Benihana Inc. Reports Fiscal First Quarter 2009 Results

Conference Call to be Held Today at 5:00 PM ET

MIAMI, Aug 27, 2008 (BUSINESS WIRE) -- Benihana Inc. (NASDAQ: BNHNA; BNHN), operator of the nation's largest chain of Japanese theme and sushi restaurants, today reported results for its 16-week fiscal first quarter ended July 20, 2008.

Fiscal First Quarter 2009 Results

For fiscal first quarter 2009, total revenues increased 5.0% to $94.5 million, compared with $89.9 million in fiscal first quarter 2008. Total restaurant sales increased 5.1% to $93.9 million from $89.4 million in the same quarter of the previous year. On a comparable basis, Company-wide comparable restaurant sales were (4.9%), including (3.4%) at Benihana teppanyaki, (9.1%) at RA Sushi, and (7.7%) at Haru. There were a total of 1,348 store-operating weeks in the fiscal first quarter of 2009 compared to 1,219 store-operating weeks in the fiscal first quarter of 2008.

"Our recent financial performance reflects the continued challenges facing our industry, as softer top-line trends, along with higher costs at the restaurant level, resulted in deleveraging across much of our income statement. We are proactively addressing the issues impacting our business, and are therefore implementing a number of initiatives in the areas of operations, menu development, and advertising that we believe will create cost savings while spurring incremental restaurant sales at our Company. In uncertain times, we know that the best concepts are those that stay true to what they are and never compromise on execution and service. We have confidence in our three brands and believe that our continuing tactical efforts will both strengthen our organization as well as deepen our relationship with our guests," said Joel A. Schwartz, Chairman and Chief Executive Officer.

During the fiscal first quarter 2009, the Company opened RA Sushi restaurants in Pembroke Pines, FL and South Miami, FL. The Company also reopened Benihana teppanyaki restaurants in Cupertino, CA; Denver, CO; and Houston, TX which had been closed for remodeling. The Benihana teppanyaki restaurant in Newport Beach, CA was closed for the entire 16-week period, but has subsequently reopened. In the fiscal second quarter of 2009, the Company has already opened a RA Sushi restaurant in Chino Hills, CA.

Restaurant operating profit for the fiscal first quarter 2009 was $12.4 million, or 13.2% of restaurant sales, compared to $15.7 million, or 17.6% of restaurant sales a year-ago.

Marketing, general and administrative expenses for the fiscal first quarter 2009 totaled $8.8 million, or 9.3% of restaurant sales, compared to $9.0 million, or 10.1% of restaurant sales in the same period last year. This resulted in income from operations of $3.4 million and $6.6 million, respectively.

Net income for the fiscal first quarter 2009 was $2.2 million, or $0.12 in diluted earnings per share, compared to $4.2 million, or $0.25 in diluted earnings per share in the same quarter last year.

Guidance

The Company is providing the following guidance for fiscal 2009:

  • Total restaurant sales of $313 million to $318 million, and 4,500 to 4,600 in total restaurant operating weeks (including the effect of 60 to 85 in gross operating weeks that are expected to be lost due to the Benihana teppanyaki renovation and revitalization program, which should be completed in the current fiscal year);
  • The opening of four Benihana teppanyaki restaurants and seven RA Sushi restaurants, including three RA Sushi restaurants that have opened so far, with the balance of openings in the second half of the fiscal year;
  • A total of $0.5 million in accelerated depreciation costs, related to shortening the useful lives for those restaurants affected by the Company's remodeling efforts, which will be incurred in the first half of the fiscal year;
  • Capital expenditures of approximately $47 million during the fiscal 2009 (vs. $60 million previously forecasted);
  • Additional utilization of approximately $17 million to $20 million (vs. $30 million previously forecasted) of the available line of credit, resulting in an outstanding balance of approximately $35 million to $38 million (vs. $50 million previously forecasted) by the end of fiscal 2009;
  • Diluted earnings per share ranging from $0.60 to $0.65. Diluted common shares outstanding are estimated to be approximately 18.3 million.



Mr. Schwartz continued, "We are maintaining our previous revenue and earnings guidance for fiscal 2009, but have reduced our capital expenditures outlook based upon a strategic decision to postpone the last two refurbishment projects of this major initiative, along with developer-related construction delays on several fiscal 2010 restaurant openings. With our multi-year revitalization program nearing completion, we will continue to devote attention to improving the performance of our existing locations as well as manage our current development activities."

Conference Call Today

The Company will hold a conference call to discuss its fiscal first quarter 2009 results today at 5:00 PM ET. The conference call can be accessed live over the phone by dialing 1-800-289-0533, or for international callers, 1-913-312-1425. A replay will be available one hour after the call through September 3, 2008 and can be accessed by dialing 1-888-203-1112, or for international callers, 1-719-457-0820; the conference ID is 4677825. The call will also be webcast live from the investor relations portion of the Company's website at www.benihana.com.

About Benihana

Benihana Inc. (Nasdaq GS: BNHNA - News) (Nasdaq GS: BNHN - News) operates 90 restaurants nationwide, including 60 Benihana teppanyaki restaurants, nine Haru sushi restaurants, and twenty-one RA Sushi Bar restaurants. Under development at present are fourteen restaurants -- eight Benihana teppanyaki restaurants and six RA Sushi restaurants. In addition, 19 franchised Benihana teppanyaki restaurants are operating in the U.S., Latin America and the Caribbean.

