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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 2, 2011
 Commission File No. 0-21625
 
 FAMOUS DAVES of AMERICA, INC.
  Minnesota
    
    41-1782300(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 12701 Whitewater Drive, Suite 200
Minnetonka, MN 55343
  952) 294-1300
 Common Stock, $0.01 par value
 Title of each class
    
    Name of each exchange on which registered
 Common Stock, $0.01 par value
    
    The NASDAQ Stock Market, LLC
 None
 o þ
 o þ
 þ o
 o o
 þ
   Large accelerated filer o   
    Accelerated filer o
    Non-accelerated filer o
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE:




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##### 



TABLE OF CONTENTS
 PagePART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    15Item 1B. Unresolved Staff Comments
    
    
    19Item 2. Properties
    
    
    19Item 3. Legal Proceedings
    
    
    22Item 4. [Removed and Reserved]
    
    
    22PART IIItem 5. Market for Registrants Common Equity and Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    22Item 6. Selected Financial Data
    
    
    25Item 7. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    26Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 8. Financial Statements and Supplementary Data
    
    
    42Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    42Item 9A. Controls and Procedures
    
    
    42Item 9B. Other Information
    
    
    43PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    44Item 11. Executive Compensation
    
    
    44Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    44Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    45Item 14. Principal Accountant Fees and Services
    
    
    45PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    46SIGNATURESEX-10.11EX-21.0EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART I
 
 ITEM 1. BUSINESS
 General Development of Business
        
    
    Growth
    
    Concept evolution, and
    
    Enhancing core systems, processes and infrastructure
 Growth
  3




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Concept evolution
  Enhancing core systems, processes and infrastructure
   Financial Information about Segments
  Narrative Description of Business
  4




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High Quality Food TM TM ® TM TM ® TM
  Distinctive Environment  Décor and Music
 Broad-Based Appeal
 Operating Strategy
  Operational Excellence 
  5




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®
 nd 1 2
  Human Resources and Training 
    6




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Restaurant Operations
    7




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Off-Premise
Occasions Focus on Convenience
   Customer Satisfaction
 Value Proposition and Guest Frequency
 Marketing and Promotion
  8




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Minneapolis City Pages Best Of issue  Minneapolis/St Paul Magazine Readers Poll  The Press of Atlantic City
  Courier-Post
   Location Strategy
   9




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Company-Owned Restaurant Expansion
 Franchise-Operated Restaurant Expansion
  Purchasing
    10




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Information Technology
   
    
    Average guest check broken down by location, by server, by day part, and by revenue
center;
    
    Daily reports of revenue and labor (both current and forecasted);
    
    Weekly reports of selected controllable restaurant expenses;
    
    Monthly reporting of detailed revenue and expenses; and
    
    Ideal vs. actual usage variance reporting for critical restaurant-level materials;
   
    
    Implementation of a Human Resource Information System (HRIS) which provides a more
efficient HR management tool by facilitating strategic analysis and mitigating risk with
the consolidation of all information into a single system.
    
    Selection of a web-based ordering solution based on results of a pilot market test
that assessed the impact on sales and guest experience. Initial focus is on online
ordering with future capabilities for mobile ordering.
    
    Continued expansion of web technology to build guest community and to drive marketing
efforts including, but not limited to, an increased presence in the social media arena
with a strategy and brand presence on Facebook, YouTube, and Twitter.
    
    Implementation of financial utilities to comply with XBRL reporting requirements and
to optimize the process for creating and supporting the data. Upgrade of messaging
infrastructure positioning us to take advantage of the latest communication capabilities
and providing a platform for increased collaboration.
    
    Continued implementation of virtual machines resulting in a significant reduction in
hardware maintenance.
  
    
    Expansion of the food cost/supply chain back-office solution to include predictive
features for ordering and product preparation that will enhance the effectiveness of
efforts to manage cost.
    
    Leverage additional capabilities available in the Human Resource Information System
(HRIS) to drive further efficiencies and self-service processes.
    
    Roll-out of web-based ordering solution providing ease of ordering for our guests and
an additional sales channel with future capabilities for mobile and Facebook ordering.
    
    Selection and implementation of a budgeting, forecasting, and strategic planning
solution that will expand upon current capabilities, increase efficiencies, and integrate
with the evolution of other systems.
    
    Continued enhancement of business intelligence and reporting capabilities to facilitate
identification and communication of key business metrics to make more timely decisions.
    
    Replace end-of-life data storage infrastructure providing increased capacity for cost
saving and multi-media initiatives along with decreased maintenance effort.
    
    Continued evaluation of options to provide technology support and strategic systems to
franchise partners.
    
    Creation of a marketing portal to facilitate the ordering, distribution and
customization of marketing materials for localization and for the franchise community.
 11




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Trademarks
  Franchise Program
    12




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Number of Franchise-OperatedState
    
    RestaurantsArkansas
    
    
    2Arizona
    
    
    6California
    
    
    14Colorado
    
    
    6Delaware
    
    
    2Florida
    
    
    3Hawaii
    
    
    1Idaho
    
    
    2Illinois
    
    
    3Indiana
    
    
    3Iowa
    
    
    3Kansas
    
    
    4Kentucky
    
    
    1Maine
    
    
    1Massachusetts
    
    
    1Michigan
    
    
    8Minnesota
    
    
    9Missouri
    
    
    3Montana
    
    
    4Nebraska
    
    
    6Nevada
    
    
    4New Hampshire
    
    
    1New Jersey
    
    
    1New York
    
    
    3North Dakota
    
    
    2Oregon
    
    
    1Ohio
    
    
    3Pennsylvania
    
    
    4South Dakota
    
    
    1Tennessee
    
    
    5Texas
    
    
    3Utah
    
    
    3Washington
    
    
    6Wisconsin
    
    
    11Total
    
    
    130
  13




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##### Table of Contents



Seasonality
  Government Regulation
  14




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Team Members
  
 ITEM 1A. RISK FACTORS
    15




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The Recent Disruptions in the Overall Economy and the Financial Markets May Adversely Impact
Our Business and Results of Operations and May Impact Our Ability to Comply with our Credit
Facilitys Financial Covenants.
   Our Future Revenue and Operating Income Are Dependent on Consumer Preference and Our Ability
to Successfully Execute Our Plan.
   Competition May Reduce Our Revenue and Operating Income.
   16




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Our Failure to Execute Our Franchise Program May Negatively Impact Our Revenue and Operating
Income.
   The Inability to Develop and Construct Our Restaurants Within Projected Budgets and Time
Periods Could Adversely Affect Our Business and Financial Condition.
  The Restaurant Industry is Subject to Extensive Government Regulation That Could Negatively
Impact Our Business.
  17




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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 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.
  Our Financial Performance is Affected By Our Ability to Contract with Reliable Suppliers At
Competitive Prices.
   18




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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.
  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.
   
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
    19




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20




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Square
    
    Interior
    
    Owned or
    
    DateLocation
    
    Footage
    
    Seats
    
    Leased
    
    Opened/Acquired1
    
    Roseville, MN (3)
    
    4,800
    
    105
    
    Leased
    
    June 19962
    
    Calhoun Square (Minneapolis, MN)
    
    10,500
    
    380
    
    Leased
    
    September 19963
    
    Maple Grove, MN
    
    6,100
    
    146
    
    Leased(1)
    
    April 19974
    
    Highland Park (St. Paul, MN)(3)
    
    5,200
    
    125
    
    Leased
    
    June 19975
    
    Stillwater, MN
    
    5,200
    
    130
    
    Leased(1)
    
    July 19976
    
    Apple Valley, MN(3)
    
    3,800
    
    90
    
    Leased(1)
    
    July 19977
    
    Forest Lake, MN(3)
    
    4,500
    
    100
    
    Leased
    
    October 19978
    
    Minnetonka, MN
    
    5,500
    
    140
    
    Owned(2)
    
    December 19979
    
    Plymouth, MN(3)
    
    2,100
    
    49
    
    Owned(2)
    
    December 199710
    
    West Des Moines, IA
    
    5,700
    
    150
    
    Leased
    
    April 199811
    
    Des Moines, IA
    
    5,800
    
    150
    
    Leased
    
    April 199812
    
    Cedar Falls, IA
    
    5,400
    
    130
    
    Leased
    
    September 199813
    
    Bloomington, MN
    
    5,400
    
    140
    
    Leased
    
    October 199814
    
    Woodbury, MN
    
    5,900
    
    180
    
    Owned(2)
    
    October 199815
    
    Lincoln, NE
    
    6,200
    
    185
    
    Owned(2)
    
    December 199916
    
    Columbia, MD
    
    7,200
    
    270
    
    Leased
    
    January 200017
    
    Annapolis, MD
    
    6,800
    
    219
    
    Leased
    
    January 200018
    
    Frederick, MD
    
    5,600
    
    180
    
    Leased
    
    January 200019
    
    Woodbridge, VA
    
    6,000
    
    219
    
    Leased
    
    January 200020
    
    Vernon Hills, IL
    
    6,660
    
    222
    
    Leased
    
    February 200021
    
    Addison, IL
    
    5,000
    
    135
    
    Owned(2)
    
    March 200022
    
    Lombard, IL
    
    6,500
    
    233
    
    Leased
    
    July 200023
    
    North Riverside, IL
    
    4,700
    
    150
    
    Leased
    
    August 200024
    
    Sterling, VA
    
    5,800
    
    200
    
    Leased
    
    December 200025
    
    Oakton, VA
    
    4,400
    
    184
    
    Leased
    
    May 200126
    
    Laurel, MD
    
    5,200
    
    165
    
    Leased
    
    August 200127
    
    Richmond I (Richmond, VA)
    
    5,400
    
    180
    
    Owned(2)
    
    December 200128
    
    Gaithersburg, MD
    
    5,000
    
    170
    
    Leased
    
    May 200229
    
    Richmond II (Richmond, VA)
    
    5,200
    
    158
    
    Owned(2)
    
    June 200230
    
    Orland Park, IL
    
    5,400
    
    158
    
    Leased
    
    June 200231
    
    Tulsa, OK
    
    4,700
    
    180
    
    Owned(2)
    
    September 200232
    
    Virginia Commons, VA
    
    5,600
    
    186
    
    Owned(2)
    
