SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]
For the fiscal year ended May 31, 2000 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]
For the transition period from to
Commission file number 0-2288
HOSOI GARDEN MORTUARY, INC.
STATE OF HAWAII
IRS Employer Identification No. 99-0088064
30 North Kukui Street
Honolulu, Hawaii 96817
Issuer's telephone number: 808-538-3877
Securities registered pursuant to Section 12(b) of
the Exchange Act:
None
Securities registered pursuant to Section 12(g) of
the Exchange Act:
Common Stock Par Value $.20 per share
Check whether the issuer (1) filed all reports
required to be filed by the Exchange Act during
the past 12 months (or for such shorter period
that the registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
<PAGE>
Check if there is no disclosure of delinquent
filers in response to Item 405 of Regulation S-B
(is not) contained in this form, and no
disclosure will 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-KSB or any amendment
to this Form 10-KSB. ( )
State issuer's revenue for its most recent fiscal
year. $2,725,611
State the aggregate market value of the voting
stock held by non-affiliates computed by
to the price at which the stock was sold, or the
average bid and asked prices of such stock, as of
a specified date within the past 60 days. (See
definition of affiliate in Rule 12b-2 of the
Exchange Act): $7,051,966
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each
of issuer's classes of common stock, as of the
latest practicable date: 1,659,286
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by
reference, briefly describe them and identify
the part of the 10-KSB (e.g. Part I,Part II, etc.)
into which the document is incorporated: (1) any
annual report to security holders; (2) any proxy
r information statement; and (3) any prospectus
filed pursuant to Rule 424(b) or (c) of the
Securities Act of 1933 ("Securities Act"). The
listed documents should be clearly described for
identification purposes (e.g. annual report to the
security holders for fiscal year ended
May 31, 1992).
Transitional Small Business Disclosure Format
(Check one): Yes X No
-2-
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Hosoi Garden Mortuary, Inc. (the "Company") was
incorporated in 1957 under the laws of the State
of Hawaii as the successor to a business founded
in 1900. Professional funeral services are the
principal services rendered by the Company. The
Company is engaged in the funeral and mortuary
business, including the sale of pre-need funeral
services contracts. During the fiscal years ended
May 31, 2000 and 1999, funeral services accounted
for 78.9% and 74.4%, respectively, of revenues.
The Company owns 50% of Garden Life Plan, Ltd.
("Garden Life") which sells pre-need funeral
service contracts for which the Company acts as
the sole servicing mortuary.
The Company operates a mortuary business in
Honolulu, Hawaii. The Company offers funeral
services to all persons in Hawaii. Although the
Company, historically, has served principally
persons of Japanese ancestry who follow a
particular and special order of worship in
accordance with their religious beliefs, the
Company continues to develop markets involving
other ethnic groups and religious beliefs. In
addition to handling funeral services for
residents of Honolulu, the Company conducts
services for residents of other counties in
Hawaii and prepares remains for shipment to or
receives them from other counties in Hawaii,
other states in the United States and foreign
countries. Competition in the funeral business
in Hawaii is based upon (1) the location of a
mortuary and (2) the principal ethnic group that
a mortuary serves. There are 21 mortuaries in
the State of Hawaii. Their locations are as
follows:
<TABLE>
<CAPTION>
LOCATION NUMBER OF MORTUARIES
<C> <C>
Island of Hawaii 3
Island of Maui 3
Island of Oahu 12 (one military)
Island of Kauai 2
Island of Molokai 1
</TABLE>
Because of the separation of the Hawaiian islands
by ocean, a mortuary is generally confined to the
funeral demands of a particular island. A very
small percentage of business constitutes service
requiring the use of funeral parlors on an island
other than where death has occurred.
-3-
<PAGE>
<TABLE>
<CAPTION>
COMPARATIVE STATISTICAL INFORMATION
Percent of Services
No. of No. of Services by Company as
Calendar Deaths in Deaths in Performed by to No. of Deaths
Year End State of HI Oahu the Company in Oahu
<S> <C> <C> <C> <C>
1990 7,056 5,253 980 18.66%
1991 6,486 4,930 980 19.88%
1992 7,173 5,317 1,011 19.01%
1993 7,570 5,689 1,114 19.58%
1994 7,531 5,588 1,091 19.52%
1995 7,795 5,834 1,043 17.88%
1996 8,148 5,557 1,151 20.71%
1997 8,016 5,856 1,050 17.93%
1998 8,297 6,058 1,063 17.54%
1999 8,369 6,136 1,100 17.93%
</TABLE>
In most cases, a substantial portion of the
business of a mortuary is from an ethnic group it
principally serves. Historically, a substantial
portion of the Company's total services were for
families of Japanese ancestry. The larger
mortuaries on the Island of Oahu and the ethnic
groups which they are believed to serve primarily
are as follows:
<TABLE>
<CAPTION>
NAME ETHNIC GROUPS SERVED
<C> <C>
Williams Mortuary Caucasian
Hosoi Garden Mortuary Japanese
Borthwick Mortuary Caucasian and Chinese
Hawaiian Memorial Park Mixed and Japanese
Mililani Memorial Park & Mortuary Mixed (Filipino and Japanese)
Leeward Funeral Home Mixed
Valley of the Temples Mortuary Japanese, Chinese and Caucasian
(also operating Kukui, Nuuanu
and Diamond Head Memorial Parks)
U.S. Army Mortuary All ethnic groups
</TABLE>
-4-
<PAGE>
On July 7, 1998, the Company entered into an
agreement with Woolsey Funeral & Cemetery
Services, Inc. to form Woolsey-Hosoi Mortuary
Services, LLC, a limited liability company under
the laws of the State of Hawaii. It is expected
that the LLC will conduct funeral services to
persons other than those of Japanese ancestry.
