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Krispy Kreme narrows 4th-Q loss totaling $24.4M

WINSTON-SALEM N.C. Krispy Kreme Doughnuts Inc. reported Thursday that it narrowed net losses for its fourth quarter and fiscal year ended Jan. 28, versus the same periods a year earlier, on reduced impairment charges, lease termination costs and litigation settlement payouts, but it still reported declining sales throughout its system.

Thursday's report was the first timely filing of financial results in more than two year for the troubled doughnut shop operator and franchisor of 395 Krispy Kreme locations. The company held its first earnings conference call in nearly three years on Thursday evening.

President and chief executive Daryl Brewster said during the call that Krispy Kreme is "moving out of survival mode, addressing key challenges and driving against a sustained growth plan."

For the three months ended Jan. 28, the company's net loss totaled $24.4 million, or 39 cents per share, compared with a net loss of $37.7 million, or 61 cents per share, in the year-earlier fourth quarter. For the year, Krispy Kreme posted a loss of $42.2 million, or 68 cents per share, compared with a loss of $135.8 million, or $2.20 per share, in fiscal 2006.

Fourth quarter revenues decreased 8.2 percent to $112.2 million and full year revenues fell 15.1 percent to $461.2 million.

Impairment charges and lease termination costs were $12.5 million in fiscal 2007, versus $55.1 million in fiscal 2006, and litigation settlement costs were $16.0 million compared to $35.8 million, in fiscal 2007 and 2006, respectively.

In addition, the company logged "professional fees" of $9.0 million in fiscal 2007, versus $31.8 million the year earlier, related to its numerous internal and external investigations, litigation and the interim turnaround management firm engaged first hired by the company in January 2005.

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