KKD » Topics » CONCENTRATION OF CREDIT RISK

These excerpts taken from the KKD 10-K filed Apr 17, 2008.
CONCENTRATION OF CREDIT RISK. Financial instruments that subject the Company to credit risk consist principally of receivables from wholesale customers and franchisees and guarantees of leases and indebtedness of franchisees. Wholesale receivables are primarily from grocery and convenience stores. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains allowances for doubtful accounts which management believes are sufficient to provide for losses which may be sustained on realization of these receivables. In fiscal 2008, 2007 and 2006, no customer accounted for more than 10% of Company-owned stores’ revenues. The Company’s two largest wholesale customers collectively accounted for approximately 10.2%, 10.2% and 10.3% of Company-owned stores’ revenues in fiscal 2008, 2007 and 2006, respectively. The Company’s two wholesale customers with the largest trade receivables balances collectively accounted for approximately 23.5% and 20.9% of wholesale doughnut customer trade receivables at February 3, 2008 and January 28, 2007, respectively. The foregoing percentages of revenues for fiscal 2007 and 2006 are computed based upon Company Stores segment revenues exclusive of sales of Consolidated Franchisees; revenues of Consolidated Franchisees accounted for 1.0% and 19.3% of total Company Stores revenues in fiscal 2007 and 2006, respectively. The Company had no Consolidated Franchisees in fiscal 2008.

     The Company also evaluates the recoverability of receivables from its franchisees and maintains allowances for doubtful accounts which management believes are sufficient to provide for losses which may be sustained on realization of these receivables. In addition, the Company evaluates the likelihood of potential payments by the Company under loan and lease guarantees and records estimated liabilities for the present value of any payments the Company considers probable.

     

CONCENTRATION OF CREDIT RISK.
Financial instruments that subject the Company to credit risk consist
principally of receivables from wholesale customers and franchisees and
guarantees of leases and indebtedness of franchisees. Wholesale receivables are
primarily from grocery and convenience stores. The Company performs ongoing
credit evaluations of its customers’ financial condition and maintains
allowances for doubtful accounts which management believes are sufficient to
provide for losses which may be sustained on realization of these receivables.
In fiscal 2008, 2007 and 2006, no customer accounted for more than 10% of
Company-owned stores’ revenues. The Company’s two largest wholesale customers
collectively accounted for approximately 10.2%, 10.2% and 10.3% of Company-owned
stores’ revenues in fiscal 2008, 2007 and 2006, respectively. The Company’s two
wholesale customers with the largest trade receivables balances collectively
accounted for approximately 23.5% and 20.9% of wholesale doughnut customer trade
receivables at February 3, 2008 and January 28, 2007, respectively. The
foregoing percentages of revenues for fiscal 2007 and 2006 are computed based
upon Company Stores segment revenues exclusive of sales of Consolidated
Franchisees; revenues of Consolidated Franchisees accounted for 1.0% and 19.3%
of total Company Stores revenues in fiscal 2007 and 2006, respectively. The
Company had no Consolidated Franchisees in fiscal 2008.


     The Company
also evaluates the recoverability of receivables from its franchisees and
maintains allowances for doubtful accounts which management believes are
sufficient to provide for losses which may be sustained on realization of these
receivables. In addition, the Company evaluates the likelihood of potential
payments by the Company under loan and lease guarantees and records estimated
liabilities for the present value of any payments the Company considers
probable.


     

This excerpt taken from the KKD 10-K filed Apr 12, 2007.
CONCENTRATION OF CREDIT RISK. Financial instruments that subject the Company to credit risk consist principally of receivables from wholesale customers and franchisees and guarantees of leases and indebtedness of franchisees. Wholesale receivables are primarily from grocery and convenience stores. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains allowances for doubtful accounts which management believes are sufficient to provide for losses which may be sustained on realization of these receivables. In fiscal 2007, 2006 and 2005, no customer accounted for more than 10% of company-owned stores’ revenues. The Company’s two largest wholesale customers collectively accounted for approximately 10.2%, 10.3% and 11.4% of company-owned stores’ revenues in fiscal 2007, 2006 and 2005, respectively. Accounts receivable for the two largest wholesale customers collectively accounted for approximately 20.9% and 23.5% of wholesale doughnut customer trade receivables at January 28, 2007 and January 29, 2006, respectively. All of the foregoing percentages are computed based upon Company Stores segment revenues and receivables exclusive of sales and receivables of Consolidated Franchisees; revenues of Consolidated Franchisees accounted for 1.0%, 19.3% and 21.8% of total Company Stores revenues in fiscal 2007, 2006 and 2005, respectively, and receivables of Consolidated Franchisees accounted for 16.3% of wholesale doughnut customer trade receivables at January 29, 2006 (there were no Consolidated Franchisees at January 28, 2007).

     The Company also evaluates the recoverability of receivables from its franchisees and maintains allowances for doubtful accounts which management believes are sufficient to provide for losses which may be sustained on realization of these receivables. In addition, the Company evaluates the likelihood of potential payments by the Company under loan and lease guarantees and records liabilities for the present value of any payments the Company considers probable. See Notes 3 and 18 for additional information regarding receivables from franchisees, including Equity Method Franchisees, and regarding loan and lease guarantees.

     

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