10-K 1 t14903_10k.txt FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended April 1, 2007 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: TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED ------------------- ------------------------------------ Common Stock, par value $.10 per share NASDAQ Class A Common Stock, par value $.10 per share NASDAQ Preferred Share Purchase Right Not Applicable Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] 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 (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] 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. [X] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] As of May 31, 2007, 2,103,953 shares of Common Stock and 7,922,615 shares of Class A Common Stock were outstanding. As of October 8, 2006, the last day of our second fiscal quarter, the aggregate market value of common equity held by non-affiliates was $247,544,000. DOCUMENTS INCORPORATED BY REFERENCE ----------------------------------- Portions of the Registrant's Annual Report to Stockholders for the year ended April 1, 2007 are incorporated by reference in Parts I and II. Portions of the Registrant's Proxy Statement for the 2007 Annual Meeting are incorporated by reference in Part III. 1 ITEM 1. BUSINESS GENERAL We have operated "Benihana" teppanyaki-style Japanese restaurants in the United States for over 40 years, and we believe we are the largest operator of teppanyaki-style restaurants in the country. Our core concept, the traditional Benihana restaurant, offers teppanyaki-style Japanese cooking in which fresh steak, chicken and seafood are prepared by a chef on a teppanyaki grill which forms a part of the table at which the food is served. Our Haru concept offers an extensive menu of Japanese fusion dishes in a high energy, urban atmosphere, as well as catering to customers seeking take-out or delivery of their meals. In addition to traditional, high quality sushi and sashimi creations, Haru offers raw bar items and Japanese cuisine. Our RA Sushi concept offers sushi and a full menu of Pacific-Rim dishes in a high energy environment featuring upbeat design elements and music. Additionally, a significant component of RA Sushi's revenues are derived from beverage sales. At May 31, 2007, we: o own and operate 59 Benihana teppanyaki-style Japanese dinnerhouse restaurants, including one restaurant under the name Samurai; o franchise 18 additional Benihana restaurants; o own and operate 7 Haru restaurants in New York City, New York and Philadelphia, Pennsylvania; and o own and operate 13 RA Sushi restaurants. We own the related United States trademarks and service marks to the names "Benihana", "Benihana of Tokyo" and the "red flower" symbol and we have the exclusive rights to own, develop and license Benihana and Benihana Grill restaurants in the United States, Central and South America and the islands of the Caribbean. We also own the United States trademarks and worldwide development rights to the names "Haru" and "RA". Sales by our owned restaurants were approximately $271.1million for the fiscal year ended April 1, 2007, as compared to approximately $244.0 million for the prior fiscal year. Our net income for the fiscal year ended April 1, 2007 was approximately $14.5 million, as compared to approximately $14.6 million for the prior fiscal year. The Company has a 52/53-week fiscal year. The Company's fiscal year ends on the Sunday within the dates of March 26 through April 1. Fiscal year 2007 consisted of 53 weeks, while fiscal years 2006 and 2005 each consisted of 52 weeks. Our principal executive offices are located at 8685 Northwest 53rd Terrace, Miami, Florida 33166 (telephone number 305-593-0770) and our corporate website address is HTTP://WWW.BENIHANA.COM. We make our electronic filings with the Securities and Exchange Commission, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports available on the corporate website free of charge as soon as practicable after filing with or furnishing to the SEC. These reports are also available at www.sec.gov. STRATEGY The critical elements of our growth strategy are as follows: SELECTIVELY PURSUE RESTAURANT GROWTH. We believe that each of our three concepts has broad appeal and that, as a result, we have significant opportunities to expand our business selectively. We plan to continue to capitalize on our broad customer appeal and strong brand recognition within the casual dining segment by opening new restaurants and selectively acquiring existing Asian-theme restaurants in major U.S. markets. In fiscal 2007, we opened two Benihana restaurants and four RA Sushi restaurants, as well as acquired a Benihana restaurant from a franchisee. DESIGN INITIATIVE. In fiscal 2006, we implemented a design initiative to develop a prototype to be used at our new Benihana restaurants to improve unit-level economics while shortening construction time and improving appeal to our customers. To date, we have opened two locations using the new prototype design. Elements of the new design are also being incorporated into certain existing Benihana restaurants that we are renovating. MAINTAIN STRONG RESTAURANT UNIT ECONOMICS. Our experienced management team intends to maintain and improve where necessary attractive restaurant unit profit margins through sustained sales growth and effective cost controls. CONTINUE TO BUILD BRAND AWARENESS AND CUSTOMER LOYALTY. We will continue to provide marketing and promotional support to sustain and grow our reputation for distinctive value, quality food and customer satisfaction. PROVIDE STRONG MANAGEMENT SUPPORT. Our senior management team is experienced in developing and operating distinctive, high-volume casual dining establishments. 2 THE BENIHANA CONCEPT The Benihana concept offers casual dining in a distinctive Japanese atmosphere enhanced by the unique entertainment provided by our highly-skilled Benihana chefs who prepare fresh steak, chicken and seafood in traditional Japanese style at a teppanyaki grill which forms a part of the customer's table. Most of our Benihana restaurants are open for both lunch and dinner and have a limited menu, offering a full course meal generally consisting of an appetizer, soup, salad, tea, rice, vegetable, an entree of steak, seafood, chicken or any combination of them and a dessert. We also offer sushi entrees at each of our Benihana teppanyaki restaurants and we believe that Benihana is the largest coast-to-coast restaurant chain highlighting sushi as a part of an Asian theme. Specific menu items may be different in the various restaurants depending upon the local geographic market. The servings prepared at the teppanyaki grill are portion controlled to provide consistency in quantities served to each customer. Alcoholic beverages, including specialty mixed drinks, wines and beers, and soft drinks are available. During fiscal 2007, beverage sales in both the lounges and dining rooms accounted for approximately 17% of its total sales. The average check size per person was $25.54 in fiscal 2007. Sushi is offered at all of our traditional restaurants at either separate sushi bars or at the teppanyaki grills. Each of our teppan tables generally seats eight customers. The chef is assisted in the service of the meal by a waitress or waiter who takes beverage and food orders. An entire dinnertime meal takes approximately one hour and thirty minutes. Of the 59 Benihana restaurants we operate: o 42 are located in freestanding, special use restaurant buildings usually on leased lands; o 7 are located in shopping centers; and o 10 are located in office or hotel building complexes. The freestanding restaurants were built to our specifications as to size, style and interior and exterior decor using an overall Japanese design theme. The other locations were adapted to the Benihana interior decor. The freestanding, traditional Benihana restaurant units, which are generally one story buildings, average approximately 8,000 square feet and are constructed on a land parcel of approximately 1.25 to 1.50 acres. Benihana restaurants located in shopping centers, office buildings and hotels are of similar size, but differ somewhat in appearance from location to location in order to conform to the appearance of the buildings in which they are located or limitation imposed by landlords or municipalities. A typical Benihana restaurant has 18 teppan tables and seats from 86 to 178 customers in the dining rooms and 8 to 120 customers in the bar, lounge and sushi bar areas. Future Benihana restaurants that we will build will conform to our new prototype design, which was first implemented during fiscal 2007 at our Miramar, Florida location. Additionally, as part of an ongoing renovation program, we are incorporating certain elements of our new prototype design at locations being renovated, where possible. During May 2007, we opened a new Benihana restaurant in Maple Grove, Minnesota. The Company is developing a restaurant in Chicago, Illinois as a replacement for a restaurant previously located in that city, which closed during May 2007. The Company is also developing Benihana restaurants to be located in Plymouth Meeting, Pennsylvania; Chandler, Arizona; and Dulles, Virginia. THE HARU CONCEPT The Haru concept offers an extensive menu of distinctive Japanese fusion dishes in a high energy, urban atmosphere. In addition to traditional, high quality sushi and sashimi creations, Haru offers raw bar items and Japanese cuisine, including New York strip steak with roasted vegetables, garlic shrimp and crispy duck. Haru also offers delivery and take-out services which represent approximately 40% of its total sales. The average check size per person was $29.86 in fiscal 2007. During fiscal 2000, we acquired 80% of the subsidiary that operates the Haru restaurants. During fiscal 2006, we acquired the remaining 20% interest upon the exercise of a put option by the holders of the balance of Haru's equity (the "Minority Stockholders"). Currently, there is a dispute between the Company and the former Minority Stockholders concerning the price at which the former Minority Stockholders exercised their put option to sell the remaining interest in Haru to the Company. The Company believes that the proper application of the put option price formula would result in a payment to the former Minority Stockholders of approximately $3.7 million. Under the former Minority Stockholders' interpretation of the put option price formula, they claim to be entitled to a greater payment. The Company has offered to pay and recorded a $3.7 million liability for the payment of the put option with respect thereto. On August 25, 2006, the former Minority Stockholders sued the Company. The complaint, which was filed in the Supreme Court of the State of New York, County of New York, seeks an award of $10.7 million based on the former Minority Stockholders' own calculation of the put option price formula and actions allegedly taken by the Company to reduce the value of the put option. On September 21, 2006, the parties jointly removed the case from the Supreme Court of the State of New York, County of New York, to the United States District Court for the Southern District of New York. The former Minority Stockholders filed a motion to remand the case back to the Supreme Court of the State of New York, County of New York, but that motion was denied on May 21, 2007. The District Court has set a scheduling conference for June 21, 2007. 