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 January 4, 1998
or,
[ ] 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 of 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 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 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, 3,571,116 shares outstanding at January 23, 1998
Class A common stock $.10 par value, 2,517,463 shares outstanding at
January 23, 1998
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
TEN PERIODS ENDED January 4, 1998
TABLE OF CONTENTS
PAGE
PART I - Financial Information
Consolidated Balance Sheets at January 4, 1998
(unaudited) and March 30, 1997 1
Consolidated Statements of Operations
(unaudited) for the Three and Ten Periods
Ended January 4, 1998 and January 5, 1997 2 - 3
Consolidated Statement of Stockholders' Equity
(unaudited) for the Ten Periods Ended
January 4, 1998 4
Consolidated Statements of Cash Flows
(unaudited) for the Ten Periods Ended
January 4, 1998 and January 5, 1997 5
Notes to the Consolidated Financial
Statements 6 - 8
Management's Discussion and Analysis of the
Financial Condition and Results of
Operations 9 - 13
PART II - Other Information 14
Exhibit 11 15
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
PART I - Financial Information
CONSOLIDATED BALANCE SHEETS
<TABLE>
(Dollars in thousands, except per share amounts)
<CAPTION>
(Unaudited)
January 4, March 30,
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and equivalents $ 3,915 $ 7,043
Receivables (net of allowance for doubtful amount of
$0 in January 1998 and $27 in March 1997)
Trade 251 218
Other 88 324
- -------------------------------------------------------------------------------------------------------------------
Total Receivables 339 542
Inventories (Note 3) 3,356 3,148
Prepaid expenses (Note 4) 948 837
- -------------------------------------------------------------------------------------------------------------------
Total Current Assets 8,558 11,570
Property and equipment, net 32,101 25,416
Deferred income taxes, net 4,692 1,487
Goodwill, net (Note 2) 12,340
Other assets (Note 5) 2,592 2,089
- -------------------------------------------------------------------------------------------------------------------
$60,283 $40,562
===================================================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $10,313 $ 7,018
Current maturities of long-term debt and
obligations under capital leases 1,880 1,436
- -------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 12,193 8,454
Long-term debt 17,326 5,271
Due to affiliates - long term 198 312
Obligations under capital leases 3,422 3,771
Stockholders' Equity:
Preferred stock - $1.00 par value;
authorized - 5,000,000 shares, issued
and outstanding - 1,500 shares and
2,000 shares, respectively 2 2
Common stock - $.10 par value;
convertible into Class A Common, authorized - 12,000,000 shares, issued
and outstanding - 3,571,116 shares and 3,557,366 shares,
respectively 357 356
Class A common stock - $.10 par value;
authorized - 20,000,000 shares, issued
and outstanding - 2,517,463 shares and
2,516,300 shares, respectively 252 252
Additional paid-in capital 15,599 14,978
Retained earnings 11,050 7,282
Treasury stock - 9,177 shares at cost (116) (116)
- -------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 27,144 22,754
- -------------------------------------------------------------------------------------------------------------------
$60,283 $40,562
===================================================================================================================
See notes to consolidated financial statements
</TABLE>
-1-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
(Dollars in thousands, except per share amounts)
<CAPTION>
Three Periods Ended
January 4, January 5,
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues
Net restaurant food and beverage sales $23,939 $19,573
Other income 157 253
- -------------------------------------------------------------------------------------------------------------------
Total Revenues 24,096 19,826
Costs and Expenses
Cost of restaurant food and beverage sales 6,353 5,078
Restaurant expenses 13,746 11,693
General and administrative expenses 1,384 784
Interest expense 271 209
- -------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses 21,754 17,764
- -------------------------------------------------------------------------------------------------------------------
Income from operations before income taxes 2,342 2,062
Income tax provision 780 660
- -------------------------------------------------------------------------------------------------------------------
Net Income $ 1,562 $ 1,402
- -------------------------------------------------------------------------------------------------------------------
Earnings Per Share (Note 6)
Earnings per common share $ .25 $ .23
Earnings per common share - assuming dilution $ .24 $ .22
- -------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements
</TABLE>
-2-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
(Dollars in thousands, except per share amounts)
<CAPTION>
Ten Periods Ended
January 4, January 5,
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues
Net restaurant food and beverage sales $72,383 $63,996
Other income 494 611
- -------------------------------------------------------------------------------------------------------------------
Total Revenues 72,877 64,607
Costs and Expenses
Cost of restaurant food and beverage sales 18,850 16,430
Restaurant expenses 43,118 39,076
General and administrative expenses 3,919 3,162
Interest expense 648 725
- -------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses 66,535 59,393
- -------------------------------------------------------------------------------------------------------------------
Income from operations before income taxes 6,342 5,214
Income tax provision 2,000 1,668
- -------------------------------------------------------------------------------------------------------------------
Net Income $ 4,342 $ 3,546
- -------------------------------------------------------------------------------------------------------------------
Earnings Per Share (Note 6)
Earnings per common share $ .70 $ .58
Earnings per common share - assuming dilution $ .68 $ .56
- -------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements
</TABLE>
-3-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
(Dollars in thousands)
<CAPTION>
Class A Additional Total
Preferred Common Common Paid-in Retained Treasury Stockholders'
Stock Stock Stock Capital Earnings Stock Equity
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 30, 1997 $2 $356 $252 $14,978 $ 7,282 ($116) $22,754
Net income 4,342 4,342
Fair market value of
warrant issued 563 563
Preferred stock redeemed (500) (500)
Dividend on preferred stock (74) (74)
Exercise of stock options 1 58 59
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, January 4, 1998 $2 $357 $252 $15,599 $11,050 ($116) $27,144
- ---------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements
</TABLE>
-4-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
(Dollars in thousands)
<CAPTION>
Ten Periods Ended
January 4, January 5,
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Activities:
Net income $4,342 $3,546
Adjustments to reconcile net income to net
Cash provided by operating activities:
Depreciation and amortization 2,144 1,937
Deferred income taxes 132
Change in assets and liabilities, excluding purchase of Rudy's Restaurant
Group, Inc.:
Accounts receivable 277 (240)
Inventories 148 (1,044)
Prepaid expenses (54) (903)
Other assets (369) (104)
Accounts payable and accrued expenses 2,720 785
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 9,340 3,977
- -------------------------------------------------------------------------------------------------------------------
Investing activities:
Acquisition of Rudy's Restaurant Group, Inc.,
net of cash acquired (18,777)
Expenditures for property and equipment (3,523) (1,305)
- -------------------------------------------------------------------------------------------------------------------
Net cash (used in) investing activities (22,300) (1,305)
- -------------------------------------------------------------------------------------------------------------------
Financing Activities:
Borrowings of long-term debt 18,000
Proceeds from issuance of common stock 59 575
Repayment of long-term debt and obligations
under capital leases (7,653) (1,343)
Dividend paid on preferred stock (74) (94)
Preferred stock redeemed (500)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 9,832 (862)
- -------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents (3,128) 1,810
Cash and cash equivalents, beginning of year 7,043 4,722
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $3,915 $6,532
- -------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information:
Cash paid during the ten periods:
Interest $ 505 $ 623
Income taxes 2,245 1,544
Non-cash investing and financing activities:
Fair market value of warrant issued $ 563 -
Non-competition agreement 684 -
See notes to consolidated financial statements.
</TABLE>
-5-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TEN PERIODS ENDED JANUARY 4, 1998 AND JANUARY 5, 1997
(UNAUDITED)
1. GENERAL
The accompanying consolidated financial statements are unaudited and reflect
all adjustments (consisting only of normal recurring adjustments at January
4, 1998) 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 ten periods (forty weeks) ended January 4, 1998 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 Company adopted Statement of Financial Accounting Standards (SFAS) No.
128 "Earnings per Share" which simplified the standards for computing and
presenting earnings per share previously found in APB Opinion No. 15,
Earnings per Share. All prior periods presented have been restated to
comply with SFAS No. 128.
