HOSOI GARDEN MORTUARY, INC.
30 North Kukui Street
(Corner of Nuuanu Avenue and Kukui Street)
Honolulu, Hawaii 96817
December 17, 1999
PROXY STATEMENT
GENERAL INFORMATION
The accompanying proxy is solicited on behalf of
the Board of Directors of Hosoi Garden Mortuary, Inc.
(the "Company") to be used at the Annual Meeting of
Shareholders of the Company to be held at 11:00 A. M.
on Sunday, January 23, 2000, at 30 North Kukui Street
(corner of Nuuanu Avenue and Kukui Street), Honolulu,
Hawaii 96817, and any adjournments thereof.
Attached to this proxy statement is your proxy.
The Board of Directors will vote all proxies it receives
which are properly signed and received in time. If you
send the Board of Directors your proxy, it will be voted
according to how you fill out the proxy. However, if
you send your proxy to the Board, but do not tell the
Board how to vote by filling out the proxy, the Board
will vote your proxy according to its recommendations
explained in this proxy statement.
The Board is seeking to have the proxy, proxy
statement, annual report and other materials sent to the
shareholders between December 17 and 21, 1999.
REVOCABILITY OF PROXY
You may revoke your proxy any time before the proxy
is voted. You can revoke your proxy only if you inform
the secretary of the Company in writing, as provided in
the Company's by-laws. You can also change your proxy
by sending another proxy of later date to the Board.
Your attendance at the Annual Meeting in person
will not revoke the proxy you give to the Board. But
if you attend the Annual Meeting in person, you still
may revoke any proxy you have given and you may vote
your shares in person.
SHAREHOLDERS WHO MAY VOTE
Only shareholders of record at the close of
business on November 15, 1999, may vote at the Annual
Meeting. On November 15, 1999, there were 1,675,275
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shares outstanding, with each share entitled to one
vote. A quorum consists of the holders of a majority
of the outstanding shares, present either in person
or by proxy. There are 511,865 shares in the treasury
which are not included in calculating such number and
shall not be voted.
CUMULATIVE VOTING
Cumulative voting is governed by Hawaii Revised
Statutes Section 415-33. If a request for cumulative
voting is delivered in writing to an officer of the
Company not less than forty-eight (48) hours prior to
the time set for the Annual Meeting of Shareholders,
cumulative voting will be used for the election of
directors. If cumulative voting is used, each
shareholder shall be entitled to as many votes as
shall equal the number of his shares multiplied by
the number of directors to be elected. He may cast
all of such votes for a single director or may
distribute them among any two or more of the number
to be elected as he may see fit. If no request for
cumulative voting is received, each shareholder will
be entitled to one vote per share for each position
on the Board of Directors.
PERSONS MAKING THE SOLICITATION AND COST
The accompanying proxy is solicited by mail on
behalf of the Board of Directors of the Company.
The Company will pay the cost of solicitation of
proxies. Following the mailing of proxy soliciting
material, officers, employees and directors of the
Company may, without additional expense, solicit
proxies by appropriate means, including by mail,
telephone, fax or personal interview.
SECURITIES MARKET AND DIVIDENDS
The common shares of the Company are neither
traded nor listed on an exchange and has no
established public trading market. One stockbroker
in Honolulu has quoted the common shares, but the
Company is not aware of the prices at which sales
have been made. The records of the Company indicate
that very few shares are transferred. During the
fiscal year ended May 31, 1999, the Company redeemed
65,772 shares at $4.25 per share and 4,500 shares at
$3.75 per share, some of which were acquired as payment
for funeral expenses incurred by the shareholders.
Effective November 1, 1999, the Board of Directors
authorized the redemption of shares (for either cash
or services) at $4.25 per share.
There were 1,473 record holders of common shares
as of November 15, 1999.
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A cash dividend has been declared and paid once
a year since 1969. The dividend declared in October,
1999 was $.06 per share and in October, 1998 was $.10
per share.