3 The Company believes that it has correctly calculated the put option price and that the claims of the former Minority Stockholders are without merit. However, there can be no assurance as to the outcome of this litigation. We currently operate six Haru restaurants in New York City and one in Philadelphia, Pennsylvania. The Company is currently developing a Haru restaurant to be located in the Wall Street financial district of New York City, as well as one in Boston, Massachusetts. The Haru restaurants that we operate are located in office or residential buildings. The restaurants vary in size and decor. We typically seek restaurant locations that are in densely populated metropolitan areas in order to take advantage of Haru's delivery business. THE RA SUSHI CONCEPT The RA Sushi concept offers sushi and Pacific-Rim dishes in a fun-filled, high energy environment. The average check size per person was $21.11 for fiscal 2007 and beverage sales in both the lounges and dining rooms accounted for approximately 35% of its total sales. Of the 13 RA Sushi restaurants we operate: o 5 are located in special-use restaurant buildings on leased land; and o 8 are located in shopping or "life style" centers. All of the restaurants were built to our specifications as to size, style and emphasize a contemporary interior and exterior decor. These restaurants average approximately 5,000 square feet which exclude outdoor seating. A typical RA Sushi restaurant seats from 150 to 225 customers in the bar and sushi areas, including outdoor seating. RA Sushi is the Company's fastest growing concept. Having opened four new RA Sushi restaurants during fiscal 2007, we currently operate thirteen RA Sushi restaurants. We are focused on the continued expansion of this concept, and have signed leases for and are currently developing another nine RA Sushi restaurants to be located in Mesa, Arizona; Huntington Beach, California; Tustin, California; Pembroke Pines, Florida; South Miami, Florida; Baltimore, Maryland; Lombard, Illinois; Houston, Texas; and Plano, Texas. RESTAURANT OPERATIONS Our Benihana restaurants are under the direction of our Executive Vice President-Restaurant Operations and are divided among eight geographic regions, each managed by a regional manager. Food preparation in the teppanyaki restaurants is supervised by nine regional chefs. Our Haru restaurants are managed out of New York City under the direction of Haru's Vice President of Operations and our RA Sushi restaurants are managed out of Phoenix, Arizona under the direction of RA Sushi's Vice President of Operations. Each restaurant has a manager and one or more assistant managers responsible for the operation of the restaurant, including personnel matters, local inventory purchasing, and maintenance of quality control standards, cleanliness and service. Strict guidelines as documented in our restaurant operations manuals are followed to assure consistently high quality in customer service and food quality for each location. Specifications are used for quality and quantity of ingredients, food preparation, maintenance of premises and employee conduct and are incorporated in manuals used by the managers, assistant managers and head chefs. Food and portion sizes are regularly and systematically tested for quality and compliance with our standards. The Company has entered into supply agreements for the purchase of beef and seafood, in the normal course of business, at fixed prices for up to twelve-month terms. These supply agreements will eliminate volatility in the cost of the commodities over the terms of the agreements. Substantially all commodities are distributed to our teppanyaki restaurants by a national food service logistics company. Most of the other food products are purchased locally by the individual restaurant managers and senior chefs. Substantially all of our restaurant operating supplies are purchased centrally and distributed to the restaurants from our warehouse or a bonded warehouse. Our chefs are trained in the teppanyaki style of cooking and sushi preparation and in customer service with 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 training in our method of restaurant operations and in both tableside and kitchen food preparation as applied in our 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 each restaurant unit. 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 listings. 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. 4 MARKETING We utilize television, radio, billboard and print media to promote our restaurants; strengthen our brand identity; and maintain high name recognition. In fiscal year 2007, we expended approximately $6.7 million on advertising and other marketing. The advertising programs are tailored to each local market. The advertising program is designed to emphasize the inherently fresh aspects of a Benihana meal and the entertainment value of the chef cooking at the customer's table. The entertainment component of the Benihana method of food preparation and service is emphasized to distinguish Benihana from other restaurant concepts. RA Sushi's advertising campaigns are geared to young affluent demographics via radio and print media, while Haru focuses on local publications. FRANCHISING We have, from time to time, franchised Benihana teppanyaki restaurant to operators in markets in which we consider expansion to be of benefit to the Benihana system. We selectively pursue franchising opportunities, particularly in Central and South America and the islands of the Caribbean, 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 franchisee support for: o site selection, o prototypical architectural plans, o interior and exterior design and layout, o training, marketing and sales techniques, and o opening assistance. All franchisees are required to operate their restaurants in accordance with Benihana operating 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 from $30,000 to $50,000 per restaurant and royalties of from 3% to 6% of gross sales. In fiscal year 2007, revenues from franchising were approximately $1.6 million. To comply with the terms of the franchise agreements, we are prohibited from opening additional restaurants within certain areas in which our existing franchisees 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 us with respect to each new restaurant opened by a franchisee and continuing royalty payments to us based upon a percentage of a franchisee's gross sales throughout the term of the franchise. TRADE NAMES AND SERVICE MARKS Benihana is a Japanese word meaning "red flower". In the United States and certain foreign countries, we own the "Benihana" and "Benihana of Tokyo" brand names and related trademarks and "red flower" symbol, which we believe to be of material importance to our business and are registered in the United States Patent and Trademark Office. We also own the United States trademarks and worldwide development rights to the names "Haru" and "RA". Benihana of Tokyo, Inc., a privately held company and our largest stockholder 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 islands of the Caribbean. Benihana of Tokyo, Inc. is also the operator of a Benihana restaurant in Honolulu, Hawaii under an exclusive, royalty-free franchise from the Company. We have no financial interest in any restaurant operated or franchised by Benihana of Tokyo, Inc. NEW RESTAURANT SITE SELECTION AND DEVELOPMENT We believe the locations of our restaurants are critical to our long-term success and, accordingly, we devote significant time and resources to analyzing each prospective site. Each of our three concepts requires a different real estate formula for successful execution. The Benihana concept is successful in free-standing or in-line locations and require approximately 7,000 to 8,000 square feet. The prototype was designed to accommodate 7,000 square feet. The Haru concept is successful in densely populated urban markets and space requirements are somewhat flexible. The RA Sushi concept is successful in urban or suburban shopping malls, retail strip centers and entertainment life-style centers and typically requires 4,500 to 5,500 square feet. In general, we currently prefer to open our restaurants in high profile sites within larger metropolitan areas with dense populations and above-average household incomes. The layout of each restaurant is customized to accommodate different types of buildings and different square feet within the available space. In addition to analyzing demographic information for each prospective site, we consider other factors such as visibility, traffic patterns and general accessibility; the availability of suitable parking and the proximity of residences and shopping areas. 