult with, become employed by, or otherwise render services to any Competitive Business (as defined below) in the Territory (as defined below), except that it shall not be considered a violation of this clause for the Participant to be a passive owner of not more than two percent of the outstanding stock of any class of any corporation which is publicly traded, so long as the Participant has no active participation in the business of such corporation;
(ii)	induce or attempt to induce any customer, supplier, client, or other business relation of the Company or its Affiliates to cease doing business with the Company or its Affiliates if such cessation could reasonably be expected to result in material harm to the Company;
(iii)	induce or attempt to induce any employee of the Company or its Affiliates to leave the employ of the Company or its Affiliates, or in any way interfere with the relationship between the Company or its Affiliates and any person employed by them; or
(iv)	violate the Company’s Securities Trading Policy.

     (b)The Participant expressly agrees and covenants that the Participant will not, without the prior written consent of the Company, directly or indirectly, disclose or use at any time before or after the Participant’s Termination of Employment any Confidential Information (as defined below) of which the Participant is or becomes aware, whether or not such information is developed by the Participant, except to the extent such disclosure or use is directly related to and appropriate in connection with the Participant’s performance of duties assigned to the Participant by the Company or its Affiliates. Under all circumstances and at all times, the Participant will take all appropriate steps to safeguard Confidential Information in his or her possession and to protect it against disclosure, misuse, espionage, loss, and theft.

(c)If the Committee determines that the Participant has violated any provisions of this Section 22 or that the Participant’s employment has been terminated for Cause, then the Participant agrees and covenants that:

(i)

The Participant shall automatically forfeit any rights the Participant may have with respect to the Option or underlying Shares as of the date of such determination; and

(ii)

if the Participant has exercised all or any part of the Option within the twelve-month period immediately preceding a violation of this Section 22 or termination of the Participant’s employment for Cause, upon the Company’s demand, the Participant shall immediately deliver to the Company (A) any Shares acquired upon exercise of the Option, if the Participant still owns the Shares (at which time the Company will deliver to the Participant an amount equal to the Purchase Price for such Shares), or (B) if the Participant no longer owns the Shares, an amount equal to the Gain realized by the Participant upon such exercise. For the purposes herein, “Gain” shall be equal to the disposition price per Share of any Shares sold or disposed of, multiplied by the number of Shares sold or disposed of, minus the Purchase Price paid for the Shares, and less any taxes paid which are not refundable or for which the Participant does not otherwise receive a tax credit or other form of reimbursement.

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     (d) Definitions. For purposes of this Section 22, the following definitions shall apply:

(i)	“Competitive Business” means any business listed on Exhibit A hereto.
(ii)	“Confidential Information” means information that is not generally known to the public and that was or is used, developed, or obtained by the Company or its Affiliates in connection with the business of the Company or its Affiliates and which constitutes trade secrets or information which they have attempted to protect, which may include, but is not limited to, trade “know-how,” customer information, supplier information, cost, and pricing information, marketing and sales techniques, strategies, and programs, computer programs and software, and financial information. It shall not include information (A) required to be disclosed by court or administrative order; (B) lawfully obtainable from other sources or which is in the public domain through no fault of the Participant; or (C) the disclosure of which is consented to in writing by the Company.
(iii)	“Restricted Period” means the period during which the Participant is employed by the Company or an Affiliate and twelve months following the date that the Participant ceases to be employed by the Company or an Affiliate for any reason whatsoever.
(iv)	“Territory” means:

(A)The entire United States and any other country where the Company or any of its Subsidiaries, joint venturers, franchisees, or Affiliates has operated a retail facility at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with the Company or its Affiliates;

(B)In the event that the preceding clause shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the entire United States;

(C)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the states in the United States where the Company or any of its Subsidiaries, joint venturers, franchisees, or Affiliates has operated a retail facility at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with Company or its Affiliates;

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     (D)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the area that includes all of the areas that are within a 50-mile radius of any retail store location in the United States at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with the Company or its Affiliates; and

(E)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the entire state of North Carolina.

(e)The Company may require the Participant, in connection with the exercise of the Option, to certify in a manner acceptable to the Company that the Participant has not violated the terms of this Section 22 and may decline to give effect to such exercise if the Participant fails so to certify. If the Participant is required to repay any Gain to the Company pursuant to this Section 22, the Participant shall pay such amount in such manner and on such terms and conditions as the Company may require, and the Company shall be entitled to withhold or set-off against any other amount owed to the Participant by the Company or any of its Affiliates (other than any amount owed to the Participant under any retirement plan intended to be qualified under Code Section 401(a)) up to any amount sufficient to satisfy any unpaid obligation of the Participant under this Section 22.

(f)The Participant acknowledges and agrees that the period, scope, and geographic areas of restriction imposed upon the Participant by the provisions of Section 22 are fair and reasonable and are reasonably required for the protection of the Company. In the event that any part of this Agreement, including, without limitation, Section 22, is held to be unenforceable or invalid, the remaining parts of Section 22 and this Agreement shall nevertheless continue to be valid and enforceable as though the invalid portions were not a part of this Agreement. If any one of the provisions in this Section 22 is held to be excessively broad as to period, scope, and geographic areas, any such provision shall be construed by limiting it to the extent necessary to be enforceable under Applicable Law.

(g)The Participant acknowledges that breach by the Participant of this Agreement would cause irreparable harm to the Company and that, in the event of such breach, the Company shall have, in addition to monetary damages and other remedies at law, the right to an injunction, specific performance, and other equitable relief to prevent violations of the Participant’s obligations hereunder.

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23. [Confidentiality]²

     The Participant agrees to maintain the existence and terms of this Agreement, including the number of Shares in the Option granted hereunder, as confidential, and neither the Participant nor any person acting on his or her behalf shall disclose the terms of this Agreement to any third party, other than to the Participant’s attorney, accountant, members of the Participant’s immediate family, or as required by Applicable Law. In certain instances, the Company may be required by securities regulations or other laws to disclose information about the Option and even the full content of this Agreement. In the event the Participant breaches the terms of this confidentiality provision, the Option granted hereunder shall be immediately forfeited.

[Signature Page to Follow]

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² Section 23 is not included in the Nonqualified Stock Option Agreement for Executive Officers/Section 16 reporting persons of the Company.

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     IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement hereto as of the day and year first above written.

KRISPY KREME DOUGHNUTS, INC.

By:

Title:

PARTICIPANT

Signature:

Printed Name: 

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Exhibit A

The following businesses, together with their affiliated companies, are the “Competitive Businesses” for purposes of this Agreement:

Dunkin Brands Inc.
Tim Hortons, Inc.
George Weston Limited
Interstate Bakeries Corporation
Flowers Foods, Inc.
McKee Foods Inc.
Starbucks
Dewey’s Bakery
Salem Baking Company
Dawn Food Products, Inc.
CSM Bakery Products

Or any other business that derives more than fifty percent (50%) of its revenues from the sale of doughnuts or baked goods.

The Company reserves the right to modify or amend this Exhibit A at any time and from time to time.

STOCK OPTION EXERCISE FORM

This form must be completed and returned to Krispy Kreme’s Chief Financial Officer on or before 1:00 p.m. Eastern Standard Time on date of exercise.

SECTION I

NAME (please print):	SOCIAL SECURITY NO.:
HOME ADDRESS:	WORK ADDRESS:
HOME TELEPHONE:	WORK TELEPHONE:

SECTION II: I wish to exercise the following options:

A	B	C	D
	NUMBER OF	EXERCISE	TOTAL PURCHASE PRICE:
GRANT DATE	OPTIONS	PRICE	(COLUMN B x COLUMN C)
TOTAL

SECTION III	SECTION IV
I elect to pay for my shares (check one):	I elect to pay my taxes on this transaction
	(check one):
oBroker assisted Cashless Exercise	oSell shares to cover taxes (Broker assisted
	Cashless Exercise)
oCash Purchase by Check (payable to	oCheck (payable to Krispy Kreme Doughnuts, Inc.)
Krispy Kreme Doughnuts, Inc.)
	oShare withholding
oShare delivery
oShare withholding
Signature		Date of Exercise

Return KRISPY KREME DOUGHNUTS, INC.
form to:
     ATTN: Chief Financial Officer
370 Knollwood Street
Winston-Salem, NC 27103
Phone: 336-725-2981

EX-10.2

[FORM OF]
2012 STOCK INCENTIVE PLAN
KRISPY KREME DOUGHNUTS, INC.
INCENTIVE STOCK OPTION AGREEMENT

     THIS INCENTIVE STOCK OPTION AGREEMENT (the “Agreement”) is made as of [_____] (the “Grant Date”), by and between Krispy Kreme Doughnuts, Inc., a North Carolina corporation (the “Company”), and [_______] (the “Participant”).

WITNESSETH:

WHEREAS, the Board of Directors and shareholders of the Company have approved the Krispy Kreme Doughnuts, Inc. 2012 Stock Incentive Plan (the “Plan”), for the purposes of and subject to the provisions set forth in the Plan; and

WHEREAS, pursuant to authority granted to it in the Plan, the Compensation Committee of the Board of Directors of the Company (the “Committee”) has, on behalf of the Company, granted to the Participant an incentive stock option to purchase shares of Common Stock of the Company, as set forth below; and

WHEREAS, this Agreement evidences the grant of such option pursuant to the Plan.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.Summary of Grant

Number of Shares: [_________]
Option Price: [$_________]
Date of Grant: [__________]
Expiration Date: [__________]

2.Grant of Option

This Agreement sets forth the terms of an incentive stock option (the “Option”) granted to the Participant to purchase from the Company, during the period specified in Sections 3 and 4 of this Agreement, a total of [_________] shares of Common Stock (the “Shares”), at the purchase price of [__________] per share (the “Option Price”), in accordance with the terms and conditions stated in this Agreement. To the extent that the Option is designated as an incentive stock option and such Option or portion thereof does not qualify as an incentive stock option, the Option or portion thereof shall be treated as a nonqualified stock option.

3.Vesting and Exercise of Option

(a)The Option shall vest and become exercisable in increments in accordance with the schedule set forth below, provided that the Option shall vest and become exercisable with respect to an increment as specified only if the Participant has not incurred a Termination of Employment prior to the vesting date with respect to such increment:

          (i)no portion of the Option shall vest or become exercisable prior to the first anniversary of the Grant Date;

(ii)on the first anniversary of the Grant Date, the Option shall vest and become exercisable with respect to 25% of the number of Shares subject to the Option (as indicated in Section 1);

(iii)on the second anniversary of the Grant Date, the Option shall vest and become exercisable with respect to an additional 25% of the number of Shares subject to the Option (for a total of 50% of the number of Shares subject to the Option);

(iv)on the third anniversary of the Grant Date, the Option shall vest and become exercisable with respect to an additional 25% of the number of Shares subject to the Option (for a total of 75% of the number of Shares subject to the Option); and

(v)on the fourth anniversary of the Grant Date, the Option shall vest and become exercisable with respect to the remaining 25% of the number of Shares subject to the Option (for a total of 100% of the number of Shares subject to the Option).

(b)Notwithstanding the vesting provisions described above, the Option shall vest and become exercisable with respect to 100% of the Shares upon the Participant’s Termination of Employment if the Participant’s Termination of Employment is due to his or her Retirement, death or Disability.

(c) In addition, the following provisions shall apply in the event of a Change in Control:

(i) To the extent the successor company does not assume or substitute for the Option (or the Company is the ultimate parent corporation and does not continue the Option) on substantially equivalent terms (as determined by the Committee), the Option will become vested and exercisable in full upon the effective date of the Change in Control.

(ii) Further, in the event that the Option is substituted, assumed or continued, the Option will become vested and exercisable in full if the Participant incurs a Termination of Employment within six months before (in which case vesting shall not occur until the effective date of the Change in Control) or two years after the effective date of a Change in Control if such Termination of Employment (A) is by the Company not for Cause or (B) is by the Participant for Good Reason. In the event that vesting of the Option is accelerated as a result of a Termination of Employment related to a Change in Control as provided herein, the Committee or the Board of Directors, in its discretion, may send the Participant prior written notice of the effectiveness of such event and the last day on which the Participant may exercise the Option. In such event, the Participant may, upon compliance with all of the terms of this Agreement and the Plan, purchase any or all of the Shares with respect to which the Option is vested and exercisable on or prior to the last day specified in such notice, and, to the extent the Option is not exercised, it shall (unless the Committee or the Board of Directors determines otherwise) terminate at 5:00 P.M., Winston-Salem, North Carolina time, on the last day specified in such notice. If no such notice is given, the Option shall terminate as provided in Section 4(f) herein. For the purposes herein, (X) “Good Reason” shall have the meaning set forth in Section 21(c) of the Agreement; and (Y) “Company” shall include the successor to the Company’s business or assets, or if all or substantially all of the voting stock of the Company is held by another public company, such public company.

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     The schedule set forth above is cumulative, so that Shares as to which the Option has become vested and exercisable pursuant to the provisions above may be purchased pursuant to exercise of the Option at any date subsequent to vesting but prior to termination of the Option. The Option may be exercised at any time and from time to time to purchase up to the number of Shares as to which it is then vested and exercisable.

4.Termination of Option

Unless adjusted by the Committee in its sole discretion or as otherwise provided in the Plan, the Option shall remain exercisable as specified in Section 3 above until 5:00 p.m., Winston-Salem, North Carolina time, on the earliest to occur of the dates specified below, upon which date the Option shall terminate:

(a)the date all of the Shares are purchased pursuant to the terms of this Agreement;

(b) upon the expiration of three months following the Participant’s Termination of Employment for any reason other than his or her Retirement, death, Disability, or for Cause;

(c)upon the expiration of 360 days following the Participant’s Termination of Employment on account of his or her Disability;

(d)upon the expiration of 360 days following the Participant’s Termination of Employment on account of his or her death;

(e)immediately upon the Participant’s Termination of Employment for Cause;

(f)on the last date specified in the notice described in Section 3 above in the event of a Termination of Employment by the Participant for Good Reason or by the Company other than for Cause within six months before or two years after the effective date of a Change in Control; provided that, if no such notice is given, the Option shall terminate on the one year anniversary of the date of the Participant’s Termination of Employment;

(g)on the ten year anniversary of the Grant Date (the “Expiration Date”); or

(h)on the ten year anniversary of the Grant Date in the event of the Participant’s Termination of Employment on account of Retirement.

Upon its termination, the Option shall have no further force or effect and the Participant shall have no further rights under the Option or to any Shares which have not been purchased pursuant to the prior exercise of the Option.

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5.Manner of Exercise of Option

     (a)Exercise. The Option may be exercised only by (i) the Participant’s delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised and (ii) the payment to the Company, pursuant to the terms of this Agreement, of an amount equal to the Option Price multiplied by the number of Shares being purchased as specified in the Participant’s notice of exercise (the “Purchase Price”). The Participant’s notice of exercise shall be given in the manner specified in Section 10 but any exercise of the Option shall be effective only when the items required by the preceding sentence are actually received by the Company. The notice of exercise shall be in the form attached to this Agreement or in another form provided by the Company. Notwithstanding anything to the contrary in this Agreement, the Option may be exercised only if compliance with Applicable Law can be effected, with the Committee being the final arbitrator thereof, in its sole and absolute discretion, in the event of any dispute between the Company and the Participant with regard to the interpretation of such laws.

(b)Form of Payment. Payment of the Purchase Price may be made by (i) cash or cash equivalent; (ii) authorizing a third party to sell a portion of the Shares acquired upon exercise of the Option and remit to the Company a sufficient portion of the sales proceeds to pay the full Purchase Price (that is, a broker-assisted “cashless exercise”); (iii) unless prohibited by the Committee, by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price or portion thereof, (iv) unless prohibited by the Committee, by withholding Shares subject to the Option having an aggregate Fair Market Value at the time of exercise equal to the Option Price or portion thereof, or (v) combining the above methods.

(c)Issuance and Delivery of Shares. As soon as practicable following receipt of such notice of exercise and payment, the Company shall notify the Participant of any payment required under subsection (d) below. The Company shall deliver a certificate or certificates for the Shares to the Participant (or provide other evidence of ownership of the Shares, such as tracking through book entry) as soon as practicable after the Participant has made any payment required under subsection (d) below. Shares issued pursuant to the exercise of the Option will be issued only in the name of the Participant and may not be transferred into the name of any agent of or nominee for Participant until such time as the Participant has complied with the terms of this Agreement.

(d)Taxes and Withholding.

(i)The Participant shall be responsible for all federal, state, local, and foreign income taxes payable with respect to the Option and the exercise thereof. The Participant acknowledges that he or she may incur substantial tax liability arising out of the exercise of the Option and that the Company has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for the Participant.

(ii)The Company shall have the power and right to deduct or withhold, or require the Participant to remit to the Company in cash, an amount sufficient to satisfy federal, state, local, and foreign taxes (including but not limited to the Participant’s FICA obligation), if any, required by law to be withheld with respect to any taxable event arising in connection with the Option. In lieu of the payment specified in this paragraph, the Participant may satisfy the obligation, in whole or in part, by the methods specified in subsection (b)(i) and (ii) above. In addition, unless the Committee determines otherwise and subject to such conditions as may be established by the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares with a Fair Market Value equal to (but not in excess of) the minimum statutory tax required to be withheld. The right to satisfy this obligation by cashless exercise or the withholding of Shares may be withdrawn by the approval of the Committee.

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     (e)Delay In Issuance of Shares. Anything in this Agreement to the contrary notwithstanding, if, at any time specified herein for the issuance of Shares to the Participant, any law, or any regulation or requirement of the Securities and Exchange Commission or other governmental authority having jurisdiction over such matter shall require either the Company or the Participant to take any action in connection with the Shares then to be issued, the issuance of such Shares shall be deferred until such action shall have been taken; the Company shall be under no obligation to take such action; and the Company shall have no liability whatsoever as a result of the non-issuance of such Shares, except to refund to the Participant any consideration tendered in respect of the Purchase Price.

(f)Stop Transfer Instructions. The Company may impose stop-transfer instructions with respect to any Shares (or other securities) subject to any restriction set forth in this Agreement until the restriction has been satisfied or terminates.

6.Nontransferability

To the extent that the Option is designated as an incentive stock option, the Option shall not be transferable (including by sale, assignment, pledge, or hypothecation) other than by will or the laws of intestate succession, or, in the Committee’s discretion, as may otherwise be permitted in accordance with Treas. Reg. Section 1.421-1(b)(2) or Treas. Reg. Section 1.421-2(c) or any successor provisions thereto. To the extent that the Option is treated as a nonqualified stock option, the Option shall not be transferable (including by sale, assignment, pledge, or hypothecation) other than by will or the laws of intestate succession, except for transfers without consideration if and to the extent permitted by the Committee in a manner consistent with the registration provisions of the Securities Act. Except as may be permitted by the preceding sentences, the Option shall be exercisable during the Participant’s lifetime only by the Participant or his or her guardian or legal representative. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.

7.No Rights as a Shareholder

The Participant shall not have any rights as a shareholder with respect to the Shares subject to his or her Option until the issuance of such Shares to the Participant pursuant to the exercise of the Option.

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8.No Right to Employment or Future Grants; Compliance with Applicable Law

     (a)Nothing in this Agreement shall be construed as constituting a commitment, guarantee, agreement, or understanding of any kind or nature that the Company, any Subsidiary, or other Affiliate shall continue to employ the Participant, nor shall this Agreement affect in any way the right of the Company, any Subsidiary, or other Affiliate to terminate the employment or other service of the Participant at any time and for any reason. By the Participant’s execution of this Agreement, the Participant acknowledges and agrees that the Participant’s employment or other service to the Company, any Subsidiary, or other Affiliate is “at will.” The Participant acknowledges and agrees that the award and acceptance of the Option pursuant to this Agreement does not entitle the Participant to future grants under the Plan or any other plan.

(b)The Company may impose such restrictions on the Option, the Shares, and any other benefits underlying the Option as it may deem advisable, including, without limitation, restrictions under the federal securities laws, the requirements of any securities exchange or similar organization, and any blue sky, state, or foreign securities laws applicable to such securities. The Company shall not be obligated to issue, deliver, or transfer Shares, make any other distribution of benefits under the Plan, or take any other action, unless such delivery, distribution, or action is in compliance with Applicable Law (including but not limited to the requirements of the Securities Act). The Company will be under no obligation to register the Shares or other securities with the Securities and Exchange Commission or to effect compliance with the exemption, registration, qualification, or listing requirements of any state or foreign securities laws or securities exchange or similar organization, and the Company will have no liability for any inability or failure to do so. The Company may cause a restrictive legend or legends to be placed on any certificate issued pursuant to the Option hereunder in such form as may be prescribed from time to time by Applicable Law or as may be advised by legal counsel.

9.Successors and Assigns

(a)This Agreement shall be binding upon and inure to the benefit of any assignee or successor in interest to the Company, whether by merger, consolidation, or the sale of all or substantially all of the Company’s assets.

(b)This Agreement shall be binding upon and inure to the benefit of the Participant and his or her legal representative and any person to whom the Option may be transferred by will, the applicable laws of intestate succession, or otherwise in accordance with the terms of the Plan.

10.Notices

Any and all notices under this Agreement shall be in writing, and sent by hand delivery or by certified or registered mail (return receipt requested and first-class postage prepaid), in the case of the Company, to its principal executive offices to the attention of the Chief Financial Officer, and, in the case of the Participant, to the Participant’s address as shown on the Company’s records.

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11.Entire Agreement

     The parties hereto agree that this Agreement sets forth all of the promises, agreements, conditions, understandings, warranties, and representations between the parties with respect to the Option and the Shares and that there are no promises, agreements, conditions, understandings, warranties, or representations, oral or written, express or implied between the parties with respect to the Option and the Shares other than as set forth in this Agreement and in the Plan.

12.Amendment of Agreement

This Agreement may be modified, amended, suspended, or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the parties hereto and otherwise in accordance with the Plan. Notwithstanding the foregoing, the Committee shall have unilateral authority to amend the Agreement (without the Participant’s consent) to the extent necessary to comply with Applicable Law or changes to Applicable Law (including but in no way limited to Code Section 409A, Code Section 422, and federal securities laws).

13.Severability

The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially unenforceable provision to the extent enforceable in any jurisdiction, shall nevertheless be binding and enforceable.

14.Waiver

The waiver by the Company of a breach of any provision of this Agreement by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.

15.Plan Controls

This Agreement and the Option are subject in all respects to the terms and conditions of the Plan (which are incorporated herein by reference). Except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. To the extent that any conflict may exist between any term or provision of this Agreement and any term or provision of the Plan, such term or provision of the Plan shall control, unless the Committee determines otherwise.

16.Agreement to be Bound by Plan

The Participant acknowledges that the Participant fully understands his or her rights under the Plan, and that the Participant agrees to be bound by all terms and conditions of the Plan. The Participant acknowledges that the Participant has received a copy of the Plan prospectus.

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17.Authority of Committee

     All determinations made by the Committee with respect to the interpretation, construction, and application of any provision of this Agreement shall be final, conclusive, and binding on the parties.

18.Covenants and Representations of Participant

The Participant represents, warrants, covenants, and agrees with the Company as follows:

(a)The Participant has not relied upon the Company with respect to any tax consequences related to the Option or the Shares. The Participant assumes full responsibility for all such tax consequences and the filing of all tax returns and elections the Participant may be required or find desirable to file in connection therewith.

(b)The Participant will not distribute or resell any Shares (or other securities) issuable upon exercise of the Option granted hereby in violation of Applicable Law. The Participant shall comply with all provisions of the Company’s Securities Trading Policy, as in effect from time to time.

(c)The agreements, representations, warranties, and covenants made by the Participant herein with respect to the Option shall also extend and apply to all of the Shares issued to the Participant from time to time pursuant to exercise of the Option. Acceptance by the Participant of any certificate representing the Shares (or other evidence of beneficial ownership) shall constitute a confirmation by the Participant that all such agreements, representations, warranties, and covenants made herein continue to be true and correct at that time.