UPON REQUEST THE COMPANY WILL SEND TO YOU AT NO
CHARGE A COPY OF FORM 10-KSB, THE ANNUAL REPORT
INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL
STATEMENTS SCHEDULES FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR THE MOST RECENT FISCAL YEAR.
TO REQUEST A COPY, YOU MUST WRITE TO:
MS. ELAINE NAKAMURA, SECRETARY
HOSOI GARDEN MORTUARY, INC.
30 NORTH KUKUI STREET
HONOLULU, HAWAII 96817
SOLICITED PROXIES WILL BE VOTED ON THE FOLLOWING MATTERS
The Board of Directors intends to vote solicited
proxies on the following matters:
I. To elect three (3) directors to serve
until the 2003 annual meeting of
shareholders and until their successors
are elected;
II. To elect an auditor; and
III. To vote upon other business properly
before the meeting or any adjournment
thereof.
I. TO ELECT THREE (3) DIRECTORS TO SERVE UNTIL THE
2003 ANNUAL MEETING OF SHAREHOLDERS AND UNTIL
THEIR SUCCESSORS ARE ELECTED.
The Company has a total of nine (9) directors
constituting the entire Board of Directors, divided
into three (3) classes of three (3) directors each. The
Company's Articles of Association provide for each class
of directors to be elected for three-year terms on a
staggered basis. At the 2000 annual meeting of the
shareholders, three directors will be elected to serve
until the 2003 annual meeting of the shareholders and
until their respective successors are elected.
The Board of Directors' three nominees for
directors are Robert Kuwahara, Julie Shimonishi and
Glenn Suetsugu. All three of these nominees are
currently directors of the Company. Each nominee has
consented to serve as a director, if elected.
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Proxies in the accompanying form will (unless a
contrary direction is indicated therein) be voted to
elect the foregoing nominees (who have been nominated
by the present Board of Directors) as directors to
serve, subject to the Articles of Association and
By-Laws of the Company. If any of the nominees listed
is not available for election at the Annual Meeting
(a contingency which the management of the Company does
not now foresee), it is the intention of the Board of
Directors to recommend the election of such other
persons as may be necessary to fill such vacancies.
Proxies in the accompanying form will be voted for the
election of such other persons unless authority to vote
such proxies in the election of directors has been
withheld.
II. TO ELECT AN AUDITOR.
The Board of Directors recommends the election of
Endo & Company, a firm of certified public accountants,
as auditor for the year commencing June 1, 2000. Endo
& Company was elected as auditor for the year
commencing June 1, 1999 at the Annual Meeting held on
January 24, 1999. A representative of Endo & Company
will be present at the Annual Meeting, will make a
statement if the shareholders desire and will respond
to any appropriate questions raised at the meeting.
With respect to the election of the Auditor, each
shareholder is entitled to one vote for each share.
III. TO VOTE UPON OTHER BUSINESS PROPERLY BEFORE
THE MEETING.
Management does not intend to bring any matters
before the meeting other than the election of directors,
election of auditor, and presentation of President's
Report with the financial statements for the fiscal year
ended May 31, 1999. Management does not have any
information that other matters will be brought before
the meeting, or any adjournment or adjournments thereof.
If other matters are introduced, it is the intention of
the persons named in the enclosed form of proxy to vote
said proxy in accordance with their judgment.
INFORMATION ON STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS
A. PRINCIPAL SHAREHOLDERS
The Herman S. Hosoi Trust, whose trustees are
Sadako Hosoi and Julie S. Shimonishi, and the Hosoi
Family Limited Partnership, whose general partner is the
Hosoi Family Voting Trust, by its trustee Julie S.
Shimonishi, are the only persons who own of record or
are known to the Company to own beneficially more than
five percent of the common shares of the Company as of
May 31, 1999. Certain information about the holders is
set forth in the table below.