Funeral services arranged by the LLC will
generally be conducted at churches and other
locations other than on the Company's premises.
Thirty-three (33) persons were employed by the
Company for the fiscal year ended May 31, 2000.
Seventeen (17) persons were employed full-time
and sixteen (16)persons were employed part-time.
ITEM 2. DESCRIPTION OF PROPERTY
The Company operates its business at 30 North
Kukui Street, Honolulu, Hawaii, 96817, on the
northwest corner of Nuuanu Avenue and Kukui
Street in Honolulu, Hawaii. The business site
consists of 92,773 square feet, of which the
Company owns a 78/104th interest. The Herman S.
Hosoi Trust owns a 13.65/104th interest and the
Hosoi-Tamori-Shimonishi Trust owns the remaining
12.35/104th interest. The trustees and
beneficiaries of both trusts include directors,
officers and shareholders of the Company.
The portion owned by the Company is owned in fee
simple. The Company leases the portion owned by
the Herman S. Hosoi Trust and
Hosoi-Tamori-Shimonishi Trust ("Trusts") under a
fifteen-year lease that expires on October 31,
2014. The lease provides for an annual base rent
of $112,200 for the period from November 1, 1999
to October 31, 2004, and annual base rent $132,000
for the period from November 1, 2004 to October
31, 2009. Additionally, the lease provides for
the payment of percentage rent on the Company's
annual gross revenues. The Company is also
responsible for the payment of real property taxes
on the portion of the land owned by the Trusts.
Total rental expense was $216,776 and $345,636
in fiscal years 2000 and 1999, respectively.
The main mortuary building, which was built in
1961, contains a chapel area, which is capable
being used for one service with a seating capacity
of 600 or for two chapels with a seating capacity
of 300 each. There is an altar and family room a
each end of the building. The office is located
on the west end of the main mortuary building.
The embalming rooms are on the second floor.
-5-
<PAGE>
In addition, there is a combined garage, kitchen
and room annex. Parking facilities for 147 cars
have access to Nuuanu Avenue, Kukui Street and
Maunakea Street, and are one-half block away from
Vineyard Boulevard, which is one the main
thoroughfares in Honolulu. The areas not used
for buildings or parking stalls have been
appropriately landscaped to qualify for partial
real property tax exemption.
No substantial addition or changes in the real
property or improvements of the Company were
made during the fiscal year ended May 31, 2000.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF
SECURITY HOLDERS
On January 23, 2000, the annual meeting of the
shareholders was held. According to the
Company's stock transfer agent Continental Stock
Transfer & Trust Co., the total shares issued,
outstanding and entitled to vote were 1,683,741.
The total shares present in person and proxy
were 1,037,025 (61.59%).
The election of three directors and the election
of an auditor were submitted to a vote of the
shareholders. Of the total shares present in
person and proxy, the following vote of the
shareholders was taken:
<TABLE>
ELECTION OF CLASS A DIRECTORS (3 YEAR TERM)
<CAPTION>
NAME FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Robert Kuwahara 1,036,225 (61.54%) 800
Julie Shimonishi 1,021.090 (60.64%) 15,935
Glenn Suetsugu 1,036,225 (61.54%) 800
The foregoing persons were elected at the annual
meeting to serve a three-year term until the 2002
annual meeting or until their successors shall
be elected.
</TABLE>
<TABLE>
ELECTION OF AUDITOR (One Year Term)
<CAPTION>
NAME FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Endo & Company, CPA 1,021,185 (60.65%) 15,135 705
(Jack Y. Endo)
</TABLE>
-6-
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON STOCK AND RELATED
SHAREHOLDER MATTERS
The common shares of the Company are neither
traded nor listed on an exchange and has no
established public trading market. During the
fiscal year ended May 31, 2000, the Company
redeemed 15,255 shares as follows:
<TABLE>
<CAPTION>
NO. OF SHARES REDEMPTION PRICE
<C> <C>
15,255 $4.25
</TABLE>
There were 1,598 record holders of common stock
as of May 31, 2000.
