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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended April 1, 2001
or,
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-26396
Benihana Inc.
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(Exact name of registrant as specified in its charter)
Delaware 65-0538630
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8685 Northwest 53rd Terrace, Miami, Florida 33166
-------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (305) 593-0770
--------------
Securities registered pursuant
to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $.10 per share
Class A Common Stock, par value $.10 per share
Preferred Share Purchase Right
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of June 22, 2001, 3,284,379 shares of Common Stock and 2,996,370 shares of
Class A Common Stock were outstanding, and the aggregate market value of the
common equity of Benihana Inc. held by non-affiliates was approximately
$46,425,954.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Portions of the Registrant's Annual Report to Stockholders for the year ended
April 1, 2001 are incorporated by reference in Parts I and II.
Portions of the Registrant's Proxy Statement for the Annual Meeting to be held
August 16, 2001 are incorporated by reference in Part III.
Item 1. General
Benihana Inc. ("the Company"), the leading operator of Japanese teppanyaki-style
restaurants in the United States, owned and operated 58 teppanyaki and sushi
restaurants and franchised 16 others at June 30, 2001. We have achieved 35
consecutive quarters of comparable quarter sales growth and customer count
increases. We attribute this success to (i) a well-established brand identity
supported by consistent marketing and promotional activities since the opening
of the first Benihana restaurant in 1964, (ii) growing consumer demand for a
dining experience that features a theme or entertainment component, (iii) the
Company's continued emphasis on quality and customer satisfaction, (iv)
Benihana's experienced management team, and (v) a healthy economy over the past
several years.
We own the exclusive rights to develop, operate or license Benihana restaurants
in the United States (subject to certain rights granted to Benihana of Tokyo,
Inc. ("BOT"), the corporate founder of the chain and a principal shareholder,
with respect to the State of Hawaii), Central and South America and the
Caribbean Islands. The Company also owns the exclusive rights to develop,
operate or license Sushi Doraku by Benihana and Haru restaurants worldwide.
A description of the Company-owned and licensed restaurants is set forth below
under "Properties".
Sales by the Company's owned restaurants were approximately $161,865,000 for the
fiscal year ended April 1, 2001, as compared to approximately $136,389,000 for
the prior fiscal year.
The Company is engaged in one business segment and operates with three Japanese
theme concepts; Benihana, Sushi Doraku by Benihana and Haru.
The Benihana Concept
The Benihana concept offers casual upscale dining in a distinctive Japanese
atmosphere enhanced by the unique entertainment provided by the Company's
highly-skilled Benihana chefs who prepare fresh steak, chicken and seafood in
traditional Japanese style at the customer's table. Most of the Company's
Benihana restaurants are open for both lunch and dinner. The restaurants have a
limited menu offering a full course meal consisting of an appetizer, soup,
salad, tea, rice, a vegetable and an entree of steak, seafood, chicken or any
combination of them. Specific menu items may be different in the various
restaurants depending upon the local geographic market. The servings are all
portion controlled to provide consistency in quantities served to each customer.
Alcoholic beverages, including specialty mixed drinks, wines, beers and soft
drinks, are available. The average check size per person was $23.35 in fiscal
2001. During fiscal 2001, beverage sales in both the lounges and dining rooms
accounted for approximately 17% of total restaurant sales. Sushi is offered at
all of the Company's traditional restaurants at either separate sushi bars or at
the teppanyaki grills.
An entire teppan table generally seats eight customers. The chef is assisted in
the service of the meal by the waitress or waiter who takes beverage and food
orders. An entire dinnertime meal takes approximately one hour and thirty
minutes.
We own and operate 51 Benihana restaurants. Of which 34 are located in
freestanding, special use restaurant buildings, six in shopping centers, and 11
in office or hotel building complexes. The freestanding restaurants were built
to the Company's specifications as to size, style and interior and exterior
decor. The other locations were adapted to the Benihana interior decor. The
free-standing, traditional Benihana restaurant units, which are generally one
story buildings, average approximately 8,000 square feet and are constructed on
a lot of approximately 1.25 to 1.50 acres. The shopping center, office building
and hotel-based Benihana restaurants are of similar size, but differ somewhat in
appearance from location to location in order to conform to the existing
buildings. A typical Benihana restaurant has 18 teppan tables. The Benihana
restaurants seat from 86 to 178 customers in the dining rooms and 8 to 120
customers in the bar lounge areas. We also own and operate a similar teppanyaki
restaurant under the name Samurai in Miami, Florida. See "Properties."
We anticipate opening three new Benihana restaurants in fiscal 2002, in addition
to the Benihana restaurant recently opened in June 2001 in Wheeling, Illinois.
The Sushi Doraku by Benihana Concept
The Sushi Doraku by Benihana concept offers sushi "kaiten" style. At a kaiten
bar, customers select their favorite sushi items from a continuously revolving
conveyor system. The average check size per person was $14.20 in fiscal 2001.
The first Sushi Doraku by Benihana is located in an entertainment complex. We
have three Sushi Doraku by Benihana restaurants in operation and we do not have
plans for expansion.
The Haru Concept
The Haru concept offers sushi as well as other certain Japanese dishes. Haru
also offers delivery and takeout which account for approximately 45% of the
total sales. The average check size per person was $27.92 in fiscal 2001. Two
Haru restaurants were operating in fiscal 2001, a third was opened in May 2001
and we anticipate that two additional restaurants will open in early fiscal
2002.
Restaurant Operations
Our restaurants are centrally managed by the Executive Vice President-Restaurant
Operations and are divided among seven geographic regions, each managed by a
regional manager. Food preparation in the restaurants is supervised by eight
regional chefs.
Each restaurant has a manager and one or more assistant managers responsible for
the operation of the restaurant, including personnel matters, local inventory
purchasing, maintenance of quality control standards, cleanliness and service.
We use various incentive compensation plans pursuant to which key restaurant
personnel share in the results of operations at both a local and company-wide
level.
Specific strict guidelines as documented in restaurant operations manuals are
followed to assure consistently high quality in customer service and food
quality from location to location. Operating specifications are used for quality
of ingredients, preparation of food, maintenance of premises and employee
conduct and are incorporated in manuals used by the managers, assistant managers
and head chefs. Food products and portion sizes are regularly and systematically
tested for quality and compliance with our standards. Certain seafood items are
purchased in bulk for most of the restaurants under which a certain quantity is
purchased at a specific price. Most of the other food products are purchased in
local markets. Substantially all of the restaurant operating supplies are
purchased centrally and distributed to the restaurants from our warehouse or one
of the two bonded warehouses.
The chefs are trained in the teppanyaki or sushi style of cooking and customer
service in training programs lasting from eight to twelve weeks. A portion of
the training is spent working in a restaurant under the direct supervision of an
experienced head chef. The program includes lectures on our method of restaurant
operations and training in both tableside and kitchen food preparation as
applied in its restaurants. Manager training is similar except that the manager
trainee is given in-depth exposure to each position in the restaurant. Other
categories of employees are trained by the manager and assistant manager at the
restaurant. Ongoing continuing education programs and seminars are provided to
restaurant managers and chefs to improve restaurant quality and implement
changes in operating policy or menu items.
Marketing
We utilize television, radio, billboard and print media to promote our
restaurants, strengthen our brand identity and maintain high name recognition.
The advertising programs are tailored to each local market and to print media
focused on the business traveler. The advertising program is designed to
emphasize the inherently fresh aspects of a Benihana meal and the entertainment
value of the food preparation at the table. In fiscal year 2001, we expended
$6.2 million on advertising and other marketing, approximately 3.8% of net
sales. The entertainment value of the Benihana method of food preparation and
service is emphasized to distinguish Benihana from other restaurant concepts.
Franchising
We have, from time to time, franchised experienced restaurant operators (such as
Hilton Hotels) in markets in which it considers expansion to be of benefit to
the Benihana system. We have begun to more aggressively pursue franchising
opportunities, particularly in foreign countries (Central and South America and
the Caribbean Islands) where we own the rights to the Benihana trademarks and
system.
Franchisees bear all direct costs involved in the development, construction and
operation of their restaurants. We provide franchisees support for site
selection, prototypical architectural plans, interior and exterior design and
layout, training, marketing and sales techniques and opening assistance. All
franchisees are required to operate their restaurants in accordance with
Benihana standards and specifications including menu offerings, food quality and
preparation.
The current standard franchise agreement provides for payment to us of a
non-refundable franchise fee of $30,000 to $50,000 per restaurant and royalties
of 3% to 6% of sales. In fiscal year 2001 revenues from franchising were
$1,378,000.
We presently franchise Benihana restaurants in Anchorage, Alaska; Austin and San
Antonio, Texas; Las Vegas and Reno, Nevada; Beverly Hills, California; Seattle,
Washington; Key West, Florida; Harrisburg, Pennsylvania; Milwaukee, Wisconsin;
Little Rock, Arkansas; Caracas, Venezuela; Lima, Peru and Aruba. To comply with
the terms of these franchise agreements entered into by the Company in the
United States, we are prohibited from opening additional restaurants within
certain areas in which the Company's existing franchises have the exclusive
right to open additional restaurants and operate their existing Benihana
restaurants. In general, such franchise agreements currently provide for an
initial payment to Benihana with respect to each new restaurant opened by a
franchisee and continuing royalty payments to the Company based upon a
percentage of a franchisee's gross sales from each such restaurant throughout
the term of the franchise.
We anticipate that two new franchised Benihana restaurants will open in fiscal
2002: one in Edison, New Jersey and the other in Caracas, Venezuela.
Trade Names and Service Marks
Benihana is Japanese for "red flower". In the United States, the "Benihana" and
"Benihana of Tokyo" names and "flower" logo, which management believes to be of
material importance to our business, are owned by us and are registered in the
United States Patent and Trademark Office and certain foreign countries. We also
own registered trademarks of Samurai, Kyoto brands and the "Sushi Doraku by
Benihana" concept. Additionally, we have filed an application to register the
Haru trademark.
Benihana of Tokyo, Inc. ("BOT"), a privately held company and originator of the
Benihana concept, continues to own the rights to the Benihana name and
trademarks outside of the United States, Central and South America and the
Caribbean Islands. BOT is a principal shareholder of the Company. We have no
financial interest in any restaurant operated by BOT.
Employees
At April 1, 2001, we employed 2,895 persons, of which 2,835 were restaurant
employees and 60 were corporate personnel. Most employees, except restaurant
management and corporate management personnel, are paid on an hourly basis. We
also employ some restaurant personnel on a part-time basis to provide the
services necessary during the peak periods of restaurant operations. We believe
our relationship with our employees is good.
Competition
The casual dining segment of the restaurant industry is expected to remain
intensely competitive with respect to price, service, location, and the type and
quality of food. Each of our restaurants competes directly or indirectly with
locally owned restaurants as well as regional and national chains, and several
of our significant competitors are larger or more diversified and have
substantially greater resources than the Company. It is also anticipated that
growth in the industry will result in continuing competition for available
restaurant sites as well as continued competition in attracting and retaining
qualified management-level operating personnel. We believe that our competitive
position is enhanced by offering quality food selections at an appropriate price
with the unique entertainment provided by our chefs in an attractive, relaxed
atmosphere.
Government Regulation
Each of our restaurants is subject to licensing and regulation by the health,
sanitation, safety standards, fire department and the alcoholic beverage control
authorities in the state or municipality where it is located. Difficulties or
failure in obtaining the required licensing or requisite approvals could result
in delays or cancellations in the opening of new restaurants; termination of the
liquor license for any Benihana restaurant would adversely affect the revenues
for the restaurant. While to date, we have not experienced any material
difficulties in obtaining and maintaining necessary governmental approvals, the
failure to obtain or retain, or a delay in obtaining food and liquor licenses or
any other governmental approvals could have a material adverse effect on our
operating results. Federal and state environmental regulations have not had a
material effect on our operations, but more stringent and varied requirements of
local governmental bodies with respect to zoning, land use and environmental
factors could delay construction of new restaurants.
We are also subject to federal and state regulations regarding franchise
offering and sales. Such laws impose registration and disclosure requirements on
franchisors in the offer and sale of franchises, or impose substantive standards
on the relationship between franchisee and franchisor.
The Americans with Disabilities Act (the "ADA") prohibits discrimination on the
basis of disability in public accommodations and employment. The ADA, which
mandates accessibility standards for individuals with physical disabilities,
increases the cost of construction of new restaurants and of remodeling older
restaurants.
We are also subject to the Fair Labor Standards Act, which governs such matters
as minimum wages, overtime, and other working conditions. A significant portion
of our food service personnel are paid at rates related to federal or state
minimum wage rates, and accordingly, increases in any such minimum wage will
increase our labor costs.
Management Information Systems
We provide restaurant managers with centralized financial and management control
systems through use of data processing information systems and prescribed
reporting procedures.
Each restaurant forwards sales reports, vendor invoices, payroll and other
operational data to the home office on a weekly and four-week period basis. We
utilize this information to centrally monitor sales, product, labor and other
costs and to prepare periodic financial and management reports. We believe that
our centralized accounting, payroll and human resources, cash management and
information systems improve its ability to control and manage its operations
efficiently.
Properties
Of the 58 restaurants we operate at June 30, 2001, six are owned and 52 are
leased pursuant to leases, which require either a specific monthly rental, or a
minimum rent and additional rent based upon a percentage of gross sales. In
addition there are three Benihana restaurants under construction in Santa
Monica, California, Irving, Texas and Westbury, New York and two Haru
restaurants under construction in New York City, New York. Generally, these
leases are "triple net" leases which pass increases in property operating
expenses, such as real estate taxes and utilities, through to the Company as
tenant. Expiration dates of these leases, including renewal options, range from
May 2001 to March 2027.
The following table sets forth the location of our owned restaurants:
Benihana, Sushi Approx. Approximate Seating
-------------------------------------------------
Doraku by Benihana Sq. Ft. of Dining Sushi Date
Or Haru Location Building Room Lounge Bar Opened
- ---------------------- -------- ---- ------ ---- ------
CALIFORNIA:
Benihana
2100 E. Ball Road
Anaheim (1) 8,710 160 67 36 March, 1980
Benihana
1496 Old Bayshore Hwy.
Burlingame (1) 8,740 160 99 27 February, 1978
Benihana
17877 Gale Avenue
City of Industry (1) 8,000 144 50 30 November, 1988
Benihana
1989 Diamond Blvd.
Concord (1) 8,250 144 84 18 February, 1980
Benihana
2074 Vallco Fashion Pk.
Cupertino (1) 7,937 144 45 8 July, 1980
Benihana
16226 Ventura Blvd.
Encino (2) 7,790 152 64 -0- October, 1970
Benihana
14160 Panay Way
Marina Del Rey (1) 4,840 96 66 6 March, 1972
Benihana
136 Olivier Street
Monterey (2) 4,856 112 33 9 June, 2000
Benihana
4250 Birch Street
Newport Beach (2) 8,275 144 72 26 March, 1978
Benihana
3760 E. Inland Empire Blvd.
Ontario (1) 7,433 144 8 20 December, 1998
Benihana
5489F Sunrise Blvd.
Citrus Heights
(Sacramento) (1) 3,798 88 8 5 October, 1995
Benihana
477 Camino Del Rio So.
San Diego (1) 7,981 144 68 23 May, 1977
Benihana
1737 Post Street
San Francisco (1) 7,990 140 45 -0- December, 1980
(1) Lease provides for minimum rent, plus additional rent based upon a
percentage of gross sales.
(2) Lease provides for fixed rent.
