BNHNA Benihana Inca (MM)

Benihana Inc. (NASDAQ: BNHNA)(NASDAQ: BNHN), operator of the nation’s largest chain of Japanese theme and sushi restaurants, today reported financial results for its second fiscal quarter 2011 period ended October 10, 2010.

Richard C. Stockinger, Chairman, President and Chief Executive Officer, said, “We delivered a strong performance at the restaurant level in the second fiscal quarter. Top-line growth exhibited by our reinvigorated Benihana Teppanyaki brand, coupled with effective management of controllable expenses, resulted in a significant reduction in restaurant operating expenses. Excluding one-time general and administrative items totaling $4.3 million, income from operations would have been $0.3 million. We are also pleased with the traction we have gained thus far through our Renewal Program, including a 9.4% gain in guest counts during the current period, and are optimistic about achieving further sustained improvements in our results.”

Mr. Stockinger concluded, “With respect to our capital structure, we also strengthened our balance sheet by increasing our cash position by $1.5 million and paying down an additional $0.8 million of outstanding debt, resulting in total borrowings of $16.9 million and remaining availability of $19.3 million as of October 10, 2010. We remain disciplined in our capital deployment, targeting a handful of refurbishing projects while also positioning ourselves for expansion. Concurrent with our review of strategic alternatives, we firmly believe we can enhance value for all of our shareholders by building upon our success to date through the Renewal Program, as well as value-based promotions, media advertising and local marketing initiatives across all three restaurant concepts.”

Second Fiscal Quarter 2011 Financial Results

For the second fiscal quarter of 2011, total revenues increased 4.1% to $72.2 million from $69.3 million in the second fiscal quarter of 2010. Total restaurant sales increased 4.1% to $71.8 million from $69.0 million in the same period last year.

Company-wide comparable restaurant sales increased 4.7%, including 7.9% at Benihana Teppanyaki, but decreased 0.9% at RA Sushi and 1.0% at Haru. During the quarter, Benihana Teppanyaki represented approximately 66% of consolidated restaurant sales, while RA Sushi and Haru accounted for 24% and 10% of consolidated restaurant sales, respectively. There were a total of 1,160 store-operating weeks in the second fiscal quarter of 2011 compared to 1,179 store-operating weeks in the second fiscal quarter of 2010.

Cost of food and beverage sales for the second fiscal quarter of 2011 totaled $17.5 million, or 24.4% of restaurant sales, compared to $16.6 million, or 24.1% of restaurant sales, in the second fiscal quarter of 2010. The increase in cost as a percentage of sales is primarily due to improvements in the quality of food offerings associated with implementation of the Renewal Program, as well as various promotions offering Benihana Teppanyaki guests a meal for two at a set price.

Restaurant operating expenses for the second fiscal quarter of 2011 totaled $48.2 million, or 67.1% of restaurant sales, compared to $49.5 million, or 71.8% of restaurant sales, in the second fiscal quarter of 2010, reflecting improved cost and labor management in the current period in connection with the continued efforts of the Renewal Program.

General and administrative expenses for the second fiscal quarter of 2011 totaled $10.5 million, or 14.6% of restaurant revenues, compared to $5.0 million, or 7.2% of restaurant revenues, in the same period last year. During the second fiscal quarter of 2011, the Company incurred $0.1 million in higher corporate salaries as a result changes in Benihana Teppanyaki corporate operations and the regional manager and regional chef structure, $0.6 million in additional legal fees with respect to various legal items, and $0.2 million of expense related to the general claims liability.

The Company also incurred non-recurring costs totaling approximately $4.3 million in the second fiscal quarter of 2011, which consisted of $1.7 million related to various financial and operational consulting agreements, including services provided by our interim Chief Financial Officer, $1.5 million related to the execution of an accounting and payroll function outsourcing agreement, along with related accelerated depreciation expense and final contract settlement of the ERP system and severance costs, $0.9 million in advisory fees to respond to and ultimately settle the proxy contest in connection with the Annual Shareholders’ Meeting, and $0.2 million related to the write-off of abandoned projects.

Safe Harbor Statement

Except for the historical matters contained herein, statements in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect the business and prospects of the Company, including, without limitation: risks related to the Company’s business strategy, including the Company’s Renewal Program and marketing programs; risks related to the Company’s ability to operate successfully in the current challenging economic environment; risks related to the Company’s efforts to strengthen its Benihana Teppanyaki concept and build its RA Sushi and Haru brands; and other risks and uncertainties that may cause results to differ materially from those set forth in the forward-looking statements. Past performance may not be indicative of future results. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that its expectations will be realized. In addition to the risks and uncertainties set forth above, investors should consider the risks and uncertainties discussed in the Company’s filings with the Securities and Exchange Commission, including, without limitation, the risks and uncertainties discussed under the heading “Risk Factors” in such filings. The Company does not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

About Benihana

Headquartered in Miami, Benihana Inc. (NASDAQ GS: BNHN, BNHNA) is the nation's leading operator of Japanese theme and sushi restaurants with 97 restaurants nationwide, including 63 Benihana restaurants, nine Haru sushi restaurants, and 25 RA Sushi restaurants. In addition, 20 franchised Benihana restaurants are operating in the United States, Latin America and the Caribbean.