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Title of Name and Address of Nature of Beneficial No. of Percent of
Class Beneficial Owner Ownership Shares Class
Common Julie S. Shimonishi Shared as co-trustee 158,250 9.38%
30 N. Kukui Street of the Herman S.
Honolulu, HI 96817 Hosoi Trust
General Partner of 160,250 9.50%
the Hosoi Family
Limited Partnership,
as Trustee of the
Hosoi Family
Voting Trust
Custodian for Chad 8,000 0.47%
Shimonishi and Lane
Shimonishi under
HUGMA
Direct 52,534 3.11%
Total 379,034 22.46%
Common Sadako Hosoi Shared as co-trustee 158,250 9.38%
30 N. Kukui Street of the Herman S.
Honolulu, HI 96817 Hosoi Trust
Settlor of the Hosoi 160,250 9.50%
Family Voting Trust
and limited partner
of the Hosoi Family
Limited Partnership
Total 318,500 18.88%
Common Herman S. Hosoi Trust Direct 158,250 9.38%
Sadako Hosoi and
Julie S. Shimonishi,
Trustees
30 N. Kukui Street
Honolulu, HI 96817
Common Hosoi Family Limited Direct 160,250 9.50%
Partnership (1)
30 N. Kukui Street
Honolulu, HI 96817
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<FN>
(1) The Sadako Hosoi Trust, by its trustees Sadako
Hosoi and Julie S. Shimonishi, transferred 160,250
shares of the Company to the Hosoi Family Limited
Partnership, whose general partner is the Hosoi
Family Voting Trust, by its trustee Julie S.
Shimonishi, and whose limited partner is Sadako
Hosoi. Julie S. Shimonishi, as trustee, exercises
voting and investment powers over those shares
pursuant to the Hosoi Family Voting Trust Agreement
dated December 30, 1994, between Sadako Hosoi, as
settlor, and Julie S. Shimonishi, as trustee.
</FN>
B. DIRECTORS AND EXECUTIVE OFFICERS
Certain information with respect to the
holdings of common shares of the directors and executive
officers of the Company as of November 15, 1999, is set
forth in the table below.
Title of Name of Amount and Nature of Percent of
Class Beneficial Owner(1) Beneficial Ownership Class
Common Julie S. Shimonishi 379,034 (2) 22.46%
Common Sadako Hosoi 318,500 (3) 18.88%
Common Clifford Hosoi 52,532 (4) 3.11%
Common Anne T. Tamori 56,534 (5) 3.35%
All directors and officers 489,100 28.92%
as a group (12 persons) (6)
<FN>
(1) The address of each person is 30 N. Kukui Street,
Honolulu, Hawaii 96817.
(2) Includes:
52,534 shares (3.11%) as to which Ms. Shimonishi exercises
sole voting and investment powers;
8,000 shares (0.47%) as to which Ms. Shimonishi exercises
sole voting and investment powers as
Custodian for Chad Shimonishi and
Lane Shimonishi under HUGMA;
158,250 shares (9.38%) as to which Ms. Shimonishi and Sadako
Hosoi share voting and investment
powers as trustees of the Herman S.
Hosoi Trust; and
160,250 shares (9.50%) as to which Ms. Shimonishi, as trustee
of the Hosoi Family Voting Trust, has
voting and investment powers over the
shares owned by the Hosoi Family Limited
Partnership.
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(3) Voting and investment powers over 158,250 shares of the
Company are shared by Sadako Hosoi and Julie S. Shimonishi,
as Trustees of the Herman S. Hosoi Trust, which owns 158,250
shares of the Company.
Voting and investment power over 160,250 shares of the
Company are exercised by Julie S. Shimonishi, as trustee
under the Hosoi Family Voting Trust. See the preceding
table for more information about the Hosoi Family Limited
Partnership and the Hosoi Family Voting Trust.
(4) Voting and investment powers exercised solely.
(5) Includes:
52,534 shares (3.11%) as to which Mrs. Tamori exercises
sole voting and investment powers; and
4,000 shares (0.24%) as to which Mrs. Tamori exercises
sole voting and investment powers
for Ryan Tamori under HUGMA.
(6) Rene Mansho, Ricky C. Manayan, Berton T. Kato, Robert
Kuwahara and Glenn Suetsugu, who are currently serving
as directors, and Elaine Nakamura, David Fujishige and
Keith Numazu, who are currently serving as officers, do
not own any shares of the Company.