5 Our new restaurant development model for each of our active concepts typically calls for us to occupy leased space in shopping malls, office complexes, strip centers, entertainment centers and other real estate developments (the "retail lease" development model). We have also acquired the land where it is economically justified. While we expect the retail lease development model to continue as our principal approach for opening new restaurant units, we also expect to open more freestanding restaurants. We generally lease our restaurant locations for primary periods of 15 to 20 years and include renewal options for varying lengths of time. Our rent structures vary from lease to lease, but generally provide for the payment of both minimum base rent and contingent rent, such as percentage rent based on restaurant sales and rent increases based on changes in the consumer price index. We are also responsible for our proportionate share of common area maintenance (CAM), insurance, property tax and other occupancy-related expenses under our leases. Many of our leases provide for maximum allowable annual percentage or fixed dollar increases for CAM and insurance expenses to enable us to better predict and control future variable lease costs. We expend cash for leasehold improvements and furnishings, fixtures and equipment to build out leased premises. We own all of the equipment in our restaurants and currently plan to do so in the future. Due to the uniquely flexible and customized nature of our teppanyaki restaurant operations and the complex design, construction and preopening processes for each new location, our lease negotiation and restaurant development timeframes vary for each restaurant. The development and opening process generally ranges from twelve to fifteen months after lease signing and depends largely upon the availability of the leased space we intend to occupy, and are often subject to matters that result in delays outside of our control, usually the permitting process and mandates of local governmental building authorities. The number and timing of new restaurants actually opened during any given period, and their associated contribution, will depend on a number of factors including, but not limited to, the identification and availability of suitable locations and leases; the timing of the delivery of the leased premises to us from our landlords so that we can commence our build-out construction activities; the ability of our landlords and us to timely obtain all necessary governmental licenses and permits to construct and operate our restaurants; disputes experienced by our landlords or our outside contractors; any unforeseen engineering or environmental problems with the leased premises; weather conditions that interfere with the construction process; our ability to successfully manage the design, construction and preopening processes for each restaurant; the availability of suitable restaurant management and hourly employees; and general economic conditions. While we attempt to manage those factors within our control, we have experienced unforeseen delays in restaurant openings from time to time in the past and will likely experience such delays in the future. We have developed a prototype Benihana teppanyaki restaurant to improve the unit-level economics while shortening construction time and improving decor. The new design reflects the cutting edge of contemporary dining and entertainment, and places the customer at the center of the Benihana experience through the visual impact of the exterior, a vibrant waiting area, and a more dramatic stage for our legendary Benihana Chefs. The restaurant in Miramar, Florida, which opened during June 2006, is the first company-owned restaurant to feature the new prototype design. The restaurant in Maple Grove, Minnesota which opened in May 2007, also features the prototype design. While the prototype design standardizes the look and feel, as well as the operational efficiency, of the Benihana operations, it does provide certain flexibility to accommodate specific market conditions. RENOVATION OF EXISTING RESTAURANTS Under a renovation program commenced during 2005, we are also using many of the design elements of the new prototype to refurbish our mature teppanyaki restaurant units. During fiscal 2006, management made a strategic decision to accelerate the renovation and revitalization program, which was discussed above. We are committed to revitalizing our 40-plus year old Benihana teppanyaki concept for a new generation, while simultaneously generating a solid return on invested capital for our shareholders. The new design reflects the cutting edge of contemporary dining and entertainment, and places the customer at the center of the Benihana experience through the visual impact of the exterior, a vibrant waiting area, and a more dramatic stage setting for our legendary Benihana chefs. We plan to refurbish a total of approximately 20-25 of our mature teppanyaki restaurants over a thirty month timeframe. By beginning the transformation of these 20-25 mature Benihana teppanyaki units now, we are opportunistically building a stronger foundation for our core brand amid a growing American appetite for Asian cuisine. During fiscal 2006, our restaurant in Short Hills, New Jersey was the first teppanyaki to be retrofitted with the new design elements. During fiscal 2007, our Memphis, Tennessee; Cleveland, Ohio; Indianapolis, Indiana and Anaheim, California restaurants re-opened after similar renovations were completed. A minor remodel has also been completed at the Bethesda, Maryland restaurant, without the need to temporarily close the location. At the end of fiscal 2007, restaurants closed and undergoing major renovations included the Fort Lauderdale, Florida; Miami Beach, Florida; Burlingame, California and Torrance, California locations. The Torrance location has subsequently reopened and we believe that we will complete two more of these major renovations during the first quarter of fiscal 2008. We expect the other one to be completed during the second quarter of fiscal 2008. Similar to the Bethesda location, two restaurants located in the New York City, New York and Sacramento, California are currently undergoing minor remodeling, as well. These restaurants have not required temporary closures either. We expect to complete a total of 17 renovations and have four other restaurants in progress, by the end of fiscal 2008. As we roll out the new design, we currently estimate the capital expenditures of the program to average approximately between $2.0 million and $2.3 million per unit. The cost to remodel each unit is directly dependent on the scope of work to be performed at each location. Management is continuously reviewing the extent of work to be performed at these sites. The scope of work may be impacted by the age of the location, current condition of the location, as well as local permitting requirements. The scope of work will vary by location. Some locations will undergo a limited remodel, while others will undergo a complete renovation and a major facility upgrade of its HVAC, electrical and plumbing systems. Management believes the long-term benefits of the revitalization initiative far outweigh the costs. 6 The renovation of the Company's older teppanyaki units is necessary to ensure the continued relevance of the Benihana brand, and the program will enhance our leadership position as the premier choice for Japanese-style dining. RESTAURANT OPENING COSTS FOR NEW RESTAURANTS Restaurant opening costs include incremental out-of-pocket costs that are directly related to the openings of new restaurants and are not capitalizable and an amortization of rentals under lease agreements, for accounting purposes. Restaurant opening costs include costs to recruit and train an average of 50-100 hourly restaurant employees; wages, travel and lodging costs for our opening training team and other support employees, costs for practice service activities; and straight-line minimum base rent during the restaurant preopening period. Restaurant opening costs will vary from location to location depending on a number of factors, including the proximity of our existing restaurants; the size and physical layout of each location; the cost of travel and lodging for different metropolitan areas; the extent of unexpected delays, if any, in obtaining final licenses and permits to open the restaurants, which may also be dependent upon our landlords obtaining their licenses and permits, as well as completing their construction activities for the restaurant units. Restaurant opening costs will fluctuate from period to period, based on the number and timing of restaurant openings and the specific restaurant opening costs incurred for each restaurant unit. These fluctuations could be significant. We expense restaurant opening costs as incurred. EMPLOYEES At April 1, 2007, we employed approximately 5,000 people, of which approximately 125 were corporate personnel and the balance were restaurant employees. Most employees, except restaurant 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. EXECUTIVE OFFICERS Joel A. Schwartz, age 66, serves as our Chairman of the Board and Chief Executive Officer. Juan C. Garcia, age 43, serves as President and Chief Operating Officer. Taka Yoshimoto, age 61, serves as Executive Vice President-Operations and Director. Jose I. Ortega, age 35, serves as Vice President-Finance and Chief Financial Officer. COMPETITION The casual dining segment of the restaurant industry is 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 much larger or more diversified and have substantially greater resources than we do. 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 and other 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 would adversely affect the revenues for the restaurant. While we have not yet 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. Changes in 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 and materially affect our existing restaurant operations. 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") which prohibits discrimination on the basis of disability in public accommodations and employment mandates accessibility standards for individuals with physical disabilities and increases the cost of construction of new restaurants and of remodeling older restaurants. We are subject to "dram-shop" statutes in most of the states where we operate restaurants, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages. We carry liquor liability coverage as part of our existing comprehensive general liability insurance that we believe is consistent with coverage carried by other entities in the restaurant industry of similar size and scope of operations. Even though we are covered by general liability insurance, a settlement or judgment against us under a `dram-shop" statute in excess of our liability coverage could have a material adverse effect on our operations. 