1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended April 2, 2000
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
-------------------- -----------------
Commission file number 0-21625
FAMOUS DAVE'S OF AMERICA, INC.
(Exact Name of Registrant as Specified in Its Charter)
Minnesota 41-1782300
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
7657 Anagram Drive, Eden Prairie, MN 55344
(Address of Principal Executive Offices)
(952) 294-1300
(Registrant's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
Indicate by check whether the registrant: (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 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 X No
--- ---
At May 10, 2000 there were 9,098,693 shares of common stock, $.01 par
value, outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
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FAMOUS DAVE'S OF AMERICA, INC.
Form 10-Q Index
April 2, 2000
Page Number
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Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - 3
April 2, 2000 and January 2,2000
Condensed Consolidated Statements of Operations - 4
For the thirteen weeks ended April 2, 2000 and
April 4,1999
Condensed Consolidated Statements of Cash Flows - 5
For the thirteen weeks ended April 2, 2000 and
April 4, 2000
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
Part II OTHER INFORMATION
Items 1,5 and 6. 13
Signatures 14
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
APRIL 2, JANUARY 2,
2000 2000
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................................... $ 987,000 $ 1,712,000
Inventories .................................................. 1,259,000 1,108,000
Prepaids and other current assets ............................ 1,291,000 1,249,000
------------ ------------
Total current assets ...................................... 3,537,000 4,069,000
PROPERTY, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS, NET ........................................... 40,878,000 38,742,000
OTHER ASSETS:
Deposits ..................................................... 367,000 315,000
Debt issuance costs, net ..................................... 376,000 200,000
------------ ------------
$ 45,158,000 $ 43,326,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit ............................................... $ 1,544,000 $ 3,050,000
Current portion of capital lease obligations ................. 1,039,000 1,026,000
Accounts payable ............................................. 3,144,000 4,220,000
Accrued payroll and related taxes ............................ 794,000 807,000
Other current liabilities .................................... 2,045,000 2,136,000
------------ ------------
Total current liabilities ................................. 8,566,000 11,239,000
NOTE PAYABLE ................................................... 750,000 0
FINANCING LEASE OBLIGATIONS .................................... 8,290,000 4,500,000
CAPITAL LEASE OBLIGATIONS, NET OF CURRENT
PORTION ..................................................... 456,000 577,000
------------ ------------
Total liabilities ......................................... 18,062,000 16,316,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 100,000,000 shares authorized,
9,070,360 and 9,055,139 shares issued and outstanding ...... 91,000 91,000
Additional paid-in capital ................................... 43,300,000 43,265,000
Accumulated deficit .......................................... (16,295,000) (16,346,000)
------------ ------------
Total shareholders' equity ................................ 27,096,000 27,010,000
------------ ------------
$ 45,158,000 $ 43,326,000
============ ============
See accompanying notes to condensed consolidated financial statements.
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FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Thirteen Weeks Ended
----------------------------
April 2, April 4,
2000 1999
------------ ------------
(Unaudited) (Unaudited)
REVENUES, NET $ 15,091,000 $ 10,388,000
------------ ------------
COSTS AND EXPENSES:
Food and beverage costs 4,980,000 3,546,000
Labor and benefits 4,250,000 2,924,000
Operating expenses 3,514,000 2,449,000
Depreciation and amortization 814,000 609,000
Pre-opening expenses 192,000 103,000
General and administrative 1,079,000 1,069,000
------------ ------------
Total costs and expenses 14,829,000 10,700,000
------------ ------------
INCOME (LOSS) FROM OPERATIONS 262,000 (312,000)
OTHER INCOME (EXPENSE):
Interest income 0 33,000
Interest expense (225,000) (48,000)
Franchise income 14,000 11,000
------------ ------------
Total other income (expense) (211,000) (4,000)
------------ ------------
NET INCOME (LOSS) $ 51,000 $ (316,000)
============ ============
BASIC NET INCOME (LOSS) PER COMMON SHARE $ 0.01 $ (0.04)
============ ============
DILUTED NET INCOME (LOSS) PER COMMON SHARE $ 0.01 $ (0.04)
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC 9,069,371 8,837,590
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 9,168,689 8,837,590
============ ============
See accompanying notes to condensed consolidated financial statements.
