Krispy Kreme, Inc.

Note 4 —Goodwill and Other Intangible Assets, net

Goodwill, net

Changes in the carrying amount of goodwill by reportable segment are as follows:

(1)Refer to Note 1, Description of Business and Summary of Significant Accounting Policies for more information on the goodwill impairment.

Other Intangible Assets, net

Other intangible assets consist of the following:

(1)Reacquired franchise rights include the impact of foreign currency fluctuations associated with the respective countries.

Amortization expense related to intangible assets included in depreciation and amortization expense was $7.8 million and $15.5 million for the quarter and two quarters ended June 29, 2025, respectively, and $7.4 million and $14.8 million for the quarter and two quarters ended June 30, 2024, respectively.

Note 5 —Leases

The Company included the following amounts related to operating and finance lease assets and liabilities within the Condensed Consolidated Balance Sheets:

Lease costs were as follows:

Supplemental disclosures of cash flow information related to leases were as follows:

(1)Operating cash flows for operating leases include variable rent payments which are not included in the measurement of lease liabilities. Variable rent payments were $15.1 million for the two quarters ended June 29, 2025 and $14.8 million for the two quarters ended June 30, 2024.

In the quarter ended June 29, 2025, the Company completed two sale-leaseback transactions whereby it disposed of real estate at two properties for cumulative proceeds of $10.9 million. The Company subsequently leased back the properties, which are accounted for as operating leases. The Company recognized net gains on sale of $6.7 million, which are included in Other income, net on the Condensed Consolidated Statement of Operations. There were no sale-leaseback transactions completed in the two quarters ended June 30, 2024.

In the quarter ended June 29, 2025, the Company recorded lease impairment and termination costs of $28.9 million. Refer to Note 1, Description of Business and Summary of Significant Accounting Policies for more information.

Note 6 —Fair Value Measurements

The following table presents assets and liabilities that are measured at fair value on a recurring basis as of June 29, 2025 and December 29, 2024:

There were no assets or liabilities measured using Level 1 or Level 3 inputs and no transfers of financial assets or liabilities among the levels within the fair value hierarchy during the two quarters ended June 29, 2025 and fiscal year ended December 29, 2024. The Company’s derivatives are valued using discounted cash flow analyses that incorporate observable market parameters, such as interest rate yield curves and currency rates.

Note 7 —Derivative Instruments

Commodity Price Risk

The Company uses forward contracts to protect against the effects of commodity price fluctuations in the cost of ingredients of its products, of which flour, sugar, and shortening are the most significant, and the cost of gasoline used by its delivery vehicles. Management has not designated these forward contracts as hedges. As of both June 29, 2025 and December 29, 2024, the total notional amount of commodity derivatives was 1.5 million gallons of fuel. They are scheduled to mature between July 2025 and March 2026 and January 2025 and October 2025, respectively. As of June 29, 2025 and December 29, 2024, the Company recorded balances of $0.1 million and less than $0.1 million, respectively, related to the fair market values of its commodity derivatives. The settlement of commodity derivative contracts is reported in the Condensed Consolidated Statements of Cash Flows as a cash flow from operating activities.

Interest Rate Risk

The Company uses interest rate swaps to manage its exposure to interest rate volatility from its debt arrangements. Management has designated the swap agreements as cash flow hedges and recognized the changes in the fair value of these swaps in other comprehensive income. As of June 29, 2025 and December 29, 2024, the aggregate notional amount hedged by the swap agreements was $550.0 million and $500.0 million of term loan principal, respectively. As of June 29, 2025 and December 29, 2024, the Company has recorded a liability of $8.2 million and an asset of $0.4 million, respectively, related to the fair market values of its interest rate derivatives. The cash flows associated with the interest rate swaps are reflected in operating activities in the Condensed Consolidated Statements of Cash Flows, which is consistent with the classification as operating activities of the interest payments on the term loan.

The net effect of the interest rate swap arrangements is to fix the variable interest rate on the term loan under the 2023 Facility (as defined in Note 9, Long-Term Debt) up to the notional amount outstanding at the rates payable under the swap agreements plus the Applicable Rate (as defined by the 2023 Facility), through the swap maturity dates in March 2028.

Foreign Currency Exchange Rate Risk

The Company is exposed to foreign currency exchange rate risk primarily from its investments in consolidated subsidiaries that operate in Canada, the U.K., Ireland, Australia, New Zealand, Mexico, and Japan. In order to mitigate foreign exchange fluctuations, the Company enters into foreign exchange forward contracts. Management has not designated these forward contracts as hedges. As of June 29, 2025 and December 29, 2024, the total notional amount of foreign exchange derivatives was $214.3 million and $152.6 million, respectively. The majority matured in July 2025 and January 2025, respectively. The Company recorded liabilities of $0.9 million and $0.7 million as of June 29, 2025 and December 29, 2024, respectively, related to the fair market values of its foreign exchange derivatives.