    June 200333
    
    Chantilly, VA
    
    6,400
    
    205
    
    Leased
    
    January 200634
    
    Florence, KY
    
    5,900
    
    217
    
    Leased
    
    January 200635
    
    Waldorf, MD
    
    6,600
    
    200
    
    Leased
    
    June 200636
    
    Coon Rapids, MN
    
    6,300
    
    160
    
    Owned(2)
    
    December 200637
    
    Fredericksburg, VA
    
    6,500
    
    219
    
    Leased
    
    September 200738
    
    Owings Mills, MD
    
    6,700
    
    219
    
    Leased
    
    November 200739
    
    Bolingbrook, IL
    
    6,600
    
    219
    
    Leased
    
    November 200740
    
    Oswego, IL
    
    6,600
    
    219
    
    Leased
    
    December 200741
    
    Alexandria, VA
    
    6,600
    
    219
    
    Leased
    
    February 200842
    
    Algonquin, IL
    
    6,000
    
    219
    
    Leased
    
    September 200843
    
    Greenwood, IN
    
    5,700
    
    184
    
    Leased
    
    October 200844
    
    Salisbury, MD
    
    5,400
    
    192
    
    Leased
    
    October 200845
    
    Brick, NJ
    
    5,200
    
    181
    
    Leased
    
    March 201046
    
    Mays Landing, NJ
    
    6,400
    
    237
    
    Leased
    
    March 201047
    
    Smithtown, NY
    
    6,400
    
    237
    
    Leased
    
    March 201048
    
    Westbury, NY
    
    6,400
    
    276
    
    Leased
    
    March 201049
    
    New Brunswick, NJ
    
    7,200
    
    255
    
    Leased
    
    March 201050
    
    Mountainside, NJ
    
    8,800
    
    253
    
    Leased
    
    March 201051
    
    Metuchen, NJ
    
    6,200
    
    176
    
    Leased
    
    March 201052
    
    Bel Air, MD
    
    6,360
    
    199
    
    Leased
    
    August 2010
 
 
 (1)
    
    Restaurant is collateral in a financing lease.(2)
    
    Restaurant land and building are owned by the Company.(3)
    
    Counter service restaurant 21




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ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. [REMOVED AND RESERVED]
 
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
 Market Information
  2010
    
    2009Period
    
    High
    
    Low
    
    High
    
    Low1st Quarter
    
    $
    8.30
    
    
    $
    6.00
    
    
    $
    4.41
    
    
    $
    2.002nd Quarter
    
    $
    9.69
    
    
    $
    7.77
    
    
    $
    7.00
    
    
    $
    3.023rd Quarter
    
    $
    9.64
    
    
    $
    7.50
    
    
    $
    7.25
    
    
    $
    5.204th Quarter
    
    $
    11.44
    
    
    $
    8.90
    
    
    $
    7.08
    
    
    $
    5.30
 Holders
  Dividends
  Stock Performance Graph
    22




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Comparison
of Five-Year Cumulative Total Return*
Among Famous Daves Of America, Inc., the S&P 500 Index
and S&P Small Cap Restaurants
 
 
 *
    
    $100 invested on January 1, 2006 in stock or December 31, 2005 in stock or index, including
reinvestment of dividends. Fiscal years ending on December 31, 2006, December 30, 2007, December
28, 2008, January 3, 2010, and January 2, 2011,
respectively.Copyright© 2011 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved. Purchases of Equity Securities by the Issuer
   23




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MaximumNumber(or ApproximateTotal Number
    
    Dollar Value) ofof Shares
    
    SharesTotal
    
    Average
    
    (or Units)
    
    (or Units)Number
    
    Price
    
    Purchased as
    
    that May Yet beof Shares
    
    Paid per
    
    Part of Publically
    
    Purchased(or Units)
    
    Share(1)
    
    Announced Plans
    
    Under the PlansPeriod
    
    Purchased
    
    (or Unit)
    
    or Programs
    
    or ProgramsMonth #1 (January 4, 2010  January 31, 2010)
    
    
    62,100
    (2)
    
    $
    6.28
    
    
    
    62,100
    (2)
    
    
    830,888
    (3)Month #2 (February 1, 2010  February 28, 2010)
    
    
    79,212
    (2)
    
    $
    6.48
    
    
    
    79,212
    (2)
    
    
    751,676
    (3)Month #3 (March 1, 2010  April 4, 2010)
    
    
    288,486
    (2)
    
    $
    7.20
    
    
    
    288,486
    (2)
    
    
    463,190
    (3)Month #4 (April 5, 2010  May 2, 2010)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    463,190
    (3)Month #5 (May 3, 2010  May 30, 2010)
    
    
    159,700
    (2)
    
    $
    8.68
    
    
    
    159,700
    (2)
    
    
    303,490
    (3)Month #6 (May 31, 2010  July 4, 2010)
    
    
    64,450
    (2)
    
    $
    8.60
    
    
    
    64,450
    (2)
    
    
    239,040
    (3)Month #7 (July 5, 2010  August 1, 2010)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    239,040
    (3)Month #8 (August 2, 2010  August 29, 2010)
    
    
    65,379
    (2)
    
    $
    8.21
    
    
    
    65,379
    (2)
    
    
    173,661
    (3)Month #9 (August 30, 2010  October 3, 2010)
    
    
    173,661
    (2)
    
    $
    8.49
    
    
    
    173,661
    (2)
    
    
    Month #10 (October 4, 2010  October 31, 2010)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    Month #11 (November 1, 2010  November 28, 2010)
    
    
    26,900
    (4)
    
    $
    9.66
    
    
    
    26,900
    (4)
    
    
    973,100
    (5)Month #12 (November 29, 2010  January 2, 2011)
    
    
    147,200
    (4)
    
    $
    10.45
    
    
    
    147,200
    (4)
    
    
    825,900
    (5)
 
 (1)
    
    Excluding commissions.(2)
    
    Shares purchased under the 1.0 million share publicly announced repurchase plan adopted August 6, 2008.(3)
    
    Reflects the maximum number of shares that may be purchased in the future under the publicly announced share repurchase
plan adopted August 6, 2008.(4)
    
    Shares purchased under the 1.0 million share publically announced repurchase plan adopted November 4, 2010.(5)
    
    Reflects the maximum number of shares that may be purchased in the future under the publicly announced share repurchase
plan adopted November 4, 2010. 24




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ITEM 6. SELECTED FINANCIAL DATA
   FINANCIAL HIGHLIGHTS
 FISCAL YEAR($s in 000s, except per share data and average weekly sales)
    
    2010
    
    
    2009(1)
    
    
    2008
    
    
    2007
    
    
    2006STATEMENTS OF OPERATIONS DATARevenue
    
    $
    148,268
    
    
    $
    136,018
    
    
    $
    140,382
    
    
    $
    125,873
    
    
    $
    116,621Asset
impairment and estimated lease termination and other closing costs(2)
    
    $
    (74
    )
    
    $
    (218
    )
    
    $
    (6,912
    )
    
    $
    (596
    )
    
    $
    (1,136
    )Income from operations
    
    $
    11,983
    
    
    $
    10,514
    
    
    $
    2,030
    
    
    $
    10,436
    
    
    $
    9,243Income tax (expense) benefit
    
    $
    (3,796
    )
    
    $
    (2,989
    )
    
    $
    119
    
    
    $
    (3,100
    )
    
    $
    (2,737
    )Net income
    
    $
    7,218
    
    
    $
    5,701
    
    
    $
    389
    
    
    $
    6,070
    
    
    $
    4,954Basic net income per common share
    
    $
    0.84
    (3)
    
    $
    0.63
    
    
    $
    0.04
    
    
    $
    0.61
    
    
    $
    0.47Diluted net income per common share
    
    $
    0.82
    (3)
    
    $
    0.62
    
    
    $
    0.04
    
    
    $
    0.59
    
    
    $
    0.46BALANCE SHEET DATA (at year end)Cash and cash equivalents
    
    $
    2,654
    
    
    $
    2,996
    
    
    $
    1,687
    
    
    $
    1,538
    
    
    $
    1,455Total assets
    
    $
    76,129
    
    
    $
    68,381
    
    
    $
    73,401
    
    
    $
    73,942
    
    
    $
    65,859Long-term debt less current maturities(4)
    
    $
    23,497
    
    
    $
    17,990
    
    
    $
    29,252
    
    
    $
    11,693
    
    
    $
    13,025Total shareholders equity
    
    $
    32,904
    
    
    $
    32,994
    
    
    $
    26,184
    
    
    $
    30,400
    
    
    $
    36,171OTHER DATARestaurant Sales:Company-owned
    
    $
    131,154
    
    
    $
    117,934
    
    
    $
    122,016
    
    
    $
    107,820
    
    
    $
    100,026Franchise-operated
    
    $
    340,454
    
    
    $
    358,696
    
    
    $
    355,946
    
    
    $
    320,750
    
    
    $
    282,160Number of restaurants open at year end:Company-owned restaurants
    
    
    52
    
    
    
    45
    
    
    
    47
    
    
    
    44
    
    
    
    41Franchise-operated restaurants
    
    
    130
    
    
    
    132
    
    
    
    123
    
    
    
    120
    
    
    
    104Total restaurants
    
    
    182
    
    
    
    177
    
    
    
    170
    
    
    
    164
    
    
    
    145Company-owned comparable storeSales increase (decrease)(5)
    
    
    0.7
    %
    
    
    (6.3
    )%(6)
    
    
    (2.0
    )%
    
    
    2.1
    %
    
    
    2.9
    %Average weekly sales:Company-owned restaurants
    
    $
    49,187
    
    
    $
    48,197
    
    
    $
    50,685
    
    
    $
    50,385
    
    
    $
    47,894Franchise-operated restaurants
    
    $
    52,631
    
    
    $
    53,016
    
    
    $
    56,535
    
    
    $
    56,727
    
    
    $
    58,334
 
 (1)
    
    Fiscal 2009 consisted of 53 weeks. Fiscal 2010, 2008, 2007, and 2006 all consisted of 52 weeks.(2)
    
    Fiscal 2009 primarily reflects closing costs for two company-owned restaurants. Fiscal 2008 reflects impairment charges for eight restaurants. Five of these have closed and three are still operating. Fiscal 2007 reflects impairment charges associated with one restaurant that was subsequently closed. Fiscal
2006 reflects impairment charges associated with one restaurant and land held for sale: one which was subsequently sold, the other which was subsequently closed.(3)
    
    Reflects gain on acquisition of New York and New Jersey restaurants in March of 2010, of $0.15 per share.(4)
    