To learn more about Benihana Inc. and its three restaurant concepts, please view the corporate video at www.benihana.com/about/video.

     

Benihana Inc. and Subsidiaries

Sales by Concept

(Unaudited)

(In thousands)

  Three Periods Ended October 10,     October 11, Percentage 2010 2009 change Comparable restaurant sales by concept: Teppanyaki $ 47,266 $ 43,796 7.9 % RA Sushi 16,918 17,071 -0.9 % Haru   7,411   7,489 -1.0 % Total comparable restaurant sales $ 71,595 $ 68,356 4.7 %       Seven Periods Ended October 10, October 11, Percentage 2010 2009 change Total restaurant sales by concept: Teppanyaki $ 111,479 $ 105,941 5.2 % RA Sushi 38,995 39,178 -0.5 % Haru   17,792   17,623 1.0 % Total restaurant sales $ 168,266 $ 162,742 3.4 %      

Benihana Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(Unaudited)

(In thousands)

  October 10, March 28,     2010     2010 Assets Cash and cash equivalents $ 7,622 $ 2,558 Other current assets     14,416       13,149 Total current assets 22,038 15,707   Property and equipment, net 187,469 194,261 Goodwill 6,896 6,896 Other assets, net     14,768       17,226 Total assets   $ 231,171     $ 234,090   Liabilities, Convertible Preferred Stock and Stockholders’ Equity Current Liabilities: Borrowings under line of credit $ 16,923 $ 22,410 Other current liabilities     36,972       32,979 Total current liabilities 53,895 55,389   Other long term liabilities     15,312       15,362 Total liabilities     69,207       70,751   Convertible preferred stock     19,670       19,623   Stockholders’ Equity Total stockholders’ equity     142,294       143,716 Total liabilities, convertible preferred stock and stockholders' equity   $ 231,171     $ 234,090  

Benihana Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(Unaudited)

(In thousands)

  Seven Periods Ended October 10,         October 11,         2010           2009         Revenues: Restaurant sales $ 172,044 99.5 % $ 164,454 99.5 % Franchise fees and royalties     915       0.5 %       866       0.5 % Total revenues     172,959       100.0 %       165,320       100.0 %     Restaurant Expenses: Cost of food and beverage sales 42,099 24.3 % 39,004 23.6 % Restaurant operating expenses 112,428 65.0 % 112,917 68.3 % Restaurant opening costs 8 0.0 % 1,063 0.6 % General and administrative expenses     19,901       11.5 %       12,289       7.4 % Total operating expenses 174,436 100.9 % 165,273 100.0 %   (Loss) Income from operations (1,477 ) -0.9 % 47 0.0 % Interest income (expense), net     (273 )     -0.2 %       (804 )     -0.5 %   Loss before income taxes (1,750 ) -1.0 % (757 ) -0.5 % Income tax benefit     (357 )     -0.2 %       (1,010 )     -0.6 %   Net (Loss) Income (1,393 ) 253

Less: Accretion of preferred stock issuance costs and preferred stock dividends

   

583

             

583

          Net loss attributable to common stockholders   $ (1,976 )           $ (330 )         Loss Per Share Basic loss per common share $ (0.13 ) $ (0.02 ) Diluted loss per common share   $ (0.13 )           $ (0.02 )         Weighted Average Shares Outstanding Basic 15,451 15,374 Diluted     15,451               15,374              

Benihana Inc. and Subsidiaries

Condensed Balance Sheet Data

(Unaudited)

(In thousands)

  July 18, March 28,     2010     2010 Assets Cash and cash equivalents $ 7,622 $ 2,558 Other current assets     14,416       13,149 Total current assets 22,038 15,707   Property and equipment, net 187,469 194,261 Goodwill 6,896 6,896 Other assets, net     14,768       17,226 Total assets   $ 231,171     $ 234,090   Liabilities, Convertible Preferred Stock and Stockholders’ Equity Current Liabilities: Borrowings under line of credit $ 16,923 $ 22,410 Other current liabilities     36,972       32,979 Total current liabilities 53,895 55,389   Other long term liabilities     15,312       15,362 Total liabilities     69,207       70,751   Convertible preferred stock     19,670       19,623   Stockholders’ Equity Total stockholders’ equity     142,294       143,716 Total liabilities, convertible preferred stock and stockholders' equity   $ 231,171     $ 234,090