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Famous Dave's Announces 2003 Results

March 3, 2004 at 4:16 PM EST

MINNEAPOLIS--(BUSINESS WIRE)--March 3, 2004--Famous Dave's of America, Inc. (Nasdaq:DAVE) today reported results for the fourth quarter and fiscal year ended December 28, 2003. Revenues for the fourth quarter of fiscal 2003 of approximately $22.8 million increased 6.0% over revenues for the fourth quarter of fiscal 2002. Comparable sales for company restaurants open year-round for 18 months or more decreased 4.0% for the quarter.

For the fourth quarter of fiscal 2003, the company reported a net loss of approximately $777,000, or $0.06 per diluted share, compared to a net loss of approximately $228,000, or $0.02 per diluted share for the comparable period in the prior year. The results for the fourth quarter of 2003 include pre-tax non-recurring impairment and restructuring charges of approximately $764,000, or $0.04 per diluted share related to the closing of two stores in the Texas market.

Year-to-date revenues of approximately $97.7 million increased 7.6% over 2002 revenues, while comparable sales declined 3.0%. System-wide sales for fiscal 2003 of approximately $187.2 million increased 24.6% over system-wide sales for the prior year. System-wide sales is a non-GAAP financial measure that includes sales of all restaurants, company-owned and franchise, operating under the Famous Dave's brand name. Management believes that system-wide sales information is useful to investors because it gives a more accurate indication of the market penetration of the Famous Dave's brand.

For fiscal year 2003, the company reported a net loss of approximately $2.9 million, or $0.25 per diluted share, which includes pre-tax non-recurring charges of approximately $4.2 million, or $0.22 per diluted share, related to impairment and restructuring charges on five restaurant locations, two of which were subsequently sold and two of which were subsequently closed. In addition, fiscal 2003 results include pre-tax non-recurring charges of approximately $2.2 million, or $0.11 per diluted share, which reflects losses in the Isaac Hayes Blues clubs, as well as costs associated with our divestiture of those clubs. As previously reported, Famous Dave's has no further obligations relating to the Isaac Hayes clubs. In comparison, the company reported a net loss for fiscal 2002 of approximately $928,000, or $0.08 per diluted share. Fiscal 2002 results included losses of approximately $6.0 million, or $0.23 per diluted share, related to the Isaac Hayes clubs.

"Fiscal 2003 was a year of culture building changes for our business, in organizational direction, in areas of focus, in our approach to marketing, and in leadership," said David Goronkin, President and CEO. "It was a year for us to get our financial house in order and to recommit our focus towards our core competencies, and our financial results reflect these changes," Goronkin continued. "For example, our 2003 results reflect our financial investment towards the basic repair and maintenance of many of our restaurants that had been neglected. During 2003 we also took charges as a result of decisions to divest our interest in the Isaac Hayes Blues Club operations, to eliminate the Ribs by Air segment and to wind-down our refrigerated products business. In addition, we took impairment charges on five restaurants, two of which we subsequently sold and two of which we elected to close. While the consolidated financial results of 2003 were disappointing, we are pleased with the progress in our restaurants and the operational improvements that our team has delivered."

Goronkin concluded, "We have put fiscal 2003 behind us and are now firmly focused on fiscal 2004, which should prove to be a pivotal year for the company. We will be celebrating our tenth anniversary and we will open our 100th restaurant. The decisions that we made during fiscal 2003 are the foundation for a successful 2004 and beyond. All efforts will be aligned with ensuring operational integrity, brand development and financial performance. We will focus on our core company-operated restaurants and franchise growth. While we have no plans to open any new company-operated restaurants this year, we anticipate opening 20 to 25 new franchise-operated restaurants by the end of 2004."

The company stated that the comparable sales decline in fiscal 2003 reflects the company's decision, during the third quarter, to eliminate routine discounting throughout its company restaurants. Although discounting during fiscal 2002 had increased restaurant traffic, the majority of the incremental sales derived had substantially lower margins. The company believes that the decision to discontinue discounting was the right decision to protect its brand for the long-term. Comparable-sales are expected to continue to remain soft, at a minimum, through the second quarter of 2004.

The company is hosting a conference call tomorrow, Thursday, March 4, 2004 at 10:00 am CT to discuss its fiscal 2003 financial results, and invites all those interested in hearing management's discussion of the year to join the conference call by dialing (800) 374-1553. A replay will be available for one week following the call by dialing (800) 642-1687; conference ID 4888548. Participants may also access a live webcast of the discussion through the Investor Relations section of Famous Dave's web site at www.famousdaves.com.

Contact information: Diana Purcel (952) 294-1300, or diana.purcel@famousdaves.com.

Famous Dave's of America, Inc. (Nasdaq:DAVE) develops, owns, operates and franchises barbeque restaurants. The company currently owns 38 locations and franchises 54 additional units in 23 states and has signed development agreements for an additional 151 franchise locations. Its menu features award-winning barbequed and grilled meats, an ample selection of salads, side items, sandwiches and unique desserts.

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 expectation 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.


            FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
      For the Year Ended December 28, 2003 and December 29, 2002
        (in thousands, except per share and shares outstanding)

                                             December 28, December 29,
                                                2003         2002
                                             ------------ ------------
Revenues:
  Restaurant revenues, net                   $    91,500  $    86,378
  Franchising royalty revenue                      4,567        3,027
  Franchise fee revenue                            1,139        1,205
  Licensing and other revenue                        534          210
                                             ------------ ------------
Total revenues                                    97,740       90,820
Costs and expenses:
  Food and beverage costs                         28,014       27,355
  Labor and benefits                              27,586       25,252
  Operating expenses                              23,376       20,009
  Total depreciation and amortization              4,840        4,630
  Impairments and restructuring charges            4,238          ---
  Pre-opening expenses                               543        1,040
  General and administrative                       9,336        8,064
                                             ------------ ------------
Total costs and expenses                          97,933       86,350

Income (loss) from operations                       (193)       4,470

Other income (expense):
  Interest expense, net                           (1,661)      (1,038)
  Gain on sale of assets                             112          549
  Other expense, net                                (779)        (126)
  Equity in losses of investment in
    unconsolidate affiliate                       (2,155)      (5,994)
                                             ------------ ------------
Total other expense                               (4,483)      (6,609)

Loss before taxes                                 (4,676)      (2,139)
Income tax benefit                                 1,778        1,211
                                             ------------ ------------
Net loss                                     $    (2,898) $      (928)
                                             ============ ============

Basic and diluted net loss per common share  $     (0.25) $     (0.08)

Weighted average common shares outstanding
 - basic and diluted                          11,771,584   11,334,997



    Unit-Level Costs and Expenses as a % of Net Restaurant Revenue
    --------------------------------------------------------------

                                             December 28, December 29,
Year Ended:                                     2003         2002
-----------                                  ------------ ------------
Food and beverage costs                         30.6%        31.7%
Labor and benefits                              29.8%        29.2%
Operating expenses                              25.5%        23.2%
Depreciation and amortization                    5.0%         5.0%
                                             ------------ ------------
Total costs and expenses                        90.9%        89.1%
Income from unit-level operations                9.1%        10.9%



                    Supplemental Sales Information
                    ------------------------------

                                            December 28,  December 29,
Year Ended:                                    2003          2002
-----------                                ------------- -------------
Weighted average weekly net sales,
 company-operated                          $     42,491  $     45,783
Weighted average weekly net sales,
 franchise-operated                        $     47,400  $     46,642

System-wide net sales                      $187,153,000  $150,231,000

Comparable net sales, company-operated            (3.0%)        (0.3%)

Total number of units, company-operated              38            40
Total number of units, franchise-operated            54            33



            FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
     For the Quarter Ended December 28, 2003 and December 29, 2002
        (in thousands, except per share and shares outstanding)

                                             December 28, December 29,
                                                2003         2002
                                             ------------ ------------
Revenues:
  Restaurant revenues, net                   $    20,734  $    20,466
  Franchising royalty revenue                      1,332          773
  Franchise fee revenue                              384          265
  Licensing and other revenue                        372           35
                                             ------------ ------------
Total revenues                                    22,822       21,539
Costs and expenses:
  Food and beverage costs                          6,607        6,338
  Labor and benefits                               6,571        6,396
  Operating expenses                               5,885        5,111
  Total depreciation and amortization              1,156        1,197
  Impairments and restructuring charges              764          ---
  Pre-opening expenses                               ---          328
  General and administrative                       2,551        2,147
                                             ------------ ------------
Total costs and expenses                          23,534       21,517

Income (loss) from operations                       (712)          22

Other income (expense):
  Interest expense, net                             (456)        (281)
  Gain (loss) on sale of assets                       82          (11)
  Other expense, net                                (114)        (182)
  Equity in losses of investment in
    unconsolidate affiliate                          ---         (540)
                                             ------------ ------------
Total other expense                                 (488)      (1,014)

Loss before taxes                                 (1,200)        (992)
Income tax benefit                                   423          764
                                             ------------ ------------
Net loss                                     $      (777) $      (228)
                                             ============ ============

Basic and diluted net loss per common share  $     (0.06) $     (0.02)

Weighted average common shares outstanding -
 basic and diluted                            12,137,324   11,388,295



    Unit-Level Costs and Expenses as a % of Net Restaurant Revenue
    --------------------------------------------------------------

                                             December 28, December 29,
Quarter Ended:                                  2003         2002
--------------                               ------------ ------------
Food and beverage costs                          31.9%        31.0%
Labor and benefits                               30.3%        31.3%
Operating expenses                               28.1%        25.0%
Depreciation and amortization                     5.2%         5.5%
                                             ------------ ------------
Total costs and expenses                         95.5%        92.8%
Income from unit-level operations                 4.5%         7.2%



                    Supplemental Sales Information
                    ------------------------------

                                             December 28, December 29,
Quarter Ended:                                  2003         2002
--------------                               ------------ ------------
Weighted average weekly net sales, company-
 operated                                    $    39,121  $    39,973
Weighted average weekly net sales,
 franchise-operated                          $    45,744      $40,193

System-wide net sales                        $48,180,000  $36,503,000

Comparable net sales, company-operated             (4.0%)       (1.4%)

Total number of units, company-operated               38           40
Total number of units, franchise-operated             54           33



            FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
      For the Year Ended December 28, 2003 and December 29, 2002
                            (in thousands)

                                            December 28,  December 29,
                                               2003          2002
                                            ------------  ------------
ASSETS
 Current assets                             $   16,350    $   13,550
 Property, equipment and leasehold
  improvements, net                             47,147        51,861
 Other assets                                   10,270         9,406
                                            ------------  ------------
 Total assets                               $   73,767    $   74,817
                                            ============  ============

LIABILITIES AND SHAREHOLDERS' EQUITY

 Current liabilities                        $    7,309    $    7,781
 Long-term obligations                          19,586        19,744
 Shareholders' equity                           46,872        47,292
                                            ------------  ------------
 Total liabilities and shareholders' equity $   73,767    $   74,817
                                            ============  ============

    CONTACT: Famous Dave's of America, Inc., Eden Prairie
             Diana Purcel, 952-294-1300

    SOURCE: Famous Dave's of America, Inc.