2015 ANNUAL REPORT
Dear Fellow Shareholders,
• Focusing on our Guests
!"#$(cid:7)%(cid:19)(cid:27)(cid:7)(cid:19)(cid:7)(cid:28)(cid:4)(cid:15)(cid:10)(cid:11)(cid:20)(cid:12)(cid:7)’(cid:5)(cid:19)(cid:16)(cid:7)(cid:6)(cid:31)(cid:16)(cid:7)(cid:17)(cid:19)*(cid:31)(cid:11)(cid:27)(cid:7)+(cid:19)(cid:13)(cid:5)/(cid:27)(cid:7)%(cid:3)(cid:4)(cid:10)(cid:3)(cid:7)(cid:16)(cid:5)(cid:27)(cid:11)(cid:20)(cid:12)(cid:5)(cid:28)(cid:7)(cid:4)(cid:18)(cid:7)(cid:27)(cid:4)(cid:22)(cid:18)(cid:4);(cid:10)(cid:19)(cid:18)(cid:12)(cid:7)(cid:20)(cid:5)(cid:19)(cid:28)(cid:5)(cid:16)(cid:27)(cid:3)(cid:4)(cid:21)(cid:7)(cid:10)(cid:3)(cid:19)(cid:18)(cid:22)(cid:5)(cid:27)<(cid:7)=(cid:7)(cid:19)(cid:10)(cid:10)(cid:5)(cid:21)(cid:12)(cid:5)(cid:28)
(cid:12)(cid:3)(cid:5)(cid:7)=(cid:18)(cid:12)(cid:5)(cid:16)(cid:4)*(cid:7)(cid:2)(cid:8)(cid:14)(cid:7)(cid:12)(cid:4)(cid:12)(cid:20)(cid:5)(cid:7)(cid:4)(cid:18)(cid:7)(cid:20)(cid:19)(cid:12)(cid:5)(cid:7)>(cid:11)(cid:18)(cid:5)(cid:7)!"#$(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)(cid:12)(cid:16)(cid:19)(cid:18)(cid:27)(cid:4)(cid:12)(cid:4)(cid:31)(cid:18)(cid:5)(cid:28)(cid:7)(cid:12)(cid:31)(cid:7)(cid:2)(cid:8)(cid:14)(cid:7)(cid:31)(cid:18)(cid:7)>(cid:19)(cid:18)(cid:11)(cid:19)(cid:16)’(cid:7)#(cid:29)(cid:7)!"#?<(cid:7)=(cid:18)(cid:7)>(cid:11)(cid:20)’(cid:7)(cid:12)(cid:3)(cid:5)(cid:7)(cid:12)(cid:5)(cid:19)*(cid:7)(cid:27)(cid:31)(cid:11)(cid:22)(cid:3)(cid:12)
(cid:12)(cid:31)(cid:7)(cid:28)(cid:16)(cid:4)(cid:13)(cid:5)(cid:7)(cid:4)*(cid:21)(cid:31)(cid:16)(cid:12)(cid:19)(cid:18)(cid:12)(cid:7)(cid:10)(cid:3)(cid:19)(cid:18)(cid:22)(cid:5)(cid:27)(cid:7)(cid:12)(cid:31)(cid:7)(cid:27)(cid:12)(cid:19)@(cid:4)(cid:20)(cid:4)H(cid:5)(cid:7)(cid:12)(cid:3)(cid:5)(cid:7)@(cid:11)(cid:27)(cid:4)(cid:18)(cid:5)(cid:27)(cid:27)(cid:29)(cid:7)%(cid:4)(cid:12)(cid:3)(cid:7)(cid:6)(cid:31)(cid:11)(cid:16)(cid:7)(cid:18)(cid:5)%(cid:7)(cid:28)(cid:4)(cid:16)(cid:5)(cid:10)(cid:12)(cid:31)(cid:16)(cid:27)(cid:7)I(cid:31)(cid:4)(cid:18)(cid:4)(cid:18)(cid:22)(cid:7)(cid:12)(cid:3)(cid:5)(cid:7)@(cid:31)(cid:19)(cid:16)(cid:28)J(cid:7)>(cid:31)(cid:27)(cid:5)(cid:21)(cid:3)(cid:7)>(cid:19)(cid:10)(cid:31)@(cid:27)(cid:29)
K(cid:4)(cid:10)(cid:3)(cid:19)(cid:16)(cid:28)(cid:7)O(cid:3)(cid:19)(cid:21)(cid:4)(cid:16)(cid:31)(cid:29)(cid:7)(cid:30)(cid:18)(cid:19)(cid:18)(cid:28)(cid:7)X(cid:19)(cid:20)(cid:19)(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)Y(cid:16)’(cid:19)(cid:18)(cid:7)Z(cid:31)(cid:20)[<(cid:7)(cid:14)(cid:11)(cid:16)(cid:7)(cid:2)(cid:3)(cid:19)(cid:4)(cid:16)*(cid:19)(cid:18)(cid:29)(cid:7)>(cid:31)(cid:5)(cid:7)>(cid:19)(cid:10)(cid:31)@(cid:27)(cid:29)(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)K(cid:4)(cid:10)(cid:3)(cid:19)(cid:16)(cid:28)(cid:7)O(cid:3)(cid:19)(cid:21)(cid:4)(cid:16)(cid:31)(cid:7)(cid:16)(cid:5)(cid:21)(cid:16)(cid:5)(cid:27)(cid:5)(cid:18)(cid:12)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)
(cid:20)(cid:19)(cid:16)(cid:22)(cid:5)(cid:27)(cid:12)(cid:7)(cid:27)(cid:3)(cid:19)(cid:16)(cid:5)(cid:3)(cid:31)(cid:20)(cid:28)(cid:5)(cid:16)(cid:29)(cid:7)Z(cid:5)(cid:9)(cid:6)(cid:31)(cid:16)(cid:28)(cid:7)(cid:2)(cid:19)(cid:21)(cid:4)(cid:12)(cid:19)(cid:20)<(cid:7)(cid:30)(cid:18)(cid:19)(cid:18)(cid:28)(cid:7)X(cid:19)(cid:20)(cid:19)(cid:7)(cid:4)(cid:27)(cid:7)(cid:31)(cid:18)(cid:5)(cid:7)(cid:31)(cid:6)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)(cid:20)(cid:19)(cid:16)(cid:22)(cid:5)(cid:27)(cid:12)(cid:7)(cid:6)(cid:16)(cid:19)(cid:18)(cid:10)(cid:3)(cid:4)(cid:27)(cid:5)(cid:5)(cid:27)(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)@(cid:16)(cid:4)(cid:18)(cid:22)(cid:27)(cid:7)(cid:27)(cid:4)(cid:22)(cid:18)(cid:4);(cid:10)(cid:19)(cid:18)(cid:12)(cid:7)
(cid:16)(cid:5)(cid:27)(cid:12)(cid:19)(cid:11)(cid:16)(cid:19)(cid:18)(cid:12)(cid:7)(cid:5)(cid:9)(cid:21)(cid:5)(cid:16)(cid:12)(cid:4)(cid:27)(cid:5)(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)(cid:24)(cid:18)(cid:31)%(cid:20)(cid:5)(cid:28)(cid:22)(cid:5)(cid:7)(cid:31)(cid:6)(cid:7)(cid:12)(cid:3)(cid:5)(cid:7)(cid:2)(cid:31)*(cid:21)(cid:19)(cid:18)’<(cid:7)Y(cid:16)’(cid:19)(cid:18)(cid:7)Z(cid:31)(cid:20)[(cid:7)(cid:27)(cid:5)(cid:16)(cid:13)(cid:5)(cid:27)(cid:7)(cid:19)(cid:27)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)(cid:19)(cid:11)(cid:28)(cid:4)(cid:12)(cid:7)(cid:10)(cid:3)(cid:19)(cid:4)(cid:16)(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)(cid:4)(cid:27)(cid:7)(cid:2)(cid:17)(cid:14)(cid:7)(cid:31)(cid:6)(cid:7)
Thrive Market, a fast-growing internet retailer. We now have a strong, active board that is aligned with and
motivated to create long-term value for shareholders.
=(cid:18)(cid:7)(cid:19)(cid:28)(cid:28)(cid:4)(cid:12)(cid:4)(cid:31)(cid:18)(cid:7)(cid:12)(cid:31)(cid:7)(cid:12)(cid:3)(cid:5)(cid:7)@(cid:31)(cid:19)(cid:16)(cid:28)(cid:29)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)*(cid:19)(cid:18)(cid:19)(cid:22)(cid:5)*(cid:5)(cid:18)(cid:12)(cid:7)(cid:12)(cid:5)(cid:19)*(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)(cid:12)(cid:3)(cid:5)(cid:7)(cid:5)*(cid:21)(cid:20)(cid:31)’(cid:5)(cid:5)(cid:27)(cid:7)(cid:31)(cid:6)(cid:7)(cid:17)(cid:19)*(cid:31)(cid:11)(cid:27)(cid:7)+(cid:19)(cid:13)(cid:5)/(cid:27)(cid:7)(cid:19)(cid:16)(cid:5)(cid:7)(cid:18)(cid:31)%
(cid:27)(cid:3)(cid:19)(cid:16)(cid:5)(cid:3)(cid:31)(cid:20)(cid:28)(cid:5)(cid:16)\(cid:6)(cid:31)(cid:10)(cid:11)(cid:27)(cid:5)(cid:28)(cid:29)(cid:7)(cid:10)(cid:31)**(cid:4)(cid:12)(cid:12)(cid:5)(cid:28)(cid:7)(cid:12)(cid:31)(cid:7)*(cid:31)(cid:13)(cid:4)(cid:18)(cid:22)(cid:7)(cid:12)(cid:3)(cid:5)(cid:7)(cid:10)(cid:31)*(cid:21)(cid:19)(cid:18)’(cid:7)(cid:6)(cid:31)(cid:16)%(cid:19)(cid:16)(cid:28)(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)(cid:27)(cid:4)(cid:22)(cid:18)(cid:4);(cid:10)(cid:19)(cid:18)(cid:12)(cid:20)’(cid:7)(cid:4)*(cid:21)(cid:16)(cid:31)(cid:13)(cid:4)(cid:18)(cid:22)(cid:7)(cid:31)(cid:11)(cid:16)
(cid:6)(cid:11)(cid:12)(cid:11)(cid:16)(cid:5)(cid:7)(cid:16)(cid:5)(cid:27)(cid:11)(cid:20)(cid:12)(cid:27)<(cid:7)O(cid:4)(cid:18)(cid:10)(cid:5)(cid:7)>(cid:11)(cid:20)’(cid:7)%(cid:5)(cid:7)(cid:3)(cid:19)(cid:13)(cid:5)(cid:7)(cid:12)(cid:19)(cid:24)(cid:5)(cid:18)(cid:7)(cid:4)*(cid:21)(cid:31)(cid:16)(cid:12)(cid:19)(cid:18)(cid:12)(cid:7)(cid:19)(cid:10)(cid:12)(cid:4)(cid:31)(cid:18)(cid:27)(cid:7)(cid:12)(cid:31)(cid:7)(cid:27)(cid:12)(cid:16)(cid:5)(cid:18)(cid:22)(cid:12)(cid:3)(cid:5)(cid:18)(cid:7)(cid:12)(cid:3)(cid:5)(cid:7)(cid:10)(cid:31)*(cid:21)(cid:19)(cid:18)’(cid:29)(cid:7)(cid:4)(cid:18)(cid:10)(cid:20)(cid:11)(cid:28)(cid:4)(cid:18)(cid:22)J
• Ensuring all decisions aim to provide a better Guest experience
• Reinstating the original Famous Dave’s commitment to a quality Guest experience,
which was destroyed under previous management
] (cid:2)(cid:31)**(cid:4)(cid:12)(cid:12)(cid:4)(cid:18)(cid:22)(cid:7)(cid:12)(cid:31)(cid:7)(cid:27)(cid:5)(cid:16)(cid:13)(cid:4)(cid:18)(cid:22)(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)(cid:10)(cid:31)(cid:20)(cid:20)(cid:19)@(cid:31)(cid:16)(cid:19)(cid:12)(cid:4)(cid:18)(cid:22)(cid:7)%(cid:4)(cid:12)(cid:3)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)(cid:6)(cid:16)(cid:19)(cid:18)(cid:10)(cid:3)(cid:4)(cid:27)(cid:5)(cid:7)(cid:21)(cid:19)(cid:16)(cid:12)(cid:18)(cid:5)(cid:16)(cid:27)(cid:29)(cid:7)(cid:4)(cid:18)(cid:10)(cid:20)(cid:11)(cid:28)(cid:4)(cid:18)(cid:22)(cid:7)(cid:16)(cid:5)(cid:6)(cid:16)(cid:19)(cid:18)(cid:10)(cid:3)(cid:4)(cid:27)(cid:4)(cid:18)(cid:22)(cid:7);(cid:13)(cid:5)
restaurants in 2015 and an additional seven restaurants in early 2016
• Welcoming back our Founder, Dave Anderson, who is restoring our company culture and passion to
serve the best Bar-B-Que.
• Adding new talent and leadership to the executive leadership team
• Streamlining our operating structure to reduce costs
• Welcoming a new franchise partner in the United Arab Emirates and supporting the successful
(cid:7)(cid:7)(cid:7)(cid:31)(cid:21)(cid:5)(cid:18)(cid:4)(cid:18)(cid:22)(cid:7)(cid:31)(cid:6)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7);(cid:16)(cid:27)(cid:12)(cid:7)(cid:23)(cid:4)(cid:28)(cid:28)(cid:20)(cid:5)(cid:7)(cid:8)(cid:19)(cid:27)(cid:12)(cid:7)(cid:20)(cid:31)(cid:10)(cid:19)(cid:12)(cid:4)(cid:31)(cid:18)
As CEO my sole objective is working on your behalf to create per-share shareholder value. While
(cid:19)(cid:10)(cid:12)(cid:4)(cid:13)(cid:5)(cid:20)’(cid:7)(cid:19)(cid:28)(cid:28)(cid:16)(cid:5)(cid:27)(cid:27)(cid:4)(cid:18)(cid:22)(cid:7)(cid:12)(cid:3)(cid:5)(cid:7)*(cid:19)(cid:18)’(cid:7)(cid:10)(cid:11)(cid:16)(cid:16)(cid:5)(cid:18)(cid:12)(cid:7)(cid:10)(cid:3)(cid:19)(cid:20)(cid:20)(cid:5)(cid:18)(cid:22)(cid:5)(cid:27)(cid:29)(cid:7)=(cid:7)(cid:19)*(cid:7)(cid:19)(cid:20)(cid:27)(cid:31)(cid:7)%(cid:31)(cid:16)(cid:24)(cid:4)(cid:18)(cid:22)(cid:7)(cid:12)(cid:31)(cid:22)(cid:5)(cid:12)(cid:3)(cid:5)(cid:16)(cid:7)%(cid:4)(cid:12)(cid:3)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)(cid:6)(cid:31)(cid:11)(cid:18)(cid:28)(cid:5)(cid:16)(cid:7)(cid:19)(cid:18)(cid:28)
(cid:12)(cid:5)(cid:19)*(cid:7)(cid:12)(cid:31)(cid:7)(cid:4)*(cid:21)(cid:16)(cid:31)(cid:13)(cid:5)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)(cid:6)(cid:11)(cid:12)(cid:11)(cid:16)(cid:5)(cid:7)(cid:21)(cid:16)(cid:31);(cid:12)(cid:19)@(cid:4)(cid:20)(cid:4)(cid:12)’(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)(cid:22)(cid:16)(cid:31)%(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)(cid:6)(cid:16)(cid:19)(cid:18)(cid:10)(cid:3)(cid:4)(cid:27)(cid:5)(cid:7)(cid:21)(cid:19)(cid:16)(cid:12)(cid:18)(cid:5)(cid:16)/(cid:27)(cid:7)(cid:16)(cid:5)(cid:12)(cid:11)(cid:16)(cid:18)(cid:27)(cid:7)@’J
] =*(cid:21)(cid:16)(cid:31)(cid:13)(cid:4)(cid:18)(cid:22)(cid:7)(cid:12)(cid:16)(cid:19)(cid:15)(cid:10)(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)(cid:27)(cid:19)(cid:20)(cid:5)(cid:27)(cid:7)
• Focusing on food execution, hospitality and menu innovation
• Strengthening marketing with new leadership, Guest centric mindset and a focus on
regaining brand strength and consistency
] =(cid:18)(cid:10)(cid:16)(cid:5)(cid:19)(cid:27)(cid:4)(cid:18)(cid:22)(cid:7)(cid:16)(cid:5)(cid:27)(cid:12)(cid:19)(cid:11)(cid:16)(cid:19)(cid:18)(cid:12)(cid:7)*(cid:19)(cid:16)(cid:22)(cid:4)(cid:18)(cid:27)(cid:7)@’(cid:7)(cid:4)*(cid:21)(cid:16)(cid:31)(cid:13)(cid:4)(cid:18)(cid:22)(cid:7)(cid:20)(cid:19)@(cid:31)(cid:16)(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)(cid:6)(cid:31)(cid:31)(cid:28)(cid:7)(cid:10)(cid:31)(cid:27)(cid:12)(cid:27)
• Providing exceptional franchisee support and collaborating with franchisees to better serve them
• Continuing the refranchising of corporate restaurants to sharpen our focus on serving our
franchise partners
] (cid:14)(cid:21)(cid:5)(cid:16)(cid:19)(cid:12)(cid:4)(cid:18)(cid:22)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)@(cid:11)(cid:27)(cid:4)(cid:18)(cid:5)(cid:27)(cid:27)(cid:7)(cid:5)[(cid:5)(cid:10)(cid:12)(cid:4)(cid:13)(cid:5)(cid:20)’(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)(cid:5)(cid:15)(cid:10)(cid:4)(cid:5)(cid:18)(cid:12)(cid:20)’
• Allocating capital to maximize return on invested capital
=(cid:7)%(cid:31)(cid:11)(cid:20)(cid:28)(cid:7)(cid:20)(cid:4)(cid:24)(cid:5)(cid:7)(cid:12)(cid:31)(cid:7)(cid:12)(cid:3)(cid:19)(cid:18)(cid:24)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)X(cid:11)(cid:5)(cid:27)(cid:12)(cid:27)(cid:7)(cid:6)(cid:31)(cid:16)(cid:7)(cid:12)(cid:3)(cid:5)(cid:4)(cid:16)(cid:7)(cid:10)(cid:31)(cid:18)(cid:12)(cid:4)(cid:18)(cid:11)(cid:5)(cid:28)(cid:7)(cid:20)(cid:31)’(cid:19)(cid:20)(cid:12)’(cid:29)(cid:7)(cid:19)(cid:18)(cid:28)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)(cid:12)(cid:5)(cid:19)*(cid:7)*(cid:5)*@(cid:5)(cid:16)(cid:27)(cid:29)(cid:7)(cid:6)(cid:16)(cid:19)(cid:18)(cid:10)(cid:3)(cid:4)(cid:27)(cid:5)(cid:5)(cid:27)(cid:29)(cid:7)(cid:19)(cid:18)(cid:28)
suppliers for their dedication to Famous Dave’s.
(cid:17)(cid:4)(cid:18)(cid:19)(cid:20)(cid:20)’(cid:29)(cid:7)(cid:12)(cid:3)(cid:19)(cid:18)(cid:24)(cid:7)’(cid:31)(cid:11)(cid:7)(cid:12)(cid:31)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)(cid:27)(cid:3)(cid:19)(cid:16)(cid:5)(cid:3)(cid:31)(cid:20)(cid:28)(cid:5)(cid:16)(cid:27)(cid:7)(cid:6)(cid:31)(cid:16)(cid:7)’(cid:31)(cid:11)(cid:16)(cid:7)(cid:10)(cid:31)(cid:18);(cid:28)(cid:5)(cid:18)(cid:10)(cid:5)(cid:7)(cid:4)(cid:18)(cid:7)(cid:31)(cid:11)(cid:16)(cid:7)(cid:2)(cid:31)*(cid:21)(cid:19)(cid:18)’<(cid:7)Z(cid:5)(cid:7)(cid:19)(cid:16)(cid:5)(cid:7)(cid:10)(cid:31)**(cid:4)(cid:12)(cid:12)(cid:5)(cid:28)(cid:7)(cid:12)(cid:31)
(cid:27)(cid:4)(cid:22)(cid:18)(cid:4);(cid:10)(cid:19)(cid:18)(cid:12)(cid:20)’(cid:7)(cid:4)*(cid:21)(cid:16)(cid:31)(cid:13)(cid:4)(cid:18)(cid:22)(cid:7)(cid:12)(cid:3)(cid:5)(cid:7)(cid:16)(cid:5)(cid:12)(cid:11)(cid:16)(cid:18)(cid:27)(cid:7)(cid:31)(cid:18)(cid:7)’(cid:31)(cid:11)(cid:16)(cid:7)(cid:4)(cid:18)(cid:13)(cid:5)(cid:27)(cid:12)*(cid:5)(cid:18)(cid:12)<(cid:7)(cid:7)
Sincerely,
Adam Wright
12701 Whitewater Drive, Suite 200 | Minneatonka, MN 55343 | 952.294.1300 | famousdaves.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended January 3, 2016
Commission File No. 0-21625
FAMOUS DAVE’S of AMERICA, INC.
(Exact name of registrant as specified in its charter)
Minnesota
(State or other jurisdiction of
incorporation or organization)
41-1782300
(I.R.S. Employer
Identification No.)
12701 Whitewater Drive, Suite 200
Minnetonka, MN 55343
(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code (952) 294-1300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
Common Stock, $0.01 par value
The NASDAQ Global Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
Yes (cid:2) No (cid:3)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes(cid:2) No (cid:3)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (cid:3) No (cid:2)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes (cid:3)
No (cid:2)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K
(cid:3)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer (cid:2)
Accelerated Filer (cid:2)
Non- Accelerated Filer (cid:2) Smaller reporting company (cid:3)
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:2) No (cid:3)
The aggregate market value of common stock held by non-affiliates of the registrant was approximately $42.5 million as
of June 26, 2015 (the last business day of the registrant’s most recently completed second quarter), assuming solely for
the purpose of this calculation that all directors, officers, and more than 10% shareholders of the registrant are affiliates.
The determination of affiliate status for this purpose is not necessarily conclusive for any other purpose. As of March 8,
2016, 6,957,628 shares of the registrant's Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the definitive Proxy Statement for our 2016 Annual Meeting of Shareholders which is to be filed within 120
days after the end of the fiscal year ended January 3, 2016, are incorporated by reference into Part III of this Form 10-K,
to the extent described in Part III.
TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Disclosure
Item 9A.
Item 9B.
Controls and Procedures
Other Information
PART III
Item 10.
Item 11.
Item 12.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
Item 13.
Item 14.
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Item 15.
Exhibits and Financial Statement Schedules
SIGNATURES
2
Page
3
13
19
19
20
21
21
23
25
41
41
41
41
42
43
43
43
44
44
45
ITEM 1. BUSINESS
Summary of Business Results and Plans
PART I
Famous Dave's of America, Inc. (“Famous Dave’s”, the “Company” or “we”) was incorporated as a
Minnesota corporation in March 1994 and opened its first restaurant in Minneapolis, Minnesota in June 1995. As
of January 3, 2016, there were 179 Famous Dave’s restaurants operating in 33 states, the Commonwealth of Puerto
Rico and Canada, including 44 Company-owned restaurants and 135 franchise-operated restaurants. An additional
58 franchise restaurants were committed to be developed through signed area development agreements at January
3, 2016.
Fiscal 2015 continued to be another year of transition for Famous Dave’s. The Company refranchised five
company-owned restaurants in Cedar Falls, Iowa, Florence, Kentucky, Greenwood, Indiana, Lincoln, Nebraska,
and Smithtown, New York. Additionally, late in the fourth quarter the Company entered into an asset purchase
agreement to refranchise its seven Chicago-area restaurants (located in Addison, Algonquin, Bolingbrook,
Evergreen Park, North Riverside, Orland Park, and Oswego, Illinois). Subsequent to year end, on March, 1, 2016,
this transaction was completed. This transaction resulted in classifying these restaurants as “Discontinued
Operations” for all years reported and excluded from the operating results.
The Company’s topline sales continued to be challenged throughout 2015 with a comparable sales decline
of 9.3%. The Company believes that this was primarily a result of strategic decisions made beginning in the first
quarter of 2014 and compounded by restaurant-level changes implemented in the first quarter of 2015 that
adversely impacted our guests’ experience. These restaurant-level changes were reversed during the second half of
2015. The Company believes that it will take significant time for these changes to begin to be noticed by the guest
and then to positively impact sales. However, an early indication that these changes have been well received is that
our measure of Overall Guest Satisfaction has increased by 16.6% since the changes were made in June of 2015.
In fiscal 2015, total revenue was $114.2 million, a decrease from $131.9 million in fiscal 2014. This
decrease predominantly reflected a comparable sales decline and the impact from refranchising five Company-
owned locations, partially offset by sales from the company’s 53rd operating week. Franchise royalty revenue and
fees increased as a result of the 53rd operating week, partially offset by a comparable sales decline. Licensing and
other revenue was flat year-over-year. The Company saw a comparable sales decrease for Company-owned
restaurants of 9.3% compared to a comparable sales decrease of 5.7% for fiscal 2014.
The franchise-operated restaurants saw a comparable sales decrease of 2.5% in each of fiscal 2015 and 2014.
Sales for franchise-operated restaurants are not revenues of the Company and are not included in the Company’s
consolidated financial statements. The Company’s management believes that disclosure of sales for franchise-
operated restaurants provides useful information to investors because historical performance and trends of Famous
Dave’s franchisees related directly to trends in franchise royalty revenues that the Company receives from such
franchisees and have an impact on the perceived success and value of the Famous Dave’s brand. It also provides a
comparison against which management and investors can evaluate the extent to which Company-owned restaurant
operations are realizing their revenue potential. In addition to refranchising five Company-owned restaurants, the
Company closed one Company-owned restaurant. The Company did not open any new Company-owned
restaurants in fiscal 2015. During 2015, three new franchise-operated restaurants opened and twelve lower volume
franchise-operated restaurants closed.
Fiscal 2015 earnings per diluted share were $0.15. This included the positive impact of $817,000, or $0.12
per diluted share, of net non-cash gains as the result of the sale of land for two previously closed restaurants in
Richmond, VA and Eden Prairie, MN and the refranchising of the Lincoln, Nebraska restaurant that included the
sale of the underlying real estate. These gains were partially offset by the charges from the refranchising of Cedar
Falls, Iowa, Florence, Kentucky, Greenwood Indiana, and Smithtown, New York. This compared to earnings per
diluted share of $0.31 in fiscal 2014.
3
Fiscal 2015 earnings per diluted share decreased year-over-year due to several factors. The decline in
restaurant sales had an adverse impact on operating margins. Furthermore, the Company incurred increased
general and administrative expenses as a result of professional fees associated with brand development, legal fees
associated with corporate and franchise matters resulting from the changes to the Board of Directors and Chief
Executive Officer, a year-over-year increase in stock-based compensation, and a charge recorded for obsolete plate
ware. These cost increases were partially offset by a decline in headcount at the Support Center.
Although the Company is still early in its turnaround, its priority for 2016 is solely focused on increasing
guest traffic and generating comparable sales growth. To help drive this growth the Company has augmented its
senior leadership team by adding an experienced Chief Operating Officer and, early in 2016, a Chief Marketing
Officer. It aims to achieve growth through sustainable and accretive guest-traffic building initiatives across all lines
of business (Dine In, To Go and Catering) while emphasizing guest service and hospitality at the restaurant level.
The Company remains focused and committed to serving the needs of our franchisees. Furthermore, the Company
continues to focus on improving profitability at both the restaurant and Company-level, refranchising Company
restaurants to well-qualified existing and new franchisees and maintaining balance sheet flexibility to make
appropriate capital allocation decisions.
The Company continues to target refranchising Company-owned restaurants so that it will eventually
operate a limited number of restaurants system-wide. The Company will aim to sell some of its existing
restaurants to existing and new franchisees that have the ability to not only acquire these restaurants but also to
develop additional restaurants. The Company believes refranchising focuses the organization on serving our
franchisees.
During 2015 and early 2016, the Company has sold the real estate on which three previously closed
restaurants were located (two in Richmond, Virginia and one in Eden Prairie, Minnesota) and has sold two
properties as a result of refranchising (Lincoln, Nebraska, and Addison, Illinois).
Financial Information about Segments
Since our inception, our revenue, operating income and assets have been attributable to the single industry
segment of the foodservice industry. Our revenue and operating income for each of the last three fiscal years, and
our assets for each of the last two fiscal years, are set forth elsewhere in this Form 10-K under Item 8, Financial
Statements and Supplementary Data.
Narrative Description of Business
Famous Dave’s restaurants, a majority of which offer full table service, feature wood-smoked and off-the-
grill entrée favorites that fit into the broadly defined barbeque category. We seek to differentiate ourselves by
providing high-quality food in distinctive and comfortable environments with signature décor and signage. As of
January 3, 2016, 38 of our Company-owned restaurants were full-service and six were counter-service. Generally,
our prototypical design includes the following elements: a designated bar, a signature exterior smokestack, a
separate entrance for our To Go business and a patio (where available). This design enables us to capitalize on a
consistent trade-dress and readily identifiable look and feel for our future locations. We have designs that can be
adapted to fit various location sizes and desired service styles such as full-service or counter-service.
In 2015, our three franchise openings were a mixture of conversions of existing full-service casual dining
restaurants to our concept as well as new construction. In 2015, the Company did not open any Company-owned
restaurants. In fiscal 2014, the Company completed a significant remodel of two Chicago-area restaurants. In
fiscal 2013, the Company completed construction on two restaurants in Maryland; both were ground-up
construction of full-service restaurants. All other locations that opened in fiscal 2013 were franchise-owned full-
service restaurants.
We offer conversion packages that provide our franchisees with the flexibility to convert existing restaurants
as well as existing retail footprints into a Famous Dave’s restaurant. Due to the flexibility and scalability of our
concept, we believe that there are a variety of development opportunities available now and in the future.
4
We pride ourselves on the following:
High Quality Food – Each restaurant features a distinctive selection of authentic hickory-smoked and off-
the-grill barbecue favorites, such as flame-grilled St. Louis-style and baby back ribs, Texas beef brisket, Georgia
chopped pork, country-roasted chicken, and signature sandwiches and salads. Also, enticing side items, such as
corn bread, potato salad, coleslaw, Shack FriesTM and Wilbur BeansTM, accompany the broad entrée selection.
Homemade desserts, including Famous Dave's Bread Pudding and Hot Fudge Kahlua Brownies, are another
specialty. To complement our entrée and appetizer items and to suit different customer tastes, we offer six regional
barbeque sauces: Rich & Sassy®, Texas PitTM, Georgia MustardTM, Devil’s Spit®, Sweet and ZestyTM and
Wilbur’s RevengeTM. These sauces, in addition to a variety of seasonings, rubs, marinades, and other items are
also distributed in retail grocery stores throughout the country under licensing agreements.