(d)As a condition to receiving this award, the Participant agrees to abide by the Company’s Equity Retention Policy, Compensation Recovery Policy, and Stock Ownership Guidelines and/or other similar policies, each as in effect from time to time and to the extent applicable to the Participant. In addition, the Participant shall be subject to such compensation recovery, recoupment, forfeiture, or other similar provisions as may apply to the Participant under Applicable Law.

19.Limitation of Liability

The liability of the Company under this Agreement and in the award of the Option hereunder is limited to the obligations set forth herein with respect to such award, and nothing herein contained shall be interpreted as imposing any liability in favor of the Participant or any others with respect to any loss, cost, or expense which the Participant or any others may incur in connection with or arising out of any transaction involving the Option or the Shares.

20.Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of North Carolina, without giving effect to the principles of conflicts of laws, and in accordance with applicable federal laws.

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21.Definitions

     (a)“Retirement” shall mean the Participant’s Termination of Employment at a time when the sum of the Participant’s age and years of employment with the Company, its Subsidiaries, or other Affiliates equals or exceeds 65, provided that the Participant shall have attained a minimum age of 55.

(b)“Termination of Employment” means the discontinuance of the Participant’s service relationship with the Company, its Subsidiaries, or another Affiliate, including but not limited to service as an employee of the Company, its Subsidiaries, or another Affiliate, as a non-employee member of the Board of Directors of the Company, or as a consultant or advisor to the Company, its Subsidiaries, or another Affiliate. Except to the extent provided otherwise in an agreement or determined otherwise by the Committee, a Termination of Employment shall not be deemed to have occurred if the Participant transfers among the various entities constituting the Company and its Subsidiaries, so long as there is no interruption in the provision of service by the Participant to the Company and its Subsidiaries. The Participant shall not be deemed to have incurred a Termination of Employment if the Participant is on military leave, sick leave, or other bona fide leave of absence approved by the Company of 180 days or fewer (or any longer period during which the Participant is guaranteed reemployment by statute or contract). In the event the Participant’s leave of absence exceeds this period, he or she will be deemed to have incurred a Termination of Employment on the day following the expiration date of such period, unless determined otherwise by the Committee.

(c)“Good Reason” shall have the meaning assigned such term in the employment agreement, if any, between the Participant and the Company, a Subsidiary, or an Affiliate, provided, however that if there is no such employment agreement in which such term is defined, “Good Reason” shall mean any of the following acts by the Company, a Subsidiary, or an Affiliate within the six-month period before or the two-year period afterthe effective date of a Change in Control, without the consent of the Participant (in each case, other than an isolated, insubstantial, and inadvertent action not taken in bad faith and which is remedied by the Company, a Subsidiary, or an Affiliate promptly after receipt of notice thereof given by the Participant): (i) the assignment to the Participant of duties or responsibilities materially inconsistent with, or a material diminution in, the Participant’s position, authority, duties, or responsibilities as in effect on the date of the Change in Control, (ii) a material reduction in the Participant’s base salary as in effect on the date of the Change in Control, (iii) except with regard to international employees, the relocation, without consent, of the Participant’s principal place of employment more than 25 miles from the location at which the Participant was stationed immediately prior to the Change in Control, or (iv) any material breach of any employment agreement between the Participant and the Company, a Subsidiary, or an Affiliate; provided that any event described in clauses (i) through (iv) above shall constitute Good Reason only if the Company fails to rescind or cure such event within 30 days after receipt from the Participant of written notice of the event which constitutes Good Reason; and provided, further, that Good Reason shall cease to exist for an event or condition described in clauses (i) through (iv) above on the 60th day following the latter of its occurrence or the Participant’s knowledge thereof, unless the Participant has given the Company written notice thereof prior to such date.

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22. [Forfeiture in the Event of Competition and/or Solicitation or other Detrimental Acts]¹

     In return for granting the Option to the Participant, the Participant agrees to the following restrictions:

(a)The Participant expressly agrees and covenants that during the Restricted Period (as defined below), the Participant shall not, without the prior written consent of the Company, directly or indirectly:

(i)own, manage, control, participate in, consult with, become employed by, or otherwise render services to any Competitive Business (as defined below) in the Territory (as defined below), except that it shall not be considered a violation of this clause for the Participant to be a passive owner of not more than two percent of the outstanding stock of any class of any corporation which is publicly traded, so long as the Participant has no active participation in the business of such corporation;

(ii)induce or attempt to induce any customer, supplier, client, or other business relation of the Company or its Affiliates to cease doing business with the Company or its Affiliates if such cessation could reasonably be expected to result in material harm to the Company;

(iii)induce or attempt to induce any employee of the Company or its Affiliates to leave the employ of the Company or its Affiliates, or in any way interfere with the relationship between the Company or its Affiliates and any person employed by them; or

(iv)violate the Company’s Securities Trading Policy.

(b)The Participant expressly agrees and covenants that the Participant will not, without the prior written consent of the Company, directly or indirectly, disclose or use at any time before or after the Participant’s Termination of Employment any Confidential Information (as defined below) of which the Participant is or becomes aware, whether or not such information is developed by the Participant, except to the extent such disclosure or use is directly related to and appropriate in connection with the Participant’s performance of duties assigned to the Participant by the Company or its Affiliates. Under all circumstances and at all times, the Participant will take all appropriate steps to safeguard Confidential Information in his or her possession and to protect it against disclosure, misuse, espionage, loss, and theft.

(c)If the Committee determines that the Participant has violated any provisions of this Section 22 or that the Participant’s employment has been terminated for Cause, then the Participant agrees and covenants that:

(i)The Participant shall automatically forfeit any rights the Participant may have with respect to the Option or underlying Shares as of the date of such determination; and

____________________

¹ Section 22 is only included in the Incentive Stock Option Agreement for persons holding the title of Senior Vice President or above of the Company or of Krispy Kreme Doughnut Corporation, its wholly-owned subsidiary.

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          (ii)if the Participant has exercised all or any part of the Option within the twelve-month period immediately preceding a violation of this Section 22 or termination of the Participant’s employment for Cause, upon the Company’s demand, the Participant shall immediately deliver to the Company (A) any Shares acquired upon exercise of the Option, if the Participant still owns the Shares (at which time the Company will deliver to the Participant an amount equal to the Purchase Price for such Shares), or (B) if the Participant no longer owns the Shares, an amount equal to the Gain realized by the Participant upon such exercise. For the purposes herein, “Gain” shall be equal to the disposition price per Share of any Shares sold or disposed of, multiplied by the number of Shares sold or disposed of, minus the Purchase Price paid for the Shares, and less any taxes paid which are not refundable or for which the Participant does not otherwise receive a tax credit or other form of reimbursement.

     (d)Definitions. For purposes of this Section 22, the following definitions shall apply:

(i)“Competitive Business” means any business listed on Exhibit A hereto.

(ii)“Confidential Information” means information that is not generally known to the public and that was or is used, developed, or obtained by the Company or its Affiliates in connection with the business of the Company or its Affiliates and which constitutes trade secrets or information which they have attempted to protect, which may include, but is not limited to, trade “know-how,” customer information, supplier information, cost and pricing information, marketing and sales techniques, strategies, and programs, computer programs and software, and financial information. It shall not include information (A) required to be disclosed by court or administrative order; (B) lawfully obtainable from other sources or which is in the public domain through no fault of Participant; or (C) the disclosure of which is consented to in writing by the Company.

(iii)“Restricted Period” means the period during which the Participant is employed by the Company or an Affiliate and twelve months following the date that the Participant ceases to be employed by the Company or an Affiliate for any reason whatsoever.

(iv)“Territory” means:

(A)The entire United States and any other country where the Company or any of its Subsidiaries, joint venturers, franchisees, or Affiliates has operated a retail facility at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with the Company or its Affiliates;

     (B)In the event that the preceding clause shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the entire United States;

(C)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the states in the United States where the Company or any of its Subsidiaries, joint venturers, franchisees, or Affiliates has operated a retail facility at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with the Company or its Affiliates;

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     (D)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the area that includes all of the areas that are within a 50-mile radius of any retail store location in the United States at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with the Company or its Affiliates; and

(E)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the entire state of North Carolina.

(e)The Company may require the Participant, in connection with the exercise of the Option, to certify in a manner acceptable to the Company that the Participant has not violated the terms of this Section 22 and may decline to give effect to such exercise if the Participant fails so to certify. If the Participant is required to repay any Gain to the Company pursuant to this Section 22, the Participant shall pay such amount in such manner and on such terms and conditions as the Company may require, and the Company shall be entitled to withhold or set-off against any other amount owed to the Participant by the Company or any of its Affiliates (other than any amount owed to the Participant under any retirement plan intended to be qualified under Code Section 401(a)) up to any amount sufficient to satisfy any unpaid obligation of the Participant under this Section 22.

(f)The Participant acknowledges and agrees that the period, scope, and geographic areas of restriction imposed upon the Participant by the provisions of Section 22 are fair and reasonable and are reasonably required for the protection of the Company. In the event that any part of this Agreement, including, without limitation, Section 22, is held to be unenforceable or invalid, the remaining parts of Section 22 and this Agreement shall nevertheless continue to be valid and enforceable as though the invalid portions were not a part of this Agreement. If any one of the provisions in this Section 22 is held to be excessively broad as to period, scope, and geographic areas, any such provision shall be construed by limiting it to the extent necessary to be enforceable under Applicable Law.

(g)The Participant acknowledges that breach by the Participant of this Agreement would cause irreparable harm to the Company and that, in the event of such breach, the Company shall have, in addition to monetary damages and other remedies at law, the right to an injunction, specific performance, and other equitable relief to prevent violations of the Participant’s obligations hereunder.

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23.[Confidentiality]²

     The Participant agrees to maintain the existence and terms of this Agreement, including the number of Shares in the Option granted hereunder, as confidential, and neither the Participant nor any person acting on his or her behalf shall disclose the terms of this Agreement to any third party, other than to the Participant’s attorney, accountant, members of the Participant’s immediate family, or as required by Applicable Law. In certain instances, the Company may be required by securities regulations or other laws to disclose information about the Option and even the full content of this Agreement. In the event the Participant breaches the terms of this confidentiality provision, the Option granted hereunder shall be immediately forfeited.

24.Limitation on Incentive Stock Options.

In no event shall there first become exercisable by the Participant in any one calendar year incentive stock options granted by the Company or any Parent or Subsidiary with respect to shares having an aggregate Fair Market Value (determined at the time an incentive stock option is granted) greater than $100,000. To the extent that any incentive stock option is first exercisable by the Participant in excess of such limitation, the excess shall be considered a nonqualified stock option.

25.Notice of Disposition.

To the extent that the Option is designated as an incentive stock option, if shares of Common Stock acquired upon exercise of the Option are disposed of within two years following the date of grant or one year following the transfer of such shares to the Participant upon exercise, the Participant shall, promptly following such disposition, notify the Company in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Committee may reasonably require.

[Signature Page to Follow]

____________________

² Section 23 is not included in the Incentive Stock Option Agreement for Executive Officers/Section 16 reporting persons of the Company.

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     IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement hereto as of the day and year first above written.

KRISPY KREME DOUGHNUTS, INC.

By:

Title:

PARTICIPANT

Signature:

Printed Name:

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Exhibit A

The following businesses, together with their affiliated companies, are the “Competitive Businesses” for purposes of this Agreement:

Dunkin Brands Inc.
Tim Hortons, Inc.
George Weston Limited
Interstate Bakeries Corporation
Flowers Foods, Inc.
McKee Foods Inc.
Starbucks
Dewey’s Bakery
Salem Baking Company
Dawn Food Products, Inc.
CSM Bakery Products

Or any other business that derives more than fifty percent (50%) of its revenues from the sale of doughnuts or baked goods.

The Company reserves the right to modify or amend this Exhibit A at any time and from time to time.

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STOCK OPTION EXERCISE FORM

This form must be completed and returned to Krispy Kreme’s Chief Financial Officer on or before 1:00 p.m. Winston-Salem, North Carolina time on date of exercise.

SECTION I

NAME (please print):	SOCIAL SECURITY NO.:
HOME ADDRESS:	WORK ADDRESS:
HOME TELEPHONE:	WORK TELEPHONE:

SECTION II: I wish to exercise the following options:

A	B	C	D
	NUMBER OF	EXERCISE	TOTAL PURCHASE PRICE:
GRANT DATE	OPTIONS	PRICE	(COLUMN B x COLUMN C)
TOTAL

SECTION III		SECTION IV
I elect to pay for my shares (check one):		I elect to pay my taxes on this transaction (check one):
o	Broker assisted Cashless Exercise	o	Sell shares to cover taxes (Broker assisted
			Cashless Exercise)
o	Cash Purchase by Check (payable to	o	Check (payable to Krispy Kreme Doughnuts, Inc.)
	Krispy Kreme Doughnuts, Inc.)
		o	Share withholding
o	Share delivery
o	Share withholding

Signature Date of Exercise

Return KRISPY KREME DOUGHNUTS, INC.
form to:
            ATTN: Chief Financial Officer
            370 Knollwood Street
            Winston-Salem, NC 27103
            Phone: 336-725-2981

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EX-10.3

[FORM OF]
KRISPY KREME DOUGHNUTS, INC.
2012 STOCK INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT

     THIS AGREEMENT (the “Agreement”) is made as of [_______________], by and between Krispy Kreme Doughnuts, Inc., a North Carolina corporation (the “Company”), and [___________________] (the “Participant”).

W I T N E S S E T H:

WHEREAS, the Board of Directors and shareholders of the Company have approved the Krispy Kreme Doughnuts, Inc. 2012 Stock Incentive Plan, as it may be amended (the “Plan”), for the purposes and subject to the provisions set forth in the Plan; and

WHEREAS, the Plan provides for the grant of restricted stock awards; and

WHEREAS, pursuant to authority granted to it in the Plan, the Compensation Committee of the Board of Directors of the Company (the “Committee”) has, on behalf of the Company, granted to the Participant restricted shares of Common Stock of the Company, as set forth below; and

WHEREAS, this Agreement evidences the grant of a restricted stock award under the Plan;

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1. Award of Restricted Stock

This Agreement sets forth the terms of an award (the “Award”) to the Participant of [________] restricted shares of the Company’s Common Stock (the “Restricted Stock”), subject to, and in accordance with, the restrictions, terms, and conditions set forth in the Plan and this Agreement. The grant date of this Award of Restricted Stock is [______________] (the “Grant Date”).

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2. Vesting of Award; Forfeiture

If the Participant remains employed by the Company, the Participant shall become vested in the Restricted Stock in [____________] equal installments beginning on [____________], and continuing on the next [____________] anniversaries of the Grant Date (each such date shall be a “Vesting Date”), all as set forth below:

	Cumulative Number
	of
Date	Shares Vested
[               ]	[               ]
[               ]	[               ]
[               ]	[               ]

     On each Vesting Date, the Participant shall own the vested shares of Restricted Stock free and clear of all forfeiture restrictions imposed by this Agreement (other than those imposed under Section 15(d) and Section 22). The Company shall deliver a certificate(s) (or other evidence of ownership, such as book entry) for the vested shares of Restricted Stock to the Participant as soon as practical after each Vesting Date. For purposes of this Agreement, employment with a Subsidiary or other Affiliate of the Company shall be considered employment with the Company. The Award and any related unvested Restricted Stock shall be automatically forfeited upon the Participant’s Termination of Employment for any reason (whether by the Company or the Participant and whether voluntary or involuntary) other than a Termination of Employment due to the Participant’s death, Retirement, or Disability or in the event of a Termination of Employment due to a Change in Control under the circumstances provided in Section 6 herein. In the event (a) of a Termination of Employment of the Participant due to his or her death, Retirement, or Disability, or (b) the Participant incurs a Termination of Employment by the Company not for Cause or by the Participant for Good Reason within six months before or two years after a Change in Control as provided in Section 6 herein, the Restricted Stock will become immediately vested in full.

3. Rights as a Shareholder

Except as otherwise provided in this Agreement or the Plan, the Participant shall have the rights of a shareholder of the Company with respect to the shares of Restricted Stock, including the right to vote such shares, except that (a) any dividends declared and paid by the Company on shares of Restricted Stock shall be paid in the form of Restricted Stock (with such Restricted Stock, in the case of cash dividends, having a Fair Market Value on the dividend payment date equal to the amount of the cash dividend), and (b) any shares of Restricted Stock representing such dividends will vest, if at all, at the same time as the shares of Restricted Stock in respect of which they are issued and shall otherwise have terms identical to the terms of such Restricted Stock.

4. Certificates

The Restricted Stock granted hereunder may be evidenced in such manner as the Committee shall determine, including, but not limited to, tracking through book entry. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend (the “Restrictive Legend”) referring to the terms, conditions, and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company (or similar instrument), endorsed in blank, relating to the Restricted Stock. Upon the vesting of the Restricted Stock pursuant to the terms hereof and the satisfaction of any withholding tax liability pursuant to Section 7 hereof, the certificates evidencing such vested shares of Common Stock, not bearing the Restrictive Legend, shall be delivered to the Participant or other evidence of vesting of shares of Common Stock shall be provided to the Participant, such as tracking through book entry.

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5. Nontransferability

     Unless the Committee determines otherwise, no grant of, nor any right or interest of the Participant in or to, the Award may be assigned, encumbered, or transferred except, in the event of the death of the Participant, by will or the laws of intestate succession.

6. Change in Control

Notwithstanding the other provisions of the Agreement, the following provisions shall apply in the event of a Change in Control:

(a)To the extent the successor company does not assume or substitute for the Award (or the Company is the ultimate parent corporation and does not continue the Award) on substantially equivalent terms (as determined by the Committee), the Award will become vested in full upon the effective date of the Change in Control.

(b)Further, in the event that the Award is substituted, assumed, or continued, the Award will become vested in full if the Participant incurs a Termination of Employment within six months before (in which case vesting shall not occur until the effective date of the Change in Control) or two years after the effective date of a Change in Control if such Termination of Employment (i) is by the Company not for Cause or (ii) is by the Participant for Good Reason. For the purposes herein, (A) “Good Reason” shall have the meaning set forth in Section 21(c) of the Agreement; and (B) “Company” shall include the successor to the Company’s business or assets, or if all or substantially all of the voting stock of the Company is held by another public company, such public company.

7. Taxes and Withholding

(a)The Participant shall be responsible for all federal, state, local, and foreign income taxes payable with respect to the Award. The Participant acknowledges that he or she may incur substantial tax liability as a result of the grant or vesting of the Award and that the Company has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for the Participant.

(b)The Company shall have the right to retain and withhold from any vesting of Restricted Stock the minimum amount of taxes (including but not limited to the Participant’s FICA obligation), if any, required by any government to be withheld or otherwise deducted and paid with respect to such vesting. At its discretion, the Company may require the Participant to immediately pay the Company in cash or reimburse the Company for any such taxes required to be withheld and may withhold any distribution in whole or in part until the Company is so paid or reimbursed. In lieu thereof, the Company shall have the right to withhold from any other cash amounts due to the Participant an amount equal to such taxes required to be withheld or withhold and cancel (in whole or in part) a number of shares of Restricted Stock having a market value equal to the amount of such taxes. In addition, unless the Committee determines otherwise and subject to such conditions as may be established by the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares with a Fair Market Value equal to the minimum statutory tax required to be withheld. The right to withhold shares of Common Stock with a Fair Market Value equal to (but not in excess of) the minimum statutory tax required to be withheld to satisfy the withholding requirement may be withdrawn by the approval of the Committee.

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8. Amendment of Agreement

     This Agreement may be modified, amended, suspended, or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the parties hereto and otherwise in accordance with the Plan. Notwithstanding the foregoing, the Committee shall have unilateral authority to amend the Agreement (without the Participant’s consent) to the extent necessary to comply with Applicable Law or changes to Applicable Law (including but in no way limited to Code Section 409A and federal securities laws).

9. Severability

The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially unenforceable provision to the extent enforceable in any jurisdiction, shall nevertheless be binding and enforceable.

10. Notices

Any and all notices under this Agreement shall be in writing, and sent by hand delivery or by certified or registered mail (return receipt requested and first-class postage prepaid), in the case of the Company, to its principal executive offices to the attention of the Chief Financial Officer, and, in the case of the Participant, to the Participant’s address as shown on the Company’s records.

11. Successors and Assigns

(a)This Agreement shall be binding upon and inure to the benefit of any assignee or successor in interest to the Company, whether by merger, consolidation, or the sale of all or substantially all of the Company’s assets.

(b)This Agreement shall be binding upon and inure to the benefit of the Participant and his or her legal representative and any person to whom the Restricted Stock may be transferred by will, the applicable laws of intestate succession, or otherwise in accordance with the terms of the Plan.

12. Agreement to be Bound by Plan

The Participant hereby acknowledges that the Participant fully understands his or her rights under the Plan, and that the Participant agrees to be bound by all the terms and provisions of the Plan. The Participant acknowledges that the Participant has received a copy of the Plan prospectus.

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13. Plan Controls

     This Agreement and the Award are subject in all respects to the terms and conditions of the Plan (which are incorporated herein by reference). Except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. To the extent that any conflict may exist between any term or provision of this Agreement and any term or provision of the Plan, such term or provision of the Plan shall control, unless the Committee determines otherwise.

14. No Right to Employment or Future Grants; Compliance with Applicable Law

(a)Nothing in this Agreement shall be construed as constituting a commitment, guarantee, agreement, or understanding of any kind or nature that the Company, any Subsidiary, or any Affiliate shall continue to employ the Participant, nor shall this Agreement affect in any way the right of the Company, any Subsidiary, or any Affiliate to terminate the employment or other service of the Participant at any time and for any reason. By the Participant’s execution of this Agreement, the Participant reaffirms and acknowledges and agrees that the Participant’s employment or other service to the Company, any Subsidiary, or any Affiliate is “at will.” The Participant acknowledges and agrees that the award and acceptance of Restricted Stock pursuant to this Agreement does not entitle the Participant to future grants under the Plan or any other plan.

(b)The Company may impose such restrictions on the Award, the shares of Common Stock subject to the Award, and any other benefits underlying the Award as it may deem advisable, including without limitation restrictions under the federal securities laws, the requirements of any securities exchange or similar organization, and any blue sky, state, or foreign securities laws applicable to such securities. The Company shall not be obligated to issue, deliver, or transfer shares of Common Stock, make any other distribution of benefits under the Plan, or take any other action, unless such delivery, distribution, or action is in compliance with Applicable Law (including but not limited to the requirements of the Securities Act). The Company will be under no obligation to register the shares of Common Stock or other securities with the Securities and Exchange Commission or to effect compliance with the exemption, registration, qualification, or listing requirements of any state or foreign securities laws, or any securities exchange or similar organization, and the Company will have no liability for any inability or failure to do so. The Company may cause a restrictive legend or legends to be placed on any certificate issued pursuant to the Award in such form as may be prescribed from time to time by Applicable Law or as may be advised by legal counsel.

15. Covenants and Representations of Participant

The Participant represents, warrants, covenants, and agrees with the Company as follows:

(a)The Participant has not relied upon the Company with respect to any tax consequences related to the Award or the shares of Common Stock subject thereto. The Participant assumes full responsibility for all such tax consequences and the filing of all tax returns and elections the Participant may be required or find desirable to file in connection therewith.

5

     (b)The Participant will not distribute or resell any shares of Common Stock subject to the Award (or other securities) issuable upon lapse of the restrictions hereunder in violation of Applicable Law. The Participant shall comply with all provisions of the Company’s Securities Trading Policy, as in effect from time to time.

(c)The agreements, representations, warranties, and covenants made by the Participant herein with respect to the Award shall also extend and apply to all of the shares issued to the Participant from time to time upon the lapse of the restrictions. Acceptance by the Participant of any certificate representing shares (or other evidence of beneficial ownership) shall constitute a confirmation by the Participant that all such agreements, representations, warranties, and covenants made herein continue to be true and correct at that time.

