-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HZmdCsOXG3+PSRfEOmUbiXyCQUmKbgLi/07ej57t9vz3oscyo7c2o05YB5Ognw+u q5YqiDD6InF9Bt3B0yPkBw== 0000935226-01-500010.txt : 20010905 0000935226-01-500010.hdr.sgml : 20010905 ACCESSION NUMBER: 0000935226-01-500010 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010401 FILED AS OF DATE: 20010904 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BENIHANA INC CENTRAL INDEX KEY: 0000935226 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 650538630 STATE OF INCORPORATION: DE FISCAL YEAR END: 0328 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-26396 FILM NUMBER: 1730373 BUSINESS ADDRESS: STREET 1: 8685 NW 53RD TERRACE CITY: MIAMI STATE: FL ZIP: 33166 BUSINESS PHONE: 3055930770 MAIL ADDRESS: STREET 1: 8685 NW 53RD TERRACE CITY: MIAMI STATE: FL ZIP: 33166 10-K/A 1 form10-k2001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended April 1, 2001 or, [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-26396 Benihana Inc. --------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 65-0538630 ---------- ----------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8685 Northwest 53rd Terrace, Miami, Florida 33166 ------------------------------------------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code): (305) 593-0770 -------------- Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12 (g) of the Act: Common Stock, par value $.10 per share Class A Common Stock, par value $.10 per share Preferred Share Purchase Right Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of June 22, 2001, 3,284,379 shares of Common Stock and 2,996,370 shares of Class A Common Stock were outstanding, and the aggregate market value of the common equity of Benihana Inc. held by non-affiliates was approximately $46,425,954. DOCUMENTS INCORPORATED BY REFERENCE ----------------------------------- Portions of the Registrant's Annual Report to Stockholders for the year ended April 1, 2001 are incorporated by reference in Parts I and II. Portions of the Registrant's Proxy Statement for the Annual Meeting to be held August 16, 2001 are incorporated by reference in Part III. This amendment on Form 10-K/A is filed to amend Note 12 to the Consolidated Financial Statements incorporated by reference in Item 14 hereof, to clarify that the events described in that Note as occurring after May 18, 2001, the date of the opinion relating to such Consolidated Financial Statements of Deloitte & Touche LLP, our independent auditors, are not covered by such opinion and are, therefore, unaudited. Item 1. General Benihana Inc. ("the Company"), the leading operator of Japanese teppanyaki-style restaurants in the United States, owned and operated 58 teppanyaki and sushi restaurants and franchised 16 others at June 30, 2001. We have achieved 35 consecutive quarters of comparable quarter sales growth and customer count increases. We attribute this success to (i) a well-established brand identity supported by consistent marketing and promotional activities since the opening of the first Benihana restaurant in 1964, (ii) growing consumer demand for a dining experience that features a theme or entertainment component, (iii) the Company's continued emphasis on quality and customer satisfaction, (iv) Benihana's experienced management team, and (v) a healthy economy over the past several years. We own the exclusive rights to develop, operate or license Benihana restaurants in the United States (subject to certain rights granted to Benihana of Tokyo, Inc. ("BOT"), the corporate founder of the chain and a principal shareholder, with respect to the State of Hawaii), Central and South America and the Caribbean Islands. The Company also owns the exclusive rights to develop, operate or license Sushi Doraku by Benihana and Haru restaurants worldwide. A description of the Company-owned and licensed restaurants is set forth below under "Properties". Sales by the Company's owned restaurants were approximately $161,865,000 for the fiscal year ended April 1, 2001, as compared to approximately $136,389,000 for the prior fiscal year. The Company is engaged in one business segment and operates with three Japanese theme concepts; Benihana, Sushi Doraku by Benihana and Haru. The Benihana Concept The Benihana concept offers casual upscale dining in a distinctive Japanese atmosphere enhanced by the unique entertainment provided by the Company's highly-skilled Benihana chefs who prepare fresh steak, chicken and seafood in traditional Japanese style at the customer's table. Most of the Company's Benihana restaurants are open for both lunch and dinner. The restaurants have a limited menu offering a full course meal consisting of an appetizer, soup, salad, tea, rice, a vegetable and an entree of steak, seafood, chicken or any combination of them. Specific menu items may be different in the various restaurants depending upon the local geographic market. The servings are all portion controlled to provide consistency in quantities served to each customer. Alcoholic beverages, including specialty mixed drinks, wines, beers and soft drinks, are available. The average check size per person was $23.35 in fiscal 2001. During fiscal 2001, beverage sales in both the lounges and dining rooms accounted for approximately 17% of total restaurant sales. Sushi is offered at all of the Company's traditional restaurants at either separate sushi bars or at the teppanyaki grills. An entire teppan table generally seats eight customers. The chef is assisted in the service of the meal by the waitress or waiter who takes beverage and food orders. An entire dinnertime meal takes approximately one hour and thirty minutes. We own and operate 51 Benihana restaurants. Of which 34 are located in freestanding, special use restaurant buildings, six in shopping centers, and 11 in office or hotel building complexes. The freestanding restaurants were built to the Company's specifications as to size, style and interior and exterior decor. The other locations were adapted to the Benihana interior decor. The free-standing, traditional Benihana restaurant units, which are generally one story buildings, average approximately 8,000 square feet and are constructed on a lot of approximately 1.25 to 1.50 acres. The shopping center, office building and hotel-based Benihana restaurants are of similar size, but differ somewhat in appearance from location to location in order to conform to the existing buildings. A typical Benihana restaurant has 18 teppan tables. The Benihana restaurants seat from 86 to 178 customers in the dining rooms and 8 to 120 customers in the bar lounge areas. We also own and operate a similar teppanyaki restaurant under the name Samurai in Miami, Florida. See "Properties." We anticipate opening three new Benihana restaurants in fiscal 2002, in addition to the Benihana restaurant recently opened in June 2001 in Wheeling, Illinois. The Sushi Doraku by Benihana Concept The Sushi Doraku by Benihana concept offers sushi "kaiten" style. At a kaiten bar, customers select their favorite sushi items from a continuously revolving conveyor system. The average check size per person was $14.20 in fiscal 2001. The first Sushi Doraku by Benihana is located in an entertainment complex. We have three Sushi Doraku by Benihana restaurants in operation and we do not have plans for expansion. The Haru Concept The Haru concept offers sushi as well as other certain Japanese dishes. Haru also offers delivery and takeout which account for approximately 45% of the total sales. The average check size per person was $27.92 in fiscal 2001. Two Haru restaurants were operating in fiscal 2001, a third was opened in May 2001 and we anticipate that two additional restaurants will open in early fiscal 2002. Restaurant Operations Our restaurants are centrally managed by the Executive Vice President-Restaurant Operations and are divided among seven geographic regions, each managed by a regional manager. Food preparation in the restaurants is supervised by eight regional chefs. Each restaurant has a manager and one or more assistant managers responsible for the operation of the restaurant, including personnel matters, local inventory purchasing, maintenance of quality control standards, cleanliness and service. We use various incentive compensation plans pursuant to which key restaurant personnel share in the results of operations at both a local and company-wide level. Specific strict guidelines as documented in restaurant operations manuals are followed to assure consistently high quality in customer service and food quality from location to location. Operating specifications are used for quality of ingredients, preparation of food, maintenance of premises and employee conduct and are incorporated in manuals used by the managers, assistant managers and head chefs. Food products and portion sizes are regularly and systematically tested for quality and compliance with our standards. Certain seafood items are purchased in bulk for most of the restaurants under which a certain quantity is purchased at a specific price. Most of the other food products are purchased in local markets. Substantially all of the restaurant operating supplies are purchased centrally and distributed to the restaurants from our warehouse or one of the two bonded warehouses. The chefs are trained in the teppanyaki or sushi style of cooking and customer service in training programs lasting from eight to twelve weeks. A portion of the training is spent working in a restaurant under the direct supervision of an experienced head chef. The program includes lectures on our method of restaurant operations and training in both tableside and kitchen food preparation as applied in its restaurants. Manager training is similar except that the manager trainee is given in-depth exposure to each position in the restaurant. Other categories of employees are trained by the manager and assistant manager at the restaurant. Ongoing continuing education programs and seminars are provided to restaurant managers and chefs to improve restaurant quality and implement changes in operating policy or menu items. Marketing We utilize television, radio, billboard and print media to promote our restaurants, strengthen our brand identity and maintain high name recognition. The advertising programs are tailored to each local market and to print media focused on the business traveler. The advertising program is designed to emphasize the inherently fresh aspects of a Benihana meal and the entertainment value of the food preparation at the table. In fiscal year 2001, we expended $6.2 million on advertising and other marketing, approximately 3.8% of net sales. The entertainment value of the Benihana method of food preparation and service is emphasized to distinguish Benihana from other restaurant concepts. Franchising We have, from time to time, franchised experienced restaurant operators (such as Hilton Hotels) in markets in which it considers expansion to be of benefit to the Benihana system. We have begun to more aggressively pursue franchising opportunities, particularly in foreign countries (Central and South America and the Caribbean Islands) where we own the rights to the Benihana trademarks and system. Franchisees bear all direct costs involved in the development, construction and operation of their restaurants. We provide franchisees support for site selection, prototypical architectural plans, interior and exterior design and layout, training, marketing and sales techniques and opening assistance. All franchisees are required to operate their restaurants in accordance with Benihana standards and specifications including menu offerings, food quality and preparation. The current standard franchise agreement provides for payment to us of a non-refundable franchise fee of $30,000 to $50,000 per restaurant and royalties of 3% to 6% of sales. In fiscal year 2001 revenues from franchising were $1,378,000. We presently franchise Benihana restaurants in Anchorage, Alaska; Austin and San Antonio, Texas; Las Vegas and Reno, Nevada; Beverly Hills, California; Seattle, Washington; Key West, Florida; Harrisburg, Pennsylvania; Milwaukee, Wisconsin; Little Rock, Arkansas; Caracas, Venezuela; Lima, Peru and Aruba. To comply with the terms of these franchise agreements entered into by the Company in the United States, we are prohibited from opening additional restaurants within certain areas in which the Company's existing franchises have the exclusive right to open additional restaurants and operate their existing Benihana restaurants. In general, such franchise agreements currently provide for an initial payment to Benihana with respect to each new restaurant opened by a franchisee and continuing royalty payments to the Company based upon a percentage of a franchisee's gross sales from each such restaurant throughout the term of the franchise. We anticipate that two new franchised Benihana restaurants will open in fiscal 2002: one in Edison, New Jersey and the other in Caracas, Venezuela. Trade Names and Service Marks Benihana is Japanese for "red flower". In the United States, the "Benihana" and "Benihana of Tokyo" names and "flower" logo, which management believes to be of material importance to our business, are owned by us and are registered in the United States Patent and Trademark Office and certain foreign countries. We also own registered trademarks of Samurai, Kyoto brands and the "Sushi Doraku by Benihana" concept. Additionally, we have filed an application to register the Haru trademark. Benihana of Tokyo, Inc. ("BOT"), a privately held company and originator of the Benihana concept, continues to own the rights to the Benihana name and trademarks outside of the United States, Central and South America and the Caribbean Islands. BOT is a principal shareholder of the Company. We have no financial interest in any restaurant operated by BOT. Employees At April 1, 2001, we employed 2,895 persons, of which 2,835 were restaurant employees and 60 were corporate personnel. Most employees, except restaurant management and corporate management personnel, are paid on an hourly basis. We also employ some restaurant personnel on a part-time basis to provide the services necessary during the peak periods of restaurant operations. We believe our relationship with our employees is good. Competition The casual dining segment of the restaurant industry is expected to remain intensely competitive with respect to price, service, location, and the type and quality of food. Each of our restaurants competes directly or indirectly with locally owned restaurants as well as regional and national chains, and several of our significant competitors are larger or more diversified and have substantially greater resources than the Company. It is also anticipated that growth in the industry will result in continuing competition for available restaurant sites as well as continued competition in attracting and retaining qualified management-level operating personnel. We believe that our competitive position is enhanced by offering quality food selections at an appropriate price with the unique entertainment provided by our chefs in an attractive, relaxed atmosphere. Government Regulation Each of our restaurants is subject to licensing and regulation by the health, sanitation, safety standards, fire department and the alcoholic beverage control authorities in the state or municipality where it is located. Difficulties or failure in obtaining the required licensing or requisite approvals could result in delays or cancellations in the opening of new restaurants; termination of the liquor license for any Benihana restaurant would adversely affect the revenues for the restaurant. While to date, we have not experienced any material difficulties in obtaining and maintaining necessary governmental approvals, the failure to obtain or retain, or a delay in obtaining food and liquor licenses or any other governmental approvals could have a material adverse effect on our operating results. Federal and state environmental regulations have not had a material effect on our operations, but more stringent and varied requirements of local governmental bodies with respect to zoning, land use and environmental factors could delay construction of new restaurants. We are also subject to federal and state regulations regarding franchise offering and sales. Such laws impose registration and disclosure requirements on franchisors in the offer and sale of franchises, or impose substantive standards on the relationship between franchisee and franchisor. The Americans with Disabilities Act (the "ADA") prohibits discrimination on the basis of disability in public accommodations and employment. The ADA, which mandates accessibility standards for individuals with physical disabilities, increases the cost of construction of new restaurants and of remodeling older restaurants. We are also subject to the Fair Labor Standards Act, which governs such matters as minimum wages, overtime, and other working conditions. A significant portion of our food service personnel are paid at rates related to federal or state minimum wage rates, and accordingly, increases in any such minimum wage will increase our labor costs. Management Information Systems We provide restaurant managers with centralized financial and management control systems through use of data processing information systems and prescribed reporting procedures. Each restaurant forwards sales reports, vendor invoices, payroll and other operational data to the home office on a weekly and four-week period basis. We utilize this information to centrally monitor sales, product, labor and other costs and to prepare periodic financial and management reports. We believe that our centralized accounting, payroll and human resources, cash management and information systems improve its ability to control and manage its operations efficiently. Properties Of the 58 restaurants we operate at June 30, 2001, six are owned and 52 are leased pursuant to leases, which require either a specific monthly rental, or a minimum rent and additional rent based upon a percentage of gross sales. In addition there are three Benihana restaurants under construction in Santa Monica, California, Irving, Texas and Westbury, New York and two Haru restaurants under construction in New York City, New York. Generally, these leases are "triple net" leases which pass increases in property operating expenses, such as real estate taxes and utilities, through to the Company as tenant. Expiration dates of these leases, including renewal options, range from May 2001 to March 2027. The following table sets forth the location of our owned restaurants:
Benihana, Sushi Approx. Approximate Seating ------------------------------------------------- Doraku by Benihana Sq. Ft. of Dining Sushi Date Or Haru Location Building Room Lounge Bar Opened - ---------------------- -------- ---- ------ ---- ------ CALIFORNIA: Benihana 2100 E. Ball Road Anaheim (1) 8,710 160 67 36 March, 1980 Benihana 1496 Old Bayshore Hwy. Burlingame (1) 8,740 160 99 27 February, 1978 Benihana 17877 Gale Avenue City of Industry (1) 8,000 144 50 30 November, 1988 Benihana 1989 Diamond Blvd. Concord (1) 8,250 144 84 18 February, 1980 Benihana 2074 Vallco Fashion Pk. Cupertino (1) 7,937 144 45 8 July, 1980 Benihana 16226 Ventura Blvd. Encino (2) 7,790 152 64 -0- October, 1970 Benihana 14160 Panay Way Marina Del Rey (1) 4,840 96 66 6 March, 1972 Benihana 136 Olivier Street Monterey (2) 4,856 112 33 9 June, 2000 Benihana 4250 Birch Street Newport Beach (2) 8,275 144 72 26 March, 1978 Benihana 3760 E. Inland Empire Blvd. Ontario (1) 7,433 144 8 20 December, 1998 Benihana 5489F Sunrise Blvd. Citrus Heights (Sacramento) (1) 3,798 88 8 5 October, 1995 Benihana 477 Camino Del Rio So. San Diego (1) 7,981 144 68 23 May, 1977 Benihana 1737 Post Street San Francisco (1) 7,990 140 45 -0- December, 1980
(1) Lease provides for minimum rent, plus additional rent based upon a percentage of gross sales. (2) Lease provides for fixed rent.
