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 March 26, 2000
or,
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-26396
Benihana Inc.
------------------------------------
(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 9, 2000, 3,576,616 shares of Common Stock and 2,586,868 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
$44,754,076.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the year ended
March 26, 2000 are incorporated by reference in Parts I and II.
Portions of the Registrant's Proxy Statement for the Annual Meeting to be held
August 3, 2000 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, currently owns and operates 53 teppanyaki and
sushi restaurants and franchises thirteen others. The Company has achieved
31 consecutive quarters of comparable quarter sales growth and customer
count increases. Management attributes 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.
The Company owns the exclusive rights to develop, operate or license Benihana
and Benihana Grill 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 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 $136,389,000 for
the fiscal year ended March 26, 2000, as compared to approximately $118,351,000
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.
Recent Developments
During fiscal 2000, the Company completed the acquisition of 80% of the equity
of Haru Holding Corp. ("Haru"). Haru operates successful high quality sushi
restaurants. Haru currently owns and operates two sushi restaurants in New
York City. Additionally, as part of the acquisition, the Company acquired the
rights to a lease for a third Haru restaurant under construction in the Times
Square area of Manhattan.
The Benihana Concept
The Company's 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 $22.80 in fiscal 2000. During fiscal 2000, 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 teppanyaki 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.
Of the 50 owned Benihana restaurants, 33 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 teppanyaki tables. The
Benihana restaurants seat from 86 to 178 customers in the dining rooms and 8
to 120 customers in the bar lounge areas. See "Properties."
The Company anticipates that it will open three new Benihana restaurants in
fiscal 2001.
<PAGE>
The Sushi Doraku Concept
The Company's Sushi Doraku 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 $11.42 in fiscal 2000.
The first Sushi Doraku is located in an entertainment complex. The Company
anticipates that two other Sushi Doraku's will open in the summer of fiscal
2001.
The Haru Concept
The Company's Haru concept offers sushi in an upscale setting. Haru offers
in-house dining as well as delivery and takeout. Delivery and takeout account
for approximately 45% of the total sales. The average check size per person
was $25.78 in fiscal 2000. The Company anticipates that two additional Haru
restaurants will open in fiscal 2001 in New York, New York.
Restaurant Operations
The Company's 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 Benihana 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.
The Company uses 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 the
Company's 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 the Company's 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 the Company's 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 itself. 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
The Company utilizes television, radio, billboard and print media to promote
its restaurants, strengthen its 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 2000,
the Company expended $5.5 million on advertising and other marketing,
approximately 4.0% 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
The Company has, 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. The Company has begun to more aggressively
pursue franchising opportunities, particularly in foreign countries (Central
and South America and the Caribbean Islands) where the Company owns the rights
to the Benihana trademarks and system.
<PAGE>
Franchisees bear all direct costs involved in the development, construction and
operation of their restaurants. The Company provides 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 the Company 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 2000 revenues from franchising
were $1,088,000.
The Company presently franchises Benihana restaurants in Anchorage, Alaska;
Austin, Texas; Las Vegas, Nevada; Reno, Nevada; Beverly Hills, California;
Seattle, Washington; Key West, Florida; Harrisburg, Pennsylvania;
Bogota, Colombia; Little Rock, Arkansas; Lima, Peru and Aruba. The Company has
signed a development agreement for Venezuela, but no restaurants have opened
under the development agreement. To comply with the terms of these franchises
entered into by the Company in the United States, the Company is 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.
The Company anticipates that five new franchised Benihana restaurants will open
in fiscal 2001 in San Antonio, in Milwaukee, in Edison, New Jersey and two 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 the Company's business, are owned by the Company
and are registered in the United States Patent and Trademark Office and certain
foreign countries. The Company also owns registered trademarks of Samurai,
Kyoto brands and the "Sushi Doraku by Benihana" concept. Additionally, the
Company has 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. The Company
has no financial interest in any restaurant operated by BOT.
Employees
At March 26, 2000, the Company 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. The Company also employs some restaurant personnel on a part-time
basis to provide the services necessary during the peak periods of
restaurant operations. The Company believes its relationship with its 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 the Company's restaurants competes directly or
indirectly with locally owned restaurants as well as regional and national
chains, and several of the Company's 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. The
Company believes that its competitive position is enhanced by offering
quality food selections at an appropriate price with the unique entertainment
provided by its chefs in an attractive, relaxed atmosphere.
Government Regulation
Each of the Company's 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 the Company to
date has 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 the Company's operating results. Federal
and state environmental regulations have not had a material effect on the
Company's 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.
The Company is also subject to federal and state regulations regarding
franchise offering and sales. Such laws impose registration and disclosure
requirements on franchisers in the offer and sale of franchises, or impose
substantive standards on the relationship between franchisee and franchiser.
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.
The Company is also subject to the Fair Labor Standards Act, which governs
such matters as minimum wages, overtime, and other working conditions. A
significant portion of the Company's 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 the Company's labor costs.
Management Information Systems
The Company provides 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.
The Company utilizes this information to centrally monitor sales, product,
labor and other costs and to prepare periodic financial and management
reports. The Company believes that its centralized accounting, payroll and
human resources, cash management and information systems improve its ability
to control and manage its operations efficiently.
Properties
Of the 53 restaurants operated by the Company, 47 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 two Sushi Doraku by Benihana restaurants under construction in Chicago,
Illinois and Miami Beach, Florida; three Benihana restaurants under
construction in Santa Monica and Monterey, California and Wheeling, Illinois
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 December 2000 to March 2027.
<PAGE>
The following table sets forth the location of the restaurants owned by the
Company:
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 (2) 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 -0- -0- -0- under construction
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.
<PAGE>
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
Benihana
276 E. Commercial Blvd.
Ft. Lauderdale 8,965 160 70 -0- June, 1970
Benihana
8727 South Dixie Hwy.
Miami (2) 8,700 122 66 15 March, 1989
(Kendall)
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 (2) 8,145 128 85 7 October, 1988
(Orlando)
Sushi Doraku
1100 Lincoln Road
Miami Beach (1) 3,900 -0- -0- -0- under construction
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.
<PAGE>
Benihana, Sushi Approx. Approximate Seating
-----------------------------
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] (1) 6,372 115 34 11 April, 1981
ILLINOIS:
Sushi Doraku
166 East Superior St.
Chicago (1) 7,288 144 9 45 April, 1968
Benihana
1139 N. State St.
Chicago 4,500 -0- -0- -0- under construction
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 -0- -0- -0- under construction
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.
<PAGE>
Benihana, Sushi Approx. Approximate Seating
----------------------------
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 (1) 7,340 112 59 -0- June, 1973
Benihana
2105 Northern Blvd.
Munsey Park (1) 8,252 144 88 75 December, 1978
(Manhasset)
Haru
1501 Broadway
New York (2) 4,000 -0- -0- -0- under construction
Haru
1327 Third Ave.
New York (2) 4,000 -0- -0- -0- under construction
Haru
1329 Third Ave.
New York (2) 4,000 -0- -0- -0- December, 1999
(1) Lease provides for minimum rent, plus additional rent based upon a
percentage of gross sales.
(2) Lease provides for fixed rent.
