-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F7Vqna1TPScHJRmod1jGAc3QEnayQ1LISAvh/6l/h+1+VupjQK4+g50ywMYc4P+u V9GnhxwyMIkCqEajR+7odA== 0001188112-05-001547.txt : 20050825 0001188112-05-001547.hdr.sgml : 20050825 20050825161753 ACCESSION NUMBER: 0001188112-05-001547 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050717 FILED AS OF DATE: 20050825 DATE AS OF CHANGE: 20050825 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BENIHANA INC CENTRAL INDEX KEY: 0000935226 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 650538630 STATE OF INCORPORATION: DE FISCAL YEAR END: 0328 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26396 FILM NUMBER: 051049091 BUSINESS ADDRESS: STREET 1: 8685 NW 53RD TERRACE CITY: MIAMI STATE: FL ZIP: 33166 BUSINESS PHONE: 3055930770 MAIL ADDRESS: STREET 1: 8685 NW 53RD TERRACE CITY: MIAMI STATE: FL ZIP: 33166 10-Q 1 t10q-7445.txt 10-Q 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 July 17, 2005 or, [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-26396 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 check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.) Yes __X__ No _____ 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, 2,921,479 shares outstanding at July 31, 2005 Class A Common Stock $.10 par value, 6,356,975 shares outstanding at July 31, 2005 BENIHANA INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE FOUR PERIODS ENDED JULY 17, 2005 TABLE OF CONTENTS PAGE PART I - Financial Information Item 1. Financial Statements - unaudited Condensed Consolidated Balance Sheets (unaudited) at July 17, 2005 and March 27, 2005 1 Condensed Consolidated Statements of Earnings (unaudited) for the Four Periods Ended July 17, 2005 and July 18, 2004 2 Condensed Consolidated Statement of Stockholders' Equity (unaudited) for the Four Periods Ended July 17, 2005 3 Condensed Consolidated Statements of Cash Flows (unaudited) for the Four Periods Ended July 17, 2005 and July 18, 2004 4 Notes to Condensed Consolidated Financial Statements (unaudited) 5 - 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 18 Item 4. Controls and Procedures 18 - 19 PART II - Other Information Item 1. Legal Proceedings 20 Item 6. Exhibits 20 Signature 21 Certifications 22 - 25
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) JULY 17, March 27, 2005 2005 - ----------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 6,095 $ 3,278 Receivables 981 910 Inventories 6,930 6,571 Prepaid expenses deferred income taxes and other current assets 1,884 2,144 - ------------------------------------------------------------------------------------------------------------------ Total current assets 15,890 12,903 Property and equipment, net 109,926 108,132 Goodwill 28,131 28,131 Other assets 5,130 5,088 - ------------------------------------------------------------------------------------------------------------------ $ 159,077 $ 154,254 ================================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 23,716 $ 23,082 Current maturity of bank debt 3,333 3,333 Current maturities of obligations under capital leases 2 26 - ------------------------------------------------------------------------------------------------------------------ Total current liabilities 27,051 26,441 Long-term debt - bank 5,000 6,667 Deferred obligations under operating leases 6,659 6,479 Deferred income tax liability, net 427 156 - ------------------------------------------------------------------------------------------------------------------ Total liabilities 39,137 39,743 Commitments and contingencies (Note 8) Minority interest 2,177 1,999 Convertible Preferred Stock - $1.00 par value; authorized - 5,000,000 shares; Series B Mandatory Redeemable Convertible Preferred Stock - authorized - 800,000 shares; issued and outstanding - 400,000 shares with a liquidation preference of $25.00 per share (Note 7) 9,328 9,305 STOCKHOLDERS' EQUITY: Common stock - $.10 par value; convertible into Class A Common stock; authorized - 12,000,000 shares; issued and outstanding - 2,921,479 and 2,975,978 shares, respectively 292 298 Class A Common stock - $.10 par value; authorized - 20,000,000 shares; issued and outstanding - 6,351,975 and 6,198,475 shares, respectively 635 620 Additional paid-in capital 52,426 51,528 Retained earnings 55,225 50,904 Treasury stock - 10,828 shares of Common and Class A Common stock at cost (143) (143) - ------------------------------------------------------------------------------------------------------------------ Total stockholders' equity 108,435 103,207 - ------------------------------------------------------------------------------------------------------------------ $ 159,077 $ 154,254 ================================================================================================================== See notes to condensed consolidated financial statements
1