We believe that high quality food, a menu that is over 85% “scratch cooking” and the fact that we smoke our
meats daily at each of our restaurants are principal points of differentiation between us and other casual dining
competitors and are a significant contributing factor to repeat business. We also feel that our focus on barbecue
being a noun, a verb and a culture allows for product innovation without diluting our brand. As a noun, barbeque
refers to the art of the smoke and sauce. As a verb, barbeque refers to the act of grilling. As a culture, barbeque
refers to the competitive spirit. As a result, we see few geographic impediments to scaling our concept and brand.
Focus on Guest Experience – We believe that a renewed focus on enhancing our guest’s experience and
listening to their feedback is an essential pillar of the Company. In 2016, we will continue to test and further
enhance our guests experience by focusing on hospitality, food execution and training. We believe a positive guest
experience, combined with our high-quality food, makes Famous Dave's appeal to families, children, teenagers and
adults of all ages and socio-economic and demographic backgrounds.
Distinctive Environment - Décor and Music – During 2015, the Company largely reversed changes in décor
and music rolled-out in 2014 that had not been well received by the Company’s guests.
Our original décor theme was a nostalgic roadhouse shack (“Original Shack”), as defined by the abundant
use of rustic antiques and items of Americana. This format was used for both full-service and counter-service
restaurant formats. In late 1997, we introduced the “Lodge” format which featured décor reminiscent of a
comfortable “Northwoods” hunting lodge with a full-service dining room and small bar. In addition, we developed
a larger “Blues Club” format that featured authentic Chicago Blues Club décor and live music seven nights a week.
We have evolved our format to that of a full-service concept with several “prototypical” designs that incorporate
the best attributes of the past restaurants while providing a consistent brand image
Operating Strategy
We believe that our ability to achieve sustainable profitable growth is dependent upon us delivering high-
quality experiences in terms of both food and hospitality to every guest, every day, and to enhance brand awareness
in our markets. Key elements of our strategy include the following:
Operational Excellence – During fiscal 2015, we continued to focus on operational excellence and integrity,
and on creating a consistently enjoyable guest experience, both in terms of food and hospitality, across our system.
We define operational excellence as an uncompromising attention to the details of our recipes, preparation and
cooking procedures, handling procedures, rotation, sanitation, cleanliness and safety. Operational excellence also
means an unyielding commitment to provide our guests with superior service during every visit. In our
restaurants, we strive to emphasize value and speed of service by employing a streamlined operating system based
on a focused menu and simplified food preparation techniques while remaining true to authentic barbeque.
Our menu focuses on a number of popular smoked, barbequed, grilled meats, entrée items and delicious side
dishes which are prepared using easy-to-operate kitchen equipment and processes that use proprietary seasonings,
sauces and mixes. This streamlined food preparation system helps manage the cost of operation by requiring fewer
staff, lower training costs, and eliminates the need for highly compensated chefs. Additionally, barbeque has the
5
ability to be batch cooked and held, which enables our award winning food to get to our guests quickly, whether in
the restaurant, at their homes, or at a catering event. In order to enhance our appeal, expand our audience, increase
frequency, and feature our cravable products, we have assembled a research and development product pipeline
designed to generate new, delicious and exciting menu items that allow us to regularly update our menu.
During 2015, we offered our guests several new products as well as featured several signature menu items.
Early in 2015, and in support of the Lenten season, we featured several fish entrée’s such as catfish, salmon, and
cod. We also offered an Easter holiday meal program with our own Signature Smoked Hams. In the spring, we
launched a promotion that featured “our House-Smoked Turkey”, on a platter, as well as the main protein on a
salad. In the fall, the Company featured its smoked Brisket and during the holiday season, we featured system-
wide a Signature Smoked Ham and Signature Smoked Turkey product available for off-premise occasions.
Human Resources and Training/Development - A key ingredient to our success lies with our ability to hire,
train, engage and retain employees at all levels of our organization. We place a great deal of importance on
creating an exceptional working environment for all of our employees. Through our Human Resource and
Training/Development resources, tools and programs, we continually enhance and support superior performance
within our restaurants and Support Center. Our foundational guiding principle is doing the right thing for the
organization and our guests while ensuring we have the right people in the right roles with the right resources and
tools.
We are a performance-based organization, committed to recognizing and rewarding performance at all levels
of the organization. Our performance management process includes performance calibration at the organizational
level as a means of providing measureable, comparative employee evaluations relative to peer contribution, taking
into account specific core competencies and goals. It is designed to provide a complete picture of performance that
is consistent across the organization. We offer a total rewards program that is benchmarked closely against the
industry and includes health and welfare coverage, 401(k) and non-qualified deferred compensation with a
company match, base pay and incentive pay programs developed to sustain our market competitive position. Our
Human Resource and Training organization focuses on the selection and retention of talent through programs
in overall workforce planning, performance management, development, safety and risk reduction, and
continued enhancements in our organizational structures for all positions in the business.
In the Training and Development arena, we offer a variety of ongoing on-the-job and classroom training
programs for the operations teams (hourly employees, Restaurant Managers, and Multi-Unit Managers) in an effort
to create defined career paths. Our Management Trainee program provides new restaurant managers a foundational
based training for restaurant operations, including ServSafe Food and Alcohol Certification, and several learning
sessions focused on the basic behaviors and skills of a Famous Dave’s Manager. We also offer a Famous Dave’s
Leadership Series program which provides a library of workshop offerings focused on building and strengthening
core skills in the areas of communication, teamwork, coaching, change management and performance
management. In addition, we have incorporated e-learning training tasks, skills and processes on-demand.
Restaurant Operations
Our ability to manage multiple restaurants in geographically diverse locations is central to our overall
success. In each market, we place specific emphasis on the positions of Area Director and General Manager, and
seek talented individuals that bring a diverse set of skills, knowledge, and experience to the Company. We strive to
maintain quality and consistency in each of our restaurants through the careful training and supervision of
employees and the establishment of, and adherence to, high standards relating to performance, food and beverage
preparation, and maintenance of facilities.
All Managers must complete an eight-week training program, during which they are instructed in areas such
as food quality and preparation, customer service, hospitality, and employee relations. We have prepared
operations’ manuals relating to food and beverage quality and service standards. New employees participate in
training under the close supervision of our Management. Each General Manager reports to an Area Director, who
manages from six to seven restaurants, depending on the region. Our Area Directors have all served as General
6
Managers, either for Famous Dave's or for other restaurants, and are responsible for ensuring that operational
standards are consistently applied in our restaurants, communicating Company focus and priorities, and supporting
the development of restaurant management teams. In addition to the training that the General Managers are
required to complete as noted above, our Area Directors receive additional training through Area Director
Workshops that focus specifically on managing multiple locations, planning, time management, staff and
management development skills.
We have a Sr. Director of Operations who is responsible for overseeing all Company-owned and franchise-
operated restaurants. This individual works closely with the Area Directors to support day-to-day restaurant
operations. In addition, the Sr. Director of Operations assists in the professional development of our multi-unit
supervisors and general managers. The Sr. Director of Operations is also instrumental in driving our vision of
operational integrity and contributing to the improvement of results achieved at our restaurants, including building
sales, developing personnel and growing profits. The Sr. Director reports to the Chief Operating Officer.
Staffing levels at each restaurant vary according to the time of day and size of the restaurant. However, in
general, each restaurant has approximately 40 to 60 employees.
Off-Premise Occasions - Focus on Convenience – In addition to our lively and entertaining dine-in
experience, we provide our guests with maximum convenience by offering an expedient take-out service along
with catering. We believe that Famous Dave's entrées and side dishes are viewed by guests as traditional American
"picnic foods" that maintain their quality and travel particularly well, making them an attractive choice to replace a
home-cooked meal. Also, the high quality, fair prices and avoidance of preparation time make take-out of our
product particularly attractive. Our off-premise sales provide us with revenue opportunities beyond our in-house
seating capacity and we continue to seek ways to leverage these segments of our business.
Catering accounted for approximately 12.3% of our net sales for fiscal 2015, as compared to 9.8% in 2014.
We see catering as an opportunity for new consumers to sample our product who would not otherwise have had the
opportunity to visit our restaurants, and each restaurant has a dedicated vehicle to support our catering initiatives.
During 2015, we implemented a catering call center for phone-in and web catering orders which provided our
catering sales managers with more time to grow this area of the business.
To Go accounted for approximately 28.2% of net restaurant sales for fiscal 2015, as compared to 26.5% in
2014. Our restaurants have been designed specifically to accommodate a significant level of To Go sales,
including a separate To Go entrance with prominent and distinct signage, and for added convenience, we separately
staff the To Go counter. We believe our focus on To Go enables Famous Dave’s to capture a greater portion of the
“take-out” market by allowing consumers to “trade within our brand,” when dining in is not always an option. We
pursue efforts to increase awareness of To Go in all Company-owned and franchise-operated restaurants by
featuring signage and merchandising both inside and outside the restaurants.
Customer Satisfaction – We believe that we achieve a significant level of repeat business by providing high-
quality food, efficient friendly service, and warm caring hospitality in an entertaining environment at moderate
prices. We strive to maintain quality and consistency in each of our restaurants through the purposeful hiring,
training and supervision of personnel and the establishment of, and adherence to, high standards of performance,
food preparation and facility maintenance. We have also built family-friendly strategies into each restaurant’s food,
service and design by providing children's menus, smaller-sized entrees at reduced prices and changing tables in
restrooms.
Value Proposition and Guest Frequency – We offer high quality food and a distinctive atmosphere at
competitive prices to encourage frequent patronage. Lunch and dinner entrees range from $6.99 to $24.99,
resulting in a per person dine-in and To Go average of $17.05 during fiscal 2015. During fiscal 2015, lunch checks
averaged $16.18 and dinner checks averaged $19.99. We intend to use value priced offerings, new product
introductions, and the convenience of connecting with guests on their own terms, to drive new and infrequent
guests into our restaurants for additional meal occasions.
7
Marketing, Promotion and Sales
We believe that by specializing in unique and distinctive smoked meats, poultry & fish, our menu
specialty helps set the brand apart from the rest of the crowded field in casual dining. To further develop the
advertising and promotional materials and programs designed to create brand awareness and increase the reach of
the brand, we have a system-wide marketing fund. All Company-owned restaurants, and those franchise-operated
restaurants with agreements signed after December 17, 2003 are generally required to contribute 1.0% of net sales
to this fund. In fiscal 2015, the Marketing Ad Fund contribution was 1.0% of net sales. In 2016, the Marketing Ad
Fund contribution system-wide will continue at the contractual rate of 1.0% of net sales. In fiscal 2014,
predominately due to the carryover of funds from fiscal 2013, the Company temporarily decreased the 2014
Marketing Ad Fund contribution system-wide to 0.75% of net sales.
The marketing team, working with outside consultants and other resources, is responsible for the advertising,
promotion, creative development, and branding for Famous Dave’s. Franchise-operated restaurants place the
advertising and marketing programs in their local markets based on contractual requirements, while the Famous
Dave’s marketing
for Company-owned
restaurants. Famous Dave’s uses industry standard marketing efforts that include broadcast media, digital, online
& social media platforms, public relations and out-of-home vehicles. During 2015, we had 1.8 million Famous
Nation members and approximately 393,000 fans on Facebook.
the advertising and marketing
team plans and executes
The strategic focus for marketing and promotion is to ensure that Famous Dave’s is recognized as the
category–defining brand in BBQ, to create and sustain attractive differentiation in consumer’s mind, and to
continue to strengthen the brand’s positioning & consistency. In fiscal 2014 the Company discontinued the broad
use of discounts to drive guest traffic as it had the previous couple of years. To help drive top-line sales, the
Company is implementing a guest research driven innovation process to create its rolling 18 month marketing
calendar with specific strategic goals. Additionally, a number of new initiatives were planned around enhancing
the menu, the guest experience, events marketing and social media.
Famous Dave’s is somewhat unique in casual dining having four different occasions to interact with the
consumer: Dine-In, To Go, Catering, and Retail. In 2015, we shifted our emphasis to achieving growth by going
deeper in connecting with guests on their terms. Each of these dining occasions’ offer unique and often compelling
sources of growth, and each occasion is growing at a different rate. Leveraging this occasions matrix, we are
uniquely poised to offer more immediate relevancy and sales opportunities by solving the guest’s daily dinner
dilemma and address these differences in our marketing, including menu, promotional outreach, pricing, and new
product news.
Location Strategy
We believe that the barbeque segment of the casual dining niche of the restaurant industry continues to offer
strong growth opportunities, and we see few impediments to our growth on a geographical basis. Our geographical
concentration as of January 3, 2016 was 40% Midwest, 11% Middle Atlantic, 7% South, 31% West, 8% Northeast,
1% in Canada and 2% in Puerto Rico. We were located in 33 states, the Commonwealth of Puerto Rico and Canada
as of January 3, 2016.
We prepare an overall market development strategy for each market. The creation of this market strategy
starts with identifying trade areas that align demographically with the target guest profile. The identified trade
areas are then assessed for viability and vitality and prioritized as initial, second tier, or future development. Since
markets are dynamic, the market strategy includes a continual and ongoing assessment of all existing restaurant
locations. If financially feasible, a restaurant may be relocated as the retail or residential focus in a trade area
shifts.
We have a real estate site selection model to assist in assessing the site and trade area quality of new
locations. This process involves consumer research in our existing restaurants, the results of which are captured in
a target guest profile that is regularly updated. Each location is evaluated based on three primary sales drivers that
8
include: sales potential from the residential base (home quality), employment base (work quality), and retail
activity (retail quality). Locations are also evaluated on their site characteristics that includes seven categories of
key site attributes, including, but not limited to, access, visibility, and parking.
As part of our development strategy, we have engaged design firms to redesign and reimage the traditional
full-service prototype. These firms have assisted in developing plans for future service style models such as an
updated counter-service, line-service and hybrid flex-service models. The future service-style models will allow us
to access new markets or strategically locate restaurants in existing markets where a full-service restaurant is
unlikely to be financially viable. The surrounding trade area will determine which service style is appropriate. Site
selection will focus on newly developed green-field retail developments or existing retail projects being re-
developed. Conversion opportunities will be considered on a case by case basis. We intend to finance
development through the use of cash on hand, cash flow generated from operations, and through availability on our
revolving line of credit.
Company-Owned Restaurant Development – In 2016, we do not expect to open a Company-owned
restaurant. In the future we expect to continue to build in our existing markets in high profile, heavy traffic retail
locations. Our plan is to focus on sustainable, controlled growth, primarily in markets where multiple restaurants
can be opened, thereby expanding consumer awareness, and creating opportunities for operating, distribution, and
marketing efficiencies.
Franchise-Operated Restaurant Development – We expect to continue to grow the franchise program. Our
goal is to continue to improve the economics of our current restaurant prototypes, while providing more cost-
effective development options for our franchisees. As of January 3, 2016, we had signed franchise area
development agreements with aggregate commitments for 58 additional units that are expected to open over
approximately the next five years, including a four unit Area Development Agreement in the United Arab
Emirates. However, there can be no assurance that these franchisees will fulfill their commitments or fulfill them
within the anticipated timeframe. Our franchise system is a significant part of our brand’s success. As such,
another one of our goals is to be a valued franchisor; to enhance communication and recognition of best practices
throughout the system and to continue to expand our franchisee network here and outside of the United States.
Generally, we find franchise candidates with prior franchise casual-dining restaurant experience in the
markets for which they will be granted. In the past, area development agreements generally ranged from 3 to 15
restaurants, however, due to economic and market conditions, we have been willing to discuss smaller unit
agreements as well as individual franchise restaurants in the right markets where it makes sense. Additionally, we
have begun to focus on certain strategic international markets where it makes sense. We do believe that the
additional service-style formats will allow us to bring new franchisees, with diverse restaurant experience, into the
system.
Purchasing
To provide the freshest ingredients and in order to maximize operational efficiencies for our food products,
we strive to obtain consistent quality items at competitive prices from reliable sources, including identifying
secondary suppliers for many of our key products. Additionally, our secondary suppliers help us assure supply
chain integrity and better logistics. Finally, to reduce freight costs, we continually aim to optimize our distribution
networks, where the products are shipped directly to the restaurants through our foodservice distributors. Each
restaurant’s management team determines the daily quantities of food items needed and orders such quantities to be
delivered to their restaurant.
Approximately 85% of our food and non-alcoholic beverage purchases are on contract, with the majority
being proteins. Pork represents approximately 32% of our total purchases, while beef, which includes hamburger
and brisket, is approximately 13%, chicken is approximately 13%, and seafood is approximately 2%. Our
purchasing department contracts, as well as our food and beverage costs and trends associated with each, are
discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Our purchasing team is also responsible for managing the procurement of non-food items for our
9
restaurants, including restaurant equipment, small wares and restaurant supplies. Also, they contract many of our
restaurants repair and maintenance services along with managing our utility costs.
Information Technology
Famous Dave’s recognizes the importance of leveraging information and technology to support and extend
our competitive position in the restaurant industry. We continue to invest in capabilities that provide secure and
efficient operations, maximize the guest experience, and provide the ability to analyze data that describes our
operations.
We have implemented a suite of restaurant and general headquarter systems which support operations by
providing transactional functions (ordering, card processing, etc.) and reporting at both the unit and support center
level. Interfaces between Point-of-Sale (POS), labor management, inventory management, menu management, key
suppliers, and employee screening/hiring and financial systems all contribute to the following operator and
corporate visibility:
(cid:2) Average guest check broken down by location, by server, by day part, and by revenue center;
(cid:2) Daily reports of revenue and labor (both current and forecasted);
(cid:2) Weekly reports of selected controllable restaurant expenses;
(cid:2) Monthly reporting of detailed revenue and expenses; and
(cid:2)
Ideal vs. actual usage variance reporting for critical restaurant-level materials
Trademarks
Our Company has registered various trademarks, makes use of various unregistered marks, and intends to
vigorously defend these marks. “Famous Dave’s” and the Famous Dave’s logo are registered trademarks of
Famous Dave's of America, Inc. The Company highly values its trademarks, trade names and service marks and
will defend against any improper use of its marks to the fullest extent allowable by law.
Franchise Program
We are currently authorized to offer and sell franchises in 48 of 50 states, the Commonwealth of Puerto
Rico, the United Arab Emirates, and have a Canadian franchise disclosure document available. Our growth and
success depends in part upon our ability to attract, contract with and retain qualified franchisees. It also depends
upon the ability of those franchisees to successfully operate their restaurants with our standards of quality and
promote and develop Famous Dave’s brand awareness.
Although we have established criteria to evaluate prospective franchisees, and our franchise agreements
include certain operating standards, each franchisee operates his/her restaurants independently. Various laws limit
our ability to influence the day-to-day operation of our franchise restaurants. We cannot assure you that
franchisees will be able to successfully operate Famous Dave’s restaurants in a manner consistent with our
standards for operational excellence, service and food quality.
At January 3, 2016, we had 36 ownership groups operating 135 Famous Dave’s franchise restaurants.
Signed area development agreements, representing commitments to open an additional 58 franchise restaurants,
were in place as of January 3, 2016. There can be no assurance that these franchisees will fulfill their
commitments or fulfill them within the anticipated timeframe.
10
As of January 3, 2016, we had franchise-operated restaurants in the following locations:
United States
Arizona
California
Colorado
Delaware
Florida
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Maine
Maryland
Michigan
Minnesota
Missouri
Montana
Nebraska
Nevada
New Jersey
New York
North Dakota
Oregon
Ohio
Pennsylvania
South Dakota
Tennessee
Texas
Utah
Washington
Wisconsin
Wyoming
United States Total
The Commonwealth of Puerto Rico
Canada
United States, the Commonwealth of
Puerto Rico, and Canada Total
11
Number of Franchise-Operated
Restaurants
6
19
6
2
3
2
3
4
4
2
2
1
1
9
4
3
4
4
6
1
3
3
2
2
4
2
5
3
3
7
10
1
131
3
1
135
Our Franchise Operations Department is made up of the Chief Operating Officer that guides the efforts of a
Sr. Director of Operations, supported by four Franchise Area Directors. The Sr. Director of Operations has the
responsibility of supporting our franchisees throughout the country and plays a critical role for us as well as for our
franchise community. The Sr. Director of Operations manages the relationship between the franchisee and the
franchisor and provides an understanding of the roles, responsibilities, differences, and accountabilities of that
relationship. They are an active participant towards enhancing performance, as they partner in strategic and
operational planning sessions with our franchise partners and review the individual strategies and tactics for
obtaining superior performance for the franchisee. They ensure compliance with obligations under our area
development and franchise agreements. Franchisees are encouraged to utilize all available assistance from the Sr.
Director of Operations and the Franchise Area Directors and the Support Center but are not required to do so.
The Company has a comprehensive operations’ scorecard and training tool that helps us measure the
operational effectiveness of our Company-owned and franchise-operated restaurants. This scorecard is used to
evaluate, monitor and improve operations in areas such as guest satisfaction, health and safety standards,
community involvement, and local store marketing effectiveness, among other operating metrics. Also, we
generally provide support as it relates to all aspects of franchise operations including, but not limited to, store
openings and operating performance. Finally, the Company solicits feedback from our franchise system by having
an active dialogue with all Franchisees throughout the year.
Our franchise-related revenue is comprised of three separate and distinct earnings processes:
area
development fees, initial franchise fees and continuing royalty payments. Currently, our area development fee for
domestic growth consists of a one-time, non-refundable payment of approximately $10,000 per restaurant in
consideration for the services we perform in preparation of executing each area development agreement. For our
foreign area development agreements the one time, non-refundable payment is negotiated on a per development
agreement basis and is determined based on the costs incurred to sell that development agreement. Substantially all
of these services, which include, but are not limited to, conducting market and trade area analysis, a meeting with
Famous Dave’s Executive Team, and performing a potential franchise background investigation, are completed
prior to our execution of the area development agreement and receipt of the corresponding area development fee.
As a result, we recognize this fee in full upon receipt. Currently, our initial, non-refundable, franchise fee for
domestic growth is $45,000 per restaurant, of which approximately $5,000 is recognized immediately when a
franchise agreement is signed, reflecting expenses incurred related to the sale. The remaining non-refundable fee is
included in deferred franchise fees and is recognized as revenue when we have performed substantially all of our
obligations, which generally occurs upon the franchise entering into a lease agreement for the restaurant(s).
Finally, franchisees are also required to pay us a monthly royalty equal to a percentage of their net sales, which has
historically varied from 4% to 5%. In general, new franchises pay us a monthly royalty of 5% of their net sales.
The franchisee’s investment depends primarily upon restaurant size. This investment includes the area
development fee, initial franchise fee, real estate and leasehold improvements, fixtures and equipment, POS
systems, business licenses, deposits, initial food inventory, small wares, décor and training fees as well as working
capital. In 2015, franchisees were required to contribute 1.0% of net sales to a marketing fund dedicated to building
system-wide brand awareness. In 2016, franchisees will be required to contribute 1.0% of net sales to the
marketing fund. Additionally, franchisees have historically spent 1.5% to 2.0% of their net sales annually on local
marketing activities. Currently, franchisees are required to spend approximately 1.5% of their net sales annually
on local marketing activities.
Seasonality
Our restaurants typically generate higher revenue in the second and third quarters of our fiscal year as a
result of seasonal traffic increases and high catering sales experienced during the summer months, and lower
revenue in the first and fourth quarters of our fiscal year, due to possible adverse weather which can disrupt guest
and team member transportation to our restaurants.
Government Regulation
Our Company is subject to extensive state and local government regulation by various governmental
12
agencies, including state and local licensing, zoning, land use, construction and environmental regulations and
various regulations relating to the sale of food and alcoholic beverages, sanitation, disposal of refuse and waste
to periodic inspections by
products, public health, safety and fire standards. Our restaurants are subject
governmental agencies to ensure conformity with such regulations. Any difficulty or failure to obtain required
licensing or other regulatory approvals could delay or prevent the opening of a new restaurant, and the suspension
of, or inability to renew a license, could interrupt operations at an existing restaurant, any of which would
adversely affect our operations. Restaurant operating costs are also affected by other government actions that are
beyond our control, including increases in minimum hourly wage requirements, workers compensation insurance
rates, health care insurance costs, property and casualty insurance, and unemployment and other taxes. We are also
subject to "dram-shop" statutes, which generally provide a person injured by an intoxicated person the right to
recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.
As a franchisor, we are subject to federal regulation and certain state laws that govern the offer and sale of
franchises. Many state franchise laws impose substantive requirements on franchise agreements,
including
limitations on non-competition provisions and the termination or non-renewal of a franchise. Bills have been
introduced in Congress from time to time that would provide for federal regulation of substantive aspects of the
franchisor-franchisee relationship. As proposed, such legislation would limit, among other things, the duration and
scope of non-competition provisions, the ability of a franchisor to terminate or refuse to renew a franchise, and the
ability of a franchisor to designate sources of supply.
The 1990 Federal Americans with Disabilities Act prohibits discrimination on the basis of disability in
public accommodations and employment. We could be required to incur costs to modify our restaurants in order to
provide service to, or make reasonable accommodations for, disabled persons. Our restaurants are currently
designed to be accessible to the disabled, and we believe we are in substantial compliance with all current
applicable regulations relating to this Act.
Team Members
As of January 3, 2016, we employed approximately 2,585 team members of which approximately 215 were
salaried full-time employees. None of our team members are covered by a collective bargaining agreement. We
consider our relationships with our team members to be good.
ITEM 1A. RISK FACTORS
Famous Dave’s makes written and oral statements from time to time, including statements contained in this
Annual Report on Form 10-K regarding its business and prospects, such as projections of future performance,
statements of management’s plans and objectives, forecasts of market trends and other matters that are forward-
looking statements within the meaning of Sections 27A of the Securities Exchange Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Statements containing the words or phrases “will likely result,” “anticipates,”
“are expected to,” “will continue,” “is anticipated,” “estimates,” “projects,” “believes,” “expects,” “intends,”
“target,” “goal,” “plans,” “objective,” “should” or similar expressions identify forward-looking statements which
may appear in documents, reports, filings with the Securities and Exchange Commission, news releases, written or
oral presentations made by our officers or other representatives to analysts, shareholders, investors, news
organizations, and others, and discussions with our management and other Company representatives. For such
statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
Our future results, including results related to forward-looking statements, involve a number of risks and
uncertainties. No assurance can be given that the results reflected in any forward-looking statements will be
achieved. Any forward-looking statements made by us or on our behalf speak only as of the date on which such
statement is made. Our forward-looking statements are based upon our management’s current estimates and
projections of future results or trends. Although we believe that our plans and objectives reflected in or suggested
by these forward-looking statements are reasonable, we may not achieve these plans or objectives. In addition,
forward-looking statements may reflect assumptions
that are sometimes based upon estimates, data,
communications and other information from suppliers, government agencies and other sources that may be subject
13
to revision. Except as otherwise required by applicable law, we do not undertake any obligation to update or keep
current either (i) any forward-looking statements to reflect events or circumstances arising after the date of such
statement, or (ii) the important factors that could cause our future results to differ materially from historical results
or trends, results anticipated or planned by us, or which are reflected from time to time in any forward-looking
statement which may be made by us or on our behalf.
In addition to other matters identified or described by us from time to time in filings with the SEC, including
the risks described below and elsewhere in this Annual Report on Form 10-K, there are several important factors
that could cause our future results to differ materially from historical results or trends, results anticipated or
planned by us, or results that are reflected from time to time in any forward-looking statement that may be made by
us or on our behalf.
The state of the economy and the volatility of the financial markets may adversely impact our business and
results of operations and cash flows.
The restaurant industry is affected by macro-economic factors, including changes in national, regional, and
local economic conditions, employment levels and consumer spending patterns. The recent economic downturn,
and the slow economic recovery, has kept consumer confidence low, and consequently, has affected the frequency
of consumers’ dining out occasions. This has been harmful to our results of operations and cash flows, and has
negatively impacted our financial position, which has resulted in asset impairment charges being recorded and, if it
continues in the future, may result in further impairment of the Company’s assets.
A failure to maintain continued compliance with the financial covenants of our credit facility may result
in termination of the credit facility and may have a material adverse effect on our ability to accomplish our
business objectives.
Depending on the duration and severity of the continued economic downturn and the pace of recovery, it may
adversely affect our ability to comply with financial covenants under our credit facility on a continuing basis.
These financial covenants include, without limitation, cash flow ratios, adjusted leverage ratios, and in certain
circumstances, a maximum aged royalty receivable. There can be no assurances that government responses to the
disruptions in the financial markets and overall economy will restore consumer confidence, stabilize the markets or
increase liquidity and the availability of credit.
At September 27, 2015, we were not in compliance with financial covenants relating to the maximum
Adjusted Leverage Ratio and the minimum Consolidated Cash Flow Ratio under our Third Amended and Restated
Credit Agreement dated May 8, 2015 (the “Credit Agreement”) with Wells Fargo, National Association as
administrative agent and lender (“Wells Fargo”). In order to address these two financial covenant violations, we
entered into a forbearance agreement with Wells Fargo and subsequently amended the Credit Agreement. Among
other things, the amendment accelerated the maturity date from May 8, 2020 to December 31, 2018, reduced the
maximum term loan balance from $30.0 million to $12.0 million, and reduced the maximum revolving credit loan
commitment from $5.0 million to $3.0 million with a $2.0 million (rather than $3.0 million) letter of credit
sublimit. The amendment also amended effective as of September 30, 2015, the Adjusted Leverage Ratio covenant
and consolidated Cash Flow Ratio covenant such that we were in compliance with the covenants of the Credit
Agreement at September 30, 2015 and no events of default existed.
In the event we fail to comply with these or other financial covenants in the future and are unable to obtain
similar amendments or waivers, our lender will have the right to demand repayment of all principal amounts
outstanding under the credit facility, which did not have an outstanding balance at the of fiscal 2015, and the term
loan, which was approximately $12.0 million at January 3, 2016, and to terminate the existing credit facility and
term loan. If we were unable to repay outstanding amounts, either using current cash reserves, a replacement
facility or another source of capital, our lender would have the right to foreclose on our personal property, which
serves as collateral for the credit facility. Replacement financing may be unavailable to us on similar terms or at
all, especially if current credit market conditions persist. Termination of our existing credit facility without
adequate replacement, either through a similar facility or other sources of capital, would have a material and
adverse impact on our ability to continue our business operations.
14
Our future revenue, operating income, and cash flows are dependent on consumer preference and our
ability to successfully execute our plan.
Our Company’s future revenue and operating income will depend upon various factors, including continued
and additional market acceptance of the Famous Dave’s brand, the quality of our restaurant operations, our ability
to grow our brand, our ability to successfully expand into new and existing markets, our ability to successfully
execute our franchise program, our ability to raise additional financing as needed, discretionary consumer
spending, the overall success of the venues where Famous Dave’s restaurants are or will be located, economic
conditions affecting disposable consumer income, general economic conditions and the continued popularity of the
Famous Dave’s concept. An adverse change in any or all of these conditions would have a negative effect on our
operations and the market value of our common stock.