Benihana, Sushi Approx. Approximate Seating
-------------------------------------------------------
Doraku by Benihana Sq. Ft. of Dining Sushi Date
Or Haru Location Building Room Lounge Bar Opened
- ---------------------- -------- ---- ------ --- ------
Benihana
1447 4th Street
Santa Monica (1) 7,500 -0- -0- -0- under construction
Benihana
21327 Hawthorne Blvd.
Torrance (1) 7,430 128 63 28 May, 1980
COLORADO:
Benihana
3295 S. Tamarac Dr.
Denver (1) 7,572 128 82 10 February, 1977
DISTRICT OF COLUMBIA:
Benihana
3222 M Street, NW
Washington (2) 7,761 136 4 24 May, 1982
FLORIDA:
Sushi Doraku
300 S.W. 1st Avenue
Ft. Lauderdale (1) 3,700 N/A N/A 103 June, 1998
Sushi Doraku
1100 Lincoln Road
Miami Beach (1) 3,900 N/A N/A 64 June, 2000
Benihana
276 E. Commercial Blvd.
Ft. Lauderdale 8,965 160 70 -0- June, 1970
Benihana
8727 South Dixie Hwy.
Miami (2)
(Kendall) 8,700 122 66 15 March, 1989
Samurai
8717 S.W. 136th St.
Miami (1) 8,162 176 42 -0- October, 1981
Benihana
1665 N.E. 79th St.
Miami Beach 8,938 178 86 42 September, 1973
Benihana
1751 Hotel Plaza Blvd.
Lake Buena Vista (1)
(Orlando) 8,145 128 85 7 October, 1988
Benihana
3602 S.E. Ocean Blvd.
Stuart 8,485 160 69 57 February, 1977
(1) Lease provides for minimum rent, plus additional rent based upon a
percentage of gross sales.
(2) Lease provides for fixed rent.
Benihana, Approx. Approximate Seating
Sushi
-----------------------------------
Doraku by Benihana Sq. Ft. of Dining Sushi Date
or Haru Location Building Room Lounge Bar Opened
- --------------------- -------- ---- ------ --- ------
GEORGIA:
Benihana
2143 Peachtree Rd., NE
Atlanta [I] (2) 8,244 136 65 16 May, 1974
Benihana
229 Peachtree St. NE
Atlanta [II] (2) 6,372 115 34 11 April, 1981
ILLINOIS:
Sushi Doraku
1139 N. State St.
Chicago (1) 4,500 N/A N/A 71 August, 2000
Benihana
166 East Superior St.
Chicago (1) 7,288 144 9 45 April, 1968
Benihana
747 E. Butterfield Rd.
Lombard 9,200 168 51 -0- April, 1985
Benihana
1200 E. Higgins Road
Schaumburg 8,388 160 48 -0- July, 1992
Benihana
150 N. Milwaukee Ave.
Wheeling (2) 8,500 160 33 6 June, 2001
INDIANA:
Benihana
8830 Keystone Crossing Rd.
Indianapolis (1) 8,460 144 93 -0- February, 1979
KENTUCKY:
Benihana
1510 Lake Shore Court
Louisville (1) 7,572 128 88 -0- July, 1978
MARYLAND:
Benihana
7315 Wisconsin Ave.
Bethesda (1) 6,047 128 47 11 October, 1974
MICHIGAN:
Benihana
18601 Hubbard Dr.
Dearborn (1) 7,500 136 40 46 March, 1977
(1) Lease provides for minimum rent, plus additional rent based upon a
percentage of gross sales.
(2) Lease provides for fixed rent.
Benihana, Approx. Approximate Seating
Sushi
-----------------------------------
Doraku by Benihana Sq. Ft. of Dining Sushi Date
or Haru Location Building Room Lounge Bar Opened
- --------------------- -------- ---- ------ --- ------
Benihana
21150 Haggerty Rd.
Northville (2) 8,000 153 20 11 May, 1989
(Farmington Hills)
Benihana
1985 W. Big Beaver Rd.
Troy (1) 8,600 128 46 57 February, 1996
MINNESOTA:
Benihana
850 Louisiana Ave. So.
Golden Valley 10,400 192 45 -0- September, 1980
NEW JERSEY:
Benihana
840 Morris Turnpike
Short Hills (2) 11,500 144 56 56 October, 1976
Benihana
5255 Marlton Pike
Pennsauken (1) 7,000 136 93 10 February, 1978
(Cherry Hill)
NEW YORK:
Benihana
120 East 56th St.
New York (2) 3,859 86 24 -0- May, 1966
Benihana
47 West 56th St.
New York (2) 7,340 112 59 -0- June, 1973
Benihana
2105 Northern Blvd.
Munsey Park (1) 8,252 144 88 75 December, 1978
(Manhasset)
Benihana
920 Merchant's Concourse
Westbury (1) 7,400 -0- -0- -0- under construction
Haru
205 West 43rd Street
New York (2) 4,000 -0- -0- 119 May, 2001
Haru
1327 Third Ave.
New York (2) 2,200 -0- -0- -0- under construction
(1) Lease provides for minimum rent, plus additional rent based upon a
percentage of gross sales.
(2) Lease provides for fixed rent.
Benihana, Approx. Approximate Seating
Sushi
--------------------------------------------------------
Doraku by Benihana Sq. Ft. of Dining Sushi Date
or Haru Location Building Room Lounge Bar Opened
- --------------------- -------- ---- ------ --- ------
Haru
1329 Third Ave.
New York (2) 4,000 -0- -0- 78 December, 1999
Haru
433 Amsterdam Ave.
New York (2) 4,000 -0- -0- 74 December, 1999
Haru
280 Park Ave.
New York (2) 6,350 -0- -0- -0- under construction
OHIO:
Benihana
50 Tri-County Parkway
Cincinnati (1) 7,669 144 91 -0- June, 1978
Benihana
126 East 6th St.
Cincinnati (1) 5,800 112 30 -0- August, 1979
Benihana
23611 Chagrin Blvd.
Beachwood (1) 10,393 188 85 -0- May, 1973
(Cleveland)
OREGON:
Benihana
9205 S.W. Cascade Ave.
Beaverton (1) 6,077 112 54 34 August, 1986
PENNSYLVANIA:
Benihana
2100 Greentree Rd.
Pittsburgh (1) 8,000 150 84 -0- May, 1971
TENNESSEE:
Benihana
912 Ridgelake Blvd.
Memphis (1) 8,680 144 78 11 October, 1979
TEXAS:
Benihana
7775 Banner Dr.
Dallas (2) 8,007 160 115 -0- January, 1976
Benihana
3848 Oak Lawn Ave.
Dallas (1)
(Turtle Creek) 3,998 96 0 10 June, 1997
(1) Lease provides for minimum rent, plus additional rent based upon a
percentage of gross sales.
(2) Lease provides for fixed rent.
Benihana, Approx. Approximate Seating
Sushi
---------------------------------------------
Doraku by Benihana Sq. Ft. of Dining Sushi Date
or Haru Location Building Room Lounge Bar Opened
- --------------------- -------- ---- ------ --- ------
Benihana
1318 Louisiana St.
Houston [I] (2) 6,938 128 60 12 May, 1975
Benihana
Irving (2) 8,565 -0- -0- -0- under construction
Benihana
9707 Westheimer Rd.
Houston [II] (1) 7,669 144 120 10 November, 1977
Benihana
2579 Town Center Blvd.
Sugar Land (1) 3,800 96 0 17 July, 1997
UTAH:
Benihana
165 S.W. Temple, Bldg. 1
Salt Lake City (1) 7,530 120 72 10 April, 1977
(1) Lease provides for minimum rent, plus additional rent based upon a
percentage of gross sales.
(2) Lease provides for fixed rent.
The Company leases approximately 10,100 square feet of space for its general
administrative offices in Miami, Florida at an annual rental of $192,000 and
8,000 square feet for a warehouse in Miami, Florida at an annual rental of
$28,000. The leases expire May 31, 2009 and October 31, 2001, respectively.
Item 3. Legal Proceedings
-----------------
An action entitled Lixin Zhao v. Benihana Inc. was filed on February 21, 2001,
by a former employee in the United States District Court for the Southern
District of New York. The complaint also purports to be filed on behalf of other
unnamed current and former employees. The complaint sets forth a single claim
for alleged violations of the minimum wage provisions of the federal labor laws
relating to employee participation in "tip pools". Plaintiff seeks damages
consisting of the difference between the hourly wage that the plaintiff was paid
and the applicable federal minimum hourly wages. Should the plaintiff prevail
she and other current and former employees, to the extent any join the
litigation, may be awarded the liquidated damages provided by applicable federal
labor laws, and reasonable attorneys' fees and costs. The Company served an
answer to the complaint denying the material allegations made and intends to
vigorously defend the action. While the Company believes that the complaint has
no merit, this action is in its preliminary stages and there can be no assurance
that the Company will not be required to pay a material amount in the settlement
or other disposition of this matter.
Except for this matter, the Company is not a party to any litigation other than
routine claims which are incidental to its business.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
There were no matters submitted to a vote of security holders during the fourth
quarter.
PART II
Item 5. Market for the Company's Common Stock and Related Stockholder Matters
---------------------------------------------------------------------
The information required by this Item is incorporated herein by reference to
Page 28 of the Company's 2001 Annual Report to Shareholders.
Item 6. Selected Consolidated Financial Data
------------------------------------
The information required by this Item is incorporated herein by reference to
Page 1 of the Company's 2001 Annual Report to Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
---------------------------------------------------------------
The information required by this Item is incorporated herein by reference to
Pages 4 through 9 of the Company's 2001 Annual Report to Shareholders.
Item 7.A. Quantitative and Qualitative Disclosures About Market Risks
-----------------------------------------------------------
The information required by this item is incorporated herein by reference to
Page 9 of the Company's 2001 Annual Report to Shareholders.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
The information required by this Item is incorporated herein by reference to
Pages 10 through 26 of the Company's 2001 Annual Report to Shareholders.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
---------------------------------------------------------------
None.
PART III
Item 10. Directors and Executive Officers of the Company
-----------------------------------------------
Directors. The information appearing under the caption "Election of Directors"
on Pages 7 through 10 of the Company's Proxy Statement for its Annual Meeting of
Stockholders to be held on August 16, 2001 (the "Proxy Statement") is
incorporated herein by reference.
Item 11. Executive Compensation
----------------------
The information appearing under the caption "Executive Compensation" commencing
on Page 14 of the Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The information appearing under the caption "Security Ownership of Certain
Beneficial Owners of Management" on Pages 3 through 7 of the Proxy Statement is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
The information appearing under the captions "Certain Relationships and Related
Transactions" commencing on Page 16 of the Proxy Statement is incorporated
herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
---------------------------------------------------------------
(a) 1. Financial Statements:
The following consolidated financial statements of the Company
and its subsidiaries, which are set forth on Pages 10 through 26
of the Company's 2001 Annual Report to Shareholders included
herein as Exhibit 13, are incorporated herein by reference as
part of this report.
Consolidated Balance Sheets as of April 1, 2001 and March 26,
2000.
Consolidated Statements of Income for the years ended April 1,
2001, March 26, 2000 and March 28, 1999.
Consolidated Statements of Stockholders' Equity for the years
ended April 1, 2001, March 26, 2000 and March 28, 1999.
Consolidated Statements of Cash Flows for the years ended April
1, 2001, March 26, 2000 and March 28, 1999.
Notes to Consolidated Financial Statements.
Report of Independent Accountants.
2. Financial Statement Schedules:
None
3. Exhibits:
2.01 Amended and Restated Agreement and Plan of
Reorganization dated as of December 29, 1994 and
amended as of March 17, 1995 among BNC, BOT, the
Company and BNC Merger Corp. Incorporated by
reference to Exhibit 2.01 to the Company's
Registration Statement on Form S-4, Registration
No. 33-88295, made effective March 23, 1995 (the
"S-4").
3.01 Certificate of Incorporation of the Company.
Incorporated by reference to Exhibit 3.01 to
the S-4 and to Exhibit 1 on Form 8-A dated
February 12, 1997.
3.02 By-Laws of the Company. Incorporated by
reference to Exhibit 3.02 to the S-4.
4.01 Certificate of Designation of Rights, Preferences
and Terms for the Series A Convertible Preferred
Stock of the Company. Incorporated by reference
to Exhibit 4.01 to the Company's Current Report
on Form 8-K dated May 15, 1995.
4.02 Form of Certificate representing shares of the
Company's Common Stock. Incorporated by
reference to Exhibit 4.02 to the S-4.
4.03 Form of Certificate representing shares of the
Company's Class A Common Stock. Incorporated
by reference to Exhibit 4.03 to the S-4.
4.04 Warrant Agreement dated December 1, 1997 between
the Company and Douglas M. Rudolph. Incorporated
by reference to Exhibit 4.1 to the Company's
current report on Form 8-K dated December 1,
1997.
4.05 Amendment dated February 15, 2001 to Warrant
Agreement December 1, 1997 between Douglas M.
Rudolph and the Company.
10.01 License Agreement, dated as of May 15, 1995
between BNC and BOT Inc. Incorporated by
reference to Exhibit 10.01 to the S-4.
10.04 BNC's 1985 Employee's Stock Option Plan.
Incorporated by reference to Appendix II to BNC
Proxy Statement for its Annual Meeting of
Stockholders held on December 11, 1985.
Incorporated by reference to Exhibit 10.06 to
the S-4.
10.05 1994 Employees' Stock Option Plan Incorporated
by reference to Exhibit 10.07 to the S-4.
10.06 Directors' Stock Option Plan. Incorporated by
reference to Exhibit 10.08 to the S-4.
10.07 Employment Agreement dated April 1, 2001 between
Joel A. Schwartz and the Company.
10.08 Employment Agreement dated January 1, 1995
between Michael R. Burris and the Company.
Incorporated by reference to Exhibit 10.10 to
the S-4.
10.09 Credit Agreement, dated December 1, 1997, among
Benihana Inc., its Subsidiaries named as
guarantors and First Union National Bank, as
Agent for the Lenders.
10.10 Benihana Administrative Incentive Compensation
Plan. Incorporated by reference to Exhibit 10.12
to the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1996.
10.11 1996 Class A Stock Option Plan. Incorporated by
reference to Exhibit A to Benihana Inc. Proxy
Statement for its Annual Meeting of Stockholders
held on July 19, 1996.
10.12 Employment Agreement dated April 1, 2001 between
Taka Yoshimoto and the Company.
10.13 Amendment dated April 1, 2001 to Employment
Agreement dated January 1, 1995 between Michael
R. Burris and the Company.
10.14 Amendment dated April 1, 2001 to Employment
Agreement dated October 19, 1998 between Kevin
Y. Aoki and the Company.
10.15 Employment Agreement dated September 1, 2000
between Juan C. Garcia and the Company.
10.16 Amendment dated December 11, 1997 to Employment
Agreement dated January 1, 1995 between Michael
R. Burris and Benihana Inc. Incorporated by
reference to Exhibit 10.18 to the Company's
Annual Report on Form 10-K for the fiscal year
ended March 29, 1998.
10.17 1997 Employees Class A Stock Option Plan.
Incorporated by reference to Exhibit A of
Benihana Inc.'s Proxy Statement for its Annual
Meeting of Stockholders held August 27, 1998.
10.18 Amendments to the Directors' Stock Option Plan.
Incorporated by reference to Exhibit B of
Benihana Inc.'s Proxy Statement for its Annual
Meeting of Stockholders held August 5, 1999.
10.19 Employment Agreement dated October 19, 1998
between Kevin Y. Aoki and the Company.
Incorporated by reference to Exhibit 10.19 to
the Company's Annual Report on Form 10-K for
the fiscal year ended March 26, 2000.
10.20 Amendment dated January 25, 2000 to Employment
Agreement dated October 19, 1998 between Kevin
Y. Aoki and the Company. Incorporated by
reference to Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the fiscal year
ended March 26, 2000.
10.21 2000 Employees Class A Common Stock Option Plan.
