However, the company sees significant potential in internationalexpansion. Markets outside the US are a potential source of growth,and Krispy Kreme is hiring additional staff to assist in thedevelopment of international markets, the company said. As of Jan.28, Krispy Kreme's international stores totaled 123, includinglocations in Australia, Canada, Hong Kong, Indonesia, Japan,Kuwait, Mexico, the Philippines, South Korea and the UnitedKingdom. During the year, the company awarded development rights inthe Middle East, Hong Kong, Macau, Tokyo, the Philippines andIndonesia. It expects that the development and franchise agreementsfor these territories have the potential for approximately 200stores in the next five years.

Commenting during a conference call with financial analysts,Krispy Kreme execs reported that for the fourth quarter ended Jan.28 the company lost 39 cents per diluted share on a net loss of$24.4 million, compared with a loss of 61 cents per share on a netloss of $37.7 million in the comparable period last year. The netloss for the quarter included a charge related to the settlement oflitigation of approximately $16 million. During the fourth quarter,the company recorded a $2.1 million provision for doubtful accountssubstantially all of which relates to receivables fromfranchisees.

The net loss for the full year came to 68 cents per share on atotal net loss of $42.2 million, compared with a net loss of $2.20per share on a $135.8 million loss the previous year. On the salesside, the fourth quarter total decreased 8.2% to $112.2 million andthe full-year total full year total decreased 15.1% to $461.2million.