Quantitative Summary of Derivative Positions and Their Effect on Results of Operations

The following tables present the fair values of derivative instruments included in the Condensed Consolidated Balance Sheets as of June 29, 2025 and December 29, 2024, for derivatives not designated as hedging instruments and derivatives designated as hedging instruments, respectively. The Company only has cash flow hedges that are designated as hedging instruments.

The effect of derivative instruments in the Condensed Consolidated Statements of Operations for the quarters and two quarters ended June 29, 2025 and June 30, 2024 is as follows:

Note 8 —Vendor Finance Programs

The following table presents liabilities related to vendor finance programs which the Company participates in as a buyer as of June 29, 2025 and December 29, 2024:

Supply Chain Financing (“SCF”) Programs

The Company has an agreement with a third-party administrator which allows participating vendors to track the Company’s payments, and if voluntarily elected by the vendor, to sell payment obligations from the Company to financial institutions as part of the SCF program. When participating vendors elect to sell one or more of the Company’s payment obligations, the Company’s rights and obligations to settle the payables on their contractual due date are not impacted. The Company agrees on commercial terms with vendors for the goods and services procured, which are consistent with payment terms observed at other peer companies in the industry. The Company has historically prioritized negotiating longer payment terms with some of its largest vendors, and certain of these vendors have also elected to participate in the SCF program. Payment terms and pricing negotiations are independent of, and not conditioned upon, a vendor’s participation in the SCF program. The financial institutions do not provide the Company with incentives such as rebates or profit sharing under the SCF program. As the terms are not impacted by the SCF program, such obligations are classified as Accounts payable in the Condensed Consolidated Balance Sheets and the associated cash flows are included in operating activities in the Condensed Consolidated Statements of Cash Flows.

Structured Payables Programs

The Company utilizes various card products issued by financial institutions to facilitate purchases of goods and services. By using these products, the Company may receive differing levels of rebates based on timing of repayment. The payment obligations under these card products are classified as Structured payables in the Condensed Consolidated Balance Sheets and the associated cash flows are included in financing activities in the Condensed Consolidated Statements of Cash Flows.

Note 9 —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. During the quarter ended June 29, 2025, the Company amended the 2023 Facility (referred to herein as the “2025 Amendment”) to, among other things, establish additional, incremental term loan commitments in an aggregate principal amount of $125.0 million. During the quarter ended June 29, 2025, the Company capitalized $0.8 million of debt issuance costs related to the 2025 Amendment.

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 June 29, 2025 and December 29, 2024, the unhedged interest rates were 6.43% and 6.48% under the 2023 Facility, respectively. As of June 29, 2025 and December 29, 2024, $550.0 million and $500.0 million, respectively, of the outstanding term loan balance was hedged, with the interest rate swap agreements scheduled to mature in March 2028. As of June 29, 2025 and December 29, 2024, the effective interest rates on the term loan were approximately 6.17% and 6.20%, respectively. The Company is required to make installments of 1.25% of the aggregate closing date principal amounts 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.

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, and other investments) and for any other purpose not prohibited under the related loan documents. The 2025 Amendment 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.

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 10 —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 $4.2 million and $6.4 million for the quarter and two quarters ended June 29, 2025, respectively, and $6.8 million and $12.9 million for the quarter and two quarters ended June 30, 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 two quarters 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 $0.8 million for the quarter and two quarters ended June 29, 2025, respectively, and $0.9 million and $1.8 million for the quarter and two quarters ended June 30, 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 quarter and two quarters ended June 29, 2025. During the quarter and two quarters ended June 30, 2024,1.5 million time-vested stock options vested.

Note 11 —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 4.4% and 4.6% for the quarter and two quarters ended June 29, 2025, respectively, and 42.3% and -5.9% for the quarter and two quarters ended June 30, 2024, respectively. The Company’s effective income tax rate for the quarter ended June 29, 2025 differed from the respective statutory rates primarily due to the tax effects of goodwill impairment charges, the mix of income and taxes attributable to foreign jurisdictions, disallowed executive compensation expense, and the sale of the Company’s investment in Insomnia Cookies. The Company’s effective income tax rate for the quarter ended June 30, 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.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S. The legislation permanently extends certain expiring provisions of the Tax Cuts and Jobs Act, alters aspects of the U.S. international tax regime, and reinstates certain business tax provisions, among other changes. The OBBBA has multiple effective dates, with provisions becoming effective in 2025 through 2027. The Company is currently assessing the OBBBA’s expected impact on its consolidated financial statements.

