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| (Mark one) |
|------------|
| þ     |        | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) |
|       |   | OF THE SECURITIES EXCHANGE ACT OF 1934 |
|       |   |   |
|       |   | For the fiscal year ended January 30, 2011 |
|       |   |   |
| OR         |
| o          |   | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) |
|       |   | OF THE SECURITIES EXCHANGE ACT OF 1934 |
|       |   |   |
|       |   | For the transition period from       to |

| North Carolina                           | 56-2169715                           |
|------------------------------------------|--------------------------------------|
| (State or other jurisdiction of          | (I.R.S. Employer Identification No.) |
| incorporation or organization)           |                                 |
|                                     |                                 |
| 370 Knollwood Street,                    | 27103                                |
| Winston-Salem, North Carolina            | (Zip Code)                           |
| (Address of principal executive offices) |                                 |

|                            | Name of                 |
|---------------------------------|-------------------------|
|                            | Each Exchange           |
|                            | on Which                |
| Title of Each Class             | Registered              |
| Common Stock, No Par Value      | New York Stock Exchange |
| Preferred Share Purchase Rights | New York Stock Exchange |

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| Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller Reporting Company o |
|---------------------------|--------------------------|-------------------------|-----------------------------|

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|                       |                           |                                                                                       | Page   |
|----------------------------|--------------------------------|--------------------------------------------------------------------------------------------|--------|
| FORWARD-LOOKING STATEMENTS | 4                              |
|                       |
| PART I                     |
|                       |
| Item 1.                    |       | Business                                                                                   | 5      |
| Item 1A.                   |                           | Risk Factors                                                                               | 23     |
| Item 1B.                   |                           | Unresolved Staff Comments                                                                  | 28     |
| Item 2.                    |                           | Properties                                                                                 | 28     |
| Item 3.                    |                           | Legal Proceedings                                                                          | 29     |
| Item 4.                    |                           | Reserved                                                                                   | 29     |
|                       |
| PART II                    |
|                       |
| Item 5.                    |                           | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of |   |
|                       |                           |        Equity Securities                                | 29     |
| Item 6.                    |                           | Selected Financial Data                                                                    | 32     |
| Item 7.                    |                           | Management's Discussion and Analysis of Financial Condition and Results of Operations      | 33     |
| Item 7A.                   |                           | Quantitative and Qualitative Disclosures about Market Risk                                 | 61     |
| Item 8.                    |                           | Financial Statements and Supplementary Data                                                | 64     |
| Item 9.                    |                           | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure       | 103    |
| Item 9A.                   |                           | Controls and Procedures                                                                    | 103    |
| Item 9B.                   |                           | Other Information                                                                          | 104    |
|                       |
| PART III                   |
|                       |
| Item 10.                   |                           | Directors, Executive Officers and Corporate Governance                                     | 104    |
| Item 11.                   |                           | Executive Compensation                                                                     | 104    |
| Item 12.                   |                           | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder     |   |
|                       |                           |        Matters                                          | 104    |
| Item 13.                   |                           | Certain Relationships and Related Transactions, and Director Independence                  | 104    |
| Item 14.                   |                           | Principal Accountant Fees and Services                                                     | 104    |
|                  |
| PART IV                    |
|                       |
| Item 15.                   |                           | Exhibits and Financial Statement Schedules                                                 | 105    |
| SIGNATURES                 | 107                            |

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- the quality of Company and franchise store operations;  
- our ability, and our dependence on the ability of our franchisees, to execute on our and their business plans;  
- our relationships with our franchisees;   
- our ability to implement our international growth strategy;   
- our ability to implement our new domestic operating model;   
- political, economic, currency and other risks associated with our international operations;   
- the price and availability of raw materials needed to produce doughnut mixes and other ingredients;   
- compliance with government regulations relating to food products and franchising;   
- our relationships with off-premises customers;   
- our ability to protect our trademarks and trade secrets;   
- restrictions on our operations and compliance with covenants contained in our secured credit facilities;   
- changes in customer preferences and perceptions;   
- risks associated with competition;   
- risks related to the food service industry, including food safety and protection of personal information;   
- increased costs or other effects of new government regulations relating to healthcare benefits; and   
- other factors discussed below in Item 1A, “Risk Factors” and in Krispy Kreme’s periodic reports and other information filed with the Securities and Exchange Commission (the “SEC”). 

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|                                            |       | Domestic |       | International |       | Total                          |
|-------------------------------------------------|--------------------------------|----------|--------------------------------|---------------|--------------------------------|--------------------------------|
| Company stores                                  |                           | 85       |                           | -             |                           |       | 85 |
| Franchise stores                                |                           | 144      |                           | 417           |                           |                           | 561 |
|        Total |                           | 229      |                           | 417           |                           |                           | 646 |
|                                            |                           |     |                           |          |                           |                           |   |

- On-premises sales: Sales to customers visiting Company and franchise factory and satellite stores, including sales made through drive-thru windows, along with discounted sales to community organizations that in turn sell doughnuts for fundraising purposes. A substantial majority of the doughnuts sold in our shops are consumed elsewhere.  
- Off-premises sales: Sales of fresh doughnuts and packaged sweets primarily on a branded basis to a variety of retail customers, including convenience stores, grocery stores/mass merchants and other food service and institutional accounts.  These customers display and resell the doughnuts from self-service display cases, and in packages merchandised on stand-alone display units. Products are delivered to customer locations by our fleet of delivery trucks operated by a commissioned employee sales force. Distribution through off-premises sales channels generally is limited to stores in the United States. Only a small minority of sales by international franchisees are made to off-premises customers. 

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- to stimulate an increase in on-premises sales of doughnuts and complementary products by increasing the number of retail distribution points to provide customers more convenient access to our products;  
- to reduce the investment required to produce a given level of sales and reduce operating costs by operating smaller satellite stores supplied by larger, more expensive traditional factory stores;  
- to increase the number of markets which can support a factory store through the continuing development of smaller factory store models;  
- to achieve greater production efficiencies by centralizing doughnut production to minimize the burden of fixed costs;  
- to achieve greater consistency of product quality through a reduction in the number of doughnut-making locations;  
- to enable store employees to focus on achieving excellence in customer satisfaction and in-shop consumer experience. 

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| Hours                  |       | Percentage of Retail Sales |
|------------------------|--------------------------------|----------------------------|
| 6 a.m. – 11 a.m. |                           | 34%                        |
| 11 a.m. – 2 p.m. |                           | 13%                        |
| 2 p.m. – 6 p.m.  |                           | 21%                        |
| 6 p.m. – 11 p.m. |                           | 28%                        |

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|                 |                           | Number of Company Stores |
|----------------------|--------------------------------|--------------------------|
|                 |                           | Factory                  |   |   |   |   |   |   |
| State                |       | Stores                   |       | Hot Shops |       | Fresh Shops |       | Total |
| Alabama              |                           | 3                        |   | - |   | - |   | 3 |
| District of Columbia |                           | -                        |   | 1 |   | - |   | 1 |
| Florida              |                           | 4                        |   | - |   | - |   | 4 |
| Georgia              |                           | 6                        |   | 4 |   | - |   | 10 |
| Indiana              |                           | 3                        |   | 1 |   | - |   | 4 |
| Kansas               |                           | 3                        |   | - |   | - |   | 3 |
| Kentucky             |                           | 3                        |   | 1 |   | - |   | 4 |
| Louisiana            |                           | 1                        |   | - |   | - |   | 1 |
| Maryland             |                           | 2                        |   | - |   | - |   | 2 |
| Michigan             |                           | 3                        |   | - |   | - |   | 3 |
| Mississippi          |                           | 1                        |   | - |   | - |   | 1 |
| Missouri             |                           | 4                        |   | - |   | - |   | 4 |
| New York             |                           | -                        |   | - |   | 1 |   | 1 |
| North Carolina       |                           | 11                       |   | 3 |   | - |   | 14 |
| Ohio                 |                           | 6                        |   | - |   | - |   | 6 |
| South Carolina       |                           | 2                        |   | 1 |   | - |   | 3 |
| Tennessee            |                           | 7                        |   | 4 |   | - |   | 11 |
| Texas                |                           | 3                        |   | - |   | - |   | 3 |
| Virginia             |                           | 6                        |   | - |   | - |   | 6 |
| West Virginia        |                           | 1                        |   | - |   | - |   | 1 |
| Total                |                           | 69                       |   | 15 |   | 1 |   | 85 |
|                 |                           |                     |   |   |   |   |   |   |

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|                 |                           | Number of Company Stores                                  |
|----------------------|--------------------------------|-----------------------------------------------------------|
|                 |                           | Factory                                                   |   |   |   |   |   |   |   |   |   |
|                 |       | Stores                                                    |       | Hot Shops |       | Fresh Shops |       | Total |
| February 3, 2008     |                           | 97                                                        |   |   | 5 |   |   | 3 |   |   | 105 |   |
| Opened               |                           | -                                                         |   |   | - |   |   | - |   |   | - |   |
| Closed               |                           | (4                                                        | ) |   | - |   |   | (2 | ) |   | (6 | ) |
| Refranchised         |                           | (5                                                        | ) |   | - |   |   | (1 | ) |   | (6 | ) |
| Change in store type |                           | (5                                                        | ) |   | 5 |   |   | - |   |   | - |   |
| February 1, 2009     |                           | 83                                                        |   |   | 10 |   |   | - |   |   | 93 |   |
| Opened               |                           | 1                                                         |   |   | 3 |   |   | 2 |   |   | 6 |   |
| Closed               |                           | (10                                                       | ) |   | (2 | ) |   | - |   |   | (12 | ) |
| Refranchised         |                           | (4                                                        | ) |   | - |   |   | - |   |   | (4 | ) |
| Change in store type |                           | (1                                                        | ) |   | 1 |   |   | - |   |   | - |   |
| January 31, 2010     |                           | 69                                                        |   |   | 12 |   |   | 2 |   |   | 83 |   |
| Opened               |                           | -                                                         |   |   | 3 |   |   | 1 |   |   | 4 |   |
| Closed               |                           | -                                                         |   |   | (1 | ) |   | (1 | ) |   | (2 | ) |
| Refranchised         |                           | -                                                         |   |   | - |   |   | - |   |   | - |   |
| Change in store type |                           | -                                                         |   |   | 1 |   |   | (1 | ) |   | - |   |
| January 30, 2011     |                           |           69 |   |   |               15 |   |   |                     1 |   |   |     85 |   |
|                 |                           |                                                      |   |   |   |   |   |   |   |   |   |   |

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- Associates.  Associate franchisees are located principally in the Southeast, and their stores have attributes that are similar to Company stores located in the Southeast. Associates typically have many years of experience operating Krispy Kreme stores and selling Krispy Kreme branded products both on-site and off-premises in defined territories. This group of franchisees generally concentrates on growing sales within the current base of stores rather than developing new stores. Under their associate license agreements, associates generally have the exclusive right to open new stores in their geographic territories, but they are not obligated to develop additional stores. We cannot grant new franchises within an associate’s territory during the term of the license agreement. Further, we generally cannot sell within an associate’s territory any Krispy Kreme branded products, because we have granted those exclusive rights to the franchisee for the term of the license agreement.   Associates typically have license agreements that expire in 2020. Associates generally pay royalties of 3.0% of on-premises sales and 1.0% of all other sales. Some associates also contribute 1.0% of all sales to the Company-administered public relations and advertising fund, which we refer to as the Brand Fund.   
- Area developers.  In the mid-1990s, we franchised territories in the United States, usually defined by metropolitan statistical areas, pursuant to area development agreements. These development agreements established the number of stores to be developed in an area, and the related franchise agreements governed the operation of each store. Most of the area development agreements have expired or have been terminated. Under their franchise agreements, area developers generally have the exclusive right to sell Krispy Kreme branded products within a one-mile radius of their stores and in off-premises accounts that they have serviced in the last 12 months.   The franchise agreements for area developers have a 15-year term that may be renewed by the Company. These franchise agreements provide for royalties of 4.5% of sales and contributions to the Brand Fund of 1.0% of sales. For fiscal 2009, the Company elected to reduce the royalty rate payable by area developers on off-premises sales from 4.5% to 3.5%, for fiscal 2010, the Company elected to reduce the royalty rate on off-premises sales to 2.5%, and for fiscal 2011, the Company elected to reduce the royalty rate on off-premises sales to 1.75%. The Company further reduced the royalty rate payable on off-premises sales by area developers to 1.5% for fiscal 2012.  As of January 30, 2011, we had an equity interest in two of the domestic area developers. Where we are an equity investor in an area developer, we contribute equity or guarantee debt of the franchisee generally proportionate to our ownership interest. See Note 17 to the consolidated financial statements appearing elsewhere herein for additional information on our franchisee investments. We do not currently expect to own any equity interests in any future franchisees.  
- Recent franchisees.  During the past three fiscal years, the Company has signed new franchise agreements with respect to 44 stores in the United States. Nine of these recent franchise agreements resulted from the expiration of existing agreements, five were related to new stores opened by persons who were franchisees as of the end of fiscal 2008 and six resulted from a change in ownership. The remaining 24 agreements were related to transactions, in which the Company conveyed rights to  Company markets to franchisees. Of these agreements, four were related to the refranchising of existing Company stores to franchisees and 20 were related to stores opened by new franchisees. Some of the recent franchisees have signed development agreements, which require the franchisee to build a specified number of stores in an exclusive geography within a specified time period, usually five years or less. The franchise agreements with this group of franchisees have a 15-year term, renewable at the Company’s discretion, and they generally do not contemplate off-premises business. Additionally, these franchise agreements generally allow the Company to sell Krispy Kreme branded products in close geographic proximity to the franchisees’ stores. These franchise agreements and development agreements are used for all new franchisees and, in general, for the renewal of older franchise agreements and associate license agreements. We are charging recent franchisees the same royalty and Brand Fund rates as those charged to area developer franchisees. 

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|           |                                 | Number of Domestic Franchise Stores |
|----------------|--------------------------------------|-------------------------------------|
|           |                                 | Factory                             |   |   |   |   |   |   |
| State          |        | Stores                              |        | Hot Shops |        | Fresh Shops |        | Total |
| Alabama        |                                 | 5                                   |   | 2 |   | - |   | 7 |
| Arizona        |                                 | 2                                   |   | - |   | 9 |   | 11 |
| Arkansas       |                                 | 2                                   |   | - |   | - |   | 2 |
| California     |                                 | 12                                  |   | - |   | 3 |   | 15 |
| Colorado       |                                 | 2                                   |   | - |   | - |   | 2 |
| Connecticut    |                                 | 1                                   |   | - |   | 3 |   | 4 |
| Florida        |                                 | 11                                  |   | 5 |   | 1 |   | 17 |
| Georgia        |                                 | 7                                   |   | 4 |   | - |   | 11 |
| Hawaii         |                                 | 1                                   |   | - |   | - |   | 1 |
| Idaho          |                                 | 1                                   |   | - |   | - |   | 1 |
| Illinois       |                                 | 4                                   |   | - |   | - |   | 4 |
| Iowa           |                                 | 1                                   |   | - |   | - |   | 1 |
| Louisiana      |                                 | 3                                   |   | - |   | - |   | 3 |
| Mississippi    |                                 | 2                                   |   | - |   | - |   | 2 |
| Missouri       |                                 | 2                                   |   | 1 |   | - |   | 3 |
| Nebraska       |                                 | 1                                   |   | - |   | 1 |   | 2 |
| Nevada         |                                 | 3                                   |   | 1 |   | 3 |   | 7 |
| New Mexico     |                                 | 1                                   |   | - |   | 1 |   | 2 |
| North Carolina |                                 | 6                                   |   | 1 |   | - |   | 7 |
| Oklahoma       |                                 | 3                                   |   | - |   | 1 |   | 4 |
| Oregon         |                                 | 2                                   |   | - |   | - |   | 2 |
| Pennsylvania   |                                 | 5                                   |   | 1 |   | 1 |   | 7 |
| South Carolina |                                 | 6                                   |   | 2 |   | 1 |   | 9 |
| Tennessee      |                                 | 1                                   |   | - |   | - |   | 1 |
| Texas          |                                 | 7                                   |   | - |   | 1 |   | 8 |
| Utah           |                                 | 2                                   |   | - |   | - |   | 2 |
| Washington     |                                 | 8                                   |   | - |   | - |   | 8 |
| Wisconsin      |                                 | 1                                   |   | - |   | - |   | 1 |
| Total          |                                 | 102                                 |   | 17 |   | 25 |   | 144 |
|           |                                 |                                |   |   |   |   |   |   |

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|                 |                           | Number of Domestic Franchise Stores |
|----------------------|--------------------------------|-------------------------------------|
|                 |                           | Factory                             |   |   |   |   |   |   |   |   |   |
|                 |       | Stores                              |       | Hot Shops |       | Fresh Shops |       | Total |
| February 3, 2008     |                           | 118                                 |   |   | 15 |   |   | 12 |   |   | 145 |   |
| Opened               |                           | 1                                   |   |   | 1 |   |   | 4 |   |   | 6 |   |
| Closed               |                           | (17                                 | ) |   | (4 | ) |   | - |   |   | (21 | ) |
| Refranchised         |                           | 1                                   |   |   | - |   |   | 1 |   |   | 2 |   |
| Change in store type |                           | 1                                   |   |   | 1 |   |   | (2 | ) |   | - |   |
| February 1, 2009     |                           | 104                                 |   |   | 13 |   |   | 15 |   |   | 132 |   |
| Opened               |                           | 3                                   |   |   | - |   |   | 9 |   |   | 12 |   |
| Closed               |                           | (4                                  | ) |   | - |   |   | (3 | ) |   | (7 | ) |
| Refranchised         |                           | 4                                   |   |   | - |   |   | - |   |   | 4 |   |
| Change in store type |                           | (3                                  | ) |   | 1 |   |   | 2 |   |   | - |   |
| January 31, 2010     |                           | 104                                 |   |   | 14 |   |   | 23 |   |   | 141 |   |
| Opened               |                           | 2                                   |   |   | 1 |   |   | 4 |   |   | 7 |   |
| Closed               |                           | (3                                  | ) |   | - |   |   | (1 | ) |   | (4 | ) |
| Change in store type |                           | (1                                  | ) |   | 2 |   |   | (1 | ) |   | - |   |
| January 30, 2011     |                           |      102        |   |   |            17 |   |   |              25 |   |   |    144 |   |
|                 |                           |                                |   |   |   |   |   |   |   |   |   |   |

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|                 |                           | Number of International Franchise Stores |
|----------------------|--------------------------------|------------------------------------------|
|                 |                           | Fiscal                                   |   |   |   |   |   |   |   |   |   |   |
|                 |                           | Year First                               |   | Factory |   |   |   |   |   |   |   |   |
| Country              |       | Store Opened                             |       | Stores |       | Hot Shops |       | Fresh Shops |       | Kiosks |       | Total |
| Australia            |                           | 2004                                     |   | 6 |   | 1 |   | 12 |   | 10 |   | 29 |
| Bahrain              |                           | 2009                                     |   | 2 |   | - |   | 2 |   | 5 |   | 9 |
| Canada               |                           | 2002                                     |   | 4 |   | - |   | 1 |   | - |   | 5 |
| China                |                           | 2010                                     |   | 1 |   | - |   | - |   | - |   | 1 |
| Dominican Republic   |                           | 2011                                     |   | 1 |   | - |   | - |   | - |   | 1 |
| Indonesia            |                           | 2007                                     |   | 2 |   | - |   | 3 |   | 4 |   | 9 |
| Japan                |                           | 2007                                     |   | 13 |   | - |   | 8 |   | - |   | 21 |
| Kuwait               |                           | 2007                                     |   | 3 |   | - |   | 23 |   | 2 |   | 28 |
| Lebanon              |                           | 2009                                     |   | 2 |   | - |   | 6 |   | 3 |   | 11 |
| Malaysia             |                           | 2010                                     |   | 2 |   | 1 |   | 1 |   | 1 |   | 5 |
| Mexico               |                           | 2004                                     |   | 5 |   | 1 |   | 25 |   | 27 |   | 58 |
| Philippines          |                           | 2007                                     |   | 4 |   | 3 |   | 12 |   | 2 |   | 21 |
| Puerto Rico          |                           | 2009                                     |   | 4 |   | - |   | - |   | - |   | 4 |
| Qatar                |                           | 2008                                     |   | 2 |   | - |   | 3 |   | 1 |   | 6 |
| Saudi Arabia         |                           | 2008                                     |   | 8 |   | - |   | 66 |   | 9 |   | 83 |
| South Korea          |                           | 2005                                     |   | 31 |   | 1 |   | 9 |   | - |   | 41 |
| Thailand             |                           | 2011                                     |   | 2 |   | - |   | - |   | - |   | 2 |
| Turkey               |                           | 2010                                     |   | 1 |   | - |   | 10 |   | 2 |   | 13 |
| United Arab Emirates |                           | 2008                                     |   | 2 |   | - |   | 18 |   | 4 |   | 24 |
| United Kingdom       |                           | 2004                                     |   | 11 |   | 4 |   | 23 |   | 8 |   | 46 |
| Total                |                           |                                     |   | 106 |   | 11 |   | 222 |   | 78 |   | 417 |
|                 |                           |                                     |   |   |   |   |   |   |   |   |   |   |

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|                 |                           | Number of International Franchise Stores |
|----------------------|--------------------------------|------------------------------------------|
|                 |                           | Factory                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                 |       | Stores                                   |       | Hot Shops |       | Fresh Shops |       | Kiosks |       | Total |
| February 3, 2008     |                           | 80                                       |   |   | 28 |   |   | 52 |   |   | 39 |   |   | 199 |   |
| Opened               |                           | 18                                       |   |   | 2 |   |   | 75 |   |   | 19 |   |   | 114 |   |
| Closed               |                           | (6                                       | ) |   | (4 | ) |   | (5 | ) |   | (4 | ) |   | (19 | ) |
| Refranchised         |                           | 4                                        |   |   | - |   |   | - |   |   | - |   |   | 4 |   |
| Change in store type |                           | (2                                       | ) |   | - |   |   | 4 |   |   | (2 | ) |   | - |   |
| February 1, 2009     |                           | 94                                       |   |   | 26 |   |   | 126 |   |   | 52 |   |   | 298 |   |
| Opened               |                           | 9                                        |   |   | 3 |   |   | 52 |   |   | 18 |   |   | 82 |   |
| Closed               |                           | (7                                       | ) |   | - |   |   | (9 | ) |   | (6 | ) |   | (22 | ) |
| Change in store type |                           | (1                                       | ) |   | (15 | ) |   | 11 |   |   | 5 |   |   | - |   |
| January 31, 2010     |                           | 95                                       |   |   | 14 |   |   | 180 |   |   | 69 |   |   | 358 |   |
| Opened               |                           | 19                                       |   |   | - |   |   | 56 |   |   | 20 |   |   | 95 |   |
| Closed               |                           | (6                                       | ) |   | (3 | ) |   | (16 | ) |   | (11 | ) |   | (36 | ) |
| Change in store type |                           | (2                                       | ) |   | - |   |   | 2 |   |   | - |   |   | - |   |
| January 30, 2011     |                           |       106            |   |   |            11 |   |   |            222 |   |   |      78 |   |   |   417 |   |
|                 |                           |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                                                                                          |                           | Year Ended                |
|-----------------------------------------------------------------------------------------------|--------------------------------|---------------------------|
|                                                                                          |                           | January 30,               |   | January 31, |   | February 1, |
|                                                                                          |                           | 2011                      |   | 2010 |   | 2009 |
|                                                                                          |                           | (In thousands)            |
| Revenues by geographic region:                                                                |       |                      |   |       |   |   |       |   |   |
|        United States                                            |                           | $     | 324,934 |   | $     | 314,528 |   | $     | 333,599 |
|        Other North America                                      |                           |                      | 5,864 |   |   | 4,231 |   |   | 14,513 |
|        Asia/Pacific                                             |                           |                      | 18,542 |   |   | 15,469 |   |   | 18,927 |
|        Middle East                                              |                           |                      | 9,152 |   |   | 8,852 |   |   | 10,477 |
|        Europe                                                   |                           |                      | 3,463 |   |   | 3,440 |   |   | 8,006 |
|               Total Revenues |                           | $                         | 361,955 |   | $ | 346,520 |   | $ | 385,522 |
|                                                                                          |                           |                      |   |   |   |   |   |   |   |

- Good neighbor product deliveries to create trial users;  
- Sponsorship of local events and nonprofit organizations;  
- Friends of Krispy Kreme eMessages sent to guests registered to receive monthly updates about new products, promotions and store openings;  
- Fundraising programs designed to assist local charitable organizations in raising money for their non-profit causes which the Company estimates helped raise over $30 million for these organizations during fiscal 2011; and   
- Digital, social, viral and interactive efforts including the use of social media such as Facebook and Twitter to communicate product and promotional activity, new store openings and local store marketing programs. We currently have nearly 3 million fans on Facebook. 

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- Krispy Kreme doughnuts are the preferred doughnut of choice for guests nationwide; and  
- Krispy Kreme is a trusted food retailer with a long history of providing superior, innovative products and delivering quality customer service; and    
- Krispy Kreme cares about our team members, our guests and the communities we serve. 

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- Consumer trends, preferences and disposable income;  
- Our ability to execute our business strategy effectively;  
- Competition;  
- General regional and national economic conditions; and  
- Seasonality and weather conditions. 

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- Changes in general conditions in the economy or the financial markets;  
-  Variations in our quarterly operating results or our operating results failing to meet the expectations of securities analysts or investors in a particular period;  
- Changes in financial estimates by securities analysts;  
- Other developments affecting Krispy Kreme, our industry, customers or competitors; and    
- The operating and stock price performance of companies that investors deem comparable to Krispy Kreme. 

- As of January 30, 2011, all of our Company stores, except our six commissaries, had on-premises sales, and 41 of our Company factory stores also engaged in off-premises sales.  
- Of the 85 Company stores as of January 30, 2011, we owned the land and building for 42 stores, we owned the building and leased the land for 22 stores and leased both the land and building for 21 stores. 