<PAGE>
Benihana, Sushi Approx. Approximate Seating
----------------------------
Doraku by Benihana Sq.Ft.of Dining Sushi Date
or Haru Location Building Room Lounge Bar Opened
--------------------- -------- ---- ------ ------ --------
Haru
433 Amsterdam Ave.
New York (2) 4,000 -0- -0- -0- December, 1999
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
Benihana
1318 Louisiana St.
Houston [I] (2) 6,938 128 60 12 May, 1975
(1) Lease provides for minimum rent, plus additional rent based upon a
percentage of gross sales.
(2) Lease provides for fixed rent.
<PAGE>
Benihana, Sushi Approx. Approximate Seating
----------------------------
Doraku by Benihana Sq.Ft.of Dining Sushi Date
or Haru Location Building Room Lounge Bar Opened
----------------------- -------- ---- ------ ------ --------
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.
<PAGE>
The Company leases approximately 10,100 square feet of space for its general
administrative offices in Miami, Florida at an annual rental of $186,000 and
8,000 square feet for a warehouse in Miami, Florida at an annual rental
of $26,000. The leases expire May 31, 2009 and October 31, 2000, respectively.
Item 3. Legal Proceedings
There are no material legal proceedings to which the Company or any of its
subsidiaries is a party other than ordinary litigation incidental to the
conduct of the Company's 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.
<PAGE>
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 2000 Annual Report to Shareholders.
Item 6. Selected Consolidated Financial Data
The information required by this Item is incorporated herein by reference to
Page 6 of the Company's 2000 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 7 through 11 of the Company's 2000 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 11 of the Company's 2000 Annual Report to Shareholders.
Item 8. Financial Statements and Supplementary Data
The information required by this Item is incorporated herein by reference to
Pages 12 through 27 of the Company's 2000 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 2 through 4 of the Company's Proxy Statement for its
Annual Meeting of Stockholders to be held on August 3, 2000 (the "Proxy
Statement") is incorporated herein by reference.
Item 11. Executive Compensation
The information appearing under the caption "Executive Compensation"
commencing on Page 10 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 5 through 9 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 12 through 27
of the Company's 2000 Annual Report to Shareholders included
herein as Exhibit 13, are incorporated herein by reference as
part of this report.
Consolidated Balance Sheets as of March 26, 2000 and March 28,
1999.
Consolidated Statements of Income for the years ended March 26,
2000, March 28, 1999 and March 29, 1998.
Consolidated Statements of Stockholders' Equity for the years
ended March 26, 2000, March 28, 1999 and March 29, 1998.
Consolidated Statements of Cash Flows for the years ended March
26, 2000, March 28, 1999 and March 29, 1998.
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
Benihana 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.
<PAGE>
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.
10.02 Employment Agreement dated May 15, 1995 between
Rocky H. Aoki and the Company. Incorporated by
reference to Exhibit 10.03 to the S-4.
10.03 Employment Agreement dated May 15, 1995 between
Joel A. Schwartz and the Company. Incorporated by
reference to Exhibit 10.04 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, 1995 between
Taka Yoshimoto and BNC. Incorporated by reference
to Exhibit 10.09 to the S-4.
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 Amendment dated December 11, 1997 to Employment
Agreement dated May 15, 1995 between Rocky H. Aoki
and the Company. Incorporated by reference to
Exhibit 10.14 to the Company's Annual Report on
Form 10-K for the fiscal year ended March 29, 1998.
10.13 Amendment dated May 18, 1998 to Employment
Agreement dated May 15, 1995 and amended December
11, 1997 between Rocky H. Aoki and the Company.
Incorporated by reference to Exhibit 10.15 to the
Company's Annual Report on Form 10-K for the
fiscal year ended March 29, 1998.
10.14 Amendment dated December 11, 1997 to Employment
Agreement dated May 15, 1995 between Joel A.
Schwartz and the Company. Incorporated by reference
to Exhibit 10.16 to the Company's Annual Report on
Form 10-K for the fiscal year ended March 29, 1998.
10.15 Amendment dated December 11, 1997 to Employment
Agreement dated April 1, 1995 between Taka
Yoshimoto and Benihana Inc. Incorporated by
reference to Exhibit 10.17 to the Company's Annual
Report on Form 10-K for the fiscal year ended
March 29, 1998.
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.
<PAGE>
10.19 Employment Agreement dated October 19, 1998 between
Kevin Aoki and the Company.
10.20 Amendment dated January 25, 2000 to Employment
Agreement dated October 19, 1998 between Kevin Aoki
and the Company.
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.
13.01 Portions of Annual Report to Stockholders for the
year ended March 26, 2000.
22.01 List of Subsidiaries. Incorporated by reference to
Exhibit No. 22.01 to the S-4.
23.01 Consent of Deloitte & Touche LLP.
23.02 Consent of Deloitte & Touche LLP.
(b) Reports on Form 8-K.
None.
<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 report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: June 15, 2000 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 15, 2000
--------------------------
Joel A. Schwartz Director (Principal
Executive Officer)
/s/ Taka Yoshimoto Executive Vice President - June 15, 2000
--------------------------
Taka Yoshimoto Restaurant Operations
and Director
/s/ Michael R. Burris Senior Vice President of June 15, 2000
--------------------------
Michael R. Burris Finance and Treasurer -
Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Kevin Aoki Vice President - June 15, 2000
--------------------------
Kevin Aoki Marketing and Director
/s/ Juan C. Garcia Vice President-Controller June 15, 2000
--------------------------
Juan C. Garcia
/s/ Darwin C. Dornbush Secretary and Director June 15, 2000
--------------------------
Darwin C. Dornbush
/s/ John E. Abdo Director June 15, 2000
--------------------------
John E. Abdo
/s/ Norman Becker Director June 15, 2000
--------------------------
Norman Becker
/s/ Robert B. Greenberg Director June 15, 2000
--------------------------
Robert B. Greenberg
<PAGE>
Exhibit 10.19
EMPLOYMENT AGREEMENT
AGREEMENT dated October 19, 1998, by and between Benihana Inc.,
a Delaware corporation (the "Company"), and Kevin Aoki (the "Employee").
RECITAL:
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 November 1, 1998
(the "Effective Date"), and ending, unless sooner terminated in accordance
with the provisions of Section 4 hereof, on October 31, 2001 (the "Employment
Period").
2. Scope of Duties. Employee shall be employed by the Company in an
executive capacity as determined by the President and the Board of Directors
of the Company, and will report directly to the President of the Company. In
such capacity, the Employee shall have such authority, powers and duties
delegated to his by the President and the Board of Directors of the Company.
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 an executive. 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 Eighty Thousand
Dollars ($80,000.00)("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.
3.3 Stock Options. The Employee will be eligible to
receive stock options under the Company's stock option plans at the
discretion of the Stock Option Committee of the Board of Directors of
the Company in accordance with policies existing at the time of such
grants.
3.4 Other Benefits.
(a) Employee shall be entitle 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.
<PAGE>
(b) 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.
(c) The Company will pay up to Two Thousand Dollars
($2,000.00) to defray Employee's actual expenses of
relocating his home from Hawaii to Miami, Florida, upon
submission of vouchers or other evidence thereof in
accordance with the company's usual policy of expense
reimbursement.
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 anytime 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 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 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" direct or indirect disclosure of the same.
<PAGE>
Employee further agrees that for a period of one year following
the termination of Employee's employment, 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 within the
"Territory" 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 which is competitive with the business of the Company
or any of its subsidiaries", shall include only the operation or franchise of
restaurants selling Japanese, or other Asian food, or restaurants of a type
then being operated by the Company, or any of its subsidiaries; and the term
"Territory" is defined to mean the area within a five (5) mile radius of any
restaurant then being operated by the Company or any of its subsidiaries.