Benihana, Sushi Approx. Approximate Seating ------------------------------------------------------- Doraku by Benihana Sq. Ft. of Dining Sushi Date Or Haru Location Building Room Lounge Bar Opened - ---------------------- -------- ---- ------ --- ------ Benihana 1447 4th Street Santa Monica (1) 7,500 -0- -0- -0- under construction Benihana 21327 Hawthorne Blvd. Torrance (1) 7,430 128 63 28 May, 1980 COLORADO: Benihana 3295 S. Tamarac Dr. Denver (1) 7,572 128 82 10 February, 1977 DISTRICT OF COLUMBIA: Benihana 3222 M Street, NW Washington (2) 7,761 136 4 24 May, 1982 FLORIDA: Sushi Doraku 300 S.W. 1st Avenue Ft. Lauderdale (1) 3,700 N/A N/A 103 June, 1998 Sushi Doraku 1100 Lincoln Road Miami Beach (1) 3,900 N/A N/A 64 June, 2000 Benihana 276 E. Commercial Blvd. Ft. Lauderdale 8,965 160 70 -0- June, 1970 Benihana 8727 South Dixie Hwy. Miami (2) (Kendall) 8,700 122 66 15 March, 1989 Samurai 8717 S.W. 136th St. Miami (1) 8,162 176 42 -0- October, 1981 Benihana 1665 N.E. 79th St. Miami Beach 8,938 178 86 42 September, 1973 Benihana 1751 Hotel Plaza Blvd. Lake Buena Vista (1) (Orlando) 8,145 128 85 7 October, 1988 Benihana 3602 S.E. Ocean Blvd. Stuart 8,485 160 69 57 February, 1977
(1) Lease provides for minimum rent, plus additional rent based upon a percentage of gross sales. (2) Lease provides for fixed rent.
Benihana, Approx. Approximate Seating Sushi ----------------------------------- Doraku by Benihana Sq. Ft. of Dining Sushi Date or Haru Location Building Room Lounge Bar Opened - --------------------- -------- ---- ------ --- ------ GEORGIA: Benihana 2143 Peachtree Rd., NE Atlanta [I] (2) 8,244 136 65 16 May, 1974 Benihana 229 Peachtree St. NE Atlanta [II] (2) 6,372 115 34 11 April, 1981 ILLINOIS: Sushi Doraku 1139 N. State St. Chicago (1) 4,500 N/A N/A 71 August, 2000 Benihana 166 East Superior St. Chicago (1) 7,288 144 9 45 April, 1968 Benihana 747 E. Butterfield Rd. Lombard 9,200 168 51 -0- April, 1985 Benihana 1200 E. Higgins Road Schaumburg 8,388 160 48 -0- July, 1992 Benihana 150 N. Milwaukee Ave. Wheeling (2) 8,500 160 33 6 June, 2001 INDIANA: Benihana 8830 Keystone Crossing Rd. Indianapolis (1) 8,460 144 93 -0- February, 1979 KENTUCKY: Benihana 1510 Lake Shore Court Louisville (1) 7,572 128 88 -0- July, 1978 MARYLAND: Benihana 7315 Wisconsin Ave. Bethesda (1) 6,047 128 47 11 October, 1974 MICHIGAN: Benihana 18601 Hubbard Dr. Dearborn (1) 7,500 136 40 46 March, 1977
(1) Lease provides for minimum rent, plus additional rent based upon a percentage of gross sales. (2) Lease provides for fixed rent.
Benihana, Approx. Approximate Seating Sushi ----------------------------------- Doraku by Benihana Sq. Ft. of Dining Sushi Date or Haru Location Building Room Lounge Bar Opened - --------------------- -------- ---- ------ --- ------ Benihana 21150 Haggerty Rd. Northville (2) 8,000 153 20 11 May, 1989 (Farmington Hills) Benihana 1985 W. Big Beaver Rd. Troy (1) 8,600 128 46 57 February, 1996 MINNESOTA: Benihana 850 Louisiana Ave. So. Golden Valley 10,400 192 45 -0- September, 1980 NEW JERSEY: Benihana 840 Morris Turnpike Short Hills (2) 11,500 144 56 56 October, 1976 Benihana 5255 Marlton Pike Pennsauken (1) 7,000 136 93 10 February, 1978 (Cherry Hill) NEW YORK: Benihana 120 East 56th St. New York (2) 3,859 86 24 -0- May, 1966 Benihana 47 West 56th St. New York (2) 7,340 112 59 -0- June, 1973 Benihana 2105 Northern Blvd. Munsey Park (1) 8,252 144 88 75 December, 1978 (Manhasset) Benihana 920 Merchant's Concourse Westbury (1) 7,400 -0- -0- -0- under construction Haru 205 West 43rd Street New York (2) 4,000 -0- -0- 119 May, 2001 Haru 1327 Third Ave. New York (2) 2,200 -0- -0- -0- under construction
(1) Lease provides for minimum rent, plus additional rent based upon a percentage of gross sales. (2) Lease provides for fixed rent.
Benihana, Approx. Approximate Seating Sushi -------------------------------------------------------- Doraku by Benihana Sq. Ft. of Dining Sushi Date or Haru Location Building Room Lounge Bar Opened - --------------------- -------- ---- ------ --- ------ Haru 1329 Third Ave. New York (2) 4,000 -0- -0- 78 December, 1999 Haru 433 Amsterdam Ave. New York (2) 4,000 -0- -0- 74 December, 1999 Haru 280 Park Ave. New York (2) 6,350 -0- -0- -0- under construction OHIO: Benihana 50 Tri-County Parkway Cincinnati (1) 7,669 144 91 -0- June, 1978 Benihana 126 East 6th St. Cincinnati (1) 5,800 112 30 -0- August, 1979 Benihana 23611 Chagrin Blvd. Beachwood (1) 10,393 188 85 -0- May, 1973 (Cleveland) OREGON: Benihana 9205 S.W. Cascade Ave. Beaverton (1) 6,077 112 54 34 August, 1986 PENNSYLVANIA: Benihana 2100 Greentree Rd. Pittsburgh (1) 8,000 150 84 -0- May, 1971 TENNESSEE: Benihana 912 Ridgelake Blvd. Memphis (1) 8,680 144 78 11 October, 1979 TEXAS: Benihana 7775 Banner Dr. Dallas (2) 8,007 160 115 -0- January, 1976 Benihana 3848 Oak Lawn Ave. Dallas (1) (Turtle Creek) 3,998 96 0 10 June, 1997
(1) Lease provides for minimum rent, plus additional rent based upon a percentage of gross sales. (2) Lease provides for fixed rent.
Benihana, Approx. Approximate Seating Sushi --------------------------------------------- Doraku by Benihana Sq. Ft. of Dining Sushi Date or Haru Location Building Room Lounge Bar Opened - --------------------- -------- ---- ------ --- ------ Benihana 1318 Louisiana St. Houston [I] (2) 6,938 128 60 12 May, 1975 Benihana Irving (2) 8,565 -0- -0- -0- under construction Benihana 9707 Westheimer Rd. Houston [II] (1) 7,669 144 120 10 November, 1977 Benihana 2579 Town Center Blvd. Sugar Land (1) 3,800 96 0 17 July, 1997 UTAH: Benihana 165 S.W. Temple, Bldg. 1 Salt Lake City (1) 7,530 120 72 10 April, 1977
(1) Lease provides for minimum rent, plus additional rent based upon a percentage of gross sales. (2) Lease provides for fixed rent. The Company leases approximately 10,100 square feet of space for its general administrative offices in Miami, Florida at an annual rental of $192,000 and 8,000 square feet for a warehouse in Miami, Florida at an annual rental of $28,000. The leases expire May 31, 2009 and October 31, 2001, respectively. Item 3. Legal Proceedings ----------------- An action entitled Lixin Zhao v. Benihana Inc. was filed on February 21, 2001, by a former employee in the United States District Court for the Southern District of New York. The complaint also purports to be filed on behalf of other unnamed current and former employees. The complaint sets forth a single claim for alleged violations of the minimum wage provisions of the federal labor laws relating to employee participation in "tip pools". Plaintiff seeks damages consisting of the difference between the hourly wage that the plaintiff was paid and the applicable federal minimum hourly wages. Should the plaintiff prevail she and other current and former employees, to the extent any join the litigation, may be awarded the liquidated damages provided by applicable federal labor laws, and reasonable attorneys' fees and costs. The Company served an answer to the complaint denying the material allegations made and intends to vigorously defend the action. While the Company believes that the complaint has no merit, this action is in its preliminary stages and there can be no assurance that the Company will not be required to pay a material amount in the settlement or other disposition of this matter. Except for this matter, the Company is not a party to any litigation other than routine claims which are incidental to its business. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- There were no matters submitted to a vote of security holders during the fourth quarter. PART II Item 5. Market for the Company's Common Stock and Related Stockholder Matters --------------------------------------------------------------------- The information required by this Item is incorporated herein by reference to Page 28 of the Company's 2001 Annual Report to Shareholders. Item 6. Selected Consolidated Financial Data ------------------------------------ The information required by this Item is incorporated herein by reference to Page 1 of the Company's 2001 Annual Report to Shareholders. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations --------------------------------------------------------------- The information required by this Item is incorporated herein by reference to Pages 4 through 9 of the Company's 2001 Annual Report to Shareholders. Item 7.A. Quantitative and Qualitative Disclosures About Market Risks ----------------------------------------------------------- The information required by this item is incorporated herein by reference to Page 9 of the Company's 2001 Annual Report to Shareholders. Item 8. Financial Statements and Supplementary Data ------------------------------------------- The information required by this Item is incorporated herein by reference to Pages 10 through 26 of the Company's 2001 Annual Report to Shareholders. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure --------------------------------------------------------------- None. PART III Item 10. Directors and Executive Officers of the Company ----------------------------------------------- Directors. The information appearing under the caption "Election of Directors" on Pages 7 through 10 of the Company's Proxy Statement for its Annual Meeting of Stockholders to be held on August 16, 2001 (the "Proxy Statement") is incorporated herein by reference. Item 11. Executive Compensation ---------------------- The information appearing under the caption "Executive Compensation" commencing on Page 14 of the Proxy Statement is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management -------------------------------------------------------------- The information appearing under the caption "Security Ownership of Certain Beneficial Owners of Management" on Pages 3 through 7 of the Proxy Statement is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions ---------------------------------------------- The information appearing under the captions "Certain Relationships and Related Transactions" commencing on Page 16 of the Proxy Statement is incorporated herein by reference. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K --------------------------------------------------------------- (a) 1. Financial Statements: The following consolidated financial statements of the Company and its subsidiaries, which are set forth on Pages 10 through 26 of the Company's 2001 Annual Report to Shareholders included herein as Exhibit 13, are incorporated herein by reference as part of this report. Consolidated Balance Sheets as of April 1, 2001 and March 26, 2000. Consolidated Statements of Income for the years ended April 1, 2001, March 26, 2000 and March 28, 1999. Consolidated Statements of Stockholders' Equity for the years ended April 1, 2001, March 26, 2000 and March 28, 1999. Consolidated Statements of Cash Flows for the years ended April 1, 2001, March 26, 2000 and March 28, 1999. Notes to Consolidated Financial Statements. Independent Auditors' Report. 2. Financial Statement Schedules: None 3. Exhibits: 2.01 Amended and Restated Agreement and Plan of Reorganization dated as of December 29, 1994 and amended as of March 17, 1995 among BNC, BOT, the Company and BNC Merger Corp. Incorporated by reference to Exhibit 2.01 to the Company's Registration Statement on Form S-4, Registration No. 33-88295, made effective March 23, 1995 (the "S-4"). 3.01 Certificate of Incorporation of the Company. Incorporated by reference to Exhibit 3.01 to the S-4 and to Exhibit 1 on Form 8-A dated February 12, 1997. 3.02 By-Laws of the Company. Incorporated by reference to Exhibit 3.02 to the S-4. 4.01 Certificate of Designation of Rights, Preferences and Terms for the Series A Convertible Preferred Stock of the Company. Incorporated by reference to Exhibit 4.01 to the Company's Current Report on Form 8-K dated May 15, 1995. 4.02 Form of Certificate representing shares of the Company's Common Stock. Incorporated by reference to Exhibit 4.02 to the S-4. 4.03 Form of Certificate representing shares of the Company's Class A Common Stock. Incorporated by reference to Exhibit 4.03 to the S-4. 4.04 Warrant Agreement dated December 1, 1997 between the Company and Douglas M. Rudolph. Incorporated by reference to Exhibit 4.1 to the Company's current report on Form 8-K dated December 1, 1997. 4.05 Amendment dated February 15, 2001 to Warrant Agreement December 1, 1997 between Douglas M. Rudolph and the Company. 10.01 License Agreement, dated as of May 15, 1995 between BNC and BOT Inc. Incorporated by reference to Exhibit 10.01 to the S-4. 10.04 BNC's 1985 Employee's Stock Option Plan. Incorporated by reference to Appendix II to BNC Proxy Statement for its Annual Meeting of Stockholders held on December 11, 1985. Incorporated by reference to Exhibit 10.06 to the S-4. 10.05 1994 Employees' Stock Option Plan Incorporated by reference to Exhibit 10.07 to the S-4. 10.06 Directors' Stock Option Plan. Incorporated by reference to Exhibit 10.08 to the S-4. 10.07 Employment Agreement dated April 1, 2001 between Joel A. Schwartz and the Company. 10.08 Employment Agreement dated January 1, 1995 between Michael R. Burris and the Company. Incorporated by reference to Exhibit 10.10 to the S-4. 10.09 Credit Agreement, dated December 1, 1997, among Benihana Inc., its Subsidiaries named as guarantors and First Union National Bank, as Agent for the Lenders. 10.10 Benihana Administrative Incentive Compensation Plan. Incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996. 10.11 1996 Class A Stock Option Plan. Incorporated by reference to Exhibit A to Benihana Inc. Proxy Statement for its Annual Meeting of Stockholders held on July 19, 1996. 10.12 Employment Agreement dated April 1, 2001 between Taka Yoshimoto and the Company. 10.13 Amendment dated April 1, 2001 to Employment Agreement dated January 1, 1995 between Michael R. Burris and the Company. 10.14 Amendment dated April 1, 2001 to Employment Agreement dated October 19, 1998 between Kevin Y. Aoki and the Company. 10.15 Employment Agreement dated September 1, 2000 between Juan C. Garcia and the Company. 10.16 Amendment dated December 11, 1997 to Employment Agreement dated January 1, 1995 between Michael R. Burris and Benihana Inc. Incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended March 29, 1998. 10.17 1997 Employees Class A Stock Option Plan. Incorporated by reference to Exhibit A of Benihana Inc.'s Proxy Statement for its Annual Meeting of Stockholders held August 27, 1998. 10.18 Amendments to the Directors' Stock Option Plan. Incorporated by reference to Exhibit B of Benihana Inc.'s Proxy Statement for its Annual Meeting of Stockholders held August 5, 1999. 10.19 Employment Agreement dated October 19, 1998 between Kevin Y. Aoki and the Company. Incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended March 26, 2000. 10.20 Amendment dated January 25, 2000 to Employment Agreement dated October 19, 1998 between Kevin Y. Aoki and the Company. Incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended March 26, 2000. 10.21 2000 Employees Class A Common Stock Option Plan. Incorporated by reference to Exhibit A of Benihana Inc.'s Proxy Statement for its Annual Meeting of Stockholders to be held August 3, 2000. 10.22 Amendment dated April 1, 2001 to Employment Agreement dated September 1, 2001 between Juan C. Garcia and the Company. 10.23 Consulting Agreement dated April 1, 2001 between Rocky H. Aoki and the Company. 13.01 Portions of Annual Report to Stockholders for the year ended April 1, 2001. 21.01 List of Subsidiaries. 23.01 Consent of Deloitte & Touche LLP. 23.02 Consent of Deloitte & Touche LLP. (b) Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: June 26, 2001 BENIHANA INC. By: /s/ Joel A. Schwartz ---------------------------------- Joel A. Schwartz, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on the date indicated above by the following persons on behalf of the registrant and in the capacities indicated. Signature Title Date - --------- ----- ---- /s/ Joel A. Schwartz President and June 26, 2001 - -------------------------------- Joel A. Schwartz Director (Principal Executive Officer) /s/ Taka Yoshimoto Executive Vice President- June 26, 2001 - -------------------------------- Taka Yoshimoto Restaurant Operations and Director /s/ Michael R. Burris Senior Vice President of June 26, 2001 - --------------------------------- Michael R. Burris Finance and Treasurer- Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Kevin Y. Aoki Vice President- June 26, 2001 - --------------------------------- Kevin Y. Aoki Marketing and Director /s/ Juan C. Garcia Vice President-Controller June 26, 2001 - --------------------------------- Juan C. Garcia /s/ Darwin C. Dornbush Secretary and Director June 26, 2001 - --------------------------------- Darwin C. Dornbush /s/ John E. Abdo Director June 26, 2001 - --------------------------------- John E. Abdo /s/ Norman Becker Director June 26, 2001 - --------------------------------- Norman Becker /s/ Max Pine Director June 26, 2001 - ---------------------------------- Max Pine EXHIBIT 4.05 DOUGLAS M. RUDOLPH PARTNERS, LTD. 1218 Webster - Houston, Texas 77002 - ------------------------------------------------------------------------------- February 8, 2001 Benihana Inc. 8685 N.W. 53rd Terrace Miami, FL 33166 Attn.: Mr. Joel Schwartz, President Dear Joel, This letter will serve as an amendment to the Warrant Agreement dated December 1, 1997 between us, as assignee from Douglas M. Rudolph, and you. 1. The Warrant Expiration Date will be extended to 5:00 p.m. (N.Y. time) on June 1, 2004. 