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All subsequent events requiring recognition and disclosure have been incorporated into these Condensed Consolidated Financial 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________

FORM 10-Q
_________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 2022

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: 001-04321

dnut-20221002_g1.jpg
Krispy Kreme, Inc.
(Exact name of registrant as specified in its charter)
_________________________

Delaware 37-1701311
(State or other jurisdiction of incorporation)
(IRS Employer Identification No.)
2116 Hawkins Street, Charlotte, North Carolina 28203
(Address of principal executive offices)

(800) 457-4779
(Registrant’s telephone number, including area code)

N/A
(Former name or former address, if changed since last report)
_________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol Name of each exchange on which registered
Common stock, $0.01 par value per share
DNUT
Nasdaq Global Select Market
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 No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

The registrant had outstanding 167,437,123 shares of common stock as of October 31, 2022.


Table of Contents
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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Krispy Kreme, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share amounts)
Quarter Ended Three Quarters Ended
October 2, 2022 (13 weeks) October 3, 2021 (13 weeks) October 2, 2022 (39 weeks) October 3, 2021 (39 weeks)
Net revenues
Product sales $ 370,216  $ 334,324  $ 1,102,045  $ 989,132 
Royalties and other revenues 7,306  8,475  23,254  24,662 
Total net revenues 377,522  342,799  1,125,299  1,013,794 
Product and distribution costs 102,870  92,152  299,539  257,166 
Operating expenses 177,592  157,315  520,260  462,733 
Selling, general and administrative expense 54,801  52,950  160,266  163,417 
Marketing expenses 10,995  12,062  32,369  31,621 
Pre-opening costs 1,200  1,192  3,514  4,335 
Other expenses/(income), net 2,964  (359) 1,800  (4,365)
Depreciation and amortization expense 28,127  25,663  83,782  74,258 
Operating (loss)/income (1,027) 1,824  23,769  24,629 
Interest expense, net 8,871  7,186  23,808  25,228 
Interest expense — related party —  —  —  10,387 
Other non-operating expense/(income), net 1,648  732  2,083  (126)
Loss before income taxes (11,546) (6,094) (2,122) (10,860)
Income tax expense/(benefit) 294  (2,342) 5,668  8,266 
Net loss (11,840) (3,752) (7,790) (19,126)
Net income attributable to noncontrolling interest 1,216  1,907  5,113  6,736 
Net loss attributable to Krispy Kreme, Inc. $ (13,056) $ (5,659) $ (12,903) $ (25,862)
Net loss per share:
Common stock — Basic $ (0.08) $ (0.04) $ (0.08) $ (0.20)
Common stock — Diluted $ (0.08) $ (0.04) $ (0.08) $ (0.20)
Weighted average shares outstanding:
Basic 167,431  166,034  167,353  141,124 
Diluted 167,431  166,034  167,353  141,124 
See accompanying notes to Condensed Consolidated Financial Statements.
1

Krispy Kreme, Inc.
Condensed Consolidated Statements of Comprehensive (Loss)/Income (Unaudited)
(in thousands)
  Quarter Ended Three Quarters Ended
  October 2, 2022 (13 weeks) October 3, 2021 (13 weeks) October 2, 2022 (39 weeks) October 3, 2021 (39 weeks)
Net loss $ (11,840) $ (3,752) $ (7,790) $ (19,126)
Other comprehensive (loss)/income, net of income taxes:
Foreign currency translation adjustment (25,708) (9,823) (61,887) (13,544)
Unrealized income on cash flow hedges, net of income taxes(1)
7,692  1,398  24,798  7,631 
Total other comprehensive loss, net of income taxes (18,016) (8,425) (37,089) (5,913)
Comprehensive loss (29,856) (12,177) (44,879) (25,039)
Net income attributable to noncontrolling interest 1,216  1,907  5,113  6,736 
Foreign currency translation adjustment attributable to noncontrolling interest (1,283) (414) (2,186) (414)
Total comprehensive (loss)/income attributable to noncontrolling interest (67) 1,493  2,927  6,322 
Comprehensive loss attributable to Krispy Kreme, Inc. $ (29,789) $ (13,670) $ (47,806) $ (31,361)
(1)Net of income tax expense of $2.6 million and $8.3 million for the quarter and three quarters ended October 2, 2022, respectively, and $0.5 million and $2.6 million for the quarter and three quarters ended October 3, 2021, respectively.
See accompanying notes to Condensed Consolidated Financial Statements.
2

