SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended October 8, 1995
or,
/ X / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-12644
Benihana Inc.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 65-0538630
------------------------------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8685 Northwest 53rd Terrace, Miami, Florida 33166
------------------------------------------- ---------
(Address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 593-0770
None
- - -------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the rpeceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common stock $.10 par value, 3,507,816 shares
outstanding at November 2, 1995
Class A common stock $.10 par value, 2,316,300 shares
outstanding at November 2, 1995
<PAGE>
PART I - Financial Information
<TABLE>
CONSOLIDATED BALANCE SHEETS (See Note 2)
All dollar amounts in thousands, except as per share amounts
<CAPTION>
October 8, March 26,
1995 1995
---------- ---------
<S> <C>
Assets
Current assets
Cash and equivalents $ 676 $ 1,854
Receivables
Trade 265 269
Affiliates 89 80
Other 15 52
------- -------
Total Receivables 369 401
Inventories (Note 3) 1,787 1,559
Prepaid expenses (Note 4) 1,163 1,297
------- -------
Total Current Assets 3,995 5,111
Property and equipment, net 25,184 25,071
Due from affiliates, long term 246 265
Deferred income taxes, net 962 1,383
Other assets (Note 5) 1,880 1,892
------- -------
$32,267 $33,722
======= =======
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accured expenses $ 5,331 $ 6,951
Current maturities of long-term debt and
obligations under capital leases 1,480 1,683
-------- --------
Total Current Liabilities 6,811 8,634
Long-term debt 6,451 7,357
Due to affiliates - long term 490 650
Obligations under capital leases 4,630 4,876
Stockholders's Equity
Preferred stock - $1.00 par value;
authorized - 5,000,000 shares, issued
and outstanding - 2,000 shares 2 2
Common stock - $.10 par value;
convertible, authorized - 12,000,000
shares, issued and outstanding -
3,507,816 shares and 3,492,916 shares,
respectively 351 349
Class A common stock - $.10 par value;
authorized - 20,000,000 shares, issued
and outstanding - 2,316,300 shares 232 232
Additional paid-in capital 13,263 13,337
Retained earnings (accumulated deficit) 37 (1,715)
------- -------
Total Stockholders' Equity 13,885 12,205
------- -------
$32,267 $33,722
======= =======
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS (See Note 2)
(UNAUDITED)
All dollar amounts in thousands, except per share amounts
<CAPTION>
Three Periods Ended
----------------------------
October 8, October 9,
1995 1994
---------- ----------
<S> <C> <C>
Revenues
Net restaurant food and beverage sales $17,601 $16,363
Other income 98 131
------- -------
Total Revenues 17,699 16,494
Costs and Expenses
Cost of restaurant food and beverage sales 4,661 4,734
Restaurant expenses 10,869 10,135
General and administrative expenses 999 965
Interest expense 283 269
------- -------
Total Costs and Expenses 16,812 16,103
Income from operations before income taxes 887 391
Income tax provision 198 28
------- -------
Net Income $ 689 $ 363
======= =======
Pro Forma Net Income Per Common Share (Note 6) $ 0.11 $ 0.05
======= =======
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS (See Note 2)
(UNAUDITED)
<CAPTION>
Seven Periods Ended
----------------------------
October 8, October 9,
1995 1994
---------- ----------
<S> <C> <C>
Revenues
Net restaurant food and beverage sales $41,105 $38,055
Other income 265 263
------- -------
Total Revenues 41,370 38,318
Costs and Expenses
Cost of restaurant food and beverage sales 11,107 11,000
Restaurant expenses 25,014 23,396
General and administrative expenses 2,181 2,257
Interest expense 679 618
------- -------
Total costs and expenses 38,981 37,271
Income from operations before income taxes 2,389 1,047
Income tax provision 589 75
------- -------
Net Income $ 1,800 $ 972
======= =======
Pro Forma Net Income Per Common Share (Note 6) $ 0.29 $ 0.14
======= =======
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (See Note 2)
(UNAUDITED)
All dollar amounts in thousands