(d)As a condition to receiving this Award, the Participant agrees that he or she shall abide by all provisions of the Company’s Equity Retention Policy, Compensation Recovery Policy, and Stock Ownership Guidelines and/or other similar policies, each as in effect from time to time and to the extent applicable to the Participant. In addition, the Participant shall be subject to such compensation recovery, recoupment, forfeiture, or other similar provisions as may apply to the Participant under Applicable Law.

16. Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of North Carolina, without giving effect to the principles of conflicts of laws, thereof, and in accordance with applicable federal laws.

17. Waiver

The waiver by the Company of a breach of any provision of this Agreement by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.

18. Limitation of Liability

The liability of the Company under this Agreement and in the Award is limited to the obligations set forth herein with respect to such Award, and nothing herein contained shall be interpreted as imposing any liability in favor of the Participant or any others with respect to any loss, cost, or expense which the Participant or others may incur in connection with or arising out of any transaction involving the Award or the shares of Common Stock subject thereto.

19. Entire Agreement

The parties hereto agree that this Agreement sets forth all of the promises, agreements, conditions, understandings, warranties, and representations between the parties with respect to the Award and that there are no promises, agreements, conditions, understandings, warranties, or representations, oral or written, express or implied between the parties with respect to the Award other than as set forth in this Agreement and in the Plan.

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20. Authority of Committee

     All determinations made by the Committee with respect to the interpretation, construction, and application of any provision of this Agreement shall be final, conclusive, and binding on the parties.

21. Definitions

(a)“Retirement” shall mean the Participant’s Termination of Employment at a time when the sum of the Participant’s age and years of employment with the Company, its Subsidiaries, or other Affiliates equals or exceeds 65, provided that the Participant shall have attained a minimum age of 55.

(b)“Termination of Employment” means the discontinuance of the Participant’s service relationship with the Company, its Subsidiaries, or another Affiliate, including but not limited to service as an employee of the Company, its Subsidiaries, or another Affiliate, as a non-employee member of the Board of Directors of the Company, or as a consultant or advisor to the Company, its Subsidiaries, or another Affiliate. Except to the extent provided otherwise in an agreement or determined otherwise by the Committee, a Termination of Employment shall not be deemed to have occurred if the Participant transfers among the various entities constituting the Company and its Subsidiaries, so long as there is no interruption in the provision of service by the Participant to the Company and its Subsidiaries. The determination of whether the Participant has incurred a Termination of Employment shall be made by the Committee in its discretion. The Participant shall not be deemed to have incurred a Termination of Employment if the Participant is on military leave, sick leave, or other bona fide leave of absence approved by the Company of 180 days or fewer (or any longer period during which the Participant is guaranteed reemployment by statute or contract). In the event the Participant’s leave of absence exceeds this period, he or she will be deemed to have incurred a Termination of Employment on the day following the expiration date of such period, unless determined otherwise by the Committee.

(c)“Good Reason” shall have the meaning assigned to such term in the employment agreement, if any, between the Participant and the Company, a Subsidiary, or an Affiliate, provided, however that if there is no such employment agreement in which such term is defined, “Good Reason” shall mean any of the following acts by the Company, a Subsidiary, or an Affiliate within the six month period before or two-year period after the effective date of a Change in Control, without the consent of the Participant (in each case, other than an isolated, insubstantial, and inadvertent action not taken in bad faith and which is remedied by the Company, a Subsidiary, or an Affiliate promptly after receipt of notice thereof given by the Participant): (i) the assignment to the Participant of duties or responsibilities materially inconsistent with, or a material diminution in, the Participant’s position, authority, duties, or responsibilities as in effect on the date of the Change in Control, (ii) a material reduction in the Participant’s base salary as in effect on the date of the Change in Control, (iii) except with regard to international employees, the relocation, without consent, of the Participant’s principal place of employment more than 25 miles from the location at which the Participant was stationed immediately prior to the Change in Control, or (iv) any material breach of any employment agreement between the Participant and the Company, a Subsidiary, or an Affiliate; provided that any event described in clauses (i) through (iv) above shall constitute Good Reason only if the Company fails to rescind or cure such event within 30 days after receipt from the Participant of written notice of the event which constitutes Good Reason; and provided, further, that Good Reason shall cease to exist for an event or condition described in clauses (i) through (iv) above on the 60th day following the latter of its occurrence or the Participant’s knowledge thereof, unless the Participant has given the Company written notice thereof prior to such date.

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22. [Forfeiture in the Event of Competition and/or Solicitation or other Detrimental Acts]¹

     In return for granting the Restricted Stock to the Participant, the Participant agrees to the following restrictions.

(a)The Participant expressly agrees and covenants that during the Restricted Period (as defined below), the Participant shall not, without the prior written consent of the Company, directly or indirectly:

(i)own, manage, control, participate in, consult with, become employed by, or otherwise render services to any Competitive Business (as defined below) in the Territory (as defined below), except that it shall not be considered a violation of this clause for the Participant to be a passive owner of not more than two percent of the outstanding stock of any class of any corporation which is publicly traded, so long as the Participant has no active participation in the business of such corporation;

(ii)induce or attempt to induce any customer, supplier, client, or other business relation of the Company or its Affiliates to cease doing business with the Company or its Affiliates if such cessation could reasonably be expected to result in material harm to the Company;

(iii)induce or attempt to induce any employee of the Company or its Affiliates to leave the employ of the Company or its Affiliates, or in any way interfere with the relationship between the Company or its Affiliates and any person employed by them; or

(iv)violate the Company’s Securities Trading Policy.

(b)The Participant expressly agrees and covenants that the Participant will not, without the prior written consent of the Company, directly or indirectly, disclose or use at any time before or after the Participant’s Termination of Employment any Confidential Information (as defined below) of which the Participant is or becomes aware, whether or not such information is developed by the Participant, except to the extent such disclosure or use is directly related to and appropriate in connection with the Participant’s performance of duties assigned to the Participant by the Company or its Affiliates. Under all circumstances and at all times, the Participant will take all appropriate steps to safeguard Confidential Information in his or her possession and to protect it against disclosure, misuse, espionage, loss, and theft.

____________________

¹ Section 22 is only included in the Restricted Stock Award Agreement for persons holding the title of Senior Vice President or above of the Company or of Krispy Kreme Doughnut Corporation, its wholly-owned subsidiary.

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     (c)If the Committee determines that the Participant has violated any provisions of this Section 22 or that the Participant’s employment has been terminated for Cause, then the Participant agrees and covenants that:

(i)the Participant shall automatically forfeit any rights the Participant may have with respect to the Award or the underlying shares of Common Stock as of the date of such determination; and

(ii)if the Participant has received a distribution of all or any part of the shares of Common Stock subject to the Award within the twelve-month period immediately preceding a violation of this Section 22 or termination of the Participant’s employment for Cause, upon the Company’s demand, the Participant shall immediately deliver to the Company (A) the shares of Common Stock subject to the Award which have been distributed during such period (without the payment by the Company of any consideration for such shares), if the Participant still owns such shares, or (B) if the Participant no longer owns such shares, an amount equal to the Gain realized by the Participant with respect to the shares of Common Stock subject to the Award. For the purposes herein, “Gain” shall be equal to the disposition price per share of any shares of Common Stock received pursuant to the Award which shares were sold or disposed of, multiplied by the number of such shares sold or disposed of, and less any taxes paid which are not refundable or for which the Participant does not otherwise receive a tax credit or other form of reimbursement.

(d) Definitions. For purposes of this Section 22, the following definitions shall apply:

(i) “Competitive Business” means any business listed on Exhibit A hereto.

(ii) “Confidential Information” means information that is not generally known to the public and that was or is used, developed or obtained by the Company or its Affiliates in connection with the business of the Company or its Affiliates and which constitutes trade secrets or information which they have attempted to protect, which may include, but is not limited to, trade “know-how,” customer information, supplier information, cost and pricing information, marketing and sales techniques, strategies and programs, computer programs and software, and financial information. It shall not include information (A) required to be disclosed by court or administrative order; (B) lawfully obtainable from other sources or which is in the public domain through no fault of the Participant; or (C) the disclosure of which is consented to in writing by the Company.

(iii)“Restricted Period” means the period during which the Participant is employed by the Company or an Affiliate and twelve months following the date that the Participant ceases to be employed by the Company or an Affiliate for any reason whatsoever.

(iv)“Territory” means:

(A)The entire United States and any other country where the Company or any of its Subsidiaries, joint venturers, franchisees, or Affiliates has operated a retail facility at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with the Company or its Affiliates;

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     (B)In the event that the preceding clause shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the entire United States;

(C)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the states in the United States where the Company or any of its Subsidiaries, joint venturers, franchisees, or Affiliates has operated a retail facility at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with the Company or its Affiliates;

(D)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the area that includes all of the areas that are within a 50-mile radius of any retail store location in the United States at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with the Company or its Affiliates; and

(E)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the entire state of North Carolina.

(e)The Company may require the Participant, in connection with the distribution of the shares of Common Stock subject to the Award, to certify in a manner acceptable to the Company that the Participant has not violated the terms of this Section 22 and may decline to distribute such shares if the Participant fails so to certify. If the Participant is required to repay any amount to the Company pursuant to this Section 22, the Participant shall pay such amount in such manner and on such terms and conditions as the Company may require, and the Company shall be entitled to withhold or set-off against any other amount owed to the Participant by the Company or any of its Affiliates (other than any amount owed to the Participant under any retirement plan intended to be qualified under Code Section 401(a)) up to any amount sufficient to satisfy any unpaid obligation of the Participant under this Section 22.

(f)The Participant acknowledges and agrees that the period, scope, and geographic areas of restriction imposed upon the Participant by the provisions of Section 22 are fair and reasonable and are reasonably required for the protection of the Company. In the event that any part of this Agreement, including, without limitation, Section 22, is held to be unenforceable or invalid, the remaining parts of Section 22 and this Agreement shall nevertheless continue to be valid and enforceable as though the invalid portions were not a part of this Agreement. If any one of the provisions in this Section 22 is held to be excessively broad as to period, scope, and geographic areas, any such provision shall be construed by limiting it to the extent necessary to be enforceable under Applicable Law.

(g)The Participant acknowledges that breach by the Participant of this Agreement would cause irreparable harm to the Company and that, in the event of such breach, the Company shall have, in addition to monetary damages and other remedies at law, the right to an injunction, specific performance, and other equitable relief to prevent violations of the Participant’s obligations hereunder.

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23. Code Section 409A

     If and to the extent that Code Section 409A is deemed to apply to the Award, it is intended that this Agreement and the Award shall, to the extent practicable, be construed in accordance therewith. Notwithstanding any provision to the contrary in this Agreement, if the Participant is deemed on the date of his or her “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company to be a “specified employee” (within the meaning of Treas. Reg. Section 1.409A-1(i)), then with regard to any payment that is considered deferred compensation under Code Section 409A payable on account of a “separation from service” that is required to be delayed pursuant to Code Section 409A(a)(2)(B) of the Code (after taking into account any applicable exceptions to such requirement), such payment shall be made on the date that is the earlier of (i) the expiration of the six-month period measured from the date of the Participant’s “separation from service” (with such payments to be made during the seventh month following the “separation from service”) or, if earlier, (ii) the date of the Participant’s death, or as otherwise permitted under Code Section 409A (the “Delay Period”). Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 24 shall be paid to the Participant in a lump sum. Notwithstanding any provision of this Agreement to the contrary, for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment constituting deferred compensation for purposes of Code Section 409A, references to the Participant’s “termination of employment” (and corollary terms) with the Company shall be construed to refer to the Participant’s “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company. In the event that the Award, this Agreement, or the Plan is deemed not to comply with Code Section 409A, then neither the Company, the Board of Directors, the Committee, nor its designees or agents will be responsible to the Participant or any person for actions, decisions, or determinations made in good faith.

24. [Confidentiality] ²

The Participant agrees to maintain the existence and terms of this Agreement, including the number of shares of Restricted Stock granted hereunder, as confidential, and neither the Participant nor any person acting on his or her behalf shall disclose the terms of this Agreement to any third party, other than to the Participant’s attorney, accountant, members of the Participant’s immediate family, or as required by Applicable Law. In certain instances, the Company may be required by securities regulations or other Applicable Law to disclose information about this Award and even the full content of this Agreement. In the event the Participant breaches the terms of this confidentiality provision, unvested shares of Common Stock underlying the Award granted hereunder shall be immediately forfeited.

[Signature Page to Follow]

____________________

² Section 24 is not included in the Restricted Stock Agreement for Executive Officers/Section 16 reporting persons of the Company.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

KRISPY KREME DOUGHNUTS, INC.

By:

Title: 

PARTICIPANT

Signature:

Printed Name: 

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Exhibit A

The following businesses, together with their affiliated companies, are the “Competitive Businesses” for purposes of this Agreement:

Dunkin Brands Inc.
Tim Hortons, Inc.
George Weston Limited
Interstate Bakeries Corporation
Flowers Foods, Inc.
McKee Foods Inc.
Starbucks
Dewey’s Bakery
Salem Baking Company
Dawn Food Products, Inc.
CSM Bakery Products

Or any other business that derives more than fifty percent (50%) of its revenues from the sale of doughnuts or baked goods.

The Company reserves the right to modify or amend this Exhibit A at any time and from time to time.

EX-10.4

[FORM OF]
KRISPY KREME DOUGHNUTS, INC.
2012 STOCK INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT

     THIS AGREEMENT (the “Agreement”) is made as of [_____], by and between Krispy Kreme Doughnuts, Inc., a North Carolina corporation (the “Company”), and [_____] (the “Participant”).

W I T N E S S E T H:

WHEREAS, the Board of Directors and shareholders of the Company have approved the Krispy Kreme Doughnuts, Inc. 2012 Stock Incentive Plan, as it may be amended (the “Plan”), for the purposes and subject to the provisions set forth in the Plan; and

WHEREAS, the Plan provides for the grant of restricted stock units; and

WHEREAS, pursuant to authority granted to it in the Plan, the Compensation Committee of the Board of Directors of the Company (the “Committee”) has, on behalf of the Company, granted to the Participant restricted stock units with respect to the Common Stock of the Company, as set forth below; and

WHEREAS, this Agreement evidences the grant of restricted stock units under the Plan.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.Award of Restricted Stock Units

This Agreement sets forth the terms of an award to the Participant of [_____] restricted stock units (the “Restricted Stock Units” or the “Award”), subject to, and in accordance with, the restrictions, terms, and conditions set forth in the Plan and this Agreement. The grant date of this award of Restricted Stock Units is [_____] (the “Grant Date”). Each Restricted Stock Unit will entitle the Participant to receive one share of Common Stock at the time, and subject to the conditions, set forth herein and in the Plan.

2. Vesting of Award; Forfeiture

If the Participant remains employed by the Company, the Participant shall become vested in the Restricted Stock Units in [_____] installments beginning on [_____], and continuing on the next [_____] anniversaries of such date (each such date shall be a “Vesting Date”), all as set forth below:

	Number of
	Restricted Stock
	Units that Vest
Date	on Such Date
[       ]	[       ]
[       ]	[       ]
[       ]	[       ]
[       ]	[       ]

     Any unvested Restricted Stock Units shall be automatically forfeited upon the Participant’s Termination of Employment for any reason (whether by the Company or the Participant and whether voluntary or involuntary) other than a Termination of Employment due to the Participant’s death or Disability, or a Termination of Employment after becoming Retirement Eligible, or as provided in Section 7 herein in the event of a Change in Control. In the event (a) of a Termination of Employment of the Participant due to his or her death or Disability, or (b) the Participant becomes Retirement Eligible, his or her Restricted Stock Units shall become immediately vested in full, provided, however, that distribution of the shares of Common Stock subject to such Restricted Stock Units shall be made only as provided in Section 4 herein. For purposes of this Agreement, employment with a Subsidiary or other Affiliate of the Company shall be considered employment with the Company. Unless otherwise provided by the Committee, all amounts receivable in connection with any adjustments to the Common Stock under Section 4.4 of the Plan shall be subject to the vesting schedule in this Section 2.

3.No Rights as a Shareholder

Prior to vesting of the Restricted Stock Units and delivery of the shares of Common Stock to the Participant, the Participant shall not have any rights or privileges of a shareholder as to the shares of Common Stock underlying such Award. Specifically, the Participant shall not have the right to receive dividends or the right to vote such shares of Common Stock prior to vesting of the Restricted Stock Units and delivery of a certificate(s) (or other evidence of ownership, such as book entry) for the shares of Common Stock.

4.Distribution of Common Stock

Subject to the terms of Sections 8 and 24, and except as otherwise provided in this Section 4, the Company shall distribute to the Participant (or his or her heirs in the event of the Participant’s death) at the time of vesting of the Restricted Stock Units (as provided in Section 2 or Section 7 hereof), a number of shares of Common Stock equal to the number of Restricted Stock Units then held by the Participant that became vested at such time. Shares of Common Stock or any other benefit subject to the Restricted Stock Units shall, upon vesting of the Restricted Stock Units pursuant to Section 2 or Section 7 (and except as otherwise provided in Section 2 and Section 4 herein in the event of Retirement Eligibility), be issued and distributed to the Participant (or his or her beneficiary) no later than the later of (a) the 15th day of the third month following the Participant’s first taxable year in which the amount is no longer subject to a substantial risk of forfeiture, or (b) the 15th day of the third month following the end of the Company’s first taxable year in which the amount is no longer subject to a substantial risk of forfeiture, or otherwise in accordance with Code Section 409A. Shares subject to the Restricted Stock Units which become vested upon the Participant’s becoming Retirement Eligible shall be distributed upon the first to occur of (i) each Vesting Date(s) as specified in Section 2 herein, (ii) the date of the Participant’s Termination of Employment (that is, the date of the Participant’s separation from service, as defined under Code Section 409A) after becoming Retirement Eligible, (iii) the date of the Participant’s death, (iv) the date of the Participant’s Disability (as defined under Code Section 409A), or (v) the date of the Participant’s Termination of Employment by the Company not for Cause or by the Participant for Good Reason within two years after the effective date of a Change in Control (as defined under Code Section 409A). Shares to be distributed as provided in the preceding sentence (following vesting due to Retirement Eligibility) shall be distributed within 90 days of the first to occur of the dates described in (i) through (v) of the preceding sentence (provided that in no event shall the Participant have the right to designate the taxable year in which such distribution shall occur).

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5.Certificates

Except as otherwise provided in Section 4 herein (regarding Retirement Eligibility) upon the vesting of the Restricted Stock Units pursuant to the terms hereof and the satisfaction of any withholding tax liability pursuant to Section 8 hereof, certificates evidencing the shares of Common Stock required to be delivered pursuant to the terms hereof shall be delivered to the Participant or other evidence of ownership of such shares of Common Stock shall be provided to the Participant, such as tracking through book entry.

6.Nontransferability

     Unless the Committee determines otherwise, no grant of, nor any right or interest of the Participant in or to, the Award may be assigned, encumbered, or transferred except, in the event of the death of Participant, by will or the laws of intestate succession.

7.Change in Control

Notwithstanding the other provisions of the Agreement, the following provisions shall apply in the event of a Change in Control:

(a)To the extent the successor company does not assume or substitute for the Award (or the Company is the ultimate parent corporation and does not continue the Award) on substantially equivalent terms (as determined by the Committee), the Award will become vested in full upon the effective date of the Change in Control.

(b)Further, in the event that the Award is substituted, assumed or continued, the Award will become vested in full if the Participant incurs a Termination of Employment within six months before (in which case vesting shall not occur until the effective date of the Change in Control) or two years after the effective date of a Change in Control if such Termination of Employment (i) is by the Company not for Cause or (ii) is by the Participant for Good Reason. For the purposes herein, (A) “Good Reason” shall have the meaning set forth in Section 22(c) of the Agreement; and (B) “Company” shall include the successor to the Company’s business or assets, or if all or substantially all of the voting stock of the Company is held by another public company, such public company.

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8.Taxes and Withholding

(a)The Participant shall be responsible for all federal, state, local, and foreign income taxes payable with respect to the Award. The Participant acknowledges that he or she may incur substantial tax liability arising out of the grant, vesting, and/or settlement of the Award and that the Company has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for the Participant.

(b)The Company shall have the right to retain and withhold from any distribution of Common Stock in respect of Restricted Stock Units the minimum amount of taxes (including but not limited to the Participant’s FICA obligation) required by any government to be withheld or otherwise deducted and paid with respect to such Restricted Stock Units. At its discretion, the Company may require the Participant to immediately pay the Company in cash or reimburse the Company for any such taxes required to be withheld and may withhold any distribution in whole or in part until the Company is so paid or reimbursed. In lieu thereof, the Company shall have the right to withhold from any other cash amounts due to the Participant an amount equal to such taxes required to be withheld or withhold and cancel (in whole or in part) with respect to the Restricted Stock Units a number of shares of Common Stock having a market value equal to the amount of such taxes. In addition, unless the Committee determines otherwise and subject to such conditions as may be established by the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares of Common Stock with a Fair Market Value equal to the minimum statutory tax required to be withheld. The right to withhold shares of Common Stock with a Fair Market Value equal to (but not in excess of) the minimum statutory tax required to be withheld to satisfy the withholding requirement may be withdrawn by the approval of the Committee.

9.Amendment of Agreement

This Agreement may be modified, amended, suspended, or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the parties hereto and otherwise in accordance with the Plan. Notwithstanding the foregoing, the Committee shall have unilateral authority to amend the Agreement (without the Participant’s consent) to the extent necessary to comply with Applicable Law or changes to Applicable Law (including but in no way limited to Code Section 409A and federal securities laws).

10.Severability

The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially unenforceable provision to the extent enforceable in any jurisdiction, shall nevertheless be binding and enforceable.

11.Notices

Any and all notices under this Agreement shall be in writing, and sent by hand delivery or by certified or registered mail (return receipt requested and first-class postage prepaid), in the case of the Company, to its principal executive offices to the attention of the Chief Financial Officer, and, in the case of the Participant, to the Participant’s address as shown on the Company’s records.

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12.Successors and Assigns

     (a)This Agreement shall be binding upon and inure to the benefit of any assignee or successor in interest to the Company, whether by merger, consolidation, or the sale of all or substantially all of the Company’s assets.

(b)This Agreement shall be binding upon and inure to the benefit of the Participant and his or her legal representative and any person to whom the Restricted Stock Units may be transferred by will, the applicable laws of intestate succession, or otherwise in accordance with the terms of the Plan.

13.Agreement to be Bound by Plan

The Participant hereby acknowledges that the Participant fully understands his or her rights under the Plan and that the Participant agrees to be bound by all the terms and provisions of the Plan. The Participant acknowledges that the Participant has received a copy of the Plan prospectus.

14.Plan Controls

This Agreement and the Award are subject in all respects to the terms and conditions of the Plan (which are incorporated herein by reference). Except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. To the extent that any conflict may exist between any term or provision of this Agreement and any term or provision of the Plan, such term or provision of the Plan shall control, unless the Committee determines otherwise.

15.No Right to Employment or Future Grants; Compliance with Applicable Law

(a)Nothing in this Agreement shall be construed as constituting a commitment, guarantee, agreement, or understanding of any kind or nature that the Company, any Subsidiary, or any Affiliate shall continue to employ the Participant, nor shall this Agreement affect in any way the right of the Company, any Subsidiary, or an Affiliate to terminate the employment or other service of the Participant at any time and for any reason. By the Participant’s execution of this Agreement, the Participant reaffirms and acknowledges and agrees that the Participant’s employment or other service to the Company, any Subsidiary, or any Affiliate is “at will.” The Participant acknowledges and agrees that the award and acceptance of Restricted Stock Units pursuant to this Agreement does not entitle the Participant to future grants under the Plan or any other plan.