Note 12 —Commitments and Contingencies

Pending Litigation

Securities Litigation

On May 16, 2025, a shareholder of the Company filed a putative federal securities class action in the Western District of North Carolina against the Company, its Chief Executive Officer (“CEO”), and its former Chief Financial Officer (“CFO”). On June 30, 2025, a shareholder of the Company filed a similar putative federal securities class action in the Western District of North Carolina against the Company, its CEO, and its former CFO. Both actions allege that, throughout the proposed putative class periods, defendants made materially false and/or misleading statements and/or failed to disclose materially adverse facts concerning the Company’s business, operations, and prospects related to the Business Relationship Agreement with McDonald’s USA. Motions to appoint lead plaintiff for both actions were filed on June 15, 2025.

Data Breach Litigation

On June 16, 2025, the Company released a Notice of Data Breach stating that on November 29, 2024, the Company became aware of the 2024 Cybersecurity Incident (defined below) and on May 22, 2025, the Company’s investigation determined that personal information of certain individuals was affected. Beginning on June 20, 2025, several putative class actions lawsuits have been filed against the Company in the Middle District of North Carolina and the Western District of North Carolina. The complaints assert claims of negligence, negligence per se, unjust enrichment, breach of implied contract, breach of the implied covenant of good faith and fair dealing, breach of confidence, breach of fiduciary duty, breach of bailment, invasion of privacy, declaratory judgment, and violations of California and North Carolina statutory law, arising from the Company’s alleged failure to secure and safeguard the personally identifiable information and private health information of plaintiffs and purported class members.

The securities litigation and data breach litigation are currently in the pleading phase. The Company has engaged external counsel with respect to these matters and intends to vigorously defend against them. It is too soon to predict with any certainty what, if any, damages could be awarded if liability were found.

Shareholder Derivative Litigation

On June 13, 2025 and June 25, 2025, purported shareholders of the Company filed shareholder derivative actions in the Western District of North Carolina against its CEO, its former CFO, and current and former members of its Board of Directors. Both derivative actions allege that the derivative defendants breached their fiduciary duties by allowing the Company to issue materially false and misleading statements and failed to maintain adequate internal controls. This matter is currently in the pleading phase and the Company has engaged external counsel with respect to this matter.

Other Legal Matters

The Company also 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 $20.3 million as of June 29, 2025 and $20.8 million as of December 29, 2024, a majority of which secure the Company’s reimbursement obligations to insurers under its self-insurance arrangements.

Note 13 —Related Party Transactions

As of June 29, 2025 the Company held minority equity interests inthree entities, Krispy Kreme Doughnuts France SAS (“KK France”) (33.0% ownership), KK Brazil (45.0% ownership), and KK Spain (25.0% ownership) with an aggregate carrying value of $6.1 million. As of December 29, 2024 the company held minority equity interests infour entities, KK France (33.0% ownership), KK Brazil (45.0% ownership), KK Spain (25.0% ownership), and Insomnia Cookies (34.8% ownership), with an aggregate carrying value of $91.1 million.

In the quarter ended June 29, 2025, the Company sold its remaining ownership interest in Insomnia Cookies. In connection with this transaction, the Company incurred $0.5 million of financial advisory fees with an affiliate of BNP Paribas, SA, which beneficially owns greater than 5% of the Company’s common stock. Refer to Note 2, Acquisitions and Divestitures for further information.

Note 14 —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 15 —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 10, 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 quarter and two quarters ended June 29, 2025 and June 30, 2024, all 2.6 million and 2.9 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 16 —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 CEO, the Company’s Chief Operating Decision Maker (“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 and two quarters ended June 29, 2025 also consist of equity method income from Insomnia Cookies following the divestiture of a controlling interest in Insomnia Cookies during fiscal 2024.

(2)The quarter and two quarters ended June 29, 2025 consist primarily of costs associated with the U.S. national expansion, including exit costs associated with termination of the Business Relationship Agreement with McDonald’s USA, and the evaluation of potential opportunities to refranchise certain equity markets. The quarter and two quarters ended June 30, 2024 consist 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 USA).

(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 and two quarters ended June 29, 2025 consist primarily of costs associated with restructuring of the U.S. and U.K. businesses.

(7)The quarter and two quarters ended June 29, 2025 consist primarily of $0.9 million and $5.3 million, respectively, in costs related to remediation of the 2024 Cybersecurity Incident, including fees for cybersecurity experts and other advisors. The quarter and two quarters ended June 30, 2024 consist primarily of a gain from insurance proceeds received related to a shop in the U.S. that was destroyed and subsequently rebuilt.

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