Krispy Kreme Inc

Note 8 —Long-Term Debt

The Company’s long-term debt obligations consist of the following:

2023 Secured Credit Facility

The Company is party to a credit agreement (the “2023 Facility”) consisting of a $300.0 million senior secured revolving credit facility and a term loan with an original principal amount of $700.0 million. The 2023 Facility is secured by a first priority lien on substantially all of the Company’s personal property assets, certain real estate properties, and all of the Company’s domestic wholly owned subsidiaries. Loans made pursuant to the 2023 Facility may be used for general corporate purposes of the Company (including, but not limited to, financing working capital needs, capital expenditures, acquisitions, other investments, dividends, and stock repurchases) and for any other purpose not prohibited under the related loan documents.

Borrowings under the 2023 Facility are generally subject to an interest rate of adjusted term Secured Overnight Financing Rate (“SOFR”) plus a credit spread adjustment of 0.10% plus (i)2.25% if the Company’s leverage ratio (as defined in the 2023 Facility) equals or exceeds 4.00 to 1.00, (ii)2.00% if the Company’s leverage ratio is less than 4.00 to 1.00 but greater than or equal to 3.00 to 1.00, or (iii)1.75% if the Company’s leverage ratio is less than 3.00 to 1.00. As of March 30, 2025 and December 29, 2024, the unhedged interest rates were 6.42% and 6.48% under the 2023 Facility, respectively. As of both March 30, 2025 and December 29, 2024, $500.0 million out of the $647.5 million term loan balance was hedged, with the interest rate swap agreements scheduled to mature in March 2028. As of March 30, 2025 and December 29, 2024, the effective interest rates on the term loan were approximately 6.19% and 6.20%, respectively. The Company is required to make equal installments of 1.25% of the aggregate closing date principal amount of the term loan on the last day of each fiscal quarter. All remaining term loan and revolving loan balances are to be due at maturity in March 2028.

Subsequent to March 30, 2025, the Company amended the 2023 Facility. Refer to Note 16, Subsequent Events for further information.

Short-Term Lines of Credit

The Company is party totwo agreements with existing lenders providing for short-term, uncommitted lines of credit up to an aggregate of $25.0 million. Borrowings under these short-term lines of credit are payable to the lenders on a revolving basis for tenors up to a maximum of three months and are subject to an interest rate of adjusted term SOFR plus a credit spread adjustment of 0.10% plus a margin of 1.75%.

Note 9 —Share-based Compensation

Restricted Stock Units (“RSUs”) and Performance Stock Units (“PSUs”)

The Company and certain of its subsidiaries issue time-vested RSUs and PSUs under their respective executive ownership plans and long-term incentive plans.

RSU and PSU activity under the Company’s various plans during the periods presented is as follows:

The Company recorded total non-cash compensation expense related to the RSUs and PSUs under the plans of $2.2 million and $6.1 million for the quarters ended March 30, 2025 and March 31, 2024, respectively, which is included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

The unrecognized compensation cost related to the unvested RSUs and PSUs and the weighted average period over which such cost is expected to be recognized are as follows:

The estimated fair value of restricted stock is calculated using a market approach (i.e., an agreed-upon EBITDA buyout multiple is used for KK Australia and KK Mexico plans).

Time-Vested Stock Options

KKI issues time-vested stock options under its 2021 Omnibus Incentive Plan. The fair value of time-vested stock options was estimated on the date of grant using the Black-Scholes option pricing model.

The status of the time-vested stock options as of December 29, 2024 and changes during the first quarter of fiscal 2025 are presented below:

The Company recorded total non-cash compensation expense related to the time-vested stock optionsof $0.4 million and $0.9 million for the quarters ended March 30, 2025 and March 31, 2024, respectively, which is included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

The unrecognized compensation cost related to the stock options and the weighted average period over which such cost is expected to be recognized are as follows:

No time-vested stock options vested during the quarters ended March 30, 2025 or March 31, 2024.

Note 10 —Income Taxes

For interim tax reporting, the Company estimates a worldwide annual effective tax rate and applies that rate to the year-to-date ordinary (loss)/income. The tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.

The Company’s effective income tax rates were 7.4% and -177.5% for the quarters ended March 30, 2025 and March 31, 2024, respectively. The Company’s effective income tax rate for the quarter ended March 30, 2025 differed from the respective statutory rates primarily due to the mix of income and taxes attributable to foreign jurisdictions and disallowed executive compensation expense. The Company’s effective income tax rate for the quarter ended March 31, 2024 differed from the respective statutory rates primarily due to disallowed executive compensation expense, the mix of income and taxes attributable to foreign jurisdictions, and noncontrolling interest in domestic joint ventures.

Note 11 —Commitments and Contingencies

Other Legal Matters

The Company is engaged in various legal proceedings arising in the normal course of business. The Company maintains insurance policies against certain kinds of such claims and suits, including insurance policies for workers’ compensation and personal injury, all of which are subject to deductibles. While the ultimate outcome of these matters could differ from management’s expectations, management currently does not believe their resolution will have a material adverse effect on the Company’s Condensed Consolidated Financial Statements.

Other Commitments and Contingencies

The Company’s primary banks issued letters of credit on its behalf totaling $20.8 million as of both March 30, 2025 and December 29, 2024, a majority of which secure the Company’s reimbursement obligations to insurers under its self-insurance arrangements.

Note 12 —Related Party Transactions

The Company held minority equity interests infour entities, Krispy Kreme Doughnuts France SAS (33.0% ownership), Krispy Kreme Doughnuts Brasil S.A. (45.0% ownership), Glaseadas Originales S.L. (25.0% ownership), and Insomnia Cookies (34.8% ownership), with an aggregate carrying value of $90.8 million and $91.1 million as of March 30, 2025 and December 29, 2024, respectively.

