Note 3 – Benihana Acquisition

On May 1, 2024, the Company acquired 100% of the issued and outstanding equity interests of Safflower Holdings Corp. and its affiliates comprising of 93 company owned restaurants and 12 franchised restaurants. The Company purchased the equity for a contractual price of $365.0 million, subject to customary adjustments. The Company believes that Benihana is complementary to its existing brands and will enable the Company to capture market share in the Vibe Dining segment.

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The assets and liabilities of Benihana were recorded at their respective fair values as of the date of acquisition. Since the initial valuation, the Company adjusted the fair values for cash and cash equivalents by ($0.1) million, other current assets by $0.2 million, property and equipment by ($0.5) million, operating lease right-of-use assets by $1.2 million, deferred tax assets by $3.5 million, intangible assets by ($13.1) million, goodwill by $10.6 million, accrued expenses by $1.2 million, other current liabilities by ($1.7) million, and operating lease liabilities by $1.2 million to reflect the current fair value valuation and alignment with the Company’s accounting policies. The fair values are set forth below (in thousands):

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The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill at Benihana. The portion of the purchase price attributable to goodwill represents benefits expected because of the acquisition, including sales and unit growth opportunities in addition to supply-chain and support-cost synergies. The Benihana and RA Sushi tradenames have an indefinite life based on the expected use of the asset and the regulatory and economic environment within which it is being used. The tradenames represent highly respected brands with positive connotations, and the Company intends to cultivate and protect the use of the brands. Goodwill and indefinite-lived tradenames are not amortized but are reviewed annually for impairment or more frequently if indicators of impairment exist. Goodwill is not deductible for tax purposes as the Benihana Acquisition was a stock transaction.

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As a result of the Benihana Acquisition, the Company incurred approximately $8.8 million of transaction costs during 2024, which are included in transaction and exit costs in the consolidated statements of operations. The Company incurred $13.7 million for transition and related integration efforts in 2024. Since the acquisition date, the Benihana Acquisition resulted in actual revenues of $339.7 million and net loss of $4.5 million in the consolidated statements of operations. The net loss that resulted from the Benihana Acquisition is primarily due to the allocation of interest expense, transaction, transition and integration expenses.

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The following unaudited pro forma results of operations for December 31, 2024 and 2023 give effect to the Benihana Acquisition as if it had occurred on January 1, 2023 (in thousands):

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(1) Purchase price accounting adjustments include the elimination of Benihana's impairment charges and changes to depreciation

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The most significant adjustments included in the pro forma financial information are the elimination of the release of Benihana’s valuation allowance, elimination of Benihana’s impairment charges, movement of transaction, transition, integration and debt extinguishment costs, and increased interest expense associated with debt incurred to fund the Benihana Acquisition, all giving effect as if the acquisition had occurred on January 1, 2023.

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In the opinion of the Company’s management, the unaudited pro forma financial information includes all significant necessary adjustments that can be factually supported to reflect the effects of the Benihana Acquisition and related transactions. The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of what actual results of operations would have been had the Benihana Acquisition and related transactions been completed as of January 1, 2023 or that may be achieved in the future.

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