In fiscal 2016, the Company does not anticipate opening a new Company-owned restaurant. There is no
guarantee that any of the Company-owned or franchise-operated restaurants will open when planned, or at all, due
to many factors that may affect the development and construction of our restaurants, including landlord delays,
weather interference, unforeseen engineering problems, environmental problems, construction or zoning problems,
local government regulations, modifications in design to the size and scope of the project, and other unanticipated
increases in costs, any of which could give rise to delays and cost overruns. There can be no assurance that we will
successfully implement our growth plan for our Company-owned and franchise-operated restaurants. In addition,
we also face all of the risks, expenses and difficulties frequently encountered in the development of an expanding
business.
Competition may reduce our revenue, operating income, and cash flows.
Competition in the restaurant industry is intense. The restaurant industry is affected by changes in consumer
preferences, as well as by national, regional and local economic conditions, including real estate, and demographic
trends, traffic patterns, the cost and availability of qualified labor, and product availability. Discretionary spending
priorities, traffic patterns, tourist travel, weather conditions, and the type, number and location of competing
restaurants, among other factors, will also directly affect the performance of our restaurants. Changes in any of
these factors in the markets where we currently operate our restaurants could adversely affect the results of our
operations.
Increased competition by existing or future competitors may reduce our sales. Our restaurants compete with
moderately-priced restaurants primarily on the basis of quality of food and service, atmosphere, location and value.
In addition to existing barbeque restaurants, we face competition from steakhouses and other restaurants featuring
protein-rich foods. We also compete with other restaurants and retail establishments for quality sites.
Many of our competitors have substantially greater financial, marketing and other resources than we do.
Regional and national restaurant companies continue to expand their operations into our current and anticipated
market areas. We believe our ability to compete effectively depends on our ongoing ability to promote our brand
and offer high quality food and hospitality in a distinctive and comfortable environment. If we are unable to
respond to, or unable to respond in a timely manner, to the various competitive factors affecting the restaurant
industry, our revenue and operating income could be adversely affected.
Our failure to execute our franchise program may negatively impact our revenue, operating income and
cash flows.
Our growth and success depends in part upon increasing the number of our franchised restaurants, through
execution of area development and franchise agreements with new and existing franchisees in new and existing
markets. We are also pursuing a strategic “re-franchising” initiative to transition some of our Company-owned
restaurants into franchised locations. Our ability to successfully franchise additional restaurants and re-franchise
existing Company-owned restaurants will depend on various factors, including our ability to attract, contract with
and retain quality franchisees, the availability of suitable sites, the negotiation of acceptable leases or purchase
terms for new locations, the negotiation of acceptable terms for the re-franchising of existing Company-owned
15
restaurants, permitting and regulatory compliance, the ability to meet construction schedules, the financial and
other capabilities of our franchisees, our ability to manage this anticipated expansion, and general economic and
business conditions. Many of the foregoing factors are beyond the control of the Company or our franchisees.
Our growth and success also depends upon the ability of our franchisees to operate their restaurants
successfully to our standards and promote the Famous Dave’s brand. Although we have established criteria to
evaluate prospective franchisees, and our franchise agreements include certain operating standards, each franchisee
operates his/her restaurant independently. Various laws limit our ability to influence the day-to-day operation of
our franchise restaurants. We cannot assure you that our franchisees will be able to successfully operate Famous
Dave’s restaurants in a manner consistent with our concepts and standards, which could reduce their sales and
correspondingly, our franchise royalties, and could adversely affect our operating income and our ability to
leverage the Famous Dave’s brand. In addition, there can be no assurance that our franchisees will have access to
financial resources necessary to open the restaurants required by their respective area development agreements,
which would negatively impact our growth plans.
We may not be successful in expanding our international footprint.
Our current franchise program includes three restaurants in the Commonwealth of Puerto Rico and one
restaurant in Manitoba, Canada, and subsequent to year end a franchisee opened its first restaurant in the United
Arab Emirates. We believe there is a significant opportunity to expand our concept in international markets.
Because we are at the early stage of pursuing international growth, we may not be completely aware of the
development efforts involved and barriers to entry into foreign markets. As a result, we may incur more expenses
than originally anticipated and there is a risk that we may not be successful in expanding internationally. If we are
successful in expanding our international footprint, our future results could be materially adversely affected by a
variety of uncontrollable and changing factors affecting international operations including, among others,
regulatory, social, political, or economic conditions in a specific country or region, trade protection measures and
other regulatory requirements, government spending patterns, and changes in the laws and policies. Furthermore,
by expanding our international footprint, our brand value could be harmed by factors outside of our control,
including, among other things, difficulties in achieving the consistency of product quality and service compared to
our U.S. restaurants and an inability to obtain adequate and reliable supplies of ingredients and products.
The restaurant industry is subject to extensive government regulation that could negatively impact our
business.
The restaurant industry is subject to extensive federal, state, and local government regulation by various
government agencies, including state and local licensing, zoning, land use, construction and environmental
regulations and various regulations relating to the preparation and sale of food and alcoholic beverages, sanitation,
disposal of refuse and waste products, public health, safety and fire standards, adjustments to tip credits, increases
to minimum wage requirements, workers’ compensation and citizenship requirements. Due to the fact that we offer
and sell franchises, we are also subject to federal regulation and certain state laws which govern the offer and sale
of franchises. Many state franchise laws impose substantive requirements on franchise agreements, including
limitations on non-competition provisions and termination or non-renewal of a franchise. We may also be subject
in certain states to “dram-shop” statutes, which provide a person injured by an intoxicated person the right to
recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. In
addition, our operating results would be adversely affected in the event we fail to maintain our food and liquor
licenses.
Any change in the current status of such regulations, including an increase in team member benefits costs,
any and all insurance rates, or other costs associated with team members, could substantially increase our
compliance and labor costs. Because we pay many of our restaurant-level team members rates based on either the
federal or the state minimum wage, increases in the minimum wage would lead to increased labor costs. In 2014,
the general counsel’s office of the National Labor Relations Board issued complaints naming the McDonald’s
Corporation as a joint employer of workers at its franchisees for alleged violations of the Fair Labor Standards Act.
There can be no assurance that other franchisors will not receive similar complaints in the future which may result
in legal proceedings based on the actions of its franchisees. Enactment and enforcement of various federal, state
16
and local laws, rules and regulations on immigration and labor organizations may adversely impact the availability
and costs of labor for our restaurants in a particular area or across the United States. Other labor shortages or
increased team member turnover could also increase labor costs. Furthermore, restaurant operating costs are
affected by increases in unemployment tax rates and similar costs over which we have no control.
During 2010, the Patient Protection and Affordable Care Act and the Health Care and Education
Reconciliation Act of 2010 were signed into law in the United States. Our restaurants are governed by these laws.
This legislation mandates menu labeling of certain nutritional aspects of restaurant menu items such as caloric,
sugar, sodium, and fat content. There is a risk that consumers’ dining preferences may be impacted by such menu
labeling. If we elect to alter our recipes in response to such a change in dining preferences, doing so could increase
our costs and/or change the flavor profile of our menu offerings which could have an adverse impact on our results
of operations.
Healthcare reform legislation could have a negative impact on our business.
Certain of the provisions of recent health care legislation that have increased our healthcare costs include the
removal of annual plan limits and the mandate that health plans provide 100% coverage on expanded preventative
care. In addition, our healthcare costs could increase significantly as the new legislation and accompanying
regulations require us to automatically enroll employees in health coverage, potentially cover more variable hour
employees than we do currently or pay penalty amounts in the event that employees do not elect our offered
coverage. Additionally, minimum employee health care coverage mandated by state or federal legislation could
have an adverse effect on our results of operations and financial condition. Although much of the cost of recent
healthcare legislation will occur in the future due to provisions of the legislation being phased in over time,
changes to our healthcare cost structure could have an impact on our business and operating costs.
We are subject to the risks associated with the food services industry, including the risk that incidents of
food-borne illnesses or food tampering could damage our reputation and reduce our restaurant sales.
Our industry is susceptible to the risk of food-borne illnesses. As with any restaurant operation we cannot
guarantee that our internal controls and training will be fully effective in preventing all food-borne illnesses.
Furthermore, our reliance on third-party food suppliers and distributors increases the risk that food-borne illness
incidents could be caused by third-party food suppliers and distributors outside of our control and/or multiple
locations being affected rather than a single restaurant. New illnesses resistant to any precautions may develop in
the future, or diseases with long incubation periods could arise that could give rise to claims or allegations on a
retroactive basis. Reports in the media or on social media of one or more instances of food-borne illness in one of
our Company-owned restaurants, one of our franchise-operated restaurants or in one of our competitor’s
restaurants could negatively affect our restaurant sales, force the closure of some of our restaurants and
conceivably have a national impact if highly publicized. This risk exists even if it were later determined that the
illness had been wrongly attributed to the restaurant. Furthermore, other illnesses could adversely affect the supply
of some of our food products and significantly increase our costs. A decrease in guest traffic as a result of these
health concerns or negative publicity could materially harm our business, results of operations and financial
condition.
Our ability to exploit our brand depends on our ability to protect our intellectual property, and if any third
parties make unauthorized use of our intellectual property, our competitive position and business could
suffer.
We believe that our trademarks and other intellectual proprietary rights are important to our success and our
competitive position. Accordingly, we have registered various trademarks and make use of various unregistered
marks. However, the actions we have taken or may take in the future to establish and protect our trademarks and
other intellectual proprietary rights may be inadequate to prevent others from imitating our products and concept or
claiming violations of their trademarks and proprietary rights by us. Although we intend to defend against any
improper use of our marks to the fullest extent allowable by law, litigation related to such defense, regardless of the
merit or resolution, may be costly and time consuming and divert the efforts and attention of our management.
17
Our financial performance is affected by our ability to contract with reliable suppliers at competitive
prices.
In order to maximize operating efficiencies, we have entered into arrangements with food manufacturers and
distributors pursuant to which we obtain approximately 85% of the products used by the Company, including, but
not limited to, pork, poultry, beef, and seafood. Although we may be able to obtain competitive products and prices
from alternative suppliers, an interruption in the supply of products delivered by our food suppliers could adversely
affect our operations in the short term. Due to the rising market price environment, our food costs may increase
without the desire and/or ability to pass that price increase to our customers.
Although we do contract for utilities in all available states, the costs of these energy-related items will
fluctuate due to factors that may not be predictable, such as the economy, current political/international relations
and weather conditions. Because we cannot control these types of factors, there is a risk that prices of energy/utility
items will increase beyond our current projections and adversely affect our operations.
We could be adversely impacted if our information technology and computer systems do not perform
properly or if we fail to protect our customers’ credit card information or our employees’ personal data.
We rely heavily on information technology to conduct our business, and any material failure or interruption
of service could adversely affect our operations. Furthermore, we accept credit and debit card payments in our
restaurants. Recently, retailers have experienced actual or potential security breaches in which credit and debit card
information may have been compromised, including several highly publicized incidents. Although we take it very
seriously and expend significant resources to ensure that our information technology operates securely and
effectively, any security breaches could result
in disruptions to operations or unauthorized disclosure of
confidential information. If our guests’ consumer data or our team members’ personal data are compromised, our
operations could be adversely affected, our reputation could be harmed, and we could be subjected to litigation or
the imposition of penalties and other remedial costs. In addition, as a franchisor, we are subject to additional
reputation risk associated with data breaches that could occur at one of our franchise locations that could
potentially harm the Famous Dave’s brand reputation.
We evaluate restaurant sites and long-lived assets for impairment and expenses recognized as a result of
any impairment would negatively affect our financial condition and consolidated results of operations.
During fiscal 2015, we recognized asset impairment, lease termination and other closing costs of $1.5
million, which included an asset impairment taken in connection with the sale of our Smithtown, New York
restaurant, lease termination reserve costs and the write-off of development costs associated with the cancellation
of a potential new restaurant location in North Riverside, Illinois that we ultimately decided not to develop, costs
associated with restaurant closures in Eden Prairie, Minnesota and the Richmond, Virginia area, and the closure of
our Lombard, Illinois field office (partially offset by recapture of deferred rent credits in fiscal 2016). We also
recognized expenses of $8.8 million resulting from the impairment of assets comprising seven Chicago, Illinois
area Company-owned restaurants upon entering into agreements for the sale of such restaurants that are reflected as
discontinued operations in the Company’s consolidated financial statements. Upon the closing of such sale, we
recaptured approximately $1.1 to $1.3 million of deferred rent credits, which partially offset the above referenced
impairment charge. We evaluate restaurant sites and long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of restaurant
sites to be held and used is measured by a comparison of the carrying amount of the restaurant site to the
undiscounted future net cash flows expected to be generated on a restaurant-by-restaurant basis. If a restaurant is
determined to be impaired, the loss is measured by the amount by which the carrying amount of the restaurant site
exceeds its fair value. Fair value is estimated based on the best information available including estimated future
cash flows, expected growth rates in comparable restaurant sales, remaining lease terms, discount rate and other
factors. If these estimates change in the future, we may be required to take additional impairment charges for the
related assets, which would negatively affect our financial condition and consolidated results of operations.
Considerable management judgment is necessary to estimate future cash flows. Accordingly, actual results could
vary significantly from such estimates.
18
Pursuant to its authority to designate and issue shares of our stock as it deems appropriate, our board of
directors may assign rights and privileges to currently undesignated shares which could adversely affect
the rights of existing shareholders.
Our authorized capital consists of 100,000,000 shares of capital stock. Our Board of Directors, without any
action by the shareholders, may designate and issue shares in such classes or series (including classes or series of
preferred stock) as it deems appropriate and establish the rights, preferences and privileges of such shares,
including dividends, liquidation and voting rights. As of March 8, 2016, we had 6,957,628 shares of common stock
outstanding.
The rights of holders of preferred stock and other classes of common stock that may be issued could be
superior to the rights granted to the current holders of our common stock. Our Board’s ability to designate and
issue such undesignated shares could impede or deter an unsolicited tender offer or takeover proposal. Further, the
issuance of additional shares having preferential rights could adversely affect the voting power and other rights of
holders of common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The development cost of our restaurants varies depending primarily on the size and style of the restaurant,
whether the property is purchased or leased, and whether it is a conversion of an existing building or a newly
constructed restaurant. We have engaged a design firm to redesign and reimage the traditional full-service
prototype and develop plans for three additional service style models including counter-service, line-service and
hybrid flex-service models. The three additional service-style models will allow us to access new markets or
strategically locate restaurants in existing markets where a full-service restaurant
is not sustainable. The
surrounding trade area will determine which service style is appropriate. These new prototypes can be built as free
standing buildings, as end caps of a building or as in-line locations. Additionally, we offer lower cost conversion
packages that provide our franchisees with the flexibility to build in cost effective formats, such as opportunities to
convert existing restaurants into a Famous Dave’s restaurant.
In fiscal 2015, the Company did not open any new Company-owned locations, closed one location and
refranchised five additional company-owned restaurants.
In fiscal 2014, the Company did not open any new
In fiscal 2013 the Company opened two free-standing, full-
Company owned locations, closed four locations.
service restaurants, one in a 5,000 square foot building constructed by the landlord and the second in a 5,600
square foot prototype building constructed by the Company.
In addition to the Company locations, franchisees
opened eight full-service restaurants during fiscal 2013 including five conversions, two ground-up free-standing
buildings, and one end-cap. Due to the flexibility and scalability of our concept, there are a variety of development
opportunities available now and in the future. In 2016, we do not expect to open a Company-owned restaurant.
Our leased restaurant facilities are occupied under agreements with remaining terms ranging from 1 month
to 32 years, including renewal options. Such leases generally provide for fixed rental payments plus operating
expenses associated with the properties. Several leases also require the payment of percentage rent based on net
sales.
Our Minnesota executive offices are currently located in approximately 28,600 square feet in Minnetonka,
Minnesota. Our executive office lease expires November 2018, with two five-year renewal options. The minimum
annual rent commitment remaining over the lease term, including renewal options, is approximately $3.8 million.
During fiscal 2015, the Company sublet approximately 10,340 square feet to two subtenants. During 2015, our
8,400 square foot office in Lombard, IL was closed and sublet to another tenant. This office lease expires October
2022. The minimum annual rent commitment remaining over the lease term is approximately $715,000.
19
We believe that our properties will be suitable for our needs and adequate for operations for the foreseeable
future. The following table sets forth certain information about our existing Company-owned restaurant locations,
as of January 3, 2016, sorted by opening date:
Location
1 Roseville, MN (3)
2 Calhoun Square (Minneapolis, MN)
3 Maple Grove, MN
4 Highland Park (St. Paul, MN)(3)
5 Stillwater, MN
6 Apple Valley, MN(3)
7 Forest Lake, MN(3)
8 Minnetonka, MN
9 Plymouth, MN(3)
10 West Des Moines, IA
11 Cedar Falls, IA
12 Bloomington, MN
13 Woodbury, MN
14 Columbia, MD
15 Annapolis, MD
16 Frederick, MD
17 Woodbridge, VA
18 Addison, IL
19 North Riverside, IL
20 Sterling, VA
21 Oakton, VA
22 Laurel, MD
23 Orland Park, IL
24 Chantilly, VA
25 Waldorf, MD
26 Coon Rapids, MN
27 Fredericksburg, VA
28 Owings Mills, MD
29 Bolingbrook, IL
30 Oswego, IL
31 Alexandria, VA
32 Algonquin, IL
33 Brick, NJ
34 May's Landing, NJ
35 Westbury, NY
36 New Brunswick, NJ
37 Mountainside, NJ
38 Metuchen, NJ
39 Bel Air, MD
40 Falls Church, VA
41 Gainesville, VA
42 Evergreen Park, IL(3)
43 Germantown, MD
44 Timonium, MD
Square
Footage
4,800
10,500
6,100
5,200
5,200
3,800
4,500
5,500
2,100
5,700
5,400
5,400
5,900
7,200
6,800
5,600
6,000
5,000
4,700
5,800
4,400
5,200
5,400
6,400
6,600
6,300
6,500
6,700
6,600
6,600
6,600
6,000
5,200
6,400
6,400
7,200
8,800
6,200
6,360
5,430
6,000
3,600
5,000
5,600
Interior
Seats
105
380
146
125
130
90
100
140
49
150
130
140
180
270
219
180
219
135
150
200
184
165
158
205
200
160
219
219
219
219
219
219
181
237
276
255
253
176
199
169
215
90
160
187
Owned or
Leased
Date
Opened/Acquired
Leased
Leased
Leased(1)
Leased
Leased(1)
Leased(1)
Leased
Owned(2)
Owned(2)
Leased
Leased
Leased
Owned(2)
Leased
Leased
Leased
Leased
Owned(2)
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Owned(2)
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
June 1996
September 1996
April 1997
June 1997
July 1997
July 1997
October 1997
December 1997
December 1997
April 1998
September 1998
October 1998
October 1998
January 2000
January 2000
January 2000
January 2000
March 2000
August 2000
December 2000
May 2001
August 2001
June 2002
January 2006
June 2006
December 2006
September 2007
November 2007
November 2007
December 2007
February 2008
September 2008
March 2010
March 2010
March 2010
March 2010
March 2010
March 2010
August 2010
August 2011
June 2012
November 2012
September 2013
November 2013
All seat count and square footage amounts are approximate.
(1)Restaurant is collateral in a financing lease.
(2)Restaurant land and building are owned by the Company.
(3)Counter service restaurant
ITEM 3. LEGAL PROCEEDINGS
From time-to-time, we are involved in various legal actions arising in the ordinary course of business. In the
opinion of our management, the ultimate dispositions of these matters will not have a material adverse effect on
our consolidated financial position and results of operations. Currently, there are no significant legal matters
pending except as described below.
20
Famous Dave’s of America, Inc.’s (“Famous Dave’s”) filed a complaint on July 14, 2015, against a group of
former franchisees in California seeking injunctive relief and damages for: (1) Federal Trademark Infringement;
(2) Federal Trademark Dilution; (3) Federal Unfair Competition; (4) Federal Trade Dress Dilution; (5) Trademark
Infringement under California Business and Professions Code § 14200; (6) Trademark Dilution under California
Business and Professions Code §14200; (7) Common Law Trademark Infringement; (8) Unfair Competition under
California Business and Professions Code § 17200; (9) False Advertising; (10) Breach of Contract; (11) Breach of
Implied Covenant of Good Faith and Fair Dealing; and (12) Intentional Interference with Contract. The claims
stem from the former franchisees breaches of their franchise agreements, including the failure to pay franchise fees
and their continued operation of five restaurants utilizing Famous Dave’s intellectual property without
authorization. After two defendants in the case, Kurt Schneiter and M Mart 1, filed a demurrer to the Complaint,
Famous Dave’s filed an Amended Complaint on October 9, 2015, reasserting the same claims. The case is
captioned Famous Dave’s of America, Inc., v. SR El Centro FD, Inc., et al., Case No. BC589329, and is currently
pending before the Honorable Elihu M. Berle in the Superior Court of Los Angeles. No trial date has been
set. Famous Dave’s intends to vigorously prosecute the lawsuit.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock has traded on the NASDAQ Stock Market since July 24, 1997 under the symbol DAVE.
Currently, our common stock trades on the NASDAQ Global Market. The following table summarizes the high
and low sale prices per share of our common stock for the periods indicated, as reported on the NASDAQ Global
Market.
Period
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
2015
2014
High
Low
High
Low
$
$
$
$
34.72
30.94
20.97
12.96
$
$
$
$
24.50
18.22
12.36
6.70
$
$
$
$
31.99
34.70
29.67
29.98
$
$
$
$
15.01
23.00
23.26
23.88
Holders
As of March 8, 2016, we had approximately 330 shareholders of record and approximately 3,433 beneficial
shareholders.
Dividends
Our Board of Directors has not declared any dividends on our common stock since our inception, and does
not intend to pay out any cash dividends on our common stock in the foreseeable future. We presently intend to
retain all earnings, if any, to provide for growth, reduce our debt levels, and repurchase our common stock. The
payment of cash dividends in the future, if any, will be at the discretion of the Board of Directors and will depend
upon such factors as earnings levels, capital requirements, loan agreement restrictions, our financial condition and
other factors deemed relevant by our Board of Directors.
21
Stock Performance Graph
Below is a line-graph presentation that compares the cumulative, five-year return to the Company’s
shareholders (based on appreciation of the market price of the Company’s common stock) on an indexed basis with
(i) a broad equity market index and (ii) an appropriate published industry or line-of-business index, or Peer Group
Index constructed by the Company. The following presentation compares the Company’s common stock price for
the period from January 2, 2011 through January 3, 2016, to the S&P 500 Stock Index and to the S&P Small Cap
Restaurant Index.
The Company has elected to use the S&P Small Cap Restaurant Index in compiling its stock performance
graph because it believes the S&P Small Cap Restaurant Index represents a comparison to competitors’ with
similar market capitalization to the Company.
The presentation assumes that the value of an investment in each of the Company's common stock, the S&P
500 Index and S&P Small Cap Restaurants was $100 on January 2, 2011, and that any dividends paid were
reinvested in the same security.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Famous Dave's of America, Inc., the S&P 500 Index,
and S&P Small Cap Restaurants
$300
$250
$200
$150
$100
$50
$0
1/2/11
1/1/12
12/30/12
12/29/13
12/28/14
1/3/16
Famous Dave's of America, Inc.
S&P 500
S&P Small Cap Restaurants
*$100 invested on 1/2/11 in stock or index, including reinvestment of dividends.
Fiscal year ending January 3, 2016 with previous specific fiscal year ends at January 2, 2011,
January 1, 2012, December 30, 2012, December 29, 2013 and December 28, 2014.
Copyright© 2016 S&P, a division of McGraw Hill Financial. All rights reserved.
Purchases of Equity Securities by the Issuer
On May 1, 2012, our Board of Directors approved a stock repurchase program that authorized the repurchase
of up to 1.0 million shares of our common stock in both the open market or through privately negotiated
transactions. During the year ended January 3, 2016, we repurchased 195,899 shares under this program for
22
approximately $5.7 million at an average market price per share of $28.92, excluding commissions. Since the
program was adopted in May 2012, we have repurchased all 1.0 million shares for approximately $18.6 million at
an average market price per share of $18.57, excluding commissions.
The following table includes information about the stock repurchase program approved on May 1, 2012 for
the fiscal year ended January 3, 2016:
Maximum
Number
Total Number
(or Approximate
of Shares
Dollar Value)
Total
Average
Purchased as
of Shares that May
Number
Price
Part of Publically
Yet be Purchased
of Shares
Paid per
Announced Plans
Under the Plans
Period
Purchased
Share(1)
or Programs
or Programs
Month #1 (December 29, 2014 – January 25, 2015)
Month #2 (January 26, 2015 – February 22, 2015)
Month #3 (February 23, 2015 – March 29, 2015)
Month #4 (March 30, 2015 – April 26, 2015)
Month #5 (April 27, 2015 – May 24, 2015)
Month #6 (May 25, 2015 – June 28, 2015)
Month #7 (June 29, 2015 – July 26, 2015)
Month #8 (July 27, 2015 – August 23, 2015)
Month #9 (August 24, 2015 – September 27, 2015)
Month #10 (September 28, 2015 – October 25, 2015)
Month #11 (October 26, 2015– November 22, 2015)
Month #12 (November 23, 2015 – January 3, 2016)
(1)Excluding commissions.
---
---
118,210(2)
77,689(2)
---
---
30.67
26.26
---
---
118,210 (2)
77,689 (2)
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
195,899(3)
195,899(3)
77,689(3)
---(3)
---(3)
---(3)
---(3)
---(3)
---(3)
---(3)
---(3)
---(3)
(2)Shares purchased under the 1.0 million share publically announced repurchase plan adopted May 1, 2012.
(3)Reflects the maximum number of shares that may be purchased in the future under the publicly announced share repurchase plan adopted May 1, 2012.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data presented below should be read in conjunction with the consolidated financial
statements and notes included elsewhere in this Form 10-K, and in conjunction with “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” included elsewhere in this Form 10-K.
The selected financial data as of and for the fiscal years ended January 3, 2016 (fiscal 2015), December 28,
2014 (fiscal 2014), December 29, 2013 (fiscal 2013), December 30, 2012 (fiscal 2012), and January 1, 2012 (fiscal
2011) have been derived from our consolidated financial statements as audited by Grant Thornton LLP,
independent registered public accounting firm.
23
FINANCIAL HIGHLIGHTS
FISCAL YEAR
($’s in 000’s, except per share data and average weekly
sales)
STATEMENTS OF OPERATIONS DATA
Revenue
Asset impairment and estimated lease termination
and other closing costs(2)
Income from operations
Income tax expense
Net income from continuing operations
Net (loss) income from discontinued operations
Net (loss) income
Basic continuing net income per common share
Basic discontinued net (loss) income per common
share
Basic net (loss) income per common share
Diluted continuing net income per common share
Diluted discontinued net (loss) income per common
share
Diluted net (loss) income per common share
BALANCE SHEET DATA (at year end)
Cash and cash equivalents
Total assets
Long-term debt less current maturities
Total shareholders’ equity
OTHER DATA
Restaurant Sales:
Company-owned
Number of restaurants open at year end:
Company-owned restaurants
Franchise-operated restaurants
Total restaurants
Comparable Sales:
Company-owned comparable store
Sales (decrease) increase (3)
Average weekly sales: (4)
Company-owned restaurants
2015(1)
2014
2013
2012
2011
$114,226
$131,862
$137,282
$138,871
$139,061
($1,520)
$2,144
($48)
$1,079
($5,463)
($4,384)
$0.15
($0.78)
($0.63)
$0.15
($0.78)
($0.63)
$5,300
$57,825
$12,957
$22,061
($4,517)
$3,856
($732)
$2,255
$642
$2,897
$0.31
$0.09
$0.40
$0.31
$0.09
$0.40
$2,133
$66,677
$11,493
$31,802
($1,181)
$6,584
($1,697)
$3,949
$818
$4,767
$0.54
$0.11
$0.65
$0.52
$0.11
$0.62
$1,293
$75,337
$18,924
$32,791
($370)
$5,833
($751)
$4,062
$298
$4,360
$0.54
$0.04
$0.58
$0.53
$0.04
$0.57
($513)
$8,729
($2,591)
$5,095
$467
$5,562
$0.64
$0.06
$0.70
$0.62
$0.06
$0.68
$2,074
$76,253
$22,105
$33,767
$1,148
$73,839
$20,451
$34,094
$95,475
$113,522
$118,780
$119,613
$121,146
44
135
179
50
139
189
54
140
194
53
135
188
54
133
187
(9.3)%
(5.7)%
(0.7)%
(2.1)%
3.0%
$44,366
$47,202
$43,656
$36,053
$42,322
(1)Fiscal 2015 was 53 weeks. All other presented fiscal years consisted of 52 weeks.
(2)Fiscal 2015 reflects impairment charges for four refranchised restaurants and one closed restaurant, and lease costs for the closed Chicago field office
and a cancelled restaurant relocation. Fiscal 2014 reflects non-cash impairment charges for six Company-owned restaurants, two lease restructurings
charges at additional Company-owned restaurants and the décor warehouse, the write-off of décor due to a change in operating strategy and closing costs
associated with Company owned restaurants. Fiscal 2013 reflects non-cash impairment charges for one Company-owned restaurant, a lease restructuring
at another Company-owned restaurant, and residual closing costs for a restaurant relocated in 2013. Fiscal 2012 primarily reflects closing costs for three
Company-owned restaurants as well as a lease reserve for one of the closed restaurants. Fiscal 2011 primarily reflects impairment charges for three
Company-owned restaurants. One is still operating and two have closed.
(3)Our comparable store sales includes Company-owned restaurants that are open year round and have been open more than 24 months.
(4)The Supplemental Sales Information excludes the impact of the seven Chicago restaurants that were refranchised in the first quarter of 2016, with the
exception that the seven restaurants are included in the total number of Company-owned restaurants.
24
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements contained in this Annual Report on Form 10-K include “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements
are based on information currently available to us as of the date of this Annual Report, and we assume no
obligation to update any forward-looking statements except as otherwise required by applicable law. Forward-
looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual
results to differ materially from any future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors may include, among others, those factors listed in Item 1A of and
elsewhere in this Annual Report and our other filings with the Securities and Exchange Commission. The
following discussion should be read in conjunction with “Selected Financial Data” above (Item 6 of this Annual
Report) and our financial statements and related footnotes appearing elsewhere in this Annual Report.
OVERVIEW
Famous Dave's of America, Inc. was incorporated as a Minnesota corporation in March 1994 and opened its
first restaurant in Minneapolis in June 1995. As of January 3, 2016, there were 179 Famous Dave’s restaurants
operating in 33 states, the Commonwealth of Puerto Rico, and Canada, including 44 Company-owned restaurants
and 135 franchise-operated restaurants. An additional 58 franchise restaurants were committed to be developed
through signed area development agreements as of January 3, 2016.
