Famous Dave's Reports Third Quarter Earnings of $0.13 Per Share

October 28, 2009 4:14 PM EDT

Includes charges for lease terminations and impairment of software of $0.03 per share

MINNEAPOLIS--(BUSINESS WIRE)-- Famous Dave's of America, Inc. (NASDAQ: DAVE) today reported revenue of $33.3 million and net income of $1.2 million, or $0.13 per diluted share, for its fiscal third quarter ended September 27, 2009. Total revenue for the quarter decreased 5.1 percent from the comparable period in 2008. For the nine months ended September 27, 2009, the company reported revenue of $103.4 million and net income of $4.9 million, or $0.54 per diluted share.

Same store sales for company-owned restaurants open for 24 months or more declined 6.8 percent during the quarter, reflecting declines in dine-in, To-Go and catering, while same store sales for its franchise-operated restaurants declined 9.5 percent. Franchise royalty revenue for the quarter totaled $4.2 million, a decrease of 2.8 percent from the comparable period in 2008. Same store sales for company-owned restaurants declined 7.3 percent on a year-to-date basis, while same store sales for franchise-operated restaurants declined 8.8 percent. Franchise royalty revenue for the year-to-date timeframe totaled $12.9 million.

"The sales environment for the entire casual dining sector remains challenging, but I remain excited about the energy we've created with our marketing efforts," said Christopher O'Donnell, chief executive officer of Famous Dave's. "We've continued to make progress in our efforts to control costs and have worked hard to strengthen our balance sheet."

Sales results for the third quarter for company-owned restaurants reflect general declines in consumer spending slightly offset by the impact of weighted average price increases of approximately 2.0 percent, which were taken prior to 2009.

The company's 2009 third quarter also reflected the following:

    --  Early Debt Repayment

During the third quarter of fiscal 2009, the company repaid $2.6 million in long-term high fixed-rate debt. As previously announced, on October 1, 2009, the company has since repaid the last of five outstanding term notes, bringing the amount of debt the company has repaid to date in 2009 to approximately $10.0 million. The total pay down of long-term debt in fiscal 2009 should result in approximately $610,000 of scheduled interest savings for fiscal 2010. The company continues to maintain its revolving line of credit, which had a balance of $14.0 million at the end of the third quarter.

    --  Impairment and Lease Termination Charges

During the quarter, asset impairment and lease termination charges totaled $446,000. Included in this total are charges related to a final agreement to buy out the lease of a previously closed restaurant, a lease termination settlement for a restaurant site where construction never commenced, and a software product that was replaced with an alternative solution prior to implementation.

    --  Stock-Based Compensation

Earnings results for the third quarter of 2009 included approximately $236,000, or $0.02 per diluted share, in compensation expense related to the company's stock-based incentive programs, as compared to approximately $100,000, or $0.01 per diluted share, for the prior year comparable period. Stock-based compensation expense for the nine months ended September 27, 2009 was approximately $610,000, or $0.04 per diluted share, compared to approximately $698,000 or $0.05 per diluted share for the prior year comparable period.

Marketing and Development

Marketing and Development highlights during the quarter included a 15 year anniversary celebration featuring the return of the "Buck-A-Bone" promotion, $1.15 draft beers and a special "Dave's Day" event. This fall, the company's Limited Time Offer is a "Smokin' hot meatloaf and potatoes" entree and a 12 ounce smoked rib-eye steak with Dave's special barbeque butter, roasted baby red potatoes with baby bella mushrooms and a choice of side dish. This promotion is available through November.

"We've responded to the current business climate with promotions geared towards driving traffic through a balance of value-oriented and premium items, as well as promotions that enhance our already strong brand," O'Donnell said. "Our 15-year anniversary celebration was an example of this, which included our 'Dave's Day' celebration, an event that we could 'own' and that drove traffic and delivered sales that rivaled our largest day, Fathers Day."

