Famous Dave's Announces Payoff of Debt and Lease Terminations, and Updates Restaurant Opening Guidance
Famous Dave's of America, Inc. (NASDAQ: DAVE) today announced that it recently completed the early retirement of approximately $4.2 million of long-term debt at interest rates ranging from 8.83 percent to 10.53 percent, originally due between February 2020 and June 2022.
The company incurred an early termination fee of $350,000 or $0.03 per diluted share as a result of this debt repayment. The company expects to pay down an additional $2.6 million of long-term fixed rate debt, with no early termination fee, with interest rates ranging from 8.10 percent to 8.75 percent, by fiscal year end. The total pay down of long-term debt in fiscal 2009 should result in approximately $600,000 of interest savings for fiscal 2010. As of the end of the second quarter, the company's line of credit balance was $14.5 million.
The company also announced that it has successfully completed the lease termination of two of its restaurants in Atlanta that were closed during the 2008 fourth quarter. The company terminated these leases for approximately $1.0 million, resulting in the recapture of the lease termination reserve of approximately $450,000, or $0.03 per diluted share, which will be reflected as a reduction in the asset impairment and estimated lease termination and other closing costs line in the statement of operations. The company is currently in negotiations to terminate the third, and final, Atlanta restaurant lease.
'The operating environment continues to be very difficult,' said Christopher O'Donnell, president and CEO of Famous Dave's of America, 'as the graduation and summer bar-b-que season to date hasn't delivered the sales improvement that we had hoped for. In spite of these conditions, we have been paying extremely close attention to our cash flow and balance sheet in order to position the company for future growth when economic conditions improve.'
New Restaurant Opening Update
The company is updating its guidance on franchise restaurant openings in fiscal 2009 to a range of 9 to 11 from the original guidance of 8 to 10. The company noted that it has already opened 8 restaurants during the first six months of fiscal 2009, all of which qualified under the company's growth incentive program for a reduced royalty rate of 4 percent for 12 months from date of opening. The company indicated that any additional openings in 2009, as well as any openings in 2010, will qualify for the reduced royalty rate of 1.5 percent for 12 months from date of opening.
The company will announce its Second Quarter 2009 earnings after market close July 29, 2009, and will host a conference call, July 30, 2009, at 10:00 a.m., Central Time.
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