Fiscal Year
Our fiscal year ends on the Sunday nearest December 31st of each year. Our fiscal year is generally 52
weeks; however it periodically consists of 53 weeks. The fiscal years ended January 3, 2016 (fiscal 2015),
consisted of 53 weeks while December 28, 2014 (fiscal 2014), and December 29, 2013 (fiscal 2013) consisted of
52 weeks. Fiscal 2016, which ends on January 1, 2017, will consist of 52 weeks.
Basis of Presentation – The financial results presented and discussed herein reflect our results and the
results of our wholly-owned and majority-owned consolidated subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation. Certain reclassifications have been made to prior year amounts
to conform to the current year’s presentation.
Application of Critical Accounting Policies and Estimates – The following discussion and analysis of the
Company’s financial condition and results of operations is based upon its financial statements, which have been
prepared in accordance with accounting principles generally accepted in the United States. The preparation of
these financial statements requires management to make estimates and judgments that affect the reported amount
of assets, liabilities and expenses, and related disclosures. On an on-going basis, management evaluates its
estimates and judgments. By their nature, these estimates and judgments are subject to an inherent degree of
uncertainty. Management bases its estimates and judgments on historical experience, observance of trends in the
industry, information provided by customers and other outside sources and on various other factors that are
believed to be reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions. Management believes the following critical
accounting policies reflect its more significant judgments and estimates used in the preparation of the Company’s
consolidated financial statements. Our Company’s significant accounting policies are described in (Note 1) to the
consolidated financial statements included herein.
We have discussed the development and selection of the following critical accounting estimates with the
Audit Committee of our Board of Directors and the Audit Committee has reviewed our disclosures relating to such
estimates in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Recognition of Franchise-Related Revenue – Initial franchise fee revenue is recognized when we have
25
performed substantially all of our obligations as franchisor. Franchise royalties are recognized when earned.
area
Our franchise-related revenue is comprised of three separate and distinct earnings processes:
development fees, initial franchise fees and continuing royalty payments. Currently, our area development fee for
domestic growth consists of a one-time, non-refundable payment of approximately $10,000 per restaurant in
consideration for the services we perform in preparation of executing each area development agreement. For our
foreign area development agreements the one time, non-refundable payment is negotiated on a per development
basis and is determined based on the costs incurred to sell that development agreement. Substantially all of these
services, which include, but are not limited to, a review of the potential franchisee’s current operations, conducting
market and trade area analysis, a meeting with Famous Dave’s Executive Team, and performing a potential
franchise background investigation, are completed prior to our execution of the area development agreement and
receipt of the corresponding area development fee. As a result, we recognize this fee in full upon receipt.
Currently, our initial, non-refundable, franchise fee for domestic growth is $45,000 per restaurant, of which
approximately $5,000 is recognized immediately when a franchise agreement is signed, reflecting expenses
incurred related to the sale. The remaining non-refundable fee is included in deferred franchise fees and is
recognized as revenue when we have performed substantially all of our obligations, which generally occurs upon
the franchise entering into a lease agreement for the restaurant(s). Finally, franchisees are also required to pay us a
monthly royalty equal to a percentage of their net sales, which has historically varied from 4% to 5%. In general,
new franchises pay us a monthly royalty of 5% of their net sales.
Asset Impairment and Estimated Lease Termination and Other Closing Costs – We evaluate restaurant
sites and long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of restaurant sites to be held and used is measured by a
comparison of the carrying amount of the restaurant site to the undiscounted future net cash flows expected to be
generated on a restaurant-by-restaurant basis. If a restaurant is determined to be impaired, the loss is measured by
the amount by which the carrying amount of the restaurant site exceeds its fair value. Fair value is estimated based
on the best information available including estimated future cash flows, expected growth rates in comparable
restaurant sales, remaining lease terms, discount rate and other factors. If these assumptions change in the future,
we may be required to take additional impairment charges for the related assets. Considerable management
judgment is necessary to estimate future cash flows. Accordingly, actual results could vary significantly from such
estimates. Restaurant sites that are operating, but have been previously impaired, are reported at the lower of their
carrying amount or fair value less estimated costs to sell.
Lease Accounting – We recognize lease expense for our operating leases over the entire lease term
including lease renewal options where the renewal is reasonably assured and the build-out period takes place prior
to the restaurant opening or lease commencement date. We account for construction allowances by recording a
receivable when its collectability is considered probable, depreciating the leasehold improvements over the lesser
of their useful lives or the full term of the lease, including renewal options and build-out periods, amortizing the
construction allowance as a credit to rent expense over the full term of the lease, including renewal options and
build-out periods, and relieving the receivable once the cash is obtained from the landlord for the construction
allowance. We record rent expense during the build-out period and classify this expense in pre-opening expenses in
our consolidated statements of operations.
Liquor licenses - The Company owns transferable liquor licenses in jurisdictions with a limited number of
authorized liquor licenses. These licenses were capitalized as indefinite-lived intangible assets and are included in
intangible assets, net in our consolidated Balance Sheets (see note 3 to our consolidated financial statements) at
January 3, 2016 and December 28, 2014. We annually review the liquor licenses for impairment and in fiscal 2015
and 2014 no impairment charges were required to be recorded. Additionally, the costs of obtaining non-
transferable liquor licenses that are directly issued by local government agencies for nominal fees are expensed as
incurred. Annual liquor license renewal fees are expensed over the renewal term.
Accounts receivable, net – We provide an allowance for uncollectible accounts on accounts receivable based
on historical losses and existing economic conditions, when relevant. We provide for a general bad debt reserve
for franchise receivables due to increases in days’ sales outstanding and deterioration in general economic market
conditions. This general reserve is based on the aging of receivables meeting specified criteria and is adjusted each
26
quarter based on past due receivable balances. Additionally, we have periodically established a specific reserve on
certain receivables as necessary. Any changes to the reserve are recorded in general and administrative expenses.
The allowance for uncollectible accounts was approximately $246,000 and $214,000, at January 3, 2016 and
December 28, 2014, respectively. In 2015, the increase in the allowance for doubtful accounts was primarily due
to the aging of receivables associated with certain franchisee groups. Accounts receivable balances written off have
not exceeded allowances provided. We believe all accounts receivable in excess of the allowance are fully
collectible. If accounts receivable in excess of provided allowances are determined uncollectible, they are charged
to expense in the period that determination is made. Outstanding past due accounts receivable are subject to a
monthly interest charge on unpaid balances which is recorded as interest income in our consolidated statements of
operations. In assessing recoverability of these receivables, we make judgments regarding the financial condition
of the franchisees based primarily on past and current payment trends, as well as other variables, including annual
financial information, which the franchisees are required to submit to us.
Stock-based compensation – We recognize compensation expense for share-based awards granted to team
members based on their fair values at the time of grant over the requisite service period. Additionally, our board
members receive share-based awards for their board service. Our pre-tax compensation expense for stock options
and other incentive awards is included in general and administrative expenses in our consolidated statements of
operations (see Note 9 to our financial statements).
Income Taxes – We provide for income taxes based on our estimate of federal and state income tax
liabilities. These estimates include, among other items, effective rates for state and local income taxes, allowable
tax credits for items such as taxes paid on reported tip income, estimates related to depreciation and amortization
expense allowable for tax purposes, and the tax deductibility of certain other items. Our estimates are based on the
information available to us at the time that we prepare the income tax provision. We generally file our annual
income tax returns several months after our fiscal year-end.
Income tax returns are subject to audit by federal,
state, and local governments, generally years after the tax returns are filed. These returns could be subject to
material adjustments or differing interpretations of the tax laws. Accounting for uncertain tax positions requires
significant judgment including estimating the amount, timing, and likelihood of ultimate settlement. Although the
Company believes that its estimates are reasonable, actual results could differ from these estimates. Additionally,
uncertain positions may be re-measured as warranted by changes in facts or law.
Results of Operations
Revenue – Our revenue consists of four components: Company-owned restaurant sales, franchise-related
revenue from royalties and franchise fees, licensing revenue from the retail sale of our sauces and rubs, and other
revenue from the opening assistance we provide to franchise partners. We record restaurant sales at the time food
and beverages are served. Our revenue recognition policies for franchising are discussed under “Recognition of
Franchise-Related Revenue” above. Our franchise-related revenue consists of area development fees, initial
franchise fees and continuing royalty payments. We record sales of merchandise items at the time items are
delivered to the customer.
We have a licensing agreement for our retail products, with renewal options of five years, subject to the
licensee’s attainment of identified minimum product sales levels. Based on achievement of the required minimum
product sales, the agreement will be in force until April 2020 at which time these levels will be re-evaluated.
Periodically, we provide additional services, beyond the general franchise agreement, to our franchise
operations, such as new restaurant training and décor installation services. The cost of these services is billed to
the respective franchisee, is recorded as other income when the service is provided, and is generally payable on net
30-day terms. Since 2010, the franchise agreements require a 50% deposit be paid in advance for these services.
Costs and Expenses – Restaurant costs and expenses include food and beverage costs, labor and benefits
costs, operating expenses which include occupancy costs, repair and maintenance costs, supplies, advertising and
promotion, and restaurant depreciation and amortization. Certain of these costs and expenses are variable and will
increase or decrease with sales volume. The primary fixed costs are corporate and restaurant management salaries
and occupancy costs. Our experience is that when a new restaurant opens, it incurs higher than normal levels of
27
labor and food costs until operations stabilize, usually during the first three to four months of operation. As
restaurant management and team members gain experience following a restaurant’s opening, labor scheduling,
food cost management and operating expense control typically improve to levels similar to those at our more
established restaurants.
General and Administrative Expenses – General and administrative expenses include all corporate and
administrative functions that provide an infrastructure to support existing operations and support future growth.
Salaries, including restaurant-level supervision, bonuses, team member benefits, legal fees, accounting fees,
consulting fees, travel, rent, and general insurance are major items in this category. Additionally, we record
expenses for Managers in Training (“MITs”) in this category for approximately six weeks prior to a restaurant
opening. We also provide franchise services, the revenue from which are included in other revenue and the
expenses of which are included in general and administrative expenses.
The following table presents items in our consolidated statements of operations as a percentage of total
revenue or net restaurant sales, as indicated, for the following fiscal years:(5)
Food and beverage costs(1)
Labor and benefits(1)
Operating expenses(1)(3)
Restaurant level cash flow margin(1)(4)
Depreciation & amortization (restaurant level)(1)
Asset impairment and estimated lease
termination and other closing costs(1)
Pre-opening expenses and net (gain) loss
on disposal of property(1)
Costs and expenses (restaurant level)(1)
Restaurant level margin(1)(3)
Depreciation & amortization (corporate level)(2)
General and administrative(2)
Total costs and expenses(2)
Income from operations(2)
2015
2014
2013
30.5%
34.1%
29.1%
6.3%
3.9%
1.6%
(2.4)%
96.8%
3.2%
0.7%
16.7%
98.1%
1.9%
29.5%
32.5%
27.8%
10.2%
3.9%
4.0%
0.4%
98.1%
1.9%
0.6%
12.1%
97.1%
2.9%
30.2%
32.3%
25.8%
11.7%
3.8%
1.0%
0.6%
93.7%
6.3%
0.5%
13.6%
95.2%
4.8%
(1)As a percentage of restaurant sales, net
(2)As a percentage of total revenue
(3)Restaurant level cash flow margin is equal to taking restaurant sales, net less restaurant level food and beverage costs, labor and
benefit costs, and operating expenses.
(4)Restaurant level margin is equal to restaurant level cash flow margins less restaurant level depreciation and amortization, asset
impairment and estimated lease termination and other closing costs, pre-opening expenses and net (gain) loss on disposal of property.
(5)Data regarding our restaurant operations as presented in this table includes sales, costs and expenses associated with our Rib Team,
which netted a loss of $7,000, and $54,000 respectively, in fiscal years 2014 and 2013. In fiscal 2015 we did not have any Rib Team
operations. Our Rib Team travels around the country introducing people to our brand of barbeque and building brand awareness.
Fiscal Year 2015 Compared to Fiscal Year 2014
Due to the strategic operational changes we initiated during fiscal year 2014 and continued throughout 2015,
we are continuing to evaluate and assess various aspects of our business that may impact our budgets and expected
financial performance for fiscal 2016. As a result, we believe that it is premature to provide any guidance for fiscal
2016 in this report and have elected not to do so. We will re-assess the advisability of providing guidance in the
future commencing with our quarterly report on Form 10-Q for the first fiscal quarter of 2016.
28
Total Revenue
Total revenue of approximately $114.2 million for fiscal 2015 decreased approximately $17.6 million, or
13.4%, from total revenue of $131.9 in fiscal 2014, reflecting the refranchising of five company-owned restaurants
and closure of four Company-owned restaurants as well as a comparable sales decline, partially offset by revenue
from the 53rd week of fiscal 2015. Fiscal 2015 consisted of 53 weeks while 2014 consisted of 52 weeks.
Restaurant Sales, net
Restaurant sales for fiscal 2015 were approximately $95.5 million, compared to approximately $113.5
million for fiscal 2014 reflecting a 15.9% decrease. Total restaurant sales reflected the refranchising of five
company-owned restaurants, closure of one company-owned restaurant during 2015, and the annualized impact of
three restaurants closed at the end of fiscal 2014. During fiscal 2015 there was 9.3% comparable sales decrease
which was, on a weighted basis, comprised of a 7.7% comparable sales decrease for dine-in sales, a 2.0%
comparable sales decrease for To Go and a 0.4% comparable sales increase for catering.
Franchise-Related Revenue
Franchise-related revenue consists of royalty revenue and franchise fees, which includes initial franchise
fees and area development fees. Franchise-related revenue was approximately $17.8 million for fiscal 2015 and
$17.4 million for fiscal 2014. The franchise-related revenue reflected three franchise-operated openings and five
company-owned restaurants that were refranchised during fiscal 2015 and the impact of the 53rd week. These
increases were partially offset by the closure of twelve franchise-operated restaurants in fiscal 2015 and a
comparable sales decline of 2.5%. Fiscal 2015 included 7,107 franchise operating weeks, compared to 7,244
franchise operating weeks in fiscal 2014. There were 135 franchise-operated restaurants open at January 3, 2016,
compared to 139 at December 28, 2014.
Licensing and Other Revenue
Licensing revenue includes royalties from a retail line of business, including sauces, rubs, marinades and
seasonings. Other revenue includes opening assistance and training we provide to our franchise partners.
Licensing royalty revenue was approximately $940,000 for fiscal 2015 as compared to $878,000 for fiscal 2014.
Other revenue for fiscal 2015 was approximately $14,000 compared to approximately $76,000 for fiscal
2014. The decrease was primarily due to a decrease in the number of franchise openings and level of assistance
provided to the franchisees year over year.
Same Store Net Sales (or Comparable Net Sales)
It is our policy to include in our same store net sales base, restaurants that are open year round and have been
open at least 24 months. Same store net sales for Company-owned restaurants open at least 24 months ended
January 3, 2016 decreased 9.3%, compared to fiscal 2014’s decrease of 5.7%. For fiscal 2015 and fiscal 2014,
there were 35 and 42 restaurants, respectively, included in the Company-owned 24 month comparable sales base.
Same store net sales on a 24 month basis for franchise-operated restaurants for fiscal 2015 decreased 2.5%,
compared to fiscal 2014’s comparable same store net sales that were down 2.5%. For fiscal 2015 and fiscal 2014,
there were 115 and 117 restaurants, respectively, included in the franchise-operated 24 month comparable sales
base.
Same store net sales for franchise-operated restaurants are not revenues of the Company and are not included
in the Company’s consolidated financial statements. The Company’s management believes that disclosure of
comparable restaurant net sales for franchise-operated restaurants provides useful information to investors because
historical performance and trends of Famous Dave’s franchisees relate directly to trends in franchise royalty
revenues that the Company receives from such franchisees and have an impact on the perceived success and value
of the Famous Dave’s brand. It also provides a comparison against which management and investors can whether
29
the extent to which Company-owned restaurant operations is realizing its revenue potential.
Average Weekly Net Sales and Operating Weeks
The following table shows Company-owned and franchise-operated average weekly net sales for fiscal 2015
and fiscal 2014:
Average Weekly Net Sales (AWS):
Company-Owned
Full-Service
Counter-Service
Franchise-Operated(1)
Fiscal Years Ended
January 3,
2016
December 28,
2014
$
$
$
$
42,661
43,330
37,896
50,202
$
$
$
$
46,836
47,784
39,034
51,059
(1) Same store net sales for franchise-operated restaurants are not revenues of the Company and are not included in the
Company’s consolidated financial statements. The Company’s management believes that disclosure of comparable
restaurant net sales for franchise-operated restaurants provides useful information to investors because historical
performance and trends of Famous Dave’s franchisees relate directly to trends in franchise royalty revenues that the
Company receives from such franchisees and have an impact on the perceived success and value of the Famous
Dave’s brand. It also provides a comparison against which management and investors can whether the extent to
which Company-owned restaurant operations is realizing its revenue potential.
Food and Beverage Costs
Food and beverage costs for fiscal 2015 were approximately $29.1 million or 30.5% of net restaurant sales
compared to approximately $33.5 million or 29.5% of net restaurant sales for fiscal 2014. This increase as a
percent of sales was the result of anticipated food contract inflation partially offset by a settlement of a class action
lawsuit.
Labor and Benefits Costs
Labor and benefits costs for fiscal 2015 were approximately $32.6 million or 34.1% of net restaurant sales,
compared to approximately $36.9 million or 32.5% of net restaurant sales for fiscal 2014. This increase was
primarily due to sales deleverage on fixed and management labor costs and in efficiencies in direct labor controls
as a result of the implementation of a new labor management system for part of fiscal 2015.
Operating Expenses
Operating expenses for fiscal 2015 were approximately $27.8 million or 29.1% of net restaurant sales,
compared to approximately $31.5 million or 27.8% of net restaurant sales for fiscal 2014. This increase was
primarily related to sales deleverage on fixed operating costs as well as a year over year increase in repairs and
maintenance.
In fiscal 2015, advertising, as a percentage of sales, was approximately 2.6%, compared to fiscal 2014’s
percentage at 2.7%. For 2015, the Marketing Fund contribution returned to 1.0% and was 0.75% in fiscal 2014.
Depreciation and Amortization
Depreciation and amortization expense for fiscal 2015 and 2014 was approximately $4.5 million and $5.2
million, respectively, and was 3.9% and 3.9%, respectively, of total revenue. The decline in total expense reflects
the reduction in total property, equipment and leasehold improvements due to the refranchising or closing of nine
restaurants during the current year.
30
General and Administrative Expenses
General and administrative expenses for fiscal 2015 were approximately $19.0 million or 16.7%
of total revenue compared to approximately $15.9 million or 12.1% of total revenue for fiscal 2014. Recurring
core general and administrative expenses have decreased year over year. However, these reductions were offset by
expenses incurred for professional and consulting fees related to brand development, legal fees, a reserve for
obsolete plate ware, and severance costs incurred for the closure of the Chicago office, compounded by revenue
deleverage.
Asset Impairment and Estimated Lease Termination and Other Closing Costs
Restaurant sites that are operating, but have been previously impaired, are reported at the lower of their
carrying amount or fair value less estimated costs to sell. Following is a summary of these events for fiscal 2015
and fiscal 2014:
Richmond, VA Area Restaurant Closures
On December 29, 2014, the Company announced the closure of its three underperforming company-owned
restaurants located in and around Richmond, Virginia. The associated impairment charges primarily related to the
write-off of the book value of the related property, plant and equipment, net of estimated proceeds from the sale of
these assets (primarily derived from the sale of real property). Loss before taxes associated with these operations
for the year ended December 28, 2014 totaled approximately $187,000.
On December 28, 2014 the remaining book value, were valued at the estimated proceeds from the sale and
were recorded as Assets held for sale in the Consolidated Balance Sheet. Two of these properties were sold during
the third quarter of fiscal 2015 and the first quarter of 2016, respectively. On January 3, 2016, the remaining
property’s fair value was reclassified to property, equipment and leasehold improvements, net because it is not
probable that the assets will not be sold in the next 12 months.
2015 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
Restaurants
Reason
Smithtown, NY
N. Riverside, IL
Richmond, VA area restaurants
N. Riverside, IL
Chicago, IL field office
Eden Prairie, MN
Other
Total for 2015
Asset impairment(1)
Lease termination costs(2)
Costs for closed locations
Site costs-restaurants not opened(3)
Lease termination costs(4)
Costs for closed restaurants
Costs for closed locations
Amount
$
$
935
368
143
122
106
(42)
(112)
1,520
(1)Asset impairment calculated at June 28, 2015 based upon anticipated sale of Smithtown restaurant, which occurred in the third quarter of
2015.
(2)Lease termination costs associated with the cancellation of a potential new restaurant location.
(3)Write-off of failed site preparation costs for two locations the Company decided not to open.
(4)Includes $191,000 in write-off for closed Lombard, Illinois field office site lease commitment partially offset by an $86,000 recapture of
deferred rent credits.
31
2014 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
Restaurants
Reason
Amount
Asset impairment(1)
Richmond, VA area restaurants
Asset impairment(1)
May's Landing, NJ
Two Minneapolis, MN area restaurants Asset impairment(1)
Asset impairment(2)
Décor
Asset impairment(1)
Des Moines, IA
Restaurant closing costs(3)
Salisbury, MD
Lease termination costs(4)
Décor Warehouse
Restaurant closing costs(5)
Richmond, VA area restaurants
Lease termination costs(6)
Salisbury, MD
Total for 2014
$
$
2,285
766
544
342
226
187
94
54
19
4,517
(1)Based on the Company's assessment of expected cash flows, an asset impairment charge was recorded for these restaurants. The remaining asset
balances are expected to be recovered through sale or transferred to other restaurants.
(2)Change in strategy regarding décor resulted in the impairment of the décor located in the Company's restaurants.
(3)Write-off of obsolete restaurant equipment.
(4)Lease termination costs associated with closure of the décor warehouse.
(5)Costs associated with anticipated future closures.
(6)Lease termination costs associated with closure of the restaurant, net of deferred rent credits.
Pre-opening Expenses
Pre-opening expenses consist of labor, food, utilities, training and rent costs incurred prior to the opening of
a restaurant. Included in pre-opening costs is pre-opening rent for approximately 16 weeks prior to opening but this
will vary based on lease terms. During fiscal 2015 and 2014, we had $1,000 and $7,000, respectively, of pre-
opening expenses which included pre-opening rent and other pre-opening expenses.
Interest Expense
Interest expense was approximately $1.0 million or 0.9% of total revenue for fiscal 2015, and $867,000 or
0.7% of total revenue for fiscal 2014. This year over year increase was the result of the write-off of deferred
financing costs related to the December credit facility amendment.
Interest Income
Interest income was approximately $11,000 for fiscal 2015 and $2,000 for fiscal 2014.
Interest income
reflects interest received on short-term cash and cash equivalent balances as well as on outstanding accounts
receivable balances.
Provision for Income Taxes
For fiscal 2015, our tax provision was approximately $48,000, or 4.3% of income before income taxes,
compared to the prior year comparable period of approximately $732,000, or 24.5% of income before income
taxes. Our effective tax rate for fiscal 2015 reflected year over year change in pre-tax income.
32
Income or loss from discontinued operations, net of taxes
For fiscal 2015, our loss from discontinued operations totaled approximately $5.5 million, reflecting a
$2,000 operating loss combined with an $8.8 million asset impairment charge, offset by a $3.3 million tax benefit.
This compares to income of $642,000 from discontinued operations in 2014 reflecting operating income of $1.0
million offset by $367,000 of income tax expense.
Basic and Diluted Net Income Per Common Share
Net income for fiscal 2015 was approximately $1.1 million, or $0.15 per basic share and $0.15 per diluted
share, on approximately 6,992,000 weighted average basic shares outstanding and approximately 7,013,000
weighted average diluted shares outstanding, respectively. Net income for fiscal 2014 was approximately $2.3
million, or $0.31 per basic share and $0.31 per diluted share, on approximately 7,199,000 weighted average basic
shares outstanding and approximately 7,226,000 weighted average diluted shares outstanding, respectively.
Fiscal Year 2014 Compared to Fiscal Year 2013
Total Revenue
Total revenue of approximately $131.9 million for fiscal 2014 decreased approximately $5.4 million, or
3.9%, from total revenue of $137.3 million in fiscal 2013. Fiscal 2014 and 2013 both consisted of 52 weeks.
Restaurant Sales, net
Restaurant sales for fiscal 2014 were approximately $113.5 million, compared to approximately $118.8
million for fiscal 2013 reflecting a 4.5% decrease. Total restaurant sales reflected a 5.3% comparable sales
decrease partially offset by the full year effect of a weighted average price increase of approximately 2.5% during
fiscal 2013. This comparable sales decrease was, on a weighted basis, comprised of a 4.7% comparable sales
decrease for dine-in sales, a 0.3% comparable sales decrease for catering, and a 0.3% decrease for To Go.
Franchise-Related Revenue
Franchise-related revenue consists of royalty revenue and franchise fees, which includes initial franchise fees
and area development fees. Franchise-related revenue was approximately $17.4 million in both fiscal 2014 and in
fiscal 2013. The franchise-related revenue reflected the five franchise-operated openings fiscal 2014 and the
annualized impact of eight franchise-operated restaurants opened in 2014, a comparable sales decline of 2.5% and a
year over year decline in franchise fees. Fiscal 2014 included 7,244 franchise operating weeks, compared to 6,971
franchise operating weeks in fiscal 2013. There were 139 franchise-operated restaurants open at December 28,
2014, compared to 140 at December 29, 2013.
Licensing and Other Revenue
Licensing revenue includes royalties from a retail line of business, including sauces, rubs, marinades and
seasonings. Other revenue includes opening assistance and training we provide to our franchise partners.
Licensing royalty revenue was approximately $878,000 for fiscal 2014 as compared to $805,000 for fiscal 2013.
Other revenue for fiscal 2014 was approximately $76,000 compared to approximately $311,000 for the
comparable period of fiscal 2013. The decrease was primarily due to a decrease in the number of franchise
openings year over year and a corresponding decrease in the opening assistance required.
Same Store Net Sales
It is our policy to include in our same store net sales base, restaurants that are open year round and have been
open at least 24 months. Same store net sales for Company-owned restaurants open at least 24 months ended
33
December 28, 2014 decreased 5.7%, compared to fiscal 2013’s decrease of 0.7%. For fiscal 2014 and fiscal 2013,
there were 42 and 43 restaurants, respectively, included in the Company-owned 24 month comparable sales base.
Same store net sales on a 24 month basis for franchise-operated restaurants for fiscal 2014 decreased 2.5%,
compared to fiscal 2013’s comparable same store net sales which were down 2.9%. For fiscal 2014 and fiscal
2013, there were 117 and 114 restaurants, respectively, included in the franchise-operated 24 month comparable
sales base.
Same store net sales for franchise-operated restaurants are not revenues of the Company and are not included
in the Company’s consolidated financial statements. The Company’s management believes that disclosure of
comparable restaurant net sales for franchise-operated restaurants provides useful information to investors because
historical performance and trends of Famous Dave’s franchisees relate directly to trends in franchise royalty
revenues that the Company receives from such franchisees and have an impact on the perceived success and value
of the Famous Dave’s brand. It also provides a comparison against which management and investors can whether
the extent to which Company-owned restaurant operations is realizing its revenue potential.
Average Weekly Net Sales and Operating Weeks
The following table shows Company-owned and franchise-operated average weekly net sales for fiscal 2014
and fiscal 2013:
Average Weekly Net Sales (AWS):
Company-Owned
Full-Service
Counter-Service
Franchise-Operated(1)
Fiscal Years Ended
December 28,
2014
December 29,
2013
$
$
$
$
46,836
47,784
39,034
51,059
$
$
$
$
49,158
50,338
39,455
52,136
(1) Same store net sales for franchise-operated restaurants are not revenues of the Company and are not included in the
Company’s consolidated financial statements. The Company’s management believes that disclosure of comparable restaurant
net sales for franchise-operated restaurants provides useful information to investors because historical performance and trends
of Famous Dave’s franchisees relate directly to trends in franchise royalty revenues that the Company receives from such
franchisees and have an impact on the perceived success and value of the Famous Dave’s brand. It also provides a comparison
against which management and investors can whether the extent to which Company-owned restaurant operations is realizing
its revenue potential.
Food and Beverage Costs
Food and beverage costs for fiscal 2014 were approximately $33.5 million or 29.5% of net restaurant sales
compared to approximately $35.9 million or 30.2% of net restaurant sales for fiscal 2013. This decrease is due to a
reduction in discounting and the full year effect of more favorable pricing on some of our food contracts.
Labor and Benefits Costs
Labor and benefits costs for fiscal 2014 were approximately $36.9 million or 32.5% of net restaurant sales,
compared to approximately $38.4 million or 32.3% of net restaurant sales for fiscal 2013. This slight increase as a
percent of sales was primarily due to sales deleverage of fixed and management labor costs.
Operating Expenses
Operating expenses for fiscal 2014 were approximately $31.5 million or 27.8% of net restaurant sales,
compared to approximately $30.6 million or 25.8% of net restaurant sales for fiscal 2013. This increase was
primarily related to sales deleverage on fixed operating costs as well as charges incurred for our optimized menu,
higher repairs and maintenance, and other operating costs. These increases were partially offset by lower supply
34
costs.
In fiscal 2014, advertising, as a percentage of sales, was approximately 2.6% compared to fiscal 2013’s
percentage at 2.4%. The Company decreased the Marketing Fund contribution system-wide to 0.75% for fiscal
2014 and 2013.
Depreciation and Amortization
Depreciation and amortization expense for fiscal 2014 and 2013 was approximately $5.2 million and $5.3
million, respectively, and was 3.9% and 3.8%, respectively, of total revenue reflecting prior years capital
expenditures and revenue deleverage partially offset by slightly lower fiscal 2013 capital expenditures.
General and Administrative Expenses
General and administrative expenses for fiscal 2014 were approximately $15.9 million or 12.1% of total
revenue compared to approximately $18.7 million or 13.6% of total revenue for fiscal 2013. The decrease year
over year primarily reflects the results of executive and employee departures during 2014 partially offset by the
impact of revenue deleverage.
Asset Impairment and Estimated Lease Termination and Other Closing Costs
Restaurant sites that are operating, but have been previously impaired, are reported at the lower of their
carrying amount or fair value less estimated costs to sell. Here is a summary of these events for fiscal 2014 and
fiscal 2013:
2014 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
Restaurants
Reason
Amount
Richmond, VA area restaurants
Asset impairment(1)
Asset impairment(1)
May's Landing, NJ
Two Minneapolis, MN area restaurants Asset impairment(1)
Asset impairment(2)
Décor
Asset impairment(1)
Des Moines, IA
Restaurant closing costs(3)
Salisbury, MD
Lease termination costs(4)
Décor Warehouse
Richmond, VA area restaurants
Restaurant closing costs(5)
Salisbury, MD
Lease termination costs(6)
Total for 2014
$
$
2,285
766
544
342
226
187
94
54
19
4,517
(1)Based on the Company's assessment of expected cash flows, an asset impairment charge was recorded for these restaurants. The remaining asset
balances are expected to be recovered through sale or transferred to other restaurants.