A cash dividend has been declared and paid once a
year since 1969. The dividend for the year ended
May 31, 1999, which was declared on November 15,
1999, was $.06 per share, and was paid to
shareholders in January 2000.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following table sets forth items from Hosoi
Garden Mortuary, Inc.'s statement of income as
percentages of net revenues:
<TABLE>
<CAPTION>
Years Ended May 31,
1999 (As
2000 restated)
<S> <C> <C>
Total revenues 100.0% 100.0%
Cost of sales and services 71.2 74.7
Gross profit 28.8 25.3
Selling, general and administrative 27.7 24.0
Operating income 1.1 1.3
Other income (expenses) 6.9 6.4
Income before income taxes 8.0 7.7
Provision for income taxes 2.3 3.3
Income before equity in earnings
of Garden Life Plan, Ltd. (GLP) 5.7 4.4
Equity in earnings of GLP, net - -
Net income 5.7% 4.4%
</TABLE>
-7-
<PAGE>
RESULTS OF OPERATIONS
TOTAL REVENUES
The Company's revenues decreased by $21,690 in
2000 over 1999. The decrease of 0.8% is principally
attributable to an increase in the number of
pre-need services in 2000 over 1999. Pre-need
services, which generate a lower average price,
increased from 410 in 1999 to 451 in 2000 which is
an increase of 10%. The decrease in total revenues
resulting from the increase in pre-need services in
2000 was partially offset by an increase in revenues
from at-need services and additional merchandise
sales to pre-need customers.
The Company expects increases in the number of
pre-need services from the current level of 40% of
total services to approximately 45% to 50% of total
services within the next five years. The Company
expects to mitigate the reduction in revenues from
this expected increase in pre-need services by a
combination of marketing additional merchandise
sales to its pre-need customers, providing
cremation services on its premises and marketing
its at-need services to ethnic groups which
currently comprise a minor part of its at-need
services revenues.
The continued affiliation with Woolsey
Funeral & Cemetery Services, Inc., described in
ITEM 1. DESCRIPTION OF BUSINESS, is a revenue
source from a segment of the community which
was not served by the Company. This affiliation
with Woolsey is expected to provide an additional
revenue source from an ethnic group (Polynesian)
which currently contributes only a minor part of
the Company's revenues.
The Company's operating expenses in 2000
increased as a percentage of revenues due to an
increase in professional services, salaries and
wages, and educational expenses, which was
partially offset by a decrease in lease rent and
real property tax expenses. The Company's
operating expenses is expected to increase as a
result of the Company's continued plans for the
upgrade of its personnel and facilities as follows:
1. Upgrade and train professional staff
to meet the current market demands
and the changing nature of customer
preferences. The current trend
indicates that families are having
smaller services with lower priced
merchandise.
2. Upgrade the facilities to provide
the capacity to provide multi-cultural
services and service the expected
increase in pre-need services.
-8-
<PAGE>
3. Explore the establishment of a
pre-need authority, or consider the
purchase of the interest of its 50%
shareholder in Garden Life Plan, Ltd.
or extend the service agreement with
Garden Life Plan, Ltd. beyond its
expiration in 2001.
4. Construction of an on-site crematory.
Operating results for fiscal 2001 will be
adversely affected if revenues do not increase in
relation to the increase in costs. The increase
in the number of pre-need services expected in
relation to at-need services will limit the growth
of total revenues. The upgrade of the Company's
personnel and facilities is expected to mitigate
the effects of the increase in pre-need plan
services. Also if the economic recovery, which
Hawaii is experiencing, can be sustained overall
revenues is expected to increase as a result.
GROSS PROFIT
Gross profit increased to 28.8% of revenue
in 2000 from 25.3% in 1999. The 3.5% increase in
gross profit in attributable to a decrease in the
lease rent and real property taxes.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses
increased to 27.7% in 2000 from 24.0% in 1999. The
increase is attributable to increases in
professional services, advertising and promotions,
salaries and wages, and educational expenses.
It is expected that advertising and
professional services expenses will increase in the
short term as the Company attempts to attract
customers from ethic groups not currently served
and seeks legal and accounting services relating
to issues concerning expansion of its facilities
and whether to continue its relationship with
Garden Life Plan, Ltd. or establish its own
pre-need authority. It is the Company's goal to
manage operating expenses, overtime, relative to
its revenues and gross margin.
EQUITY IN EARNINGS OF GARDEN LIFE PLAN, LTD.
The financial audit of Garden Life Plan, Ltd.
(GLP) for its year ended May 31, 2000 was not
completed by the filing deadline for Hosoi Garden
-9-
<PAGE>
Mortuary, Inc.'s (HGM) Form 10-KSB. In addition,
HGM's audited financial statements for its year
ended May 31, 1999 is in the process of being
recalled because of the resignation of GLP's
auditors before the completion of the audit of
GLP's financial for its year ended May 31,
1999.The resignation of the auditors resulted
principally because of a disagreement over the
accounting for the recognition of revenues on
the financial statements of GLP.
