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Famous Dave’s Reports First Quarter Earnings of $0.30 Per Share

2010-04-29

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Famous Daves Famous Dave's of America, Inc. (NASDAQ: DAVE) announced revenue and net income of $32.6 million and $2.7 million, respectively, or $0.30 per diluted share, for the first quarter ended April 4, 2010. This compares to revenue and net income of $33.8 million and $1.3 million, or $0.15 per diluted share for the comparable period in 2009.

Includes non-cash gains of $0.15 per share

“I was pleased with our execution during the first quarter of 2010.”

First quarter results include one-time non-cash gains of approximately $2.1 million or $0.15 per diluted share related to the acquisition of seven restaurants in New York and New Jersey and the termination of a Marietta, Georgia lease.

“I was pleased with our execution during the first quarter of 2010.” said Christopher O’Donnell, President and CEO of Famous Dave’s of America. “We turned in a solid quarter of profitable financial performance in a business environment that remains challenging, and during a time when we were also acquiring, and integrating, seven new company-owned restaurants.”

Same store sales for company-owned restaurants open for 24 months or more decreased 3.5 percent during the quarter. Severe weather-related closures, affecting 16 east coast restaurants for 28 operating days, negatively impacted comparable sales for the quarter by approximately 110 basis points. Additionally, the shift of Easter from the second quarter of 2009 to the first quarter of 2010 had a 50 basis point unfavorable impact on the quarter. The comparable sales decline was net of weighted average price increases of approximately 1.0 percent.

Franchise royalty revenue for the first quarter of 2010 totaled $4.0 million, down 4.6 percent from the comparable period in 2009. The decrease in franchise royalty revenue primarily reflects a 3.4% decline in comparable sales. Additionally, the decline reflects the loss of royalties for seven New York and New Jersey locations purchased by the company, and the closure of one of the New Jersey locations, in early March.

Acquisition of Seven Franchise Restaurants

Earnings for the first quarter include a non-cash gain of approximately $0.15 per diluted share from the acquisition of seven restaurants in New York and New Jersey, equal to the difference between the fair market value of the assets acquired of approximately $9.8 million, and the purchase price of approximately $7.4 million. In addition, acquisition-related costs of approximately $307,000 have been netted against the gain. The Company purchased these seven restaurants in early March for cash consideration of approximately $6.8 million.

Lease Termination for Previously Closed Restaurant

During the first quarter, the company terminated the last of its Atlanta, Georgia leases, resulting in the recapture of the lease termination reserve of approximately $84,000, which is reported in asset impairment and estimated lease termination and other closing costs in the Consolidated Statement of Operations.

Stock-based Compensation and Common Share Repurchase

Earnings results for the first quarter of 2010 included approximately $355,000 or $0.03 per diluted share, in compensation expense related to the company’s stock-based incentive programs, as compared to approximately $138,000 or $0.01 per diluted share, for the prior year comparable period. The increase is primarily due to a shift in the timing of board of director’s stock-based compensation to align with the timing of their board service in 2009 from a previous fiscal year method as well as an increase in the Company’s stock price over the prior year.

The company repurchased approximately 430,000 shares of common stock during the fiscal first quarter at an average price of $6.92 per share, excluding commissions, for a total of approximately $3.0 million. The Company has repurchased approximately 537,000 shares under its current 1,000,000 share authorization.

Marketing and Development

Development and marketing highlights during the quarter included a successful "limited time offer" of Cajun style seafood featuring Blackened BBQ Catfish, New Orleans BBQ Shrimp, BBQ or Buffalo Shrimp Appetizers, “add a skewer” BBQ Shrimp and a Mardi Gras inspired beverage, The Big Easy.

The current limited time offering, “80 Proof BBQ,” features Jack Daniels Tennessee Whiskey^® and includes Whisky Wings, an 80 Proof BBQ Burger, 80 Proof BBQ Ribs, and Tennessee Style Bread Pudding with Sweet Vanilla Whiskey Sauce and Lynchburg Lemonade.

“We continue to be excited about the innovation taking place in our test kitchen,” O’Donnell said. “We have launched a broad array of no fewer than 18 new menu items that are currently being tested in several of our restaurants, including low calorie options as well as a variety of exciting new smoked and grilled offerings. All of these items extend and amplify the Famous Dave’s brand and ensure our continued relevance to our guests.”

Famous Dave’s opened one new franchise-operated restaurant during the first quarter, in Omaha, NE. Three franchise-operated locations closed during the quarter in Barboursville, WV, South Charleston, WV and Hillsborough, NJ. Subsequent to quarter end, one franchise location opened in Gilbert, AZ. Famous Dave's ended the quarter with 175 restaurants, including 52 company-owned restaurants and 123 franchise-operated restaurants, located in 36 states.