BENIHANA INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (In thousands, except per share information) FOUR PERIODS ENDED ---------------------------------- JULY 17, July 18, 2005 2004 - ----------------------------------------------------------------------------------------------------------------- REVENUES Restaurant sales $ 73,617 $ 64,934 Franchise fees and royalties 448 457 - ----------------------------------------------------------------------------------------------------------------- Total revenues 74,065 65,391 - ----------------------------------------------------------------------------------------------------------------- COSTS AND EXPENSES Cost of food and beverage sales 17,956 17,279 Restaurant operating expenses 42,271 38,283 Restaurant opening costs 289 254 Marketing, general and administrative expenses 6,256 6,331 - ----------------------------------------------------------------------------------------------------------------- Total operating expenses 66,772 62,147 - ----------------------------------------------------------------------------------------------------------------- Earnings from operations 7,293 3,244 Interest expense, net 117 114 - ----------------------------------------------------------------------------------------------------------------- Earnings before income taxes and minority interest 7,176 3,130 Income tax provision 2,500 1,006 - ----------------------------------------------------------------------------------------------------------------- Earnings before minority interest 4,676 2,124 Minority interest 178 212 - ----------------------------------------------------------------------------------------------------------------- NET INCOME $ 4,498 $ 1,912 Less: accretion of issuance costs and preferred stock dividends 177 26 - ----------------------------------------------------------------------------------------------------------------- NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 4,321 $ 1,886 ================================================================================================================= EARNINGS PER SHARE Basic earnings per common share $ .47 $ .21 Diluted earnings per common share $ .44 $ .20 ================================================================================================================= Number of restaurants at end of period 72 70 See notes to condensed consolidated financial statements
2
BENIHANA INC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOUR PERIODS ENDED JULY 17, 2005 (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 27, 2005 $298 $620 $51,528 $50,904 $(143) $103,207 Net income 4,498 4,498 Issuance of 96,500 shares of Class A common stock under exercise of options 9 692 701 Issuance of 2,500 shares of common stock under exercise of options - 16 16 Conversion of 57,000 shares of common stock into 57,000 shares of Class A common stock at $.10 par value (6) 6 - Dividends on Series B Preferred Stock (154) (154) Accretion of issuance costs on Series B Preferred Stock (23) (23) Tax benefit from stock options 190 190 - ------------------------------------------------------------------------------------------------------------------------- BALANCE, JULY 17, 2005 $292 $635 $52,426 $55,225 $(143) $108,435 =========================================================================================================================
See notes to condensed consolidated financial statements 3
BENIHANA INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands, except share information) FOUR PERIODS ENDED ----------------------------------- JULY 17, July 18, 2005 2004 - ------------------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES: Net income $ 4,498 $ 1,912 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,287 2,844 Minority interest 178 212 Deferred income taxes 156 154 Issuance of Class A common stock for incentive compensation - 7 Loss on disposal of assets 60 160 Change in operating assets and liabilities that provided (used) cash: Receivables (71) 66 Inventories (359) (153) Prepaid expenses and other current assets 375 230 Other assets (206) (259) Accounts payable and accrued expenses and deferred obligations under operating leases 907 1,584 - ------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 8,825 6,757 - ------------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES: Expenditures for property and equipment (4,977) (5,389) - ------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (4,977) (5,389) - ------------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES: Repayment of long-term debt and obligations under capital leases (1,691) (10,593) Proceeds from issuance of Series B Preferred Stock, net - 9,253 Borrowings under revolving line of credit - 500 Proceeds from issuance of common stock under exercise of stock options 717 463 Tax benefit from stock option exercises 190 124 Dividends paid on Series B Preferred stock (247) (26) - ------------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (1,031) (279) - ------------------------------------------------------------------------------------------------------------------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 2,817 1,089 Cash and cash equivalents, beginning of year 3,278 2,196 - ------------------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,095 $ 3,285 ========================================================================================================================= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the four periods: Interest $ 181 $ 200 Income taxes $ 1,738 $ 829 =========================================================================================================================