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FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Thirteen Weeks Ended
--------------------------
April 2, April 4,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 51,000 $ (316,000)
Adjustments to reconcile net income (loss) to
cash flows from operating activities:
Depreciation and amortization 872,000 688,000
Impairment reserve for restaurants and other assets (35,000) (32,000)
Changes in working capital items -
Inventories (151,000) (16,000)
Prepaids and other current assets (42,000) (185,000)
Deposits (52,000) (9,000)
Accounts payable (1,076,000) (2,311,000)
Accrued payroll and other taxes (13,000) 83,000
Other current liabilities (62,000) (61,000)
----------- -----------
Cash flows from operating activities (508,000) (2,159,000)
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CASH FLOWS FROM
INVESTING ACTIVITIES:
Proceeds from available-for-sale securities 0 75,000
Purchase of property, equipment
and leasehold improvements (2,217,000) (1,481,000)
----------- -----------
Cash flows from investing activities (2,217,000) (1,406,000)
----------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Payments on debt issuance costs (181,000) 0
Net payments on line of credit (1,506,000) (683,000)
Proceeds from financing lease obligation 3,790,000 4,500,000
Payments on capital lease obligations (108,000) (86,000)
Proceeds from exercise of stock options 5,000 0
----------- -----------
Cash flows from financing activities 2,000,000 3,731,000
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INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (725,000) 166,000
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,712,000 1,951,000
----------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 987,000 $ 2,117,000
=========== ===========
NONCASH INVESTING AND FINANCING
ACTIVITIES:
Note payable issued in connection with
land acquired $ 750,000 $ 0
----------- -----------
Common shares issued in lieu of other
current liabilities $ 29,000 $ 0
----------- -----------
See accompanying notes to condensed consolidated financial statements.
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FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 2, 2000
(Unaudited)
(1) GENERAL
Famous Dave's of America, Inc. ("Famous Dave's" or the "Company") currently
operates or franchises twenty-nine restaurants under the name "Famous Dave's"
and three under the name "Red River Barbeque & Grille" in the Midwestern and
Eastern regions of the United States. The three owned Red River restaurants are
to be converted to Famous Dave's. Our restaurants, the majority of which offer
full table service, feature hickory smoked off-the-grill meat entree favorites
served in one of our three casual formats: a "Northwoods" style lodge, a
nostalgic roadhouse "shack", or a Blues Club featuring nightly musical
entertainment. We seek to differentiate ourselves by providing high quality food
in these distinctive and comfortable environments. As of April 2, 2000 we
operated or franchised thirty-two restaurants with one additional owned unit and
three franchise units in development. The owned unit is in Illinois, and the
three franchise units are in Illinois, Minnesota, and Wisconsin. As of April 4,
1999 we operated or franchised twenty-four restaurants, with one additional unit
in development.
(2) BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared by us following the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. Although we believe that the disclosures are adequate to make the
information presented not misleading, it is suggested that these interim
condensed consolidated financial statements be read in conjunction with our most
recent audited consolidated financial statements and notes thereto included in
our Annual Report on Form 10-KSB for the fiscal year ended January 2, 2000. In
our opinion, all adjustments (which include only normal recurring adjustments)
necessary for a fair presentation of the financial position, results of
operations and cash flows for the interim periods presented have been made.
Operating results for the thirteen-week period ended April 2, 2000 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2000.
Certain amounts in the fiscal 1999 financial statements have been reclassified
to conform to the fiscal 2000 presentation with no impact on previously reported
net loss or shareholders' equity.
(3) INCOME (LOSS) PER COMMON SHARE
Basic earnings (loss) per share (EPS) is computed by dividing net income
(loss) by the weighted average number of common shares outstanding during the
quarter. Diluted EPS is computed by dividing net income (loss) by the weighted
average common shares outstanding and dilutive common equivalent shares assumed
to be outstanding during each period. Dilutive common equivalent shares have not
been included in the computation of diluted EPS for 1999 because their inclusion
would be anti-dilutive.