During the third quarter of fiscal 2009, two franchise-operated restaurants opened in Thousand Oaks, California and Amarillo, Texas and one franchise-operated restaurant closed in Omaha, Nebraska. Famous Dave's ended the quarter with 177 restaurants, including 46 company-owned restaurants and 131 franchise-operated restaurants, located in 38 states.

Outlook

Subsequent to quarter-end, three franchise-operated restaurants opened in Lake Delton, Wisconsin, Ft. Collins, Colorado, and Topeka, Kansas, bringing the total number of franchise-operated restaurant openings in 2009 to 13. Additionally, the company closed a company-owned restaurant in Naperville, Illinois at the end of its lease term and a franchise-operated restaurant closed in Augusta, Georgia. The company expects to open a minimum of 8 franchise-operated units in 2010. Company-owned unit growth for 2010 is still being evaluated.

The company has taken no price increases to date in 2009, but expects to take a 1.0% price increase in December 2009.

Conference Call

The company will host a conference call tomorrow, October 29, 2009, at 10:00 a.m. Central Time to discuss its third quarter financial results. There will be a live webcast of the discussion through the Investor Relations section of Famous Dave's web site at www.famousdaves.com.

About Famous Dave's

Famous Dave's of America, Inc. develops, owns, operates and franchises barbeque restaurants. As of today, the company owns 45 locations and franchises 133 additional units in 37 states. Its menu features award-winning barbequed and grilled meats, an ample selection of salads, side items and sandwiches, and unique desserts.

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

                      Three Months Ended            Nine Months Ended

                      September 27,  September 28,  September 27,  September 28,

                      2009           2008           2009           2008

Revenue:

Restaurant sales,     $ 28,763       $ 30,407       $ 89,600       $ 93,219
net

Franchise royalty       4,242          4,366          12,851         13,194
revenue

Franchise fee           80             110            155            457
revenue

Licensing and other     220            205            811            707
revenue

Total revenue           33,305         35,088         103,417        107,577

Costs and expenses:

Food and beverage       8,762          9,523          27,046         28,754
costs

Labor and benefits      9,174          9,816          27,857         28,726
costs

Operating expenses      7,760          7,497          23,492         24,162

Depreciation and        1,253          1,397          3,834          4,126
amortization

Asset impairment and
estimated lease         446            3,879          119            3,879
termination and
other closing costs

General and
administrative          3,701          3,337          11,976         12,370
Expenses

Pre-opening expenses    ---            333            ---            636

Net loss on disposal    7              10             13             16
of property

Total costs and         31,103         35,792         94,337         102,669
expenses

Income (loss) from      2,202          (704      )    9,080          4,908
operations

Other expense:

Loss on early
extinguishment of       (40       )    ---            (489      )    ---
debt

Interest expense        (277      )    (504      )    (1,177    )    (1,478    )

Interest income         26             73             93             172

Other income            7              (3        )    (1        )    (33       )
(expense), net

Total other expense     (284      )    (434      )    (1,574    )    (1,339    )

Income (loss) before
income                  1,918          (1,138    )    7,506          3,569

taxes

Income tax (expense)    (679      )    375            (2,579    )    (1,225    )
benefit

Net income (loss)     $ 1,239        $ (763      )  $ 4,927        $ 2,344

Basic net income
(loss) per common     $ 0.14         $ (0.08     )  $ 0.54         $ 0.25
share

Diluted net income
(loss) per common     $ 0.13         $ (0.08     )  $ 0.54         $ 0.24
share

Weighted average
common shares           9,124,000      9,304,000      9,104,000      9,516,000
outstanding - basic

Weighted average
common shares           9,254,000      9,304,000      9,184,000      9,671,000
outstanding -
diluted

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

OPERATING RESULTS

(unaudited)

                      Three Months Ended            Nine Months Ended

                      September 27,  September 28,  September 27,  September 28,

                      2009           2008           2009           2008

Food and beverage     30.5 %         31.3  %        30.2 %         30.8 %
costs (1)

Labor and benefits    31.9 %         32.3  %        31.1 %         30.8 %
costs (1)

Operating expenses    27.0 %         24.7  %        26.2 %         25.9 %
(1)