During the four periods ended July 17, 2005, 57,000 shares of common stock were converted into 57,000 shares of Class A common stock. During the four periods ended July 18, 2004, 142,000 shares of common stock were converted into 142,000 shares of Class A common stock. See notes to condensed consolidated financial statements. 4 BENIHANA INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOUR PERIODS ENDED JULY 17, 2005 AND JULY 18, 2004 (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 four periods (sixteen weeks) ended July 17, 2005 and July 18, 2004 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 27, 2005 appearing in the 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. The Company has a 52/53-week fiscal year and divides the year into 13 periods of four weeks. 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 generally 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. 5 BENIHANA INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOUR PERIODS ENDED JULY 17, 2005 AND JULY 18, 2004 (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 four periods ended (in thousands, except per share information):
FOUR PERIODS ENDED ------------------------------- JULY 17, July 18, 2005 2004 ------------- ----------- NET INCOME As reported $4,498 $1,912 Less: Accretion of issuance costs and preferred stock dividends 177 26 ------------- ----------- Net income attributable to common stockholders 4,321 1,886 Add: Stock-based compensation cost included in net income - 7 Less: Total stock-based employee compensation expense determined under fair value based method for all awards 24 226 ------------- ----------- Pro forma income for computation of basic earnings per share $4,297 $1,667 Add: Accretion of issuance costs and preferred stock dividends 177 26 ------------- ----------- Pro forma income for computation of diluted earnings per common share $4,474 $1,693 ============= =========== BASIC EARNINGS PER SHARE As reported $ .47 $ .21 ============= =========== Pro forma $ .47 $ .18 ============= =========== DILUTED EARNINGS PER SHARE As reported $ .44 $ .20 ============= =========== Pro forma $ .43 $ .17 ============= ===========
3. INVENTORIES Inventories consist of (in thousands):
JULY 17, July 18, 2005 2004 ------------- ----------- Food and beverage $3,166 $2,834 Supplies 3,764 3,737 ------------- ----------- $6,930 $6,571 ============= ===========
6 BENIHANA INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOUR PERIODS ENDED JULY 17, 2005 AND JULY 18, 2004 (UNAUDITED) 4. EARNINGS PER SHARE Basic earnings per common share is computed by dividing net income available to common shareholders 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. The following data shows the amounts used in computing earnings per share and the effect on income and the weighted average number of shares of dilutive potential common stock (in thousands):
FOUR PERIODS ENDED --------------------------------------------- JULY 17, July 18, 2005 2004 ----------------- ----------------- Net income, as reported $ 4,498 $ 1,912 Less: Accretion of issuance costs and preferred stock dividends 177 26 ----------------- ----------------- Income for computation of basic earnings per common share 4,321 1,886 Add: Accretion of issuance costs and preferred stock dividends 177 26 ----------------- ----------------- Income for computation of diluted earnings per common share $ 4,498 $ 1,912 ================= ================= FOUR PERIODS ENDED --------------------------------------------- JULY 17, July 18, 2005 2004 ----------------- ----------------- Weighted average number of common shares used in basic earnings per share 9,224 9,133 Effect of dilutive securities: Stock options 398 555 Series B preferred stock 697 87 ----------------- ----------------- Weighted average number of common shares and dilutive potential common stock used in diluted earnings per share 10,319 9,775 ================= =================
During the four periods ended July 17, 2005 and July 18, 2004, stock options to purchase 222,750 and 1,138,000 shares, respectively, of common stock were excluded from the calculation of diluted earnings per share since the effect would be considered antidilutive. 