    Long-term debt includes our line of credit in fiscal 2009 and fiscal 2008. Prior to fiscal 2008, the line of credit was included in current liabilities.(5)
    
    Our comparable store sales base includes company-owned restaurants that are open year round and have been open more than 24 months.(6)
    
    For purposes of computing comparable store sales, this computation assumes fiscal 2009 was a 52-week year. 25




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  OVERVIEW
  Fiscal Year
  Basis of Presentation
 Application of Critical Accounting Policies and Estimates
  Recognition of Franchise-Related Revenue 
 26




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##### Table of Contents



Asset Impairment and Estimated Lease Termination and Other Closing Costs ,
 Lease Accounting  ,
 Accounts Receivable, Net
 27




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##### Table of Contents



Income Taxes
 Results of Operations
 Revenue
   Costs and Expenses
 General and Administrative Expenses 
 28




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##### Table of Contents



(4)
 2010
    
    2009
    
    2008Food and beverage costs(1)
    
    
    29.5
    %
    
    
    30.1
    %
    
    
    30.8
    %Labor and benefits(1)
    
    
    31.5
    %
    
    
    31.4
    %
    
    
    31.3
    %Operating expenses(1)
    
    
    27.5
    %
    
    
    26.7
    %
    
    
    26.6
    %Depreciation & amortization (restaurant level)(1)
    
    
    3.8
    %
    
    
    3.9
    %
    
    
    4.1
    %Depreciation & amortization (corporate level)(2)
    
    
    0.4
    %
    
    
    0.4
    %
    
    
    0.4
    %General and administrative(2)
    
    
    10.9
    %
    
    
    11.8
    %
    
    
    11.8
    %Pre-opening expenses and net loss
on disposal of property(1)
    
    
    0.2
    %
    
    
    
    
    
    
    0.9
    %Asset impairment and estimated lease
termination and other closing costs(1)
    
    
    0.1
    %
    
    
    0.2
    %
    
    
    5.7
    %Gain on acquisition, net of acquisition costs(1)(3)
    
    
    (1.6
    )%
    
    
    0.1
    %
    
    
    Total costs and expenses(2)
    
    
    91.9
    %
    
    
    92.3
    %
    
    
    98.6
    %Income from operations(2)
    
    
    8.1
    %
    
    
    7.7
    %
    
    
    1.4
    %
 
 (1)
    
    As a percentage of restaurant sales, net(2)
    
    As a percentage of total revenue(3)
    
    Acquisition costs incurred in 2009 were prior to the completion of an acquisition in fiscal 2010.(4)
    
    Data regarding our restaurant operations as presented in the table, includes sales, costs and expenses associated with our Rib Team, which had a net loss of $6,000 and net
income of $4,000 and $5,000, respectively, in fiscal years 2010, 2009 and 2008. Our Rib Team travels around the country introducing people to our brand of barbeque and building brand
awareness. Fiscal Year 2010 Compared to Fiscal Year 2009
 Total Revenue
  Restaurant Sales, net
  Franchise-Related Revenue
  29




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##### Table of Contents



Licensing and Other Revenue
   Same Store Net Sales
   Average Weekly Net Sales and Operating Weeks
  Fiscal Years EndedJanuary 2,
    
    January 3,2011
    
    2010Company-Owned
    
    $
    49,187
    
    
    $
    48,197Full-Service
    
    $
    50,760
    
    
    $
    49,840Counter-Service
    
    $
    34,697
    
    
    $
    35,413Franchise-Operated
    
    $
    52,631
    
    
    $
    53,016
 Food and Beverage Costs
    30




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##### Table of Contents




    
    In the fourth quarter of fiscal 2010, we initiated a 1.0% price increase on selected
menu items. Additionally, we initiated an additional 1.0% price increase, primarily
related to our beverage menu, during the new menu roll out in January of 2011. We will
determine whether we will effect further price increases later in 2011.
    
    We will seek opportunities for regional produce contracting.
    
    We will perform a comprehensive review of the way we source, ship, and purchase our
poultry products.
    
    We will focus on continued optimization of our distribution network to reduce freight
costs.
    
    We will continue to evaluate and manage our prep-time labor and product quality for our
non-core and side items, to determine if it is best to completely prepare certain items
in-house or partially pre-prep them at our suppliers.
    
    We will prioritize continued strategic management of limited time offerings and their
potential to positively impact on our menu mix and margin.
  Labor and Benefits Costs
   Operating Expenses
   31




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##### Table of Contents



Depreciation and Amortization
  Pre-opening Expenses
  General and Administrative Expenses
   Board of
    
    Board ofPerformance
    
    Restricted
    
    Directors
    
    Directors CashShares
    
    Stock Units
    
    Shares
    
    Compensation
    
    Total$1,105
    
    $
    136
    
    
    $
    64
    
    
    $
    400
    
    
    $
    1,705
  Asset Impairment and Estimated Lease Termination and Other Closing Costs
  32




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##### Table of Contents



2010 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
 Restaurants
    
    Reason
    
    AmountVarious
    
    Costs for closed restaurants(1)
    
    $
    68Palatine
    
    Lease reserve(2)
    
    
    88Atlanta
    
    Gain on lease terminations(3)
    
    
    (84
    )Various
    
    Other
    
    
    2Total for 2010
    
    
    
    $
    74
 
 (1)
    
    The Company incurred costs for closed restaurants which primarily related to its Palatine, IL restaurant which was closed in 2010.(2)
    
    The lease reserve was recorded in accordance with FASB Accounting Standards Codification for Exit and Disposal Cost Obligations, and equals the net present value
of the remaining lease obligations for the Palatine, Illinois restaurant, net of expected sublease income, equal to zero.(3)
    
    During the year, the Company negotiated lease buyouts for its Marietta, GA location. Total termination fees were approximately $506,000 less lease reserve of
approximately $591,000 for a net gain of approximately $84,000. 2009 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
 Restaurants
    

    Reason

    

    AmountVarious
    
    Costs for closed restaurants(1)
    
    $
    240Various
    
    Gain on lease terminations(2)
    
    
    (162
    )Software
    
    Asset impairment(3)
    
    
    129Various
    
    Other
    
    
    11Total for 2009
    
    
    
    $
    218
 
 (1)
    
    The Company incurred costs for the following closed restaurants: Snellville, Georgia, Alpharetta, Georgia, and Marietta, Georgia, which all closed in 2008.
Additionally, there were costs for West St. Paul, Minnesota and Naperville, Illinois which were closed in 2009.(2)
    
    During the year, the Company negotiated lease buyouts for two Georgia locations, for a restaurant that closed in fiscal year 2006, and negotiated a lease
termination settlement for a restaurant site where construction had never commenced. Total termination fees were approximately $1,313,000 less lease reserves of approximately
$1,475,000 for a net gain of approximately $162,000.(3)
    
    In accordance with FASB Accounting Standards Codification for Property, Plant and Equipment, the asset impairment charge, which was recorded in the third quarter
of fiscal 2009, was related to a software product that was replaced with an alternative solution prior to implementation. Gain on Acquisition, Net of Acquisition Costs
   33




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##### Table of Contents



Inventory
    
    $
    125Property, equipment, and leasehold improvements
    
    
    7,262Other assets(1)
    
    
    2,843
    (2)Gift card liability
    
    
    (312
    )Lease interest liabilities
    
    
    (138
    )(2)Asset disposal costs
    
    
    (2
    )Fair value of the net assets acquired
    
    $
    9,778
 
 (1)
    
    Other assets are comprised of approximately $1.4 million of liquor licenses, $1.4 million of lease interest assets and $16,000 of security deposits
for various operating leases.(2)
    
    Lease interest assets and lease interest liabilities will be amortized ratably to occupancy costs which is reflected in operating expenses in the
Companys consolidated statements of operations.  Loss on Early Extinguishment of Debt
  Interest Expense
  Interest Income
  34




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##### Table of Contents



Provision for Income Taxes
  Basic and Diluted Net Income Per Common Share
  Fiscal Year 2009 Compared to Fiscal Year 2008
 Total Revenue
 Restaurant Sales
 Franchise-Related Revenue
 Licensing and Other Revenue
 Same Store Net Sales
 35




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##### Table of Contents



Fiscal Years EndedJanuary 3,
    
    December 28,2010
    
    2008Average Weekly Net Sales (AWS):Company-Owned
    
    $
    48,197
    
    
    $
    50,685Full-Service
    
    $
    49,840
    
    
    $
    52,744Counter-Service
    
    $
    35,413
    
    
    $
    36,911Franchise-Operated
    
    $
    53,016
    
    
    $
    56,535
 Food and Beverage Costs
 Labor and Benefits rd
 Operating Expenses
 Depreciation and Amortization
 General and Administrative Expenses
 Asset Impairment and Estimated Lease Termination and Other Closing Costs 
 36




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##### Table of Contents



2009 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
 Restaurants
    
    Reason
    
    AmountVarious
    
    Costs for closed restaurants(1)
    
    $
    240Various
    
    Gain on lease terminations(2)
    
    
    (162
    )Software
    
    Asset impairment(3)
    
    
    129Various
    
    Other
    
    
    11Total for 2009
    
    
    
    $
    218
 
 (1)
    
    The Company incurred costs for the following
closed restaurants: Snellville, Georgia, Alpharetta, Georgia, and
Marietta, Georgia, which all closed in 2008. Additionally, there
were costs for West St. Paul, Minnesota and Naperville, Illinois
which were closed in 2009.(2)
    
    During the year, the Company negotiated lease
buyouts for two Georgia locations, for a restaurant that closed in
fiscal year 2006, and negotiated a lease termination settlement
for a restaurant site where construction had never commenced.
Total termination fees were approximately $1,313,000 less lease
reserves of approximately $1,475,000 for a net gain of
approximately $162,000.(3)
    
    In accordance with FASB Accounting Standards
Codification for Property, Plant and Equipment, the asset
impairment charge, which was recorded in the third quarter of
fiscal 2009, was related to a software product that was replaced
with an alternative solution prior to implementation. 37




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##### Table of Contents



2008 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
 Restaurant
    
    Reason
    
    AmountCarpentersville
    
    Store closure (net of deferred rent credits)(1)
    
    $
    177Calhoun
    
    Asset impairment(2)
    
    
    1,057Naperville
    
    Asset impairment(2)
    