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. Miscellaneous Provisions.
7.1 Section headings are for convenience only and shall not
be deemed to govern, limit, modify or supersede the provisions of
this Agreement.
7.2 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.
7.3 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.
7.4 This Agreement may be modified only by means of a
writing signed by the party to be charged with such modification.
7.5 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 N.W. 53rd Terrace
Miami, Florida 33166-0120
If to Employee:
Kevin Aoki
232 East 63rd Street
New York, New York 10021
<PAGE>
7.6 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.
7.7 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/ Kevin Aoki
----------------------------
Kevin Aoki
<PAGE>
Exhibit 10.20
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Amendment No. 1 dated January 25, 2000 to Employment Agreement dated
October 19, 1998 (the "Agreement") by and between Benihana Inc. and Kevin
Aoki.
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 1.1 of the Agreement is hereby amended to read in
its entirety as follows:
1.1 Subject to the terms and provisions of
this Agreement, the Company will continue to employ the
Employee for an extended term continuing until October 31,
2002.
B. Section 3.1 of the Agreement 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,
the Company agrees to pay the Employee an annual salary
of One Hundred, Ten Thousand Dollars ($110,000.00) ("Basic
Compensation"), payable, commencing January 1, 2000, 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/ Kevin Aoki
----------------------------
Kevin Aoki
<PAGE>
Exhibit 13.01
SELECTED FINANCIAL DATA
(In thousands, except per share information)
Years Ended
March 26, March 28, March 29, March 30, March 31,
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Total revenues $137,477 $119,149 $99,757 $85,204 $81,606
Cost of sales 36,588 30,964 25,894 21,658 21,128
Restaurant operating expenses 78,827 70,387 58,352 51,199 48,636
Store opening costs 566 12 165 47 40
General and administrative
expenses 6,663 6,144 5,408 4,217 4,801
Interest expense, net 1,297 1,644 1,076 904 1,226
Minority interest 81
Income before taxes 13,455 9,998 8,862 7,179 5,775
Net income 8,733 6,518 5,940 4,947 4,410
Basic earnings
per common share 1.41 1.06 .96 .81 .73
Diluted earnings
per common share 1.32 1.02 .93 .77 .70
CONSOLIDATED BALANCE SHEET
DATA:
Total assets 75,445 $60,868 $58,157 $40,562 $36,257
Long-term debt including
current maturities 14,646 12,407 16,840 6,543 7,495
Stockholders' equity 43,545 34,699 28,223 22,754 17,326
OTHER FINANCIAL DATA:
EBITDA (1) 19,100 15,529 12,938 10,510 9,157
Capital expenditures 9,643 7,212 5,079 2,818 2,156
(1) EBITDA, or earnings before interest, taxes on income and depreciation
and amortization is a common measurement used by financial statement
users to analyze performance. EBITDA is not intended to represent cash
flow from operations as defined by generally accepted accounting
principles and may not be comparable among different companies.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations
Overview of Fiscal 2000
The Company finished fiscal 2000 with record revenues, net income, and
earnings per share. Revenues totaled $137,477,000 in fiscal 2000 as
compared to $119,149,000 in fiscal 1999 and $99,757,000 in fiscal 1998. Net
income totaled $8,733,000 in fiscal 2000 as compared to $6,518,000 in
fiscal 1999 and $5,940,000 in fiscal 1998. Diluted earnings per share for
fiscal 2000 was $1.32 as compared to $1.02 in fiscal 1999 and $.93 per share
in fiscal 1998.
During fiscal 2000, the Company completed the acquisition of 80% of the
equity of Haru Holding Corp. ("Haru"). Haru operates successful high
quality sushi restaurants. Haru currently owns and operates two sushi
restaurants in New York City. Additionally, as part of the acquisition, the
Company acquired the rights to a lease for a third Haru restaurant under
construction in the Times Square area of Manhattan.
The Company continues to benefit from an overall strong economy and the
growing popularity to the Company's concept and sushi products. Sushi is
offered at all of the Company's traditional restaurants at either separate
sushi bars or at the teppanyaki grills and is featured at the Company's
Sushi Doraku and Haru restaurants.
The Company's revenues consist of sales of food and beverages in each of
the owned restaurants and franchise fees and royalties received from
franchisees. Cost of food and beverage sales represents the direct cost of
the ingredients for the prepared food and beverages sold. Restaurant expenses
consist of direct and indirect labor, occupancy costs, advertising and
other costs that are directly attributed to each restaurant location.
Restaurant revenues and expenses are dependent upon a number of factors
including the number of restaurants in operation, restaurant patronage
and average check amounts. Expenses are dependent upon the costs of food
commodities and of beverages sold, average wage rates, marketing costs
and the costs of interest and administering restaurant operations.
Management's Outlook
The Company has benefited and continues to benefit from a healthy economy
over the past several years and from changes in demographic trends, both
of which leads to an increased frequency for people dining out. However,
diners have more choices to spend their food dollars at a variety of
restaurant concepts and at a growing number of additional restaurant
locations opened by the Company's competitors. The competitive environment
requires that the Company provide outstanding value to its customers.
Management believes that an emphasis on its unique presentation and quality
customer service will increase their return frequency and that the
consumer will accept higher menu prices along with the enhanced dining
experience.
The Company is accelerating its new store development and currently has
signed leases for seven new restaurant locations. Three of these restaurants
will operate as traditional Benihana restaurants, two will operate as Sushi
Doraku restaurants (Benihana's kaiten sushi concept) and two restaurants
will operate as Haru restaurants. New restaurant units typically have
increased costs associated with pre-opening expenses such as employee
relocation and training, advertising, and other costs. So while a new
restaurant unit generally has lower operating results than restaurants with
more established locations, it is the Company's experience that profitability
generally improves over time and we believe that investment spending in
additional restaurant units adds to long-term shareholder value. The
Company also anticipates that five additional franchised units will open in
fiscal 2001, in San Antonio, in Milwaukee, in Nashville and two in
Caracas, Venezuela. However, because of factors discussed in the Forward-
Looking Information section, there can be no assurances that anticipated
growth in restaurant units or comparable same store sales will result.
Revenues
The amounts of revenues and the changes in amount and percentage change
in amount of revenues from the previous fiscal year are shown in the
following tables (in thousands):
YEAR ENDED MARCH
2000 1999 1998
---- ---- ----
Restaurant sales $136,389 $118,351 $99,062
Franchise fees and royalties 1,088 798 695
------------ ------------ ----------
Total Revenues $137,477 $119,149 $99,757
======== ======== =======
<PAGE>
YEAR ENDED MARCH
2000 1999 1998
---- ---- ----
Amount of change in total revenue from
the previous year $18,328 $19,392 $14,553
Percentage change from the previous year 15.4% 19.4% 17.1%
Percentage growth in comparable restaurant sales 10.6% 7.8% 8.5%
Year ended March 26, 2000 compared to March 28, 1999 -- Restaurant
sales increased $18,038,000 over fiscal 1999. The acquisition of Haru
represented $2,599,000 of the increase. Increased revenues at restaurants
opened longer than one year represented $12,385,000 of the sales increase.
Customer counts increased to 5,962,000 (12.8%) over the prior year.