7 Various federal and state labor laws govern our operations and our relationships with our employees, including such matters as minimum wages, breaks, overtime, fringe benefits, safety, working conditions and work authorization requirements. Significant increases in minimum wages, changes in statutes regarding paid or unpaid leaves of absence and mandated health benefits, or increased tax reporting, assessment or payment requirements related to our employees who receive gratuities all could be detrimental to the profitability of our operation. Various proposals that would require employers to provide health insurance for all of their employees are considered from time-to-time in Congress and various individual states. The imposition of any requirement that we provide health insurance to all employees could have an adverse effect on our results of operations and financial position, as well as the restaurant industry in general. Our suppliers may also be affected by higher minimum wage and benefit standards, which could result in higher costs for goods and services supplied to the Company. While we carry employment practices insurance, a settlement or judgment against us in excess of our coverage limitations could have a material adverse effect on our results of operations, liquidity, financial position or business. We have a significant number of hourly restaurant employees that receive tip income. We have elected to voluntarily participate in a Tip Rate Alternative Commitment ("TRAC") agreement with the Internal Revenue Service. By complying with the educational and other requirements of the TRAC agreement, we reduce the likelihood of potential employer-only FICA assessments for unreported or underreported tips. 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. We have also upgraded our point-of-sale and time and attendance systems. Each restaurant transmits sales, purchasing, payroll and other operational data to the home office on a weekly and four-week period basis. This data is used to record 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 management's ability to control and manage its operations efficiently. FORWARD LOOKING STATEMENTS This report contains various "forward-looking statements" which represent our expectations or beliefs concerning future events, including unit growth, future capital expenditures, and other operating information. A number of factors could, either individually or in combination, cause actual results to differ materially from those included in the forward-looking statements, including changes in consumer dining preferences, fluctuations in commodity prices, availability of qualified employees, changes in the general economy, industry cyclicality, and in consumer disposable income, competition within the restaurant industry, availability of suitable restaurant locations, or acquisition opportunities, harsh weather conditions in areas in which the Company and its franchisees operate restaurants or plan to build new restaurants, acceptance of the Company's concepts in new locations, changes in governmental laws and regulations affecting labor rates, employee benefits, and franchising, ability to complete new restaurant construction and obtain governmental permits on a reasonably timely basis, the possibility of an adverse outcome in the Company's dispute with the former Minority Stockholders of Haru Holding Corp., unstable economic conditions in foreign countries where we franchise restaurants and other factors that we cannot presently foresee. 8 ITEM 1A. RISK FACTORS FAILURE OF OUR RESTAURANTS TO ACHIEVE EXPECTED RESULTS COULD HAVE A NEGATIVE IMPACT ON OUR REVENUES AND PERFORMANCE RESULTS. Performance results currently achieved by our restaurants may not be indicative of longer term performance or the potential market acceptance of restaurants in new locations. We cannot be assured that new restaurants that we open will have similar operating results as existing restaurants. New restaurants take several months to reach expected operating levels due to inefficiencies typically associated with new restaurants, including lack of market awareness, inability to hire sufficient staff and other factors. The failure of our existing or new restaurants to perform as predicted could negatively impact our revenues and results of operations. THE INABILITY TO CONSTRUCT NEW RESTAURANTS AND REMODEL EXISTING RESTAURANTS WITHIN PROJECTED BUDGETS AND TIME PERIODS WILL ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL CONDITION. Many factors may affect the costs associated with construction of new restaurants and remodeling of existing restaurants, including: o landlord delays; o labor disputes; o shortages of materials and skilled labor; o weather interference; o unforeseen engineering problems; o environmental problems; o construction or zoning problems; o local government regulations; o modifications in design to the size and scope of the projects; and o other unanticipated increases in costs, any of which could give rise to delays or cost overruns. If we are not able to develop additional restaurants within anticipated budgets or time periods, our business, financial condition, results of operations or cash flows will be adversely affected. FAILURE TO EXPAND OUR OPERATIONS COULD ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND CASH FLOWS. Critical to our future success is our ability to profitably expand our operations. Our ability to expand profitably will depend on a number of factors, including: o identification and availability of suitable locations; o competition for restaurant sites; o negotiation of favorable lease arrangements; o timely development of commercial, residential, street or highway construction near our restaurants; o management of the costs of construction and development of new restaurants; o securing required governmental approvals and permits; o recruitment of qualified operating personnel, particularly managers and chefs; o weather conditions; o competition in new markets; and o general economic conditions. The opening of additional restaurants in the future will depend in part upon our ability to generate sufficient funds from operations or to obtain sufficient equity or debt financing on favorable terms to support our expansion. We may not be able to open our planned new operations on a timely basis, if at all, and, if opened, these restaurants may not be operated profitably. We have experienced, and expect to continue to experience, delays in restaurant openings from time to time. Delays or failures in opening planned new restaurants could have an adverse effect on our business, financial condition, results of operations or cash flows. INCREASES IN THE MINIMUM WAGE MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL RESULTS. Many of our employees are subject to various minimum wage requirements. Many restaurants are located in states where the minimum wage was recently increased. There likely will be additional increases implemented in jurisdictions in which we operate or seek to operate. We note that the federal minimum wage has not changed in nearly a decade. The possibility exists that the federal minimum wage or the minimum subject to other jurisdictions will be increased in the near future. These minimum wage increases may have a material adverse effect on our business, financial condition, results of operations or cash flows. 9 INTENSE COMPETITION IN THE RESTAURANT INDUSTRY COULD PREVENT US FROM INCREASING OR SUSTAINING OUR REVENUES AND PROFITABILITY. The restaurant industry is intensely competitive with respect to food quality, price-value relationships, ambiance, service and location, and many restaurants compete with us at each of our locations. There are a number of well-established competitors with substantially greater financial, marketing, personnel and other resources than ours, and many of our competitors are well established in the markets where we have restaurants, or in which we intend to locate restaurants. Additionally, other companies may develop restaurants that operate with similar concepts. Any inability to successfully compete with the other restaurants in our markets will prevent us from increasing or sustaining our revenues and profitability and result in a material adverse effect on our business, financial condition, results of operations or cash flows. We may also need to modify or refine elements of our restaurant system to evolve our concepts in order to compete with popular new restaurant formats or concepts that may develop in the future. We cannot assure you that we will be successful in implementing these modifications or that these modifications will not reduce our profitability. CHANGES IN GENERAL ECONOMIC AND POLITICAL CONDITIONS AFFECT CONSUMER SPENDING AND MAY HARM OUR REVENUES AND OPERATING RESULTS. Our country's economic condition affects our customers' levels of discretionary spending. A decrease in discretionary spending due to decreases in consumer confidence in the economy could impact the frequency with which our customers choose to dine out or the amount they spend on meals while dining out, thereby decreasing our revenues and operating results. FLUCTUATIONS IN OPERATING RESULTS MAY CAUSE PROFITABILITY TO DECLINE. Our operating results may fluctuate significantly as a result of a variety of factors, including: o general economic conditions; o consumer confidence in the economy; o changes in consumer preferences; o competitive factors; o weather conditions; o timing of new restaurant openings and related expenses; o timing and duration of temporary restaurant closures; o changes in governmental regulations; o revenues contributed by new restaurants; and o increases or decreases in comparable restaurant revenues. We typically incur the most significant portion of restaurant opening expenses associated with a given restaurant within the three months immediately preceding and the month of the opening of the restaurant. Our experience to date has been that labor and operating costs associated