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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 December 28, 2008
 Commission File No. 0-21625
 
 FAMOUS DAVES of AMERICA, INC.
  Minnesota
(State or other jurisdiction of 
incorporation or organization)
    
    41-1782300
(I.R.S. Employer
Identification No.)
 12701 Whitewater Drive, Suite 200
Minnetonka, MN 55343
 952) 294-1300
 Common Stock, $0.01 par value
 None
 o þ
 o þ
 þ o
 þ
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o 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
    
    
    20Item 3.
    
    Legal Proceedings
    
    
    22Item 4.
    
    Submission of Matters To a Vote of Security Holders
    
    
    22PART IIItem 5.
    
    Market for Registrants Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    23Item 6.
    
    Selected Financial Data
    
    
    26Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27Item 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
    
    
    43Item 9A.
    
    Controls and Procedures
    
    
    43Item 9B.
    
    Other Information
    
    
    44PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    45Item 11.
    
    Executive Compensation
    
    
    45Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    45Item 13.
    
    Certain Relationships and Related Transactions
    
    
    46Item 14.
    
    Principal Accountant Fees and Services
    
    
    46PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    47SIGNATURESEX-21.0EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I
 
 ITEM 1.
    
    BUSINESS
 General Development of Business
   
    
    Leadership Stabilization and Development We had significant turnover in key
leadership positions during 2008. In all of our key leadership disciplines, we now
have a team that has the discipline of prudent business operators and the creative
spirit of entrepreneurs who are flexible and adaptive.
  
    
    Sales Stabilization and P&L Optimization
    
    Menu Enhancement and Innovation Strategy
    
    People and Resource Optimization
    
    Growth Strategy and Preparation
    
    Valued Franchisor
 Financial Information about Segments
  Narrative Description of Business
  3




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High Quality Food TM TM ® TM TM ® TM
  Distinctive Environment  Décor and Music
 Broad-Based Appeal
 Operating Strategy
  Operational Excellence 
 4




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Human Resources and Training 
   5




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Restaurant Operations
   6




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Off-Premise Occasions  Focus on Convenience 
   Customer Satisfaction
 7




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Value Proposition and Guest Frequency
 Marketing and Promotion
    8




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Location Strategy
  Company-Owned Restaurant Expansion
    Franchise-Operated Restaurant Expansion
 9




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Purchasing
     Information Technology
  10




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
    
    Average guest check daily, by location, by server, by day part, by revenue center
    
    Daily reports of revenue and labor (both current and projected)
    
    Weekly reports of selected controllable restaurant expenses
    
    Monthly reporting of detailed revenue and expenses
    
    
    Existing corporate and franchise intranet resources were transitioned to a portal,
providing users with the ability to share best practices and with easier access to more
information and a framework for future collaborative and analytic capabilities.
    
    Key financial systems for accounting, budgeting, and forecasting were upgraded in order
to continue maintenance and to take advantage of improved forecasting and budgeting
capabilities.
    
    Configuration and testing were completed for a back-office solution focusing on supply
chain management and food cost to be implemented in 2009.
    
    Business intelligence efforts were begun that will leverage technologies and processes
of the portal, and also provide long-term, flexible, enhanced replacement for reporting
capabilities.
  
    
    Full implementation of a back-office solution that will provide supply chain visibility
for the system and food cost visibility for the corporate restaurants.
    
    Begin implementation of business intelligence solution to facilitate identification and
communication of key business metrics to make more timely decisions. This solution will
also provide tools for standardized data and cross-functional analysis thereby offering
additional insight into our operations and profit opportunities.
    
    Evaluation and testing of an online ordering solution offering another vehicle for
guests placing to go orders.
    
    Evaluation and planning for a comprehensive human resource and payroll system intended
to streamline processes and compliance with applicable laws and regulations, and to further
mitigate our risk.
    
    Evaluation and planning to leverage web technology to drive marketing efforts and build
guest community.
 11




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Trademarks
  Franchise Program
    12




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Number of Franchise-OperatedState
    
    RestaurantsArkansas
    
    
    2Arizona
    
    
    5California
    
    
    11Colorado
    
    
    4Delaware
    
    
    1Florida
    
    
    2Georgia
    
    
    1Idaho
    
    
    1Illinois
    
    
    3Indiana
    
    
    3Iowa
    
    
    3Kansas
    
    
    3Kentucky
    
    
    1Massachusetts
    
    
    1Michigan
    
    
    9Minnesota
    
    
    9Missouri
    
    
    3Montana
    
    
    4Nebraska
    
    
    5Nevada
    
    
    3New Hampshire
    
    
    1New Jersey
    
    
    7New York
    
    
    4North Dakota
    
    
    2Ohio
    
    
    3Pennsylvania
    
    
    3South Dakota
    
    
    1Tennessee
    
    
    5Texas
    
    
    3Utah
    
    
    3Washington
    
    
    5West Virginia
    
    
    2Wisconsin
    
    
    10Total
    
    
    123
   13




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Seasonality
  Government Regulation
  14




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Associates
  
 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.
  17




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The Restaurant Industry is Subject to Extensive Government Regulation That Could Negatively
Impact Our Business.
   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.
  18




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Our Financial Performance is Affected By Our Ability to Contract with Reliable Suppliers At
Competitive Prices.
  If the
Market Price of Our Stock Declines Further Due to Macroeconomic
Conditions Effect on
the Restaurant Industry or Otherwise, Our Stock Runs the Risk of
Being Delisted From the
NASDAQ Global Market, Which Could Hinder Our Ability to Obtain
Accurate Quotations on the
Price of Our Stock or Dispose of Our Stock in the Secondary Market.
  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
 None.
 19




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ITEM 2.
    
    PROPERTIES
    20




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Square
    
    Interior
    OwnedLocation
    
    Footage
    
    Seats
    or Leased
    

    Date Opened1
    
    Roseville, MN (4)
    
    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) (4)
    
    5,200
    
    125
    
    Leased
    

    June 19975
    
    Stillwater, MN
    
    5,200
    
    130
    
    Leased
    (1)

    July 19976
    
    Apple Valley, MN (4)
    
    3,800
    
    90
    
    Leased
    (1)

    July 19977
    
    Forest Lake, MN (4)
    
    4,500
    
    100
    
    Leased
    

    October 19978
    
    Minnetonka, MN
    
    5,500
    
    140
    
    Owned
    (2)

    December 19979
    
    Plymouth, MN (4)
    
    2,100
    
    49
    
    Owned
    (3)

    December 199710
    
    West St. Paul, MN (4)
    
    6,800
    
    140
    
    Leased
    

    January 199811
    
    West Des Moines, IA
    
    5,700
    
    150
    
    Leased
    

    April 199812
    
    Des Moines, IA
    
    5,800
    
    150
    
    Leased
    

    April 199813
    
    Naperville, IL
    
    5,500
    
    170
    
    Leased
    

    April 199814
    
    Cedar Falls, IA
    
    5,400
    
    130
    
    Leased
    

    September 199815
    
    Bloomington, MN
    
    5,400
    
    140
    
    Leased
    

    October 199816
    
    Woodbury, MN
    
    5,900
    
    180
    
    Owned
    (2)

    October 199817
    
    Lincoln, NE
    
    6,200
    
    185
    
    Owned
    (3)

    December 199918
    
    Columbia, MD
    
    7,200
    
    270
    
    Leased
    

    January 200019
    
    Annapolis, MD
    
    6,800
    
    219
    
    Leased
    

    January 200020
    
    Frederick, MD
    
    5,600
    
    180
    
    Leased
    

    January 200021
    
    Woodbridge, VA
    
    6,000
    
    219
    
    Leased
    

    January 200022
    
    Vernon Hills, IL
    
    6,660
    
    222
    
    Leased
    

    February 200023
    
    Addison, IL
    
    5,000
    
    135
    
    Owned
    (3)

    March 200024
    
    Lombard, IL
    
    6,500
    
    233
    
    Leased
    

    July 200025
    
    North Riverside, IL
    
    4,700
    
    150
    
    Leased
    

    August 200026
    
    Sterling, VA
    
    5,800
    
    200
    
    Leased
    

    December 200027
    
    Oakton, VA
    
    4,400
    
    184
    
    Leased
    

    May 200128
    
    Laurel, MD
    
    5,200
    
    165
    
    Leased
    

    August 200129
    
    Palatine, IL
    
    9,100
    
    249
    
    Leased
    

    August 200130
    
    Richmond I (Richmond, VA)
    