<CAPTION>
(Accumulated
Class A Additional Deficit)/
Preferred Common Common Paid-in Retained
Stock Stock Stock Capital Earnings
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Balance, March 26, 1995 $ 2 $ 349 $ 232 $13,337 ($ 1,715)
Net income 1,800
Dividend on preferred stock (48)
Exercise of stock options 2 36
Distribution to BOT (110)
---------- ---------- ---------- ------- ---------
Balance, October 8, 1995 $ 2 $ 351 $ 232 $13,263 $ 37
========== ========== ========== ======= =========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (See Note 2)
(UNAUDITED)
All dollar amounts in thousands
<CAPTION>
Seven Periods Ended
----------------------------
October 8, October 9,
1995 1994
---------- ----------
<S> <C> <C>
Operating Activities
Net income $1,800 $ 972
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,148 1,127
Change in operating assets and liabilities
that provided or (used) cash:
Accounts receivable 32 (49)
Inventories (228) (34)
Prepaid expenses 135 (334)
Other assets (1) 130
Accounts payable and accrued expenses (1,620) 212
Deferred taxes 420
------ ------
Net cash provided by operating
activities 1,686 2,024
------ ------
Investing Activities
Expenditures for property and equipment (1,228) (597)
------ ------
Net cash (used in) investing activities (1,228) (597)
------ ------
Financing Activities
Repayment of long-term debt and obligations
under capital leases (1,834) (1,311)
Proceeds from issuance of long-term debt 319
Net cash distributed to BOT (110) (460)
Dividend paid (48)
Proceeds from issuance of common stock 37
------ ------
Net cash (used in) financing activities (1,636) (1,771)
------ ------
Net decrease in cash and cash equivalents (1,178) ( 344)
Cash and cash equivalents, beginning of year 1,854 1,455
------ ------
Cash and cash equivalents, end of period $ 676 $1,111
====== ======
Supplemental Cash Flow Information
Cash paid during the seven periods:
Interest $ 467 $ 322
Income taxes 113 126
Noncash Items:
Capital lease obligations of $182 were incurred in the seven periods ended
October 9, 1994 when the Company entered into lease agreements for new
equipment.
See notes to consoldiated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEVEN PERIODS ENDED OCTOBER 8, 1995 AND OCTOBER 9, 1994
(UNAUDITED)
1. GENERAL
The accompanying consolidated financial statements are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments
at October 8, 1995) which are, in the opinion of management, necessary
for a fair representation of financial position and results of
operations. The results of operations for the seven periods (twenty-
eight weeks) ended October 8, 1995 are not necessarily indicative of the
results to be expected for the full year. Certain information and
footnotes normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. The Company's fiscal year consists of 13 four-week
accounting periods. The current fiscal year consists of 53 weeks.
2. BASIS OF PRESENTATION AND ACQUISITION
During the prior fiscal year, Benihana Inc. (the "Company") entered
into a definitive agreement with Benihana National Corp. ("BNC") and
its controlling shareholder, Benihana of Tokyo, Inc. ("BOT") to acquire
from BOT 17 of its Benihana restaurant properties, certain agreements
with four independent licensees and certain U.S. trademarks ("the BOT
Restaurants").
The acquisition of the BOT Restaurants has been accounted for in a
manner similar to a pooling of interests since the parties to the
transaction were under common control. The Company paid $3,000,000 in
cash and issued 76,905 shares of Common Stock, 2,000 shares of $1.00
par value Class A Convertible Preferred Stock, and a 7 1/2% promissory
note in the amount of $650,000.
In connection with the acquisition of the BOT Restaurants, BNC was
merged with a wholly owned subsidiary of the Company through a share-for-
share exchange effective with a vote of the BNC shareholders made on
May 1, 1995. Accordingly, the Company's financial statements for the
period ended October 9, 1994 have been restated retroactively to include
the historical accounts of BNC and the BOT Restaurants without
adjustment.