(b) The Company may impose such restrictions on the Restricted Stock Units, the shares of Common Stock underlying the Award and any other benefits underlying the Award as it may deem advisable, including, without limitation, restrictions under the federal securities laws, the requirements of any securities exchange or similar organization, and any blue sky, state, or foreign securities laws applicable to such securities. The Company shall not be obligated to issue, deliver, or transfer shares of Common Stock, make any other distribution of benefits under the Plan, or take any other action, unless such delivery, distribution, or action is in compliance with Applicable Law (including but not limited to the requirements of the Securities Act). The Company will be under no obligation to register the shares of Common Stock or other securities with the Securities and Exchange Commission or to effect compliance with the exemption, registration, qualification, or listing requirements of any state or foreign securities laws, or any securities exchange or similar organization, and the Company will have no liability for any inability or failure to do so. The Company may cause a restrictive legend or legends to be placed on any certificate issued pursuant to the Award in such form as may be prescribed from time to time by Applicable Law or as may be advised by legal counsel.

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16.Covenants and Representations of Participant

     The Participant represents, warrants, covenants, and agrees with the Company as follows:

(a)The Participant has not relied upon the Company with respect to any tax consequences related to the Award or shares of Common Stock subject thereto. The Participant assumes full responsibility for all such tax consequences and the filing of all tax returns the Participant may be required to file in connection therewith.

(b)The Participant will not distribute or resell any Common Stock (or other securities) issuable hereunder in violation of Applicable Law. The Participant shall comply with all provisions of the Company’s Securities Trading Policy, as in effect from time to time.

(c)The agreements, representations, warranties, and covenants made by the Participant herein with respect to the Restricted Stock Units shall also extend and apply to all of the shares of Common Stock issued to the Participant from time to time pursuant to the Restricted Stock Units. Acceptance by the Participant of any certificate representing shares of Common Stock (or other evidence of beneficial ownership) shall constitute a confirmation by the Participant that all such agreements, representations, warranties, and covenants made herein continue to be true and correct at that time.

(d)As a condition to receiving this Award, the Participant agrees to abide by the Company’s Equity Retention Policy, Compensation Recovery Policy, and Stock Ownership Guidelines and/or other similar policies, each as in effect from time to time and to the extent applicable to the Participant. In addition, the Participant shall be subject to such compensation recovery, recoupment, forfeiture, or other similar provisions as may apply to the Participant under Applicable Law.

17.Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of North Carolina, without giving effect to the principles of conflicts of laws, and in accordance with applicable federal laws.

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18.Waiver

The waiver by the Company of a breach of any provision of this Agreement by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.

19.Limitation of Liability

The liability of the Company under this Agreement and in the award of the Restricted Stock Units hereunder is limited to the obligations set forth herein with respect to such Award, and nothing herein contained shall be interpreted as imposing any liability in favor of the Participant or any others with respect to any loss, cost, or expense which the Participant or others may incur in connection with or arising out of any transaction involving the Restricted Stock Units or the shares of Common Stock subject thereto.

20.Entire Agreement

The parties hereto agree that this Agreement sets forth all of the promises, agreements, conditions, understandings, warranties, and representations between the parties with respect to the Award and that there are no promises, agreements, conditions, understandings, warranties, or representations, oral or written, express or implied between the parties with respect to the Award other than as set forth in this Agreement and in the Plan.

21.Authority of Committee

All determinations made by the Committee with respect to the interpretation, construction, and application of any provision of this Agreement shall be final, conclusive, and binding on the parties.

22.Definitions

(a)“Retirement Eligible” or “Retirement Eligibility” shall mean a time when the sum of the Participant’s age and years of employment with the Company, its Subsidiaries, or other Affiliates equals or exceeds 65, provided that the Participant shall have attained a minimum age of 55.

(b)“Termination of Employment” means the discontinuance of the Participant’s service relationship with the Company, its Subsidiaries, or another Affiliate, including but not limited to service as an employee of the Company, its Subsidiaries, or another Affiliate, as a non-employee member of the Board of Directors of the Company, or as a consultant or advisor to the Company, its Subsidiaries, or another Affiliate. Except to the extent provided otherwise in an agreement or determined otherwise by the Committee, a Termination of Employment shall not be deemed to have occurred if the Participant transfers among the various entities constituting the Company and its Subsidiaries, so long as there is no interruption in the provision of service by the Participant to the Company and its Subsidiaries. The determination of whether a Participant has incurred a Termination of Employment shall be made by the Committee in its discretion. The Participant shall not be deemed to have incurred a Termination of Employment if the Participant is on military leave, sick leave, or other bona fide leave of absence approved by the Company of 180 days or fewer (or any longer period during which the Participant is guaranteed reemployment by statute or contract). In the event the Participant’s leave of absence exceeds this period, he or she will be deemed to have incurred a Termination of Employment on the day following the expiration date of such period, unless determined otherwise by the Committee.

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     (c)“Good Reason” shall have the meaning assigned to such term in the employment agreement, if any, between the Participant and the Company, a Subsidiary, or an Affiliate, provided, however that if there is no such employment agreement in which such term is defined, “Good Reason” shall mean any of the following acts by the Company, a Subsidiary, or an Affiliate within the six-month period before or two-year period after the effective date of a Change in Control, without the consent of the Participant (in each case, other than an isolated, insubstantial, and inadvertent action not taken in bad faith and which is remedied by the Company, a Subsidiary, or an Affiliate promptly after receipt of notice thereof given by the Participant): (i) the assignment to the Participant of duties or responsibilities materially inconsistent with, or a material diminution in, the Participant’s position, authority, duties, or responsibilities as in effect on the date of the Change in Control, (ii) a material reduction in the Participant’s base salary as in effect on the date of the Change in Control, (iii) except with regard to international employees, the relocation, without consent, of the Participant’s principal place of employment more than 25 miles from the location at which the Participant was stationed immediately prior to the Change in Control, or (iv) any material breach of any employment agreement between the Participant and the Company, a Subsidiary, or an Affiliate; provided that any event described in clauses (i) through (iv) above shall constitute Good Reason only if the Company fails to rescind or cure such event within 30 days after receipt from the Participant of written notice of the event which constitutes Good Reason; and provided, further, that Good Reason shall cease to exist for an event or condition described in clauses (i) through (iv) above on the 60th day following the latter of its occurrence or the Participant’s knowledge thereof, unless the Participant has given the Company written notice thereof prior to such date.

23. [Forfeiture in the Event of Competition and/or Solicitation or other Detrimental Acts]¹

In return for granting the Restricted Stock Units to the Participant, the Participant agrees to the following restrictions.

(a)The Participant expressly agrees and covenants that during the Restricted Period (as defined below), the Participant shall not, without the prior written consent of the Company, directly or indirectly:

(i)own, manage, control, participate in, consult with, become employed by, or otherwise render services to any Competitive Business (as defined below) in the Territory (as defined below), except that it shall not be considered a violation of this clause for the Participant to be a passive owner of not more than two percent of the outstanding stock of any class of any corporation which is publicly traded, so long as the Participant has no active participation in the business of such corporation;

____________________

¹ Section 23 is only included in the Restricted Stock Unit Agreement for persons holding the title of Senior Vice President or above of the Company or of Krispy Kreme Doughnut Corporation, its wholly-owned subsidiary.

8

          (ii)induce or attempt to induce any customer, supplier, client, or other business relation of the Company or its Affiliates to cease doing business with the Company or its Affiliates if such cessation could reasonably be expected to result in material harm to the Company;

(iii)induce or attempt to induce any employee of the Company or its Affiliates to leave the employ of the Company or its Affiliates, or in any way interfere with the relationship between the Company or its Affiliates and any person employed by them; or

(iv)violate the Company’s Securities Trading Policy.

(b)The Participant expressly agrees and covenants that the Participant will not, without the prior written consent of the Company, directly or indirectly, disclose or use at any time before or after the Participant’s Termination of Employment any Confidential Information (as defined below) of which the Participant is or becomes aware, whether or not such information is developed by the Participant, except to the extent such disclosure or use is directly related to and appropriate in connection with the Participant’s performance of duties assigned to the Participant by the Company or its Affiliates. Under all circumstances and at all times, the Participant will take all appropriate steps to safeguard Confidential Information in his or her possession and to protect it against disclosure, misuse, espionage, loss, and theft.

(c)If the Committee determines that the Participant has violated any provisions of this Section 23 or that the Participant’s employment has been terminated for Cause, then the Participant agrees and covenants that:

(i)the Participant shall automatically forfeit any rights the Participant may have with respect to the Award or the underlying shares of Common Stock as of the date of such determination; and

(ii)if the Participant has received a distribution of all or any part of the Common Stock subject to the Award within the twelve-month period immediately preceding a violation of this Section 23 or termination of the Participant’s employment for Cause, upon the Company’s demand, the Participant shall immediately deliver to the Company (A) the shares of Common Stock subject to the Award which have been distributed during such period (without the payment by the Company of any consideration for such shares), if the Participant still owns such shares, or (B) if the Participant no longer owns such shares of Common Stock, an amount equal to the Gain realized by the Participant with respect to the shares of Common Stock subject to the Award. For the purposes herein, “Gain” shall be equal to the disposition price per share of any shares of Common Stock received pursuant to the Award which shares were sold or disposed of, multiplied by the number of such shares sold or disposed of, and less any taxes paid which are not refundable or for which the Participant does not otherwise receive a tax credit or other form of reimbursement.

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(d)Definitions. For purposes of this Section 23 the following definitions shall apply:

(i) “Competitive Business” means any business listed on Exhibit A hereto.

(ii) “Confidential Information” means information that is not generally known to the public and that was or is used, developed, or obtained by the Company or its Affiliates in connection with the business of the Company or its Affiliates and which constitutes trade secrets or information which they have attempted to protect, which may include, but is not limited to, trade “know-how,” customer information, supplier information, cost and pricing information, marketing and sales techniques, strategies and programs, computer programs and software, and financial information. It shall not include information (A) required to be disclosed by court or administrative order; (B) lawfully obtainable from other sources or which is in the public domain through no fault of Participant; or (C) the disclosure of which is consented to in writing by the Company.

(iii)“Restricted Period” means the period during which the Participant is employed by the Company or an Affiliate and twelve months following the date that Participant ceases to be employed by the Company or an Affiliate for any reason whatsoever.

(iv)“Territory” means:

(A)The entire United States and any other country where the Company or any of its Subsidiaries, joint venturers, franchisees, or Affiliates has operated a retail facility at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with the Company or its Affiliates; 

(B)In the event that the preceding clause shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the entire United States; 

(C)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the states in the United States where the Company or any of its Subsidiaries, joint venturers, franchisees, or Affiliates has operated a retail facility at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with the Company or its Affiliates; 

(D)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the area that includes all of the areas that are within a 50-mile radius of any retail store location in the United States at which the Company’s products have been sold at any time in the one-year period ending on the last day of the Participant’s employment with the Company or its Affiliates; and 

(E)In the event that the preceding clauses shall be determined by judicial action to define too broad a territory to be enforceable, then “Territory” shall mean the entire state of North Carolina.

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     (e)The Company may require the Participant, in connection with the distribution of shares of Common Stock underlying the Award, to certify in a manner acceptable to the Company that the Participant has not violated the terms of this Section 23 and may decline to distribute such shares if the Participant fails so to certify. If the Participant is required to repay any amount to the Company pursuant to this Section 23, the Participant shall pay such amount in such manner and on such terms and conditions as the Company may require, and the Company shall be entitled to withhold or set-off against any other amount owed to the Participant by the Company or any of its Affiliates (other than any amount owed to the Participant under any retirement plan intended to be qualified under Code Section 401(a)) up to any amount sufficient to satisfy any unpaid obligation of the Participant under this Section 23.

(f)The Participant acknowledges and agrees that the period, scope, and geographic areas of restriction imposed upon the Participant by the provisions of Section 23 are fair and reasonable and are reasonably required for the protection of the Company. In the event that any part of this Agreement, including, without limitation, this Section 23, is held to be unenforceable or invalid, the remaining parts of Section 23 and this Agreement shall nevertheless continue to be valid and enforceable as though the invalid portions were not a part of this Agreement. If any one of the provisions in this Section 23 is held to be excessively broad as to period, scope, and geographic areas, any such provision shall be construed by limiting it to the extent necessary to be enforceable under Applicable Law.

(g)The Participant acknowledges that breach by the Participant of this Agreement would cause irreparable harm to the Company and that, in the event of such breach, the Company shall have, in addition to monetary damages and other remedies at law, the right to an injunction, specific performance, and other equitable relief to prevent violations of the Participant’s obligations hereunder.

24.Code Section 409A

If and to the extent that Code Section 409A is deemed to apply to the Award, it is intended that this Agreement and the Award shall, to the extent practicable, be construed in accordance therewith. Notwithstanding any provision to the contrary in this Agreement, if the Participant is deemed on the date of his or her “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company to be a “specified employee” (within the meaning of Treas. Reg. Section 1.409A-1(i)), then with regard to any payment that is considered deferred compensation under Code Section 409A payable on account of a “separation from service” that is required to be delayed pursuant to Code Section 409A(a)(2)(B) (after taking into account any applicable exceptions to such requirement), such payment shall be made on the date that is the earlier of (i) the expiration of the six month period measured from the date of the Participant’s “separation from service” (with such payments to be made during the seventh month following the “separation from service”, or, if earlier, (ii) the date of the Participant’s death, or otherwise permitted under Code Section 409A (the “Delay Period”). Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 24 shall be paid to the Participant in a lump sum. Notwithstanding any provision of this Agreement to the contrary, for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment constituting deferred compensation for purposes of Code Section 409A, references to the Participant’s “termination of employment” (and corollary terms) with the Company shall be construed to refer to the Participant’s “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company. In the event that the Award, this Agreement, or the Plan is deemed not to comply with Code Section 409A, then neither the Company, the Board of Directors, the Committee, nor its designees or agents will be responsible to the Participant or any person for actions, decisions, or determinations made in good faith.

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25.[Confidentiality]²

     The Participant agrees to maintain the existence and terms of this Agreement, including the number of shares of Common Stock subject to the Restricted Stock Units granted hereunder, as confidential, and neither the Participant nor any person acting on his or her behalf shall disclose the terms of this Agreement to any third party, other than to the Participant’s attorney, accountant, members of the Participant’s immediate family, or as required by Applicable Law. In certain instances, the Company may be required by securities regulations or other Applicable Law to disclose information about this Award and even the full content of this Agreement. In the event the Participant breaches the terms of this confidentiality provision, unvested shares of Common Stock underlying the Award granted hereunder shall be immediately forfeited.

[Signature Page to Follow]

____________________

² Section 25 is not included in the Restricted Stock Unit Agreement for Executive Officers/Section 16 reporting persons of the Company.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

KRISPY KREME DOUGHNUTS, INC.

By:

Title:

PARTICIPANT

Signature:

Printed Name:

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Exhibit A

The following businesses, together with their affiliated companies, are the “Competitive Businesses” for purposes of this Agreement:

Dunkin Brands Inc.
Tim Hortons, Inc.
George Weston Limited
Interstate Bakeries Corporation
Flowers Foods, Inc.
McKee Foods Inc.
Starbucks
Dewey’s Bakery
Salem Baking Company
Dawn Food Products, Inc.
CSM Bakery Products

Or any other business that derives more than fifty percent (50%) of its revenues from the sale of doughnuts or baked goods.

The Company reserves the right to modify or amend this Exhibit A at any time and from time to time.

EX-10.5

[FORM OF]
KRISPY KREME DOUGHNUTS, INC.
2012 STOCK INCENTIVE PLAN
DIRECTOR RESTRICTED STOCK UNIT AGREEMENT

     THIS AGREEMENT (the “Agreement”), is made as of [_________] by and between Krispy Kreme Doughnuts, Inc., a North Carolina corporation (the “Company”), and [_____________], a member of the Board of Directors of the Company (the “Participant”).

W I T N E S S E T H:

WHEREAS, the Board of Directors and shareholders of the Company have approved the Krispy Kreme Doughnuts, Inc. 2012 Stock Incentive Plan, as it may be amended (the “Plan”), for the purposes and subject to the provisions set forth in the Plan; and

WHEREAS, the Plan provides for the grant of restricted stock units; and

WHEREAS, pursuant to authority granted to it in the Plan, the Compensation Committee of the Board of Directors of the Company (the “Committee”) has, on behalf of the Company, granted to the Participant restricted stock units with respect to the Common Stock of the Company, as set forth below; and

WHEREAS, this Agreement evidences the grant of restricted stock units under the Plan;

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.Award of Restricted Stock Units

This Agreement sets forth the terms of an award to the Participant of [_________] restricted stock units (the “Restricted Stock Units” or the “Award”) subject to, and in accordance with, the restrictions, terms, and conditions set forth in the Plan and this Agreement. The grant date of the Restricted Stock Units is [___________] (the “Grant Date”). Each Restricted Stock Unit will entitle the Participant to receive one share of Common Stock at the time and subject to the conditions set forth herein and in the Plan.

2.Vesting of Award; Forfeiture

If the Participant is still in service on the Board of Directors of the Company, the Participant shall become vested in the Restricted Stock Units in four quarterly installments as set forth below:

	Number of
	Restricted Stock
	Units that Vest
Date	on Such Date
[           ]	[           ]
[           ]	[           ]
[           ]	[           ]
[           ]	[           ]

     Any unvested Restricted Stock Units shall be automatically forfeited at such time as the Participant ceases to serve as a Director for any reason other than due to the Participant’s death or Disability, or as provided in Section 7 herein in the event of a Change in Control. In the event a Participant ceases to serve as a Director due to his or her death or Disability, his or her Restricted Stock Units shall become immediately vested in full. Unless otherwise provided by the Committee, all amounts receivable in connection with any adjustments to the Common Stock under Section 4.4 of the Plan shall be subject to the vesting schedule in this Section 2.

3.No Rights as a Shareholder

Prior to vesting of the Restricted Stock Units and delivery of the shares of Common Stock to the Participant, the Participant shall not have any rights or privileges of a shareholder as to the shares of Common Stock underlying such Award. Specifically, the Participant shall not have the right to receive dividends or the right to vote such shares of Common Stock prior to vesting of the Restricted Stock Units and delivery of a certificate(s) (or other evidence of ownership, such as book entry) for the shares of Common Stock.

4.Distribution of Common Stock

The Company shall distribute to the Participant (or his or her heirs in the event of the Participant’s death) at the time of vesting of the Restricted Stock Units, a number of shares of Common Stock equal to the number of Restricted Stock Units then held by the Participant that became vested at such time; provided, however, that, if the Participant has made an irrevocable deferral election prior to the last day of the calendar year prior to the Grant Date (or otherwise in accordance with Code Section 409A), distribution of the shares of Common Stock subject to the Restricted Stock Units shall be deferred until the time the Participant ceases to be a Director for any reason.

5.Certificates

Unless the Participant has made a valid deferral election to defer delivery of shares of Common Stock as described in Section 4 herein, upon the vesting of the Restricted Stock Units pursuant to the terms hereof and the satisfaction of withholding tax liability, if any, pursuant to Section 8 hereof, certificates evidencing the shares of Common Stock required to be delivered pursuant to the terms hereof shall be delivered to the Participant or other evidence of ownership of such shares of Common Stock shall be provided to the Participant, such as tracking through book entry.

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6.Nontransferability

     Unless the Committee determines otherwise, no grant of, nor any right or interest of the Participant in or to, the Award may be assigned, encumbered, or transferred except, in the event of the death of a Participant, by will or the laws of intestate succession.

7.Change in Control

Notwithstanding the other provisions of the Agreement, the following provisions shall apply in the event of a Change in Control:

(a)To the extent the successor company does not assume or substitute for the Award (or the Company is the ultimate parent corporation and does not continue the Award) on substantially equivalent terms (as determined by the Committee), the Award will become vested in full upon the effective date of the Change in Control.

(b)Further, in the event that the Award is substituted, assumed or continued, the Award will become vested in full if, within six months before (in which case vesting shall not occur until the effective date of the Change in Control) or one year after the effective date of the Change in Control, the Participant ceases to serve as a Director, or, if the Company is not the surviving Company in the Change in Control event, a member of the board of directors of the surviving entity, in either case, due to the Participant’s failure to be nominated to serve as a director of such entity or the Participant’s failure to be elected to serve as a director of such entity, but not due to the Participant’s decision not to continue service on the Board of Directors of the Company or the board of directors of the surviving entity, as the case may be. For the purposes herein, “Company” shall include the successor to the Company’s business or assets, or if all or substantially all of the voting stock of the Company is held by another public company, such public company.

8.Taxes and Withholding

(a)The Participant shall be responsible for all federal, state, local, and foreign income taxes payable with respect to the Award. The Participant acknowledges that he or she may incur substantial tax liability arising out of the grant, vesting, and/or settlement of the Award and that the Company has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for the Participant.

(b)The Company shall have the right to retain and withhold from any distribution of Common Stock in respect of Restricted Stock Units the minimum amount of taxes, if any, required by any government to be withheld or otherwise deducted and paid with respect to such Restricted Stock Units. At its discretion, the Company may require Participant to immediately pay the Company in cash or reimburse the Company for any such taxes required to be withheld and may withhold any distribution in whole or in part until the Company is so paid or reimbursed. In lieu thereof, the Company shall have the right to withhold from any other cash amounts due to the Participant an amount equal to such taxes required to be withheld or withhold and cancel (in whole or in part) with respect to the Restricted Stock Units a number of shares of Common Stock having a market value equal to the amount of such taxes. In addition, unless the Committee determines otherwise and subject to such conditions as may be established by the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares of Common Stock with a Fair Market Value equal to (but not in excess of) the minimum statutory tax required to be withheld. The right to withhold shares of Common Stock with a Fair Market Value equal to the minimum statutory tax required to be withheld to satisfy the withholding requirement may be withdrawn by the approval of the Committee.

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9.Amendment of Agreement

     This Agreement may be modified, amended, suspended, or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the parties hereto and otherwise in accordance with the Plan. Notwithstanding the foregoing, the Committee shall have unilateral authority to amend the Agreement (without the Participant’s consent) to the extent necessary to comply with Applicable Law or changes to Applicable Law (including but in no way limited to Code Section 409A and federal securities laws).

10.Severability

The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially unenforceable provision to the extent enforceable in any jurisdiction, shall nevertheless be binding and enforceable.

11.Notices

Any and all notices under this Agreement shall be in writing, and sent by hand delivery or by certified or registered mail (return receipt requested and first-class postage prepaid), in the case of the Company, to its principal executive offices to the attention of the Chief Financial Officer, and, in the case of the Participant, to the Participant’s address as shown on the Company’s records.

12.Successors and Assigns

(a)This Agreement shall be binding upon and inure to the benefit of any assignee or successor in interest to the Company, whether by merger, consolidation, or the sale of all or substantially all of the Company’s assets.

(b)This Agreement shall be binding upon and inure to the benefit of the Participant and his or her legal representative and any person to whom the Restricted Stock Units may be transferred by will, the applicable laws of intestate succession, or otherwise in accordance with the terms of the Plan.

13.Agreement to be Bound by Plan

The Participant hereby acknowledges that the Participant fully understands his or her rights under the Plan and that the Participant agrees to be bound by all the terms and provisions of the Plan. The Participant acknowledges that the Participant has received a copy of the Plan prospectus.

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14.Plan Controls

     This Agreement and the Award are subject in all respects to the terms and conditions of the Plan (which are incorporated herein by reference). Except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. To the extent that any conflict may exist between any term or provision of this Agreement and any term or provision of the Plan, such term or provision of the Plan shall control, unless the Committee determines otherwise.

15.No Right to Service or Future Grants; Compliance with Applicable Law

(a)Nothing in this Agreement shall be construed as constituting a commitment, guarantee, agreement, or understanding of any kind or nature that the Company shall continue to require the services of the Participant as a Director, nor shall this Agreement affect in any way the right of the Company’s shareholders to terminate the services of the Participant at any time and for any reason. The Participant acknowledges and agrees that the award and acceptance of Restricted Stock Units pursuant to this Agreement does not entitle the Participant to future grants under the Plan or any other plan.