A successor auditor has been retained by
GLP for the audit of its financial statements
for the year ended May 31, 2000 and the
completion of the audit for its year ended
May 31, 1999. It is expected that the
successor auditor will be able to resolve the
issues with respect to the accounting for the
recognition of revenues in GLP's financial
statements for its years ended on May 31, 2000
and 1999.
After the completion of the audit of GLP's
financial statements, HGM's financial statements
for 1999 will be restated and an amended Form
10-KSB will be filed for the year ended May 31,
1999. After the completion of the audit of GLP's
financial statements for the year ended May 31,
2000, HGM's Form 10-KSB will be refiled with the
required financial statements.
INCOME TAXES
The Company's effective income tax rate was
29.0% of pre-tax income in 2000 and 43.3% in 1999.
LIQUIDITY AND CAPITAL RESOURCES
Total working capital remained relative
unchanged at $1,954,140 at May 31, 2000 and at
$1,950,513 at May 31, 1999. Working capital
ratio was 5.5:1 at May 31, 2000 and 6.0:1 at
May 31, 1999.
SECURITIES AVAILABLE-FOR-SALE increased to
$894,482 in 2000 from $847,718 in 1999 as a
result of earnings on the investment.
SECURITIES HELD-TO-MATURITY decreased to
$876,950 in 2000 from $888,931 in 1999 as a
result of maturing U.S. Treasury bills which
were not reinvested.
At the end of 2000, the Company did not
have any long-term debt. The Company expects
that cash flows from operations, its cash
reserves and
-10-
<PAGE>
earnings on its investments will be adequate to
meet the Company's cash requirements in the
foreseeable future.
Dividends paid were $101,024 and $173,488
in 2000 and 1999, respectively, which was $.06
and $.10 per share in 2000 and 1999, respectively.
Cash outflows for the acquisition of the
Company's shares were $64,834 in 2000 and $296,407
in 1999. The Company expects that future
acquisitions will be in the range of $100,000 to
$200,000 per year.
YEAR 2000
The following summarizes the Company's Year
2000 disclosure statement pursuant to the Year
2000 Readiness and Disclosure Act.
STATE OF READINESS
The Company did not have a formal Year 2000
readiness program, however, the Company's
Treasurer has been assigned the task of the
assessment of the Company's exposure to the Y2K
problem, the implementation of any required
remediation and the testing and validation of
its remediation efforts.
The Company's Year 2000 project focused on
two areas: (1) information technology (IT) systems,
such as application software and PC's; and
(2) suppliers.
The Company identified application software
and PC's which needed to be replaced and have
upgraded its PC systems and have replaced
application software which were not Year 2000
compliant.
As expected the Company remediation,
validation and testing efforts were completed
by the end of 1999.
RISK/CONTINGENCY PLANS
Prior to the Year 2000 date change, the
Company believed that the most likely worst-case
scenarios would have involved the interruption
of crucial suppliers as a result of
infrastructure failures or third party vendor
failures. To date, no such interruptions or
failures have occurred. The Company currently
believes that the likelihood of the occurrence
of such events due to the Year 2000 date change
is low.
-11-
<PAGE>
COST
Total cost of the Year 2000 readiness
program were not material to the Company's
financial condition or results of operations.
Cost associated with the Company's efforts around
Year 2000 issues were expensed as incurred, unless
they related to the purchase of hardware and
software, in which case they were capitalized.
ITEM 7. FINANCIAL STATEMENTS
The balance sheets as of May 31, 2000 and
May 31, 1999 and the audited statements of income,
cash flows and changes in shareholders' equity for
each of the two fiscal years preceding the date of
such audited balance sheets are not included
because the Company's auditors are unable to
complete their audits because of the issues
associated with the audit of Garden Life Plan,
Ltd. as discussed under the caption Equity in
earnings of Garden Life Plan, Ltd. in ITEM 6 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
See discussion under the caption EQUITY IN
EARNINGS OF GARDEN LIFE PLAN, LTD. in ITEM 6 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
-12-
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS: COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT
The Company has a total of nine (9) directors
constituting the entire Board of Directors,
divided into three (3) classes of three (3)
directors each. The Company's Articles of
Association provide for each class of directors
to be elected for three-year terms on a staggered
basis.
Directors hold office for the duration of their
terms and thereafter until their successors are
elected. The executive officers serve at the
pleasure of the Board of Directors. See the
table on pages 16 and 17 for certain information
about the directors and executive officers of the
Company.
The names, ages, positions and offices, terms of
office, and business experience of the directors
and executive officers of the Company are set
forth below.