with a newly opened restaurant for the first several months of operation are materially greater than what can be expected after that time, both in aggregate dollars and as a percentage of revenues. Accordingly, the volume and timing of new restaurant openings has had, and is expected to continue to have, a meaningful impact on restaurant opening expenses as well as labor and operating costs. OUR INABILITY TO FIND A SUFFICIENT NUMBER OF QUALIFIED TEPPANYAKI AND SUSHI CHEFS COULD NEGATIVELY IMPACT OUR EXPANSION PLANS. The success of our growth strategy is dependant on hiring and training a sufficient number of qualified teppanyaki and sushi chefs. The teppanyaki chefs are the centerpiece of the experience at the Benihana restaurants where customers go to be entertained by the performance of the chefs while preparing their food. Sushi chefs must possess the skills necessary for artfully preparing fresh sushi at each of our three concepts. Our inability to identify and hire a sufficient number of qualified individuals for these positions will have a direct negative impact on our ability to open new restaurant units. OUR INABILITY TO RETAIN KEY PERSONNEL COULD NEGATIVELY IMPACT OUR BUSINESS. Our success will continue to be highly dependent on our key operating officers and employees. We must continue to attract, retain and motivate a sufficient number of qualified management and operating personnel, including regional managers, general managers and executive and sushi chefs, to keep pace with our expansion schedule. Individuals of this caliber may be in short supply and such a shortage may limit our ability to effectively penetrate new market areas. Additionally, the ability of these key personnel to maintain consistency in the quality and atmosphere of our restaurants is a critical factor in our success. Any failure to do so may harm our reputation and result in a loss of business. 10 FAILURE TO COMPLY WITH GOVERNMENTAL REGULATIONS COULD HARM OUR BUSINESS AND OUR REPUTATION. We are subject to regulation by federal agencies and regulation by state and local health, sanitation, building, zoning, safety, fire and other departments relating to the development and operation of restaurants. These regulations include matters relating to: o the environment; o building construction; o zoning requirements; o the preparation and sale of food and alcoholic beverages; and o employment. Our facilities are licensed and subject to regulation under state and local fire, health and safety codes. The construction and remodeling of restaurants will be subject to compliance with applicable zoning, land use and environmental regulations. We may not be able to obtain necessary licenses or other approvals on a cost-effective and timely basis in order to construct and develop restaurants in the future. Various federal and state labor laws govern our operations and our relationship with our employees, including minimum wage, overtime, working conditions, fringe benefit and work authorization requirements. In particular, we are subject to federal immigration regulations. Given the location of many of our restaurants, even if we operate those restaurants in strict compliance with federal immigration requirements, our employees may not all meet federal work authorization or residency requirements, which could lead to disruptions in our work force. Our business can be adversely affected by negative publicity resulting from complaints or litigation alleging poor food quality, food-borne illness or other health concerns or operating issues stemming from one or a limited number of restaurants. Unfavorable publicity could negatively impact public perception of our brand. We are required to comply with the alcohol licensing requirements of the federal government, states and municipalities where our restaurants are located. Alcoholic beverage control regulations require applications to state authorities and, in certain locations, county and municipal authorities for a license and permit to sell alcoholic beverages. Typically, licenses must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of the daily operations of the restaurants, including minimum age of guests and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling, storage and dispensing of alcoholic beverages. If we fail to comply with federal, state or local regulations, our licenses may be revoked and we may be forced to terminate the sale of alcoholic beverages at one or more of our restaurants. The federal Americans with Disabilities Act prohibits discrimination on the basis of disability in public accommodations and employment. We are required to comply with the Americans with Disabilities Act and regulations relating to accommodating the needs of the disabled in connection with the construction of new facilities and with significant renovations of existing facilities. Failure to comply with these and other regulations could negatively impact our business and our reputation. FUTURE CHANGES IN FINANCIAL ACCOUNTING STANDARDS MAY CAUSE ADVERSE UNEXPECTED OPERATING RESULTS AND AFFECT OUR REPORTED RESULTS OF OPERATIONS. Changes in accounting standards can have a significant effect on our reported results and may affect our reporting of transactions completed before the change is effective. As an example, the recent change requiring that we record compensation expense in the statement of operations for employee stock options using the fair value method had a negative effect on our reported results. New pronouncements and varying interpretations of pronouncements have occurred and may occur in the future. Changes to existing rules or differing interpretations with respect to our current practices may adversely affect our reported financial results. IMPLEMENTING OUR GROWTH AND RENOVATION STRATEGIES MAY STRAIN OUR MANAGEMENT RESOURCES AND NEGATIVELY IMPACT OUR COMPETITIVE POSITION. Our growth and renovation strategies may strain our management, financial and other resources. We must maintain a high level of quality and service at our existing and future restaurants, continue to enhance our operational, financial and management capabilities and locate, hire, train and retain experienced and dedicated operating personnel, particularly restaurant managers and chefs. We may not be able to effectively manage these and other factors necessary to permit us to achieve our expansion objectives, and any failure to do so could negatively impact our competitive position. 11 POTENTIAL LABOR SHORTAGES MAY DELAY PLANNED OPENINGS OR DAMAGE CUSTOMER RELATIONS. Our success will continue to be dependent on our ability to attract and retain a sufficient number of qualified employees, including restaurant managers, chefs, kitchen staff and wait staff, to keep pace with our expansion schedule. Qualified individuals needed to fill these positions may be in short supply in certain areas. Our inability to recruit and retain qualified individuals may delay the planned openings of new restaurants while high employee turnover in existing restaurants may negatively impact customer service and customer relations, resulting in an adverse effect on our revenues or results of operations. CHANGES IN FOOD COSTS COULD NEGATIVELY IMPACT OUR REVENUES AND RESULTS OF OPERATIONS. Our profitability is dependent in part on our ability to anticipate and react to changes in food costs. Any increase in distribution and commodity costs could cause our food costs to fluctuate. Additional factors beyond our control through our supply chain, including energy costs, adverse weather conditions and governmental regulation, may affect our food costs. We may not be able to anticipate and react to changing food costs through our purchasing practices and menu price adjustments in the future, and failure to do so could negatively impact our revenues and results of operations. RISING INSURANCE COSTS COULD NEGATIVELY IMPACT PROFITABILITY. The cost of insurance (workers compensation insurance, general liability insurance, property insurance, health insurance and directors and officers liability insurance) has risen significantly over the past few years and is expected to continue to increase. These increases, as well as potential state legislation requirements for employers to provide health insurance to employees, could have a negative impact on our profitability if we are not able to negate the effect of such increases with plan modifications and cost control measures or by continuing to improve our operating efficiencies. We self-insure a substantial portion of our workers compensation and health care costs and unfavorable changes in trends could also have a negative impact on our profitability. LITIGATION COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS. We may be the subject of complaints or litigation from guests alleging illness, injury or other concerns related to visits to our restaurants. We may be adversely affected by publicity resulting from such allegations, regardless of whether such allegations are valid or whether we are liable. We may be subject to complaints or allegations from current, former or prospective employees. We may also be subject to complaints or allegations from our shareholders. A lawsuit or claim could result in an adverse decision against us that could have a materially adverse effect on our business. Additionally, the costs and expense of defending ourselves against lawsuits or claims, regardless of merit, could have an adverse impact on our profitability. While we carry general liability insurance, we may still be subject to a judgment in excess of our insurance coverage and we may not be able to obtain or continue to maintain such insurance coverage at reasonable costs, or at all. The Company is in a dispute with the former Minority Stockholders of its subsidiary, Haru Holding Corp., concerning the amount owed by the Company to the former Minority Stockholders in payment for shares in the subsidiary which the former Minority Stockholders elected to sell to the Company. The resolution of the dispute could adversely affect the Company's financial position and results of operations. COMPLIANCE WITH EXISTING AND NEW REGULATIONS OF CORPORATE GOVERNANCE AND PUBLIC DISCLOSURE MAY RESULT IN ADDITIONAL EXPENSES. Compliance with changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and NASDAQ Stock Market rules, has required an increased amount of management attention and external resources. We are committed to maintaining high standards of corporate governance and public disclosure. This investment required to comply with these changing regulations may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. ITEM 2. PROPERTIES Of the 79 restaurants in operation at May 31, 2007, 13 are located on owned real estate and 66 are leased pursuant to land or land and building 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 four Benihana restaurants, nine RA Sushi restaurants and two Haru restaurants under development. We are actively pursuing new locations suitable for development as restaurant units for each of our concepts. 