Incorporated by reference to Exhibit A of
Benihana Inc.'s Proxy Statement for its Annual
Meeting of Stockholders to be held August 3,
2000.
10.22 Amendment dated April 1, 2001 to Employment
Agreement dated September 1, 2001 between Juan
C. Garcia and the Company.
10.23 Consulting Agreement dated April 1, 2001 between
Rocky H. Aoki and the Company.
13.01 Portions of Annual Report to Stockholders for
the year ended April 1, 2001.
21.01 List of Subsidiaries.
23.01 Consent of Deloitte & Touche LLP.
23.02 Consent of Deloitte & Touche LLP.
(b) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: June 26, 2001 BENIHANA INC.
By: /s/ Joel A. Schwartz
----------------------------------
Joel A. Schwartz, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed on the date indicated above by the following persons on behalf
of the registrant and in the capacities indicated.
Signature Title Date
- --------- ----- ----
/s/ Joel A. Schwartz President and June 26, 2001
- --------------------------------
Joel A. Schwartz Director (Principal
Executive Officer)
/s/ Taka Yoshimoto Executive Vice President- June 26, 2001
- --------------------------------
Taka Yoshimoto Restaurant Operations
and Director
/s/ Michael R. Burris Senior Vice President of June 26, 2001
- ---------------------------------
Michael R. Burris Finance and Treasurer-
Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Kevin Y. Aoki Vice President- June 26, 2001
- ---------------------------------
Kevin Y. Aoki Marketing and Director
/s/ Juan C. Garcia Vice President-Controller June 26, 2001
- ---------------------------------
Juan C. Garcia
/s/ Darwin C. Dornbush Secretary and Director June 26, 2001
- ---------------------------------
Darwin C. Dornbush
/s/ John E. Abdo Director June 26, 2001
- ---------------------------------
John E. Abdo
/s/ Norman Becker Director June 26, 2001
- ---------------------------------
Norman Becker
/s/ Max Pine Director June 26, 2001
- ----------------------------------
Max Pine
EXHIBIT 4.05
DOUGLAS M. RUDOLPH PARTNERS, LTD.
1218 Webster - Houston, Texas 77002
- -------------------------------------------------------------------------------
February 8, 2001
Benihana Inc.
8685 N.W. 53rd Terrace
Miami, FL 33166
Attn.: Mr. Joel Schwartz, President
Dear Joel,
This letter will serve as an amendment to the Warrant Agreement dated December
1, 1997 between us, as assignee from Douglas M. Rudolph, and you.
1. The Warrant Expiration Date will be extended to 5:00 p.m. (N.Y. time) on
June 1, 2004.
2. Benihana shall have the right of first refusal on the Warrant on the
following basis:
a) Should the Warrantholder desire to sell or exercise any or
all of the Warrant, the Warrantholder shall first offer to
Benihana the right to purchase that same portion of the
Warrant (or, at Benihana's option, as much as 50,000
shares, should the portion to be sold or exercised be less
than 50,000 shares);
b) The purchase price for that portion of the Warrant shall be
equal to the average of the closing bid price of the shares
of Benihana Class A stock for the five trading-days prior
to the Warrantholder's offer to Benihana, minus $8.00 per
share, times .95 (a five percent discount on the
differential between the sale price and the exercise
price), times the number of shares in that portion of the
Warrant to be purchased by Benihana under this agreement;
c) Benihana shall have five business-days from notification by
the Warrantholder to exercise its right of first refusal,
and shall waive its right to that particular tranche should
it not exercise in writing its right to purchase within the
five business-day period.
Any exercise by Benihana of its right of first refusal will be paid to the
Warrantholder in cash within seven days of notice to exercise. This right of
first refusal will not apply should Benihana have knowledge of, or be in
discussions to arrange, a secondary offering of its stock to the public, nor
shall it apply to intra-family or affiliate transfers of the Warrant so long as
the transferee assumes this right of first refusal. Benihana agrees to cause the
registration statement pertaining to the shares underlying the Warrant to
continue to be available for use in connection with the resale of the shares
through the extended Warrant Expiration Date. All other terms and conditions of
the original Warrant shall remain unchanged, and in full force and effect.
If this is acceptable, kindly sign in the space provided below whereupon this
will be a binding agreement between us.
Agreed and accepted this 15th day of February, 2001
Douglas M. Rudolph Partners, Ltd. Benihana Inc.
By: /s/ Douglas M. Rudolph By: /s/ Joel A. Schwartz
- ----------------------------------- ------------------------------------
Douglas M. Rudolph Joel A. Schwartz
Authorized Representative President
EXHIBIT 10.07
2001
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 1st day of April,
2001 (the "Effective Date"), by and among BENIHANA INC., a Delaware corporation
(the "Company") and JOEL A. SCHWARTZ (the "Executive").
The Executive has heretofore for many years been employed
by the Company and by its predecessor, Benihana National Corp., as its
President and Chief Operating Officer and, since 1998, as its President and
Chief Executive Officer. The Company and the Executive desire to enter into an
employment agreement which will set forth the terms and conditions upon which
the Executive shall serve in the employ of the Company and upon which the
Company shall compensate the Executive and to replace and supersede the
Employment Agreement (the "Prior Agreement"), dated as of May 15, 1995 and
amended as of December 11, 1997, September 1, 1998 and January 25, 2000, between
the Executive and the Company.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants hereinafter set forth, the parties hereto have agreed, and
do hereby agree, as follows:
1. EMPLOYMENT TERM
1.1 The Company will employ the Executive in its
business and the Executive will work for the Company as President and Chief
Executive Officer for a term commencing as of the Effective Date and continuing
until March 31, 2006. Executive also agrees to serve as director of the Company
and as an officer and director of any subsidiary, if so elected. Employment
Period shall mean the term hereof. Executive may terminate this Agreement upon
not less than three months prior written notice to the Company in the event that
Executive would be required, in order to perform his services hereunder, to move
his principal residence from the metropolitan Miami area.
1.2 The term "Company" as used in this Agreement
shall be deemed to include any and all present and future subsidiaries and
affiliates of the Company
2. DUTIES
2.1 During the Employment Period, the Executive
shall perform the duties of President and Chief Executive Officer of the
Company and such further executive duties consistent with such position as
shall, from time to time, be reasonably delegated or assigned to him by the
Board of Directors of the Company consistent with the Executive's abilities.
3. DEVOTION OF TIME
3.1 During the Employment Period, the Executive
shall expend substantially all of his working time for the Company; shall
devote his best efforts, energy and skill to the services of the Company and the
promotion of its interests; and shall not take part in activities detrimental to
the best interests of the Company.
4. COMPENSATION
4.1 In respect of services to be performed by
the Executive during the Employment Period, the Company agrees to pay the
Executive an annual salary of Three Hundred thirty thousand ($300,000) Dollars
("Basic Compensation"), payable in accordance with the Company's customary
payroll practices for executive employees.
4.2 The Basic Compensation shall be increased by
an amount established by reference to the "Consumer Price Index for Urban
Wage Earners and Clerical Workers, New York, New York- Northern New Jersey area
published by the Bureau of Labor Statistics of the United States Department of
Labor (the "Consumer Price Index"). The base period shall be the month ended
December 31, 2000 (the "Base Period"). If the Consumer Price Index for the month
of December in any year, commencing in 2001, is greater than the Consumer Price
Index for the Base Period, Basic Compensation shall be increased, commencing on
April 1 of the next following year, to the amount obtained by multiplying Basic
Compensation by a fraction, the numerator of which is the Consumer Price Index
for the month of December of the year in which such determination is being made
and the denominator of which is the Consumer Price Index for the Base Period.
4.3 The Executive shall also be entitled to such
additional increments and bonuses as shall be determined from time to time
by the Board of Directors of the Company.
4.4 If during the term hereof Executive owns any
options to purchase securities of the Company which securities are publicly
traded and which options were granted to him in connection with his service as
an employee, officer or director of the Company, the Executive shall have the
right at any time after a "Change in Control", as defined in Section 7.1 to
cause the Company to repurchase such options from him at a purchase price equal
to the difference between (i) the closing price of the appropriate security of
the Company (if traded on the New York or American Stock Exchange or quoted in
the NASDAQ National Market) or the average between the closing bid and asked
prices (if traded on the over-the-counter market) on the date immediately prior
to the date on which Executive exercises such right and (ii) the exercise price
of such option; provided however, that in no fiscal year of the Company shall
the aggregate purchase price of such options exceed five percent (5%) of the
total stockholders equity (net worth) of the Company as shown on its audited
financial statements for the fiscal year immediately preceding the year in which
such right is exercised. Such right shall be exercised by Executive giving the
Company written notice thereof and the purchase and sale shall be consummated
not more than ten (10) business days after receipt by the Company of the notice
of exercise.
5. USE OF AUTOMOBILE; REIMBURSEMENT OF EXPENSES
5.1 The Company shall pay directly, or reimburse
the Executive, for all other reasonable and necessary expenses (other than
the automobile expenses described in Section 5.2) and disbursements incurred by
him for and on behalf of the Company in the performance of his duties during the
Employment Period upon submission of vouchers or other evidence thereof in
accordance with the Company's usual policies of expense reimbursement.
5.2 In addition to the reimbursement described
in Section 5.1, Executive shall receive an allowance of $300 per month for
automobile expenses, including lease costs or purchase price, gasoline and oil
and garaging.
6. DISABILITY OR DEATH
6.1 If, during the Employment Period, the
Executive shall die, the Company shall pay to such person or persons as
Executive shall from time to time designate in writing as the beneficiary of
such payment, or, in the absence of such designation, to Executive's estate,
("Beneficiary") the amount of Three Hundred and Fifty Thousand ($350,000)
Dollars less the amount of any insurance on Executive's life which has been
purchased by the Company for the payment to the Beneficiary. Such payment shall
be made in a lump sum within Ninety (90) days of the death of the Executive.
6.2 In the event Executive's employment hereunder
shall terminate because Executive has incurred a "Disability", as
hereinafter defined, then there shall be paid to Executive the amount of "Long
Term Compensation" set forth in Section 9. In such case such amount shall be
paid to Executive in Sixty (60) equal monthly installments. Such payments shall
commence on the first day of month next following such termination of
employment. In the event Executive shall suffer an event which might reasonably
be considered a Disability, either the Company or the Executive (or the
Executive's legal representative) shall have the right to give to the other
party written notice of such termination on 15 days notice. In the event the
parties shall in good faith disagree on whether Executive is suffering a
Disability, final determination shall be made by a doctor reasonable acceptable
to both parties. "Disability" shall mean the inability of Executive, for a
continuous period of more than twelve (12) months, to perform substantially all
of his regular duties and carry out substantially all of his responsibilities
hereunder because of physical or mental incapacity. The Company shall have the
right to have Executive examined by a competent doctor for purposes of
determining his physical or mental incapacity.
6.3 The obligations of the Company under
Section 6.2 may be satisfied, in whole or in part, by payments to the Executive
under disability insurance provided by the Company, and under laws providing
disability benefits for employees.
7. CHANGE IN CONTROL
7.1 In the event at any time after the Effective
Date, a majority of the Board of Directors is composed of persons who are
not "Continuing Directors", as hereinafter defined, which event is defined to
mean a "Change in Control", Executive shall have the option, to be exercised by
written notice to the Company, to resign as an employee and terminate this
Agreement, effective as of such date specified in the notice of exercise and
immediately upon such termination to receive payment of a sum equal to the
product of (A) the Basic Compensation in effect on the date of such termination
multiplied (B) by the number of years (both full and partial) remaining in the
term hereof had such termination not occurred. The payment to be made upon the
exercise of the option by the Executive in accordance with the provisions of the
preceding sentence is defined as the "Severance Payment". The Severance Payment
shall be made to Executive not later than twenty (20) days after the date
designated by the Executive as the date upon which Executive's resignation as an
employee and termination of his Employment is to be effective. The Severance
Payment shall constitute liquidated damages and not a penalty, and Executive
shall not be obligated to seek employment to mitigate his damages; nor shall any
compensation the Executive receives from any party subsequent to such
termination be an offset to the amount of the Severance Payment.
7.2 "Continuing Directors" shall mean (i) the
directors of the Company at the close of business on April 1, 2001, and (ii)
any person who was or is recommended to (A) succeed a Continuing Director or (B)
become a director as a result of an increase in the size of the Board, in each
case, by a majority of the Continuing Directors then on the Board.
7.3 In the event that payments to Executive under
this Section 7, plus payments made under Section 9 on account of a Change
in Control, plus any other payments or other benefits made by the Company to
Executive on account of a Change in Control would, in the opinion of tax counsel
selected by the Company and reasonably acceptable to the Executive ("Tax
Counsel"), be subject, in whole or in part, to the excise tax (the "Excise Tax")
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), as determined as provided below, the total amount of such payments
shall be reduced (with the Executive having the option as to which payments are
to bear the burden of such reduction) until no portion of such payments would be
subject to the Excise Tax. For the purpose of this provision, (i) only the
portion of such payments which in the opinion of Tax Counsel constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code shall
be taken into account and (ii) such payments shall be reduced only to the extent
necessary so that such payments would not be subject to the Excise Tax, in the
opinion of Tax Counsel.
8. TERMINATION OF EMPLOYMENT WITHOUT CAUSE
Upon any termination of the Executive's employment without
"Cause" as hereafter defined, the Executive shall be entitled to receive an
amount computed in the same manner as the Severance Payment not later than 20
days after any such termination. This payment shall constitute liquidated
damages and not a penalty, and Executive shall not be obligated to seek
employment to mitigate his damages; nor shall any compensation the Executive
receives from any party subsequent to such termination be an offset to the
amount of such payment. As used herein, the term "Cause" shall mean:(i)
Executive's deliberate and intentional refusal (except by reason of incapacity
due to mental or physical illness or disability) to comply with the provisions
of Section 3.1 of this Agreement relating to the time and effort to be devoted
by the Executive to the business and affairs of the Company after demand for
performance by the Company that specifically identifies the manner in which the
Company alleges the Executive has not performed his duties, (ii) the Executive's
proven dishonesty with respect to the Company, disloyalty, Executive's gross
negligence or willful misconduct which, in any case, results in demonstrable
material harm to the Company, (iii) the breach by the Executive of his covenant
not to compete contained in Section 10.4 hereof, (iv) the continuing breach of
any of the other covenants on the Executive's part herein set forth resulting
in, or which may reasonably be expected to result in a substantial adverse
effect on the Company, or (v) Executive's conviction of a crime involving moral
turpitude.
9. LONG TERM COMPENSATION
In recognition of Executive's many years of service to the
Company and its predecessors, in the event Executive's employment with the
Company is terminated (i) involuntarily during the term of this agreement other
than for Cause in accordance with Section 8, (ii) as a result of a Change of
Control in accordance with Section 7, (iii) as a result of Executive's incurring
a Disability as contemplated by Section 6.2 or (iv) as a result of the failure
of the Company and Executive to reach agreement on a renewal, extension or
replacement of this Agreement upon expiration of the term hereof, the Company
shall pay Executive, as additional long term compensation, an amount equal to
Five (5) times Executive's Basic Compensation in effect as at the time of such
termination of employment. Such payments shall be in addition to the payments
contemplated by Sections 7 or 8, respectively. In the case of termination by the
Company for reasons other than Cause or termination on account of a Change in
Control, such payment shall be made in two installments - 50% at the time of
termination and the remaining 50% on the first anniversary of such date. In the
case of termination on account of Disability or termination because of the
failure to renew, extend or replace this Agreement, such payment shall be made
in 60 equal monthly installments. Nothing in this provision shall imply any
obligation of Executive to enter into an extension, renewal or replacement of
this Agreement or to be reasonable in negotiating any such extension, renewal or
replacement.