(b)The Company may impose such restrictions on the Restricted Stock Units, the shares of Common Stock underlying the Award, and any other benefits underlying the Award hereunder as it may deem advisable, including, without limitation, restrictions under the federal securities laws, the requirements of any securities exchange or similar organization, and any blue sky, state, or foreign securities laws applicable to such securities. The Company shall not be obligated to issue, deliver, or transfer shares of Common Stock, make any other distribution of benefits under the Plan, or take any other action, unless such delivery, distribution, or action is in compliance with Applicable Law (including but not limited to the requirements of the Securities Act). The Company will be under no obligation to register the shares of Common Stock underlying the Award or other securities with the Securities and Exchange Commission or to effect compliance with the exemption, registration, qualification, or listing requirements of any state or foreign securities laws, securities exchange or similar organization, and the Company will have no liability for any inability or failure to do so. The Company may cause a restrictive legend or legends to be placed on any certificate issued pursuant to the Award hereunder in such form as may be prescribed from time to time by Applicable Law or as may be advised by legal counsel.

16.Covenants and Representations of Participant

The Participant represents, warrants, covenants, and agrees with the Company as follows:

(a)The Participant has not relied upon the Company with respect to any tax consequences related to the Award or shares of Common Stock subject thereto. The Participant assumes full responsibility for all such tax consequences and the filing of all tax returns the Participant may be required to file in connection therewith.

(b)The Participant will not distribute or resell any Common Stock (or other securities) issuable hereunder in violation of Applicable Law. The Participant shall comply with all provisions of the Company’s Securities Trading Policy, as in effect from time to time.

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     (c)The agreements, representations, warranties, and covenants made by the Participant herein with respect to the Restricted Stock Units shall also extend and apply to all of the shares of Common Stock issued to the Participant from time to time pursuant to the Restricted Stock Units. Acceptance by the Participant of any certificate representing shares of Common Stock (or other evidence of beneficial ownership) shall constitute a confirmation by the Participant that all such agreements, representations, warranties, and covenants made herein continue to be true and correct at that time.

(d)As a condition to receiving this Award, the Participant agrees to abide by the Company’s Equity Retention Policy, Compensation Recovery Policy, Stock Ownership Guidelines, and/or other similar policies, each as in effect from time to time and to the extent applicable to the Participant. In addition, the Participant shall be subject to such compensation recovery, recoupment, forfeiture, or other similar provisions as may apply to the Participant under Applicable Law.

17.Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of North Carolina, without giving effect to the principles of conflicts of laws, and in accordance with applicable federal laws.

18.Waiver

The waiver by the Company of a breach of any provision of this Agreement by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.

19.Limitation of Liability

The liability of the Company under this Agreement and in the award of the Restricted Stock Units hereunder is limited to the obligations set forth herein with respect to such Award, and nothing herein contained shall be interpreted as imposing any liability in favor of the Participant or any others with respect to any loss, cost, or expense which the Participant or others may incur in connection with or arising out of any transaction involving the Restricted Stock Units or the shares of Common Stock subject thereto.

20.Entire Agreement

The parties hereto agree that this Agreement sets forth all of the promises, agreements, conditions, understandings, warranties, and representations between the parties with respect to the Award and that there are no promises, agreements, conditions, understandings, warranties, or representations, oral or written, express or implied between the parties with respect to the Award other than as set forth in this Agreement and in the Plan.

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21.Authority of Committee

     All determinations made by the Committee with respect to the interpretation, construction, and application of any provision of this Agreement shall be final, conclusive, and binding on the parties.

22.Code Section 409A

If and to the extent that Code Section 409A is deemed to apply to the Award, it is intended that this Agreement and the Award shall, to the extent practicable, be construed in accordance therewith. Notwithstanding any provision to the contrary in this Agreement, if the Participant is deemed on the date of his or her “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company to be a “specified employee” (within the meaning of Treas. Reg. Section 1.409A-1(i)), then with regard to any payment that is considered deferred compensation under Code Section 409A payable on account of a “separation from service” that is required to be delayed pursuant to Code Section 409A(a)(2)(B) (after taking into account any applicable exceptions to such requirement), such payment shall be made on the date that is the earlier of (i) the expiration of the six (6)-month period measured from the date of the Participant’s “separation from service” (with such payment to be made during the seventh month following the “separation from service”), or, if earlier, (ii) the date of the Participant’s death, or as otherwise permitted under Code Section 409A (the “Delay Period”). Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 22 shall be paid to Participant in a lump sum. Notwithstanding any provision of this Agreement to the contrary, for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment constituting deferred compensation for purposes of Code Section 409A, references to the Participant’s “termination of employment” (and corollary terms) with the Company shall be construed to refer to the Participant’s “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company. In the event that this Award, this Agreement, or the Plan is deemed not to comply with Code Section 409A, then neither the Company, the Board of Directors, the Committee, nor its designees or agents will be responsible to the Participant or any other person for actions, decisions, or determinations made in good faith.

[Signature Page to Follow]

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     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

KRISPY KREME DOUGHNUTS, INC.

By:

Title:

PARTICIPANT

Signature:

Printed Name:   

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EX-10.6

[FORM OF]
KRISPY KREME DOUGHNUTS, INC.
2012 STOCK INCENTIVE PLAN
DIRECTOR NONQUALIFIED STOCK OPTION AGREEMENT

     THIS NONQUALIFIED STOCK OPTION AGREEMENT (the “Agreement”) is made as of [_____] (the “Grant Date”), by and between Krispy Kreme Doughnuts, Inc., a North Carolina corporation (the “Company”), and [_____], a member of the Board of Directors of the Company (the “Participant”).

W I T N E S S E T H:

WHEREAS, the Board of Directors and shareholders of the Company have approved the Krispy Kreme Doughnuts, Inc. 2012 Stock Incentive Plan, as it may be amended (the “Plan”), for the purposes and subject to the provisions set forth in the Plan; and

WHEREAS, pursuant to authority granted to it in the Plan, the Compensation Committee of the Board of Directors of the Company (the “Committee”) has, on behalf of the Company, granted to the Participant a nonqualified stock option to purchase shares of Common Stock of the Company as set forth below; and

WHEREAS, this Agreement evidences the grant of such option pursuant to the Plan.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.Summary of Grant

Number of Shares: [_____]
Option Price: [$_____]
Date of Grant: [_____]
Expiration Date: [_____]

2.Grant of Option

This Agreement sets forth the terms of a nonqualified option (the “Option”) granted to the Participant to purchase from the Company, during the period specified in Sections 3 and 4 of this Agreement, a total of [_____] shares of Common Stock (the “Shares”), at the purchase price of [_____] per share (the “Option Price”), in accordance with the terms and conditions stated in this Agreement.

3.Vesting and Exercise of Option

     (a)The Option shall vest and become exercisable in increments in accordance with the schedule set forth below, provided that the Option shall vest and become exercisable with respect to an increment as specified only if the Participant is still in service as a Director on each such vesting date:

(i)no portion of the Option shall vest or become exercisable prior to the date that is three months after the Grant Date;

(ii)the Option shall vest and become exercisable with respect to 25% of the number of Shares subject to the Option (as indicated in Section 1) on the date that is three months after the Grant Date;

(iii)the Option shall vest and become exercisable with respect to an additional 25% of the number of Shares subject to the Option (for a total of 50% of the number of Shares subject to the Option) on the date that is six months after the Grant Date;

(iv)the Option shall vest and become exercisable with respect to an additional 25% of the number of Shares subject to the Option (for a total of 75% of the number of Shares subject to the Option) on the date that is nine months after the Grant Date; and

(v)the Option shall vest and become exercisable with respect to the remaining 25% of the number of Shares subject to the Option (for a total of 100% of the number of Shares subject to the Option) on the date that is the first anniversary of the Grant Date.

(b)Notwithstanding the vesting provisions described above, the Option shall vest and become exercisable with respect to 100% of the Shares upon the Participant’s termination of service as a Director if the Participant’s termination of service is due to his or her death or Disability.

(c)In addition, the following provisions shall apply in the event of a Change in Control:

(i)To the extent the successor company does not assume or substitute for the Option (or the Company is the ultimate parent corporation and does not continue the Option) on substantially equivalent terms (as determined by the Committee), the Option will become vested and exercisable in full upon the effective date of the Change in Control.

(ii)Further, in the event that the Option is substituted, assumed or continued, the Option will become vested and exercisable in full if, within six months before (in which case vesting shall not occur until the effective date of the Change in Control) or one year after the effective date of the Change in Control, the Participant ceases to serve as a Director, or, if the Company is not the surviving Company in the Change in Control event, a member of the board of directors of the surviving entity, in either case, due to the Participant’s failure to be nominated to serve as a director of such entity or the Participant’s failure to be elected to serve as a director of such entity, but not due to the Participant’s decision not to continue service on the Board of Directors of the Company or the board of directors of the surviving entity, as the case may be. For the purposes herein, “Company” shall include the successor to the Company’s business or assets, or if all or substantially all of the voting stock of the Company is held by another public company, such public company. In the event that vesting of the Option is accelerated as a result of a termination of service related to a Change in Control as provided herein, the Committee or the Board of Directors, in its discretion, may send the Participant prior written notice of the effectiveness of such event and the last day on which the Participant may exercise the Option. In such event, the Participant may, upon compliance with all of the terms of this Agreement and the Plan, purchase any or all of the Shares with respect to which the Option is vested and exercisable on or prior to the last day specified in such notice, and, to the extent the Option is not exercised, it shall (unless the Committee or the Board of Directors determines otherwise) terminate at 5:00 P.M., Winston-Salem, North Carolina time, on the last day specified in such notice. If no such notice is given, the Option shall terminate as provided in Section 4(d) herein.

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     (d)The schedule set forth above is cumulative, so that Shares as to which the Option has become vested and exercisable pursuant to the provisions above may be purchased pursuant to exercise of the Option at any date subsequent to vesting but prior to termination of the Option. The Option may be exercised at any time and from time to time to purchase up to the number of Shares as to which it is then vested and exercisable.

4.Termination of Option

Unless adjusted by the Committee in its sole discretion, the Option shall remain exercisable as specified in Section 3 above until 5:00 p.m., Winston-Salem, North Carolina time, on the earliest to occur of the dates specified below, upon which date the Option shall terminate:

(a)the date all of the Shares are purchased pursuant to the terms of this Agreement;

(b)upon the expiration of three years following the Participant’s termination of service as a Director for any reason other than for Cause;

(c)immediately upon the Participant’s termination of service as a Director for Cause;

(d)on the last date specified in the notice described in Section 3(c) above in the event that the Participant ceases to serve as a Director (or director of the surviving entity) within six months before or one year after the effective date of a Change in Control upon such terms and conditions as are provided in Section 3(c) herein; provided that, if no such notice is given, the Option shall terminate on the one year anniversary of the date of the Participant’s termination of service; or

(e)on the ten year anniversary of the Grant Date (the “Expiration Date”).

Notwithstanding the foregoing, the term of the Option shall (unless the Committee determines otherwise) automatically be extended if exercise at the end of the original term would violate Applicable Law (including but not limited to the Company’s Securities Trading Policy), but such extension may not exceed 30 days from the expiration of the period during which exercise is prohibited, and any such extension must be in accordance with Reg. Section. 1.409A-1(b)(5)(v)(C)(1). Upon its termination, the Option shall have no further force or effect and the Participant shall have no further rights under the Option or to any Shares which have not been purchased pursuant to the prior exercise of the Option.

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5.Manner of Exercise of Option

(a)Exercise. The Option may be exercised only by (i) the Participant’s delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, (ii) the payment to the Company, pursuant to the terms of this Agreement, of an amount equal to the Option Price multiplied by the number of Shares being purchased as specified in the Participant’s notice of exercise (the “Purchase Price”). The Participant’s notice of exercise shall be given in the manner specified in Section 10 but any exercise of the Option shall be effective only when the items required by the preceding sentence are actually received by the Company. The notice of exercise shall be in the form attached to this Agreement or in another form provided by the Company. Notwithstanding anything to the contrary in this Agreement, the Option may be exercised only if compliance with Applicable Law can be effected, with the Committee being the final arbitrator thereof, in its sole and absolute discretion, in the event of any dispute between the Company and the Participant with regard to the interpretation of such laws.

(b)Form of Payment. Payment of the Purchase Price may be made by (i) cash or cash equivalent; (ii) authorizing a third party to sell a portion of the Shares acquired upon exercise of the Option and remit to the Company a sufficient portion of the sales proceeds to pay the full Purchase Price (that is, a broker-assisted cashless exercise); (iii) unless prohibited by the Committee, by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price or portion thereof, (iv) unless prohibited by the Committee, by withholding Shares subject to the Option having an aggregate Fair Market Value at the time of exercise equal to the Option Price or portion thereof, or (v) combining the above methods.

(c)Issuance and Delivery of Shares. As soon as practicable following receipt of such notice of exercise and payment, the Company shall notify the Participant of any payment required under subsection (d) below. The Company shall deliver a certificate or certificates for the Shares to the Participant (or provide other evidence of ownership of the Shares, such as tracking through book entry) as soon as practicable after the Participant has made any payment required under subsection (d) below. Shares issued pursuant to the exercise of the Option will be issued only in the name of the Participant and may not be transferred into the name of any agent of or nominee for the Participant until such time as the Participant has complied with the terms of this Agreement.

(d)Taxes and Withholding.

(i)The Participant shall be responsible for all federal, state, local, and foreign income taxes payable with respect to the Option and the exercise thereof. The Participant acknowledges that he or she may incur substantial tax liability arising out of the exercise of the Option and that the Company has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for the Participant.

(ii)The Company shall have the power and right to deduct or withhold, or require the Participant to remit to the Company in cash, an amount sufficient to satisfy federal, state, local, and foreign taxes (including but not limited to the Participant’s FICA obligation), if any, required by law to be withheld with respect to any taxable event arising in connection with the Option. In lieu of the payment specified in this paragraph, the Participant may satisfy the obligation, in whole or in part, by the methods specified in subsection (b)(i) and (ii) above. In addition, unless the Committee determines otherwise and subject to such conditions as may be established by the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares with a Fair Market Value equal to (but not in excess of) the minimum statutory tax required to be withheld. The right to satisfy this obligation by cashless exercise or the withholding of Shares may be withdrawn by the approval of the Committee.

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     (e)Delay In Issuance of Shares. Anything in this Agreement to the contrary notwithstanding, if, at any time specified herein for the issuance of Shares to the Participant, any law, or any regulation or requirement of the Securities and Exchange Commission or other governmental authority having jurisdiction over such matter, shall require either the Company or the Participant to take any action in connection with the Shares then to be issued, the issuance of such Shares shall be deferred until such action shall have been taken; the Company shall be under no obligation to take such action; and the Company shall have no liability whatsoever as a result of the non-issuance of such Shares, except to refund to the Participant any consideration tendered in respect of the Purchase Price.

(f)Stop Transfer Instructions. The Company may impose stop-transfer instructions with respect to any Shares (or other securities) subject to any restriction set forth in this Agreement until the restriction has been satisfied or terminates.

6.Nontransferability

The Option shall not be transferable (including by sale, assignment, pledge, or hypothecation) other than by will or the laws of intestate succession, except for transfers without consideration if and to the extent permitted by the Committee in a manner consistent with the registration provisions of the Securities Act. Except as may be permitted by the preceding sentence, the Option shall be exercisable during the Participant’s lifetime only by the Participant or by his or her guardian or legal representative. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.

7.No Rights as a Shareholder

The Participant shall not have any rights as a shareholder with respect to the Shares subject to his or her Option until the issuance of such Shares to the Participant pursuant to the exercise of the Option.

8.No Right to Service or Future Grants; Compliance with Applicable Law

(a)Nothing in this Agreement shall be construed as constituting a commitment, guarantee, agreement, or understanding of any kind or nature that the Company shall continue the services of the Participant as a Director nor shall this Agreement affect in any way the right of the Company’s shareholders to terminate the services of the Participant at any time and for any reason. The Participant acknowledges and agrees that the award and acceptance of the Option pursuant to this Agreement does not entitle the Participant to future grants under the Plan or any other plan.

(b)The Company may impose such restrictions on the Option, the Shares, and any other benefits underlying the Option hereunder as it may deem advisable, including, without limitation, restrictions under the federal securities laws, the requirements of any securities exchange or similar organization, and any blue sky, state, or foreign securities laws applicable to such securities. The Company shall not be obligated to issue, deliver, or transfer Shares, make any other distribution of benefits under the Plan, or take any other action, unless such delivery, distribution, or action is in compliance with Applicable Law (including but not limited to the requirements of the Securities Act). The Company will be under no obligation to register Shares or other securities with the Securities and Exchange Commission or to effect compliance with the exemption, registration, qualification, or listing requirements of any state or foreign securities laws, or securities exchange or similar organization, and the Company will have no liability for any inability or failure to do so. The Company may cause a restrictive legend or legends to be placed on any certificate issued pursuant to the Option hereunder in such form as may be prescribed from time to time by Applicable Law or as may be advised by legal counsel.

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9.Successors and Assigns

     (a)This Agreement shall be binding upon and inure to the benefit of any assignee or successor in interest to the Company, whether by merger, consolidation, or the sale of all or substantially all of the Company’s assets.

(b)This Agreement shall be binding upon and inure to the benefit of the Participant and his or her legal representative and any person to whom the Option may be transferred by will, the applicable laws of intestate succession, or otherwise in accordance with the terms of the Plan.

10.Notices

Any and all notices under this Agreement shall be in writing, and sent by hand delivery or by certified or registered mail (return receipt requested and first-class postage prepaid), in the case of the Company, to its principal executive offices to the attention of the Chief Financial Officer, and, in the case of the Participant, to the Participant’s address as shown on the Company’s records.

11.Entire Agreement

The parties hereto agree that this Agreement sets forth all of the promises, agreements, conditions, understandings, warranties, and representations between the parties with respect to the Option and the Shares and that there are no promises, agreements, conditions, understandings, warranties, or representations, oral or written, express or implied between the parties with respect to the Option and the Shares other than as set forth in this Agreement and in the Plan.

12.Amendment of Agreement

This Agreement may be modified, amended, suspended, or terminated, and any terms or conditions may be waived, but only by a written instrument executed by the parties hereto and otherwise in accordance with the Plan. Notwithstanding the foregoing, the Committee shall have unilateral authority to amend the Agreement (without the Participant’s consent) to the extent necessary to comply with Applicable Law or changes to Applicable Law (including but in no way limited to Code Section 409A and federal securities laws).

6

13.Severability

The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially unenforceable provision to the extent enforceable in any jurisdiction, shall nevertheless be binding and enforceable.

14.Waiver

The waiver by the Company of a breach of any provision of this Agreement by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.

15.Plan Controls

This Agreement and the Option are subject in all respects to the terms and conditions of the Plan (which are incorporated herein by reference), and the Participant agrees to be bound by the terms and conditions of the Plan. Except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. To the extent that any conflict may exist between any term or provision of this Agreement and any term or provision of the Plan, such term or provision of the Plan shall control, unless the Committee determines otherwise.

16.Agreement to be Bound by Plan

The Participant acknowledges that the Participant fully understands his or her rights under the Plan, and that the Participant agrees to be bound by all terms and conditions of the Plan. The Participant acknowledges that the Participant has received a copy of the Plan prospectus.

17.Authority of Committee

All determinations made by the Committee with respect to the interpretation, construction, and application of any provision of this Agreement shall be final, conclusive, and binding on the parties.

18.Covenants and Representations of the Participant

The Participant represents, warrants, covenants, and agrees with the Company as follows:

(a)The Participant has not relied upon the Company with respect to any tax consequences related to the Option or the Shares. The Participant assumes full responsibility for all such consequences and the filing of all tax returns and elections the Participant may be required or find desirable to file in connection therewith.

(b)The Participant will not distribute or resell any Shares (or other securities) issuable upon exercise of the Option granted hereby in violation of Applicable Law. The Participant shall comply with all provisions of the Company’s Securities Trading Policy, as in effect from time to time.

7

     (c)The agreements, representations, warranties, and covenants made by the Participant herein with respect to the Option shall also extend and apply to all of the Shares issued to the Participant from time to time pursuant to exercise of the Option. Acceptance by the Participant of any certificate representing the Shares (or other evidence of beneficial ownership) shall constitute a confirmation by the Participant that all such agreements, representations, warranties, and covenants made herein continue to be true and correct at that time.

(d)As a condition to receiving this award, the Participant agrees to abide by the Company’s Equity Retention Policy, Compensation Recovery Policy, and Stock Ownership Guidelines and/or other similar policies, each as in effect from time to time and to the extent applicable to the Participant from time to time. In addition, the Participant shall be subject to such compensation recovery, recoupment, forfeiture, or other similar provisions as may apply to the Participant under Applicable Law.

19.Limitation of Liability

The liability of the Company under this Agreement and in the award of the Option hereunder is limited to the obligations set forth herein with respect to such award, and nothing herein contained shall be interpreted as imposing any liability in favor of the Participant or any others with respect to any loss, cost, or expense which the Participant or any others may incur in connection with or arising out of any transaction involving the Option or the Shares.

20.Governing Law

This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of North Carolina, without giving effect to the principles of conflicts of laws, and in accordance with applicable federal laws.

[Signature Page to Follow]

8

     IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement hereto as of the day and year first above written.

KRISPY KREME DOUGHNUTS, INC.

By:

Title:

PARTICIPANT

Signature:

Printed Name:

9

STOCK OPTION EXERCISE FORM

This form must be completed and returned to Krispy Kreme’s Chief Financial Officer on or before 1:00 p.m. Eastern Standard Time on date of exercise.

