Attached files
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| 8-K - FORM 8-K - Simplicity Bancorp, Inc. | t71396_8k.htm |
Exhibit 99.1
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Pursuant to Rule 425 under the Securities
Act of 1933 and deemed filed pursuant to
Rule 14a-6 of the Securities Exchange Act
of 1934
Subject Company: Benihana Inc.
Registration Statement File No.: 333174815
Presentation
August 18, 2011
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Forward-Looking Statements
Statements made in this presentation, other than those concerning historical financial information, may be considered “forward-looking
statements,” which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and based upon
current expectations, involving a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from
such forward-looking statements. In view of such uncertainties, recipients should not place undue reliance on our forward-looking
statements. Such statements speak only as of the date of this presentation, and we undertake no obligation to update any forward-looking
statements made herein. Factors that could cause actual results to differ materially from management’s expectations include, without
limitation: (i) general economic conditions and disruptions in the global credit and equity markets, (ii) competition in the restaurant industry,
(iii) ability to achieve expected results, (iv) changes in food and supply costs, (v) increases in minimum wage, (vi) rising insurance costs, (vii)
fluctuations in operating results, (viii) challenges to continued growth, (ix) access to sources of capital and the ability to raise capital, (x)
issuances of additional equity securities, (xi) ability to construct new restaurants within projected budgets and time periods, (xii) ability to
renew existing leases on favorable terms, (xiii) further deterioration in general economic conditions and high unemployment, (xiv) availability
of qualified employees, (xv) ability to implement our growth strategies, including the Renewal Program and marketing programs, (xvi) ability
to retain key personnel, (xvii) litigation, ability to comply with governmental regulations, (xviii) changes in financial accounting standards, (xix)
ability to establish, maintain and apply adequate internal control over financial reporting and (xx) effect of market forces on the price of our
stock. This list of factors is not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that would impact our
business. In addition to the risks and uncertainties set forth above, recipients 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.
On June 9, 2011, Benihana Inc. filed with the Securities and Exchange Commission a Registration Statement on Form S-4, which has since been
declared effective by the Securities and Exchange Commission. The Registration Statement on Form S-4 contains a proxy
statement/prospectus which describes the proposed recapitalization. STOCKHOLDERS OF BENIHANA INC. ARE ADVISED TO READ THE PROXY
STATEMENT/PROSPECTUS, BECAUSE IT CONTAINS IMPORTANT INFORMATION. Such proxy statement/prospectus and other relevant
documents may be obtained, free of charge, on the Securities and Exchange Commission's website (http://www.sec.gov) or from Benihana
Inc. by contacting Cristina Mendoza, General Counsel and Secretary, by telephone at (305) 593-6770 or by email at
http://www.benihana.com.
Benihana Inc. and certain persons may be deemed to be participants in the solicitation of proxies relating to the proposed recapitalization. The
participants in such solicitation may include Benihana Inc.'s executive officers and directors. Further information regarding persons who may
be deemed participants is available in Benihana Inc.'s proxy statement/prospectus.