    5,400
    
    180
    
    Owned
    (2)

    December 200131
    
    Gaithersburg, MD
    
    5,000
    
    170
    
    Leased
    

    May 200232
    
    Richmond II (Richmond, VA)
    
    5,200
    
    158
    
    Owned
    (2)

    June 200233
    
    Orland Park, IL
    
    5,400
    
    158
    
    Leased
    

    June 200234
    
    Tulsa, OK
    
    4,700
    
    180
    
    Owned
    (3)

    September 200235
    
    Virginia Commons, VA
    
    5,600
    
    186
    
    Owned
    (2)

    June 200336
    
    Chantilly, VA
    
    6,400
    
    205
    
    Leased
    

    January 200637
    
    Florence, KY
    
    5,900
    
    217
    
    Leased
    

    January 200638
    
    Waldorf, MD
    
    6,600
    
    200
    
    Leased
    

    June 200639
    
    Coon Rapids, MN
    
    6,300
    
    160
    
    Owned
    (3)

    December 200640
    
    Fredericksburg, VA
    
    6,500
    
    219
    
    Leased
    

    September 200741
    
    Owings Mills, MD
    
    6,700
    
    219
    
    Leased
    

    November 200742
    
    Bolingbrook, IL
    
    6,600
    
    219
    
    Leased
    

    November 200743
    
    Oswego, IL
    
    6,600
    
    219
    
    Leased
    

    December 200744
    
    Alexandria, VA
    
    6,600
    
    219
    
    Leased
    

    February 200845
    
    Algonquin, IL
    
    6,000
    
    219
    
    Leased
    

    September 200846
    
    Greenwood, IN
    
    5,700
    
    184
    
    Leased
    

    October 200847
    
    Salisbury, MD
    
    5,400
    
    192
    
    Leased
    

    October 2008
  
 (1)
    
    Restaurant is collateral in a financing lease.(2)
    
    Restaurant is subject to a mortgage.(3)
    
    Restaurant land and building is owned by the Company.(4)
    
    Counter service restaurant 21




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ITEM 3.
    
    LEGAL PROCEEDINGS
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  22




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
 Market Information
 SM
 2008
    
    2007Period
    
    High
    
    Low
    
    High
    
    Low1st Quarter
    
    $
    14.36
    
    
    $
    8.55
    
    
    $
    19.33
    
    
    $
    16.212nd Quarter
    
    $
    11.28
    
    
    $
    7.60
    
    
    $
    23.37
    
    
    $
    17.273rd Quarter
    
    $
    10.81
    
    
    $
    5.26
    
    
    $
    23.09
    
    
    $
    15.584th Quarter
    
    $
    6.69
    
    
    $
    2.39
    
    
    $
    18.14
    
    
    $
    11.03
 Holders
  Dividends
  Stock Performance Graph
    23




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Comparison of Five-Year Cumulative Total Return
Among Famous Daves of America, Inc., a Peer Group
and the S&P 500 Index
 
 Total Return Analysis
 2003
    

2004
    

2005
    
    2006
    
    2007
    
    2008Famous Daves of America
    
    $
    100.00
    
    
    $
    258.10
    
    
    $
    228.14
    
    
    $
    333.81
    
    
    $
    260.53
    
    
    $
    55.67Peer Group*
    
    $
    100.00
    
    
    $
    119.86
    
    
    $
    114.55
    
    
    $
    119.14
    
    
    $
    82.51
    
    
    $
    47.71S&P 500
    
    $
    100.00
    
    
    $
    110.59
    
    
    $
    113.91
    
    
    $
    129.42
    
    
    $
    134.91
    
    
    $
    79.64
 
 *
    
    Peer Group includes the following restaurant companies: OCharleys, Inc., Dine Equity,
Inc., Landrys Restaurant, Inc., Red R obin Gourmet
Burgers, Inc., Ruby Tuesday, Inc., Steak n Shake Company, Buffalo Wild Wings, Inc., Cracker Barrel
Old Country Store, Inc., California Pizza Kitchen, Inc., and PF Changs China Bistro, Inc. PURCHASES OF EQUITY SECURITIES BY THE ISSUER
   24




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MaximumNumber(or ApproximateTotal Number of
    
    Dollar Value) ofAverage
    
    Shares
    
    SharesTotal
    
    Price
    
    (or Units)
    
    (or Units)Number
    
    Paid per
    
    Purchased as
    
    that May Yet beof Shares
    
    Share(1)
    
    Part of Publicly
    
    Purchased(or Units)
    
    (or
    
    Announced Plans
    
    Under the PlansPeriod
    
    Purchased
    
    Unit)
    
    or Programs
    
    or ProgramsMonth #1 (December 31, 2007  January 27, 2008)
    
    
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    517,544
    (3)Month #2 (January 28, 2008  February 24, 2008)
    
    
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    517,544
    (3)Month #3 (February 25, 2008  March 30, 2008)
    
    
    16,000
    (2)
    
    $
    9.73
    
    
    
    16,000
    (2)
    
    
    501,544
    (3)Month #4 (March 31, 2008  April 27, 2008)
    
    
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    501,544
    (3)Month #5 (April 28, 2008  May 25, 2008)
    
    
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    501,544
    (3)Month #6 (May 26, 2008, June 29, 2008)
    
    
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    501,544
    (3)Month #7 (June 30, 2008  July 27, 2008)
    
    
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    501,544
    (3)Month #8 (July 28, 2008  August 24, 2008)
    
    
    576,956
    (4)
    
    $
    9.00
    
    
    
    576,956
    (4)
    
    
    924,588
    (5)Month #9 (August 25, 2008  September 28, 2008)
    
    
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    924,588
    (5)Month #10 (September 29, 2008  October 28, 2008)
    
    
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    924,588
    (5)Month #11 (October 29, 2008  November 28, 2008)
    
    
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    924,588
    (5)Month #12 (November 29, 2008  December 28, 2008)
    
    
    -0-
    
    
    $
    -0-
    
    
    
    -0-
    
    
    
    924,588
    (5)
 
 (1)
    
    Excluding commissions.(2)
    
    Shares purchased under the 1.0 million share publicly announced repurchase plan adopted September 27, 2007.(3)
    
    Reflects the maximum number of shares that may be purchased in the future under the publicly announced share repurchase plan adopted on September 27, 2007.(4)
    
    Includes all 501,544 shares remaining available for purchase under the publicly announced share repurchase plan adopted on September 27, 2007; also includes
75,412 shares purchased under the publicly announced share repurchase plan adopted on August 6, 2008.(5)
    
    Reflects the maximum number of shares that may be purchased in the future under the publicly announced share repurchase plan adopted on August 6, 2008. 25




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ITEM 6.
    