7 BENIHANA INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOUR PERIODS ENDED JULY 17, 2005 AND JULY 18, 2004 (UNAUDITED) 5. RESTAURANT OPERATING EXPENSES Restaurant operating expenses consist of the following (in thousands): FOUR PERIODS ENDED ---------------------------------- JULY 17, July 18, 2005 2004 --------------- --------------- Labor and related costs $25,294 $23,150 Restaurant supplies 1,448 1,249 Credit card discounts 1,336 1,153 Utilities 1,772 1,558 Occupancy costs 4,384 3,850 Depreciation and amortization 3,148 2,782 Other operating expenses 4,889 4,541 --------------- --------------- Total restaurant operating expenses $42,271 $38,283 =============== =============== 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. At July 17, 2005, we had a $2,306,000 letter of credit outstanding against such facility in connection with our workers compensation insurance program. Accordingly, at July 17, 2005, we had $12,694,000 available for borrowing. At July 17, 2005, we had $8,333,000 outstanding under the term loan which is payable in quarterly installments of $833,333 until the term loan matures in December 2007. The interest rate at July 17, 2005 of both the line of credit and the term loan was 4.49%. 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. As of July 17, 2005, the Company was in compliance with all covenants of the Company's credit agreement with Wachovia. 7. RELATED PARTY TRANSACTION On July 1, 2004, the Company received net proceeds of $9,253,000, after transaction costs, 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 Financial Corporation ("BFC"). In connection with the first tranche, the Company issued and sold 400,000 shares of its Series B Preferred Stock. John E. Abdo, a director of the Company, is a director and Vice Chairman of the Board of BFC and is a significant shareholder of BFC. 8 BENIHANA INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOUR PERIODS ENDED JULY 17, 2005 AND JULY 18, 2004 (UNAUDITED) On August 4, 2005, the Company completed the second and final tranche involving $10,000,000 aggregate principal amount of its Series B Preferred Stock sold to BFC. In connection with the second tranche, the Company issued and sold 400,000 shares of its Series B Preferred Stock. The Company received proceeds of $10,000,000 from the sale. No transaction costs were incurred with the second tranche. The Series B Preferred Stock has a liquidation preference of $25.00 per share (subject to anti-dilution provisions). 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% payable in cash or additional Series B Preferred Stock, and votes 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 is required for certain events outside the ordinary course of business, principally acquisitions or disposition of assets having a value in excess of 25% of the total consolidated assets of the Company. The holders of a majority of the outstanding Series B Preferred Stock are 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. 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") had a one-time option to sell the shares to the Company (the "put option"). In the event that the Minority Stockholders did not exercise the put option, the Company had a one-time option (the "call option") to purchase the shares of the Minority Stockholders between October 1, 2005 and December 31, 2005. The exercise price under the put option is four and one-half (4 1/2) times Haru's consolidated cash flow for the fiscal year ended March 27, 2005 less the amount of Haru's debt (as that term is defined in the purchase agreement) at the date of the computation. The exercise price of the call option is calculated on the same basis as the put option except that the amount of consolidated cash flow will be multiplied at five and one-half (5 1/2) times. As of March 27, 2005, the price for both the put and call options at the purchase dates were estimated to be between $3.7 million and $4.9 million. On July 1, 2005, the Minority Stockholders gave notice of their intention to exercise the put option to sell their respective shares to the Company. 9 BENIHANA INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOUR PERIODS ENDED JULY 17, 2005 AND JULY 18, 2004 (UNAUDITED) Currently, there is a dispute between the Company and the Minority Stockholders concerning the price upon which the Minority Stockholders may exercise their put option to sell the remaining interest in Haru to the Company. Under the Minority Stockholders' interpretation of the put option price formula, they claim to be entitled to between $5.5 million and $5.9 million for their interest. The Company believes that the proper application of the put option price formula would result in a payment to the Minority Stockholders of approximately $3.7 million. Presently, the parties have agreed to submit the matter to a nonbinding mediation, and are arranging for the selection of a mediator and the scheduling of a mediation session. There can be no assurance that this matter will not result in an arbitration or legal proceeding or that the Company's interpretation of the put option price formula will prevail in any such proceeding. As of July 17, 2005, the Company had not acquired any shares covered by the put option. Pursuant to the purchase agreement of RA Sushi, the Company is required to pay the seller contingent purchase price payments based on certain operating results of the acquired business for fiscal years ending 2004, 2005 and 2006. The contingent purchase price payments are based 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 such payments are not contingent on the continued employment of the sellers of the restaurants. The amount of