2. BASIS OF PRESENTATION AND ACQUISITION
The Company's financial statements and the discussion and data presented
below include the acquisition of Rudy's Restaurant Group, Inc. ("Rudy's") on
December 1, 1997. Rudy's owns and operates nine teppanyaki-style Japanese
restaurants in Florida, Ohio, Michigan, Minnesota, Pennsylvania and
Washington, D.C. under the names Samurai and Kyoto. The acquisition price
was $5.29 per share for each outstanding common share of Rudy's which,
together with non-competition payments to Rudy's personnel to be paid in
connection with the acquisition, resulted in a total purchase price of
approximately $20 million. Additionally, the Company granted a five-year
option to purchase 200,000 shares of the Company's Class A Common Stock at
an exercise price of $8.00 per share to the chief executive officer of
Rudy's. The acquisition has been accounted for using the purchase method and
the operating results of Rudy's have been included in the Company's current
fiscal year consolidated statement of operations since the date of
acquisition. The excess of the purchase price over the acquired tangible and
intangible net assets of approximately $12 million has been allocated to
goodwill and is being amortized on a straight-line basis over 25 years.
3. INVENTORIES
<TABLE>
Inventories consist of (in thousands):
<CAPTION>
January 4, March 30,
1998 1997
--------- --------
<S> <C> <C>
Food and beverage $1,368 $1,243
Supplies 1,988 1,905
------ ------
$3,356 $3,148
====== ======
</TABLE>
-6-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
<TABLE>
4. PREPAID EXPENSES
Prepaid expenses consist of (in thousands):
<CAPTION>
January 4, March 30,
1998 1997
--------- --------
<S> <C> <C>
Prepaid insurance $ 434 $ 547
Prepaid rent 313 0
Other 201 290
------- -------
$ 948 $ 837
======= =======
</TABLE>
5. OTHER ASSETS
<TABLE>
Other assets consist of (in thousands):
<CAPTION>
January 4, March 30,
1998 1997
--------- --------
<S> <C> <C>
Lease acquisition costs $ 443 $ 490
Cash surrender value of officer's
life insurance 305 305
Premium on liquor licenses 909 651
Long-term note receivable 168 196
Deferred financing charges 373 0
Security deposits 185 162
Preopening expenses 109 46
Other 100 239
------ ------
$2,592 $2,089
====== ======
</TABLE>
6. EARNINGS PER SHARE
The following data shows the amounts (in thousands) used in computing
earnings per share and the effect on income and the weighted average number
of shares of dilutive potential common stock.
<TABLE>
<CAPTION>
Three Periods Ended Ten Periods Ended
January 4, January 5, January 4, January 5,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income from continuing operations $1,562 $1,402 $4,342 $3,546
Less preferred dividends (21) (28) (74) (92)
------ ------ ------ ------
Income available to common stockholders 1,541 1,374 4,268 3,454
Convertible preferred stock 21 28 74 92
------ ------ ------ ------
Income available to common stockholders
after assumed conversions of dilutive
securities $1,562 $1,402 $4,342 $3,546
====== ====== ====== ======
</TABLE>
-7-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Periods Ended Ten Periods Ended
January 4, January 5, January 4, January 5,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Weighted average number of common
shares used in basic EPS 6,085 6,043 6,077 6,005
Effect of dilutive securities:
Stock options 86 78 56 77
Convertible preferred stock 225 300 246 300
----- ----- ----- -----
Weighted number of common shares
and dilutive potential common stock
used in diluted EPS 6,396 6,421 6,379 6,382
===== ===== ===== =====
</TABLE>
-8-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company's revenues consist of sales of food and beverages sold in each of
the owned restaurants and licensing fees received from licensees. Cost of
restaurant food and beverage sold represents the direct cost of the ingredients
for the prepared food and beverages sold. 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. 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 achieved revenue, net income and earnings per share growth when
compared to the comparable periods of the prior year. Restaurant revenue
increased 22.3%, net income increased 11.4% and earnings per share increased
9.1% for the three periods ended January 4, 1998. Restaurant revenue increased
13.1%, net income increased 22.4% and earnings per share increased 21.4% for the
ten periods then ended. The Company continues to enjoy sustained increases in
patronage. The aforementioned increase in patronage has led to the increase in
revenues, net income and per share earnings.