    SELECTED FINANCIAL DATA
   FINANCIAL HIGHLIGHTS
 FISCAL YEAR
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004 (1)($s in 000s, except per share data and average weekly sales)STATEMENTS OF OPERATIONS DATARevenue
    
    $
    140,382
    
    
    $
    125,873
    
    
    $
    116,621
    
    
    $
    102,354
    
    
    $
    99,325Asset impairment and estimated lease
termination and other closing costs
(2)
    
    $
    (6,912
    )
    
    $
    (596
    )
    
    $
    (1,136
    )
    
    $
    
    
    
    $
    Income from operations
    
    $
    2,030
    
    
    $
    10,436
    
    
    $
    9,243
    
    
    $
    8,735
    
    
    $
    7,437Income tax benefit (expense)
    
    $
    119
    
    
    $
    (3,100
    )
    
    $
    (2,737
    )
    
    $
    (2,719
    )
    
    $
    (1,922
    )Net income
    
    $
    389
    
    
    $
    6,070
    
    
    $
    4,954
    
    
    $
    4,425
    
    
    $
    3,538Basic net income per common
share
    
    $
    0.04
    
    
    $
    0.61
    
    
    $
    0.47
    
    
    $
    0.41
    
    
    $
    0.30Diluted net income per common
share
    
    $
    0.04
    
    
    $
    0.59
    
    
    $
    0.46
    
    
    $
    0.40
    
    
    $
    0.29BALANCE SHEET DATA (at year end)Cash and cash equivalents
    
    $
    1,687
    
    
    $
    1,538
    
    
    $
    1,455
    
    
    $
    4,410
    
    
    $
    11,170Total assets
    
    $
    73,401
    
    
    $
    73,942
    
    
    $
    65,859
    
    
    $
    67,426
    
    
    $
    71,761Long-term
debt less current maturities(3)
    
    $
    11,252
    
    
    $
    11,693
    
    
    $
    13,025
    
    
    $
    16,374
    
    
    $
    16,840Total shareholders equity
    
    $
    26,184
    
    
    $
    30,400
    
    
    $
    36,171
    
    
    $
    38,194
    
    
    $
    43,757OTHER DATANumber of restaurants open at year end:Company-owned restaurants
    
    
    47
    
    
    
    44
    
    
    
    41
    
    
    
    38
    
    
    
    38Franchise-operated restaurants
    
    
    123
    
    
    
    120
    
    
    
    104
    
    
    
    88
    
    
    
    66Total restaurants
    
    
    170
    
    
    
    164
    
    
    
    145
    
    
    
    126
    
    
    
    104Company-owned comparable store
Sales increase (decrease) (4)
    
    
    (2.0
    )%
    
    
    2.1
    %
    
    
    2.9
    %
    
    
    2.9
    %
    
    
    2.2
    %(5)Average weekly sales:Company-owned restaurants
    
    $
    50,685
    
    
    $
    50,385
    
    
    $
    47,894
    
    
    $
    45,072
    
    
    $
    44,164Franchise-operated restaurants
    
    $
    56,535
    
    
    $
    56,727
    
    
    $
    58,334
    
    
    $
    55,011
    
    
    $
    51,538
 
 (1)
    
    Fiscal 2004 consisted of 53 weeks. Fiscal 2008, 2007, 2006, and 2005 all consisted of 52 weeks.(2)
    
    Fiscal 2008 reflects impairment, estimated lease termination and closing costs for 8 restaurants. Four of these have closed and four are still operating. Fiscal
2007 reflects impairment charges associated with one restaurant that is still operating. 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)
    
    Long-term debt consists of total debt, including debt obligations and financing leases, less current maturities.(4)
    
    Our comparable store sales base includes company-owned restaurants that are open year round and have been open more than 24 months.(5)
    
    For purposes of computing comparable store sales, this computation assumes fiscal 2004 was a 52-week year. 26




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
  Impact of the Current Economic Environment
 
    
    A 2.0% decline in same store sales for company-operated restaurants and a 3.6% decline
in same store sales for franchise-operated restaurants, including a decrease in catering
and to-go revenues.
    
    Deteriorating financial health of some franchise partners including 1) our takeover of
the franchise-operated restaurants in the Atlanta market that resulted in closure of the
restaurants in the fourth quarter, 2) increased accounts receivable reserves and 3) a
slowing of our franchise partners development plans.
    
    Asset impairment, lease termination and other closing costs for underperforming
restaurants.
  Fiscal Year st
 Basis of Presentation
 27




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##### Table of Contents



Application of Critical Accounting Policies and Estimates
  Recognition of Franchise-Related Revenue  Accounting for Franchise Fee Revenue
   28




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##### Table of Contents



Asset Impairment and Estimated Lease Termination and Other Closing Costs Accounting for the Impairment or Disposal of Long-Lived Assets,
 Lease Accounting  Accounting for Leases,
 Accounts Receivable, Net
 Income Taxes
 29




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##### Table of Contents



Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109
 Results of Operations
 Revenue
   Costs and Expenses
 General and Administrative Expenses 
 30




---



##### Table of Contents



(3)
 2008
    
    2007
    
    2006Food and beverage costs (1)
    
    
    30.8
    %
    
    
    30.1
    %
    
    
    30.4
    %Labor and benefits (1)
    
    
    31.3
    %
    
    
    30.3
    %
    
    
    30.0
    %Operating expenses (1)
    
    
    26.6
    %
    
    
    25.6
    %
    
    
    25.3
    %Depreciation & amortization (restaurant level) (1)
    
    
    4.1
    %
    
    
    4.2
    %
    
    
    3.9
    %Depreciation & amortization (corporate level) (2)
    
    
    0.4
    %
    
    
    0.4
    %
    
    
    0.4
    %Asset impairment and estimated lease termination
and other closing costs
(1)
    
    
    5.7
    %
    
    
    0.6
    %
    
    
    1.1
    %General and administrative (2)
    
    
    11.8
    %
    
    
    12.4
    %
    
    
    13.2
    %Pre-opening expenses & net loss on disposal of property (1)
    
    
    0.9
    %
    
    
    1.5
    %
    
    
    0.8
    %Total costs and expenses (2)
    
    
    98.6
    %
    
    
    91.7
    %
    
    
    92.1
    %Income from operations (2)
    
    
    1.4
    %
    
    
    8.3
    %
    
    
    7.9
    %
 
 (1)
    
    As a percentage of restaurant sales, net(2)
    
    As a percentage of total revenue(3)
    
    Data regarding our restaurant operations as presented in the table, includes sales,
costs and expenses associated with our Rib Team, which had net income of $5,000, a net loss
of $60,000 and a net loss of $7,000, respectively in fiscal years 2008, 2007 and 2006. Our Rib Team
travels around the country introducing people to our brand of barbeque and builds brand awareness. Fiscal Year 2008 Compared to Fiscal Year 2007
 Total Revenue
 Restaurant Sales
 Franchise-Related Revenue
 Licensing and Other Revenue
 31




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##### Table of Contents



Same Store Net Sales
 Average Weekly Net Sales 
 Twelve Months EndedDecember 28,
    
    December 30,2008
    
    2007Company-Owned
    
    $
    50,685
    
    
    $
    50,385Full-Service
    
    $
    52,744
    
    
    $
    52,326Counter-Service
    
    $
    36,911
    
    
    $
    39,051Franchise-Operated
    
    $
    56,535
    
    
    $
    56,727
 Food and Beverage Costs
  32




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##### Table of Contents



Labor and Benefits
 Operating Expenses
 Depreciation and Amortization
 General and Administrative Expenses
   33




---



##### Table of Contents



Restricted Stock
    
    
    
    
    
    Unvested StockPerformance Shares
    
    Units
    
    Board of Directors Shares
    
    Options
    
    Total$
    545
    
    
    $
    136
    
    
    $
    257
    
    
    $
    22
    
    
    $
    960
 Asset Impairment and Estimated Lease Termination and Other Closing Costs
 Accounting for the Impairment or Disposal of Long-Lived Assets
 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)
    
    $
    3322 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 is subject to a bankruptcy judges final approval,
which we deem more likely than not as of the time of this filing.(2)
    
    In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets,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. We do not expect
to incur any significant additional costs related to these locations. The lease reserve
was recorded in accordance with SFAS No. 146 Accounting for Costs Associated with Exit or
Disposal Activities,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. 34




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##### Table of Contents



Pre-opening Expenses 
 Loss on Early Extinguishment of Debt
 Interest Expense
 Interest Income 
 Income Tax Expense
 Basic and Diluted Net Income Per Common Share 
  Fiscal Year 2007 Compared to Fiscal Year 2006
 Total Revenue
 35




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##### Table of Contents



Restaurant Sales
 Franchise-Related Revenue
 Licensing and Other Revenue
  Same Store Net Sales
 Average Weekly Net Sales 
 Twelve Months EndedDecember 30,
    
    December 31,2007
    
    2006Company-Owned
    
    $
    50,385
    
    
    $
    47,894Full-Service
    
    $
    52,326
    
    
    $
    49,482Counter-Service
    
    $
    39,051
    
    
    $
    38,887Franchise-Operated
    
    $
    56,727
    
    
    $
    58,334
 36




---



##### Table of Contents



Food and Beverage Costs
 Labor and Benefits
 Operating Expenses
 Depreciation and Amortization
 General and Administrative Expenses
 Asset Impairment and Estimated Lease Termination and Other Closing Costs
 37