<TABLE>
3. INVENTORIES
Inventories consist of (in thousands):
<CAPTION>
October 8, March 26,
1995 1995
---------- ----------
<S> <C> <C>
Food and beverage $ 540 $ 560
Supplies 1,247 999
------ ------
$1,787 $1,559
====== ======
<PAGE>
4. PREPAID EXPENSES
Prepaid expenses consist of (in thousands):
<CAPTION>
October 8, March 26,
1995 1995
---------- ---------
<S> <C> <C>
Prepaid insurance $ 504 $ 687
Prepaid advertising 23 148
Other 636 462
------ ------
$1,163 $1,297
====== ======
5. OTHER ASSETS
Other assets consist of (in thousands):
<CAPTION>
October 8, March 26,
1995 1995
---------- ---------
<S> <C> <C>
Lease acquisition costs $ 580 $ 613
Restaurant management fee receivable 35 48
Cash surrender value of officer's
life insurance 240 240
Premium on liquor licenses 651 651
Security deposits 201 214
Preopening expenses 51 2
Other 122 124
------ ------
$1,880 $1,892
====== ======
</TABLE>
6. PRO FORMA NET INCOME PER COMMON SHARE
The pro forma net income per common share was computed by using the
weighted average number of shares and dilutive common stock equivalents
(5,983 thousand shares in October 1995 and 5,809 thousand shares in
October) of Common Stock and Class A Common Stock. The amounts
of preferred dividends and interest expense that would have been incurred
as a result of the acquisition of the BOT Restaurants described above
have been factored in the calculation of pro forma earnings from the
beginning of each of the seven periods ended October 8, 1995 and
October 9, 1994.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company's financial statements and the discussion and data presented below
reflect a reorganization pursuant to which the Company acquired seventeen
restaurants, four license agreements and the U.S. trademarks of Benihana of
Tokyo, Inc. and became the successor to Benihana National Corp. through the
merger of Benihana National Corp. and a wholly owned subsidiary of the Company
through a share-for-share exchange of common equity.
The Company's revenues consist of sales of food and beverages in each of the
Company-owned restaurants and licensing fees received from licensees. Cost of
restaurant food and beverages sold represents the direct cost of the
ingredients for the prepared food and beverages. Restaurant expenses
consist of direct and indirect labor, occupancy costs, advertising and other
costs that are directly attributed to each restaurant location.
Restaurant revenues and expenses are dependent upon a number of factors
including the number of restaurants in operation and restaurant patronage.
Revenues are also dependent on the average check amount and expenses are
additionally dependent upon the costs of food and beverages sold, average
wage rates, marketing costs and the costs of administering restaurant
operations and interest.
The Company's revenues and net income attained record levels during the
three and seven periods ended October 8, 1995 surpassing the comparable
periods in the previous year. Restaurant revenue increased by 7.6% and 8.0%
for the three and seven periods, respectively. Net income increased by
89.8% and 85.2% for the three and seven periods, respectively. Revenues are
increasing as a result of continuing increases in patronage and the resulting
revenue improvements are reflected in increased net income and per share
earnings. In the previous year's seven periods, federal income taxes were not
provided because of the existence of substantial net operating losses. The
Company has provided for federal income taxes during the seven periods ended
October 8, 1995, since taxable income is estimated to utilize the remaining
tax assets from net operating loss carryforwards.
Earnings per share have been affected by additional equivalent shares from
options and warrants that became dilutive during the seven periods because of
the increase in the market price of the Common and Class A Stock.
REVENUES
The amounts of sales and the changes in amount and percentage change in amount
of sales from the previous fiscal year are shown in the following tables.
<PAGE>
<TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
<CAPTION>
Three Periods Ended Seven Periods Ended
------------------------- -------------------------
October 8, October 9, October 8, October 9,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net restaurant sales $17,601 $16,363 $41,105 $38,055
Other income 98 131 265 263
------- ------- ------- -------
$17,699 $16,494 $41,370 $38,318
======= ======= ======= =======
<CAPTION>
Three Periods Ended Seven Periods Ended
------------------------- -------------------------
October 8, October 9, October 8, October 9,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Amount of change from previous year $1,238 $323 $3,050 $1,441
Percentage change for the
previous year 7.6% 2.0% 8.0% 3.9%
Comparable sales per unit $ 476 $442 $1,111 $1,029
Percentage growth in comparable
sales restaurant 7.6% 4.7% 8.0% 6.2%
</TABLE>
Three and Seven Periods Ended October 8, 1995 compared to October 9, 1994 --
Restaurant revenues continued to increase in both the three and seven periods
ended October 8, 1995 as compared to the equivalent periods ended October 9,
1994. The Company's trend of increases in comparable per unit sales continued
during the three and seven periods with 7.6% and 8.0%, respectively. Patronage
at Benihana continues to increase resulting from favorable consumer response to
the Company's advertising programs from physical improvements made to several
restaurant properties, from opening the restaurants for lunch service on the
weekends and opening sushi bars and Karaoke centers at several of the
restaurants.