SECTION I
NAME (please print):	SOCIAL SECURITY NO.:
HOME ADDRESS:	WORK ADDRESS:
HOME TELEPHONE:	WORK TELEPHONE:

SECTION II: I wish to exercise the following options:

A	B	C	D
	NUMBER OF	EXERCISE	TOTAL PURCHASE PRICE:
GRANT DATE	OPTIONS	PRICE	(COLUMN B x COLUMN C)
TOTAL

SECTION III		SECTION IV
I elect to pay for my shares (check one):		I elect to pay my taxes on this transaction
		(check one):
o	Broker assisted Cashless Exercise	o	Sell shares to cover taxes (Broker assisted
			Cashless Exercise)
o	Cash Purchase by Check (payable to	o	Check (payable to Krispy Kreme Doughnuts, Inc.)
	Krispy Kreme Doughnuts, Inc.)
		o	Share withholding
o	Share delivery
o	Share withholding

Signature Date of Exercise

Return	KRISPY KREME DOUGHNUTS, INC.
form to	ATTN: Chief Financial Officer
	370 Knollwood Street
	Winston-Salem, NC 27103
	Phone: 336-725-2981

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, James H. Morgan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Krispy Kreme Doughnuts, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 7, 2012

/s/ James H. Morgan

James H. Morgan

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Douglas R. Muir, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Krispy Kreme Doughnuts, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 7, 2012

/s/ Douglas R. Muir

Douglas R. Muir

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, James H. Morgan, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the accompanying Quarterly Report on Form 10-Q of Krispy Kreme Doughnuts, Inc. (the “Company”) for the fiscal quarter ended October 28, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James H. Morgan

James H. Morgan

Chief Executive Officer

Date: December 7, 2012

This certification shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

A signed original of this written statement required by Section 906 has been provided to Krispy Kreme Doughnuts, Inc. and will be retained by Krispy Kreme Doughnuts, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Douglas R. Muir, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the accompanying Quarterly Report on Form 10-Q of Krispy Kreme Doughnuts, Inc. (the “Company”) for the fiscal quarter ended October 28, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Douglas R. Muir

Douglas R. Muir

Chief Financial Officer

Date: December 7, 2012

This certification shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

A signed original of this written statement required by Section 906 has been provided to Krispy Kreme Doughnuts, Inc. and will be retained by Krispy Kreme Doughnuts, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Investments in Franchisees (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended			9 Months Ended				9 Months Ended					3 Months Ended	9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011	Jan. 29, 2012	Oct. 28, 2012 Kremeworks Llc [Member]	Jan. 29, 2012 Kremeworks Llc [Member]	Oct. 28, 2012 Kremeworks Canada LP [Member]	Jan. 29, 2012 Kremeworks Canada LP [Member]	Oct. 28, 2012 Krispy Kreme South Florida Llc [Member]	Jan. 29, 2012 Krispy Kreme South Florida Llc [Member]	Oct. 28, 2012 Krispy Kreme Mexico [Member]	Jan. 29, 2012 Krispy Kreme Mexico [Member]	May 05, 2011 Krispy Kreme Mexico [Member]	May 01, 2011 Sale Of Interest In KK Mexico [Member]	Oct. 30, 2011 Sale Of Interest In KK Mexico [Member]
Schedule of Equity Method Investments [Line Items]
Number Of Investments In Franchisees	three		three
Guarantor Obligations, Maximum Exposure, Undiscounted	$ 2,243,000		$ 2,243,000		$ 2,685,000	$ 534,000	$ 739,000	$ 0	$ 0	$ 1,709,000	$ 1,946,000
Potential Guarantee Obligation Exposure										1,600,000
Equity Method Investment, Ownership Percentage						25.00%	25.00%	24.50%	24.50%	35.30%	35.30%	0.00%	0.00%	30.00%
Guarantee Obligations Maximum Exposure Percentage						20.00%
Debt Instrument, Maturity Date						Oct. 01, 2013				Oct. 01, 2009
Underlying Indebtedness Of Guaranteed Obligations Amount						2,700,000
Proceeds from sale of interest in equity method franchisee			0	7,723,000
Equity Method Investment Realized Gain Loss On Disposal	0	0	0	6,198,000
Income Taxes Paid On Disposal Of Equity Method Franchisee																1,500,000
After Tax Gain On Equity Method Investment Disposal																4,700,000
Equity Method Investment, Net Sales Proceeds																6,200,000
Payment Received In Conjunction With Sale															765,000
Allowance For Doubtful Accounts Receivable Recoveries															391,000
Royalty Revenue															280,000
Initial Franchise Fees															$ 95,000

XML

Fair Value Measurement (Assets and Liabilities Measured at Fair Value and carrying value) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 28, 2012	Jan. 29, 2012	Oct. 30, 2011	Jan. 30, 2011
Assets:
Cash and cash equivalents	$ 49,903	$ 44,319	$ 37,579	$ 21,970
Receivables	23,436	21,616
Interest rate derivatives	20	53
Receivables from equity method franchisees	774	655
Liabilities:
Accounts payable	12,047	10,494
Long-term debt (including current maturities)	25,912	27,593
Fair Values By Balance Sheet Grouping [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	49,903	44,319
Accounts Receivable, Fair Value Disclosure	23,436	21,616
Due From Related Parties Current Fair Value Disclosure	774	655
Interest Rate Cash Flow Hedge Asset at Fair Value	20	53
Accounts Payable, Fair Value Disclosure	12,047	10,494
Long-term Debt, Fair Value	25,912	27,593
Agricultural Commodity Futures Contracts [Member]
Assets:
Commodity future contracts - Assets	60	21
Fair Values By Balance Sheet Grouping [Abstract]
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value	$ 60	$ 21

XML

Impairment Charges and Lease Termination Costs (accrual for lease termination costs) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011
Impairment Charges And Lease Termination Costs Disclosure [Abstract]
Balance	$ 679	$ 1,152	$ 709	$ 1,995
Adjustments to previously recorded provisions resulting from settlements with lessors and adjustments of previous estimates	209	119	279	611
Accretion of discount	7	16	23	69
Total provision	216	135	302	680
Payments on unexpired leases, including settlements with lessors	(48)	(563)	(164)	(1,951)
Balance	$ 847	$ 724	$ 847	$ 724

XML

Income taxes (Narratives) (Details) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended						9 Months Ended	12 Months Ended	9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011	Jan. 29, 2012	Jan. 30, 2011	Jan. 31, 2010	Oct. 28, 2012 Krispy Kreme Mexico [Member]	Jan. 29, 2012 Krispy Kreme Mexico [Member]	May 05, 2011 Krispy Kreme Mexico [Member]	Oct. 28, 2012 Litigation Warrant [Member]	Jan. 29, 2012 Litigation Warrant [Member]	Oct. 28, 2012 Warrants Issued As Compensation For Services Provided Member [Member]
Income Tax Disclosure [Abstract]
Deferred Tax Assets, Valuation Allowance	$ 10,700,000		$ 10,700,000		$ 10,700,000
Income Loss Before Income Taxes From Continuing Operations	8,874,000	5,212,000	28,266,000	25,523,000	30,400,000	8,900,000	418,000
Equity Method Investment Realized Gain Loss On Disposal	0	0	0	6,198,000
Valuation Allowance Deferred Taxes Asset Change In Amount					139,600,000
Class of Warrant or Right [Line Items]
Warrants issue stock price											$ 12.21		$ 7.75
Warrants Expiration Date											March 2012		January 31, 2013
Deferred Tax Assets Warrants												7,200,000	2,600,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights													1.2
Share Price	$ 9.10		$ 9.10
Fair Value Of Warrants When Issued													6,700,000
Portion Of Deferred Tax Asset Possibly Not Recognize													$ 2,000,000
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage								0.00%	0.00%	30.00%

XML

Investment in Franchisee (Tables)

9 Months Ended

Oct. 28, 2012

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments In Franchisees [Table Text Block]

	October 28, 2012
	Company	Investment
	Ownership	and				Loan
	Percentage	Advances		Receivables		Guarantees
	(Dollars in thousands)
Kremeworks, LLC	25.0%	$	900	$	330	$	534
Kremeworks Canada, LP	24.5%		-		28		-
Krispy Kreme of South Florida, LLC	35.3%		-		416		1,709
			900		774	$	2,243
Less: reserves and allowances			(900)		-
		$	-	$	774
	January 29, 2012
	Company	Investment
	Ownership	and				Loan
	Percentage	Advances		Receivables		Guarantees
	(Dollars in thousands)
Kremeworks, LLC	25.0%	$	900	$	308	$	739
Kremeworks Canada, LP	24.5%		-		20		-
Krispy Kreme of South Florida, LLC	35.3%		-		327		1,946
			900		655	$	2,685
Less: reserves and allowances			(900)		-
		$	-	$	655

XML

Derivative (Effect of Derivative Instruments by Balance Sheet locations) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 28, 2012	Jan. 29, 2012
Derivative [Line Items]
Interest Rate Cash Flow Hedge Asset at Fair Value	$ 20	$ 53
Agricultural Commodity Futures Contracts [Member]
Derivative [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value	60	21
Other Current Assets [Member] | Agricultural Commodity Futures Contracts [Member]
Derivative [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value	60	21
Other Assets [Member]
Derivative [Line Items]
Interest Rate Cash Flow Hedge Asset at Fair Value	$ 20	$ 53

XML

Shareholders' Equity (Narrative) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011
Common Stock
Equity Disclosure [Line Items]
Shares repurchased under share repurchase authorization	$ 0	$ 0	$ 20,000	$ 0
Stock Incentive 2000 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement Plan Expiration Date			Jun. 30, 2012
Stock Incentive 2012 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Description			On June 12, 2012, the Company’s shareholders approved the Krispy Kreme Doughnuts, Inc. 2012 Stock Incentive Plan (the “2012 Plan”). The 2012 Plan, which expires on June 11, 2022, replaces the Company’s 2000 Stock Incentive Plan, which expired on June 30, 2012. The 2012 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, stock awards, performance unit awards, performance share awards, stock appreciation rights and phantom stock awards. The 2012 Plan limits the issuance of shares of Company common stock under the 2012 Plan to approximately 3,550,000 shares. Any shares that are subject to options or stock appreciation rights awarded under the 2012 Plan will be counted against the 2012 Plan limit as one share for every one share granted, and any shares that are subject to 2012 Plan awards other than options or stock appreciation rights will be counted against this limit as one and thirty three-hundredths (1.33) shares for every one share granted. The 2012 Plan provides that options may be granted with exercise prices not less than the closing sale price of the Company’s common stock on the date of grant.
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	3,550,000		3,550,000
Share-based Compensation Arrangement Plan Expiration Date			Jun. 11, 2022

XML

Receivables (Notes Receivables from Franchisees) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 28, 2012	Jan. 29, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes And Loans Receivable Gross Net Of Deferred Gain	$ 2,014	$ 777
Less - portion due within one year included in receivables	(553)	(185)
Less - allowance for doubtful accounts	(62)	(68)
Net Notes Receivable	$ 1,399	$ 524

XML

Acquisitions and Divestitures (Narratives) (Details) (USD $)	9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011
Schedule Of Acquisitions And Divestitures [Line Items]
Payments to Acquire Businesses, Net of Cash Acquired	$ 915,000	$ 0
August 2012 Business Acquisition [Member]
Schedule Of Acquisitions And Divestitures [Line Items]
Business Acquisition Effective Date Of Acquisition1	Aug. 30, 2012
Number Of Stores Acquired	two
Business Acquisition, Purchase Price Allocation, Property, Plant and Equipment	464,000
Business Acquisition Purchase Price Allocation Other Assets	8,000
Business Acquisition Purchase Price Allocation Intangible assets	443,000
August 2006 Asset Acquisition [Member]
Schedule Of Acquisitions And Divestitures [Line Items]
Payments To Acquire Store Assets	2,900,000
September 2012 Divestiture [Member]
Schedule Of Acquisitions And Divestitures [Line Items]
Asset Sale Effective Date Of Sale	Sep. 27, 2012
Number Of Stores Sold	three
Total Purchase Price From Sale Of Assets	3,600,000
Proceeds from Sales of Business, Affiliate and Productive Assets	360,000
Notes Receivable Due Gross	3,200,000
Notes Receivable Periodic Payment	51,000
Notes Receivable Interest Rate	8.00%
Note Receivable Initial Payment Due Date	Nov. 01, 2012
Note Receivable Due Date	Oct. 01, 2017
Assets Sold Carrying Amounts	1,900,000
Deferred Gain on Sale of Property	$ 1,700,000
PercentInvestmentMustExceedToConsiderGainRecognition	20.00%

XML

Fair Value Measurement (Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 28, 2012	Jan. 29, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate derivative	$ 20	$ 53
Agricultural Commodity Futures Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commodity future contracts - Assets	60	21
Fair Value, Measurements, Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
401(k) mirror plan assets	1,656	1,039
Interest rate derivative	0	0
Total Assets	1,716	1,060
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Agricultural Commodity Futures Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commodity future contracts - Assets	60	21
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
401(k) mirror plan assets	0	0
Interest rate derivative	20	53
Total Assets	20	53
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Agricultural Commodity Futures Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commodity future contracts - Assets	0	0
Fair Value, Measurements, Recurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
401(k) mirror plan assets	0	0
Interest rate derivative	0	0
Total Assets	0	0
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Agricultural Commodity Futures Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commodity future contracts - Assets	$ 0	$ 0

XML

Segment Information

9 Months Ended

Oct. 28, 2012

Segment Reporting Disclosure [Abstract]

Segment Reporting Disclosure Text Block

Note 2 — Segment Information

The Company's reportable segments are Company Stores, Domestic Franchise, International Franchise and KK Supply Chain. The Company Stores segment is comprised of the stores operated by the Company. These stores sell doughnuts and complementary products through both on-premises and wholesale 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. Expenses for these segments include costs to recruit new franchisees, to assist in store openings, 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 nine months endedOctober 28, 2012 and October 30, 2011. Segment operating income is consolidated operating income before unallocated general and administrative expenses and impairment charges and lease termination costs.

					Three Months Ended				Nine Months Ended
					October 28,		October 30,		October 28,		October 30,
					2012		2011		2012		2011
					(In thousands)
Revenues:
	Company Stores				$	72,493	$	67,606	$	215,172	$	203,073
	Domestic Franchise					2,498		2,327		7,561		7,045
	International Franchise					6,024		5,374		17,832		16,362
	KK Supply Chain:
		Total revenues				52,825		50,277		158,075		154,501
		Less – intersegment sales elimination				(26,753)		(26,876)		(80,942)		(79,721)
			External KK Supply Chain revenues			26,072		23,401		77,133		74,780
				Total revenues	$	107,087	$	98,708	$	317,698	$	301,260
Operating income (loss):
	Company Stores				$	1,985	$	(574)	$	5,271	$	551
	Domestic Franchise					1,174		1,114		4,072		2,477
	International Franchise					4,301		3,313		12,957		10,893
	KK Supply Chain					7,312		6,987		24,181		23,074
		Total segment operating income				14,772		10,840		46,481		36,995
	Unallocated general and administrative expenses					(5,345)		(5,155)		(16,900)		(16,037)
	Impairment charges and lease termination costs					(216)		(135)		(302)		(680)
		Consolidated operating income			$	9,211	$	5,550	$	29,279	$	20,278
Depreciation expense:
	Company Stores				$	1,880	$	1,756	$	5,921	$	4,982
	Domestic Franchise					40		55		150		165
	International Franchise					3		-		9		4
	KK Supply Chain					172		183		569		560
	Corporate administration					262		214		589		522
		Total depreciation expense			$	2,357	$	2,208	$	7,238	$	6,233

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.

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Shareholders' Equity (Share-based compensation) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011
Share Based Compensation Arrangement By Share Based Payment Award And Income Statement Location [Line Items]
Share-based compensation	$ 1,422	$ 1,631	$ 3,570	$ 3,437
Stock Options [Member]
Share Based Compensation Arrangement By Share Based Payment Award And Income Statement Location [Line Items]
Share-based compensation	234	375	1,295	1,145
Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award And Income Statement Location [Line Items]
Share-based compensation	1,188	1,256	2,275	2,292
Direct Operating Expense [Member]
Share Based Compensation Arrangement By Share Based Payment Award And Income Statement Location [Line Items]
Share-based compensation	864	1,096	1,591	2,061
General and Administrative Expense [Member]
Share Based Compensation Arrangement By Share Based Payment Award And Income Statement Location [Line Items]
Share-based compensation	$ 558	$ 535	$ 1,979	$ 1,376

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Derivative Instruments (Tables)

9 Months Ended

Oct. 28, 2012

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

		Asset Derivatives
		Fair Value
		October 28,		January 29,
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	2012		2012
		(In thousands)
Agricultural commodity futures contracts	Other current assets	$	60	$	21

		Asset Derivatives
		Fair Value
		October 28,		January 29,
Derivatives Designated as a Cash Flow Hedge	Balance Sheet Location	2012		2012
		(In thousands)
Interest rate derivative	Other assets	$	20	$	53

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance [Table Text Block]

				Amount of Derivative Gain or (Loss)
				Recognized in Income
				Three Months Ended							Nine Months Ended
Derivatives Not Designated as Hedging Instruments			Location of Derivative Gain or (Loss) Recognized in Income	October 28,			October 30,				October 28,		October 30,
						2012			2011			2012		2011
				(In thousands)
Agricultural commodity futures
	contracts		Direct operating expenses	$	(110)		$	176		$	1,007	$	(422)
Gasoline commodity futures
	contracts		Direct operating expenses		-			(35)			-		(44)
		Total		$	(110)		$	141		$	1,007	$	(466)
				Amortization of Derivative Asset
				Recognized in Income
				Three Months Ended							Nine Months Ended
Derivatives Designated as a Cash Flow Hedge			Location of Amortization of Derivative Asset Recognized in Income	October 28,			October 30,				October 28,		October 30,
						2012			2011			2012		2011
				(In thousands)
Interest rate derivative			Interest expense	$	(10)		$	-		$	(19)	$	-

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) [Table Text Block]

		Amount of Derivative Gain or (Loss)
		Recognized in Income
		Three Months Ended						Nine Months Ended
Derivatives Designated as a Cash Flow Hedge	Location of Derivative Gain or (Loss) Recognized in OCI	October 28,			October 30,			October 28,			October 30,
				2012			2011			2012			2011
			(In thousands)
Interest rate derivative	Change in fair value of derivative	$	-		$	(77)		$	(14)		$	(459)
	Less - income tax effect		-			30			5			181
	Net change in amount recognized in OCI	$	-		$	(47)		$	(9)		$	(278)

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Fair Value Measurement (Tables)

9 Months Ended

Oct. 28, 2012

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

		October 28, 2012
		Level 1		Level 2		Level 3
		(In thousands)
Assets:
	401(k) mirror plan assets	$	1,656	$	-	$	-
	Agricultural commodity futures contracts		60		-		-
	Interest rate derivative		-		20		-
	Total assets	$	1,716	$	20	$	-
		January 29, 2012
		Level 1		Level 2		Level 3
		(In thousands)
Assets:
	401(k) mirror plan assets	$	1,039	$	-	$	-
	Agricultural commodity futures contracts		21		-		-
	Interest rate derivative		-		53		-
	Total assets	$	1,060	$	53	$	-

Fair Value, by Balance Sheet Grouping [Table Text Block]

		October 28, 2012				January 29, 2012
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
		(In thousands)
Assets:
	Cash and cash equivalents	$	49,903	$	49,903	$	44,319	$	44,319
	Receivables		23,436		23,436		21,616		21,616
	Receivables from Equity Method Franchisees		774		774		655		655
	Agricultural commodity futures contracts		60		60		21		21
	Interest rate derivatives		20		20		53		53
Liabilities:
	Accounts payable		12,047		12,047		10,494		10,494
	Long-term debt (including current maturities)		25,912		25,912		27,593		27,593

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Shareholders' Equity (Share Repurchase) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011
Equity Disclosure [Line Items]
Repurchase of common shares			20,758	954
Common Shares Outstanding [Member]
Equity Disclosure [Line Items]
Stock Repurchased Authorized During Period Shares	0	0	3,113	0
Shares surrendered in reimbursement for withholding taxes	100	105	100	121
Repurchase of common shares	100	105	3,213	121
Common Stock
Equity Disclosure [Line Items]
Shares repurchased under share repurchase authorization	0	0	20,000	0
Shares surrendered in reimbursement for withholding taxes	758	829	758	954
Repurchase of common shares	758	829	20,758	954

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Accounting Policies (Narratives) (Details)	3 Months Ended		9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	3,100,000	7,400,000	3,200,000	7,400,000
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		340,000	58,000	158,000
Maximum [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	35.00%		35.00%
Minimum [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	25.00%		25.00%

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Accounting Policies (Earnings Per Share) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011
Earnings Per Share Reconciliation [Abstract]
Net income	$ 5,044	$ 4,717	$ 15,999	$ 22,727
Basic earnings per share - weighted average shares outstanding	66,668	69,384	67,897	69,013
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Diluted earnings per share - weighted average shares outstanding plus dilutive potential common shares	68,803	71,547	70,041	71,474
Stock Options [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Incremental Common Shares Attributable to Share-based Payment Arrangements	1,719	1,654	1,663	1,796
Restricted Stock [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Incremental Common Shares Attributable to Share-based Payment Arrangements	416	509	481	665

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Accounting Policies

9 Months Ended

Oct. 28, 2012

Accounting Policies [Abstract]

Basis Of Presentation And Significant Accounting Policies [Text Block]

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 derives revenue from franchise and development fees and royalties from franchisees. Additionally, the Company sells doughnut mix, other ingredients and supplies and doughnut-making equipment to franchisees.

Significant Accounting Policies

BASIS OF PRESENTATION. The consolidated financial statements contained herein should be read in conjunction with the Company's 2012 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 the2012 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 January 29, 2012 were derived from the Company's audited financial statements but do not include all disclosures required by GAAP.

BASIS OF CONSOLIDATION. The financial statements include the accounts of KKDI and its subsidiaries, the most significant of which is KKDI's principal operating subsidiary, Krispy Kreme Doughnut Corporation.

Investments in entities over which the Company has the ability to exercise significant influence but which the Company does not control, and whose financial statements are not otherwise required to be consolidated, are accounted for using the equity method. These entities typically are 25% to 35% owned and are hereinafter sometimes referred to as “Equity Method Franchisees.”

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 warrants and the vesting of currently unvested shares of restricted stock and restricted stock units.

The following table sets forth amounts used in the computation of basic and diluted earnings per share:

			Three Months Ended				Nine Months Ended
			October 28,		October 30,		October 28,		October 30,
			2012		2011		2012		2011
			(In thousands)
Numerator: net income			$	5,044	$	4,717	$	15,999	$	22,727
Denominator:
	Basic earnings per share - weighted average shares outstanding			66,668		69,384		67,897		69,013
	Effect of dilutive securities:
		Stock options and warrants		1,719		1,654		1,663		1,796
		Restricted stock and restricted stock units		416		509		481		665
	Diluted earnings per share - weighted average shares
		outstanding plus dilutive potential common shares		68,803		71,547		70,041		71,474

The sum of the quarterly earnings per share amounts does not necessarily equal earnings per share for the year to date.

Stock options and warrants with respect to 3.1million and 7.4million shares for the three months ended October 28, 2012 and October 30, 2011, respectively,as well as 340,000 unvestedshares of restricted stock and unvested restricted stock unitsfor the three months endedOctober 30, 2011, have been excluded from the computation of the number of shares used to compute diluted earnings per share because their inclusion would be antidilutive.

Stock options and warrants with respect to 3.2million and 7.4 million shares, as well as 58,000 and 158,000 unvested shares of restricted stock and unvested restricted stock units, have been excluded from the computation of the number of shares used to compute diluted earnings per share for the nine months ended October 28, 2012 and October 30, 2011, respectively, because their inclusion would be antidilutive.

RecentAccounting Pronouncements

In May 2011, the Financial Accounting Standards Board (the “FASB”) issued an Accounting Standards Update (“ASU”) related to fair value measurements. The ASU clarifiessome existing concepts, eliminates wording differences between GAAP and International Financial Reporting Standards (“IFRS”), and in some limited cases, changes some principles to achieve convergence between GAAP and IFRS. The ASU also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level3)inputs. The Company adopted the new standards in the first quarter of fiscal 2013; such adoption had no effect on the Company's financial condition or results of operations.

In June 2011, the FASB issued new accounting standards which require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. The new accounting rules eliminate the option to present components of other comprehensive income as part of the statement of changes in shareholders' equity. The Company adopted the new standards in the first quarter of fiscal 2013 by presenting a separate consolidated statement of comprehensive income in addition to the consolidated statement of income.

In July 2012, the FASB issued amended accounting guidance regarding indefinite-lived intangible asset impairment testing and whether it is necessary to perform the quantitative impairment test currently required. This guidance is effective for the Company in fiscal 2014, with early adoption permitted. The Company does not expect that this new guidance with have a material impact on its consolidated financial statements.