The acquisition of Rudy's completed in the three periods ended January 4, 1998,
contributed to the increase in revenues, net income and earnings per share
growth for both the three and ten periods.
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.
-9-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
<TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
<CAPTION>
Three Periods Ended Ten Periods Ended
January 4, January 5, January 4, January 5,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net restaurant sales $23,939 $19,573 $72,383 $63,996
Other income 157 253 494 611
------- ------- ------- -------
Total Revenues $24,096 $19,826 $72,877 $64,607
======= ======= ======= =======
<CAPTION>
Three Periods Ended Ten Periods Ended
January 4, January 5, January 4, January 5,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Amount of change in total revenues
from previous year $4,270 $ 857 $ 8,270 $4,268
Percentage of change from the
previous year 21.5% 4.5% 12.8% 7.1%
</TABLE>
Three and Ten Periods Ended January 4, 1998 compared to January 5, 1997 --
Restaurant revenues continued to increase in the three and ten periods ended
January 4, 1998 as compared to the equivalent periods ended January 5, 1997. The
Company's trend of increases in comparable per unit sales continued during the
three periods increasing 9.3% in the current three periods as compared to 4.2%
in the previous three periods and increasing 8.4% in the current ten periods as
compared to 6.3% in the previous ten periods. Patronage continues to increase
resulting from the opening of two new restaurants, from the acquisition of
Rudy's, from favorable consumer response to the Company's advertising programs,
and from physical improvements made to several restaurant properties, including
the opening of sushi bars at four of the Company's restaurants. The Company
serves sushi at all of its restaurants and currently operates sushi bars at 30
of its 49 restaurants. The restaurants acquired from Rudy's accounted for 47.1%
of the increase in restaurant sales for the three periods and 24.5% of the
increase in restaurant sales for the ten periods.
COSTS AND EXPENSES
Costs of restaurant sales, which are generally variable with sales, directly
increased with changes in revenues for the three and ten 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 ten periods.
-10-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
<TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
<CAPTION>
Three Periods Ended Ten Periods Ended
January 4, January 5, January 4, January 5,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
COST AS A PERCENTAGE OF
RESTAURANT SALES:
Cost of restaurant food and
beverage sales 26.5% 25.9% 26.0% 25.7%
Restaurant expenses 57.4% 59.7% 59.6% 61.1%
General and administrative expenses 5.8% 4.0% 5.4% 4.9%
AMOUNT OF CHANGE FROM
PREVIOUS YEAR (IN THOUSANDS):
Cost of restaurant food and
beverage sales $1,275 $289 $2,420 $ 534
Restaurant expenses $2,053 $596 $4,042 $2,966
General and administrative expenses $ 600 ($244) $ 757 ($ 48)
PERCENTAGE CHANGE FROM
PREVIOUS YEAR:
Cost of restaurant food and
beverage sales 25.1% 6.0% 14.7% 3.4%
Restaurant expenses 17.6% 5.4% 10.3% 8.2%
General and administrative expenses 76.5% (23.7%) 23.9% (1.5%)
</TABLE>
Three and Ten Periods Ended January 4, 1998 compared to January 5, 1997 -- The
cost of food and beverage sales increased in total dollar amount for the three
and ten periods and increased when expressed as a percentage of sales. The
increase is a result of higher seafood costs in the current three and ten
periods. Restaurant expenses increased in total dollar amount but decreased when
expressed as a percentage of sales for the three and ten periods as compared to
the previous comparable periods. The increase in dollar amount resulted from
those costs such as credit card discounts and percentage rent expense which are
directly related to the increase in sales. Rudy's spending on advertising was
significantly less than that of the Company and, accordingly, restaurant
operating costs decreased as a percentage of sales. The Company plans to
increase the amount spent on advertising relating to the Rudy's restaurants, and
accordingly, results of operations may not be indicative of results to be
expected in future periods.