COSTS AND EXPENSES
Costs of restaurant sales, which are generally variable with sales, directly
increased with changes in revenues for the seven periods. The following
table reflects the proportion that the various elements of costs and expenses
bore to sales and the changes in amounts and percentage changes in amounts
from the previous year's three and seven periods.
<PAGE>
<TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
<CAPTION>
Three Periods Ended Seven Periods Ended
------------------------- -------------------------
October 8, October 9, October 8, October 9,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
COST AS A PERCENTAGE OF
RESTAURANT SALES:
Cost of restaurant food and
beverage sales 26.5% 28.9% 27.0% 28.9%
Restaurant expenses 61.8% 61.9% 60.9% 61.5%
General and administrative
expenses 5.7% 5.9% 5.3% 5.9%
AMOUNT OF CHANGE FROM
PREVIOUS YEAR (IN THOUSANDS):
Cost of restaurant food and
beverage sales $(73) $348 $ 107 $835
Restaurant expenses $734 $263 $1,618 $510
General and administrative expenses $ 34 $(61) $ 61 $ 56
PERCENTAGE CHANGE FROM
PREVIOUS YEAR:
Cost of restaurant food and
beverage sales (1.5%) 7.9% 1.0% 8.2%
Restaurant expenses 7.2% 2.7% 6.9% 2.2%
General and administrative expenses 3.5% (5.9%) 2.7% 2.5%
</TABLE>
Three and Seven Periods Ended October 8, 1995 Compared to Three and Seven
Periods Ended October 9, 1994 -- The cost of food and beverage sales decreased
in total amount for the three periods and increased for the seven periods, but
decreased for both the three and seven periods when expressed as a percentage
of sales. The Company implemented an aggressive procurement program to reduce
costs of shrimp and lobster. Additionally, the Company obtained more favorable
pricing from several vendors for other food products and services. Restaurant
expenses increased in absolute amount for both the three and seven periods but
decreased when expressed as a percentage of sales; principally, because of the
generally fixed nature of such expenses. Both marketing costs and depreciation
and amortization expenses increased slightly in absolute amount but decreased
when expressed as a percentage of sales. Interest costs increased during the
three and seven periods because of the additional borrowings made to acquire
the BOT Restaurant properties. Despite the increase in outstanding debt,
interest cost has not risen significantly due to the Company's successful
efforts in reducing its interest rate as part of the consolidation of the
Company's bank indebtedness (see Liquidity and Capital Resources below).
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company, as is typical with many restaurant companies, does not have to
provide financing for inventories and accounts receivable and operates with a
working capital deficiency. The Company's deficiency in working capital
decreased by $707 for the seven periods ended October 8, 1995.
The Company expended $631 more for property and equipment than it did during
the previous comparable periods. This was a result of expenditures made to
build the Benihana Grill in Sacramento, California which opened on October 12,
1995. The Benihana Grill is a smaller Benihana restaurant. The approximate
construction and opening costs for this first location were $550,000.
Management believes that the reduced construction and opening costs for the
Benihana Grill expands the potential for the Company to penetrate smaller
markets.
Additionally, the Company has accelerated physical improvements to several
restaurant locations and added facilities for serving and preparing sushi and
for Karaoke.
The Company financed the $6,150,000 aggregate pruchase price of the BOT
Restaurants by issuing 76,905 shares of common stock; 2,000 shares of preferred
stock with a $2,000,000 liquidation value; a note payable to BOT in the amount
of $650,000; and $3,000,000 in cash. The cash portion was financed by
consolidating BNC's previously existing bank term loans and increasing the
amount borrowed. Although the amount borrowed under the term loan agreement
has increased, periodic principal payment requirements have decreased by
approximately $800,000 annually.