(4) INCOME FROM FRANCHISEES
As of April 2, 2000 we had two franchise units in operation, one each in
Minnesota and Wisconsin. The franchise agreements provide that in exchange for
the payment of certain fees, the franchisee may open up to three units under the
Famous Dave's brand, along with receiving other benefits. The revenue generated
by this arrangement is not recognized until the franchised restaurant is open
and the Company has provided all services. We anticipate that three additional
units will open during the second quarter of 2000. The developments are in
Illinois, Minnesota, and Wisconsin.
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FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
April 2, 2000
(Unaudited)
(5) SEVERANCE
In December 1999, we recorded a provision totaling $147,000 for executive
severance expense. During the quarter ended April 2, 2000, we charged $65,000 to
this provision.
(6) IMPAIRMENT RESERVE FOR RESTAURANTS TO BE DISPOSED
In March 1998, we implemented a plan to close two restaurants. As part of
this plan, we recorded a provision, which was adjusted in December 1999. The
write-offs against this provision totaled $35,000 for the 13 weeks ended April
2, 2000 and $32,000 for the comparable period in 1999.
(7) RELATED PARTY TRANSACTIONS
S&D Land Holdings, Inc. - We lease the real estate for three of our units
from S&D Land Holdings, Inc., a company wholly owned by the Company's founding
shareholder and Chairman.
(8) INCOME TAXES
The Company has generated net operating losses of approximately $16,295,000
which, if not used, will begin to expire in 2011. Future changes in ownership
may place limitations on the use of these net operating loss carry-forwards. We
have recorded a full valuation allowance against the deferred tax asset due to
the uncertainty of realizing the related benefit.
(9) NOTE PAYABLE
On January 21, 2000 a note payable was signed with S&D Land Holdings Inc., a
company wholly owned by the Company Chairman, for $750,000 to facilitate
mortgage financing. The entire principal balance and accrued interest is payable
twenty four months from the date of the note.
(10) FINANCING LEASE OBLIGATIONS
In March 1999, we completed a sale-leaseback transaction involving three of
our existing units that provided net proceeds of approximately $4.4 million.
Under this financing we are obligated to make monthly payments of approximately
$41,250 (which increases 4.04% every two years) for a minimum of twenty years.
During January 2000, the Company completed mortgage financing for two of its
existing units. The proceeds of this financing were $3.7 million. The Company is
obligated under these agreements to make monthly payments of approximately
$38,015 for a period of twenty years.
(11) COMMITMENTS AND CONTINGENCIES
CONSTRUCTION AND DEVELOPMENT CONTRACTS
In conjunction with our expansion activity, we enter into fixed price
construction contracts from time to time. At April 2, 2000, we had commitments
outstanding under two contracts for construction of lodges in Vernon Hills and
Addison Illinois. As of April 2, 2000, the balance remaining to be paid under
these contracts was approximately $600,000.
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Item 2.
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
OVERVIEW
The business of Famous Dave's of America, Inc. is to develop, own and
operate casual dining restaurants under the name "Famous Dave's." As of April 2,
2000 we owned and operated thirty restaurants: fourteen in Minnesota, four in
Wisconsin, three in Iowa, two in Illinois, three in Maryland and one each in
Nebraska and Virginia. In addition, there were two restaurants located in
Minnesota and Wisconsin operating under franchise agreements.
Famous Dave's was formed in March 1994 and we opened our first restaurant in
the Linden Hills neighborhood of Minneapolis in June 1995. We currently operate
three lodge restaurants featuring hickory smoked off-the-grill entrees, a rustic
Northwoods decor and big band music. In addition, we operate twenty-one
nostalgic roadhouse barbecue shacks of which fourteen have been opened as, or
converted to, a full service format that resembles the Lodge concept. We also
operate two Blues Clubs (featuring authentic Chicago Blues Club decor and live
music seven nights a week) and a Take-Out and Catering facility. All of our
restaurants feature similar menu items, consistent preparation methods and
uniform kitchen layouts.