---



##### Table of Contents



Pre-opening Expenses 
 Loss on Early Extinguishment of Debt 
 Interest Expense
 Interest Income 
 Income Tax Expense
 Basic and Diluted Net Income Per Common Share 
  Recently Issued Accounting Pronouncements
 The Fair Value Option for
Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115
 38




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##### Table of Contents



Business Combinations Non-controlling Interest in Consolidated Financial Statements,
an amendment of ARB
 Fair Value Measurements Determining the Fair Value of a Financial Asset When
the Market for that Asset is Not Active,
 Financial Condition, Liquidity and Capital Resources
     39




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##### Table of Contents



40




---



##### Table of Contents



Contractual Obligations  in thousands)
 Payments Due by Period(including interest)
    
    Total
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    ThereafterLong Term Debt
    
    $
    11,859
    
    
    $
    939
    
    
    $
    939
    
    
    $
    939
    
    
    $
    939
    
    
    $
    939
    
    
    $
    7,164Financing Leases
    
    
    6,686
    
    
    
    597
    
    
    
    603
    
    
    
    622
    
    
    
    628
    
    
    
    646
    
    
    
    3,590Operating Leases
    
    
    97,126
    
    
    
    4,994
    
    
    
    4,952
    
    
    
    4,859
    
    
    
    4,908
    
    
    
    4,694
    
    
    
    72,719Total
    
    $
    115,671
    
    
    $
    6,530
    
    
    $
    6,494
    
    
    $
    6,420
    
    
    $
    6,475
    
    
    $
    6,279
    
    
    $
    83,473
  41




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Income Taxes
  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
  42




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##### Table of Contents



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
 Changes in Internal Control over Financial Reporting
   
 ITEM 9B.
    
    OTHER INFORMATION
 Director Resignation; Election of New Director
    43




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##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS AND EXECUTIVE OFFICERS 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




---



##### Table of Contents



Number of SecuritiesRemaining Available forNumber of Securities
    
    
    Weighted-
    
    
    Future Issuance Underto be Issued Upon
    
    
    Average
    
    
    Equity CompensationExercise of
    
    
    Exercise Price of
    
    
    Plans (ExcludingOutstanding Options
    
    
    Outstanding
    
    
    Securities Reflected inWarrants and Rights
    
    
    Options
    
    
    Column (A))Plan Category
    
    (A)
    
    
    (B)
    
    
    (C)Equity compensation plans
approved by shareholders:1995 Stock Option and Compensation Plan
    
    
    134,300
    (1)
    
    $
    6.47
    
    
    
    -0-1998 Director Stock Option Plan
    
    
    180,500
    
    
    $
    5.77
    
    
    
    -0-2005 Stock Incentive Plan
    
    
    176,200
    (1)
    
    $
    10.98
    
    
    
    703,500TOTAL
    
    
    491,000
    
    
    $
    7.55
    
    
    
    703,500Equity compensation plans not
approved by shareholders:1997 Employee Stock Option Plan
    
    
    179,260
    (1)
    
    $
    6.50
    
    
    
    -0-TOTAL
    
    
    670,260
    
    
    $
    5.59
    
    
    
    -0-
 
 (1)
    
    Includes stock options, restricted stock and shares reserved for issuance under the
Companys existing Performance Share Programs: 26,800 shares under the Management Plan, 87,800
shares under the Employee Plan, 91,200 performance shares under the 2005 Plan and 75,000
restricted shares under the 2005 plan.  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  45




---



##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
            46




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
    Internal Control  Integrated Framework
  
 F-1




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 Internal ControlIntegrated Framework
    Internal ControlIntegrated Framework
   
 F-2




---



##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 28, 2009 AND DECEMBER 30, 2007  in thousands,except share and per-share data
 December 28,
    
    
    December 30,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,687
    
    
    $
    1,538Restricted cash
    
    
    1,170
    
    
    
    2,420Accounts receivable, net
    
    
    4,702
    
    
    
    5,098Inventories
    
    
    2,281
    
    
    
    1,987Deferred tax asset
    
    
    1,708
    
    
    
    1,643Prepaid expenses and other current assets
    
    
    1,689
    
    
    
    1,477Current portion of notes receivable
    
    
    54
    
    
    
    92Total current assets
    
    
    13,291
    
    
    
    14,255Property, equipment and leasehold improvements, net
    
    
    58,129
    
    
    
    57,243Other assets:Notes receivable, less current portion
    
    
    170
    
    
    
    1,165Deferred tax asset
    
    
    989
    
    
    
    511Other assets
    
    
    822
    
    
    
    768$
    73,401
    
    
    $
    73,942LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Line of credit
    
    $
    18,000
    
    
    $
    13,000Current portion of long-term debt and financing lease
obligation
    
    
    441
    
    
    
    382Accounts payable
    
    
    5,713
    
    
    
    6,647Accrued compensation and benefits
    
    
    2,279
    
    
    
    3,011Other current liabilities
    
    
    3,627
    
    
    
    5,045Total current liabilities
    
    
    30,060
    
    
    
    28,085Long-term liabilities:Long-term debt, less current portion
    
    
    6,600
    
    
    
    6,899Financing lease obligations less current portion
    
    
    4,652
    
    
    
    4,794Other liabilities
    
    
    5,905
    
    
    
    3,764Total liabilities
    
    
    47,217
    
    
    
    43,542Shareholders equity:Common stock, $.01 par value, 100,000,000 shares authorized
9,079,000 and 9,606,000 shares issued and outstanding
at December 28, 2008 and December 30, 2007, respectively
    
    
    91
    
    
    
    96Additional paid-in capital
    
    
    16,428
    
    
    
    21,028Retained earnings
    
    
    9,665
    
    
    
    9,276Total shareholders equity
    
    
    26,184
    
    
    
    30,400$
    73,401
    
    
    $
    73,942
  F-3




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED
DECEMBER 28, 2008, DECEMBER 30, 2007 AND DECEMBER 31, 2006
( in thousands, except share and per-share data)
 December 28,
    
    
    December 30,
    
    
    December 31,2008
    
    
    2007
    
    
    2006Revenue:Restaurant sales, net
    
    $
    122,016
    
    
    $
    107,820
    
    
    $
    100,026Franchise royalty revenue
    
    
    17,026
    
    
    
    15,718
    
    
    
    13,796Franchise fee revenue
    
    
    492
    
    
    
    1,323
    
    
    
    1,825Licensing and other revenue
    
    
    848
    
    
    
    1,012
    
    
    
    974Total revenue
    
    
    140,382
    
    
    
    125,873
    
    
    
    116,621Costs and expenses:Food and beverage costs
    
    
    37,581
    
    
    
    32,419
    
    
    
    30,403Labor and benefits
    
    
    38,185
    
    
    
    32,673
    
    
    
    29,960Operating expenses
    
    
    32,510
    
    
    
    27,547
    
    
    
    25,311Depreciation and amortization
    
    
    5,522
    
    
    
    4,980
    
    
    
    4,419General and administrative expenses
    
    
    16,521
    
    
    
    15,603
    
    
    
    15,381Asset impairment and estimated lease termination
and other closing costs
    
    
    6,912
    
    
    
    596
    
    
    
    1,136Pre-opening expenses
    
    
    1,103
    
    
    
    1,154
    
    
    
    625Net loss on disposal of property
    
    
    18
    
    
    
    465
    
    
    
    143Total costs and expenses
    
    
    138,352
    
    
    
    115,437
    
    
    
    107,378Income from operations
    
    
    2,030
    
    
    
    10,436
    
    
    
    9,243Other expense:Loss on early extinguishment of debt
    
    
    
    
    
    
    (12
    )
    
    
    (148
    )Interest expense
    
    
    (1,977
    )
    
    
    (1,577
    )
    
    
    (1,721
    )Interest income
    
    
    246
    
    
    
    293
    
    
    
    331Other (expense) income, net
    
    
    (29
    )
    
    
    30
    
    
    
    (14
    )Total other expense
    
    
    (1,760
    )
    
    
    (1,266
    )
    
    
    (1,552
    )Income before income taxes
    
    
    270
    
    
    