Customer counts increased by 54,000 from the acquisition and by 481,000
from increased traffic at restaurants opened longer than a year. The
increasing popularity in the Company's concepts, along with the Haru
acquisition resulted in the increased patronage. The average overall check
amount increased 1.3% to $22.68 from $22.39.
The average dinner check amount was $25.47 in 2000 compared to $25.06 in
1999 and the average lunch check amount was $14.07 in 2000 compared to
$13.71 in 1999.
Revenue from franchising activities increased $290,000 or 36.3% from
the previous year as a result of the opening of two new franchised restaurants
in Lima, Peru and Anchorage, Alaska and increased royalties as a result
of increased sales by franchisees.
Year ended March 28, 1999 compared to March 29, 1998 -- Restaurant
sales increased $19,289,000 during the year and franchise revenues exceeded
fiscal 1998 by $103,000. The acquisition of Rudy's represented $9,911,000
of the increase. Increased revenues at Benihana restaurants opened longer than
one year represented $6,971,000 of the sales increase. The Company's two new
units, the traditional Benihana in Ontario, California and the Sushi Doraku
by Benihana in Fort Lauderdale, contributed $1,618,000 to the increase.
The Benihana Grill units had increased overall sales of $789,000.
Customer counts increased to 5,285,000 (19.1%) from the previous fiscal year.
Of this increase, 7.3% represents increased traffic at Benihana restaurants
open over one year. The remainder is the result of the acquisition and the
two new restaurants. The average check amount increased slightly to $22.39
from $22.32 in 1998. Management was successful in its efforts to increase the
average check amount 6% at the Benihana Grill units to improve their
profitability. The average check amount at the acquired units when they
were purchased was lower than the Company's Benihana units. As the units were
converted, menu prices were increased to reflect the improvements made in
food quality and standards of service.
The average dinner check amount was $25.06 in 1999 compared to $24.79 in
1998 and the average lunch check amount was $13.71 in 1999 compared to
$13.54 in 1998.
Revenue from franchising activities increased 14.8% as a result of
increased sales of franchisees.
Costs and Expenses
Cost of restaurant food and beverage sales, which are generally variable
with sales, directly increased with changes in revenues for each of the fiscal
years. The following table reflects the proportion that the various elements
of costs and expenses bore to sales and the changes in amounts and percentage
changes in amounts from the previous fiscal year.
<PAGE>
YEAR ENDED MARCH
COST AS PERCENTAGE OF RESTAURANT SALES: 2000 1999 1998
---- ---- ----
Cost of food and beverage sales 26.8% 26.1% 26.1%
Restaurant operating expenses 57.8% 59.5% 58.9%
Store opening costs .4% .0% .2%
General and administrative expenses 4.9% 5.2% 5.5%
AMOUNT OF CHANGE FROM PREVIOUS
YEAR (IN THOUSANDS):
Cost of restaurant food and beverage sales $ 5,624 $ 5,070 $4,236
Restaurant operating expenses $ 8,440 $ 12,035 $7,153
Store opening costs $ 554 $ (153) $ 118
General and administrative expenses $ 519 $ 736 $1,191
Interest expense, net $ (347) $ 568 $ 172
Percentages increase (decrease):
Cost of restaurant food and beverage sales 18.2% 19.6% 19.6%
Restaurant operating expenses 12.0% 20.6% 14.0%
Store opening costs 4,616.7% (92.7%) 251.1%
General and administrative expenses 8.4% 13.6% 28.2%
Interest expense, net (21.1%) 52.8% 19.0%
Year ended March 26, 2000 compared to March 28, 1999 - The cost of food
and beverage increased in total dollar amount and when expressed as a
percentage of sales. The increase in cost of sales is a result of increases
in customer counts and from higher commodity costs, principally beef costs
in the current fiscal year.
Restaurant expenses increased in total amount, but decreased when expressed as
a percentage of sales. The increase in absolute amount is a result of
increased expenses from the two Haru restaurants. The decrease when
expressed as a percentage of sales is due to the fixed nature of certain
restaurant expenses coupled with the increase in sales.
Store opening costs increased by $554,000 in the current year and
represent costs incurred for new restaurant properties under construction.
These costs may increase as the Company continues to develop new restaurant
properties.
General and administrative expenses increased in total dollar amount,
but decreased when expressed as a percentage of sales. The increase is
attributable to the amortization of goodwill from the Haru acquisition and
from additional administrative expenses relating to the Haru operations.
The decrease when expressed as a percentage of sales is due to the fixed
nature of certain general and administrative expenses coupled with the
increase in sales.
Interest expense, net, decreased by $347,000 compared to the preceding year.
The decrease is attributable to a decrease in average outstanding debt
from the prior year.
Year ended March 28, 1999 compared to March 29, 1998 -- The cost of food
and beverage sales held constant as a percentage of sales at 26.1%.
Restaurant expenses increased by $7,242,000 from the additional
expenses associated with the units acquired with the Rudy's Restaurant Group
acquisition. Restaurant expenses also increased as a result of increased
customer counts and from the full year effect of increases in the minimum
wage.
General and administrative expenses decreased as a percentage of sales.
The total dollar amount increased, however, from additional salaries for newly
hired key employees and from normal increases in compensation.
Amortization of goodwill from the Rudy's acquisition represented $349,000
of the increase in general and administrative expenses.
Interest expense, net increased by $568,000 over the preceding year.
This increase results from borrowings made to acquire Rudy's.
Income Taxes
The Company's effective tax rate increased to 35.1% in 2000 from 34.8% in
1999 and 33.0% in 1998. The increase from 1998 to 1999 reflects increased
state income taxes.
<PAGE>
Liquidity and Capital Resources
The Company does not require significant amounts of inventory or receivables,
and, as is typical of many restaurant companies, the Company does not have
to provide financing for such assets and operates with a working capital
deficit. Cash flow provided from operations has been sufficient to meet
the Company's financial obligations as they come due. Cash required to
provide for expansion either through acquisition or new store development
has been met by borrowings on the Company's existing line of credit or its
master lease facility. The Company requires capital principally for the
construction and development of new restaurants, acquisitions of other
restaurant businesses, and the refurbishment of existing restaurant units.
March 26, 2000 March 28, 1999
Cash provided by operating activities $15,811 $12,726
Cash used in investing activities (18,109) (7,230)
Cash provided by (used in) financing activities 1,779 (4,981)
-------- ---------
$ (519) $ 515
========== =========
Operating Activities
Net cash provided by operating activities increased in the current year
by $3,084 over the prior year. The increase is mostly attributable to an
increase in net income and increased depreciation and amortization.
Investing Activities
During the current year, the Company purchased 80% of Haru for a cash
purchase price of $8.4 million. The acquisition was financed largely from
a draw-down on the existing line of credit.
Expenditures for property and equipment increased in the current year
when compared to the prior year as a result of new restaurants under
development.
The Company is developing three new restaurants to operate as traditional
Benihana restaurants in Monterey and Santa Monica, California and Wheeling,
Illinois. Two additional new restaurants are currently under construction
and will be operated under the Company's Sushi Doraku by Benihana concept in
Miami Beach and Chicago, and are scheduled to open in the summer of 2000. Two
new Haru restaurants are currently under construction in Manhattan. The total
estimated remaining costs to construct these restaurants are $10,000,000,
of which approximately $4,000,000 is to be financed under a master lease
facility described below. The remaining costs to develop these new
restaurant units are expected to be financed from operating cash flow.
