##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q
 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended April 2, 2006
 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File No. 0-21625
 
 FAMOUS DAVES of AMERICA, INC.
  Minnesota
    
    41-1782300(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 12701 Whitewater Drive, Suite 200
 Minnetonka, MN 55343
  (952) 294-1300
 þ o
  o þ o
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 SM




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FAMOUS DAVES OF AMERICA, INC.
TABLE OF CONTENTS
 
 PagePART I
    
    FINANCIAL INFORMATIONItem 1
    
    Consolidated Financial StatementsConsolidated Balance Sheets
As of April 2, 2006 and January 1, 2006
    
    3Consolidated Statements of Operations
For the three months ended April 2, 2006 and April 3, 2005
    
    4Consolidated Statements of Cash Flows
For the three months ended April 2, 2006 and April 3, 2005
    
    5Notes to Consolidated Financial Statements
    
    6Item 2
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    14Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    22Item 4
    
    Controls and Procedures
    
    22PART II
    
    OTHER INFORMATIONItem 1
    
    Legal Proceedings
    
    23Item 6
    
    Exhibits
    
    23SIGNATURESCERTIFICATIONSCertification of Chief Executive Officer Pursuant to Section 302Certification of Chief Financial Officer Pursuant to Section 302Certification of Chief Executive Officer Pursuant to Section 906
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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 APRIL 2, 2006 AND JANUARY 1, 2006
 (in thousands, except share and per-share data)
 April 2,
    
    
    January 1,2006
    
    
    2006(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    6,427
    
    
    $
    4,410Restricted cash
    
    
    2,053
    
    
    
    1,221Accounts receivable, net
    
    
    2,686
    
    
    
    2,843Inventories
    
    
    1,633
    
    
    
    1,588Deferred tax asset
    
    
    2,699
    
    
    
    3,120Prepaid expenses and other current assets
    
    
    1,379
    
    
    
    2,312Total current assets
    
    
    16,877
    
    
    
    15,494Property, equipment and leasehold improvements, net
    
    
    48,217
    
    
    
    46,872Other assets:Notes receivable, less current portion
    
    
    1,685
    
    
    
    1,719Deferred tax asset, less current portion
    
    
    2,632
    
    
    
    2,632Other assets
    
    
    871
    
    
    
    881$
    70,282
    
    
    $
    67,598LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Line of credit
    
    $
    
    
    
    $
    Current portion of long-term debt
    
    
    434
    
    
    
    422Current portion of capital leases
    
    
    
    
    
    
    16Accounts payable
    
    
    5,397
    
    
    
    3,811Accrued compensation and benefits
    
    
    2,637
    
    
    
    2,203Other current liabilities
    
    
    2,902
    
    
    
    3,410Total current liabilities
    
    
    11,370
    
    
    
    9,862Long-term liabilities:Long-term debt and capital leases, less current portion
    
    
    11,315
    
    
    
    11,430Financing leases
    
    
    4,500
    
    
    
    4,500Other liabilities
    
    
    4,057
    
    
    
    3,918Total liabilities
    
    
    31,242
    
    
    
    29,710Shareholders equity:Common stock, $.01 par value, 100,000,000 shares
authorized, 10,609,000 and 10,599,000 shares issued
and outstanding at
April 2, 2006 and January 1, 2006, respectively
    
    
    106
    
    
    
    106Additional paid-in capital
    
    
    40,245
    
    
    
    39,835Accumulated deficit
    
    
    (1,311
    )
    
    
    (2,053
    )Total shareholders equity
    
    
    39,040
    
    
    
    37,888$
    70,282
    
    
    $
    67,598
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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 APRIL 2, 2006 AND APRIL 3, 2005
 (in thousands, except share and per share data)
 (Unaudited)
 Three Months EndedApril 2,
    
    
    April 3,2006
    
    
    2005Revenue:Restaurant sales, net
    
    $
    23,216
    
    
    $
    20,743Franchise royalty revenue
    
    
    3,140
    
    
    