2. Benihana shall have the right of first refusal on the Warrant on the following basis: a) Should the Warrantholder desire to sell or exercise any or all of the Warrant, the Warrantholder shall first offer to Benihana the right to purchase that same portion of the Warrant (or, at Benihana's option, as much as 50,000 shares, should the portion to be sold or exercised be less than 50,000 shares); b) The purchase price for that portion of the Warrant shall be equal to the average of the closing bid price of the shares of Benihana Class A stock for the five trading-days prior to the Warrantholder's offer to Benihana, minus $8.00 per share, times .95 (a five percent discount on the differential between the sale price and the exercise price), times the number of shares in that portion of the Warrant to be purchased by Benihana under this agreement; c) Benihana shall have five business-days from notification by the Warrantholder to exercise its right of first refusal, and shall waive its right to that particular tranche should it not exercise in writing its right to purchase within the five business-day period. Any exercise by Benihana of its right of first refusal will be paid to the Warrantholder in cash within seven days of notice to exercise. This right of first refusal will not apply should Benihana have knowledge of, or be in discussions to arrange, a secondary offering of its stock to the public, nor shall it apply to intra-family or affiliate transfers of the Warrant so long as the transferee assumes this right of first refusal. Benihana agrees to cause the registration statement pertaining to the shares underlying the Warrant to continue to be available for use in connection with the resale of the shares through the extended Warrant Expiration Date. All other terms and conditions of the original Warrant shall remain unchanged, and in full force and effect. If this is acceptable, kindly sign in the space provided below whereupon this will be a binding agreement between us. Agreed and accepted this 15th day of February, 2001 Douglas M. Rudolph Partners, Ltd. Benihana Inc. By: /s/ Douglas M. Rudolph By: /s/ Joel A. Schwartz - ----------------------------------- ------------------------------------ Douglas M. Rudolph Joel A. Schwartz Authorized Representative President EXHIBIT 10.07 2001 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, dated as of the 1st day of April, 2001 (the "Effective Date"), by and among BENIHANA INC., a Delaware corporation (the "Company") and JOEL A. SCHWARTZ (the "Executive"). The Executive has heretofore for many years been employed by the Company and by its predecessor, Benihana National Corp., as its President and Chief Operating Officer and, since 1998, as its President and Chief Executive Officer. The Company and the Executive desire to enter into an employment agreement which will set forth the terms and conditions upon which the Executive shall serve in the employ of the Company and upon which the Company shall compensate the Executive and to replace and supersede the Employment Agreement (the "Prior Agreement"), dated as of May 15, 1995 and amended as of December 11, 1997, September 1, 1998 and January 25, 2000, between the Executive and the Company. NOW THEREFORE, in consideration of the premises and of the mutual covenants hereinafter set forth, the parties hereto have agreed, and do hereby agree, as follows: 1. EMPLOYMENT TERM 1.1 The Company will employ the Executive in its business and the Executive will work for the Company as President and Chief Executive Officer for a term commencing as of the Effective Date and continuing until March 31, 2006. Executive also agrees to serve as director of the Company and as an officer and director of any subsidiary, if so elected. Employment Period shall mean the term hereof. Executive may terminate this Agreement upon not less than three months prior written notice to the Company in the event that Executive would be required, in order to perform his services hereunder, to move his principal residence from the metropolitan Miami area. 1.2 The term "Company" as used in this Agreement shall be deemed to include any and all present and future subsidiaries and affiliates of the Company 2. DUTIES 2.1 During the Employment Period, the Executive shall perform the duties of President and Chief Executive Officer of the Company and such further executive duties consistent with such position as shall, from time to time, be reasonably delegated or assigned to him by the Board of Directors of the Company consistent with the Executive's abilities. 3. DEVOTION OF TIME 3.1 During the Employment Period, the Executive shall expend substantially all of his working time for the Company; shall devote his best efforts, energy and skill to the services of the Company and the promotion of its interests; and shall not take part in activities detrimental to the best interests of the Company. 4. COMPENSATION 4.1 In respect of services to be performed by the Executive during the Employment Period, the Company agrees to pay the Executive an annual salary of Three Hundred thousand ($300,000) Dollars ("Basic Compensation"), payable in accordance with the Company's customary payroll practices for executive employees. 4.2 The Basic Compensation shall be increased by an amount established by reference to the "Consumer Price Index for Urban Wage Earners and Clerical Workers, New York, New York- Northern New Jersey area published by the Bureau of Labor Statistics of the United States Department of Labor (the "Consumer Price Index"). The base period shall be the month ended December 31, 2000 (the "Base Period"). If the Consumer Price Index for the month of December in any year, commencing in 2001, is greater than the Consumer Price Index for the Base Period, Basic Compensation shall be increased, commencing on April 1 of the next following year, to the amount obtained by multiplying Basic Compensation by a fraction, the numerator of which is the Consumer Price Index for the month of December of the year in which such determination is being made and the denominator of which is the Consumer Price Index for the Base Period. 4.3 The Executive shall also be entitled to such additional increments and bonuses as shall be determined from time to time by the Board of Directors of the Company. 4.4 If during the term hereof Executive owns any options to purchase securities of the Company which securities are publicly traded and which options were granted to him in connection with his service as an employee, officer or director of the Company, the Executive shall have the right at any time after a "Change in Control", as defined in Section 7.1 to cause the Company to repurchase such options from him at a purchase price equal to the difference between (i) the closing price of the appropriate security of the Company (if traded on the New York or American Stock Exchange or quoted in the NASDAQ National Market) or the average between the closing bid and asked prices (if traded on the over-the-counter market) on the date immediately prior to the date on which Executive exercises such right and (ii) the exercise price of such option; provided however, that in no fiscal year of the Company shall the aggregate purchase price of such options exceed five percent (5%) of the total stockholders equity (net worth) of the Company as shown on its audited financial statements for the fiscal year immediately preceding the year in which such right is exercised. Such right shall be exercised by Executive giving the Company written notice thereof and the purchase and sale shall be consummated not more than ten (10) business days after receipt by the Company of the notice of exercise. 5. USE OF AUTOMOBILE; REIMBURSEMENT OF EXPENSES 5.1 The Company shall pay directly, or reimburse the Executive, for all other reasonable and necessary expenses (other than the automobile expenses described in Section 5.2) and disbursements incurred by him for and on behalf of the Company in the performance of his duties during the Employment Period upon submission of vouchers or other evidence thereof in accordance with the Company's usual policies of expense reimbursement. 5.2 In addition to the reimbursement described in Section 5.1, Executive shall receive an allowance of $300 per month for automobile expenses, including lease costs or purchase price, gasoline and oil and garaging. 6. DISABILITY OR DEATH 6.1 If, during the Employment Period, the Executive shall die, the Company shall pay to such person or persons as Executive shall from time to time designate in writing as the beneficiary of such payment, or, in the absence of such designation, to Executive's estate, ("Beneficiary") the amount of Three Hundred and Fifty Thousand ($350,000) Dollars less the amount of any insurance on Executive's life which has been purchased by the Company for the payment to the Beneficiary. Such payment shall be made in a lump sum within Ninety (90) days of the death of the Executive. 6.2 In the event Executive's employment hereunder shall terminate because Executive has incurred a "Disability", as hereinafter defined, then there shall be paid to Executive the amount of "Long Term Compensation" set forth in Section 9. In such case such amount shall be paid to Executive in Sixty (60) equal monthly installments. Such payments shall commence on the first day of month next following such termination of employment. In the event Executive shall suffer an event which might reasonably be considered a Disability, either the Company or the Executive (or the Executive's legal representative) shall have the right to give to the other party written notice of such termination on 15 days notice. In the event the parties shall in good faith disagree on whether Executive is suffering a Disability, final determination shall be made by a doctor reasonable acceptable to both parties. "Disability" shall mean the inability of Executive, for a continuous period of more than twelve (12) months, to perform substantially all of his regular duties and carry out substantially all of his responsibilities hereunder because of physical or mental incapacity. The Company shall have the right to have Executive examined by a competent doctor for purposes of determining his physical or mental incapacity. 6.3 The obligations of the Company under Section 6.2 may be satisfied, in whole or in part, by payments to the Executive under disability insurance provided by the Company, and under laws providing disability benefits for employees. 7. CHANGE IN CONTROL 7.1 In the event at any time after the Effective Date, a majority of the Board of Directors is composed of persons who are not "Continuing Directors", as hereinafter defined, which event is defined to mean a "Change in Control", Executive shall have the option, to be exercised by written notice to the Company, to resign as an employee and terminate this Agreement, effective as of such date specified in the notice of exercise and immediately upon such termination to receive payment of a sum equal to the product of (A) the Basic Compensation in effect on the date of such termination multiplied (B) by the number of years (both full and partial) remaining in the term hereof had such termination not occurred. The payment to be made upon the exercise of the option by the Executive in accordance with the provisions of the preceding sentence is defined as the "Severance Payment". The Severance Payment shall be made to Executive not later than twenty (20) days after the date designated by the Executive as the date upon which Executive's resignation as an employee and termination of his Employment is to be effective. The Severance Payment shall constitute liquidated damages and not a penalty, and Executive shall not be obligated to seek employment to mitigate his damages; nor shall any compensation the Executive receives from any party subsequent to such termination be an offset to the amount of the Severance Payment. 7.2 "Continuing Directors" shall mean (i) the directors of the Company at the close of business on April 1, 2001, and (ii) any person who was or is recommended to (A) succeed a Continuing Director or (B) become a director as a result of an increase in the size of the Board, in each case, by a majority of the Continuing Directors then on the Board. 7.3 In the event that payments to Executive under this Section 7, plus payments made under Section 9 on account of a Change in Control, plus any other payments or other benefits made by the Company to Executive on account of a Change in Control would, in the opinion of tax counsel selected by the Company and reasonably acceptable to the Executive ("Tax Counsel"), be subject, in whole or in part, to the excise tax (the "Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), as determined as provided below, the total amount of such payments shall be reduced (with the Executive having the option as to which payments are to bear the burden of such reduction) until no portion of such payments would be subject to the Excise Tax. For the purpose of this provision, (i) only the portion of such payments which in the opinion of Tax Counsel constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code shall be taken into account and (ii) such payments shall be reduced only to the extent necessary so that such payments would not be subject to the Excise Tax, in the opinion of Tax Counsel. 8. TERMINATION OF EMPLOYMENT WITHOUT CAUSE Upon any termination of the Executive's employment without "Cause" as hereafter defined, the Executive shall be entitled to receive an amount computed in the same manner as the Severance Payment not later than 20 days after any such termination. This payment shall constitute liquidated damages and not a penalty, and Executive shall not be obligated to seek employment to mitigate his damages; nor shall any compensation the Executive receives from any party subsequent to such termination be an offset to the amount of such payment. As used herein, the term "Cause" shall mean:(i) Executive's deliberate and intentional refusal (except by reason of incapacity due to mental or physical illness or disability) to comply with the provisions of Section 3.1 of this Agreement relating to the time and effort to be devoted by the Executive to the business and affairs of the Company after demand for performance by the Company that specifically identifies the manner in which the Company alleges the Executive has not performed his duties, (ii) the Executive's proven dishonesty with respect to the Company, disloyalty, Executive's gross negligence or willful misconduct which, in any case, results in demonstrable material harm to the Company, (iii) the breach by the Executive of his covenant not to compete contained in Section 10.4 hereof, (iv) the continuing breach of any of the other covenants on the Executive's part herein set forth resulting in, or which may reasonably be expected to result in a substantial adverse effect on the Company, or (v) Executive's conviction of a crime involving moral turpitude. 9. LONG TERM COMPENSATION In recognition of Executive's many years of service to the Company and its predecessors, in the event Executive's employment with the Company is terminated (i) involuntarily during the term of this agreement other than for Cause in accordance with Section 8, (ii) as a result of a Change of Control in accordance with Section 7, (iii) as a result of Executive's incurring a Disability as contemplated by Section 6.2 or (iv) as a result of the failure of the Company and Executive to reach agreement on a renewal, extension or replacement of this Agreement upon expiration of the term hereof, the Company shall pay Executive, as additional long term compensation, an amount equal to Five (5) times Executive's Basic Compensation in effect as at the time of such termination of employment. Such payments shall be in addition to the payments contemplated by Sections 7 or 8, respectively. In the case of termination by the Company for reasons other than Cause or termination on account of a Change in Control, such payment shall be made in two installments - 50% at the time of termination and the remaining 50% on the first anniversary of such date. In the case of termination on account of Disability or termination because of the failure to renew, extend or replace this Agreement, such payment shall be made in 60 equal monthly installments. Nothing in this provision shall imply any obligation of Executive to enter into an extension, renewal or replacement of this Agreement or to be reasonable in negotiating any such extension, renewal or replacement. 10. CONFIDENTIAL INFORMATION; INVENTIONS; RESTRICTIVE COVENANT 10.1 The Executive agrees not to divulge, furnish or make available to anyone (other than in the regular course of business of the Company) any knowledge or information with respect to the Company, or with respect to any other confidential or secret aspect of the Company's activities. 10.2 Any methods, developments, inventions and/or improvements, whether patentable or unpatentable, which the Executive may conceive or make along the lines of the Company's business while in its employ as an employee or consultant, shall be and remain the property of the Company. The Executive further agrees on request to execute patent applications based on such methods, developments, inventions and/or improvements, including any other instruments deemed necessary by the Company for the prosecution of such patent application or the acquisition of Letters Patent of this and any foreign country. 10.3 The Executive agrees to communicate and make known to the Company all knowledge possessed by him relating to any methods, developments, inventions and/or improvements, whether patented, patentable or unpatentable, which concern in any way the business of the Company, whether acquired by him before or during the term hereof, provided, however, that nothing herein shall be construed as requiring any such communication where the method, development, invention and/or improvement is lawfully protected from disclosure as the trade secret of a third party or by any other lawful bar to such communication. 10.4 The services of the Executive are unique and extraordinary and essential to the business of the Company, especially since the Executive shall have access to the Company's customer lists, trade secrets and other privileged and confidential information essential to the Company's business. Therefore, the Executive agrees that if his employment hereunder shall at any time be terminated for any reason (other than by the Company. without Cause), the Executive will not at any time within one (1) year after such termination, without the prior written approval of the Company, directly or indirectly, within the United States of America, or any other area in which the Company shall then conduct substantial operations, engage in any business activity "competitive with the business of the Company", as hereinafter defined, and further, the Executive agrees that during such one (1) year period he shall not solicit, directly or indirectly, any employee or customer or account of the Company who at the time of such termination was then actively being solicited by the Company. For the purpose of this agreement a business activity competitive with the business of the Company shall include only (i) the operation or franchising of restaurants of a type then being operated, or under construction, by the Company and (ii) the sale, at wholesale or retail, of products similar in type and quality to those being marketed by the Company at the time of Executive's termination of employment. 11. VACATIONS The Executive shall be entitled to reasonable vacations during each twelve-month period of the term hereof, the time and duration thereof to be determined by mutual agreement between the Executive and the Company. 