To learn more about the Company and its three Japanese theme and sushi restaurant concepts, please view the corporate video at www.benihana.com/company_profile.asp


Benihana Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Unaudited)
(in thousands except per share data)
Four Periods Ended $ %
20-Jul-08 22-Jul-07 Change Change
Revenues
Restaurant sales $93,925 $89,369 $4,556 5.1%
Franchise fees and royalties 535 566 (31) -5.5%
Total revenues 94,460 89,935 4,525 5.0%
Costs and Expenses
Cost of food and beverage sales 22,600 21,035 1,565 7.4%
Restaurant operating expenses 58,920 52,597 6,323 12.0%
Restaurant opening costs 735 709 26 3.7%
Marketing, general
and administrative expenses 8,776 9,026 (250) -2.8%
Total operating expenses 91,031 83,367 7,664 9.2%

Income from operations 3,429 6,568 (3,139) -47.8%
Interest (expense) income, net (56) 25 (81) -324.0%
Income before income taxes 3,373 6,593 (3,220) -48.8%
Income tax expense 1,181 2,387 (1,206) -50.5%

Net income 2,192 4,206 (2,014) -47.9%
Less: accretion of issuance costs
and preferred stock dividends 334 334 - 0.0%
Net income attributable
to common stockholders $1,858 $3,872 $(2,014) -52.0%

Earnings Per Share
Basic earnings per common share $ 0.12 $ 0.26 $(0.14) -53.8%
Diluted earnings per common share $ 0.12 $ 0.25 $(0.13) -52.0%

Weighted Average Shares Outstanding
Basic 15,279 15,013 26 1.8%
Diluted 18,595 17,010 1,585 9.3%

Benihana Inc. and Subsidiaries
Sales by Concept
(Unaudited)
(in thousands)
Four Periods Ended $ %
20-Jul-08 22-Jul-07 Change Change
Total restaurant sales by concept:
Benihana $64,233 $65,514 $(1,281) -2.0%
RA Sushi 17,803 13,450 4,353 32.4%
Haru 11,889 10,405 1,484 14.3%
Total restaurant sales $93,925 $89,369 $4,556 5.1%
Comparable restaurant sales by concept:
Benihana $57,561 $59,594 $(2,033) -3.4%
RA Sushi 12,231 13,450 (1,219 -9.1%
Haru 9,607 10,405 (798) -7.7%
Total comparable restaurant sales $79,399 $83,449 $(4,050) -4.9%

Benihana Inc. and Subsidiaries
Restaurant Operating Profit
(Unaudited)
(in thousands)
Four Periods Ended $ %
20-Jul-08 22-Jul-07 Change Change
Restaurant sales $93,925 $89,369 $4,556 5.1%
Cost of food & beverage sales 22,600 21,035 1,565 7.4%
Gross profit 1,325 68,334 2,991 4.4%
Restaurant operating expenses:
Labor and related costs 33,606 29,865 3,741 12.5%
Restaurant supplies 2,295 2,036 259 12.7%
Credit card discounts 1,795 1,653 142 8.6%
Utilities 2,727 2,247 480 21.4%
Occupancy costs 5,811 5,461 350 6.4%
Depreciation and amortization 5,581 4,901 680 13.9%
Other restaurant operating expenses 7,105 6,434 671 10.4%
Total restaurant operating expenses 58,920 52,597 6,323 12.0%
Restaurant operating profit $12,405 $15,737 $(3,332) -21.2%

Benihana Inc. and Subsidiaries
Restaurant Operating Margins
(Unaudited)
Four Periods Ended
20-Jul-08 22-Jul-07
Restaurant sales 100.00 % 100.00 %
Cost of food and beverage sales 24.06 % 23.54 %
Gross profit margin 75.94 % 76.46 %
Restaurant operating expenses:
Labor and related costs 35.78 % 33.42 %
Restaurant supplies 2.44 % 2.28 %
Credit card discounts 1.91 % 1.85 %
Utilities 2.90 % 2.51 %
Occupancy costs 6.19 % 6.11 %
Depreciation and amortization 5.94 % 5.48 %
Other restaurant operating expenses 7.56 % 7.20 %
Total restaurant operating expenses 62.73 % 58.85 %
Restaurant operating profit margin 13.21 % 17.61 %

Benihana Inc. and Subsidiaries
Balance Sheet Data
(Unaudited)
(in thousands)
20-Jul-08 30-Mar-08
Assets
Cash and cash equivalents $1,791 $1,718
Other current assets 16,941 17,897
Total current assets 18,732 19,615
Property and equipment, net 195,857 184,176
Goodwill 29,900 29,900
Other assets 9,422 7,963
$253,911 $241,654
Liabilities and Stockholders' Equity
Other current liabilities $35,172 $35,102
Total current liabilities 35,172 35,102
Long-term debt--bank 27,214 17,422
Other liabilities 12,323 12,065
Total liabilities 74,709 64,589
Convertible preferred stock 19,476 19,449
Total stockholders' equity 159,726 157,616
$253,911 $241,654


SOURCE: Benihana Inc.

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