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Overview: Our Strategy for Continuing to Enhance Stockholder Value
PreparefornewrestaurantdevelopmentContinueenhancingbackofficeefficiencyContinuedrivingRenewalPrograminitiativestofurtherimproveestaurantmarginsandtrafficProposedsimplificationofstockstructureandeliminationofcurrentstockholderrightsplan
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Stockholders Have a Simple Choice
Support Benihana of Tokyo, Inc. (BOT) and its self-interested objective of
protecting its 26.7% voting position
OR
Enable the company to continue its significant progress by taking steps that
would create stockholder value
•Over a period of years, BOT has consistently opposed the Company’s proposals. Their opposition has been without
merit and scare tactics have proven to be unfounded
•The Company has been making strong progress and delivering against its operational plan (which BOT had also
opposed)
•The dual-class structure has been an overhang on the Company’s stock price. Reclassification will help address
concerns about liquidity of stock and align economic and voting interests
•The proposed Reclassification will also provide the flexibility to realize strategic opportunities in light of favorable
sector macro trends
•The proposed Reclassification is in the best interest of ALL stockholders
That is the critical issue; BOT’s attempt to divert focus onto BFC is a red herring:
BFC’s voting stake will be diluted by the reclassification, and yet it voted in favor of the proposal
The series B Preferred shares have no veto over strategy, day-to-day operations or matters other than customary
public preferred stock veto rights over fundamental corporate changes
BOT’s attempt to impugn BFC’s portfolio simply ignores BNHN’s business progress and stock price appreciation as the
Renewal Plan under this leadership has gained momentum
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Company Summary
• NASDAQ GS: BNHN and BNHNA
• Founder Rocky Aoki introduced Japanese food to America in 1965
• Now, leading operator of Japanese theme and sushi restaurants
• Famous for entertaining chefs who present and prepare delicious Teppanyaki entrees at hibachi tables, as
well as sushi and other Japanese favorites
• 96 restaurants nationwide, including 63 Benihana restaurants, eight Haru sushi restaurants, and 25 RA Sushi
restaurants
• 18 franchised Benihana restaurants in the United States, Latin America and the Caribbean
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Company is Making Measurable Progress in Driving Business
• Renewal Program is working
– Nineteen consecutive four-week periods of comparable store sales growth and six consecutive quarters of
revenue growth
– Comprehensive refocusing of enterprise to best practices in every facet of operations, marketing and
organization
• Continuation of Renewal Program initiatives to further strengthen performance, including:
– Improve back office efficiency
– Expand The Chef’s Table and better track members’ redemption and spending patterns
• Management team continues to be strengthened
– Team of proven executives with decades of sector experience
– Industry veteran David Flanery hired as permanent CFO
• Company preparing for new restaurant development
– Market study to optimize site selection
– New restaurant design with reduced construction budget and same number of Teppanyaki tables
– Analyzing ways to unlock the value of our real estate portfolio
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The Renewal Program
FoodQuality,ConsistencyandCreativityGuestExperienceOperationalAccountabilityCorporateandFinancialControls
• Reintroduced higher
quality food
• No entrée menu price
increases until April
2011, when commodities
pressures forced
increases
• Upgraded wine and
beverage program
• Improved alcohol mix
• Centralized purchasing
and reduced SKUs from
8,240 to 725
• Partnered with Iron Chef
Hiroyuki Sakai
• Retrained staff in cooking
techniques and steps of
service
• Improved Retail Eyes
mystery shopper scores
• Improved health and
sanitation scores/
Everclean
• Initiated The Chef’s Table
and Kabuki Kids
programs
• Addressed deferred
maintenance
• Appointed industry
veteran Chris Ames to
COO position
• Recruited experienced
regional management
• Promoted Toshiya
Nemoto to Executive
Chef
• Created general manager
position
• Established competitive
benefit programs and
incentive plans
• Standardized job
descriptions
• Reduced corporate
headcount to 50
• Outsourced certain
accounting and finance
functions
• Initiated manager P&L
responsibility
• Improved labor
management and
reduced overtime hours
• Improved store-level
operating margins
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Experienced Management Team
NameTitleIndustryExperienceTimeatBenihanaInc.
Richard Stockinger President, Chief Executive Officer and Chairman of the Board of Directors 26 years 2 years
Chris Ames Chief Operating Officer 25 years 2 years
David Flanery Chief Financial Officer 17 years New
Scott Kilpatrick Vice President of Operations, RA Sushi 15 years 9 years
Seth Rose Vice President of Operations, Haru 15 years 10 years
Joseph Abbruzese Vice President of Construction 22 years 5 years
Kevin Connolly Vice President of Purchasing and Distribution 19 years 3 years
Jeannie Means Vice President of Marketing 5 years 5 years
Source: Company information.