12. PARTICIPATION IN EMPLOYEE BENEFIT PLANS The Executive and any beneficiary of the Executive shall be accorded the right to participate in and receive benefits under and in accordance with the provisions of any pension, profit-sharing, insurance, bonus, deferred compensation, medical and dental insurance or reimbursement, stock option, or other plan or program of the Company now in existence or hereafter adopted for the benefit of its executive employees. 13. INJUNCTIVE RELIEF The Executive acknowledges and agrees that, in the event he shall violate any of the restrictions of Section 10 hereof, the Company will be without adequate remedy at law and will therefor be entitled to enforce such restrictions by temporary or permanent injunctive or mandatory relief obtained in an action or may have at law or in equity, and the Executive hereby consents to the jurisdiction of such Court for such purpose, provided that reasonable notice of any proceeding is given, it being understood that such injunction shall be in addition to any remedy which the Company may have at law or otherwise. 14. ASSIGNMENT, ETC. This Agreement, as it relates to the employment of the Executive, is a personal contract and the rights and interests of the Executive hereunder may not be sold, transferred, assigned, pledged or hypothecated. Except as otherwise expressly provided, this Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. 15. RIGHT TO PAYMENTS, ETC. The Executive shall not under any circumstances have any option or right to require payments hereunder otherwise than in accordance with the terms hereof. To the extent allowed by law, the Executive shall not have any power of anticipation, alienation or assignment of payments contemplated hereunder, and all rights and benefits of the Executive, and no other person shall acquire any right, title or interest hereunder by reason of any sale, assignment, transfer, claim or judgment or bankruptcy proceedings against the Executive. 16. NOTICES, ETC. Any notice required or permitted to be given to the Executive pursuant to this Agreement shall be sufficiently given if sent to the Executive by certified mail addressed to him at the following address: 4100 North 36th Avenue, Hollywood, Florida, 33021, or at any such other address as he shall designate by notice to the Company, and any notice required or permitted to be given to the Company pursuant to this Agreement shall be sufficiently given if sent to the Company by certified mail addressed to it at 8685 Northwest 53rd Terrace, Miami, Florida 33166, attention of Corporation Secretary, or such other address as the Company shall designate by notice to the Executive, with a copy to Herschel S. Weinstein, Esq., Dornbush Mensch Mandelstam & Schaeffer, LLP, 747 Third Avenue, New York, New York, 10017. 17. GOVERNING LAW This Agreement shall be governed by, and construed in accordance with the laws of the State of Florida, applicable to agreements made and to be performed solely within such state. 18. WAIVER OF BREACH; PARTIAL INVALIDITY The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. If any provisions of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and not in any way affect or render invalid or unenforceable any other provisions of this Agreement, and this Agreement shall be carried out as if such invalid or unenforceable provision were not embodied therein. 19. ENTIRE AGREEMENT This Agreement constitutes the entire agreement between the parties hereto and there are no representations, warranties or commitments except as set forth herein. This Agreement supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, including the Prior Agreement, whether written or oral, of the parties hereto relating to the transactions contemplated by this Agreement. This Agreement may be amended only in writing executed by the parties hereto affected by such amendment. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written. BENIHANA INC. By: /s/ Taka Yoshimoto ------------------------------------ Taka Yoshimoto, Executive Vice President /s/ Joel A. Schwartz ------------------------------------ Joel A. Schwartz EXHIBIT 10.12 2001 EMPLOYMENT AGREEMENT AGREEMENT dated as of this 1st day of April, 2001, (the "Effective Date") by and between BENIHANA INC., a Delaware corporation (the "Company"), and TAKA YOSHIMOTO (the "Executive"). R E C I T A L The Executive has for many years been employed by the Company and by its predecessor, Benihana National Corp. as its Executive Vice President - Operations. The Company and the Executive desire to enter into a new employment agreement which will set forth the terms and conditions upon which the Executive shall serve in the employ of the Company and upon which the Company shall compensate the Executive and to replace and supercede the Employment Agreement between the parties hereto dated April 1, 1995 and amended by an Amendment No. 1 dated December 11, 1997, by an Amendment No. 2 dated September 1, 1998 and by an Amendment No. 3 dated January 25, 2000 (the "Prior Agreement"). NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is hereby agreed by and between the Company and Executive as follows: 1. ENGAGEMENT AND TERM. The Company hereby employs Executive and Executive hereby accepts such employment by the Company on the terms and conditions set forth herein, for a period commencing on the Effective Date of this Agreement and ending, unless sooner terminated in accordance with the provisions of Section 5 hereof, on March 31, 2006 (the "Employment Period"). 2. SCOPE OF DUTIES. Executive shall be employed by the Company as its Executive Vice President - Operations. In such capacities, the Executive shall have such authority, powers and duties customarily attendant upon such offices. If elected or appointed, Executive shall also serve, without additional compensation, in one or more offices and, if and when elected, as a director of the Company or any subsidiary or affiliate of the Company, provided that his duties and responsibilities are not inconsistent with those pertaining to his position as stated above. Executive shall faithfully devote his full business time and efforts so as to advance the best interests of the Company. During the Employment Period, Executive shall not be engaged in any other business activity, whether or not such business activity is pursued for profit or other pecuniary advantage, unless same is only incidental and is in no way, directly or indirectly, competitive with, or opposed to the best interests of the Company. 3. COMPENSATION. 3.1 Basic Compensation. In respect of ------------------- services to be performed by the Executive during the Employment Period, the Company agrees to pay the Executive an annual salary of One Hundred Sixty-Five Thousand Dollars ($165,000) ("Basic Compensation"), payable in accordance with the Company's customary payroll practices for executive employees. 3.2 Cost of Living Adjustments. The Basic -------------------------- Compensation shall be increased by an amount established by reference to the "Consumer Price Index for Urban Wage Earners and Clerical Workers, New York, New York- Northern New Jersey area published by the Bureau of Labor Statistics of the United States Department of Labor (the "Consumer Price Index"). The base period shall be the month ended December 31, 2000 (the "Base Period"). If the Consumer Price Index for the month of December in any year, commencing in 2001, is greater than the Consumer Price Index for the Base Period, Basic Compensation shall be increased, commencing on April 1 of the next following year, to the amount obtained by multiplying Basic Compensation by a fraction, the numerator of which is the Consumer Price Index for the month of December of the year in which such determination is being made and the denominator of which is the Consumer Price Index for the Base Period. 3.3 Discretionary Increases. The ----------------------- Executive shall also be entitled to such additional increments and bonuses as shall be determined from time to time by the Board of Directors of the Company. 3.3 Other Benefits. -------------- (a) Executive shall be entitled to participate, at Company's expense, in the major medical health insurance plan, and all other health, insurance or other benefit plans applicable generally to executive officers of the Company. (b) During the Employment Period, Executive will be entitled to paid vacations and holidays consistent with the Company's policy applicable to executives generally. All vacations shall be scheduled at the mutual convenience of the Company and the Executive. 4. TERMINATION OF EMPLOYMENT. The provisions of Section 1 of this Agreement notwithstanding, the Company may terminate this Agreement and Executive's employment hereunder in the manner and for the causes hereinafter set forth, in which event the Company shall be under no further obligation to Executive other than as specifically provided herein: 4.1 If Executive is absent from work or otherwise substantially unable to assume his normal duties for a period of sixty (60) successive days or an aggregate of ninety (90) business days during any consecutive twelve-month period during the Employment Period because of physical or mental disability, accident, illness, or any other cause other than vacation or approved leave of absence, the Company may thereupon, or any time thereafter while such absence or disability still exists, terminate the employment of Executive hereunder upon ten (10) days' written notice to Executive. 4.2 In the event of the death of Executive, this Agreement shall immediately terminate on the date thereof. 4.3 If Executive materially breaches or violates any material term of his employment hereunder, or commits any criminal act or an act of dishonesty or moral turpitude, in the reasonable judgment of the Company's Board of Directors, then the Company may, in addition to other rights and remedies available at law or equity, immediately terminate this Agreement upon written notice to Executive with the date of such notice being the termination date and such termination being deemed for "cause." 4.4 In the event Executive's employment shall be terminated by reason of the provisions of Section 4.2 or 4.3, then in such event, the Company shall pay to Executive, if living, or other person or persons as Executive may from time to time designate in writing as the beneficiary of such payment a sum, equal to the basic compensation in effect at the time which such death or disability occurred, such payment to continue for three months after such death or disability. 5. DISCLOSURE OF CONFIDENTIAL INFORMATION AND COVENANT NOT TO COMPETE. Executive acknowledges that the Company possesses confidential information, know-how, customer lists, purchasing, merchandising and selling techniques and strategies, and other information used in its operations of which Executive will obtain knowledge, and that the Company will suffer serious and irreparable damage and harm if this confidential information were disclosed to any other party or if Executive used this information to compete against the Company. Accordingly, Executive hereby agrees that except as required by Executive's duties to the Company, Executive without the consent of the Company's Board of Directors, shall not at any time during or after the term of this contract disclose or use any secret or confidential information of the Company, including, without limitation, such business opportunities, customer lists, trade secrets, formulas, techniques and methods of which Executive shall become informed during his employment, whether learned by him as an Executive of the Company, as a member of its Board of Directors or otherwise, and whether or not developed by the Executive, unless such information shall be or become public knowledge other than as a result of the Executive's direct or indirect disclosure of the same. Executive further agrees that for a period of one year following the termination of Executive's employment, the Company, except as a result of the breach by the Company of any material term or condition hereof, Executive will not, directly or indirectly, alone or with others, individually or through or by a corporate or other business entity in which he may be interested as a partner, shareholder, joint venturer, officer or director or otherwise, engage in the United States in "any business which is competitive with that of the Company or any of its subsidiaries" as hereinafter defined, provided, however, that the foregoing shall not be deemed to prevent the ownership by Executive of up to five percent of any class of securities of any corporation which is regularly traded on any stock exchange or over-the-counter market. For the purpose of this Agreement, a business activity competitive with the business of the Company or any of its subsidiaries, shall include only (i) the operation or franchise of restaurants selling Japanese, or other oriental food, or restaurants of a type then being operated by the Company, or any of its subsidiaries; and (ii) the sale at wholesale or retail of oriental food products. 6. REIMBURSEMENT OF EXPENSES; USE OF AUTOMOBILE. 6.1. The Company shall further pay directly, or reimburse the Executive, for all other reasonable and necessary expenses and disbursements incurred by him for and on behalf of the Company in the performance of his duties during the Employment Period upon submission of vouchers or other evidence thereof in accordance with the Company's usual policies of expense reimbursement. 6.2. In addition to the reimbursement described in Section 6.1, Executive shall receive an allowance of $200 per month for automobile expenses, including lease costs or purchase price, gasoline, oil and garaging. 7. CHANGE IN CONTROL. 7.1. In the event at any time after the Effective Date, a majority of the Board of Directors is composed of persons who are not "Continuing Directors", as hereinafter defined, which event is defined to mean a "Change in Control", Executive shall have the option, to be exercised by written notice to the Company, to resign as an employee and terminate this Agreement, effective as of such date specified in the notice of exercise and immediately upon such termination to receive payment of a sum equal to the product of (A) the Basic Compensation in effect on the date of such termination multiplied (B) by the number of years (both full and partial) remaining in the term hereof had such termination not occurred. The payment to be made upon the exercise of the option by the Executive in accordance with the provisions of the preceding sentence is defined as the "Severance Payment". The Severance Payment shall be made to Executive not later than twenty (20) days after the date designated by the Executive as the date upon which Executive's resignation as an employee and termination of his Employment is to be effective. The Severance Payment shall constitute liquidated damages and not a penalty, and Executive shall not be obligated to seek employment to mitigate his damages; nor shall any compensation the Executive receives from any party subsequent to such termination be an offset to the amount of the Severance Payment. 7.2 "Continuing Directors" shall mean (i) the directors of the Company at the close of business on April 10, 2001, and (ii) any person who was or is recommended to (A) succeed a Continuing Director or (B) become a director as a result of an increase in the size of the Board, in each case, by a majority of the Continuing Directors then on the Board. 7.3 If during the term hereof Executive owns any options to purchase securities of the Company which securities are publicly traded and which options were granted to him in connection with his service as an employee, officer or director of the Company, the Executive shall have the right at any time after a "Change in Control" to cause the Company to repurchase such options from him at a purchase price equal to the difference between (i) the closing price of the appropriate security of the Company (if traded on the New York or American Stock Exchange or quoted in the NASDAQ National Market) or the average between the closing bid and asked prices (if traded on the over-the-counter market) on the date immediately prior to the date on which Executive exercises such right and (ii) the exercise price of such option; provided however, that in no fiscal year of the Company shall the aggregate purchase price of such options exceed five percent (5%) of the total stockholders equity (net worth) of the Company as shown on its audited financial statements for the fiscal year immediately preceding the year in which such right is exercised. Such right shall be exercised by Executive giving the Company written notice thereof and the purchase and sale shall be consummated not more than ten (10) business days after receipt by the Company of the notice of exercise. 8. TERMINATION OF EMPLOYMENT WITHOUT CAUSE. Upon any termination of the Executive's employment without cause, the Executive shall be entitled to receive an amount computed in the same manner as the Severance Payment not later than 20 days after any such termination. This payment shall constitute liquidated damages and not a penalty, and Executive shall not be obligated to seek employment to mitigate his damages; nor shall any compensation the Executive receives from any party subsequent to such termination be an offset to the amount of such payment. 9. MISCELLANEOUS PROVISIONS. 9.1 Section headings are for convenience only and shall not be deemed to govern, limit, modify or supersede the provisions of this Agreement. 9.2 This Agreement is entered into in the State of Florida and shall be governed pursuant to the laws of the State of Florida. If any provision of this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal or unenforceable, the remaining provisions hereof shall continue to be fully effective. 9.3 This Agreement contains the entire agreement of the parties regarding this subject matter. There are no contemporaneous oral agreements, and all prior understandings, agreements, negotiations and representations are merged herein. This Agreement replaces and supercedes the Prior Agreement. 9.4 This Agreement may be modified only by means of a writing signed by the party to be charged with such modification. 9.5 Notices or other communications required or permitted to be given hereunder shall be in writing and shall be deemed duly given upon receipt by the party to whom sent at the respective addresses set forth below or to such other address as any party shall hereafter designate to the other in writing delivered in accordance herewith: If to the Company: Benihana Inc. 8685 NW 53rd Terrace Miami, Florida 33166-0120 If to Executive: Taka Yoshimoto 7010 N.W. 186th Street - #516 Miami, Florida 33015 9.6 This Agreement shall inure to the benefit of, and shall be binding upon, the Company, its successors and assigns, including, without limitation, any entity that may acquire all or substantially all of the Company's assets and business or into which the Company may be consolidated or merged. This Agreement may not be assigned by Executive. 