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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 10, 2004
or,
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-26396
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 No.)
8685 Northwest 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
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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
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Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act.) Yes X No
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Indicate the 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, 2,992,979 shares outstanding at November 23, 2004
Class A Common Stock $.10 par value, 6,161,475 shares outstanding at November
23, 2004
BENIHANA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE AND SEVEN PERIODS ENDED OCTOBER 10, 2004
TABLE OF CONTENTS
PAGE
PART I - Financial Information
Item 1. Financial Statements - unaudited
Condensed Consolidated Balance Sheets (unaudited)
at October 10, 2004 and March 28, 2004 1
Condensed Consolidated Statements of Earnings
(unaudited) for the Three and Seven Periods Ended
October 10, 2004 and October 12, 2003 2 - 3
Condensed Consolidated Statement of Stockholders'
Equity (unaudited) for the Seven Periods Ended
October 10, 2004 4
Condensed Consolidated Statements of Cash Flows
(unaudited) for the Seven Periods Ended
October 10, 2004 and October 12, 2003 5
Notes to Condensed Consolidated Financial Statements
(unaudited) 6 - 11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12 - 17
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 17 - 18
Item 4. Controls and Procedures 18
PART II - Other Information
Item 1. Legal Proceedings 19
Item 4. Results of Vote of Security Holders 19 - 20
Item 6. Exhibits and Reports on Form 8-K 20 - 21
Signature 22
Certifications 23 - 26
BENIHANA INC. AND SUBSIDIARIES
PART I - Financial Information
ITEM 1. FINANCIAL STATEMENTS - UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share and per share information) October 10, March 28,
2004 2004
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Assets (As restated,
Current Assets: see Note 6)
Cash and cash equivalents $ 2,790 $ 2,196
Receivables 800 882
Inventories 6,225 6,147
Prepaid expenses 2,636 2,426
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Total current assets 12,451 11,651
Property and equipment, net 104,474 98,219
Goodwill, net 27,783 27,783
Other assets 4,767 4,757
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$149,475 $142,410
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Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued expenses $22,371 $ 20,730
Current maturity of bank debt 3,250 21,500
Current maturities of obligations under capital leases 135 273
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Total current liabilities 25,756 42,503
Long-term debt - bank 10,000 18,500
Obligations under capital leases 26
Deferred income taxes, net 1,433 1,237
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Total liabilities 37,189 43,766
Commitments and contingencies (Note 8)
Minority interest 1,776 1,414
Series B Mandatory Redeemable Convertible Preferred Stock -
$1.00 par value; convertible into Common stock; authorized -
5,000,000 shares; issued and outstanding - 400,000 at
October 10, 2004 (Note 7) 9,271
Stockholders' Equity:
Common stock - $.10 par value; convertible into Class A Common
stock; authorized - 12,000,000 shares; issued and outstanding -
2,992,979 and 3,134,979 shares, respectively 299 313
Class A Common stock - $.10 par value; authorized -
20,000,000 shares; issued and outstanding -
6,161,475 and 5,967,527 shares, respectively 616 597
Additional paid-in capital 51,361 50,772
Retained earnings 49,106 45,691
Treasury stock - 10,828 shares of Common and
Class A Common stock at cost (143) (143)
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Total stockholders' equity 101,239 97,230
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$149,475 $142,410
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See notes to condensed consolidated financial statements
BENIHANA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(In thousands, except per share information)
Three Periods Ended
------------------------------
October 10, October 12,
2004 2003
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Revenues
Restaurant sales $47,801 $43,925
Franchise fees and royalties 309 310
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Total revenues 48,110 44,235
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Costs and Expenses
Cost of food and beverage sales 11,652 11,232
Restaurant operating expenses 28,425 26,304
Restaurant opening costs 299 590
Marketing, general and administrative expenses 4,949 3,697
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Total operating expenses 45,325 41,823
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Earnings from operations 2,785 2,412
Interest expense, net 72 84
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Earnings from operations before income taxes and minority interest 2,713 2,328
Income tax provision 902 717
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Earnings before minority interest 1,811 1,611
Minority interest 150 149
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Net Income $ 1,661 $ 1,462
Less: Accretion of issuance costs and preferred stock dividends 132
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Net income attributable to common stockholders $ 1,529 $ 1,462
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Earnings Per Share
Basic earnings per common share $ .17 $ .17
Diluted earnings per common share $ .16 $ .16
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Number of restaurants at end of period 69 65
See notes to condensed consolidated financial statements
BENIHANA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(In thousands, except per share information)
Seven Periods Ended
-------------------------------
October 10, October 12,
2004 2003
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Revenues
Restaurant sales $112,735 $104,467
Franchise fees and royalties 766 870
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Total revenues 113,501 105,337
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Costs and Expenses
Cost of food and beverage sales 28,931 26,803
Restaurant operating expenses 66,708 61,787
Restaurant opening costs 553 833
Marketing, general and administrative expenses 11,280 8,710
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Total operating expenses 107,472 98,133
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Earnings from operations 6,029 7,204
Interest expense, net 186 233
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Earnings from operations before income taxes and minority interest 5,843 6,971
Income tax provision 1,908 2,219
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Earnings before minority interest 3,935 4,752
Minority interest 362 338
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Net Income $ 3,573 $ 4,414
Less: Accretion of issuance costs and preferred stock dividends 158
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Net income attributable to common stockholders $ 3,415 $ 4,414
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Earnings Per Share
Basic earnings per common share $ .37 $ .50
Diluted earnings per common share $ .35 $ .49
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Number of restaurants at end of period 69 65
See notes to condensed consolidated financial statements