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Marketing Strategy for Benihana Teppanyaki
• Comprehensive customer research project completed in 2010
– Gathered information on customer base
– Refined marketing strategy to better target consumers
– Identified creative ways to deliver the Company’s
marketing message and further expand brand
• Developed and implemented new marketing programs
– The Chef’s Table –1.8 million members as of July 2011
– Kabuki Kids – 220,000 members as of July 2011
– Chef’s Specials
• In November 2010, changed redemption of The Chef’s Table to
Monday-Thursday only, driving weekday traffic
• Advertising building brand awareness
• Local store marketing initiatives
• Social Media
– Facebook –over 90,000 fans as of July 2011
– Twitter –over 3,800 followers as of July 2011
– You Tube –over 157,000 channel views as of July 2011
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Impact of the Renewal Program
• The Renewal Program introduced during Q2 2010 is driving increases in comparable store sales and guest traffic
• Higher quality food, an enhanced beverage program and Chef’s Specials have contributed to meaningful
increases in sales
• Newly renovated restaurants and popular marketing programs including The Chef’s Table and Kabuki Kids have
resulted in positive traffic trends
Benihana Comparable Store Sales and Traffic
Source: Company information.
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Proposed Structural Changes in the Best Interest of ALL stockholders
Reclassification Proposal
• Each share of Class A Common Stock to be reclassified as and changed into one share of Common Stock
• Class of Class A Common Stock eliminated
• Increase in number of authorized shares of Common Stock to a number less than pre-Reclassification
number of total authorized shares of all classes of common stock
• Impact of Reclassification on major stockholders:
What is the opposition really based on –fear of voting power dilution?
Source: S-4 Statement. Figures in table taken from that filing (7/29/2011) and reflect the record date of 7/18/2011
1. BFC beneficially owns 500,000 shares of Series B Preferred Stock having the right to 986,582 votes when voting with all classes of stock.
2. Andreeff Equity Advisors L.L.C. beneficially owns 587,955 shares of Class A Common Stock having the right to 58,796 votes when voting with all
classes of stock. Andreeff Equity Advisors L.L.C. disclaims beneficial ownership in the shares except to the extent of its pecuniary interest therein.
3. Excludes 3,333 shares issuable on the exercise of outstanding stock options.
4. Coliseum Capital Management, LLC beneficially owns 1,843,883 shares of Class A Common Stock having the right to 184,388 votes when voting with
all classes of stock. Coliseum Capital Management, LLC disclaims beneficial ownership in the shares except to the extent of their pecuniary interest
therein.
5. RBC Global Asset Management (U.S.) Inc. beneficially owns 1,100,781 shares of Class A Common Stock having the right to 110,078 votes when voting
with all classes of stock.
6. Ameriprise Financial, Inc. beneficially owns 976,706 shares of Class A Common Stock. Ameriprise Financial, Inc. disclaims beneficial ownership in the
shares.
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Rationale for Proposed Structural Changes
Reclassification Proposal
• Removes overhang by adoption of a corporate governance “best practice”
– ISS “supports a ‘one-share, one-vote’ voting structure at publicly traded companies” (ISS Report on
Aaron’s Inc., 11/17/2010)
– Charles Elson, Weinberg Center for Corporate Governance at the University of Delaware: "I think
investors should think about steering clear of [a dual-class] structure,“ (Smart Money, August 1, 2011)
• Improved liquidity and enhanced quality of trade execution
– The mean and median of the change in average daily trading volume for selected reclassifications
reviewed by Company’s independent financial advisers a year after the companies reclassified
reflected an increase in trading volume
– Supports facilitating enhanced liquidity for stockholders by aggregating the volume of common shares
traded
– Allows investors to buy and sell larger positions with less impact on the stock price
– ISS concludes that “research suggests that companies with dual-class capital structures… often trade at
a discount to similar companies without such structures.” (ISS, Governance Risk Indicators, March 10,
2010)
• Alignment of voting rights with economic ownership
– Eliminates current right of holders of Class A Common Stock, voting separately as a class, to elect 25%
of Board
– Company believes Reclassification may therefore make Common Stock a more attractive investment
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Rationale for Proposed Structural Changes
Reclassification Proposal, ctd