9.7 This Agreement may be executed in separate counterparts, each of which shall constitute the original hereof. IN WITNESS WHEREOF, the parties have set their hands as of the date first above written. BENIHANA INC. By: /s/ Joel A. Schwartz ---------------------------------- Joel A. Schwartz, President /s/ Taka Yoshimoto ----------------------------------- Taka Yoshimoto EXHIBIT 10.13 AMENDMENT NO. 4 TO EMPLOYMENT AGREEMENT Amendment No. 4 dated as of April 1, 2001 (the "Effective Date") to Employment Agreement dated January 1, 1995, amended December 11, 1997, September 1, 1998 and January 25, 2000 (as amended, the "Agreement") by and between BENIHANA INC. (the "Company") and MICHAEL R. BURRIS (the "Employee"). Unless otherwise defined herein, capitalized terms shall have the respective meanings assigned to them in the Agreement. The parties agree that the Agreement shall be amended as follows: Effective as of the Effective Date, Section 3.1 of the Agreement, as heretofore amended, is further amended to read in its entirety as follows: 3.1 Basic Compensation. In respect of ------------------- services to be performed by the Employee during the Employment Period from and after the Effective Date, the Company agrees to pay the Employee an annual salary of One Hundred Forty-Seven Thousand, Five Hundred Dollars ($147,500) ("Basic Compensation"), payable in accordance with the Company's customary payroll practices for executive employees. Except as modified herein, the Agreement remains in full force and effect in accordance with its terms without revocation or change. IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 4 as of the date and year first above written. BENIHANA INC. By: /s/ Joel A. Schwartz ------------------------------------ Joel A. Schwartz, President /s/ Michael R. Burris ------------------------------------- Michael R. Burris EXHIBIT 10.14 AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT Amendment No. 2 dated as of April 1, 2001 (the "Effective Date") to Employment Agreement dated September 1, 1998 and amended January 25, 2000 (as amended, the "Agreement") by and between BENIHANA INC. (the "Company") and KEVIN AOKI (the "Employee"). Unless otherwise defined herein, capitalized terms shall have the respective meanings assigned to them in the Agreement. The parties agree that the Agreement shall be amended as follows, effective as of the Effective Date: A. Section 1.1 of the Agreement, as heretofore amended, is hereby amended to read in its entirety as follows: 1.1 Term. Subject to ---- the terms and conditions of this Agreement, the Company will continue to employ the Employee for an extended term continuing until March 31, 2004. B. Section 3.1 of the Agreement, as heretofore amended, is hereby amended to read in its entirety as follows: 3.1 Basic Compensation. ------------------ In respect of services to be performed by the Employee during the Employment Period from and after the Effective Date, the Company agrees to pay the Employee an annual salary of One Hundred Twenty-Two Thousand, Five Hundred Dollars ($122,500) ("Basic Compensation"), payable in accordance with the Company's customary payroll practices for executive employees. Except as modified herein, the Agreement remains in full force and effect in accordance with its terms without revocation or change. IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 2 as of the date and year first above written. BENIHANA INC. By: /s/ Joel A. Schwartz --------------------------------- Joel A. Schwartz, President /s/ Kevin Aoki --------------------------------- Kevin Aoki EXHIBIT 10.15 EMPLOYMENT AGREEMENT AGREEMENT dated this 1st day of September 2000, by and between Benihana National Corp., a Delaware corporation (the "Company"), and Juan C. Garcia (the "Employee"). R E C I T A L: The Company is desirous of employing Employee and Employee is desirous of being employed by the Company on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is hereby agreed by and between the Company and Employee as follows: 1. Engagement and Term. The Company hereby employs -------------------- Employee and Employee hereby accepts such employment by the Company on the terms and conditions set forth herein, for a period commencing on September 1, 2000 (the "Effective Date") and ending, unless sooner terminated in accordance with the provisions of Section 4 hereof, on the third anniversary of such Effective Date (the "Employment Period"). 2. Scope of Duties. Employee shall be employed by --------------- the Company as its Vice President/Controller. The Employee shall have such authority, powers and duties customarily attendant upon such position. If elected or appointed, Employee shall also serve, without additional compensation, in one or more offices and, if and when elected, as a director of the Company or any subsidiary or affiliate of the Company, provided that his duties and responsibilities are not inconsistent with those pertaining to his position as stated above. Employee shall faithfully devote his full business time and efforts so as to advance the best interests of the Company. During the Employment Period, Employee shall not be engaged in any other business activity, whether or not such business activity is pursued for profit or other pecuniary advantage, unless same is only incidental and is in no way, directly or indirectly, competitive with, or opposed to the best interests of the Company. 3. Compensation. ------------- 3.1 Basic Compensation. In respect of ------------------- services to be performed by the Employee during the Employment Period, the Company agrees to pay the Employee an annual salary of Ninety-Five Thousand Dollars ($95,000) ("Basic Compensation"), payable in accordance with the Company's customary payroll practices for executive employees. 3.2 Discretionary Increases. The ------------------------ Employee shall also be entitled to such additional increments and bonuses as shall be determined from time to time by the Board of Directors of the Company. 3.4 Other Benefits. -------------- (a) Employee shall be entitled to participate in any bonus or incentive compensation or similar plans adopted by the Company. (b) Employee shall be entitled to participate, at Company's expense, in the major medical health insurance plan, and all other health, insurance or other benefit plans applicable generally to executive officers of the Company. (c) During the Employment Period, Employee will be entitled to paid vacations and holidays consistent with the Company's policy applicable to executives generally. All vacations shall be scheduled at the mutual convenience of the Company and the Employee. 4. Term of Employment. The provisions of Section 1 ------------------ of this Agreement notwithstanding, the Company may terminate this Agreement and Employee's employment hereunder in the manner and for the causes hereinafter set forth, in which event the Company shall be under no further obligation to Employee other than as specifically provided herein: A. If Employee is absent from work or otherwise substantially unable to assume his normal duties for a period of sixty (60) successive days or an aggregate of ninety (90) business days during any consecutive twelve-month period during the Employment Period because of physical or mental disability, accident, illness, or any other cause other than vacation or approved leave of absence, the Company may thereupon, or any time thereafter while such absence or disability still exists, terminate the employment of Employee hereunder upon ten (10) days' written notice to Employee. B. In the event of the death of Employee, this Agreement shall immediately terminate on the date thereof. C. If Employee materially breaches or violates any material term of his employment hereunder, or commits any criminal act or an act of dishonesty or moral turpitude, in the reasonable judgment of the Company's Board of Directors, then the Company may, in addition to other rights and remedies available at law or equity, immediately terminate this Agreement upon written notice to Employee with the date of such notice being the termination date and such termination being deemed for "cause." D. In the event Employee's employment shall be terminated by reason of the provisions of subparagraph A or B of this Section 4, then in such event, the Company shall pay to Employee, if living, or other person or persons as Employee may from time to time designate in writing as the beneficiary of such payment a sum, equal to the basic compensation in effect at the time which such death or disability occurred, such payment to continue for three months after such death or disability. 5. Disclosure of Confidential Information and ---------------------------------------------- Covenant Not to Compete. Employee acknowledges that the Company possesses - ------------------------ confidential information, know-how, customer lists, purchasing, merchandising and selling techniques and strategies, and other information used in its operations of which Employee has knowledge, and that the Company will suffer serious and irreparable damage and harm if this confidential information were disclosed to any other party or if Employee used this information to compete against the Company. Accordingly, Employee hereby agrees that except as required by Employee's duties to the Company, Employee without the consent of the Company's Board of Directors, shall not at any time during or after the term of this contract disclose or use any secret or confidential information of the Company, including, without limitation, such business opportunities, customer lists, trade secrets, formulas, techniques and methods of which Employee shall become informed during his employment, whether learned by him as an Employee of the Company, as a member of its Board of Directors or otherwise, and whether or not developed by the Employee, unless such information shall be or become public knowledge other than as a result of the Employee's direct or indirect disclosure of the same. Employee further agrees that for a period of one year following the termination of Employee's employment, the Company, except as a result of the breach by the Company of any material term or condition hereof, Employee will not, directly or indirectly, alone or with others, individually or through or by a corporate or other business entity in which he may be interested as a partner, shareholder, joint venturer, officer or director or otherwise, engage in the United States in "any business which is competitive with that of the Company or any of its subsidiaries" as hereinafter defined, provided, however, that the foregoing shall not be deemed to prevent the ownership by Employee of up to five percent of any class of securities of any corporation which is regularly traded on any stock exchange or over-the-counter market. For the purpose of this Agreement, a business activity competitive with the business of the Company or any of its subsidiaries, shall include only (i) the operation or franchise of restaurants selling Japanese, or other oriental food, or restaurants of a type then being operated by the Company, or any of its subsidiaries; and (ii) the sale at wholesale or retail of oriental food products. 6. Reimbursement of Expenses. The Company shall -------------------------- further pay directly, or reimburse the Employee, for all other reasonable and necessary expenses and disbursements incurred by him for and on behalf of the Company in the performance of his duties during the Employment Period upon submission of vouchers or other evidence thereof in accordance with the Company's usual policies of expense reimbursement. 7. Change In Control. ----------------- 7.1 In the event at any time after the Effective Date, a majority of the Board of Directors is composed of persons who are not "Continuing Directors", as hereinafter defined, and Employee's employment is terminated by the Company other than for one of the reasons set forth in Section 4 hereof, Employee shall not be obligated to seek employment to mitigate his damages, if any, to which he may be entitled for breach of this Agreement. 7.2 "Continuing Directors" shall mean (i) the directors of the Company at the close of business on September 1, 2000, and (ii) any person who was or is recommended to (A) succeed a Continuing Director or (B) become a director as a result of an increase in the size of the Board, in each case, by a majority of the Continuing Directors then on the Board. 8. Miscellaneous Provisions. 8.1 Section headings are for convenience only and shall not be deemed to govern, limit, modify or supersede the provisions of this Agreement. 8.2 This Agreement is entered into in the State of Florida and shall be governed pursuant to the laws of the State of Florida. If any provision of this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal or unenforceable, the remaining provisions hereof shall continue to be fully effective. 8.3 This Agreement contains the entire agreement of the parties regarding this subject matter. There are no contemporaneous oral agreements, and all prior understandings, agreements, negotiations and representations are merged herein. 8.4 This Agreement may be modified only by means of a writing signed by the party to be charged with such modification. 8.5 Notices or other communications required or permitted to be given hereunder shall be in writing and shall be deemed duly given upon receipt by the party to whom sent at the respective addresses set forth below or to such other address as any party shall hereafter designate to the other in writing delivered in accordance herewith: If to the Company: Benihana National Corp. 8685 NW 53rd Terrace Miami, Florida 33166-0120 If to Employee: Juan Garcia 5900 SW 112th Street Pine Crest, Florida 33156 8.6 This Agreement shall inure to the benefit of, and shall be binding upon, the Company, its successors and assigns, including, without limitation, any entity that may acquire all or substantially all of the Company's assets and business or into which the Company may be consolidated or merged. This Agreement may not be assigned by Employee. IN WITNESS WHEREOF, the parties have set their hands as of the date first above written. BENIHANA NATIONAL CORP. By: /s/ Joel A. Schwartz ------------------------------------ Joel A. Schwartz, President /s/ Juan C. Garcia ------------------------------------ Juan C. Garcia EXHIBIT 10.22 AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT Amendment No. 1 dated as of April 1, 2001 (the "Effective Date") to Employment Agreement dated September, 2000 (the "Agreement") by and between BENIHANA INC. (the "Company") and JUAN C. GARCIA (the "Employee"). Unless otherwise defined herein, capitalized terms shall have the respective meanings assigned to them in the Agreement. The parties agree that the Agreement shall be amended as follows: A. Section 1 of the Agreement is hereby amended to read in its entirety as follows: 1. Engagement and Term. --------------------- The Company hereby employs Employee and Employee accepts such employment by the Company on the terms and conditions set forth herein, for a period commencing on September 1, 2000 and ending, unless sooner terminated on accordance with the provisions of Section 4 hereof, on September 1, 2003 (the "Employment Period"). B. Effective as of the Effective Date, Section 3.1 of the Agreement, as heretofore amended, is further amended to read in its entirety as follows: 3.1 Basic Compensation. ------------------- In respect of services to be performed by the Employee during the Employment Period from and after the Effective Date, the Company agrees to pay the Employee an annual salary of One Hundred Five Thousand ($105,000) Dollars ("Basic Compensation"), payable in accordance with the Company's customary payroll practices for executive employees. Except as modified herein, the Agreement remains in full force and effect in accordance with its terms without revocation or change. IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 as of the date and year first above written. BENIHANA INC. By:/s/ Joel A. Schwartz ----------------------------------- Joel A. Schwartz, President /s/ Juan C. Garcia ------------------------------------ Juan C. Garcia EXHIBIT 10.23 CONSULTING AGREEMENT This CONSULTING AGREEMENT, dated as of the 1st day of April, 2001 (the "Effective Date") by and between BENIHANA INC., a Delaware corporation (the "Company") and ROCKY H. AOKI (the "Consultant"). The Consultant has heretofore for many years been retained by the Company and by Benihana National Corp ("BNC"), a Delaware corporation, a predecessor corporation of the Company and, as of the Effective Date, a wholly owned subsidiary of the Company, as a consultant and, prior to May 18, 1998 as its Chief Executive Officer and Chairman of the Board. The Company and the Consultant desire to enter into a consulting agreement which will set forth the terms and conditions upon which the Consultant shall serve as a consultant to the Company and upon which the Company shall compensate the Consultant, and to replace and supersede the Employment Agreement (the "Prior Agreement"), dated as of May 15, 1995 and amended December 11, 1997 and May 18, 1998 between the Consultant and the Company. NOW THEREFORE, in consideration of the premises and of the mutual covenants hereinafter set forth, the parties hereto have agreed, and do hereby agree, as follows: 10 EMPLOYMENT; TERM ---------------- 1.1 Subject to the terms and provisions of this Agreement, the Company will continue to employ the Consultant in its business and the Consultant will continue to work for the Company as a consultant for an extended term continuing until March 31, 2006. "Consulting Period" shall mean the term hereof. Such employment may be terminated by the Company at any time for "cause", which shall be limited to (i) Consultant's deliberate and intentional refusal (except by reason of incapacity due to mental or physical illness or disability) to comply with the provisions of Section 3.1 of this Agreement relating to the time and effort to be devoted by the Consultant to the business and affairs of the Company after demand for performance by the Company that specifically identifies the manner in which the Company alleges the Consultant has not performed his duties, (ii) the Consultant's proven dishonesty with respect to the Company, disloyalty, Consultant's gross negligence or wilful misconduct which, in any case, results in demonstrable material harm to the Company, (iii) the breach by the Consultant of his covenant not to compete contained in Section 9.4 hereof, (iv) the continuing breach of any of the other covenants on the Consultant's part herein set forth resulting in, or which may reasonably be expected to result in a substantial adverse effect on the Company, or (v) Consultant's conviction of a crime involving moral turpitude. 