Future revenues and profits, if any, will depend upon various factors,
including continued market acceptance of the Famous Dave's concept, the quality
of our restaurant operations, our ability to successfully expand into new
markets, the acceptance of our franchise concept, our ability to raise
additional financing as needed and general economic conditions. There can be no
assurance that we will successfully implement our expansion plans, in which case
we will continue to be dependent on the revenues from existing operations. We
also face all of the risks, expenses and difficulties frequently encountered in
connection with the expansion and development of an expanding business.
Furthermore, to the extent that our expansion strategy is successful, we must
manage the transition to multiple-site and higher-volume operations, the control
of overhead expenses and the addition of necessary personnel.
Components of operating expenses include operating payroll and fringe
benefits, occupancy costs, repairs and maintenance, and advertising and
promotion. Certain of these costs are variable and will fluctuate as sales
fluctuate. The primary fixed costs are corporate and restaurant management and
occupancy costs. Our experience is that when a new restaurant opens, it incurs
higher than normal levels of labor and food costs until operations stabilize,
usually during the first three months of operation. We believe, however, that as
restaurant management and staff gain experience, labor scheduling, food cost
management and operating expense control are improved to levels similar to those
at our more established restaurants.
General and administrative expenses include all corporate and administrative
functions that serve to support existing operations and provide an
infrastructure to support future growth. Management, supervisory and staff
salaries, employee benefits, travel, rent, depreciation, general insurance and
marketing expenses are major items in this category.
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the accompanying unaudited
condensed consolidated financial statements and notes thereto and the audited
consolidated financial statements and notes thereto included in the Company's
Form 10-KSB for the fiscal year ended January 2, 2000.
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FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
Our overall operating results expressed as a percentage of net revenue were as
follows:
THIRTEEN WEEKS ENDED
April 2, April 4,
2000 1999
(unaudited) (unaudited)
---------- -----------
REVENUES, NET 100.0% 100.0%
---------- -----------
UNIT-LEVEL COSTS AND EXPENSES:
Food and beverage costs 33.0% 34.1%
Labor and benefits 28.2% 28.1%
Operating expenses 23.3% 23.6%
Depreciation and amortization 5.4% 5.9%
Pre-opening expenses 1.3% 1.0%
---- ----
Total costs and expenses 91.1% 92.7%
---- ----
INCOME FROM UNIT-LEVEL OPERATIONS 8.9% 7.3%
General and administrative 7.2% 10.3%
Reserve for loss on closed sites 0.0% 0.0%
---- ----
INCOME (LOSS) FROM OPERATIONS 1.7% (3.0%)
Other income (expense), net (1.4%) 0.0%
---- ----
NET INCOME (LOSS) 0.3% (3.0%)
---- ----
REVENUE, NET
Net revenue for the thirteen weeks ended April 2, 2000 was $15,091,000
compared to $10,388,000 for the same period in 1999, a 45.3% increase. The
increase in net revenue is primarily due to the addition of four restaurants
opened during the four quarters subsequent to April 4, 1999, the purchase of
four Red River Barbeque & Grille restaurants on the East coast, and an increase
in same store sales. The Company has nineteen restaurants that have been open
for more than eighteen months and these restaurants reported increases in same
store sales of approximately 8.1% in the thirteen weeks ended April 2, 2000.
This is the fourth consecutive quarter of comparable store sales increases for
our company and is an improvement in comparable store sales performance from
last year's first quarter decline of approximately 5%.
FOOD AND BEVERAGE COSTS
Food and beverage costs for the thirteen weeks ended April 2, 2000 were
$4,980,000 or 33.0% of net revenue, compared to $3,546,000 or 34.1% of net
revenue for the same period in 1999. The decrease in food and beverage costs as
a percent of net revenue was primarily due to increased revenue and improved
purchasing economies, including contract pricing of certain pork items.