    9,170
    
    
    
    7,691Income tax benefit (expense)
    
    
    119
    
    
    
    (3,100
    )
    
    
    (2,737
    )Net income
    
    $
    389
    
    
    $
    6,070
    
    
    $
    4,954Basic net income per common share
    
    $
    0.04
    
    
    $
    0.61
    
    
    $
    0.47Diluted net income per common share
    
    $
    0.04
    
    
    $
    0.59
    
    
    $
    0.46Weighted average common shares
outstanding-basic
    
    
    9,406,000
    
    
    
    9,960,000
    
    
    
    10,453,000Weighted average common shares
outstanding-diluted
    
    
    9,542,000
    
    
    
    10,298,000
    
    
    
    10,801,000
  F-4




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
FOR THE YEARS ENDED
DECEMBER 28, 2008, DECEMBER 30, 2007, AND DECEMBER 31, 2006(in thousands)
 RetainedAdditional
    
    
    Earnings/Common Stock
    
    
    Paid-In
    
    
    (Accumulated)Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit)
    
    
    TotalBalance-January 1, 2006
    
    
    10,599
    
    
    $
    106
    
    
    $
    39,836
    
    
    $
    (1,748
    )
    
    $
    38,194Exercise of stock options
    
    
    123
    
    
    
    1
    
    
    
    449
    
    
    
    
    
    
    
    450Tax benefit for equity
awards issued
    
    
    
    
    
    
    
    
    
    
    469
    
    
    
    
    
    
    
    469Common stock issued
    
    
    19
    
    
    
    
    
    
    
    303
    
    
    
    
    
    
    
    303Repurchase of common stock
    
    
    (611
    )
    
    
    (6
    )
    
    
    (9,303
    )
    
    
    
    
    
    
    (9,309
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,110
    
    
    
    
    
    
    
    1,110Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,954
    
    
    
    4,954Balance-December 31, 2006
    
    
    10,130
    
    
    $
    101
    
    
    $
    32,864
    
    
    $
    3,206
    
    
    $
    36,171Exercise of stock options
    
    
    305
    
    
    
    3
    
    
    
    1,442
    
    
    
    
    
    
    
    1,445Tax benefit for equity
awards issued
    
    
    
    
    
    
    
    
    
    
    473
    
    
    
    
    
    
    
    473Common stock issued
    
    
    41
    
    
    
    
    
    
    
    325
    
    
    
    
    
    
    
    325Repurchase of common stock
    
    
    (870
    )
    
    
    (8
    )
    
    
    (14,436
    )
    
    
    
    
    
    
    (14,444
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    360
    
    
    
    
    
    
    
    360Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,070
    
    
    
    6,070Balance-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
    
    
    60
    
    
    
    
    
    
    
    90
    
    
    
    
    
    
    
    90Repurchase 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
    
    
    $
    26,184
  F-5




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
DECEMBER 28, 2008, DECEMBER 30, 2007, AND DECEMBER 31, 2006(in thousands)
 December 28,
    
    
    December 30,
    
    
    December 31,2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    389
    
    
    $
    6,070
    
    
    $
    4,954Adjustments to reconcile net income to cash flows provided
by operations:Depreciation and amortization
    
    
    5,522
    
    
    
    4,980
    
    
    
    4,419Amortization of deferred financing costs
    
    
    22
    
    
    
    56
    
    
    
    57Loss on early extinguishment of debt
    
    
    
    
    
    
    12
    
    
    
    148Net loss on disposal of property
    
    
    18
    
    
    
    465
    
    
    
    143Asset impairment and estimated lease termination and
other
closing costs
    
    
    6,912
    
    
    
    596
    
    
    
    1,170Deferred income taxes
    
    
    (542
    )
    
    
    1,781
    
    
    
    1,646Deferred rent
    
    
    570
    
    
    
    370
    
    
    
    398Stock-based compensation
    
    
    694
    
    
    
    838
    
    
    
    1,413Changes in operating assets and liabilities:Restricted cash
    
    
    1,250
    
    
    
    (995
    )
    
    
    (204
    )Accounts receivable, net
    
    
    (252
    )
    
    
    (1,761
    )
    
    
    (672
    )Inventories
    
    
    (294
    )
    
    
    (261
    )
    
    
    (177
    )Prepaid expenses and other current assets
    
    
    (372
    )
    
    
    99
    
    
    
    (250
    )Deposits
    
    
    (39
    )
    
    
    (234
    )
    
    
    61Accounts payable
    
    
    (1,668
    )
    
    
    993
    
    
    
    1,418Accrued compensation and benefits
    
    
    (909
    )
    
    
    (507
    )
    
    
    1,196Other current liabilities
    
    
    (115
    )
    
    
    497
    
    
    
    152Long-term deferred compensation
    
    
    (29
    )
    
    
    
    
    
    
    Cash flows provided by operations
    
    
    11,157
    
    
    
    12,999
    
    
    
    15,872Cash flows from investing activities:Purchases of property, equipment and leasehold
improvements
    
    
    (10,537
    )
    
    
    (14,263
    )
    
    
    (8,159
    )Sale of property, equipment and leasehold
improvements
    
    
    
    
    
    
    1,753
    
    
    
    900Payments received on notes receivable
    
    
    71
    
    
    
    180
    
    
    
    245Cash flows used for investing activities
    
    
    (10,466
    )
    
    
    (12,330
    )
    
    
    (7,014
    )Cash flows from financing activities:Proceeds from draws on line of credit
    
    
    26,000
    
    
    
    19,500
    
    
    
    Payments on line of credit
    
    
    (21,000
    )
    
    
    (6,500
    )
    
    
    Payments for debt issuance costs
    
    
    (37
    )
    
    
    
    
    
    
    (34
    )Payments on long-term debt and financing lease obligations
    
    
    (383
    )
    
    
    (1,350
    )
    
    
    (3,389
    )Proceeds from exercise of stock options
    
    
    26
    
    
    
    1,447
    
    
    
    450Tax (shortfall) benefit for equity awards issued
    
    
    (76
    )
    
    
    473
    
    
    
    469Repurchase of common stock
    
    
    (5,072
    )
    
    
    (14,156
    )
    
    
    (9,309
    )Cash flows used for financing activities
    
    
    (542
    )
    
    
    (586
    )
    
    
    (11,813
    )Increase (decrease) in cash and cash equivalents
    
    
    149
    
    
    
    83
    
    
    
    (2,955
    )Cash and cash equivalents, beginning of year
    
    
    1,538
    
    
    
    1,455
    
    
    
    4,410Cash and cash equivalents, end of year
    
    $
    1,687
    
    
    $
    1,538
    
    
    $
    1,455
  F-6




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING 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
 F-7




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
 Accounts receivable, net
 Inventories
 Property, equipment and leasehold improvements, net 
 Debt issuance costs
 Construction overhead and capitalized interest
 F-8




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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 ACCOUNTING POLICIES (continued)
 Advertising costs
 Software implementation costs Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use.
 Research and development costs 
 Pre-opening expenses
 Lease accounting  Accounting for Leases,
 Recoverability of property, equipment and leasehold improvements, impairment charges, exit and
disposal costs, and asset retirement obligations Accounting for
the Impairment or Disposal of Long-Lived Assets
 F-9




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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 ACCOUNTING POLICIES (continued)
  Accounting for Costs Associated with Exit or
Disposal Activities.
     F-10




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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 ACCOUNTING POLICIES (continued)
 Accounting for Costs Associated with Exit
or Disposal Activities,
   Asset retirement obligations Accounting for Conditional
Asset Retirement Obligations  an interpretation of FASB Statement No. 143
 Public relations, marketing development fund and restricted cash 
 Gift cards 
 F-11




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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 ACCOUNTING POLICIES (continued)
 Interest income 
 Net income per common share
  Fiscal Year(in thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2006Net income per common share  basic:Net income
    
    $
    389
    
    
    $
    6,070
    
    
    $
    4,954Weighted average shares outstanding
    
    
    9,406
    
    
    
    9,960
    
    
    