DIRECTORS WHOSE TERMS EXPIRED IN 2000 AND WHO
WERE ELECTED TO TERMS EXPIRING IN 2003
Julie S. Shimonishi is a school teacher and has
been employed by the Department of Education,
State of Hawaii, since 1970. She has been a
director since 1979. At the January 23, 2000
annual meeting she was elected to a new three-year
term which will expire in 2003. She is the
daughter of Sadako Hosoi, director, and the sister
of Clifford Hosoi, director and president of the
Company, and Anne T. Tamori, director and
vice-president of the Company.
Robert Kuwahara is a Certified Public Accountant
and has his own CPA practice. He has been a
director of the Company since 1995. At the
January 23, 2000 annual meeting he was elected to
a new three-year term which will expire in
He is actively involved in human services
organizations such as the YMCA.
Glenn Suetsugu is a Real Estate Appraiser and
also engages in real property sales and
management. He has been a director of the
Company since 1999. At the January 23, 2000
annual meeting he was elected to a new
three-year term which will expire in 2003. He
provides volunteer work for the Boy Scouts of
America.
DIRECTORS WHOSE TERMS EXPIRE IN 2002
Sadako Hosoi is the widow of Herman S. Hosoi,
founder of the Company. She has
-13-
<PAGE>
been a director of the Company since 1957 and is
the Chairperson of the Board Emeritus. In the
past, she has served as chairperson of the
Company and treasurer. She serves as a director
of Garden Life Plan, Ltd. She is the mother of
Julie S. Shimonishi, director, Clifford Hosoi,
director and president of the Company, and Anne
T. Tamori, director and vice president of the
Company.
Berton T. Kato is an attorney licensed in the
State of Hawaii and has his own law practice.
Anne T. Tamori has been employed by the Company
since 1978. She has been a vice president and
director of the Company since 1994. She has
served as an associate secretary of the Company.
She is the daughter of Sadako Hosoi, director,
and the sister of Clifford Hosoi, director and
president of the Company, and Julie S.
Shimonishi, director.
DIRECTORS WHOSE TERMS EXPIRE IN 2001
Clifford Hosoi has been a director of the Company
since 1989. He was a vice president from 1989
until his appointment as president and chief
executive officer of the Company as of January
1, 1994. He has been a licensed embalmer since
1979. He has been a Funeral Director for the
Company since 1985. He serves as a director of
Garden Life Plan, Ltd. He is the son of Sadako
Hosoi, director, and the brother of Julie S.
Shimonishi, director, and Anne T. Tamori,
director and vice-president of the Company.
Rene Mansho is an elected member of the City
Council of the City and County of Honolulu and
has served on the City Council since 1988. She
has been a director of the Company since 1993.
She presently serves as chairperson of the Board
of Directors and was elected to that position in
1994. She has been a school teacher,
Vice-Principal and Administrator with the
Department of Education of the State of Hawaii
between 1971 through 1988. Other organizations
with which she is involved include the Hawaii
State Association of Counties, the Mililani
Hongwanji, Mililani YMCA, Honolulu Japanese
Chamber of Commerce, Goodwill Industries, Great
Aloha Run, Salvation Army, Wahiawa Lions,
Muscular Dystrophy Association of Hawaii.
Ricky C. Manayan is currently a Manager - Prepaid
Card Programs with GTE Hawaiian Tel. He has been
a director of the Company since 1995. His other
business affiliations include Rick Manayan &
Associates. He is President of East-West Real
Estate Co., Inc., Ricky Manayan Associates and
Transpacific Empire, Inc.
-14-
<PAGE>
OTHER EXECUTIVE OFFICERS ARE AS FOLLOWS:
David Fujishige has been employed by the Company
since 1989. He has been a funeral director since
1991. He has been a vice president of the Company
since 1994. Prior to joining the Company, he was
a food production supervisor at Rehabilitation
Hospital of the Pacific.
Keith Numazu has been employed by the Company
since 1992. He has been treasurer of the Company
since 1994. He has been an assistant bookkeeper
and programmer since 1992. Prior to joining the
Company, he was a systems operator/analyst for
Consolidated Amusement, Inc. and a senior systems
analyst/programmer for Holmes and Narver, Inc.
and Raytheon Services Nevada.
Elaine Nakamura has been employed by the Company
since 1963. She is the secretary of the Company.
<TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
<CAPTION>
No. Of
Director Yrs.
Name Age Office Since Family Relationship Employed
<S> <C> <C> <C> <C> <C>
Sadako Hosoi 83 Director/ 1957 Mother of Julie S.
Chairperson Shimonishi,Director
Emeritus Clifford Hosoi,Director
and President,and Anne
Tamori, Director and
Vice President
Rene Mansho 51 Director/ 1993 None 0
Chairperson
of the Board
Clifford Hosoi 51 Director/ 1991 Son of Sadako Hosoi, 20
President Brother of Julie S.
Shimonishi and
Anne Tamori
Julie S. 54 Director 1979 Daughter of Sadako Part-time
Shimonishi Hosoi, Sister of since
Clifford Hosoi and 1996
Anne T. Tamori
-15-
<PAGE>
No. Of
Director Yrs.