 Krispy Kreme, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
As of
  (Unaudited) October 2, 2022 January 2, 2022
ASSETS    
Current assets:    
Cash and cash equivalents $ 28,096  $ 38,562 
Restricted cash 403  630 
Accounts receivable, net 46,941  47,491 
Inventories 49,406  34,851 
Taxes receivable 16,537  14,662 
Prepaid expense and other current assets 33,126  20,701 
Total current assets 174,509  156,897 
Property and equipment, net 450,954  438,918 
Goodwill 1,074,241  1,105,322 
Other intangible assets, net 966,358  992,520 
Operating lease right of use asset, net 410,001  435,168 
Other assets 25,788  16,429 
Total assets $ 3,101,851  $ 3,145,254 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt $ 40,243  $ 36,583 
Current operating lease liabilities 45,551  50,359 
Accounts payable 188,059  182,104 
Accrued liabilities 111,818  140,750 
Structured payables 123,331  116,361 
Total current liabilities 509,002  526,157 
Long-term debt, less current portion 738,504  680,307 
Noncurrent operating lease liabilities 400,594  415,208 
Deferred income taxes, net 140,244  145,418 
Other long-term obligations and deferred credits 39,784  42,509 
Total liabilities 1,828,128  1,809,599 
Commitments and contingencies
Shareholders’ equity:
Common stock, $0.01 par value; 300,000 shares authorized as of both October 2, 2022 and January 2, 2022; 167,437 and 167,251 shares issued and outstanding as of October 2, 2022 and January 2, 2022, respectively
1,674  1,673 
Additional paid-in capital 1,422,850  1,415,185 
Shareholder note receivable (4,812) (4,382)
Accumulated other comprehensive loss, net of income tax (37,380) (2,478)
Retained deficit (208,886) (178,409)
Total shareholders’ equity attributable to Krispy Kreme, Inc. 1,173,446  1,231,589 
Noncontrolling interest 100,277  104,066 
Total shareholders’ equity 1,273,723  1,335,655 
Total liabilities and shareholders’ equity $ 3,101,851  $ 3,145,254 
See accompanying notes to Condensed Consolidated Financial Statements.
3

Krispy Kreme, Inc.
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(in thousands, except per share amounts)
 
Common Stock
Additional
Paid-in
Capital
Subscription Receivable
Shareholder
Note
Receivable
Accumulated Other Comprehensive
Income/(Loss)
Retained
(Deficit)/
Earnings
Noncontrolling
Interest
Total
 
Shares
Outstanding
Amount
Foreign
Currency
Translation
Adjustment
Unrealized
(Loss)/Income on
Cash Flow
Hedges
Unrealized  Loss on Employee
Benefit Plans
Balance at January 2, 2022 167,251  $ 1,673  $ 1,415,185  $   $ (4,382) $ 8,967  $ (11,001) $ (444) $ (178,409) $ 104,066  $ 1,335,655 
Net income for the quarter ended April 3, 2022 —  —  —  —  —  —  —  —  4,002  2,456  6,458 
Other comprehensive income for the quarter ended April 3, 2022 before reclassifications —  —  —  —  —  1,334  11,724  —  —  —  13,058 
Reclassification from AOCI —  —  —  —  —  —  2,510  —  —  —  2,510 
Capital contribution by shareholders —  —  (3) —  243  —  —  —  —  —  240 
Share-based compensation —  —  5,041  —  —  —  —  —  —  —  5,041 
Purchase of shares by noncontrolling interest —  —  —  —  (58) —  —  —  —  110  52 
Dividends declared on common stock and equivalents ($0.035 per share)
—  —  —  —  —  —  —  —  (5,855) —  (5,855)
Distribution to noncontrolling interest —  —  —  —  21  —  —  —  —  (1,383) (1,362)
Issuance of common stock upon settlement of RSUs, net of shares withheld 46  —  (390) —  —  —  —  —  —  —  (390)
Other —  —  (2) —  (14) —  —  —  —  (15)
Balance at April 3, 2022 167,297  $ 1,673  $ 1,419,831  $   $ (4,190) $ 10,301  $ 3,233  $ (444) $ (180,261) $ 105,249  $ 1,355,392 
Net (loss)/income for the quarter ended July 3, 2022 —  —  —  —  —  —  —  —  (3,849) 1,441  (2,408)
Other comprehensive (loss)/income for the quarter ended July 3, 2022 before reclassifications —  —  —  —  —  (36,610) 1,011  —  —  (903) (36,502)
Reclassification from AOCI —  —  —  —  —  —  1,861  —  —  —  1,861 
Capital contribution from shareholders —  —  (31) —  (236) —  —  —  —  —  (267)
Share-based compensation —  —  5,452  —  —  —  —  —  —  —  5,452 
Purchase of shares by noncontrolling interest —  —  —  —  (133) —  —  —  —  491  358 
Dividends declared on common stock and equivalents ($0.035 per share)
—  —  —  —  —  —  —  —  (5,860) —  (5,860)
Distribution to noncontrolling interest —  —  (3,944) —  —  —  —  —  —  (4,190) (8,134)
Issuance of common stock upon settlement of RSUs, net of shares withheld 131  (898) —  —  —  —  —  —  —  (897)
Other —  —  —  —  (14) —  —  —  —  (13)
Balance at July 3, 2022 167,428  $ 1,674  $ 1,420,410  $   $ (4,573) $ (26,309) $ 6,106  $ (444) $ (189,970) $ 102,088  $ 1,308,982 
Net (loss)/income for the quarter ended October 2, 2022 —  —  —  —  —  —  —  —  (13,056) 1,216  (11,840)
Other comprehensive (loss)/income for the quarter ended October 2, 2022 before reclassifications —  —  —  —  —  (24,425) 7,585  —  —  (1,283) (18,123)
Reclassification from AOCI —  —  —  —  —  —  107  —  —  —  107 
Capital contribution from shareholders —  —  (38) —  (223) —  —  —  —  —  (261)
Share-based compensation —  —  2,825  —  —  —  —  —  —  —  2,825 
Dividends declared on common stock and equivalents ($0.035 per share)(1)
—  —  —  —  —  —  —  —  (5,860) —  (5,860)
Distribution to noncontrolling interest —  —  (285) —  —  —  —  —  —  (1,744) (2,029)
Issuance of common stock upon settlement of RSUs, net of shares withheld —  (62) —  —  —  —  —  —  —  (62)
Other —  —  —  —  (16) —  —  —  —  —  (16)
Balance at October 2, 2022 167,437  $ 1,674  $ 1,422,850  $   $ (4,812) $ (50,734) $ 13,798  $ (444) $ (208,886) $ 100,277  $ 1,273,723 
(1)Includes a $0.035 cash dividend per common share declared in the third quarter of fiscal 2022 and expected to be paid in the fourth quarter of fiscal 2022.
See accompanying notes to Condensed Consolidated Financial Statements.
4