    10,453Net income per common share  basic
    
    $
    0.04
    
    
    $
    0.61
    
    
    $
    0.47Net income per common share  diluted:Net income
    
    $
    389
    
    
    $
    6,070
    
    
    $
    4,954Weighted average shares outstanding
    
    
    9,406
    
    
    
    9,960
    
    
    
    10,453Dilutive impact of common stock equivalents outstanding
    
    
    136
    
    
    
    338
    
    
    
    348Adjusted weighted average shares outstanding
    
    
    9,542
    
    
    
    10,298
    
    
    
    10,801Net income per common share  diluted
    
    $
    0.04
    
    
    $
    0.59
    
    
    $
    0.46
  Stock-based compensation Share-Based Payment
   F-12




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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 ACCOUNTING POLICIES (continued)
 Revenue recognition
 Franchise arrangements 
 Licensing and other revenue 
  Recently issued accounting pronouncements  Business Combinations Non-controlling Interest in Consolidated Financial Statements, an amendment of ARB
 Fair Value Measurements
 F-13




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
 Determining the Fair Value of a Financial Asset When the Market for that Asset is Not
Active,
 (2) INVENTORIES
  December 28,
    
    
    December 30,(in thousands)
    
    2008
    
    
    2007Smallwares and supplies
    
    $
    1,360
    
    
    $
    1,241Food and beverage
    
    
    884
    
    
    
    706Retail goods
    
    
    37
    
    
    
    40$
    2,281
    
    
    $
    1,987
 F-14




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (3) NOTES RECEIVABLE
  (in thousands)
    
    December 28,
    
    
    December 30,2008
    
    
    2007Famous Ribs of Georgia, LLC, Famous Ribs of
Snellville, LLC, Famous Ribs of Marietta,
LLC, Famous Ribs of Alpharetta, LLC, and
Famous Ribs of Lawrenceville, LLC, $1,300
amortized over 9 years at 3.27% interest,
due November 2012, secured by property and
equipment and guaranteed by the franchise
owner. (1)
    
    $
    
    
    
    $
    982Old 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.
    
    
    224
    
    
    
    270Rivervalley BBQ, Inc.  line of credit for
up to $50.0 with monthly interest only
though December 2007 with total outstanding
balance due December 2007 including
interest at prime (7.25% at December 30,
2007 and 8.25% at January 31, 2006) plus
1.50%, unsecured.
    
    
    
    
    
    
    5Total notes receivable
    
    
    224
    
    
    
    1,257Less: current maturities
    
    
    (54
    )
    
    
    (92
    )Long-term portion of notes receivable
    
    $
    170
    
    
    $
    1,165
 
 (1)
    
    On February 12, 2007 the Company amended a promissory note receivable with Famous
Ribs, Georgia, LLC, Famous Ribs of Snellville, LLC, Famous Ribs of Marietta, LLC, Famous Ribs
of Alpharetta LLC, and Famous Ribs of Lawrenceville, LLC. The terms of the note were amended
from February 1, 2007 to November 17, 2012 to require a minimum installment payment of $5,000
each month. In addition, a one-time principal payment of $10,000 was required and paid on
February 1, 2007. On July 1, 2007, an additional principal payment of $300,000 was required
and paid through the redemption of Famous Daves of America, Inc. common stock. This $300,000
payment was allowed to be applied to future principal amounts outstanding under the amended
promissory note which reduced the principal and interest amount due until 2012 to
$5,000/month. On the maturity date, the Borrower would be required to pay the entire
remaining principal balance together with any unpaid accrued interest. In August 2008, the
Company forgave the remainder of the note in exchange for the three Atlanta restaurants that
had been the original basis for the note.  (in thousands)
 Fiscal Year2009
    
    $
    542010
    
    
    552011
    
    
    602012
    
    
    55Total
    
    $
    224
 F-15




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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
  December 28,
    
    
    December 30,(in thousands)
    
    2008
    
    
    2007Land, buildings and improvements
    
    $
    65,496
    
    
    $
    58,987Furniture, fixtures and equipment
    
    
    31,086
    
    
    
    26,745Décor
    
    
    2,866
    
    
    
    2,552Construction in progress
    
    
    391
    
    
    
    3,325Accumulated depreciation and amortization
    
    
    (41,710
    )
    
    
    (34,366
    )Property, equipment and leasehold improvements, net
    
    $
    58,129
    
    
    $
    57,243
 (5) OTHER CURRENT LIABILITIES
  (in thousands)
    
    December 28,
    
    
    December 30,2008
    
    
    2007Gift cards payable
    
    $
    1,558
    
    
    $
    1,617Other liabilities
    
    
    876
    
    
    
    813Sales tax payable
    
    
    856
    
    
    
    662Accrued property and equipment purchases
    
    
    197
    
    
    
    1,533Deferred franchise fees
    
    
    140
    
    
    
    420$
    3,627
    
    
    $
    5,045
 (6) CREDIT FACILITY AND DEBT COVENANTS
   F-16




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     F-17




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (7) LONG-TERM DEBT
   December 28,
    
    
    December 30,(in thousands)
    
    2008
    
    
    2007(1)Notes payable  GE Capital Franchise
Finance Corporation  monthly
installments from approximately $13 to
$20 including interest between 8.10%
and 10.53%, due between January 2020
and October 2023, secured by property
and equipment.
    
    $
    6,899
    
    
    $
    7,169Less current maturities
    
    
    (299
    )
    
    
    (270
    )Long-term debt net of current maturities
    
    $
    6,600
    
    
    $
    6,899
 
 (1)
    
    During the first quarter of fiscal 2007, we repaid approximately $1.0
million in notes payable related to our Tulsa, Oklahoma company-owned restaurant in
advance, which resulted in an approximate $12,000 non-cash charge to write-off
deferred financing fees.  (in thousands)Fiscal Year2009
    
    $
    2992010
    
    
    3292011
    
    
    3622012
    
    
    3972013
    
    
    438Thereafter
    
    
    5,074Total
    
    $
    6,899
 (8) FINANCING LEASE OBLIGATION
 th th
 F-18




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (8) FINANCING LEASE OBLIGATION (continued)
   December 28,
    
    
    December 30,(in thousands)
    
    2008
    
    
    2007Financing lease  Spirit Financial  monthly
installments of $48-$59   including an interest
rate of 9.63%, due in March 2019.
    
    $
    4,794
    
    
    $
    4,906Less current maturities
    
    
    (142
    )
    
    
    (112
    )Long-term financing lease net of current maturities
    
    $
    4,652
    
    
    $
    4,794
  (In thousands)Fiscal Year2009
    
    $
    1422010
    
    
    1622011
    
    
    1982012
    
    
    2242013
    
    
    266Thereafter
    
    
    3,802Total financing lease obligation
    
    $
    4,794
 (9) OPERATING LEASE OBLIGATIONS
  F-19




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (9) OPERATING LEASE OBLIGATIONS (continued)
  (in thousands)
 Fiscal Year2009
    
    $
    4,9942010
    
    
    4,9522011
    
    
    4,8592012
    
    
    4,9082013
    
    
    4,694Thereafter
    
    
    72,719Total operating lease obligations
    
    $
    97,126
 (10) RELATED PARTY TRANSACTIONS
 Famous Ribs of Georgia, Snellville, Marietta and Alpharetta, LLC
  F-20




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (11)
    
    STOCK OPTIONS, PERFORMANCE SHARES, OTHER FORMS OF COMPENSATION, AND COMMON SHARE REPURCHASES
  Stock-based Compensation
 For the Years EndedDecember 28,
    
    
    December 30,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007
    
    
    2006Performance Share Programs:Fiscal 2004  2006
    
    $
    
    
    
    $
    
    
    
    $
    38Fiscal 2005  2007 (1)
    
    
    
    
    
    
    (286
    )
    
    
    423Fiscal 2006  2008 (1)
    
    
    17
    
    
    
    14
    
    
    
    271Fiscal 2007  2009 (1)
    
    
    156
    
    
    
    349
    
    
    
    Fiscal 2008  2010 (2)
    
    
    129
    
    
    
    
    
    
    
    Performance Shares
    
    $
    302
    
    
    $
    77
    
    
    $
    732Director Shares
    
    
    266
    
    
    
    478
    
    
    
    303Stock Options (1)
    