    2,143Franchise fee revenue
    
    
    562
    
    
    
    395Licensing and other revenue
    
    
    170
    
    
    
    215Total revenue
    
    
    27,088
    
    
    
    23,496Costs and expenses:Food and beverage costs
    
    
    7,005
    
    
    
    6,349Labor and benefits
    
    
    7,187
    
    
    
    6,293Operating expenses
    
    
    5,990
    
    
    
    5,066Depreciation and amortization
    
    
    1,127
    
    
    
    1,123General and administrative
    
    
    4,007
    
    
    
    3,373Pre-opening expenses
    
    
    182
    
    
    
    Loss on disposal
    
    
    9
    
    
    
    4Total costs and expenses
    
    
    25,507
    
    
    
    22,208Income from operations
    
    
    1,581
    
    
    
    1,288Other income (expense):Interest expense
    
    
    (471
    )
    
    
    (480
    )Interest income
    
    
    105
    
    
    
    94Other expense, net
    
    
    (38
    )
    
    
    (43
    )Total other expense
    
    
    (404
    )
    
    
    (429
    )Income before income taxes
    
    
    1,177
    
    
    
    859Income tax provision
    
    
    (435
    )
    
    
    (326
    )Net income
    
    $
    742
    
    
    $
    533Basic and diluted net income per common share
    
    $
    0.07
    
    
    $
    0.05Weighted average common shares outstanding  basic
    
    
    10,606,000
    
    
    
    11,329,000Weighted average common shares outstanding  diluted
    
    
    10,949,000
    
    
    
    11,720,000
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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 APRIL 2, 2006 AND APRIL 3, 2005
 (in thousands)
 (Unaudited)
 Three Months EndedApril 2,
    
    
    April 3,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    742
    
    
    $
    533Adjustments to reconcile net income to cash flows provided by operations:Depreciation and amortization
    
    
    1,127
    
    
    
    1,123Amortization of deferred financing costs
    
    
    16
    
    
    
    14Loss on disposal of property
    
    
    9
    
    
    
    4Deferred income taxes
    
    
    421
    
    
    
    236Deferred rent
    
    
    138
    
    
    
    108Stock-based compensation
    
    
    371
    
    
    
    206Changes in operating assets and liabilities:Restricted cash
    
    
    (832
    )
    
    
    (320
    )Accounts receivable, net
    
    
    157
    
    
    
    205Inventories
    
    
    (45
    )
    
    
    21Prepaid expenses and other current assets
    
    
    (54
    )
    
    
    106Accounts payable
    
    
    1,586
    
    
    
    (1,869
    )Accrued compensation and benefits
    
    
    427
    
    
    
    (105
    )Other current liabilities
    
    
    (552
    )
    
    
    731Cash flows provided by operations
    
    
    3,511
    
    
    
    993Cash flows from investing activities:Purchases of property, equipment and leasehold improvements
    
    
    (1,473
    )
    
    
    (742
    )Payments received on notes receivable
    
    
    53
    
    
    
    70Cash flows used for investing activities
    
    
    (1,420
    )
    
    
    (672
    )Cash flows from financing activities:Payments for debt issuance costs
    
    
    
    
    
    
    (85
    )Payments on long-term debt and capital lease obligations
    
    
    (120
    )
    
    
    (156
    )Proceeds from exercise of stock options
    
    
    46
    
    
    
    394Repurchase of common stock
    
    
    
    
    
    
    (4,970
    )Cash flows used for financing activities
    
    
    (74
    )
    
    
    (4,817
    )Increase (decrease) in cash and cash equivalents
    
    
    2,017
    
    
    
    (4,496
    )Cash and cash equivalents, beginning of period
    
    
    4,410
    
    
    
    11,170Cash and cash equivalents, end of period
    
    $
    6,427
    
    
    $
    6,674
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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (1)
    
    Basis of Presentation
   Share-Based Payment, an amendment of SFAS No. 123 and 95 Accounting for Stock Issued to
Employees
  (2)
    
    Net Income Per Common Share
   (in thousands, except per share data)
    
    Three Months EndedApril 2,
    
    
    April 3,2006
    
    
    2005Net income per common share  basic:Net income
    
    $
    742
    
    
    $
    533Weighted average shares outstanding
    
    
    10,606
    
    
    
    11,329Net income per common share  basic
    
    $
    0.07
    
    
    $
    0.05Net income per common share  diluted:Net income
    
    $
    742
    
    
    $
    533Weighted average shares outstanding
    
    
    10,606
    
    
    
    11,329Dilutive impact of common stock equivalents outstanding
    
    
    343
    
    
    
    391Adjusted weighted average shares outstanding
    
    
    10,949
    
    
    
    11,720Net income per common share  diluted
    
    $
    0.07
    
    
    $
    0.05




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (2)
    
    Net Income Per Common Share (continued)
  (3)
    
    Public Relations and Marketing Development Fund and Restricted Cash
   (4)
    
    Credit Facility
    (5)
    
    Stock-Based Compensation
 SFAS No. 123R Impact
  -7-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (5)
    
    Stock-Based Compensation (continued)
        -8-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (5)
    
    Stock-Based Compensation (continued)
  (number of options in thousands)
    
    Number of
    
    Weighted AverageOptions
    
    Exercise PriceOutstanding at January 1, 2006
    
    
    900
    
    
    $
    5.14Granted
    
    
    
    
    
    
    Exercised
    
    
    (10
    )
    
    
    4.07Canceled or expired
    
    
    (23
    )
    
    
    7.37Outstanding at April 2, 2006
    
    
    867
    
    
    $
    5.10Options exercisable at April 2, 2006
    
    
    555
    
    
    $
    4.67
  (number outstanding and number exercisable in thousands)
 OptionsTotal outstanding
    
    ExercisableWeighted-average
    
    Weighted-
    
    
    
    
    
    Weighted-Exercise
    
    Number
    
    remaining
    
    average
    
    Number
    
    averageprices
    
    outstanding
    
    contractual life
    
    exercise price
    
    exercisable
    
    exercise price$2.00 - $2.63
    
    
    70
    
    
    2.85 years
    
    $
    2.33
    
    
    
    70
    
    
    $
    2.33$3.09 - $4.18
    
    
    344
    
    
    6.43 years
    
    $
    3.91
    
    
    
    267
    
    
    $
    3.89$4.82 - $6.72
    
    
    393
    
    
    7.64 years
    
    $
    5.98
    
    
    
    183
    
    
    $
    6.02$7.54 - $10.98
    
    
    60
    
    
    5.56 years
    
    $
    9.29
    
    
    
    35
    
    
    $
    8.10$2.00 - $10.98
    
    
    867
    
    
    6.63 years
    
    $
    5.10
    
    
    
    555
    
    
    $
    4.67
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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (5)
    
    Stock-Based Compensation (continued)
  (in thousands, except per share data)
 Three MonthsEndedApril 3, 2005Net income as reported
    
    $
    533Less: Compensation expense determined under the fair value
      method, net of tax
    
    
    (147
    )Pro forma net income
    
    $
    386Net income per common share:Basic EPS as reported
    
    $
    0.05Basic EPS pro forma
    
    $
    0.03Diluted EPS as reported
    
    $
    0.05Diluted EPS pro forma
    
    $
    0.03
  Performance Shares
    -10-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (5)
    
    Stock-Based Compensation (continued)
    Deferred Stock Unit Plan
    (6)
    
    Retirement Savings Plans
 401(k) Plan
  -11-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (6)
    
    Retirement Savings Plans (continued)
 Non-Qualified Deferred Compensation Plan
     (7)
    
    Common Share Repurchases
  (8)
    
    Acquisition of Florence, Kentucky Restaurant
  -12-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (8)
    
    Acquisition of Florence, Kentucky Restaurant (continued)
  (9)
    