Name Age Office Since Family Relationship Employed
<S> <C> <C> <C> <C> <C>
Ricky C. 41 Director 1995 None 0
Manayan
Berton T. Kato 52 Director 1996 None 0
Robert 53 Director 1995 None 0
Kuwahara
Glenn 51 Director 1999 None 0
Suetsugu
Anne T. Tamori 53 Director/ 1994 Daughter of Sadako 22
Vice Pres. Hosoi, Sister of
Clifford Hosoi
and Julie S.
Shimonishi
Elaine 62 Secretary 1972 None 36
Nakamura
David 52 Vice 1994 None 11
Fujishige President
Keith Numazu 38 Treasurer 1994 None 7
<FN>
(1) None of the directors of the Company is a
director of an investment company or another
company registered under the Securities
Exchange Act of 1934. All officers serve at
the pleasure of the Board of Directors.
</FN>
</TABLE>
CERTAIN REPORTS
The Company has been informed that none of its
directors, officers or holders of ten percent or
more of its securities were required to file
Forms 3 or 4 during the fiscal year ended May 31,
2000, and that during this same time period none
of the holders of five percent or more of the
Company's securities were required to file a
report on Schedule 13D.
-16-
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
The following sets forth the information, on an
accrual basis, with respect to the compensation
of the chief executive officer of the Company for
the three fiscal years ended May 31, 1999.
<TABLE>
SUMMARY COMPENSATION - ANNUAL COMPENSATION
<CAPTION>
Year ended All Other
Name and Position May 31 Salary Compensation
<S> <C> <C> <C>
Clifford Hosoi 1998 $46,731 $7,420 (1)
President/Chief 1999 $52,961 $8,098 (2)
Executive Officer 2000 $64,788 (3) $8,987 (4)
<FN>
(1) Amount shown includes $2,337 contributed to
the Company's Money Purchase Pension Plan,
$3,583 contributed to the Company's Profit
Sharing Plan and $1,500 fees paid as a
director.
(2) Amount shown includes $2,355 contributed to
the Company's Money Purchase Pension Plan,
$3,668 contributed to the Company's Profit
Sharing Plan and $2,075 fees paid as a
director.
(3) Amount shown includes retroactive pay of
$7,292.
(4) Amount shown includes $3,239 contributed to
the Company's Money Purchase Pension Plan,
$4,248 contributed to the Company's Profit
Sharing Plan and $1,500 fees paid as a
director.
</FN>
</TABLE>
The total annual salary and bonus for any other
executive officer does not exceed $100,000.
The standard fees paid to directors are $100 for
each Board of Directors meeting attended and $25
for each committee meeting attended.
COMPENSATION PURSUANT TO PLANS
(a) PROFIT-SHARING PLAN. The Company has
established a profit-sharing plan for the
Company's employees. Every employee, who has
completed one year of service with the
Company, becomes eligible to participate in the
profit-sharing plan. An employee who has
completed 1,000 hours of service commencing from
the date of employment or an anniversary date is
considered to have one year of service.
-17-
<PAGE>
The Company's contribution to the profit-sharing
plan is discretionary and may be up to 15% of the
participant's eligible compensation. The
Company's total contributions shall not exceed
the amount allowable by income tax regulations.
The amounts charged against income for the
profit-sharing plan in 2000 and 1999 were $40,000
in each year. The Company's allocation of
contributions among eligible members is based
on their respective compensation and is allocated
proportionately.
The investment decision for the profit-sharing
plan is formulated by a registered investment
advisor through Pacific Century Trust.
(b)Money Purchase Pension Plan. The Company
has established a money purchase pension plan,
which became effective as of June 1, 1990, for
the Company's employees. Every employee, who
has completed one year of service with the
Company, becomes eligible to participate in
the money purchase plan. An employee who has
completed 1,000 hours of service commencing from
the date of employment or an anniversary date is
considered to have one year of service.
The Company is required to contribute 5% of each
participant's eligible compensation to the money
purchase plan. The Company's total
contributions cannot exceed the amount allowable
by income tax regulations. The amounts charged
against income for the money purchase pension
plan in 2000 and 1999 were $33,845 and $26,820,
respectively.
The investment decision for the money purchase
plan is formulated by a registered investment
advisor through Smith Barney, Inc.
-18-
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS & MANAGEMENT
A. PRINCIPAL SHAREHOLDERS
The Herman S. Hosoi Trust, whose trustees are
Sadako Hosoi and Julie S. Shimonishi, and the
Hosoi Family Limited Partnership, whose general
partner is the Hosoi Family Voting Trust, by its
trustee Julie S. Shimonishi, are the only persons
who own of record or are known to the Company to
own beneficially more than five percent of the
common shares of the Company as of May 31, 1999.
Certain information about the holders is set
forth below.