The Company's senior lender has also committed to increase the amount of the
term loan by approximately $700,000 at the Company's request if the request
is made within one year. The Company's senior lender has also made available
an additional $500,000 working capital line of credit. These additional
borrowing facilities may be used for working capital purposes, to make
improvements to owned restaurant properties or to finance the development of
additional restaurant locations. The Company had sufficient cash resources
for the construction of the above mentioned restaurant and management believes
that it has sufficient cash resources to provide for its operating cash needs
without utilizing the additional borrowing facilities.
<PAGE>
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(b) None.
<PAGE>
EXHIBIT 11
<TABLE>
CALCULATION OF EARNINGS PER SHARE
<CAPTION>
Seven Periods Ended
--------------------------
October 8, October 9,
1995 1994
---------- ----------
<S> <C> <C>
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 5,815,545 5,732,211
(COMMON & CLASS A) COMMON STOCK
ISSUED TO BOT IN CONNECTION WITH
THE REORGANIZATION 76,905
DILUTIVE EFFECT OF WARRANTS
OUTSTANDING (1) 101,793
DILUTIVE EFFECT OF STOCK OPTIONS
OUTSTANDING USED IN CALCULATION
OF EARNINGS PER SHARE 65,389
---------- ----------
5,982,727 5,809,116
========== ==========
NET INCOME $1,800,326 $ 971,873
EFFECT OF DIVIDENDS (PROFORMA IN
1994) ON PREFERRED STOCK ISSUED IN
CONNECTION WITH THE
REORGANIZATION (64,615) (64,615)
PROFORMA INTEREST ON DEBT INCURRED
TO FINANCE ACQUISITION OF BOT
RESTAURANTS (36,250) (140,538)
PROFORMA INTEREST ON DEBT ISSUED
TO BOT TO FINANCE ACQUISITION OF
BOT RESTAURANTS (6,806) (26,385)
INCOME TAX EFFECT ON PROFORMA
AMOUNTS OF INTEREST ON
ACQUISITION DEBT INDEBTEDNESS 17,222 66,769
---------- ----------
PROFORMA NET INCOME $1,709,877 $ 807,104
========== ==========
EARNINGS PER SHARE $.29 $.14
==== ====
(1) Antidilutive in 1994
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BENIHANA INC.
(Registrant)
November 2, 1995 /s/ Joel A. Schwartz
- - ---------------- -----------------------
Date Joel A. Schwartz
President
November 2, 1995 /s/ Michael R. Burris
- - ---------------- -----------------------
Date Michael R. Burris
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
October 8, 1995 Financial Statements and is qualified in its entirety by
reference to such Financial Statements.
</LEGEND>
<RESTATED>
<CIK> 0000935226
<NAME> BENIHANA INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 3 MOS 6 MOS
<FISCAL-YEAR-END> 03-26-95 03-26-95
<PERIOD-START> 07-17-95 03-27-95
<PERIOD-END> 10-08-95 10-08-95
<EXCHANGE-RATE> 1 1
<CASH> 676 676
<SECURITIES> 0 0
<RECEIVABLES> 369 369
<ALLOWANCES> 57 57
<INVENTORY> 1787 1787
<CURRENT-ASSETS> 3995 3995
<PP&E> 25184 25184
<DEPRECIATION> 25478 25478
<TOTAL-ASSETS> 32267 32267
<CURRENT-LIABILITIES> 6811 6811
<BONDS> 11571 11571
<COMMON> 583 583
0 0
2 2
<OTHER-SE> 13300 13300
<TOTAL-LIABILITY-AND-EQUITY> 32267 32267
<SALES> 17601 41105
<TOTAL-REVENUES> 17699 41370
<CGS> 4661 11107
<TOTAL-COSTS> 10869 25014
<OTHER-EXPENSES> 999 2181
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 283 679
<INCOME-PRETAX> 887 2389
<INCOME-TAX> 198 589
<INCOME-CONTINUING> 689 1800
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 689 1800
<EPS-PRIMARY> .11 .29
<EPS-DILUTED> .11 .29
</TABLE>