Krispy Kreme, Inc.
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(in thousands)
 
Common Stock
Additional
Paid-in
Capital
Subscription Receivable
Shareholder
Note
Receivable
Accumulated Other Comprehensive Income/(Loss)
Retained
(Deficit)/
Earnings
Noncontrolling
Interest
Total
 
Shares
Outstanding
Amount
Foreign
Currency
Translation
Adjustment
Unrealized
Loss on
Cash Flow
Hedges
Unrealized  Loss on Employee
Benefit Plans
Balance at January 3, 2021 124,987  $ 1,250  $ 845,499  $   $ (18,660) $ 23,508  $ (24,610) $ (106) $ (142,197) $ 163,675  $ 848,359 
Net (loss)/income for the quarter ended April 4, 2021 —  —  —  —  —  —  —  —  (3,061) 2,683  (378)
Other comprehensive (loss)/income for the quarter ended April 4, 2021 before reclassifications —  —  —  —  —  (2,264) 2,572  —  —  —  308 
Reclassification from AOCI —  —  —  —  —  2,530  —  —  —  2,530 
Share-based compensation —  —  2,368  —  —  —  —  —  —  2,368 
Purchase of shares by noncontrolling interest —  —  —  —  139  —  —  —  12,048  12,187 
Distribution to noncontrolling interest —  —  —  —  363  —  —  —  (2,239) (1,876)
Other —  —  (26) —  (70) —  —  (1) (95)
Balance at April 4, 2021 124,987  $ 1,250  $ 847,841  $   $ (18,228) $ 21,244  $ (19,508) $ (106) $ (145,256) $ 176,166  $ 863,403 
Net (loss)/income for the quarter ended July 4, 2021 —  —  —  —  —  —  —  —  (17,142) 2,146  (14,996)
Other comprehensive loss for the quarter ended July 4, 2021 before reclassifications —  —  —  —  —  (1,457) (1,430) —  —  —  (2,887)
Reclassification from AOCI —  —  —  —  —  —  2,561  —  —  —  2,561 
Capital contribution from shareholders 6,997  70  120,862  —  —  —  —  —  —  —  120,932 
Share-based compensation —  —  8,290  —  —  —  —  —  —  —  8,290 
Purchase of shares by noncontrolling interest —  —  —  —  14,421  —  —  —  —  26,648  41,069 
Distribution to shareholders —  —  (42,334) —  —  —  —  —  —  —  (42,334)
Distribution to noncontrolling interest —  —  —  —  —  —  —  —  —  (4,142) (4,142)
Conversion of noncontrolling interest to additional paid-in capital in connection with the Merger 9,371  93  107,258  —  —  —  —  —  —  (107,351) — 
Issuance of common stock in connection with initial public offering, net of underwriting discounts and issuance costs 29,412  294  459,391  (471,250) —  —  —  —  —  —  (11,565)
Issuance of common stock upon settlement of RSUs, net of shares withheld 1,267  13  (15,507) —  —  —  —  —  —  —  (15,494)
Repurchase of common stock (8,438) (84) (122,922) —  —  —  —  —  —  —  (123,006)
Other —  —  (4) —  (20) —  —  —  (1) —  (25)
Balance at July 4, 2021 163,596  $ 1,636  $ 1,362,875  $ (471,250) $ (3,827) $ 19,787  $ (18,377) $ (106) $ (162,399) $ 93,467  $ 821,806 
Net (loss)/income for the quarter ended October 3, 2021 —  —  —  —  —  —  —  —  (5,659) 1,907  (3,752)
Other comprehensive income/(loss) for the quarter ended October 3, 2021 before reclassifications —  —  —  —  —  (9,409) (1,215) —  —  (414) (11,038)
Reclassification from AOCI —  —  —  —  —  —  2,613  —  —  —  2,613 
Capital contribution from shareholders —  —  (17) —  (383) —  —  —  —  —  (400)
Share-based compensation —  —  6,315  —  —  —  —  —  —  —  6,315 
Dividends declared on common stock and equivalents ($0.035 per share)
—  —  —  —  —  —  —  —  (5,853) —  (5,853)
Purchase of shares by noncontrolling interest —  —  —  —  —  —  —  —  —  81  81 
Distribution to noncontrolling interest —  —  (13,413) —  —  —  —  —  —  (2,882) (16,295)
Issuance of common stock in connection with initial public offering, net of underwriting discounts and issuance costs 3,500  35  55,151  471,250  —  —  —  —  —  —  526,436 
Issuance of common stock upon settlement of RSUs, net of shares withheld 17  —  (188) —  —  —  —  —  —  —  (188)
Other —  —  —  (6) —  —  —  —  —  (5)
Balance at October 3, 2021 167,113  $ 1,671  $ 1,410,724  $   $ (4,216) $ 10,378  $ (16,979) $ (106) $ (173,911) $ 92,159  $ 1,319,720 
See accompanying notes to Condensed Consolidated Financial Statements.
5