1.2 The term "Company" as used in this Agreement shall be deemed to include any and all present and future subsidiaries and affiliates of the Company. 20 DUTIES ------ During the Consulting Period, the Consultant shall perform such duties as a consultant as may be, from time to time, reasonably delegated or assigned to him by the Board of Directors of the Company consistent with the Consultant's abilities. 30 DEVOTION OF TIME ---------------- During the Consulting Period, the Consultant shall expend a substantial part of his working time for the Company; shall devote his best efforts, energy and skill to the services of the Company and the promotion of its interests; and shall not take part in activities detrimental to the best interests of the Company. Nothing in this Agreement shall preclude the Consultant during the term of this Agreement from engaging, directly or indirectly, in any business activity which is not competitive with the then existing business of the Company and Consultant shall be permitted to spend portions of his working time and best efforts, energy and skill as is necessary to fulfill his duties as an officer, director or employee of Benihana of Tokyo, Inc. ("BOT") provided such activities are in compliance with, and do not constitute a breach of (i) the Agreement and Plan of Reorganization dated December 29, 1994 among BOT, BNC, the Company and BNC Merger Corp. (the "Reorganization Agreement") and (ii) the License Agreement, dated May 15, 1995, between the Company and BOT (the "License"). 40 COMPENSATION ------------ 4.1 In respect of services to be performed by the Consultant during the Employment Period, the Company agrees to pay the Consultant an annual salary of Six Hundred Thousand ($600,000) Dollars ("Basic Compensation"), payable in accordance with the Company's customary payroll practices for executive employees. 4.2 The Basic Compensation shall be increased by an amount established by reference to the "Consumer Price Index for Urban Wage Earners and Clerical Workers, New York, New York, all items - Series A-01" published by the Bureau of Labor Statistics of the United States Department of Labor (the "Consumer Price Index"). The base period shall be the month ended December 31, 2000 (the "Base Period"). If the Consumer Price Index for the month of December in any year, commencing in 2001, is greater than the Consumer Price Index for the Base Period, Basic compensation shall be increased, commencing on March 1 of the next following year, to the amount obtained by multiplying Basic Compensation by a fraction, the numerator of which is the Consumer Price Index for the month of December of the year in which such determination is being made and the denominator of which is the Consumer Price Index for the Base Period. 4.3 The Consultant shall also be entitled to such additional increments and bonuses as shall be determined from time to time by the Board of Directors of the Company. 50 USE OF AUTOMOBILE; REIMBURSEMENT OF EXPENSES -------------------------------------------- 5.1 The Company shall pay directly, or reimburse the Consultant, for all other reasonable and necessary expenses (other than the automobile expenses described in Section 5.2) and disbursements incurred by him for and on behalf of the Company in the performance of his duties during the Employment Period upon submission of vouchers or other evidence thereof in accordance with the Company's usual policies of expense reimbursement. a65535 In addition to the reimbursement described in Section 5.1, Consultant shall receive an allowance which is commensurate with his consulting duties hereunder and consistent with Company policy for automobile expenses, including lease costs or purchase price, gasoline and oil and garaging. 60 DISABILITY, DEATH OR RETIREMENT ------------------------------- 6.1 If during the Employment Period, the Consultant shall die, voluntarily retire or have a "Disability", as hereinafter defined, then there shall be paid to Consultant, if living, or other person or persons as Consultant shall from time to time designate in writing as the beneficiary of such payment ("Beneficiary") a sum equal to fifty (50%) percent of the Compensation paid for the Company's fiscal year immediately preceding the year in which such death, retirement or Disability occurred; such reduced payment to continue for the remainder of the term of this Agreement. 6.2 "Disability" shall mean the inability of Consultant, for a continuous period of more than twelve (12) months, to perform substantially all of his regular duties and carry out substantially all of his responsibilities hereunder because of physical or mental incapacity. The Company shall have the right to have Consultant examined by a competent doctor for purposes of determining his physical or mental incapacity. In the event Executive's employment hereunder shall terminate because Executive has incurred a Disability, the payments referred to in Section 6.1 shall commence on the first day of month next following such termination of employment. In the event Executive shall suffer an event which might reasonably be considered a Disability, either the Company or theExecutive (or the Executive's legal representative shall have the right to give to the other party written notice of such termination on 15 days notice. In the event the parties shall in good faith disagree on whether Executive is suffering a Disability, final determination shall be made by a doctor reasonable acceptable to both parties. 6.3 If the Consultant shall be able to resume his full duties after a Disability, he shall commence to receive his full Compensation from and after the date on which he shall have resumed full employment. 6.4 The obligations of the Company under Articles 6.1 and 6.2 may be satisfied, in whole or in part, by payments to the Consultant under disability insurance provided by the Company, and under laws providing disability benefits for employees. 70 CONFIDENTIAL INFORMATION; INVENTIONS; ------------------------------------- RESTRICTIVE COVENANT - -------------------- 7.1 The Consultant agrees not to divulge, furnish or make available to anyone (other than in the regular course of business of the Company) any knowledge or information with respect to the Company, or with respect to any other confidential or secret aspect of the Company's activities. 7.2 Any methods, developments, inventions and/or improvements, whether patentable or unpatentable, which the Consultant may conceive or make along the lines of the Company's business while in its employ as an Consultant or consultant, shall be and remain the property of the Company. The Consultant further agrees on request to execute patent applications based on such methods, developments, inventions and/or improvements, including any other instruments deemed necessary by the Company for the prosecution of such patent application or the acquisition of Letters Patent of this and any foreign country. 7.3 The Consultant agrees to communicate and make known to the Company all knowledge possessed by him relating to any methods, developments, inventions and/or improvements, whether patented, patentable or unpatentable, which concern in any way the business or the Company, whether acquired by him before or during the term hereof, provided, however, that nothing herein shall be construed as requiring any such communication where the method, development, invention and/or improvement is lawfully protected from disclosure as the trade secret of a third party or by any other lawful bar to such communication. 7.4 The services of the Consultant are unique and extraordinary and essential to the business of the Company, especially since the Consultant shall have access to the Company's customer lists, trade secrets and other privileged and confidential information essential to the Company's business. Therefore, the Consultant agrees that if his employment or consulting hereunder shall at any time be terminated for any reason whatsoever, the Consultant will not at any time within three (3) years after such termination, without the prior written approval of the Company, directly or indirectly, within the United States of America (excluding the State of Hawaii), or any other area in which the Company shall then conduct substantial operations, engage in any business activity competitive with the business of the Company; and further, the Consultant agrees that during such three (3) year period he shall not solicit, directly or indirectly, any employee or customer or account of the Company who at the time of such termination was then actively being solicited by the Company. For the purpose of this agreement a business activity competitive with the business of the Company shall include (i) the operation or franchising of restaurants of a type then being operated, or under construction, by the Company and (ii) the sale, at wholesale or retail, of (A) food products bearing the trade name or trademarks of any company engaged in the hospitality industry or (B) oriental food products, if the Company is marketing food products, at wholesale or retail, at the time of Consultant's termination of employment. 80 VACATIONS --------- The Consultant shall be entitled to reasonable vacations during each twelve-month period of the term hereof, the time and duration thereof to be determined by mutual agreement between the Consultant and the Company. 90 PARTICIPATION IN EMPLOYEE BENEFIT PLANS --------------------------------------- To the extent permitted by the terms of such plans and of any insurance policies purchased under such plans, the Consultant and any beneficiary of the Consultant shall be accorded the right to participate in and receive benefits under and in accordance with the provisions of any insurance, medical and dental insurance or reimbursement program of the Company. 100 KEY MAN INSURANCE ----------------- The Company presently owns life insurance policy on the Consultant's life in the face amount of Five Million Dollars. The Company shall remain the owner and beneficiary thereof and shall pay the annual premium of such policy during the term hereof. Upon the termination of the Consulting Period, for any reason whatsoever, the policy shall be assigned to Consultant. 110 INJUNCTIVE RELIEF ----------------- The Consultant acknowledges and agrees that, in the event he shall violate any of the restrictions of Articles 3 and 7 hereof, the Company will be without adequate remedy at law and will therefor be entitled to enforce such restrictions by temporary or permanent injunctive or mandatory relief obtained in an action or may have at law or in equity, and the Consultant hereby consents to the jurisdiction of such Court for such purpose, provided that reasonable notice of any proceeding is given, it being understood that such injunction shall be in addition to any remedy which the Company may have at law or otherwise. 120 ASSIGNMENT ---------- This Agreement, as it relates to the employment of the Consultant, is a personal contract and the rights and interests of the Consultant hereunder may not be sold, transferred, assigned, pledged or hypothecated. Except as otherwise expressly provided, this Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. 130 RIGHT TO PAYMENTS, ETC. ----------------------- The Consultant shall not under any circumstances have any option or right to require payments hereunder otherwise than in accordance with the terms hereof. To the extent allowed by law, the Consultant shall not have any power of anticipation, alienation or assignment of payments contemplated hereunder, and all rights and benefits of the Consultant, and no other person shall acquire any right, title or interest hereunder by reason of any sale, assignment, transfer, claim or, judgment or bankruptcy proceedings against the Consultant. 140 NOTICES, ETC. ------------- Any notice required or permitted to be given to the Consultant pursuant to this Agreement shall be sufficiently given if sent to the Consultant by certified mail addressed to him at: 8685 Northwest 53rd Terrace, Miami, Florida, 33166, or at any such other address as he shall designate by notice to the Company, and any notice required or permitted to be given to the Company pursuant to this Agreement shall be sufficiently given if sent to the Company by certified mail addressed to it at 8685 N. W. 53rd Terrace, Miami, Florida, 33166, attention of Corporation Secretary, or such other address as the Company shall designate by notice to the Consultant, with a copy to Herschel S. Weinstein, Esq., Dornbush Mensch Mandelstam & Schaeffer, 747 Third Avenue, New York, New York, 10017. 150 GOVERNING LAW ------------- This Agreement shall be governed by, and construed in accordance with the laws of the State of New York, applicable to agreements made and to be performed solely within such state. 160 WAIVER OF BREACH; PARTIAL INVALIDITY ------------------------------------ The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. If any provisions of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and not in any way affect or render invalid or unenforceable any other provisions of this Agreement, and this Agreement shall be carried out as if such invalid or unenforceable provision were not embodied therein. 170 ENTIRE AGREEMENT ---------------- This Agreement constitutes the entire agreement between the parties hereto and there are no representations, warranties or commitments except as set forth herein. This Agreement supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether written or oral, of the parties hereto relating to the transactions contemplated by this Agreement. This Agreement may be amended only in writing executed by the parties hereto affected by such amendment. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written. BENIHANA INC. By: /s/ Joel A. Schwartz ---------------------------------- Joel A. Schwartz, President /s/ Rocky H. Aoki ----------------------------------- Rocky H. Aoki EXHIBIT 13.01 ANNUAL REPORT BENIHANA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share information)
Year ended April 1, March 26, March 28, 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------------------------ Revenues Restaurant sales $161,865 $136,389 $118,351 Franchise fees and royalties 1,378 1,088 798 - ------------------------------------------------------------------------------------------------------------------------------------ Total revenues 163,243 137,477 119,149 - ------------------------------------------------------------------------------------------------------------------------------------ Costs and Expenses Cost of food and beverage sales 43,301 36,588 30,964 Restaurant operating expenses 89,427 74,088 65,188 Selling, general and administrative expenses 13,690 11,402 11,343 Restaurant opening costs 1,453 566 12 - ------------------------------------------------------------------------------------------------------------------------------------ Total operating expenses 147,871 122,644 107,507 - ------------------------------------------------------------------------------------------------------------------------------------ Income from operations 15,372 14,833 11,642 Interest expense, net 1,233 1,297 1,644 Minority interest 40 81 - ------------------------------------------------------------------------------------------------------------------------------------ Income from operations before income taxes 14,099 13,455 9,998 Income tax provision 5,008 4,722 3,480 - ------------------------------------------------------------------------------------------------------------------------------------ Net Income $9,091 $8,733 $6,518 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings Per Share Basic earnings per common share $1.47 $1.41 $1.06 Diluted earnings per common share $1.38 $1.32 $1.02 - ------------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements BENIHANA INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share information)
April 1, March 26, 2001 2000 - ----------------------------------------------------------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 935 $ 1,165 Receivables 734 481 Inventories 4,149 3,613 Prepaid expenses 1,122 765 - ----------------------------------------------------------------------------------------------------------------------------------- Total current assets 6,940 6,024 Property and equipment, net 54,104 43,564 Deferred income taxes, net 2,973 3,290 Goodwill, net 16,478 17,302 Other assets 5,434 5,265 - ----------------------------------------------------------------------------------------------------------------------------------- $85,929 $75,445 - ----------------------------------------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $16,486 $14,471 Current maturity of bank debt 2,000 1,750 Current maturity of other long-term debt 145 251 Current maturities of obligations under capital leases 702 629 - ----------------------------------------------------------------------------------------------------------------------------------- Total current liabilities 19,333 17,101 Long-term debt - bank 12,500 12,500 Long-term debt - other 145 Obligations under capital leases 1,371 2,073 Minority interest 40 81 Commitments and Contingencies Stockholders' Equity: Series A Redeemable Convertible Preferred stock - $1.00 par value; authorized - 5,000,000 shares; issued and outstanding - 700 shares in 2001 and 2000 1 1 Common stock - $.10 par value; convertible into Class A Common stock; authorized - 12,000,000 shares; issued and outstanding - 3,579,116 and 3,576,616 shares in 2001 and 2000, respectively 358 358 Class A Common stock - $.10 par value; authorized - 20,000,000 shares; issued and outstanding - 2,589,713 and 2,580,202 shares in 2001 and 2000, respectively 259 258 Additional paid-in capital 14,847 14,756 Retained earnings 37,336 28,288 Treasury Stock - 9,177 shares of Class A Common stock at cost (116) (116) - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 52,685 43,545 - ---------------------------------------------------------------------------------------------------------------------------------- $85,929 $75,445 - ----------------------------------------------------------------------------------------------------------------------------------
BENIHANA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except share information)