</FN>
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS OF THE
COMPANY
The Board of Directors is comprised of nine members
who serve staggered three-year terms. One-third of the
directors will be elected each year for a
three-year term. Directors hold office for the duration
of their terms and thereafter until their successors are
elected. The executive officers serve at the pleasure
of the Board of Directors.
The Board of Directors of the Company has no audit or
compensation committees or committees performing similar
functions.
A. The following table sets forth the directors'
and executive officers' names, ages, position and year
of appointment or election, relationship, and business
experience.
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Name Age Office Business Experience and Family Relationship
NOMINEES FOR ELECTION AS DIRECTORS - TERMS TO EXPIRE IN 2002
Sadako Hosoi 82 Director Widow of Herman Hosoi, founder of the
(since 1957) Company; in the past, served as Treasurer
and Chairperson of the Board of the
Company; Director of Garden Life Plan,
Ltd.; mother of Julie Shimonishi, Director,
Clifford Hosoi, Director and President, and
Anne Tamori, Director and Vice President
Berton T. 51 Director Attorney (admitted to the Bar of the State
Kato (since 1996) of Hawaii in 1973); Director Garden Life
Plan, Ltd.
Anne T. 52 Director Employed by the Company since 1978; Vice
Tamori (since 1994); President since 1994; daughter of Sadako
Vice President Hosoi; sister of Clifford Hosoi, Director
(since 1994) and President, and Julie S. Shimonishi,
Director
DIRECTORS WHOSE TERMS EXPIRE IN 2001
Rene Mansho 50 Director City Council member, City and County of
(since 1993); Honolulu, Hawaii (since 1988); School
Chairperson of teacher, Vice-Principal and Administrator,
the Board Department of Education, State of Hawaii
(since 1994) (1971-1988); other organizations include
Hawaii State Association of Counties,
Mililani Hongwanji, Mililani YMCA, Honolulu
Japanese Chamber of Commerce, Goodwill
Industries, Great Aloha Run, Salvation
Army, Wahiawa Lions, Muscular Dystrophy
Association of Hawaii
Clifford Hosoi 50 Director Licensed embalmer since 1979; Funeral
(since 1989); Director since 1985; Vice President of the
President and Company from 1989 - 1994; Director Garden
Chief Executive Life Plan, Ltd.; son of Sadako Hosoi,
Officer Director, brother of Julie S. Shimonishi,
(since 1994) Director, and Anne Tamori, Director and
Vice President
Ricky C. 40 Director Manager - Prepaid Card Programs, GTE
Manayan (since 1995) Hawaiian Tel; President of Rick Manayan
Associates; President of East-West Real
Estate Co., Inc.; President of Transpacific
Empire, Inc.
Name Age Office Business Experience and Family Relationship
NOMINEES FOR ELECTION AS DIRECTORS - TERMS TO EXPIRE IN 2000
Julie S. 53 Director School teacher, Department of Education,
Shimonishi (since 1979) State of Hawaii since 1970; daughter of
Sadako Hosoi, Director; sister of Clifford
Hosoi, Director and President, and sister
of Anne Tamori, Director and Vice President
Robert K. 51 Director Certified Public Accountant since 1975;
Kuwahara (since 1995) actively involved in human services
organizations such as the YMCA
Richard B. 54 Director Vice-President and Principal of Kuroman
Dole (1) (since 1995) Realty, Inc.
Glenn 51 Director Real estate appraiser; real property sales
Suetsugu (1) (since 1999) and management; volunteer work for the Boy
Scouts of America
OTHER EXECUTIVE OFFICERS
David 51 Vice President Employed by the Company since 1989; Funeral
Fujishige (since 1994) Director since 1991; Food Production
Supervisor, Rehabilitation Hospital of the
Pacific (1980-1991)
Keith Numazu 37 Treasurer Employed by the Company as assistant
(since 1994) bookkeeper and programmer since 1992;
Systems Operator/Analyst, Consolidated
Amusement, Inc. (1991-1992); Senior Systems
Analyst/Programmer, Holmes and Narver,
Inc., and Raytheon Services Nevada (1987-
1991)
Elaine 61 Secretary Employed by the Company since 1963
Nakamura (since 1972)
<FN>
(1) Richard B. Dole resigned as a director in 1999.