Krispy Kreme, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
  Three Quarters Ended
  October 2, 2022 (39 weeks) October 3, 2021 (39 weeks)
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (7,790) $ (19,126)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense 83,782  74,258 
Deferred income taxes (10,259) 9,168 
Loss on extinguishment of debt —  1,700 
Impairment and lease termination charges 7,255  854 
(Gain)/loss on disposal of property and equipment (244) 157 
Gain on sale-leaseback (4,311) — 
Share-based compensation 13,318  16,973 
Change in accounts and notes receivable allowances 378  133 
Inventory write-off 388  2,983 
Other 804  (315)
Change in operating assets and liabilities, excluding business acquisitions and foreign currency translation adjustments (12,591) 12,003 
Net cash provided by operating activities 70,730  98,788 
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Purchase of property and equipment (75,002) (83,485)
Proceeds from disposals of assets 856  202 
Proceeds from sale-leaseback 5,700  — 
Acquisition of shops and franchise rights from franchisees, net of cash acquired (17,335) (33,888)
Purchase of equity method investment (989) — 
Other investing activities (931) 455
Net cash used for investing activities (87,701) (116,716)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt 121,500  670,000 
Repayment of long-term debt and lease obligations (70,180) (1,115,910)
Payment of financing costs —  (1,700)
Proceeds from structured payables 219,459  194,927 
Payments on structured payables (211,778) (223,063)
Payment of contingent consideration related to a business combination (900) — 
Capital contribution by shareholders, net of loans issued (288) 120,532 
Proceeds from IPO, net of underwriting discounts (excluding unpaid issuance costs) —  527,329 
Payments of issuance costs in connection with IPO (12,458) — 
Proceeds from sale of noncontrolling interest in subsidiary 410  53,337 
Distribution to shareholders (17,570) (42,334)
Payments for repurchase and retirement of common stock (2,425) (138,501)
Distribution to noncontrolling interest (11,525) (17,257)
Net cash provided by financing activities 14,245  27,360 
Effect of exchange rate changes on cash, cash equivalents and restricted cash (7,967) (1,827)
Net (decrease)/increase in cash, cash equivalents and restricted cash (10,693) 7,605 
Cash, cash equivalents and restricted cash at beginning of period 39,192  37,483 
Cash, cash equivalents and restricted cash at end of period $ 28,499  $ 45,088 
Supplemental schedule of non-cash investing and financing activities:
Increase in accrual for property and equipment $ 16,272  $ 3,137 
Stock issuance under shareholder notes 547  446 
Accrual for distribution to shareholders (5,860) (5,853)
Accrual for repurchase and retirement of common stock —  (188)
Accrual for distribution to noncontrolling interest —  (5,056)
Reconciliation of cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents $ 28,096  $ 44,895 
Restricted cash 403  193 
Total cash, cash equivalents and restricted cash $ 28,499  $ 45,088 
See accompanying notes to Condensed Consolidated Financial Statements.
6

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 their omni-channel business model to provide doughnut experiences and produce doughnuts for Doughnut Shops, Delivered Fresh Daily (“DFD”) outlets, Ecommerce and delivery, and Krispy Kreme branded sweet treats (“Branded Sweet Treat Line”) channels, expanding consumer access to the Krispy Kreme brand.
The Company has three reportable operating segments: 1) U.S. and Canada, which includes all Krispy Kreme Company-owned operations in the U.S. and Canada, Insomnia Cookies shops and the Branded Sweet Treat Line; 2) International, which includes all Krispy Kreme Company-owned operations in the U.K., Ireland, Australia, New Zealand and Mexico; and 3) Market Development, which includes worldwide franchise operations, as well as Krispy Kreme Company-owned shops in Japan. 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 data periods contained within fiscal years 2021 and 2022 will reflect the results of operations for the 52-week periods ended January 2, 2022 and January 1, 2023, respectively. The quarters ended October 2, 2022 and October 3, 2021 were both 13-week periods.
The unaudited Condensed Consolidated Financial Statements include the accounts of KKI and subsidiaries and have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the 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 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.
These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto as of and for the year ended January 2, 2022, included in the Annual Report on Form 10-K. The Condensed Consolidated Balance Sheet as of January 2, 2022 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 three quarters ended October 2, 2022 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending January 1, 2023.
Noncontrolling interest in the Company’s Condensed Consolidated Financial Statements represents the interest in subsidiaries held by joint venture partners and employee shareholders. The joint venture partners hold noncontrolling interests in the Company’s consolidated subsidiaries, Awesome Doughnut, LLC (“Awesome Doughnut”), W.K.S. Krispy Kreme, LLC (“WKS Krispy Kreme”), and Krispy K Canada, Inc. (“KK Canada”). Employee shareholders hold noncontrolling interests in the consolidated subsidiaries Krispy Kreme Holding U.K. Ltd. (“KKUK”), Krispy Kreme Holdings Pty Ltd. (“KK Australia”), Krispy Kreme Mexico S. de R.L. de C.V. (“KK Mexico”) and Insomnia Cookies Holdings, LLC (“Insomnia Cookies”). Since the Company consolidates the financial statements of these subsidiaries, the noncontrolling owners’ share of each subsidiary’s net assets and results of operations are deducted and reported as noncontrolling interest on the Condensed Consolidated Balance Sheets and as net income 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 Income/(Loss).
7