Outlook

The company reiterates its guidance on restaurant development, as issued in its fourth quarter earnings release, and anticipates opening one company-owned restaurant and approximately eight franchise-operated restaurants during fiscal 2010.



FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
	Three Months Ended
	April 4,			March 29,
	2010			2009
Revenue:
Restaurant sales, net	$	28,393		$	29,291
Franchise royalty revenue		3,982			4,175
Franchise fee revenue		40			75
Licensing and other revenue		184			246
Total revenue		32,599			33,787

Costs and expenses:
Food and beverage costs		8,327			8,778
Labor and benefits costs		9,249			9,311
Operating expenses		7,628			7,550
Depreciation and amortization		1,292			1,312
General and administrative expenses		3,811			4,300
Asset impairment and estimated lease termination and other closing costs		(74	)		106
Pre-opening expenses		27			--- ---
Gain on acquisition, net of acquisition costs		(2,036	)		---
Total costs and expenses		28,224			31,357

Income from operations		4,375			2,430

Other expense:
Interest expense		(300	)		(474	)
Interest income		39			34
Other income, net		7			10
Total other expense		(254	)		(430	)

Income before income taxes	4,121			2,000

Income tax expense	(1,414		)	(680		)

Net income	$	2,707		$	1,320

Basic and Diluted net income per common share	$	0.30		$	0.15

Weighted average common shares outstanding – basic		8,999,000			9,082,000

Weighted average common shares outstanding – diluted		9,162,000			9,087,000



FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
OPERATING RESULTS
(unaudited)
	Three Months Ended
	April 4,		March 29,
	2010		2009
Food and beverage costs ⁽¹⁾	29.3	%	30.0	%
Labor and benefits ⁽¹⁾	32.6	%	31.8	%
Operating expenses ⁽¹⁾	26.9	%	25.8	%
Depreciation & amortization (restaurant level) ⁽¹⁾	4.0	%	4.0	%
Depreciation & amortization (corporate level) ⁽²⁾	0.4	%	0.4	%
General and administrative ⁽²⁾	11.7	%	12.7	%
Asset impairment and estimated lease termination and other closing costs ⁽¹⁾	(0.3	%)	0.4	%
Pre-opening expenses ⁽¹⁾	0.1	%	0.0	%
Gain on acquisition, net of acquisition costs ⁽¹⁾	(7.2	%)	0.0	%

Total costs and expenses ⁽²⁾	86.6	%	92.8	%
Income from operations ⁽²⁾	13.4	%	7.2	%

⁽¹⁾ As a percentage of restaurant sales, net
⁽²⁾ As a percentage of total revenue



FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
	April 4,		January 3,
	2010		2010
ASSETS
Cash and cash equivalents	$	1,641	$	2,996
Other current assets		9,253		9,486
Property, equipment and leasehold improvements, net		61,424		54,818
Other assets		3,664		1,081
Total assets	$	75,982	$	68,381

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities	$	11,174	$	12,464
Line of credit		15,500		13,500
Other long-term obligations		16,302		9,423
Shareholders’ equity		33,006		32,994
Total liabilities and shareholders’ equity	$	75,982	$	68,381



FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	Three Months Ended
	April 4,			March 29,
	2010			2009

Cash flows provided by operating activities	$	364		$	3,798
Cash flows used for investing activities		(7,461	)		(311	)
Cash flows provided by (used for) financing activities		5,742			(3,145	)
(Decrease) / increase in cash and cash equivalents	$	(1,355	)	$	342



SUPPLEMENTAL SALES INFORMATION
(unaudited)
	Three Months Ended
	April 4,			March 29,
	2010			2009

Restaurant sales (in thousands):
Company-Owned	$	28,393		$	29,291
Franchise-Operated	$	85,141		$	87,128

Total number of restaurants:
Company-Owned		52			47
Franchise-Operated		123			127
Total		175			174

Total weighted average weekly net sales (AWS):
Company-Owned	$	45,821		$	47,939
Franchise-Operated	$	52,327		$	54,660

AWS 2005 and Post 2005: ⁽¹⁾
Company-Owned	$	52,156		$	59,030
Franchise-Operated	$	56,629		$	60,836

AWS Pre-2005: ⁽¹⁾
Company-Owned	$	43,105		$	44,137
Franchise-Operated	$	45,437		$	46,272

Operating weeks:
Company-Owned		613			611
Franchise-Operated		1,626			1,594

Comparable net sales (24 month):
Company-Owned %		(3.5	%)		(5.5	%)
Franchise-Operated %		(3.4	%)		(6.2	%)

Total number of comparable restaurants:
Company-Owned		41			39
Franchise-Operated		95			92