Note 13 —Revenue Recognition

Disaggregation of Revenues

Revenues are disaggregated as follows:

Other revenues include advertising fund contributions from franchisees, rental income, development and franchise fees, and licensing royalties from customers for use of the Krispy Kreme brand, such as Keurig coffee cups.

Contract Balances

Deferred revenue and related receivables are as follows:

Trade receivables relate primarily to payments due for royalties, franchise fees, advertising fees, sale of products, and licensing fees. Deferred revenue primarily represents the Company’s remaining performance obligations under gift cards and franchise and development agreements for which consideration has been received or is receivable and is generally recognized on a straight-line basis over the remaining term of the related agreement. The noncurrent portion of deferred revenue primarily relates to the remaining performance obligations in the franchise and development agreements.

Note 14 —Net Loss per Share

The following table presents the calculations of basic and diluted EPS:

Potential dilutive shares consist of unvested RSUs and PSUs, calculated using the treasury stock method. The calculation of dilutive shares outstanding excludes certain unvested RSUs granted under certain subsidiaries’ executive ownership plans and long-term incentive plans, because their inclusion would have been antidilutive. Refer to Note 9, Share-based Compensation for further information about the plans.

The following table summarizes the gross number of potential dilutive unvested RSUs and PSUs excluded due to antidilution (unadjusted for the treasury stock method):

For the quarters ended March 30, 2025 and March 31, 2024, all 2.6 million and 3.0 million time-vested stock options, respectively, were excluded from the computation of diluted weighted average common shares outstanding based on application of the treasury stock method.

Note 15 —Segment Reporting

The Company conducts business through the following three reportable segments:

•U.S.: Includes all Krispy Kreme Company-owned operations in the U.S., and Insomnia Cookies Bakeries globally through the date of deconsolidation;

•International: Includes all Krispy Kreme Company-owned operations in the U.K., Ireland, Australia, New Zealand, Mexico, Canada, and Japan; and

•Market Development: Includes franchise operations across the globe.

Unallocated corporate costs are excluded from the Company’s measurement of segment performance. These costs include general corporate expenses.

Segment information is identified and prepared on the same basis that the Chief Executive Officer (“CEO”), the Company’s CODM, evaluates financial results, allocates resources, and makes key operating decisions. The CODM allocates resources and assesses performance based on geography and line of business, which represents the Company’s operating segments.

The primary financial measures used by the CODM to evaluate the performance of its operating segments are net revenues and segment Adjusted EBIT. For all of the segments, the CODM uses segment Adjusted EBIT to monitor and evaluate operating performance and to provide a consistent benchmark for comparison across reporting periods.

The following tables reconcile segment results to consolidated results reported in accordance with GAAP. The accounting policies used for internal management reporting at the operating segments are consistent with those described in Note 1, Description of Business and Summary of Significant Accounting Policies, to the Condensed Consolidated Financial Statements. The Company manages its assets on a total company basis and the CODM does not review asset information by segment when assessing performance or allocating resources. Consequently, the Company does not report total assets by reportable segment.

The reportable segment results are as follows:

(1)The U.S. and International segments’ other segment items consist of pre-opening costs and other expenses, net. The Market Development segment other segment items consist of operating expenses, marketing expenses, pre-opening costs, and other expenses, net.

The following table presents a reconciliation of net loss to Adjusted EBIT:

(1)Primarily foreign translation gains and losses in each period. The quarter ended March 30, 2025 also consists of equity method income from Insomnia Cookies following the divestiture of a controlling interest in Insomnia Cookies during fiscal 2024.

(2)The quarter ended March 30, 2025 consists primarily of costs associated with preparing for and executing the U.S. national expansion (including McDonald’s), and the evaluation of potential opportunities to refranchise certain equity markets. The quarter ended March 31, 2024 consists primarily of costs associated with global transformation, exploring strategic alternatives for the Insomnia Cookies business, and preparing for the U.S. national expansion (including McDonald’s).

(3)Consists of acquisition and integration-related costs in connection with the Company’s business and franchise acquisitions, including legal, due diligence, and advisory fees incurred in connection with acquisition and integration-related activities for the applicable period.

(4)Consists of start-up costs associated with entry into new countries for which the Company’s brands have not previously operated, including Brazil and Spain.

(5)Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment.

(6)The quarter ended March 30, 2025 consists primarily of costs associated with restructuring of the U.S. and U.K. executive teams.

(7)The quarter ended March 30, 2025 consists primarily of $4.4 million in costs related to remediation of the 2024 Cybersecurity Incident (as defined below), including fees for cybersecurity experts and other advisors.

(8)Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the Condensed Consolidated Statements of Operations.

Note 16 —Subsequent Events

The Company evaluated subsequent events and transactions for potential recognition or disclosure in the Condensed Consolidated Financial Statements through May 8, 2025, the date the Condensed Consolidated Financial Statements were available to be issued. All subsequent events requiring recognition and disclosure have been incorporated into these Condensed Consolidated Financial Statements.

In May 2025, the Company amended the 2023 Facility. The amendments, among other things, (a) established incremental term loan commitments in an aggregate principal amount of $125.0 million and (b) imposed certain restrictions on the ability to make restricted payments, including dividends, if the leverage ratio under the 2023 Facility exceeds 3.00 to 1.00. The borrowing will mature in March 2028 consistent with the existing balances under the 2023 Facility, and will be subject to an interest rate which is also consistent with the 2023 Facility as described in Note 8, Long-Term Debt. These additional term loan proceeds are expected to be used for general corporate purposes of the Company including to pay down a portion of the outstanding revolving credit facility balance under the 2023 Facility.