BENIHANA INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SEVEN PERIODS ENDED OCTOBER 10, 2004
(UNAUDITED)
(In thousands, except share information)
Class A Additional Total
Common Common Paid-in Retained Treasury Stockholders'
Stock Stock Capital Earnings Stock Equity
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, March 28, 2004 $313 $597 $50,772 $45,691 $(143) $97,230
Net income 3,573 3,573
Issuance of 51,598 shares of Class A
common stock under exercise of options 5 458 463
Conversion of 142,000 shares of common stock
into 142,000 shares of Class A common stock (14) 14
Issuance of 350 shares of Class A
common stock for incentive compensation 7 7
Dividends on Series B Preferred Stock (140) (140)
Tax benefit from stock option exercises 124 124
Accretion of issuance costs on
Series B Preferred Stock (18) (18)
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Balance, October 10, 2004 $299 $616 $51,361 $49,106 $(143) $101,239
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See notes to condensed consolidated financial statements
BENIHANA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands, except share information) Seven Periods Ended
-------------------------------
October 10, October 12,
2004 2003
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Operating Activities:
Net income $ 3,573 $ 4,414
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,023 4,414
Minority interest 362 338
Deferred income taxes 196 231
Issuance of Class A common stock for incentive compensation 7
Loss on disposal of assets 174 61
Change in operating assets and liabilities that provided (used) cash:
Receivables 82 (75)
Inventories (78) (566)
Prepaid expenses (210) 672
Other assets (211) (124)
Accounts payable and accrued expenses 1,641 (155)
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Net cash provided by operating activities 10,559 9,210
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Investing Activities:
Cash proceeds from sale of equipment 4
Expenditures for property and equipment (11,255) (10,062)
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Net cash used in investing activities (11,251) (10,062)
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Financing Activities:
Borrowings under revolving line of credit 3,500 10,400
Proceeds from issuance of Series B Preferred Stock, net 9,253
Proceeds from issuance of common stock under exercise of
stock options and warrants 463 420
Tax benefit from stock option exercises 124
Repayment of term loan (2,250) (2,250)
Repayment of revolving line of credit (9,500) (7,800)
Repayment of obligations under capital leases (164) (252)
Dividends paid or accrued on Series B Preferred Stock (140)
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Net cash provided by financing activities 1,286 518
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Net increase (decrease) in cash and cash equivalents 594 (334)
Cash and cash equivalents, beginning of year 2,196 2,299
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Cash and cash equivalents, end of period $ 2,790 $ 1,965
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Supplemental Disclosures of Cash Flow Information:
Cash paid during the seven periods:
Interest $ 274 $ 321
Income taxes $ 1,951 $ 389
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Supplemental schedule of noncash financing activities:
Accretion of issuance costs on Series B Preferred Stock $ 18
During the seven periods ended October 10, 2004, 142,000 shares of common stock
were converted into 142,000 shares of Class A common stock.
During the seven periods ended October 12, 2003, 30,000 shares of common stock
were converted into 30,000 shares of Class A common stock.
See notes to condensed consolidated financial statements.
BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SEVEN PERIODS ENDED OCTOBER 10, 2004 AND OCTOBER 12, 2003
(UNAUDITED)
1. GENERAL
The accompanying condensed consolidated financial statements are unaudited
and reflect all adjustments (consisting only of normal recurring
adjustments) 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 seven periods (twenty-eight weeks) ended October 10, 2004
and October 12, 2003 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 accounting
principles generally accepted in the United States of America have been
condensed or omitted. These interim financial statements should be read in
conjunction with the consolidated financial statements and accompanying
notes thereto for the year ended March 28, 2004 appearing in Benihana Inc.
and Subsidiaries (the "Company") Form 10-K filed with the Securities and
Exchange Commission.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates. Certain prior period amounts have been
reclassified to conform to the current period presentation.
The Company has a 52/53-week fiscal year and divides the year into 13
four-week periods. The Company's first fiscal quarter consists of 16 weeks,
and the remaining three quarters are 12 weeks each, except in the event of a
53-week year with the final quarter composed of 13 weeks. Because of the
differences in length of these accounting periods, results of operations
between the first quarter and the later quarters of a fiscal year are not
comparable.
2. STOCK-BASED COMPENSATION
The Company accounts for stock options issued to employees under the
intrinsic value method of accounting for stock-based compensation. The
Company recognizes no compensation expense with respect to such awards
because stock options are granted at the fair market value of the
underlying shares on the date of the grant.
BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SEVEN PERIODS ENDED OCTOBER 10, 2004 AND OCTOBER 12, 2003
(UNAUDITED)
Had the Company accounted for its stock-based awards under the fair value
method, the table below shows the pro forma effect on net income and earnings
per share for the three and seven periods ended:
Three Periods Ended Seven Periods Ended
------------------------------- ---------------------------------
October 10, October 12, October 10, October 12,
2004 2003 2004 2003
----------- ------------ ----------- -----------
Net Income (in thousands)
As reported $1,661 $1,462 $3,573 $4,414
Accretion of issuance costs
and preferred stock dividends 132 158
------------ ------------ ----------- -----------
Net income attributable to
common stockholders 1,529 1,462 3,415 4,414
Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards 108 133 255 307
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Pro forma $1,421 $1,329 $3,160 $4,107
============= ============= ============ ===========
Basic earnings per share
As reported $ .17 $ .17 $ .37 $ .50
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Pro forma $ .16 $ .15 $ .35 $ .47
============= ============= ============ ===========
Diluted earnings per share
As reported $ .16 $ .16 $ .35 $ .49
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Pro forma $ .14 $ .15 $ .31 $ .45
============= ============= ============ ===========
3. INVENTORIES
Inventories consist of (in thousands):
October 10, March 28,
2004 2004
----------- ----------
Food and beverage $2,385 $2,090
Supplies 3,840 4,057
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$6,225 $6,147
=========== ==========
4. EARNINGS PER SHARE
Basic earnings per common share is computed by dividing net income
attributable to common stockholders by the weighted average number of common
shares outstanding during each period. The diluted earnings per common share
computation includes dilutive common share equivalents issued under the
Company's various stock option plans and conversion rights of Series B
Preferred Stock.
BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SEVEN PERIODS ENDED OCTOBER 10, 2004 AND OCTOBER 12, 2003
(UNAUDITED)
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:
Three Periods Ended Seven Periods Ended
--------------------------------- ---------------------------------
October 10, October 12, October 10, October 12,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Net income $1,661 $1,462 $3,573 $4,414
Less: Accretion of issuance costs and
preferred stock dividends 132 158
----------- ----------- ----------- -----------
Income for computation of basic
earnings per common share 1,529 1,462 3,415 4,414
Add: Accretion of issuance costs and
preferred stock dividends 132 158
----------- ----------- ------------ -----------
Income for computation of diluted
earnings per common share $1,661 $1,462 $3,573 $4,414
=========== =========== ============ ===========
Three Periods Ended Seven Periods Ended
--------------------------------- --------- --- -----------------
October 10, October 12, October 10, October 12,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Weighted average number of
common shares used in basic
earnings per share 9,154 8,807 9,151 8,791
Effect of dilutive securities:
Stock options and warrants 336 313 519 271
Series B Preferred Stock 776 403
----------- ----------- ------------ -----------
Weighted average number of
common shares and dilutive
potential common stock used
in diluted earnings per share 10,266 9,120 10,073 9,062
========== =========== ============ ===========
During the seven periods ended October 10, 2004 and October 12, 2003, stock
options and warrants to purchase 1,227,000 and 1,502,000 shares, respectively,
of common stock were excluded from the calculation of diluted earnings per share
since the effect would be considered antidilutive.
BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SEVEN PERIODS ENDED OCTOBER 10, 2004 AND OCTOBER 12, 2003
(UNAUDITED)
5. RESTAURANT OPERATING EXPENSES
Restaurant operating expenses consist of the following (in thousands):
Three Periods Ended Seven Periods Ended
--------------------------------- ---------------------------------
October 10, October 12, October 10, October 12,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Labor and related costs $16,994 $15,928 $40,144 $37,695
Restaurant supplies 920 875 2,169 2,029
Credit card discounts 855 741 2,008 1,813
Utilities 1,279 1,218 2,837 2,680
Occupancy costs 2,860 2,536 6,710 5,934
Depreciation and amortization 2,132 1,875 4,914 4,228
Other restaurant operating expenses 3,385 3,131 7,926 7,408
----------- ----------- ----------- ---------
Total restaurant operating expenses $28,425 $26,304 $66,708 $61,787
=========== =========== =========== =========
6. LONG-TERM DEBT
The Company has borrowings from Wachovia Bank, National Association
("Wachovia") under a term loan as well as a revolving line of credit
facility. The line of credit facility allows us to borrow up to $15,000,000
through December 31, 2007 and at October 10, 2004, we had $12,500,000
available for borrowing. We also had a $1,000,000 letter of credit
outstanding against such facility in connection with our workers
compensation insurance program. At October 10, 2004, we had $10,750,000
outstanding under the term loan which is payable in quarterly installments
of $750,000 through December 2004 and $833,333 thereafter until the term
loan matures in December 2007. The interest rate at October 10, 2004 of both
the line of credit and the term loan was 2.98%. We have the option to pay
interest at Wachovia's prime rate plus 1% or at libor plus 1%. The interest
rate may vary depending upon the ratio of the sum of earnings before
interest, taxes, depreciation and amortization to our indebtedness. The loan
agreements limit our capital expenditures to certain amounts, require that
we maintain certain financial ratios and profitability amounts and limit the
payment of cash dividends.
For the quarter ended October 10, 2004, the Company was not in compliance
with a Consolidated EBITDA covenant of the Company's credit agreement with
Wachovia. The Company received a waiver from Wachovia to cure its
non-compliance on November 2, 2004 and has amended its credit agreement such
that the Company expects to be in compliance through the end of the second
quarter in fiscal 2006. There can be no assurance that such non-compliance
will not occur in future periods or that if it does, the Company's lender
will agree to waive any such non-compliance.
BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SEVEN PERIODS ENDED OCTOBER 10, 2004 AND OCTOBER 12, 2003
(UNAUDITED)
As discussed above, for the quarter ended October 10, 2004, the Company was
not in compliance with a Consolidated EBITDA covenant of the Company's
credit facility. However, the aforementioned bank debt is classified in
long-term liabilities on the Company's condensed consolidated balance sheet
at October 10, 2004 since the Company has, on November 2, 2004, obtained a
waiver for the Consolidated EBITDA covenant for the second quarter of fiscal
year 2005 and has amended its credit agreement such that the Company expects
to be in compliance through October 30, 2005. There can be no assurance
that such non-compliance will not occur in future periods or that if it
does, the Company's lender will agree to waive any such non-compliance.
Subsequent to the issuance of the Company's fiscal year 2004 consolidated
financial statements contained in the Company's Annual Report on Form 10-K,
the Company determined that $18.5 million of bank debt previously classified
in long-term liabilities should have been classified in current liabilities
because the waiver of the Consolidated EBITDA covenant was extended only as
of fiscal year-end rather than through the end of the year ending March 26,
2005. The Company's condensed consolidated balance sheet at March 28, 2004
has been restated from the amounts previously reported to reflect the
appropriate classification of the bank debt at March 28, 2004. The Company
also intends to file an amended Form 10-K for the year ended March 28, 2004
and Form 10-Q for the quarter ended July 18, 2004 to reflect the appropriate
classification of the bank debt in its condensed consolidated balance sheets
at March 28, 2004 and July 18, 2004, respectively.