Financing Activities
In December 1997, the Company negotiated a credit agreement with First Union
National Bank consisting of a $12,000,000 term loan and a $15,000,000
revolving line of credit. Interest under the credit agreement accrues, at
the Company's option, at either prime rate plus a margin up to 1.0% or
at LIBOR plus an interest rate margin up to 2.25%. The applicable interest
rate margin varies with the Company's leverage ratio (defined as EBITDA
divided by funded indebtedness). The term loan principal is payable at a
rat of 250,000 per quarter through March 31, 2000; $500,000 per quarter
beginning June 30, 2000 through March 31, 2002; and $750,000 per quarter
beginning June 30, 2002 through March 31, 2004. The revolving line of
credit matures in 2004. The credit agreement restricts the Company from
making dividend payments and purchases of the Company's common equity
and limits the amount of annual capital expenditures. Furthermore,
the credit agreement also requires the Company to achieve certain ratios of
operating cash flow to debt and other financial benchmarks. As of March 26,
2000, the Company had available $11,000,000 under the revolving line of
credit facility.
In September 1999, the Company entered into a $25,000,000 master lease
pursuant to an agreement with its principal bank lender, First Union
National Bank and two other banks, for the purpose of financing property
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 in an amount of less than 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 credit facilities. As of March 26, 2000, the
Company had available $24,600,000 under the master lease facility.
<PAGE>
Management believes that the amount available under the master lease
agreement, along with the revolving facility, together with internally
generated funds from operations, provide sufficient cash resources
for anticipated capital improvements as well as construction of new
restaurants.
Seasonality and Quarterly Results
The Company operates on a 52/53 week fiscal year; the first quarter consists
of 16 weeks and the remaining three quarters consist of 12 weeks, except that
the fourth quarter will have 13 weeks when the entire fiscal year consists
of 53 weeks. Fiscal year 2001 will have 53 weeks.
Although the Company's business is not highly seasonal, the Company does
enjoy greater than normal customer traffic on certain days of the year:
Mother's Day falls in the first quarter, Christmas Day and New Year's Eve
fall in the third quarter and Valentine's Day falls in the fourth quarter.
Forward-Looking Information
This annual report contains various "forward-looking statements" which
represent management's expectations or beliefs concerning future events,
including unit growth, future capital expenditures, and other operating
information. A number of factors could, either individually or in
combination, cause actual results to differ materially from those
included in the forward-looking statements, including, without
limitation, changes in consumer dining preferences, fluctuation in
commodity prices, availability of qualified employees, changes in the general
economy and industry cyclicality, changes in consumer disposable income,
competition within the restaurant industry, availability of suitable
restaurant locations, harsh weather conditions in areas in which the Company
and its franchisees operate restaurants or plan to build new restaurants,
acceptance of the Company's concepts in new locations, changes in
governmental laws and regulations affecting labor rates, employee benefits,
and franchising, ability to complete new restaurant construction and obtain
governmental permits on a reasonably timely basis and other factors.
Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk from changes in interest rates on debt
and changes in commodity prices. A discussion of the Company's accounting
policy for derivative financial instruments is included in the Summary of
Significant Accounting Policies in the notes to the consolidated financial
statements.
The Company's net exposure to interest rate risk consists of floating
rate borrowings that are benchmarked to US and European short-term interest
rates. The Company may from time-to-time utilize interest rate swaps to
manage overall borrowing costs and reduce exposure to adverse fluctuations
in interest rates. The Company does not use derivative instruments for
trading purposes and the Company has a policy to that effect. At March 26,
2000, the Company had a financial derivative with a notional amount of
$4,598,000 against floating rate debt of $14,250,000. A one percentage point
interest charge on the outstanding balance of the variable rate debt as of
March 26, 2000 would not be material.
The Company purchases certain commodities such as beef, chicken and
seafood. These commodities are purchased based upon market prices
established with vendors. The Company does not use financial instruments
to hedge commodity prices because these purchase arrangements help to
control the ultimate cost paid and any cost aberrations have historically
been short term in nature.
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share information)
Year ended March 26, March 28, March 29,
2000 1999 1998
Revenues
Restaurant sales $136,389 $118,351 $99,062
Franchise fees and royalties 1,088 798 695
Total revenues 137,477 119,149 99,757
Costs and Expenses
Cost of food and beverage sales 36,588 30,964 25,894
Restaurant operating expenses 78,827 70,387 58,352
Store opening costs 566 12 165
General and administrative expenses 6,663 6,144 5,408
Interest expense, net 1,297 1,644 1,076
Minority interest 81
Total costs and expenses 124,022 109,151 90,895
Income from operations before income taxes 13,455 9,998 8,862
Income tax provision 4,722 3,480 2,922
Net Income $ 8,733 $ 6,518 $ 5,940
Earnings Per Share
Basic earnings per common share $ 1.41 $ 1.06 $ .96
Diluted earnings per common share $ 1.32 $ 1.02 $ .93
See notes to consolidated financial statements
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share information)
March 26, March 28,
2000 1999
-------- --------
Assets
Current assets:
Cash and cash equivalents $ 1,165 $ 1,684
Receivables(net of allowance for
doubtful accounts of $35 in 1999) 481 269
Inventories 3,613 3,106
Prepaid expenses 765 635
Total current assets 6,024 5,694
Property and equipment, net 43,564 37,128
Deferred income taxes, net 3,290 3,385
Goodwill, net 17,302 12,150
Other assets 5,265 2,511
$75,445 $60,868
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $14,552 $10,497
Current maturity of bank debt 1,750 1,000
Current maturity of other long-term debt 251 735
Current maturities of obligations
under capital leases 629 563
Total current liabilities 17,182 12,795
Long-term debt - bank 12,500 10,250
Long-term debt - other 145 422
Obligations under capital leases 2,073 2,702
Stockholders' Equity:
Series A Redeemable Convertible Preferred stock
- $1.00 par value; authorized - 5,000,000 shares;
issued and outstanding - 700 shares in 2000 and 1999 1 1
Common stock - $.10 par value; convertible into Class
A Common; authorized - 2,000,000 shares; issued and
outstanding - 3,576,616 and 3,571,616 shares in 2000
and 1999, respectively 358 357
Class A Common stock - $.10 par value; authorized -
20,000,000 shares; issued and outstanding -
2,580,202 and 2,563,443 shares in 2000 and 1999,
respectively 258 256
Additional paid-in capital 14,756 14,604
Retained earnings 28,288 19,597
Treasury stock - 9,177 shares at cost (116) (116)
Total stockholders' equity 43,545 34,699
$75,445 $60,868
See notes to consolidated financial statements
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share information)
<TABLE>
<CAPTION>
Class A Additional Total
Preferred Common Common Paid-in Retained Treasury Stockholders'
Stock Stock Stock Capital Earnings Stock Equity
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, March 30, 1997 $ 2 $ 356 $ 252 $14,978 $ 7,282 $ (116) $22,754
Net income 5,940 5,940
Dividend on preferred stock (93) (93)
Fair market value of warrant issued
in connection with the acquisition
of Rudy's 563 563
Redemption of preferred stock (1) (999) (1,000)
Issuance of 14,913 shares of common
stock under exercise of options 1 58 59
---------------------------------------------------------------------------------------------------------------
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 2 136 138
Issuance of 650 shares of Class A common
stock for incentive compensation 1 1
---------------------------------------------------------------------------------------------------------------
Balance, March 26, 2000 $ 1 $358 $ 258 $14,756 $28,288 $(116) $43,545
---------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
March 26, March 28, March 29
2000 1999 1998
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net income $ 8,733 $6,518 $5,940
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,349 3,887 3,000
Issuance of common stock for incentive compensation 9
Deferred income taxes 95 396 1,043
Change in operating assets and liabilities that provided (used) cash:
Receivables (212) 116 233