any contingent payments that may be required with respect to the fiscal year ending 2006 is not yet estimable. On July 2, 2004, Benihana of Tokyo, Inc. ("BOT"), a significant holder of the Company's 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 ("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 $14.2 million for loss of value of the Company's Common Stock and from $9.5 million to $10.8 million for loss of an alleged control premium, and recovery of costs and expenses, in connection with the closing of the $20.0 million 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 holding in the Company. The trial portion of the litigation was completed on November 15, 2004 and a decision is expected in the first half of the current fiscal year. The Company and its Board of Directors believe that the BFC financing was and is in the Company's best interest 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 liability for this lawsuit, but legal expenses 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. The Company is not subject to any other pending legal proceedings, other than ordinary routine claims incidental to its business. 10 BENIHANA INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOUR PERIODS ENDED JULY 17, 2005 AND JULY 18, 2004 (UNAUDITED) 9. RECENTLY ISSUED ACCOUNTING STANDARDS In May 2005, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 154, "Accounting Changes and Error Corrections", which changes the requirements for the accounting and reporting of a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle as well as to changes required by an accounting pronouncement that does not include transition provisions. SFAS No. 154 is effective for accounting changes and corrections of errors made after December 15, 2005. 11 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 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 prices, average wage rates, marketing costs and the expenses of interest and administering restaurant operations. Revenues increased 13.3% in the current four periods when compared to the corresponding periods a year ago. Net income and earnings per diluted share increased 135.3% and 120.0%, respectively, in the current four periods when compared to the equivalent periods of the prior year. The increases in net income and earnings per diluted share are attributable primarily to an overall increase in comparable sales of 9.0% coupled with stable commodity prices during the current four periods. REVENUES Four periods ended July 17, 2005 compared to July 18, 2004 -- The amounts of sales and the changes in amount and percentage change in amount of revenues from the corresponding periods in the prior year are shown in the following tables (in thousands): FOUR PERIODS ENDED ------------------------------ JULY 17, July 18, 2005 2004 ------------- ----------- Restaurant sales $73,617 $64,934 Franchise fees and royalties 448 457 ------------- ----------- Total revenues $74,065 $65,391 ============= =========== FOUR PERIODS ENDED ------------------------------ JULY 17, July 18, 2005 2004 ------------- ----------- Amount of change in total revenues from the corresponding periods in the prior year $8,674 $4,289 ------------- ----------- Percentage of change from the corresponding periods in the prior year 13.3% 7.0% ============= =========== 12 BENIHANA INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Restaurant revenues increased for the four periods ended July 17, 2005 compared to the corresponding periods a year ago. Restaurant sales from restaurants open less than 12 months increased by $2.7 million for the current four periods as compared to the corresponding periods a year ago. The Anchorage restaurant, which was acquired during the fourth quarter of fiscal 2005 contributed $0.9 million in sales. The increase in restaurant sales was also attributable to positive comparable sales of $5.7 million in the current four periods when compared to the equivalent periods a year ago. Restaurant sales were negatively impacted by temporary and permanent restaurant closures of $0.6 million for the current four periods when compared to the equivalent periods a year ago. Comparable restaurant sales growth for restaurants opened longer than one year was 9.0% in the current four periods compared to the equivalent periods a year ago. Comparable sales for the teppanyaki restaurants, which represent 78.5% of total restaurant sales, increased 8.5%, comparable sales for the Haru restaurants increased 0.5%, comparable sales for the RA Sushi restaurants increased 25.0% and for the one Doraku restaurant comparable sales increased 23.3% in the current four periods when compared to the equivalent periods a year ago. The increases in comparable sales are attributable to both increases in traffic counts and increases in menu prices at the teppanyaki restaurants. Menu prices for the teppanyaki restaurants were increased between 2.5% and 3.0% during the second quarter of fiscal 2005. COSTS AND EXPENSES Four periods ended July 17, 2005 compared to July 18, 2004 -- 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 four periods.