7. RELATED PARTY TRANSACTION
John E. Abdo, a director of the Company, is a director and Vice Chairman of
the Board of BFC Financial Corporation ("BFC") and is a significant
shareholder of BFC. On July 1, 2004, the Company received $10,000,000, net
of issuance costs of approximately $747,000, representing the funding of the
first tranche of its sale of $20,000,000 aggregate principal amount of
Series B Convertible Preferred Stock ("Series B Preferred Stock") from BFC.
The Company has the option to issue another 400,000 shares of the Series B
Preferred Stock from time to time during the two-year period commencing on
June 8, 2005. The Series B Preferred Stock is convertible into Common Stock
of the Company at a conversion price of $19.00 per share; subject to
adjustment, carries a dividend of 5.0% payable in cash or additional Series
B Preferred Stock, and will vote on an "as if converted" basis together with
the Company's Common Stock on all matters put to a vote of the holders of
Common Stock. In addition, under certain circumstances, the approval of a
majority of the Series B Preferred Stock will be required for certain events
outside the ordinary course of business.
The holders of a majority of the outstanding Series B Preferred Stock will
be entitled to nominate one director at all times and one additional
director in the event that dividends are not paid for two consecutive
quarters to the holders of the Series B Preferred Stock.
The Company is obligated to redeem the Series B Preferred Stock at its
original issue price on July 2, 2014, which date may be extended by the
holders of a majority of the then-outstanding shares of Series B Preferred
Stock to a date no later than July 2, 2024. The Company may pay the
redemption in cash or, at its option, in shares of Common Stock valued at
then-current market prices unless the aggregate market value of the
Company's Common Stock and any other common equity is below $75.0 million.
In addition, the Series B Preferred Stock may, at the Company's option, be
redeemed in cash at any time beginning three years from the date of issue
if the volume-weighted average price of the Common Stock exceeds $38.00 per
share for sixty consecutive trading days.
BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SEVEN PERIODS ENDED OCTOBER 10, 2004 AND OCTOBER 12, 2003
(UNAUDITED)
8. COMMITMENTS AND CONTINGENCIES
In December 1999, the Company completed the acquisition of 80% of the equity
of Haru Holding Corp. ("Haru"). The acquisition was accounted for using the
purchase method of accounting. Pursuant to the purchase agreement, at any
time during the period of July 1, 2005 through September 30, 2005, the
holders of the balance of Haru's equity (the "Minority Stockholders") have a
one-time option to sell their shares to the Company. In the event that the
Minority Stockholders do not exercise their right to sell their shares, then
the Company has a one-time option to purchase the shares of the Minority
Stockholders between the period of October 1, 2005 and December 31, 2005.
The price for both the put and call options will be determined based on a
multiple of the defined cash flow measure for the acquired business. As of
October 10, 2004, the price for both the put and call options at the
purchase dates is not determinable as a number of unknown future factors
could, either individually or in combination, cause material changes in the
value of the put and call options.
In connection with our acquisition of RA Sushi in 2002, the Company agreed
to pay a base purchase price that consisted of $11.4 million along with the
assumption of approximately $1.2 million of debt and other costs of $0.5
million. The purchase price also included additional contingent purchase
price consideration to the sellers of the restaurants. The contingent
amounts are payable upon the achievement of stipulated levels of operating
earnings and revenues by the acquired restaurants over a three year period
commencing with the end of fiscal 2004, and are not contingent on the
continued employment of the sellers of the restaurants. For fiscal 2004 the
contingent payment amounted to $652,000. The minimum contingent payment is
not yet determinable for fiscal 2005. The Company accounts for the
contingent payments as an addition to the purchase price.
On July 2, 2004, Benihana of Tokyo, Inc. ("BOT"), which owns shares
representing approximately 43.6% of the votes represented by the Company's
outstanding Common Stock, commenced a lawsuit in the Court of Chancery of
the State of Delaware against the Company, members of the Company's Board
of Directors and BFC. The action, which purports to be brought both
individually and derivatively on behalf of the Company, seeks temporary and
permanent injunctive relief, monetary damages of $14.24 million for loss of
value of the Company's Common Stock and from $9.48 million to $10.84
million for loss of an alleged control premium, and recovery of costs and
expenses, in connection with the closing of the $20,000,000 sale of a new
class of Series B Preferred Stock of the Company to BFC, a diversified
holding company with operations in banking, real estate and other
industries. John E. Abdo, a director of the Company, serves as a Vice
Chairman, director, and is a significant shareholder of BFC. Among other
relief sought, the action seeks rescission of the sale of the Series B
Preferred Stock to BFC.
The action alleges that the director defendants breached their fiduciary
duties in approving the financing transaction with BFC by diluting the
voting power represented by BOT's Common Stock holdings in the Company. The
trial for the action was commenced on November 9, 2004 and testimony was
completed on November 15, 2004. All of the defendants have filed motions to
dismiss the complaint, which has not yet been ruled upon by the court. The
Company and its Board of Directors believe that the BFC financing was and
is in the best interests of the Company and all of its shareholders, that
there is no merit to the action brought by BOT, and have and intend to
continue to vigorously defend and oppose the action. Based on the above
discussion, the Company has not recorded a reserve balance for this
lawsuit, but legal costs are being incurred to defend the Company and
members of the Board of Directors. There can be no assurance that an
adverse outcome of the litigation will not have a material adverse effect
on the Company and its financial position.
BENIHANA INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Our revenues consist of sales of food and beverages at our restaurants and
licensing fees from franchised restaurants. Cost of restaurant food and
beverages sold represents the direct cost of the ingredients for the prepared
food and beverages sold. Restaurant operating expenses consist of direct and
indirect labor, occupancy costs, advertising and other costs that are directly
attributed to each restaurant location. Restaurant opening costs include rent
paid during the development period, as well as labor, training expenses and
certain other pre-opening charges which are expensed as incurred.
