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Famous Dave's Reports First Quarter Results

April 23, 2008 at 4:18 PM EDT

MINNEAPOLIS--(BUSINESS WIRE)--April 23, 2008--Famous Dave's of America, Inc. (NASDAQ: DAVE) today announced revenue and net income of $33.7 million and $835,000, respectively, or $0.09 per diluted share, for its fiscal first quarter ended March 30, 2008. Revenue for the quarter increased 16.2 percent over the comparable period in 2007.

Same store sales for the company-owned restaurants open for 24 months or more increased 3.6 percent during the quarter, while same store sales for its franchise-operated restaurants declined 3.2 percent. Same store sales for the company-owned restaurants open for 18 months or more increased 3.2 percent during the quarter, while same store sales for its franchise-operated restaurants declined 4.8 percent. Franchise royalty revenue for the quarter totaled $4.2 million, up 14.2 percent over the comparable period in 2007.

Sales growth in the first quarter for company-owned restaurants was driven by the five new restaurants that have opened since the first quarter of 2007, and the impact from an approximate 3% weighted average price increase. The year-over-year shift in the Easter holiday from the second quarter of 2007 to the first quarter of 2008 had an approximate 1.0% negative impact on comparable sales.

Sales at comparable franchise-operated restaurants continue to be affected by adverse economic conditions in several areas of the country, which have been hard-hit by the effects of the credit and housing crisis.

"I've admired this brand for some time and I am excited to be part of its future growth," said Wilson Craft, newly appointed President and Chief Executive Officer. "Obviously, we have some challenges, particularly given the difficult environment for casual dining. An intensified focus on our franchise business and a renewed focus on the company-owned restaurants will be a top priority," Craft said.

Earnings for the first quarter on a year-over-year basis declined, reflecting the opening of five new company-owned restaurants since September 2007 which are still normalizing labor and operating costs. The company also experienced significantly below average temperatures in many of its core markets during the first quarter of 2008. This unseasonably cold weather resulted in increased labor costs due to unexpected declines in guest traffic, and negatively impacted operating costs due to higher utility costs.

The company's 2008 first quarter also reflected the following:

  • An increase in labor and benefits expense year-over-year reflecting a prior year worker's compensation insurance credit adjustment that was approximately $105,000 higher than the current year adjustment.

  • An increase in operating expenses due to increased levels of advertising year-over-year.

  • Pre-opening expenses primarily for a new company-owned restaurant in Alexandria, Virginia totaling approximately $254,000.

  • Bad debt reserves of approximately $234,000 related to franchisees' receivable balances, reflected in general and administrative expenses.

  • Executive search fees of approximately $200,000 related to the hiring of the company's new CEO, reflected in general and administrative expenses.

  • An increase in depreciation and amortization year-over-year, reflecting capital invested towards the opening of five new restaurants and the result of the fourth quarter fiscal 2007 reclassification of assets previously held for sale to assets held and used.

  • A year-over-year increase in interest expense reflecting a higher average balance on the company's revolver.

Earnings results for the first quarter of 2008 included approximately $280,000 or $0.02 per diluted share, in compensation expense as related to the company's stock-based incentive programs, as compared to approximately $536,000, or $0.03 per diluted share, for the prior year comparable period.

Development and marketing highlights during the quarter included a "limited time offer" of BBQ shrimp, the company's most successful promotion to date. Aiding traffic in the quarter was a successful television and radio campaign featured in the majority of its core markets.

Famous Dave's opened four new restaurants during the first quarter: A company-owned restaurant in Alexandria, VA, and three franchise-operated restaurants in Silverdale, WA, Kansas City, MO and Bakersfield, CA.

Famous Dave's ended the quarter with 168 restaurants, including 45 company-owned restaurants and 123 franchise-operated restaurants, located in 35 states.

During the first quarter of 2008, Famous Dave's repurchased 16,000 shares of common stock at an average price of $9.73 per share, excluding commissions.


Famous Dave's is reiterating its guidance issued in its fourth quarter earnings release. The company anticipates opening a total of 20 to 25 restaurants in 2008, with up to five locations to open in the second quarter.

In addition, the company reiterated its outlook on food costs and potential margin pressure during the first half of the year. In June, the company will be taking an additional price increase, intended to mitigate additional margin pressures for the remainder of 2008.

Conference Call

The company will host a conference call tomorrow, April 24, 2008, at 10:00 a.m. Central Time to discuss its first quarter financial results. There will be a live webcast of the discussion through the Investor Relations section of Famous Dave's web site at

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 124 additional units in 34 states and has signed development agreements for an additional 132 franchised locations. Its menu features award-winning barbequed and grilled meats, an ample selection of salads, side items and sandwiches, and unique desserts.

