What was the impact of the purchase of treasury stock on Benihana's equity in 2022?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
e ONE Group Hospitality, Inc. | $ | 4,718 | $ | 13,534 | | Currency translation loss | | (61) | | (224) | | Comprehensive income attributable to The One Group Hospitality, Inc. | $ | 4,657 | $ | 13,310 | | | | | | | | Net income attributable to The ONE Group Hospitality, Inc. per share: | | | | | | Basic net income per share | $ | 0.15 | $ | 0.42 | | Diluted net income per share | $ | 0.15 | $ | 0.40 | | | | | | | | Shares used in computing basic income per share | | 31,556,437 | | 32,400,515 | | Shares used in computing diluted income per share | | 32,287,864 | | 33,871,797 | | | | | | |
THE ONE GROUP HOSPITALITY, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (in thousands, except share information)
| Common stock Shares Par value | Treasury stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive Stockholders' loss | equity | Noncontrolling interests | Total | ||
|---|---|---|---|---|---|---|---|---|---|
| Balance at January | 32,125,762 | $ 3 | $ (37) | $ 53,481 | $10,632 | $ (2,645) | $ 61,434 | $ (909) | $60,525 |
| 1, 2022 | |||||||||
| Stock-based | 40,573 | — | — | 3,985 | — | — | 3,985 | — | 3,985 |
| compensation | |||||||||
| Exercise of stock | 65,000 | — | — | 138 | — | — | 138 | — | 138 |
| options and | |||||||||
| warrants | |||||||||
| Issuance of | 586,026 | — | — | (2,021) | — | — | (2,021) | — | (2,021) |
| vested restricted | |||||||||
| shares, net of tax | |||||||||
| withholding | |||||||||
| Purchase of |
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the purchase of treasury stock in 2022 had a negative impact on the company's equity. Specifically, the treasury stock decreased the total stockholders' equity by $7,132. This is reflected in the balance sheet where treasury stock is listed as a reduction from the overall equity.
In September 2022, Benihana's Board of Directors authorized a stock purchase program of up to $10.0 million of outstanding common stock. As of December 31, 2022, Benihana had repurchased 1,081,938 shares for $7.1 million under the program. The balance of treasury stock at January 1, 2022 was ($37), and the purchase of treasury stock during 2022 was ($7,132), resulting in a balance at December 31, 2022 of ($7,169).
For a prospective franchisee, this indicates that Benihana is actively managing its stock and investing in itself, which can be seen as a positive sign of financial health and confidence in the company's future. However, it's important to note that such stock repurchases use company funds that could potentially be used for other investments or operational improvements. Therefore, franchisees should consider this as part of their overall assessment of Benihana's financial strategy and stability.