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May 2, 2019
Hajime Uba
Chairman and Chief Executive Officer
Kura Sushi USA, Inc.
17932 Sky Park Circle, Suite H
Irvine, CA 92614
Re: Kura Sushi USA, Inc.
Draft Registration Statement on Form S-1
Submitted April 5, 2019
CIK No. 0001772177
Dear Mr. Uba:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-1
Additional Financial Measures and Other Data, page iv
1. As cash-on-cash return includes in its computation the non-GAAP measure
of
"Restaurant-level Adjusted EBITDA," it appears it is a non-GAAP
financial measure that
should be described as such. Please revise your disclosure as
appropriate. Also, provide
with equal or greater prominence the most directly comparable GAAP
measure.
Reference is made to Item 10(e)(1)(i)(A) and (2) of Regulation S-K.
2. You state in the last paragraph that "cash-on-cash return" is a widely
used metric in the
restaurant industry. To the extent your calculation of this metric
differs from that
commonly used in the industry, please explain these differences here as
well as any
material underlying assumptions. Also address specific limitations on
comparability, such
Hajime Uba
Kura Sushi USA, Inc.
May 2, 2019
Page 2
as the number of restaurants included in a particular period or the
fact that all of your
locations are leased.
Prospectus Summary
Overview of Kura Shushi USA, page 1
3. Refer to the fourth paragraph following the bar graph on page 2.
Please substantiate that
your cash-on-cash return for fiscal year 2017 restaurant openings "is
among the highest of
publicly listed casual dining companies."
Our Strengths, page 2
4. On page 4 and where ever else presented please disclose with equal or
greater prominence
the comparable GAAP measure to the non-GAAP measure "restaurant-level
adjusted
EBITDA margin" pursuant to Item 10(e)(1)(i)(A) of Regulation S-K.
Summary Historical Financial and Operating Data
Key Financial and Operational Metrics, page 12
5. On page 15 you present a reconciliation of the non-GAAP measure
"restaurant-level
adjusted EBITDA" that is ultimately reconciled to consolidated net
income. It appears
this measure is not indicative of overall company performance and
profitability in that this
measure does not accrue directly to the benefit of shareholders due to
the nature of the
costs excluded, such as depreciation and amortization, general and
administrative,
preopening costs/rent expense and non-cash rent expense. It appears
the reconciliation of
this measure should begin with your most directly comparable GAAP
measure, such as
"operating income" reported in your statement of earnings. Such a
reconciliation appears
to be more representative of a restaurant level contribution to your
results, rather than to
net income which is an overall company measure. Please revise your
presentation
accordingly.
Risks Related to Ownership of Our Class A Common Stock
There may be an adverse effect on the value and liquidity of our Class A common
stock, page 34
6. Please clarify that future issuances of Class B common stock may be
dilutive to Class A
stockholders.
Risks Related to Our Organizational Structure
We are controlled by Kura Corporation, whose interests may differ from those of
our other
stockholders, page 37
FirstName LastNameHajime Ubacontext by disclosing the percentage of outstanding
shares that
7. Please place these risks in
Comapany NameKura Sushi USA, Inc.
Kura Corporation must keep to continue effectively to control the
outcome of matters
May 2,submitted to stockholders.
2019 Page 2
FirstName LastName
Hajime Uba
FirstName LastNameHajime Uba
Kura Sushi USA, Inc.
Comapany NameKura Sushi USA, Inc.
May 2, 2019
May 2, 2019 Page 3
Page 3
FirstName LastName
The corporate opportunity provisions in our amended and restated certificate of
incorporation
could enable Kura Corporation to benefit, page 39
8. Please put this risk factor into context by disclosing the number or
percentage of your
officers and directors who fit into each of the three categories in
bullet point in this risk
factor.
Capitalization , page 43
9. Please revise to exclude the amount of cash and cash equivalents from
the amount of
"total capitalization."
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview, page 51
10. Please describe any known trends or uncertainties that have had, or
that you reasonably
expect will have, a material favorable or unfavorable impact on
revenue or results of
operations. We note by way of example that your discussion of
"honeymoon period" and
cash-on-cash return appears limited to the three restaurants opened in
fiscal year 2017.
Also address the reasons for the variance in comparable restaurant
sales growth
percentage. Refer to Item 303(a) of Regulation S-K and Section
III.B.3. of Release No.
33-8350.
Business, page 65
11. We note your statement in several places in the document that you
believe you have an
opportunity to grow your restaurant base to over 290 restaurants in
the United States.
Please clarify the time period by which you expect you might grow to
over 290
restaurants. In this regard, we note that you have added three to four
restaurants each year
between 2015 and today, with a total of 21 restaurants open currently.
Management, page 81
12. Please provide the disclosure required by Item 407(c) of Regulation
S-K, including
whether you consider diversity in identifying nominees for director
and whether you have
a policy with regard to consideration of diversity in identifying
director nominees. If so,
describe how this policy is implemented and how the board assesses its
effectiveness.
Refer to Item 407(c)(2)(vi) of Regulation S-K and, for guidance,
Regulation S-K
Compliance and Disclosure Interpretation 116.11.
Description of Capital Stock
Class B Common Stock, page 97
13. Please clarify whether there are any "sunset" provisions that limit
the lifespan of the Class
B common stock or would require conversion other than as described on
page 98.
Hajime Uba
Kura Sushi USA, Inc.
May 2, 2019
Page 4
Index to Financial Statements, page F-1
14. Please update the financial statements included in the filing pursuant to
Rule 3-12 or Rule
8-08 of Regulation S-X, as appropriate. In connection with this, update
all financial
information throughout the filing as appropriate to include the latest
period presented in
the filing.
You may contact Beverly Singleton, Staff Accountant, at (202) 551-3328
or Doug Jones,
Staff Accountant, at (202) 551-3309 if you have questions regarding comments on
the financial
statements and related matters. Please contact J. Nolan McWilliams,
Attorney-Advisor, at (202)
551-3217 or Anne Nguyen Parker, Assistant Director, at (202) 551-3611 with any
other
questions.
Sincerely,
FirstName LastNameHajime Uba
Division of
Corporation Finance
Comapany NameKura Sushi USA, Inc.
Office of
Transportation and Leisure
May 2, 2019 Page 4
cc: Aaron Seamon
FirstName LastName