----

| Item 5.  | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
|---------------|---------------------------------------------------------------------------------------------------------------------|

|                         |                           | High                |   | Low                            |
|------------------------------|--------------------------------|---------------------|--------|--------------------------------|
| Year Ended January 31, 2010: |       |                |   |       |   |   |
| First Quarter                |                           | $                   | 4.38   |                           | $ | 1.01 |
| Second Quarter               |                           |                | 4.23   |                           |   | 2.51 |
| Third Quarter                |                           |                | 4.75   |                           |   | 2.71 |
| Fourth Quarter               |                           |                | 3.94   |                           |   | 2.56 |
| Year Ended January 30, 2011: |                           |                |   |                           |   |   |
| First Quarter                |                           | $    | 5.15   |                           | $    | 2.76 |
| Second Quarter               |                           |                | 4.15   |                           |   | 3.25 |
| Third Quarter                |                           |                | 6.00   |                           |   | 3.55 |
| Fourth Quarter               |                           |                | 8.14   |                           |   | 5.18 |

----

|                                               |                           |                                                                   |                           |                 |                                                                                                                |                    |   |                    | Number of Securities                                            |
|----------------------------------------------------|--------------------------------|------------------------------------------------------------------------|--------------------------------|----------------------|---------------------------------------------------------------------------------------------------------------------|-------------------------|--------|-------------------------|-----------------------------------------------------------------|
|                                               |                           | Number of Securities                                                   |                           |                 |                                                                                                                |                    |   | Remaining Available For |
|                                               |                           | to Be Issued Upon                                                      |                           |                 |                                                                                                                |                    |   | Future Issuance Under   |
|                                               |                           | Exercise of                                                            |                           | Weighted Average     |                                                                                                                | Equity Compensation     |
|                                               |                           | Outstanding                                                            |                           | Exercise Price of    |                                                                                                                | Plans (Excluding        |
|                                               |                           | Options, Warrants                                                      |                           | Outstanding Options, |                                                                                                                | Securities Reflected in |
|                                               |                           | and Rights                                                             |                           | Warrants and Rights  |                                                                                                                | Column (a))             |
| Plan Category                                      |       | (a)                                                                    |       | (b)                  |                                                                                            | (c)                     |
| Equity compensation plans approved by security     |                           |                                                                   |                           |                 |                                                                                                                |                    |   |                    |                                                            |   |
|        holders       |                           | 8,145,600                                                              | (1)                            |                 | $                                                                                                                   | 9.77                    | (2)    |                    | 4,441,200                                                       | (3) |
| Equity compensation plans not approved by security |                           |                                                                   |                           |                 |                                                                                                                |                    |   |                    |                                                            |   |
|        holders       |                           |            1,200,000 | (4)                            |                 | $                    | 7.75                    |   |                    |          Not applicable |   |

| (1)    |       | Includes 5,933,700 shares of common stock issuable pursuant to the exercise of outstanding stock options, 839,000 common shares issuable pursuant to restricted stock units granted to employees that have not yet vested, 1,372,900 common shares issuable pursuant to restricted stock units granted to directors that have vested but with respect to which the director has elected to defer issuance of the shares until the completion of the director’s service on the Board of Directors. All of these awards were granted under the Company’s 2000 Stock Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
| (2)    |                           | Computed solely with respect to outstanding stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |
| (3)    |                           | Represents shares of common stock which may be issued pursuant to awards under the 2000 Stock Incentive Plan and the Employee Stock Purchase Plan. Under the Employee Stock Purchase Plan, each employee of the Company or any participating subsidiary (other than those whose customary employment was for not more than five months per calendar year) was eligible to participate after the employee completed 12 months of employment, and each participant could elect to purchase shares of Company common stock at the end of quarterly offering periods. The amount of shares that could be purchased was based on the amount of payroll deductions a participant elected to have withheld and applied at the end of the purchase period to the purchase of shares (ranging from 1 to 15% of the participant’s base compensation). The purchase price for the shares was the lesser of the fair market value of the shares on the first day of the purchase period or the last day of the purchase period. Effective October 21, 2005, the Company halted purchases under the Employee Stock Purchase Plan. |
|   |
| (4)    |                           | Represents common shares issuable upon the exercise of a stock warrant granted to an advisory firm in fiscal 2006 in exchange for services and which expires on January 31, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

----

|                          | January 29, | January 28, | February 3,   | February 1,   | January 31,   | January 30, |
|-------------------------------|-------------|-------------|---------------|---------------|---------------|-------------|
|                          | 2006        | 2007        | 2008          | 2009          | 2010          | 2011        |
| Krispy Kreme Doughnuts, Inc.  | $100.00     | $241.65     | $  54.22 | $  26.08 | $  52.91 | $119.89     |
| NYSE Composite Index          | 100.00      | 113.07      | 114.59        | 64.18         | 85.03         | 99.59       |
| S&P 500 Restaurants Index | 100.00      | 117.24      | 123.75        | 117.82        | 146.02        | 187.24      |

----

|                                                                                                |                           | Year Ended                                                 |
|-----------------------------------------------------------------------------------------------------|--------------------------------|------------------------------------------------------------|
|                                                                                                |                           | January 30,                                                |   | January 31, |   | February 1, |   | February 3, |   | January 28, |
|                                                                                                |       | 2011                                                       |       | 2010 |       | 2009 |       | 2008 |       | 2007 |
|                                                                                                |                           | (In thousands, except per share and number of stores data) |
| STATEMENT OF OPERATIONS DATA:                                                                       |                           |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                                                            |                           | $                                                | 361,955 |   |   | $   | 346,520 |   |   | $   | 385,522 |   |   | $   | 430,370 |   |   | $   | 461,195 |   |
| Operating expenses:                                                                                 |                           |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Direct operating expenses (exclusive of depreciation           |                           |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               expense shown below) |                           |                                                       | 313,475 |   |   |   | 297,859 |   |   |   | 348,044 |   |   |   | 381,026 |   |   |   | 391,242 |   |
|        General and administrative expenses                            |                           |                                                       | 21,870 |   |   |   | 22,793 |   |   |   | 23,460 |   |   |   | 26,355 |   |   |   | 48,913 |   |
|        Depreciation expense                                           |                           |                                                       | 7,389 |   |   |   | 8,191 |   |   |   | 8,709 |   |   |   | 18,433 |   |   |   | 21,046 |   |
|        Impairment charges and lease termination costs                 |                           |                                                       | 4,066 |   |   |   | 5,903 |   |   |   | 548 |   |   |   | 62,073 |   |   |   | 12,519 |   |
|        Settlement of litigation                                       |                           |                                                       | - |   |   |   | - |   |   |   | - |   |   |   | (14,930 | ) |   |   | 15,972 |   |
| Operating income (loss)                                                                             |                           |                                                       | 15,155 |   |   |   | 11,774 |   |   |   | 4,761 |   |   |   | (42,587 | ) |   |   | (28,497 | ) |
| Interest income                                                                                     |                           |                                                       | 207 |   |   |   | 93 |   |   |   | 331 |   |   |   | 1,422 |   |   |   | 1,627 |   |
| Interest expense                                                                                    |                           |                                                       | (6,359 | ) |   |   | (10,685 | ) |   |   | (10,679 | ) |   |   | (9,796 | ) |   |   | (20,334 | ) |
| Loss on refinancing of debt                                                                         |                           |                                                       | (1,022 | ) |   |   | - |   |   |   | - |   |   |   | (9,622 | ) |   |   | - |   |
| Equity in income (losses) of equity method franchisees                                              |                           |                                                       | 547 |   |   |   | (488 | ) |   |   | (786 | ) |   |   | (933 | ) |   |   | (842 | ) |
| Other non-operating income and (expense), net                                                       |                           |                                                       | 329 |   |   |   | (276 | ) |   |   | 2,815 |   |   |   | (3,211 | ) |   |   | 7,021 |   |
| Income (loss) before income taxes                                                                   |                           |                                                       | 8,857 |   |   |   | 418 |   |   |   | (3,558 | ) |   |   | (64,727 | ) |   |   | (41,025 | ) |
| Provision for income taxes                                                                          |                           |                                                       | 1,258 |   |   |   | 575 |   |   |   | 503 |   |   |   | 2,324 |   |   |   | 1,211 |   |
| Net income (loss)                                                                                   |                           | $                                                          | 7,599 |   |   | $ | (157 | ) |   | $ | (4,061 | ) |   | $ | (67,051 | ) |   | $ | (42,236 | ) |
| Earnings (loss) per common share:                                                                   |                           |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Basic                                                          |                           | $                                                          | 0.11 |   |   | $ | - |   |   | $ | (0.06 | ) |   | $ | (1.05 | ) |   | $ | (0.68 | ) |
|        Diluted                                                        |                           | $                                                          | 0.11 |   |   | $ | - |   |   | $ | (0.06 | ) |   | $ | (1.05 | ) |   | $ | (0.68 | ) |
|                                                                                                |                           |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE SHEET DATA (AT END OF YEAR):                                                                |                           |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Working capital (deficit)(1)                                                                        |                           | $                                                          | 22,576 |   |   | $ | 21,550 |   |   | $ | 36,190 |   |   | $ | 32,862 |   |   | $ | (3,052 | ) |
| Total assets                                                                                        |                           |                                                       | 169,926 |   |   |   | 165,276 |   |   |   | 194,926 |   |   |   | 202,351 |   |   |   | 349,492 |   |
| Long-term debt, less current maturities                                                             |                           |                                                       | 32,874 |   |   |   | 42,685 |   |   |   | 73,454 |   |   |   | 75,156 |   |   |   | 105,966 |   |
| Total shareholders' equity                                                                          |                           |                                                       | 76,428 |   |   |   | 62,767 |   |   |   | 57,755 |   |   |   | 56,624 |   |   |   | 78,962 |   |
| Number of stores at end of year:                                                                    |                           |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Company                                                        |                           |                                                       | 85 |   |   |   | 83 |   |   |   | 93 |   |   |   | 105 |   |   |   | 113 |   |
|        Franchise                                                      |                           |                                                       | 561 |   |   |   | 499 |   |   |   | 430 |   |   |   | 344 |   |   |   | 282 |   |
|        Systemwide                                                     |                           |                                                       | 646 |   |   |   | 582 |   |   |   | 523 |   |   |   | 449 |   |   |   | 395 |   |
| ____________________                                                                                |

| (1) |      | Reflects a liability, net of amounts recoverable from insurance companies, of approximately $51.8 million as of January 28, 2007, related to the settlement of certain litigation. This liability was satisfied in March 2007 through the issuance of shares of common stock and warrants to acquire shares of common stock. |
|-----|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 7.  | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
|---------------|----------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                               |                           | Year Ended    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|---------------|
|                                                                                                                                                                                                               |                           | January 30,   |   | January 31, |   | February 1, |
|                                                                                                                                                                                                               |       | 2011          |       | 2010 |       | 2009 |
| Change in Same Store Sales (on-premises sales only):                                                                                                                                                               |                           |          |   |   |   |   |   |   |   |   |   |   |
|        Company stores                                                                                                                                                                |                           |          | 4.0 | % |   |   | 3.5 | % |   |   | (0.7 | )% |
|        Domestic Franchise stores                                                                                                                                                     |                           |          | 4.5 |   |   |   | 0.9 |   |   |   | (3.3 | ) |
|        International Franchise stores                                                                                                                                                |                           |          | (8.8 | ) |   |   | (24.2 | ) |   |   | (23.4 | ) |
|        International Franchise stores, in constant dollars(1)                                                                                                                        |                           |          | (13.9 | ) |   |   | (21.1 | ) |   |   | (18.6 | ) |
|                                                                                                                                                                                                               |                           |          |   |   |   |   |   |   |   |   |   |   |
| Change in Same Store Customer Count - Company stores (retail sales only)                                                                                                                                           |                           |          | 1.8 | % |   |   | N/A |   |   |   | N/A |   |
|                                                                                                                                                                                                               |                           |          |   |   |   |   |   |   |   |   |   |   |
| Off-Premises Metrics (Company stores only):                                                                                                                                                                        |                           |          |   |   |   |   |   |   |   |   |   |   |
|        Average weekly number of doors served:                                                                                                                                        |                           |          |   |   |   |   |   |   |   |   |   |   |
|               Grocers/mass merchants                                                                                                              |                           |          | 5,664 |   |   |   | 5,634 |   |   |   | 6,306 |   |
|               Convenience stores                                                                                                                  |                           |          | 5,122 |   |   |   | 5,285 |   |   |   | 5,985 |   |
|                                                                                                                                                                                                               |                           |          |   |   |   |   |   |   |   |   |   |   |
|        Average weekly sales per door:                                                                                                                                                |                           |          |   |   |   |   |   |   |   |   |   |   |
|               Grocers/mass merchants                                                                                                              |                           | $   | 260 |   |   | $   | 242 |   |   | $   | 219 |   |
|               Convenience stores                                                                                                                  |                           |          | 206 |   |   |   | 208 |   |   |   | 217 |   |
|                                                                                                                                                                                                               |                           |          |   |   |   |   |   |   |   |   |   |   |
| Systemwide Sales (in thousands):(2)                                                                                                                                                                                |                           |          |   |   |   |   |   |   |   |   |   |   |
|        Company stores                                                                                                                                                                |                           | $             | 244,324 |   |   | $ | 243,387 |   |   | $ | 263,888 |   |
|        Domestic Franchise stores                                                                                                                                                     |                           |          | 238,890 |   |   |   | 220,629 |   |   |   | 235,558 |   |
|        International Franchise stores                                                                                                                                                |                           |          | 325,192 |   |   |   | 263,601 |   |   |   | 273,054 |   |
|        International Franchise stores, in constant dollars(3)                                                                                                                        |                           |          | 325,192 |   |   |   | 276,808 |   |   |   | 274,589 |   |
|                                                                                                                                                                                                               |                           |          |   |   |   |   |   |   |   |   |   |   |
| Average Weekly Sales Per Store (in thousands):(4) (5)                                                                                                                                                              |                           |          |   |   |   |   |   |   |   |   |   |   |
|        Company stores:                                                                                                                                                               |                           |          |   |   |   |   |   |   |   |   |   |   |
|               Factory stores:                                                                                                                     |                           |          |   |   |   |   |   |   |   |   |   |   |
|                      Commissaries — off-premises                                                         |                           | $             | 175.3 |   |   | $ | 155.7 |   |   | $ | 164.6 |   |
|                      Dual-channel stores:                                                                      |                           |          |   |   |   |   |   |   |   |   |   |   |
|                             On-premises                                     |                           |          | 30.2 |   |   |   | 26.1 |   |   |   | 23.5 |   |
|                             Off-premises                                    |                           |          | 42.0 |   |   |   | 31.4 |   |   |   | 29.3 |   |
|                                    Total |                           |          | 72.2 |   |   |   | 57.5 |   |   |   | 52.8 |   |
|                      On-premises only stores                                                                   |                           |          | 30.7 |   |   |   | 31.9 |   |   |   | 30.6 |   |
|                      All factory stores                                                                        |                           |          | 64.6 |   |   |   | 57.2 |   |   |   | 54.5 |   |
|               Satellite stores                                                                                                                    |                           |          | 18.6 |   |   |   | 18.1 |   |   |   | 17.8 |   |
|               All stores                                                                                                                          |                           |          | 56.9 |   |   |   | 52.2 |   |   |   | 50.8 |   |
|                                                                                                                                                                                                               |                           |          |   |   |   |   |   |   |   |   |   |   |
|        Domestic Franchise stores:                                                                                                                                                    |                           |          |   |   |   |   |   |   |   |   |   |   |
|               Factory stores                                                                                                                      |                           | $             | 40.4 |   |   | $ | 37.1 |   |   | $ | 39.3 |   |
|               Satellite stores                                                                                                                    |                           |          | 12.2 |   |   |   | 14.8 |   |   |   | 15.4 |   |
|                                                                                                                                                                                                               |                           |          |   |   |   |   |   |   |   |   |   |   |
|        International Franchise stores:                                                                                                                                               |                           |          |   |   |   |   |   |   |   |   |   |   |
|               Factory stores                                                                                                                      |                           | $             | 42.3 |   |   | $ | 36.2 |   |   | $ | 46.7 |   |
|               Satellite stores                                                                                                                    |                           |          | 9.1 |   |   |   | 9.4 |   |   |   | 12.3 |   |

----

| (1)    |                     | Represents the change in International Franchise same store sales computed by reconverting franchise store sales in each foreign currency to U.S. dollars at a constant rate of exchange for each period.                                                                                 |
|--------|--------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
| (2)    |                     | Excludes sales among Company and franchise stores.                                                                                                                                                                                                                                        |
|   |
| (3)    |                     | Represents International Franchise store sales computed by reconverting International Franchise store sales for the year ended January 31, 2010 and February 1, 2009 to U.S. dollars based upon the weighted average of the exchange rates prevailing in the year ended January 30, 2011. |
|   |
| (4)    |                     | Includes sales between Company and franchise stores.                                                                                                                                                                                                                                      |
|   |
| (5)    |      | Metrics for the year ended January 30, 2011 include only stores open at January 30, 2011 and metrics for the year ended January 31, 2010 and February 1, 2009 include only stores open at January 31, 2010.                                                                               |

|                                                                                                                                                                                       |                           | January 30, |                           | January 31, |                           | February 1, |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-------------|--------------------------------|-------------|--------------------------------|-------------|
|                                                                                                                                                                                       |       | 2011        |       | 2010        |       | 2009        |
| Number of Stores Open At Year End:                                                                                                                                                         |                           |        |                           |        |                           |        |
|        Company stores:                                                                                                                                       |                           |        |                           |        |                           |        |
|               Factory:                                                                                                    |                           |        |                           |        |                           |        |
|                      Commissaries                                                      |                           | 6           |                           | 6           |                           | 6           |
|                      Dual-channel stores                                               |                           | 35          |                           | 38          |                           | 51          |
|                      On-premises only stores                                           |                           | 28          |                           | 25          |                           | 26          |
|               Satellite stores                                                                                            |                           | 16          |                           | 14          |                           | 10          |
|                             Total Company stores    |                           | 85          |                           | 83          |                           | 93          |
|                                                                                                                                                                                       |                           |        |                           |        |                           |        |
|        Domestic Franchise stores:                                                                                                                            |                           |        |                           |        |                           |        |
|               Factory stores                                                                                              |                           | 102         |                           | 104         |                           | 104         |
|               Satellite stores                                                                                            |                           | 42          |                           | 37          |                           | 28          |
|                      Total Domestic Franchise stores                                   |                           | 144         |                           | 141         |                           | 132         |
|                                                                                                                                                                                       |                           |        |                           |        |                           |        |
|        International Franchise stores:                                                                                                                       |                           |        |                           |        |                           |        |
|               Factory stores                                                                                              |                           | 106         |                           | 95          |                           | 94          |
|               Satellite stores                                                                                            |                           | 311         |                           | 263         |                           | 204         |
|                      Total International Franchise stores                              |                           | 417         |                           | 358         |                           | 298         |
|                                                                                                                                                                                       |                           |        |                           |        |                           |        |
|                             Total systemwide stores |                           | 646         |                           | 582         |                           | 523         |
|                                                                                                                                                                                       |

----

|                                                                                                                                             |                           | Year Ended  |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-------------|
|                                                                                                                                             |                           | January 30, |   | January 31, |   | February 1, |
|                                                                                                                                             |       | 2011        |       | 2010 |       | 2009 |
| Store Operating Weeks:                                                                                                                           |                           |        |   |   |   |   |
|        Company stores:                                                                                             |                           |        |   |   |   |   |
|               Factory stores:                                                   |                           |        |   |   |   |   |
|                      Commissaries            |                           | 316         |   | 312 |   | 312 |
|                      Dual-channel stores     |                           | 1,820       |   | 2,541 |   | 3,191 |
|                      On-premises only stores |                           | 1,456       |   | 1,217 |   | 1,196 |
|               Satellite stores                                                  |                           | 786         |   | 592 |   | 487 |
|                                                                                                                                             |                           |        |   |   |   |   |
|        Domestic Franchise stores:(1)                                                                               |                           |        |   |   |   |   |
|               Factory stores                                                    |                           | 5,275       |   | 5,324 |   | 5,098 |
|               Satellite stores                                                  |                           | 1,985       |   | 1,449 |   | 1,085 |
|                                                                                                                                             |                           |        |   |   |   |   |
|        International Franchise stores:(1)                                                                          |                           |        |   |   |   |   |
|               Factory stores                                                    |                           | 4,305       |   | 4,303 |   | 3,714 |
|               Satellite stores                                                  |                           | 14,581      |   | 11,177 |   | 7,274 |

| (1) |      | Metrics for the year ended January 30, 2011 include only stores open at January 30, 2011 and metrics for the year ended January 31, 2010 and the year ended February 1, 2009 include only stores open at January 31, 2010. |
|-----|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                   |                           | Year Ended          |
|--------------------------------------------------------------------------------------------------------|--------------------------------|---------------------|
|                                                                                                   |       | January 30,         |       | January 31, |
|                                                                                                   |                           | 2011                |   | 2010 |
|                                                                                                   |                           | (In thousands)      |
| Total revenues as reported                                                                             |                           | $    | 361,955 |   |   | $    | 346,520 |   |
| Sales by refranchised stores                                                                           |                           |                | - |   |   |   | (8,993 | ) |
| Royalties from refranchised stores                                                                     |                           |                | (319 | ) |   |   | (65 | ) |
| KK Supply Chain sales to refranchised stores                                                           |                           |                | (2,682 | ) |   |   | (398 | ) |
|        Adjusted total revenues exclusive of the effects of refranchising |                           | $                   | 358,954 |   |   | $ | 337,064 |   |
|                                                                                                   |

----

|                                                                                                                                                                              |                           | Year Ended             |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|------------------------|
|                                                                                                                                                                              |                           | January 30,            |   | January 31, |
|                                                                                                                                                                              |       | 2011                   |       | 2010 |
|                                                                                                                                                                              |                           | (Dollars in thousands) |
| Revenues by business segment:                                                                                                                                                     |                           |                   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           | $            | 245,841 |   |   | $   | 246,373 |   |
|        Domestic Franchise                                                                                                                           |                           |                   | 8,527 |   |   |   | 7,807 |   |
|        International Franchise                                                                                                                      |                           |                   | 18,282 |   |   |   | 15,907 |   |
|        KK Supply Chain:                                                                                                                             |                           |                   |   |   |   |   |   |   |
|               Total revenues                                                                                     |                           |                   | 181,594 |   |   |   | 162,127 |   |
|               Less - intersegment sales elimination                                                              |                           |                   | (92,289 | ) |   |   | (85,694 | ) |
|                      External KK Supply Chain revenues                        |                           |                   | 89,305 |   |   |   | 76,433 |   |
|                             Total revenues |                           | $                      | 361,955 |   |   | $ | 346,520 |   |
|                                                                                                                                                                              |                           |                   |   |   |   |   |   |   |
| Segment revenues as a percentage of total revenues:                                                                                                                               |                           |                   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           |                   | 67.9 | % |   |   | 71.1 | % |
|        Domestic Franchise                                                                                                                           |                           |                   | 2.4 |   |   |   | 2.3 |   |
|        International Franchise                                                                                                                      |                           |                   | 5.1 |   |   |   | 4.6 |   |
|        KK Supply Chain (external sales)                                                                                                             |                           |                   | 24.7 |   |   |   | 22.1 |   |
|                                                                                                                                                                              |                           |                   | 100.0 | % |   |   | 100.0 | % |
|                                                                                                                                                                              |                           |                   |   |   |   |   |   |   |
| Operating income (loss):                                                                                                                                                          |                           |                   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           | $                      | (4,238 | ) |   | $ | 2,288 |   |
|        Domestic Franchise                                                                                                                           |                           |                   | 3,498 |   |   |   | 3,268 |   |
|        International Franchise                                                                                                                      |                           |                   | 12,331 |   |   |   | 9,896 |   |
|        KK Supply Chain                                                                                                                              |                           |                   | 30,213 |   |   |   | 25,962 |   |
|               Total segment operating income                                                                     |                           |                   | 41,804 |   |   |   | 41,414 |   |
|        Unallocated general and administrative expenses                                                                                              |                           |                   | (22,583 | ) |   |   | (23,737 | ) |
|        Impairment charges and lease termination costs                                                                                               |                           |                   | (4,066 | ) |   |   | (5,903 | ) |
|               Consolidated operating income                                                                      |                           | $                      | 15,155 |   |   | $ | 11,774 |   |
|                                                                                                                                                                              |

----

|                                                                                                                                              |                           |           |                           | Percentage of Total Revenues |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|------------------------------|
|                                                                                                                                              |                           | Year Ended     |                           | Year Ended                   |
|                                                                                                                                              |                           | January 30,    |                           | January 31,                  |   | January 30, |   | January 31, |
|                                                                                                                                              |       | 2011           |       | 2010                         |       | 2011 |       | 2010 |
|                                                                                                                                              |                           | (In thousands) |
| Revenues:                                                                                                                                         |                           |           |                           |                         |   |   |   |   |   |   |   |   |   |
|        On-premises sales:                                                                                           |                           |           |                           |                         |   |   |   |   |   |   |   |   |   |
|               Retail sales                                                       |                           | $    | 100,021                        |                         |   | $   | 103,856 |   | 40.7 | % |   | 42.2 | % |
|               Fundraising sales                                                  |                           |           | 14,063                         |                         |   |   | 13,481 |   | 5.7 |   |   | 5.5 |   |
|                      Total on-premises sales  |                           |           | 114,084                        |                         |   |   | 117,337 |   | 46.4 |   |   | 47.6 |   |
|        Off-premises sales:                                                                                          |                           |           |                           |                         |   |   |   |   |   |   |   |   |   |
|               Grocers/mass merchants                                             |                           |           | 76,173                         |                         |   |   | 70,952 |   | 31.0 |   |   | 28.8 |   |
|               Convenience stores                                                 |                           |           | 52,898                         |                         |   |   | 55,451 |   | 21.5 |   |   | 22.5 |   |
|               Other off-premises                                                 |                           |           | 2,686                          |                         |   |   | 2,371 |   | 1.1 |   |   | 1.0 |   |
|                      Total off-premises sales |                           |           | 131,757                        |                         |   |   | 128,774 |   | 53.6 |   |   | 52.3 |   |
|        Other revenues                                                                                               |                           |           | -                              |                         |   |   | 262 |   | - |   |   | 0.1 |   |
|                      Total revenues           |                           |           | 245,841                        |                         |   |   | 246,373 |   | 100.0 |   |   | 100.0 |   |
|                                                                                                                                              |                           |           |                           |                         |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                                                                                               |                           |           |                           |                         |   |   |   |   |   |   |   |   |   |
|        Cost of sales:                                                                                               |                           |           |                           |                         |   |   |   |   |   |   |   |   |   |
|               Food, beverage and packaging                                       |                           |           | 91,114                         |                         |   |   | 84,551 |   | 37.1 |   |   | 34.3 |   |
|               Shop labor                                                         |                           |           | 48,901                         |                         |   |   | 48,714 |   | 19.9 |   |   | 19.8 |   |
|               Delivery labor                                                     |                           |           | 21,189                         |                         |   |   | 21,280 |   | 8.6 |   |   | 8.6 |   |
|               Employee benefits                                                  |                           |           | 17,974                         |                         |   |   | 19,145 |   | 7.3 |   |   | 7.8 |   |
|                      Total cost of sales      |                           |           | 179,178                        |                         |   |   | 173,690 |   | 72.9 |   |   | 70.5 |   |
|        Vehicle costs(1)                                                                                             |                           |           | 13,914                         |                         |   |   | 11,491 |   | 5.7 |   |   | 4.7 |   |
|        Occupancy(2)                                                                                                 |                           |           | 8,947                          |                         |   |   | 10,140 |   | 3.6 |   |   | 4.1 |   |
|        Utilities expense                                                                                            |                           |           | 5,692                          |                         |   |   | 5,737 |   | 2.3 |   |   | 2.3 |   |
|        Depreciation expense                                                                                         |                           |           | 5,641                          |                         |   |   | 6,293 |   | 2.3 |   |   | 2.6 |   |
|        Settlement of litigation                                                                                     |                           |           | -                              |                         |   |   | 1,700 |   | - |   |   | 0.7 |   |
|        Other operating expenses                                                                                     |                           |           | 19,064                         |                         |   |   | 19,114 |   | 7.8 |   |   | 7.8 |   |
|               Total store level costs                                            |                           |           | 232,436                        |                         |   |   | 228,165 |   | 94.5 |   |   | 92.6 |   |
|        Store operating income                                                                                       |                           |           | 13,405                         |                         |   |   | 18,208 |   | 5.5 |   |   | 7.4 |   |
|        Other segment operating costs(3)                                                                             |                           |           | 13,143                         |                         |   |   | 9,567 |   | 5.3 |   |   | 3.9 |   |
|        Allocated corporate overhead                                                                                 |                           |           | 4,500                          |                         |   |   | 6,353 |   | 1.8 |   |   | 2.6 |   |
| Segment operating income (loss)                                                                                                                   |                           | $              | (4,238                         | )                            |   | $ | 2,288 |   | (1.7 | )% |   | 0.9 | % |
|                                                                                                                                              |

| (1)    |                     | Includes fuel, maintenance and repairs, rent, taxes and other costs of operating the delivery fleet, exclusive of depreciation.                                     |
|--------|--------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                     |                                                                                                                                                                |
| (2)    |                     | Includes rent, property taxes, common area maintenance charges, insurance, building maintenance and other occupancy costs, exclusive of utilities and depreciation. |
|   |                     |                                                                                                                                                                |
| (3)    |      | Includes marketing costs not charged to stores, segment management costs, off-premises selling expenses and support functions.                                      |

|                                                  |       | On-Premises    |       | Off-Premises |       | Total         |
|-------------------------------------------------------|--------------------------------|----------------|--------------------------------|--------------|--------------------------------|---------------|
|                                                  |                           | (In thousands) |
| Sales for the year ended January 31, 2010             |                           | $    | 117,337                        |         |                           | $   | 128,774 |   |   | $   | 246,111 |   |
| Fiscal 2010 sales at refranchised stores              |                           |           | (6,247                         | )            |                           |          | (2,746 | ) |   |   | (8,993 | ) |
| Fiscal 2010 sales at closed stores                    |                           |           | (5,031                         | )            |                           |          | (1,479 | ) |   |   | (6,510 | ) |
| Fiscal 2011 sales at closed stores                    |                           |           | 708                            |         |                           |          | - |   |   |   | 708 |   |
| Increase in sales at mature stores (open stores only) |                           |           | 4,275                          |         |                           |          | 7,208 |   |   |   | 11,483 |   |
| Increase in sales at stores opened in fiscal 2010     |                           |           | 1,146                          |         |                           |          | - |   |   |   | 1,146 |   |
| Sales at stores opened in fiscal 2011                 |                           |           | 1,896                          |         |                           |          | - |   |   |   | 1,896 |   |
| Sales for the year ended January 30, 2011             |                           | $              | 114,084                        |         |                           | $             | 131,757 |   |   | $ | 245,841 |   |
|                                                  |