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 January 2, 2022 included in the Annual Report on Form 10-K. There have been no material changes to the significant accounting policies during the quarter ended October 2, 2022.
Recent Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. It is effective for all entities as of March 12, 2020 through December 31, 2022. A company may elect to apply the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The Company is currently evaluating the effect of the new guidance on its Condensed Consolidated Financial Statements and related disclosures.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which prescribes the measurement of acquired contract assets and contract liabilities arising from revenue contracts with customers recognized in a business combination. It is effective for public business entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments in this update should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the effect of the new guidance on its Condensed Consolidated Financial Statements and related disclosures.
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which requires certain disclosures be made when an entity receives government assistance, including the types of assistance, an entity’s accounting for the assistance, and the effect of the assistance on an entity’s financial statements. It is effective for all entities for financial statements issued for annual periods beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the effect of the new guidance on its annual disclosures.
In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which requires certain disclosures be made by a buyer in a supplier finance program, including the key terms of the program and, for the obligations that the buyer has confirmed as valid to the finance provider, the amount outstanding that remains unpaid by the buyer as of the end of the fiscal period, a description of where those obligations are presented in the balance sheet, and a rollforward of those obligations during the fiscal period. It is effective for all entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating the effect of the new guidance on its annual and interim disclosures.
Note 2 — Acquisitions
2022 Acquisitions
In the third quarter of fiscal 2022, the Company acquired the business and operating assets of one franchisee, consisting of seven Krispy Kreme shops in the U.S. (with one shop under construction). The Company paid total consideration of $19.4 million, consisting of $17.3 million of cash, $1.2 million of consideration payable to the sellers, and $0.9 million settlement of amounts related to pre-existing relationships, to acquire substantially all of the shops’ assets. Consideration payable of $1.2 million was withheld primarily to cover indemnification claims that could arise after closing. Absent any claims, these amounts are payable within 12 months of the acquisition date.
The settlement of pre-existing relationships included in the purchase consideration includes the write-off of accounts and notes receivable, net of deferred revenue, of $0.3 million. It also includes the disposal of the franchise intangible asset related to the franchisee recorded at time of the acquisition of Krispy Kreme by JAB Holding Company (“JAB”). The cumulative net book value of the franchise intangible asset was $0.6 million at the acquisition date. The Company accounted for the transaction as a business combination.
8

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition for the acquisition above.
 
KK U.S. Shops
Assets acquired:  
Cash and cash equivalents $
Prepaid expense and other current assets 138 
Property and equipment, net 895 
Other intangible assets, net 11,652 
Operating lease right of use asset, net 4,702 
Other assets 20 
Total identified assets acquired 17,414 
Liabilities assumed:
Accrued liabilities (106)
Current operating lease liabilities (221)
Noncurrent operating lease liabilities (4,481)
Total liabilities assumed (4,808)
Goodwill 6,842 
Purchase consideration, net $ 19,448 
Transaction costs in 2022 $ 589 
Transaction costs in 2021
Reportable segment U.S. and Canada
During the measurement period, the Company will continue to obtain information to assist in determining the fair value of net assets acquired, which may differ materially from these preliminary estimates. Measurement period adjustments, if applicable, will be applied in the reporting period in which the adjustment amounts are determined.
Equity Method Investment in KK France
In the third quarter of fiscal 2022, the Company acquired a 33% noncontrolling ownership interest in the newly formed entity Krispy Kreme Doughnuts France SAS (“KK France”), for approximately $1.0 million in cash. As the Company has the ability to exercise significant influence over KK France, but it does not exercise control, the investment will be accounted for using the equity method, and equity method earnings will be recognized within Other expenses/(income), net on the Condensed Consolidated Statements of Operations.
2021 Acquisitions
In the first quarter of fiscal 2021, the Company acquired the business and operating assets of two franchisees, collectively consisting of 17 Krispy Kreme shops in the U.S. On October 4, 2021, the Company acquired a 60% controlling ownership interest in ten franchise shops in Canada (KK Canada). The valuation for the acquisitions requires significant estimates and assumptions. The estimates are inherently uncertain and subject to revision as additional information is obtained during the measurement period for the acquisitions. Measurement period adjustments for the 2021 acquisitions did not have a material impact to the Condensed Consolidated Financial Statements for the three quarters ended October 2, 2022.
Note 3 — Inventories
The components of Inventories are as follows:
October 2, 2022 January 2, 2022
Raw materials $ 18,282  $ 15,278 
Work in progress 394  700 
Finished goods and purchased merchandise 30,730  18,873 
Total inventories $ 49,406  $ 34,851 
9

Note 4 — Goodwill and Other Intangible Assets, net
Goodwill
Changes in the carrying amount of goodwill by reportable segment are as follows:
U.S. and Canada
International
Market Development
Total
Balance as of January 2, 2022 $ 688,048  $ 283,342  $ 133,932  $ 1,105,322 
Acquisitions
11,259  —  (4,417) 6,842 
Foreign currency impact
(1,283) (36,640) —  (37,923)
Balance as of October 2, 2022 $ 698,024  $ 246,702  $ 129,515  $ 1,074,241 
Other Intangible Assets, net
Other intangible assets consist of the following:
  October 2, 2022 January 2, 2022
Gross
Carrying
Amount
Accumulated
Amortization
Net Amount
Gross
Carrying
Amount  
Accumulated
Amortization
Net Amount
Intangible assets with indefinite lives      
 