<TABLE>
<CAPTION>
Nature of
Title of Name and Address of Beneficial No. of Percent
Class Beneficial Owner Ownership Shares of Class
<S> <C> <C> <C> <C>
Common Julie S. Shimonishi Co-trustee of 158,250 9.53%
30 N. Kukui Street the Herman S.
Honolulu, HI 96817 Hosoi Trust
General Partner of 160,250 9.66%
the Hosoi Family
Limited Partnership,
as Trustee of the
Hosoi Family
Voting Trust
Custodian for Cha 8,000 0.48%
Shimonishi and Lane
Shimonishi under
HUGMA
Direct 52,534 3.17%
Total 379,034 22.84%
-19-
<PAGE>
Nature of
Title of Name and Address of Beneficial No. of Percent
Class Beneficial Owner Ownership Shares of Class
<S> <C> <C> <C> <C>
Common Sadako Hosoi Co-trustee of 158,250 9.53%
30 N. Kukui Street the Herman S.
Honolulu, HI 96817 Hosoi Trust
Settlor of the Hosoi 160,250 9.66%
Family Voting Trust
and limited partner
of the Hosoi Family
Limited Partnership
Total 318,500 19.19%
Common Herman S. Hosoi Trust Direct 158,250 9.53%
Sadako Hosoi and
Julie S. Shimonishi,
Trustees
30 N. Kukui Street
Honolulu, HI 96817
Common Hosoi Family Limited Direct 160,250 9.66%
Partnership (1)
30 N. Kukui Street
Honolulu, HI 96817
<FN>
(1) The Sadako Hosoi Trust, by its trustees
Sadako Hosoi and Julie S. Shimonishi, transferred
160,250 shares of the Company to the Hosoi Family
Limited Partnership, whose general partner is the
Hosoi Family Voting Trust, by its trustee Julie S.
Shimonishi, and whose limited partner is Sadako
Hosoi. Julie S. Shimonishi, as trustee,
exercises voting and investment powers over those
shares pursuant to the Hosoi Family Voting Trust
Agreement dated December 30, 1994, between Sadako
Hosoi, as settlor, and Julie S. Shimonishi, as
trustee.
</FN>
</TABLE>
-20-
B. DIRECTORS AND EXECUTIVE OFFICERS
Certain information with respect to the holdings
of Common Stock of the directors and executive
officers of the Company as of May 31, 1999 is set
forth below.
<TABLE>
<CAPTION>
Title of Name of Amount and Nature of Percent of
Class Beneficial Owner (1) Beneficial Ownership Class
<S> <C> <C> <C>
Common Julie S. Shimonishi 379,034 (2) 22.84%
Common Sadako Hosoi 318,500 (3) 19.19%
Common Clifford Hosoi 52,532 (4) 3.17%
Common Anne T. Tamori 56,534 (5) 3.41%
All directors and officers 489,100 29.42%
as a group (12 persons) (6)
<FN>
(1) The address of each person is 30 N. Kukui
Street, Honolulu, Hawaii 96817.
(2) Includes:
52,534 shares (3.17%) as to which Ms. Shimonishi
exercises sole voting and
investment powers;
8,000 shares (0.47%) as to which Ms. Shimonishi
exercises sole voting and
investment powers as Custodian
for Chad Shimonishi and Lane
Shimonishi under HUGMA;
158,250 shares (9.53%) as to which Ms. Shimonishi
and Sadako Hosoi share voting
and investment powers as
trustees of the Herman S.
Hosoi Trust; and
160,250 shares (9.66%) as to which Ms. Shimonishi,
as trustee of the Hosoi
Family Voting Trust, has
voting and investment powers
over the shares owned by the
Hosoi Family Limited
Partnership.
-21-
<PAGE>
(3) Voting and investment powers over 158,250 shares
of the Company are shared by Sadako Hosoi and
Julie S. Shimonishi, as Trustees of the Herman S.
Hosoi Trust, which owns 158,250 shares of the
Company. Voting and investment power over
160,250 shares of the Company are exercised by
Julie S. Shimonishi, as trustee under the Hosoi
Family Voting Trust. See the preceding table
for more information about the Hosoi Family
Limited Partnership and the Hosoi Family Voting
Trust.
(4) Voting and investment powers exercised solely.
(5) Includes:
52,534 shares (3.17%) as to which Ms. Tamori
exercises sole voting and
investment powers; and
4,000 shares (0.24%) as to which Ms. Tamori
exercises sole voting and
investment powers for Ryan
Tamori under HUGMA.
(6) Rene Mansho, Ricky C. Manayan, Berton T. Kato,
Robert Kuwahara and Glenn Suetsugu, who are
currently serving as directors, and Elaine
Nakamura, David Fujishige and Keith Numazu,
who are currently serving as officers, do not
own any shares of the Company.
</FN>
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases a portion of the land on which
the mortuary is situated from the Herman S. Hosoi
Trust and the Hosoi-Tamori-Shimonishi Trusts (Trusts),
which own a 13% and 12% interest in the land. The
terms of the lease agreement between the Company and
the Trust are described in ITEM 2 - DESCRIPTION OF
PROPERTY.