The Board of Directors nominated and elected Glenn
Suetsugu to serve the remaining term of Richard B.
Dole, which will expire in 2000.
(2) None of the current directors of the Company is a
director of an investment company registered under
the Securities Exchange Act of 1934. All officers
serve at the pleasure of the Board of Directors.
</FN>
B. Shareholders, Board, Committees, Number of
Meetings - fiscal year ended May 31, 1999.
The shareholders of the Company last met on
January 24, 1999. 1,160,272 shares representing 66.885%
of shares issued and outstanding were present in person
or by proxy. All members of the Board of Directors were
elected by holders of at least 63.93% of the shares
outstanding.
A nominating committee was formed with Sadako
Hosoi, Berton Kato and Anne Tamori as members at the
October 21, 1999 Board meeting to designate nominees for
election at the annual meeting. Shareholders may suggest
nominees by contacting Sadako Hosoi, Berton Kato and
Anne Tamori at the Company's address. No specific format
or information is required to nominate a person as a
director. Nominations must be received by the close of
nominations during the course of the Annual Meeting on
January 23, 2000, to be acted upon at that Annual Meeting.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth the information, on an
accrual basis, with respect to the compensation of the
chief executive officer of the Company for the three
fiscal years ended May 31, 1999.
Name and Year ended Annual Other
Position May 31 Compensation Compensation
Clifford Hosoi 1997 $54,759 $ 7,955 (1)
President/Chief 1998 $46,731 $ 7,420 (2)
Executive Officer 1999 $52,961 $ 8,098 (3)
<FN>
(1) Amount shown includes $2,738 contributed to the
Company's Money Purchase Pension Plan, $3,817
contributed to the Company's Profit Sharing Plan
and $1,400 fees paid as a director.
(2) Amount shown includes $2,337 contributed to the
Company's Money Purchase Pension Plan, $3,583
contributed to the Company's Profit Sharing Plan
and $1,500 fees paid as a director.
(3) Amount shown includes $2,355 contributed to the
Company's Money Purchase Pension Plan, $3,668
contributed to the Company's Profit Sharing Plan
and $2,075 fees paid as a director.
</FN>
The total annual salary and bonus for any other
executive officer does not exceed $100,000.
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The standard fees paid to directors are $100 for
each Board of Directors meeting attended and $25 for
each committee meeting attended.
COMPENSATION PURSUANT TO PLANS
(a) PROFIT-SHARING PLAN. The Company has established a
profit-sharing plan for the Company's employees. Every
employee, who has completed one year of service with the
Company, becomes eligible to participate in the
profit-sharing plan. An employee who has completed
1,000 hours of service commencing from the date of
employment or an anniversary date is considered to have
one year of service.
The Company's contribution to the profit-sharing plan
is discretionary and may be up to 15% of the
participant's eligible compensation. The Company's total
contributions shall not exceed the amount allowable by
income tax regulations. The amounts charged against
income for the profit-sharing plan in 1999 and 1998 were
$40,000 and $40,000, respectively. The Company's
allocation of contributions among eligible members is
based on their respective compensation and is allocated
proportionately.
The investment decision for the profit-sharing plan
is formulated by a registered investment advisor
through Hawaiian Trust Company, Ltd.
(b) MONEY PURCHASE PENSION PLAN. The Company has
established a money purchase pension plan, which became
effective as of June 1, 1990, for the Company's
employees. Every employee, who has completed one year
of service with the Company, becomes eligible to
participate in the money purchase plan. An employee
who has completed 1,000 hours of service commencing
from the date of employment or an anniversary date is
considered to have one year of service.
The Company is required to contribute 5% of each
participant's eligible compensation to the money
purchase plan. The Company's total contributions
cannot exceed the amount allowable by income tax
regulations. The amounts charged against income for
the money purchase pension plan in 1999 and 1998 were
$26,820 and $26,560, respectively.