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 of these leases, including renewal options, occur at various dates through calendar year 2034. 12 The following table sets forth the location of our Company-owned restaurants: Benihana, Haru, Approx. or RA Sushi Square Date Location Address Footage Opened -------- ------- ------- ------ ALASKA: BENIHANA 1100 West 8th Avenue, Anchorage (3) 7,970 March, 2005 ARIZONA: BENIHANA 16403 N. Scottsdale Road, Scottsdale (1) 8,600 November, 2003 BENIHANA 6091 N. Oracle Road, Tucson (2) 8,300 November, 2005 BENIHANA 3025 West Chandler Blvd., Chandler (1) 7,390 Under development RA SUSHI 2905 E. Skyline Drive, Suite 289, Tucson (1) 3,900 November, 2003 RA SUSHI 4921 E. Ray Road, Suite B-1, Phoenix (2) 6,200 December, 2002 RA SUSHI 3815 N. Scottsdale Road, Scottsdale (2) 5,000 December, 2002 RA SUSHI 411 S. Mill Avenue, Tempe (1) 3,500 December, 2002 RA SUSHI 7012 E. Greenway Parkway, Scottsdale (2) 4,200 December, 2002 RA SUSHI 1652 S. Val Vista Dr., Suite 101, Mesa (1) 4,530 Under development CALIFORNIA: BENIHANA 2100 E. Ball Road, Anaheim (1) 8,710 March, 1980 BENIHANA 1496 Old Bayshore Hwy., Burlingame (1) 8,740 February, 1978 BENIHANA 755 Raintree Drive, Carlsbad (1) 10,850 June, 2004 BENIHANA 17877 Gale Avenue, City of Industry (1) 8,000 November, 1988 BENIHANA 1989 Diamond Blvd., Concord (1) 8,250 February, 1980 BENIHANA 2074 Vallco Fashion Park, Cupertino (1) 7,937 July, 1980 BENIHANA 16226 Ventura Blvd., Encino (2) 7,790 October, 1970 BENIHANA 4250 Birch Street, Newport Beach (2) 8,275 March, 1978 BENIHANA 3760 E. Inland Empire Blvd., Ontario (1) 7,433 December, 1998 BENIHANA 5489F Sunrise Blvd., Citrus Heights (1) 3,798 October, 1995 BENIHANA 477 Camino Del Rio So., San Diego (1) 7,981 May, 1977 BENIHANA 1737 Post Street, San Francisco (1) 7,990 December, 1980 BENIHANA 1447 4th Street, Santa Monica (1) 7,500 September, 2001 BENIHANA 21327 Hawthorne Blvd., Torrance (1) 7,430 May, 1980 RA SUSHI 474 Broadway, San Diego (1) 4,676 December, 2003 (1) Lease provides for minimum rent, plus additional rent based upon a percentage of gross sales. (2) Lease provides for fixed rent. (3) Owned. 13 Benihana, Haru, Approx. or RA Sushi Square Date Location Address Footage Opened --------- ------- ------- ------ RA SUSHI 155 5th Street, Suite 183, Huntington Beach (1) 4,535 Under development RA SUSHI 2785 Cabot Dr. #7-101, Corona (1) 4,500 October 2006 RA SUSHI 3525 Carson Street, Torrance (1) 4,500 November 2006 RA SUSHI Tustin (1) (Specific address not yet assigned) 4,500 Under development COLORADO: BENIHANA 3295 S. Tamarac Drive, Denver (1) 7,572 February, 1977 BENIHANA 515 Zang Street, Broomfield (2) 8,921 September, 2006 DISTRICT OF COLUMBIA: BENIHANA 3222 M Street, NW, Washington (2) 7,761 May, 1982 FLORIDA: SAMURAI 8717 S.W. 136th Street, Miami (1) 8,162 October, 1981 BENIHANA 276 E. Commercial Blvd., Ft. Lauderdale (3) 8,965 June, 1970 BENIHANA 1665 N.E. 79th Street, Miami (3) 8,938 September, 1973 BENIHANA 1751 Hotel Plaza Blvd., Lake Buena Vista (1) 8,145 October, 1988 BENIHANA 3602 S.E. Ocean Blvd., Stuart (3) 8,485 February, 1977 BENIHANA 242 Miracle Mile, Coral Gables (1) 7,000 October, 2006 BENIHANA 3261 S.W. 160th Avenue, Miramar (2) 6,598 June, 2006 RA SUSHI 11701 Lake Victoria Gardens Avenue Suite 4105, Palm Beach Gardens (1) 4,200 April, 2006 RA SUSHI South Miami (1) (Specific address not yet 5,000 Under development assigned) RA SUSHI Pembroke Pines (1) (Specific address not yet 5,600 Under development assigned) GEORGIA: BENIHANA 2365 Mansell Road, Alpharetta (3) 8,600 October, 2003 BENIHANA 2143 Peachtree Road, NE, Atlanta I (2) 8,244 May, 1974 BENIHANA 229 Peachtree Street NE, Atlanta II (2) 6,372 April, 1981 ILLINOIS: BENIHANA Chicago (1) (Specific address not yet assigned) 8,200 Under development BENIHANA 747 E. Butterfield Road, Lombard (3) 9,200 April, 1985 BENIHANA 1200 E. Higgins Road, Schaumburg (3) 8,388 July, 1992 BENIHANA 150 N. Milwaukee Avenue, Wheeling (3) 8,500 June, 2001 (1) Lease provides for minimum rent, plus additional rent based upon a percentage of gross sales. (2) Lease provides for fixed rent. (3) Owned. 14 Benihana, Haru, Approx. or RA Sushi Square Date Location Address Footage Opened --------- ------- ------- ------ RA SUSHI 1139 N. State Street, Chicago (1) 4,500 January, 2004 RA SUSHI 2601 Aviator Lane, Glenview (1) 5,469 May, 2006 RA SUSHI 310 Yorktown Center, Lombard (1) 4,500 Under development INDIANA: BENIHANA 8830 Keystone Crossing Road, Indianapolis (1) 8,460 February, 1979 MARYLAND: BENIHANA 7935 Wisconsin Avenue, Bethesda (1) 9,300 October, 2003 RA SUSHI 701 Eden Street, Baltimore (1) 5,422 Under development MASSACHUSETTS HARU Boston (1) (Specific address not yet assigned) Under development MICHIGAN: BENIHANA 18601 Hubbard Drive, Dearborn (1) 7,500 March, 1977 BENIHANA 21150 Haggerty Road, Northville (3) 8,000 May, 1989 BENIHANA 1985 W. Big Beaver Road, Troy (1) 8,600 February, 1996 MINNESOTA: BENIHANA 850 Louisiana Avenue So., Golden Valley (3) 10,400 September, 1980 BENIHANA 11840 Fountains Way North, Maple Grove (3) 6,706 May, 2007 NEVADA: RA SUSHI 3200 Las Vegas Blvd. South, Las Vegas (2) 4,500 October, 2004 NEW JERSEY: BENIHANA 840 Morris Turnpike, Short Hills (2) 11,500 October, 1976 BENIHANA 5255 Marlton Pike, Pennsauken (1) 7,000 February, 1978 NEW YORK: BENIHANA 47 West 56th Street, New York (2) 7,340 June, 1973 BENIHANA 2105 Northern Blvd., Manhassett (1) 8,252 December, 1978 BENIHANA 920 Merchant's Concourse, Westbury (1) 7,400 April, 2003 HARU 355 West 36 Street, New York (2) 2,400 May, 2001 HARU 205 West 43rd Street, New York (2) 4,400 May, 2001 HARU 1327 Third Avenue, New York (2) 2,200 September, 2001 HARU 1329 Third Avenue, New York (2) 4,000 December, 1999 HARU 433 Amsterdam Avenue, New York (2) 4,000 December, 1999 (1) Lease provides for minimum rent, plus additional rent based upon a percentage of gross sales. (2) Lease provides for fixed rent. (3) Owned. 15 Benihana, Haru, Approx. or RA Sushi Square Date Location Address Footage Opened --------- ------- ------- ------ HARU 280 Park Avenue, New York (2) 6,350 August, 2001 HARU 220 Park Avenue South, New York (2) 4,650 February, 2005 HARU One Wall Street Court, New York (1) 6,110 Under development OHIO: BENIHANA 50 Tri-County Parkway, Cincinnati I (1) 7,669 June, 1978 BENIHANA 126 East 6th Street, Cincinnati II (1) 5,800 August, 1979 BENIHANA 23611 Chagrin Blvd., Beachwood (1) 10,393 May, 1973 OREGON: BENIHANA 9205 S.W. Cascade Avenue, Beaverton (1) 6,077 August, 1986 PENNSYLVANIA BENIHANA 2100 Greentree Road, Pittsburgh (1) 8,000 May, 1971 BENIHANA Plymouth Meeting (2) (Specific address not yet assigned) 6,156 Under development HARU 241-243 Chestnut Street, Philadelphia (1) 6,000 July, 2005 TENNESSEE: BENIHANA 912 Ridgelake Blvd., Memphis (1) 8,680 October, 1979 TEXAS: BENIHANA 7775 Banner Drive, Dallas (3) 8,007 January, 1976 BENIHANA 3848 Oak Lawn Avenue, Dallas (1) 3,998 June, 1997 BENIHANA 1318 Louisiana Street, Houston I (2) 6,938 May, 1975 BENIHANA 1720 Lake Woodlands Drive, The Woodlands (3) 8,728 April, 2002 BENIHANA 5400 Whitehall Street, Irving (2) 8,565 May, 2002 BENIHANA 9707 Westheimer Road, Houston II (1) 7,669 November, 1977 BENIHANA 2579 Town Center Blvd., Sugar Land (1) 5,000 July, 1997 RA SUSHI 3908 Westheimer Road, Houston(1) 5,600 February, 2006 RA SUSHI Houston II (1) (Specific address not yet 5,177 Under development assigned) RA SUSHI Plano (1) (Specific address not yet assigned) 5,000 Under development UTAH: BENIHANA 165 S.W. Temple, Bldg. 1, Salt Lake City (1) 7,530 April, 1977 VIRGINIA BENIHANA 21089 Dulles Town Circle, Dulles (1) 7,000 Under development (1) Lease provides for minimum rent, plus additional rent based upon a percentage of gross sales. (2) Lease provides for fixed rent. (3) Owned. 16 The Company leases approximately 16,300 square feet of space for its general administrative offices in Miami, Florida at an annual rental of approximately $304,000 and 8,000 square feet for a warehouse in Miami, Florida at an annual rental of approximately $40,000. The leases expire on November 30, 2013 and October 31, 2007, respectively. ITEM 3. LEGAL PROCEEDINGS BENIHANA OF TOKYO LITIGATION - On July 2, 2004, Benihana of Tokyo, Inc. ("BOT"), a significant holder of the Company's Common Stock, commenced a lawsuit in the Court of Chancery of the State of Delaware (the "Chancery Court") against the Company, individuals who were then members of the Company's Board of Directors and BFC Financial Corporation ("BFC"). The action sought temporary and permanent injunctive relief, monetary damages and recovery of costs and expenses, in connection with the closing of the $20.0 million sale of a new class of Series B Preferred Stock of the Company to BFC, a diversified holding company with operations in banking, real estate and other industries. John E. Abdo, a director of the Company, serves as a Vice Chairman, director, and is a significant shareholder of BFC. Among other relief sought, the action sought rescission of the sale of the Series B Preferred Stock to BFC. The action alleged that the director defendants breached their fiduciary duties in approving the financing transaction with BFC by diluting the voting power represented by BOT's Common Stock holding in the Company. After a trial, the Chancery Court rejected all claims asserted against the Company and its directors finding that "the directors who approved the transaction did so, on an informed basis, acting in good faith and believing that they were acting in the best interests of Benihana." Thereafter, BOT filed an