• Increased attractiveness to institutional investors
– Will address complexity and liquidity concerns of institutional investors, and will allow our common
shares to be held by certain institutional investors whose policies do not permit investments in dual-
class companies
• Elimination of investor confusion and improved transparency
– Reclassification would simplify capital structure and eliminate potential investor confusion as to
calculation of company’s total market capitalization, shares outstanding and earnings per share
• Increased flexibility for strategic opportunities
– Simplified structure could provide increased flexibility to structure acquisitions and equity financing by
using equity as acquisition currency, and for possible future offerings of capital stock to potential
investors
Elimination of Stockholder Rights Plan if Reclassification becomes Effective
• Originally implemented to protect stockholders from unfair tactics by a single leading stockholder or group,
which protection continues post-strategic process
• With reclassification and resulting diversification of stockholder base, it is now in stockholders’ best
interests to eliminate the Rights Plan
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Proposed changes are stockholder friendly; stated objections do not
stand up to scrutiny
Points raised in BOT 14A filing
and 8/14/2011 letter
Facts
Dual Class structure would still exist
post‐approval of Reclassification
The Series B Preferred Stock does not publicly trade and is treated as a convertible debt
instrument for accounting purposes. In addition, the Series B Preferred Stock generally has
the same voting rights as Common Stock (eliminating voting power discrepancies among
stockholders)
BFC, the holder of Series B Preferred Stock, will have its total voting power diluted through
the Reclassification from 19.6% to 9% ‐‐ and is committed to voting in favor
Liquidity issues likely to exist post‐
Reclassification; Investor relations
program could better address liquidity
problem
The mean and median of the change in average daily trading volume for selected
reclassifications reviewed by Benihana’s independent financial advisers a year following
reclassification reflected an increase in trading volume
Benihana has launched an aggressive IR program already, including meetings with sell‐side
analysts, conference calls with the financial community to review earnings, and scheduled
conference presentations. As demonstrated by the Sidoti report, however, concerns over
governance ‐ that the Company believes the Reclassification will ameliorate ‐ appear to be
diluting the impact of the IR program
Company’s grants of Class A shares to
executive officers in past six months
The grants of restricted stock to management equals only 3.7% (approximately) of total
shares outstanding as of August 17, 2011, reflecting levels below the industry standard
The majority of these restricted stock grants are linked to performance and include
restricted stock that vest at a share price of up to $20
Extension of Stockholder Rights Plan
post‐strategic process without
stockholder vote
The Plan was originally implemented to protect stockholders from unfair tactics by a single
leading stockholder or group, which protection continues post‐strategic process. However,
if reclassification becomes effective, with resulting diversification of stockholder base, it is
now in stockholders’ best interests to eliminate the Rights Plan
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Proposed changes are stockholder friendly; stated objections do not
stand up to scrutiny
Points raised in BOT 14A filing
and 8/14/2011 letter
Facts
Process for approving Reclassification
and role of BFC in the process
The Reclassification proposal was voted upon by the entire Board, including those directors
nominated by BOT. None of the directors voted against recommendation
Independent financial adviser engaged for the purpose of evaluating proposal. Benihana
has significantly less trading liquidity than that of its peers and the mean and median of the
change in average daily volume for selected reclassifications reviewed a year after
companies reclassified dual‐class common shares reflected an increase in trading volume
BFC will have its total voting power diluted through the Reclassification from 19.6% to 9% ‐‐
and is committed to voting in favor
Coliseum, the only significant stockholder on the Board whose voting position would
increase as a result of the Reclassification proposal, abstained from voting
Company choosing to move the
record date to accommodate
stockholder(s)
In fact, the change to special meeting date and thus record date was wholly the direct
result of the length of time involved in the process of clearing the Registration Statement
through the SEC
Need for Special Meeting given