----

|                                                                                                                                   |                           | Year Ended  |
|----------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-------------|
|                                                                                                                                   |                           | January 30, |   | January 31, |
|                                                                                                                                   |       | 2011        |       | 2010 |
| On-premises:                                                                                                                           |                           |        |   |   |   |   |
|               Change in same store sales                              |                           | 4.0         | % |   | 3.5 | % |
|               Change in same store customer count (retail sales only) |                           | 1.8         | % |   | N/A |   |
| Off-premises:                                                                                                                          |                           |        |   |   |   |   |
|        Grocers/mass merchants:                                                                           |                           |        |   |   |   |   |
|               Change in average weekly number of doors                |                           | 0.5         | % |   | (10.7 | )% |
|               Change in average weekly sales per door                 |                           | 7.4         | % |   | 10.5 | % |
|        Convenience stores:                                                                               |                           |        |   |   |   |   |
|               Change in average weekly number of doors                |                           | (3.1        | )% |   | (11.7 | )% |
|               Change in average weekly sales per door                 |                           | (1.0        | )% |   | (4.1 | )% |

----

----

|                                                                                                                                                                              |                           | Stores in Operation at January 30, 2011 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-----------------------------------------|
|                                                                                                                                                                              |                           |                                    |   |   |   |   |   |   |   | Percentage of Total Revenues |
|                                                                                                                                                                              |                           | Year Ended                              |   | Year Ended |
|                                                                                                                                                                              |                           | January 30,                             |   | January 31, |   | January 30, |   | January 31, |
|                                                                                                                                                                              |       | 2011                                    |       | 2010 |       | 2011 |       | 2010 |
|                                                                                                                                                                              |                           | (In thousands)                          |
| Revenues:                                                                                                                                                                         |                           |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|        On-premises sales:                                                                                                                           |                           |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|               Retail sales                                                                                       |                           | $                             | 99,403 |   |   | $   | 93,191 |   |   | 40.6 | % |   | 40.4 | % |
|               Fundraising sales                                                                                  |                           |                                    | 13,973 |   |   |   | 12,868 |   |   | 5.7 |   |   | 5.6 |   |
|                      Total on-premises sales                                  |                           |                                    | 113,376 |   |   |   | 106,059 |   |   | 46.3 |   |   | 45.9 |   |
|        Off-premises sales:                                                                                                                          |                           |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|               Grocers/mass merchants                                                                             |                           |                                    | 76,173 |   |   |   | 68,335 |   |   | 31.1 |   |   | 29.6 |   |
|               Convenience stores                                                                                 |                           |                                    | 52,898 |   |   |   | 53,888 |   |   | 21.6 |   |   | 23.3 |   |
|               Other off-premises                                                                                 |                           |                                    | 2,686 |   |   |   | 2,326 |   |   | 1.1 |   |   | 1.0 |   |
|                      Total off-premises sales                                 |                           |                                    | 131,757 |   |   |   | 124,549 |   |   | 53.7 |   |   | 53.9 |   |
|        Other revenues                                                                                                                               |                           |                                    | - |   |   |   | 262 |   |   | - |   |   | 0.1 |   |
|                             Total revenues |                           |                                    | 245,133 |   |   |   | 230,870 |   |   | 100.0 |   |   | 100.0 |   |
|                                                                                                                                                                              |                           |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                                                                                                                                               |                           |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|        Cost of sales:                                                                                                                               |                           |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|               Food, beverage and packaging                                                                       |                           |                                    | 90,805 |   |   |   | 79,055 |   |   | 37.0 |   |   | 34.2 |   |
|               Shop labor                                                                                         |                           |                                    | 48,658 |   |   |   | 44,745 |   |   | 19.8 |   |   | 19.4 |   |
|               Delivery labor                                                                                     |                           |                                    | 21,188 |   |   |   | 20,470 |   |   | 8.6 |   |   | 8.9 |   |
|               Employee benefits                                                                                  |                           |                                    | 17,903 |   |   |   | 17,534 |   |   | 7.3 |   |   | 7.6 |   |
|                      Total cost of sales                                      |                           |                                    | 178,554 |   |   |   | 161,804 |   |   | 72.8 |   |   | 70.1 |   |
|        Vehicle costs                                                                                                                                |                           |                                    | 13,885 |   |   |   | 10,896 |   |   | 5.7 |   |   | 4.7 |   |
|        Occupancy                                                                                                                                    |                           |                                    | 8,592 |   |   |   | 8,447 |   |   | 3.5 |   |   | 3.7 |   |
|        Utilities expense                                                                                                                            |                           |                                    | 5,635 |   |   |   | 5,112 |   |   | 2.3 |   |   | 2.2 |   |
|        Depreciation expense                                                                                                                         |                           |                                    | 5,596 |   |   |   | 5,981 |   |   | 2.3 |   |   | 2.6 |   |
|        Other operating expenses                                                                                                                     |                           |                                    | 18,938 |   |   |   | 18,801 |   |   | 7.7 |   |   | 8.1 |   |
|               Total store level costs                                                                            |                           |                                    | 231,200 |   |   |   | 211,041 |   |   | 94.3 |   |   | 91.4 |   |
|               Store operating income - ongoing stores                                                            |                           |                                    | 13,933 |   |   |   | 19,829 |   |   | 5.7 | % |   | 8.6 | % |
|               Store operating loss - closed and refranchised stores                                              |                           |                                    | (528 | ) |   |   | (1,621 | ) |   |   |   |   |   |   |
| Store operating income                                                                                                                                                            |                           | $                                       | 13,405 |   |   | $ | 18,208 |   |   |   |   |   |   |   |
|                                                                                                                                                                              |

----

|                                                                                                    |       | Year Ended          |
|---------------------------------------------------------------------------------------------------------|--------------------------------|---------------------|
|                                                                                                    |                           | January 30,         |       | January 31, |
|                                                                                                    |                           | 2011                |   | 2010 |
|                                                                                                    |                           | (In thousands)      |
| Revenues:                                                                                               |                           |                |   |   |   |   |
|        Royalties                                                               |                           | $                   | 7,932 |   | $ | 7,542 |
|        Development and franchise fees                                     |                           |                | 120 |   |   | 50 |
|        Other                                                              |                           |                | 475 |   |   | 215 |
|               Total revenues           |                           |                | 8,527 |   |   | 7,807 |
|                                                                                                    |                           |                |   |   |   |   |
| Operating expenses:                                                                                     |                           |                |   |   |   |   |
|        Segment operating expenses                                         |                           |                | 4,409 |   |   | 4,016 |
|        Depreciation expense                                               |                           |                | 220 |   |   | 71 |
|        Allocated corporate overhead                                       |                           |                | 400 |   |   | 452 |
|               Total operating expenses |                           |                | 5,029 |   |   | 4,539 |
| Segment operating income                                                                                |                           | $    | 3,498 |   | $    | 3,268 |
|                                                                                                    |                           |                |   |   |   |   |

----

|                                                                                                         |                           | Year Ended          |
|--------------------------------------------------------------------------------------------------------------|--------------------------------|---------------------|
|                                                                                                         |       | January 30,         |       | January 31, |
|                                                                                                         |                           | 2011                |   | 2010 |
|                                                                                                         |                           | (In thousands)      |
| Revenues:                                                                                                    |                           |                |   |   |   |   |
|        Royalties                                                          |                           | $                   | 16,539 |   | $ | 14,164 |
|        Development and franchise fees                                     |                           |                | 1,743 |   |   | 1,743 |
|               Total revenues           |                           |                | 18,282 |   |   | 15,907 |
|                                                                                                         |                           |                |   |   |   |   |
| Operating expenses:                                                                                          |                           |                |   |   |   |   |
|        Segment operating expenses                                         |                           |                | 4,644 |   |   | 4,926 |
|        Depreciation expense                                               |                           |                | 7 |   |   | - |
|        Allocated corporate overhead                                       |                           |                | 1,300 |   |   | 1,085 |
|               Total operating expenses |                           |                | 5,951 |   |   | 6,011 |
| Segment operating income                                                                                     |                           | $    | 12,331 |   | $    | 9,896 |
|                                                                                                         |                           |                |   |   |   |   |

----

|                                                                                                                                              |                           |                      |    |        |                           |                      |    |                           | Percentage of Total Revenues  |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|---------------------------|---------|-------------|--------------------------------|---------------------------|---------|--------------------------------|-------------------------------|
|                                                                                                                                              |                           |                      |    |        |                           |                      |    |                           | Before Intersegment           |
|                                                                                                                                              |                           |                      |    |        |                           |                      |    |                           | Sales Elimination             |
|                                                                                                                                              |                           | Year Ended                |    | Year Ended  |
|                                                                                                                                              |                           | January 30,               |    | January 31, |                           | January 30,               |    | January 31,                    |
|                                                                                                                                              |                           | 2011                      |    | 2010        |                           | 2011                      |    | 2010                           |
|                                                                                                                                              |                           | (In thousands)            |    |        |                           |                      |    |                           |
| Revenues:                                                                                                                                         |       |                      |    |        |       |                      |    |       |                          |   |       |   |   |
|        Doughnut mixes                                                                                               |                           | $                         | 62,333  |        |                           | $                         | 58,332  |                           | 34.3                          | % |   | 36.0 | % |
|        Other ingredients, packaging and supplies                                                                    |                           |                      | 112,147 |        |                           |                      | 97,622  |                           | 61.8                          |   |   | 60.2 |   |
|        Equipment                                                                                                    |                           |                      | 6,281   |        |                           |                      | 6,173   |                           | 3.5                           |   |   | 3.8 |   |
|        Fuel surcharge                                                                                               |                           |                      | 833     |        |                           |                      | -       |                           | 0.5                           |   |   | - |   |
|               Total revenues before intersegment sales elimination               |                           |                      | 181,594 |        |                           |                      | 162,127 |                           | 100.0                         |   |   | 100.0 |   |
|                                                                                                                                              |                           |                      |    |        |                           |                      |    |                           |                          |   |   |   |   |
| Operating expenses:                                                                                                                               |                           |                      |    |        |                           |                      |    |                           |                          |   |   |   |   |
|        Cost of sales:                                                                                               |                           |                      |    |        |                           |                      |    |                           |                          |   |   |   |   |
|               Cost of goods produced and purchased                               |                           |                      | 120,555 |        |                           |                      | 108,194 |                           | 66.4                          |   |   | 66.7 |   |
|               (Gain) loss on agricultural derivatives                            |                           |                      | (544    | )           |                           |                      | 308     |                           | (0.3                          | ) |   | 0.2 |   |
|               Inbound freight                                                    |                           |                      | 3,629   |        |                           |                      | 3,483   |                           | 2.0                           |   |   | 2.1 |   |
|                      Total cost of sales      |                           |                      | 123,640 |        |                           |                      | 111,985 |                           | 68.1                          |   |   | 69.1 |   |
|        Distribution costs:                                                                                          |                           |                      |    |        |                           |                      |    |                           |                          |   |   |   |   |
|               Outbound freight                                                   |                           |                      | 10,337  |        |                           |                      | 10,007  |                           | 5.7                           |   |   | 6.2 |   |
|               Other distribution costs                                           |                           |                      | 3,736   |        |                           |                      | 3,372   |                           | 2.1                           |   |   | 2.1 |   |
|                      Total distribution costs |                           |                      | 14,073  |        |                           |                      | 13,379  |                           | 7.7                           |   |   | 8.3 |   |
| Other segment operating costs                                                                                                                     |                           |                      | 11,760  |        |                           |                      | 8,751   |                           | 6.5                           |   |   | 5.4 |   |
| Depreciation expense                                                                                                                              |                           |                      | 808     |        |                           |                      | 883     |                           | 0.4                           |   |   | 0.5 |   |
| Allocated corporate overhead                                                                                                                      |                           |                      | 1,100   |        |                           |                      | 1,167   |                           | 0.6                           |   |   | 0.7 |   |
|        Total operating costs                                                                                        |                           |                      | 151,381 |        |                           |                      | 136,165 |                           | 83.4                          |   |   | 84.0 |   |
| Segment operating income                                                                                                                          |                           | $     | 30,213  |        |                           | $     | 25,962  |                           |      16.6 | % |   |      16.0 | % |
|                                                                                                                                              |                           |                      |    |        |                           |                      |    |                           |                          |   |   |   |   |

----

|                                                                                                                |                           | Year Ended                 |
|---------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------------------|
|                                                                                                                |                           | January 30,                |   | January 31, |
|                                                                                                                |                           | 2011                       |   | 2010 |
|                                                                                                                |       | (In thousands)             |
| Impairment charges:                                                                                                 |                           |                       |   |   |       |   |   |   |
|        Impairment of long-lived assets - current period charges                       |                           | $                          | 3,437 |   |   | $ | 3,108 |   |
|        Impairment of long-lived assets - adjustments to previously recorded estimates |                           |                       | (173 | ) |   |   | - |   |
|        Impairment of reacquired franchise rights                                      |                           |                       | 40 |   |   |   | 40 |   |
|        Recovery from bankruptcy estate of former subsidiary                           |                           |                       | - |   |   |   | (482 | ) |
|               Total impairment charges             |                           |                       | 3,304 |   |   |   | 2,666 |   |
|               Lease termination costs              |                           |                       | 762 |   |   |   | 3,237 |   |
|                                                                                                                |                           | $      | 4,066 |   |   | $      | 5,903 |   |
|                                                                                                                |                           |                       |   |   |   |   |   |   |

----

|                                                                              |                           | Year Ended          |
|-----------------------------------------------------------------------------------|--------------------------------|---------------------|
|                                                                              |                           | January 30,         |   | January 31, |
|                                                                              |                           | 2011                |   | 2010 |
|                                                                              |                           | (In thousands)      |
| Interest accruing on outstanding indebtedness                                     |       | $                   | 4,312 |       | $ | 5,789 |
| Letter of credit and unused revolver fees                                         |                           |                | 1,136 |   |   | 1,240 |
| Fees associated with credit agreement amendments                                  |                           |                | - |   |   | 925 |
| Write-off of deferred financing costs associated with credit agreement amendments |                           |                | - |   |   | 89 |
| Amortization of deferred financing costs                                          |                           |                | 696 |   |   | 770 |
| Mark-to-market adjustments on interest rate derivatives                           |                           |                | - |   |   | 559 |
| Amortization of unrealized losses on interest rate derivatives                    |                           |                | 152 |   |   | 1,151 |
| Other                                                                             |                           |                | 63 |   |   | 162 |
|                                                                              |                           | $    | 6,359 |   | $    | 10,685 |
|                                                                              |                           |                |   |   |   |   |

----

----

|                                                                                                                                                                              |                           | Year Ended             |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|------------------------|
|                                                                                                                                                                              |                           | January 31,            |   | February 1, |
|                                                                                                                                                                              |                           | 2010                   |   | 2009 |
|                                                                                                                                                                              |                           | (Dollars in thousands) |
| Revenues by business segment:                                                                                                                                                     |       |                   |   |   |       |   |   |   |
|        Company Stores                                                                                                                               |                           | $                      | 246,373 |   |   | $ | 265,890 |   |
|        Domestic Franchise                                                                                                                           |                           |                   | 7,807 |   |   |   | 8,042 |   |
|        International Franchise                                                                                                                      |                           |                   | 15,907 |   |   |   | 17,495 |   |
|        KK Supply Chain:                                                                                                                             |                           |                   |   |   |   |   |   |   |
|               Total revenues                                                                                     |                           |                   | 162,127 |   |   |   | 191,456 |   |
|               Less - intersegment sales elimination                                                              |                           |                   | (85,694 | ) |   |   | (97,361 | ) |
|                      External KK Supply Chain revenues                        |                           |                   | 76,433 |   |   |   | 94,095 |   |
|                             Total revenues |                           | $                      | 346,520 |   |   | $ | 385,522 |   |
|                                                                                                                                                                              |                           |                   |   |   |   |   |   |   |
| Segment revenues as a percentage of total revenues:                                                                                                                               |                           |                   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           |                   | 71.1 | % |   |   | 69.0 | % |
|        Domestic Franchise                                                                                                                           |                           |                   | 2.3 |   |   |   | 2.1 |   |
|        International Franchise                                                                                                                      |                           |                   | 4.6 |   |   |   | 4.5 |   |
|        KK Supply Chain (external sales)                                                                                                             |                           |                   | 22.1 |   |   |   | 24.4 |   |
|                                                                                                                                                                              |                           |                   | 100.0 | % |   |   | 100.0 | % |
|                                                                                                                                                                              |                           |                   |   |   |   |   |   |   |
| Operating income (loss):                                                                                                                                                          |                           |                   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           | $                      | 2,288 |   |   | $ | (9,813 | ) |
|        Domestic Franchise                                                                                                                           |                           |                   | 3,268 |   |   |   | 4,965 |   |
|        International Franchise                                                                                                                      |                           |                   | 9,896 |   |   |   | 11,550 |   |
|        KK Supply Chain                                                                                                                              |                           |                   | 25,962 |   |   |   | 23,269 |   |
|               Total segment operating income                                                                     |                           |                   | 41,414 |   |   |   | 29,971 |   |
|        Unallocated general and administrative expenses                                                                                              |                           |                   | (23,737 | ) |   |   | (24,662 | ) |
|        Impairment charges and lease termination costs                                                                                               |                           |                   | (5,903 | ) |   |   | (548 | ) |
|                      Consolidated operating income                            |                           | $       | 11,774 |   |   | $    | 4,761 |   |
|                                                                                                                                                                              |                           |                   |   |   |   |   |   |   |

----

|                                                                                                                                                                              |                           |                |                           |        |                           |        |                           |        | Percentage of Total Revenues |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|---------------------|--------------------------------|-------------|--------------------------------|-------------|--------------------------------|-------------|------------------------------|
|                                                                                                                                                                              |                           | Year Ended          |                           | Year Ended  |
|                                                                                                                                                                              |                           | January 31,         |                           | February 1, |                           | January 31, |                           | February 1, |
|                                                                                                                                                                              |       | 2010                |       | 2009        |       | 2010        |       | 2009        |
|                                                                                                                                                                              |                           | (In thousands)      |                           |        |                           |        |                           |        |
| Revenues:                                                                                                                                                                         |                           |                |                           |        |                           |        |                           |        |                         |   |   |   |   |
|        On-premises sales:                                                                                                                           |                           |                |                           |        |                           |        |                           |        |                         |   |   |   |   |
|               Retail sales                                                                                       |                           | $                   | 103,856                        |        | $                              | 107,142     |                           |        | 42.2                         | % |   | 40.3 | % |
|               Fundraising sales                                                                                  |                           |                | 13,481                         |        |                           | 13,260      |                           |        | 5.5                          |   |   | 5.0 |   |
|                      Total on-premises sales                                  |                           |                | 117,337                        |        |                           | 120,402     |                           |        | 47.6                         |   |   | 45.3 |   |
|        Off-premises sales:                                                                                                                          |                           |                |                           |        |                           |        |                           |        |                         |   |   |   |   |
|               Grocers/mass merchants                                                                             |                           |                | 70,952                         |        |                           | 75,556      |                           |        | 28.8                         |   |   | 28.4 |   |
|               Convenience stores                                                                                 |                           |                | 55,451                         |        |                           | 67,071      |                           |        | 22.5                         |   |   | 25.2 |   |
|               Other off-premises                                                                                 |                           |                | 2,371                          |        |                           | 2,861       |                           |        | 1.0                          |   |   | 1.1 |   |
|                      Total off-premises sales                                 |                           |                | 128,774                        |        |                           | 145,488     |                           |        | 52.3                         |   |   | 54.7 |   |
|        Other revenues                                                                                                                               |                           |                | 262                            |        |                           | -           |                           |        | 0.1                          |   |   | - |   |
|                             Total revenues |                           |                | 246,373                        |        |                           | 265,890     |                           |        |    100.0      |   |   |    100.0 |   |
|                                                                                                                                                                              |                           |                |                           |        |                           |        |                           |        |                         |   |   |   |   |
| Operating expenses:                                                                                                                                                               |                           |                |                           |        |                           |        |                           |        |                         |   |   |   |   |
|        Cost of sales:                                                                                                                               |                           |                |                           |        |                           |        |                           |        |                         |   |   |   |   |
|               Food, beverage and packaging                                                                       |                           |                | 84,551                         |        |                           | 96,208      |                           |        | 34.3                         |   |   | 36.2 |   |
|               Shop labor                                                                                         |                           |                | 48,714                         |        |                           | 53,113      |                           |        | 19.8                         |   |   | 20.0 |   |
|               Delivery labor                                                                                     |                           |                | 21,280                         |        |                           | 25,419      |                           |        | 8.6                          |   |   | 9.6 |   |
|               Employee benefits                                                                                  |                           |                | 19,145                         |        |                           | 21,269      |                           |        | 7.8                          |   |   | 8.0 |   |
|                      Total cost of sales                                      |                           |                | 173,690                        |        |                           | 196,009     |                           |        | 70.5                         |   |   | 73.7 |   |
|        Vehicle costs(1)                                                                                                                             |                           |                | 11,491                         |        |                           | 16,877      |                           |        | 4.7                          |   |   | 6.3 |   |
|        Occupancy(2)                                                                                                                                 |                           |                | 10,140                         |        |                           | 12,225      |                           |        | 4.1                          |   |   | 4.6 |   |
|        Utilities expense                                                                                                                            |                           |                | 5,737                          |        |                           | 7,236       |                           |        | 2.3                          |   |   | 2.7 |   |
|        Depreciation expense                                                                                                                         |                           |                | 6,293                          |        |                           | 6,402       |                           |        | 2.6                          |   |   | 2.4 |   |
|        Settlement of litigation                                                                                                                     |                           |                | 1,700                          |        |                           | -           |                           |        | 0.7                          |   |   | - |   |
|        Other operating expenses                                                                                                                     |                           |                | 19,114                         |        |                           | 21,079      |                           |        | 7.8                          |   |   | 7.9 |   |
|               Total store level costs                                                                            |                           |                | 228,165                        |        |                           | 259,828     |                           |        | 92.6                         |   |   | 97.7 |   |
|        Store operating income                                                                                                                       |                           |                | 18,208                         |        |                           | 6,062       |                           |        | 7.4                          |   |   | 2.3 |   |
|        Other segment operating costs(3)                                                                                                             |                           |                | 9,567                          |        |                           | 10,031      |                           |        | 3.9                          |   |   | 3.8 |   |
|        Allocated corporate overhead                                                                                                                 |                           |                | 6,353                          |        |                           | 5,844       |                           |        | 2.6                          |   |   | 2.2 |   |
| Segment operating income (loss)                                                                                                                                                   |                           | $    | 2,288                          |        | $               | (9,813      | )                              |        | 0.9                          | % |   | (3.7 | )% |
| ____________________                                                                                                                                                              |                           |                |                           |        |                           |        |                           |        |                         |   |   |   |   |

| (1)    |        | Includes fuel, maintenance and repairs, rent, taxes and other costs of operating the delivery fleet, exclusive of depreciation.                                     |
|--------|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                 |                                                                                                                                                                |
| (2)    |                                 | Includes rent, property taxes, common area maintenance charges, insurance, building maintenance and other occupancy costs, exclusive of utilities and depreciation. |
|   |
| (3)    |                                 | Includes marketing costs not charged to stores, segment management costs, off-premises selling expenses and support functions.                                      |

----

|                                                                                                                    |                           | Year Ended  |
|-------------------------------------------------------------------------------------------------------------------------|--------------------------------|-------------|
|                                                                                                                    |                           | January 31, |   | February 1, |
|                                                                                                               |       | 2010        |       | 2009 |
| On-premises:                                                                                                            |                           |        |   |   |   |   |
|               Change in same store sales               |                           | 3.5         | % |   | (0.7 | )% |
| Off-premises:                                                                                                           |                           |        |   |   |   |   |
|        Grocers/mass merchants:                                                            |                           |        |   |   |   |   |
|               Change in average weekly number of doors |                           | (10.7       | )% |   | (8.0 | )% |
|               Change in average weekly sales per door  |                           | 10.5        | % |   | (4.8 | )% |
|        Convenience stores:                                                                |                           |        |   |   |   |   |
|               Change in average weekly number of doors |                           | (11.7       | )% |   | (5.0 | )% |
|               Change in average weekly sales per door  |                           | (4.1        | )% |   | (10.7 | )% |

----

|                                                                                                    |                           | Year Ended          |
|---------------------------------------------------------------------------------------------------------|--------------------------------|---------------------|
|                                                                                                    |                           | January 31,         |   | February 1, |
|                                                                                                    |       | 2010                |       | 2009 |
|                                                                                                    |                           | (In thousands)      |
| Revenues:                                                                                               |                           |                |   |   |   |   |
|        Royalties                                                          |                           | $                   | 7,542 |   | $ | 7,810 |
|        Development and franchise fees                                     |                           |                | 50 |   |   | 3 |
|        Other                                                              |                           |                | 215 |   |   | 229 |
|               Total revenues           |                           |                | 7,807 |   |   | 8,042 |
|                                                                                                    |                           |                |   |   |   |   |
| Operating expenses:                                                                                     |                           |                |   |   |   |   |
|        Segment operating expenses                                         |                           |                | 4,016 |   |   | 2,838 |
|        Depreciation expense                                               |                           |                | 71 |   |   | 86 |
|        Allocated corporate overhead                                       |                           |                | 452 |   |   | 153 |
|               Total operating expenses |                           |                | 4,539 |   |   | 3,077 |
| Segment operating income                                                                                |                           | $    | 3,268 |   | $    | 4,965 |
|                                                                                                    |                           |                |   |   |   |   |

|                                                                                                    |                           | Year Ended          |
|---------------------------------------------------------------------------------------------------------|--------------------------------|---------------------|
|                                                                                                    |       | January 31,         |       | February 1, |
|                                                                                                    |                           | 2010                |   | 2009 |
|                                                                                                    |                           | (In thousands)      |
| Revenues:                                                                                               |                           |                |   |   |   |   |
|        Royalties                                                          |                           | $                   | 14,164 |   | $ | 14,942 |
|        Development and franchise fees                                     |                           |                | 1,743 |   |   | 2,460 |
|        Other                                                              |                           |                | - |   |   | 93 |
|               Total revenues           |                           |                | 15,907 |   |   | 17,495 |
|                                                                                                    |                           |                |   |   |   |   |
| Operating expenses:                                                                                     |                           |                |   |   |   |   |
|        Segment operating expenses                                         |                           |                | 4,926 |   |   | 5,016 |
|        Allocated corporate overhead                                       |                           |                | 1,085 |   |   | 929 |
|               Total operating expenses |                           |                | 6,011 |   |   | 5,945 |
| Segment operating income                                                                                |                           | $    | 9,896 |   | $    | 11,550 |
|                                                                                                    |                           |                |   |   |   |   |

