v3.3.1.900
DISCONTINUED OPERATIONS
 12 Months Ended
Jan. 03, 2016
Discontinued Operations And Disposal Groups [Abstract]  
Disposal Groups Including Discontinued Operations Disclosure [TextBlock]

(11) DISCONTINUED OPERATIONS

On December 14, 2015, Famous Dave’s of America, Inc. and certain of its subsidiaries (collectively, the “Company”) entered into an Asset Purchase Agreement and related Real Estate Purchase Agreement (the “Purchase Agreements”) with Windy City Restaurant Holdings LLC and its affiliate (together, the “Purchaser”) pursuant to which the Company has agreed to sell the assets comprising its seven Chicago, Illinois area Company-owned restaurants located in Addison, Algonquin, Bolingbrook, Evergreen Park, North Riverside, Orland Park and Oswego (collectively, “Purchased Restaurants”) to the Purchaser. As consideration for the purchased assets, which includes the real property on which the Company operates the Purchased Restaurant located in Addison, Illinois, the Purchaser will pay the Company $1.15 million, plus the book value of purchased inventory on the closing date, and will assume specified liabilities of the Company. Included among the assumed liabilities are the Company’s existing leases for the Purchased Restaurants located in Bolingbrook, North Riverside and Orland Park, Illinois. Subsequent to year end, this transaction closed on March 1, 2016.

Under the Purchase Agreements, the Purchaser has also agreed to enter into (i) sublease agreements for the real property on which Purchased Restaurants are located in Algonquin, Evergreen Park and Oswego, Illinois, (ii) franchise agreements for each Purchased Restaurant, and (iii) an Area Development Agreement pursuant to which the Purchaser will agree to use commercially reasonable efforts to develop ten additional Famous Dave’s restaurants in the Chicago metropolitan area market. The Company has agreed to waive its standard initial franchise fee for the Purchased Restaurants and the Company’s standard franchise royalty rates have been reduced as they relate to certain of the Purchased Restaurants for a limited period of time. The Purchaser has further agreed to invest no less than $500,000 in refreshing and improving the Purchased Restaurants pursuant to an agreed upon work schedule no later than one year following the closing. To the extent Purchaser fails to invest such amount within the prescribed timeframe, it will remit the difference to the Company.

In accordance with the Purchase Agreements, the Purchaser has deposited earnest money in the amount of $140,000 with a third party title company. The earnest money will be delivered to the Company, and applied against the purchase price at closing, but is otherwise non-refundable unless the transactions fail to close under certain circumstances set forth in the Purchase Agreements, in which case it may be refunded in whole or in part.

In conjunction with this agreement, the Company has recorded an $8.8 million impairment charge. Subsequent to the close of this transaction, the Company anticipates recapturing approximately $1.1 to $1.3 million in deferred rent credits. The net assets and liabilities of the Purchased Restaurants that are associated with this transaction are included in assets and liabilities held for sale on the accompanying Consolidated Balance Sheets at January 3, 2016. The carrying value of the assets and liabilities included in the asset sale was as follows (in thousands):

(in thousands)January 3,December 28,
20162014
Accounts receivable, net$65 $46
Inventories344 484
Prepaid expenses and other current assets30 30
Total current assets439 560
Property, equipment and leasehold improvements, net991 10,143
Total assets$1,430 $10,703
Accounts payable10 5
Accrued compensation and benefits96 255
Other current liabilities389 391
Total current liabilities495 651
Other liabilities1,252 1,129
Total liabilities$1,747 $1,780

The operating results of the Purchased Restaurants for the years ended January 3, 2016, December 28, 2014 and December 29, 2013 are summarized below. These results include costs directly attributable to the components of the businesses which were divested. Interest expense of $28,000, $27,000 and $32,000 were allocated to discontinued operations for the years ended January 3, 2016, December 28, 2014 and December 29, 2013, respectively, based upon the portion of the borrowing base associated with discontinue operations. Income tax (benefit) expense of $(3.3 million), $367,000 and $313,000 for the years ended January 3, 2016, December 28, 2014 and December 29, 2013, respectively have also been allocated to discontinued operations. These adjustments have been made for all periods presented.

Fiscal Year
(in thousands)201520142013
Revenue$17,002 $17,493 $18,150
(Loss) income from operations$(8,763)$1,036 $1,164
(Loss) income from discontinued operations, net of income taxes$(5,463)$642 $1,170