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Segment (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011
Segment Reporting Information [Line Items]
Revenues	$ 107,087	$ 98,708	$ 317,698	$ 301,260
Segment Reporting Information, Revenue for Reportable Segment	52,825	50,277	158,075	154,501
Segment Reporting Information, Intersegment Revenue	(26,753)	(26,876)	(80,942)	(79,721)
Segment Operating Income Loss	14,772	10,840	46,481	36,995
Segment Reporting Gen And Admin Expense	(5,345)	(5,155)	(16,900)	(16,037)
Impairment charges and lease termination costs	(216)	(135)	(302)	(680)
Operating income	9,211	5,550	29,279	20,278
Depreciation expense	2,357	2,208	7,238	6,233
Company Stores [Member]
Segment Reporting Information [Line Items]
Revenues	72,493	67,606	215,172	203,073
Segment Operating Income Loss	1,985	(574)	5,271	551
Depreciation expense	1,880	1,756	5,921	4,982
Domestic Franchise [Member]
Segment Reporting Information [Line Items]
Revenues	2,498	2,327	7,561	7,045
Segment Operating Income Loss	1,174	1,114	4,072	2,477
Depreciation expense	40	55	150	165
International Franchise [Member]
Segment Reporting Information [Line Items]
Revenues	6,024	5,374	17,832	16,362
Segment Operating Income Loss	4,301	3,313	12,957	10,893
Depreciation expense	3	0	9	4
KK Supply Chain [Member]
Segment Reporting Information [Line Items]
Revenues	26,072	23,401	77,133	74,780
Segment Operating Income Loss	7,312	6,987	24,181	23,074
Depreciation expense	172	183	569	560
Corporate Administration [Member]
Segment Reporting Information [Line Items]
Depreciation expense	$ 262	$ 214	$ 589	$ 522

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Investment in Franchisees (Details) (USD $) In Thousands, unless otherwise specified	Oct. 28, 2012	Jan. 29, 2012	May 05, 2011
Schedule of Equity Method Investments [Line Items]
Investments in equity method franchisees	0	0
Receivables from equity method franchisees	774	655
Guarantor Obligations, Maximum Exposure, Undiscounted	2,243	2,685
Kremeworks Llc [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	25.00%	25.00%
Investments in equity method franchisees	900	900
Receivables from equity method franchisees	330	308
Guarantor Obligations, Maximum Exposure, Undiscounted	534	739
Kremeworks Canada LP [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	24.50%	24.50%
Investments in equity method franchisees	0	0
Receivables from equity method franchisees	28	20
Guarantor Obligations, Maximum Exposure, Undiscounted	0	0
Krispy Kreme South Florida Llc [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	35.30%	35.30%
Investments in equity method franchisees	0	0
Receivables from equity method franchisees	416	327
Guarantor Obligations, Maximum Exposure, Undiscounted	1,709	1,946
Krispy Kreme Mexico [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Ownership Percentage	0.00%	0.00%	30.00%
Gross Amount Before Reserve [Member]
Schedule of Equity Method Investments [Line Items]
Investments in equity method franchisees	900	900
Receivables from equity method franchisees	774	655
Reserves And Allowances [Member]
Schedule of Equity Method Investments [Line Items]
Investments in equity method franchisees	(900)	(900)
Receivables from equity method franchisees	0	0

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CONSOLIDATED STATEMENT OF INCOME (USD $)	3 Months Ended		9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011
CONSOLIDATED STATEMENT OF INCOME
Revenues	$ 107,087,000	$ 98,708,000	$ 317,698,000	$ 301,260,000
Operating expenses:
Direct operating expenses (exclusive of depreciation expense shown below)	90,220,000	85,874,000	264,568,000	258,554,000
General and administrative expenses	5,083,000	4,941,000	16,311,000	15,515,000
Depreciation expense	2,357,000	2,208,000	7,238,000	6,233,000
Impairment charges and lease termination costs	216,000	135,000	302,000	680,000
Operating income	9,211,000	5,550,000	29,279,000	20,278,000
Interest income	14,000	30,000	102,000	131,000
Interest Expense	(384,000)	(385,000)	(1,202,000)	(1,276,000)
Equity in losses of equity method franchisees	(47,000)	(72,000)	(150,000)	(69,000)
Gain on sale of interest in equity method franchisee	0	0	0	6,198,000
Other non-operating income and (expense), net	80,000	89,000	237,000	261,000
Income before income taxes	8,874,000	5,212,000	28,266,000	25,523,000
Provision for income taxes	3,830,000	495,000	12,267,000	2,796,000
Net income	$ 5,044,000	$ 4,717,000	$ 15,999,000	$ 22,727,000
Earnings per common share:
Basic	$ 0.08	$ 0.07	$ 0.24	$ 0.33
Diluted	$ 0.07	$ 0.07	$ 0.23	$ 0.32

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Impairment Charges and Lease Termination Costs (components of impairment charges and lease termination costs) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011
Impairment Charges And Lease Termination Costs Disclosure [Abstract]
Impairment of long-lived assets	$ 0	$ 0	$ 0	$ 0
Lease termination costs	216	135	302	680
Total impairment charges and lease termination costs	$ 216	$ 135	$ 302	$ 680

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CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 15,999	$ 22,727
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	7,238	6,233
Deferred income taxes	10,824	159
Accrued rent expense	369	389
Loss on disposal of property and equipment	468	348
Gain on sale of interest in equity method franchisee	0	(6,198)
Share-based compensation	3,570	3,437
Provision for doubtful accounts	65	(397)
Amortization of deferred financing costs	300	320
Equity in losses of equity method franchisees	150	69
Other	(1,075)	956
Change in assets and liabilities:
Receivables	(1,467)	(1,794)
Inventories	(169)	(2,313)
Other current and non-current assets	(1,499)	(595)
Accounts payable and accrued liabilities	690	1,767
Other long-term obligations	2,515	(2,196)
Net cash provided by operating activities	37,978	22,912
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(9,480)	(8,222)
Proceeds from disposals of property and equipment	66	26
Acquisition of stores from franchisee	(915)	0
Proceeds from sale of interest in equity method franchisee	0	7,723
Escrow deposit recovery	0	1,600
Other investing activities	347	(52)
Net cash provided by (used for) investing activities	(9,982)	1,075
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt	(1,652)	(8,437)
Deferred financing costs	(11)	(23)
Proceeds from exercise of stock options	0	1,036
Proceeds from exercise of warrants	9	0
Repurchase of common shares	(20,758)	(954)
Net cash used for financing activities	(22,412)	(8,378)
Net increase in cash and cash equivalents	5,584	15,609
Cash and cash equivalents at beginning of period	44,319	21,970
Cash and cash equivalents at end of period	$ 49,903	$ 37,579

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Receivables (Receivables by categories) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 28, 2012	Jan. 29, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other receivables	$ 1,081	$ 1,015
Current portion of notes receivable	553	185
Accounts Notes And Loans Receivable Gross Current	23,730	22,774
Allowance for Doubtful Accounts Receivable, Current	(294)	(1,158)
Receivables, Net, Current, Total	23,436	21,616
Receivables from equity method franchisees	774	655
Wholesale Customers [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Receivable, Gross, Current	10,485	10,169
Allowance for Doubtful Accounts Receivable, Current	(254)	(349)
Unaffiliated Franchisees [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Receivable, Gross, Current	11,611	11,405
Allowance for Doubtful Accounts Receivable, Current	$ (40)	$ (809)

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Segment (Tables)

9 Months Ended

Oct. 28, 2012

Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

					Three Months Ended				Nine Months Ended
					October 28,		October 30,		October 28,		October 30,
					2012		2011		2012		2011
					(In thousands)
Revenues:
	Company Stores				$	72,493	$	67,606	$	215,172	$	203,073
	Domestic Franchise					2,498		2,327		7,561		7,045
	International Franchise					6,024		5,374		17,832		16,362
	KK Supply Chain:
		Total revenues				52,825		50,277		158,075		154,501
		Less – intersegment sales elimination				(26,753)		(26,876)		(80,942)		(79,721)
			External KK Supply Chain revenues			26,072		23,401		77,133		74,780
				Total revenues	$	107,087	$	98,708	$	317,698	$	301,260
Operating income (loss):
	Company Stores				$	1,985	$	(574)	$	5,271	$	551
	Domestic Franchise					1,174		1,114		4,072		2,477
	International Franchise					4,301		3,313		12,957		10,893
	KK Supply Chain					7,312		6,987		24,181		23,074
		Total segment operating income				14,772		10,840		46,481		36,995
	Unallocated general and administrative expenses					(5,345)		(5,155)		(16,900)		(16,037)
	Impairment charges and lease termination costs					(216)		(135)		(302)		(680)
		Consolidated operating income			$	9,211	$	5,550	$	29,279	$	20,278
Depreciation expense:
	Company Stores				$	1,880	$	1,756	$	5,921	$	4,982
	Domestic Franchise					40		55		150		165
	International Franchise					3		-		9		4
	KK Supply Chain					172		183		569		560
	Corporate administration					262		214		589		522
		Total depreciation expense			$	2,357	$	2,208	$	7,238	$	6,233

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Receivables (Doubtful accounts summary) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	$ 1,158
Provision for doubtful accounts	65	(397)
Balance	294
Trade Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,158	1,334
Provision for doubtful accounts	130	15
Net recoveries (chargeoffs)	(994)	(212)
Balance	294	1,137
Equity Method Franchisees Receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	0	0
Provision for doubtful accounts	(59)	0
Net recoveries (chargeoffs)	59	0
Balance	0	0
Notes Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	68	538
Provision for doubtful accounts	(6)	(412)
Net recoveries (chargeoffs)	0	(58)
Balance	$ 62	$ 68

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Inventory (Tables)

9 Months Ended

Oct. 28, 2012

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

	October 28,		January 29,
	2012		2012
	(In thousands)
Raw materials	$	5,818	$	5,306
Work in progress		46		89
Finished goods and purchased merchandise		10,813		11,102
	$	16,677	$	16,497

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) In Thousands	Total USD ($)	Common Shares Outstanding [Member]	Common Stock USD ($)	Accumulated Other Comprehensive Income (Loss) USD ($)	Accumulated Deficit USD ($)
Beginning Balance at Jan. 30, 2011	$ 76,428		$ 370,808	$ (34)	$ (294,346)
Beginning Balance at Jan. 30, 2011		67,527
Total comprehensive income	22,483			(244)	22,727
Exercise of stock options	1,036		1,036
Exercise of stock options		397
Cancelation of restricted shares	0		0
Cancelation of restricted shares		(8)
Exercise of warrants	0
Share-based compensation	3,437		3,437
Share-based compensation		280
Repurchase of common shares	(954)		(954)
Repurchase of common shares		(121)
Ending Balance at Oct. 30, 2011	102,430		374,327	(278)	(271,619)
Ending Balance at Oct. 30, 2011		68,075
Beginning Balance at Jan. 29, 2012	249,126		377,539	(336)	(128,077)
Beginning Balance at Jan. 29, 2012		68,092
Total comprehensive income	15,990			(9)	15,999
Write Off of deferred tax asset related to expiration of warrants	(7,174)		(7,174)
Exercise of stock options	0
Exercise of warrants	9		9
Exercise of warrants		1
Share-based compensation	3,570		3,570
Share-based compensation		344
Repurchase of common shares	(20,758)		(20,758)
Repurchase of common shares		(3,213)
Ending Balance at Oct. 28, 2012	$ 240,763		$ 353,186	$ (345)	$ (112,078)
Ending Balance at Oct. 28, 2012		65,224

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011
Statement of Income and Comprehensive Income [Abstract]
Net income	$ 5,044	$ 4,717	$ 15,999	$ 22,727
Other comprehensive income (loss):
Foreign currency translation adjustment	0	0	0	57
Less income taxes	0	0	0	(23)
Foreign currency translation adjustment, net of income taxes	0	0	0	34
Unrealized loss on cash flow hedge	0	(77)	(14)	(459)
Less income taxes	0	30	5	181
Unrealized loss on cash flow hedge, net of income taxes	0	(47)	(9)	(278)
Total other comprehensive loss	0	(47)	(9)	(244)
Comprehensive income	$ 5,044	$ 4,670	$ 15,990	$ 22,483

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Fair Value Measurements

9 Months Ended

Oct. 28, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures Text Block

Note 10 — 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 October 28, 2012 and January 29, 2012.

		October 28, 2012
		Level 1		Level 2		Level 3
		(In thousands)
Assets:
	401(k) mirror plan assets	$	1,656	$	-	$	-
	Agricultural commodity futures contracts		60		-		-
	Interest rate derivative		-		20		-
	Total assets	$	1,716	$	20	$	-
		January 29, 2012
		Level 1		Level 2		Level 3
		(In thousands)
Assets:
	401(k) mirror plan assets	$	1,039	$	-	$	-
	Agricultural commodity futures contracts		21		-		-
	Interest rate derivative		-		53		-
	Total assets	$	1,060	$	53	$	-

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

There were no nonrecurring fair value measurements recorded during the three and nine months ended October 28, 2012 and October 30, 2011.

Fair Values of Financial Instruments at the Balance Sheet Dates

The carrying values and approximate fair values of certain financial instruments as of October 28, 2012 and January 29, 2012 were as follows:

		October 28, 2012				January 29, 2012
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
		(In thousands)
Assets:
	Cash and cash equivalents	$	49,903	$	49,903	$	44,319	$	44,319
	Receivables		23,436		23,436		21,616		21,616
	Receivables from Equity Method Franchisees		774		774		655		655
	Agricultural commodity futures contracts		60		60		21		21
	Interest rate derivatives		20		20		53		53
Liabilities:
	Accounts payable		12,047		12,047		10,494		10,494
	Long-term debt (including current maturities)		25,912		25,912		27,593		27,593

The fair value of the term loan is estimated based on an indicative bid price, valuation input Level 2, under GAAP.

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Document and Entity Information	9 Months Ended
	Oct. 28, 2012	Nov. 23, 2012
Document and Entity Information [Abstract]
Document Type	10-Q
Document Period End Date	Oct. 28, 2012
Amendment Flag	false
Entity Registrant Name	KRISPY KREME DOUGHNUTS INC
Entity Central Index Key	0001100270
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--02-03
Entity Filer Category	Accelerated Filer
Entity Well Known Seasoned Issuer	Yes
Entity Common Stock Shares Outstanding		65,223,895
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

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Derivative Instruments

9 Months Ended

Oct. 28, 2012

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments And Hedging Activities Disclosure Text Block

Note 11 — 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 and interest rate 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 10.

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 October 28, 2012, the Company had commodity derivatives with an aggregate contract volume of130,000bushels of wheat. Other than the requirement to meet minimum margin requirements with respect to the commodity derivatives, there are no collateral requirements related to such contracts.

Interest Rate Risk

All of the borrowings under the Company's secured credit facilities bear interest at variable rates based upon either the lenders' prime rate, the Fed funds rate or LIBOR. The interest cost of the Company's debt may be affected by changes in these short-term interest rates and increases in those rates may adversely affect the Company's results of operations.

On March 3, 2011, the Company entered into an interest rate derivative contract having an aggregate notional principal amount of $17.5 million. The derivative contract entitles the Company to receive from the counterparty the excess, if any, of the three-month LIBOR rate over 3.00% for each of the calendar quarters in the period beginning April 2012 and ending December 2015. The Company is accounting for this derivative contract as a cash flow hedge.

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 October 28, 2012 and January 29, 2012:

		Asset Derivatives
		Fair Value
		October 28,		January 29,
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	2012		2012
		(In thousands)
Agricultural commodity futures contracts	Other current assets	$	60	$	21
		Asset Derivatives
		Fair Value
		October 28,		January 29,
Derivatives Designated as a Cash Flow Hedge	Balance Sheet Location	2012		2012
		(In thousands)
Interest rate derivative	Other assets	$	20	$	53

The effect of derivative instruments on the consolidated statement of income for the three and nine months ended October 28, 2012 and October 30, 2011, was as follows:

				Amount of Derivative Gain or (Loss)
				Recognized in Income
				Three Months Ended							Nine Months Ended
Derivatives Not Designated as Hedging Instruments			Location of Derivative Gain or (Loss) Recognized in Income	October 28,			October 30,				October 28,			October 30,
						2012			2011				2012			2011
				(In thousands)
Agricultural commodity futures
	contracts		Direct operating expenses	$	(110)		$	176		$	1,007		$	(422)
Gasoline commodity futures
	contracts		Direct operating expenses		-			(35)			-			(44)
		Total		$	(110)		$	141		$	1,007		$	(466)
				Amortization of Derivative Asset
				Recognized in Income
				Three Months Ended							Nine Months Ended
Derivatives Designated as a Cash Flow Hedge			Location of Amortization of Derivative Asset Recognized in Income	October 28,			October 30,				October 28,			October 30,
						2012			2011				2012			2011
				(In thousands)
Interest rate derivative			Interest expense	$	(10)		$	-		$	(19)		$	-
				Amount of Derivative Gain or (Loss)
				Recognized in Income
				Three Months Ended						Nine Months Ended
Derivatives Designated as a Cash Flow Hedge			Location of Derivative Gain or (Loss) Recognized in OCI	October 28,			October 30,			October 28,			October 30,
						2012			2011			2012			2011
					(In thousands)
Interest rate derivative			Change in fair value of derivative	$	-		$	(77)		$	(14)		$	(459)
			Less - income tax effect		-			30			5			181
			Net change in amount recognized in OCI	$	-		$	(47)		$	(9)		$	(278)

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CONSOLIDATED BALANCE SHEET (USD $) In Thousands, unless otherwise specified	Oct. 28, 2012	Jan. 29, 2012
CURRENT ASSETS:
Cash and cash equivalents	$ 49,903	$ 44,319
Receivables	23,436	21,616
Receivables from equity method franchisees	774	655
Inventories	16,677	16,497
Deferred income taxes	17,685	10,540
Other current assets	6,991	3,613
Total current assets	115,466	97,240
Property and equipment	76,132	75,466
Investments in equity method franchisees	0	0
Goodwill and other intangible assets	24,219	23,776
Deferred income taxes	103,910	129,053
Other assets	12,153	9,413
Total assets	331,880	334,948
CURRENT LIABILITIES:
Current maturities of long-term debt	2,162	2,224
Accounts payable	12,047	10,494
Accrued liabilities	28,280	28,800
Total current liabilities	42,489	41,518
Long-term debt, less current maturities	23,750	25,369
Other long-term obligations	24,878	18,935
Commitments and contingencies	0	0
SHAREHOLDERS EQUITY:
Preferred stock, no par value	0	0
Common stock, no par value	353,186	377,539
Accumulated other comprehensive loss	(345)	(336)
Accumulated deficit	(112,078)	(128,077)
Total shareholders equity	240,763	249,126
Total liabilities and shareholders equity	$ 331,880	$ 334,948

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Inventories

9 Months Ended

Oct. 28, 2012

Inventory Disclosure [Abstract]

Inventory Disclosure Text Block

Note 5 — Inventories

The components of inventories are as follows:

	October 28,		January 29,
	2012		2012
	(In thousands)
Raw materials	$	5,818	$	5,306
Work in progress		46		89
Finished goods and purchased merchandise		10,813		11,102
	$	16,677	$	16,497

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Receivables

9 Months Ended

Oct. 28, 2012

Receivables [Abstract]

Loans Notes Trade And Other Receivables Disclosure Text Block

Note 4 — Receivables

The components of receivables are as follows:

			October 28,		January 29,
			2012		2012
			(In thousands)
Receivables:
	Wholesale customers		$	10,485	$	10,169
	Unaffiliated franchisees			11,611		11,405
	Other receivables			1,081		1,015
	Current portion of notes receivable			553		185
				23,730		22,774
	Less — allowance for doubtful accounts:
		Wholesale customers		(254)		(349)
		Unaffiliated franchisees		(40)		(809)
				(294)		(1,158)
			$	23,436	$	21,616
Receivables from Equity Method Franchisees (Note 6):
	Trade		$	774	$	655

The changes in the allowance for doubtful accounts are summarized as follows:

		Nine Months Ended
		October 28,		October 30,
		2012		2011
		(In thousands)
Allowance for doubtful accounts related to receivables:
	Balance at beginning of period	$	1,158	$	1,334
	Provision for doubtful accounts		130		15
	Net recoveries (chargeoffs)		(994)		(212)
	Balance at end of period	$	294	$	1,137
Allowance for doubtful accounts related to receivables from Equity Method Franchisees:
	Balance at beginning of period	$	-	$	-
	Provision for doubtful accounts		(59)		-
	Net recoveries (chargeoffs)		59		-
	Balance at end of period	$	-	$	-

The Company also has notes receivable from franchiseesincluded in “Other assets” in the accompanying consolidated balance sheet which are summarized in the following table.

		October 28,		January 29,
		2012		2012
		(In thousands)
Notes receivable:
	Notes receivable from franchisees, net of deferred gain of $1.7 million in fiscal 2013 (Note 12)	$	2,014	$	777
	Less — portion due within one year included in receivables		(553)		(185)
	Less — allowance for doubtful accounts		(62)		(68)
		$	1,399	$	524

The changes in the allowance for doubtful accounts related to notes receivable are summarized as follows:

	Nine Months Ended
	October 28,		October 30,
	2012		2011
	(In thousands)
Balance at beginning of period	$	68	$	538
Provision for doubtful accounts		(6)		(412)
Net recoveries (chargeoffs)		-		(58)
Balance at end of period	$	62	$	68

In addition to the foregoing notes receivable, the Company had promissory notes totaling approximately $3.3million at October 28, 2012 and January 29, 2012representing principally royalties and fees due to the Company which, as a result of doubt about their collection, the Company had not yet recorded as revenues. No payments were required to be made currently on any of these amounts. During the quarter ended May 1, 2011, the Company recognized approximately $375,000 of previously unrecognized revenues related to KK Mexico which were received on May 5, 2011 in connection with the Company's sale of its 30% equity interest in the franchisee, as more fully described in Note 6.During thequarter ended May 1, 2011, the Company also reversed an allowance for doubtful notes receivable of $391,000 related to KK Mexico; such note also was paid in full on May 5, 2011.

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Receivables (Tables)

9 Months Ended

Oct. 28, 2012

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

			October 28,		January 29,
			2012		2012
			(In thousands)
Receivables:
	Wholesale customers		$	10,485	$	10,169
	Unaffiliated franchisees			11,611		11,405
	Other receivables			1,081		1,015
	Current portion of notes receivable			553		185
				23,730		22,774
	Less — allowance for doubtful accounts:
		Wholesale customers		(254)		(349)
		Unaffiliated franchisees		(40)		(809)
				(294)		(1,158)
			$	23,436	$	21,616
Receivables from Equity Method Franchisees (Note 6):
	Trade		$	774	$	655

		October 28,		January 29,
		2012		2012
		(In thousands)
Notes receivable:
	Notes receivable from franchisees, net of deferred gain of $1.7 million in fiscal 2013 (Note 12)	$	2,014	$	777
	Less — portion due within one year included in receivables		(553)		(185)
	Less — allowance for doubtful accounts		(62)		(68)
		$	1,399	$	524

Allowance for Credit Losses on Financing Receivables [Table Text Block]

		Nine Months Ended
		October 28,		October 30,
		2012		2011
		(In thousands)
Allowance for doubtful accounts related to receivables:
	Balance at beginning of period	$	1,158	$	1,334
	Provision for doubtful accounts		130		15
	Net recoveries (chargeoffs)		(994)		(212)
	Balance at end of period	$	294	$	1,137
Allowance for doubtful accounts related to receivables from Equity Method Franchisees:
	Balance at beginning of period	$	-	$	-
	Provision for doubtful accounts		(59)		-
	Net recoveries (chargeoffs)		59		-
	Balance at end of period	$	-	$	-

	Nine Months Ended
	October 28,		October 30,
	2012		2011
	(In thousands)
Balance at beginning of period	$	68	$	538
Provision for doubtful accounts		(6)		(412)
Net recoveries (chargeoffs)		-		(58)
Balance at end of period	$	62	$	68

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Acquisitions and Divestitures

9 Months Ended

Oct. 28, 2012

Acquisitions and Divestitures [Abstract]

Acquisitions And Divestitures Disclosures [Text Block]

Note 12 — Acquisitions and Divestitures

Business Combination

On August 30, 2012, the Company acquired the assets and operations of one of its franchisees in exchange for $915,000 cash. The acquired assets consisted principally of two Krispy Kreme stores.The preliminary allocation of the purchase price was as follows: $464,000to property and equipment,$8,000 to other assets,and the balance of $443,000to intangibles. The Company has not yet finalized its allocation of the $443,000 portion of the purchase price allocated to intangibles to specific intangible assets. The results of operations of the acquired business have been included with those of the Company from the acquisition date.

Asset Divestiture

On September 27, 2012, the Company sold to one of its franchisees the leasehold interests and certain other assets, including rights under franchise agreements, for three Krispy Kreme stores operated by the franchisee. The Company acquired the leasehold interests and other assets related to the three stores from the franchisee in August 2006for $2.9 million cash. Since that time, the franchisee has continued to operate the stores for its own account pursuant to an operating agreement between the Company and the franchisee. The aggregate purchase price of the three stores and the related assets was approximately $3.6 million, of which approximately $360,000 was paid in cash at closing. The balance of the purchase price was evidenced by a promissory note in the approximate amount of $3.2 million, payable in monthly installments of approximately $51,000, including interest at 8%, beginning in November 2012, and a final installment of the remaining principal balance on October 1, 2017. The carrying value of the divested assets was approximately $1.9 million. Because the initial investment made by the franchisee to acquire the assets was less than the minimum amount necessary to recognize a gain on the sale, the Company deferred recognition of the $1.7 million gain, and such deferred gain is reflected as a reduction in the carrying value of the note receivable. The Company will report the principal and interest payments received from the franchisee as a reduction of the carrying value of the note until such time as the franchisee's investment exceeds 20% of the purchase price, at which time the Company will reconsider whether recognition of a gain on the transaction is then appropriate.