10. CONFIDENTIAL INFORMATION; INVENTIONS;
RESTRICTIVE COVENANT
10.1 The Executive agrees not to divulge, furnish
or make available to anyone (other than in the regular course of business of
the Company) any knowledge or information with respect to the Company, or with
respect to any other confidential or secret aspect of the Company's activities.
10.2 Any methods, developments, inventions and/or
improvements, whether patentable or unpatentable, which the Executive may
conceive or make along the lines of the Company's business while in its employ
as an employee or consultant, shall be and remain the property of the Company.
The Executive further agrees on request to execute patent applications based on
such methods, developments, inventions and/or improvements, including any other
instruments deemed necessary by the Company for the prosecution of such patent
application or the acquisition of Letters Patent of this and any foreign
country.
10.3 The Executive agrees to communicate and
make known to the Company all knowledge possessed by him relating to any
methods, developments, inventions and/or improvements, whether patented,
patentable or unpatentable, which concern in any way the business of the
Company, whether acquired by him before or during the term hereof, provided,
however, that nothing herein shall be construed as requiring any such
communication where the method, development, invention and/or improvement is
lawfully protected from disclosure as the trade secret of a third party or by
any other lawful bar to such communication.
10.4 The services of the Executive are unique
and extraordinary and essential to the business of the Company, especially
since the Executive shall have access to the Company's customer lists, trade
secrets and other privileged and confidential information essential to the
Company's business. Therefore, the Executive agrees that if his employment
hereunder shall at any time be terminated for any reason (other than by the
Company. without Cause), the Executive will not at any time within one (1) year
after such termination, without the prior written approval of the Company,
directly or indirectly, within the United States of America, or any other area
in which the Company shall then conduct substantial operations, engage in any
business activity "competitive with the business of the Company", as hereinafter
defined, and further, the Executive agrees that during such one (1) year period
he shall not solicit, directly or indirectly, any employee or customer or
account of the Company who at the time of such termination was then actively
being solicited by the Company. For the purpose of this agreement a business
activity competitive with the business of the Company shall include only (i) the
operation or franchising of restaurants of a type then being operated, or under
construction, by the Company and (ii) the sale, at wholesale or retail, of
products similar in type and quality to those being marketed by the Company at
the time of Executive's termination of employment.
11. VACATIONS
The Executive shall be entitled to reasonable
vacations during each twelve-month period of the term hereof, the time and
duration thereof to be determined by mutual agreement between the Executive
and the Company.
12. PARTICIPATION IN EMPLOYEE BENEFIT PLANS
The Executive and any beneficiary of the
Executive shall be accorded the right to participate in and receive benefits
under and in accordance with the provisions of any pension, profit-sharing,
insurance, bonus, deferred compensation, medical and dental insurance or
reimbursement, stock option, or other plan or program of the Company now in
existence or hereafter adopted for the benefit of its executive employees.
13. INJUNCTIVE RELIEF
The Executive acknowledges and agrees that, in
the event he shall violate any of the restrictions of Section 10 hereof, the
Company will be without adequate remedy at law and will therefor be entitled to
enforce such restrictions by temporary or permanent injunctive or mandatory
relief obtained in an action or may have at law or in equity, and the Executive
hereby consents to the jurisdiction of such Court for such purpose, provided
that reasonable notice of any proceeding is given, it being understood that such
injunction shall be in addition to any remedy which the Company may have at law
or otherwise.
14. ASSIGNMENT, ETC.
This Agreement, as it relates to the employment
of the Executive, is a personal contract and the rights and interests of the
Executive hereunder may not be sold, transferred, assigned, pledged or
hypothecated. Except as otherwise expressly provided, this Agreement shall inure
to the benefit of and be binding upon the Company and its successors and
assigns.
15. RIGHT TO PAYMENTS, ETC.
The Executive shall not under any circumstances
have any option or right to require payments hereunder otherwise than in
accordance with the terms hereof. To the extent allowed by law, the Executive
shall not have any power of anticipation, alienation or assignment of payments
contemplated hereunder, and all rights and benefits of the Executive, and no
other person shall acquire any right, title or interest hereunder by reason of
any sale, assignment, transfer, claim or judgment or bankruptcy proceedings
against the Executive.
16. NOTICES, ETC.
Any notice required or permitted to be given to
the Executive pursuant to this Agreement shall be sufficiently given if sent
to the Executive by certified mail addressed to him at the following address:
4100 North 36th Avenue, Hollywood, Florida, 33021, or at any such other address
as he shall designate by notice to the Company, and any notice required or
permitted to be given to the Company pursuant to this Agreement shall be
sufficiently given if sent to the Company by certified mail addressed to it at
8685 Northwest 53rd Terrace, Miami, Florida 33166, attention of Corporation
Secretary, or such other address as the Company shall designate by notice to the
Executive, with a copy to Herschel S. Weinstein, Esq., Dornbush Mensch
Mandelstam & Schaeffer, LLP, 747 Third Avenue, New York, New York, 10017.
17. GOVERNING LAW
This Agreement shall be governed by, and
construed in accordance with the laws of the State of Florida, applicable to
agreements made and to be performed solely within such state.
18. WAIVER OF BREACH; PARTIAL INVALIDITY
The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach. If any provisions of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall attach only
to such provision and not in any way affect or render invalid or unenforceable
any other provisions of this Agreement, and this Agreement shall be carried out
as if such invalid or unenforceable provision were not embodied therein.
19. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement
between the parties hereto and there are no representations, warranties or
commitments except as set forth herein. This Agreement supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
including the Prior Agreement, whether written or oral, of the parties hereto
relating to the transactions contemplated by this Agreement. This Agreement may
be amended only in writing executed by the parties hereto affected by such
amendment.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first above written.
BENIHANA INC.
By: /s/ Taka Yoshimoto
------------------------------------
Taka Yoshimoto, Executive Vice President
/s/ Joel A. Schwartz
------------------------------------
Joel A. Schwartz
EXHIBIT 10.12
2001
EMPLOYMENT AGREEMENT
AGREEMENT dated as of this 1st day of April, 2001, (the
"Effective Date") by and between BENIHANA INC., a Delaware corporation (the
"Company"), and TAKA YOSHIMOTO (the "Executive").
R E C I T A L
The Executive has for many years been employed by the
Company and by its predecessor, Benihana National Corp. as its Executive Vice
President - Operations. The Company and the Executive desire to enter into a new
employment agreement which will set forth the terms and conditions upon which
the Executive shall serve in the employ of the Company and upon which the
Company shall compensate the Executive and to replace and supercede the
Employment Agreement between the parties hereto dated April 1, 1995 and amended
by an Amendment No. 1 dated December 11, 1997, by an Amendment No. 2 dated
September 1, 1998 and by an Amendment No. 3 dated January 25, 2000 (the "Prior
Agreement").
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, it is hereby agreed by and between the Company and Executive
as follows:
1. ENGAGEMENT AND TERM. The Company hereby employs
Executive and Executive hereby accepts such employment by the Company on the
terms and conditions set forth herein, for a period commencing on the Effective
Date of this Agreement and ending, unless sooner terminated in accordance with
the provisions of Section 5 hereof, on March 31, 2006 (the "Employment Period").
2. SCOPE OF DUTIES. Executive shall be employed
by the Company as its Executive Vice President - Operations. In such
capacities, the Executive shall have such authority, powers and duties
customarily attendant upon such offices. If elected or appointed, Executive
shall also serve, without additional compensation, in one or more offices and,
if and when elected, as a director of the Company or any subsidiary or affiliate
of the Company, provided that his duties and responsibilities are not
inconsistent with those pertaining to his position as stated above. Executive
shall faithfully devote his full business time and efforts so as to advance the
best interests of the Company. During the Employment Period, Executive shall not
be engaged in any other business activity, whether or not such business activity
is pursued for profit or other pecuniary advantage, unless same is only
incidental and is in no way, directly or indirectly, competitive with, or
opposed to the best interests of the Company.
3. COMPENSATION.
3.1 Basic Compensation. In respect of
-------------------
services to be performed by the Executive during the Employment Period, the
Company agrees to pay the Executive an annual salary of One Hundred Twenty-Five
Thousand Dollars ($165,000) ("Basic Compensation"), payable in accordance with
the Company's customary payroll practices for executive employees.
3.2 Cost of Living Adjustments. The Basic
--------------------------
Compensation shall be increased by an amount established by reference to the
"Consumer Price Index for Urban Wage Earners and Clerical Workers, New York, New
York- Northern New Jersey area published by the Bureau of Labor Statistics of
the United States Department of Labor (the "Consumer Price Index"). The base
period shall be the month ended December 31, 2000 (the "Base Period"). If the
Consumer Price Index for the month of December in any year, commencing in 2001,
is greater than the Consumer Price Index for the Base Period, Basic Compensation
shall be increased, commencing on April 1 of the next following year, to the
amount obtained by multiplying Basic Compensation by a fraction, the numerator
of which is the Consumer Price Index for the month of December of the year in
which such determination is being made and the denominator of which is the
Consumer Price Index for the Base Period.
3.3 Discretionary Increases. The
-----------------------
Executive shall also be entitled to such additional increments and bonuses as
shall be determined from time to time by the Board of Directors of the Company.
3.3 Other Benefits.
--------------
(a) Executive shall be entitled
to participate, at Company's expense, in the major medical health insurance
plan, and all other health, insurance or other benefit plans applicable
generally to executive officers of the Company.
(b) During the Employment
Period, Executive will be entitled to paid vacations and holidays consistent
with the Company's policy applicable to executives generally. All vacations
shall be scheduled at the mutual convenience of the Company and the Executive.
4. TERMINATION OF EMPLOYMENT. The
provisions of Section 1 of this Agreement notwithstanding, the Company may
terminate this Agreement and Executive's employment hereunder in the manner and
for the causes hereinafter set forth, in which event the Company shall be under
no further obligation to Executive other than as specifically provided herein:
4.1 If Executive is absent from work or
otherwise substantially unable to assume his normal duties for a period of
sixty (60) successive days or an aggregate of ninety (90) business days during
any consecutive twelve-month period during the Employment Period because of
physical or mental disability, accident, illness, or any other cause other than
vacation or approved leave of absence, the Company may thereupon, or any time
thereafter while such absence or disability still exists, terminate the
employment of Executive hereunder upon ten (10) days' written notice to
Executive.
4.2 In the event of the death of
Executive, this Agreement shall immediately terminate on the date thereof.
4.3 If Executive materially breaches or
violates any material term of his employment hereunder, or commits any criminal
act or an act of dishonesty or moral turpitude, in the reasonable judgment of
the Company's Board of Directors, then the Company may, in addition to other
rights and remedies available at law or equity, immediately terminate this
Agreement upon written notice to Executive with the date of such notice being
the termination date and such termination being deemed for "cause."
4.4 In the event Executive's employment
shall be terminated by reason of the provisions of Section 4.2 or 4.3, then in
such event, the Company shall pay to Executive, if living, or other person or
persons as Executive may from time to time designate in writing as the
beneficiary of such payment a sum, equal to the basic compensation in effect at
the time which such death or disability occurred, such payment to continue for
three months after such death or disability.
5. DISCLOSURE OF CONFIDENTIAL INFORMATION AND
COVENANT NOT TO COMPETE. Executive acknowledges that the Company possesses
confidential information, know-how, customer lists, purchasing, merchandising
and selling techniques and strategies, and other information used in its
operations of which Executive will obtain knowledge, and that the Company will
suffer serious and irreparable damage and harm if this confidential information
were disclosed to any other party or if Executive used this information to
compete against the Company. Accordingly, Executive hereby agrees that except as
required by Executive's duties to the Company, Executive without the consent of
the Company's Board of Directors, shall not at any time during or after the term
of this contract disclose or use any secret or confidential information of the
Company, including, without limitation, such business opportunities, customer
lists, trade secrets, formulas, techniques and methods of which Executive shall
become informed during his employment, whether learned by him as an Executive of
the Company, as a member of its Board of Directors or otherwise, and whether or
not developed by the Executive, unless such information shall be or become
public knowledge other than as a result of the Executive's direct or indirect
disclosure of the same.
Executive further agrees that for a period of one year
following the termination of Executive's employment, the Company, except as a
result of the breach by the Company of any material term or condition hereof,
Executive will not, directly or indirectly, alone or with others, individually
or through or by a corporate or other business entity in which he may be
interested as a partner, shareholder, joint venturer, officer or director or
otherwise, engage in the United States in "any business which is competitive
with that of the Company or any of its subsidiaries" as hereinafter defined,
provided, however, that the foregoing shall not be deemed to prevent the
ownership by Executive of up to five percent of any class of securities of any
corporation which is regularly traded on any stock exchange or over-the-counter
market. For the purpose of this Agreement, a business activity competitive with
the business of the Company or any of its subsidiaries, shall include only (i)
the operation or franchise of restaurants selling Japanese, or other oriental
food, or restaurants of a type then being operated by the Company, or any of its
subsidiaries; and (ii) the sale at wholesale or retail of oriental food
products.
6. REIMBURSEMENT OF EXPENSES; USE OF AUTOMOBILE.
6.1. The Company shall further pay
directly, or reimburse the Executive, for all other reasonable and necessary
expenses and disbursements incurred by him for and on behalf of the Company in
the performance of his duties during the Employment Period upon submission of
vouchers or other evidence thereof in accordance with the Company's usual
policies of expense reimbursement.
6.2. In addition to the reimbursement
described in Section 6.1, Executive shall receive an allowance of $200 per
month for automobile expenses, including lease costs or purchase price,
gasoline, oil and garaging.
7. CHANGE IN CONTROL.
7.1. In the event at any time after the Effective
Date, a majority of the Board of Directors is composed of persons who are
not "Continuing Directors", as hereinafter defined, which event is defined to
mean a "Change in Control", Executive shall have the option, to be exercised by
written notice to the Company, to resign as an employee and terminate this
Agreement, effective as of such date specified in the notice of exercise and
immediately upon such termination to receive payment of a sum equal to the
product of (A) the Basic Compensation in effect on the date of such termination
multiplied (B) by the number of years (both full and partial) remaining in the
term hereof had such termination not occurred. The payment to be made upon the
exercise of the option by the Executive in accordance with the provisions of the
preceding sentence is defined as the "Severance Payment". The Severance Payment
shall be made to Executive not later than twenty (20) days after the date
designated by the Executive as the date upon which Executive's resignation as an
employee and termination of his Employment is to be effective. The Severance
Payment shall constitute liquidated damages and not a penalty, and Executive
shall not be obligated to seek employment to mitigate his damages; nor shall any
compensation the Executive receives from any party subsequent to such
termination be an offset to the amount of the Severance Payment.
7.2 "Continuing Directors" shall mean (i) the
directors of the Company at the close of business on April 10, 2001, and (ii)
any person who was or is recommended to (A) succeed a Continuing Director or (B)
become a director as a result of an increase in the size of the Board, in each
case, by a majority of the Continuing Directors then on the Board.
7.3 If during the term hereof Executive owns any
options to purchase securities of the Company which securities are publicly
traded and which options were granted to him in connection with his service as
an employee, officer or director of the Company, the Executive shall have the
right at any time after a "Change in Control" to cause the Company to repurchase
such options from him at a purchase price equal to the difference between (i)
the closing price of the appropriate security of the Company (if traded on the
New York or American Stock Exchange or quoted in the NASDAQ National Market) or
the average between the closing bid and asked prices (if traded on the
over-the-counter market) on the date immediately prior to the date on which
Executive exercises such right and (ii) the exercise price of such option;
provided however, that in no fiscal year of the Company shall the aggregate
purchase price of such options exceed five percent (5%) of the total
stockholders equity (net worth) of the Company as shown on its audited financial
statements for the fiscal year immediately preceding the year in which such
right is exercised. Such right shall be exercised by Executive giving the
Company written notice thereof and the purchase and sale shall be consummated
not more than ten (10) business days after receipt by the Company of the notice
of exercise.