Inventories (417) 662 (264)
Prepaid expenses (111) 123 135
Other assets (534) (150) (494)
Accounts payable and accrued expenses 3,899 1,174 1,652
-----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 15,811 12,726 11,245
-----------------------------------------------------------------------------------------------------------------------
Investing Activities:
Business acquisition, net of cash acquired (8,445) (19,138)
Expenditures for property and equipment (9,643) (7,212) (5,079)
Other (21) (18) (1)
-----------------------------------------------------------------------------------------------------------------------
Net cash (used in) investing activities (18,109) (7,230) (24,218)
-----------------------------------------------------------------------------------------------------------------------
Financing Activities:
Preferred stock redeemed (1,000)
Dividends paid on preferred stock (42) (50) (93)
Proceeds from issuance of long-term debt 7,700 18,000
Repayment of long-term debt and obligations under
capital leases (6,024) (4,939) (9,867)
Proceeds from issuance of common stock 145 59
Conversion of preferred stock 8
-----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 1,779 (4,981) 7,099
-----------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (519) 515 (5,874)
Cash and cash equivalents, beginning of year 1,684 1,169 7,043
-----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 1,165 $ 1,684 $1,169
-----------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information Cash paid during the fiscal year for:
Interest $ 1,087 $ 1,159 $ 860
Income taxes $ 3,815 $ 2,992 $2,804
-----------------------------------------------------------------------------------------------------------------------
Noncash investing and financing activities:
Fair market value of warrant issued $ 563
Non-competition agreement $ 684
-----------------------------------------------------------------------------------------------------------------------
Business acquisitions, net of cash acquired:
Fair value of assets acquired, other than cash $ 2,830 $8,888
Liabilities assumed (157) (2,577)
Purchase price in excess of the net assets acquired 5,772 12,827
-----------------------------------------------------------------------------------------------------------------------
$ 8,445 $19,138
-----------------------------------------------------------------------------------------------------------------------
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
</TABLE>
<PAGE>
BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 26, 2000, MARCH 28, 1999 AND MARCH 29, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business - Benihana Inc. owns and operates 53 Japanese teppanyaki-
style and sushi restaurants and franchises thirteen others. The
Company has the rights to open, license and develop Benihana
restaurants in the United States, Central and South America and the
Caribbean islands.
Fiscal Year - The Company's fiscal year is a 52/53 week year. All
of the years presented in these financial statements consist of 52
weeks.
Operating Segments - The Company operates within only one reportable
operating segment.
Principles of Consolidation - 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 interests. In consolidation, significant
intercompany accounts and transactions are eliminated.
Use of Estimates - The preparation of financial statements
in conformity with 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 and results
could differ from those estimates.
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 Rudy's acquisition and over a
15 year period for the Haru acquisition, the estimated benefit
period for each of the businesses acquired. Accumulated
amortization of goodwill was $1,308,000 at March 26, 2000.
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
in income when earned.
Accounting for Long-Lived Assets - The Company evaluates its
net investment in restaurant properties and goodwill for
impairment whenever events or changes in circumstances indicate that
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 - From time to time, the Company
utilizes interest rate swaps to hedge its 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 applies the intrinsic value
method in accounting for stock options. Accordingly, compensation
cost for stock options is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of grant
over the amount an employee must pay to acquire the stock.
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):
<TABLE>
<CAPTION>
March 26, March 28, March 29,
2000 1999 1998
----------- ----------- ---------
<S> <C> <C> <C>
Income from operations $8,733 $6,518 $5,940
Less preferred dividends (42) (50) (93)
--------- --------- ---------
Income for computation of basic
earnings per common share 8,691 6,468 5,847
Convertible preferred dividends 42 50 93
--------- --------- ---------
Income for computation of diluted
earnings per common share $8,733 $6,518 $5,940
====== ====== ======
Weighted average number of common
shares used in basic EPS 6,147 6,105 6,080
Effect of dilutive securities:
Stock options and warrants 384 180 86
Convertible preferred shares 105 134 233
-------- -------- --------
Weighted average number of common
shares and dilutive potential common
shares used in diluted EPS 6,636 6,419 6,399
===== ======= =======
</TABLE>
New Accounting Standards Not Yet Adopted - In June 1998, FAS
133, "Accounting for Derivative Instruments and Hedging Activities"
was issued. The new statement requires all derivatives to be
recorded on the balance sheet at fair value and establishes new
accounting rules for hedging instruments. The statement is effective
for years beginning after June 15, 2000. Company management is
assessing the impact this statement will have on the consolidated
financial statements, but does not currently believe it will be
material.
Reclassifications - Certain prior year amounts have been reclassified
to conform to the fiscal year 2000 presentation.
2. BASIS OF PRESENTATION AND ACQUISITION
The Company's financial statements and the discussion and
data presented below reflect the acquisition 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 has been accounted for using the purchase
method of accounting and the operating results of Haru have been
included in the Company's current fiscal year consolidated statement
of operations 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 has been 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 were
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.
<PAGE>
The following unaudited pro forma financial information gives effect
to the acquisition as if the acquisition had occurred as of the
beginning of the fiscal years presented. This pro forma financial
information reflects certain adjustments such as: amortization
of goodwill, interest expense on additional bank borrowings, and
related income tax effects.
(In thousands, except per share information)
<TABLE>
<CAPTION>
March 26, March 28,
2000 1999
----------- ---------
(Unaudited) (Unaudited)
<S> <C> <C>
Restaurant Sales $142,066 $125,336
Net Income $ 8,808 $ 6,593
Basic earnings per common share $ 1.43 $ 1.07
Diluted earnings per common share $ 1.33 $ 1.03
</TABLE>
These pro forma results are not necessarily indicative of what
actually would have occurred if the acquisition had taken place
as of the beginning of the fiscal years presented.
On December 1, 1997, the Company acquired Rudy's Restaurant Group,
Inc. ("Rudy's"), a company that owns nine teppanyaki-style Japanese
theme restaurants similar to those owned by the Company. The
Company paid approximately $20,000,000 and issued a warrant to
purchase 200,000 shares of the Company's Class A Common Stock at
$8.00 per share. The excess of the purchase price over the tangible
and intangible net assets acquired of approximately $13 million
has been allocated to goodwill.
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 estimated fair value has been
determined by the Company using available market information and
appropriate valuation methodologies. However, considerable judgment
is required in interpreting data to develop such estimates.
Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions
could have a material effect on estimated fair value. The carrying
value and estimated fair value of the financial instruments
held by the Company as of March 26, 2000 and March 28, 1999 are as
follows (in thousands):
<TABLE>
<CAPTION>
March 26, 2000 March 28, 1999
------------------------- --------------------
Estimated Carrying Estimated Carrying
Fair Value Value Fair Value Value
<S> <C> <C> <C> <C>
Receivables $ 567 $ 563 $ 430 $ 422
Cash surrender value of officer's
life insurance $ 345 $ 345 $ 324 $ 324
Financial liabilities
Bank and other indebtedness $ 14,673 $ 14,646 $ 12,636 $ 12,407
</TABLE>
The following methods and assumptions were used to estimate the
fair value of the Company's financial instruments for which it
was practicable to estimate that value:
Cash and cash equivalents
The carrying value approximates fair value because of
the short-term nature of the instruments.
