Krispy Kreme, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, unless otherwise specified)

Note 1 —Description of Business and Summary of Significant Accounting Policies

Description of Business

Krispy Kreme, Inc. (“KKI”) and its subsidiaries (collectively, the “Company” or “Krispy Kreme”) operate through an omni-channel business model to produce doughnuts and deliver fresh doughnut experiences for Doughnut Shops, fresh delivery doors, and digital channels, expanding consumer access to the Krispy Kreme brand.

The Company hasthree reportable operating segments: 1) U.S., which includes all Company-owned operations in the U.S., and W.K.S. Krispy Kreme, LLC (“W.K.S. Krispy Kreme”) through the date of deconsolidation; 2) International, which includes Company-owned operations in the U.K., Ireland, Australia, New Zealand, Mexico, and Canada, as well as Japan through the date of disposition; and 3) Market Development, which includes franchise operations across the globe, including Krispy Kreme Doughnut Japan Co., Ltd (“Krispy Kreme Japan”) after March 2, 2026 and W.K.S. Krispy Kreme after March 23, 2026, and also includes Company-owned operations in France through Krispy Kreme Doughnuts France SAS ("Krispy Kreme France") after May 25, 2026. Refer to Note 3, Acquisitions and Divestitures, for more information on the impact of refranchising and the Company’s acquisition of Krispy Kreme France. Unallocated corporate costs are excluded from the Company’s measurement of segment performance.

Basis of Presentation and Consolidation

The Company operates and reports financial information on a 52- or 53-week year with the fiscal year ending on the Sunday closest to December 31. The quarters ended June 28, 2026 and June 29, 2025 were both 13-week periods.

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of KKI and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, these interim financial statements do not include all information and footnotes required under GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of results of operations, balance sheet, cash flows, and shareholders’ equity for the periods presented. All significant intercompany balances and transactions among KKI and its subsidiaries have been eliminated in consolidation. Investments in entities over which the Company has the ability to exercise significant influence but which it does not control and whose financial statements are not otherwise required to be consolidated, are accounted for using the equity method.

The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto as of and for the year ended December 28, 2025, included in KKI’s Annual Report on Form 10-K for the year then ended (the “Annual Report on Form 10-K”). The Condensed Consolidated Balance Sheet as of December 28, 2025 was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The results of operations for the quarter and two quarters ended June 28, 2026 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending January 3, 2027.

Noncontrolling interest in the Company’s Condensed Consolidated Financial Statements represents the interest in subsidiaries held by employee shareholders, all of which were purchased by the Company during the quarter ended March 29, 2026. Employee shareholders held noncontrolling interests in the consolidated subsidiaries Krispy Kreme Holdings Pty Ltd. (“KK Australia”), Krispy Kreme Mexico Holding S.A.P.I. de C.V. (“KK Mexico”), and Krispy Kreme Japan prior to disposition. Since the Company consolidates the financial statements of these subsidiaries, the noncontrolling owners’ share of net assets and results of operations are deducted and reported as noncontrolling interest in the Condensed Consolidated Balance Sheets and as net income/(loss) attributable to noncontrolling interest in the Condensed Consolidated Statements of Operations and comprehensive income attributable to noncontrolling interest in the Condensed Consolidated Statements of Comprehensive Loss/(Income).

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 1, Description of Business and Summary of Significant Accounting Policies, to the Consolidated Financial Statements for the year ended December 28, 2025 included in the Annual Report on Form 10-K. There were no material changes to the significant accounting policies during the quarter ended June 28, 2026.

Termination of the Business Relationship Agreement with McDonald’s USA

On June 24, 2025, the Company and McDonald’s USA, LLC (“McDonald’s USA”) announced that the companies had jointly decided to terminate the Business Relationship Agreement between Krispy Kreme Doughnut Corporation and McDonald’s USA (the “Business Relationship Agreement”) effective July 2, 2025 (the “Termination Effective Date”). Effective as of the Termination Effective Date, neither party has any further obligations to the other party under the Business Relationship Agreement except for obligations related to confidentiality, indemnification, and certain other miscellaneous provisions that expressly survive termination.

Goodwill and Other Asset Impairments

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. For each reporting unit, the Company assesses goodwill for impairment annually at the beginning of the fourth quarter or more frequently when impairment indicators are present. If the carrying value of the reporting unit exceeds its fair value, the Company recognizes an impairment charge for the difference up to the carrying value of the allocated goodwill.

In the quarter ended June 29, 2025, management identified impairment indicators that required a quantitative assessment of goodwill outside of management’s routine annual assessment. These indicators included that during the two quarters ended June 29, 2025, the Company experienced a decline in its stock price and market capitalization, which became significant and sustained during the quarter ended June 29, 2025. In addition, the Company’s operating results for the quarter were below previous forecasts. Lastly, the Company updated its forecasts for the full year following termination of the Business Relationship Agreement with McDonald’s USA during the quarter, and the updated forecasts were below previous forecasts. After completing the quantitative impairment test, management concluded that the estimated fair values of the U.S., Krispy Kreme Holding U.K. Ltd. (“KK U.K.”), and KK Australia reporting units had declined below their carrying values, and management recognized a cumulative, non-cash, partial goodwill impairment charge of $356.0 million (gross of income taxes) in the quarter ended June 29, 2025.