    
    1,001Atlanta
    
    Asset impairment and lease reserve(2)(3)
    
    
    4,043Stillwater
    
    Asset impairment(2)
    
    
    188Vernon Hills
    
    Asset impairment(2)
    
    
    332Two Prospective Restaurants
    
    Site costs for restaurants that were not opened(4)
    
    
    105Various
    
    Other
    
    
    9Total for 2008
    
    
    
    $
    6,912
 
 (1)
    
    The Company closed this restaurant in conjunction with the opening of a new prototype restaurant
within four miles of the existing restaurant, supporting the companys strategy to reposition legacy restaurants in
markets when opportunities arise. The Company negotiated a lease buyout for this location and another location in
the Chicago market that had been previously closed for a total of $80,000. The agreement with the landlord for
these two locations was subject to a bankruptcy judges final approval, which was obtained in the third quarter of
2009. The final settlement was contained in the $1.3 million lease termination fees paid in 2009.(2)
    
    In accordance with FASB Accounting Standards Codification for Property Plant and Equipment, based
on the Companys assessment of expected cash flows from this location over the remainder of the respective lease
terms.(3)
    
    Includes the three restaurants in the Atlanta market which were acquired by the company from a
franchisee for amounts due that were subsequently closed. The lease reserve was recorded in accordance with FASB
Accounting Standards Codification for Exit and Disposal Cost Obligations, and equals the net present value of the
remaining lease obligations for the 3 closed Atlanta restaurants, net of zero expected sublease income.(4)
    
    Write off of failed site preparation costs for two locations that the Company decided not to open. Pre-opening Expenses 
 Loss on Early Extinguishment of Debt
 Interest Expense
 Interest Income 
 Income Tax Expense/Benefit
 Basic and Diluted Net Income Per Common Share 
 38




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##### Table of Contents



Financial Condition, Liquidity and Capital Resources
        39




---



##### Table of Contents



40




---



##### Table of Contents



Contractual Obligations
 (In thousands)
  Total
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    ThereafterLong Term Debt(1)
    
    $
    8,040
    
    
    $
    543
    
    
    $
    573
    
    
    $
    599
    
    
    $
    620
    
    
    $
    638
    
    
    $
    5,067Financing Leases
    
    
    5,486
    
    
    
    622
    
    
    
    628
    
    
    
    647
    
    
    
    653
    
    
    
    673
    
    
    
    2,263Line of Credit
    
    
    13,000
    
    
    
    
    
    
    
    
    
    
    
    13,000
    
    
    
    
    
    
    
    
    
    
    
    Uncertain Tax Positions
    
    
    761
    
    
    
    761
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Lease Obligations
    
    
    127,386
    
    
    
    5,659
    
    
    
    5,571
    
    
    
    5,583
    
    
    
    5,564
    
    
    
    5,643
    
    
    
    99,366Sublease Income
    
    
    (90
    )
    
    
    (33
    )
    
    
    (34
    )
    
    
    (23
    )
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    154,583
    
    
    $
    7,552
    
    
    $
    6,738
    
    
    $
    19,806
    
    
    $
    6,837
    
    
    $
    6,954
    
    
    $
    106,696
 
 (1)
    
    This is variable interest rate debt and interest expense is based on assumptions made at the time of this filing.  Off-Balance Sheet Arrangements
  Income Taxes
  41




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##### Table of Contents



Inflation
   
 Item 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Managements Discussion and Analysis of
Financial Condition and Results of Operations  Financial Condition, Liquidity and Capital
Resources.
  
 ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
  Managements Report on Internal Control over Financial Reporting
 Internal
Control-Integrated Framework
 42




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 ITEM 9B.
    
    OTHER INFORMATION
  43




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##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT
   
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 Securities Authorized for Issuance under Equity Compensation Plans
    44




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##### Table of Contents



Number of
    
    
    
    
    
    
    Number of SecuritiesSecurities to be
    
    
    
    
    
    
    Remaining Available forIssued Upon
    
    
    Weighted-
    
    
    Future Issuance UnderExercise of
    
    
    Average
    
    
    Equity CompensationOutstanding
    
    
    Exercise Price
    
    
    Plans (ExcludingOptions Warrants
    
    
    of Outstanding
    
    
    Securities Reflected inand Rights
    
    
    Options
    
    
    Column (A))Plan Category
    
    (A)
    
    
    (B)
    
    
    (C)Equity compensation plans approved by
shareholders:1995 Stock Option and Compensation
Plan
    
    
    100,000
    
    
    $
    5.96
    
    
    
    1998 Director Stock Option Plan
    
    
    105,500
    
    
    $
    6.55
    
    
    
    2005 Stock Incentive Plan(1)
    
    
    567,932
    
    
    $
    10.98
    
    
    
    179,210TOTAL
    
    
    773,432
    
    
    $
    6.48
    
    
    
    179,210Equity compensation plans not approved by
shareholders:1997 Employee Stock Option Plan
    
    
    31,025
    
    
    $
    4.81
    
    
    
    TOTAL
    
    
    804,457
    
    
    $
    6.27
    
    
    
    179,210
 
 (1)
    
    Includes 482,932 performance shares under the 2005 Plan, 75,000 restricted shares under the 2005 Plan, and 10,000
options granted under the 2005 Plan.  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  45




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##### Table of Contents



PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 Documents filed as part of this Form 10-K:Report of Independent Registered Public Accounting Firm
    
    F-1Consolidated Balance Sheets  January 2, 2011 and January 3, 2010
    
    F-2Consolidated Statements of Operations  Years ended January 2, 2011, January 3, 2010 and
December 28, 2008
    
    F-3Consolidated Statements of Shareholders Equity  Years ended January 2, 2011, January 3,
2010 and December 28, 2008
    
    F-4Consolidated Statements of Cash Flows  Years ended January 2, 2011, January 3, 2010 and
December 28, 2008
    
    F-5Notes to Consolidated Financial Statements
    
    F-6Financial Statement Schedule:Schedule II. Schedule of Valuation and Qualifying Accounts
    
    F-32Exhibits:See exhibit index on the page following the consolidated financial statements and
related footnotes
 46




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
     
 F-1




---



##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 JANUARY 2, 2011 AND JANUARY 3, 2010
 (in thousands, except share and per-share data)
 January 2,
    
    
    January 3,2011
    
    
    2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,654
    
    
    $
    2,996Restricted cash
    
    
    94
    
    
    
    627Accounts receivable, net
    
    
    3,097
    
    
    
    3,279Inventories
    
    
    2,444
    
    
    
    2,198Deferred tax asset
    
    
    205
    
    
    
    714Prepaid expenses and other current assets
    
    
    2,369
    
    
    
    1,845Current portion of notes receivable, net
    
    
    384
    
    
    
    823Total current assets
    
    
    11,247
    
    
    
    12,482Property, equipment and leasehold improvements, net
    
    
    61,550
    
    
    
    54,818Other assets:Notes receivable, net, less current portion
    
    
    54
    
    
    
    327Deferred tax asset
    
    
    
    
    
    
    206Other assets
    
    
    3,278
    
    
    
    548$
    76,129
    
    
    $
    68,381LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt and financing lease obligations
    
    $
    538
    
    
    $
    162Accounts payable
    
    
    3,935
    
    
    
    3,974Accrued compensation and benefits
    
    
    4,409
    
    
    
    4,337Other current liabilities
    
    
    4,972
    
    
    
    3,991Total current liabilities
    
    
    13,854
    
    
    
    12,464Long-term liabilities:Line of credit
    
    
    13,000
    
    
    
    13,500Long-term debt, less current portion
    
    
    6,205
    
    
    
    Financing lease obligations, less current portion
    
    
    4,292
    
    
    
    4,490Deferred tax liability
    
    
    446
    
    
    
    Other liabilities
    
    
    5,428
    
    
    
    4,933Total liabilities
    
    
    43,225
    
    
    
    35,387Shareholders equity:Common stock, $.01 par value, 100,000 shares authorized,
8,245 and 9,202 shares issued and outstanding
at January 3, 2010 and December 28, 2008 respectively
    
    
    82
    
    
    
    92Additional paid-in capital
    
    
    10,238
    
    
    
    17,536Retained earnings
    
    
    22,584
    
    
    
    15,366Total shareholders equity
    
    
    32,904
    
    
    
    32,994$
    76,129
    
    
    $
    68,381
  F-2




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 FOR THE YEARS ENDED
 JANUARY 2, 2011, JANUARY 3, 2010, AND DECEMBER 28, 2008
 (in thousands, except share and per share data)
 January 2,
    
    
    January 3,
    
    
    December 28,2011
    
    
    2010
    
    
    2008Revenue:Restaurant sales, net
    
    $
    131,154
    
    
    $
    117,934
    
    
    $
    122,016Franchise royalty revenue
    
    
    15,902
    
    
    
    16,912
    
    
    
    17,026Franchise fee revenue
    
    
    345
    
    
    
    200
    
    
    
    492Licensing and other revenue
    
    
    867
    
    
    
    972
    
    
    
    848Total revenue
    
    
    148,268
    
    
    
    136,018
    
    
    
    140,382Costs and expenses:Food and beverage costs
    
    
    38,754
    
    
    
    35,489
    
    
    
    37,581Labor and benefits costs
    
    
    41,352
    
    
    
    37,016
    
    
    
    38,185Operating expenses
    
    
    36,107
    
    
    
    31,487
    
    
    
    32,510Depreciation and amortization
    
    
    5,547
    
    
    
    5,191
    
    
    
    5,522General and administrative expenses
    
    
    16,165
    
    
    
    16,000
    
    
    
    16,521Asset impairment and estimated lease
termination and other closing costs
    
    
    74
    
    
    
    218
    
    
    
    6,912Pre-opening expenses
    
    
    300
    
    
    
    
    
    
    
    1,103Gain on acquisition, net of acquisition costs
    
    
    (2,036
    )
    
    
    79
    
    
    
    Net loss on disposal of property
    
    
    22
    
    
    
    24
    
    
    
    18Total costs and expenses
    
    
    136,285
    
    
    
    125,504
    
    
    
    138,352Income from operations
    
    
    11,983
    
    
    
    10,514
    
    
    
    2,030Other expense:Loss on early extinguishment of debt
    
    
    
    
    
    
    (509
    )
    
    
    Interest expense
    
    
    (1,140
    )
    
    
    (1,443
    )
    
    
    (1,977
    )Interest income
    
    
    171
    
    
    
    129
    
    
    
    246Other expense, net
    
    
    
    
    
    
    (1
    )
    
    
    (29
    )Total other expense
    
    
    (969
    )
    
    
    (1,824
    )
    
    
    (1,760
    )Income before income taxes
    
    
    11,014
    
    
    
    8,690
    
    
    
    270Income tax (expense) benefit
    
    
    (3,796
    )
    
    
    (2,989
    )
    
    
    119Net income
    
    $
    7,218
    
    
    $
    5,701
    
    
    $
    389Basic net income per common share
    
    $
    0.84
    
    
    $
    0.63
    
    
    $
    0.04Diluted net income per common share
    
    $
    0.82
    
    
    $
    0.62
    
    
    $
    0.04Weighted average common shares outstanding  basic
    
    
    8,620,000
    
    
    
    9,114,000
    
    
    
    9,406,000Weighted average common shares outstanding  diluted
    
    
    8,784,000
    
    
    
    9,211,000
    
    
    
    9,542,000
  F-3




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 FOR THE YEARS ENDED
 JANUARY 2, 2011, JANUARY 3, 2010, AND DECEMBER 28, 2008
 (in thousands)
 AdditionalCommon Stock
    
    
    Paid-in
    
    
    RetainedShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    TotalBalance
 December 30, 2007
    
    
    9,606
    
    
    $
    96
    
    
    $
    21,028
    
    
    $
    9,276
    
    
    $
    30,400Exercise of stock options
    
    
    6
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    26Tax shortfall for equity
awards issued
    
    
    
    
    
    
    
    
    
    
    (76
    )
    
    
    
    
    
    
    (76
    )Common stock issued
    
    
    79
    
    
    
    
    
    
    
    266
    
    
    
    
    
    
    
    266Performance shares surrendered to
cover payroll taxes incurred
    
    
    (19
    )
    
    
    
    
    
    
    (176
    )
    
    
    
    
    
    
    (176
    )Repurchase of common stock
    
    
    (593
    )
    
    
    (5
    )
    
    
    (5,067
    )
    
    
    
    
    
    
    (5,072
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    427
    
    
    
    
    
    
    
    427Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    389
    
    
    
    389Balance
 December 28, 2008
    
    
    9,079
    
    
    $
    91
    
    
    $
    16,428
    
    
    $
    9,665
    
    
    $
    26,184Exercise of stock options
    
    
    17
    
    
    
    
    
    
    
    57
    
    
    
    
    
    
    
    57Tax benefit for equity
awards issued
    
    
    
    
    
    
    
    
    
    
    436
    
    
    
    
    
    
    
    436Common stock issued
    
    
    147
    
    
    
    1
    
    
    
    791
    
    
    
    
    
    
    
    792Performance shares surrendered to
cover payroll taxes incurred
    
    
    (10
    )
    
    
    
    
    
    
    (28
    )
    
    
    
    
    
    
    (28
    )Repurchase of common stock
    
    
    (31
    )
    
    
    
    
    
    
    (188
    )
    
    
    
    
    
    
    (188
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    492
    
    
    
    
    
    
    
    492Deferred compensation
    
    
    
    
    
    
    
    
    
    
    (452
    )
    
    
    
    
    
    
    (452
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,701
    
    
    
    5,701Balance  January 3, 2010
    
    
    9,202
    
    
    $
    92
    
    
    $
    17,536
    
    
    $
    15,366
    
    
    $
    32,994Exercise of stock options
    
    
    93
    
    
    
    1
    
    
    
    351
    
    
    
    
    
    
    
    352Tax benefit for equity
awards issued
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    62Common stock issued
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Performance shares surrendered to
cover payroll taxes incurred
    
    
    (9
    )
    
    
    
    
    
    
    (68
    )
    
    
    
    
    
    
    (68
    )Repurchase of common stock
    
    
    (1,067
    )
    
    
    (11
    )
    
    
    (8,735
    )
    
    
    
    
    
    
    (8,746
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    861
    
    
    
    
    
    
    
    861Deferred compensation
    
    
    
    
    
    
    
    
    
    
    231
    
    
    
    
    
    
    
    231Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,218
    
    
    
    7,218Balance  January 2, 2011
    
    
    8,245
    
    
    $
    82
    
    
    $
    10,238
    
    
    $
    22,584
    
    
    $
    32,904
  F-4




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED
 JANUARY 2, 2011, JANUARY 3, 2010, AND DECEMBER 28, 2008
 (in thousands)
 January 2,
    
    
    January 3,
    
    
    December 28,2011
    
    
    2010
    
    
    2008Cash flows from operating activities:Net income
    
    $
    7,218
    
    
    $
    5,701
    
    
    $
    389Adjustments to reconcile net income to cash flows provided by
operations:Depreciation and amortization
    
    
    5,547
    
    
    
    5,191
    
    
    
    5,522Amortization of deferred financing costs
    
    
    56
    
    
    
    60
    
    
    
    22Loss on early extinguishment of debt
    
    
    
    
    
    
    159
    
    
    
    Net loss on disposal of property
    
    
    22
    
    
    
    24
    
    
    
    18Gain on acquisition of restaurants
    
    
    (2,343
    )
    
    
    
    
    
    
    Asset impairment and estimated lease
termination and other closing costs
    
    
    74
    
    
    
    218
    
    
    
    6,912Inventory reserve
    
    
    8
    
    
    
    45
    
    
    
    Deferred income taxes
    
    
    1,161
    
    
    
    1,777
    
    
    
    (542
    )Deferred rent
    
    
    671
    
    
    
    277
    
    
    
    570Stock-based compensation
    
    
    1,092
    
    
    
    832
    
    
    
    694Changes in operating assets and liabilities, net of acquisition:Restricted cash
    
    
    533
    
    
    
    543
    
    
    
    1,250Accounts receivable, net
    
    
    (83
    )
    
    
    443
    
    
    
    (252
    )Inventories
    
    
    (153
    )
    
    
    48
    
    
    
    (294
    )Prepaid expenses and other current assets
    
    
    (478
    )
    
    
    (160
    )
    
    
    (372
    )Deposits
    
    
    (6
    )
    
    
    100
    
    
    
    (39
    )Accounts payable
    
    
    (70
    )
    
    
    (1,745
    )
    
    
    (1,668
    )Accrued compensation and benefits
    
    
    1
    
    
    
    2,023
    
    
    
    (909
    )Other current liabilities
    
    
    532
    
    
    
    (1,041
    )
    
    
    (115
    )Long-term deferred compensation
    
    
    102
    
    
    
    26
    
    
    
    (29
    )Cash flows provided by operations
    
    
    13,884
    
    
    
    14,521
    
    
    
    11,157Cash flows from investing activities:Payments received on notes receivable
    
    
    428
    
    
    
    54
    
    
    
    71Payments for acquired restaurants
    
    
    (6,822
    )
    
    
    
    
    
    
    Purchases of property, equipment and leasehold improvements
    
    
    (5,296
    )
    
    
    (1,984
    )
    
    
    (10,537
    )Issuance of note receivable
    
    
    (64
    )
    
    
    
    
    
    
    Cash flows used for investing activities
    
    
    (11,754
    )
    
    
    (1,930
    )
    
    
    (10,466
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    6,800
    
    
    
    
    
    
    
    Proceeds from draws on line of credit
    
    
    20,500
    
    
    
    9,000
    
    
    
    26,000Payments on line of credit
    
    
    (21,000
    )
    
    
    (13,500
    )
    
    
    (21,000
    )Payments for debt issuance costs
    
    
    (24
    )
    
    
    (45
    )
    
    
    (37
    )Payments on long-term debt and financing lease obligations
    
    
    (416
    )
    
    
    (7,042
    )
    
    
    (383
    )Proceeds from exercise of stock options
    
    
    352
    
    
    
    57
    
    
    
    26Tax benefit (shortfall) for equity awards issued
    
    
    62
    
    
    
    436
    
    
    
    (76
    )Repurchase of common stock
    
    
    (8,746
    )
    
    
    (188
    )
    
    
    (5,072
    )Cash flows used for financing activities
    
    
    (2,472
    )
    
    
    (11,282
    )
    
    
    (542
    )(Decrease) increase in cash and cash equivalents
    
    
    (342
    )
    
    
    1,309
    
    
    
    149Cash and cash equivalents, beginning of year
    
    
    2,996
    
    
    
    1,687
    
    
    
    1,538Cash and cash equivalents, end of year
    
    $
    2,654
    
    
    $
    2,996
    
    
    $
    1,687
  F-5




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) NATURE OF BUSINESS AND SIGNIFICANT ACCOUTNING POLICIES
 Nature of business
 Seasonality
 Principles of consolidation
 Managements use of estimates
 Reclassifications
 Financial instruments
 Segment reporting
 Fiscal year
 Unrestricted cash and cash equivalents
 Accounts receivable, net
 F-6




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Inventories
 Notes receivable
 Property, equipment and leasehold improvements, net
 Liquor licenses 
 Debt issuance costs
 F-7




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Construction overhead and capitalized interest
 Advertising costs
 Software implementation costs .
 Research and development costs 
 Pre-opening expenses
 Lease accounting ,
 Recoverability of property, equipment and leasehold improvements, impairment charges, and exit
and disposal costs
 F-8




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  .
 Asset retirement obligation 
 Public relations, marketing development fund and restricted cash
 Gift cards
 Interest income
 Net income per common share
 F-9




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Fiscal Year(in thousands, except per share data)
    
    2010
    
    
    2009
    
    
    2008Net income per common share  basic:Net income
    
    $
    7,218
    
    
    $
    5,701
    
    
    $
    389Weighted average shares outstanding
    
    
    8,620
    
    
    
    9,114
    
    
    
    9,406Net income per common share  basic
    
    $
    0.84
    
    
    $
    0.63
    
    
    $
    0.04Net income per common share  diluted:Net income
    
    $
    7,218
    
    
    $
    5,701
    
    
    $
    389Weighted average shares outstanding
    
    
    8,620
    
    
    
    9,114
    
    
    
    9,406Dilutive impact of common stock equivalents
outstanding
    
    
    164
    
    
    
    97
    
    
    
    136Adjusted weighted average shares outstanding
    
    
    8,784
    
    
    
    9,211
    
    
    
    9,542Net income per common share  diluted
    
    $
    0.82
    
    
    $
    0.62
    
    
    $
    0.04
  Stock-based compensation
  Revenue recognition
 Franchise arrangements 
 F-10




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Licensing and other revenue
  Recently issued accounting pronouncements
 (2) INVENTORIES
  January 2,
    
    
    January 3,(in thousands)
    
    2011
    
    
    2010Small wares and supplies
    
    $
    1,420
    
    
    $
    1,331Food and beverage
    
    
    986
    
    
    
    829Retail goods
    
    
    38
    
    
    
    38$
    2,444
    
    
    $
    2,198
 F-11




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (3) NOTES RECEIVABLE
  January 2,
    
    
    January 3,(in thousands)
    
    2011
    
    
    2010Star Ribs  monthly installment of approximately
$39, payments began in March 2010, including interest of 7.9%
due September 2011. This note is unsecured
    
    $
    319
    (1)(4)
    
    $
    477
    (1)(2)North Country BBQ Ventures Inc.  was paid
in one installment based on the bankruptcy courts ruling
pursuant to Section 363 of Chapter 11 of the US Bankruptcy
Code. This note was unsecured. (See Note 15)
    
    
    
    
    
    
    485
    (1)JPs Bar-B-Que, LLC  payable in monthly
installments of approximately $8 was paid in full in February
2010. This note was unsecured
    
    
    
    
    
    
    14
    (1)(3)Old School BBQ, Inc.  monthly installments
of approximately $5.7 including interest at 9.0%, due November
2012, secured by property and equipment and guaranteed by the
franchise owners
    
    
    119
    
    
    
    174Total notes receivable
    
    
    438
    
    
    
    1,150Less: current maturities
    
    
    (384
    )
    
    
    (823
    )Long-term portion of notes receivable
    
    $
    54
    
    
    $
    327
 
 (1)
    
    The note was originally classified as accounts receivable, but was
reclassified to a note receivable due to the payment terms established by the
bankruptcy court.(2)
    
    This note was net of a reserve of $99.(3)
    
    This note was net of a reserve of $1.(4)
    
    Based on Star Ribs good payment history, subsequent to their
emergence from bankruptcy, the Company determined that the risk of collection was
minimal and a reserve was no longer required.  (in thousands)Fiscal Year2011
    
    $
    3842012
    
    
    54Total
    
    $
    438
 F-12




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (4) PROPERTY, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS, NET
  January 2,
    
    
    January 3,(in thousands)
    
    2011
    
    
    2010Land, buildings and improvements
    
    $
    69,592
    
    
    $
    62,585Furniture, fixtures, and equipment
    
    
    34,057
    
    
    
    30,609Décor
    
    
    2,768
    
    
    
    2,559Construction in progress
    
    
    869
    
    
    
    782Accumulated depreciation and amortization
    
    
    (45,736
    )
    
    
    (41,717
    )Property, equipment and leasehold improvements, net
    
    $
    61,550
    
    
    $
    54,818
 (5) OTHER ASSETS
  January 2,
    
    
    January 3,(in thousands)
    
    2011
    
    
    2010Liquor licenses
    
    $
    1,410
    
    
    $
    Long-term lease interest assets
    
    
    1,329
    
    
    
    Other assets
    
    
    539
    
    
    
    548$
    3,278
    
    
    $
    548
 (6) OTHER CURRENT LIABILITIES
  January 2,
    
    
    January 3,(in thousands)
    
    2011
    
    
    2010Gift cards payable
    
    $
    1,960
    
    
    $
    1,441Other liabilities
    
    
    1,347
    
    
    
    1,381Income taxes payable
    
    
    681
    
    
    
    Sales tax payable
    
    
    785
    
    
    
    834Accrued property and equipment purchases
    
    
    59
    
    
    
    300Deferred franchise fees
    
    
    140
    
    
    
    35$
    4,972
    
    
    $
    3,991
 F-13




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (7) OTHER LIABILITIES
  January 2,
    
    
    January 3,(in thousands)
    
    2011
    
    
    2010Deferred rent
    
    $
    5,043
    
    
    $
    4,404Lease termination costs
    
    
    
    
    
    
    89Asset retirement obligations
    
    
    96
    
    
    
    304Other liabilities
    
    
    289
    
    
    
    136$
    5,428
    
    
    $
    4,933
 (8) CREDIT FACILITY AND DEBT COVENANTS, LONG-TERM DEBT, AND FINANCING LEASE OBLIGATIONS
      F-14




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    January 2,
    
    January 3,(in thousands)
    
    2011
    
    2010Credit facility  Wells Fargo  balloon payment of
the outstanding balance due May 2013
    
    $
    13,000
    
    
    $
    13,500Less: current maturities
    
    
    
    
    
    
    Long-term credit facility
net of current portion
    
    $
    13,000
    
    
    $
    13,500
  (in thousands)Fiscal Year2011
    
    $
    2012
    
    
    2013
    
    
    13,000Total credit facility
obligation
    
    $
    13,000
 Long-Term Debt
  F-15




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  January 2,
    
    
    January 3,(in thousands)
    
    2011
    
    
    2010Notes Payable  Wells Fargo  monthly installments are
approximately $28 until the final year of the loan, then
our payments will increase to approximately $400
including interest at an adjusted Eurodollar rate plus
225 basis points for an interest rate period of one, two,
three, or six months which is determined by the Company
and is due March 2017, secured by the property and
equipment
    
    $
    6,545
    
    
    $
    Less: current maturities
    
    
    (340
    )
    
    
    Long-term debt net of current maturities
    
    $
    6,205
    
    
    $
    
  (in thousands)Fiscal Year2011
    
    $
    3402012
    
    
    3402013
    
    
    3402014
    
    
    3402015
    
    
    340Thereafter
    
    
    4,845Total
    
    $
    6,545
 Financing Lease Obligation
 th
 F-16




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  January 2,
    
    
    January 3,(in thousands)
    
    2011
    
    
    2010Financing lease  Spirit Financial  monthly installments of
$50-$59  including an interest rate of 9.63%, due in March 2019
    
    $
    4,490
    
    
    $
    4,652Less current maturities
    
    
    (198
    )
    
    
    (162
    )Long-term financing lease net of current maturities
    
    $
    4,292
    
    
    $
    4,490
  (in thousands)Fiscal Year2011
    
    $
    1982012
    
    
    2242013
    
    
    2662014
    
    
    3002015
    
    
    351Thereafter
    
    
    3,151Total
    
    $
    4,490
 (9) OPERATING LEASE OBLIGATIONS
  F-17




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (in thousands)Fiscal Year2011
    
    $
    5,6592012
    
    
    5,5712013
    
    
    5,5832014
    
    
    5,5642015
    
    
    5,643Thereafter
    
    
    99,366Total operating lease obligations
    
    
    127,386Sublease income
    
    
    (90
    )Net operating lease obligations
    
    $
    127,296
 (10) PERFORMANCE SHARES, STOCK OPTIONS, OTHER FORMS OF COMPENSATION, AND COMMON SHARE REPURCHASES
 Stock-based Compensation
  For the Years EndedJanuary 2,
    
    
    January 3,
    
    
    December 28,(in thousands)
    
    2011
    
    
    2010
    
    
    2008Performance Share Programs:2006 Program
    
    $
    
    
    
    $
    
    
    
    $
    172007 Program
    
    
    
    
    
    
    (19
    )
    
    
    1562008 Program
    
    
    101
    
    
    
    104
    
    
    
    1292009 Program
    
    
    244
    
    
    
    247
    
    
    
    2010 Program
    
    
    380
    
    
    
    
    
    
    
    Performance Shares
    
    $
    725
    
    
    $
    332
    
    
    $
    302Director Shares
    
    
    231
    
    
    
    340
    
    
    
    266Stock Options
    
    
    
    
    
    
    24
    
    
    
    85Restricted Stock Units(1)
    
    
    136
    
    
    
    136
    
    
    
    41$
    1,092
    
    
    $
    832
    
    
    $
    694
 
 (1)
    
    On September 11, 2008, a new Chief Executive Officer was appointed and, commensurate with his promotion, a 50,000
restricted stock unit grant was made. In addition, on the same date, 25,000 restricted stock units were granted to our Chief
Financial Officer. F-18




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Performance Shares
      F-19




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  No. ofTarget No. of
    
    PerformancePerformance
    
    Shares
    
    EstimatedShares
    
    (Outstanding
    
    Payout ofAward
    
    Performance Share
    
    (Originally
    
    at January 2,
    
    PerformanceDate
    
    Program
    
    Granted)(1)
    
    2011)(2)
    
    Shares12/31/2007
    
    
    2008 Program
    
    
    78,800
    
    
    
    27,000
    
    
    
    24,632
    (4)12/29/2008
    
    
    2009 Program(3)
    
    
    280,300
    
    
    
    267,100
    
    
    
    267,100
    (5)1/4/2010
    
    
    2010 Program
    
    
    193,700
    
    
    
    191,200
    
    
    
    191,200
    (6)
 
 (1)
    
    Assumes achievement of 100% of the applicable cumulative EPS goal.(2)
    
    Net of forfeitures for employee departures.(3)
    
    The aggregate target number of performance shares awarded under this
program increased significantly over prior years as a result of one-time grants
related to the hiring of several new executives and board members in late 2008 and
early 2009, and a significantly lower stock price at the grant date.(4)
    
    Based on actual achievement of 91.2% of the cumulative EPS goal
over the completed three year performance period.(5)
    
    Based on achievement of 100% of the cumulative EPS goal over the
first two years of the performance period.(6)
    
    Assumes achievement of 100% of the applicable cumulative EPS goal. Board of Directors Compensation
    Stock Options
  F-20




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Stock Options
 Number of
    
    
    Weighted Average(number of options in thousands)
    
    Options
    
    
    Exercise PriceOptions outstanding at December 30, 2007
    
    
    399
    
    
    $
    5.57Canceled or expired
    
    
    (4
    )
    
    
    4.98Exercised
    
    
    (6
    )
    
    
    4.62Options outstanding at December 28, 2008
    
    
    389
    
    
    
    5.59Canceled or expired
    
    
    (21
    )
    
    
    5.94Exercised
    
    
    (17
    )
    
    
    3.44Options outstanding at January 3, 2010
    
    
    351
    
    
    
    5.68Exercised(1)
    
    
    (104
    )
    
    
    4.30Options outstanding at January 2, 2011
    
    
    247
    
    
    $
    6.27Options exercisable at December 28, 2008
    
    
    382
    
    
    $
    5.58Options exercisable at January 3, 2010
    
    
    351
    
    
    $
    5.68Options exercisable at January 2, 2011
    
    
    247
    
    
    $
    6.27
 
 (1)
    
    In 2010, Optionholders elected to forfeit approximately
11,000 shares to satisfy the strike price and tax withholding obligations,
resulting in a net issuance of approximately 93,000 shares. F-21




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  OptionsTotal outstanding
    
    
    ExercisableWeighted-average
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Number
    
    
    remaining
    
    
    average
    
    
    Number
    
    
    averageExercise prices


    outstanding
    
    
    contractual life
    
    
    exercise price
    
    
    exercisable
    
    
    exercise price$ 3.94  $   6.00
    
    
    110
    
    
    2.30 years
    
    $
    4.93
    
    
    
    110
    
    
    $
    4.93$ 6.15  $ 10.98
    
    
    137
    
    
    3.00 years
    
    $
    7.35
    
    
    
    137
    
    
    $
    7.35247
    
    
    2.69 years
    
    $
    6.27
    
    
    
    247
    
    
    $
    6.27
  Restricted Stock Units
   Common Share Repurchases
   F-22




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Employee Stock Purchase Plan
  (11) RETIREMENT SAVINGS PLANS
 401(k) Plan
  Non-Qualified Deferred Compensation Plan
     F-23




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (12) INCOME TAXES
    Fiscal Year(in thousands)
    
    2010
    
    
    2009
    
    
    2008Current:Federal
    
    $
    (2,134
    )
    
    $
    (523
    )
    
    $
    (310
    )State
    
    
    (501
    )
    
    
    (235
    )
    
    
    (113
    )(2,635
    )
    
    
    (758
    )
    
    
    (423
    )Deferred:Federal
    
    
    (1,137
    )
    
    
    (1,992
    )
    
    
    433State
    
    
    (24
    )
    
    
    (239
    )
    
    
    109(1,161
    )
    
    
    (2,231
    )
    
    
    542Total tax (expense) benefit
    
    $
    (3,796
    )
    
    $
    (2,989
    )
    
    $
    119
  F-24




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (in thousands)Beginning balance on December 28, 2008
    
    $
    Increases attributable to tax positions taken during prior periods
    
    
    55Beginning balance on January 3, 2010
    
    
    55Increases attributable to tax positions taken during prior periods
    
    
    734Decreases due to lapses of statutes of limitations
    
    
    (19
    )Ending balance on January 2, 2011
    
    $
    770
      F-25




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 January 2,
    
    
    January 3,(in thousands)
    
    2011
    
    
    2010Current deferred tax asset (liability):Tax credit carryover
    
    $
    
    
    
    $
    500Accrued and deferred compensation
    
    
    669
    
    
    
    708Deferred revenue
    
    
    593
    
    
    
    462Accrued expenses
    
    
    197
    
    
    
    161Other
    
    
    30
    
    
    
    26Financing lease obligations
    
    
    (137
    )
    
    
    (81
    )Inventories
    
    
    (531
    )
    
    
    (498
    )Prepaid expenses
    
    
    (616
    )
    
    
    (564
    )Total short-term deferred tax asset
    
    $
    205
    
    
    $
    714Long-term
deferred tax (liability) asset:Tax credit carryover
    
    $
    653
    
    
    $
    1,675State net operating loss carry-forwards
    
    
    1,236
    
    
    
    1,411Accrued and deferred compensation
    
    
    141
    
    
    
    152Accrued expenses
    
    
    1,733
    
    
    
    Lease reserve
    
    
    101
    
    
    
    124Deferred revenue
    
    
    (112
    )
    
    
    (221
    )Valuation allowance
    
    
    (1,236
    )
    
    
    (1,368
    )Intangible property basis difference
    
    
    216
    
    
    
    Property and equipment basis difference
    
    
    (3,178
    )
    
    
    (1,567
    )Total long-term deferred tax (liability) asset
    
    $
    (446
    )
    
    $
    206
  Fiscal Year2010
    
    2009
    
    2008(1)Federal statutory tax rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State taxes, net of federal benefit
    
    
    3.6
    
    
    
    3.6
    
    
    
    50.0Tax effect of permanent differences  meals and entertainment
    
    
    0.3
    
    
    
    0.7
    
    
    
    24.1Tax effect of permanent differences  Tip Credit
    
    
    1.7
    
    
    
    2.1
    
    
    
    68.5Tax effect of permanent differences  Other
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    1.5Tax effect of general business credits
    
    
    (5.4
    )
    
    
    (6.4
    )
    
    
    (205.6
    )Adjustment to beginning deferreds
    
    
    
    
    
    
    
    
    
    
    (22.2
    )Uncertain tax positions
    
    
    0.6
    
    
    
    0.6
    
    
    
    Other
    
    
    (0.1
    )
    
    
    
    
    
    
    5.6Effective tax rate
    
    
    34.5
    %
    
    
    34.4
    %
    
    
    (44.1
    )%
 
 (1)
    
    2008 percentages are larger compared to other years as a
result of less income before taxes in 2008 compared to other years, even though
the dollar amounts of items are similar. F-26




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (13)
    
    SUPPLEMENTAL CASH FLOWS INFORMATION
 For the Fiscal Year Ended2010
    
    2009
    
    2008(in thousands)Cash paid for interest
    
    $
    961
    
    
    $
    1,418
    
    
    $
    1,823Cash paid for taxes
    
    $
    1,819
    
    
    $
    820
    
    
    $
    446Non-cash investing and financing activities:Redemption of note receivable due to the
acquisition of franchise restaurants
    
    $
    613
    
    
    $
    
    
    
    $
    Accrued property and equipment purchases
    
    $
    240
    
    
    $
    (102
    )
    
    $
    1,335Reclassification of additional paid-in-capital to payroll taxes
payable for performance shares issued
    
    $
    68
    
    
    $
    (28
    )
    
    $
    (176
    )Issuance of common stock to independent board members
    
    $
    
    
    
    $
    340
    
    
    $
    266Acquisition of the fixed assets and inventory from
the Atlanta acquisition
    
    $
    
    
    
    $
    
    
    
    $
    (1,745
    )Write-off of note receivable, accounts receivable, other assets and
accounts payable from the Atlanta acquisition
    
    $
    
    
    
    $
    
    
    
    $
    1,745
 (14)
    
    SELECTED QUARTERLY DATA (UNAUDITED)
  First Quarter
    
    Second Quarter
    
    Third Quarter
    
    Fourth Quarter2010
    
    2009
    
    2010
    
    2009
    
    2010
    
    2009
    
    2010
    
    2009Revenue
    
    $
    32,599
    
    
    $
    33,787
    
    
    $
    40,749
    
    
    $
    36,325
    
    
    $
    38,703
    
    
    $
    33,305
    
    
    $
    36,217
    
    
    $
    32,601Income from operations
    
    $
    4,375
    
    
    $
    2,430
    
    
    $
    4,137
    
    
    $
    4,448
    
    
    $
    2,444
    
    
    $
    2,202
    
    
    $
    1,027
    
    
    $
    1,434Net income
    
    $
    2,707
    
    
    $
    1,320
    
    
    $
    2,536
    
    
    $
    2,368
    
    
    $
    1,458
    
    
    $
    1,239
    
    
    $
    517
    
    
    $
    774Basic net income
per common share
    
    $
    0.30
    
    
    $
    0.15
    
    
    $
    0.29
    
    
    $
    0.26
    
    
    $
    0.17
    
    
    $
    0.14
    
    
    $
    0.06
    
    
    $
    0.08Diluted net income
per common share
    
    $
    0.30
    
    
    $
    0.15
    
    
    $
    0.29
    
    
    $
    0.26
    
    
    $
    0.17
    
    
    $
    0.13
    
    
    $
    0.06
    
    
    $
    0.08
 (15)
    
    LITIGATION
  F-27




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (16) ASSET IMPAIRMENT AND ESTIMATED LEASE TERMINATION AND OTHER CLOSING COSTS
  2010 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
 Restaurants
    
    Reason
    
    AmountVarious
    
    Costs for closed restaurants(1)
    
    $
    68Palatine
    
    Lease reserve(2)
    
    
    88Atlanta
    
    Gain on lease terminations(3)
    
    
    (84
    )Various
    
    Other
    
    
    2Total for 2010
    
    
    
    $
    74
 
 (1)
    
    The Company incurred costs for closed restaurants which primarily related to its Palatine, IL restaurant which was closed in 2010.(2)
    
    The lease reserve was recorded in accordance with FASB Accounting Standards Codification for Exit and Disposal Cost Obligations,
and equals the net present value of the remaining lease obligations for the Palatine, Illinois restaurant, net of expected sublease income, equal
to zero.(3)
    
    During the year, the Company negotiated lease buyouts for its Marietta, GA location. Total termination fees were approximately
$506,000 less lease reserve of approximately $591,000 for a net gain of approximately $84,000. F-28




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2009 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
 Restaurants
    
    Reason
    
    AmountVarious
    
    Costs for closed restaurants(1)
    
    $
    240Various
    
    Gain on lease terminations(2)
    
    
    (162
    )Software
    
    Asset impairment(3)
    
    
    129Various
    
    Other
    
    
    11Total for 2009
    
    
    
    $
    218
 
 (1)
    
    The Company incurred costs for the following
closed restaurants: Snellville, Georgia, Alpharetta, Georgia, and
Marietta, Georgia, which all closed in 2008. Additionally, there
were costs for West St. Paul, Minnesota and Naperville, Illinois
which were closed in 2009.(2)
    
    During the year, the Company negotiated lease
buyouts for two Georgia locations, for a restaurant that closed in
fiscal year 2006, and negotiated a lease termination settlement
for a restaurant site where construction had never commenced.
Total termination fees were approximately $1,313,000 less lease
reserves of approximately $1,475,000 for a net gain of
approximately $162,000.(3)
    
    In accordance with FASB Accounting Standards
Codification for Property, Plant and Equipment, the asset
impairment charge, which was recorded in the third quarter of
fiscal 2009, was related to a software product that was replaced
with an alternative solution prior to implementation. 2008 Asset Impairment and Estimated Lease Termination and Other Closing Costs (in thousands):
 Restaurant
    
    Reason
    
    AmountCarpentersville
    
    Store closure (net of deferred rent credits)(1)
    
    $
    177Calhoun
    
    Asset impairment(2)
    
    
    1,057Naperville
    
    Asset impairment(2)
    
    
    1,001Atlanta
    
    Asset impairment and lease reserve(2)(3)
    
    
    4,043Stillwater
    
    Asset impairment(2)
    
    
    188Vernon Hills
    
    Asset impairment(2)
    
    
    332Two Prospective Restaurants
    
    Site costs for restaurants that were not opened(4)
    
    
    105Various
    
    Other
    
    
    9Total for 2008
    
    
    
    $
    6,912
 
 (1)
    
    The Company closed this restaurant in conjunction with the opening of a new prototype restaurant
within four miles of the existing restaurant, supporting the companys strategy to reposition legacy restaurants in
markets when opportunities arise. The Company negotiated a lease buyout for this location and another location in
the Chicago market that had been previously closed for a total of $80,000. The agreement with the landlord for
these two locations was subject to a bankruptcy judges final approval, which was obtained in the third quarter of
2009. The final settlement was contained in the $1.3 million lease termination fees paid in 2009.(2)
    
    In accordance with FASB Accounting Standards Codification for Property Plant and Equipment, based
on the Companys assessment of expected cash flows from this location over the remainder of the respective lease
terms.(3)
    
    Includes the three restaurants in the Atlanta market which were acquired by the company from a
franchisee for amounts due that were subsequently closed. The lease reserve was recorded in accordance with FASB
Accounting Standards Codification for Exit and Disposal Cost Obligations, and equals the net present value of the
remaining lease obligations for the 3 closed Atlanta restaurants, net of zero expected sublease income.(4)
    
    Write off of failed site preparation costs for two locations that the Company decided not to open. F-29




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  DeductionsCredits toAdditions
    
    Costs andBalance at
    
    Charged to
    
    Expenses
    
    Balance atBeginning
    
    Costs and
    
    and Other
    
    End ofof Period
    
    Expenses
    
    Accounts
    
    PeriodYear ended January 3, 2010Reserve for lease termination costs
    
    $
    2,201.4
    
    
    
    292.6
    
    
    
    (1,905.0
    )
    
    $
    589.0Year ended January 2, 2011Reserve for lease termination costs
    
    $
    589.0
    
    
    
    89.2
    
    
    
    (590.5
    )
    
    $
    87.7
  (17) ACQUISITION OF SEVEN RESTAURANTS IN NEW YORK AND NEW JERSEY
   F-30




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands)
 Inventory
    
    $
    125Property, equipment, and leasehold improvements
    
    
    7,262Other assets(1)
    
    
    2,843
    (2)Gift card liability
    
    
    (312
    )Lease interest liabilities
    
    
    (138
    )             (2)Asset disposal costs
    
    
    (2
    )Fair value of the net assets acquired
    
    $
    9,778
 
 (1)
    
    Other assets are comprised of approximately $1.4 million of
liquor licenses, $1.4 million of lease interest assets and $16,000 of security
deposits for various operating leases.(2)
    
    Lease interest assets and lease interest liabilities will be
amortized ratably to occupancy costs which is reflected in operating expenses
in the Companys consolidated statements of operations.    Pro Forma Results (unaudited)
    
    Fiscal Years2010
    
    2009(in thousands except per share data)Revenue
    
    $
    150,614
    
    
    $
    154,391Net income
    
    
    7,242
    
    
    
    7,294Net income per common share-basic
    
    
    0.84
    
    
    
    0.80Net income per common share-diluted
    
    
    0.82
    
    
    
    0.79
 F-31




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
 Financial Statement Schedule
 
 SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
 Additions
    
    DeductionsCredits toCosts andBalance at
    
    Charged to
    
    Expenses
    
    Balance atBeginning
    
    Costs and
    
    and Other
    
    End of(in thousands)
    
    of Period
    
    Expenses
    
    Accounts
    
    PeriodYear ended December 28, 2008:Allowance for doubtful accounts
    
    $
    15.9
    
    
    $
    658.8
    
    
    $
    (217.7
    )
    
    $
    457.0Reserve for lease termination costs
    
    $
    171.0
    
    
    $
    2,242.9
    
    
    $
    (212.5
    )
    
    $
    2,201.4Reserve for corporate severance
    
    $
    
    
    
    $
    269.0
    
    
    $
    (62.0
    )
    
    $
    207.0Year ended January 3, 2010:Allowance for doubtful accounts
    
    $
    457.0
    
    
    $
    226.5
    
    
    $
    (616.1
    )
    
    $
    67.4Reserve for lease termination costs
    
    $
    2,201.4
    
    
    $
    292.6
    
    
    $
    (1,905.0
    )
    
    $
    589.0Reserve for corporate severance
    
    $
    207.0
    
    
    $
    74.3
    
    
    $
    (281.3
    )
    
    $
    Year ended January 2, 2011:Allowance for doubtful accounts
    
    $
    67.4
    
    
    $
    50.9
    
    
    $
    (38.7
    )
    
    $
    79.6Reserve for lease termination costs
    
    $
    589.0
    
    
    $
    89.2
    
    
    $
    (590.5
    )
    
    $
    87.7Reserve for corporate severance
    
    $
    
    
    
    $
    81.3
    
    
    $
    (71.1
    )
    
    $
    10.2
 F-32




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##### Table of Contents



SIGNATURES
  FAMOUS DAVES OF AMERICA, INC.
(Registrant)Dated: March 18, 2011
    By:
    /s/ Christopher ODonnellChristopher ODonnellPresident and Chief Executive Officer and Director

(Principal Executive Officer)By:
    /s/ Diana Garvis PurcelDiana Garvis PurcelChief Financial Officer and Secretary

(Principal Financial and Accounting Officer)  Signature
    
    Title/s/ Christopher ODonnell

Christopher ODonnell
    
    President and Chief Executive Officer and Director/s/ K. Jeffrey Dahlberg

K. Jeffrey Dahlberg
    
    Director/s/ Wallace B. Doolin

Wallace B. Doolin
    
    Director/s/ Lisa A. Kro

Lisa A. Kro
    
    Director/s/ Richard L. Monfort

Richard L. Monfort
    
    Director/s/ Dean A. Riesen

Dean A. Riesen
    
    Director




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##### Table of Contents



EXHIBITS
 Exhibit No.
    
    Description3.1
    
    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, 19963.2
    
    Amended and Restated Bylaws, incorporated by reference to
Exhibit 3.1 to Form 10-Q filed November 7, 200810.1
    
    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, 199610.2
    
    1995 Employee Stock Option Plan (as amended through May 22,
2002), incorporated by reference from Exhibit 10.1 to Form
10-Q filed August 14, 200210.3
    
    Amendment to 1995 Employee Stock Option and Compensation Plan,
effective November 7, 2006, incorporated by reference to
Exhibit 10.2 to Form 10-Q filed November 9, 200610.4
    
    1997 Stock Option and Compensation Plan (as amended through
May 22, 2002), incorporated by reference from Exhibit 10.2 to
Form 10-Q filed August 14, 200210.5
    
    1998 Director Stock Option Plan (as amended through May 22,
2002), incorporated by reference from Exhibit 10.3 to Form
10-Q filed August 14, 200210.6
    
    Amended and Restated 2005 Stock Incentive Plan, incorporated
by reference from Exhibit 10.1 to Form 10-Q filed August 8,
200810.7
    
    First Amended and Restated Executive Elective Deferred Stock
Unit Plan dated January 1, 2008, incorporated by reference
from Exhibit 10.11 to Form 10-K filed March 14, 200810.8
    
    Amended and Restated Credit Agreement by and between Wells
Fargo Bank, National Association and Famous Daves of America,
Inc., dated July 31, 2006, incorporated by reference to
Exhibit 10.1 to Form 8-K filed August 2, 200610.9
    
    First Amendment to the Amended and Restated Credit Agreement
by and between Wells Fargo Bank, National Association and
Famous Daves of America, Inc., dated April 17, 2008,
incorporated by reference to Exhibit 10.1 to Form 8-K filed
April 23, 200810.10
    
    Second Amendment to the 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, 201010.11
    
    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.10.12
    
    Employee Stock Purchase Plan, incorporated by reference to
Exhibit 10.1 to Form 10-Q filed May 9, 200810.13
    
    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, 200810.14
    
    Form of Severance Agreement dated January 4, 2008, between
Famous Daves of America, Inc. and each of Diana G. Purcel and
Christopher ODonnell, incorporated by reference to Exhibit
10.1 for Form 8-K filed January, 8, 2008




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##### Table of Contents



EXHIBITS
 Exhibit No.
    
    Description10.15
    
    Form of 2008  2010 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 18, 200810.16
    
    Form 2009  2011 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 28, 200910.17
    
    Form 2010-2012 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 6, 201010.18
    
    Form 2011-2013 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 5, 201110.19
    
    Form of Director Stock Grant, incorporated by reference to
Exhibit 10.3 to Form 8-K filed February 21, 200810.20
    
    Restricted Stock Unit Agreement, between Famous Daves of
America, Inc. and each of Diana G. Purcel and Christopher
ODonnell, incorporated by reference to Exhibits 10.1 and
10.2, to Form 8-K filed September 17, 200810.21
    
    Form of Restricted Stock Agreement dated May 5, 2009,
between Famous Daves of America, Inc. and K. Jeffrey
Dahlberg, incorporated by reference from Exhibit 10.1 to Form
10-Q filed on May 7, 200910.22
    
    Form of Restricted Stock Agreement dated May 5, 2009,
between Famous Daves of America, Inc. and Lisa A. Kro,
incorporated by reference from Exhibit 10.2 to Form 10-Q filed
on May 7, 200910.23
    
    Form of Restricted Stock Agreement dated May 5, 2009,
between Famous Daves of America, Inc. and Wallace B. Doolin,
incorporated by reference from Exhibit 10.1 to Form 10-Q filed
on November 5, 200910.24
    
    Amended and Restated Asset Purchase Agreement by and
between North Country BBQ Ventures, Inc. and Famous Daves of
America, Inc., dated February 26, 2010, incorporated by
reference to Exhibit 10.1 to Form 8-K filed March 9, 201021.0
    
    Subsidiaries of Famous Daves of America, Inc.23.1
    
    Consent of Grant Thornton LLP31.1
    
    Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 200232.2
    
    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