proximity of this year’s annual
meeting
Complexity of annual meeting and potential for stockholder confusion grows significantly if
stockholders are asked to vote on reclassification at the same time as also voting on
potential director nominees for two different scenarios – depending on whether
reclassification is successful
Special meeting confers no advantage nor disadvantage to company or any particular
stockholder in terms of vote
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The opposition to company’s proposal is part of a well-worn pattern
• BOT has a consistent track record of opposition to the Company’s actions:
– Repeated and ongoing disagreements at Board level with operational improvements
– Opposed successful proposal to increase authorized common stock in 2010, citing fears of a “negative
impact on current stockholders” (BOT 13D/A filing, 1/27/2010)
– Mounted proxy contest to director nominees in 2010
– Filed litigation challenging ownership of Benihana brand name in 2011, during the strategic process ,
affecting potential buyers seeking to acquire the company
• BOT’s fears and allegations have repeatedly proven unfounded. In reality, the Board and management have
been strong stewards of value for stockholders:
– BNHN share price on 1/27/10: $4.73; BNHN share price on 8/15/2011: $7.70
– Both shares of Common Stock and Class A Common Stock have significantly appreciated in value since
the proposal to increase common stock was approved in 2010
– Company has delivered nineteen consecutive four-week periods of comparable store sales growth and
six consecutive quarters of revenue growth
– The Board, having received stockholder approval for issuance of 12.5 million shares, acted judiciously
based on its evaluation of market conditions and the strategic opportunities available and did not issue
additional shares. Notably, the 625,000 restricted stock grants issued to management were granted
under the Equity Plan and were unrelated to the 12.5M increase in authorized shares
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Our Strategy for Continuing to Enhance stockholder Value
PreparefornewrestaurantdevelopmentProposedsimplificationofstockstructureandeliminationofcurrentstockholderrightsplanContinuedriingRenewalPrograminitiativestofurtherimproverestaurantmarginsandtrafficContinueenhancingbackofficeefficiency
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Additional Information
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Competitive Advantages
Tremendous portfolio of brands with unique positioning
Experienced management team driving continued improvements
Success of Benihana Teppanyaki Renewal Program continues to generate positive momentum
Benihana Teppanyaki is an iconic category defining brand
Industry environment plays to all three brand propositions
Industry leader in comparable store sales
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Historical Financial Summary
• The Company has grown revenue and guest count despite macroeconomic challenges
• The Company possesses an extremely healthy store base
BenihanaInc.TotalRevenue
($Millions)
FY FY FY FY
2008 2009 2010 2011
$297 $306 $314 $328 $200 $250 $300 $350+ 2.9%
+ 2.6%
+ 4.5%
Source: Company information.
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Balance Sheet as of March 27, 2011
• The Company maintains a strong balance sheet and substantial liquidity position
• Conservative financial profile defined by no borrowings on our credit facility on August 15, 2011 (compared with a
high of at $35.2M as of 11/8/09) and growing cash and liquidity position
• Completed an amended and restated credit agreement that provides us with continued access to our existing
secured revolving credit facility through February 10, 2014, with an initial aggregate principal amount of $30
million and an option to increase the principal amount by $5 million to $35 million, subject to certain conditions
($ Thousands)
Assets Liabilities, Convertible Preferred
Current Assets: Stock and Stockholders’ Equity
Cash and cash equivalents Current Liabilities:
Other current assets
4,038
Borrowings under line of credit
-
11,133
Other current liabilities
Total current assets
15,171 33,467
Total current liabilities 33,467
Property and equipment, net
182,992
Goodwill Borrowings under line of credit 5,689
6,896
Deferred income tax asset, net Long term liabilities 15,293
15,823
Total assets Total liabilities 54,449
220,882
Source: Company information.
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Comparable Stores Sales
• Performance demonstrates strength of brands and tremendous upside
• Nineteen consecutive four-week periods of comparable store sales growth and six consecutive quarters of revenue growth
Annual Comparable Store Sales by Concept
Source: Company public filings.
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