-22-
<PAGE>
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS.
Except as noted, the following exhibits were
previously filed on August 31, 1981, as exhibits to
Form 10-K for the fiscal year ended May 31, 1981, for
the Company and are incorporated herein by reference:
(2) Plan of Purchase, Sale, Reorganization,
Arrangement, Liquidation and Succession
(3) Articles of Association and ByLaws
(a) Articles of Association, Affidavit of
Officers and Supplemental affidavit of
incorporation filed May 31, 1957
(1) Amendments
(i) January 18, 1962
(ii) January 16, 1963
(iii) February 3, 1972
(iv) February 2, 1977
(v) March 31, 1978
(vi) July 23, 1993 (1)
(b) By Laws dated May 31, 1957
(1) Amendments
(i) January 30, 1972
(ii) March 31, 1978
(4) Instruments Defining the Rights of Security
Holders, Including Indentures
(a) Equity securities: Articles of
Association and Affidavit of Officers,
Certificate of Amendment filed January
16, 1963, in the Hawaii Department of
Regulatory Agencies.
(b) Debt securities: Not applicable.
-23-
<PAGE>
(9) Voting Trust Agreement
Hosoi Family Voting Trust Agreement dated
December 30, 1994, between Sadako Hosoi, as
settlor, and Julie S. Shimonishi, as trustee,
covering 160,250 shares owned by the Hosoi
Family Limited Partnership. (5)
(10) Material Contracts
(a) Lease between the Company, as lessee,
and Sadako Hosoi and Julie Sakaye
Shimonishi, as trustees of the Herman S.
Hosoi Trust, and Clifford Isamu Sadao
Hosoi, Anne Ume Toyo Tamori and Julie
Sakaye Shimonishi, as trustees under the
Hosoi-Tamori-Shimonishi Trust, as
lessor, dated as of July 10, 1990. (2)
(b) Deed conveying the interest of the late
Herman Hosoi to the Trustees of the
Herman S. Hosoi Trust, dated February
27, 1978.
(c) Profit-sharing Plan. (3)
(d) Annuities. (3)
(e) Amendment to profit-sharing plan. (4)
[FN]
(1) Filed August 30, 1993, as an exhibit to the
Annual Report on Form 10-KSB for the year ended
May 31, 1993.
(2) Filed August 28, 1990, as an exhibit to the
Annual Report on Form 10-K for the year ended May
31, 1990.
(3) Filed August 30, 1984, as Exhibit 19 to the
Annual Report on Form 10-K for the year ended May
31, 1984.
(4) Filed August 30, 1985, as Exhibit 19 to the
Annual Report on Form 10-K for the year ended May
31, 1985.
(5) Filed August 30, 1995, as an exhibit to this
Annual Report on Form 10-KSB for the year ended
May 31, 1995.
</FN>
(11) Statements Re Computation of Per Share
Earnings
Not applicable.
-24-
<PAGE>
(13) Annual Report to Security Holders, Form 10-K,
or Quarterly Report to Security Holders,
Form 10-Q
Not applicable.
(16) Letter on Change in Certifying Accountants
Not applicable.
(18) Letter Re Change in Accounting Principles
Not applicable.
(21) Subsidiaries of the Registrant
Garden Life Plan, Ltd., a Hawaii corporation,
is 50 percent owned by the Company.
(22) Published Report Regarding Matters Submitted
to Vote of Security Holders
Not applicable.
(23) Consents of Experts and Counsel
Not applicable.
(24) Power of Attorney
Not applicable.
(28) Information from Reports to State Insurance
Regulatory Authorities
Not applicable.
(99) Additional Exhibits
Not applicable.
B. REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K in the year
ended May 31, 2000.
-25-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)of
the Securities Exchange Act of 1934, the registrant
has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: Honolulu, Hawaii, September 13, 2000.
HOSOI GARDEN MORTUARY, INC.
By CLIFFORD HOSOI
President
-26-
<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this Form 10-KSB for the year ended May
31, 2000, has been signed below by the following
persons on behalf of the registrant and in the capacity
and on the date indicated.
Dated: September 13, 2000 RENE MANSHO
Director and Chairperson
of the Board of Directors
Dated: September 13, 2000 CLIFFORD HOSOI
Director, President and
Chief Executive Officer
Dated: September 13, 2000 SADAKO HOSOI
Director
Dated: September 13, 2000 BERTON T. KATO
Director
Dated: September 13, 2000 ROBERT KUWAHARA
Director
Dated: September 13, 2000 RICKY C. MANAYAN
Director
Dated: September 13, 2000 JULIE S. SHIMONISHI
Director
Dated: September 13, 2000 ANNE T. TAMORI
Director
Dated: September 13, 2000 GLENN SUETSUGU
Director
-27-
<PAGE>