(2)Change in strategy regarding décor resulted in the impairment of the décor located in the Company's restaurants.
(3)Write-off of obsolete restaurant equipment.
(4)Lease termination costs associated with closure of the décor warehouse.
(5)Costs associated with anticipated future closures.
(6)Lease termination costs associated with closure of the restaurant, net of deferred rent credits.
35
2013 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
Restaurants
Reason
Salisbury, MD
Oakton, VA
Gaithersburg, MD
Total for 2013
Asset impairment(1)
Lease termination fee(2)
Costs for closed restaurants(3)
Amount
943
200
38
1,181
$
$
(1)Based on the Company's assessment of expected cash flows, an asset impairment charge was recorded for this restaurant. The remaining balance
can be transferred to other restaurants.
(2)Lease costs associated with terminating, and then entering into a new lease for this restaurant.
(3)The Company incurred various costs for this restaurant which closed at the end of its natural lease term.
Pre-opening Expenses
Pre-opening expenses consist of labor, food, utilities, training and rent costs incurred prior to the opening of
a restaurant.
Included in pre-opening costs is pre-opening rent for approximately 16 weeks prior to opening but
this will vary based on lease terms. During fiscal 2014 and 2013, we had $7,000 and $646,000, respectively, of
pre-opening expenses which included pre-opening rent and other pre-opening expenses.
Interest Expense
Interest expense was approximately $867,000 or 0.7% of total revenue for fiscal 2014 and $965,000 or 0.7%
of total revenue for fiscal 2013. Interest expense was slightly favorable compared to fiscal 2013 primarily due to
lower balances on our line of credit, term loan and financing lease obligations.
Interest Income
Interest income was approximately $2,000 for fiscal 2014 and $7,000 for fiscal 2013, respectively. Interest
income reflects interest received on short-term cash and cash equivalent balances as well as on outstanding notes
receivable and accounts receivable balances.
Provision for Income Taxes
For fiscal 2014, our tax provision was approximately $732,000, or 24.5% of income before income taxes,
compared to the fiscal 2013 tax provision of approximately $1.7 million, or 30.0% of income before income taxes.
Our effective tax rate for fiscal 2014 reflected year over year change in pre-tax income.
Income or loss from discontinued operations, net of taxes
For fiscal 2014, our income from discontinued operations totaled approximately $642,000 consisting of
operating income of $1.0 million from the discontinued operations offset by $367,000 of income tax expense.
Fiscal 2013’s income from discontinued operations totaled $818,000 consisting of operating income of $1.5
million from discontinued operations offset by $313,000 of income tax expense.
Basic and Diluted Net Income Per Common Share
Net income for fiscal 2014 was approximately $2.3 million, or $0.31 per basic share and $0.31 per diluted
share, on approximately 7,199,000 weighted average basic shares outstanding and approximately 7,226,000
weighted average diluted shares outstanding, respectively. Net income for fiscal 2013 was approximately $3.6
million, or $0.49 per basic share and $0.47 per diluted share, on approximately 7,367,000 weighted average basic
36
shares outstanding and approximately 7,648,000 weighted average diluted shares outstanding, respectively.
Financial Condition, Liquidity and Capital Resources
As of January 3, 2016, our Company held cash and cash equivalents of approximately $5.3 million
compared to approximately $2.1 million as of December 28, 2014. Our cash balance primarily reflects net cash
flows from operations of $2.0 million, $7.5 million generated from the sales of restaurant assets and décor, and a
net borrowing of $3.3 million on the line of credit partially offset by $5.7 million for the repurchase of common
stock, including commissions, and the purchases of property, equipment, and leasehold improvements for
approximately $3.2 million.
Our current ratio, which measures our immediate short-term liquidity, was 1.18 at January 3, 2016,
compared to 1.55 at December 28, 2014. The current ratio is computed by dividing total current assets by total
current liabilities. The change in our current ratio was primarily due to the inclusion of $2.2 million of assets held
for sale within current assets, comprising the fair value of the property and equipment at one Richmond restaurant
closed at the end of the fourth quarter of 2014, sold in the first quarter of 2016, and the fair value of discontinued
operations that were sold during the first quarter of 2016. Additionally, there was a year over year increase in the
restricted cash, accounts receivable due to the 53rd week in 2016, and a year over year decline in accrued
compensation and benefits. These increases in working capital were partially offset by an increase in the current
portion of long-term debt. As is true with most restaurant companies, we often operate in a negative working
capital environment because we receive cash up front from customers and then pay our vendors on a delayed basis.
Net cash provided by operations for each of the last three fiscal years was approximately $1.9 million in
fiscal 2015, $11.1 million in fiscal 2014, and $13.6 million in fiscal 2013. Cash generated in fiscal 2015 was
primarily from net income of approximately $1.1 million, depreciation and amortization of approximately $4.5
million, asset impairment, lease reserve and closing costs of $1.5 million. These net increases were partially offset
by a $2.3 million gain on the disposal of property, decrease in accrued compensation and benefits of $2.2 million,
and an increase in accounts receivable of $1.2 million.
Cash generated in fiscal 2014 was primarily from net income of approximately $2.3 million, depreciation
and amortization of approximately $5.2 million, asset impairment, lease reserve and closing costs of $4.5 million,
and a $1.2 million increase in other liabilities. These net increases were partially offset by a decrease in accrued
compensation and benefits of $1.2 million, a tax benefit for equity awards issued of $1.2 million, and a decrease in
accounts payable of $866,000.
Cash outflows in fiscal 2013 were primarily from a net paydown of $2.2 million on our line of credit, the use
of approximately $6.8 million for the repurchase of common stock, including commissions, and the purchases of
property, equipment, and leasehold improvements for approximately $6.4 million. These net decreases in cash
were partially offset by depreciation and amortization of approximately $5.3 million, net income of approximately
$3.6 million, an increase in accounts payable of approximately $2.3 million, stock-based compensation of $1.5
million, and an increase in deferred rent of approximately $1.1 million.
Net cash provided by investing activities for fiscal 2015 was approximately $4.3 million. Net cash used for
In
investing activities for fiscal 2014 and 2013 was approximately $1.5 million, and $6.7 million, respectively.
fiscal 2015 we generated $7.5 million from the refranchising of five company-owned restaurants and the sale of
In fiscal 2014 we used approximately $1.4 million for capital
real estate for two previously closed restaurants.
expenditures for remodeling projects and various corporate infrastructure projects.
In fiscal 2013, we used
approximately $6.4 million for capital expenditures for the construction of two new Company-owned restaurants,
continued investments in our existing restaurants, and various corporate infrastructure projects. Additionally, we
purchased a liquor license for a new location for $229,000.
Net cash used for financing activities was approximately $3.1 million in fiscal 2015, $9.0 million in fiscal
2014, and $9.6 million in fiscal 2013. In fiscal 2015, we had draws on our line of credit of approximately $27.7
million and had repayments of approximately $24.4 million. The maximum balance on our line of credit during
fiscal 2015 was $17.7 million. Additionally, we used approximately $5.7 million to repurchase approximately
37
195,899 shares of our common stock at an average price of $28.92 per share, including commissions.
In fiscal
2014, we had draws on our line of credit of approximately $22.4 million and had repayments of approximately
$28.8 million. The maximum balance on our line of credit during fiscal 2014 was $14.9 million. Additionally, we
used approximately $2.7 million to repurchase approximately 101,000 shares of our common stock at an average
price of $25.72 per share, including commissions.
In fiscal 2013 we had draws on our line of credit of
approximately $23.9 million and repayments of approximately $26.1 million. The maximum balance on our line
of credit during fiscal 2013 was $16.0 million. Additionally, we used approximately $6.8 million to repurchase
approximately 379,000 shares of our common stock at an average price of $18.22 per share,
including
commissions.
On December 11, 2015, the Company and certain of its subsidiaries (collectively known as the “Borrower”)
entered into its First Amendment to the Third Amended and Restated Credit Agreement (the “Credit Agreement”),
which amended and restated the Company’s Third Amended and Restated Credit Agreement (the “Third Credit
Agreement”) with Wells Fargo Bank, National Association as administrative agent and lender (the “Lender”). The
Credit Agreement will expire on December 31, 2018 and contains a $3.0 million revolving credit facility (the
“Facility”) with a $2.0 million letter of credit sublimit, and a term loan with a maximum balance of $12.0 million
(the “Term Loan”). See “Long-Term Debt” under Note 7 of our Consolidated Financial Statements included in
this Annual Report on Form 10-K.
Principal amounts outstanding under the Facility bear interest at either an adjusted Eurodollar rate plus an
applicable margin or at a Base Rate plus an applicable margin. The Base Rate is defined in the Credit Agreement
as the greater of the Federal Funds Rate plus 1.5% or the Wells Fargo Prime rate. The applicable margin is
initially 3.25% for Eurodollar Rate Loans, 1.75% for Base Rate Loans and 0.50% for Commitment Fees, and will
thereafter be adjusted based upon the Adjusted Leverage Ratio. The applicable margin will depend on the
Company’s Adjusted Leverage Ratio, as defined, at the end of the previous quarter and will range from 2.25% to
3.25% for Eurodollar Rate Loans and from 0.75% to 1.75% for Base Rate Loans. Unused portions of the Facility
will be subject to an unused Facility fee which will be equal to either 0.375% or 0.500% of the unused portion,
depending on the Company’s Adjusted Leverage Ratio. Our rate for the unused portion of the Facility as of
January 3, 2016, was 0.375%. Our current weighted average interest rate for the fiscal years ended January 3, 2016
and December 28, 2014 was 2.66% and 2.72%, respectively.
The Facility contains customary affirmative and negative covenants for credit facilities of this type,
including limitations on the Borrower with respect to indebtedness, liens, investments, distributions, mergers and
acquisitions, dispositions of assets and transactions with affiliates of the Borrower, among others. The Facility also
includes various financial covenants that have maximum target capital expenditures, cash flow ratios, minimum
EBITDA ratios and adjusted leverage ratios.
The Credit Agreement currently provides for up to $2.0 million in letters of credit to be used by the
Company, with any amounts outstanding reducing our availability for general corporate purchases, and also allows
for the termination of the Facility by the Borrower without penalty at any time. At January 3, 2016 we had no
borrowings under this Facility, $12.0 million of outstanding principal under the Term Loan, and approximately
$1.1 million in letters of credit for real estate locations. As of January 3, 2016, we were in compliance with all of
our covenants. The Company was also generally prohibited from making any Restricted Payment (as defined in
the Credit Agreement) and from making any Growth Capital Expenditures (as defined in the Credit Agreement) in
the fiscal quarter ending December 31, 2015 and, for the subsequent quarters, is prohibited from making Growth
Capital Expenditures costing in excess of $2 million in the aggregate during any fiscal year.
Under the terms of the Amendment, the Company is required to pay $150,000 each month commencing after
the First Amendment Effective Date as a principal reduction of the term loans and are required to make mandatory
principal prepayments in an amount equal to specified percentages of the net cash proceeds of Dispositions (as
defined in the First Amendment) based upon the Adjusted Leverage Ratio. These mandatory principal prepayments
will be applied first to the term loans and second to any revolving loans then outstanding.
If the bank were to call the Facility prior to expiration, the Company believes there are multiple options
available to obtain other sources of financing. Although possibly at different terms, the Company believes there
38
would be other lenders available and willing to finance a new credit facility. However, if replacement financing
were unavailable to us, termination of the Facility without adequate replacement would have a material and
adverse impact on our ability to continue our business operations.
We expect to use any borrowings under the Credit Agreement for general working capital purchases as
needed. Under the Facility, the Borrower has granted the Lender a security interest in all current and future
personal property of the Borrower.
Contractual Obligations
(In thousands)
Payments Due by Period (including interest)
Long Term Debt(1)
$
Financing Leases
Operating Lease
Obligations
Total
Total
2016
2017
2018
2019
2020
Thereafter
12,756
$
2,104
$
2,051
$
8,601
$
--- $
3,925
680
700
707
1,838 (2)
$
---
---
---
---
123,246
5,530
5,731
5,937
6,034
6,126
$
139,927
$
8,314
$
8,482
$
15,245
$
7,872 $
6,126
$
93,888
93,888
(1)This is variable interest rate debt and the interest expense assumption was based on projected interest rates averaging 2.72%
over the term of the loan at January 3, 2016.
(2)Includes $1.7 million of land to be conveyed at the end of the lease term.
See Notes 7 and 8 to our Consolidated Financial Statements included in this Annual Report on Form 10-K
for details of our contractual obligations.
Off-Balance Sheet Arrangements
Our Company does not have any off-balance sheet arrangements (as such term is defined in Item 303 of
regulation S-K) that are reasonably likely to have a current or future effect on our financial condition or changes in
financial condition, operating results, or liquidity.
Income Taxes
In 2015, we had cumulative state net operating loss carry-forwards for tax reporting purposes of
approximately $38.8 million which if not used, will begin to expire in fiscal 2018. This amount may be adjusted
when we file our fiscal 2015 income tax returns in 2016.
Recent Accounting Guidance
Recently adopted accounting guidance
In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) No. 2014-08, “Presentation of Financial Statements and Property, Plant, and Equipment: Reporting
Discontinued Operations and Disclosures of Disposals of Components of an Entity.” This ASU changes the
requirements for reporting discontinued operations in Accounting Standard Codification Subtopic 205-20, and
requires a disposal of a component of an entity or a group of components of an entity to be reported in discontinued
operations only if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s
operations and financial results. There are also additional disclosures required. The amendments in this ASU are
effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December
15, 2014, with early adoption permitted. We have chosen early adoption of this standard, effective for fiscal year
39
2014. This had no material impact on fiscal year 2014 income from continuing operations or net income and no
impact on fiscal year 2014 earnings per share.
Recent accounting guidance not yet adopted
In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers.” The
amendments in ASU 2014-9 provide for a single, principles-based model for revenue recognition that replaces the
existing revenue recognition guidance.
In July 2015, the FASB deferred the effective date of ASU 2014-9 until
annual and interim periods beginning on or after December 15, 2017. It will replace most existing revenue
recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or
cumulative effect transition method and early adoption is not permitted. We have not yet selected a transition
method and are in the process of evaluating the effect this standard will have on our consolidated financial
statements and related disclosures.
In January 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-01, “Income
Statement—Extraordinary and Unusual Items.” This update eliminates from GAAP the concept of extraordinary
items. ASU 2015-01 is effective for the first interim period within fiscal years beginning after December 15, 2015,
with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of
adoption. A reporting entity may apply the amendments prospectively or retrospectively to all prior periods
presented in the financial statements. The Company believes the adoption of this ASU will not have a material
impact on its consolidated financial statements.
In April 2015, the FASB issued guidance on the financial statement presentation of debt issuance costs.
This guidance requires debt issuance costs to be presented in the balance sheet as a reduction of the related debt
liability rather than as an asset. The standard will become effective for annual periods beginning after December
15, 2015 and for interim periods beginning after December 15, 2016. Early adoption is permitted. The standard
requires companies to apply the guidance retrospectively to all prior periods. The Company does not expect the
adoption of this guidance to have a material impact on its combined and consolidated financial statements of
operations.
In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred
Taxes, which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified
balance sheet. The ASU is effective for annual periods beginning after December 15, 2017, and interim periods
within annual periods beginning after December 15, 2018. Early adoption is permitted for all entities. The
Company is currently evaluating the impact of this new standard on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing
guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize a lease liability and
a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments in this ASU are
effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early
adoption is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases
existing at, or entered into after the date of initial adoption, with an option to elect to use certain transition relief.
The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
Inflation
The primary inflationary factors affecting our operations include food, beverage, and labor costs. In addition,
our leases require us to pay taxes, maintenance, repairs and utilities and these costs are subject to inflationary
increases. In some cases, some of our lease commitments are tied to consumer price index (CPI) increases. We are
also subject to interest rate changes based on market conditions.
We believe that increasing inflation rates have contributed to some price instability. There is no assurance,
however, that inflation rates will continue at their current levels or decrease.
40
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our Company’s financial instruments include cash and cash equivalents and long-term debt. Our Company
includes as unrestricted cash and cash equivalents, investments with original maturities of three months or less
when purchased and that are readily convertible into known amounts of cash. Our Company’s unrestricted cash
and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments.
We have no derivative financial instruments or derivative commodity instruments in our cash and cash equivalents.
The total outstanding long-term debt of all our Company as of January 3, 2016 was approximately $15.1 million,
including our line of credit, our term loan with Wells Fargo and financing lease obligations. The terms of our
credit facility with Wells Fargo Bank, National Association, as administrative agent and lender are discussed above
under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial
Condition, Liquidity and Capital Resources.”
Some of the food products purchased by us are affected by commodity pricing and are, therefore, subject to
price volatility caused by weather, production problems, delivery difficulties and other factors that are outside our
control. To control this risk in part, we have fixed-price purchase commitments for food from vendors.
In
addition, we believe that substantially all of our food is available from several sources, which helps to manage food
commodity risks. We now have secondary, and in some cases tertiary, source suppliers for key items in order to
protect the supply chain and to ensure a competitive pricing environment. We believe we have some ability to
increase menu prices, or vary the menu options offered, if needed, in response to a food product price increase.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of Famous Dave’s of America, Inc. are included herein, beginning
on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is
defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of the end
of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that as of such date our disclosure controls and procedures were effective.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended). Our
management assessed the effectiveness of our internal control over financial reporting as of January 3, 2016. In
making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) in the 2013 Internal Control-Integrated Framework. Our management has
concluded that, as of January 3, 2016, our internal control over financial reporting is effective based on these
criteria.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that
our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control system must reflect the fact that there are
41
resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within Famous Dave's of America have been detected.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting during our most recently-completed
fiscal quarter ended January 3, 2016 that have materially affected or are reasonably likely to materially affect our
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
42
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE
REGISTRANT
Information in response to this Item is incorporated herein by reference to our definitive proxy statement to
be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this form 10-K.
The Company has adopted a Code of Ethics specifically applicable to its CEO, CFO and Key Financial &
Accounting Management. In addition, there is a more general Code of Ethics applicable to all team members. The
Code of Ethics is available on our website at www.famousdaves.com and a copy is available free of charge to
anyone requesting it.
ITEM 11. EXECUTIVE COMPENSATION
Information in response to this Item is incorporated herein by reference to our definitive proxy statement to
be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
Securities Authorized for Issuance under Equity Compensation Plans
Effective May 5, 2015, we adopted a 2015 Equity Plan (the “2015 Plan”), pursuant to which we may grant
stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance
stock units and other stock and cash awards to eligible participants. We also maintain an Amended and Restated
2005 Stock Incentive Plan (the “2005 Plan”). The 2005 Plan prohibits the granting of incentives after May 12,
2015, the tenth anniversary of the date such Plan was approved by the Company’s shareholders. Nonetheless, the
2005 Stock Incentive Plan will remain in effect until all outstanding incentives granted thereunder have either been
satisfied or terminated. Together, the 2015 Plan and 2005 Plan are referred to herein as the “Plans.” Under the
2015 Plan, an aggregate of 330,926 shares of our Company’s common stock remained unreserved and available for
issuance at January 3, 2016.
The purpose of the 2015 Plan is to increase shareholder value and to advance the interests of the Company
by furnishing a variety of economic incentives designed to attract, retain and motivate team members (including
officers), certain key consultants and directors of the Company. The 2015 Plan and the 2005 plan have each been
approved by the Company’s shareholders. The following table sets forth certain information as of January 3, 2016
with respect to the 2005 Plan and the 2015 Plan.
Plan Category
Equity compensation plans approved
by shareholders:
2005 Stock Incentive Plan
2015 Stock Incentive Plan
TOTAL
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options
Warrants and Rights
(A)
Weighted-
Average
Exercise Price
of Outstanding
Options,
Warrants and
Rights
(B)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (A))
(C)
117,250
369,074
486,324
$
$
$
31.25
11.88
15.94
---
330,926
330,926
43
Additional information in response to this Item is incorporated herein by reference to our definitive proxy
statement to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this
form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
Information in response to this Item is incorporated herein by reference to our definitive proxy statement to be
filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this form 10-K.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information in response to this Item is incorporated herein by reference to our definitive proxy statement to be
filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this form 10-K.
44
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Documents filed as part of this Form 10-K:
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets – January 3, 2016 and December 28, 2014
Consolidated Statements of Operations – Years ended January 3, 2016, December 28, 2014 and
December 29, 2013
Consolidated Statements of Shareholders’ Equity – Years ended January 3, 2016, December 28,
2014 and December 29, 2013
Consolidated Statements of Cash Flows – Years ended January 3, 2016, December 28, 2014 and
December 29, 2013
Notes to Consolidated Financial Statements
Financial Statement Schedule:
Schedule II. Schedule of Valuation and Qualifying Accounts
Exhibits:
See "exhibit index" on the page following the consolidated financial statements and related
footnotes and the signature page to this Form 10-K
45
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
Famous Dave’s of America, Inc.
We have audited the accompanying consolidated balance sheets of Famous Dave’s of America, Inc. (a Minnesota
corporation) and subsidiaries (the “Company”) as of January 3, 2016 and December 28, 2014, and the related
consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period
ended January 3, 2016. Our audits of the basic consolidated financial statements included the financial statement
schedule listed in the index appearing under Item 15. These financial statements and financial statement schedule are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements
and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s
internal control over financial reporting. Our audits included consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Famous Dave’s of America, Inc. and subsidiaries as of January 3, 2016 and December 28, 2014, and the
results of their operations and their cash flows for each of the three years in the period ended January 3, 2016 in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the
related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth therein.
/s/ Grant Thornton LLP
Minneapolis, Minnesota
March 18, 2016
F-1
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 3, 2016 AND DECEMBER 28, 2014
(in thousands, except per share data)
ASSETS
January 3,
2016
December 28,
2014
Current assets:
Cash and cash equivalents
Restricted cash
Accounts receivable, net
Inventories
Deferred tax asset
Prepaid expenses and other current assets
Assets held for sale
Total current assets
Property, equipment and leasehold improvements, net
Other assets:
Intangible assets, net
Deferred tax asset
Other assets
$
$
5,300
1,087
4,677
2,070
181
1,671
2,211
17,197
32,491
2,902
4,411
824
57,825
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and financing lease obligations
Accounts payable
Accrued compensation and benefits
Deferred tax liability
Other current liabilities
Liabilities held for sale
Total current liabilities
Long-term liabilities:
Line of credit
Long-term debt, less current portion
Financing lease obligations, less current portion
Other liabilities
Total liabilities
Shareholders’ equity:
Common stock, $.01 par value, 100,000 shares authorized,
6,958 and 7,137 shares issued and outstanding
at January 3, 2016 and December 28, 2014 respectively
Retained earnings
Total shareholders’ equity
$
$
See accompanying notes to consolidated financial statements.
F-2
$
$
$
2,193
5,685
1,390
101
3,406
1,747
14,522
---
10,200
2,757
8,285
35,764
66
21,995
22,061
57,825
$
2,133
648
3,512
2,257
1
1,964
13,203
23,718
39,352
2,949
336
322
66,677
1,031
5,648
3,202
131
3,548
1,780
15,340
5,000
3,343
3,150
8,042
34,875
68
31,734
31,802
66,677
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED
JANUARY 3, 2016, DECEMBER 28, 2014, AND DECEMBER 29, 2013
(in thousands, except per share data)
Revenue:
Restaurant sales, net
Franchise royalty revenue
Franchise fee revenue
Licensing and other revenue
Total revenue
Costs and expenses:
Food and beverage costs
Labor and benefits costs
Operating expenses
Depreciation and amortization
General and administrative expenses
Asset impairment and estimated lease
termination and other closing costs
Pre-opening expenses
Net (gain) loss on disposal of property
Total costs and expenses
Income from operations
Other expense:
Interest expense
Interest income
Other income (expense), net
Total other expense
Income before income taxes
Income tax expense
Net income from continuing operations
Net (loss) income from discontinued operations, net of taxes
Net (loss) income
Income (loss) income per common share:
Basic net income from continuing operations
Basic net (loss) income from discontinued operations
Basic net (loss) income
Diluted net income from continuing operations
Diluted net (loss) income from discontinued operations
Diluted net (loss) income
Weighted average common shares outstanding - basic
Weighted average common shares outstanding - diluted
January 3,
2016
December 28,
2014
December 29,
2013
$
$
$
$
$
$
$
$
95,475
17,542
255
954
114,226
29,093
32,553
27,780
4,452
19,021
1,520
1
(2,337)
112,083
2,143
(1,027)
11
---
(1,016)
1,127
(48)
1,079
(5,463)
(4,384)
0.15
(0.78)
(0.63)
0.15
(0.78)
(0.63)
6,992
7,013
$
$
$
$
$
$
$
$
113,522
17,196
190
954
131,862
33,478
36,945
31,540
5,183
15,906
4,517
7
430
128,006
3,856
(867)
2
(4)
(869)
2,987
(732)
2,255
642
2,897
0.31
0.09
0.40
0.31
0.09
0.40
7,199
7,226
$
$
$
$
$
$
$
$
118,780
17,104
282
1,116
137,282
35,870
38,387
30,622
5,253
18,705
1,181
646
34
130,698
6,584
(965)
7
20
(938)
5,646
(1,697)
3,949
818
4,767
0.54
0.11
0.65
0.52
0.11
0.62
7,367
7,648
See accompanying notes to consolidated financial statements.
F-3
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED
JANUARY 3, 2016, DECEMBER 28, 2014, AND DECEMBER 29, 2013
(in thousands)
Common Stock
Shares
Amount
Additional
Paid-in
Capital
Retained
Earnings
Total
Balance - December 30, 2012
7,514
$
Exercise of stock options
Tax benefit for equity
awards issued
Common stock issued
Performance shares surrendered to
cover payroll taxes incurred
Repurchase of common stock
Stock-based compensation
Deferred compensation
Net income
31
---
178
(60)
(389)
---
---
---
Balance - December 29, 2013
7,274
$
Exercise of stock options
Tax benefit for equity
awards issued
Common stock issued, net of
cancellations
Performance shares surrendered to
cover payroll taxes incurred
Repurchase of common stock
Stock-based compensation
Deferred compensation
Net income
Balance - December 28, 2014
Tax benefit for equity
awards issued
Common stock issued, net of
cancellations
Performance shares surrendered to
cover payroll taxes incurred
Repurchase of common stock
Stock-based compensation
Deferred compensation
Net income
24
---
(4)
(56)
(101)
---
---
---
7,137
---
25
(9)
(195)
---
---
---
$
Balance - January 3, 2016
6,958
$
73
---
---
---
---
(3)
---
---
---
70
---
---
(1)
---
(1)
---
---
---
68
---
---
---
(2)
---
---
---
66
$
1,188
$
32,506
$
33,767
(42)
513
383
(641)
(4,072)
1,076
1,595
---
---
---
---
---
(3,001)
---
(1,551)
4,767
(42)
513
383
(641)
(7,076)
1,076
44
4,767
$
---
$
32,721
$
32,791
(114)
1,153
---
(28)
---
(1,011)
---
---
---
144
---
---
---
(144)
---
---
$
---
24
---
(1,492)
(2,610)
220
(26)
2,897
31,734
---
---
(215)
(5,670)
470
60
(4,384)
$
(114)
1,177
(1)
(1,520)
(2,611)
(791)
(26)
2,897
31,802
144
---
(215)
(5,672)
326
60
(4,384)
$
$
---
$
21,995
$
22,061
See accompanying notes to consolidated financial statements.
F-4
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
JANUARY 3, 2016, DECEMBER 28, 2014, AND DECEMBER 29, 2013
(in thousands)
Cash flows from operating activities:
Net income from continuing operations
Adjustments to reconcile net income to cash flows provided by
operations:
Depreciation and amortization
Amortization of deferred financing costs
Net (gain) loss on disposal of property
Asset impairment and estimated lease
termination and other closing costs
Deferred income taxes
Deferred rent and net amortization of lease interest assets
and liabilities
Stock-based compensation
Tax benefit for equity awards issued
Changes in operating assets and liabilities, net of acquisition:
Restricted cash
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Deposits
Accounts payable
Accrued compensation and benefits
Other current liabilities
Other liabilities
Long-term deferred compensation
Cash flows (used for) provided by continuing operating activities
Cash flows provided by discontinued operating activities
Cash flows provided by operating activities
Cash flows from investing activities:
Proceeds from the sale of restaurant assets and décor
Purchases of property, equipment and leasehold improvements
Purchases of intangible assets
Cash flows provided by (used for) continuing investing activities
Cash flows used for discontinued investing activities
Cash flows provided by (used) for investing activities
Cash flows from financing activities:
Proceeds from draws on line of credit
Payments on line of credit
Payments for debt issuance costs
Payments on long-term debt and financing lease obligations
Payments from exercise of stock options
Tax benefit for equity awards issued
Repurchase of common stock
Cash flows used for financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
January 3,
2016
December 28, December 29,
2014
2013
$
1,079
$
2,255
$
3,949
4,452
212
(2,337)
1,520
(4,255)
909
386
(144)
(439)
(1,257)
140
267
9
(305)
(2,165)
162
(38)
(74)
(1,878)
3,862
1,984
7,502
(3,197)
---
4,305
(60)
4,245
27,700
(24,440)
(160)
(634)
---
144
(5,672)
(3,062)
5,183
84
430
4,517
(728)
940
(817)
(1,177)
453
483
(40)
531
(27)
(866)
(1,224)
1,229
31
(135)
11,122
1,557
12,679
95
(1,568)
---
(1,473)
(1,317)
(2,790)
22,400
(28,800)
(40)
(981)
(114)
1,177
(2,691)
(9,049)
3,167
2,133
5,300
$
840
1,293
2,133
$
$
5,253
69
34
1,181
(113)
1,084
1,502
(513)
(412)
(176)
(200)
244
(12)
2,348
(788)
317
30
165
13,962
1,638
15,600
---
(6,428)
(229)
(6,657)
(156)
(6,813)
23,900
(26,100)
(58)
(946)
(42)
513
(6,835)
(9,568)
(781)
2,074
1,293
See accompanying notes to consolidated financial statements.
F-5
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of business - We, Famous Dave's of America, Inc. (“Famous Dave’s” or the “Company”), were
incorporated in Minnesota on March 14, 1994. We develop, own, operate and franchise restaurants under the
name "Famous Dave's". As of January 3, 2016, there were 179 Famous Dave’s restaurants operating in 33
states, the Commonwealth of Puerto Rico, and Canada, including 44 Company-owned restaurants and 135
franchise-operated restaurants. An additional 58 franchise restaurants were committed to be developed
through signed area development agreements as of January 3, 2016.