Restaurant revenues and expenses are dependent upon a number of factors
including the number of restaurants in operation, restaurant patronage and the
average check amount. Expenses are additionally dependent upon commodity costs,
average wage rates, marketing costs and the costs of interest and administering
restaurant operations.
Revenues increased 8.8% in the current three periods and 7.8% in the current
seven periods when compared to the corresponding periods a year ago. Net income
increased 13.6% in the current three periods but decreased 19.1% in the current
seven periods when compared to the corresponding periods a year ago. Earnings
per diluted share remained constant in the current three periods and decreased
28.6% when compared to the corresponding seven periods a year ago. Revenues and
net income increased in the current three periods due to increased sales as a
result of a menu price and patronage increases and in spite of legal fees of
approximately $655,000 related to the Benihana of Tokyo, Inc. litigation.
Earnings per diluted share remained constant in the three periods as a result of
increased restaurant operating profits offset by legal fees related to the
Benihana of Tokyo, Inc. litigation and 12.7% greater number of common stock and
equivalents outstanding during the current three periods compared to the
equivalent period a year ago.
REVENUES
Three and seven periods ended October 10, 2004 compared to October 12, 2003 --
The amounts of sales and the changes in amount and percentage change in amount
of revenues from the previous fiscal year are shown in the following tables (in
thousands).
Three Periods Ended Seven Periods Ended
------------------------------- ---------------------------------
October 10, October 12, October 10, October 12,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Restaurant sales $47,801 $43,925 $112,735 $104,467
Franchise fees and royalties 309 310 766 870
----------- ----------- ----------- -----------
Total revenues $48,110 $44,235 $113,501 $105,337
=========== ============ =========== ===========
Three Periods Ended Seven Periods Ended
------------------------------- ---------------------------------
October 10, October 12, October 10, October 12,
2004 2003 2004 2003
----------- ------------ ----------- -----------
Amount of change in total
revenues from previous year $3,875 $2,277 $8,164 $6,220
----------- ------------ ----------- -----------
Percentage of change from the
previous year 8.8% 5.4% 7.8% 6.3%
=========== ============ =========== ===========
BENIHANA INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Restaurant revenues increased for the three and seven periods ended October 10,
2004 compared to the corresponding periods a year ago. Restaurant sales
increased from newly opened restaurants by $3.6 million for the current three
periods and $7.7 million for the seven periods as compared to the corresponding
periods a year ago. The increase in restaurant sales was attributable to
positive comparable sales of $2.7 million in the current three periods and $4.2
million for the current seven periods when compared to the equivalent periods a
year ago. Restaurant sales were also negatively impacted by temporary and
permanent restaurant closures of $2.4 million for the current three periods and
$3.9 million for the current seven periods when compared to the equivalent
periods a year ago.
Comparable restaurant sales growth for restaurants opened longer than one year
was 6.5% in the current three periods and 4.2% for the current seven periods
compared to the equivalent periods a year ago. Comparable sales for the
teppanyaki restaurants increased 6.4% and 3.6%, comparable sales for the Haru
restaurants increased 4.1% and 5.1%, comparable sales for the RA Sushi
restaurants increased 13.2% and 11.2% and for the one Doraku restaurant
comparable sales increased 4.4% and 5.4% in the current three and seven periods,
respectively, when compared to the equivalent periods a year ago.
Restaurant sales were positively affected by a 2 to 3% menu price increase
instituted during the current three periods.
COSTS AND EXPENSES
Three and seven periods ended October 10, 2004 compared to October 12, 2003 --
The following table reflects the proportion that the various elements of costs
and expenses bore to restaurant sales and the changes in amounts and percentage
changes in amounts from the previous year's three and seven periods.
Three Periods Ended Seven Periods Ended
-------------------------------- ---------------------------------
October 10, October 12, October 10, October 12,
2004 2003 2004 2003
----------- ------------ ----------- -----------
COST AS A PERCENTAGE OF
RESTAURANT SALES:
Cost of food and beverage sales 24.4% 25.6% 25.7% 25.7%
Restaurant operating expenses 59.5% 59.9% 59.2% 59.1%
Restaurant opening costs 0.6% 1.3% 0.5% 0.8%
Marketing, general and
administrative expenses 10.4% 8.4% 10.0% 8.3%
Three Periods Ended Seven Periods Ended
-------------------------------- ---------------------------------
October 10, October 12, October 10, October 12,
2004 2003 2004 2003
----------- ----------- ----------- -----------
AMOUNT OF CHANGE FROM
PREVIOUS COMPARABLE PERIOD
(IN THOUSANDS):
Cost of food and beverage sales $ 420 $ 909 $2,128 $2,490
Restaurant operating expenses $2,121 $ 467 $4,921 $2,198
Restaurant opening costs $ (291) $ 474 $ (280) $ 569
Marketing, general and
administrative expenses $1,252 $ 316 $2,570 $ 533
BENIHANA INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Three Periods Ended Seven Periods Ended
-------------------------------- ---------------------------------
October 10, October 12, October 10, October 12,
2004 2003 2004 2003
----------- ----------- ----------- -----------
PERCENTAGE CHANGE FROM
PREVIOUS COMPARABLE PERIOD:
Cost of food and beverage sales 3.7% 8.8% 7.9% 10.2%
Restaurant operating expenses 8.1% 1.8% 8.0% 3.7%
Restaurant opening costs (49.3%) 408.6% (33.6%) 215.5%
Marketing, general and
administrative expenses 33.9% 9.3% 29.5% 6.5%
The cost of food and beverage sales increased in total dollar amount and
decreased when expressed as a percentage of sales in the current three periods
when compared to the corresponding periods in the prior year. The cost of food
and beverage sales increased in total dollar amount and remained constant when
expressed as a percentage of sales in the current seven periods when compared to
the corresponding periods in the prior year. Costs of food and beverage sales,
which are generally variable with sales, directly increased with changes in
revenues for the three and seven periods ended October 10, 2004 as compared to
the equivalent periods ended October 12, 2003. The decrease when expressed as a
percentage of sales in the current three periods resulted from the
aforementioned menu price increase coupled with relatively stable commodity
prices.