----

----

|                                                                                                                                              |                           |           |                           |        |                           |                       |                           | Percentage of Total Revenues |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|-------------|--------------------------------|----------------------------|--------------------------------|------------------------------|
|                                                                                                                                              |                           |           |                           |        |                           |                       |                           | Before Intersegment          |
|                                                                                                                                              |                           |           |                           |        |                           |                       |                           | Sales Elimination            |
|                                                                                                                                              |                           | Year Ended     |                           | Year Ended  |
|                                                                                                                                              |       | January 31,    |       | February 1, |       | January 31,                |       | February 1,                  |
|                                                                                                                                              |                           | 2010           |                           | 2009        |                           | 2010                       |                           | 2009                         |
|                                                                                                                                              |                           | (In thousands) |                           |        |                           |                       |                           |                         |
| Revenues:                                                                                                                                         |                           |           |                           |        |                           |                       |                           |                         |   |   |   |   |
|        Doughnut mixes                                                                                               |                           | $              | 58,332                         |        | $                              | 73,312                     |                           | 36.0                         | % |   | 38.3 | % |
|        Other ingredients, packaging and supplies                                                                    |                           |           | 97,622                         |        |                           | 106,054                    |                           | 60.2                         |   |   | 55.4 |   |
|        Equipment                                                                                                    |                           |           | 6,173                          |        |                           | 8,749                      |                           | 3.8                          |   |   | 4.6 |   |
|        Fuel surcharge                                                                                               |                           |           | -                              |        |                           | 3,341                      |                           | -                            |   |   | 1.7 |   |
|               Total revenues before intersegment sales elimination               |                           |           |     162,127     |        |                           |     191,456 |                           |     100.0     |   |   |     100.0 |   |
|                                                                                                                                              |                           |           |                           |        |                           |                       |                           |                         |   |   |   |   |
| Operating expenses:                                                                                                                               |                           |           |                           |        |                           |                       |                           |                         |   |   |   |   |
|        Cost of sales:                                                                                               |                           |           |                           |        |                           |                       |                           |                         |   |   |   |   |
|               Cost of goods produced and purchased                               |                           |           | 108,194                        |        |                           | 131,020                    |                           | 66.7                         |   |   | 68.4 |   |
|               Gain on agricultural derivatives                                   |                           |           | 308                            |        |                           | 574                        |                           | 0.2                          |   |   | 0.3 |   |
|               Inbound freight                                                    |                           |           | 3,483                          |        |                           | 7,550                      |                           | 2.1                          |   |   | 3.9 |   |
|                      Total cost of sales      |                           |           | 111,985                        |        |                           | 139,144                    |                           | 69.1                         |   |   | 72.7 |   |
|        Distribution costs:                                                                                          |                           |           |                           |        |                           |                       |                           |                         |   |   |   |   |
|               Outbound freight                                                   |                           |           | 10,007                         |        |                           | 13,806                     |                           | 6.2                          |   |   | 7.2 |   |
|               Other distribution costs                                           |                           |           | 3,372                          |        |                           | 3,357                      |                           | 2.1                          |   |   | 1.8 |   |
|                      Total distribution costs |                           |           | 13,379                         |        |                           | 17,163                     |                           | 8.3                          |   |   | 9.0 |   |
|        Other segment operating costs                                                                                |                           |           | 8,751                          |        |                           | 9,496                      |                           | 5.4                          |   |   | 5.0 |   |
|        Depreciation expense                                                                                         |                           |           | 883                            |        |                           | 1,019                      |                           | 0.5                          |   |   | 0.5 |   |
|        Allocated corporate overhead                                                                                 |                           |           | 1,167                          |        |                           | 1,365                      |                           | 0.7                          |   |   | 0.7 |   |
|               Total operating costs                                              |                           |           | 136,165                        |        |                           | 168,187                    |                           | 84.0                         |   |   | 87.8 |   |
| Segment operating income                                                                                                                          |                           | $              | 25,962                         |        | $                              | 23,269                     |                           | 16.0                         | % |   | 12.2 | % |
|                                                                                                                                              |

----

|                                                                                                    |                           | Year Ended     |
|---------------------------------------------------------------------------------------------------------|--------------------------------|----------------|
|                                                                                                    |                           | January 31,    |   | February 1, |
|                                                                                                    |       | 2010           |       | 2009 |
|                                                                                                    |                           | (In thousands) |
| Impairment charges:                                                                                     |                           |           |   |   |   |   |   |   |
|        Impairment of long-lived assets - current period charges           |                           | $              | 3,108 |   |   | $ |     1,050 |   |
|        Impairment of reacquired franchise rights                          |                           |           | 40 |   |   |   | - |   |
|        Recovery from bankruptcy estate of former subsidiary               |                           |           | (482 | ) |   |   | - |   |
|               Total impairment charges |                           |           | 2,666 |   |   |   | 1,050 |   |
|               Lease termination costs  |                           |           | 3,237 |   |   |   | (502 | ) |
|                                                                                                    |                           | $              |     5,903 |   |   | $ | 548 |   |
|                                                                                                    |

----

|                                                                              |                           | Year Ended     |
|-----------------------------------------------------------------------------------|--------------------------------|----------------|
|                                                                              |                           | January 31,    |   | February 1, |
|                                                                              |       | 2010           |       | 2009 |
|                                                                              |                           | (In thousands) |
| Interest accruing on outstanding indebtedness                                     |                           | $              | 5,789 |   | $ | 6,402 |
| Letter of credit and unused revolver fees                                         |                           |           | 1,240 |   |   | 1,082 |
| Fees associated with credit agreement amendments                                  |                           |           | 925 |   |   | 261 |
| Write-off of deferred financing costs associated with credit agreement amendments |                           |           | 89 |   |   | 289 |
| Amortization of deferred financing costs                                          |                           |           | 770 |   |   | 543 |
| Mark-to-market adjustments on interest rate derivatives                           |                           |           | 559 |   |   | 798 |
| Amortization of unrealized losses on interest rate derivatives                    |                           |           | 1,151 |   |   | 969 |
| Payment to counterparty on interest rate cap derivative                           |                           |           | - |   |   | 124 |
| Other                                                                             |                           |           | 162 |   |   | 211 |
|                                                                              |                           | $              |     10,685 |   | $ |     10,679 |
|                                                                              |

----

|                                                                                      |                           | Year Ended     |
|-------------------------------------------------------------------------------------------|--------------------------------|----------------|
|                                                                                      |                           | January 30,    |   | January 31, |   | February 1, |
|                                                                                      |       | 2011           |       | 2010 |       | 2009 |
|                                                                                      |                           | (In thousands) |
| Net cash provided by operating activities                                                 |                           | $              | 20,508 |   |   | $ | 19,827 |   |   | $ | 16,593 |   |
| Net cash used for investing activities                                                    |                           |           | (8,572 | ) |   |   | (2,175 | ) |   |   | (4,296 | ) |
| Net cash used for financing activities                                                    |                           |           |     (10,181 | ) |   |   |     (32,975 | ) |   |   | (1,422 | ) |
| Effect of exchange rate changes on cash                                                   |                           |           | - |   |   |   | - |   |   |   | (72 | ) |
|        Net increase (decrease) in cash and cash equivalents |                           | $              | 1,755 |   |   | $ | (15,323 | ) |   | $ |     10,803 |   |
|                                                                                      |

----

----

|                                                                                 |                           |           |                           |   | Payments Due In                |
|--------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|--------|--------------------------------|
|                                                                                 |                           |           |                           |   | Less than 1                    |   |   |   |   |   |   |   | More Than 5 |
|                                                                                 |       | Total Amount   |       | Year   |       | 1-3 Years |       | 3-5 Years |       | Years |
|                                                                                 |                           | (In thousands) |
| Long-term debt (excluding capital lease obligations),                                |                           |           |                           |   |                           |   |   |   |   |   |   |   |   |   |   |
|        including current maturities                    |                           | $              | 35,000                         |   | $                              | 2,333 |   | $ | 4,666 |   | $ | 28,001 |   | $ | - |
| Interest payment obligations(1)                                                      |                           |           | 8,857                          |   |                           | 1,626 |   |   | 3,228 |   |   | 4,003 |   |   | - |
| Capital lease obligations                                                            |                           |           | 387                            |   |                           | 180 |   |   | 207 |   |   | - |   |   | - |
| Operating lease obligations                                                          |                           |           | 117,977                        |   |                           | 10,064 |   |   | 14,402 |   |   | 11,962 |   |   | 81,549 |
| Purchase obligations                                                                 |                           |           | 73,514                         |   |                           | 51,998 |   |   | 20,932 |   |   | 584 |   |   | - |
| Contingent guarantee obligations(2)                                                  |                           |           | 3,169                          |   |                           | 3,169 |   |   | - |   |   | - |   |   | - |
| Other long-term obligations, including current portion,                              |                           |           |                           |   |                           |   |   |   |   |   |   |   |   |   |   |
|        reflected on the Company’s balance sheet: |                           |           |                           |   |                           |   |   |   |   |   |   |   |   |   |   |
|        Self-insurance claims, principally worker's     |                           |           |                           |   |                           |   |   |   |   |   |   |   |   |   |   |
|        compensation                                    |                           |           | 11,780                         |   |                           | 3,642 |   |   | 3,426 |   |   | 1,633 |   |   | 3,079 |
|        401(k) mirror plan liability                    |                           |           | 796                            |   |                           | - |   |   | - |   |   | - |   |   | 796 |
| Total                                                                                |                           | $    | 251,480                        |   | $                    | 73,012 |   | $   | 46,861 |   | $   | 46,183 |   | $   | 85,424 |
|                                                                                 |

| (1)                                  |        | Estimated interest payments for variable rate debt are based upon the forward LIBOR interest rate curve as of January 28, 2011. On March 3, 2011, the Company paid approximately $602,000 to enter into an interest rate derivative contract to hedge the Company’s exposure to higher interest rates, as more fully described in Note 9 to the consolidated financial statements appearing elsewhere herein. This payment is not reflected in the table above. |
|--------------------------------------|--------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |
| (2)                                  |        | Amounts represent 100% of the Company’s aggregate exposure at January 30, 2011 under loan guarantees related to franchisees in which the Company has an ownership interest. The timing of the potential payment is based upon the maturity of the guaranteed indebtedness. No demand has been made on the Company to perform under any of the guarantees.                                                                                                       |

----

- Working capital and other general corporate purposes;  
- Opening new Company stores in selected markets, principally small retail shops;  
- Remodeling and relocation of selected older Company shops;  
- Investing in equipment to support the off-premises distribution channel;  
- Maintaining and enhancing the KK Supply Chain manufacturing and distribution capabilities; and  
- Investing in systems and technology 

----

----

----

----

|                                       |                                          |                           | Weighted         |                           |              |                           |           |   |   |
|--------------------------------------------|-----------------------------------------------|--------------------------------|------------------|--------------------------------|-------------------|--------------------------------|----------------|--------|--------|
|                                       |                                          |                           | Average Contract |                           | Aggregate         |                           |           |   |
|                                       |                                          |                           | Price or Strike  |                           | Contract Price or |                           | Aggregate Fair |
|                                       | Contract Volume                               |       | Price            |       | Strike Price      |       | Value          |
|                                       | (Dollars in thousands, except average prices) |
| Futures contracts:                         |                                          |                           |             |                           |              |                           |           |   |   |   |
|        Wheat | 180,000 bu.                                   |                           | $                | 8.88                           |              | $                              | 1,598          |   | $      | 144 |

----

|       |                           |                    |                           |                        |                           |               |                           |                   |   | Approximate Annual |
|------------|--------------------------------|-------------------------|--------------------------------|-----------------------------|--------------------------------|--------------------|--------------------------------|------------------------|--------|--------------------|
|       |       | Approximate Anticipated |       | Approximate Range of Prices |                           | Hypothetical Price |                           | Effect Of Hypothetical |
| Ingredient |                           | Fiscal 2012 Purchases   |                           | Paid In Fiscal 2011         |                           | Increase           |                           | Price Increase         |
|       |                           |                    |                           |                        |       |               |       | (In thousands)         |
| Flour      |                           | 63.3 million lbs.       |                           | $0.1258 - $0.2368/lb.       |                           | $                  | 0.05/                          | lb.                    |   | $                  | 3,165 |
| Shortening |                           | 40.7 million lbs.       |                           | $0.5092 - $0.8100/lb.       |                           | $                  | 0.10/                          | lb.                    |   | $                  | 4,070 |
| Sugar      |                           | 55.5 million lbs.       |                           | $0.3100 - $0.3670/lb.       |                           | $                  | 0.05/                          | lb.                    |   | $                  | 2,775 |
| Gasoline   |                           | 2.6 million gal.        |                           | $2.52 - $2.99/gal.          |                           | $                  | 0.30/                          | gal.                   |   | $                  | 780 |

----

|                                                                                                                             | Page   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|
| Index to Financial Statements                                                                                                    |   |
| Report of Independent Registered Public Accounting Firm                                                                          | 65     |
| Consolidated statement of operations for each of the three years in the period ended January 30, 2011                            | 66     |
| Consolidated balance sheet as of January 30, 2011 and January 31, 2010                                                           | 67     |
| Consolidated statement of cash flows for the each of the three years in the period ended January 30, 2011                        | 68     |
| Consolidated statement of changes in shareholders’ equity for each of the three years in the period ended January 30, 2011 | 69     |
| Notes to financial statements                                                                                                    | 70     |

----

----

|                                                                                                           | Year Ended                               |
|----------------------------------------------------------------------------------------------------------------|------------------------------------------|
|                                                                                                           | January 30,                              |   | January 31, |   | February 1, |
|                                                                                                           | 2011                                     |   | 2010 |   | 2009 |
|                                                                                                           | (In thousands, except per share amounts) |
| Revenues                                                                                                       | $                         | 361,955 |   |       | $    | 346,520 |   |       | $    | 385,522 |   |
| Operating expenses:                                                                                            |                                     |   |   |   |   |   |   |   |   |   |   |
|        Direct operating expenses (exclusive of depreciation expense shown below) |                                     | 313,475 |   |   |   | 297,859 |   |   |   | 348,044 |   |
|        General and administrative expenses                                       |                                     | 21,870 |   |   |   | 22,793 |   |   |   | 23,460 |   |
|        Depreciation expense                                                      |                                     | 7,389 |   |   |   | 8,191 |   |   |   | 8,709 |   |
|        Impairment charges and lease termination costs                            |                                     | 4,066 |   |   |   | 5,903 |   |   |   | 548 |   |
| Operating income                                                                                               |                                     | 15,155 |   |   |   | 11,774 |   |   |   | 4,761 |   |
| Interest income                                                                                                |                                     | 207 |   |   |   | 93 |   |   |   | 331 |   |
| Interest expense                                                                                               |                                     | (6,359 | ) |   |   | (10,685 | ) |   |   | (10,679 | ) |
| Loss on refinancing of debt                                                                                    |                                     | (1,022 | ) |   |   | - |   |   |   | - |   |
| Equity in income (losses) of equity method franchisees                                                         |                                     | 547 |   |   |   | (488 | ) |   |   | (786 | ) |
| Other non-operating income and (expense), net                                                                  |                                     | 329 |   |   |   | (276 | ) |   |   | 2,815 |   |
| Income (loss) before income taxes                                                                              |                                     | 8,857 |   |   |   | 418 |   |   |   | (3,558 | ) |
| Provision for income taxes                                                                                     |                                     | 1,258 |   |   |   | 575 |   |   |   | 503 |   |
| Net income (loss)                                                                                              | $                                        | 7,599 |   |   | $ | (157 | ) |   | $ | (4,061 | ) |
|                                                                                                           |
| Earnings (loss) per common share:                                                                              |                                     |   |   |   |   |   |   |   |   |   |   |
|        Basic                                                                     | $                                        | 0.11 |   |   | $ | - |   |   | $ | (0.06 | ) |
|        Diluted                                                                   | $                                        | 0.11 |   |   | $ | - |   |   | $ | (0.06 | ) |
|                                                                                                           |

----

|                                                                                                                            | January 30,         |     | January 31, |
|---------------------------------------------------------------------------------------------------------------------------------|---------------------|----------|-------------|
|                                                                                                                            | 2011                |     | 2010        |
|                                                                                                                            | (In thousands)      |
| ASSETS                                                                                                                          |
| CURRENT ASSETS:                                                                                                                 |                |     |        |       |   |   |   |
| Cash and cash equivalents                                                                                                       | $    | 21,970   |        |   | $    | 20,215 |   |
| Receivables                                                                                                                     |                | 20,261   |        |   |   | 17,839 |   |
| Receivables from equity method franchisees                                                                                      |                | 586      |        |   |   | 524 |   |
| Inventories                                                                                                                     |                | 14,635   |        |   |   | 14,321 |   |
| Other current assets                                                                                                            |                | 5,970    |        |   |   | 6,324 |   |
|        Total current assets                                                                       |                | 63,422   |        |   |   | 59,223 |   |
| Property and equipment                                                                                                          |                | 71,163   |        |   |   | 72,986 |   |
| Investments in equity method franchisees                                                                                        |                | 1,663    |        |   |   | 781 |   |
| Goodwill and other intangible assets                                                                                            |                | 23,776   |        |   |   | 23,816 |   |
| Other assets                                                                                                                    |                | 9,902    |        |   |   | 8,470 |   |
|        Total assets                                                                               | $                   | 169,926  |        |   | $ | 165,276 |   |
|                                                                                                                            |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                      |
| CURRENT LIABILITIES:                                                                                                            |                |     |        |   |   |   |   |
| Current maturities of long-term debt                                                                                            | $                   | 2,513    |        |   | $ | 762 |   |
| Accounts payable                                                                                                                |                | 9,954    |        |   |   | 6,708 |   |
| Accrued liabilities                                                                                                             |                | 28,379   |        |   |   | 30,203 |   |
|        Total current liabilities                                                                  |                | 40,846   |        |   |   | 37,673 |   |
| Long-term debt, less current maturities                                                                                         |                | 32,874   |        |   |   | 42,685 |   |
| Other long-term obligations                                                                                                     |                | 19,778   |        |   |   | 22,151 |   |
|                                                                                                                            |
| Commitments and contingencies                                                                                                   |                |     |        |   |   |   |   |
|                                                                                                                            |
| SHAREHOLDERS’ EQUITY:                                                                                                     |                |     |        |   |   |   |   |
| Preferred stock, no par value                                                                                                   |                | -        |        |   |   | - |   |
| Common stock, no par value                                                                                                      |                | 370,808  |        |   |   | 366,237 |   |
| Accumulated other comprehensive loss                                                                                            |                | (34      | )           |   |   | (180 | ) |
| Accumulated deficit                                                                                                             |                | (294,346 | )           |   |   | (303,290 | ) |
|        Total shareholders’ equity                                                           |                | 76,428   |        |   |   | 62,767 |   |
|               Total liabilities and shareholders’ equity | $                   | 169,926  |        |   | $ | 165,276 |   |
|                                                                                                                            |

----

|                                                                                                                     | Year Ended           |
|--------------------------------------------------------------------------------------------------------------------------|----------------------|
|                                                                                                                     | January 30,          |   | January 31, |   | February 1, |
|                                                                                                                     | 2011                 |       | 2010 |       | 2009 |
|                                                                                                                     | (In thousands)       |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                    |                 |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                                                        | $     | 7,599 |   |   | $    | (157 | ) |   | $    | (4,061 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities:                                 |                 |   |   |   |   |   |   |   |   |   |   |
|        Depreciation expense                                                                |                 | 7,389 |   |   |   | 8,191 |   |   |   | 8,709 |   |
|        Deferred income taxes                                                               |                 | (95 | ) |   |   | (479 | ) |   |   | 651 |   |
|        Impairment charges                                                                  |                 | 3,304 |   |   |   | 2,666 |   |   |   | 1,050 |   |
|        Accrued rent expense                                                                |                 | (77 | ) |   |   | (412 | ) |   |   | (352 | ) |
|        Loss on disposal of property and equipment                                          |                 | 621 |   |   |   | 915 |   |   |   | 746 |   |
|        Gain on refranchise of Canadian subsidiary                                          |                 | - |   |   |   | - |   |   |   | (2,805 | ) |
|        Gain on disposal of interests in equity method franchisees                          |                 | - |   |   |   | - |   |   |   | (931 | ) |
|        Impairment of investment in equity method franchisee                                |                 | - |   |   |   | 500 |   |   |   | - |   |
|        Unrealized loss on interest rate derivatives                                        |                 | - |   |   |   | 559 |   |   |   | 798 |   |
|        Share-based compensation                                                            |                 | 5,147 |   |   |   | 4,779 |   |   |   | 5,152 |   |
|        Provision for doubtful accounts                                                     |                 | 32 |   |   |   | (161 | ) |   |   | 270 |   |
|        Amortization of deferred financing costs                                            |                 | 1,561 |   |   |   | 859 |   |   |   | 832 |   |
|        Equity in (income) losses of equity method franchisees                              |                 | (547 | ) |   |   | 488 |   |   |   | 786 |   |
|        Other                                                                               |                 | (330 | ) |   |   | (225 | ) |   |   | 1,820 |   |
| Change in assets and liabilities:                                                                                        |                 |   |   |   |   |   |   |   |   |   |   |
|        Receivables                                                                         |                 | (2,604 | ) |   |   | 2,151 |   |   |   | 4,222 |   |
|        Inventories                                                                         |                 | (314 | ) |   |   | 1,216 |   |   |   | 4,263 |   |
|        Other current and non-current assets                                                |                 | (2,506 | ) |   |   | 594 |   |   |   | 526 |   |
|        Accounts payable and accrued liabilities                                            |                 | 1,445 |   |   |   | (1,650 | ) |   |   | (3,817 | ) |
|        Other long-term obligations                                                         |                 | (117 | ) |   |   | (7 | ) |   |   | (1,266 | ) |
|               Net cash provided by operating activities |                 | 20,508 |   |   |   | 19,827 |   |   |   | 16,593 |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                    |                 |   |   |   |   |   |   |   |   |   |   |
| Purchase of property and equipment                                                                                       |                 | (9,694 | ) |   |   | (7,967 | ) |   |   | (4,694 | ) |
| Proceeds from disposals of property and equipment                                                                        |                 | 2,949 |   |   |   | 5,752 |   |   |   | 748 |   |
| Investments in equity method franchisees                                                                                 |                 | (50 | ) |   |   | (325 | ) |   |   | (113 | ) |
| Escrow deposit                                                                                                           |                 | (1,800 | ) |   |   | - |   |   |   | - |   |
| Other investing activities                                                                                               |                 | 23 |   |   |   | 365 |   |   |   | (237 | ) |
|               Net cash used for investing activities    |                 | (8,572 | ) |   |   | (2,175 | ) |   |   | (4,296 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                    |                 |   |   |   |   |   |   |   |   |   |   |
| Proceeds from issuance of long-term debt                                                                                 |                 | 35,000 |   |   |   | - |   |   |   | - |   |
| Repayment of long-term debt                                                                                              |                 | (43,257 | ) |   |   | (31,678 | ) |   |   | (1,989 | ) |
| Deferred financing costs                                                                                                 |                 | (1,348 | ) |   |   | (954 | ) |   |   | (467 | ) |
| Proceeds from exercise of stock options and warrants                                                                     |                 | 5 |   |   |   | - |   |   |   | 3,103 |   |
| Repurchase of common shares                                                                                              |                 | (581 | ) |   |   | (343 | ) |   |   | (2,069 | ) |
|               Net cash used for financing activities    |                 | (10,181 | ) |   |   | (32,975 | ) |   |   | (1,422 | ) |
| Effect of exchange rate changes on cash                                                                                  |                 | - |   |   |   | - |   |   |   | (72 | ) |
| Net increase (decrease) in cash and cash equivalents                                                                     |                 | 1,755 |   |   |   | (15,323 | ) |   |   | 10,803 |   |
| Cash and cash equivalents at beginning of year                                                                           |                 | 20,215 |   |   |   | 35,538 |   |   |   | 24,735 |   |
| Cash and cash equivalents at end of year                                                                                 | $                    | 21,970 |   |   | $ | 20,215 |   |   | $ | 35,538 |   |
| Supplemental schedule of non-cash investing and financing activities:                                                    |                 |   |   |   |   |   |   |   |   |   |   |
|        Assets acquired under capital leases                                                | $                    | 197 |   |   | $ | 258 |   |   | $ | 143 |   |

----

|                                                                                                                                                                                                                                                                                                               |                                  |   |                           |           |          |   |                           | Accumulated |                                                |   |                           |                |     |   |                      |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|--------|--------------------------------|----------------|---------------|--------|--------------------------------|-------------|-----------------------------------------------------|--------|--------------------------------|---------------------|----------|--------|---------------------------|--------|
|                                                                                                                                                                                                                                                                                                               | Common                                |   |                           |           |          |   | Other                          |        |                                                |   |                           |                |     |   |                      |
|                                                                                                                                                                                                                                                                                                               | Shares                                |   | Common                         |           | Comprehensive |   | Accumulated                    |        |                                                |   |                           |
|                                                                                                                                                                                                                                                                                                               | Outstanding                           |   | Stock                          |           | Income (Loss) |   | Deficit                        |        | Total                                               |
|                                                                                                                                                                                                                                                                                                               | (In thousands)                        |
| Balance at February 3, 2008                                                                                                                                                                                                                                                                                        | 65,370                                |   |       | $              | 355,615       |   |       | $           | 81                                                  |   |       | $    | (299,072 | )      |       | $      | 56,624 |   |
| Comprehensive income (loss):                                                                                                                                                                                                                                                                                       |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|        Net loss for the year ended                                                                                                                                                                                                                                                   |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|               February 1, 2009                                                                                                                                                                                                                    |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                | (4,061   | )      |                      |   | (4,061 | ) |
|        Recognition of foreign currency translation              adjustment upon disposal of subsidiary,              net of income taxes of $1,173 |                                  |   |                           |           |          |   |                           |        |           (1,797 | )      |                           |                |     |   |                      |   |     (1,797 | ) |
|        Foreign currency translation adjustment, net                                                                                                                                                                                                                                  |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|               of income taxes of $153                                                                                                                                                                                                             |                                  |   |                           |           |          |   |                           |        | 239                                                 |   |                           |                |     |   |                      |   | 239 |   |
|        Unrealized loss on cash flow hedge,                                                                                                                                                                                                                                           |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|               net of income taxes of $14                                                                                                                                                                                                          |                                  |   |                           |           |          |   |                           |        | (22                                                 | )      |                           |                |     |   |                      |   | (22 | ) |
|        Amortization of unrealized loss on interest                                                                                                                                                                                                                                   |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|               rate derivative, net of income taxes of $383                                                                                                                                                                                        |                                  |   |                           |           |          |   |                           |        | 586                                                 |   |                           |                |     |   |                      |   | 586 |   |
|        Total comprehensive loss                                                                                                                                                                                                                                                      |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   | (5,055 | ) |
| Exercise of stock options                                                                                                                                                                                                                                                                                          | 2,387                                 |   |                           |           | 3,103         |   |                           |        |                                                |   |                           |                |     |   |                      |   | 3,103 |   |
| Share-based compensation                                                                                                                                                                                                                                                                                           | 301                                   |   |                           |           | 5,152         |   |                           |        |                                                |   |                           |                |     |   |                      |   | 5,152 |   |
| Repurchase of common shares                                                                                                                                                                                                                                                                                        | (546                                  | )      |                           |           | (2,069        | )      |                           |        |                                                |   |                           |                |     |   |                      |   | (2,069 | ) |
| Balance at February 1, 2009                                                                                                                                                                                                                                                                                        |       67,512 |   |                           | $    | 361,801       |   |                           | $           | (913                                                | )      |                           | $                   | (303,133 | )      |                      | $      | 57,755 |   |
| Comprehensive income (loss):                                                                                                                                                                                                                                                                                       |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|        Net loss for the year ended                                                                                                                                                                                                                                                   |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|               January 31, 2010                                                                                                                                                                                                                    |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                | (157     | )      |                      |   | (157 | ) |
|        Foreign currency translation adjustment, net                                                                                                                                                                                                                                  |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|               of income taxes of $24                                                                                                                                                                                                              |                                  |   |                           |           |          |   |                           |        | 37                                                  |   |                           |                |     |   |                      |   | 37 |   |
|        Amortization of unrealized loss on interest                                                                                                                                                                                                                                   |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|               rate derivative, net of income taxes of $455                                                                                                                                                                                        |                                  |   |                           |           |          |   |                           |        | 696                                                 |   |                           |                |     |   |                      |   | 696 |   |
|        Total comprehensive income                                                                                                                                                                                                                                                    |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   | 576 |   |
| Cancelation of restricted shares                                                                                                                                                                                                                                                                                   | (52                                   | )      |                           |           | -             |   |                           |        |                                                |   |                           |                |     |   |                      |   | - |   |
| Share-based compensation                                                                                                                                                                                                                                                                                           | 57                                    |   |                           |           | 4,779         |   |                           |        |                                                |   |                           |                |     |   |                      |   | 4,779 |   |
| Repurchase of common shares                                                                                                                                                                                                                                                                                        | (76                                   | )      |                           |           | (343          | )      |                           |        |                                                |   |                           |                |     |   |                      |   | (343 | ) |
| Balance at January 31, 2010                                                                                                                                                                                                                                                                                        | 67,441                                |   |                           | $              | 366,237       |   |                           | $           | (180                                                | )      |                           | $                   | (303,290 | )      |                      | $      | 62,767 |   |
| Effect of adoption of new accounting                                                                                                                                                                                                                                                                               |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|        standard (Note 1)                                                                                                                                                                                                                                                             |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                | 1,345    |   |                      |   | 1,345 |   |
| Comprehensive income:                                                                                                                                                                                                                                                                                              |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|        Net income for the year ended                                                                                                                                                                                                                                                 |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|               January 30, 2011                                                                                                                                                                                                                    |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                | 7,599    |   |                      |   | 7,599 |   |
|        Foreign currency translation adjustment, net                                                                                                                                                                                                                                  |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|               of income taxes of $35                                                                                                                                                                                                              |                                  |   |                           |           |          |   |                           |        | 54                                                  |   |                           |                |     |   |                      |   | 54 |   |
|        Amortization of unrealized loss on interest                                                                                                                                                                                                                                   |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   |   |   |
|               rate derivative, net of income taxes of $60                                                                                                                                                                                         |                                  |   |                           |           |          |   |                           |        | 92                                                  |   |                           |                |     |   |                      |   | 92 |   |
|        Total comprehensive income                                                                                                                                                                                                                                                    |                                  |   |                           |           |          |   |                           |        |                                                |   |                           |                |     |   |                      |   | 7,745 |   |
| Exercise of warrants                                                                                                                                                                                                                                                                                               | -                                     |   |                           |           | 5             |   |                           |        |                                                |   |                           |                |     |   |                      |   | 5 |   |
| Cancelation of restricted shares                                                                                                                                                                                                                                                                                   | (2                                    | )      |                           |           | -             |   |                           |        |                                                |   |                           |                |     |   |                      |   | - |   |
| Share-based compensation                                                                                                                                                                                                                                                                                           | 161                                   |   |                           |           | 5,147         |   |                           |        |                                                |   |                           |                |     |   |                      |   | 5,147 |   |
| Repurchase of common shares                                                                                                                                                                                                                                                                                        | (73                                   | )      |                           |           | (581          | )      |                           |        |                                                |   |                           |                |     |   |                      |   | (581 | ) |
| Balance at January 30, 2011                                                                                                                                                                                                                                                                                        | 67,527                                |   |                           | $              | 370,808       |   |                           | $           | (34                                                 | )      |                           | $                   | (294,346 | )      |                      | $      | 76,428 |   |
|                                                                                                                                                                                                                                                                                                               |

----

- Company Stores revenue is derived from the sale of doughnuts and complimentary products to on-premises and off-premises customers. Revenue is recognized at the time of sale for on-premises sales. For off-premises sales, revenue is recognized at the time of delivery, net of provisions for estimated product returns.  
- Domestic and International Franchise revenue is derived from development and initial franchise fees relating to new store openings and ongoing royalties charged to franchisees based on their sales. Development and franchise fees for new stores are deferred until the store is opened, which is the time at which the Company has performed substantially all of the initial services it is required to provide. Royalties are recognized in income as underlying franchisee sales occur unless there is significant uncertainty concerning the collectibility of such revenues, in which case royalty revenues are recognized when received.   
- KK Supply Chain revenue is derived from the sale of doughnut mix, other ingredients and supplies and doughnut-making equipment. Revenues for the sale of doughnut mix and supplies are recognized upon delivery to the customer or, in the case of franchisees located outside North America, when the goods are loaded on the transport vessel at the U.S. port. Revenue for equipment sales and installation associated with new store openings is recognized at the store opening date. Revenue for equipment sales not associated with new store openings is recognized when the equipment is installed if the Company is responsible for the installation, and otherwise upon shipment of the equipment. 