Depreciation &
amortization

(restaurant level)    3.9  %         4.2   %        3.8  %         4.0  %
(1)

Depreciation &
amortization

(corporate level)     0.4  %         0.4   %        0.4  %         0.3  %
(2)

Asset impairment and
lease termination

and other closing     1.6  %         12.8  %        0.1  %         4.2  %
costs (1)

General and
administrative        11.1 %         9.5   %        11.6 %         11.5 %
expenses (2)

Pre-opening expenses
and net

loss on disposal of   0.0  %         1.1   %        0.0  %         0.7  %
property (1)

Total costs and       93.4 %         102.0 %        91.2 %         95.4 %
expenses (2)

Income (loss) from    6.6  %         (2.0  %)       8.8  %         4.6  %
operations (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)

                                                     September 27,  December 28,

                                                     2009           2008

ASSETS

Cash and cash equivalents                            $ 1,629        $ 1,687

Other current assets                                   10,801         11,604

Property, equipment and leasehold improvements, net    55,047         58,129

Other assets                                           1,878          1,981

Total assets                                         $ 69,355       $ 73,401

LIABILITIES AND SHAREHOLDERS' EQUITY

Line of credit                                       $ 13,000       $ 18,000

Other current liabilities                              14,107         12,060

Long-term obligations                                  10,436         17,157

Shareholders' equity                                   31,812         26,184

Total liabilities and shareholders' equity           $ 69,355       $ 73,401

FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)                               Nine Months Ended

                                             September 27,  September 28,

                                             2009           2008

Cash flows provided by operating activities  $ 11,684       $ 10,352

Cash flows used for investing activities       (1,039  )      (8,046 )

Cash flows used for financing activities       (10,703 )      (2,353 )

Decrease in cash and cash equivalents        $ (58     )    $ (47    )

SUPPLEMENTAL SALES INFORMATION

(unaudited)

                      Three Months Ended            Nine Months Ended

                      September 27,  September 28,  September 27,  September 28,

                      2009           2008           2009           2008

Total weighted
average weekly net
sales (AWS):

Company-Owned         $ 47,706       $ 49,429       $ 49,427       $ 52,368

Franchise-Operated    $ 53,524       $ 58,276       $ 54,870       $ 58,449

AWS 2005 and Post
2005: (1)

Company-Owned         $ 55,340       $ 62,578       $ 58,909       $ 67,918

Franchise-Operated    $ 57,683       $ 64,600       $ 60,201       $ 65,691

AWS Pre 2005: (1)

Company-Owned         $ 45,011       $ 46,295       $ 46,112       $ 48,608

Franchise-Operated    $ 47,472       $ 50,355       $ 47,326       $ 49,834

Operating Weeks:

Company-Owned           598            608            1,807          1,772

Franchise-Operated      1,684          1,597          4,934          4,723

Total number of
restaurants:

Company-Owned           46             47             46             47

Franchise-Operated      131            123            131            123

Total                   177            170            177            170

Comparable net sales
(24 month):

Company-Owned           (6.8   %)      (4.7   %)      (7.3   %)      0.1    %

Franchise-Operated      (9.5   %)      (4.6   %)      (8.8   %)      (2.8   %)

Total number of
comparable
restaurants:

Company-Owned           38             38             38             35

Franchise-Operated      100            86             92             75

(1) Provides further delineation of AWS for restaurants opened during the pre-fiscal 2005, and restaurants opened during the post-fiscal 2005, timeframes.

Statements in this press release that are not strictly historical, including but not limited to statements regarding the timing of our restaurant openings and the timing or success of our expansion plans, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, which may cause the company's actual results to differ materially from expected results. Although Famous Dave's of America, Inc. believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectation will be attained. Factors that could cause actual results to differ materially from Famous Dave's expectation include financial performance, restaurant industry conditions, execution of restaurant development and construction programs, franchisee performance, changes in local or national economic conditions, availability of financing, governmental approvals and other risks detailed from time to time in the company's SEC reports.

    Source: Famous Dave's

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