           (in thousands, except share and per share data)

                                                 Three Months Ended
                                                March 30,   April 1,
                                                  2008        2007
                                               (unaudited) (unaudited)
                                               ----------- -----------
  Restaurant sales, net                        $    29,247 $    24,941
  Franchise royalty revenue                          4,167       3,649
  Franchise fee revenue                                115         315
  Licensing and other revenue                          186          98
                                               ----------- -----------
      Total revenue                                 33,715      29,003
                                               ----------- -----------

Costs and expenses:
  Food and beverage costs                            8,939       7,611
  Labor and benefits costs                           9,182       7,480
  Operating expenses                                 7,493       6,193
  Depreciation and amortization                      1,461       1,155
  General and administrative expenses                4,653       4,123
  Pre-opening expenses                                 254           6
  (Gain) loss on disposal of property                  (6)          18
                                               ----------- -----------
      Total costs and expenses                      31,976      26,586
                                               ----------- -----------

Income from operations                               1,739       2,417
                                               ----------- -----------

Other expense:
  Loss on early extinguishment of debt                 ---        (12)
  Interest expense                                   (511)       (363)
  Interest income                                       58          76
  Other (expense) income, net                          (1)           4
                                               ----------- -----------
      Total other expense                            (454)       (295)
                                               ----------- -----------

Income before income taxes                          1,285        2,122

Income tax expense                                  (450)        (720)
                                               ---------- ------------

Net income                                     $      835  $     1,402
                                               ========== ============

Basic net income per common share              $     0.09  $      0.14
                                               ========== ============

Diluted net income per common share            $     0.09  $      0.13
                                               ========== ============

Weighted average common shares outstanding -
 basic                                          9,611,000   10,130,000
                                               ========== ============

Weighted average common shares outstanding -
 diluted                                        9,773,000   10,492,000
                                               ========== ============
                          OPERATING RESULTS
                                                Three Months Ended
                                              March 30,     April 1,
                                                2008          2007
                                            ------------- ------------
Food and beverage costs (1)                         30.6%        30.5%
Labor and benefits (1)                              31.4%        30.0%
Operating expenses (1)                              25.6%        24.8%
Depreciation & amortization (restaurant
 level) (1)                                          4.6%         4.1%
Depreciation & amortization (corporate
 level) (2)                                          0.3%         0.4%
General and administrative (2)                      13.8%        14.2%
Pre-opening expenses & net (gain) loss on
 disposal(1)                                         0.9%         0.1%

  Total restaurant costs and expenses (1)           93.1%        89.5%
  Income from operations (2)                         5.2%         8.3%


(1) As a percentage of restaurant sales, net

(2) As a percentage of total revenue

                            (in thousands)

                                              March 30,   December 30,
                                                 2008         2007
                                             (unaudited)  (unaudited)
                                             ------------ ------------
  Current assets                                  $12,410      $14,255
  Property, equipment and leasehold
   improvements, net                               57,521       57,243
  Other assets                                      2,441        2,444
                                             ------------ ------------
  Total assets                                    $72,372      $73,942
                                             ============ ============

  Current liabilities                             $25,705      $28,085
  Long-term obligations                            15,484       15,457
  Shareholders' equity                             31,183       30,400
                                             ------------ ------------
  Total liabilities and shareholders' equity      $72,372      $73,942
                                             ============ ============

                                                  Three Months Ended
                                                 March 30,   April 1,
                                                   2008        2007
                                                ----------- ----------
Total weighted average weekly net sales (AWS):
     Company-Owned                                $50,512    $46,794
     Franchise-Operated                           $55,684    $56,018
        AWS 2005 and Post 2005: (1)
             Company-Owned                        $68,065    $69,192
             Franchise-Operated                   $63,297    $66,315
        AWS Pre-2005: (1)
             Company-Owned                        $46,349    $44,373
             Franchise-Operated                   $47,012    $47,847
Operating weeks:
     Company-Owned                                    579        533
     Franchise-Operated                             1,538      1,326
24 month comparable net sales:
     Company-Owned                                    3.6%      (0.9%)
     Franchise-Operated                              (3.2%)     (3.2%)
18 month comparable net sales:
     Company-Owned                                    3.2%      (0.9%)
     Franchise-Operated                              (4.8%)     (5.1%)
Total number of restaurants:
     Company-Owned                                     45         41
     Franchise-Operated                               123        104
                                                ----------- ----------
          Total                                       168        145

(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.

CONTACT: Famous Dave's of America, Inc.
Diana G. Purcel, 952-294-1300
Chief Financial Officer

SOURCE: Famous Dave's of America, Inc.