 
Trade name $ 657,900  $ —  $ 657,900  $ 657,900  $ —  $ 657,900 
Intangible assets with definite lives
Franchise agreements 30,632  (9,006) 21,626  32,545  (8,369) 24,176 
Customer relationships 15,000  (5,332) 9,668  15,000  (4,684) 10,316 
Reacquired franchise rights 371,989  (94,825) 277,164  384,305  (84,177) 300,128 
Website development costs 6,500  (6,500) —  6,500  (6,500) — 
Total intangible assets with definite lives 424,121  (115,663) 308,458  438,350  (103,730) 334,620 
Total intangible assets $ 1,082,021  $ (115,663) $ 966,358  $ 1,096,250  $ (103,730) $ 992,520 
Amortization expense related to intangible assets included in depreciation and amortization expense was $7.1 million and $21.3 million for the quarter and three quarters ended October 2, 2022, respectively, and $7.5 million and $22.6 million for the quarter and three quarters ended October 3, 2021, 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:
As of
    October 2, 2022 January 2, 2022
Assets Classification    
Operating lease Operating lease right of use asset, net $ 410,001  $ 435,168 
Finance lease Property and equipment, net 25,604  19,298 
Total leased assets $ 435,605  $ 454,466 
Liabilities  
Current  
Operating lease Current operating lease liabilities $ 45,551  $ 50,359 
Finance lease Current portion of long-term debt 5,243  1,583 
Noncurrent  
Operating lease Noncurrent operating lease liabilities 400,594  415,208 
Finance lease Long-term debt, less current portion 25,648  22,890 
Total leased liabilities $ 477,036  $ 490,040 
10

Lease costs were as follows:
Quarter Ended Three Quarters Ended
    October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021
Lease cost Classification    
Operating lease cost Selling, general and administrative expense $ 666  $ 648  $ 1,643  $ 1,967 
Operating lease cost Operating expenses 20,605  21,201  64,262  62,910 
Short-term lease cost Operating expenses 1,555  233  3,841  1,797 
Variable lease costs Operating expenses 6,032  4,015  17,367  11,309 
Sublease income Royalties and other revenues (35) (108) (175) (285)
Finance lease cost:
 
 
Amortization of right of use assets Depreciation and amortization expense $ 1,405  $ 727  $ 3,348  $ 2,375 
Interest on lease liabilities Interest expense, net 489  466  1,430  1,540 
Supplemental disclosures of cash flow information related to leases were as follows:
Three Quarters Ended
October 2, 2022 October 3, 2021
Other information
Cash paid for leases:
Operating cash flows for operating leases(1)
$ 77,122  $ 67,129 
Operating cash flows for finance leases
1,441  1,458 
Financing cash flows for finance leases
2,930  2,512 
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases
$ 31,246  $ 48,770 
Finance leases
4,549  1,788 
(1)Operating cash flows for operating leases include variable rent payments which are not included in the measurement of lease liabilities. For the three quarters ended October 2, 2022 and October 3, 2021, variable rent payments were $17.4 million and $11.3 million, respectively.

The Company recognized $3.0 million and $4.4 million of lease termination charges in the quarter and three quarters ended October 2, 2022, respectively, related to the decision to exit certain Krispy Kreme shops in the U.S. There were no lease termination charges in the three quarters ended October 3, 2021.
In March 2022, the Company completed a sale-leaseback transaction whereby it disposed of the land at one real estate property for proceeds of $3.0 million. The Company subsequently leased back the property, which is accounted for as an operating lease. The Company recognized a gain on sale of $2.6 million, which is included in Other expenses/(income), net on the Condensed Consolidated Statement of Operations for the three quarters ended October 2, 2022. In September 2022, the Company completed a sale-leaseback transaction whereby it disposed of the land at one real estate property for proceeds of $2.7 million. The Company subsequently leased back the property, which is accounted for as an operating lease. The Company recognized a gain on sale of $1.9 million, which is included in Other expenses/(income), net on the Condensed Consolidated Statement of Operations for the quarter ended October 2, 2022. There were no sale-leaseback transactions completed in the three quarters ended October 3, 2021.
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Note 6 — Fair Value Measurements
The following table presents assets and liabilities that are measured at fair value on a recurring basis as of October 2, 2022 and January 2, 2022:
October 2, 2022
Level 1 Level 2
Assets:
401(k) mirror plan assets
$ $ — 
Interest rate derivatives
—  18,397 
Commodity derivatives
—  570 
Foreign currency derivatives
—  562 
Total Assets $ 6  $ 19,529 
Liabilities:
Foreign currency derivatives
$ —  $ 219 
Total Liabilities $   $ 219 
January 2, 2022
Level 1
Level 2
Assets:
401(k) mirror plan assets
$ 111  $ — 
Commodity derivatives
—  1,486 
Total Assets $ 111  $ 1,486 
Liabilities:
Foreign currency derivatives $ —  $ 80 
Interest rate derivatives
—  14,667 
Total Liabilities $   $ 14,747 
There were no assets nor liabilities measured using Level 3 inputs and no transfers of financial assets or liabilities among the levels within the fair value hierarchy during the quarter ended October 2, 2022 and fiscal year ended January 2, 2022. 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 October 2, 2022 and January 2, 2022, the total notional amount of commodity derivatives was 2.1 million and 1.9 million gallons of gasoline, respectively. They were scheduled to mature between October 3, 2022 and December 1, 2024 and January 3, 2022 and March 31, 2023, respectively. As of October 2, 2022 and January 2, 2022, the Company recorded an asset of $0.6 million and $1.5 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 October 2, 2022 and January 2, 2022, the Company has recorded assets of $18.4 million and liabilities of $14.7 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.
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Foreign Currency Exchange Rate Risk
The Company is exposed to foreign currency 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 the impact of foreign exchange fluctuations on commercial and financial transactions with these subsidiaries, the Company enters into foreign exchange forward contracts. Management has not designated these forward contracts as hedges. As of October 2, 2022 and January 2, 2022, the total notional amount of foreign exchange derivatives was $59.3 million and $51.8 million, respectively. They were scheduled to mature between October 2022 and November 2022 and between January 2022 and February 2022, respectively. The Company recorded an asset (net of liabilities) of $0.3 million and a liability of $0.1 million as of October 2, 2022 and January 2, 2022, 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 October 2, 2022 and January 2, 2022, 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.
Derivatives Fair Value
Derivatives Not Designated as Hedging
Instruments
October 2,
2022
January 2,
2022
Balance Sheet Location
Commodity derivatives
$ 570  $ 1,486  Prepaid expense and other current assets
Foreign currency derivatives
562  —  Prepaid expense and other current assets
Total Assets $ 1,132  $ 1,486 
Foreign currency derivatives
$ 219  $ 80  Accrued liabilities
Total Liabilities $ 219  $ 80 
Derivatives Fair Value
Derivatives Designated as Hedging
Instruments
October 2,
2022
January 2,
2022
Balance Sheet Location
Interest rate derivatives (current)
$ 11,623  $ —  Prepaid expense and other current assets
Interest rate derivatives (noncurrent)
6,774  —  Other assets
Total Assets $ 18,397  $  
Interest rate derivatives (current)
$ —  $ 8,535 
Accrued liabilities
Interest rate derivatives (noncurrent)
—  6,132 
Other long-term obligations and deferred credits
Total Liabilities $   $ 14,667 
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The effect of derivative instruments on the Condensed Consolidated Statements of Operations for the quarter and three quarters ended October 2, 2022 and October 3, 2021 is as follows:
 