Additional Total Preferred Common Class A Paid-in Retained Treasury Stockholders' Stock Stock Common Stock Capital Earnings Stock Equity - ------------------------------------------------------------------------------------------------------------------------------------ Balance, March 29, 1998 $ 1 $ 357 $ 252 $14,600 $13,129 $(116) $28,223 Net income 6,518 6,518 Dividend on preferred stock (50) (50) Conversion of 300 shares of preferred stock into 45,113 shares of Class A common stock 4 (4) Issuance of 500 shares of common stock under exercise of options 2 2 Issuance of 867 shares of Class A common stock under exercise of options 6 6 - ----------------------------------------------------------------------------------------------------------------------------------- Balance, March 28, 1999 1 357 256 14,604 19,597 (116) 34,699 Net income 8,733 8,733 Dividend on preferred stock (42) (42) Issuance of 5,000 shares of common stock Under exercise of options 16 16 Issuance of 16,109 shares of Class A Common stock under exercise of options 2 128 130 Issuance of 650 shares of Class A common stock for incentive compensation 1 8 9 - ----------------------------------------------------------------------------------------------------------------------------------- Balance, March 26, 2000 1 358 258 14,756 28,288 (116) 43,545 Net income 9,091 9,091 Dividend on preferred stock (43) (43) Issuance of 2,500 shares of common stock Under exercise of options 14 14 Issuance of 9,511 shares of Class A Common stock under exercise of options 1 77 78 - ----------------------------------------------------------------------------------------------------------------------------------- Balance, April 1, 2001 $ 1 $ 358 $ 259 $14,847 $37,336 $(116) $52,685 - -----------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements. BENIHANA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, except share information)
April 1, March 26, March 28, 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------------------------- Operating Activities: Net income $9,091 $8,733 $6,518 Adjustments to reconcile net income to net cash Provided by operating activities: Depreciation and amortization 5,178 4,349 3,887 Minority interest (40) 81 Deferred income taxes 317 95 396 Issuance of common stock for incentive compensation 9 Change in operating assets and liabilities that provided (used) cash: Receivables (253) (212) 116 Inventories (536) (417) 662 Prepaid expenses (357) (111) 123 Other assets (497) (534) (150) Accounts payable and accrued expenses 2,015 3,818 1,174 - ----------------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 14,918 15,811 12,726 - ----------------------------------------------------------------------------------------------------------------------------------- Investing Activities: Business acquisition, net of cash acquired (8,445) Expenditures for property and equipment (14,548) (9,643) (7,212) Other (19) (21) (18) - ----------------------------------------------------------------------------------------------------------------------------------- Net cash (used in) investing activities (14,567) (18,109) (7,230) - ----------------------------------------------------------------------------------------------------------------------------------- Financing Activities: Dividends paid on preferred stock (43) (42) (50) Proceeds from issuance of long-term debt 6,500 7,700 Repayment of long-term debt and obligations under capital leases (7,130) (6,024) (4,939) Proceeds from issuance of common stock 92 145 8 - ----------------------------------------------------------------------------------------------------------------------------------- Net cash (used in) provided by financing activities (581) 1,779 (4,981) - ----------------------------------------------------------------------------------------------------------------------------------- Net (decrease) increase in cash and cash equivalents (230) (519) 515 Cash and cash equivalents, beginning of year 1,165 1,684 1,169 - ----------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of year $ 935 $1,165 $1,684 - ----------------------------------------------------------------------------------------------------------------------------------- Supplemental Cash Flow Information Cash paid during the fiscal year for: Interest $1,376 $1,087 $1,159 Income taxes $6,254 $3,815 $2,992 Business acquisitions, net of cash acquired: Fair value of assets acquired, other than cash $2,830 Liabilities assumed (157) Purchase price in excess of the net assets acquired 5,772 - ----------------------------------------------------------------------------------------------------------------------------------- $8,445 - ----------------------------------------------------------------------------------------------------------------------------------- During the fiscal year ended March 28, 1999, 300 shares of Preferred stock were converted into 45,113 shares of Class A Common Stock
See notes to consolidated financial statements BENIHANA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED APRIL 1, 2001, MARCH 26, 2000 AND MARCH 28, 1999 - ------------------------------------------------------------ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Operations - Benihana Inc., including its majority owned subsidiaries (the "Company"), owned and operated 51 teppanyaki style and five sushi restaurants and franchised 16 others as of April 1, 2001. The Company has the rights to open, license and develop Benihana restaurants in the United States, Central and South America and the Caribbean islands. Basis of Presentation - The consolidated financial statements include the assets, liabilities and results of operations of its majority-owned subsidiaries. The ownership of other interest holders including attributable income and losses is reflected as minority interest. All intercompany accounts and transactions have been eliminated in consolidation. The Company operates within only one reportable operating segment. The Company has a 52/53-week fiscal year. All of the years presented in these financial statements consist of 52 weeks except for the year ended April 1, 2001, which consist of 53 weeks. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("generally accepted accounting principles") requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates. Certain prior year amounts in the accompanying consolidated financial statements have been reclassified to conform with fiscal 2001 classifications. Franchise and License Fee Revenue Recognition - The Company recognizes initial franchise fees as income when substantially all of its obligations are satisfied, which generally coincides with the opening of the franchised restaurants. The Company also receives continuing royalty fees based upon a percentage of each franchised restaurant's gross revenues. Royalty fees are recognized as income when earned. Cash and Cash Equivalents - The Company considers all highly liquid investment instruments purchased with an initial maturity of three months or less to be cash equivalents. Inventories - Inventories, which consist principally of restaurant operating supplies and food and beverage, are stated at the lower of cost (first-in, first-out method) or market. Depreciation and Amortization - Depreciation and amortization are computed by the straight-line method over the estimated useful life (buildings - 30 years; restaurant furniture, fixtures and equipment - 8 years; office equipment - 8 years; personal computers, software and related equipment - 3 years; and leaseholds - lesser of the lease terms, including renewal options, or useful life). Goodwill is being amortized on a straight-line basis over a 25-year period for the acquisition of Rudy's Restaurant Group, Inc. in 1997 and over a 15-year period for the acquisition of 80% of Haru Holding Corp. in 1999. The amortization period represents the estimated benefit period for each of the businesses acquired. Accumulated amortization of goodwill was $2,206,000 at April 1, 2001. The Company capitalizes all direct costs incurred to construct restaurants. Upon opening, these costs are depreciated and charged to expense based upon their property classification. The amount of interest capitalized in connection with restaurant construction was approximately $345,000 in fiscal year 2001 and was nil in fiscal years 2000 and 1999. Accounting for Long-Lived Assets - The Company periodically evaluates its net investment in restaurant properties and goodwill for impairment for events or changes in circumstances that indicate the carrying amounts of an asset may not be recoverable. During the periods presented, no such impairment had occurred. Accounting for the Costs of Computer Software Developed or Obtained for Internal Use - The Company capitalizes and records in other assets the cost of computer software obtained for internal use and amortizes such costs over a three-year period. Derivative Instruments - The Company utilizes interest rate swap agreements to hedge exposure to fluctuations in variable interest rates. The Company recognizes the interest differential to be paid or received on an interest rate swap as an adjustment to interest expense as the differential occurs. If the Company was to terminate an interest rate swap, any gain or loss realized upon termination would be deferred and amortized to interest expense over the remaining term of the underlying debt instrument it was intended to modify or would be recognized immediately if the underlying debt instrument were settled prior to maturity. Stock-Based Compensation - The Company accounts for stock based compensation under the intrinsic value method of accounting for stock based compensation and has disclosed pro forma net income and earnings per share amounts using the fair value method. Earnings Per Share - Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during each period. The diluted earnings per common share computation includes dilutive common share equivalents issued under the Company's various stock option plans and dilutive convertible preferred stock. The computation of basic earnings per common share and diluted earnings per common share for each year is shown below (in thousands):
April 1, March 26, March 28, 2001 2000 1999 ---------------- ---------------- -------------- Income from operations $9,091 $8,733 $6,518 Less preferred dividends (43) (42) (50) ---------------- ---------------- -------------- Income for computation of basic earnings per common share 9,048 8,691 6,468 Convertible preferred dividends (See Note 12) 43 42 50 ---------------- ---------------- -------------- Income for computation of diluted earnings per common share $9,091 $8,733 $6,518 ================ ================ ============== Weighted average number of common shares in basic earnings per share 6,165 6,147 6,105 Effect of dilutive securities: Stock options and warrants 341 384 180 Convertible preferred shares (See Note 12) 105 105 134 ---------------- ---------------- -------------- Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share 6,611 6,636 6,419 ================ ================ ==============
Recent Accounting Pronouncements - In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133, as amended by SFAS No. 137 and SFAS No. 138, requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives will be recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. The adoption of this statement for the first quarter of fiscal 2002 did not have a material impact on the Company's financial statements. 2. ACQUISITION The Company's financial statements and the discussion and data presented below reflect the acquisitions by the Company of 80% of the equity of Haru Holding Corp. ("Haru") on December 6, 1999. Haru owns and operates two sushi restaurants in New York City. The purchase price paid in cash at closing was approximately $8.4 million. The acquisition was accounted for using the purchase method of accounting and the operating results of Haru have been included in the Company's consolidated statements of earnings since the date of acquisition. The ownership of the minority interest including attributable income and losses is reflected as minority interest. The excess of the purchase price over the acquired tangible and intangible net assets of approximately $5.8 million was allocated to goodwill and is being amortized on a straight-line basis over 15 years. Additionally, lease acquisition costs of $2.1 million relating to a lease for a Haru restaurant location in the Times Square area of Manhattan was included in the purchase price. The costs to acquire this lease is amortized on a straight-line basis over the remaining 14 years balance of the lease term. 3. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company has estimated the fair value of financial instruments that are included as assets and liabilities in the accompanying consolidated balance sheets. The carrying value of cash and cash equivalents and receivables approximate fair value because of the short-term nature of these instruments. The carrying value of the cash surrender value of officer's life insurance approximates the fair value because of the nature of the life insurance contract. The fair value of outstanding borrowings under the Company's long-term debt agreement approximates the carrying value since the interest rate floats subject to market conditions. The value of the interest rate swap agreement included in the fair value of the debt was obtained from dealer quotes which represent the estimated amount the Company would receive or pay to terminate the agreement taking into consideration current market interest rates. The estimated fair value of outstanding borrowings was $14,746,000 and the carrying value was $14,645,000 at April 1, 2001 and the estimated fair value of outstanding borrowings was $14,673,000 and the fair value was $14,646,000 at March 26, 2000. 4. INVENTORIES Inventories consist of (in thousands):
April 1, March 26, 2001 2000 ------------------ --------------- Food and beverage $1,634 $1,450 Supplies 2,515 2,163 ------------------ --------------- $4,149 $3,613 ================== =============== 5. PROPERTY AND EQUIPMENT Property and equipment consist of (in thousands): April 1, March 26, 2001 2000 ------------------- ---------------- Land $5,925 $5,925 Buildings 12,035 11,924 Leasehold improvements 44,110 35,385 Restaurant furniture, fixtures, and equipment 19,272 17,592 Restaurant facilities and equipment under capital leases 7,638 7,638 ------------------- ---------------- 88,980 78,464 Less accumulated depreciation and amortization (Including accumulated amortization of restaurant facilities and equipment under capital leases of $6,810 and $6,508 in 2001 and 2000, respectively) 43,969 41,842 ------------------- ---------------- 45,011 36,622 Construction in progress 9,093 6,942 ------------------- ---------------- $54,104 $43,564 =================== ================
6. OTHER ASSETS Other assets consist of (in thousands):
April 1, March 26, 2000 2000 ------------------ --------------- Lease acquisition costs, net $2,605 $2,683 Premium on liquor licenses 947 961 Security deposits 958 545 Long-term receivables 105 181 Computer software costs, net 261 291 Deferred financing charges, net 194 259 Cash surrender value of life insurance policy 364 345 ------------------ --------------- $5,434 $5,265 ================== =============== 7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of (in thousands): April 1, March 26, 2001 2000 ------------------- ----------------- Accounts payable $6,999 $5,325 Accrued payroll, incentive compensation and related taxes 3,005 3,162 Accrued sales taxes 1,061 750 Unredeemed gift certificates 902 759 Accrued percentage rent 900 842 Accrued property taxes 590 481 Accrued income taxes 1,205 Other accrued operating expenses 3,029 1,947 ------------------- ----------------- $16,486 $14,471 =================== =================
8. LEASE OBLIGATIONS The Company generally operates its restaurants in leased premises. The typical restaurant premises lease is for a term of between 15 to 25 years with renewal options ranging from 5 to 25 years. The leases generally provide for the payment of property taxes, utilities, and various other use and occupancy costs. Rentals under certain leases are based on a percentage of sales in excess of a certain minimum level. Certain leases provide for increases based upon the changes in the consumer price index. The Company is also obligated under various leases for restaurant equipment and for office space and equipment. Minimum payments under lease commitments are summarized below for capital and operating leases. The imputed interest rates used in the calculations for capital leases vary from 9.75% to 12% and are equivalent to the rates which would have been incurred to borrow, over a similar term, the amounts necessary to purchase the leased assets. The amounts of operating and capital lease obligations are as follows (in thousands):
Operating Capital Leases Leases --------------- --------------- Fiscal year ending: 2002 $4,850 $893 2003 5,570 785 2004 5,561 458 2005 5,527 289 2006 5,411 26 Thereafter 36,302 --------------- --------------- Total minimum lease payments $63,221 $2,451 =============== Less amount representing interest 378 --------------- Total obligations under capital leases 2,073 Less current maturities 702 --------------- Long-term obligations under capitalized Leases at April 1, 2001 $1,371 ===============
Rental expense consists of (in thousands):
April 1, March 26, March 28, 2001 2000 1999 ---------------------------------------------------- Minimum rental commitments $6,497 $5,665 $4,844 Rental based on percentage of sales 2,298 1,711 1,491 ---------------------------------------------------- $8,795 $7,376 $6,335 ====================================================
In September 1999, the Company entered into a $25,000,000 master lease agreement with its principal bank lender, First Union National Bank and two other banks, to finance land acquisition and construction of new restaurants. Under the agreement, a grantor trust purchases properties selected by the Company, finances all of the construction costs and leases the facilities to the Company upon their completion. The initial term of the lease is for five years and the lease can be renewed upon approval by all parties to the transaction. The Company accounts for the lease as an operating lease. Upon maturity, the Company retains the option to purchase all of the properties owned by the trust. However, if the Company elects not to purchase the properties, the Company provides a residual guaranty for the leased facilities and is liable for the decline in market value of the leased facilities up to 90% of the cost of the property at the inception of the lease inclusive of the present value of lease payments. The Company must also maintain compliance with financial covenants similar to its other credit facilities as described in the following note. 9. LONG-TERM DEBT Long-term debt consists of (in thousands):