Seasonality – Our restaurants typically generate higher revenue in the second and third quarters of our
fiscal year as a result of seasonal traffic increases and high catering sales experienced during the summer
months, and lower revenue in the first and fourth quarters of our fiscal year, due to possible adverse weather
which can disrupt customer and team member transportation to our restaurants.
Principles of consolidation – The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned and majority-owned subsidiaries. Any inter-company
transactions and balances have been eliminated in consolidation.
Management’s use of estimates – The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassifications – Certain reclassifications have been made to prior year amounts to conform to the
current year’s presentation of discontinued operations (see Note 11).
Financial instruments – Due to their short-term nature, the carrying value of our current financial
assets and liabilities approximates their fair value. The fair value of long-term debt approximates the carrying
amount based upon our expected borrowing rate for debt with similar remaining maturities and comparable
risk.
Segment reporting – We have Company-owned and franchise-operated restaurants in the United
States, the Commonwealth of Puerto Rico, and Canada, and operate within the single industry segment of
foodservice. We make operating decisions on behalf of the Famous Dave’s brand which includes both
Company-owned and franchise-operated restaurants. In addition, all operating expenses are reported in total
and are not allocated to franchising operations for either external or internal reporting. We believe we meet
the criteria for aggregating our operating segments into a single reporting segment.
Fiscal year – Our fiscal year ends on the Sunday nearest December 31st of each year. Our fiscal year
is generally 52 weeks; however it periodically consists of 53 weeks. The fiscal year ended January 3, 2016
(fiscal 2015), consisted of 53 weeks while the fiscal years ended December 28, 2014 (fiscal 2014), and
December 29, 2013 (fiscal 2013) consisted of 52 weeks. The fiscal year ending January 1, 2017 (fiscal 2016)
will consist of 52 weeks.
Cash and cash equivalents – Cash equivalents include all investments with original maturities of three
months or less or which are readily convertible into known amounts of cash and are not legally restricted.
Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000, while
the remaining balances are uninsured at January 3, 2016 and December 28, 2014. The Company has not
F-7
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash
and cash equivalents.
Restricted cash and marketing fund – We have a system-wide marketing fund. Company-owned
restaurants and franchise-operated restaurants that entered into franchise agreements with the Company after
December 17, 2003, are required to contribute a percentage of net sales to the fund that is used for public
relations and marketing development efforts throughout the system. These restaurants were required to
contribute 1.0% of net sales to this fund during fiscal 2015 and 0.75% of net sales during fiscal 2014.
In
fiscal 2016, the contribution will remain at 1.0% of net sales. The assets held by this fund are considered
restricted and are in an interest bearing account. Accordingly, we reflected the cash related to this fund in
restricted cash and the liability is included in accounts payable on our consolidated balance sheets. As of
January 3, 2016 and December 28, 2014, we had approximately $1.1 million and $648,000 in this fund,
respectively.
Accounts receivable, net – We provide an allowance for uncollectible accounts on accounts receivable
based on historical losses and existing economic conditions, when relevant. We provide for a general bad
debt reserve for franchise receivables due to increases in days’ sales outstanding and deterioration in general
economic market conditions. This general reserve is based on the aging of receivables meeting specified
criteria and is adjusted each quarter based on past due receivable balances. Additionally, we have
periodically established a specific reserve on certain receivables as necessary. In assessing recoverability of
these receivables, we make judgments regarding the financial condition of the franchisees based primarily on
past and current payment trends, as well as other variables, including annual financial information, which the
franchisees are required to submit to us. Any changes to the reserve are recorded in general and administrative
expenses. The allowance for uncollectible accounts was approximately $246,000 and $214,000, at January 3,
2016 and December 28, 2014, respectively.
In fiscal 2015, the increase in the allowance for doubtful
accounts was primarily due to delays in collections associated with certain franchises. Accounts receivable are
written off when they become uncollectible, and payments subsequently received on such receivables are
credited to allowance for doubtful accounts. Accounts receivable balances written off have not exceeded
allowances provided. We believe all accounts receivable in excess of the allowance are fully collectible. If
accounts receivable in excess of provided allowances are determined uncollectible, they are charged to
expense in the period that determination is made. Outstanding past due accounts receivable are subject to a
monthly interest charge on unpaid balances which is recorded as interest income in our consolidated
statements of operations.
Inventories – Inventories consist principally of small wares and supplies, food and beverages, and
retail goods, and are recorded at the lower of cost (first-in, first-out) or market.
Property, equipment and leasehold improvements, net – Property, equipment and leasehold
improvements are capitalized at a level of $250 or greater and are recorded at cost. Repair and maintenance
costs are charged to operations when incurred. Furniture, fixtures, and equipment are depreciated using the
straight-line method over estimated useful lives ranging from 3-7 years, with the exception of restaurant
signage which, is included in furniture, fixtures, and equipment and is depreciated over 10 to 15 years, while
buildings are depreciated over 30 years. Leasehold improvements are amortized using the straight-line
method over the shorter of the lease term, including reasonably assured renewal options, or the estimated
useful life of the assets. Décor that has been installed in the restaurants is recorded at cost and is depreciated
using the straight-line method over seven years.
Liquor licenses - The Company has transferable liquor licenses in jurisdictions with a limited number
of authorized liquor licenses. These licenses were capitalized as indefinite-lived intangible assets and are
F-8
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
included in intangible assets, net in our consolidated balance sheets (see Note 3). We annually review the
liquor licenses for impairment and in fiscal 2015 and 2014, no impairment charges were recorded.
Additionally, the costs of obtaining non-transferable liquor licenses that are directly issued by local
government agencies for nominal fees are expensed as incurred. Annual liquor license renewal fees are
expensed over the renewal term.
Debt issuance costs – Debt issuance costs are amortized to interest expense over the term of the related
financing. The carrying value of our deferred debt issuance costs, classified in other long-term assets, is
approximately $112,000, and $165,000, net of accumulated amortization of $1.0 million and $821,000, as of
January 3, 2016 and December 28, 2014, respectively.
Construction overhead and capitalized interest – We capitalize construction overhead costs until the
time a building is turned over to operations, which is approximately two weeks prior to opening.
In fiscal
2015, we did not capitalize any construction overhead costs and in 2014, and 2013, we capitalized
construction overhead costs of approximately $48,000, and $138,000, respectively. These reflect no new
restaurant openings or remodel projects during fiscal 2015, two remodel projects taking place in fiscal 2014,
and two new restaurant openings during 2013. In fiscal 2015, we did not capitalize any interest costs and in
2014, and 2013, we capitalized interest costs of approximately $7,000 and $30,000, respectively. We
depreciate and amortize construction overhead and capitalized interest over the same useful life as leasehold
improvements.
Advertising costs – Advertising costs are charged to expense as incurred. Advertising costs were
approximately $2.5 million, $3.0 million, and $2.9 million for fiscal years 2015, 2014, and 2013, respectively,
and are included in operating expenses in the consolidated statements of operations.
Software implementation costs – We capitalize labor costs associated with the implementation of
significant information technology infrastructure projects based on actual labor rates per person including
benefits, for all time spent on the implementation of software and are depreciated over 5 years. In fiscal 2015
we did not capitalize any software implementation costs and in 2014 and 2013, we capitalized software
implementation costs of $102,000, and $134,000 respectively.
Research and development costs – Research and development costs represent salaries and expenses of
personnel engaged in the creation of new menu and promotional offerings, recipe enhancements and
documentation activities. Research and development costs were approximately $668,000, $468,000, and
$388,000, for fiscal years 2015, 2014, and 2013, respectively, and are included in general and administrative
expenses in the consolidated statements of operations.
Pre-opening expenses – All start-up and pre-opening costs are expensed as incurred. Pre-opening rent
during the build-out period is included in pre-opening expense. In fiscal 2015, 2014, 2013, we had pre-
opening expenses of approximately $1,000, $7,000, and $646,000 respectively. The low levels of pre-
opening expenses in the recent years are due to not opening any new company-owned restaurants during
fiscal 2015 and 2014.
Lease accounting – We recognize lease expense on a straight-line basis for our operating leases over
the entire lease term including lease renewal options and build-out periods where the renewal is reasonably
assured and the build-out period takes place prior to the restaurant opening or lease commencement date.
Rent expense recorded during the build-out period is reported as pre-opening expense. We account for
construction allowances by recording a receivable when its collectability is considered probable, and relieve
the receivable once the cash is obtained from the landlord for the construction allowance. Construction
F-9
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
allowances are amortized as a credit to rent expense over the full term of the lease, including reasonably
assured renewal options and build-out periods.
Recoverability of property, equipment and leasehold improvements, impairment charges, and
exit and disposal costs – We evaluate restaurant sites and long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of restaurant sites to be held and used is measured by a comparison of the carrying amount of
the restaurant site to the undiscounted future net cash flows expected to be generated on a restaurant-by-
restaurant basis. If a restaurant site is determined to be impaired, the loss is measured as the amount by which
the carrying amount of the restaurant site exceeds its fair value. Fair value, as determined by the discounted
future net cash flows, is estimated based on the best information available including estimated future cash
flows, expected growth rates in comparable restaurant sales, remaining lease terms and other factors. If these
assumptions change in the future, we may be required to take additional impairment charges for the related
assets. Considerable management judgment is necessary to estimate future cash flows. Accordingly, actual
results could vary significantly from the estimates.
Exit or disposal activities, including restaurant closures, include the cost of disposing of the assets as
well as other facility-related expenses from previously closed restaurants. These costs are generally expensed
as incurred. Additionally, at the date we cease using a property under an operating lease, we record a liability
for the net present value of any remaining lease obligations, net of estimated sublease income. Any
subsequent adjustments to that liability as a result of lease termination or changes in estimates of sublease
income are recorded in the period incurred. Upon disposal of the assets associated with a closed restaurant,
any gain or loss is recorded in the same caption as the original impairment within our consolidated statements
of operations.
Asset retirement obligation – We recognize a liability for the fair value of a required asset retirement
obligation (“ARO”) when such obligation is incurred. The Company’s AROs are primarily associated with
leasehold improvements which, at the end of a lease, the Company is contractually obligated to remove in
order to comply with the lease agreement. The net ARO liability included in other long term liabilities in our
consolidated balance sheets was $111,000 and $109,000 at January 3, 2016 and December 28, 2014,
respectively.
Gift cards – We record a liability in the period in which a gift card is issued and proceeds are received.
As gift cards are redeemed, this liability is reduced and revenue is recognized. We recognize gift card
breakage income as an offset to operating expense based on a stratified breakage rate per year. This breakage
rate is based on a percentage of sales when the likelihood of the redemption of the gift card becomes remote.
Interest income – We recognize interest income when earned.
Net income per common share – Basic net income per common share (“EPS”) is computed by
dividing net income by the weighted average number of common shares outstanding for the reporting period.
Diluted EPS equals net income divided by the sum of the weighted average number of shares of common
stock outstanding plus all additional common stock equivalents, such as stock options and restricted stock
units, when dilutive.
F-10
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Following is a reconciliation of basic and diluted net income per common share:
(in thousands, except per share data)
2015
Fiscal Year
2014
2013
Net income per common share – basic:
Net income from continuing operations, net of taxes
Net (loss) income from discontinued operations, net of taxes
Net (loss) income
Weighted average shares outstanding
Net income from continuing operations per common share – basic
Net (loss) income from discontinued operations
per common share – basic
Net (loss) income per common share – basic
Net income per common share – diluted:
Net income from continuing operations, net of taxes
Net (loss) income from discontinued operations, net of taxes
Net (loss) income
Weighted average shares outstanding
Dilutive impact of common stock equivalents outstanding
Adjusted weighted average shares outstanding
Net income from continuing operations per common share – diluted
Net (loss) income from discontinued operations
per common share – diluted
Net (loss) income per common share – diluted
$
$
$
$
$
$
$
$
1,079
(5,463)
(4,384)
6,992
0.15
$
$
(0.78) $
(0.63) $
1,079
(5,463)
(4,384)
6,992
21
7,013
0.15
$
$
(0.78) $
(0.63) $
2,255
642
2,897
7,199
0.31
0.09
0.40
2,255
642
2,897
7,199
27
7,226
0.31
0.09
0.40
$
$
$
$
$
$
$
$
3,949
818
4,767
7,367
0.54
0.11
0.65
3,949
818
4,767
7,367
281
7,648
0.52
0.11
0.62
There were 507,000 and 118,000 options outstanding as of January 3, 2016 and December 28, 2014,
respectively that were not included in the computation of diluted EPS because they were anti-dilutive. All options
outstanding as of December 29, 2013 were included in the computation of diluted earnings per share.
Stock-based compensation – We recognize compensation cost for share-based awards granted to team
members and Board members based on their fair values at the time of grant over the requisite service period. Stock
options granted to non-employees are marked to market when they vest, and unvested options are marked to
market each reporting period. Our pre-tax compensation cost for stock options and other incentive awards is
included in general and administrative expenses in our consolidated statements of operations (see Note 9).
Cash flows from the exercise of stock options resulting from tax benefits in excess of recognized cumulative
compensation cost (excess tax benefits) is classified as cash flows from financing activities. During 2015 and
2014, 464,774 and 190,500 stock options were granted, respectively. There were no stock options granted during
fiscal 2013. During 2015, 147,950 stock options were forfeited.
Income Taxes – We provide for income taxes based on our estimate of federal and state income tax
liabilities. These estimates include, among other items, effective rates for state and local income taxes, allowable
tax credits for items such as taxes paid on reported tip income, estimates related to depreciation and amortization
expense allowable for tax purposes, and the tax deductibility of certain other items. Our estimates are based on the
information available to us at the time that we prepare the income tax provision. We generally file our annual
F-11
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
income tax returns several months after our fiscal year-end.
Income tax returns are subject to audit by federal,
state, and local governments, generally years after the tax returns are filed. These returns could be subject to
material adjustments or differing interpretations of the tax laws.
Revenue recognition – We record restaurant sales at the time food and beverages are served. We record
sales of merchandise items at the time items are delivered to the guest. All sales taxes are excluded from revenue.
We have detailed below our revenue recognition policies for franchise and licensing agreements.
Franchise arrangements – Initial franchise fee revenue is recognized when we have performed substantially
all of our obligations as franchisor. Franchise royalties are recognized when earned.
area
Our franchise-related revenue is comprised of three separate and distinct earnings processes:
development fees, initial franchise fees and continuing royalty payments. Currently, our area development fee for
domestic growth consists of a one-time, non-refundable payment of approximately $10,000 per restaurant in
consideration for the services we perform in preparation of executing each area development agreement. For our
foreign area development agreements the one time, non-refundable payment is negotiated on a per development
basis and is determined based on the costs incurred to sell that development agreement. Substantially all of these
services, which include, but are not limited to, conducting market and trade area analysis, a meeting with Famous
Dave’s Executive Team, and performing a potential franchise background investigation, are completed prior to our
execution of the area development agreement and receipt of the corresponding area development fee. As a result,
we recognize this fee in full upon receipt. Currently, our initial, non-refundable, franchise fee for domestic growth
is $45,000 per restaurant, of which approximately $5,000 is recognized immediately when a franchise agreement is
signed, reflecting expenses incurred related to the sale. The remaining non-refundable fee is included in deferred
franchise fees and is recognized as revenue when we have performed substantially all of our obligations, which
generally occurs upon the franchise entering into a lease agreement for the restaurant(s). Finally, franchisees are
also required to pay us a monthly royalty equal to a percentage of their net sales, which has historically varied from
4% to 5%. In general, new franchises pay us a monthly royalty of 5% of their net sales.
Licensing and other revenue – We have a licensing agreement for our retail products, the current term of
which expires in April 2020 with renewal options of five years, subject to the licensee’s attainment of identified
minimum product sales levels. Licensing revenue is recorded based on royalties earned by the Company in
accordance with our agreement. Licensing revenue for fiscal years 2015, 2014, and 2013 was approximately
$940,000, $878,000, and $805,000, respectively.
Periodically, we provide additional services, beyond the general franchise agreement, to our franchise operations,
such as new restaurant training, information technology setup and décor installation services. The cost of these
services is recognized upon completion and is billed to the respective franchisee and is generally payable on net
30-day terms. Other revenue related to these services for fiscal years 2015, 2014, and 2013 was approximately
$14,000, $76,000, and $311,000, respectively. These year over year decreases are a result of fewer franchise-
operated restaurant openings as well as a level of assistance we provided during those openings
Recent Accounting Guidance
Recently adopted accounting guidance
In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) No. 2014-08, “Presentation of Financial Statements and Property, Plant, and Equipment: Reporting
Discontinued Operations and Disclosures of Disposals of Components of an Entity.” This ASU changes the
requirements for reporting discontinued operations in Accounting Standard Codification Subtopic 205-20, and
requires a disposal of a component of an entity or a group of components of an entity to be reported in discontinued
operations only if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s
F-12
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
operations and financial results. There are also additional disclosures required. The amendments in this ASU are
effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December
15, 2014, with early adoption permitted. We have chosen early adoption of this standard, effective for fiscal year
2014. This had no material impact on fiscal year 2014 income from continuing operations or net income and no
impact on fiscal year 2014 earnings per share.
Recent accounting guidance not yet adopted
In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers.” The
amendments in ASU 2014-9 provide for a single, principles-based model for revenue recognition that replaces the
existing revenue recognition guidance.
In July 2015, the FASB deferred the effective date of ASU 2014-9 until
annual and interim periods beginning on or after December 15, 2017. It will replace most existing revenue
recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or
cumulative effect transition method and early adoption is not permitted. We have not yet selected a transition
method and are in the process of evaluating the effect this standard will have on our consolidated financial
statements and related disclosures.
In January 2015, the FASB issued ASU No. 2015-01, “Income Statement—Extraordinary and Unusual
Items.” This update eliminates from GAAP the concept of extraordinary items. ASU 2015-01 is effective for the
first interim period within fiscal years beginning after December 15, 2015, with early adoption permitted provided
that the guidance is applied from the beginning of the fiscal year of adoption. A reporting entity may apply the
amendments prospectively or retrospectively to all prior periods presented in the financial statements. The
Company believes the adoption of this ASU will not have a material impact on its consolidated financial
statements.
In April 2015, the FASB issued guidance on the financial statement presentation of debt issuance costs.
This guidance requires debt issuance costs to be presented in the balance sheet as a reduction of the related debt
liability rather than as an asset. The standard will become effective for annual periods beginning after December
15, 2015 and for interim periods beginning after December 15, 2016. Early adoption is permitted. The standard
requires companies to apply the guidance retrospectively to all prior periods. The Company does not expect the
adoption of this guidance to have a material impact on its consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of
Deferred Taxes, which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a
classified balance sheet. The ASU is effective for annual periods beginning after December 15, 2017, and interim
periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all entities. The
Company is currently evaluating the impact of this new standard on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing
guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize a lease liability and
a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments in this ASU are
effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early
adoption is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases
existing at, or entered into after the date of initial adoption, with an option to elect to use certain transition relief.
The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
F-13
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(2)
INVENTORIES
Inventories consisted approximately of the following at:
(in thousands)
Small wares and supplies
Food and beverage
Retail goods
(3)
INTANGIBLE ASSETS
January 3,
2016
December 28,
2014
$
$
1,251
761
58
2,070
$
$
1,162
1,030
65
2,257
The Company has intangible assets that consist of liquor licenses and lease interest assets. The liquor
licenses are indefinite lived assets (see Note 1) and are not subject to amortization. The lease interest assets are
amortized,
to occupancy costs, on a straight-line basis over the remaining term of each respective lease.
Amortization for each of the next five years is expected to be approximately $47,500.
A reconciliation of beginning and ending amounts of intangible assets for the years ended December 28,
2014 and January 3, 2016, respectively, is presented in a table below:
(in thousands)
Balance at December 28, 2014
Lease interest assets
Liquor licenses
Total
(in thousands)
Balance at January 3, 2016
Lease interest assets
Liquor licenses
Total
Remaining
estimated
useful life
(years)
25.1
Remaining
estimated
useful life
(years)
24.1
$
$
$
$
Original
Cost
Accumulated
Amortization
Net Book
Value
Less
Current
Portion(1)
Non-
Current
Portion
1,417 $
1,810
(230) $
---
1,187 $
1,810
(48) $
---
1,139
1,810
3,227 $
(230) $
2,997 $
(48) $
2,949
Original
Cost
Accumulated
Amortization
Net Book
Value
Less
Current
Portion(1)
Non-
Current
Portion
1,417 $
1,810
(277) $
---
1,140 $
1,810
(48) $
---
1,092
1,810
3,227 $
(277) $
2,950 $
(48) $
2,902
(1)The current portion of lease interest assets are recorded in prepaid expenses and other current assets.
F-14
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4)
PROPERTY, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS, NET
Property, equipment and leasehold improvements, net, consisted approximately of the following at:
(in thousands)
Land, buildings, and improvements
Furniture, fixtures, and equipment
Décor
Construction in progress
Accumulated depreciation and amortization
Property, equipment and leasehold improvements, net
(5) OTHER CURRENT LIABILITIES
Other current liabilities consisted of the following at:
(in thousands)
Gift cards payable
Other liabilities
Sales tax payable
Deferred franchise fees
Income taxes payable
Accrued property and equipment purchases
(6) OTHER LIABILITIES
Other liabilities consisted of the following at:
(in thousands)
Deferred rent
Other liabilities
Asset retirement obligations
Long term lease reserve
Long term deferred compensation
Income taxes payable
January 3,
2016
December 28,
2014
$
$
50,713
34,866
1,553
471
(55,112)
32,491
$
$
55,628
36,900
1,712
370
(55,258)
39,352
January 3,
2016
December 28,
2014
$
$
1,616
902
674
134
40
40
3,406
$
$
1,960
526
751
225
36
50
3,548
January 3,
2016
December 28,
2014
$
$
7,191
455
111
258
258
12
8,285
$
$
7,307
164
109
---
411
51
8,042
(7) CREDIT FACILITY AND DEBT COVENANTS, LONG-TERM DEBT, AND FINANCING LEASE
OBLIGATIONS
On December 11, 2015, the Company and certain of its subsidiaries (collectively known as the “Borrower”)
entered into its First Amendment to the Third Amended and Restated Credit Agreement (the “Credit Agreement”),
F-15
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
which amended and restated the Company’s Third Amended and Restated Credit Agreement (the “Third Credit
Agreement”) with Wells Fargo Bank, National Association as administrative agent and lender (the “Lender”). The
Credit Agreement will expire on December 31, 2018 and contains a $3.0 million revolving credit facility (the
“Facility”) with a $2.0 million letter of credit sublimit, and a term loan with a maximum of $12.0 million (the
“Term Loan”). See “Long-Term Debt” below.
Principal amounts outstanding under the Facility bear interest at either an adjusted Eurodollar rate plus an
applicable margin or at a Base Rate plus an applicable margin. The Base Rate is defined in the Credit Agreement
as the greater of the Federal Funds Rate plus 1.5% or the Wells Fargo Prime rate. The applicable margin is
initially 3.25% for Eurodollar Rate Loans, 1.75% for Base Rate Loans and 0.50% for Commitment Fees, and will
thereafter be adjusted based upon the Adjusted Leverage Ratio. The applicable margin will depend on the
Company’s Adjusted Leverage Ratio, as defined, at the end of the previous quarter and will range from 2.25% to
3.25% for Eurodollar Rate Loans and from 0.75% to 1.75% for Base Rate Loans. Unused portions of the Facility
will be subject to an unused Facility fee which will be equal to either 0.375% or 0.500% of the unused portion,
depending on the Company’s Adjusted Leverage Ratio. Our rate for the unused portion of the Facility as of
January 3, 2016, was 0.375%. Our current weighted average interest rate for the fiscal years ended January 3, 2016
and December 28, 2014 was 2.66% and 2.72%, respectively.
The Facility contains customary affirmative and negative covenants for credit facilities of this type,
including limitations on the Borrower with respect to indebtedness, liens, investments, distributions, mergers and
acquisitions, dispositions of assets and transactions with affiliates of the Borrower, among others. The Facility also
includes various financial covenants that include maximum target capital expenditures, cash flow ratios, minimum
EBITDA ratios and adjusted leverage ratios.
The Credit Agreement currently provides for up to $2.0 million in letters of credit to be used by the
Company, with any amounts outstanding reducing our availability for general corporate purchases, and also allows
for the termination of the Facility by the Borrower without penalty at any time. At January 3, 2016 we had no
borrowings under this Facility, $12.0 million of outstanding principal under the Term Loan, and approximately
$1.1 million in letters of credit for real estate locations. As of January 3, 2016, we were in compliance with all of
our covenants. The Company was also generally prohibited from making any Restricted Payment (as defined in
the Credit Agreement) and from making any Growth Capital Expenditures (as defined in the Credit Agreement) in
the fiscal quarter ending December 31, 2015 and, for the subsequent quarters, is prohibited from making Growth
Capital Expenditures costing in excess of $2 million in the aggregate during any fiscal year.
Under the terms of the Amendment, the Company is required to pay $150,000 each month commencing after
the First Amendment Effective Date as a principal reduction of the term loans and are required to make mandatory
principal prepayments in an amount equal to specified percentages of the net cash proceeds of Dispositions (as
defined in the First Amendment) based upon the Adjusted Leverage Ratio. These mandatory principal prepayments
will be applied first to the term loans and second to any revolving loans then outstanding.
If the bank were to call the Facility prior to expiration, the Company believes there are multiple options
available to obtain other sources of financing. Although possibly at different terms, the Company believes there
would be other lenders available and willing to finance a new credit facility. However, if replacement financing
were unavailable to us, termination of the Facility without adequate replacement would have a material and
adverse impact on our ability to continue our business operations.
We expect to use any borrowings under the Credit Agreement for general working capital purchases as
needed. Under the Facility, the Borrower has granted the Lender a security interest in all current and future
personal property of the Borrower.
F-16
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Our facility consisted of the following at:
(in thousands)
Credit facility - Wells Fargo
Less: current maturities
Long-term credit facility net of current portion
Long-Term Debt
January 3,
2016
December 28,
2014
$ ---
---
---
$
$
$
5,000
---
5,000
Principal amounts outstanding under the Term Loan bear interest at the same rate as the Facility. The
weighted average interest rate of the Term Loan for fiscal years ended January 3, 2016 and December 28, 2014
was 2.77% and 2.12%, respectively. The Company is required to pay $150,000 each month commencing after the
First Amendment Effective Date as a principal reduction of the term loans and are required to make mandatory
principal prepayments in an amount equal to specified percentages of the net cash proceeds of Dispositions (as
defined in the First Amendment) based upon the Adjusted Leverage Ratio. The $150,000 monthly payments are
payable until December 31, 2018 at which time the Company will have a balloon payment of approximately $6.8
million plus interest. These mandatory principal prepayments will be applied first to the term loan and second to
the revolving credit facility then outstanding.
Long-term debt consisted approximately of the following at:
(in thousands)
Notes Payable - Wells Fargo - minimum monthly
installments are $150 until December 31, 2018;
at which time we have a balloon payment
of approximately $6,750 plus interest at an
adjusted Eurodollar rate plus the applicable margin.
Less: current maturities
Long-term debt net of current maturities
Required principal payments on long-term debt are as follows:
January 3,
2016
December 28,
2014
$
$
12,000
(1,800)
10,200
$
$
4,023
(680)
3,343
(in thousands)
Fiscal Year
2016
2017
2018
Total
$
$
1,800
1,800
8,400
12,000
F-17
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financing Lease Obligation
On March 31, 1999, the Company completed a $4.5 million financing obligation involving three existing
restaurants as part of a sale/leaseback transaction. Under this financing, we are obligated to make monthly
payments of $56,627 (which increases 4.04% every two years) for a minimum of 20 years. At the end of the 20
year lease term, we may extend the lease for up to two additional five year terms. We also have the option to
purchase the leased restaurants on the 20th anniversary of the lease term and between the first and second five year
option terms. The option purchase price is the greater of $4.5 million or the fair market value, as defined in the
agreement, of the properties at the time the purchase option is exercised. Based upon our continued involvement in
the leased property and its purchase option, the transaction has been accounted for as a financing arrangement.
Accordingly, the three existing restaurants are included in property, equipment and leasehold improvements, and
are being depreciated over a 20 year term. In addition, as the monthly lease payments are made, the obligation will
be reduced by the 20 year amortization table.
Financing lease obligations consisted of the following at:
(in thousands)
January 3,
2016
December 28,
2014
Financing lease – Spirit Financial – monthly installments of $54-
$59 – including an interest rate of 9.63%, due in March 2019.
Less: current maturities
Long-term financing lease net of current maturities
$
$
3,150
(393)
2,757
Required future minimum payments under our financing leases are as follows:
(in thousands)
Fiscal Year
2016
2017
2018
2019
Total
$
$
$
$
3,501
(351)
3,150
679
700
707
1,838
3,924
(8) OPERATING LEASE OBLIGATIONS
We have various operating leases for existing and future restaurants and corporate office space with
remaining lease terms ranging from 1 month to 32 years, including lease renewal options. Of the total operating
leases, 14 require percentage rent between 3% and 6% of annual gross sales, typically above a natural breakeven
point, in addition to the base rent. All of these leases contain provisions for payments of real estate taxes,
insurance and common area maintenance costs. Total occupancy lease costs for fiscal year 2015 including rent,
common area maintenance costs, real estate taxes and percentage rent, were approximately $7.6 million. In fiscal
years 2014 and 2013, the total occupancy lease costs were each approximately $8.6 million. Cash rent expense
was approximately $5.8 million, $6.1 million, and $5.9 million, for fiscal years 2015, 2014, and 2013, respectively.
Percentage rent was approximately $10,000 , $6,000 , and $17,000 for fiscal years 2015, 2014, and 2013,
respectively.
The Company sublet its Chicago field office in 2015 in addition to 10,340 square feet of its corporate office
space. It also sublet 2,100 square feet of its corporate office space from December 2009 to August 2013. In 2015,
F-18
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2014, and 2013, the Company recognized $104,000, $0, and $23,000, respectively, of sublease income which
partially offset our total rent expense.
Future minimum lease payments (including reasonably assured renewal options) existing at January 3, 2016
were:
(in thousands)
Fiscal Year
2016
2017
2018
2019
2020
Thereafter
Total operating lease obligations
Sublease income
Total
$
$
5,530
5,731
5,937
6,034
6,126
93,888
123,246
(453)
122,793
(9)
PERFORMANCE SHARES, STOCK OPTIONS, OTHER FORMS OF COMPENSATION, AND
COMMON SHARE REPURCHASES
Stock-based Compensation
Effective May 5, 2015, we adopted a 2015 Equity Plan (the “2015 Plan”), pursuant to which we may grant
stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance
stock units and other stock and cash awards to eligible participants. We also maintain an Amended and Restated
2005 Stock Incentive Plan (the “2005 Plan”). Together, the 2015 Plan and 2005 Plan are referred to herein as the
“Plans.” Under the 2015 Plan, an aggregate of 330,926 shares of our Company’s common stock remained
unreserved and available for issuance at January 3, 2016. The 2005 Plan prohibits the granting of incentives after
May 12, 2015. Nonetheless, the 2005 Stock Incentive Plan will remain in effect until all outstanding incentives
granted thereunder have either been satisfied or terminated.