8. TERMINATION OF EMPLOYMENT WITHOUT CAUSE. Upon any
termination of the Executive's employment without cause, the Executive shall
be entitled to receive an amount computed in the same manner as the Severance
Payment not later than 20 days after any such termination. This payment shall
constitute liquidated damages and not a penalty, and Executive shall not be
obligated to seek employment to mitigate his damages; nor shall any compensation
the Executive receives from any party subsequent to such termination be an
offset to the amount of such payment.
9. MISCELLANEOUS PROVISIONS.
9.1 Section headings are for convenience
only and shall not be deemed to govern, limit, modify or supersede the
provisions of this Agreement.
9.2 This Agreement is entered into in
the State of Florida and shall be governed pursuant to the laws of the State of
Florida. If any provision of this Agreement shall be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable, the remaining
provisions hereof shall continue to be fully effective.
9.3 This Agreement contains the entire
agreement of the parties regarding this subject matter. There are no
contemporaneous oral agreements, and all prior understandings, agreements,
negotiations and representations are merged herein. This Agreement replaces and
supercedes the Prior Agreement.
9.4 This Agreement may be modified only
by means of a writing signed by the party to be charged with such modification.
9.5 Notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed duly given upon receipt by the party to whom sent at the respective
addresses set forth below or to such other address as any party shall hereafter
designate to the other in writing delivered in accordance herewith:
If to the Company:
Benihana Inc.
8685 NW 53rd Terrace
Miami, Florida 33166-0120
If to Executive:
Taka Yoshimoto
7010 N.W. 186th Street - #516
Miami, Florida 33015
9.6 This Agreement shall inure to the
benefit of, and shall be binding upon, the Company, its successors and assigns,
including, without limitation, any entity that may acquire all or substantially
all of the Company's assets and business or into which the Company may be
consolidated or merged. This Agreement may not be assigned by Executive.
9.7 This Agreement may be executed in
separate counterparts, each of which shall constitute the original hereof.
IN WITNESS WHEREOF, the parties have set their hands as of
the date first above written.
BENIHANA INC.
By: /s/ Joel A. Schwartz
----------------------------------
Joel A. Schwartz, President
/s/ Taka Yoshimoto
-----------------------------------
Taka Yoshimoto
EXHIBIT 10.13
AMENDMENT NO. 4 TO EMPLOYMENT AGREEMENT
Amendment No. 4 dated as of April 1, 2001 (the
"Effective Date") to Employment Agreement dated January 1, 1995, amended
December 11, 1997, September 1, 1998 and January 25, 2000 (as amended, the
"Agreement") by and between BENIHANA INC. (the "Company") and MICHAEL R. BURRIS
(the "Employee").
Unless otherwise defined herein, capitalized
terms shall have the respective meanings assigned to them in the Agreement.
The parties agree that the Agreement shall be
amended as follows:
Effective as of the Effective Date, Section 3.1
of the Agreement, as heretofore amended, is further amended to read in its
entirety as follows:
3.1 Basic Compensation. In respect of
-------------------
services to be performed by the Employee during the Employment Period from and
after the Effective Date, the Company agrees to pay the Employee an annual
salary of One Hundred Forty-Seven Thousand, Five Hundred Dollars ($147,500)
("Basic Compensation"), payable in accordance with the Company's customary
payroll practices for executive employees.
Except as modified herein, the Agreement remains
in full force and effect in accordance with its terms without revocation or
change.
IN WITNESS WHEREOF, the undersigned have executed
this Amendment No. 4 as of the date and year first above written.
BENIHANA INC.
By: /s/ Joel A. Schwartz
------------------------------------
Joel A. Schwartz, President
/s/ Michael R. Burris
-------------------------------------
Michael R. Burris
EXHIBIT 10.14
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
Amendment No. 2 dated as of April 1, 2001 (the
"Effective Date") to Employment Agreement dated September 1, 1998 and amended
January 25, 2000 (as amended, the "Agreement") by and between BENIHANA INC. (the
"Company") and KEVIN AOKI (the "Employee").
Unless otherwise defined herein, capitalized
terms shall have the respective meanings assigned to them in the Agreement.
The parties agree that the Agreement shall be
amended as follows, effective as of the Effective Date:
A. Section 1.1 of the Agreement, as heretofore
amended, is hereby amended to read in its entirety as follows:
1.1 Term. Subject to
----
the terms and conditions of this Agreement, the Company will continue to
employ the Employee for an extended term continuing until March 31, 2004.
B. Section 3.1 of the Agreement, as heretofore
amended, is hereby amended to read in its entirety as follows:
3.1 Basic Compensation.
------------------
In respect of services to be performed by the Employee during the Employment
Period from and after the Effective Date, the Company agrees to pay the Employee
an annual salary of One Hundred Twenty-Two Thousand, Five Hundred Dollars
($122,500) ("Basic Compensation"), payable in accordance with the Company's
customary payroll practices for executive employees.
Except as modified herein, the Agreement remains
in full force and effect in accordance with its terms without revocation or
change.
IN WITNESS WHEREOF, the undersigned have executed
this Amendment No. 2 as of the date and year first above written.
BENIHANA INC.
By: /s/ Joel A. Schwartz
---------------------------------
Joel A. Schwartz, President
/s/ Kevin Aoki
---------------------------------
Kevin Aoki
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
AGREEMENT dated this 1st day of September 2000, by and
between Benihana National Corp., a Delaware corporation (the "Company"), and
Juan C. Garcia (the "Employee").
R E C I T A L:
The Company is desirous of employing Employee and Employee
is desirous of being employed by the Company on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, it is hereby agreed by and between the Company and Employee
as follows:
1. Engagement and Term. The Company hereby employs
--------------------
Employee and Employee hereby accepts such employment by the Company on the
terms and conditions set forth herein, for a period commencing on September 1,
2000 (the "Effective Date") and ending, unless sooner terminated in accordance
with the provisions of Section 4 hereof, on the third anniversary of such
Effective Date (the "Employment Period").
2. Scope of Duties. Employee shall be employed by
---------------
the Company as its Vice President/Controller. The Employee shall have such
authority, powers and duties customarily attendant upon such position. If
elected or appointed, Employee shall also serve, without additional
compensation, in one or more offices and, if and when elected, as a director of
the Company or any subsidiary or affiliate of the Company, provided that his
duties and responsibilities are not inconsistent with those pertaining to his
position as stated above. Employee shall faithfully devote his full business
time and efforts so as to advance the best interests of the Company. During the
Employment Period, Employee shall not be engaged in any other business activity,
whether or not such business activity is pursued for profit or other pecuniary
advantage, unless same is only incidental and is in no way, directly or
indirectly, competitive with, or opposed to the best interests of the Company.
3. Compensation.
-------------
3.1 Basic Compensation. In respect of
-------------------
services to be performed by the Employee during the Employment Period, the
Company agrees to pay the Employee an annual salary of Ninety-Five Thousand
Dollars ($95,000) ("Basic Compensation"), payable in accordance with the
Company's customary payroll practices for executive employees.
3.2 Discretionary Increases. The
------------------------
Employee shall also be entitled to such additional increments and bonuses as
shall be determined from time to time by the Board of Directors of the Company.
3.4 Other Benefits.
--------------
(a) Employee shall be entitled
to participate in any bonus or incentive compensation or similar plans adopted
by the Company.
(b) Employee shall be entitled
to participate, at Company's expense, in the major medical health insurance
plan, and all other health, insurance or other benefit plans applicable
generally to executive officers of the Company.
(c) During the Employment
Period, Employee will be entitled to paid vacations and holidays consistent
with the Company's policy applicable to executives generally. All vacations
shall be scheduled at the mutual convenience of the Company and the Employee.
4. Term of Employment. The provisions of Section 1
------------------
of this Agreement notwithstanding, the Company may terminate this Agreement
and Employee's employment hereunder in the manner and for the causes hereinafter
set forth, in which event the Company shall be under no further obligation to
Employee other than as specifically provided herein:
A. If Employee is absent from work or
otherwise substantially unable to assume his normal duties for a period of
sixty (60) successive days or an aggregate of ninety (90) business days during
any consecutive twelve-month period during the Employment Period because of
physical or mental disability, accident, illness, or any other cause other than
vacation or approved leave of absence, the Company may thereupon, or any time
thereafter while such absence or disability still exists, terminate the
employment of Employee hereunder upon ten (10) days' written notice to Employee.
B. In the event of the death of Employee,
this Agreement shall immediately terminate on the date thereof.
C. If Employee materially breaches or
violates any material term of his employment hereunder, or commits any
criminal act or an act of dishonesty or moral turpitude, in the reasonable
judgment of the Company's Board of Directors, then the Company may, in addition
to other rights and remedies available at law or equity, immediately terminate
this Agreement upon written notice to Employee with the date of such notice
being the termination date and such termination being deemed for "cause."
D. In the event Employee's employment
shall be terminated by reason of the provisions of subparagraph A or B of this
Section 4, then in such event, the Company shall pay to Employee, if living, or
other person or persons as Employee may from time to time designate in writing
as the beneficiary of such payment a sum, equal to the basic compensation in
effect at the time which such death or disability occurred, such payment to
continue for three months after such death or disability.
5. Disclosure of Confidential Information and
----------------------------------------------
Covenant Not to Compete. Employee acknowledges that the Company possesses
- ------------------------
confidential information, know-how, customer lists, purchasing, merchandising
and selling techniques and strategies, and other information used in its
operations of which Employee has knowledge, and that the Company will suffer
serious and irreparable damage and harm if this confidential information were
disclosed to any other party or if Employee used this information to compete
against the Company. Accordingly, Employee hereby agrees that except as required
by Employee's duties to the Company, Employee without the consent of the
Company's Board of Directors, shall not at any time during or after the term of
this contract disclose or use any secret or confidential information of the
Company, including, without limitation, such business opportunities, customer
lists, trade secrets, formulas, techniques and methods of which Employee shall
become informed during his employment, whether learned by him as an Employee of
the Company, as a member of its Board of Directors or otherwise, and whether or
not developed by the Employee, unless such information shall be or become public
knowledge other than as a result of the Employee's direct or indirect disclosure
of the same.
Employee further agrees that for a period of one year
following the termination of Employee's employment, the Company, except as a
result of the breach by the Company of any material term or condition hereof,
Employee will not, directly or indirectly, alone or with others, individually or
through or by a corporate or other business entity in which he may be interested
as a partner, shareholder, joint venturer, officer or director or otherwise,
engage in the United States in "any business which is competitive with that of
the Company or any of its subsidiaries" as hereinafter defined, provided,
however, that the foregoing shall not be deemed to prevent the ownership by
Employee of up to five percent of any class of securities of any corporation
which is regularly traded on any stock exchange or over-the-counter market. For
the purpose of this Agreement, a business activity competitive with the business
of the Company or any of its subsidiaries, shall include only (i) the operation
or franchise of restaurants selling Japanese, or other oriental food, or
restaurants of a type then being operated by the Company, or any of its
subsidiaries; and (ii) the sale at wholesale or retail of oriental food
products.
6. Reimbursement of Expenses. The Company shall
--------------------------
further pay directly, or reimburse the Employee, for all other reasonable and
necessary expenses and disbursements incurred by him for and on behalf of the
Company in the performance of his duties during the Employment Period upon
submission of vouchers or other evidence thereof in accordance with the
Company's usual policies of expense reimbursement.
7. Change In Control.
-----------------
7.1 In the event at any time after the Effective
Date, a majority of the Board of Directors is composed of persons who are
not "Continuing Directors", as hereinafter defined, and Employee's employment is
terminated by the Company other than for one of the reasons set forth in Section
4 hereof, Employee shall not be obligated to seek employment to mitigate his
damages, if any, to which he may be entitled for breach of this Agreement.
7.2 "Continuing Directors" shall mean (i) the
directors of the Company at the close of business on September 1, 2000, and
(ii) any person who was or is recommended to (A) succeed a Continuing Director
or (B) become a director as a result of an increase in the size of the Board, in
each case, by a majority of the Continuing Directors then on the Board.
8. Miscellaneous Provisions.
8.1 Section headings are for convenience
only and shall not be deemed to govern, limit, modify or supersede the
provisions of this Agreement.
8.2 This Agreement is entered into in the
State of Florida and shall be governed pursuant to the laws of the State of
Florida. If any provision of this Agreement shall be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable, the remaining
provisions hereof shall continue to be fully effective.
8.3 This Agreement contains the entire
agreement of the parties regarding this subject matter. There are no
contemporaneous oral agreements, and all prior understandings, agreements,
negotiations and representations are merged herein.
8.4 This Agreement may be modified only by
means of a writing signed by the party to be charged with such modification.
8.5 Notices or other communications required
or permitted to be given hereunder shall be in writing and shall be deemed
duly given upon receipt by the party to whom sent at the respective addresses
set forth below or to such other address as any party shall hereafter designate
to the other in writing delivered in accordance herewith:
If to the Company:
Benihana National Corp.
8685 NW 53rd Terrace
Miami, Florida 33166-0120
If to Employee:
Juan Garcia
5900 SW 112th Street
Pine Crest, Florida 33156
8.6 This Agreement shall inure to the benefit
of, and shall be binding upon, the Company, its successors and assigns,
including, without limitation, any entity that may acquire all or substantially
all of the Company's assets and business or into which the Company may be
consolidated or merged. This Agreement may not be assigned by Employee.
IN WITNESS WHEREOF, the parties have set their hands as of
the date first above written.
BENIHANA NATIONAL CORP.
By: /s/ Joel A. Schwartz
------------------------------------
Joel A. Schwartz, President
/s/ Juan C. Garcia
------------------------------------
Juan C. Garcia
EXHIBIT 10.22
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Amendment No. 1 dated as of April 1, 2001
(the "Effective Date") to Employment Agreement dated September, 2000
(the "Agreement") by and between BENIHANA INC. (the "Company") and JUAN C.
GARCIA (the "Employee").
Unless otherwise defined herein, capitalized
terms shall have the respective meanings assigned to them in the Agreement.
The parties agree that the Agreement shall be
amended as follows:
A. Section 1 of the Agreement is hereby
amended to read in its entirety as follows:
1. Engagement and Term.
---------------------
The Company hereby employs Employee and
Employee accepts such employment by the Company on
the terms and conditions set forth herein, for a
period commencing on September 1, 2000 and ending,
unless sooner terminated on accordance with the
provisions of Section 4 hereof, on September 1,
2003 (the "Employment Period").
B. Effective as of the Effective Date,
Section 3.1 of the Agreement, as heretofore amended, is further amended to
read in its entirety as follows:
3.1 Basic Compensation.
-------------------
In respect of services to be performed by the
Employee during the Employment Period from and
after the Effective Date, the Company agrees to pay
the Employee an annual salary of One Hundred Five
Thousand ($105,000) Dollars ("Basic Compensation"),
payable in accordance with the Company's customary
payroll practices for executive employees.
Except as modified herein, the Agreement remains
in full force and effect in accordance with its terms without revocation or
change.
IN WITNESS WHEREOF, the undersigned have executed
this Amendment No. 1 as of the date and year first above written.
BENIHANA INC.
By:/s/ Joel A. Schwartz
-----------------------------------
Joel A. Schwartz, President
/s/ Juan C. Garcia
------------------------------------
Juan C. Garcia
EXHIBIT 10.23
CONSULTING AGREEMENT
This CONSULTING AGREEMENT, dated as of the 1st
day of April, 2001 (the "Effective Date") by and between BENIHANA INC., a
Delaware corporation (the "Company") and ROCKY H. AOKI (the "Consultant").