The estimated fair values of the reporting units were based on estimates and assumptions that are considered Level 3 inputs under the fair value hierarchy. In estimating the fair values of the reporting units, management reconciles the fair value of the Company to the Company’s market capitalization. Consistent with the quantitative assessment for the fiscal year ended December 29, 2024, management utilized a discounted cash flow approach and a market approach to determine fair values, allocating 50% to each approach. These calculations require management to make assumptions and to apply judgment when estimating future cash flows and asset fair values, including projected revenue growth and operating expenses related to existing businesses, product innovation, and new shop concepts, as well as selecting valuation multiples of similar publicly traded companies and an appropriate discount rate. Estimates of revenue growth and operating expenses were based on internal projections that considered the reporting unit’s past performance and forecasted growth, strategic initiatives, local market economics, and the local business environment impacting the reporting unit’s performance. The discount rate was selected based on the estimated cost of capital for a market participant to operate the reporting unit in the region. These estimates, as well as the selection of comparable companies and valuation multiples used in the market approaches were highly subjective, and the Company’s ability to realize the future cash flows used in management’s fair value calculations was affected by factors such as the success of strategic initiatives, changes in economic conditions, changes in operating performance, and changes in business strategies, including retail initiatives and international expansion. For the discounted cash flow approach, management applied discount rates to management’s projected cash flows of approximately 10.0%,12.0%, and 12.0% for the U.S., KK U.K., and KK Australia reporting units, respectively.

Additionally, in response to management’s updated forecasts and the termination of the Business Relationship Agreement with McDonald’s USA during the quarter ended June 29, 2025, the Company recorded non-cash long-lived asset impairment charges of $22.1 million and non-cash lease impairment and termination costs of $28.9 million. These impairment charges, along with the goodwill impairment, are included in Goodwill and other asset impairments in the Condensed Consolidated Statements of Operations.

The goodwill and other asset impairments did not have an impact on the Company’s compliance with the financial covenants under the Company’s debt arrangements.

Reclassifications

The accompanying condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, consisting of normal recurring adjustments, unless otherwise disclosed. Certain amounts in prior periods previously reported in the Company’s Quarterly Report on Form 10-Q for the period ended June 29, 2025 (the “Q2 2025 Form 10-Q”) have been reclassified to conform to the current period presentation. The Company believes that the disclosures are adequate to make the information presented not misleading and should be read in conjunction with the unaudited consolidated financial statements and related footnotes contained in the Q2 2025 Form 10-Q.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires a public business entity (“PBE”) to disclose in the notes to the financial statements, at each interim and annual reporting period, specified information about certain costs and expenses, including (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities, for each income statement line item that contains those expenses. For PBEs, the ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. An entity may apply the amendments in this ASU prospectively or retrospectively. The Company expects this ASU to impact its expense disclosures, but with no impacts to its results of operations, cash flows, and financial condition.

In September 2025, the FASB issued ASU 2025-06, Intangibles (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which clarifies and modernizes the accounting for costs related to internal-use software. The guidance removes all references to project stages in Accounting Standards Codification (“ASC”) 350-40, Intangibles — Goodwill and Other — Internal-Use Software and clarifies the threshold entities apply to begin capitalizing costs. The new guidance requires an entity to start capitalizing software costs when (a) management has authorized and committed to funding the software project, and (b) it is probable that the project will be completed and the software will be used to perform the function intended. For PBEs, the ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those annual periods, with early adoption permitted. Entities may apply the amendments in this ASU using a prospective, retrospective, or modified transition approach. The Company does not expect this ASU to materially impact its results of operations, cash flows, and financial condition.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270), which centralizes interim disclosure requirements and codifies a "disclosure principle" requiring an explanation of material changes occurring since the most recent annual period. As the Company currently adheres to similar requirements under SEC Regulation S-X Rule 8-03, the adoption of this guidance is not expected to significantly change current interim reporting practices. The amendments are effective for the Company for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company expects to adopt this guidance prospectively and does not anticipate that the adoption will have a material impact on its Condensed Consolidated Financial Statements or disclosures.

Note 2 —Revision of Financial Statements

Revision of Previously Issued Financial Statements

During the preparation of the financial statements for the year ended December 28, 2025, the Company identified and corrected the classification and accounting treatment for the redeemable noncontrolling interests in W.K.S. Krispy Kreme and KK Canada AcquisitionCo Inc. (“KK Canada”) (the “redeemable noncontrolling interests”). The Company determined that the accounting for the redeemable noncontrolling interests for periods prior to the annual period ended December 28, 2025 was incorrect. Specifically, the redeemable noncontrolling interests had originally been classified as Noncontrolling interest within Shareholders’ equity in the financial statements included in the Company’s annual and quarterly reports filed prior to the fiscal year ended December 28, 2025. The Company determined that the redeemable noncontrolling interests should instead be accounted for as Mezzanine equity. In addition, the redeemable noncontrolling interests, which were recorded at fair value each annual and quarterly reporting period, with changes recorded in Net (loss)/income, should instead be recorded at the greater of (i) current redemption value or (ii) carrying amount each quarterly reporting period with changes to this amount being recorded in Additional paid-in capital.

Accordingly, the change in carrying value of the redeemable noncontrolling interest, which was originally included in the calculation of Net (loss)/income as well as the calculation of Net (loss)/income attributable to Krispy Kreme, Inc. for periods prior to the annual period ended December 28, 2025, should instead be included only in the calculation of Net (loss)/income attributable to Krispy Kreme, Inc. as those captions are presented in the Consolidated Statement of Changes in Shareholders' Equity. In accordance with the guidance provided by the SEC’s Staff Accounting Bulletin 99, Materiality, and Staff Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company determined that the impact of adjustments relating to the corrections of this accounting error were not material to previously issued annual audited and unaudited consolidated financial statements. Accordingly, these adjustments are disclosed herein and will be disclosed prospectively. As a result of the aforementioned correction of accounting errors, the quarterly financial statements included herein have been revised as follows: