SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FROM 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended July 16, 1995
/ X / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-12644
Benihana Inc.
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(Exact name of registrant as specified in its charter)
Delaware 65-0538630
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
8685 N.W. 53rd Terrace, Miami, Florida 33166
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (305) 593-0770
---------------
None
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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 preceding 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 the number of shares outstanding of each of the issurer's classes
of common stock, as of the lastest practicable date.
Common Stock $.10 par value, 3,500,416 shares
outstanding at August 8, 1995
Class A Common Stock $.10 par value, 2,316,300 shares
outstanding at August 8, 1995
<PAGE>
PART I - Financial Information
<TABLE>
CONSOLIDATED BALANCE SHEETS (NOTE 2)
All dollar amounts in thousands, except as per share amounts
ASSETS
<CAPTION>
July 16, March 26,
1995 1995
(Unaudited)
----------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 1,088 $ 1,854
Receivables
Trade 273 269
Affilites 81 80
Other 30 52
----------- ----------
Total Receivables 384 401
Inventories 1,623 1,559
Prepaid expenses 1,007 1,297
----------- ----------
Total Current Assets 4,102 5,111
Property and equipment, net 24,973 25,071
Due from affiliates, long term 254 265
Other assets 1,871 1,892
Deferred income taxes, net 1,097 1,383
----------- ----------
$ 32,297 $ 33,722
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 5,671 $ 6,951
Current maturities of long-term debt and
obligations under capital leases 1,486 1,683
----------- ----------
Total Current Liabilities 7,157 8,634
Long-term debt 6,665 8,007
Due to affiliates - long term 519 650
Obligations under capital leases 4,759 4,876
STOCKHOLDERS' EQUITY
Preferred stock - $1.00 par values;
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 -
3,500,416 and 3,492,916 shares,
respectively 350 349
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 13,237 13,337
Accumulated Deficit (624) (1,715)
----------- ----------
13,197 12,205
----------- ----------
$ 32,297 $ 33,722
=========== ==========
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS (NOTE 2)
(UNAUDITED)
All dollar amounts in thousands, except per share amounts
<CAPTION>
Four Periods Ended
July 16, July 17,
1995 1994
----------- -----------
<S> <C> <C>
REVENUES
Net restaurant food and beverage sales $ 23,504 $ 21,692
Other income 167 132
----------- -----------
Total Revenues 23,671 21,824
----------- -----------
COST AND EXPENSES
Cost of restaurant food and
beverage sales 6,446 6,266
Restaurant expenses 14,145 13,261
General and administrative expenses 1,182 1,292
Interest expense 396 349
----------- -----------
Total Costs and Expenses 22,169 21,168
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Income from operations before income taxes 1,502 656
Income tax provision 391 47
----------- -----------
Net Income $ 1,111 $ 609
=========== ===========
Pro Forma Net Income Per Common Share (Note 6) $ .18 $ .09
=========== ===========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (NOTE 2)
(UNAUDITED)
All dollar amounts in thousands
<CAPTION>
Class A Additional
Preferred Common Common Paid-In (Accumulated
Stock Stock Stock Capital Deficit)
---------- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Balance, March 26, 1995 $ 2 $ 349 $ 232 $ 13,337 $ (1,715)
Net income 1,111
Dividend on preferred stock (20)
Exercise of stock options 1 10
Distribution to BOT (110)
---------- ---------- --------- ---------- ------------
Balance, July 16, 1995 $ 2 $ 350 $ 232 $ 13,237 $ 624
========== ========== ========= ========== ============
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 2)
(UNAUDITED)
All dollar amounts in thousands
<CAPTION>
Four Periods Ended
July 16, July 17,
1995 1994
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<S> <C> <C>
OPERATING ACITIVITIES
Net income $ 1,111 $ 609
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 661 643
Change in operating assets and liabilities
that provided or (used) cash:
Accounts receivable 18 1
Inventories (64) (100)
Prepaid expenses 290 (23)
Other assets 14 73)
Accounts payable and accrued expenses (1,281) (290)
Deferred taxes 285
----------- -----------
Net cash (used in) provided by operating activities (77) 304
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INVESTING ACTIVITIES
Expenditures for property and equipment (544) (290)
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Net cash (used in) investing activities (544) (290)
----------- -----------
FINANCING ACTIVITIES
Repayment of long-term debt and
obligations under capital leases (1,470) (708)
Proceeds from issuance of long-term debt 334
Net cash distributed to BOT (110) (176)
Dividend paid (20)
Proceeds from issuance of common stock 10
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Net cash (used in) financing activities (1,256) (884)
----------- -----------
Net decrease in cash and cash equivalents (766) (261)
Cash and cash equivalents, beginning of quarter 1,854 1,455
----------- -----------
Cash and cash equivalents, end of quarter $ 1,088 $ 1,194
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the quarter for:
Interest
Income taxes $ 267 $ 161
102 126
NONCASH ITEM:
Capital lease obligations of $92 were incurred in the four periods ended
July 17, 1994 when the Company entered into lease agreements for new
equipment.
See notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOUR PERIODS ENDED JULY 16, 1995 AND JULY 17, 1994
(UNAUDITED)
NOTE 1 - GENERAL
The accompanying consolidated financial statements are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments at July 16, 1995)
which are, in the opinion of management, necessary for a fair presentation of
financial position and results of operations. The results of operations for
the four periods (sixteen weeks) ended July 16, 1995 are not necessarily
indicative of the 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 operations of the Company consist of 13 four week accounting
periods ending on the Sunday nearest to March 31.
NOTE 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 into
Benihana Inc. in 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 July 17, 1994 have been restated retroactively
to include the accounts of BNC and the BOT Restaurants without adjustment.
<TABLE>
NOTE 3
<CAPTION>
Inventories consist of (in thousands): July 16, March 26,
1995 1995
----------- -----------
<S> <C> <C>
Food and beverage $ 543 $ 560
Supplies 1,080 999
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$ 1,623 $ 1,559
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NOTE 4
<CAPTION>
Prepaid expenses consist of (in thousands): July 16, March 26,
1995 1995
----------- -----------
<S> <C> <C>
Prepaid insurance $ 568 $ 687
Prepaid advertising 148
Other 439 462
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$ 1,007 $ 1,297
=========== ===========
</TABLE>
<PAGE>
<TABLE>
NOTE 5
<CAPTION>
Other assets consist of (in thousands): July 16, March 26,
1995 1995
----------- -----------
<S> <C> <C>
Lease acquisition costs $ 594 $ 613
Restaurant management fee receivable 47 48
Cash surrender value of officer's
life insurance 240 240
Premium on liquor licenses 651 651
Security deposits 211 214
Other 128 126
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$ 1,871 $ 1,892
=========== ===========
</TABLE>
NOTE 6
The pro forma net income per common share was computed by using the weighted
average number of shares and dilutive common stock equivalents (5,964 thousand
shares in July 1995 and 5,809 thousand shares in July 1994) of Common Stock and
Class A Comon 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 four periods ended July 16, 1995 and
July 17, 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 the Reorganization pursuant to which the Company acquired seventeen
restaurants, four license agreements and the U.S. trademarks of Benihana of
Tokyo, Inc. The financial condition and results of operations of Benihana
National Corp. was merged into the Company through a share-for-share exchange
of common stock.
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 interest and administering restaurant
operations.
The Company's revenues and net income attained record levels during the quarter
ended July 16, 1995 surpassing the comparable period in the previous year by
8.5% and 82.4%, respectively. Revenues are increasing as a result of
continuing increases in patronage and the resulting revenue improvements are
reflected in substantially increased net income and per share earnings. In
previous year's first fiscal quarter, federal income taxes were not provided
for federal income taxes during the first quarter of fiscal 1996 since taxable
earnings is estimated to utilize the remaining tax assets from net operating
carryforwards.
<TABLE>
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.
<CAPTION>
Four Periods Ended
July 16, July 17,
1995 1994
------- -------
<S> <C> <C>
Net restaurant sales $23,504 $21,692
Other income 167 132
------- -------
$23,671 $21,824
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Four Periods Ended
July 16, July 17,
1995 1994
------- -------
<S> <C> <C>
Amount of change from previous year $ 1,847 $ 1,126
Percentage change for the previous year 8.5% 5.4%
Comparable sales per unit $ 635 $ 586
Percentage growth in comparable sales
per restaurant 8.4% 5.4%
</TABLE>
<PAGE>
Four Periods Ended July 16, 1995 Compared to July 17, 1994 -- Restaurant
revenues continued to increase in 1995 from 1994. The Company's trend of
increases in comparable per unit sales continued during the period with 8.4%
greater than 1994. Patronage at Benihana continues to increase resulting from
favorable consumer response to advertising programs and physical improvements
made to several restaurant properties.
COSTS AND EXPENSES
Costs of restaurant sales, which are generally variable with sales, directly
increased with changes in revenues for first quarter. 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 first quarter.