FOUR PERIODS ENDED ----------------------------------- JULY 17, July 18, 2005 2004 --------------- --------------- COST AS A PERCENTAGE OF RESTAURANT SALES: Cost of food and beverage sales 24.4% 26.6% Restaurant operating expenses 57.4% 59.0% Restaurant opening costs 0.4% 0.4% Marketing, general and administrative expenses 8.5% 9.7% FOUR PERIODS ENDED ----------------------------------- JULY 17, July 18, 2005 2004 --------------- --------------- AMOUNT OF CHANGE FROM PREVIOUS COMPARABLE PERIOD (IN THOUSANDS): Cost of food and beverage sales $ 677 $1,708 Restaurant operating expenses $3,988 $2,787 Restaurant opening costs $ 35 $(103) Marketing, general and administrative expenses $ (75) $1,318
13 BENIHANA INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOUR PERIODS ENDED ----------------------------------- JULY 17, July 18, 2005 2004 --------------- --------------- PERCENTAGE CHANGE FROM PREVIOUS COMPARABLE PERIOD: Cost of food and beverage sales 3.9% 11.0% Restaurant operating expenses 10.4% 7.9% Restaurant opening costs 13.8% (28.9%) Marketing, general and administrative expenses (1.2%) 26.3%
The cost of food and beverage sales increased in total dollar amount, but decreased when expressed as a percentage of sales in the current four periods when compared to the corresponding periods in the prior year. Costs of food and beverage sales, which are generally variable with sales, increased with changes in revenues for the four periods ended July 17, 2005 as compared to the equivalent periods ended July 18, 2004. However, the increases were offset as a result of commodities price decreases, principally beef and shrimp costs, in the current four periods as compared to the equivalent periods in the prior year. Beef costs comprise approximately 40% of our total commodity costs. Average beef costs decreased by approximately 10% in the current four periods compared to the equivalent periods a year ago. Shrimp costs decreased by as much as 15% in many markets in the current four periods compared to the equivalent periods a year ago. All other commodity cost fluctuations were not significant. Restaurant operating expenses increased in absolute amount, but decreased when expressed as a percentage of sales in the current four periods compared to the corresponding periods a year ago. The increase was due to labor and related costs, occupancy costs, and depreciation and amortization from newly opened restaurants in the current four periods when compared to the equivalent periods. The Anchorage restaurant, which was acquired during the fourth quarter of fiscal 2005, also contributed to the increases. Marketing, general and administrative costs were consistent between periods; however, they decreased as a percentage of sales due to the significant increase in revenues. Management continues to monitor and control expenditures. Interest expense increased in the current four periods when compared to the corresponding periods of the prior year. The increase in the current four periods was attributable to higher interest rates offset by decreased borrowings in the current four periods compared to the equivalent four periods a year ago. Our effective income tax rate increased in the four periods to 34.8% from 32.1% in the prior year's four periods. 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. We have financed acquisitions principally through the use of borrowed funds. 14 BENIHANA INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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. At July 17, 2005, we had a $2,306,000 letter of credit outstanding against such facility in connection with our workers compensation insurance program. Accordingly, at July 17, 2005, we had $12,694,000 available for borrowing. At July 17, 2005, we had $8,333,000 outstanding under the term loan which is payable in quarterly installments of $833,333 until the term loan matures in December 2007. The interest rate at July 17, 2005 of both the line of credit and the term loan was 4.49%. 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. On July 1, 2004, the Company received net proceeds of $9,253,000, after transaction costs, 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 Financial Corporation ("BFC"). In connection with the first tranche, the Company issued and sold 400,000 shares of its Series B Preferred Stock. John E. Abdo, a director of the Company, is a director and Vice Chairman of the Board of BFC and is a significant shareholder of BFC. On August 4, 2005, the Company completed the second and final tranche involving $10,000,000 aggregate principal amount of its Series B Preferred Stock sold to BFC. In connection with the second tranche, the Company issued and sold 400,000 shares of its Series B Preferred Stock. The Company received proceeds of $10,000,000 from the sale. No transaction costs were incurred with the second tranche. The Series B Preferred Stock has a liquidation preference of $25.00 per share (subject to anti-dilution provisions). 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% payable in cash or additional Series B Preferred Stock, and votes 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 is required for certain events outside the ordinary course of business, principally acquisitions or disposition of assets having a value in excess of 25% of the total consolidated assets of the Company. The holders of a majority of the outstanding Series B Preferred Stock are 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. 15 BENIHANA INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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):