The Consultant has heretofore for many years been
retained by the Company and by Benihana National Corp ("BNC"), a Delaware
corporation, a predecessor corporation of the Company and, as of the Effective
Date, a wholly owned subsidiary of the Company, as a consultant and, prior to
May 18, 1998 as its Chief Executive Officer and Chairman of the Board. The
Company and the Consultant desire to enter into a consulting agreement which
will set forth the terms and conditions upon which the Consultant shall serve as
a consultant to the Company and upon which the Company shall compensate the
Consultant, and to replace and supersede the Employment Agreement (the "Prior
Agreement"), dated as of May 15, 1995 and amended December 11, 1997 and May 18,
1998 between the Consultant and the Company.
NOW THEREFORE, in consideration of the premises
and of the mutual covenants hereinafter set forth, the parties hereto have
agreed, and do hereby agree, as follows:
10 EMPLOYMENT; TERM
----------------
1.1 Subject to the terms and
provisions of this Agreement, the Company will continue to employ the
Consultant in its business and the Consultant will continue to work for the
Company as a consultant for an extended term continuing until March 31, 2006.
"Consulting Period" shall mean the term hereof. Such employment may be
terminated by the Company at any time for "cause", which shall be limited to
(i) Consultant's deliberate and intentional refusal (except by reason of
incapacity due to mental or physical illness or disability) to comply with the
provisions of Section 3.1 of this Agreement relating to the time and effort to
be devoted by the Consultant to the business and affairs of the Company after
demand for performance by the Company that specifically identifies the manner
in which the Company alleges the Consultant has not performed his duties, (ii)
the Consultant's proven dishonesty with respect to the Company, disloyalty,
Consultant's gross negligence or wilful misconduct which, in any case, results
in demonstrable material harm to the Company, (iii) the breach by the Consultant
of his covenant not to compete contained in Section 9.4 hereof, (iv) the
continuing breach of any of the other covenants on the Consultant's part herein
set forth resulting in, or which may reasonably be expected to result in a
substantial adverse effect on the Company, or (v) Consultant's conviction of a
crime involving moral turpitude.
1.2 The term "Company" as used in
this Agreement shall be deemed to include any and all present and future
subsidiaries and affiliates of the Company.
20 DUTIES
------
During the Consulting Period, the
Consultant shall perform such duties as a consultant as may be, from time to
time, reasonably delegated or assigned to him by the Board of Directors of the
Company consistent with the Consultant's abilities.
30 DEVOTION OF TIME
----------------
During the Consulting Period,
the Consultant shall expend a substantial part of his working time for the
Company; shall devote his best efforts, energy and skill to the services of the
Company and the promotion of its interests; and shall not take part in
activities detrimental to the best interests of the Company. Nothing in this
Agreement shall preclude the Consultant during the term of this Agreement from
engaging, directly or indirectly, in any business activity which is not
competitive with the then existing business of the Company and Consultant shall
be permitted to spend portions of his working time and best efforts, energy and
skill as is necessary to fulfill his duties as an officer, director or employee
of Benihana of Tokyo, Inc. ("BOT") provided such activities are in compliance
with, and do not constitute a breach of (i) the Agreement and Plan of
Reorganization dated December 29, 1994 among BOT, BNC, the Company and BNC
Merger Corp. (the "Reorganization Agreement") and (ii) the License Agreement,
dated May 15, 1995, between the Company and BOT (the "License").
40 COMPENSATION
------------
4.1 In respect of services to be
performed by the Consultant during the Employment Period, the Company
agrees to pay the Consultant an annual salary of Six Hundred Thousand
($600,000) Dollars ("Basic Compensation"), payable in accordance with the
Company's customary payroll practices for executive employees.
4.2 The Basic Compensation shall be
increased by an amount established by reference to the "Consumer Price Index
for Urban Wage Earners and Clerical Workers, New York, New York, all items -
Series A-01" published by the Bureau of Labor Statistics of the United States
Department of Labor (the "Consumer Price Index"). The base period shall be the
month ended December 31, 2000 (the "Base Period"). If the Consumer Price Index
for the month of December in any year, commencing in 2001, is greater than the
Consumer Price Index for the Base Period, Basic compensation shall be increased,
commencing on March 1 of the next following year, to the amount obtained by
multiplying Basic Compensation by a fraction, the numerator of which is the
Consumer Price Index for the month of December of the year in which such
determination is being made and the denominator of which is the Consumer Price
Index for the Base Period.
4.3 The Consultant shall also be
entitled to such additional increments and bonuses as shall be determined
from time to time by the Board of Directors of the Company.
50 USE OF AUTOMOBILE; REIMBURSEMENT OF EXPENSES
--------------------------------------------
5.1 The Company shall pay directly,
or reimburse the Consultant, for all other reasonable and necessary expenses
(other than the automobile expenses described in Section 5.2) and disbursements
incurred by him for and on behalf of the Company in the performance of his
duties during the Employment Period upon submission of vouchers or other
evidence thereof in accordance with the Company's usual policies of expense
reimbursement. a65535 In addition to the reimbursement described in Section 5.1,
Consultant shall receive an allowance which is commensurate with his consulting
duties hereunder and consistent with Company policy for automobile expenses,
including lease costs or purchase price, gasoline and oil and garaging.
60 DISABILITY, DEATH OR RETIREMENT
-------------------------------
6.1 If during the Employment Period,
the Consultant shall die, voluntarily retire or have a "Disability", as
hereinafter defined, then there shall be paid to Consultant, if living, or other
person or persons as Consultant shall from time to time designate in writing as
the beneficiary of such payment ("Beneficiary") a sum equal to fifty (50%)
percent of the Compensation paid for the Company's fiscal year immediately
preceding the year in which such death, retirement or Disability occurred; such
reduced payment to continue for the remainder of the term of this Agreement.
6.2 "Disability" shall mean the
inability of Consultant, for a continuous period of more than twelve (12)
months, to perform substantially all of his regular duties and carry out
substantially all of his responsibilities hereunder because of physical or
mental incapacity. The Company shall have the right to have Consultant examined
by a competent doctor for purposes of determining his physical or mental
incapacity. In the event Executive's employment hereunder shall terminate
because Executive has incurred a Disability, the payments referred to in
Section 6.1 shall commence on the first day of month next following such
termination of employment. In the event Executive shall suffer an event which
might reasonably be considered a Disability, either the Company or theExecutive
(or the Executive's legal representative shall have the right to give to the
other party written notice of such termination on 15 days notice. In the event
the parties shall in good faith disagree on whether Executive is suffering a
Disability, final determination shall be made by a doctor reasonable acceptable
to both parties.
6.3 If the Consultant shall be able
to resume his full duties after a Disability, he shall commence to receive his
full Compensation from and after the date on which he shall have resumed full
employment.
6.4 The obligations of the Company
under Articles 6.1 and 6.2 may be satisfied, in whole or in part, by payments
to the Consultant under disability insurance provided by the Company, and under
laws providing disability benefits for employees.
70 CONFIDENTIAL INFORMATION; INVENTIONS;
-------------------------------------
RESTRICTIVE COVENANT
- --------------------
7.1 The Consultant agrees not to
divulge, furnish or make available to anyone (other than in the regular course
of business of the Company) any knowledge or information with respect to the
Company, or with respect to any other confidential or secret aspect of the
Company's activities.
7.2 Any methods, developments,
inventions and/or improvements, whether patentable or unpatentable, which
the Consultant may conceive or make along the lines of the Company's business
while in its employ as an Consultant or consultant, shall be and remain the
property of the Company. The Consultant further agrees on request to execute
patent applications based on such methods, developments, inventions and/or
improvements, including any other instruments deemed necessary by the Company
for the prosecution of such patent application or the acquisition of Letters
Patent of this and any foreign country.
7.3 The Consultant agrees to
communicate and make known to the Company all knowledge possessed by him
relating to any methods, developments, inventions and/or improvements, whether
patented, patentable or unpatentable, which concern in any way the business or
the Company, whether acquired by him before or during the term hereof, provided,
however, that nothing herein shall be construed as requiring any such
communication where the method, development, invention and/or improvement is
lawfully protected from disclosure as the trade secret of a third party or by
any other lawful bar to such communication.
7.4 The services of the Consultant
are unique and extraordinary and essential to the business of the Company,
especially since the Consultant shall have access to the Company's customer
lists, trade secrets and other privileged and confidential information essential
to the Company's business. Therefore, the Consultant agrees that if his
employment or consulting hereunder shall at any time be terminated for any
reason whatsoever, the Consultant will not at any time within three (3) years
after such termination, without the prior written approval of the Company,
directly or indirectly, within the United States of America (excluding the State
of Hawaii), or any other area in which the Company shall then conduct
substantial operations, engage in any business activity competitive with the
business of the Company; and further, the Consultant agrees that during such
three (3) year period he shall not solicit, directly or indirectly, any employee
or customer or account of the Company who at the time of such termination was
then actively being solicited by the Company. For the purpose of this agreement
a business activity competitive with the business of the Company shall include
(i) the operation or franchising of restaurants of a type then being operated,
or under construction, by the Company and (ii) the sale, at wholesale or retail,
of (A) food products bearing the trade name or trademarks of any company engaged
in the hospitality industry or (B) oriental food products, if the Company is
marketing food products, at wholesale or retail, at the time of Consultant's
termination of employment.
80 VACATIONS
---------
The Consultant shall be entitled to
reasonable vacations during each twelve-month period of the term hereof, the
time and duration thereof to be determined by mutual agreement between the
Consultant and the Company.
90 PARTICIPATION IN EMPLOYEE BENEFIT PLANS
---------------------------------------
To the extent permitted by the terms
of such plans and of any insurance policies purchased under such plans, the
Consultant and any beneficiary of the Consultant shall be accorded the right to
participate in and receive benefits under and in accordance with the provisions
of any insurance, medical and dental insurance or reimbursement program of the
Company.
100 KEY MAN INSURANCE
-----------------
The Company presently owns life
insurance policy on the Consultant's life in the face amount of Five Million
Dollars. The Company shall remain the owner and beneficiary thereof and shall
pay the annual premium of such policy during the term hereof. Upon the
termination of the Consulting Period, for any reason whatsoever, the policy
shall be assigned to Consultant.
110 INJUNCTIVE RELIEF
-----------------
The Consultant acknowledges and
agrees that, in the event he shall violate any of the restrictions of Articles
3 and 7 hereof, the Company will be without adequate remedy at law and will
therefor be entitled to enforce such restrictions by temporary or permanent
injunctive or mandatory relief obtained in an action or may have at law or in
equity, and the Consultant hereby consents to the jurisdiction of such Court for
such purpose, provided that reasonable notice of any proceeding is given, it
being understood that such injunction shall be in addition to any remedy which
the Company may have at law or otherwise.
120 ASSIGNMENT
----------
This Agreement, as it relates to
the employment of the Consultant, is a personal contract and the rights and
interests of the Consultant hereunder may not be sold, transferred, assigned,
pledged or hypothecated. Except as otherwise expressly provided, this Agreement
shall inure to the benefit of and be binding upon the Company and its successors
and assigns.
130 RIGHT TO PAYMENTS, ETC.
-----------------------
The Consultant shall not under any
circumstances have any option or right to require payments hereunder otherwise
than in accordance with the terms hereof. To the extent allowed by law, the
Consultant shall not have any power of anticipation, alienation or assignment of
payments contemplated hereunder, and all rights and benefits of the Consultant,
and no other person shall acquire any right, title or interest hereunder by
reason of any sale, assignment, transfer, claim or, judgment or bankruptcy
proceedings against the Consultant.
140 NOTICES, ETC.
-------------
Any notice required or permitted to
be given to the Consultant pursuant to this Agreement shall be sufficiently
given if sent to the Consultant by certified mail addressed to him at: 8685
Northwest 53rd Terrace, Miami, Florida, 33166, or at any such other address as
he shall designate by notice to the Company, and any notice required or
permitted to be given to the Company pursuant to this Agreement shall be
sufficiently given if sent to the Company by certified mail addressed to it at
8685 N. W. 53rd Terrace, Miami, Florida, 33166, attention of Corporation
Secretary, or such other address as the Company shall designate by notice to the
Consultant, with a copy to Herschel S. Weinstein, Esq., Dornbush Mensch
Mandelstam & Schaeffer, 747 Third Avenue, New York, New York, 10017.
150 GOVERNING LAW
-------------
This Agreement shall be governed by,
and construed in accordance with the laws of the State of New York, applicable
to agreements made and to be performed solely within such state.
160 WAIVER OF BREACH; PARTIAL INVALIDITY
------------------------------------
The waiver by either party of a
breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach. If any provisions of this Agreement shall
be held to be invalid or unenforceable, such invalidity or unenforceability
shall attach only to such provision and not in any way affect or render invalid
or unenforceable any other provisions of this Agreement, and this Agreement
shall be carried out as if such invalid or unenforceable provision were not
embodied therein.
170 ENTIRE AGREEMENT
----------------
This Agreement constitutes the
entire agreement between the parties hereto and there are no representations,
warranties or commitments except as set forth herein. This Agreement supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether written or oral, of the parties hereto relating to the
transactions contemplated by this Agreement. This Agreement may be amended only
in writing executed by the parties hereto affected by such amendment.
IN WITNESS WHEREOF, the undersigned have executed
this Agreement as of the day and year first above written.
BENIHANA INC.
By: /s/ Joel A. Schwartz
----------------------------------
Joel A. Schwartz, President
/s/ Rocky H. Aoki
-----------------------------------
Rocky H. Aoki
EXHIBIT 13.01
ANNUAL REPORT
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share information)
Year ended April 1, March 26, March 28,
2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Revenues
Restaurant sales $161,865 $136,389 $118,351
Franchise fees and royalties 1,378 1,088 798
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 163,243 137,477 119,149
- ------------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of food and beverage sales 43,301 36,588 30,964
Restaurant operating expenses 89,427 74,088 65,188
Selling, general and administrative expenses 13,690 11,402 11,343
Restaurant opening costs 1,453 566 12
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 147,871 122,644 107,507
- ------------------------------------------------------------------------------------------------------------------------------------
Income from operations 15,372 14,833 11,642
Interest expense, net 1,233 1,297 1,644
Minority interest 40 81
- ------------------------------------------------------------------------------------------------------------------------------------
Income from operations before income taxes 14,099 13,455 9,998
Income tax provision 5,008 4,722 3,480
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income $9,091 $8,733 $6,518
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share
Basic earnings per common share $1.47 $1.41 $1.06
Diluted earnings per common share $1.38 $1.32 $1.02
- ------------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share information)
April 1, March 26,
2001 2000
- -----------------------------------------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 935 $ 1,165
Receivables 734 481
Inventories 4,149 3,613
Prepaid expenses 1,122 765
- -----------------------------------------------------------------------------------------------------------------------------------
Total current assets 6,940 6,024
Property and equipment, net 54,104 43,564
Deferred income taxes, net 2,973 3,290
Goodwill, net 16,478 17,302
Other assets 5,434 5,265
- -----------------------------------------------------------------------------------------------------------------------------------
$85,929 $75,445
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $16,486 $14,471
Current maturity of bank debt 2,000 1,750
Current maturity of other long-term debt 145 251
Current maturities of obligations
under capital leases 702 629
- -----------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 19,333 17,101
Long-term debt - bank 12,500 12,500
Long-term debt - other 145
Obligations under capital leases 1,371 2,073
Minority interest 40 81
Commitments and Contingencies
Stockholders' Equity:
Series A Redeemable Convertible Preferred stock - $1.00 par value;
authorized - 5,000,000 shares; issued
and outstanding - 700 shares in 2001 and 2000 1 1
Common stock - $.10 par value; convertible into Class
A Common stock; authorized - 12,000,000 shares; issued and outstanding
- 3,579,116 and 3,576,616 shares in
2001 and 2000, respectively 358 358
Class A Common stock - $.10 par value; authorized -
20,000,000 shares; issued and outstanding -
2,589,713 and 2,580,202 shares in 2001 and 2000,
respectively 259 258
Additional paid-in capital 14,847 14,756
Retained earnings 37,336 28,288
Treasury Stock - 9,177 shares of Class A
Common stock at cost (116) (116)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 52,685 43,545
- ----------------------------------------------------------------------------------------------------------------------------------
$85,929 $75,445
- ----------------------------------------------------------------------------------------------------------------------------------
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share information)
Additional Total
Preferred Common Class A Paid-in Retained Treasury Stockholders'
Stock Stock Common Stock Capital Earnings Stock Equity
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, March 29, 1998 $ 1 $ 357 $ 252 $14,600 $13,129 $(116) $28,223
Net income 6,518 6,518
Dividend on preferred stock (50) (50)
Conversion of 300 shares of preferred stock
into 45,113 shares of Class A common stock 4 (4)
Issuance of 500 shares of common stock
under exercise of options 2 2
Issuance of 867 shares of Class A common
stock under exercise of options 6 6
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, March 28, 1999 1 357 256 14,604 19,597 (116) 34,699
Net income 8,733 8,733
Dividend on preferred stock (42) (42)
Issuance of 5,000 shares of common stock
Under exercise of options 16 16
Issuance of 16,109 shares of Class A
Common stock under exercise of options 2 128 130
Issuance of 650 shares of Class A common
stock for incentive compensation 1 8 9
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, March 26, 2000 1 358 258 14,756 28,288 (116) 43,545
Net income 9,091 9,091
Dividend on preferred stock (43) (43)
Issuance of 2,500 shares of common stock
Under exercise of options 14 14
Issuance of 9,511 shares of Class A
Common stock under exercise of options 1 77 78
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, April 1, 2001 $ 1 $ 358 $ 259 $14,847 $37,336 $(116) $52,685
- -----------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share information)
April 1, March 26, March 28,
2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Activities:
Net income $9,091 $8,733 $6,518
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization 5,178 4,349 3,887
Minority interest (40) 81
Deferred income taxes 317 95 396
Issuance of common stock for incentive compensation 9
Change in operating assets and liabilities that provided
(used) cash:
Receivables (253) (212) 116
Inventories (536) (417) 662
Prepaid expenses (357) (111) 123
Other assets (497) (534) (150)
Accounts payable and accrued expenses 2,015 3,818 1,174
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 14,918 15,811 12,726
- -----------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Business acquisition, net of cash acquired (8,445)
Expenditures for property and equipment (14,548) (9,643) (7,212)
Other (19) (21) (18)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) investing activities (14,567) (18,109) (7,230)
- -----------------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Dividends paid on preferred stock (43) (42) (50)
Proceeds from issuance of long-term debt 6,500 7,700
Repayment of long-term debt and obligations under
capital leases (7,130) (6,024) (4,939)
Proceeds from issuance of common stock 92 145 8
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (581) 1,779 (4,981)
- -----------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (230) (519) 515
Cash and cash equivalents, beginning of year 1,165 1,684 1,169
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 935 $1,165 $1,684
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information Cash paid during the fiscal year for:
Interest $1,376 $1,087 $1,159
Income taxes $6,254 $3,815 $2,992
Business acquisitions, net of cash acquired:
Fair value of assets acquired, other than cash $2,830
Liabilities assumed (157)
Purchase price in excess of the net assets acquired 5,772
- -----------------------------------------------------------------------------------------------------------------------------------
$8,445
- -----------------------------------------------------------------------------------------------------------------------------------
During the fiscal year ended March 28, 1999, 300 shares of Preferred stock
were converted into 45,113 shares of Class A Common Stock
See notes to consolidated financial statements
BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 1, 2001, MARCH 26, 2000 AND MARCH 28, 1999
- ------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operations - Benihana Inc., including its majority owned subsidiaries
(the "Company"), owned and operated 51 teppanyaki style and five
sushi restaurants and franchised 16 others as of April 1, 2001. The
Company has the rights to open, license and develop Benihana
restaurants in the United States, Central and South America and the
Caribbean islands.
Basis of Presentation - The consolidated financial statements include
the assets, liabilities and results of operations of its
majority-owned subsidiaries. The ownership of other interest holders
including attributable income and losses is reflected as minority
interest. All intercompany accounts and transactions have been
eliminated in consolidation. The Company operates within only one
reportable operating segment.
The Company has a 52/53-week fiscal year. All of the years presented
in these financial statements consist of 52 weeks except for the year
ended April 1, 2001, which consist of 53 weeks.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
("generally accepted accounting principles") requires that management
make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting
period. Actual amounts could differ from those estimates.
Certain prior year amounts in the accompanying consolidated financial
statements have been reclassified to conform with fiscal 2001
classifications.
Franchise and License Fee Revenue Recognition - The Company
recognizes initial franchise fees as income when substantially all of
its obligations are satisfied, which generally coincides with the
opening of the franchised restaurants. The Company also receives
continuing royalty fees based upon a percentage of each franchised
restaurant's gross revenues. Royalty fees are recognized as income
when earned.
Cash and Cash Equivalents - The Company considers all highly liquid
investment instruments purchased with an initial maturity of three
months or less to be cash equivalents.
Inventories - Inventories, which consist principally of restaurant
operating supplies and food and beverage, are stated at the lower of
cost (first-in, first-out method) or market.
Depreciation and Amortization - Depreciation and amortization are
computed by the straight-line method over the estimated useful life
(buildings - 30 years; restaurant furniture, fixtures and equipment -
8 years; office equipment - 8 years; personal computers, software and
related equipment - 3 years; and leaseholds - lesser of the lease
terms, including renewal options, or useful life).
Goodwill is being amortized on a straight-line basis over a 25-year
period for the acquisition of Rudy's Restaurant Group, Inc. in 1997
and over a 15-year period for the acquisition of 80% of Haru Holding
Corp. in 1999. The amortization period represents the estimated
benefit period for each of the businesses acquired. Accumulated
amortization of goodwill was $2,206,000 at April 1, 2001.
The Company capitalizes all direct costs incurred to construct
restaurants. Upon opening, these costs are depreciated and charged to
expense based upon their property classification. The amount of
interest capitalized in connection with restaurant construction was
approximately $345,000 in fiscal year 2001 and was nil in fiscal
years 2000 and 1999.
Accounting for Long-Lived Assets - The Company periodically evaluates
its net investment in restaurant properties and goodwill for
impairment for events or changes in circumstances that indicate the
carrying amounts of an asset may not be recoverable. During the
periods presented, no such impairment had occurred.
Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use - The Company capitalizes and records in other
assets the cost of computer software obtained for internal use and
amortizes such costs over a three-year period.
Derivative Instruments - The Company utilizes interest rate swap
agreements to hedge exposure to fluctuations in variable interest
rates. The Company recognizes the interest differential to be paid or
received on an interest rate swap as an adjustment to interest
expense as the differential occurs. If the Company was to terminate
an interest rate swap, any gain or loss realized upon termination
would be deferred and amortized to interest expense over the
remaining term of the underlying debt instrument it was intended to
modify or would be recognized immediately if the underlying debt
instrument were settled prior to maturity.
Stock-Based Compensation - The Company accounts for stock based
compensation under the intrinsic value method of accounting for stock
based compensation and has disclosed pro forma net income and
earnings per share amounts using the fair value method.
Earnings Per Share - Basic earnings per common share is computed by
dividing net income available to common shareholders by the weighted
average number of common shares outstanding during each period. The
diluted earnings per common share computation includes dilutive
common share equivalents issued under the Company's various stock
option plans and dilutive convertible preferred stock.
The computation of basic earnings per common share and diluted
earnings per common share for each year is shown below (in thousands):
April 1, March 26, March 28,
2001 2000 1999
---------------- ---------------- --------------
Income from operations $9,091 $8,733 $6,518
Less preferred dividends (43) (42) (50)
---------------- ---------------- --------------
Income for computation of basic
earnings per common share 9,048 8,691 6,468
Convertible preferred dividends (See Note 12) 43 42 50
---------------- ---------------- --------------
Income for computation of diluted
earnings per common share $9,091 $8,733 $6,518
================ ================ ==============
Weighted average number of common
shares in basic earnings per share 6,165 6,147 6,105
Effect of dilutive securities:
Stock options and warrants 341 384 180
Convertible preferred shares (See Note 12) 105 105 134
---------------- ---------------- --------------
Weighted average number of common
shares and dilutive potential common
shares used in diluted earnings per share 6,611 6,636 6,419
================ ================ ==============
Recent Accounting Pronouncements - In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133, as
amended by SFAS No. 137 and SFAS No. 138, requires that all
derivative instruments be recorded on the balance sheet at their fair
value. Changes in the fair value of derivatives will be recorded each
period in current earnings or other comprehensive income, depending
on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. The adoption of this
statement for the first quarter of fiscal 2002 did not have a
material impact on the Company's financial statements.
2. ACQUISITION
The Company's financial statements and the discussion and data
presented below reflect the acquisitions by the Company of 80% of the
equity of Haru Holding Corp. ("Haru") on December 6, 1999. Haru owns
and operates two sushi restaurants in New York City. The purchase
price paid in cash at closing was approximately $8.4 million. The
acquisition was accounted for using the purchase method of accounting
and the operating results of Haru have been included in the Company's
consolidated statements of earnings since the date of acquisition.
The ownership of the minority interest including attributable income
and losses is reflected as minority interest. The excess of the
purchase price over the acquired tangible and intangible net assets
of approximately $5.8 million was allocated to goodwill and is being
amortized on a straight-line basis over 15 years. Additionally, lease
acquisition costs of $2.1 million relating to a lease for a Haru
restaurant location in the Times Square area of Manhattan was
included in the purchase price. The costs to acquire this lease is
amortized on a straight-line basis over the remaining 14 years
balance of the lease term.
3. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has estimated the fair value of financial instruments
that are included as assets and liabilities in the accompanying
consolidated balance sheets. The carrying value of cash and cash
equivalents and receivables approximate fair value because of the
short-term nature of these instruments. The carrying value of the
cash surrender value of officer's life insurance approximates the
fair value because of the nature of the life insurance contract.
The fair value of outstanding borrowings under the Company's
long-term debt agreement approximates the carrying value since the
interest rate floats subject to market conditions. The value of the
interest rate swap agreement included in the fair value of the debt
was obtained from dealer quotes which represent the estimated amount
the Company would receive or pay to terminate the agreement taking
into consideration current market interest rates. The estimated fair
value of outstanding borrowings was $14,746,000 and the carrying
value was $14,645,000 at April 1, 2001 and the estimated fair value
of outstanding borrowings was $14,673,000 and the fair value was
$14,646,000 at March 26, 2000.
4. INVENTORIES
Inventories consist of (in thousands):
April 1, March 26,
2001 2000
------------------ ---------------
Food and beverage $1,634 $1,450
Supplies 2,515 2,163
------------------ ---------------
$4,149 $3,613
================== ===============
5. PROPERTY AND EQUIPMENT
Property and equipment consist of (in thousands):
April 1, March 26,
2001 2000
------------------- ----------------
Land $5,925 $5,925
Buildings 12,035 11,924
Leasehold improvements 44,110 35,385
Restaurant furniture, fixtures, and equipment 19,272 17,592
Restaurant facilities and equipment under
capital leases 7,638 7,638
------------------- ----------------
88,980 78,464
Less accumulated depreciation and amortization
(Including accumulated amortization of
restaurant facilities and equipment under
capital leases of $6,810 and $6,508 in 2001
and 2000, respectively) 43,969 41,842
------------------- ----------------
45,011 36,622
Construction in progress 9,093 6,942
------------------- ----------------
$54,104 $43,564
=================== ================
6. OTHER ASSETS
Other assets consist of (in thousands):
April 1, March 26,
2000 2000
------------------ ---------------
Lease acquisition costs, net $2,605 $2,683
Premium on liquor licenses 947 961
Security deposits 958 545
Long-term receivables 105 181
Computer software costs, net 261 291
Deferred financing charges, net 194 259
Cash surrender value of
life insurance policy 364 345
------------------ ---------------
$5,434 $5,265
================== ===============
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of (in thousands):
April 1, March 26,
2001 2000
------------------- -----------------
Accounts payable $6,999 $5,325
Accrued payroll, incentive
compensation and related taxes 3,005 3,162
Accrued sales taxes 1,061 750
Unredeemed gift certificates 902 759
Accrued percentage rent 900 842
Accrued property taxes 590 481
Accrued income taxes 1,205
Other accrued operating expenses 3,029 1,947
------------------- -----------------
$16,486 $14,471
=================== =================
8. LEASE OBLIGATIONS
The Company generally operates its restaurants in leased
premises. The typical restaurant premises lease is for a term of
between 15 to 25 years with renewal options ranging from 5 to 25
years. The leases generally provide for the payment of property
taxes, utilities, and various other use and occupancy costs.
Rentals under certain leases are based on a percentage of sales
in excess of a certain minimum level. Certain leases provide for
increases based upon the changes in the consumer price index.
The Company is also obligated under various leases for
restaurant equipment and for office space and equipment.
Minimum payments under lease commitments are summarized below
for capital and operating leases. The imputed interest rates
used in the calculations for capital leases vary from 9.75% to
12% and are equivalent to the rates which would have been
incurred to borrow, over a similar term, the amounts necessary
to purchase the leased assets.
The amounts of operating and capital lease obligations are as
follows (in thousands):
Operating Capital
Leases Leases
--------------- ---------------
Fiscal year ending:
2002 $4,850 $893
2003 5,570 785
2004 5,561 458
2005 5,527 289
2006 5,411 26
Thereafter 36,302
--------------- ---------------
Total minimum lease payments $63,221 $2,451
===============
Less amount representing interest 378
---------------
Total obligations under capital leases 2,073
Less current maturities 702
---------------
Long-term obligations under capitalized
Leases at April 1, 2001 $1,371
===============
Rental expense consists of (in thousands):
April 1, March 26, March 28,
2001 2000 1999
----------------------------------------------------
Minimum rental commitments $6,497 $5,665 $4,844
Rental based on percentage of sales 2,298 1,711 1,491
----------------------------------------------------
$8,795 $7,376 $6,335
====================================================
In September 1999, the Company entered into a $25,000,000 master
lease agreement with its principal bank lender, First Union
National Bank and two other banks, to finance land acquisition
and construction of new restaurants. Under the agreement, a
grantor trust purchases properties selected by the Company,
finances all of the construction costs and leases the facilities
to the Company upon their completion. The initial term of the
lease is for five years and the lease can be renewed upon
approval by all parties to the transaction. The Company accounts
for the lease as an operating lease. Upon maturity, the Company
retains the option to purchase all of the properties owned by
the trust. However, if the Company elects not to purchase the
properties, the Company provides a residual guaranty for the
leased facilities and is liable for the decline in market value
of the leased facilities up to 90% of the cost of the property
at the inception of the lease inclusive of the present value of
lease payments. The Company must also maintain compliance with
financial covenants similar to its other credit facilities as
described in the following note.