LABOR AND BENEFITS
Labor and benefits for the thirteen weeks ended April 2, 2000 were
$4,250,000 or 28.2% of net revenue, compared to $2,924,000 or 28.1% of net
revenue for the same period in 1999. The increase in dollar cost of labor for
2000 is caused by the growth in number of restaurants compared to 1999. Labor
costs as a percent of net revenue are higher in 2000 compared to 1999 due to the
mix of full table service to counter service restaurants, as well as a
heightened emphasis on
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FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
training and execution company-wide. Full service restaurants that operate in
states without a "tip credit" (such as Minnesota) experience a higher wage rate
for dining room labor. The migration toward full service dining in most of the
Company's restaurants is part of management's strategy for increasing unit-level
sales.
OPERATING EXPENSES
For the thirteen weeks ended April 2, 2000, operating costs were $3,514,000
or 23.3% of net revenue, compared to $2,449,000 or 23.6% of net revenue for the
same period in 1999. The increase in dollars of operating expense is related to
the growth of restaurant units. The decrease in operating expense as a percent
of net revenue is due to emphasizing cost reduction efforts. However, the
savings as a percent of net revenue were impacted by property tax expense
revisions to fully assessed building values and entertainer expense at our
Chicago Blues Club.
DEPRECIATION AND AMORTIZATION
Unit-level depreciation and amortization for the thirteen weeks ended April
2, 2000 was $814,000 or 5.4% of net revenue compared to $609,000 or 5.9% of net
revenue during the same period in 1999. The decrease in unit-level depreciation
and amortization percentage results from lower construction costs associated
with units operating in 2000 compared to those operating in fiscal 1999. In
addition, the effect of impairment write-downs made in the fourth quarter of
fiscal 1999 contributed to the decrease of depreciation as a percentage of net
revenue.
PRE-OPENING EXPENSES
Pre-opening expenses were $192,000 or 1.3% of net revenue for the thirteen
weeks ended April 2, 2000 compared to $103,000 or 1.0% of net revenue during the
same period in 1999. Pre-opening expenses are charged to expense in the month
that they are incurred. The 2000 expenses reflect the opening of units in
Lincoln Nebraska, Vernon Hills Illinois, and Addison Illinois, compared to the
Chicago Blues Club, which was in development in the same period in 1999.
INCOME FROM UNIT-LEVEL OPERATIONS
Income from unit-level operations totaled $1,341,000 or 8.9% of net revenue
for the thirteen weeks ended April 2, 2000, compared to $757,000 or 7.3 % of net
revenue in the corresponding period of 1999, an increase of 77.1%. Income from
unit-level operations represents income from operations before general and
administrative expenses. Although income from unit-level operations should not
be considered an alternative to income/loss from operations as a measure of our
operating performance, such unit-level measurement is commonly used as an
additional measure of operating performance in the restaurant industry and
certain related industries. The change in income from unit-level operations,
both in amount and as a percent of revenue, from 1999 to 2000 is attributable to
the increase in net revenue from new and existing units and retail and other
non-restaurant revenue and the other changes in costs and expenses as discussed
previously.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the thirteen weeks ended April 2,
2000 were $1,079,000 or 7.2% of net revenue, compared to $1,069,000 or 10.3% of
net revenue for the same period in 1999. The reduction in general and
administrative expenses as a percent of net revenue reflects continued efforts
to maximize efficiency as additional locations are opened, and the improved
distribution of higher revenue spread over a controlled level of general and
administrative expenses.
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FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
INCOME (LOSS) FROM OPERATIONS
Income from operations totaled $262,000 or 1.7% of net revenue, for the
thirteen weeks ended April 2, 2000 compared to a loss from operations of
$312,000 or 3.0% of net revenue, in the corresponding period in 1999. The
increase in income is primarily attributable to increased flow through
restaurant operations and control of general and administrative expense.
INTEREST AND OTHER INCOME (EXPENSE), NET
Interest and other income (expense), net, primarily represents interest
expense on capital lease obligations, a line of credit and financing lease
obligations. Interest expense was $225,000 or 1.5% of net revenue for the
thirteen weeks ended April 2, 2000 compared to interest expense of $48,000 or
0.4% for same period in 1999. The increase in net expense from 1999 to 2000 was
primarily due to an increase in interest expense on financing lease transactions
that occurred during March 1999 and January 2000, interest incurred on a bank
line of credit, and the elimination of short-term investments in 2000.