<TABLE>
<CAPTION>
Four Periods Ended
July 16, July 17,
1995 1994
-------- --------
<S> <C> <C>
COST AS A PERCENTAGE OF RESTAURANT
SALES:
Cost of restaurant food and beverage sales 27.4% 28.9%
Restaurant expenses 60.2% 61.1%
General and administrative expenses 5.0% 6.0%
AMOUNT OF CHANGE FROM PREVIOUS YEAR
(IN THOUSANDS):
Cost of restaurant food and beverage sales $ 180 $ 487
Restaurant expenses $ 884 $ 247
General and administrative expenses $ (110) $ 10
PERCENTAGE CHANGE FROM PREVIOUS YEAR:
Cost of restaurant food and beverage sales 2.9% 8.4%
Restaurant expenses 6.7% 1.9%
General and administrative expenses (8.6%) .1%
</TABLE>
<PAGE>
Four Periods Ended July 16, 1995 Compared to July 1994 -- The cost of food and
beverage sales increased in total amount as a result of increased sales but
decreased 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 but
decreased as a percentage of sales principally because of the generally fixed
nature of such expenses. Marketing and administrative costs decreased in amount
and as a percentage of sales from fiscal 1994 as a result of administrative cost
reductions. Interest costs increased during the quarter because of the
additional borrowings made to acquire the BOT Restaurant properties. However,
in connection with the consolidation of the Company's bank indebtedness, the
Company was successful in reducing its overall interest rate (see Liquidity and
Capital Resources below).
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 $468,000 for the sixteen-week period ended July 16, 1995 as a
result of cash provided by operations and by refinancing bank indebtedness,
which was partially offset by the cash used in acquiring the BOT Restaurants.
The Company financed the $6,150,000 aggregate purchase 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 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 presently intends on opening an
additional location in the Sacramento, California area in the second quarter.
Management believes that it has sufficient cash resources to provide for its
operating cash needs and for investment purposes in the construction of the
Sacramento location and its opening costs without utilizing the additional
borrowing availability.
<PAGE>
PART II - Other Information
Item 4. Results of Vote of Security Holders
(a) A special meeting of the stockholders of Benihana National Corp., the
predecessor of the registrant, was held on May 1, 1995.
(b) As part of the Reorganization described in sub paragraph (c) below, the
following persons were elected to the registrants Board of Directors:
Rocky H. Aoki
Joel A. Schwartz
Taka Yoshimoto
John E. Abdo
Robert B. Greenberg
Irwin K. Chapman
(c) On March 27, 1995 BNC furnished its stockholders a proxy statement in
connection with a solicitation of proxies by BNC's Board of Directors for
use at a special meeting of its stockholders held on May 1, 1995. At this
meeting BNC's stockholders approved an Agreement and Plan of Reorganization
"The Reorganization" that combined the operations of BNC and certain
restaurant properties of BOT into the Company. See Note 2 to the Financial
Statements and Management's Discussion and Analysis.
The stockholders of the Common Stock voted 2,266,502 shares in the
affirmative and 11,695 shares in the negative to The Reorganization. The
stockholders of the Class A Common Stock voted 77,680 in the affirmative
and 1,752 shares in the negative to The Reorganization. Abstaining votes
were made representing 1,300 shares of Common Stock and 1,245 shares of
Class A Common Stock. The same vote tabulation applied to each of the
directors elected.
<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)
August 8, 1995 /s/ Joel A. Schwartz
-------------- --------------------
Date Joel A. Schwartz
President
August 8, 1995 /s/ Michael R. Burris
-------------- ---------------------
Date Michael R. Burris
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
July 16, 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>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-26-1995
<PERIOD-START> MAR-27-1995
<PERIOD-END> JUL-16-1995
<EXCHANGE-RATE> 1
<CASH> 1088
<SECURITIES> 0
<RECEIVABLES> 384
<ALLOWANCES> 57
<INVENTORY> 1623
<CURRENT-ASSETS> 4102
<PP&E> 24973
<DEPRECIATION> 25072
<TOTAL-ASSETS> 32297
<CURRENT-LIABILITIES> 7157
<BONDS> 11943
<COMMON> 582
0
2
<OTHER-SE> 12613
<TOTAL-LIABILITY-AND-EQUITY> 13197
<SALES> 23504
<TOTAL-REVENUES> 23671
<CGS> 6446
<TOTAL-COSTS> 14145
<OTHER-EXPENSES> 1182
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 396
<INCOME-PRETAX> 1502
<INCOME-TAX> 391
<INCOME-CONTINUING> 1111
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1111
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