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Shareholders' Equity

9 Months Ended

Oct. 28, 2012

Disclosure Of Compensation Related Costs Share Based Payments And Repurchase Of Shares [Abstract]

Disclosure Of Compensation Related Costs Share Based Payments And Repurchase Of Shares[TextBlock]

Note 8 — Shareholders' Equity

Share-Based Compensation for Employees and Directors

On June 12, 2012, the Company's shareholders approved the Krispy Kreme Doughnuts, Inc. 2012 Stock Incentive Plan (the “2012 Plan”). The 2012 Plan, which expires on June 11, 2022, replaces the Company's 2000 Stock Incentive Plan, which expired on June 30, 2012. The 2012 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, stock awards, performance unit awards, performance share awards, stock appreciation rightsand phantom stock awards.

The 2012 Plan limits the issuance of shares of Company common stock under the 2012 Plan to approximately 3,550,000 shares. Any shares that are subject to options or stock appreciation rights awarded under the 2012 Plan will be counted against the 2012 Plan limit as one share for every one share granted, and any shares that are subject to 2012 Plan awards other than options or stock appreciation rights will be counted against this limit as one and thirty three-hundredths (1.33) shares for every one share granted. The 2012 Plan provides that options may be granted with exercise prices not less than the closing sale price of the Company's common stock on the date of grant.

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 nine months ended October 28, 2012 and October 30, 2011 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 or restricted stock units during any of the periods.

			Three Months Ended				Nine Months Ended
			October 28,		October 30,		October 28,		October 30,
			2012		2011		2012		2011
			(In thousands)
Costs charged to earnings related to:
	Stock options		$	234	$	375	$	1,295	$	1,145
	Restricted stock and restricted stock units			1,188		1,256		2,275		2,292
		Total costs	$	1,422	$	1,631	$	3,570	$	3,437
Costs included in:
	Direct operating expenses		$	864	$	1,096	$	1,591	$	2,061
	General and administrative expenses			558		535		1,979		1,376
		Total costs	$	1,422	$	1,631	$	3,570	$	3,437

Repurchases of Common Stock

Pursuant to the authorization of its Board of Directors, from March 27, 2012 through June 28, 2012, the Company repurchased $20 million of its common stock.

The Company generally permits holders of restricted stock and 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 nine months endedOctober 28, 2012 and October 30, 2011:

	Three Months Ended
	October 28,			October 30,
	2012			2011
		Common			Common
	Shares	Stock		Shares	Stock
	(In thousands)
Shares repurchased under share repurchase authorization	-	$	-	-	$	-
Shares surrendered in reimbursement for withholding taxes	100		758	105		829
	100	$	758	105	$	829
	Nine Months Ended
	October 28,			October 30,
	2012			2011
		Common			Common
	Shares	Stock		Shares	Stock
	(In thousands)
Shares repurchased under share repurchase authorization	3,113	$	20,000	-	$	-
Shares surrendered in reimbursement for withholding taxes	100		758	121		954
	3,213	$	20,758	121	$	954

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Investment in Franchisees

9 Months Ended

Oct. 28, 2012

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments Disclosure Text Block

Note 6 — Investments in Franchisees

As of October 28, 2012, the Company had investments in three franchisees. These investments have been made in the form of capital contributions and, in certain instances, loans evidenced by promissory notes. These investments are reflected as “Investments in equity method franchisees” in the consolidated balance sheet.

The Company's financial exposures related to franchisees in which the Company has an investment are summarized in the tables below.

	October 28, 2012
	Company	Investment
	Ownership	and				Loan
	Percentage	Advances		Receivables		Guarantees
	(Dollars in thousands)
Kremeworks, LLC	25.0%	$	900	$	330	$	534
Kremeworks Canada, LP	24.5%		-		28		-
Krispy Kreme of South Florida, LLC	35.3%		-		416		1,709
			900		774	$	2,243
Less: reserves and allowances			(900)		-
		$	-	$	774
	January 29, 2012
	Company	Investment
	Ownership	and				Loan
	Percentage	Advances		Receivables		Guarantees
	(Dollars in thousands)
Kremeworks, LLC	25.0%	$	900	$	308	$	739
Kremeworks Canada, LP	24.5%		-		20		-
Krispy Kreme of South Florida, LLC	35.3%		-		327		1,946
			900		655	$	2,685
Less: reserves and allowances			(900)		-
		$	-	$	655

The Company has guaranteed loans from third-party lenders on behalf of certain Equity Method Franchisees, primarily to assist the franchisees in obtaining financing. The loans are collateralized by certain assets of the franchisee, generally the Krispy Kreme store and related equipment. The loan guarantee amounts represent the portion of the principal amount outstanding under the related loan that is subject to the Company's guarantee.

The Company has a 25% interest in Kremeworks, LLC (“Kremeworks”), and has guaranteed 20% of the outstanding principal balance of certain of Kremeworks' bank indebtedness, which, as amended, matures in October 2013. The aggregate amount of such indebtedness was approximately $2.7million atOctober 28, 2012. There was no liability reflected in the financial statements for the guarantee of Kremeworks' debt because the Company did not believe it was probable that the Company would be required to perform under that guarantee.

Current liabilities at October 28, 2012 and January 29, 2012 include accruals for potential payments under loan guarantees of approximately $1.7 million and $1.9 million, respectively, related to Krispy Kreme of South Florida, LLC (“KKSF”). The underlying indebtedness related to approximately $1.6 million of the Company's KKSF guarantee exposure matured by its terms in October 2009. Such maturity had been extended on a month-to-month basis pursuant to an informal agreement between KKSF and the original lender. In October 2012, KKSF received notice that the original lender had sold the loan to a new lender. The new lender has advised KKSF that the entire balance due under the loan is currently due and owing, but has not made demand for payment on KKSF. KKSF intends to seek modifications of the loan agreement from the new lender to extend the maturity of the loan and, as an alternative, is seeking replacement financing from other lenders to refinance the balance of the loan.

On May 5, 2011, the Company sold its 30% equity interest in KK Mexicoto KK Mexico's majority shareholder. The Company received cash proceeds of approximately $7.7 million in exchange for its equity interest and, after deducting costs of the transaction, realized a gain of approximately $6.2 million on thedisposition. After provision for payment of Mexican income taxes related to the sale of approximately $1.5 million, the Company reported an after tax gain on the disposition of approximately $4.7million in the quarter ending July 31, 2011.The net after tax proceeds of the sale of approximately $6.2 million were used to prepay a portion of the outstanding balance of the 2011 Term Loan.

In connection with the Company's sale of its KK Mexico interest, KK Mexico paid approximately $765,000 of amounts due to the Company which were evidenced by promissory notes, relating principally to past due royalties and fees due to the Company. As a consequence of this payment, in the quarter ended May 1, 2011, the Company reversed an allowance for doubtful notes receivable of $391,000 and recorded royalty and franchise fee income of approximately $280,000 and $95,000, respectively. The reserve had previously been established, and the royalties and fees had not previously been recognized as revenue, because of uncertainty surrounding the collection of these amounts.

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Commitments and contingencies

9 Months Ended

Oct. 28, 2012

Commitments And Contingencies [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 7 — Commitments and Contingencies

Except as described below, there have been no significant changes in the status of matters disclosed in Note 14 to the Company's consolidated financial statements in the 2012 Form 10-K.

On January 27, 2012, Colchester Security II, LLC, the Company's former landlord in Lorton, Virginia, filed a suit against the Company in the Circuit Court of Fairfax County, Virginia alleging breach of the lease and negligence resulting in property damage at a commissary facility previously operated by the Company.  The plaintiff seeks $2.7 million in damages.  The Company denies the allegations and intends to pursue counterclaims of approximately $3.0million relating to indemnity claims and breach of the lease. No liability has been recorded with respect to this matter because management does not believe it is probable that a loss has been incurred. During the third quarter of fiscal 2013, the Court scheduled this matter for trial beginning March 25, 2013.

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Impairment Charges and Lease Termination Costs

9 Months Ended

Oct. 28, 2012

Impairment Charges And Lease Termination Costs Disclosure [Abstract]

Impairment Charges And Lease Termination Costs Disclosure [Text Block]

Note 9 — Impairment Charges and Lease Termination Costs

The components of impairment charges and lease termination costs are as follows:

		Three Months Ended				Nine Months Ended
		October 28,		October 30,		October 28,		October 30,
		2012		2011		2012		2011
		(In thousands)
Impairment of long-lived assets		$	-	$	-	$	-	$	-
Lease termination costs			216		135		302		680
	Total impairment charges and lease termination costs	$	216	$	135	$	302	$	680

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, 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.

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 are 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.

The transactions reflected in the accrual for lease termination costs are summarized as follows:

					Three Months Ended				Nine Months Ended
					October 28,		October 30,		October 28,		October 30,
					2012		2011		2012		2011
				(In thousands)
Balance at beginning of period				$	679	$	1,152	$	709	$	1,995
	Provision for lease termination costs:
		Adjustments to previously recorded provisions resulting from
			settlements with lessors and adjustments of previous estimates		209		119		279		611
		Accretion of discount			7		16		23		69
			Total provision		216		135		302		680
	Payments on unexpired leases, including settlements with
		lessors			(48)		(563)		(164)		(1,951)
Balance at end of period				$	847	$	724	$	847	$	724

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Receivables (Narratives) (Details) (USD $)						3 Months Ended
	Oct. 28, 2012	Jan. 29, 2012	Oct. 28, 2012 Krispy Kreme Mexico [Member]	Jan. 29, 2012 Krispy Kreme Mexico [Member]	May 05, 2011 Krispy Kreme Mexico [Member]	May 01, 2011 Sale Of Interest In KK Mexico [Member]
Receivables [Abstract]
Notes Receivable Unrecognized Franchise Revenue	$ 3,300,000	$ 3,300,000
Schedule of Equity Method Investments [Line Items]
Franchise Revenue						375,000
Equity Method Investment, Ownership Percentage			0.00%	0.00%	30.00%
Allowance For Doubtful Accounts Receivable Recoveries						$ 391,000

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Derivative Instruments(Effect of Derivative Instuments by Income Statement Location) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 28, 2012	Oct. 30, 2011	Oct. 28, 2012	Oct. 30, 2011
Derivative Instruments, Gain (Loss) Recognized in Income, Net [Abstract]
Derivative Instruments, Gain (Loss) Recognized in Income, Net	$ (110)	$ 141	$ 1,007	$ (466)
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net [Abstract]
Unrealized loss on cash flow hedge, net of income taxes	0	(47)	(9)	(278)
Gain Loss In Fair Value Of Derivative Gross [Member]
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net [Abstract]
Unrealized Gain (Loss) on Interest Rate Cash Flow Hedges, Pretax, Accumulated Other Comprehensive Income (Loss)	0	(77)	(14)	(459)
Income Tax Effect [Member]
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net [Abstract]
Other Comprehensive Income Loss Derivatives Qualifying As Hedges Tax	0	30	5	181
Direct Operating Expense [Member] | Agricultural Commodity Futures Contracts [Member]
Derivative Instruments, Gain (Loss) Recognized in Income, Net [Abstract]
Derivative Instruments, Gain (Loss) Recognized in Income, Net	(110)	176	1,007	(422)
Direct Operating Expense [Member] | Gasoline Commodity Future Contracts [Member]
Derivative Instruments, Gain (Loss) Recognized in Income, Net [Abstract]
Derivative Instruments, Gain (Loss) Recognized in Income, Net	0	(35)	0	(44)
Interest Expense [Member]
Derivative Instruments, Gain (Loss) Recognized in Income, Net [Abstract]
Derivative Instruments, Gain (Loss) Recognized in Income, Net	$ (10)	$ 0	$ (19)	$ 0

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Accounting Policies (Tables)

9 Months Ended

Oct. 28, 2012

Accounting Policies [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share [Table Text Block]

			Three Months Ended				Nine Months Ended
			October 28,		October 30,		October 28,		October 30,
			2012		2011		2012		2011
			(In thousands)
Numerator: net income			$	5,044	$	4,717	$	15,999	$	22,727
Denominator:
	Basic earnings per share - weighted average shares outstanding			66,668		69,384		67,897		69,013
	Effect of dilutive securities:
		Stock options and warrants		1,719		1,654		1,663		1,796
		Restricted stock and restricted stock units		416		509		481		665
	Diluted earnings per share - weighted average shares
		outstanding plus dilutive potential common shares		68,803		71,547		70,041		71,474

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Shareholders' Equity (Tables)

9 Months Ended

Oct. 28, 2012

Disclosure Of Compensation Related Costs Share Based Payments And Repurchase Of Shares [Abstract]

Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Table Text Block]

			Three Months Ended				Nine Months Ended
			October 28,		October 30,		October 28,		October 30,
			2012		2011		2012		2011
			(In thousands)
Costs charged to earnings related to:
	Stock options		$	234	$	375	$	1,295	$	1,145
	Restricted stock and restricted stock units			1,188		1,256		2,275		2,292
		Total costs	$	1,422	$	1,631	$	3,570	$	3,437
Costs included in:
	Direct operating expenses		$	864	$	1,096	$	1,591	$	2,061
	General and administrative expenses			558		535		1,979		1,376
		Total costs	$	1,422	$	1,631	$	3,570	$	3,437

Schedule of Repurchase of Stock [Table Text Block]

	Three Months Ended
	October 28,			October 30,
	2012			2011
		Common			Common
	Shares	Stock		Shares	Stock
	(In thousands)
Shares repurchased under share repurchase authorization	-	$	-	-	$	-
Shares surrendered in reimbursement for withholding taxes	100		758	105		829
	100	$	758	105	$	829
	Nine Months Ended
	October 28,			October 30,
	2012			2011
		Common			Common
	Shares	Stock		Shares	Stock
	(In thousands)
Shares repurchased under share repurchase authorization	3,113	$	20,000	-	$	-
Shares surrendered in reimbursement for withholding taxes	100		758	121		954
	3,213	$	20,758	121	$	954

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Derivative (Narratives) (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Oct. 28, 2012
Derivative [Line Items]
Derivative, Inception Date	Mar. 03, 2011
Notional Amount of Interest Rate Cash Flow Hedge Derivatives	$ 17.5
Derivative, Description of Variable Rate Basis	three-month LIBOR rate over 3.00%
Derivative Effective Dates	Apr. 01, 2012
Derivative, Maturity Date	Dec. 01, 2015
Derivative, Description of Terms	The derivative contract entitles the Company to receive from the counterparty the excess, if any, of the three-month LIBOR rate over 3.00% for each of the calendar quarters in the period beginning April 2012 and ending December 2015. The Company is accounting for this derivative contract as a cash flow hedge.
Agricultural Commodity Futures Contracts [Member]
Derivative [Line Items]
Derivative Nonmonetary Notional Amount	130,000

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Commitments and Contingencies (Narrative) (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Oct. 28, 2012
Commitments And Contingencies [Abstract]
Loss Contingency, Damages Sought, Value	$ 2.7
Gain Contingency, Unrecorded Amount	$ 3.0
Loss Contingency, Expected Trial Commencement	2013-03

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CONSOLIDATED BALANCE SHEET (Parenthenicals) In Thousands, unless otherwise specified	Oct. 28, 2012	Jan. 29, 2012
Preferred stock, shares authorized	10,000	10,000
Preferred stock, shares issued and outstanding	0	0
Common stock, shares authorized	300,000	300,000
Common Shares Outstanding [Member]
Common stock, shares issued and outstanding	65,224	68,092

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Income taxes

9 Months Ended

Oct. 28, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 3 — Income Taxes

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 Company had valuation allowances against deferred tax assets of $10.7 million at October 28, 2012 and January 29, 2012, representing the portion of such deferred tax assets which, as of such dates, management estimated would not be realized in future periods. Under GAAP, future realization of deferred tax assets is evaluated under a “more likely than not” standard. Realization of net deferred tax assets generally is dependent on generation of taxable income in future periods. From fiscal 2005 until the fourth quarter of fiscal 2012, the Company maintained valuation allowances on deferred tax assets equal to the entire excess of those assets over the Company's deferred income tax liabilities because of the uncertainty surrounding the realization of those assets. Such uncertainty arose principally from the substantial losses incurred by the Company from fiscal 2005 through fiscal 2009.

The Company reported a pretax profit of $418,000 in fiscal 2010 and $8.9 million in fiscal 2011. In fiscal 2012, the Company's pretax profit increased to $30.4million, inclusive of a $6.2 million non-recurring gain on the Company's sale of its 30% interest in Krispy Kreme Mexico, S. de R.L. de C.V. (“KK Mexico”), the Company's franchisee in Mexico. After considering all relevant factors and objectively verifiable evidence having an impact on the likelihood of future realization of the Company's deferred tax assets, in the fourth quarter of fiscal 2012 management concluded that it was more likely than not that a substantial portion of the Company's deferred tax assets will be realized in future years. Accordingly, the Company reversed $139.6 million of the valuation allowance on deferred tax assets, with an offsetting credit to the provision for income taxes, in the fourth quarter of fiscal 2012.

The remaining valuation allowance of $10.7 million at October 28, 2012 and January 29, 2012 represents the portion of the Company's deferred tax assets management estimates will not be realized in the future. Such assets are associated principally with state net operating loss and state credit carryforwards having relatively short carryforward periods which are forecasted to expire unused, as well as federal foreign tax credits and federal jobs credit carryforwards forecasted to expire unused.

The realization of deferred income tax assets is dependent on future events. 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.

In fiscal 2008, the Company issued warrants to acquire shares of the Company's common stock at a price of $12.21 per share in connection with the settlement of certain litigation. Such warrants expired worthless in March 2012 and, accordingly, the Company will not receive any income tax deduction related to them. Deferred tax assets at January 29, 2012 included approximately $7.2 million related to these warrants. In accordance with GAAP, the write-off of this deferred tax asset was charged to common stock in the first quarter of fiscal 2013 and reduced the Company's pool of windfall tax benefits.

In fiscal 2006, the Company issued warrants to purchase 1.2 million shares of the Company's common stock at a price of $7.75 per share as compensation for services provided to the Company. Such warrants have a term of seven years expiring on January 31, 2013. The Company will be entitled to an income tax deduction equalto the amount of income, if any, recognized by the holder of the warrants upon their exercise. The amount of income recognized by the holder upon the exercise of the warrants is equal to the excess, if any, of the fair value of one share of the Company's common stock on the date of exercise over $7.75 per share, multiplied by the number of shares exercised. To the extent that the income tax deduction, if any, available to the Company upon any exercise of the warrants is less than $6.7 million (which was the fair value of the warrants at its issuance date), then some or all of the $2.6million deferred tax asset related to the warrants will not be realized. Any such unrealized amount will be charged to common stock in the fourth quarter of fiscal 2013 and will reduce the Company's pool of windfall tax benefits.As of November 30, 2012, the price of the Company's common stock was $9.10 per share. If the price of the Company's common stock on the date of any exercise of the warrants is $9.10 per share, and the warrants are fully exercised, then approximately $2.0 million of the deferred tax asset will not be realized.

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Impairment Charges and Lease Termination Costs (Tables)

9 Months Ended

Oct. 28, 2012

Impairment Charges And Lease Termination Costs Disclosure [Abstract]

Schedule Of Impairment Charges And Lease Termination Costs [TableTextBlock]

		Three Months Ended				Nine Months Ended
		October 28,		October 30,		October 28,		October 30,
		2012		2011		2012		2011
		(In thousands)
Impairment of long-lived assets		$	-	$	-	$	-	$	-
Lease termination costs			216		135		302		680
	Total impairment charges and lease termination costs	$	216	$	135	$	302	$	680

Rollforward Of Lease Termination Costs [TableText Block]

					Three Months Ended				Nine Months Ended
					October 28,		October 30,		October 28,		October 30,
					2012		2011		2012		2011
				(In thousands)
Balance at beginning of period				$	679	$	1,152	$	709	$	1,995
	Provision for lease termination costs:
		Adjustments to previously recorded provisions resulting from
			settlements with lessors and adjustments of previous estimates		209		119		279		611
		Accretion of discount			7		16		23		69
			Total provision		216		135		302		680
	Payments on unexpired leases, including settlements with
		lessors			(48)		(563)		(164)		(1,951)
Balance at end of period				$	847	$	724	$	847	$	724

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Oct. 28, 2012	Jan. 29, 2012
Inventory Disclosure [Abstract]
Raw materials	$ 5,818	$ 5,306
Work in progress	46	89
Finished goods and purchased merchandise	10,813	11,102
Inventories, Net, Total	$ 16,677	$ 16,497

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Accounting Policies (Policies)

9 Months Ended

Oct. 28, 2012

Accounting Policies [Abstract]

Basis Of Presentation [Policy Text Block]

BASIS OF PRESENTATION. The consolidated financial statements contained herein should be read in conjunction with the Company's 2012 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 the2012 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 January 29, 2012 were derived from the Company's audited financial statements but do not include all disclosures required by GAAP.

Consolidation, Policy [Policy Text Block]

BASIS OF CONSOLIDATION. The financial statements include the accounts of KKDI and its subsidiaries, the most significant of which is KKDI's principal operating subsidiary, Krispy Kreme Doughnut Corporation.

Investments in entities over which the Company has the ability to exercise significant influence but which the Company does not control, and whose financial statements are not otherwise required to be consolidated, are accounted for using the equity method. These entities typically are 25% to 35% owned and are hereinafter sometimes referred to as “Equity Method Franchisees.”

Earnings Per Share, Policy [Policy Text Block]

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 warrants and the vesting of currently unvested shares of restricted stock and restricted stock units.

The following table sets forth amounts used in the computation of basic and diluted earnings per share:

The sum of the quarterly earnings per share amounts does not necessarily equal earnings per share for the year to date.

Stock options and warrants with respect to 3.1million and 7.4million shares for the three months ended October 28, 2012 and October 30, 2011, respectively,as well as 340,000 unvestedshares of restricted stock and unvested restricted stock unitsfor the three months endedOctober 30, 2011, have been excluded from the computation of the number of shares used to compute diluted earnings per share because their inclusion would be antidilutive.

Stock options and warrants with respect to 3.2million and 7.4 million shares, as well as 58,000 and 158,000 unvested shares of restricted stock and unvested restricted stock units, have been excluded from the computation of the number of shares used to compute diluted earnings per share for the nine months ended October 28, 2012 and October 30, 2011, respectively, because their inclusion would be antidilutive.

New Accounting Pronouncements Policy Policy [Text Block]

RecentAccounting Pronouncements

In May 2011, the Financial Accounting Standards Board (the “FASB”) issued an Accounting Standards Update (“ASU”) related to fair value measurements. The ASU clarifiessome existing concepts, eliminates wording differences between GAAP and International Financial Reporting Standards (“IFRS”), and in some limited cases, changes some principles to achieve convergence between GAAP and IFRS. The ASU also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level3)inputs. The Company adopted the new standards in the first quarter of fiscal 2013; such adoption had no effect on the Company's financial condition or results of operations.

In June 2011, the FASB issued new accounting standards which require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. The new accounting rules eliminate the option to present components of other comprehensive income as part of the statement of changes in shareholders' equity. The Company adopted the new standards in the first quarter of fiscal 2013 by presenting a separate consolidated statement of comprehensive income in addition to the consolidated statement of income.

In July 2012, the FASB issued amended accounting guidance regarding indefinite-lived intangible asset impairment testing and whether it is necessary to perform the quantitative impairment test currently required. This guidance is effective for the Company in fiscal 2014, with early adoption permitted. The Company does not expect that this new guidance with have a material impact on its consolidated financial statements.