9. LONG-TERM DEBT
Long-term debt consists of (in thousands):
April 1, March 26,
2001 2000
------------------ -------------------
Term loan - bank $8,000 $10,250
Revolving line of credit - bank 6,500 4,000
Notes payable - 7% unsecured note
obligation payable in monthly installments
of $7 thru February 2001 70
Note obligation under terms of non-competition
agreement with former shareholder of Rudy's
discounted at 8%, payable in monthly
installments of $17 thru December 2001 145 326
------------------ -------------------
14,645 14,646
Less current portion 2,145 2,001
------------------
-------------------
$12,500 $12,645
================== ===================
The Company has a credit arrangement with a bank that includes a
term loan and a revolving line of credit under which $8,500,000
was available at April 1, 2001. Interest under the credit
arrangement accrues at the Company's option at either prime rate
plus a margin up to 1.0% or at LIBOR plus a margin of between
1.0% to 2.25%. At April 1, 2001, interest was accrued at
approximately 6.0% (LIBOR plus 1.0%). The applicable interest
rate margin varies with the Company's leverage ratio (defined as
earnings before interest, taxes, and depreciation and
amortization divided by funded indebtedness). The final maturity
date of both the term loan and the revolving line of credit is
March 31, 2004. The credit arrangement restricts the Company
from making dividend payments and purchases of the Company's
common equity securities and limits the amounts of capital
expenditures that the Company can make annually during the term
of the agreement. The credit arrangement also requires the
Company to achieve certain ratios of operating cash flow to debt
and other financial benchmarks. The credit agreement is
collateralized by a security interest in the Company's assets.
The Company entered into an interest rate swap agreement
involving an exchange of floating rate interest payment
obligations for fixed rate payment obligations. The purpose of
the swap agreement was to protect against significant increases
in interest rates on variable rate bank indebtedness. Periodic
cash payments either received or paid pursuant to the swap are
accrued on a settlement basis as an adjustment to interest
expense. The notional amount of the agreement at April 1, 2001
was $3,708,000 and that amount is reduced by $74,000 monthly
until March 2002 when the balance of the agreement expires. At
April 1, 2001, the agreement had a fair market value of
$101,000.
Principal maturities of long-term debt obligations at April 1, 2001
are as follows:
Fiscal year ending
2002 $2,145
2003 2,250
2004 3,000
2005 7,250
------------
Total $14,645
============
10. INCOME TAXES
Deferred tax assets and liabilities reflect the tax effect of
temporary differences between amounts of assets and liabilities for
financial reporting purposes and the amounts of such assets and
liabilities as measured by income tax law. A valuation allowance is
recognized to reduce deferred tax assets to the amounts that are more
likely than not to be realized.
The net deferred tax asset balance consists of (in thousands):
April 1, 2001 March 26, 2000
Assets Liabilities Total Assets Liabilities Total
------------------------------------------------------------------------------------------------------------------------
Tax loss carryforwards $1,596 $ - $1,596 $2,028 $- $2,028
Excess book amortization
For pre-opening costs
And capital leases 526 526 675 675
Income tax credits 392 392 392 392
Gift certificates 361 361 304 304
Accelerated depreciation
For tax purposes (104) (104) (273) (273)
Other 202 202 164 164
--------------------------------------------------------------------------------
Total asset (liability) $3,077 ($104) $2,973 $3,563 ($273) $3,290
================================================================================
The Company's net operating loss carryforwards as of April 1, 2001
was $3,990,000 for ordinary income tax purposes and $4,304,000 for
alternative minimum income tax purposes and are available to reduce
future taxable income. The net operating loss carryforwards are
subject to the change of control provision limiting the usage of the
net operating loss carryforwards to approximately $1,100,000 per
year. All net operating loss carryforwards expire as follows (in
thousands):
Fiscal year ending
2005 $3,520
2006 470
-----------------
$3,990
=================
The income tax provision consists of (in thousands):
April 1, March 26, March 28,
2001 2000 1999
------------------------------------------------------------------------------------------------------------------------
Current:
Federal $3,398 $3,527 $2,273
State 1,293 1,100 811
Deferred:
Federal and State 317 95 396
----------------------------------------
Income tax provision $5,008 $4,722 $3,480
========================================
The income tax provision differed from the amount computed at the
statutory rate as follows (in thousands):
April 1, March 26, March 28,
2001 2000 1999
------------------------------------------------------------------------------------------------------------------------
Federal income tax provision at statutory rate of 34% $4,835 $4,609 $3,399
State income taxes, net of federal benefit 854 726 535
Tax credits, net (833) (687) (593)
Change in valuation allowance (107)
Other 152 181 139
----------------------------------------
Income tax provision $5,008 $4,722 $3,480
========================================
Effective income tax rate 35.5% 35.1% 34.8%
========================================
11. CONTINGENCIES
From time to time, lawsuits are filed against the Company in the
ordinary course of business. Such lawsuits typically involve claims
from customers and others related to operational issues common to the
food service industry. In addition, the Company also encounters
similar complaints and allegations from current and former employees
or others which are common for similar businesses.
An action was filed by a former employee in the United States
District Court for the Southern District of New York. The complaint
also purports to be filed on behalf of other unnamed current and
former employees. The complaint sets forth a single claim form for
alleged violations of the minimum wage provisions of the federal
labor laws relating to employees participation in "tip pools". The
plaintiffs allege that the Company did not comply with the
requirement of the laws that pertain to tipped employees. Plaintiff
seeks damages consisting of the difference between the hourly wage
that the plaintiff was paid and the applicable federal minimum hourly
wages. Should the plaintiff prevail he and other current and former
employees may be awarded the liquidated damages provided by
applicable federal labor laws and reasonable attorneys' fees and
costs. The Company served an answer to the complaint denying the
material allegations made and intends to vigorously defend the
action. While the Company believes that the complaint has no merit,
this action is in its preliminary stages and there can be no
assurance that the Company will not be required to pay a material
amount in the settlement or other disposition of this matter.
12. STOCKHOLDERS' EQUITY
Series A Redeemable Convertible Preferred Stock - The preferred stock
has a liquidation preference of $1,000 per share, carries a
cumulative dividend of 6% and entitles the holder a right to convert
into a maximum of 105,263 shares of the Company's Class A Common
Stock. The preferred stock is redeemable at the option of the
Company. On May 15, 2001, the holder converted all of the preferred
stock to 105,263 shares of Class A Common Stock.
Common and Class A Common Stock - The Company's Common Stock is
convertible into Class A Common Stock on a one-for-one basis. The
Class A Common Stock is identical to the Common Stock except that it
gives the holder one-tenth (1/10) vote per share, voting together
with the Company's Common Stock as a single class on all matters
except the election of directors. For election of directors, the
Class A Common Stockholders vote as a class to elect 25% of the
members of the Board of Directors. On June 4, 2001, the holder of
294,737 shares of Common Stock converted these shares into 294,737
shares of Class A Common Stock.
Stock Options - The Company has various stock option plans: a 1994
Employee Stock Option Plan (1994 Plan), a 1996 Class A Stock Option
Plan (1996 Plan), a 1997 Class A Stock Option Plan (1997 Plan), a
2000 Class A Stock Option Plan (2000 Plan), a Directors' Stock Option
Plan (Directors' Plan) and a Directors' Class A Stock Option Plan
(Directors' Class A Plan), under all of which a maximum of 3,285,000
shares of the Company's Common Stock were authorized for grant and
for all of which options for 1,871,493 shares remain available for
grant.
Options granted under the 1996 and 1997 plans have a term of ten
years from date of issuance, and are exercisable ratably over a
three-year period commencing with the date of the grant. Options
granted under these plans require that the exercise price be at
market value on the date of the grant, or for optionees that own more
than 10% of the combined voting rights of the Company, at 110% of
market value for incentive stock options.
Options granted under the 1994 Plan have a term of ten years from
date of issuance and are exercisable on the date of grant. Under the
Directors' Plan, options to purchase 10,000 shares are automatically
granted to each of the Company's non-employee directors on the date
of the Company's annual meeting. Options granted under the Directors
Plan are exercisable ratably over two years commencing with the first
anniversary of the date of the grant.
The Company applies the intrinsic-value-based method in accounting
for stock-based awards to employees. Therefore, the Company generally
recognizes no compensation expense with respect to such awards
because options are generally granted at the fair market value on the
date of the grant.
Had the Company accounted for its stock-based awards to employees
under the fair value method, the table below shows the pro forma
effect on net income and earnings per share. The fair value of the
Company's stock based awards to employees was estimated using a
Black-Scholes option- pricing model.
The following weighted average assumptions were used in the
Black-Scholes option-pricing model: a risk-free interest rate of
4.73% for fiscal year 2001, 6.7% for 2000 and 5.5% for 1999,
respectively; an expected life of three years, no expected dividend
yield and a volatility factor of 53%, 38% and 58% for fiscal years
2001, 2000 and 1999, respectively.
The Company's pro forma information is as follows:
April 1, March 26, March 28,
2001 2000 1999
--------------------------------------------------
Net Income
As reported $9,091 $8,733 $6,518
Pro forma $8,163 $7,796 $5,760
Diluted Earnings Per Common Share
As reported $1.38 $1.32 $1.02
Pro forma $1.23 $1.17 $.90
As a result of the inclusion of only the grants made subsequent to
fiscal 1995, the effects may not be Representative of the pro forma
impact in future years.
The following table summarizes information about fixed-price stock
options outstanding at April 1, 2001:
Options Outstanding Options Exercisable
----------------------------------------- ---------------------------
Weighted-
Average Weighted Weighted
Ranges of Remaining Average Average
Exercise Contractual Exercise Exercise
Prices Number Life Price Number Price
------------------------------------------------------------------------------------------------------------------------
$ 1.38 - $ 3.25 25,500 2.6 $2.63 25,500 $2.63
6.75 - 8.38 388,791 6.7 7.42 388,791 7.42
9.00 - 10.11 131,478 5.6 9.39 124,811 9.41
10.25 - 12.25 511,335 7.1 11.85 446,390 11.92
12.69 - 15.50 369,834 9.0 13.91 159,945 14.19
---------------- ---------------
$ 1.38 - 15.50 1,426,938 1,145,437
================ ================
Transactions under the above plans for the years ended are as
follows:
April 1, March 26, March 28,
2001 2000 1999
------------------------------------------------------------------------------------------------
Balance, beginning of year 1,177,784 877,560 669,427
Granted 276,500 322,500 209,500
Canceled (15,135)
Expired (1,167)
Exercised (12,011) (21,109) (1,367)
---------------------------------------------
Balance, end of year 1,426,938 1,177,784 877,560
=============================================
Weighted average fair value of options
Granted during year $5.07 $4.24 $5.26
On April 1, 2001, options for 1,145,437 of the shares are exercisable
at prices ranging from $1.38 to $15.50.
Stock Rights - The Company has a Shareholder Rights Plan under which
a Preferred Share Purchase Right (Right) is represented by each
outstanding share of the Company's Common and Class A Common Stock.
The Rights operate to create substantial dilution to a potential
acquirer who seeks to make an acquisition, the terms of which the
Company's Board of Directors believes is inadequate or structured in
a coercive manner.
The Rights become exercisable on the tenth day (or such later date as
the Board of Directors may determine) after public announcement that
a person or a group (subject to certain exceptions) has acquired 20%
or more of the outstanding Common Stock or an announcement of a
tender offer that would result in beneficial ownership by a person or
a group of 20% or more of the Common Stock.
13. INCENTIVE AND DEFERRED COMPENSATION PLANS
The Company has an incentive compensation plan whereby bonus awards
are made if the Company attains a certain targeted return on its
opening equity. The purpose of the plan is to improve the long-term
sustainable results of operations of the Company by more fully
aligning the interests of management and key employees with the
shareholders of the Company. One-third of the amounts awarded are
immediately made available to the employee and the remaining
two-thirds become available ratably over the succeeding two years.
Amounts allocated under the Plan may be taken in cash or deferred in
a non-qualified deferred compensation plan. The target rate, which
was 15.5% for 2001, 17.5% for 2000 and 16% for 1999, is approved
annually based upon a review of the rates of return on equity of
other publicly traded restaurant businesses by the Compensation
Committee of the Board of Directors. The amount of the awards is
capped at 50% of the eligible salary of the employee. The Company
accrued $564,000, $500,000 and $575,000 of incentive compensation for
fiscal years 2001, 2000 and 1999, respectively.
The Company has an executive retirement plan whereby certain key
employees may elect to defer up to 20% of their salary and 100% of
their bonus until retirement or age 55, whichever is later, or due to
disability or death. Employees may select from various investment
options for their available account balances. Investment earnings are
credited to their accounts.
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarter ended (in thousands except for per share information)
April 1, 2001
------------------------------------------------------------------------------------------------------------------
4th 3rd 2nd 1st
Revenues $42,216 $37,261 $36,697 $47,068
Gross profit 31,076 27,292 26,540 33,656
Net income 2,878 2,189 1,589 2,435
Basic earnings
per share $ .46 $ .35 $ .26 $ .39
Diluted earnings
per share $ .45 $ .34 $ .24 $ .37
Quarter ended (in thousands except for per share information)
March 26, 2000
------------------------------------------------------------------------------------------------------------------
4th 3rd 2nd 1st
Revenues $35,674 $32,189 $29,933 $39,681
Gross profit 26,059 23,322 21,690 28,730
Net income 2,699 2,167 1,529 2,338
Basic earnings
per share $ .43 $ .35 $ .25 $ .38
Diluted earnings
per share $ .40 $ .32 $ .23 $ .36
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Benihana Inc.:
We have audited the accompanying consolidated balance sheets of Benihana Inc.
and subsidiaries ("Benihana") as of April 1, 2001 and March 26, 2000, and the
related consolidated statements of earnings, stockholders' equity and cash flows
for each of the three years in the period ended April 1, 2001. These
consolidated financial statements are the responsibility of Benihana's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Benihana as of April 1, 2001 and
March 26, 2000, and the results of its operations and its cash flows for each of
the three years in the period ended April 1, 2001 in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche LLP
Certified Public Accountants
Miami, Florida
May 18, 2001
EXHIBIT 21.01
BENIHANA INC.
LIST OF SUBSIDIARIES
Subsidiary State of Incorporation
- ---------- ----------------------
Benihana National Corp. Delaware
Benihana New York Corp. Delaware
Teppan Restaurants Ltd. Oregon
Benihana Bethesda Corp. New York
Benihana International Inc. Delaware
Benihana Encino Corp. California
Benihana National of Florida Corp. Delaware
Big Splash Kendall Corp. Delaware
Benihana Orlando Corp. Delaware
Benihana of Texas Inc. Texas
Benihana Las Colinas Corp. Texas
Benihana Las Colinas Corp. Delaware
Benihana Lombard Corp. Illinois
Benihana Schaumburg Corp. Delaware
Benihana Marina Corp. California
Benihana of Puente Hills Corp. Delaware
Benihana Sunrise Corp. Delaware
Rudy's Restaurant Group, Inc. Nevada
The Samurai, Inc. New York
Benihana Lincoln Road Corp. Florida
Maxwell's International, Inc. Delaware
Noodle Time, Inc. Florida
Benihana Brickell Station Corp. Delaware
Benihana Monterey Corporation Delaware
Benihana State & Elm Corp. Delaware
Benihana Ontario Corp. Delaware
Benihana Westbury Corp. Delaware
Benihana Wheeling Corp. Delaware
Benihana Woodlands Corp. Texas
Haru Amsterdam Avenue Corp. New York
Haru Food Corp. New York
Haru Third Avenue Corp. New York
Haru Holding Corp. Delaware
1501 Broadway Restaurant Corp. New York
Haru Too, Inc. New York
Haru Park Avenue Corp. Delaware
EXHIBIT 23.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.'s
333-33880, 333-63783 and 333-13973 of Benihana Inc. on Form S-8 of our report
dated May 18, 2001, appearing in and incorporated by reference in the Annual
Report on Form 10-K of Benihana Inc. for the year ended April 1, 2001.
Deloitte & Touche LLP
Miami, Florida
June 22, 2001
EXHIBIT 23.02
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.'s
333-83585 and 333-13977 of Benihana Inc. on Form S-3 of our report dated May
18, 2001, appearing in and incorporated by reference in the Annual Report on
Form 10-K of Benihana Inc. for the year ended April 1, 2001 and to the reference
to us under the heading "Experts" in such Registration Statements.
Deloitte & Touche LLP
Miami, Florida
June 22, 2001