    
    85
    
    
    
    283
    
    
    
    378Restricted Stock Units (2)(3)
    
    
    41
    
    
    
    
    
    
    
    Deferred Stock Units
    
    
    
    
    
    
    (18
    )
    
    
    34$
    694
    
    
    $
    820
    
    
    $
    1,447
 
 (1)
    
    In December 2007, our Chief Executive Officer ceased employment with the
Company. As a result, we adjusted our performance share expense under these programs and
stock option expense to reflect the cancellation of these unearned grants.(2)
    
    We hired a new Chief Executive Officer and his employment commenced on April
21, 2008, at which time, performance share grants and a restricted stock unit grant was
made. This Chief Executive Officer ceased employment on September 11, 2008 at which time
all previous restricted stock unit expense was reversed.(3)
    
    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-21




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (11)
    
    STOCK OPTIONS, PERFORMANCE SHARES, OTHER FORMS OF COMPENSATION, AND COMMON SHARE REPURCHASES
(continued)
  (number of options in thousands)
    
    Number of
    
    
    Weighted AverageOptions
    
    
    Exercise PriceOptions outstanding at January 1, 2006
    
    
    900
    
    
    $
    5.14Canceled or expired
    
    
    (43
    )
    
    
    6.11Exercised
    
    
    (130
    )
    
    
    4.28Options previously cancelled
    
    
    1
    
    
    
    2.84Options outstanding at December 31, 2006
    
    
    728
    
    
    
    5.24Canceled or expired
    
    
    (24
    )
    
    
    6.01Exercised
    
    
    (305
    )
    
    
    4.75Options outstanding at December 30, 2007
    
    
    399
    
    
    
    5.57Canceled or expired
    
    
    (4
    )
    
    
    4.98Exercised
    
    
    (6
    )
    
    
    4.62Options outstanding at December 28, 2008
    
    
    389
    
    
    $
    5.59Options exercisable  December 31, 2006
    
    
    580
    
    
    $
    5.05Options exercisable  December 30, 2007
    
    
    359
    
    
    $
    5.52Options exercisable  December 28, 2008
    
    
    382
    
    
    $
    5.58
  (number outstanding and number exercisable in thousands)
 OptionsTotal outstanding
    
    
    ExercisableWeighted-average
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Exercise
    
    Number
    
    
    remaining
    
    
    average
    
    
    Number
    
    
    averageprices
    
    utstanding
    
    
    contractual life
    
    
    exercise price
    
    
    exercisable
    
    
    exercise price$2.00 - $3.19
    
    
    38
    
    
    1.23 years
    
    $
    2.88
    
    
    
    37
    
    
    $
    2.89$3.50 - $6.00
    
    
    195
    
    
    3.80 years
    
    $
    4.81
    
    
    
    196
    
    
    $
    4.81$6.15 - $10.98
    
    
    156
    
    
    5.05 years
    
    $
    7.23
    
    
    
    149
    
    
    $
    7.26389
    
    
    4.05 years
    
    $
    5.59
    
    
    
    382
    
    
    $
    5.58
  F-22




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (11)
    
    STOCK OPTIONS, PERFORMANCE SHARES, OTHER FORMS OF COMPENSATION, AND COMMON SHARE REPURCHASES
(continued)
  2005 Stock Incentive Plan
  Performance Shares
    F-23




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FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (11)
    
    STOCK OPTIONS, PERFORMANCE SHARES, OTHER FORMS OF COMPENSATION, AND COMMON
SHARE REPURCHASES (continued)
  Target No. of
    
    Maximum No. ofPerformance Shares
    
    Performance Shares(Issuable assuming
    
    (Issuable assumingPerformance Shares
    
    100%
    
    200%Performance Share
    
    (Originally Granted
    
    Payout
    
    PayoutAward Date
    
    Program
    
    at 100%)
    
    Achieved)(1)
    
    Achieved)12/29/2005
    
    2006  2008
    
    
    83,200
    
    
    26,484(2)
    
    26,484(2)02/21/2007
    
    2007  2009
    
    
    96,100
    
    
    
    35,300
    
    
    
    70,600(3)12/31/2007
    
    2008  2010
    
    
    78,800
    
    
    
    30,400
    
    
    
    60,800(3)
 
 (1)
    
    Net of forfeitures due to employee departures(2)
    
    Based on 82.26% EPS goal achieved(3)
    
    Based on 150% EPS goal achieved  Restricted Stock Units
   F-24




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (11)
    
    STOCK OPTIONS, PERFORMANCE SHARES, OTHER FORMS OF COMPENSATION,
AND COMMON SHARE REPURCHASES (continued)
  Deferred Stock Unit Plan
    Common Share Repurchases
  F-25




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (11)
    
    STOCK OPTIONS, PERFORMANCE SHARES, OTHER FORMS OF COMPENSATION,
AND COMMON SHARE REPURCHASES (continued)
    Board of Directors Compensation
    F-26




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (11)
    
    STOCK OPTIONS, PERFORMANCE SHARES, OTHER FORMS OF COMPENSATION,
AND COMMON SHARE REPURCHASES (continued)
 Warrants
  Employee Stock Purchase Plan
  (12)
    
    INCOME TAXES
   (in thousands)
    
    2008
    
    
    2007
    
    
    2006Current:Federal
    
    $
    310
    
    
    $
    758
    
    
    $
    859State
    
    
    113
    
    
    
    367
    
    
    
    248423
    
    
    
    1,125
    
    
    $
    1,107Deferred:Federal
    
    
    (433
    )
    
    
    1,982
    
    
    
    1,327State
    
    
    (109
    )
    
    
    (7
    )
    
    
    303(542
    )
    
    
    1,975
    
    
    
    1,630Total tax (benefit) expense
    
    $
    (119
    )
    
    $
    3,100
    
    
    $
    2,737
  F-27




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (12) INCOME TAXES (continued)
 Accounting for Income Taxes Accounting for Uncertainty in Income Taxes  an Interpretation of FASB
Statement No. 109
  (in thousands)
    
    December 28, 2008
    
    
    December 30, 2007Current deferred tax assets (liabilities):Tax credit carryover
    
    $
    1,470
    
    
    $
    1,720Accrued and deferred compensation
    
    
    528
    
    
    
    503Net operating loss carry-forwards
    
    
    347
    
    
    
    83Other
    
    
    299
    
    
    
    427Financing lease
    
    
    187
    
    
    
    (259
    )Inventories
    
    
    (496
    )
    
    
    (434
    )Prepaid expenses
    
    
    (627
    )
    
    
    (397
    )Total short-term deferred tax assets
    
    $
    1,708
    
    
    $
    1,643Long-term deferred tax assets (liabilities):Tax credit carryover
    
    $
    1,173
    
    
    $
    Property and equipment basis difference
    
    
    (763
    )
    
    
    374Lease reserve
    
    
    627
    
    
    
    State net operations loss carry forwards
    
    
    1,255
    
    
    
    952Other
    
    
    (48
    )
    
    
    137Valuation allowance
    
    
    (1,255
    )
    
    
    (952
    )Total long-term deferred tax assets:
    
    $
    989
    
    
    $
    511
 F-28




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (12) INCOME TAXES (continued)
  Fiscal Year2008(1)
    
    2007
    
    2006Federal statutory tax rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State taxes, net of federal benefit
    
    
    50.0
    
    
    
    2.7
    
    
    
    2.2Tax effect of permanent differences 
meals and entertainment
    
    
    24.1
    
    
    
    0.7
    
    
    
    1.0Tax effect of permanent differences  Tip Credit
    
    
    68.5
    
    
    
    1.6
    
    
    
    1.7Tax effect of permanent differences  other
    
    
    1.5
    
    
    
    0.1
    
    
    
    Tax effect of general business credits
    
    
    (205.6
    )
    
    
    (5.0
    )
    
    
    (5.0
    )Adjustment to beginning deferreds
    
    
    (22.2
    )
    
    
    (0.5
    )
    
    
    Other
    
    
    5.6
    
    
    
    (0.2
    )
    
    
    1.7Effective tax rate
    
    
    (44.1)
    %
    
    
    33.8
    %
    
    
    35.6
    %
 
 (1)
    