April 1, March 26, 2001 2000 ------------------ ------------------- Term loan - bank $8,000 $10,250 Revolving line of credit - bank 6,500 4,000 Notes payable - 7% unsecured note obligation payable in monthly installments of $7 thru February 2001 70 Note obligation under terms of non-competition agreement with former shareholder of Rudy's discounted at 8%, payable in monthly installments of $17 thru December 2001 145 326 ------------------ ------------------- 14,645 14,646 Less current portion 2,145 2,001 ------------------ ------------------- $12,500 $12,645 ================== ===================
The Company has a credit arrangement with a bank that includes a term loan and a revolving line of credit under which $8,500,000 was available at April 1, 2001. Interest under the credit arrangement accrues at the Company's option at either prime rate plus a margin up to 1.0% or at LIBOR plus a margin of between 1.0% to 2.25%. At April 1, 2001, interest was accrued at approximately 6.0% (LIBOR plus 1.0%). The applicable interest rate margin varies with the Company's leverage ratio (defined as earnings before interest, taxes, and depreciation and amortization divided by funded indebtedness). The final maturity date of both the term loan and the revolving line of credit is March 31, 2004. The credit arrangement restricts the Company from making dividend payments and purchases of the Company's common equity securities and limits the amounts of capital expenditures that the Company can make annually during the term of the agreement. The credit arrangement also requires the Company to achieve certain ratios of operating cash flow to debt and other financial benchmarks. The credit agreement is collateralized by a security interest in the Company's assets. The Company entered into an interest rate swap agreement involving an exchange of floating rate interest payment obligations for fixed rate payment obligations. The purpose of the swap agreement was to protect against significant increases in interest rates on variable rate bank indebtedness. Periodic cash payments either received or paid pursuant to the swap are accrued on a settlement basis as an adjustment to interest expense. The notional amount of the agreement at April 1, 2001 was $3,708,000 and that amount is reduced by $74,000 monthly until March 2002 when the balance of the agreement expires. At April 1, 2001, the agreement had a fair market value of $101,000. Principal maturities of long-term debt obligations at April 1, 2001 are as follows: Fiscal year ending 2002 $2,145 2003 2,250 2004 3,000 2005 7,250 ------------ Total $14,645 ============ 10. INCOME TAXES Deferred tax assets and liabilities reflect the tax effect of temporary differences between amounts of assets and liabilities for financial reporting purposes and the amounts of such assets and liabilities as measured by income tax law. A valuation allowance is recognized to reduce deferred tax assets to the amounts that are more likely than not to be realized. The net deferred tax asset balance consists of (in thousands):
April 1, 2001 March 26, 2000 Assets Liabilities Total Assets Liabilities Total ------------------------------------------------------------------------------------------------------------------------ Tax loss carryforwards $1,596 $ - $1,596 $2,028 $- $2,028 Excess book amortization For pre-opening costs And capital leases 526 526 675 675 Income tax credits 392 392 392 392 Gift certificates 361 361 304 304 Accelerated depreciation For tax purposes (104) (104) (273) (273) Other 202 202 164 164 -------------------------------------------------------------------------------- Total asset (liability) $3,077 ($104) $2,973 $3,563 ($273) $3,290 ================================================================================
The Company's net operating loss carryforwards as of April 1, 2001 was $3,990,000 for ordinary income tax purposes and $4,304,000 for alternative minimum income tax purposes and are available to reduce future taxable income. The net operating loss carryforwards are subject to the change of control provision limiting the usage of the net operating loss carryforwards to approximately $1,100,000 per year. All net operating loss carryforwards expire as follows (in thousands): Fiscal year ending 2005 $3,520 2006 470 ----------------- $3,990 ================= The income tax provision consists of (in thousands):
April 1, March 26, March 28, 2001 2000 1999 ------------------------------------------------------------------------------------------------------------------------ Current: Federal $3,398 $3,527 $2,273 State 1,293 1,100 811 Deferred: Federal and State 317 95 396 ---------------------------------------- Income tax provision $5,008 $4,722 $3,480 ======================================== The income tax provision differed from the amount computed at the statutory rate as follows (in thousands): April 1, March 26, March 28, 2001 2000 1999 ------------------------------------------------------------------------------------------------------------------------ Federal income tax provision at statutory rate of 34% $4,835 $4,609 $3,399 State income taxes, net of federal benefit 854 726 535 Tax credits, net (833) (687) (593) Change in valuation allowance (107) Other 152 181 139 ---------------------------------------- Income tax provision $5,008 $4,722 $3,480 ======================================== Effective income tax rate 35.5% 35.1% 34.8% ========================================
11. CONTINGENCIES From time to time, lawsuits are filed against the Company in the ordinary course of business. Such lawsuits typically involve claims from customers and others related to operational issues common to the food service industry. In addition, the Company also encounters similar complaints and allegations from current and former employees or others which are common for similar businesses. An action was filed by a former employee in the United States District Court for the Southern District of New York. The complaint also purports to be filed on behalf of other unnamed current and former employees. The complaint sets forth a single claim form for alleged violations of the minimum wage provisions of the federal labor laws relating to employees participation in "tip pools". The plaintiffs allege that the Company did not comply with the requirement of the laws that pertain to tipped employees. Plaintiff seeks damages consisting of the difference between the hourly wage that the plaintiff was paid and the applicable federal minimum hourly wages. Should the plaintiff prevail he and other current and former employees may be awarded the liquidated damages provided by applicable federal labor laws and reasonable attorneys' fees and costs. The Company served an answer to the complaint denying the material allegations made and intends to vigorously defend the action. While the Company believes that the complaint has no merit, this action is in its preliminary stages and there can be no assurance that the Company will not be required to pay a material amount in the settlement or other disposition of this matter. 12. STOCKHOLDERS' EQUITY Series A Redeemable Convertible Preferred Stock - The preferred stock has a liquidation preference of $1,000 per share, carries a cumulative dividend of 6% and entitles the holder a right to convert into a maximum of 105,263 shares of the Company's Class A Common Stock. The preferred stock is redeemable at the option of the Company. On May 15, 2001, the holder converted all of the preferred stock to 105,263 shares of Class A Common Stock. Common and Class A Common Stock - The Company's Common Stock is convertible into Class A Common Stock on a one-for-one basis. The Class A Common Stock is identical to the Common Stock except that it gives the holder one-tenth (1/10) vote per share, voting together with the Company's Common Stock as a single class on all matters except the election of directors. For election of directors, the Class A Common Stockholders vote as a class to elect 25% of the members of the Board of Directors. On June 4, 2001, the holder of 294,737 shares of Common Stock converted these shares into 294,737 shares of Class A Common Stock (unaudited). Stock Options - The Company has various stock option plans: a 1994 Employee Stock Option Plan (1994 Plan), a 1996 Class A Stock Option Plan (1996 Plan), a 1997 Class A Stock Option Plan (1997 Plan), a 2000 Class A Stock Option Plan (2000 Plan), a Directors' Stock Option Plan (Directors' Plan) and a Directors' Class A Stock Option Plan (Directors' Class A Plan), under all of which a maximum of 3,285,000 shares of the Company's Common Stock were authorized for grant and for all of which options for 1,871,493 shares remain available for grant. Options granted under the 1996 and 1997 plans have a term of ten years from date of issuance, and are exercisable ratably over a three-year period commencing with the date of the grant. Options granted under these plans require that the exercise price be at market value on the date of the grant, or for optionees that own more than 10% of the combined voting rights of the Company, at 110% of market value for incentive stock options. Options granted under the 1994 Plan have a term of ten years from date of issuance and are exercisable on the date of grant. Under the Directors' Plan, options to purchase 10,000 shares are automatically granted to each of the Company's non-employee directors on the date of the Company's annual meeting. Options granted under the Directors Plan are exercisable ratably over two years commencing with the first anniversary of the date of the grant. The Company applies the intrinsic-value-based method in accounting for stock-based awards to employees. Therefore, the Company generally recognizes no compensation expense with respect to such awards because options are generally granted at the fair market value on the date of the grant. Had the Company accounted for its stock-based awards to employees under the fair value method, the table below shows the pro forma effect on net income and earnings per share. The fair value of the Company's stock based awards to employees was estimated using a Black-Scholes option- pricing model. The following weighted average assumptions were used in the Black-Scholes option-pricing model: a risk-free interest rate of 4.73% for fiscal year 2001, 6.7% for 2000 and 5.5% for 1999, respectively; an expected life of three years, no expected dividend yield and a volatility factor of 53%, 38% and 58% for fiscal years 2001, 2000 and 1999, respectively. The Company's pro forma information is as follows:
April 1, March 26, March 28, 2001 2000 1999 -------------------------------------------------- Net Income As reported $9,091 $8,733 $6,518 Pro forma $8,163 $7,796 $5,760 Diluted Earnings Per Common Share As reported $1.38 $1.32 $1.02 Pro forma $1.23 $1.17 $.90
As a result of the inclusion of only the grants made subsequent to fiscal 1995, the effects may not be Representative of the pro forma impact in future years. The following table summarizes information about fixed-price stock options outstanding at April 1, 2001:
Options Outstanding Options Exercisable ----------------------------------------- --------------------------- Weighted- Average Weighted Weighted Ranges of Remaining Average Average Exercise Contractual Exercise Exercise Prices Number Life Price Number Price ------------------------------------------------------------------------------------------------------------------------ $ 1.38 - $ 3.25 25,500 2.6 $2.63 25,500 $2.63 6.75 - 8.38 388,791 6.7 7.42 388,791 7.42 9.00 - 10.11 131,478 5.6 9.39 124,811 9.41 10.25 - 12.25 511,335 7.1 11.85 446,390 11.92 12.69 - 15.50 369,834 9.0 13.91 159,945 14.19 ---------------- --------------- $ 1.38 - 15.50 1,426,938 1,145,437 ================ ================
Transactions under the above plans for the years ended are as follows:
April 1, March 26, March 28, 2001 2000 1999 ------------------------------------------------------------------------------------------------ Balance, beginning of year 1,177,784 877,560 669,427 Granted 276,500 322,500 209,500 Canceled (15,135) Expired (1,167) Exercised (12,011) (21,109) (1,367) --------------------------------------------- Balance, end of year 1,426,938 1,177,784 877,560 ============================================= Weighted average fair value of options Granted during year $5.07 $4.24 $5.26
On April 1, 2001, options for 1,145,437 of the shares are exercisable at prices ranging from $1.38 to $15.50. Stock Rights - The Company has a Shareholder Rights Plan under which a Preferred Share Purchase Right (Right) is represented by each outstanding share of the Company's Common and Class A Common Stock. The Rights operate to create substantial dilution to a potential acquirer who seeks to make an acquisition, the terms of which the Company's Board of Directors believes is inadequate or structured in a coercive manner. The Rights become exercisable on the tenth day (or such later date as the Board of Directors may determine) after public announcement that a person or a group (subject to certain exceptions) has acquired 20% or more of the outstanding Common Stock or an announcement of a tender offer that would result in beneficial ownership by a person or a group of 20% or more of the Common Stock. 13. INCENTIVE AND DEFERRED COMPENSATION PLANS The Company has an incentive compensation plan whereby bonus awards are made if the Company attains a certain targeted return on its opening equity. The purpose of the plan is to improve the long-term sustainable results of operations of the Company by more fully aligning the interests of management and key employees with the shareholders of the Company. One-third of the amounts awarded are immediately made available to the employee and the remaining two-thirds become available ratably over the succeeding two years. Amounts allocated under the Plan may be taken in cash or deferred in a non-qualified deferred compensation plan. The target rate, which was 15.5% for 2001, 17.5% for 2000 and 16% for 1999, is approved annually based upon a review of the rates of return on equity of other publicly traded restaurant businesses by the Compensation Committee of the Board of Directors. The amount of the awards is capped at 50% of the eligible salary of the employee. The Company accrued $564,000, $500,000 and $575,000 of incentive compensation for fiscal years 2001, 2000 and 1999, respectively. The Company has an executive retirement plan whereby certain key employees may elect to defer up to 20% of their salary and 100% of their bonus until retirement or age 55, whichever is later, or due to disability or death. Employees may select from various investment options for their available account balances. Investment earnings are credited to their accounts. 14. QUARTERLY FINANCIAL DATA (UNAUDITED) Quarter ended (in thousands except for per share information)
April 1, 2001 ------------------------------------------------------------------------------------------------------------------ 4th 3rd 2nd 1st Revenues $42,216 $37,261 $36,697 $47,068 Gross profit 31,076 27,292 26,540 33,656 Net income 2,878 2,189 1,589 2,435 Basic earnings per share $ .46 $ .35 $ .26 $ .39 Diluted earnings per share $ .45 $ .34 $ .24 $ .37 Quarter ended (in thousands except for per share information) March 26, 2000 ------------------------------------------------------------------------------------------------------------------ 4th 3rd 2nd 1st Revenues $35,674 $32,189 $29,933 $39,681 Gross profit 26,059 23,322 21,690 28,730 Net income 2,699 2,167 1,529 2,338 Basic earnings per share $ .43 $ .35 $ .25 $ .38 Diluted earnings per share $ .40 $ .32 $ .23 $ .36
INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Benihana Inc.: We have audited the accompanying consolidated balance sheets of Benihana Inc. and subsidiaries ("Benihana") as of April 1, 2001 and March 26, 2000, and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended April 1, 2001. These financial statements are the responsibility of Benihana's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Benihana as of April 1, 2001 and March 26, 2000, and the results of its operations and its cash flows for each of the three years in the period ended April 1, 2001 in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Certified Public Accountants Miami, Florida May 18, 2001 EXHIBIT 21.01 BENIHANA INC. LIST OF SUBSIDIARIES Subsidiary State of Incorporation - ---------- ---------------------- Benihana National Corp. Delaware Benihana New York Corp. Delaware Teppan Restaurants Ltd. Oregon Benihana Bethesda Corp. New York Benihana International Inc. Delaware Benihana Encino Corp. California Benihana National of Florida Corp. Delaware Big Splash Kendall Corp. Delaware Benihana Orlando Corp. Delaware Benihana of Texas Inc. Texas Benihana Las Colinas Corp. Texas Benihana Las Colinas Corp. Delaware Benihana Lombard Corp. Illinois Benihana Schaumburg Corp. Delaware Benihana Marina Corp. California Benihana of Puente Hills Corp. Delaware Benihana Sunrise Corp. Delaware Rudy's Restaurant Group, Inc. Nevada The Samurai, Inc. New York Benihana Lincoln Road Corp. Florida Maxwell's International, Inc. Delaware Noodle Time, Inc. Florida Benihana Brickell Station Corp. Delaware Benihana Monterey Corporation Delaware Benihana State & Elm Corp. Delaware Benihana Ontario Corp. Delaware Benihana Westbury Corp. Delaware Benihana Wheeling Corp. Delaware Benihana Woodlands Corp. Texas Haru Amsterdam Avenue Corp. New York Haru Food Corp. New York Haru Third Avenue Corp. New York Haru Holding Corp. Delaware 1501 Broadway Restaurant Corp. New York Haru Too, Inc. New York Haru Park Avenue Corp. Delaware EXHIBIT 23.01 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No.'s 333-33880, 333-63783 and 333-13973 of Benihana Inc. on Forms S-8 of our report dated May 18, 2001, incorporated by reference in the Annual Report on Form 10-K/A of Benihana Inc. for the year ended April 1, 2001. Deloitte & Touche LLP Miami, Florida September 4, 2001 EXHIBIT 23.02 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No.'s 333-83585 and 333-13977 of Benihana Inc. on Forms S-3 of our report dated May 18, 2001, incorporated by reference in the Annual Report on Form 10-K/A of Benihana Inc. for the year ended April 1, 2001 and to the reference to us under the heading "Experts" in such Registration Statements. Deloitte & Touche LLP Miami, Florida September 4, 2001 -----END PRIVACY-ENHANCED MESSAGE-----