    Supplemental Cash Flow Information
 Three Months EndedApril 2,
    
    
    April 3,2006
    
    2005Cash paid for interest
    
    $
    433
    
    
    $
    516Cash paid for taxes
    
    $
    205
    
    
    $
    206Non-cash investing and financing activities:Reclassification of other current assets to
assets held for sale
    
    $
    963
    
    
    $
    Reclassification of accounts receivable to
other current assets
    
    $
    
    
    
    $
    508Accrue property and equipment purchases
    
    $
    46
    
    
    $
    88Deferred tax asset related to tax benefit of stock
options exercised
    
    $
    7
    
    
    $
    40
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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 Item 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 OVERVIEW
  Fiscal Year
 st
 Revenue
  Costs and Expenses
  -14-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 General and Administrative Expenses
  (3)
 FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
OPERATING RESULTS  (unaudited)
 Three Months EndedApril 2,
    
    April 3,2006
    
    2005Food and beverage costs (1)
    
    
    30.2
    %
    
    
    30.6
    %Labor and benefits (1)
    
    
    31.0
    %
    
    
    30.3
    %Operating expenses (1)
    
    
    25.8
    %
    
    
    24.4
    %Depreciation & amortization (restaurant level) (1)
    
    
    4.4
    %
    
    
    5.0
    %Depreciation & amortization (corporate level) (2)
    
    
    0.4
    %
    
    
    0.4
    %General and administrative (2)
    
    
    14.8
    %
    
    
    14.4
    %Pre-opening expenses & loss on disposal (1)
    
    
    0.8
    %
    
    
    Total costs and expenses (2)
    
    
    94.2
    %
    
    
    94.5
    %Income from operations (2)
    
    
    5.8
    %
    
    
    5.5
    %
 
 (1)
    
    As a percentage of restaurant sales, net(2)
    
    As a percentage of total revenue(3)
    
    Data regarding our restaurant operations as presented in the table, includes sales,
costs and expenses associated with our Rib Team, which netted to a loss of $16,000 and $19,000
for the first quarter of 2006 and 2005, respectively. Our Rib Team travels around the country
introducing people to our brand of barbeque and builds brand awareness.  Total Revenue
  Restaurant Sales
  -15-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Franchise-Related Revenue
  Licensing and Other Revenue
  Same Store Net Sales
   Average Weekly Net Sales and Operating Weeks
  Three Months EndedApril 2,
    
    April 3,2006
    
    2005Company-Owned
    
    $
    44,953
    
    
    $
    41,960Full-Service
    
    $
    46,671
    
    
    $
    43,257Counter-Service
    
    $
    35,323
    
    
    $
    36,215Franchise-Operated
    
    $
    57,781
    
    
    $
    51,929Company-Owned Operating Weeks
    
    
    515
    
    
    
    494Franchise-Operated Operating Weeks
    
    
    1,109
    
    
    
    861
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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Food and Beverage Costs
    Labor and Benefits
  Operating Expenses
  Depreciation and Amortization
  -17-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Pre-opening Expenses
  General and Administrative Expenses
  Interest Expense
  Interest Income
  Other Expense, net
  Income Tax Provision
  -18-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Basic and Diluted Net Income Per Common Share
  Financial Condition, Liquidity and Capital Resources
      -19-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      Off-Balance Sheet Arrangements
   Critical Accounting Policies
  -20-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Information
    Additional Information on Famous Daves
 http://www.sec.gov
  -21-




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 www.famousdaves.com
 
 Item 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 Item 4. CONTROLS AND PROCEDURES
   -22-




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PART II. OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 6. EXHIBITS
 (a)
    
    
    Exhibits31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive
Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 -23-




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SIGNATURES
  FAMOUS DAVES OF AMERICA, INC.
(Registrant)
 Dated: May 12, 2006
    
    By:
    
    /s/ David GoronkinDavid GoronkinChief Executive Officer and President(Principal Executive Officer)Dated: May 12, 2006
    
    
    
    /s/ Diana Garvis PurcelDiana Garvis PurcelChief Financial Officer and Secretary(Principal Financial and Accounting Officer)
 -24-