appeal with respect to the decision of the Chancery Court, and on August 24, 2006, the Delaware Supreme Court issued an opinion affirming the trial court's ruling in favor of the Company and the Board of Directors in all respects. HARU MINORITY STOCKHOLDERS LITIGATION - In December 1999, the Company completed the acquisition of 80% of the equity of Haru Holding Corp. ("Haru"). The acquisition was accounted for using the purchase method of accounting. Pursuant to the purchase agreement, at any time during the period from July 1, 2005 through September 30, 2005, the holders of the balance of Haru's equity (the "Minority Stockholders") had a one-time option to sell their remaining shares to the Company (the "put option"). The exercise price under the put option was to be calculated as four and one-half (4 1/2) times Haru's consolidated cash flow for the fiscal year ended March 27, 2005 less the amount of Haru's debt (as that term is defined in the purchase agreement) at the date of the computation. On July 1, 2005, the Minority Stockholders exercised the put option. The Company believes that the proper application of the put option price formula would result in a payment to the former Minority Stockholders of approximately $3.7 million. The Company has offered to pay such amount to the former Minority Stockholder and recorded a $3.7 million liability with respect thereto. On August 25, 2006, the former Minority Stockholders sued the Company. The complaint, which was filed in the Supreme Court of the State of New York, County of New York, seeks an award of $10.7 million based on the former Minority Stockholders' own calculation of the put option price formula and actions allegedly taken by the Company to reduce the value of the put option. On September 21, 2006, the parties jointly removed the case from the Supreme Court of the State of New York, County of New York, to the United States District Court for the Southern District of New York. The former Minority Stockholders filed a motion to remand the case back to the Supreme Court of the State of New York, County of New York, but that motion was denied on May 21, 2007. The District Court has set a scheduling conference for June 21, 2007. The Company believes that it has correctly calculated the put option price and that the claims of the former Minority Stockholders are without merit. However, there can be no assurance as to the outcome of this litigation. The Company is not subject to any other significant pending legal proceedings, other than ordinary routine claims 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. 17 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Certain information required by this Item is incorporated herein by reference from the information under the caption "Common Stock Information" contained in the Company's 2007 Annual Report to Shareholders. Set forth below is a comparison of the five-year cumulative total return among Common Stock of the Company, the NASDAQ stock market-US index and the SIC Code Index for SIC Code 5812 (Retail - Eating Places), in each case assuming that $100 was invested on the last day of the fiscal year ending of 2002, March 31, 2002. Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.
2002 2003 2004 2005 2006 2007 BENIHANA INC. 100.00 58.42 95.19 83.54 164.19 160.55 SIC CODE INDEX 100.00 70.51 112.89 124.53 140.09 153.79 NASDAQ MARKET INDEX (U.S.) 100.00 72.51 111.77 112.75 134.03 141.86
Set forth below is a comparison of the five-year cumulative total return among Class A Common Stock of the Company, the NASDAQ stock market-US index and the SIC Code Index for SIC Code 5812, in each case assuming that $100 was invested on the last day of the fiscal year ending of 2002, March 31, 2002. Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.
2002 2003 2004 2005 2006 2007 BENIHANA INC. CL A 100.00 56.12 94.60 83.67 162.16 159.29 SIC CODE INDEX 100.00 70.51 112.89 124.53 140.09 153.79 NASDAQ MARKET INDEX (U.S.) 100.00 72.51 111.77 112.75 134.03 141.86
ITEM 6. SELECTED FINANCIAL DATA The information required by this Item is incorporated herein by reference from the information under the caption "Selected Financial Data" contained in the Company's 2007 Annual Report to Shareholders. 18 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 from the information under the caption "Management's Discussion and Analysis" contained in the Company's 2007 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 from the information under the caption "Quantitative and Qualitative Disclosures about Market Risks" contained in the Company's 2007 Annual Report to Shareholders. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this Item is incorporated herein by reference from the information under the caption "Consolidated Financial Statements" contained in the Company's 2007 Annual Report to Shareholders. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9.A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES We carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the date of such evaluation. INTERNAL CONTROL OVER FINANCIAL REPORTING Management's report on our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), and the related report of our independent public accounting firm, are included in our Annual Report under the headings MANAGEMENTS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING and REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING, respectively, and are incorporated by reference. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There has been no significant change in our internal control over financial reporting in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the Exchange Act that occurred during the fourth quarter of our fiscal year ended April 1, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9.B. OTHER INFORMATION None. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this Item is incorporated herein by reference from the information under the caption "Election of Directors" contained in the Company's Proxy Statement for its 2007 Annual Meeting of Stockholders (the "Company's Proxy Statement"). We have adopted a written code of business conduct and ethics that applies to our Chief Executive Officer, Chief Financial Officer and all of our officers and directors and can be found on our website, which is located at WWW.BENIHANA.COM. We intend to make all required disclosures concerning any amendments to, or waivers from, our code of business conduct and ethics on our website. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is incorporated herein by reference from the information under the caption "Executive Compensation" contained in the Company's Proxy Statement. 19 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required in part by this Item is incorporated herein by reference from the information under the caption "Security Ownership of Certain Beneficial Owners of Management" contained in the Company's Proxy Statement. The following sets forth certain information, as of April 1, 2007, with respect to our equity compensation plans, under which our securities may be issued:
EQUITY COMPENSATION PLAN INFORMATION Number of securities remaining available Number of securities to Weighted average for future issuance be issued upon exercise exercise price of under equity compensation of outstanding options outstanding options plans (excluding securities Plan Category warrants and rights warrants and rights reflected in column (a)) ------------- ------------------- ------------------- ------------------------ (a) (b) (c) Equity compensation plans approved by 1,034,865 $ 13.84 1,054,954 security holders Equity compensation plans not approved by security holders 5,750 7.83 - --------------------------------------------------------------------- Total 1,040,615 13.81 1,054,954 =====================================================================
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this Item is incorporated herein by reference from the information under the caption "Certain Relationships and Related Transactions" contained in the Company's Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this item is incorporated herein by reference from the information under the caption "Principal Accountant Fees and Services" contained in the Company's Proxy Statement. 20 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) 1. Financial Statements: The following consolidated financial statements of the Company and its subsidiaries, which are set forth on Pages 16 through 37 of the Company's 2007 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, 2007 and March 26, 2006. Consolidated Statements of Earnings for the years ended April 1, 2007, March 26, 2006 and March 27, 2005. Consolidated Statements of Stockholders' Equity for the years ended April 1, 2007, March 26, 2006 and March 27, 2005. Consolidated Statements of Cash Flows for the years ended April 1, 2007, March 26, 2006 and March 27, 2005. Notes to Consolidated Financial Statements. Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements. Management's Report on Internal Control Over Financial Reporting. Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting. 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. 10.01 License Agreement, dated as of May 15, 1995 between BNC and BOT. Incorporated by reference to Exhibit 10.01 to the S-4. 10.02 Directors' Stock Option Plan. Incorporated by reference to Exhibit 10.08 to the S-4. 10.03 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. 10.04 1997 Class A Stock Option Plan. Incorporated by reference to Exhibit A to Benihana Inc. Proxy Statement for its Annual Meeting of Stockholders held on August 27, 1998 (the "1998 Proxy Statement"). 10.05 Amended and Restated Directors' Stock Option Plan. Incorporated by reference to Exhibit B to the 1998 Proxy Statement. 21 10.06 2000 Employees' Class A Common Stock Option Plan. Incorporated by reference to Exhibit A to Benihana Inc. Proxy Statement for its Annual Meeting of Stockholders held on August 3, 2000. 10.07 2003 Directors' Stock Option plan. Incorporated by reference to Exhibit A to Benihana Inc. Proxy Statement for its Annual Meeting of Stockholders held on August 21, 2003. 