Restaurant operating expenses increased in absolute amount in the three and
seven periods and decreased in the three periods and increased slightly in the
seven periods when expressed as a percentage of sales compared to the
corresponding periods a year ago. The increase was due to occupancy costs and
depreciation and amortization from the newly opened teppanyaki and RA Sushi
restaurants and from capital expenditures made to existing restaurants which
also increased depreciation and amortization in the current three and seven
periods when compared to the equivalent periods. The decrease when expressed as
a percentage of sales in the current three periods compared to the equivalent
periods was a result of the aforementioned increase in sales leveraged against
the fixed portion of restaurant operating expenses.
Restaurant opening costs decreased in the current three and seven periods ended
October 10, 2004 compared to the prior year corresponding periods. The decrease
is attributable to fewer restaurants in the development stage when pre-opening
costs are incurred in the current three and seven periods when compared to the
equivalent periods a year ago.
Marketing, general and administrative costs increased in absolute amount and
when expressed as a percentage of sales in the current three and seven periods
when compared to the equivalent periods a year ago. The increase is due to
increased labor and related costs and professional fees. The increase in labor
and related costs is attributable to additional corporate personnel hired to
accommodate the Company's growth plans. The increase in professional fees is
attributable to legal fees related to the Benihana of Tokyo, Inc. litigation,
and to consulting fees related to planning and architectural design work for the
construction and renovation program for the Company's teppanyaki concept and due
to professional fees relating to Sarbanes-Oxley Section 404 compliance.
Interest expense decreased in the current three and seven periods when compared
to the corresponding periods of the prior year. The decrease in the current
three and seven periods was attributable to lower average borrowings outstanding
in the current year compared to the equivalent periods a year ago.
Our effective income tax rate increased in the seven periods to 32.7% from 31.8%
in the prior year's seven periods.
BENIHANA INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OUR FINANCIAL RESOURCES
Cash flow from operations has historically been the primary source to fund our
capital expenditures. Since we have accelerated our building program, we are
relying more upon financing obtained from financial institutions and others. We
have financed acquisitions principally through the use of borrowed funds.
We have borrowings from Wachovia Bank, National Association ("Wachovia") under a
term loan as well as a revolving line of credit facility. The line of credit
facility allows us to borrow up to $15,000,000 through December 31, 2007 and at
October 10, 2004, we had $12,500,000 available for borrowing. We also had a
$1,000,000 letter of credit outstanding against such facility in connection with
our workers compensation insurance program. At October 10, 2004, we had
$10,750,000 outstanding under the term loan which is payable in quarterly
installments of $750,000 through December 2004 and $833,333 thereafter until the
term loan matures in December 2007. The interest rate at October 10, 2004 of
both the line of credit and the term loan was 2.98%. We have the option to pay
interest at Wachovia's prime rate plus 1% or at libor plus 1%. The interest rate
may vary depending upon the ratio of the sum of earnings before interest, taxes,
depreciation and amortization to our indebtedness. The loan agreements limit our
capital expenditures to certain amounts, require that we maintain certain
financial ratios and profitability amounts and limit the payment of cash
dividends.
For the quarter ended October 10, 2004, the Company was not in compliance with a
Consolidated EBITDA covenant of the Company's credit agreement with Wachovia.
The Company received a waiver from Wachovia to cure its non-compliance on
November 2, 2004 and has amended its credit agreement such that the Company
expects to be in compliance through the end of the second quarter in fiscal
2006. There can be no assurance that such non-compliance will not occur in
future periods or that if it does, the Company's lender will agree to waive any
such non-compliance.
Since restaurant businesses generally do not have large amounts of inventory and
accounts receivable, there is no need to finance them. As a result, many
restaurant businesses, including our own, operate with negative working capital.
The following table summarizes the sources and uses of cash and cash equivalents
(in thousands):
Seven Periods Ended
--------------------------
October 10, October 12,
2004 2003
----------- ----------
Cash provided by operations $ 10,559 $ 9,210
Cash (used in) investing activities (11,251) (10,062)
Cash provided by financing activities 1,286 518
----------- ----------
Increase (decrease) in cash and cash equivalents $ 594 $ (334)
=========== ==========
During the current seven periods, the Company issued $10,000,000 in aggregate
principal amount of the Series B Preferred Stock and received net proceeds of
$9.3 million from the issuance. The Company has the option to issue an
additional $10,000,000 in principal amount of the Series B Preferred Stock from
time to time during the two-year period commencing on June 8, 2005.
BENIHANA INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
We have announced a major renovation program to approximately 20 of our
teppanyaki restaurants which is expected to begin in the third quarter of fiscal
2005. We anticipate that the total cost of these renovations will range from $25
to $30 million over a three-year period. Our other future capital requirements
depend on numerous factors, including market acceptance of our products, the
timing and rate of expansion of our business, acquisitions, and other factors.
We have increased our expenditures consistent with the development of the number
of restaurants we build and we anticipate that our expenditures will continue to
increase in the foreseeable future. We believe that the cash from operations and
the funds available under our term loan and line of credit and future issuances
of Series B Convertible Preferred Stock ("Series B Preferred Stock") pursuant to
our agreement with BFC Financial Corporation will provide sufficient capital to
fund our operations, restaurant renovation programs and restaurant expansion for
at least the next twelve months.
Operating Activities
Cash provided by operations increased during the seven periods ended October 10,
2004 compared to the equivalent period in the previous year. The increase
resulted mainly from the change in cash provided by operating assets and
liabilities in the current seven periods when compared to the comparable period
a year ago offset by a decrease in net income adjusted for depreciation and
amortization.