FOUR PERIODS ENDED --------------------------------------------- JULY 17, July 18, 2005 2004 ----------------- ----------------- Cash provided by operating activities $8,825 $6,757 Cash used in investing activities (4,977) (5,389) Cash used in financing activities (1,031) (279) ----------------- ----------------- Increase in cash and cash equivalents $2,817 $1,089 ================= =================
During fiscal 2005, we commenced a major renovation program to approximately 20 of our teppanyaki restaurants. 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 experienced increases in our expenditures commensurate with growth in our operations and we anticipate that our expenditures will continue to increase in the foreseeable future. We believe that our cash from operations and the funds available under our term loan and line of credit and proceeds from issuances of Series B Preferred Stock pursuant to our agreement with BFC Financial Corporation will provide sufficient capital to fund our operations and restaurant expansion for at least the next twelve months. OPERATING ACTIVITIES Cash provided by operations increased during the four periods ended July 17, 2005 compared to the equivalent period in the previous year. The increase resulted mainly from the increase in net income adjusted for depreciation and amortization as well as by changes in working capital during the current four periods when compared to the comparable four periods a year ago. INVESTING ACTIVITIES Expenditures for property and equipment decreased slightly during the four periods ended July 17, 2005 from the prior comparable four periods. Capital expenditures were comparable between periods; however, they are expected to increase, as the Company accelerates the pace of its renovation and new store construction program. FINANCING ACTIVITIES During the current four periods, there were stock option exercises with cash proceeds to the Company of $717,000 as compared to $463,000 in the previous comparable four periods a year ago. Our total indebtedness decreased by $1,691,000 during the four periods ended July 17, 2005. We paid down $1,667,000 of the term loan and paid $24,000 under capital leases. 16 BENIHANA INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparation of these statements requires management to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these financial statements. A summary of significant accounting policies and estimates and a description of accounting policies that are considered critical may be found in the Company's 2005 Annual Report on Form 10-K, filed on June 24, 2005, in the Notes to Consolidated Financial Statements, Note 1, and the Critical Accounting Policies section of Management's Discussion and Analysis. RECENTLY ISSUED ACCOUNTING STANDARDS In May 2005, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 154, "Accounting Changes and Error Corrections", which changes the requirements for the accounting and reporting of a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle as well as to changes required by an accounting pronouncement that does not include transition provisions. SFAS No. 154 is effective for accounting changes and corrections of errors made after December 15, 2005. 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 maintain increasing menu prices at a low level through strict cost controls. 17 BENIHANA INC. AND SUBSIDIARIES 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 July 17, 2005. 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 The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities and Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Management's assessment identified the following material weaknesses in the Company's internal control over financial reporting as of March 27, 2005: (a) an insufficient number of personnel with clearly delineated and fully documented responsibilities and with appropriate level of accounting expertise; and (b) insufficient documented procedures to identify and prepare a conclusion on matters involving material accounting issues and to independently review such conclusions as to the application of accounting principles generally accepted in the United States of America. This section of Item 4, "Controls and Procedures," should be read in conjunction with Item 9A, "Controls and Procedures," included in the Company's Form 10-K for the year ended March 27, 2005, for additional information on Management's Report on Internal Control over Financial Reporting. 