Derivative Gain/(Loss) Recognized in Income for the Quarter Ended
Derivative Gain/(Loss) Recognized in Income for the Three Quarters Ended
 
Derivatives Designated as Hedging Instruments October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021
Location of Derivative Gain/(Loss) Recognized in Income
Loss on interest rate derivatives $ (107) $ (2,613) $ (4,478) $ (7,704) Interest expense, net
  $ (107) $ (2,613) $ (4,478) $ (7,704)  
 
Derivative Gain/(Loss) Recognized in Income for the Quarter Ended
Derivative Gain/(Loss) Recognized in Income for the Three Quarters Ended
 
Derivatives Not Designated as Hedging Instruments October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021
Location of Derivative Gain/(Loss) Recognized in Income
Gain on foreign currency derivatives $ 678  $ 632  $ 423  $ 256  Other non-operating expense/(income), net
(Loss)/gain on commodity derivatives (1,589) (114) (917) 1,356  Other non-operating expense/(income), net
  $ (911) $ 518  $ (494) $ 1,612   
Note 8 — Share-based Compensation
Restricted Stock Units (“RSUs”)
The Company and certain of its subsidiaries issue time-vested RSUs under their respective executive ownership plans and long-term incentive plans.
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RSU activity under the Company’s various plans during the periods presented is as follows:
(in thousands, except per share amounts) Non-vested shares outstanding at January 2,
2022
Granted Vested Forfeited Non-vested shares outstanding at October 2,
2022
KKI
RSUs
5,866  995  281  801  5,779 
Weighted Average Grant Date Fair Value
$ 13.78  14.34  9.54  14.18  $ 14.03 
KKUK
RSUs
60  —  —  —  60 
Weighted Average Grant Date Fair Value
$ 15.77  —  —  —  $ 15.77 
Insomnia Cookies
RSUs
33  10  37 
Weighted Average Grant Date Fair Value
$ 79.66  169.70  74.12  102.67  $ 100.67 
KK Australia
RSUs
1,897  21  1,564  —  354 
Weighted Average Grant Date Fair Value
$ 1.48  1.73  1.49  —  $ 1.47 
KK Mexico
RSUs
58  —  —  60 
Weighted Average Grant Date Fair Value
$ 32.86  40.14  —  —  $ 33.08 
The Company recorded total non-cash compensation expense related to RSUs under the plans of $2.5 million and $11.4 million for the quarter and three quarters ended October 2, 2022, respectively, and $5.1 million and $14.9 million for the quarter and three quarters ended October 3, 2021, respectively.
The unrecognized compensation cost related to the unvested RSUs and the weighted-average period over which such cost is expected to be recognized are as follows:
  As of October 2, 2022
  Unrecognized Compensation Cost
Recognized Over a
Weighted-Average
Period of
KKI $ 49,955  3.0 years
KKUK 222  1.2 years
Insomnia Cookies 2,502  3.0 years
KK Australia 192  1.8 years
KK Mexico 1,431  3.2 years
The estimated fair value of restricted stock is calculated using a market approach (i.e., market multiple is used for the KKUK and Insomnia Cookies plans and an agreed-upon EBITDA buyout multiple is used for KK Australia and KK Mexico plans).
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Time-Vested Stock Options
KKI issues time-vested stock options under its 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.