General and administrative costs increased in total dollar amount for the three
and ten periods when compared to the comparable periods of the prior year. The
increase in the current three and ten periods resulted from increases in
professional fees, salaries and benefits, miscellaneous expenses and
depreciation and amortization. The increase in professional fees resulted from
the Company engaging tax consultants to perform state and tax planning
strategies to reduce the Company's state income tax liability for fiscal 1998
and beyond. The increase in salaries and benefits resulted from increases in the
base salary of executive
-11-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
officers in accordance with amended employment agreements, from the hiring of
additional administrative personnel and from an increase in the amount provided
for bonus awards to be paid under the Benihana Incentive Compensation Plan. The
increase in miscellaneous expenses resulted from transition costs relating to
the acquisition of Rudy's. The additional professional fees and miscellaneous
expenses reflect one time expenses and are not expected to continue in the
future.
Interest costs increased in the three periods of the current year, but decreased
in the ten periods as compared to the same periods of the prior year. The
increase resulted from additional interest expense on borrowings under a new
credit agreement entered into in connection with the acquisition of Rudy's.
The effective federal income tax rate increased to 28% for fiscal 1998 as
compared to 27% in fiscal 1997. The income tax provision for both the current
year and prior year reflect a net federal tax credit for FICA taxes on reported
tip income. The effective state income tax rate has been reduced for fiscal 1998
and beyond as a result of the aforementioned state tax planning strategies.
LIQUIDITY AND CAPITAL RESOURCES
The Company does not require significant amounts of inventory or receivables,
and, as is typical of most restaurant companies, the Company does not have to
provide financing for such assets and operates with a minimum amount or deficit
of working capital.
The Company requires capital principally for the development of new restaurants,
acquisitions of other restaurant businesses, and the refurbishment of existing
restaurant units. On December 1, 1997, the Company completed the acquisition of
Rudy's for approximately $20,000,000 of cash. In addition, warrants for 200,000
shares of the Company's Class A Stock were issued at an exercise price of $8.00
per share. The acquisition was financed, in part, with the proceeds of the
Credit Agreement consisting of a $12,000,000 term loan and a $15,000,000
revolving line of credit. Interest under the Credit Agreement accrues at the
Company's option at either prime rate plus a margin of 0.0% to 1.0% or at LIBOR
plus a margin of 1.0% to 2.25%. The applicable interest rate margin varies with
the Company's leverage ratio (defined as Ebitda divided by funded indebtedness).
Principal of the term loan is payable at a rate of $1,000,000 in each of the
next two years, $2,000,000 in each of years three and four, and $3,000,000 in
each of years five and six and the revolving line of credit is payable in 2002,
in each case subject to the terms of the Credit Agreement. The proceeds under
the Credit Agreement were also used to pay off all amounts under a previous loan
agreement in the approximate amount of $5,700,000. The Credit Agreement
restricts the Company from making dividend payments and purchases of the
Company's common equity and limits capital expenditures to $8,500,000 for fiscal
1998, $8,600,000 for fiscal 1999 and $8,000,000 annually thereafter plus amounts
in excess of certain operating cash flow targets and amounts of cash provided
from offerings of common equity. The Credit Agreement also requires the Company
to achieve certain ratios of operating cash flow to debt and other financial
benchmarks.
As of January 4, 1998, the Company had available $9,000,000 under the revolver
facility. Management believes that the amount available under the revolver
facility together with internally generated funds from
-12-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
operations provide sufficient cash resources for anticipated capital
improvements as well as construction and opening of new restaurants.
The Company has signed leases for three new restaurants. Estimated total
expenditures for opening these new restaurants are expected to be $2,800,000.
Two of the new restaurants will be operated under the Company's new sushi
concept Sushi Doraku in Fort Lauderdale, Florida and Chicago, Illinois. The
third restaurant will operate as a traditional Benihana in Ontario, California.
