Find factors that could explain the huge decline in market value and how they relate to the growing perpetuity formula. Show some calculations why, when built into an NPV model for investors, these "abrupt changes" in perceived cash flows being generated by the firm can have huge impacts om its market capitalization.

KRISPY KREME DOUGHNUTS, INC. Balance Sheets (in thousands) Fiscal Year Ended Three Months Ended Jan. 30, Jan. 28, Feb. 3, Feb. 2, Feb. 1, May 2, Aug. 1, 2000 2001 2002 2003 2004 2004 2004 ASSETS Current Assets: Cash and cash equivalents 3, 183 7,026 21,904 32,203 20,300 13,715 19,309 Short-term investments 15,292 22,976 Accounts receivable 17,965 19,855 26,894 34,373 45,283 47,434 44,329 Accounts receivable, affiliates 1.608 2,599 9,017 11,062 20,482 20,740 19,933 Other receivables 794 2.279 2,771 884 2,363 3,169 4,868 Notes receivable, affiliates 458 4,404 5.440 Inventories 9,979 12,031 16,159 24,365 28,573 32,974 33.076 Prepaid expenses 3,148 1,909 2,591 3,478 5,399 4,675 6,749 Income taxes refundable 861 2,534 1,963 7,946 7,449 8 , 139 Deferred income taxes 3,500 3,809 4,607 9,824 6,453 13,280 20,005 Assets held for sale 36,856 3, 374 3,325 Total current assets 41,038 67,611 101,769 141,128 174,113 151,214 165,173 Property and equipment, net 50,584 78,340 112,577 202,558 281,103 301,160 297,154 Deferred income taxes 1,398 Long-term investments 17,877 12,700 4,344 Long-term notes receivable, affiliates 0 1,000 2,988 2,925 Investments in unconsolidated joint ventures 2,827 3,400 6,871 12,426 10,72 9.921 Reacquired franchise rights 16,621 49,354 175,957 176,078 176,045 Other assets 1,938 4,838 8,309 5,232 9,456 12,315 Total assets 104,958 171,493 255,376 410,487 660,664 654,483 661,608 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable 13, 106 12,095 14,055 18,784 18 ,866 18,817 Book overdraft 5, 147 9,107 11,375 8,123 12,670 13,107 Accrued expenses 14,080 21,243 26,729 20,981 23,744 27,107 32,249 Arbitration award 9.075 Revolving line of credit 3,526 3,871 Current maturities of long-term debt 2,400 0 731 3,301 2,842 4,663 5,566 Short-term debt 0 ovE Income taxes payable 41 Total current liabilities 29,586 38,168 52,533 59,687 53,493 63,306 69,739 Deferred income taxes 579 3,930 9.849 5,374 16,468 25,564 Compensation deferred (unpaid) 990 1, 106 Revolving lines of credit 0 7,288 87,000 72,000 62,00 Long-term debt, net of current portion 20,502 3,912 49.900 48,056 58,469 50,135 Accrued restructuring expenses 4.259 3,109 Other long-term obligations 1,866 1,735 4.843 5,218 11,211 10,774 12,078 Total long-term liabilities 27,617 6,529 12,685 72,255 152,641 157,711 149,777 Minority interest 1,117 2,491 5,193 2,323 2,815 2,593 SHAREHOLDERS' EQUITY: Common stock, no par value, 300,000 shares authorized; issued and outstanding 85,060 121,052 173,112 294,477 296,812 299,865 Common stock, 10 par value, 1,000 shares authorized; issued and outstanding 4,670 Paid-in capital 10,805 Unearned compensation (188) (186) (119 (62) (47) (31) Notes receivable, employees (2,547) (2,349) (2,580) (558) (383 (383) (383) Nonqualified employee benefit plan assets (126) (138 (339) (369) (264) (264) Nonqualified employee benefit plan liability 126 138 339 369 264 264 Accumulated other comprehensive income (loss) 609 456 (1,486) (1,315) (783) (768) Retained earnings 34,827 42,547 68,925 102,403 159,490 135,052 140,816 Total shareholders' equity 47,755 125,679 187,667 273,352 439,499 Total liabilities and shareholders' equity 452,207 430,651 104,958 171,493 255,376 410,487 660,664 654,483 661,608 Data source: Company filings with the Securities and Exchange Commission (SEC)