Krispy Kreme Doughnuts, Inc. ("Krispy Kreme" or the Company) is a specialty retailer of doughnuts.

The original Complaint filed in 2004 charges Krispy Kreme and certain of its officers and directors of violating the Securities Exchange Act of 1934. The Complaint alleges that during the Class Period, Krispy Kreme touted its strong operational growth, reporting substantial increases in revenues, income and earnings per share and representing that the Company would continue to grow. The Complaint further alleges that, unbeknownst to investors, Defendants failed to disclose that, as a result of the trend toward low-fat, low carbohydrate diets, such as the South Beach and Atkins diets, Krispy Kreme had been suffering from increasingly poor sales performance. The Complaint alleges that there were other undisclosed reasons for the Company's poor performance: While the opening of new Krispy Kreme stores created initial consumer excitement and a corresponding surge in sales, sales at those newly opened stores quickly tapered off. This was especially damaging to the Company in smaller markets with a limited number of potential new customers. Rather than cultivate a base of steady customers, the Company instead attempted to capitalize on Krispy Kreme's "fad appeal" and adopted a business model and strategy for increasing sales that was predicated on the perpetual addition of new stores and the hyping of the Company's entry into new markets ---- a tactic that resulted in unsustainable surges in sales that fell off once the hype ceased and the novelty of the new store wore off. The Complaint further alleges that the Company's strategy of offsetting slowing retail sales with wholesale shipments to supermarkets was not working because the Company's wholesale business was more expensive to operate and, therefore, resulted in a lower profit margin than in-store sales and because the Company's wholesale business was saturating the market with Krispy Kreme products, cannibalizing the Company's retail operations, perhaps undermining them as well, and decreasing the Company's overall profit margin.

The Complaint alleges that on or around May 7, 2004, Defendants issued a news release in which they announced that Krispy Kreme's expected fiscal 2005 diluted earnings per share from continuing operations, excluding charges, to be 10% lower than previously announced, and that Krispy Kreme was closing certain company-owned stores and reducing plans to open new ones. Krispy Kreme also announced that it was closing its Montana Mills bread stores, an operation that it had bought a year ago, and that it was going to write-off as much as $40 million on the venture; as recently as mid- April, Defendants had said they intended to refine and expand the operation.

On this news, shares of Krispy Kreme fell $9.29, or 29%, to close at $22.51, a new 52-week low and more than 50% below Krispy Kreme's 52-week high of $49.74. The trading volume was 20.5 million shares, the largest ever for Krispy Kreme and amounting to a third of the shares outstanding.

On October 7, 2004, the Court entered an Order appointing Lead Plaintiff and Counsel. On December 14, 2004, Lead Plaintiff filed an amended consolidated Complaint. On February 4, 2005, the Court entered the Order of Consolidation. On February 15, 2005, Lead Plaintiff filed an amended Complaint.

On May 23, 2005, Lead Plaintiff filed a second amended Complaint, and the Defendants responded by filing various motions to dismiss the second amended Complaint on October 14.

The Parties entered into a Stipulation of Settlement on November 1, 2006. On November 16, the Court entered the Order preliminarily approving the settlement and providing for notice. On February 15, 2007, the Court entered several Orders approving the plan of allocation, attorney’s fees and reimbursement of expenses, and the proposed settlement. The Court entered the Final Judgment and Order of Dismissal with Prejudice on the same day.