The Fort Lauderdale sushi restaurant is scheduled to open in the spring of 1998
and the other two restaurants are projected to open in the fall of 1998.
During the current year, the Company redeemed $500,000 of preferred stock. The
Company is restricted by the new credit agreement as to the aggregate amount of
preferred stock that it can redeem to an amount not to exceed $1,000,000 in each
of the fiscal years ending in 1998 and 1999 only.
-13-
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
PART II - Other Information
Item 5. None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 Calculation of Earnings Per Share.
Exhibit 27 Financial Data Schedule.
(b) The acquisition of Rudy's Restaurant Group, Inc. was reported
on a Current Report on Form 8-K filed December 12, 1997 as
amended on Form 8K/A dated January 20, 1998. The amended Form
8K/A included Unaudited Pro Forma Income Statements for the
fiscal year ended March 30, 1997 and for the twenty-eight
weeks ended October 12, 1997, and Unaudited Pro Forma Balance
Sheet at October 12, 1997.
-14-
<PAGE>
EXHIBIT 11
<TABLE>
BENIHANA INC.
CALCULATION OF EARNINGS PER SHARE
<CAPTION>
Ten Periods Ended
January 4, January 5,
1998 1997
---------- ----------
<S> <C> <C>
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 6,077,207 6,004,931
========== ==========
NET INCOME $4,341,876 $3,546,433
PREFERRED STOCK DIVIDENDS (73,842) (92,308)
---------- ----------
NET INCOME $4,268,034 $3,454,125
========== ==========
EARNINGS PER SHARE $.70 $.58
==== ====
CALCULATION OF EARNINGS PER SHARE, ASSUMING DILUTION
<CAPTION>
Ten Periods Ended
January 4, January 5,
1998 1997
---------- ---------
<S> <C> <C>
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 6,077,207 6,004,931
CONVERTIBLE PREFERRED STOCK 246,161 300,000
DILUTIVE EFFECT OF STOCK OPTIONS
OUTSTANDING 56,212 76,891
---------- ----------
6,379,580 6,381,822
========== ==========
NET INCOME $4,341,876 $3,546,433
========== ==========
EARNINGS PER SHARE $.68 $.56
==== ====
</TABLE>
-15-
<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)
Date February 11, 1998 /s/ Joel A. Schwartz
------------------------ --------------------
Joel A. Schwartz
President
/s/ Michael R. Burris
---------------------
Michael R. Burris
Chief Financial Officer
-16-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the January
4, 1998 Financial Statements and is qualified in its entirety by reference to
such Financial Statements.
</LEGEND>
<CIK> 0000935226
<NAME> BENIHANA INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> MAR-29-1998 MAR-29-1998
<PERIOD-START> OCT-13-1997 MAR-31-1997
<PERIOD-END> JAN-04-1998 JAN-04-1998
<EXCHANGE-RATE> 1 1
<CASH> 3,915 3,915
<SECURITIES> 0 0
<RECEIVABLES> 339 339
<ALLOWANCES> 0 0
<INVENTORY> 3,356 3,356
<CURRENT-ASSETS> 8,558 8,558
<PP&E> 32,101 32,101
<DEPRECIATION> 30,160 30,160
<TOTAL-ASSETS> 60,283 60,283
<CURRENT-LIABILITIES> 12,193 12,193
<BONDS> 20,946 20,946
0 0
2 2
<COMMON> 609 609
<OTHER-SE> 26,533 26,533
<TOTAL-LIABILITY-AND-EQUITY> 60,283 60,283
<SALES> 23,939 72,383
<TOTAL-REVENUES> 24,096 72,877
<CGS> 6,353 18,850
<TOTAL-COSTS> 13,746 43,118
<OTHER-EXPENSES> 1,384 3,919
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 271 648
<INCOME-PRETAX> 2,342 6,342
<INCOME-TAX> 780 2,000
<INCOME-CONTINUING> 1,562 4,342
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,562 4,342
<EPS-PRIMARY> .25 .69
<EPS-DILUTED> .24 .68
</TABLE>