Investing Activities
Expenditures for property and equipment increased during the seven periods ended
October 10, 2004 from the prior comparable periods. The increase is attributable
to increased capital expenditures for new restaurants in the current seven
periods when compared to the equivalent periods a year ago.
Financing Activities
On July 1, 2004, the Company issued 400,000 shares of Series B Preferred Stock
at $25.00 per share which resulted in net proceeds of $9.3 million. The Company
has the option to issue another 400,000 shares of the Series B Preferred Stock
from time to time during the two-year period commencing on June 8, 2005. The
Series B Preferred Stock is convertible into Common Stock of the Company at a
conversion price of $19.00 per share, subject to adjustment, carries a dividend
of 5.0% payable in cash or additional Series B Preferred Stock and will vote on
an "as if converted" basis together with the Company's Common Stock on all
matters put to a vote of the holders of Common Stock. In addition, under certain
circumstances, the approval of a majority of the Series B Preferred Stock will
be required for certain events outside the ordinary course of business.
The holders of a majority of the outstanding Series B Preferred Stock will be
entitled to nominate one director at all times and one additional director in
the event that dividends are not paid for two consecutive quarters to the
holders of the Series B Preferred Stock.
The Company is obligated to redeem the Series B Preferred Stock at its original
issue price on July 2, 2014, which date may be extended by the holders of a
majority of the then-outstanding shares of Series B Preferred Stock to a date no
later than July 2, 2024. The Company may pay the redemption in cash or, at its
option, in shares of Common Stock valued at then-current market prices unless
the aggregate market value of the Company's Common Stock and any other common
equity is below $75.0 million. In addition, the Series B Preferred Stock may, at
the Company's option, be redeemed in cash at any time beginning three years from
the date of issue if the volume-weighted average price of the Common Stock
exceeds $38.00 per share for sixty consecutive trading days.
BENIHANA INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
During the current seven periods there were stock option exercises and warrants
with cash proceeds to the Company of $463,000 as compared to $420,000 in the
comparable period a year ago. Our total indebtedness decreased by $8,414,000
during the seven periods ended October 10, 2004. We paid down $2,250,000 of the
term loan, $6,000,000 of the revolving line of credit and paid $164,000 under
leases that are considered to be capital in nature.
Critical Accounting Policies
Our 2004 Annual Report on Form 10-K contains a description of the critical
accounting policies of the Company, including property and equipment
capitalization, impairment testing of long-lived assets and goodwill, estimated
liabilities for employee health insurance and workers' compensation, and our
estimation of certain components of our provision for income taxes. For the
three and seven periods ended October 10, 2004, there were no material changes
to these policies.
Forward-Looking Statements
This quarterly report contains various "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements represent our expectations
or beliefs concerning future events, including unit growth, future capital
expenditures, and other operating information. A number of factors could, either
individually or in combination, cause actual results to differ materially from
those included in the forward-looking statements, including changes in consumer
dining preferences, fluctuations in commodity prices, availability of qualified
employees, changes in the general economy, industry cyclicality, and in consumer
disposable income, competition within the restaurant industry, availability of
suitable restaurant locations, harsh weather conditions in areas in which we and
our franchisees operate restaurants or plan to build new restaurants, acceptance
of our concepts in new locations, changes in governmental laws and regulations
affecting labor rates, employee benefits, and franchising, ability to complete
new restaurant construction and obtain governmental permits on a reasonably
timely basis and other factors that we cannot presently foresee.
The Impact of Inflation
Inflation has not been a significant factor in our business for the past several
years. We have been able to keep increasing menu prices at a low level by
strictly maintaining cost controls.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain risks of increasing interest rates and commodity
prices. The interest on our indebtedness is largely variable and is benchmarked
to the prime rate in the United States or to the London interbank offering rate.
We may protect ourselves from interest rate increases from time-to-time by
entering into derivative agreements that fix the interest rate at predetermined
levels. We have a policy not to use derivative agreements for trading purposes.
We have no derivative agreements as of October 10, 2004.
BENIHANA INC. AND SUBSIDIARIES
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We purchase commodities such as chicken, beef, lobster and shrimp for our
restaurants. The prices of these commodities may be volatile depending upon
market conditions. We do not purchase forward commodity contracts because the
changes in prices for them have historically been short-term in nature and, in
our view, the cost of the contracts is in excess of the benefits.
Seasonality of Our Business
The Company has a 52/53-week fiscal year and divides the year into 13 periods.
The Company's first fiscal quarter consists of 16 weeks, and the remaining three
four-week quarters are 12 weeks each, except in the event of a 53-week year with
the final quarter composed of 13 weeks. Because of the differences in length of
these accounting periods, results of operations between the first quarter and
the later quarters of a fiscal year are not comparable.
Our business is not highly seasonal although we do have more patrons coming to
our restaurants for special holidays such as Mother's Day, Valentine's Day and
New Year's. Mother's Day falls in our first fiscal quarter of each year, New
Year's in the third quarter and Valentine's Day in the fourth quarter.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the Company conducted an
evaluation, under the supervision and with the participation of the principal
executive officer and principal financial officer, of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation,
the principal executive officer and principal financial officer concluded that
the Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms. There was no change in the Company's internal control over financial
reporting during the Company's most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
The Company has considered the restatement in this Form 10-Q and believes that
its internal controls continue to be effective.