The investment decision for the money purchase plan
is formulated by a registered investment advisor
through Smith Barney, Inc.
TRANSACTION WITH DIRECTORS AND OFFICERS
The Company operates its business at 30 North
Kukui Street, Honolulu, Hawaii, 96817, on the northwest
corner of Nuuanu Avenue and Kukui Street in Honolulu
Hawaii. The business site consists of 92,773 square feet,
of which the Company owns a 78/104th interest. The Herman
S. Hosoi Trust owns a 13.65/104th interest and the
Hosoi-Tamori-Shimonishi Trust owns the remaining
12.35/104th interest. The trustees and beneficiaries of
both trusts include directors, officers and shareholders
of the Company.
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The portion owned by the Company is owned in
fee simple. The Company leases the portion owned by the
Herman S. Hosoi Trust and Hosoi-Tamori-Shimonishi Trust
("Trusts"). The Directors of the Company recently
completed negotiations of a fifteen-year lease effective
November 1, 1999 through October 31, 2014. The lease
provides for an annual base rent of $112,000 for the
period from November 1, 1999 to and including October
31, 2004, $132,000 for the period from November 1, 2004
to and including October 31, 2009, and a to-be-determined
amount which is no less than $132,000 nor more than
$200,000 for the period from November 1, 2009 to and
including October 31, 2014. In addition to the base rent,
the lease provides for a percentage rent equal to the
amount by which the product of 25% multiplied by 15% of
the Company's annual Gross Revenues exceeds the annual
base rent. In addition, the Company is responsible for
the payment of real property taxes on the portion of the
land owned by the Trusts. Total rental expense was
$345,636 and $356,469 in 1999 and 1998, respectively.
For more information on the lease between the Company
and the Trusts, see Footnote (13) on page F-19 of the
Company's Financial Statements, which are attached
hereto and incorporated by reference.
SECTION 16(a) REPORTS
Section 16(a) of the Securities Exchange Act of
1934 requires the Company's directors and officers, and
persons who own more than 10% of a registered class of
the Company's equity securities, to file, on forms 3, 4
and 5, reports of ownership and changes in ownership of
such securities with the Securities and Exchange
Commission. No such reports were required to be filed
for 1999 and 1998.
ACTION WITH RESPECT TO REPORTS
Minutes of the last annual meeting of the
shareholders held on January 24, 1999, will be read and
the shareholders will be requested to approve or
disapprove the minutes. Approval or disapproval of the
minutes will not constitute approval or disapproval of
the matters referred to in such reports or minutes.
The President will give a report at the meeting.
All records of the Company, including the minutes of the
meetings of the Board of Directors and the shareholders
held during the preceding year are available for review
by the shareholders at the office of the Company.
VOTE REQUIRED FOR APPROVAL
A majority vote of shareholders present, in person
or by proxy, shall be required in matters other than
the election of directors.
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ANNUAL REPORT TO SHAREHOLDERS
The annual report to shareholders, consisting of
the President's and Chief Executive Officer's letter and
the comparative financial statements for the years ended
May 31, 1999 and May 31, 1998, is included with this
Proxy Statement.
RETURN OF PROXY
If you do not plan to attend the Annual Meeting in
person, we urge you to execute the proxy and return it
promptly in the enclosed business reply envelope.
SHAREHOLDER PROPOSALS FOR 2001
Proposals of shareholders intended to be presented
at the annual meeting of the Company in January or
February 2001 must be received by the Company on or
before September 15, 2000.
BY ORDER OF THE BOARD OF DIRECTORS
By /s/
Elaine Nakamura, Secretary
December 17, 1999
WHETHER YOU PLAN TO ATTEND OR NOT, YOU ARE URGED TO MARK,
DATE, SIGN AND RETURN THE ENCLOSED PROXY. A PROMPT
RESPONSE IS HELPFUL, AND YOUR COOPERATION WILL BE
APPRECIATED.
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