----

|                                                                                                                             |                           | Year Ended     |
|----------------------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------|
|                                                                                                                             |       | January 30,    |       | January 31, |       | February 1, |
|                                                                                                                             |                           | 2011           |   | 2010 |   | 2009 |
|                                                                                                                             |                           | (In thousands) |
| Numerator: net income (loss)                                                                                                     |                           | $              | 7,599 |   | $ | (157 | ) |   | $ | (4,061 | ) |
| Denominator:                                                                                                                     |                           |           |   |   |   |   |   |   |   |   |   |
|        Basic earnings per share - weighted average shares                                          |                           |           |   |   |   |   |   |   |   |   |   |
|               outstanding                                       |                           |           |     68,337 |   |   |     67,493 |   |   |   |     65,940 |   |
|        Effect of dilutive securities:                                                              |                           |           |   |   |   |   |   |   |   |   |   |
|               Stock options                                     |                           |           | 1,055 |   |   | - |   |   |   | - |   |
|               Restricted stock and restricted stock units       |                           |           | 530 |   |   | - |   |   |   | - |   |
|        Diluted earnings per share - weighted average shares                                        |                           |           |   |   |   |   |   |   |   |   |   |
|               outstanding plus dilutive potential common shares |                           |           | 69,922 |   |   | 67,493 |   |   |   | 65,940 |   |
|                                                                                                                             |

----

----

|                                                                                    |                           | January 30,    |                           | January 31, |
|-----------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|-------------|
|                                                                                    |       | 2011           |       | 2010        |
|                                                                                    |                           | (In thousands) |
| Accumulated other comprehensive income (loss):                                          |                           |           |                           |        |   |   |   |   |
|        Unrealized losses on interest rate derivatives     |                           | $              | -                              |        |   | $ | (152 | ) |
|        Cumulative foreign currency translation adjustment |                           |           | (57                            | )           |   |   | (146 | ) |
|                                                                                    |                           |           | (57                            | )           |   |   | (298 | ) |
|        Less: deferred income taxes                        |                           |           | 23                             |        |   |   | 118 |   |
|                                                                                    |                           | $              | (34                            | )           |   | $ | (180 | ) |
|                                                                               |

----

|                                                                              |                           | January 30,    |                           | January 31, |
|-----------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|-------------|
|                                                                              |       | 2011           |       | 2010        |
|                                                                              |                           | (In thousands) |
| Receivables:                                                                      |                           |           |                           |        |   |   |   |   |
|        Off-premises customers                       |                           | $              | 9,990                          |        |   | $ | 9,010 |   |
|        Unaffiliated franchisees                     |                           |           | 9,805                          |        |   |   | 8,974 |   |
|        Other receivables                            |                           |           | 1,565                          |        |   |   | 1,130 |   |
|        Current portion of notes receivable          |                           |           | 235                            |        |   |   | 68 |   |
|                                                                              |                           |           | 21,595                         |        |   |   | 19,182 |   |
| Less — allowance for doubtful accounts:                                     |                           |           |                           |        |   |   |   |   |
|        Off-premises customers                       |                           |           | (326                           | )           |   |   | (307 | ) |
|        Unaffiliated franchisees                     |                           |           | (1,008                         | )           |   |   | (1,036 | ) |
|                                                                              |                           |           | (1,334                         | )           |   |   | (1,343 | ) |
|                                                                              |                           | $              |     20,261      |        |   | $ |     17,839 |   |
| Receivables from Equity Method Franchisees (Note 17):                             |                           |           |                           |        |   |   |   |   |
|        Trade                                        |                           | $              | 586                            |        |   | $ | 1,263 |   |
|        Less — allowance for doubtful accounts |                           |           | -                              |        |   |   | (739 | ) |
|                                                                              |                           | $              | 586                            |        |   | $ | 524 |   |
|                                                                              |

|                                                                                       |                           | Year Ended     |
|--------------------------------------------------------------------------------------------|--------------------------------|----------------|
|                                                                                       |                           | January 30,    |   | January 31, |   | February 1, |
|                                                                                       |       | 2011           |       | 2010 |       | 2009 |
|                                                                                       |                           | (In thousands) |
| Allowance for doubtful accounts related to receivables:                                    |                           |           |   |   |   |   |   |   |   |   |   |   |
|        Balance at beginning of year                          |                           | $              | 1,343 |   |   | $ | 2,857 |   |   | $ | 4,750 |   |
|        Provision for doubtful accounts                       |                           |           | 362 |   |   |   | (769 | ) |   |   | 71 |   |
|        Chargeoffs                                            |                           |           | (224 | ) |   |   | (745 | ) |   |   |      (2,064 | ) |
|        Other                                                 |                           |           | - |   |   |   | - |   |   |   | 100 |   |
|        Transfers to allowances for notes receivable (Note 7) |                           |           | (147 | ) |   |   | - |   |   |   | - |   |
|        Balance at end of year                                |                           | $              |      1,334 |   |   | $ |      1,343 |   |   | $ | 2,857 |   |
|                                                                                       |                           |           |   |   |   |   |   |   |   |   |   |   |
| Allowance for doubtful accounts related to receivables from Equity Method                  |                           |           |   |   |   |   |   |   |   |   |   |   |
| Franchisees:                                                                               |                           |           |   |   |   |   |   |   |   |   |   |   |
|        Balance at beginning of year                          |                           | $              | 739 |   |   | $ | 249 |   |   | $ | 1,379 |   |
|        Provision for doubtful accounts                       |                           |           | (35 | ) |   |   | 490 |   |   |   | 199 |   |
|        Chargeoffs                                            |                           |           | (233 | ) |   |   | - |   |   |   | (1,329 | ) |
|        Transfers to allowances for notes receivable (Note 7) |                           |           | (471 | ) |   |   | - |   |   |   | - |   |
|        Balance at end of year                                |                           | $              | - |   |   | $ | 739 |   |   | $ | 249 |   |
|                                                                                  |

----

|                   |                           | January 30,    |                           | January 31, |
|------------------------|--------------------------------|----------------|--------------------------------|-------------|
|                   |       | 2011           |       | 2010        |
|                   |                           | (In thousands) |
| Raw materials          |                           | $              | 5,265                          |        | $ | 5,253 |
| Work in progress       |                           |           | 54                             |        |   | 4 |
| Finished goods         |                           |           | 3,194                          |        |   | 3,688 |
| Purchased merchandise  |                           |           | 6,018                          |        |   | 5,268 |
| Manufacturing supplies |                           |           | 104                            |        |   | 108 |
|                   |                           | $              |     14,635      |        | $ |     14,321 |
|                   |

|                                                                           |                           | January 30,    |                           | January 31, |
|--------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|-------------|
|                                                                           |       | 2011           |       | 2010        |
|                                                                           |                           | (In thousands) |
| Escrow deposit (Note 9)                                                        |                           | $              | 1,800                          |        | $ | - |
| Current portion of claims against insurance carriers related to self-insurance |                           |           |                           |        |   |   |
|        programs (Notes 1, 7, 8 and 10)           |                           |           | 477                            |        |   | 679 |
| Commodity futures contracts                                                    |                           |           | 144                            |        |   | - |
| Closed stores held for sale                                                    |                           |           | -                              |        |   | 2,574 |
| Prepaid expenses and other                                                     |                           |           | 3,549                          |        |   | 3,071 |
|                                                                           |                           | $              | 5,970                          |        | $ | 6,324 |
|                                                                           |

|                           |                           | January 30,    |                           | January 31, |
|--------------------------------|--------------------------------|----------------|--------------------------------|-------------|
|                           |       | 2011           |       | 2010        |
|                           |                           | (In thousands) |
| Land                           |                           | $              | 13,843                         |        |   | $ | 13,975 |   |
| Buildings                      |                           |           | 61,304                         |        |   |   | 62,812 |   |
| Leasehold improvements         |                           |           | 9,596                          |        |   |   | 9,146 |   |
| Machinery and equipment        |                           |           | 46,955                         |        |   |   | 52,124 |   |
| Computer software              |                           |           | 6,521                          |        |   |   | 6,001 |   |
| Construction in progress       |                           |           | 1,593                          |        |   |   | 432 |   |
|                           |                           |           |    139,812           |        |   |   |    144,490 |   |
| Less: accumulated depreciation |                           |           | (68,649                        | )           |   |   | (71,504 | ) |
|                           |                           | $              | 71,163                         |        |   | $ | 72,986 |   |
|                           |

----

|                                                                                                    |                           | January 30,    |                           | January 31, |
|---------------------------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|-------------|
|                                                                                                    |       | 2011           |       | 2010        |
|                                                                                                    |                           | (In thousands) |
| Indefinite-lived intangible assets:                                                                     |                           |           |                           |        |   |   |
|        Goodwill associated with International Franchise segment           |                           | $              | 15,664                         |        | $ | 15,664 |
|        Goodwill associated with Domestic Franchise segment                |                           |           | 7,832                          |        |   | 7,832 |
|        Reacquired franchise rights associated with Company Stores segment |                           |           | 280                            |        |   | 320 |
|                                                                                                    |                           | $              |     23,776      |        | $ |     23,816 |
|                                                                                                    |

|                                                                               |                           | January 30,    |                           | January 31, |
|------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|-------------|
|                                                                               |       | 2011           |       | 2010        |
|                                                                               |                           | (In thousands) |
| Deposits                                                                           |                           | $              | 3,399                          |        | $ | 1,515 |
| Non-current portion of claims against insurance carriers related to self-insurance |                           |           |                           |        |   |   |
|        programs (Note 1, 4, 8 and 10)                |                           |           | 2,543                          |        |   | 3,116 |
| Deferred financing costs, net of accumulated amortization                          |                           |           | 1,886                          |        |   | 2,099 |
| Non-current portion of notes receivable                                            |                           |           | 918                            |        |   | 146 |
| 401(k) mirror plan assets (Note 10 and 19)                                         |                           |           | 796                            |        |   | 455 |
| Other                                                                              |                           |           | 360                            |        |   | 1,139 |
|                                                                               |                           | $              |     9,902       |        | $ |     8,470 |
|                                                                               |

|                                                                                                               |                           | January 30,    |                           | January 31, |
|--------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|-------------|
|                                                                                                               |       | 2011           |       | 2010        |
|                                                                                                               |                           | (In thousands) |
| Notes receivable:                                                                                                  |                           |           |                           |        |   |   |   |   |
|        Note receivable from Equity Method Franchisee arising from past due royalties |                           | $              | 391                            |        |   | $ | - |   |
|        Note receivable arising from refranchising transaction                        |                           |           | 654                            |        |   |   | - |   |
|        Notes receivable arising from sale of real estate                             |                           |           | 148                            |        |   |   | 183 |   |
|        Other                                                                         |                           |           | 498                            |        |   |   | 160 |   |
|                                                                                                               |                           |           |     1,691       |        |   |   | 343 |   |
|        Less — portion due within one year                                      |                           |           | (235                           | )           |   |   | (68 | ) |
|        Less — allowance for doubtful accounts                                  |                           |           | (538                           | )           |   |   |         (129 | ) |
|                                                                                                               |                           | $              | 918                            |        |   | $ | 146 |   |
|                                                                                                               |

----

|                                                     |                           | Year Ended     |
|----------------------------------------------------------|--------------------------------|----------------|
|                                                     |                           | January 30,    |   | January 31, |   | February 1, |
|                                                     |       | 2011           |       | 2010 |       | 2009 |
|                                                     |                           | (In thousands) |
| Balance at beginning of year                             |                           | $              | 129 |   |   | $ | - |   | $ | - |
| Provision for doubtful accounts                          |                           |           | (295 | ) |   |   | 118 |   |   | - |
| Chargeoffs                                               |                           |           | (119 | ) |   |   | - |   |   | - |
| Recoveries                                               |                           |           | 205 |   |   |   | 11 |   |   | - |
| Transfers from allowances for trade receivables (Note 2) |                           |           | 618 |   |   |   | - |   |   | - |
| Balance at end of year                                   |                           | $              | 538 |   |   | $ | 129 |   | $ | - |
|                                                     |

|                                                                        |                           | January 30,    |                           | January 31, |
|-----------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|-------------|
|                                                                        |       | 2011           |       | 2010        |
|                                                                        |                           | (In thousands) |
| Accrued compensation                                                        |                           | $              | 7,938                          |        | $ | 6,571 |
| Accrued vacation pay                                                        |                           |           | 5,024                          |        |   | 4,814 |
| Current portion of self-insurance claims, principally worker's compensation |                           |           |                           |        |   |   |
|        (Notes 1, 4, 7 and 10)                 |                           |           | 3,642                          |        |   | 4,245 |
| Accrued guarantee liabilities (Notes 11, 13 and 17)                         |                           |           | 2,518                          |        |   | 2,702 |
| Accrued taxes, other than income                                            |                           |           | 1,795                          |        |   | 2,097 |
| Customer deposits                                                           |                           |           | 1,208                          |        |   | 1,319 |
| Accrued health care claims                                                  |                           |           | 1,136                          |        |   | 1,110 |
| Current portion of lease termination costs (Notes 10 and 12)                |                           |           | 648                            |        |   | 298 |
| Accrued professional fees                                                   |                           |           | 283                            |        |   | 873 |
| Current portion of deferred franchise fee revenue                           |                           |           | 213                            |        |   | 285 |
| Accrued interest                                                            |                           |           | 11                             |        |   | 292 |
| Fair value of interest rate derivative                                      |                           |           | -                              |        |   | 641 |
| Other                                                                       |                           |           | 3,963                          |        |   | 4,956 |
|                                                                        |                           | $              | 28,379                         |        | $ | 30,203 |
|                                                                        |

----

|                                                                                                                   |                           | Year Ended     |
|------------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------|
|                                                                                                                   |                           | January 30,    |   | January 31, |   | February 1, |
|                                                                                                                   |       | 2011           |       | 2010 |       | 2009 |
|                                                                                                                   |                           | (In thousands) |
| Accrual for self-insurance programs, net of receivables from stop-loss policies:                                       |                           |           |   |   |   |   |   |   |   |   |   |   |
|        Balance at beginning of year                                                      |                           | $              | 9,777 |   |   | $ | 11,781 |   |   | $ | 12,303 |   |
|               Additions charged to costs and expenses |                           |           | 2,538 |   |   |   | 1,372 |   |   |   | 3,707 |   |
|               Claims payments                         |                           |           | (3,555 | ) |   |   | (3,376 | ) |   |   | (4,229 | ) |
|        Balance at end of year                                                            |                           | $              | 8,760 |   |   | $ | 9,777 |   |   | $ | 11,781 |   |
|        Net accrual reflected in:                                                         |                           |           |   |   |   |   |   |   |   |   |   |   |
|               Accrued liabilities                     |                           | $              | 3,642 |   |   | $ | 4,245 |   |   | $ | 5,086 |   |
|               Other long-term obligations             |                           |           | 8,138 |   |   |   | 9,327 |   |   |   | 11,069 |   |
|        Less: Claims receivable under stop-loss insurance policies included in:           |                           |           |   |   |   |   |   |   |   |   |   |   |
|               Other current assets                    |                           |           | (477 | ) |   |   | (679 | ) |   |   | (755 | ) |
|               Other assets                            |                           |           | (2,543 | ) |   |   | (3,116 | ) |   |   | (3,619 | ) |
|                                                                                                                   |                           | $              | 8,760 |   |   | $ | 9,777 |   |   | $ | 11,781 |   |
|                                                                                                                   |

|                      |                           | January 30,    |                            | January 31, |
|---------------------------|--------------------------------|----------------|---------------------------------|-------------|
|                      |       | 2011           |        | 2010        |
|                      |                           | (In thousands) |
| 2011 Term Loan            |                           | $              | 35,000                          |        |   | $ | - |   |
| 2007 Term Loan            |                           |           | -                               |        |   |   | 43,054 |   |
| Capital lease obligations |                           |           | 387                             |        |   |   | 393 |   |
|                      |                           |           | 35,387                          |        |   |   | 43,447 |   |
| Less: current maturities  |                           |           | (2,513                          | )           |   |   | (762 | ) |
|                      |                           | $              |      32,874 |        |   | $ |      42,685 |   |
|                      |

| Fiscal Year |   |       | (In thousands) |
|-------------|--------|--------------------------------|----------------|
| 2012        |   | $                              | 2,513          |
| 2013        |   |                           | 2,473          |
| 2014        |   |                           | 2,400          |
| 2015        |   |                           | 2,333          |
| 2016        |   |                           | 25,668         |
|        |   | $                              | 35,387         |
|        |

----

----

----

|                                                    | Operating           |    | Capital                        |
|---------------------------------------------------------|---------------------|---------|--------------------------------|
| Fiscal Year                                             |                | Leases  |                           | Leases |
|                                                    | (In thousands)      |
| 2012                                                    | $                   | 10,064  |       | $      | 200 |   |
| 2013                                                    |                | 7,856   |                           |   | 150 |   |
| 2014                                                    |                | 6,546   |                           |   | 69 |   |
| 2015                                                    |                | 6,107   |                           |   | - |   |
| 2016                                                    |                | 5,855   |                           |   | - |   |
| Thereafter                                              |                | 81,549  |                           |   | - |   |
|                                                    | $    | 117,977 |                           |   | 419 |   |
| Less: portion representing interest and executory costs |                |    |                           |   | (32 | ) |
|                                                    |                |    |                           | $    | 387 |   |
|                                                    |

|                                                                            | January 30,    |   | January 31,                    |
|---------------------------------------------------------------------------------|----------------|--------|--------------------------------|
|                                                                            | 2011           |   | 2010                           |
|                                                                            | (In thousands) |
| Non-current portion of self-insurance claims, principally worker's compensation |           |   |       |   |   |
|        (Notes 1, 4, 7 and 8)                      | $              | 8,138  |                           | $ | 9,327 |
| Accrued rent expense                                                            |           | 4,605  |                           |   | 5,864 |
| Non-current portion of deferred franchise fee revenue                           |           | 3,040  |                           |   | 3,191 |
| Non-current portion of lease termination costs (Notes 8 and 12)                 |           | 1,347  |                           |   | 1,381 |
| Mirror 401(k) plan liability (Notes 7 and 19)                                   |           | 796    |                           |   | 455 |
| Other                                                                           |           | 1,852  |                           |   | 1,933 |
|                                                                            | $    | 19,778 |                           | $    | 22,151 |
|                                                                            |

----

----

|                                                                                                                                                                          | Year Ended                  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
|                                                                                                                                                                          | January 30,                 |   | January 31, |   | February 1, |
|                                                                                                                                                                          | 2011                        |   | 2010 |   | 2009 |
|                                                                                                                                                                          | (In thousands)              |
| Impairment charges:                                                                                                                                                           |                        |   |   |   |   |   |   |   |   |   |   |
|        Impairment of long-lived assets - current period charges                                                                                 | $       | 3,437 |   |       | $       | 3,108 |   |       | $      | 1,050 |   |
|        Impairment of long-lived assets - adjustments to previously recorded estimates                                                           |                        | (173 | ) |   |   | - |   |   |   | - |   |
|        Impairment of reacquired franchise rights                                                                                                |                        | 40 |   |   |   | 40 |   |   |   | - |   |
|        Recovery from bankruptcy estate of former subsidiary                                                                                     |                        | - |   |   |   | (482 | ) |   |   | - |   |
|               Total impairment charges                                                                       |                        | 3,304 |   |   |   | 2,666 |   |   |   | 1,050 |   |
| Lease termination costs:                                                                                                                                                      |                        |   |   |   |   |   |   |   |   |   |   |
|        Provision for termination costs                                                                                                          |                        | 1,449 |   |   |   | 4,195 |   |   |   | 316 |   |
|        Less — reversal of previously recorded accrued rent expense                                                                        |                        | (687 | ) |   |   | (958 | ) |   |   | (818 | ) |
|               Net provision                                                                                  |                        | 762 |   |   |   | 3,237 |   |   |   | (502 | ) |
|                      Total impairment charges and lease termination costs | $                           | 4,066 |   |   | $ | 5,903 |   |   | $ | 548 |   |
|                                                                                                                                                                          |

----

|                                                                                                                                                                                         | Year Ended                |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|
|                                                                                                                                                                                         | January 30,               |   | January 31, |   | February 1, |
|                                                                                                                                                                                         | 2011                      |   | 2010 |   | 2009 |
|                                                                                                                                                                                         | (In thousands)            |
| Balance at beginning of year                                                                                                                                                                 | $     | 1,679 |   |       | $     | 1,880 |   |       | $     | 2,837 |   |
|        Provision for lease termination costs:                                                                                                                  |                      |   |   |   |   |   |   |   |   |   |   |
|               Provisions associated with store closings, net of estimated sublease rentals                                  |                      | 422 |   |   |   | 2,427 |   |   |   | 380 |   |
|               Adjustments to previously recorded provisions resulting                                                       |                      |   |   |   |   |   |   |   |   |   |   |
|                      from settlements with lessors and adjustments of previous estimates |                      | 832 |   |   |   | 1,580 |   |   |   | (284 | ) |
|               Accretion of discount                                                                                         |                      | 195 |   |   |   | 188 |   |   |   | 220 |   |
|                      Total provision                                                     |                      | 1,449 |   |   |   | 4,195 |   |   |   | 316 |   |
|        Proceeds from assignment of leases                                                                                                                      |                      | - |   |   |   | 62 |   |   |   | 748 |   |
|        Payments on unexpired leases, including settlements with lessors                                                                                        |                      | (1,133 | ) |   |   | (4,458 | ) |   |   | (2,021 | ) |
|                      Total reductions                                                    |                      | (1,133 | ) |   |   | (4,396 | ) |   |   | (1,273 | ) |
| Balance at end of year                                                                                                                                                                       | $                         | 1,995 |   |   | $ | 1,679 |   |   | $ | 1,880 |   |
| Accrued lease termination costs are included in the consolidated balance sheet                                                                                                               |                      |   |   |   |   |   |   |   |   |   |   |
|        as follows:                                                                                                                                             |                      |   |   |   |   |   |   |   |   |   |   |
|               Accrued liabilities                                                                                           | $                         | 648 |   |   | $ | 298 |   |   | $ | 364 |   |
|               Other long-term obligations                                                                                   |                      | 1,347 |   |   |   | 1,381 |   |   |   | 1,516 |   |
|                                                                                                                                                                                         | $                         | 1,995 |   |   | $ | 1,679 |   |   | $ | 1,880 |   |
|                                                                                                                                                                                         |

|                                                               | Year Ended           |
|--------------------------------------------------------------------|----------------------|
|                                                               | January 30,          |   | January 31, |   | February 1, |
|                                                               | 2011                 |   | 2010 |   | 2009 |
|                                                               | (In thousands)       |
| Foreign currency transaction loss                                  | $                    | - |       | $ | (1 | ) |       | $ | (14 | ) |
| Gain on refranchise of Canadian subsidiary                         |                 | - |   |   | - |   |   |   | 2,805 |   |
| Gain on disposal of interests in Equity Method Franchises          |                 | - |   |   | - |   |   |   | 931 |   |
| Impairment charges and provisions related to investments in Equity |                 |   |   |   |   |   |   |   |   |   |
|        Method Franchisees (Note 17)  |                 | - |   |   | (500 | ) |   |   | (957 | ) |
| Provision for guarantee payments                                   |                 | 329 |   |   | 225 |   |   |   | 50 |   |
|                                                               | $     | 329 |   | $        | (276 | ) |   | $      | 2,815 |   |
|                                                               |