BENIHANA INC. AND SUBSIDIARIES
PART II - Other Information
Item 1. Legal Proceedings
On July 2, 2004, BOT, which owns shares representing approximately 43.6% of the
Company's outstanding Common Stock, commenced a lawsuit in the Court of Chancery
of the State of Delaware against the Company, members of the Company's Board of
Directors and BFC Financial Corporation. The action, which purports to be
brought both individually and derivatively on behalf of the Company, seeks
temporary and permanent injunctive relief, and monetary damages of $14.24
million for loss of value of the Company's Common Stock and from $9.48 million
to $10.84 million for loss of an alleged control premium, and recovery of costs
and expenses, in connection with the closing of the $20,000,000 sale of a new
class of Series B Preferred Stock of the Company to BFC Financial Corporation, a
diversified holding company with operations in banking, real estate and other
industries. John E. Abdo, a director of the Company, serves as a Vice Chairman,
director, and is a significant shareholder of BFC. Among other relief sought,
the action seeks rescission of the sale of the Series B Preferred Stock to BFC.
The action alleges that the director defendants breached their fiduciary duties
in approving the financing transaction with BFC by diluting the voting power
represented by BOT's Common Stock holdings in the Company. The trial for the
action was commenced on November 9, 2004 and testimony was completed on November
15, 2004. All of the defendants have filed motions to dismiss the complaint,
which has not yet been ruled upon by the court. The Company and its Board of
Directors believe that the BFC financing was and is in the best interests of the
Company and all of its shareholders, that there is no merit to the action
brought by BOT, and have and intend to continue to vigorously defend and oppose
the action. There can be no assurance that an adverse outcome of the litigation
will not have a material adverse effect on the Company and its financial
condition.
Item 4. Results of Vote of Security Holders
(a) We held our annual meeting of stockholders on September
28, 2004.
(b) The following directors were elected at the meeting:
Joel A. Schwartz, Kevin Y. Aoki and Lewis Jaffe
Other directors whose term of office continues after
the meeting are set forth below:
Darwin C. Dornbush, John E. Abdo, Norman Becker, Max
Pine, Robert B. Sturges and Taka Yoshimoto
(c) At the annual meeting, holders of our Common Stock
voted to elect two Class III directors for a term of
three years and holders of our Class A Common Stock
voted to elect a Class III director for a term of
three years. In addition, holders of our Common Stock
and Class A Common Stock, voting together as a single
class, voted for the ratification of Deloitte & Touche
LLP to serve as our independent registered public
accounting firm for the fiscal year ending March 26,
2005.
BENIHANA INC. AND SUBSIDIARIES
PART II - Other Information
At the meeting, the following votes for and against, as
well as the number of abstentions and broker non-votes were
recorded for each matter as set for the below:
WITHHOLD NON-
MATTER FOR AGAINST ABSTAIN AUTHORITY VOTES
----------------------------------------------------------------------------------------------------------
Election of Directors:
Class III
Joel A. Schwartz 4,073,943 657,737
Class III
Kevin Y. Aoki 3,054,041 39,783
Class III
Lewis Jaffe 1,735,306 100
Class III
Yoshihiro Sano 1,358,418
Ratification of
Public Accountants: 3,563,176 1,382 2,434
Item 6. Exhibits and Reports on Form 8-K
(a) On November 16, 2004 the Company filed a report on
Form 8-K announcing its earnings press release for
the second fiscal quarter ended October 10, 2004.
(a)(i) On October 28, 2004 the Company filed a report on Form
8-K covering its press release announcing its second
quarter sales and comparable sales results for the
fiscal quarter ended October 10, 2004.
(a)(ii) On October 15, 2004 the Company filed a report on Form
8-K disclosing a letter received from the staff of
NASDAQ advising the Company that it had not satisfied
NASDAQ Marketplace Rule 4350 (h) in connection with
the recent issuance of the Series B Preferred Stock to
BFC Financial Corporation and requesting that the
Company submit a plan to "achieve and sustain
compliance" in connection with the staff's review of
the Company's eligibility for continued listing.
(a)(iii) On October 7, 2004 the Company filed a report on Form
8-K disclosing the results of its 2004 Annual Meeting
of Stockholders.
(a)(iv) On August 24, 2004 the Company filed a report on Form
8-K announcing its earnings press release for the
first fiscal quarter ended July 18, 2004.
(b) Exhibit 31.1 - Chief Executive Officer's certification
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
(b)(i) Exhibit 31.2 - Chief Financial Officer's certification
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
(b)(ii) Exhibit 32.1 - Chief Executive Officer's certification
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
(b)(iii) Exhibit 32.2 - Chief Financial Officer's certification
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
SIGNATURE
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: November 24, 2004 /s/ Joel A. Schwartz
- ------------------------- ---------------------------------------
Joel A. Schwartz
President and
Chief Executive Officer
and Director
Exhibit 31.1
CERTIFICATION
I, Joel A. Schwartz, President and Chief Executive Officer and Director, certify
that:
1. I have reviewed this quarterly report on Form 10-Q of Benihana Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation;
and
c) disclosed in this report any change in the registrant's internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: November 24, 2004 /s/ Joel A. Schwartz
--------------------------------
Joel A. Schwartz
President and
Chief Executive Officer
and Director
Exhibit 31.2
CERTIFICATION
I, Michael R. Burris, Senior Vice President - Finance and Chief Financial
Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Benihana, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation;
and
c) disclosed in this report any change in the registrant's internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: November 24, 2004 /s/ Michael R. Burris
--------------------------------------
Michael R. Burris
Senior Vice President -
Finance and Chief Financial
Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Benihana Inc. (the "Company") on
Form 10- Q for the period ended October 10, 2004 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Joel A. Schwartz,
President and Chief Executive Officer and Director of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ Joel A. Schwartz
- -------------------------------------
Joel A. Schwartz
President and
Chief Executive Officer
and Director
November 24, 2004
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Benihana Inc. (the "Company") on
Form 10-Q for the period ended October 10, 2004 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Michael R. Burris,
Senior Vice President - Finance and Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ Michael R. Burris
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Michael R. Burris
Senior Vice President -
Finance and Chief Financial
Officer
November 24, 2004