A summary of the status of the time-vested stock options as of January 2, 2022 and changes during the first three quarters of fiscal 2022 is presented below:
Share Options Outstanding At Share Options Outstanding At
(in thousands, except per share amounts) January 2,
2022
Granted Exercised Forfeited or Expired October 2,
2022
KKI
Options 2,817  —  —  248  2,569
Weighted Average Grant Date Fair Value $ 6.10  —  —  6.10  $ 6.10
Weighted Average Exercise Price $ 14.61  —  —  14.61  $ 14.61
The Company recorded total non-cash compensation expense related to the time-vested stock options of $0.3 million and $1.9 million for the quarter and three quarters ended October 2, 2022, respectively, and $1.2 million and $2.1 million for the quarter and three quarters ended October 3, 2021, respectively.
The unrecognized compensation cost related to the unvested stock options and the weighted-average period over which such cost is expected to be recognized are as follows:
As of October 2, 2022
Unrecognized Compensation Cost
Recognized Over a
Weighted-Average
Period of
KKI $ 10,429  3.6 years
No time-vested stock options under the KKI plan vested nor were exercised during the fiscal periods presented.
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Note 9 — 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 income/(loss). 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 (2.5)% and (267.1)% for the quarter and three quarters ended October 2, 2022, respectively, and 38.4% and (76.1)% for the quarter and three quarters ended October 3, 2021, respectively. The Company’s effective income tax rate for the quarter and three quarters ended October 2, 2022 differed from the respective statutory rates primarily due to disallowed executive compensation expense, the mix of income and taxes attributable to foreign jurisdictions, the recognition of previously unrecognized tax benefits, and a discrete tax benefit related to a litigation settlement. The Company’s effective income tax rate for the quarter and three quarters ended October 3, 2021 differed from the respective statutory rates primarily due to the revaluation of U.K. deferred taxes as a result of the increase in the corporate tax rate from 19.0% to 25.0% beginning in 2023 and disallowed executive compensation in connection with the IPO. The Company’s effective income tax rates were also impacted by the mix of income and taxes attributable to foreign jurisdictions.
Note 10 — Commitments and Contingencies
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
One of the Company’s primary banks issued letters of credit on its behalf totaling $12.2 million and $8.5 million as of October 2, 2022 and January 2, 2022, respectively, a majority of which secure the Company’s reimbursement obligations to insurers under its self-insurance arrangements.
Note 11 — Related Party Transactions
As of October 2, 2022, the Company had an equity ownership in three franchisees, KremeWorks USA, LLC (20% ownership), KremeWorks Canada, L.P. (25% ownership), and KK France (33% ownership), with an aggregate carrying value of $1.9 million. As of January 2, 2022, the Company had an equity ownership in two franchisees, KremeWorks USA, LLC (20% ownership) and KremeWorks Canada, L.P. (25% ownership), with an aggregate carrying value of $1.1 million.
The Company was party to a senior unsecured note agreement with Krispy Kreme, G.P. (“KK GP”) for an aggregate principal amount of $283.1 million. In April 2019, the Company entered into an additional unsecured note with KK GP for $54.0 million (such notes together, the “Related Party Notes”). As of January 3, 2021, the outstanding amount of principal and interest was $344.6 million. The Related Party Notes were paid off in full during the second quarter of fiscal 2021. The interest expense was $10.4 million for the three quarters ended October 3, 2021. No interest expense was incurred for the three quarters ended October 2, 2022.
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Note 12 — Revenue Recognition
Disaggregation of Revenues
Revenues are disaggregated as follows:
Quarter Ended
Three Quarters Ended
October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021
Company Shops, DFD and Branded Sweet Treat Line $ 353,979  $ 322,410  $ 1,060,364  $ 952,680 
Mix and equipment revenue from franchisees 16,237  11,914  41,681  36,452 
Franchise royalties and other 7,306  8,475  23,254  24,662 
Total net revenues $ 377,522  $ 342,799  $ 1,125,299  $ 1,013,794 
Other revenues include advertising fund contributions from franchisees, rental income, development and franchise fees, and licensing royalties from Keurig related to Krispy Kreme brands coffee sales.
Contract Balances
Deferred revenue subject to Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, and related receivables are as follows:
  October 2, 2022 January 2, 2022
Balance Sheet Location
Trade receivables, net of allowances of $216 and $896, respectively
$ 41,154  $ 41,132  Accounts receivables, net
Deferred revenue:
Current $ 14,878  $ 17,458  Accrued liabilities
Noncurrent 3,615  2,981  Other long-term obligations and deferred credits
Total deferred revenue $ 18,493  $ 20,439 
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Note 13 — Net Loss per Share
The following table presents the calculations of basic and diluted EPS:
 
Quarter Ended
Three Quarters Ended
(in thousands, except per share amounts) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021
Net loss attributable to Krispy Kreme, Inc. $ (13,056) $ (5,659) $ (12,903) $ (25,862)
Adjustment to net loss attributable to common shareholders —  (522) (374) (1,815)
Net loss attributable to common shareholders - Basic $ (13,056) $ (6,181) $ (13,277) $ (27,677)
Additional income attributed to noncontrolling interest due to subsidiary potential common shares (76) (88) (174) (237)
Net loss attributable to common shareholders - Diluted $ (13,132) $ (6,269) $ (13,451) $ (27,914)
Basic weighted average common shares outstanding 167,431  166,034  167,353  141,124 
Dilutive effect of outstanding common stock options and RSUs —  —  —  —