Receivables
The carrying value approximates the fair value of current
receivables because of the short-term nature of these
instruments. The fair value of long-term receivables was
estimated based on discounted cash flows expected to be
received using interest rates at which similar loans are made
to borrowers with similar credit ratings.
<PAGE>
Cash surrender value of officer's life insurance
The carrying value approximates the fair value because of
the fixed nature of the life insurance contract.
Long-term debt
The fair value of outstanding borrowings under its 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.
<TABLE>
<CAPTION>
4. INVENTORIES
Inventories consist of (in thousands):
March 26, March 28,
2000 1999
---------- -------
<S> <C> <C>
Food and beverage $1,450 $1,147
Supplies 2,163 1,959
------- -------
$3,613 $3,106
====== ======
</TABLE>
<TABLE>
<CAPTION>
5. PROPERTY AND EQUIPMENT
Property and equipment consist of (in thousands):
March 26, March 28,
2000 1999
---------- --------
<S> <C> <C>
Land $ 5,925 $ 5,925
Buildings 11,924 11,373
Leasehold improvements 35,385 32,744
Restaurant furniture, fixtures, and equipment 17,592 17,753
Restaurant facilities and equipment under
capital leases 7,638 7,638
-------- ---------
78,464 75,433
Less accumulated depreciation and amortization (Including
accumulated amortization of restaurant facilities and
equipment under capital leases of $6,508 and $6,203
in 2000 and 1999, respectively) 41,842 39,648
-------- --------
36,622 35,785
Construction in progress 6,942 1,343
--------- ---------
$43,564 $37,128
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
6. OTHER ASSETS
Other assets consist of (in thousands):
March 26, March 28,
2000 1999
----------- --------
<S> <C> <C>
Lease acquisition costs, net $ 2,683 $ 368
Premium on liquor licenses 961 923
Security deposits 545 235
Long-term receivables 181 161
Computer software costs, net 291 150
Deferred financing charges, net 259 322
Cash surrender value of
life insurance policy 345 324
Other 28
------------- ----------
$ 5,265 $ 2,511
======== =======
</TABLE>
<TABLE>
<CAPTION>
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of (in thousands):
March 26, March 28,
2000 1999
---------- --------
<S> <C> <C>
Accounts payable $ 5,325 $ 3,761
Accrued payroll, incentive
compensation and related taxes 3,162 2,826
Unredeemed gift certificates 759 550
Accrued sales taxes 750 634
Accrued property taxes 481 403
Accrued percentage rent 842 545
Accrued income taxes 1,205 197
Other accrued operating expenses 2,028 1,581
--------- --------
$14,552 $10,497
======= =======
</TABLE>
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.
<PAGE>
The amounts of operating and capital lease obligations are
as follows (in thousands):
<TABLE>
<CAPTION>
Operating Capital
Fiscal year ending: Leases Leases
<S> <C> <C>
2001 $ 4,741 $ 893
2002 4,868 893
2003 4,788 784
2004 4,750 458
2005 4,632 289
Thereafter 33,219 27
-------- ---------
Total minimum lease payments $ 56,998 $ 3,344
=======
Less amount representing interest 642
--------
Total obligations under capital leases 2,702
Less current maturities 629
--------
Long-term obligations under capitalized
leases at March 26, 2000 $ 2,073
======
</TABLE>
<TABLE>
<CAPTION>
Rental expense consists of (in thousands):
March 26, March 28, March 29,
2000 1999 1998
------------ ------------- --------
<S> <C> <C> <C>
Minimum rental commitments $6,009 $4,844 $3,957
Rental based on percentage of sales 1,711 1,491 1,253
-------- ------- -------
$7,720 $6,335 $5,210
====== ====== ======
</TABLE>
In September 1999, the Company entered into a $25,000,000 master
lease pursuant to an agreement with its principal bank lender,
First Union National Bank and two other banks, for the purpose
of financing property 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 in an amount of less than 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
credit facilities.
<TABLE>
<CAPTION>
9. LONG-TERM DEBT
Long-term debt consists of (in thousands):
March 26, March 28,
2000 1999
<S> <C> <C>
Notes payable (see below):
Term loan - bank $10,250 $11,250
Revolving line of credit - bank 4,000
Notes payable - other:
7 1/2% unsecured promissory note payable
in monthly installments of $13 174
7% promissory note payable in monthly
installments of $30 347
7% unsecured note obligation payable in
monthly installments of $7 thru February 2001 70 143
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 326 493
---------- ----------
14,646 12,407
Less current portion 2,001 1,735
--------- ---------
$12,645 $10,672
</TABLE>
<PAGE>
The Company has a credit arrangement with a bank that includes
a term loan and a revolving line of credit under which
$11,000,000 was available at March 26, 2000. 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 1.0% to 2.25%. At March 26, 2000, interest was
accrued at 6.88%. 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 a seven year 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
March 26, 2000 was $4,598,000 and that amount is reduced by
$74,000 monthly until May 2002 when the balance of the
agreement expires.
Principal maturities of long-term debt obligations at March 26, 2000
are as follows:
Fiscal year ending
2001 $ 2,001
2002 2,645
2003 2,250
2004 3,000
2005 4,750
---------
Total $ 14,646
=======
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):
<TABLE>
<CAPTION>
March 26, 2000 March 28, 1999
Assets Liabilities Total Assets Liabilities Total
<S> <C> <C> <C> <C> <C> <C>
Excess book amortization for
for pre-opening costs and
capital leases $ 675 $ - $ 675 $ 812 $ - $ 812
Tax loss carryforwards 2,028 - 2,028 2,460 - 2,460
Accelerated depreciation for
tax purposes (273) (273) (620) (620)
Income tax credits 392 - 392 507 - 507
Other 468 - 468 333 - 333
Less - valuation allowance (107) (107)
-------------------------------------------------------------------------------------
Total asset (liability) $ 3,563 $ (273) $3,290 $4,005 $ (620) $3,385
=====================================================================================
</TABLE>
<PAGE>
The Company's net operating loss carryforwards as of March 26, 2000
was $5,069,000 for ordinary income tax purposes and $5,383,000 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. The valuation allowance has been eliminated
due to a change in tax law in the current year substantially
reducing the application of the SRLY limitation. All net operating
loss carryforwards expire as follows (in thousands):
Fiscal year ending
2005 $4,599
2006 470
-------
$5,069
The income tax provision consists of (in thousands):
<TABLE>
<CAPTION>
March 26, March 28, March 29,
2000 1999 1998
<S> <C> <C> <C>
Current:
Federal (net of utilization of net operating loss
of $1,079, $1,079 and $352 in fiscal years
2000, 1999 and 1998, respectively) $3,527 $2,273 $1,254
State 1,100 811 625
Deferred:
Federal and State 95 396 1,043
----------------------------------------------------
Income tax provision $4,722 $3,480 $2,922
====================================================
</TABLE>
The income tax provision differed from the amount computed at
the statutory rate as follows (in thousands):
<TABLE>
<CAPTION>
March 26, March 28, March 29,
2000 1999 1998
---------------------------------------------------
<S> <C> <C> <C>
Federal income tax provision at statutory rate of 34% $4,609 $3,399 $3,013
Change in valuation allowance (107) (92)
State income taxes, net of federal benefit 726 535 413
Tax credits, net (687) (593) (498)
Other 181 139 86
----------------------------------------------------
Income tax provision $4,722 $3,480 $2,922
====================================================
Effective income tax rate 35.1% 34.8% 33.0%
===================================================
</TABLE>
11. 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.
