Famous Dave's Announces One Restaurant Closing, Other Impairments
September 18 2008 - 4:06PM
Business Wire
Famous Dave's of America, Inc. (NASDAQ: DAVE) today announced that
it would close one of its 48 company-owned restaurants, in Chicago,
and would incur non-cash charges associated with that closure. The
company also announced that it would record non-cash impairment
charges on two other locations, one in Chicago and one in
Minneapolis, write off assets related to the recent acquisition of
the Atlanta market from a franchisee and record remaining lease
obligations on a location previously closed. The company expects
that its actions could result in related non-cash charges and
reserves of approximately $4.1 million, or $0.28 per diluted share
on a year-to-date basis. This sum may be reduced by as much as
$600,000, pending the outcome of negotiations for lease
terminations due to the bankruptcy filing of a landlord on the
location to close and on a location previously closed. �Anyone
watching the headlines concerning our industry, food costs and
other economic factors recognizes that this remains a very
difficult operating environment,� said Christopher O�Donnell,
Famous Dave�s president and chief executive officer. �We believe
that it�s important to recognize these realities while at the same
time positioning the company to deliver strong financial results
when conditions improve.� The restaurant expected to close in
Chicago, Illinois in mid-September, is the result of the company
opening a new prototype restaurant within four miles of the
existing restaurant, supporting the company�s strategy to
reposition legacy restaurants within a market when opportunities
arise. Famous Dave�s will recognize a net impact of approximately
$557,000 representing the disposal of assets and the recording of a
reserve for remaining lease obligations, if negotiations for a
lease termination are not successful. All managers will be
relocated to the new restaurant, and many associates are being
offered the opportunity to work at the new location or to relocate
to another Famous Dave�s restaurant within the market. The company
will additionally record net impairment charges related to two
locations, one in Chicago and one in Minneapolis, both of which are
expected to remain operational through the end of their original
lease terms, of approximately $1.6 million, and will record
remaining lease obligations of approximately $217,000 on a location
previously closed in 2006, if negotiations for a lease termination
are not successful. Subsequent to the end of the second quarter,
Famous Dave�s acquired three franchise restaurants in Atlanta from
a franchisee in exchange for amounts owed and deemed uncollectible.
Based on the company�s assessment of expected cash flows from those
locations, a net impairment charge will be recorded for
approximately $1.7 million related to assets acquired. Over the
next quarter, the company will continue to assess the long-term
viability of these restaurants remaining operational and could
engage in conversations with respective landlords regarding the
potential buyout of remaining lease obligations. Outlook Famous
Dave's is updating its guidance regarding system growth and
anticipates opening approximately 18 restaurants in 2008, including
four company-owned locations. About Famous Dave�s Famous Dave�s of
America, Inc. develops, owns, operates and franchises barbeque
restaurants. As of today, the company owns 48 locations and
franchises 123 additional units in 36 states. Its menu features
award-winning barbequed and grilled meats, an ample selection of
salads, side items and sandwiches, and unique desserts. Statements
in this press release that are not strictly historical, including
but not limited to statements regarding the timing of our
restaurant openings and the timing or success of our expansion
plans, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve known and unknown risks, which
may cause the company�s actual results to differ materially from
expected results. Although Famous Dave's of America, Inc. believes
the expectations reflected in any forward-looking statements are
based on reasonable assumptions, it can give no assurance that its
expectation will be attained. Factors that could cause actual
results to differ materially from Famous Dave's expectation include
financial performance, restaurant industry conditions, execution of
restaurant development and construction programs, franchisee
performance, changes in local or national economic conditions,
availability of financing, governmental approvals and other risks
detailed from time to time in the company's SEC reports.
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