----

|     | Year Ended                 |
|----------|----------------------------|
|     | January 30,                |       | January 31, |       | February 1, |
|     | 2011                       |   | 2010 |   | 2009 |
|     | (In thousands)             |
| Current  | $                          | 1,353 |   |   | $      | 1,054 |   |   | $        | (148 | ) |
| Deferred |                       | (95 | ) |   |   | (479 | ) |   |   | 651 |   |
|     | $      | 1,258 |   |   | $ | 575 |   |   | $ | 503 |   |
|     |

|                                                                         | Year Ended                 |
|------------------------------------------------------------------------------|----------------------------|
|                                                                         | January 30,                |       | January 31, |       | February 1, |
|                                                                         | 2011                       |   | 2010 |   | 2009 |
|                                                                         | (In thousands)             |
| Domestic                                                                     | $                          | 8,843 |   | $ | 444 |   |   | $      | (1,405 | ) |
| Foreign                                                                      |                       | 14 |   |   | (26 | ) |   |   | (2,153 | ) |
|        Total income (loss) before income taxes | $      | 8,857 |   | $         | 418 |   |   | $ | (3,558 | ) |
|                                                                         |

|                                                                         | Year Ended                  |
|------------------------------------------------------------------------------|-----------------------------|
|                                                                         | January 30,                 |       | January 31, |       | February 1, |
|                                                                         | 2011                        |   | 2010 |   | 2009 |
|                                                                         | (In thousands)              |
| Income taxes at statutory federal rate                                       | $       | 3,100 |   |   | $       | 146 |   |   | $       | (1,245 | ) |
| State income taxes                                                           |                        | 898 |   |   |   | 162 |   |   |   | 517 |   |
| Foreign (income) losses having no tax effect                                 |                        | (5 | ) |   |   | 9 |   |   |   | 47 |   |
| Change in valuation allowance on deferred income tax assets                  |                        | (2,852 | ) |   |   | 1,100 |   |   |   | 2,081 |   |
| Accruals for uncertain tax positions                                         |                        | (50 | ) |   |   | 74 |   |   |   | (1,472 | ) |
| Accruals for interest and penalties                                          |                        | (64 | ) |   |   | 86 |   |   |   | (283 | ) |
| Change in federal tax credit carryforwards (principally foreign tax credits) |                        | (1,549 | ) |   |   | (1,499 | ) |   |   | (1,557 | ) |
| Foreign withholding taxes                                                    |                        | 1,513 |   |   |   | 1,400 |   |   |   | 1,361 |   |
| Other                                                                        |                        | 267 |   |   |   | (903 | ) |   |   | 1,054 |   |
|                                                                         | $                           | 1,258 |   |   | $ | 575 |   |   | $ | 503 |   |
|                                                                         |

|                                           | January 30,                                   |       | January 31, |
|------------------------------------------------|-----------------------------------------------|--------------------------------|-------------|
|                                           | 2011                                          |                           | 2010        |
|                                           | (In thousands)                                |
| Net current assets                             | $          | 15                             |        |   | $    | - |
| Net noncurrent liabilities                     |                                          | (15                            | )           |   |   | - |
|        Net asset | $                                             | -                              |        |   | $ | - |
|                                           |

----

|                                                                                                                                                                            | Year Ended          |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|
|                                                                                                                                                                            | January 30,         |   | January 31, |
|                                                                                                                                                                            | 2011                |   | 2010 |
|                                                                                                                                                                            | (In thousands)      |
| Deferred income tax assets:                                                                                                                                                     |                |   |   |       |   |   |   |
|        Goodwill and other intangible assets                                                                                                       | $    | 16,734 |   |   | $    | 22,543 |   |
|        Allowance for doubtful accounts                                                                                                            |                | 527 |   |   |   | 822 |   |
|        Other current assets                                                                                                                       |                | 1,932 |   |   |   | 2,293 |   |
|        Property and equipment                                                                                                                     |                | 923 |   |   |   | 477 |   |
|        Other non-current assets                                                                                                                   |                | 3,956 |   |   |   | 2,968 |   |
|        Insurance accruals                                                                                                                         |                | 3,909 |   |   |   | 4,301 |   |
|        Deferred revenue                                                                                                                           |                | 2,119 |   |   |   | 2,061 |   |
|        Other current liabilities                                                                                                                  |                | 6,746 |   |   |   | 6,954 |   |
|        Accrued litigation settlement                                                                                                              |                | 7,315 |   |   |   | 7,315 |   |
|        Other non-current liabilities                                                                                                              |                | 2,490 |   |   |   | 2,919 |   |
|        Non-employee stock warrants                                                                                                                |                | 2,647 |   |   |   | 2,647 |   |
|        Share-based compensation                                                                                                                   |                | 6,979 |   |   |   | 5,878 |   |
|        Federal net operating loss carryforwards                                                                                                   |                | 84,510 |   |   |   | 83,446 |   |
|        Federal tax credit carryforwards                                                                                                           |                | 7,796 |   |   |   | 6,258 |   |
|        Charitable contributions carryforward                                                                                                      |                | 664 |   |   |   | 556 |   |
|        State net operating loss and credit carryforwards                                                                                          |                | 9,919 |   |   |   | 10,266 |   |
|        Other                                                                                                                                      |                | 180 |   |   |   | 281 |   |
|               Gross deferred income tax assets                                                                 |                | 159,346 |   |   |   | 161,985 |   |
|               Valuation allowance on deferred income tax assets                                                |                | (159,133 | ) |   |   | (161,985 | ) |
|                      Deferred income tax assets, net of valuation allowance |                | 213 |   |   |   | - |   |
| Deferred income tax liabilities:                                                                                                                                                |                |   |   |   |   |   |   |
|        Other                                                                                                                                      |                | (213 | ) |   |   | - |   |
|               Gross deferred income tax liabilities                                                            |                | (213 | ) |   |   | - |   |
|               Net deferred income tax asset                                                                    | $                   | - |   |   | $ | - |   |
|                                                                                                                                                                            |

----

|                                                    | Year Ended                 |
|---------------------------------------------------------|----------------------------|
|                                                    | January 30,                |       | January 31, |       | February 1, |
|                                                    | 2011                       |   | 2010 |   | 2009 |
|                                                    | (In thousands)             |
| Unrecognized tax benefits at beginning of year          | $      | 1,570 |   |   | $      | 1,680 |   |   | $     | 5,130 |   |
| Increases in positions related to the current year      |                       | 85 |   |   |   | 358 |   |   |   | 4 |   |
| Increases (decreases) in positions taken in prior years |                       | 28 |   |   |   | 1 |   |   |   | (1,354 | ) |
| Settlements with taxing authorities                     |                       | - |   |   |   | - |   |   |   | (1,994 | ) |
| Lapsing of statutes of limitations                      |                       | (777 | ) |   |   | (469 | ) |   |   | (106 | ) |
| Unrecognized tax benefits at end of year                | $                          | 906 |   |   | $ | 1,570 |   |   | $ | 1,680 |   |
|                                                    |

|                                                                                                                                           | Year Ended          |
|------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|
|                                                                                                                                           | January 30,         |       | January 31, |       | February 1, |
|                                                                                                                                           | 2011                |   | 2010 |   | 2009 |
|                                                                                                                                           | (In thousands)      |
| Valuation allowance on deferred tax assets:                                                                                                    |                |   |   |   |   |   |   |   |   |
|        Balance at beginning of year                                                                              | $    | 161,985 |   |   | $ | 160,885 |   | $    | 158,804 |
|               Change in allowance reflected in the provision for income taxes |                | (2,852 | ) |   |   | 1,100 |   |   | 2,081 |
|        Balance at end of year                                                                                    | $                   | 159,133 |   |   | $ | 161,985 |   | $ | 160,885 |
|                                                                                                                                           |

----

|                                                                                       | Year Ended          |
|--------------------------------------------------------------------------------------------|---------------------|
|                                                                                       | January 30,         |   | January 31, |   | February 1, |
|                                                                                       | 2011                |   | 2010 |   | 2009 |
|                                                                                       | (In thousands)      |
| Costs charged to earnings related to:                                                      |                |   |   |   |   |   |   |   |
|        Stock options                                         | $    | 1,722 |       | $    | 1,254 |       | $    | 2,181 |
|        Restricted stock and restricted stock units           |                | 3,425 |   |   | 3,525 |   |   | 2,971 |
|               Total costs | $                   | 5,147 |   | $ | 4,779 |   | $ | 5,152 |
|                                                                                       |
| Costs included in:                                                                         |                |   |   |   |   |   |   |   |
|        Direct operating expenses                             | $                   | 2,079 |   | $ | 1,673 |   | $ | 2,216 |
|        General and administrative expenses                   |                | 3,068 |   |   | 3,106 |   |   | 2,936 |
|               Total costs | $                   | 5,147 |   | $ | 4,779 |   | $ | 5,152 |
|                                                                                       |

|                         | Year Ended  |
|------------------------------|-------------|
|                         | January 30, |       | January 31, |       | February 1, |
|                         | 2011        |   | 2010 |   | 2009 |
| Expected life of option      | 7.0 years   |   |   | 7.0 years |   |     | 7.0 years |   |
| Risk-Free interest rate      | 2.66        | % |     | 3.12 | % |      | 2.74 | % |
| Expected Volatility of stock | 50.0        | % |   | 50.0 | % |   | 50.0 | % |
| Expected dividend yield      | -           |   |   | - |   |   | - |   |

----

|                                                     | Year Ended          |
|----------------------------------------------------------|---------------------|
|                                                     | January 30,         |       | January 31, |       | February 1, |
|                                                     | 2011                |   | 2010 |   | 2009 |
| Weighted average fair value per share of options granted | $                   | 3.44 |   | $ | 1.45 |   | $ | 1.22 |
| Total number of options granted                          |                | 905,000 |   |   | 870,000 |   |   | 2,090,000 |
| Total fair value of all options granted                  | $    | 3,115,000 |   | $    | 1,260,500 |   | $    | 2,557,700 |

|                            |                                             |   |                           |             |      |                           |                |      |                      | Weighted                     |
|---------------------------------|--------------------------------------------------|--------|--------------------------------|------------------|-----------|--------------------------------|---------------------|-----------|---------------------------|------------------------------|
|                            |                                             |   |                           |             |      |                           |                |      |                      | Average                      |
|                            |                                             |   |                           | Weighted Average |      | Aggregate                      |                | Remaining |
|                            | Shares Subject                                   |   | Exercise Price Per             |             | Intrinsic |                           | Contractual         |
|                            | to Option                                        |   | Share                          |             | Value     |                           | Term                |
|                            | (Dollars in thousands, except per share amounts) |
| Outstanding at February 3, 2008 | 6,395,800                                        |   |       | $                | 13.61     |       | $                   | 3,796     |       |     3.6 years |
| Granted                         | 2,090,000                                        |   |                           | $                | 2.25      |                           |                |      |                      |                         |
| Exercised                       |     (2,387,300                    | )      |                           | $                | 1.30      |                           | $                   | 7,238     |                      |                         |
| Forfeited                       | (185,500                                         | )      |                           | $                | 11.47     |                           |                |      |                      |                         |
| Outstanding at February 1, 2009 | 5,913,000                                        |   |                           | $                | 14.70     |                           | $                   | -         |                      | 6.2 years                    |
| Granted                         | 870,000                                          |   |                           | $                | 2.65      |                           |                |      |                      |                         |
| Exercised                       | -                                                |   |                           | $                | -         |                           | $                   | -         |                      |                         |
| Forfeited                       | (634,100                                         | )      |                           | $                | 15.18     |                           |                |      |                      |                         |
| Outstanding at January 31, 2010 | 6,148,900                                        |   |                           | $                | 12.94     |                           | $                   | 1,383     |                      | 5.9 years                    |
| Granted                         | 905,000                                          |   |                           | $                | 6.39      |                           |                |      |                      |                         |
| Exercised                       | -                                                |   |                           | $                | -         |                           | $                   | -         |                      |                         |
| Forfeited                       | (1,120,200                                       | )      |                           | $                | 24.43     |                           |                |      |                      |                         |
| Outstanding at January 30, 2011 | 5,933,700                                        |   |                           | $                | 9.77      |                           | $    | 12,507    |                      | 6.5 years                    |
| Exercisable at January 30, 2011 | 3,350,700                                        |   |                           | $                | 13.75     |                           | $                   | 6,825     |                      | 4.8 years                    |
|                            |

----

|                     |   |          |                           |         |                           | Options Outstanding |                           | Options Exercisable |
|--------------------------|--------|---------------|--------------------------------|--------------|--------------------------------|---------------------|--------------------------------|---------------------|
|                     |   |          |                           |         |                           |                |                           | Weighted            |   |   |   |   |   |   |   |   |
|                     |   |          |                           |         |                           |                |                           | Average             |   |   |   |   |   |   |   |   |
|                     |   |          |                           |         |                           |                |                           | Remaining           |   |   |   |   |   |   |   |   |
|                     |   |          |                           |         |                           |                |                           | Contractual         |   | Weighted Average |   |   |   | Weighted Average |
| Range of Exercise Prices |   | Shares        |       | Life (Years) |       | Exercise Price      |       | Shares              |       | Exercise Price |
| $                        | 1.40   |  -  | $                              | 3.41         |                           | 3,243,400           |                           | 7.4                 |   | $ | 2.53 |   | 1,825,400 |   | $ | 2.65 |
| $                        | 5.25   |  -  | $                              | 9.71         |                           | 1,265,000           |                           | 8.8                 |   | $ | 7.33 |   | 180,000 |   | $ | 9.71 |
| $                        | 10.20  |  -  | $                              | 16.94        |                           | 455,200             |                           | 3.6                 |   | $ | 14.01 |   | 375,200 |   | $ | 14.33 |
| $                        | 28.11  |  -  | $                              | 28.58        |                           | 306,400             |                           | 1.1                 |   | $ | 28.41 |   | 306,400 |   | $ | 28.41 |
| $                        | 30.98  |  -  | $                              | 44.22        |                           | 663,700             |                           | 1.9                 |   | $ | 38.30 |   | 663,700 |   | $ | 38.30 |

|                         |                           |                    |                           |      | Weighted      |
|------------------------------|--------------------------------|-------------------------|--------------------------------|-----------|---------------|
|                         |                           |                    |                           |      | Average Grant |
|                         |                           | Unvested                |                           | Date Fair |
|                         |       | Shares                  |       | Value     |
| Unvested at February 3, 2008 |                           | 1,185,500               |                           |      | $             | 6.33 |
| Granted                      |                           | 1,347,400               |                           |      | $             | 2.42 |
| Vested                       |                           | (483,400                | )                              |      | $             | 4.91 |
| Forfeited                    |                           | (215,700                | )                              |      | $             | 6.11 |
| Unvested at February 1, 2009 |                           | 1,833,800               |                           |      | $             | 3.86 |
| Granted                      |                           | 727,200                 |                           |      | $             | 3.14 |
| Vested                       |                           |    (1,111,200 | )                              |      | $             | 2.96 |
| Forfeited                    |                           | (63,600                 | )                              |      | $             | 5.65 |
| Unvested at January 31, 2010 |                           | 1,386,200               |                           |      | $             | 4.13 |
| Granted                      |                           | 420,000                 |                           |      | $             | 4.29 |
| Vested                       |                           | (786,500                | )                              |      | $             | 4.17 |
| Forfeited                    |                           | (15,200                 | )                              |      | $             | 4.16 |
| Unvested at January 30, 2011 |                           | 1,004,500               |                           |      | $             | 4.16 |
|                         |                           |                    |                           |      |          |   |

----

----

|                                                                                                                                                                              |                           | Year Ended          |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|---------------------|
|                                                                                                                                                                              |                           | January 30,         |   | January 31, |   | February 1, |
|                                                                                                                                                                              |       | 2011                |       | 2010 |       | 2009 |
|                                                                                                                                                                              |                           | (In thousands)      |
| Revenues:                                                                                                                                                                         |                           |                |   |   |   |   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           | $    | 245,841 |   |   | $    | 246,373 |   |   | $    | 265,890 |   |
|        Domestic Franchise                                                                                                                           |                           |                | 8,527 |   |   |   | 7,807 |   |   |   | 8,042 |   |
|        International Franchise                                                                                                                      |                           |                | 18,282 |   |   |   | 15,907 |   |   |   | 17,495 |   |
|        KK Supply Chain:                                                                                                                             |                           |                |   |   |   |   |   |   |   |   |   |   |
|               Total revenues                                                                                     |                           |                | 181,594 |   |   |   | 162,127 |   |   |   | 191,456 |   |
|               Less – intersegment sales elimination                                                        |                           |                | (92,289 | ) |   |   | (85,694 | ) |   |   | (97,361 | ) |
|                      External KK Supply Chain revenues                        |                           |                | 89,305 |   |   |   | 76,433 |   |   |   | 94,095 |   |
|                             Total revenues |                           | $                   | 361,955 |   |   | $ | 346,520 |   |   | $ | 385,522 |   |
|                                                                                                                                                                              |                           |                |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss):                                                                                                                                                          |                           |                |   |   |   |   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           | $                   | (4,238 | ) |   | $ | 2,288 |   |   | $ | (9,813 | ) |
|        Domestic Franchise                                                                                                                           |                           |                | 3,498 |   |   |   | 3,268 |   |   |   | 4,965 |   |
|        International Franchise                                                                                                                      |                           |                | 12,331 |   |   |   | 9,896 |   |   |   | 11,550 |   |
|        KK Supply Chain                                                                                                                              |                           |                | 30,213 |   |   |   | 25,962 |   |   |   | 23,269 |   |
|               Total segment operating income                                                                     |                           |                | 41,804 |   |   |   | 41,414 |   |   |   | 29,971 |   |
|        Unallocated general and administrative expenses                                                                                              |                           |                | (22,583 | ) |   |   | (23,737 | ) |   |   | (24,662 | ) |
|        Impairment charges and lease termination costs                                                                                               |                           |                | (4,066 | ) |   |   | (5,903 | ) |   |   | (548 | ) |
|               Consolidated operating income                                                                      |                           | $                   | 15,155 |   |   | $ | 11,774 |   |   | $ | 4,761 |   |
|                                                                                                                                                                              |                           |                |   |   |   |   |   |   |   |   |   |   |
| Depreciation expense:                                                                                                                                                             |                           |                |   |   |   |   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           | $                   | 5,641 |   |   | $ | 6,293 |   |   | $ | 6,402 |   |
|        Domestic Franchise                                                                                                                           |                           |                | 220 |   |   |   | 71 |   |   |   | 86 |   |
|        International Franchise                                                                                                                      |                           |                | 7 |   |   |   | - |   |   |   | - |   |
|        KK Supply Chain                                                                                                                              |                           |                | 808 |   |   |   | 883 |   |   |   | 1,019 |   |
|        Corporate administration                                                                                                                     |                           |                | 713 |   |   |   | 944 |   |   |   | 1,202 |   |
|               Total depreciation expense                                                                         |                           | $                   | 7,389 |   |   | $ | 8,191 |   |   | $ | 8,709 |   |
|                                                                                                                                                                              |                           |                |   |   |   |   |   |   |   |   |   |   |

----

|                                    |                           |                    |                           | Number of    |                           |       |                           |          |   |   |
|-----------------------------------------|--------------------------------|-------------------------|--------------------------------|--------------|--------------------------------|------------|--------------------------------|---------------|--------|--------|
|                                    |                           |                    |                           | Stores as of |                           |       |                           |          |   |   |
|                                    |                           |                    |                           | January 30,  |                           | Ownership% |
|                                    |       | Geographic Market       |       | 2011         |       | Company    |       | Third Parties |
| Kremeworks, LLC                         |                           | Alaska, Hawaii, Oregon, |                           | 11           |                           | 25.0       | %                              |          | 75.0   | %      |
|                                    |                           | Washington              |                           |         |                           |       |                           |          |   |   |
| Kremeworks Canada, LP                   |                           | Western Canada          |                           | 1            |                           | 24.5       | %                              |          | 75.5   | %      |
| Krispy Kreme of South Florida, LLC      |                           | South Florida           |                           | 3            |                           | 35.3       | %                              |          | 64.7   | %      |
| Krispy Kreme Mexico, S. de R.L. de C.V. |                           | Mexico                  |                           | 58           |                           | 30.0       | %                              |          | 70.0   | %      |

|                                    |                           | January 30, 2011                                                    |
|-----------------------------------------|--------------------------------|---------------------------------------------------------------------|
|                                    |                           | Investments and                                                     |   |   |   |   |   |   |   |   |   |   |   |
|                                    |       | Advances                                                            |       | Receivables |       | Notes Receivable |       | Loan Guarantees |
|                                    |                           | (In thousands)                                                      |
| Kremeworks, LLC                         |                           | $                                                                   | 900 |   |   | $ | 270 |   | $ | - |   |   | $ | 1,008 |
| Kremeworks Canada, LP                   |                           |                                                                | - |   |   |   | 22 |   |   | - |   |   |   | - |
| Krispy Kreme of South Florida, LLC      |                           |                                                                | - |   |   |   | 190 |   |   | - |   |   |   | 2,161 |
| Krispy Kreme Mexico, S. de R.L. de C.V. |                           |                                                                | 1,663 |   |   |   | 104 |   |   | 391 |   |   |   | - |
|                                    |                           |                                                                | 2,563 |   |   |   | 586 |   |   | 391 |   |   | $ | 3,169 |
| Less: reserves and allowances           |                           |                                                                | (900 | ) |   |   | - |   |   | (391 | ) |   |   |   |
|                                    |                           | $            | 1,663 |   |   | $ | 586 |   | $               | - |   |   |   |   |
|                                    |                           |                                                                |   |   |   |   |   |   |   |   |   |   |
|                                    |                           | January 31, 2010                                                    |
|                                    |                           | Investments and                                                     |   |   |   |   |   |   |   |   |   |   |   |
|                                    |                           | Advances                                                            |   | Receivables |   | Notes Receivable |   | Loan Guarantees |
|                                    |                           | (In thousands)                                                      |
| Kremeworks, LLC                         |                           | $                                                                   | 900 |   |   | $ | 327 |   |   | $ | - |   | $ | 1,241 |
| Kremeworks Canada, LP                   |                           |                                                                | - |   |   |   | 16 |   |   |   | - |   |   | - |
| Krispy Kreme of South Florida, LLC      |                           |                                                                | - |   |   |   | 138 |   |   |   | - |   |   | 2,489 |
| Krispy Kreme Mexico, S. de R.L. de C.V. |                           |                                                                | 781 |   |   |   | 782 |   |   |   | - |   |   | - |
|                                    |                           |                                                                | 1,681 |   |   |   | 1,263 |   |   |   | - |   | $ | 3,730 |
| Less: reserves and allowances           |                           |                                                                | (900 | ) |   |   | (739 | ) |   |   | - |   |   |   |
|                                    |                           | $                                                                   | 781 |   |   | $     | 524 |   |   | $ | - |   |   |   |
|                                    |                           |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                    |                           | Guarantee   |                           | Total Loan |                           | Amounts Expiring in Fiscal Year |
|---------------------------------------------------------|--------------------------------|-------------|--------------------------------|------------|--------------------------------|---------------------------------|
|                                                    |       | Percentages |       | Guarantees |       | 2012                            |       | 2013 |       | 2014 |       | 2015 |       | 2016 |       | Thereafter |
|                                                    |                           |        |                           |       |                           |                            |   | (In thousands) |
| Kremeworks, LLC                                         |                           | 20          | %                              |       | $               | 1,008                           |   | $    | 1,008 |   | $    | - |   | $    | - |   | $    | - |   | $    | - |   | $    | - |
| Krispy Kreme of                                         |                           |        |                           |       |                           |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        South Florida, LLC |                           | 100         | %                              |       |                           | 2,161                           |   |   | 2,161 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |
|                                                    |                           |        |                           |       | $                              | 3,169                           |   | $ | 3,169 |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | - |
|                                                    |                           |        |                           |       |                           |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                |                           | Summary Financial Information (1) |
|-------------------------------------------------------------------------------------|--------------------------------|-----------------------------------|
|                                                                                |                           |                              |   |   | Operating |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |                           |                              |   |   | Income |   | Net Income |   | Current |   | Noncurrent |   | Current |   | Noncurrent |   | Total Equity |
|                                                                                |       | Revenues                          |       | (Loss) |       | (Loss) (2) |       | Assets |       | Assets |       | Liabilities |       | Liabilities |       | (Deficit) |
|                                                                                |                           | (In thousands)                    |
| Kremeworks, LLC                                                                     |                           |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               2011 |                           | $                  | 16,984 |   | $    | (1,736 | ) |   | $    | (2,036 | ) |   | $    | 1,069 |   | $    | 14,051 |   | $    | 11,203 |   | $    | 1,957 |   | $      | 1,960 |   |
|               2010 |                           |                              | 17,091 |   |   | (2,740 | ) |   |   | (3,138 | ) |   |   | 1,510 |   |   | 15,961 |   |   | 12,613 |   |   | 1,784 |   |   | 3,074 |   |
|               2009 |                           |                              | 18,504 |   |   | (1,788 | ) |   |   | (2,728 | ) |   |   | 1,455 |   |   | 19,259 |   |   | 8,029 |   |   | 8,476 |   |   | 4,209 |   |
| Kremeworks Canada, LP                                                               |                           |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               2011 |                           |                              | 1,399 |   |   | 327 |   |   |   | 231 |   |   |   | 446 |   |   | 1,564 |   |   | 3,505 |   |   | - |   |   | (1,495 | ) |
|               2010 |                           |                              | 1,286 |   |   | (764 | ) |   |   | (862 | ) |   |   | 424 |   |   | 1,800 |   |   | 3,896 |   |   | - |   |   | (1,672 | ) |
|               2009 |                           |                              | 1,388 |   |   | 174 |   |   |   | 28 |   |   |   | 250 |   |   | 1,803 |   |   | 2,640 |   |   | - |   |   | (587 | ) |
| Krispy Kreme of South                                                               |                           |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Florida, LLC                                   |                           |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               2011 |                           |                              | 12,554 |   |   | 1,461 |   |   |   | 1,274 |   |   |   | 1,030 |   |   | 4,730 |   |   | 4,113 |   |   | 4,612 |   |   | (2,965 | ) |
|               2010 |                           |                              | 11,256 |   |   | 1,346 |   |   |   | 1,102 |   |   |   | 1,173 |   |   | 3,991 |   |   | 4,793 |   |   | 4,592 |   |   | (4,221 | ) |
|               2009 |                           |                              | 10,800 |   |   | 1,188 |   |   |   | 655 |   |   |   | 1,095 |   |   | 8,164 |   |   | 3,557 |   |   | 9,672 |   |   | (3,970 | ) |
| Krispy Kreme Mexico,                                                                |                           |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        S. de R.L de C.V.                              |                           |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               2011 |                           |                              | 18,616 |   |   | 2,035 |   |   |   | 1,889 |   |   |   | 4,591 |   |   | 6,128 |   |   | 3,356 |   |   | 166 |   |   | 7,197 |   |
|               2010 |                           |                              | 15,346 |   |   | 1,052 |   |   |   | 860 |   |   |   | 3,354 |   |   | 6,390 |   |   | 4,725 |   |   | - |   |   | 5,019 |   |
|               2009 |                           |                              | 17,189 |   |   | (386 | ) |   |   | (618 | ) |   |   | 2,425 |   |   | 5,877 |   |   | 4,365 |   |   | - |   |   | 3,937 |   |

|                           | (1)    |       | Amounts shown for each of these franchisees represents the amounts reported by the franchisee for calendar 2010, 2009 and 2008, and on or about December 31, 2010, 2009 and 2008.                                                                                                                                                              |
|--------------------------------|--------|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |   |
|                           | (2)    |                           | The net income or loss of each of these entities is includable on the income tax returns of their owners to the extent required by law. Accordingly, the financial statements of these entities do not include a provision for income taxes and as a result pretax income or loss for each of these entities is also their net income or loss. |

----

- Level 1 - Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.  
- Level 2 - Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.  
- Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value measurement of the assets or liabilities. These include certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. 