F-19
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We recognized stock-based compensation expense in our consolidated statements of operations for the years
ended 2015, 2014, and 2013, respectively, as follows:
(in thousands)
Performance Share Programs:
2011 Program(1)(3)
2012 Program(1)(4)
2013 Program(2)(5)(6)(7)(8)
Performance Shares and
Performance Stock Units
Stock Options
Restricted Stock and
Restricted Stock Units (8)
Director Shares(9)
$
$
For the Years Ended
January 3,
2016
December 28,
2014
December 29,
2013
---
---
(169)
(169)
459
---
60
350
$
$
(55)
(761)
(412)
(1,228)
371
(73)
47
(883)
$
$
205
297
582
1,084
---
405
117
1,606
(1)The 2011 and 2012 Program's consisted entirely of performance shares.
(2)The 2013 Program consisted of performance shares and performance stock units.
(3)Includes the recapture of previously recorded stock-based compensation of approximately $55,000 due to the departure of employees for
the year ended December 28, 2014.
(4)Includes the recapture of previously recorded stock-based compensation of approximately $761,000 due to the departure of employees
and the failure to achieve performance targets for the year ended December 28, 2014.
(5)Includes the recapture of previously recorded stock-based compensation related to performance shares of approximately $458,000 and
performance stock units of approximately $135,000 due to the departure of employees for the year ended December 28, 2014.
(6)Includes the recapture of previously recorded stock-based compensation related to performance shares of approximately $131,000 and
performance stock units of approximately $38,000 due to the failure to achieve threshold performance levels for the program as of January
3, 2016.
(7)Includes a mark-to-market adjustment related to performance stock units of approximately $22,000 for the year ended December 28,
2014.
(8)Includes the recapture of previously recorded stock-based compensation of approximately $128,000 due to the February 2014 departure
of our former CEO for the year ended December 28, 2014.
(9)Includes the recapture of previously recorded stock-based compensation of approximately $20,000 due to the February 2014 departure of
our former CEO for the year ended December 28, 2014.
Performance Shares and Performance Stock Units
No shares were issued during fiscal 2015 related to performance share programs. During the first quarter of
fiscal 2014, we issued 86,519 shares upon satisfaction of conditions under the 2011 performance share program,
representing the achievement of approximately 86.7% of the target payout for this program. Recipients elected to
forfeit 30,518 of those shares to satisfy tax withholding obligations, resulting in a net issuance of 56,001 shares.
For fiscal 2011 and 2012, performance under the Company’s performance share programs was measured by
comparing actual earnings per share to a target earnings per share amount. For fiscal 2013, performance under the
Company’s performance share and performance stock unit programs were measured by using Adjusted EBITDA.
For these purposes, “Adjusted EBITDA” was defined as income from operations of the Company, plus
depreciation, and amortization, non-cash adjustments (such as asset impairment, lease termination and other
closing costs) and other non-cash items as approved by the Company’s Compensation Committee. Adjusted
EBITDA was subject to adjustment by the Compensation Committee in its sole discretion for non-cash items. The
F-20
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Compensation Committee did not implement an equity incentive program for fiscal 2014. For fiscal 2015 the
Compensation Committee implemented an Incentive Stock Option program for employees.
We recognize compensation cost for performance share awards and incentive stock option awards over the
requisite service period (i.e. fixed treatment) based on their fair value, which is the closing stock price at the date of
grant. Participants in each performance share program are entitled to receive a number of shares of our common
stock (“Performance Shares”) based upon the extent to which we achieve the cumulative total of the earnings per
share or Adjusted EBITDA goals established by our Compensation Committee for each fiscal year within a three-
year performance period (the “Cumulative Adjusted EBITDA Goal”). Receipt of any performance shares is
contingent upon us achieving a specified minimum percentage of the Cumulative Adjusted EBITDA Goal (as
applicable).
We recognize compensation cost for performance stock unit awards over the requisite service period based
on their initial fair value, which is the closing stock price at the date of grant. This award is adjusted to fair value
based on the closing stock price at the end of each fiscal quarter. Recipients of performance stock unit awards are
entitled to receive a cash payout based on a number of our stock units awarded (“Performance Stock Unit”) to the
extent we achieve the Cumulative Adjusted EBITDA Goal, and the market value of our common stock.
At January 3, 2016, the following performance share programs were in progress:
Award
Date
1/8/2013
Program
2013 Program(4)
Target No. of
Performance Shares and
Performance Stock Units
(Originally Granted)(1)
25,300
Estimated Payout of
Performance Shares and
Performance Stock Units
(at January 3, 2016)(2)
---(3)
Minimum
Cumulative
Earnings
Goal
*
Maximum
Payout
(as a percent of
target number)
100.0%(5)
*Varies
(1)Assumes achievement of 100% of the applicable Cumulative EPS Goal or Adjusted EBITDA Goal.
(2)Net of employee forfeitures.
(3)No payout will occur as the applicable Cumulative Adjusted EBITDA Goal was not attained.
(4)This program consists of 15,320 performance shares and 1,480 performance stock units originally granted.
(5)The participants’ rights to receive Performance Shares or Performance Stock Units are contingent on the Company achieving
Cumulative Adjusted EBITDA for fiscal 2013-2015 that are equal to at least the sum of the amounts achieved by the Company
during fiscal 2012-2014 (as adjusted by the Compensation Committee, if applicable). If the Company achieves this threshold,
then participants will be entitled to receive a percentage of their “Target” number of Performance Shares and Performance Stock
Units equal to the percentage of the Adjusted EBITDA Goal achieved by the Company, up to 100%.
F-21
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Board of Directors’ Compensation
We recognized Board of Directors’ compensation expense in our consolidated statement of operations for
the years ended 2015, 2014, and 2013, respectively, as follows:
(in thousands)
Stock-based compensation(1)(2)(3)(4)(5)
Stock option compensation(6)(7)(8)
Cash compensation
Total Board of Directors' compensation
2015
Fiscal Years
2014
2013
$
$
$
60
69
201
$
47
155
358
330
$
560
$
117
---
435
552
(1)On May 5, 2009, and September 29, 2009 one-time 25,000 share restricted stock awards were granted to Lisa A. Kro and Wallace B. Doolin,
respectively, upon joining the Board of Directors. The grants to Ms. Kro and Mr. Doolin had grant date fair values of $168,000 and $150,000,
respectively. As of December 28, 2014, the awards had vested with respect to all of Ms. Kro's and Mr. Doolin's shares, with the exception of
5,000 of Mr. Doolin's that were canceled upon his resignation from the Board of Directors. As a result, the year ended December 28, 2014
includes the recapture of previously recorded stock-based compensation of approximately $15,000.
(2)On August 2, 2011, a one-time 15,000 share restricted stock award was granted to John F. Gilbert III, upon assuming his new position on the
Board of Directors. The grant to Mr. Gilbert had a grant date fair value of $154,000. Subsequent to the end of fiscal 2013, Mr. Gilbert
resigned from the Board of Directors and all unvested restricted shares have been forfeited and returned to the company.
(3)On April 30, 2013, a one-time 13,575 share restricted stock award was granted to Patrick Walsh, upon joining the Board of Directors. The
grant to Mr. Walsh had a grant date fair value of $150,000 and will vest ratably over a period of five years which began on the commencement
date of his board service.
(4)On November 27, 2013, a one-time 7,640 share restricted stock award was granted to Adam Wright, upon joining the Board of Directors.
The grant to Mr. Wright had a grant date fair value of $150,000 and will vest ratably over a period of five years which began on the
commencement date of his board service.
(5)Includes the recapture of previously recorded stock-based compensation of approximately $20,000 due to the forfeiture of unvested restricted
stock upon the February 2014 resignation of our former CEO, which restricted stock had been awarded as director compensation
(6)On January 10, 2014, a one-time 20,000 stock option award was granted to Edward H. Rensi upon joining the Board of Directors. The grant
to Mr. Rensi vested in five equal installments commencing on the first anniversary of the grant date, of which 16,000 were unvested and
forfeited upon his departure of June 18, 2015.
(7)On May 22, 2014, one-time 20,000 stock option awards were granted to each of Brett D. Heffes and Jonathon Lennon upon their joining the
Board of Directors. The grants to Mr. Heffes and Mr. Lennon vest in five equal annual installments commencing on the first anniversary of
the grant date and expire ten years from the same date. Mr. Heffes awards were forfeited upon his resignation from the Board of Directors on
July 13, 2015.
(8)On July 28, 2014, a one-time 27,500 stock option award was granted to David J. Mastrocola upon joining the Board of Directors. This
award was forfeited upon his resignation from the Board of Directors effective July 14, 2015.
Stock Options
On February 10, 2014, Edward H. Rensi was named Interim Chief Executive Officer by the Company’s
Board of Directors. Pursuant to the agreement governing Mr. Rensi’s employment, the Company granted him five-
year, 25,000 share stock option. These options vested in two equal installments of 12,500 shares of February 10,
2014 and February 10, 2015. The compensation expense for this grant will be recognized under general and
administrative expense in our consolidated statements of operations through the applicable service period. The
option will expire one year following Mr. Rensi’s resignation as a director of the Company on July 11, 2015.
On January 15, 2015, Edward H. Rensi was granted 75,000 stock options. These options were forfeited
upon his resignation from the position of Chief Executive Officer on June 18, 2015.
On June 2, 2014, Richard A. Pawlowski was named Chief Financial Officer by the Company’s Board of
F-22
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Directors. Pursuant to the agreement governing Mr. Pawlowski’s employment, the Company granted 78,000 stock
options. These options will vest in equal annual installments over a period of three years and expire five years
from the grant date. The compensation expense for this grant will be recognized under general and administrative
expense in our consolidated statements of operations through the applicable service period.
Effective July 11, 2015, July 13, 2015 and July 15, 2015, Edward H. Rensi, Brett D. Heffes and David
Mastrocola, respectively, resigned as members of the Board of Directors, forfeiting any unvested options
previously granted to them.
On August 31, 2015, Abelardo Ruiz became the Company’s Chief Operating Officer. Pursuant to the
agreement governing Mr. Ruiz’s employment, the Company granted 71,324 stock options. These options will vest
in equal monthly installments over a period of four years and expire five years from the grant date. The
compensation expense for this grant will be recognized under general and administrative expense in our
consolidated statements of operations through the applicable service period.
Effective January 1, 2016, Adam J. Wright was appointed the Company’s Chief Executive Officer,
removing his prior interim title. Pursuant to the agreement governing Mr. Wright’s employment, the Company
granted 50,000 stock options. These options will vest in equal monthly installments over a period of two years and
expire ten years from the grant date. The compensation expense for this grant will be recognized under general and
administrative expense in our consolidated statements of operations through the applicable service period
Other options granted to certain non-officer employees vest in equal annual installments over a period of
four years and expire five years from the grant date. Compensation expense equal to the grant date fair value is
generally recognized for these awards over the vesting period.
Options granted to certain non-employees in exchange for future services vest in monthly installments over a
period of approximately two years and expire five years from the grant date. Expense equal to the current fair
value is recognized over the vesting period, with the value being marked to market in each accounting period for
any unvested portions of the awards.
The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation
method with the assumptions noted in the table below. Due to a lack of recent historical share option exercise
experience, the Company uses a simplified method for estimating the expected life, as outlined in Accounting
Standards Codification 718, calculated using the following formula:
(vesting term + original contract term)/2.
Expected volatilities are based on the movement of the Company’s common stock over the most recent historical
period equivalent to the expected life of the option. The risk-free interest rate for periods within the contractual life
of the option is based on the U.S. maturities over the expected life at the time of grant.
F-23
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information regarding our Company’s stock options is summarized below:
(number of options in thousands)
Options outstanding at December 30, 2012
Exercised(1)
Options outstanding at December 29, 2013
Granted
Exercised(2)
Options outstanding at December 28, 2014
Granted
Canceled, forfeited or expired
Options outstanding at January 3, 2016
Options Exercisable at December 29, 2013
Options Exercisable at December 28, 2014
Options Exercisable at January 3, 2016
Number of
Options
Weighted Average
Exercise Price
102
(54)
48
191
(43)
196
465
(154)
507
48
18
77
$
$
$
$
$
6.80
5.92
7.77
28.11
7.40
27.67
15.75
28.07
16.66
7.77
17.39
21.48
(1)In 2013, option holders elected to forfeit approximately 23,000 shares to satisfy the strike price and tax withholding obligations, resulting
in a net issuance of approximately 31,000 shares.
(2)In 2014, option holders elected to forfeit approximately 18,000 shares to satisfy the strike price and tax withholding obligations, resulting
in a net issuance of approximately 25,000 shares.
(3)In 2015, no stock options were exercised.
The following are weighted-average values and assumptions for valuing grants made during fiscal 2015:
Weighted-average fair value of options granted during the year
Expected life (in years)
Expected stock volatility
Risk-free interest rate
4.90
3.3
51.2 %
1.9 %
$
As of January 3, 2016, there was $1.4 million of total unrecognized compensation cost related to
stock option arrangements granted under the Company's stock option plan. The cost is expected to be
recognized over a weighted average period of 2.5 years.
F-24
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes information about stock options outstanding at January 3, 2016:
(number outstanding and number exercisable in thousands)
Options Outstanding
Exercisable
Exercise prices
Number
outstanding
Weighted-average
remaining
contractual life in
years
Weighted-
average
exercise price
Number
exercisable
Weighted-
average
exercise price
$6.94
-
$32.10
507
5.3
$
16.66
77
$
21.48
The aggregate intrinsic value of options (the amount by which the market price of the stock on the date of
exercise exceeds the exercise price of the option) exercised during fiscal 2015 was approximately $0. As of
January 3, 2016, the aggregate intrinsic value of options outstanding and exercisable was approximately $0.
Restricted Stock Units
On September 11, 2008, the Company made a grant of 25,000 restricted stock units to the Company’s
Chief Financial Officer, Diana Purcel, for a grant date fair value of $227,000. These restricted stock units vested in
three equal installments on the three, four and five year anniversaries of the grant. Upon the termination of her
employment the restricted stock units became issued and outstanding shares six months following her separation
from service. The compensation expense for this grant was recognized in equal quarterly installments as general
and administrative expense in our consolidated statements of operations through the applicable service period
which was completed in the third quarter of fiscal 2013. Ms. Purcel’s employment with the Company terminated
effective July 1, 2014.
Employees forfeited 8,622 and 24,685 shares of restricted stock units during fiscal 2015 and 2014, at a price
of $25.05 and $26.59 per share, respectively, to cover withholding taxes that were due from the employees at the
time that the applicable forfeiture restrictions lapsed.
Common Share Repurchases
On May 1, 2012, our Board of Directors approved a stock repurchase program that authorized the repurchase
of up to 1.0 million shares of our common stock in both the open market or through privately negotiated
transactions. During the year ended January 3, 2016, we repurchased 195,899 shares under this program for
approximately $5.7 million at an average market price per share of $28.92, excluding commissions. Since the
program was adopted in May 2012, we have repurchased all of the 1.0 million shares in this authorization for
approximately $18.6 million at an average market price per share of $18.57, excluding commissions.
Employee Stock Purchase Plan
Prior to fiscal 2014, the Company maintained an Employee Stock Purchase Plan, which gave eligible team
members the option to purchase Common Stock (total purchases in a year could not exceed 10% of a team
member’s current year compensation) at 100% of the fair market value of the Common Stock at the end of each
calendar quarter. For the fiscal year ended December 29, 2013, there were approximately 2,793 shares purchased,
with a weighted average fair value of $14.22 per share. For the fiscal year ended December 29, 2013, the
Company did not recognize any expense related to the stock purchase plan due to it being non-compensatory as
defined by IRS Section 423. The Company chose to eliminate this program in fiscal 2014.
F-25
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(10) RETIREMENT SAVINGS PLANS
401(k) Plan
We have a pre-tax salary reduction/profit-sharing plan under the provisions of Section 401(k) of the Internal
Revenue Code, which covers employees meeting certain eligibility requirements. In fiscal 2015, 2014, and 2013
we matched 25.0%, of the employee’s contribution up to 4.0% of their earnings. Team member contributions were
approximately $399,000, $518,000, and $522,000, for fiscal 2015, 2014, and 2013, respectively. The employer
match was $58,000, $87,000, and $131,000 for fiscal 2015, 2014, and 2013, respectively. There were no
discretionary contributions to the plan in fiscal years 2015, 2014 or 2013.
Non-Qualified Deferred Compensation Plan
We have a Non-Qualified Deferred Compensation Plan effective as of February 25, 2005 (the “Plan”).
Eligible participants are those team members who are at the “director” level and above and who are selected by the
Company to participate in the Plan. Participants must complete a deferral election each year to indicate the level of
compensation (salary, bonus and commissions) they wish to have deferred for the coming year. This deferral
election is irrevocable except to the extent permitted by the Plan Administrator, and the Regulations promulgated
by the IRS. During fiscal 2015, 2014, and 2013, we matched 25.0% of the first 4.0% contributed and paid a
declared interest rate of 6.0% on balances outstanding. The Board of Directors administers the Plan and may
change the rate or any other aspects of the Plan at any time.
Deferral periods are limited to the earlier of termination of employment or not less than three calendar years
following the end of the applicable Plan Year. Extensions of the deferral period for a minimum of five years are
allowed provided an election for extension is made at least one year before the first payment affected by the
change. Payments can be in a lump sum or in equal payments over a two-, five- or ten-year period, plus interest
from the commencement date.
The Plan assets are kept in an unsecured account that has no trust fund.
In the event of bankruptcy,
participants entitled to future payments under the Plan would have no greater rights than that of an unsecured
general creditor of the Company and the Plan confers no legal rights for interest or claim on any specific assets of
the Company. Benefits provided by the Plan are not insured by the Pension Benefit Guaranty Corporation (PBGC)
under Title IV of the Employee Retirement Income Security Act of 1974 (“ERISA”), because the pension
insurance provisions of ERISA do not apply to the Plan.
For fiscal years ended January 3, 2016, December 28, 2014 and December 29, 2013, eligible participants
contributed approximately $64,000, $99,000 and $129,000 to the Plan and the Company provided matching funds
and interest of approximately $35,000, $58,000 and $75,000, net of distributions of approximately $368,000,
$418,000 and $187,000, respectively. The distributions were due to executive departures and required distributions
in accordance with our Plan. The outstanding deferred compensation balance at January 3, 2016 and December 28,
2014, was approximately $365,000 and $633,000 respectively.
F-26
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(11) DISCONTINUED OPERATIONS
On December 14, 2015, Famous Dave’s of America, Inc. and certain of its subsidiaries (collectively, the
“Company”) entered into an Asset Purchase Agreement and related Real Estate Purchase Agreement (the
“Purchase Agreements”) with Windy City Restaurant Holdings LLC and its affiliate (together, the “Purchaser”)
pursuant to which the Company has agreed to sell the assets comprising its seven Chicago, Illinois area Company-
owned restaurants located in Addison, Algonquin, Bolingbrook, Evergreen Park, North Riverside, Orland Park and
Oswego (collectively, “Purchased Restaurants”) to the Purchaser. As consideration for the purchased assets, which
includes the real property on which the Company operates the Purchased Restaurant located in Addison, Illinois,
the Purchaser will pay the Company $1.15 million, plus the book value of purchased inventory on the closing date,
and will assume specified liabilities of the Company. Included among the assumed liabilities are the Company’s
existing leases for the Purchased Restaurants located in Bolingbrook, North Riverside and Orland Park, Illinois.
Subsequent to year end, this transaction closed on March 1, 2016.
Under the Purchase Agreements, the Purchaser has also agreed to enter into (i) sublease agreements for the
real property on which Purchased Restaurants are located in Algonquin, Evergreen Park and Oswego, Illinois,
(ii) franchise agreements for each Purchased Restaurant, and (iii) an Area Development Agreement pursuant to
which the Purchaser will agree to use commercially reasonable efforts to develop ten additional Famous Dave’s
restaurants in the Chicago metropolitan area market. The Company has agreed to waive its standard initial
franchise fee for the Purchased Restaurants and the Company’s standard franchise royalty rates have been reduced
as they relate to certain of the Purchased Restaurants for a limited period of time. The Purchaser has further agreed
to invest no less than $500,000 in refreshing and improving the Purchased Restaurants pursuant to an agreed upon
work schedule no later than one year following the closing. To the extent Purchaser fails to invest such amount
within the prescribed timeframe, it will remit the difference to the Company.
In accordance with the Purchase Agreements, the Purchaser has deposited earnest money in the amount of
$140,000 with a third party title company. The earnest money will be delivered to the Company, and applied
against the purchase price at closing, but is otherwise non-refundable unless the transactions fail to close under
certain circumstances set forth in the Purchase Agreements, in which case it may be refunded in whole or in part.
F-27
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In conjunction with this agreement,
recorded an $8.8 million impairment
charge. Subsequent to the close of this transaction, the Company anticipates recapturing approximately $1.1 to $1.3
million in deferred rent credits. The net assets and liabilities of the Purchased Restaurants that are associated with
this transaction are included in assets and liabilities held for sale on the accompanying Consolidated Balance
Sheets at January 3, 2016. The carrying value of the assets and liabilities included in the asset sale was as follows
(in thousands):
the Company has
(in thousands)
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Total current assets
Property, equipment and leasehold improvements, net
Total assets
Accounts payable
Accrued compensation and benefits
Other current liabilities
Total current liabilities
Other liabilities
Total liabilities
January 3,
2016
December 28,
2014
$
$
$
65
344
30
439
991
1,430
10
96
389
495
1,252
1,747
$
$
$
46
484
30
560
10,143
10,703
5
255
391
651
1,129
1,780
The operating results of the Purchased Restaurants for the years ended January 3, 2016, December 28,
2014 and December 29, 2013 are summarized below. These results include costs directly attributable to the
components of the businesses which were divested. Interest expense of $28,000, $27,000 and $32,000 were
allocated to discontinued operations for the years ended January 3, 2016, December 28, 2014 and December 29,
2013, respectively, based upon the portion of the borrowing base associated with discontinue operations. Income
tax (benefit) expense of $(3.3 million), $367,000 and $313,000 for the years ended January 3, 2016, December 28,
2014 and December 29, 2013, respectively have also been allocated to discontinued operations. These adjustments
have been made for all periods presented.
(in thousands)
2015
Fiscal Year
2014
2013
Revenue
(Loss) income from operations
(Loss) income from discontinued operations, net of income taxes
$
$
$
17,002
(8,763)
(5,463)
$
$
$
17,493
1,036
642
$
$
$
18,150
1,164
1,170
F-28
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(12)
INCOME TAXES
For financial reporting purposes, income before taxes includes the following components:
The following table summarizes the income tax (expense) benefit for the last three fiscal years:
(in thousands)
United States
Foreign
Total
(in thousands)
Current:
Federal
State
Foreign
Deferred:
Federal
State
Total income tax expense
2015
Fiscal Year
2014
2013
$
$
901
226
1,127
$
$
2,764
223
2,987
2015
Fiscal Year
2014
$
$
(767)
(45)
(87)
(899)
514
337
851
(48)
$
(1,264)
(263)
(112)
(1,639)
879
28
907
$
$
$
5,297
349
5,646
2013
(1,201)
(397)
(88)
(1,686)
(21)
10
(11)
$
(732)
$
(1,697)
For financial reporting purposes, total income tax benefit (expense) includes the following components:
(in thousands)
Continuing operations
Discontinued operations
Total income tax benefit (expense)
2015
$
$
(48)
3,328
3,280
Fiscal Year
2014
$
$
(732)
(367)
(1,099)
2013
$
$
(1,697)
(313)
(2,010)
The impact of uncertain tax positions taken or expected to be taken on income tax returns must be
recognized in the financial statements at the largest amount that is more likely than not to be sustained upon audit
by the relevant taxing authority. An uncertain income tax position will not be recognized in the financial
statements unless it is more likely than not of being sustained.
F-29
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits for the years
ended January 3, 2016, December 28, 2014, and December 29, 2013, respectively, is presented in the table below:
(in thousands)
Balance at December 30, 2012
Increases attributable to tax positions taken during prior periods
Decreases attributable to tax positions taken during prior periods
Increases attributable to tax positions taken during the current period
Balance at December 29, 2013
Increases attributable to tax positions taken during prior periods
Audit settlements
Decreases due to lapses of statutes of limitations
Balance at December 28, 2014
Decreases due to lapses of statutes of limitations
Balance at January 3, 2016
$
$
21
26
(4)
2
45
69
(19)
(14)
81
(34)
47
At January 3, 2016, December 28, 2014, and December 29, 2013, there are $47,000, $81,000, and $45,000
of unrecognized tax benefits that if recognized would affect the annual effective tax rate.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a
component of income tax expense. During fiscal 2015 and 2014, we recognized a benefit related to additional
interest and penalties of $(2,000) and $(7,000), respectively. Excluded from the above reconciliation were $5,000,
$7,000 and $14,000, of accrued interest and penalties, net of tax benefit, for fiscal 2015, 2014 and 2013,
respectively.
The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The
preparation of these income tax returns requires the Company to interpret and apply relevant federal and state
income tax laws.
It is common for federal and state taxing authorities to periodically examine filed tax returns.
During these examinations, it is possible for taxing authorities to interpret facts or tax law differently than the
Company. As a result, the Company may be required to adjust tax liabilities affecting its effective tax rate.
Federal income tax exams have been completed through the 2011 taxable year. Tax years 2011 and forward
remain subject to state examination. Tax years 2012 and forward remain subject to federal examination.
It is possible that the liability associated with the unrecognized tax benefits will increase or decrease
within the next 12 months. These changes may be the result of new audits or the expiration of statutes of
limitations and could range up to $34,000 based on current estimates.
Deferred taxes, detailed below, recognize the impact of temporary differences between the amounts of
assets and liabilities recorded for financial statement purposes and such amounts measured in accordance with tax
laws. Realization of the net operating loss carry forwards and other deferred tax temporary differences are
contingent on future taxable earnings. During fiscal years 2015 and 2014, our deferred tax asset was reviewed for
expected utilization using a “more likely than not” approach as required by assessing the available positive and
negative evidence surrounding its recoverability.
At January 3, 2016, it is more likely than not that all deferred tax assets attributable to temporary
differences taken on federal and consolidated state income tax returns will be realized based on our consolidated
F-30
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
taxable income for fiscal 2015 and fiscal 2014 as well as the expectation that our Company will generate the
necessary taxable income in future years. However, there is a portion of deferred tax assets attributable to
temporary differences taken on stand-alone state returns and stand-alone state net operating losses and credit carry
forwards that are unlikely to be realized due to insufficient future earnings. For these deferred tax assets, the
Company has created a valuation allowance listed in the table below. The 2015 net change in valuation allowance
is an increase to the valuation allowance in the amount of $177,000.
(in thousands)
Deferred tax asset:
Deferred rent
State net operating loss carry-forwards
Financing lease obligation
Deferred revenue
Tax credit carryover
Stock compensation
Accrued expenses
Lease reserve
Accrued and deferred compensation
Inventories
Intangible property basis difference
Total deferred tax asset
Deferred tax liability:
Property and equipment basis difference
Inventories
Prepaid expenses
Intangible property basis difference
Total deferred tax liability
Net deferred tax assets
Valuation allowance
Total net deferred tax asset
January 3,
2016
December 28,
2014
$
$
$
$
3,379
1,779
1,170
476
376
344
284
223
151
10
---
8,192
(952)
(562)
(236)
(134)
(1,884)
6,308
(1,817)
3,352
1,607
1,300
303
330
381
236
211
11
48
5
7,784
(4,959)
(614)
(311)
(55)
(5,939)
1,845
(1,639)
4,491
$
206
$
$
$
$
$
In 2015, we had cumulative net operating loss carry-forwards for tax reporting purposes of approximately
$38.8 million for state purposes, which if not used, will begin to expire in fiscal 2018.
We made federal income tax payments, net of federal refunds, of $166,000, $369,000, and $577,000 in
2015, 2014 and 2013, respectively. State and foreign income taxes paid by the Company, net of refunds, totaled
$232,000, $231,000, and $522,000 in 2015, 2014 and 2013, respectively.
F-31
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation between the statutory rate and the effective tax rate is as follows:
Federal statutory tax rate
State taxes, net of valuation allowance and federal benefit
Foreign taxes
Tax effect of permanent differences – meals and entertainment
Tax effect of permanent differences – tip credit
Tax effect of permanent differences – other
Tax effect of general business credits
Tax effect of foreign tax credit
Uncertain tax positions
Other
Fiscal Year
2015
2014
2013
34.0 %
34.0 %
34.0 %
5.4
7.7
1.4
17.2
(0.6)
(50.7)
(7.7)
---
(2.4)
3.2
3.7
1.5
8.1
(1.4)
(23.8)
(3.7)
---
2.9
4.9
1.6
0.7
4.5
(0.4)
(13.4)
(1.6)
0.4
(0.7)
Effective tax rate(1)
4.3 %
24.5 %
30.0 %
(1)The decrease in the 2015 effective tax rate is primarily due to the small amount of 2015 pre-tax book income.
(13)
SUPPLEMENTAL CASH FLOWS INFORMATION
(in thousands)
Cash paid for interest, net of capitalized interest
Cash paid for income taxes, net of refunds
Non-cash investing and financing activities:
Reclassification of additional paid-in-capital to payroll taxes
payable for performance shares issued
Accrued property and equipment purchases
For the Fiscal Year Ended
2015
2014
2013
$
$
$
$
975
398
215
10
$
$
$
$
790
600
1,520
(32)
$
$
$
$
947
1,099
641
134
F-32
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(14) SELECTED QUARTERLY DATA (UNAUDITED)
The following represents selected quarterly financial information for fiscal years 2015 and 2014 (in
thousands except per-share data).