NET INCOME (LOSS) /NET INCOME (LOSS) PER COMMON SHARE
The net income for the thirteen weeks ended April 2, 2000 was $51,000, or
$.01 per share on 9,168,689 weighted average diluted shares outstanding,
compared to net loss of $316,000 or $.04 per share on 8,837,590 weighted average
shares outstanding, during the comparable period in 1999. The increase in net
income and net income per share is attributable to increased income from
restaurant and retail operations and emphasis on general and administrative
expenses.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
As of April 2, 2000 we had cash and cash equivalents of approximately
$987,000 compared to $1,712,000 as of January 2, 2000. The decrease in cash and
cash equivalents reflects the use of cash for the purchase and/or development of
property, equipment and leasehold improvements. (Approximately 2.2 million)
At April 2, 2000 we were party to a credit agreement with a financial
corporation which provides up to a $2,470,000 line of credit of which $1,544,000
is outstanding. This facility is secured by certain of our property, and in
addition is guaranteed by and partially secured by the Chairman of the Company.
The credit facility matured in April 2000 and has been extended to April 2002.
On March 31, 1999 we completed a sale-leaseback transaction involving three
of our existing units that provided net proceeds of approximately $4.4 million.
Effective January 21, 2000 we closed on mortgage financing that provided
proceeds of approximately 3.7 million for continued development of Company owned
restaurants.
We anticipate that future development and expansion will be funded primarily
through cash and short-term investments, proceeds from the sale of additional
equity and/or debt securities, and the proceeds from other forms of financing
such as lease financing or other credit facilities. However, there can be no
assurance that additional financing required will be available, or that the
terms will be acceptable or favorable to us.
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12
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
SEASONALITY
Our units typically generate higher revenues during the second and third
quarters (which are summer months for our locations) than in the first and
fourth quarters (which are winter months) as a result of our concentration of
locations in the Illinois, Minnesota and Wisconsin market areas.
MARKET RISK SENSITIVITY
The Company uses financial instruments, including fixed and variable rate
debt, to finance operations. The Company does not enter into contracts for
speculative purposes, nor is it a party to any leveraged instruments. There has
been no material change in the Company's market risks associated with debt
obligations during the quarter ended April 2, 2000.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-Q and other materials filed or to be filed with the Securities and
Exchange Commission (as well as information included in oral statements or other
written statements made or to be made by us) contain statements that are
forward-looking. A number of important factors could, individually or in the
aggregate, cause actual results to differ materially from those expressed or
implied in any forward-looking statements. Such factors include, but are not
limited to, the following: competition in the casual dining restaurant market;
continued market acceptance of our concept; availability and terms of additional
financing: our ability to open additional restaurants in a timely manner;
consumer spending trends and habits; weather conditions in the regions in which
we develop and operate restaurants; and laws and regulations affecting labor and
employee benefit costs. For further information regarding these and other
factors, see our Annual Report on Form 10-KSB for the fiscal year ended January
2, 2000.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any material litigation and is not aware of
any threatened litigation that would have a material adverse effect on its
business.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.19 Agreement, dated as of January 21, 2000, by and between S&D
Land Holdings, Inc., Grand Pines Resorts, Inc. and Famous
Dave's of America, Inc.
10.20 Promissory Note, dated January 21, 2000, by Famous Dave's of
America, Inc. and payable to S&D Land Holdings, Inc., in the
initial principal amount of $750,000.
10.21 Loan Agreement, dated as of January 21, 2000, by and between
FFCA Acquisition Corporation and MinWood Partners, Inc.
10.22 Master Lease, dated as of January 21, 2000, by and between
MinWood Partners, Inc. and Famous Dave's of America, Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURES
In accordance with the requirements 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.
FAMOUS DAVE'S OF AMERICA, INC.
/s/ Martin J. O'Dowd
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Martin J. O'Dowd
President and Chief Executive Officer
/s/ Kenneth J Stanecki
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Kenneth J. Stanecki
Chief Financial Officer
Date: May 12, 2000
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