----

|                                                                                             |                           | January 30, 2011    |
|--------------------------------------------------------------------------------------------------|--------------------------------|---------------------|
|                                                                                             |       | Level 1             |       | Level 2 |       | Level 3 |
|                                                                                             |                           | (In thousands)      |
| Assets:                                                                                          |                           |                |   |   |   |   |   |   |   |
|        401(k) mirror plan assets                                   |                           | $    | 796 |   | $    | - |   | $    | - |
|        Commodity futures contracts                                 |                           |                | 144 |   |   | - |   |   | - |
|               Total assets      |                           | $                   | 940 |   | $ | - |   | $ | - |
|                                                                                             |                           |                |   |   |   |   |   |   |   |
|                                                                                             |                           | January 31, 2010    |
|                                                                                             |                           | Level 1             |   | Level 2 |   | Level 3 |
|                                                                                             |                           | (In thousands)      |
| Assets:                                                                                          |                           |                |   |   |   |   |   |   |   |
| 401(k) mirror plan assets                                                                        |                           | $                   | 455 |   | $ | - |   | $ | - |
| Liabilities:                                                                                     |                           |                |   |   |   |   |   |   |   |
|        Interest rate derivatives                                   |                           | $                   | - |   | $ | 641 |   | $ | - |
|        Commodity futures contracts                                 |                           |                | 92 |   |   | - |   |   | - |
|               Total liabilities |                           | $                   | 92 |   | $ | 641 |   | $ | - |
|                                                                                             |                           |                |   |   |   |   |   |   |   |

|                                   |                           | Year Ended January 30, 2011 |
|----------------------------------------|--------------------------------|-----------------------------|
|                                   |       | Level 1                     |       | Level 2 |       | Level 3 |       | Total gain (loss) |
|                                   |                           | (In thousands)              |
| Long-lived assets                      |                           | $            | - |   | $    | 4,123 |   | $    | - |   | $           | (3,437 | ) |
| Lease termination liabilities          |                           |                        | - |   |   | 422 |   |   | - |   |   | 265 |   |
|                                   |
|                                   |                           | Year Ended January 31, 2010 |
|                                   |                           | Level 1                     |   | Level 2 |   | Level 3 |   | Total gain (loss) |
|                                   |                           | (In thousands)              |
| Long-lived assets                      |                           | $                           | - |   | $ | 10,506 |   | $ | - |   | $ | (3,108 | ) |
| Investment in Equity Method Franchisee |                           |                        | - |   |   | - |   |   | 700 |   |   | (500 | ) |
| Lease termination liabilities          |                           |                        | - |   |   | 2,427 |   |   | - |   |   | (1,469 | ) |

----

|                                                                               |                           | January 30, 2011    |                           | January 31, 2010 |
|------------------------------------------------------------------------------------|--------------------------------|---------------------|--------------------------------|------------------|
|                                                                               |                           | Carrying            |                           | Fair             |   | Carrying |   | Fair |
|                                                                               |       | Value               |       | Value            |       | Value |       | Value |
|                                                                               |                           | (In thousands)      |
| Assets:                                                                            |                           |                |                           |             |   |   |   |   |   |   |   |   |
|        Cash and cash equivalents                     |                           | $    | 21,970                         |             | $    | 21,970 |   | $    | 20,215 |   | $    | 20,215 |
|        Receivables                                   |                           |                | 20,261                         |             |   | 20,261 |   |   | 17,839 |   |   | 17,839 |
|        Receivables from Equity Method Franchisees    |                           |                | 586                            |             |   | 586 |   |   | 524 |   |   | 524 |
|        Commodity futures contracts                   |                           |                | 144                            |             |   | 144 |   |   | - |   |   | - |
|                                                                               |                           |                |                           |             |   |   |   |   |   |   |   |   |
| Liabilities:                                                                       |                           |                |                           |             |   |   |   |   |   |   |   |   |
|        Accounts payable                              |                           |                | 9,954                          |             |   | 9,954 |   |   | 6,708 |   |   | 6,708 |
|        Interest rate derivatives                     |                           |                | -                              |             |   | - |   |   | 641 |   |   | 641 |
|        Commodity futures contracts                   |                           |                | -                              |             |   | - |   |   | 92 |   |   | 92 |
|        Long-term debt (including current maturities) |                           |                | 35,387                         |             |   | 35,387 |   |   | 43,447 |   |   | 41,872 |

----

----

|                                              |                           |                   |                           | Asset Derivatives     |
|---------------------------------------------------|--------------------------------|------------------------|--------------------------------|-----------------------|
|                                              |                           |                   |                           | Fair Value            |
|                                              |                           |                   |                           | January 30,           |   | January 31, |
| Derivatives Not Designated as Hedging Instruments |       | Balance Sheet Location |       | 2011                  |       | 2010 |
|                                              |                           |                   |                           | (In thousands)        |
| Commodity futures contracts                       |                           | Other current assets   |                           | $      | 144 |   | $    | - |
|                                              |
|                                              |                           |                   |                           | Liability Derivatives |
|                                              |                           |                   |                           | Fair Value            |
|                                              |                           |                   |                           | January 30,           |   | January 31, |
| Derivatives Not Designated as Hedging Instruments |                           | Balance Sheet Location |                           | 2011                  |   | 2010 |
|                                              |                           |                   |                           |                  | (In thousands) |
| Interest rate contracts                           |                           | Accrued liabilities    |                           | $                     | - |   | $ | 641 |
| Commodity futures contracts                       |                           | Accrued liabilities    |                           |                  | - |   |   | 92 |
|                                              |                           |                   |                           | $                     | - |   | $ | 733 |
|                                              |                           |                   |                           |                  |   |   |   |   |

|                                              |                           |                                  |                           | Amount of Derivative Gain or (Loss) |
|---------------------------------------------------|--------------------------------|---------------------------------------|--------------------------------|-------------------------------------|
|                                              |                           |                                  |                           | Recognized in Income                |
|                                              |                           |                                  |                           | Year Ended                          |
|                                              |                           | Location of Derivative Gain or (Loss) |                           | January 30,                         |   | January 31, |
| Derivatives Not Designated as Hedging Instruments |       | Recognized in Income                  |       | 2011                                |       | 2010 |
|                                              |                           |                                  |                           | (In thousands)                      |
| Interest rate contracts                           |                           | Interest expense                      |                           | $                                   | - |   | $ | (559 | ) |
| Agricultural commodity futures contracts          |                           | Direct operating expenses             |                           |                                | 544 |   |   | (308 | ) |
| Gasoline commodity futures contracts              |                           | Direct operating expenses             |                           |                                | 185 |   |   | 97 |   |
|        Total        |                           |                                  |                           | $                                   | 729 |   | $ | (770 | ) |
|                                              |                           |                                  |                           |                                |   |   |   |   |   |

----

|                                                                                                |                           | Quarter Ended                         |
|-----------------------------------------------------------------------------------------------------|--------------------------------|---------------------------------------|
|                                                                                                |                           | May 2,                                |   | August 1, |   | October 31, |   | January 30, |
|                                                                                                |       | 2010                                  |       | 2010 |       | 2010 |       | 2011 |
|                                                                                                |                           | (In thousands, except per share data) |
| Revenues                                                                                            |                           | $                           | 92,117 |   |   | $   | 87,932 |   |   | $    | 90,228 |   |   | $    | 91,678 |   |
| Operating expenses:                                                                                 |                           |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Direct operating expenses (exclusive of depreciation           |                           |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               expense shown below) |                           |                                  | 77,155 |   |   |   | 77,075 |   |   |   | 79,152 |   |   |   | 80,093 |   |
|        General and administrative expenses                            |                           |                                  | 5,744 |   |   |   | 4,981 |   |   |   | 4,784 |   |   |   | 6,361 |   |
|        Depreciation expense                                           |                           |                                  | 1,864 |   |   |   | 1,937 |   |   |   | 1,818 |   |   |   | 1,770 |   |
|        Impairment charges and lease termination costs                 |                           |                                  | 1,299 |   |   |   | (216 | ) |   |   | 399 |   |   |   | 2,584 |   |
| Operating income                                                                                    |                           |                                  | 6,055 |   |   |   | 4,155 |   |   |   | 4,075 |   |   |   | 870 |   |
| Interest income                                                                                     |                           |                                  | 40 |   |   |   | 82 |   |   |   | 42 |   |   |   | 43 |   |
| Interest expense                                                                                    |                           |                                  | (1,871 | ) |   |   | (1,567 | ) |   |   | (1,585 | ) |   |   | (1,336 | ) |
| Loss on refinancing of debt                                                                         |                           |                                  | - |   |   |   | - |   |   |   | - |   |   |   | (1,022 | ) |
| Equity in income (losses) of equity method franchisees                                              |                           |                                  | 346 |   |   |   | (165 | ) |   |   | 190 |   |   |   | 176 |   |
| Other non-operating income and (expense), net                                                       |                           |                                  | 81 |   |   |   | 81 |   |   |   | 85 |   |   |   | 82 |   |
| Income (loss) before income taxes                                                                   |                           |                                  | 4,651 |   |   |   | 2,586 |   |   |   | 2,807 |   |   |   | (1,187 | ) |
| Provision for income taxes                                                                          |                           |                                  | 183 |   |   |   | 379 |   |   |   | 417 |   |   |   | 279 |   |
| Net income (loss)                                                                                   |                           | $                                     | 4,468 |   |   | $ | 2,207 |   |   | $ | 2,390 |   |   | $ | (1,466 | ) |
| Earnings (loss) per common share:                                                                   |                           |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Basic                                                          |                           | $                                     | 0.07 |   |   | $ | 0.03 |   |   | $ | 0.03 |   |   | $ | (0.02 | ) |
|        Diluted                                                        |                           | $                                     | 0.06 |   |   | $ | 0.03 |   |   | $ | 0.03 |   |   | $ | (0.02 | ) |
|                                                                                                |                           |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                |                           | Quarter Ended                         |
|-----------------------------------------------------------------------------------------------------|--------------------------------|---------------------------------------|
|                                                                                                |                           | May 3,                                |   | August 2, |   | November 1, |   | January 31, |
|                                                                                                |       | 2009                                  |       | 2009 |       | 2009 |       | 2010 |
|                                                                                                |                           | (In thousands, except per share data) |
| Revenues                                                                                            |                           | $                           | 93,420 |   |   | $     | 82,730 |   |   | $         | 83,600 |   |   | $         | 86,770 |   |
| Operating expenses:                                                                                 |                           |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Direct operating expenses (exclusive of depreciation           |                           |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               expense shown below) |                           |                                  | 76,978 |   |   |   | 71,515 |   |   |   | 74,576 |   |   |   | 74,790 |   |
|        General and administrative expenses                            |                           |                                  | 6,314 |   |   |   | 4,817 |   |   |   | 6,128 |   |   |   | 5,534 |   |
|        Depreciation expense                                           |                           |                                  | 1,993 |   |   |   | 1,999 |   |   |   | 2,154 |   |   |   | 2,045 |   |
|        Impairment charges and lease termination costs                 |                           |                                  | 2,357 |   |   |   | 1,456 |   |   |   | 109 |   |   |   | 1,981 |   |
| Operating income                                                                                    |                           |                                  | 5,778 |   |   |   | 2,943 |   |   |   | 633 |   |   |   | 2,420 |   |
| Interest income                                                                                     |                           |                                  | 14 |   |   |   | 14 |   |   |   | 10 |   |   |   | 55 |   |
| Interest expense                                                                                    |                           |                                  | (3,817 | ) |   |   | (2,312 | ) |   |   | (2,295 | ) |   |   | (2,261 | ) |
| Equity in income (losses) of equity method franchisees                                              |                           |                                  | 101 |   |   |   | (214 | ) |   |   | (393 | ) |   |   | 18 |   |
| Other non-operating income and (expense), net                                                       |                           |                                  | - |   |   |   | (500 | ) |   |   | 144 |   |   |   | 80 |   |
| Income (loss) before income taxes                                                                   |                           |                                  | 2,076 |   |   |   | (69 | ) |   |   | (1,901 | ) |   |   | 312 |   |
| Provision for income taxes                                                                          |                           |                                  | 208 |   |   |   | 88 |   |   |   | 487 |   |   |   | (208 | ) |
| Net income (loss)                                                                                   |                           | $                                     | 1,868 |   |   | $ | (157 | ) |   | $ | (2,388 | ) |   | $ | 520 |   |
| Earnings (loss) per common share:                                                                   |                           |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Basic                                                          |                           | $                                     | 0.03 |   |   | $ | - |   |   | $ | (0.04 | ) |   | $ | 0.01 |   |
|        Diluted                                                        |                           | $                                     | 0.03 |   |   | $ | - |   |   | $ | (0.04 | ) |   | $ | 0.01 |   |
|                                                                                                |                           |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                                                                                                              |                           | Quarter Ended  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------|
|                                                                                                                                                                              |                           | May 2,         |   | August 1, |   | October 31, |   | January 30, |
|                                                                                                                                                                              |       | 2010           |       | 2010 |       | 2010 |       | 2011 |
|                                                                                                                                                                              |                           | (In thousands) |
| Revenues by business segment:                                                                                                                                                     |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           | $              | 62,534 |   |   | $     | 59,970 |   |   | $   | 61,565 |   |   | $     | 61,772 |   |
|        Domestic Franchise                                                                                                                           |                           |           | 2,200 |   |   |   | 2,074 |   |   |   | 2,040 |   |   |   | 2,213 |   |
|        International Franchise                                                                                                                      |                           |           | 4,760 |   |   |   | 4,009 |   |   |   | 4,389 |   |   |   | 5,124 |   |
|        KK Supply Chain:                                                                                                                             |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               Total revenues                                                                                     |                           |           | 45,905 |   |   |   | 44,892 |   |   |   | 45,001 |   |   |   | 45,796 |   |
|               Less - intersegment sales elimination                                                              |                           |           | (23,282 | ) |   |   | (23,013 | ) |   |   | (22,767 | ) |   |   | (23,227 | ) |
|                      External KK Supply Chain revenues                        |                           |           | 22,623 |   |   |   | 21,879 |   |   |   | 22,234 |   |   |   | 22,569 |   |
|                             Total revenues |                           | $              | 92,117 |   |   | $ | 87,932 |   |   | $ | 90,228 |   |   | $ | 91,678 |   |
|                                                                                                                                                                              |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss):                                                                                                                                                          |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           | $              | (31 | ) |   | $ | (1,734 | ) |   | $ | (1,449 | ) |   | $ | (1,024 | ) |
|        Domestic Franchise                                                                                                                           |                           |           | 1,154 |   |   |   | 1,041 |   |   |   | 499 |   |   |   | 804 |   |
|        International Franchise                                                                                                                      |                           |           | 3,486 |   |   |   | 2,500 |   |   |   | 3,018 |   |   |   | 3,327 |   |
|        KK Supply Chain                                                                                                                              |                           |           | 8,690 |   |   |   | 7,329 |   |   |   | 7,342 |   |   |   | 6,852 |   |
|               Total segment operating income                                                                     |                           |           | 13,299 |   |   |   | 9,136 |   |   |   | 9,410 |   |   |   | 9,959 |   |
| Unallocated general and administrative expenses                                                                                                                                   |                           |           | (5,945 | ) |   |   | (5,197 | ) |   |   | (4,936 | ) |   |   | (6,505 | ) |
| Impairment charges and lease termination costs                                                                                                                                    |                           |           | (1,299 | ) |   |   | 216 |   |   |   | (399 | ) |   |   | (2,584 | ) |
|        Consolidated operating income                                                                                                                |                           | $              | 6,055 |   |   | $ | 4,155 |   |   | $ | 4,075 |   |   | $ | 870 |   |
|                                                                                                                                                                              |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                                              |                           | Quarter Ended  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------|
|                                                                                                                                                                              |                           | May 3,         |   | August 2, |   | November 1, |   | January 31, |
|                                                                                                                                                                              |       | 2009           |       | 2009 |       | 2009 |       | 2010 |
|                                                                                                                                                                              |                           | (In thousands) |
| Revenues by business segment:                                                                                                                                                     |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           | $    | 65,857 |   |   | $   | 59,853 |   |   | $        | 60,020 |   |   | $       | 60,643 |   |
|        Domestic Franchise                                                                                                                           |                           |           | 2,051 |   |   |   | 1,802 |   |   |   | 1,945 |   |   |   | 2,009 |   |
|        International Franchise                                                                                                                      |                           |           | 3,878 |   |   |   | 3,806 |   |   |   | 3,583 |   |   |   | 4,640 |   |
|        KK Supply Chain:                                                                                                                             |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               Total revenues                                                                                     |                           |           | 44,858 |   |   |   | 37,754 |   |   |   | 39,314 |   |   |   | 40,201 |   |
|               Less - intersegment sales elimination                                                              |                           |           | (23,224 | ) |   |   | (20,485 | ) |   |   | (21,262 | ) |   |   | (20,723 | ) |
|                      External KK Supply Chain revenues                        |                           |           | 21,634 |   |   |   | 17,269 |   |   |   | 18,052 |   |   |   | 19,478 |   |
|                             Total revenues |                           | $              | 93,420 |   |   | $ | 82,730 |   |   | $ | 83,600 |   |   | $ | 86,770 |   |
|                                                                                                                                                                              |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss):                                                                                                                                                          |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Company Stores                                                                                                                               |                           | $              | 2,944 |   |   | $ | 1,387 |   |   | $ | (1,380 | ) |   | $ | (663 | ) |
|        Domestic Franchise                                                                                                                           |                           |           | 1,180 |   |   |   | 434 |   |   |   | 811 |   |   |   | 843 |   |
|        International Franchise                                                                                                                      |                           |           | 2,435 |   |   |   | 1,943 |   |   |   | 2,117 |   |   |   | 3,401 |   |
|        KK Supply Chain                                                                                                                              |                           |           | 8,139 |   |   |   | 5,687 |   |   |   | 5,549 |   |   |   | 6,587 |   |
|               Total segment operating income                                                                     |                           |           | 14,698 |   |   |   | 9,451 |   |   |   | 7,097 |   |   |   | 10,168 |   |
| Unallocated general and administrative expenses                                                                                                                                   |                           |           | (6,563 | ) |   |   | (5,052 | ) |   |   | (6,355 | ) |   |   | (5,767 | ) |
| Impairment charges and lease termination costs                                                                                                                                    |                           |           | (2,357 | ) |   |   | (1,456 | ) |   |   | (109 | ) |   |   | (1,981 | ) |
|        Consolidated operating income                                                                                                                |                           | $              | 5,778 |   |   | $ | 2,943 |   |   | $ | 633 |   |   | $ | 2,420 |   |
|                                                                                                                                                                              |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Item 12.  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
|----------------|-------------------------------------------------------------------------------------------------|

----

|       | 1.     |       | Financial Statements. See Item 8, “Financial Statements and Supplementary Data.”          |
|--------------------------------|--------|--------------------------------|-------------------------------------------------------------------------------------------------------|
|                           |   |                           |                                                                                                  |
|                           | 2.     |                           | Financial Statement Schedules.                                                                        |   |
|                           |   |                           | For each of the three fiscal years in the period ended January 30, 2011:                              |   |
|                           |   |                           |        Schedule I — Condensed Financial Information of Registrant | F-1 |
|                           |   |                           |                                                                                                  |   |
|                           | 3.     |                           | Exhibits.                                                                                             |   |

| Exhibit     |                           |   |                           |                    |
|-------------|--------------------------------|--------|--------------------------------|-------------------------|
| Number      |       |   |       | Description of Exhibits |
| 3.1         |                           |   | —                        |                    | Restated Articles of Incorporation of the Registrant (incorporated by reference to exhibit 3.1 to the Registrant’s Annual Report on Form 10-K filed on April 15, 2010) |
| 3.2         |                           |   | —                        |                    | Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 15, 2008) |
| 4.1         |                           |   | —                        |                    | Form of Certificate for Common Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Amendment No. 4 to Registration Statement on Form S-1 (Commission File No. 333-92909) filed on April 3, 2000) |
| 4.2         |                           |   | —                        |                    | Shareholder Protection Rights Agreement between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent, dated as of January 14, 2010 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on January 19, 2010) |
| 4.3         |                           |   | —                        |                    | Warrant to purchase Common Stock issued by Krispy Kreme Doughnuts, Inc. in favor of Marsh & McLennan Risk Capital Holdings Ltd. (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on September 2, 2010) |
| 4.4         |                           |   | —                        |                    | Warrant Agreement, dated as of March 2, 2007, between Krispy Kreme Doughnuts, Inc. and American Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 8, 2007) |
| 10.1        |                           |   | —                        |                    | Trademark License Agreement, dated May 27, 1996, between HDN Development Corporation and Krispy Kreme Doughnut Corporation (incorporated by reference to Exhibit 10.22 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 (Commission File No. 333-92909), filed on February 22, 2000) |
| 10.2        |                           |   | —                        |                    | Amended and Restated Employment Agreement, dated as of March 11, 2011, among Krispy Kreme Doughnuts, Inc., Krispy Kreme Doughnut Corporation and James H. Morgan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 17, 2011)** |
| 10.3        |                           |   | —                        |                    | Amended and Restated Employment Agreement, dated as of March 11, 2011, among Krispy Kreme Doughnuts, Inc., Krispy Kreme Doughnut Corporation and Douglas R. Muir (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on March 17, 2011)** |
| 10.4        |                           |   | —                        |                    | Amended and Restated Employment Agreement, dated as of March 11, 2011, among Krispy Kreme Doughnuts, Inc., Krispy Kreme Doughnut Corporation and Jeffrey B. Welch (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on March 17, 2011)** |
| 10.5        |                           |   | —                        |                    | Amended and Restated Employment Agreement, dated as of March 11, 2011, among Krispy Kreme Doughnuts, Inc., Krispy Kreme Doughnut Corporation and Steven A. Lineberger (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on March 17, 2011)** |
| 10.6        |                           |   | —                        |                    | Amended and Restated Employment Agreement, dated as of March 11, 2011, among Krispy Kreme Doughnuts, Inc., Krispy Kreme Doughnut Corporation and Kenneth J. Hudson (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed on March 17, 2011)** |
| 10.7        |                           |   | —                        |                    | Amended and Restated Employment Agreement, dated as of March 11, 2011, among Krispy Kreme Doughnuts, Inc., Krispy Kreme Doughnut Corporation and M. Bradley Wall (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed on March 17, 2011)** |
|   10.8 | *               |   | —                        |                    | Amended and Restated Employment Agreement, dated as of March 11, 2011, among Krispy Kreme Doughnuts, Inc., Krispy Kreme Doughnut Corporation and Cynthia A. Bay** |

----

| 10.9         | *             |       | — |       | Amended and Restated Employment Agreement, dated as of March 11, 2011, among Krispy Kreme Doughnuts, Inc., Krispy Kreme Doughnut Corporation and Darryl R. Marsch **                                                                                                                                                                                                                                                                  |
|--------------|---------------|--------------------------------|---------|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.10        | *             |                           |    |                           | Amended and Restated Employment Agreement, dated as of March 11, 2011, among Krispy Kreme Doughnuts, Inc., Krispy Kreme Doughnut Corporation and G. Dwayne Chambers**                                                                                                                                                                                                                                                                 |
| 10.11        |          |                           | — |                           | Employment Agreement, dated as of September 14, 2010, among Krispy Kreme Doughnuts, Inc., Krispy Kreme Doughnut Corporation and G. Dwayne Chambers (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on December 1, 2010) (superseded by Amended and Restated Employment Agreement dated as of March 11, 2011 appearing as Exhibit 10.10 to this Annual Report on Form 10-K)** |
| 10.12        |          |                           | — |                           | Krispy Kreme Doughnut Corporation Nonqualified Deferred Compensation Plan, effective October 1, 2000 (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for fiscal 2005 filed on April 28, 2006)**                                                                                                                                                                                      |
| 10.13        |          |                           | — |                           | 1998 Stock Option Plan dated August 6, 1998 (incorporated by reference to Exhibit 10.23 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 (Commission File No. 333-92909) filed on February 22, 2000)**                                                                                                                                                                                                 |
| 10.14        | *             |                           | — |                           | 2000 Stock Incentive Plan, as amended as of January 31, 2011 (filed to correct a scrivener’s error in Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 3, 2011)**                                                                                                                                                                                                                            |
| 10.15        |          |                           | — |                           | Form of Restricted Stock Agreement under the 2000 Stock Incentive Plan (incorporated by reference to Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K filed on April 17, 2009) **                                                                                                                                                                                                                                   |
| 10.16        |          |                           | — |                           | Form of Restricted Stock Unit Agreement under the 2000 Stock Incentive Plan (incorporated by reference to Exhibit 10.8 to the Registrant’s Current Report on Form 8-K filed on March 17, 2011)**                                                                                                                                                                                                                                |
| 10.17        | *             |                           | — |                           | Form of Director Restricted Stock Unit Agreement under the 2000 Stock Incentive Plan**                                                                                                                                                                                                                                                                                                                                                |
| 10.18        |          |                           | — |                           | Form of Nonqualified Stock Option Agreement under the 2000 Stock Incentive Plan (incorporated by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K filed on March 17, 2011)**                                                                                                                                                                                                                            |
| 10.19        |          |                           | — |                           | Form of Incentive Stock Option Agreement under the 2000 Stock Incentive Plan (incorporated by reference Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 3, 2011)**                                                                                                                                                                                                                                |
| 10.20        |          |                           | — |                           | Annual Incentive Plan (incorporated by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K filed on April 17, 2008)**                                                                                                                                                                                                                                                                                     |
|   10.21 |          |                           | — |                           | Compensation Recovery Policy (incorporated by reference to Exhibit 10.35 to the Registrant’s Annual Report on Form 10-K filed on April 17, 2009)**                                                                                                                                                                                                                                                                              |
| 10.22        |          |                           | — |                           | Credit Agreement, dated as of January 28, 2011, among Krispy Kreme Doughnut Corporation, Krispy Kreme Doughnuts, Inc., the Lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 1, 2011)                                                                                       |
| 10.23        |          |                           | — |                           | Security Agreement, dated as of January 28, 2011, among Krispy Kreme Doughnut Corporation, Krispy Kreme Doughnuts, Inc., the Pledgors party thereto and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on February 1, 2011)                                                                                    |
| 10.24        |          |                           | — |                           | Guaranty Agreement, dated as of January 28, 2011, among Krispy Kreme Doughnuts, Inc., the Subsidiary Guarantors party thereto, the Lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on February 1, 2011)                                                                               |
| 10.25        |          |                           | — |                           | Form of Indemnification Agreement entered into between Krispy Kreme Doughnuts, Inc. and Lizanne Thomas and Michael Sutton (incorporated by reference to Exhibit 99.3 to the Registrant’s Current Report on Form 8-K filed on October 8, 2004)**                                                                                                                                                                                 |
| 10.26        |          |                           | — |                           | Form of Indemnification Agreement entered into between Krispy Kreme Doughnuts, Inc. and members of the Registrant’s Board of Directors (other than Lizanne Thomas and Michael Sutton) (incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K for fiscal 2005 filed on April 26, 2006)**                                                                                               |
| 10.27        |          |                           | — |                           | Form of Indemnification Agreement entered into between Krispy Kreme Doughnuts, Inc. and Officers of the Registrant (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 18, 2007)                                                                                                                                                                                       |
| 21           | *             |                           | — |                           | List of Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 23.1         | *             |                           | — |                           | Consent of PricewaterhouseCoopers LLP                                                                                                                                                                                                                                                                                                                                                                                                 |
| 23.2         | *             |                           | — |                           | Consent of Ballman Kallick, LLP                                                                                                                                                                                                                                                                                                                                                                                                       |
| 24           | *             |                           | — |                           | Powers of Attorney of certain officers and directors of the Company (included on the signature page of this Annual Report on Form 10-K)                                                                                                                                                                                                                                                                                               |
| 31.1         | *             |                           | — |                           | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                                                                                                             |
| 31.2         | *   |                           | — |                           | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                                                                                                             |
| 32.1    | *        |                           | — |                           | Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                     |
| 32.2    | *             |                           | — |                           | Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                     |

|        | *      |        | Filed herewith                                                                                                                                                                                                                                           |
|--------------------------------------|--------|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                 |   |                                 |                                                                                                                                                                                                                                                     |
|                                 | **     |                                 | Identifies management contracts and executive compensation plans or arrangements required to be filed as exhibits pursuant to Item 15(b), “Exhibits and Financial Statement Schedules — Exhibits,” of this Annual Report on Form 10-K. |

|       | 1.     |       | Financial Statements of Kremeworks, LLC |   |
|--------------------------------|--------|--------------------------------|-----------------------------------------|--------|
|                           |   |                           | Index to Financial Statements           | F-4    |