Common and Class A Common Stock - The Company's Common Stock
is convertible to 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.
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) and a Directors' Stock Option Plan (Directors' Plan), under
which a maximum of 1,785,000 shares of the Company's Common Stock
were authorized for grant and of which options for 638,000 shares
remain available for grant.
<PAGE>
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 prescribed by
Accounting Principles Board Opinion No. 25 "Accounting for Stock
Issued to Employees" (APB 25), and related Interpretations, in
accounting for stock-based awards to employees. Under APB 25, the
Company generally recognizes no compensation expense with respect
to such awards.
Pro forma information regarding net income and earnings per share is
required by Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation" (FAS 123) as if the
Company had accounted for its stock-based awards to employees under
the fair value method prescribed by FAS 123. 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
6.7% for fiscal year 2000, 5.5% for 1999 and 5.7% for 1998,
respectively; an expected life of three years, no expected
dividend yield and a volatility factor of 38%, 58% and 34% for
fiscal years 2000, 1999 and 1998, respectively.
The Company's pro forma information is as follows:
<TABLE>
<CAPTION>
March 26, March 28, March 29,
2000 1999 1998
<S> <C> <C> <C>
Net Income
As reported $8,733 $6,518 $5,940
Pro forma $7,796 $5,760 $5,372
Diluted Earnings Per Common Share
As reported $ 1.32 $ 1.02 $ .93
Pro forma $ 1.17 $ .90 $ .84
</TABLE>
Due to 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 March 26, 2000:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------- -------------------
Weighted-
Average Weighted Weighted
Ranges of Remaining Average Average
Exercise Contractual Exercise Exercise
Prices Number Life Price Number Price
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1 3/8 -$ 3 1/4 26,500 3.7 $ 2.65 26,500 $ 2.65
6 3/4 - 8 3/8 391,792 7.7 7.42 316,458 7.47
9 3/16 - 10 1/8 122,491 6.3 9.42 122,491 9.42
10 1/4 - 12 1/4 513,001 8.1 11.85 382,000 12.01
13 15/16 - 15 1/2 124,000 9.4 15.04 28,000 15.33
------------------ ---------- ----------
$ 1 3/8 -$15 1/2 1,177,784 875,449
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Transactions under the above plans for the years ended are as follows:
March 26, March 28, March 29,
2000 1999 1998
-----------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year 877,560 669,427 222,407
Granted 322,500 209,500 467,750
Canceled (3,750)
Expired (1,167) (2,067)
Exercised (21,109) (1,367) (14,913)
------------------------------------------------------------
Balance, end of year 1,177,784 877,560 669,427
============================================================
Weighted average fair value of options
granted during year $ 4.24 $ 5.26 $ 4.47
</TABLE>
On March 26, 2000, options for 875,449 of the shares are exercisable
at prices ranging from $1 3/8 to $15 1/2.
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 acquiror 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.
12. INCENTIVE AND DEFERRED COMPENSATION PLANS
The Company has an incentive compensation plan (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 17.5% for 2000, 16% for 1999 and 17.5%
for 1998, is approved annually based upon a review of the return
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 $500,000, $575,000 and $475,000 of incentive compensation
for fiscal years 2000, 1999 and 1998, 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.
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarter ended (in thousands except for per share information)
<TABLE>
<CAPTION>
March 26, 2000
-----------------------------------------------------------
4th 3rd 2nd 1st
-----------------------------------------------------------
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Quarter ended (in thousands except for per share information)
March 28, 1999
------------------------------------------------------------
4th 3rd 2nd 1st
------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 30,085 $ 27,899 $ 26,347 $ 34,818
Gross profit 22,268 20,512 19,218 25,389
Net income 2,452 1,753 1,145 1,168
Basic earnings
per share $ .39 $ .29 $ .19 $ .19
Diluted earnings
per share $ .38 $ .28 $ .18 $ .18
</TABLE>
<PAGE>
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 (the "Company") as of March 26, 2000 and March 28,
1999, and the related consolidated statements of earnings, stockholders'
equity and cash flows for each of the three years in the period ended
March 26, 2000. These consolidated financial statements are the
responsibility of the Company'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 Inc. and
subsidiaries as of March 26, 2000 and March 28, 1999, and the results of
their operations and their cash flows for each of the three years in the
period ended March 26, 2000 in conformity with accounting principles generally
accepted in the United States of America.
Deloitte & Touche LLP
Certified Public Accountants
Miami, Florida
May 12, 2000
<PAGE>
COMMON STOCK INFORMATION
The Company's Common Stock and Class A Stock are traded on the Nasdaq
National Market System. There were 262 holders of record of the Company's
Common Stock and 353 holders of record of the Class A Common Stock at March
26, 2000.
The table below sets forth high and low bid prices for the Company's
Common Stock and Class A Common Stock, which do not include commissions and
mark-ups or mark-downs for the periods indicated. Such bid prices reflect
inter-dealer prices without retail mark-ups, mark-downs or commissions
and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
Fiscal Year Ended
March 26, 2000 March 28, 1999
-------------------- -----------------
COMMON STOCK High Low High Low
<S> <C> <C> <C> <C>
1st Quarter 14 11 1/2 12 3/8 10 1/8
2nd Quarter 15 1/2 13 3/4 11 1/4 6 3/16
3rd Quarter 15 5/8 13 3/8 11 6 7/8
4th Quarter 14 3/4 13 1/4 11 3/4 9 3/4
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended
March 26, 2000 March 28, 1999
CLASS A ---------------------- --------------------
COMMON STOCK High Low High Low
<S> <C> <C> <C> <C>
1st Quarter 13 3/4 10 5/8 12 1/6 9 3/4
2nd Quarter 15 1/2 13 1/2 10 7/8 5 5/8
3rd Quarter 15 5/8 13 3/4 9 1/2 6 1/4
4th Quarter 14 1/4 13 12 9 3/8
</TABLE>
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.
The Company has not declared or paid a cash dividend since its organization
and has no present intention of paying any such dividend in the foreseeable
future. The Company intends to retain all available cash for the operation
and expansion of its business. In addition, the Company's present loan
agreement restricts the payment of dividends.
<PAGE>
Exhibit 23.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
333-33880, 333-63783 and 333-13973 of Benihana Inc. on Form S-8 of our report
dated May 12, 2000, appearing in the Annual Report on Form 10-K of Benihana
Inc. for the year ended March 26, 2000.
Deloitte & Touche LLP
Certified Public Accountants
Miami, Florida
June 19, 2000
<PAGE>
Exhibit 23.02
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
333-83585 and 333-13977 of Benihana Inc. on Form S-3 of our report dated May
12, 2000, appearing in the Annual Report on Form 10-K of Benihana Inc. for
the year ended March 26, 2000 and to the reference to us under the heading
"Experts" in such Registration Statements.
Deloitte & Touche LLP
Certified Public Accountants
Miami, Florida
June 19, 2000