    2008 percentages are larger than prior years as a result of less income before
taxes in 2008 compared to other years, even though the dollar amounts of items are similar to
prior years. (13) SUPPLEMENTAL CASH FLOWS INFORMATION
 Fiscal Year(in thousands)
    
    2008
    
    2007
    
    2006Cash paid for interest
    
    $
    1,823
    
    
    $
    1,477
    
    
    $
    1,606Cash paid for taxes
    
    $
    446
    
    
    $
    1,446
    
    
    $
    927Non-cash operating, investing and financing activities:Acquired the fixed assets and inventory from the
3 Atlanta restaurants
    
    $
    (1,745
    )
    
    $
    
    
    
    $
    Write off note receivable, accounts receivable,
other assets and accounts payable from
the 3 Atlanta restaurants
    
    $
    1,745
    
    
    $
    
    
    
    $
    Reclassification of other current assets to
assets held for sale
    
    $
    
    
    
    $
    
    
    
    $
    776Reclassification of accounts receivable to
assets held for sale
    
    $
    
    
    
    $
    
    
    
    $
    178Accrued property and equipment purchases
    
    $
    1,335
    
    
    $
    791
    
    
    $
    295Tax shortfall (benefit) for equity awards issued
    
    $
    76
    
    
    $
    (473
    )
    
    $
    (469
    )Redemption of note receivable by common
stock buyback
    
    $
    
    
    
    $
    289
    
    
    $
    Issuance of common stock to independent
board members
    
    $
    266
    
    
    $
    478
    
    
    $
    303Repurchase of common stock (performance
shares surrendered for tax)
    
    $
    (176
    )
    
    $
    (153
    )
    
    $
    
 F-29




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (14) RETIREMENT SAVINGS PLANS
 401(k) Plan
  Non-Qualified Deferred Compensation Plan
     F-30




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (15) SELECTED QUARTERLY DATA (UNAUDITED)
  First Quarter
    
    Second Quarter
    
    Third Quarter
    
    Fourth Quarter(in thousands, except per share data)
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007Revenue
    
    $
    33,715
    
    
    $
    29,003
    
    
    $
    38,774
    
    
    $
    33,535
    
    
    $
    35,088
    
    
    $
    31,902
    
    
    $
    32,805
    
    
    $
    31,433Income from operations
    
    $
    1,739
    
    
    $
    2,417
    
    
    $
    3,873
    
    
    $
    3,469
    
    
    $
    (704
    ) (1)
    
    $
    2,904
    
    
    $
    (2,878
    ) (1)
    
    $
    1,646Net income
    
    $
    835
    
    
    $
    1,402
    
    
    $
    2,272
    
    
    $
    2,139
    
    
    $
    (763
    ) (1)
    
    $
    1,732
    
    
    $
    (1,955
    ) (1)
    
    $
    797Basic net income per
common share
    
    $
    0.09
    
    
    $
    0.14
    
    
    $
    0.24
    
    
    $
    0.21
    
    
    $
    (0.08
    )
    
    $
    0.17
    
    
    $
    (0.22
    )
    
    $
    0.08Diluted net income
per common share
    
    $
    0.09
    
    
    $
    0.13
    
    
    $
    0.23
    
    
    $
    0.21
    
    
    $
    (0.08
    )
    
    $
    0.17
    
    
    $
    (0.22
    )
    
    $
    0.08
 
 (1)
    
    Includes impairments, estimated lease term costs and other closing costs of
approximately $3,879 for Third Quarter and $3,033 for Fourth Quarter, respectively. (16) LITIGATION
  F-31




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##### Table of Contents



FAMOUS DAVES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Financial Statement Schedule
 SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
 DeductionsAdditions
    
    Credits to CostsBalance at
    
    Charged to
    
    and ExpensesBeginning of
    
    Costs and
    
    and Other
    
    Balance at End(in thousands)
    
    Period
    
    Expenses
    
    Accounts
    
    of PeriodYear ended December 31, 2006:Allowance for doubtful accounts
    
    $
    36.8
    
    
    $
    28.2
    
    
    $
    (50.8
    )
    
    $
    14.2Reserve for lease termination costs
    
    $
    
    
    
    $
    398.0
    
    
    $
    (68.0
    )
    
    $
    330.0Year ended December 30, 2007:Allowance for doubtful accounts
    
    $
    14.2
    
    
    $
    19.6
    
    
    $
    (17.9
    )
    
    $
    15.9Reserve for lease termination costs
    
    $
    330.0
    
    
    $
    
    
    
    $
    (159.0
    )
    
    $
    171.0Year 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
    )
    
    $
    207.0
 F-32




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##### Table of Contents



SIGNATURES
  FAMOUS DAVES OF AMERICA, INC.
(Registrant)Dated: March 13, 2009
    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
    
    
    
    President and Chief Executive Officer and DirectorChristopher ODonnell/s/ K. Jeffrey Dahlberg
    
    
    
    DirectorK. Jeffrey Dahlberg/s/ F. Lane Cardwell, Jr.
    
    
    
    DirectorF. Lane Cardwell, Jr./s/ Mary L. Jeffries
    
    
    
    DirectorMary L. Jeffries/s/ Richard L. Monfort
    
    
    
    DirectorRichard L. Monfort/s/ Dean A. Riesen
    
    
    
    DirectorDean A. Riesen




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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
    
    Loan Agreement, dated as of January
21, 2000, by and between FFCA
Acquisition Corporation and MinWood
Partners, Inc., incorporated by
reference to Exhibit 10.21 to Form
10-Q filed May 16, 200010.3
    
    Master Lease, dated as of January
21, 2000, by and between MinWood
Partners, Inc. and Famous Daves of
America, Inc., incorporated by
reference to Exhibit 10.22 to Form
10-Q filed May 16, 200010.4
    
    Loan Agreement, dated as of August
4, 2000, by and between FFCA Funding
Corporation and FDA Properties,
Inc., incorporated by reference to
Exhibit 10.13 to Form 10-K filed
March 29, 200110.5
    
    Master Lease, dated as of August 4,
2000, by and between FDA Properties,
Inc. and Famous Daves of America,
Inc., incorporated by reference from
Exhibit 10.5 to Form 10-K filed
March 29, 200110.6
    
    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, 200210.7
    
    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, 200210.8
    
    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, 200210.9
    
    Amended and Restated 2005 Stock
Incentive Plan, incorporated by
reference from Exhibit 10.1 to Form
10-Q filed August 8, 200810.10
    
    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, 2008.




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##### Table of Contents



EXHIBITS (continued)
 Exhibit No.
    
    Description10.11
    
    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, 2008.10.12
    
    Employee Stock Purchase Plan, incorporated by reference to
Exhibit 10.1 to Form 10-Q filed May 9, 200810.13
    
    Employment Agreement with Wilson L. Craft, incorporated by
reference to Exhibit 10.1 to Form 8-K filed March 24, 200810.14
    
    Form of Amended and Restated 2005-2007 Performance Share
Agreement and Schedule of Grants under such form, incorporated
by reference to Exhibits 10.3 and 10.4 to Form 10-Q filed May
13, 200510.15
    
    Second Amended and Restated Non-Qualified Deferred
Compensation Plan, dated January 1, 200810.16
    
    Form of 2006-2008 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 December 29, 200510.17
    
    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, 200610.18
    
    Form of 2007 - 2009 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 February 27, 200710.19
    
    Form of Director Stock Grant, incorporated by reference to
Exhibit 10.3 to Form 8-K filed February 27, 200710.20
    
    Interim Employment Agreement dated as of December 13, 2007
between Famous Daves of America, Inc. and F. Lane Cardwell,
Jr.10.21
    
    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, 200810.22
    
    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, 200810.23
    
    Form of Director Stock Grant, incorporated by reference to
Exhibit 10.3 to Form 8-K filed February 21, 2008




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##### Table of Contents



EXHIBITS (continued)
 Exhibit No.
    
    Description10.24
    
    Restricted Stock Unit Agreement, between Famous Daves of
America, Inc. and Wilson L. Craft, incorporated by reference
to Exhibit 10.2 to Form 8-K filed March 24, 200810.25
    
    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, 200821.0
    
    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