----

|                 | Krispy Kreme Doughnuts, Inc.  |
|----------------------|-------------------------------|
|                 |                          |
|                 |                          |
| Date: March 31, 2011 | By:                           | /s/ Douglas R. Muir |   |
|                 | Name:     | Douglas R. Muir |
|                 | Title:                        | Executive Vice President and Chief |
|                 |                          | Financial Officer |
|                 |                          | (Duly Authorized Officer and Principal Financial Officer) |

| Signature                |       | Title                                                 |
|--------------------------|--------------------------------|-------------------------------------------------------|
| /s/ James H. Morgan      |                           | Chairman of the Board of Directors, President and     |
| James H. Morgan          |                           | Chief Executive Officer (Principal Executive Officer) |
|                     |                           |                                                  |
| /s/ Douglas R. Muir      |                           | Executive Vice President and Chief Financial Officer  |
| Douglas R. Muir          |                           | (Principal Financial and Accounting Officer)          |
|                     |                           |                                                  |
| /s/ Charles A. Blixt     |                           | Director                                              |
| Charles A. Blixt         |                           |                                                  |
|                     |                           |                                                  |
| /s/ Lynn Crump-Caine     |                           | Director                                              |
| Lynn Crump-Caine         |                           |                                                  |
|                     |                           |                                                  |
| /s/ C. Stephen Lynn      |                           | Director                                              |
| C. Stephen Lynn          |                           |                                                  |
|                     |                           |                                                  |
| /s/ Robert S. McCoy, Jr. |                           | Director                                              |
| Robert S. McCoy, Jr.     |                           |                                                  |
|                     |                           |                                                  |
| /s/ Andrew J. Schindler  |                           | Director                                              |
| Andrew J. Schindler      |                           |                                                  |
|                     |                           |                                                  |
| /s/ Michael H. Sutton    |                           | Director                                              |
| Michael H. Sutton        |                           |                                                  |
|                     |                           |                                                  |
| /s/ Lizanne Thomas       |                           | Director                                              |
| Lizanne Thomas           |                           |                                                  |
|                     |                           |                                                  |
| /s/ Togo D. West, Jr.    |                           | Director                                              |
| Togo D. West, Jr.        |                           |                                                  |

----

|                                         |                           | Year Ended                                                          |
|----------------------------------------------|--------------------------------|---------------------------------------------------------------------|
|                                         |                           | January 30,                                                         |   | January 31, |   | February 1, |
|                                         |       | 2011                                                                |       | 2010 |       | 2009 |
|                                         |                           | (In thousands, except per share amounts)                            |
| Equity in income (losses) of subsidiaries    |                           | $            | 7,599 |   | $            | (157 | ) |   | $         | (4,061 | ) |
| Miscellaneous expenses                       |                           |                                                                | - |   |   | - |   |   |   | - |   |
| Income (loss) before income taxes            |                           |                                                                | 7,599 |   |   | (157 | ) |   |   | (4,061 | ) |
| Provision for income taxes                   |                           |                                                                | - |   |   | - |   |   |   | - |   |
| Net income (loss)                            |                           | $                                                                   | 7,599 |   | $ | (157 | ) |   | $ | (4,061 | ) |
|                                         |                           |                                                                |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per common share:            |                           |                                                                |   |   |   |   |   |   |   |   |   |
|        Basic   |                           | $                                                                   | 0.11 |   | $ | - |   |   | $ | (0.06 | ) |
|        Diluted |                           | $                                                                   | 0.11 |   | $ | - |   |   | $ | (0.06 | ) |
|                                         |                           |                                                                |   |   |   |   |   |   |   |   |   |

----

|                                       |                           | January 30,               |                           | January 31, |
|--------------------------------------------|--------------------------------|---------------------------|--------------------------------|-------------|
|                                       |       | 2011                      |       | 2010        |
|                                       |                           | (In thousands)            |
| ASSETS                                     |
|                                       |
| Investment in and advances to subsidiaries |                           | $                         | 76,428                         |        |   | $ | 62,767 |   |
|                                       |
| SHAREHOLDERS’ EQUITY                 |
|                                       |
| Preferred stock                            |                           | $     | -                              |        |   | $     | - |   |
| Common stock                               |                           |                      | 370,808                        |        |   |   | 366,237 |   |
| Accumulated other comprehensive loss       |                           |                      | (34                            | )           |   |   | (180 | ) |
| Accumulated deficit                        |                           |                      | (294,346                       | )           |   |   | (303,290 | ) |
| Total shareholders’ equity           |                           | $                         | 76,428                         |        |   | $ | 62,767 |   |
|                                       |                           |                      |                           |        |   |   |   |   |

----

|                                                                                           |                           | Year Ended          |
|------------------------------------------------------------------------------------------------|--------------------------------|---------------------|
|                                                                                           |                           | January 30,         |   | January 31, |       | February 1, |
|                                                                                           |                           | 2011                |   | 2010 |   | 2009 |
|                                                                                           |                           | (In thousands)      |
| CASH FLOW FROM OPERATING ACTIVITIES:                                                           |                           |                |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                              |                           | $                   | 7,599 |   |       | $ | (157 | ) |   | $ | (4,061 | ) |
| Equity in (income) losses of subsidiaries                                                      |                           |                | (7,599 | ) |   |   | 157 |   |   |   | 4,061 |   |
|        Net cash provided by (used for) operating activities |                           |                | - |   |   |   | - |   |   |   | - |   |
| CASH FLOW FROM INVESTING ACTIVITIES:                                                           |                           |                |   |   |   |   |   |   |   |   |   |   |
| Investments in subsidiaries                                                                    |                           |                | 576 |   |   |   | 343 |   |   |   | (1,034 | ) |
|        Net cash provided by (used for) investing activities |                           |                | 576 |   |   |   | 343 |   |   |   | (1,034 | ) |
| CASH FLOW FROM FINANCING ACTIVITIES:                                                           |                           |                |   |   |   |   |   |   |   |   |   |   |
| Proceeds from exercise of stock options and warrants                                           |                           |                | 5 |   |   |   | - |   |   |   | 3,103 |   |
| Repurchase of common shares                                                                    |                           |                | (581 | ) |   |   | (343 | ) |   |   | (2,069 | ) |
|        Net cash provided by (used for) financing activities |                           |                | (576 | ) |   |   | (343 | ) |   |   | 1,034 |   |
| Net increase (decrease) in cash and cash equivalents                                           |                           |                | - |   |   |   | - |   |   |   | - |   |
| Cash and cash equivalents at beginning of period                                               |                           |                | - |   |   |   | - |   |   |   | - |   |
| Cash and cash equivalents at end of period                                                     |       | $    | - |   |   | $       | - |   |   | $    | - |   |
|                                                                                           |                           |                |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                           | Page   |
|----------------------------------------------------------------------------------------------------------------|--------|
| Index to Financial Statements:                                                                                 |   |
| Independent Auditor’s Report                                                                             | F-5    |
| Consolidated Balance Sheet as of December 29, 2010 and December 30, 2009                                       | F-6    |
| Consolidated Statement of Operations for each of the Three Years in the Period Ended December 29, 2010         | F-8    |
| Consolidated Statement of Comprehensive Loss for Each of the Three Years in the Period Ended December 29, 2010 | F-9    |
| Consolidated statement of Cash Flows for Each of the Three Years in the Period Ended December 29, 2010         | F-10   |
| Consolidated Statement of Changes in Equity for Each of the Three Years in the Period Ended December 29, 2010  | F-11   |
| Notes to Consolidated Financial Statements                                                                     | F-12   |

----

----

| Assets                                                                                                                                        |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                          |       | 2010 |       | 2009 |
| Current Assets                                                                                                                                |   |   |   |   |   |   |
|        Cash                                                                                                |   | $ | 660,582 |   | $ | 866,563 |
|        Receivables                                                                                         |   |   |   |   |   |   |
|               Credit cards                                              |   |   | 33,721 |   |   | 31,405 |
|               Wholesale                                                 |   |   | 42,141 |   |   | - |
|               Member contributions                                      |   |   | - |   |   | 239,800 |
|               Other                                                     |   |   | 14,871 |   |   | 22,017 |
|        Inventories                                                                                         |   |   | 307,815 |   |   | 336,513 |
|        Prepaid expenses                                                                                    |   |   | 9,901 |   |   | 13,521 |
|                      Total Current Assets |   |   | 1,069,031 |   |   | 1,509,819 |
| Property and Equipment (Net of accumulated                                                                                                    |   |   |   |   |   |   |
|        depreciation and amortization)                                                                      |   |   | 13,808,472 |   |   | 15,702,599 |
| Deferred Area Development and Franchise Fees, Net                                                                                             |   |   | 242,398 |   |   | 258,731 |
|                                                                                                                                          |   | $      | 15,119,901 |   | $    | 17,471,149 |
|                                                                                                                                          |   |   |   |   |   |   |

----

| Liabilities and Equity                                                                                                                                  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                    |       | 2010 |       | 2009 |
| Current Liabilities                                                                                                                                     |   |   |   |   |   |   |   |
|        Notes payable to affiliates                                                                                   |   | $ | 3,600,000 |   | $ | 3,600,000 |   |
|        Current portion of long-term debt                                                                             |   |   | 5,120,212 |   |   | 6,784,635 |   |
|        Accounts payable                                                                                              |   |   |   |   |   |   |   |
|               Trade                                                               |   |   | 134,986 |   |   | 89,151 |   |
|               Affiliated entities                                                 |   |   | 534,117 |   |   | 504,721 |   |
|        Accrued expenses                                                                                              |   |   |   |   |   |   |   |
|               Salaries and wages                                                  |   |   | 365,315 |   |   | 348,302 |   |
|               Sales tax                                                           |   |   | 18,388 |   |   | 19,500 |   |
|               Rent and real estate taxes                                          |   |   | 27,897 |   |   | 14,438 |   |
|               Accrued legal fees                                                  |   |   | 94,519 |   |   | 60,000 |   |
|               Accrued interest                                                    |   |   | 1,203,702 |   |   | 1,082,520 |   |
|               Other                                                               |   |   | 103,578 |   |   | 110,340 |   |
|                      Total Current Liabilities |   |   | 11,202,714 |   |   | 12,613,607 |   |
| Deferred Rent                                                                                                                                           |   |   | 1,956,719 |   |   | 1,783,903 |   |
|                      Total Liabilities         |   |   | 13,159,433 |   |   | 14,397,510 |   |
| Equity                                                                                                                                                  |   |   |   |   |   |   |   |
|        KremeWorks, LLC members' equity                                                                               |   |   | 15,670 |   |   | (170,855 | ) |
|        Noncontrolling interest                                                                                       |   |   | 1,944,798 |   |   | 3,244,494 |   |
|                      Total Equity              |   |   | 1,960,468 |   |   | 3,073,639 |   |
|                                                                                                                                                    |   | $ | 15,119,901 |   | $    | 17,471,149 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |

----

|                                                                                                               |       | 2010                |       | 2009   |       | 2008                |
|--------------------------------------------------------------------------------------------------------------------|--------------------------------|---------------------|--------------------------------|--------|--------------------------------|---------------------|
| Sales                                                                                                              |                           | $                   | 16,984,430                     |   |                           | $                   | 17,091,291 |   |   | $ | 18,504,101 |   |
| Cost of Sales - Food and Beverage                                                                                  |                           |                | 4,011,224                      |   |                           |                | 3,656,477 |   |   |   | 4,271,443 |   |
| Gross Profit after Food and Beverage                                                                               |                           |                | 12,973,206                     |   |                           |                | 13,434,814 |   |   |   | 14,232,658 |   |
| Store Payroll and Benefits                                                                                         |                           |                | 5,111,451                      |   |                           |                | 5,252,585 |   |   |   | 5,445,251 |   |
| Gross Profit                                                                                                       |                           |                | 7,861,755                      |   |                           |                | 8,182,229 |   |   |   | 8,787,407 |   |
| Store Operating Expenses                                                                                           |                           |                |                           |   |                           |                |   |   |   |   |   |   |
|        Direct operating                                                         |                           |                | 1,447,017                      |   |                           |                | 1,442,366 |   |   |   | 1,458,527 |   |
|        Marketing                                                                |                           |                | 328,569                        |   |                           |                | 670,991 |   |   |   | 512,792 |   |
|        Occupancy                                                                |                           |                | 1,968,432                      |   |                           |                | 1,910,504 |   |   |   | 2,144,062 |   |
|        Depreciation and amortization                                            |                           |                | 2,090,873                      |   |                           |                | 2,718,167 |   |   |   | 3,003,312 |   |
|        Impairment charge                                                        |                           |                | -                              |   |                           |                | 615,000 |   |   |   | - |   |
|        Store general and administrative                                         |                           |                | 536,756                        |   |                           |                | 507,634 |   |   |   | 549,335 |   |
|        Delivery                                                                 |                           |                | 25,672                         |   |                           |                | 23,010 |   |   |   | 35,824 |   |
|        Other                                                                    |                           |                | 87,405                         |   |                           |                | 82,039 |   |   |   | 84,968 |   |
|               Total Store Operating Expenses |                           |                | 6,484,724                      |   |                           |                | 7,969,711 |   |   |   | 7,788,820 |   |
| Income from Store Operations                                                                                       |                           |                | 1,377,031                      |   |                           |                | 212,518 |   |   |   | 998,587 |   |
| Other Operating Expenses                                                                                           |                           |                |                           |   |                           |                |   |   |   |   |   |   |
|        Other general and administrative                                         |                           |                | 965,288                        |   |                           |                | 765,994 |   |   |   | 352,219 |   |
|        Divisional payroll and benefits                                          |                           |                | 571,712                        |   |                           |                | 589,879 |   |   |   | 700,639 |   |
|        Royalty fees                                                             |                           |                | 753,407                        |   |                           |                | 769,140 |   |   |   | 832,615 |   |
|        Management fee                                                           |                           |                | 679,635                        |   |                           |                | 682,599 |   |   |   | 741,846 |   |
|        Franchise expense                                                        |                           |                | 16,333                         |   |                           |                | 16,334 |   |   |   | 16,334 |   |
|        Marketing fees                                                           |                           |                | 127,118                        |   |                           |                | 128,187 |   |   |   | 142,674 |   |
|               Total Other Operating Expenses |                           |                | 3,113,493                      |   |                           |                | 2,952,133 |   |   |   | 2,786,327 |   |
| Loss from Operations                                                                                               |                           |                | (1,736,462                     | )      |                           |                | (2,739,615 | ) |   |   | (1,787,740 | ) |
| Interest Expense, Net                                                                                              |                           |                | 299,557                        |   |                           |                | 398,820 |   |   |   | 940,583 |   |
| Net Loss                                                                                                           |                           |                | (2,036,019                     | )      |                           |                | (3,138,435 | ) |   |   | (2,728,323 | ) |
| Less Net Loss Attributable to the                                                                                  |                           |                |                           |   |                           |                |   |   |   |   |   |   |
|        Noncontrolling Interest                                                  |                           |                | 1,299,696                      |   |                           |                | 646,090 |   |   |   | 562,358 |   |
| Net Loss Attributable to KremeWorks, LLC                                                                           |                           | $    | (736,323                       | )      |                           | $    | (2,492,345 | ) |   | $    | (2,165,965 | ) |
|                                                                                                               |                           |                |                           |   |                           |                |   |   |   |   |   |   |

----

|                                                                 |       | 2010                |       | 2009   |       | 2008                |
|----------------------------------------------------------------------|--------------------------------|---------------------|--------------------------------|--------|--------------------------------|---------------------|
| Net Loss                                                             |                           | $                   | (2,036,019                     | )      |                           | $                   | (3,138,435 | ) |   | $ | (2,728,323 | ) |
| Gain on Derivative                                                   |                           |                | -                              |   |                           |                | - |   |   |   | 25,174 |   |
| Comprehensive Loss                                                   |                           |                | (2,036,019                     | )      |                           |                | (3,138,435 | ) |   |   | (2,703,149 | ) |
| Comprehensive Loss Attributable                                      |                           |                |                           |   |                           |                |   |   |   |   |   |   |
|        to Noncontrolling Interest |                           |                | 1,299,696                      |   |                           |                | 646,090 |   |   |   | 557,323 |   |
| Comprehensive Loss Attributable                                      |                           |                |                           |   |                           |                |   |   |   |   |   |   |
|        to KremeWorks, LLC         |                           | $    | (736,323                       | )      |                           | $    | (2,492,345 | ) |   | $    | (2,145,826 | ) |
|                                                                 |                           |                |                           |   |                           |                |   |   |   |   |   |   |

----

|                                                                                                                                                                                                                                                                             |                           | 2010                |       | 2009   |                           | 2008                |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|---------------------|------------|--------|--------------------------------|---------------------|
| Cash Flows from Operating Activities                                                                                                                                                                                                                                             |                           |                |       |   |                           |                |   |   |   |   |   |   |
|        Net loss                                                                                                                                                                                                                               |                           | $                   | (2,036,019 | )      |                           | $                   | (3,138,435 | ) |   | $ | (2,728,323 | ) |
|        Adjustments to reconcile net loss to net                                                                                                                                                                                               |                           |                |       |   |                           |                |   |   |   |   |   |   |
|               cash provided by operating activities                                                                                                                                                        |                           |                |       |   |                           |                |   |   |   |   |   |   |
|                      Depreciation and amortization                                                                                                                      |                           |                | 2,107,206  |   |                           |                | 2,766,510 |   |   |   | 3,056,472 |   |
|                      Impairment charge                                                                                                                                  |                           |                | -          |   |                           |                | 615,000 |   |   |   | - |   |
|                      Deferred rent                                                                                                                                      |                           |                | 172,816    |   |                           |                | 92,076 |   |   |   | 222,752 |   |
|                      (Increase) decrease in                                                                                                                             |                           |                |       |   |                           |                |   |   |   |   |   |   |
|                             Receivables                                                                                              |                           |                | (37,311    | )      |                           |                | 15,104 |   |   |   | 23,908 |   |
|                             Inventories                                                                                              |                           |                | 28,698     |   |                           |                | 52,270 |   |   |   | (18,227 | ) |
|                             Prepaid expenses                                                                                         |                           |                | 3,620      |   |                           |                | 160,143 |   |   |   | (143,494 | ) |
|                      Increase in                                                                                                                                        |                           |                |       |   |                           |                |   |   |   |   |   |   |
|                             Accounts payable                                                                                         |                           |                | 798,079    |   |                           |                | 617,222 |   |   |   | 897,743 |   |
|                             Accrued expenses                                                                                         |                           |                | 178,299    |   |                           |                | 61,466 |   |   |   | 265,252 |   |
|                                    Total Adjustments                                              |                           |                | 3,251,407  |   |                           |                | 4,379,791 |   |   |   | 4,304,406 |   |
|                                    Net Cash Provided by                                           |                           |                |       |   |                           |                |   |   |   |   |   |   |
|                                           Operating Activities |                           |                | 1,215,388  |   |                           |                | 1,241,356 |   |   |   | 1,576,083 |   |
| Cash Flows from Investing Activities                                                                                                                                                                                                                                             |                           |                |       |   |                           |                |   |   |   |   |   |   |
|        Capital expenditures                                                                                                                                                                                                                   |                           |                | (196,746   | )      |                           |                | (84,055 | ) |   |   | (182,820 | ) |
|        Proceeds from sale of fixed asset                                                                                                                                                                                                      |                           |                | -          |   |                           |                | - |   |   |   | 1,692 |   |
|                                    Net Cash Used in                                               |                           |                |       |   |                           |                |   |   |   |   |   |   |
|                                           Investing Activities |                           |                | (196,746   | )      |                           |                | (84,055 | ) |   |   | (181,128 | ) |
| Cash Flows from Financing Activities                                                                                                                                                                                                                                             |                           |                |       |   |                           |                |   |   |   |   |   |   |
|        Principal payments on long-term debt                                                                                                                                                                                                   |                           |                | (1,664,423 | )      |                           |                | (2,149,928 | ) |   |   | (1,834,110 | ) |
|        Member contributions                                                                                                                                                                                                                   |                           |                | 439,800    |   |                           |                | 1,035,200 |   |   |   | 375,000 |   |
|                                    Net Cash Used in                                               |                           |                |       |   |                           |                |   |   |   |   |   |   |
|                                           Financing Activities |                           |                | (1,224,623 | )      |                           |                | (1,114,728 | ) |   |   | (1,459,110 | ) |
| Net (Decrease) Increase in Cash                                                                                                                                                                                                                                                  |                           |                | (205,981   | )      |                           |                | 42,573 |   |   |   | (64,155 | ) |
| Cash, Beginning of Year                                                                                                                                                                                                                                                          |                           |                | 866,563    |   |                           |                | 823,990 |   |   |   | 888,145 |   |
| Cash, End of Year                                                                                                                                                                                                                                                                |       | $    | 660,582    |   |       | $    | 866,563 |   |       | $    | 823,990 |   |
|                                                                                                                                                                                                                                                                             |                           |                |       |   |                           |                |   |   |   |   |   |   |

----

|                                                           |               | KremeWorks, LLC Members' Equity |               |        |                |          |               |             |               |                                                                       |
|----------------------------------------------------------------|--------------------|---------------------------------|--------------------|-------------|---------------------|---------------|--------------------|------------------|--------------------|----------------------------------------------------------------------------|
|                                                           |               |                            |               |        |                |          |               |             | Accumulated        |                                                                       |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |               |                            |               |        |                |          |               |             | Other              |                                                                       | KremeWorks, LLC |   |   |   |   |   |   |   |   |
|                                                           |               | Member                          |               | Accumulated |                | Comprehensive |               | Members’   |               | Noncontrolling                                                             |   | Total |
|                                                           |     | Contributions                   |     | Deficit     |      | (Loss) Income |     | Equity (Deficit) |     | Interest                                                                   |     | Equity |
| Balance, December 26, 2007                                     |               | $                               | 3,398,872          |        | $                   | (2,437,632    | )                  |             | $                  |             (20,139 | ) |   | $ | 941,101 |   |   | $ | 4,447,907 |   |   | $ | 5,389,008 |   |
|        Net loss             |               |                            | -                  |        |                | (2,165,965    | )                  |             |               | -                                                                          |   |   |   |             (2,165,965 | ) |   |   | (562,358 | ) |   |   | (2,728,323 | ) |
|        Member contributions |               |                            | 1,522,785          |        |                | -             |               |             |               | -                                                                          |   |   |   | 1,522,785 |   |   |   | - |   |   |   | 1,522,785 |   |
|        Gain on derivative   |               |                            | -                  |        |                | -             |               |             |               | 20,139                                                                     |   |   |   | 20,139 |   |   |   | 5,035 |   |   |   | 25,174 |   |
| Balance, December 31, 2008                                     |               |                            | 4,921,657          |        |                | (4,603,597    | )                  |             |               | -                                                                          |   |   |   | 318,060 |   |   |   | 3,890,584 |   |   |   | 4,208,644 |   |
|        Net loss             |               |                            | -                  |        |                | (2,492,345    | )                  |             |               | -                                                                          |   |   |   | (2,492,345 | ) |   |   | (646,090 | ) |   |   | (3,138,435 | ) |
|        Member contributions |               |                            | 2,003,430          |        |                | -             |               |             |               | -                                                                          |   |   |   | 2,003,430 |   |   |   | - |   |   |   | 2,003,430 |   |
| Balance, December 30, 2009                                     |               |                            | 6,925,087          |        |                | (7,095,942    | )                  |             |               | -                                                                          |   |   |   | (170,855 | ) |   |   | 3,244,494 |   |   |   | 3,073,639 |   |
|        Net loss             |               |                            | -                  |        |                | (736,323      | )                  |             |               | -                                                                          |   |   |   | (736,323 | ) |   |   |        (1,299,696 | ) |   |   | (2,036,019 | ) |
|        Member contributions |               |                            | 922,848            |        |                | -             |               |             |               | -                                                                          |   |   |   | 922,848 |   |   |   | - |   |   |   | 922,848 |   |
| Balance, December 29, 2010                                     |               | $                               | 7,847,935          |        | $    | (7,832,265    | )                  |             | $                  | -                                                                          |   |   | $ | 15,670 |   |   | $ | 1,944,798 |   |   | $    | 1,960,468 |   |
|                                                           |               |                            |               |        |                |          |               |             |               |                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

|                              | Years |
|-----------------------------------|-------|
| Leasehold improvements            | 20    |   |
| Furniture, fixtures and equipment | 7     |   |
| Automobiles                       | 3     |   |
| Computer equipment                | 3     |   |

----

----

----

----

- Level 1 - Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.   
- Level 2 - Observable market-based inputs or unobservable inputs that are corroborated by market data.     
- Level 3 - Unobservable inputs that are not corroborated by market data. These inputs reflect management’s best estimate of fair value using its own assumptions about the assumptions a market participant would use in pricing the asset or liability. 

|           |                           |         |                           |             | Quoted Prices                  |       | Significant                    |         |                           |             |   | Total Gains |
|----------------|--------------------------------|--------------|--------------------------------|------------------|--------------------------------|------------|--------------------------------|--------------|--------------------------------|------------------|--------|-------------|
|           |                           | Fair Values  |                           | in Active        |                           | Other      |                           | Significant  |                           | (Losses) for the |
|           |                           | as of        |                           | Markets for      |                           | Observable |                           | Unobservable |                           | Year Ended       |
|           |                           | December 31, |                           | Identical Assets |                           | Inputs     |                           | Inputs       |                           | December 31,     |
| Description    |       | 2009         |       | (Level 1)        |       | (Level 2)  |       | (Level 3)    |       | 2009             |
| Property and   |                           |         |                           |             |                           |       |                           |         |                           |             |   |        |   |   |   |   |
| equipment held |                           |         |                           |             |                           |       |                           |         |                           |             |   |        |   |   |   |   |
| and used       |                           | $            | 685,000                        |             | $                              | -          |                           | $            | -                              |             | $      | 685,000     |   | $ |             (615,000 | ) |
|           |                           |         |                           |             |                           |       |                           |         |                           |             |   |        |   |   |   |   |

----

|               |      | 2010          |      | 2009   |
|--------------------|--------------------------|---------------|--------------------------|--------|
| Food and beverages |                     | $   | 198,350                  |   | $   | 175,966 |
| Packaging          |                     |          | 59,019                   |   |   | 58,872 |
| Merchandise        |                     |          | 50,446                   |   |   | 101,675 |
|               |                     | $             | 307,815                  |   | $ | 336,513 |
|               |                     |          |                     |   |   |   |

|                                           |       | 2010          |       | 2009   |
|------------------------------------------------|--------------------------------|---------------|--------------------------------|--------|
| Leasehold improvements                         |                           | $   | 20,622,008                     |   |   | $   | 20,622,008 |   |
| Furniture, fixtures and equipment              |                           |          | 14,383,205                     |   |   |   | 14,191,504 |   |
| Automobiles                                    |                           |          | 408,468                        |   |   |   | 408,468 |   |
| Computer equipment                             |                           |          | 165,220                        |   |   |   | 160,175 |   |
|                                           |                           |          | 35,578,901                     |   |   |   | 35,382,155 |   |
| Less accumulated depreciation and amortization |                           |          | (21,770,429                    | )      |   |   | (19,679,556 | ) |
|                                           |                           | $             | 13,808,472                     |   |   | $ | 15,702,599 |   |
|                                           |                           |          |                           |   |   |   |   |   |

----

|                                                      |       | 2010          |       | 2009   |
|-----------------------------------------------------------|--------------------------------|---------------|--------------------------------|--------|
| Note payable to Bank of America in monthly principal      |                           |          |                           |   |   |   |   |   |
| installments of $50,994 plus interest at the 30-day LIBOR |                           |          |                           |   |   |   |   |   |
| rate plus 2.75%. A final balloon payment of $2,668,677 is |                           |          |                           |   |   |   |   |   |
| due on October 31, 2011.                                  |                           | $   | 3,229,611                      |   |   | $   | 4,541,545 |   |
|                                                      |                           |          |                           |   |   |   |   |   |
| Note payable to Bank of America in monthly principal      |                           |          |                           |   |   |   |   |   |
| installments of $29,374 plus interest at the 30-day LIBOR |                           |          |                           |   |   |   |   |   |
| rate plus 2.75%. A final balloon payment of $1,596,861 is |                           |          |                           |   |   |   |   |   |
| due on October 31, 2011.                                  |                           |          | 1,890,601                      |   |   |   | 2,243,090 |   |
| Total long-term debt                                      |                           |          | 5,120,212                      |   |   |   | 6,784,635 |   |
|                                                      |                           |          |                           |   |   |   |   |   |
| Less current maturities                                   |                           |          | (5,120,212                     | )      |   |   | (6,784,635 | ) |
|                                                      |                           | $             | -                              |   |   | $ | - |   |
|                                                      |                           |          |                           |   |   |   |   |   |

----

| Fiscal Year Ending: |       |          |       |
|---------------------|--------------------------------|---------------|------------|
| 2011                |                           | $   | 1,560,471  |
| 2012                |                           |          | 1,575,654  |
| 2013                |                           |          | 1,662,058  |
| 2014                |                           |          | 1,828,177  |
| 2015                |                           |          | 1,830,100  |
| Later years         |                           |          | 14,561,342 |
|                |                           | $             | 23,017,802 |
|                |

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----

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----