18 BENIHANA INC. AND SUBSIDIARIES ITEM 4. CONTROLS AND PROCEDURES REMEDIATION PLANS FOR MATERIAL WEAKNESSES IN INTERNAL CONTROL OVER FINANCIAL REPORTING The Company has implemented enhancements to its internal control over financial reporting to provide reasonable assurance that errors and control deficiencies in its accounting will not occur. These enhancements include: o Management has hired a controller who has an appropriate level of accounting experience and education. o The Company has engaged a registered public accounting firm to consult on matters involving complex or emerging accounting issues. o Documentation to clearly delineate financial reporting responsibilities and procedures has been prepared. While the Company has implemented these changes, testing of the operating effectiveness of these revised controls has not been completed. Management presently anticipates that the testing necessary to conclude on the effectiveness of these changes will be completed by the end of the third quarter of fiscal 2006. As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to the Securities and Exchange Act Rule 13a-15. Based upon this evaluation as of July 17, 2005, the Chief Executive Officer and Chief Financial Officer were not able to conclude that the Company's disclosure controls and procedures were effective for the reasons more fully described above related to the material weaknesses in the Company's internal control over financial reporting identified during the Company's evaluation pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 as of the year ended March 27, 2005. To address these control weaknesses, the Company performed additional analysis and performed other procedures in order to prepare the unaudited quarterly condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Accordingly, management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, the Company's financial condition, results of operations, and cash flows for the periods presented. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING Except as otherwise discussed herein, there have been no changes in the Company's internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 19 BENIHANA INC. AND SUBSIDIARIES PART II - Other Information Item 1. LEGAL PROCEEDINGS On July 2, 2004, Benihana of Tokyo, Inc. ("BOT"), a significant holder of the Company's 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 ("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 $14.2 million for loss of value of the Company's Common Stock and from $9.5 million to $10.8 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 holding in the Company. The trial portion of the litigation was completed on November 15, 2004 and a decision is expected in the first half of the current fiscal year. The Company and its Board of Directors believe that the BFC financing was and is in the Company's best interest 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 liability for this lawsuit, but legal expenses 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. The Company is not subject to any other pending legal proceedings, other than ordinary routine claims incidental to its business. Item 6. EXHIBITS Exhibit 31.1 - Chief Executive Officer's certification pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 Exhibit 31.2 - Chief Financial Officer's certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 32.1 - Chief Executive Officer's certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32.2 - Chief Financial Officer's certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 20 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: August 25, 2005 /s/ Joel A. Schwartz - --------------------------- --------------------------------------- Joel A. Schwartz President and Chief Executive Officer and Director 21 EX-31.1 2 tex31_1-7445.txt EX-31.1 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: August 25, 2005 /s/ Joel A. Schwartz --------------------------------------- Joel A. Schwartz President and Chief Executive Officer and Director 22 EX-31.2 3 tex31_2-7445.txt EX-31.2 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: August 25, 2005 /s/ Michael R. Burris --------------------------------------- Michael R. Burris Senior Vice President - Finance and Chief Financial Officer 23 EX-32.1 4 tex32_1-7445.txt EX-32.1 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 July 17, 2005 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 August 25, 2005 24 EX-32.2 5 tex32_2-7445.txt EX-32.2 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 July 17, 2005 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 - ----------------------------------------- Michael R. Burris Senior Vice President - Finance and Chief Financial Officer August 25, 2005 25 -----END PRIVACY-ENHANCED MESSAGE-----