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2015
2014
2015
2014
2015
2014
2015
2014
Revenue
$ 28,264 $ 31,397 $ 32,714 $ 37,135 $ 27,880 $
33,401 $ 25,367 $ 29,929
Income (loss) from operations
Net income (loss) from continuing
operations
Net income (loss) from
discontinued operations
Basic net income (loss) from
continuing operations
per common share
Basic net income (loss) from
discontinued operations
per common share
Diluted net income (loss) from
continuing operations
per diluted share
Diluted net income (loss) from
discontinued operations
per diluted share
(15) LITIGATION
$
$
$
$
$
$
$
293 $
629 $
982 $
4,035 $
1,304 $
2,941 $
(447) $ (3,748)
99 $
258 $
548 $
2,576 $
728 $
1,880 $
(307) $ (2,460)
89 $
258 $
106 $
275 $
(20)
$
143 $ (5,636) $
(33)
0.02 $
0.03 $
0.08 $
0.36 $
0.10 $
0.26 $
(0.05) $
(0.34)
0.01 $
0.04 $
0.02 $
0.04 $
--- $
0.02 $
(0.81) $
(0.01)
0.01 $
0.03 $
0.08 $
0.36 $
0.10 $
0.26 $
(0.04) $
(0.34)
0.01 $
0.04 $
0.02 $
0.04 $
--- $
0.02 $
(0.81) $
(0.01)
In the normal course of business, the Company is involved in a number of litigation matters that are
incidental to the operation of the business. These matters generally include, among other things, matters with
regard to employment and general business-related issues. The Company currently believes that the resolution of
any of these pending matters will not have a material adverse effect on its financial position or liquidity, but an
adverse decision in more than one of the matters could be material to its consolidated results of operations.
The Company believes there will not be a material adverse impact as result of the following litigation;
Famous Dave’s of America, Inc.’s (“Famous Dave’s”) filed a complaint on July 14, 2015, against a group of
former franchisees in California seeking injunctive relief and damages for: (1) Federal Trademark Infringement;
(2) Federal Trademark Dilution; (3) Federal Unfair Competition; (4) Federal Trade Dress Dilution; (5) Trademark
Infringement under California Business and Professions Code § 14200; (6) Trademark Dilution under California
Business and Professions Code §14200; (7) Common Law Trademark Infringement; (8) Unfair Competition under
California Business and Professions Code § 17200; (9) False Advertising; (10) Breach of Contract; (11) Breach of
Implied Covenant of Good Faith and Fair Dealing; and (12) Intentional Interference with Contract. The claims
stem from the former franchisees breaches of their franchise agreements, including the failure to pay franchise fees
and their continued operation of five restaurants utilizing Famous Dave’s intellectual property without
F-33
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
authorization. After two defendants in the case, Kurt Schneiter and M Mart 1, filed a demurrer to the Complaint,
Famous Dave’s filed an Amended Complaint on October 9, 2015, reasserting the same claims. The case is
captioned Famous Dave’s of America, Inc., v. SR El Centro FD, Inc., et al., Case No. BC589329, and is currently
pending before the Honorable Elihu M. Berle in the Superior Court of Los Angeles. No trial date has been
set. Famous Dave’s intends to vigorously prosecute the lawsuit.
(16) ASSET IMPAIRMENT AND ESTIMATED LEASE TERMINATION AND OTHER CLOSING
COSTS
Restaurant sites that are operating, but have been previously impaired, are reported at the lower of their
carrying amount or fair value less estimated costs to sell. The following is a summary of impairment costs for
fiscal 2015, fiscal 2014, and fiscal 2013. These costs are included in asset impairment and estimated lease
termination and other closing costs in the Consolidated Statements of Operations.
Richmond, VA Area Restaurant Closures
On December 29, 2014, the Company announced the closure of its three underperforming company-owned
restaurants located in and around Richmond, Virginia. The associated impairment charges primarily related to the
write-off of the book value of the related property, plant and equipment, net of estimated proceeds from the sale of
these assets (primarily derived from the sale of real property). Loss before taxes associated with these operations
for the year ended December 28, 2014 totaled approximately $187,000.
On December 28, 2014 the restaurants were valued at the estimated proceeds from the sale and were
recorded as Assets held for sale in the Consolidated Balance Sheet. Two of these properties were sold during the
third quarter of fiscal 2015 and the first quarter of fiscal 2016, respectively. On January 3, 2016, the remaining
property’s fair value was reclassified to property, equipment and leasehold improvements, net because it is
probable that the assets will not be sold in the next in the next 12 months.
Fiscal 2015 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
Restaurants
Reason
Smithtown, NY
N. Riverside, IL
Richmond, VA area restaurants
N. Riverside, IL
Chicago, IL field office
Eden Prairie, MN
Other
Total for fiscal 2015
Asset impairment(1)
Lease termination costs(2)
Costs for closed locations
Site costs-restaurants not opened(3)
Lease termination costs(4)
Costs for closed restaurants
Costs for closed locations
Amount
$
$
935
368
143
122
106
(42)
(112)
1,520
(1)Asset impairment calculated at June 28, 2015 based upon anticipated sale of Smithtown restaurant, which occurred in the third quarter of fiscal 2015.
(2)Lease termination costs associated with the cancellation of a potential new restaurant location.
(3)Write-off of failed site preparation costs for two locations the Company decided not to open.
(4)Includes $191,000 in write-off for closed Lombard, Illinois field office site lease commitment partially offset by an $86,000 recapture of deferred rent
credits.
F-34
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fiscal 2014 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
Restaurants
Reason
Amount
Asset impairment(1)
Richmond, VA area restaurants
Asset impairment(1)
May's Landing, NJ
Two Minneapolis, MN area restaurants Asset impairment(1)
Asset impairment(2)
Décor
Asset impairment(1)
Des Moines, IA
Restaurant closing costs(3)
Salisbury, MD
Lease termination costs(4)
Décor Warehouse
Restaurant closing costs(5)
Richmond, VA area restaurants
Lease termination costs(6)
Salisbury, MD
Total for fiscal 2014
$
$
2,285
766
544
342
226
187
94
54
19
4,517
(1)Based on the Company's assessment of expected cash flows, an asset impairment charge was recorded for these restaurants. The remaining asset
balances can be recovered through sale or transferred to other restaurants.
(2)Change in strategy regarding décor resulted in the impairment of the décor located in the company's restaurants.
(3)Write-off of obsolete restaurant equipment.
(4)Lease termination costs associated with closure of the décor warehouse.
(5)Costs associated with anticipated future closures.
(6)Lease termination costs associated with closure of the restaurant, net of deferred rent credits.
Fiscal 2013 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in
Restaurant
Reason
Salisbury, MD
Oakton, VA
Gaithersburg, MD
Total for fiscal 2013
Asset impairment(1)
Lease termination fee(2)
Costs for closed restaurants(3)
Amount
943
200
38
1,181
$
$
(1)Based on the Company's assessment of expected cash flows, an asset impairment charge was recorded for this restaurant. The remaining balance can
be transferred to other restaurants.
(2)Lease costs associated with terminating lease for this restaurant.
(3)The Company incurred various costs for this restaurant which closed at the end of its natural lease term.
F-35
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Below reflects the change in our reserve for lease termination costs for fiscal 2015 and 2014:
Balance at
Beginning of
Period
Additions
Charged to
Costs and
Expenses
Deductions
Credits to
Costs and
Expenses
and Other
Accounts
Balance at
End of
Period
16.0
286.2
(69.3)
$
232.9
---
---
116.0
(100.0)
$
16.0
---
---
$
---
(in thousands)
Year ended January 3, 2016
Reserve for lease termination costs
Year ended December 28, 2014
Reserve for lease termination costs
Year ended December 29, 2013
Reserve for lease termination costs
$
$
$
These amounts were recorded in other current liabilities or other liabilities depending on when we expected the
amounts to be paid.
(17)
FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The fair value measurement framework
establishes a three-tier hierarchy. The three levels, in order of priority, are as follows:
Level 1:
Level 2:
Level 3:
Unadjusted quoted prices in active markets for identical assets or liabilities at the
measurement date. Level 1 measurements are determined by observable inputs which
include data sources and market prices available and visible outside of the entity.
Observable inputs other than quoted prices included within Level 1 for the asset or
liability, either directly or indirectly.
Inputs that are used to estimate the fair value of the asset or liability. Level 3
measurements are determined by unobservable inputs, which include data and analyses
developed within the entity to assess the fair value.
Transfers in and out of levels will be based on our judgment of the availability of unadjusted quoted prices
in active markets, other observable inputs, and non-observable inputs.
The carrying amounts of cash and cash equivalents reported in the consolidated balance sheets
approximates fair value based on current interest rates and short-term maturities. The carrying amount of accounts
receivable approximates fair value due to the short term nature of accounts receivable. The carrying amount of the
F-36
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
line of credit and long-term debt approximates fair value due to the variable interest rates charged on the line of
credit and long-term debt.
The following table (in thousands) summarizes the assets held for sale and the performance stock units
measured at fair value in our consolidated balance sheet as of January 3, 2016 and December 28, 2014:
Balance at January 3, 2016
Assets
Assets Held for Sale
Property and Equipment, net
Balance at December 28, 2014
Assets
Liabilities
Assets Held for Sale
Property and Equipment, net
Performance Stock Units
$
$
$
$
$
Level 1
Level 2
Level 3
Total
- $
- $
1,431 $
- $
780 $
507 $
2,211
507
- $
- $
38 $
- $
- $
- $
2,500 $
648 $
2,500
648
- $
38
Assets Held for Sale recorded at fair value were valued based upon a Real Estate Broker's Estimate of
Value for the properties (Level 3) or negotiated sale price (Level 2). Property and Equipment, net, recorded at fair
upon Broker's Estimate of Value or estimated discounted future cash flows (Level 3). These assets have been net
realizable value based upon the decision to dispose of the property.
The performance stock units are measured on a recurring basis and classified as other long-term liabilities
on our balance sheet.
(18) VARIABLE INTEREST ENTITIES
Once an entity is determined to be a variable interest entity (VIE), the party with the controlling financial
interest, the primary beneficiary, is required to consolidate it. The Company has an installment agreement with one
of its franchisees as the result of refranchising its Lincoln Nebraska restaurant. This franchisee is a VIE, however,
the owners of the franchise operations are the primary beneficiaries of the entities, not the Company. Therefore, the
franchise operations are not required to be consolidated in the Company’s consolidated financial statements.
On August 11, 2015, the Company entered into an agreement to sell its Greenwood, Indiana and Florence,
Kentucky restaurants. In conjunction with that agreement, the Company entered into lease assignment agreements
with the respective purchasers and landlords, releasing the Company of its obligations except in the event of
default by the purchasers. As of January 3, 2016, the amount of the future lease payments for which the company
would be liable in the event of a default are approximately $600,000. An accrual related to any future obligation
was not considered necessary at January 3, 2016 as the Company has determined the fair value of this guarantee
was zero; therefore there was no indication that the purchasers would not be able to pay the required lease
payments. This franchisee is a VIE, however, the owners of the franchise operations are the primary beneficiaries
of the entities, not the Company. Therefore, the franchise operations are not required to be consolidated in the
Company’s consolidated financial statements.
F-37
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(19) RELATED PARTY TRANSACTIONS
Adam J. Wright currently serves as our Chief Executive Officer and a director of the Company and has been
nominated for re-election at the Annual Meeting. Mr. Wright’s brother, Michael B. Wright, owns and controls
Famous Products, Inc., a corporation that licenses a line of retail products from the Company, including sauces,
rubs, marinades and seasonings, pursuant to a licensing agreement with a current term that expires in April 2020
and is subject to renewal options of five years, contingent upon the licensee’s attainment of identified minimum
product sales levels. The Company received licensing revenue from Famous Products, Inc. under the agreement of
approximately $940,000, $878,000 and $805,000 for fiscal years 2015, 2014 and 2013, respectively. Michael B.
Wright also owns DTSG, Inc., a corporation that owns or controls five franchised Famous Dave’s restaurants.
DTSG, Inc. paid an aggregate of approximately $678,000, $710,000 and $640,000 in franchise royalties and
contributions to the Company’s system-wide Public Relations and Marketing Development Fund for fiscal years
2015, 2014 and 2013, respectively.
Anand D. Gala currently serves as a director of the Company and has been nominated for re-election at the
Annual Meeting. Mr. Gala is the Founder, President and Chief Executive Officer of Gala Holdings International, a
diversified holding company that conducts consulting, restaurant development and management operations. As a
Company franchisee, Gala Holdings International paid approximately $2.1 million in franchise royalties and
contributions to the Company’s system-wide Public Relations and Marketing Development Fund for the
Company’s 2015 fiscal year. Approximately $223,000 associated with royalties and contributions to the
Company’s system-wide Public Relations and Marketing Development Fund is included in accounts receivable at
January 3, 2016.
(20) SUBSEQUENT EVENTS
The Company evaluated for the occurrence of subsequent events through the issuance date of the Company’s
financial statements. No other recognized or non-recognized subsequent events occurred that require recognition
or disclosure in the financial statements except as noted below.
On February 12, 2016 the Company completed the sale of one of its two properties in the Richmond,
Virginia area, receiving net proceeds of approximately $1.1 million, resulting in a net gain on the sale of
approximately $200,000.
On March 1, 2016 the Company completed its refranchising of seven Chicago, Illinois area Company-owned
restaurants located in Addison, Algonquin, Bolingbrook, Evergreen Park, North Riverside, Orland Park and
Oswego (collectively, “Purchased Restaurants”) to the Purchaser, Windy City, LLC. As consideration for the
Purchased Restaurants, which includes the real property on which the Company operates a Purchased Restaurant,
located in Addison, Illinois, the Purchaser will pay the Company $1.15 million, plus the book value of purchased
inventory on the closing date, and will assume specified liabilities of the Company. Included among the assumed
liabilities are the Company’s existing leases for the Purchased Restaurants located in Bolingbrook, North Riverside
and Orland Park, Illinois. During the first quarter of fiscal 2016, the Company anticipates recapturing
approximately $1.1 to $1.3 million in deferred rent credits subsequent to the close of this transaction.
In conjunction with that agreement, the Company entered into lease assignment agreements for three of the
locations and entered into sublease agreements relating to three other locations with the respective purchasers and
landlords, releasing the Company of its obligations except in the event of default by the purchasers of the sublease
agreements. As of March 1, 2016, the amount of the future lease payments for which the company would be liable
in the event of a default is approximately $2.2 million. An accrual related to any future obligation was not
considered necessary at March 1, 2016 as there was no indication that the purchasers would not be able to pay the
required lease payments.
F-38
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
Financial Statement Schedule
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Additions
Balance at
Beginning of
Period
Charged to
Costs and
Expenses
Deductions
Credits to
Costs and
Expenses
and Other
Accounts
Balance at
End of
Period
Year ended December 29, 2013:
Allowance for doubtful accounts
Reserve for corporate severance
Year ended December 28, 2014:
Allowance for doubtful accounts
Reserve for lease termination costs
Reserve for corporate severance
Year ended January 3, 2016:
Allowance for doubtful accounts
Reserve for lease termination costs
Reserve for corporate severance
$
$
$
$
$
$
$
$
236.3
120.2
72.5
---
83.3
214.4
16.0
360.6
$
$
$
$
$
$
$
$
7.3
348.1
274.1
116.0
931.1
295.9
286.2
221.0
$
$
$
$
$
$
$
$
(171.1)
(385.0)
(132.2)
(100.0)
(653.8)
(264.6)
(69.3)
(561.5)
$
$
$
$
$
$
$
$
72.5
83.3
214.4
16.0
360.6
245.7
232.9
20.1
F-39
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
FAMOUS DAVE’S OF AMERICA, INC.
(“Registrant”)
Dated: March 18, 2016
By: /s/ Adam J. Wright __
Adam J. Wright
Chief Executive Officer and Director (Principal Executive
Officer)
By: /s/ Richard A. Pawlowski
Richard A. Pawlowski
Chief Financial Officer (Principal Financial Officer)
By: /s/ John P. Beckman
John P. Beckman
Chief Accounting Officer (Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on March 18,
2016 by the following persons on behalf of the registrant, in the capacities indicated.
Signature
Title
/s/ Adam J. Wright
Adam J. Wright
/s/ Anand D. Gala
Anand D. Gala
/s/ Joseph M. Jacobs
Joseph M. Jacobs
/s/ Jonathan P. Lennon
Jonathan P. Lennon
/s/ Richard A. Shapiro
Richard A. Shapiro
/s/ Patrick D. Walsh
Patrick D. Walsh
/s/ Bryan L. Wolff
Bryan L. Wolff
Chief Executive Officer and Director
Director
Director
Director
Director
Director
Director
Exhibit No.
Description
EXHIBITS
3.1
3.2
Articles of Incorporation, incorporated by reference to Exhibit 3.1 to our Registration Statement on
Form SB-2 (File No. 333-10675) filed with the Securities and Exchange Commission on August 23,
1996
Amendment to Articles of Incorporation dated May 31, 1996, incorporated by reference to Exhibit
3.3 to our Registration Statement on Form SB-2/A (File No. 333-10675) filed with the Securities and
Exchange Commission on October 1, 1996
3.3 *
10.1
Second Amended and Restated Bylaws, as amended by Amendment Nos. 1 and 2
Trademark License Agreement between Famous Dave’s of America, Inc. and Grand Pines Resorts,
Inc., incorporated by reference to Exhibit 10.11 to the Registration Statement on Form SB-2 (File
No. 333-10675) filed on August 23, 1996
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
Employee Stock Purchase Plan, incorporated by reference to Exhibit 10.1 to Form 10-Q filed May 9,
2008
Second Amended and Restated Non-Qualified Deferred Compensation Plan, dated January 1, 2008,
incorporated by reference to Exhibit 10.16 to Form 10-K filed March 14, 2008
Second Amended and Restated Credit Agreement by and between Wells Fargo Bank, National
Association and Famous Dave’s of America, Inc., dated March 4, 2010, incorporated by reference to
Exhibit 10.2 to Form 8-K filed March 9, 2010
Letter amendment dated February 1, 2011, to the Second Amendment to the Amended and Restated
Credit Agreement by and between Wells Fargo Bank, National Association and Famous Dave’s of
America, Inc., incorporated by reference to Exhibit 10.11 to Form 10-K filed March 18, 2011
First Amendment to the Second Amended and Restated Credit Agreement by and between Wells
Fargo Bank, National Association and Famous Dave’s of America, Inc., dated July 5, 2011,
incorporated by reference to Exhibit 10.1 to Form 8-K filed July 5, 2011
Second Amendment to the Second Amended and Restated Credit Agreement by and between Wells
Fargo Bank, National Association and Famous Dave’s of America, Inc., dated November 1, 2012,
incorporated by reference to Exhibit 10.1 to Form 10-Q filed November 2, 2012
Third Amendment to the Second Amended and Restated Credit Agreement by and between Wells
Fargo Bank, National Association and Famous Dave’s of America, Inc., dated March 14, 2013,
incorporated by reference to Exhibit 10.11 to Form 10-K filed March 14, 2013
Fourth Amendment to the Second and Amended Restated Credit Agreement, incorporated by
reference to Exhibit 10.1 to Form 10-Q filed May 9, 2014
Third Amended and Restated Credit Agreement dated May 8, 2015 by and among Wells Fargo Bank,
National Association, Famous Dave’s of America, Inc. and certain subsidiaries of Famous Dave’s of
America, Inc., incorporated by reference to Exhibit 10.2 to Form 10-Q filed May 8, 2015
Forbearance Agreement dated as of November 5, 2015 by and among Famous Dave’s of America,
Inc., D&D of Minnesota, Inc., Lake & Hennepin BBQ and Blues, Inc., Famous Dave’s Ribs, Inc.,
Famous Dave’s Ribs-U, Inc., and Famous Dave’s Ribs of Maryland, Inc., each as borrowers, and
Wells Fargo Bank, National Association, as administrative agent and lender, incorporated by
reference to Exhibit 10.4 to Form 10-Q filed November 6, 2015
Exhibit No.
Description
EXHIBITS
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
First Amendment to Forbearance Agreement dated as of December 2, 2015 by and among Famous
Dave’s of America, Inc., D&D of Minnesota, Inc., Lake & Hennepin BBQ and Blues, Inc., Famous
Dave’s Ribs, Inc., Famous Dave’s Ribs-U, Inc., and Famous Dave’s Ribs of Maryland, Inc., each as
borrowers, and Wells Fargo Bank, National Association, as administrative agent and lender,
incorporated by reference to Exhibit 10.1 to Form 8-K filed December 4, 2015
First Amendment to Third Amended and Restated Credit Agreement dated as of December 11, 2015
by and among Famous Dave’s of America, Inc., D&D of Minnesota, Inc., Lake & Hennepin BBQ
and Blues, Inc., Famous Dave’s RIBS, Inc., Famous Dave’s RIBS-U, Inc., and Famous Dave’s Ribs
of Maryland, Inc., each as borrowers, and Wells Fargo Bank, National Association, as administrative
agent and lender, incorporated by reference to Exhibit 10.1 to Form 8-K filed December 11, 2015
Amended and Restated 2005 Stock Incentive Plan (as amended through January 21, 2013)
incorporated by reference to Exhibit 10.6 to Form 10-K filed March 15, 2013
Form of Director Restricted Stock Agreement Granted Under the Amended and Restated 2005 Stock
Incentive Plan, incorporated by reference to Exhibit 10.4 to Form 10-K filed March 13, 2015
Form of Director Restricted Stock Agreement Granted Under the Amended and Restated 2005 Stock
Incentive Plan, incorporated by reference to Exhibit 10.4 to Form 10-K filed March 13, 2015
Famous Dave’s of America, Inc. 2015 Equity Incentive Plan, incorporated by reference to Exhibit
10.1 to Form 10-Q filed May 8, 2015
Amendment No. 1 to 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to Form
8-K filed July 31, 2015
Amendment No. 2 to 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to Form
10-Q filed November 6, 2015
Form 2013 – 2015 Performance Share Agreement and Schedule of Grants under such form,
incorporated by reference to Exhibits 10.1 and 10.2 to Form 8-K filed January 8, 2013
Stock Option Agreement dated February 10, 2014 between Famous Dave's of America, Inc. and
Edward H. Rensi, incorporated by reference to Exhibit 10.36 to Form 10-K filed March 14, 2014 †
Employment Letter dated February 10, 2014 between Famous Dave’s of America, Inc. and Edward
H. Rensi, incorporated by reference to Exhibit 10.35 to Form 10-K filed March 14, 2014
Stock Option Agreement dated February 10, 2014 between Famous Dave’s of America, Inc. and
Edward H. Rensi, incorporated by reference to Exhibit 10.36 to Form 10-K filed March 14, 2014
Employment Letter dated May 19, 2014 between Famous Dave’s of America, Inc. and Richard A.
Pawlowski, incorporated by reference to Exhibit 10.22 to Form 10-K filed March 13, 2015
Stock Option Agreement dated June 2, 2014 between Famous Dave’s of America, Inc. and Richard
A. Pawlowski, incorporated by reference to Exhibit 10.23 to Form 10-K filed March 13, 2015
Stock Option Agreement dated January 15, 2015 between Famous Dave’s of America, Inc. and
Edward H. Rensi, incorporated by reference to Exhibit 10.24 to Form 10-K filed March 13, 2015
Employment Agreement entered into on August 3, 2015 between Famous Dave’s of America, Inc.
and Abelardo Ruiz, incorporated by reference to Exhibit 10.l to Form 8-K filed August 7, 2015
Severance Agreement dated August 17, 2015 between Famous Dave’s of America, Inc. and Richard
A. Pawlowski, incorporated by reference to Exhibit 10.l to Form 8-K filed August 21, 2015
Exhibit No.
Description
EXHIBITS
10.29 *
Stock Option Agreement dated August 31, 2015 between Famous Dave’s of America, Inc. and
Abelardo Ruiz
10.30
10.31
10.32
10.33 *
10.34 *
21.0 *
23.1 *
31.1 *
31.2 *
32.1 *
32.2 *
101.INS *
101.SCH *
101.CAL *
101.LAB *
101.PRE *
101.DEF *
* Filed
Form of Indemnification Agreement between Famous Dave’s of America, Inc. and each of its
directors and officers, incorporated by reference to Exhibit 10.2 to Form 10-Q filed November 6,
2015
Schedule of directors and officers subject to Indemnification Agreements in the form of Exhibit
10.30, incorporated by reference to Exhibit 10.3 to Form 10-Q filed November 6, 2015
Employment Agreement dated effective January 1, 2016 between Famous Dave’s of America, Inc.
and Adam J. Wright, incorporated by reference to Exhibit 10.1 to Form 8-K filed January 4, 2016
Stock Option Agreement dated January 1, 2016 between Famous Dave’s of America, Inc. and Adam
J. Wright
Employment Agreement dated February 12, 2016 between Famous Dave's of America, Inc. and
Alfredo V. Martel
Subsidiaries of Famous Dave's of America, Inc.
Consent of Grant Thornton LLP
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
XBRL Instance Document
XBRL Schema Document
XBRL Calculation Linkbase Document
XBRL Label Linkbase Document
XBRL Presentation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
SUBSIDIARIES OF FAMOUS DAVE'S OF AMERICA, INC.
Exhibit 21.0
Entity
D&D of Minnesota, Inc.
Famous Dave's Ribs of Maryland, Inc.
Famous Dave's Ribs, Inc.
Famous Dave's Ribs-U, Inc.
FDA Properties, Inc.
Lake & Hennepin BBQ and Blues, Inc.
Minwood Partners, Inc.
FEIN
% of Ownership
41-1856702
41-1958496
41-1884517
41-1884548
36-4379010
41-1834594
51-0396229
100%
96%
100%
100%
100%
100%
100%
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
We have issued our report dated March 18, 2016, with respect to the consolidated financial statements and
schedule included in the Annual Report of Famous Dave’s of America, Inc. on Form 10-K for the year ended
January 3, 2016. We consent to the incorporation by reference of said report in the Registration Statements of
Famous Dave’s of America, Inc. on Forms S-3 (File No. 333-86358, File No. 333-73504, File No. 333-65428, File
No. 333-54562, File No. 333-48492, and File No. 333-95311) and on Forms S-8 (File No. 333-208261, File No.
333-204015, File No. 333-176278, File No. 333-124985, and File No. 333-88930).
/s/ Grant Thornton LLP
Minneapolis, Minnesota
March 18, 2016
I, Adam J. Wright, certify that:
CERTIFICATIONS
Exhibit 31.1
1.
I have reviewed this Annual Report on Form 10-K of Famous Dave’s of America, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Dated: March 18, 2016
By: /s/ Adam J. Wright
Adam J. Wright
Chief Executive Officer
Exhibit 31.2
I, Richard A. Pawlowski, certify that:
CERTIFICATIONS
1.
I have reviewed this Annual Report on Form 10-K of Famous Dave’s of America, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Dated: March 18, 2016
By: /s/ Richard A. Pawlowski
Richard A. Pawlowski
Chief Financial Officer
Certification Pursuant to Rule 13a-14(b) of the
Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
Exhibit 32.1
In connection with the Annual Report of Famous Dave's of America, Inc (the “Registrant”) on Form 10-K for the
annual period ended January 3, 2016, as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I, Adam J. Wright, Chief Executive Officer and Director of the Registrant, certify, in accordance with
Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 that:
1. The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934;
and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Registrant.
Dated: March 18, 2016
By:
/s/ Adam J. Wright
Adam J. Wright
Chief Executive Officer
Certification Pursuant to Rule 13a-14(b) of the
Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
Exhibit 32.2
In connection with the Annual Report of Famous Dave's of America, Inc (the “Registrant”) on Form 10-K for the
annual period ended January 3, 2016, as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I, Richard A. Pawlowski, Chief Financial Officer and Secretary of the Registrant, certify, in accordance
with Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 that:
1. The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934;
and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Registrant.
Dated: March 18, 2016
By: /s/ Richard A. Pawlowski
Richard A. Pawlowski
Chief Financial Officer
BOARD OF DIRECTORS, EXECUTIVE TEAM AND SHAREHOLDER INFORMATION
BOARD OF DIRECTORS
EXECUTIVE TEAM
SHAREHOLDER INFORMATION
Joseph J. Jacobs
Chairman of the Board
Anand D. Gala
Jonathan P. Lennon
Member of Compensation Committee,
Member of Corporate Governance &
Nominating Committee. and Member
of Audit Committee
Adam J. Wright
(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:5)(cid:10)(cid:11)(cid:12)(cid:4)(cid:13)(cid:5)(cid:7)(cid:14)(cid:15)(cid:10)(cid:5)(cid:16)
Richard A. Pawlowski
(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:17)(cid:4)(cid:18)(cid:19)(cid:18)(cid:10)(cid:4)(cid:19)(cid:20)(cid:7)(cid:14)(cid:15)(cid:10)(cid:5)(cid:16)
Abelardo M. Ruiz
(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:14)(cid:21)(cid:5)(cid:16)(cid:19)(cid:12)(cid:4)(cid:18)(cid:22)(cid:7)(cid:14)(cid:15)(cid:10)(cid:5)(cid:16)
Alfredo V. Martel
(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:23)(cid:19)(cid:16)(cid:24)(cid:5)(cid:12)(cid:4)(cid:18)(cid:22)(cid:7)(cid:14)(cid:15)(cid:10)(cid:5)(cid:16)
Investor/Analyst Contact
Richard A. Pawlowski
952-294-1300
Independent Registered Public
Accounting Firm
Grant Thornton LLP
Minneapolis, Minnesota
Legal Counsel
Maslon, LLP
Adam J. Wright
(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:5)(cid:10)(cid:11)(cid:12)(cid:4)(cid:13)(cid:5)(cid:7)(cid:14)(cid:15)(cid:10)(cid:5)(cid:16)
Patrick D. Walsh
Chairman of Compensation
Committee and Member of
Audit Committee
Richard A. Shapiro
(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:7)(cid:10)(cid:11)(cid:12)(cid:13)
Chairman of the Audit Committee,
Chairman of Corporate Governance &
Nominating Committee, Member of
the Compensation Committee
(cid:14)(cid:15)(cid:13)(cid:7)(cid:16)(cid:9)(cid:7)(cid:17)(cid:18)(cid:3)(cid:5)(cid:19)(cid:20)(cid:11)(cid:6)
Vice President, Purchasing, Décor,
Construction and Logistics
Transfer Agent & Registrar
Wells Fargo
John P. Beckman
(cid:25)(cid:4)(cid:10)(cid:5)(cid:7)(cid:26)(cid:16)(cid:5)(cid:27)(cid:4)(cid:28)(cid:5)(cid:18)(cid:12)(cid:29)(cid:7)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:30)(cid:10)(cid:10)(cid:31)(cid:11)(cid:18)(cid:12)(cid:4)(cid:18)(cid:22)(cid:7)(cid:14)(cid:15)(cid:10)(cid:5)(cid:16)
CHAIRMAN EMERITUS
David W. Anderson
Founder and Chairman Emeritus
Stock Exchange Listing
Common stock is traded on
the NASDAQ Global Select Market
under the symbol DAVE
Annual Meeting
The annual meeting of shareholders
is scheduled to begin at 3:00 PM
(CST) on Tuesday, May 3, 2016 at the
Company’s headquarters
RESTAURANT LOCATIONS
United Arab Emirates
• 37 COMPANY RESTAURANTS
• 141 FRANCHISE RESTAURANTS
Puerto Rico
As of March 2016, Famous Dave’s had a total of 178 company-owned and franchise-operated restaurants
in 33 states, the Commonwealth of Puerto Rico, Canada and The United Arab Emirates.
Famous Dave’s of America, Inc.
12701 Whitewater Drive, Suite 200 | Minnetonka, MN 55343
952.294.1300 | famousdaves.com