10.08 Restated Credit Agreement dated December 3, 2002 (the "Credit Agreement") by and among Benihana Inc., the Guarantors (as listed and defined therein), and Wachovia Bank, National Association, as Agent and Lender. Incorporated by reference to Exhibit 10.09 of the 2003 10-K. 10.09 Second Amendment to Credit Agreement dated November 19, 2004. Incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended January 2, 2005. 10.10 Third Amendment to Credit Agreement dated November 23, 2004. Incorporated by reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q for the quarter ended January 2, 2005. 10.11 Fourth Amendment to Credit Agreement dated January 20, 2005. Incorporated by reference to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q for the quarter ended January 2, 2005. 10.12 Fifth Amendment to Credit Agreement dated May 12, 2005. 10.13 Stockholders Agreement dated as of December 6, 1999 by and among Haru Holding Corp., BNC, Mei Ping Matsumura and the Estate of Arthur Cutler. Incorporated by reference to Exhibit 10.10 to the Company's Registration Statement on Form S-2, Registration Number 333-68946. 10.14 Benihana 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. 10.15 Employment Agreement dated April 1, 2001 between Joel A. Schwartz and the Company. Incorporated by reference to Exhibit 10.07 of the 2001 10-K. 10.16 Employment Agreement dated April 1, 2001 between Taka Yoshimoto and the Company. Incorporated by reference to Exhibit 10.12 of the 2001 10-K. 10.17 Employment Agreement dated September 1, 2003 between Kevin Aoki and the Company. Incorporated by reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q for the quarterly year ended October 12, 2003. 10.18 Employment Agreement dated September 1, 2003 between Juan C. Garcia and the Company. Incorporated by reference to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q for the quarterly year ended October 12, 2003. 10.19 Consulting Agreement dated April 1, 2001 between Rocky H. Aoki and the Company. Incorporated by reference to Exhibit 10.23 of the 2001 10-K. 10.20 Employment Agreement dated September 1, 2005 between Michael R. Burris and the Company. Incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended October 12, 2003. 10.21 Amendment No. 1 dated May 27, 2004 to Employment Agreement dated April 1, 2001 between Joel A. Schwartz and the Company. Incorporated by reference to Exhibit 10.18 to the 2004 10-K. 10.22 Preferred Stock Purchase Agreement between Benihana Inc. and BFC Financial Corporation dated June 8, 2004. Incorporated by reference to Exhibit 10.19 of the 2004 10-K 10.23 Amendment No. 1 dated October 17, 2005 to Employment Agreement dated September 1, 2003 between Juan C. Garcia and the Company. Incorporated by reference to Exhibit 10.01 to Form 8-K filed October 20, 2005. 10.24 Summary Description of Benihana Incentive Compensation Plan. Incorporated by reference to Exhibit 99.1 to Form 8-K filed March 24, 2006. 10.25 Agreement of Sale dated April 17, 2006 by and among Benihana Lincoln Road Corp., Benihana National Corp., Doraku Lincoln Road LLC and Aoki Group LLC. Incorporated by reference to Exhibit 10.1 to Form 8-K filed April 21, 2006. 22 10.26 Restrictive Covenant and Agreement not to Disclose Confidential Information dated April 17, 2006 by and between Kevin Aoki and Benihana Inc. Incorporated by reference to Exhibit 10.2 to Form 8-K filed April 21, 2006. 10.27 Employment Agreement dated April 1, 2006 between Taka Yoshimoto and the Company. Incorporated by reference to Exhibit 10.27 of the 2006 10-K. 10.28 Employment Agreement dated August 28, 2006 between Jose I. Ortega and the Company. Incorporated by reference to Exhibit 10.01 to Form 8-K filed August 31, 2006. 10.29 Amendment No. 2 dated August 28, 2006 to Employment Agreement dated September 1, 2003 between Juan C. Garcia and the Company. Incorporated by reference to Exhibit 10.02 to Form 8-K filed August 31, 2006. 10.30 Amended and Restated Rights Agreement, dated as of January 31, 2007 between American Stock Transfer & Trust Company and the Company. Incorporated by reference to Exhibit 99.1 to Form 8-K filed February 2, 2007. 10.31 Credit Agreement, dated March 15, 2007, between the Company and its subsidiaries and Wachovia Bank, National Association. Incorporated by reference to Exhibit 10.1 to Form 8-K filed March 16, 2007. 10.32 Promissory Noted dated March 15, 2007 by the Company in favor of Wachovia Bank, National Association. Incorporated by reference to Exhibit 10.2 to Form 8-K filed March 16, 2007. 10.33 Security Agreement, dated March 15, 2007, by and among the Company and its subsidiaries and Wachovia Bank, National Association. Incorporated by reference to Exhibit 10.3 to Form 8-K filed March 16, 2007. 10.34 Pledge Agreement, dated March 15, 2007, by and among the Company and its subsidiaries and Wachovia, National Association. Incorporated by reference to Exhibit 10.4 to Form 8-K filed March 16, 2007. 10.35 Amendment, dated as of May 18, 2007, to Amended and Restated Rights Agreement, dated as of January 31, 2007, by and between the Company and American Stock Transfer & Trust Company. Incorporated by reference to Exhibit 99.1 to Form 8-K filed May 21, 2007. 13.01 Portions of Annual Report to Stockholders for the year ended April 1, 2007. 21.01 Subsidiaries 23.01 Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. 31.01 Chief Executive Officer's certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.02 Chief Financial Officer's certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.01 Chief Executive Officer's certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.02 Chief Financial Officer's certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 23 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: June 15, 2007 BENIHANA INC. By: /s/ Joel A. Schwartz ----------------------------- Joel A. Schwartz, CEO 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 Chief Executive Officer June 15, 2007 ----------------------------------- and Chairman of the Board Joel A. Schwartz of Directors (Principal Executive Officer) /s/ Taka Yoshimoto Executive Vice President - June 15, 2007 ----------------------------------- Restaurant Operations Taka Yoshimoto and Director /s/ Jose I. Ortega Vice President of June 15, 2007 ----------------------------------- Finance and Treasurer - Jose I. Ortega Chief Financial Officer (Principal Financial and Accounting Officer) /s/ John E. Abdo Director June 15, 2007 ----------------------------------- John E. Abdo /s/ Kevin Y. Aoki Director June 15, 2007 ----------------------------------- Kevin Y. Aoki /s/ Norman Becker Director June 15, 2007 ----------------------------------- Norman Becker /s/ J. Ronald Castell Director June 15, 2007 ----------------------------------- J. Ronald Castell /s/ Lewis Jaffe Director June 15, 2007 ----------------------------------- Lewis Jaffe /s/ Robert B. Sturges Director June 15, 2007 ----------------------------------- Robert B. Sturges /s/ Joseph J. West Director June 15, 2007 ----------------------------------- Joseph J. West 24 EXHIBIT 21.01 SUBSIDIARY NAME STATE OF INCORPORATION 1501 Broadway Restaurant Corp. New York Benihana Bethesda Corp. New York Benihana Brickell Station Corp. Delaware Benihana Broomfield Corp. Delaware Benihana Carlsbad Corp. Delaware Benihana Chandler Corp. Delaware Benihana Chicago Corp. Delaware Benihana Encino Corp. California Benihana International Inc. Delaware Benihana Las Colinas Corp. Texas Benihana Lincoln Road Corp. Florida (formerly known as Rudy's Sirloin SteakBurgers, Inc.) Benihana Lombard Corp. Illinois Benihana Marina Corp. California Benihana Meadowlands Corp. Delaware Benihana Monterey Corporation Delaware (formerly known as Benihana Development Corp.) Benihana National Corp. Delaware Benihana National of Florida Corp. Delaware Benihana New York Corp. Delaware (formerly known as Benihana Frozen Food Corp.) Benihana of Puente Hills Corp. Delaware Benihana of Texas, Inc. Texas Benihana Ontario Corp. Delaware Benihana Orlando Corp. Delaware Benihana Park Central Club, Inc. Texas (D/B/A Benihana Private Club) Benihana Plymouth Meeting Corp. Delaware Benihana Schaumburg Corp. Delaware Benihana Sunrise Corp. Delaware Benihana Tucson Corp. Delaware Benihana Westbury Corp. Delaware Benihana Wheeling Corp. Delaware Benihana Woodlands Corp. Texas Big Splash Kendall Corp. Delaware Haru Amsterdam Avenue Corp. New York Haru Food Corp. New York Haru Gramercy Park Corp. New York (formerly known as Haru Soho Corp.) Haru Holding Corp. Delaware Haru Park Avenue Corp. Delaware Haru Philadelphia Corp. Delaware Haru Prudential Corp. Delaware Haru Third Avenue Corp. New York Haru Too, Inc. New York Haru Wall Street Corp. Delaware Maxwell's International Inc. Delaware Noodle Time Inc. Florida Ra Ahwatukee Restaurant Corp. Delaware Ra Fashion Valley Corp. Delaware Ra Houston Corp. Texas Ra Kierland Restaurant Corp. Delaware Ra Scottsdale Corp. Delaware Ra Sushi South Miami Corp. Delaware Ra Sushi Chicago Corp. (f/k/a Benihana State & Elm Corp., Delaware f/k/a Benihana Beachplace, Inc.) Ra Sushi City Center Corp. Texas Ra Sushi Corona Corp. Delaware Ra Sushi Glenview Corp. Delaware Ra Sushi Baltimore Corp. Delaware Ra Sushi Denver Corp. Delaware Ra Sushi Holding Corp. Delaware Ra Sushi Huntington Beach Corp. Delaware Ra Sushi Las Vegas Corp. Nevada 25 SUBSIDIARY NAME STATE OF INCORPORATION Ra Sushi Lombard Corp. Delaware Ra Sushi Mesa Corp. Delaware Ra Sushi Palm Beach Gardens Corp. Delaware Ra Sushi Pembroke Pines Corp. Delaware Ra Sushi Plano Corp. Texas Ra Sushi San Diego Corp. Delaware Ra Sushi Tucson Corp. Delaware Ra Tempe Corp. Delaware Ra Sushi Torrance Corp. Delaware Ra Sushi Tustin Corp. Delaware Ra Sushi Westwood Corp. Delaware Rudy's Restaurant Group, Inc. Nevada Teppan Restaurants Ltd. Oregon The Samurai, Inc. New York 26 EXHIBIT 23.01 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statement Nos. 333-33880, 333-63783 and 333-13973 on Form S-8 and Registration Statement Nos. 333-83585 and 333-13977 on Form S-3 of our reports dated June 15, 2007, relating to the consolidated financial statements of Benihana Inc. and subsidiaries (the "Company") and management's report on the effectiveness of internal control over financial reporting incorporated by reference in this Annual Report on Form 10-K of the Company for the year ended April 1, 2007. Deloitte & Touche LLP Fort Lauderdale, Florida June 15, 2007 27