<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-1
AMENDMENT NO. 1 TO 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 January 3, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____TO_____
Commission File No. 0-4485
Western Beef, Inc.
A Delaware Corporation I.R.S. Employer No. 13-3266114
47-05 Metropolitan Avenue
Ridgewood, New York 11385
Telephone Number (718) 417-3770
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common stock par value $.05 per share ("Common Stock")
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 for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
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 the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, based on the $12 3/8 average of the closing bid and asked prices
reported by NASDAQ/NMS on March 14, 1997 was $18,999,053.
As of March 14, 1997, the registrant had issued and outstanding 5,463,317 shares
of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART III
Part III is amended and restated in its entirety as follows:
ITEM 10. Directors and Executive Officers of the Registrant
<TABLE>
<CAPTION>
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS AGE
- - --------- ----------------------------------------------- ---
<S> <C> <C>
Joseph Castellana (1) Vice-Chairman, Executive Vice-President-Retail Operations and 39
Executive Assistant to the President and Chief
Executive Officer of the Company since March 1995;
prior to that, Vice-President and Secretary for
more than the past five years; Director of the
Company from 1982 through 1993 and since 1995.
Peter Castellana, Jr. (1) President and Chief Executive Officer of the Company since March 37
1995; prior to that, Vice-President and President of Retail
Operations since May 1992; General Manager - Retail Operations of the
Company for more than the past five years; Director of the Company
since 1995.
Stephen R. Bokser President and Chief Executive Officer of White Rose Food, a wholesale 54
distributor and a division of Di Giorgio Corp. for more than the past
five years; Director of Di Giorgio Corp; Director of the Company
since 1993.
Arnold B. Becker President of the Arnold Becker Group, Inc., provider of management 62
consulting services to retail companies since February 1996; prior to
that President of Vendamerica, Inc., the U.S. investment arm of
Vendex International N.V. for more than the past five years; Director
of the Company since 1995.
DIRECTORS NOT SEEKING
RE-ELECTION
Frank Castellana (1) Executive Vice-President - Planning and Development since February 41
1997; prior to that, Chairman and Executive Vice-President -
Wholesale Operations of the Company since March 1995; prior to that,
President of the Company for more than the past five years.
Richard G. Klein Partner at the law firm of Hofheimer, Gartlir & Gross, LLP, since 48
February 1995; prior to that, Partner at the law firm of Bondy &
Schloss for more than the past five years.
NON-DIRECTOR EXECUTIVE
OFFICERS
Michael Castellana (1) Senior Vice-President-Retail Operations of the Company since March 33
1995; prior to that, General Manager-Produce Division of the Company
for more than the past five years.
Chris Darrow Chief Financial Officer of the Company since March 1997; prior to 40
that, Vice-President and Controller of Waldbaums, Inc., a subsidiary
of The Great Atlantic & Pacific Tea Co., for more than the past five
years.
Peter R. Admirand Controller-Retail Operations, for more than the
past five years; Secretary of the Company since March, 1995.
</TABLE>
- - -----------
(1) Joseph Castellana, Peter Castellana, Jr., Frank Castellana and Michael
Castellana are siblings.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in beneficial ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file.
Based solely upon its review of copies of such reports furnished the
Company through the date hereof, and written representations that no reports
were required to be filed, the Company believes that during the fiscal year
ended January 3, 1997, all filing requirements applicable to its officers,
directors and ten percent stockholders were complied with, subject to the
exceptions set forth below.
Peter R. Admirand, Secretary and Controller - Retail Operations of the
Company, did not file a Statement of Changes in Beneficial Ownership of
Securities on Form 4 in connection with the grant of an Employee Stock Option on
November 13, 1995. Mr. Admirand filed an Annual Statement of Changes in
Beneficial Ownership on Form 5 disclosing this event on April 21, 1997.
Arnold B. Becker and Stephen R. Bokser, each a Director of the Company,
did not file a statement of Changes in Beneficial Ownership of Securities on
Form 4 in connection with grants of Non-Employee Director Stock Option, on June
13, 1995 and June 12, 1996, respectively. Messrs. Becker, and Bokser each filed
an Annual Statement of Changes in Beneficial Ownership on Form 5 disclosing
these events on April 29, 1997 and April 23, 1997, respectively.
Chris Darrow, Chief Financial Officer of the Company, did not file an
Initial Statement of Beneficial Ownership of Securities on Form 3 in connection
with his appointment to the position of Chief Financial Officer of the Company,
on March 3, 1997. Mr. Darrow filed an Initial Statement of Beneficial Ownership
of Securities on Form 3 disclosing this event on April 23, 1997.
Robert C. Ludlow, Senior Vice-President of the Company, did not file a
Statement of Changes in Beneficial Ownership of Securities on Form 5 in
connection with a grant of an Employee Stock Option on November 13, 1995. Mr.
Ludlow filed an Annual Statement of Changes in Beneficial Ownership on Form 4
disclosing this event on April 10, 1997.
ITEM 11. Executive Compensation
EXECUTIVE COMPENSATION
General
The following table sets forth information as to the compensation of
the Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company (the "named executive officers") for services
in all capacities to the Company and its subsidiaries during fiscal years 1996,
1995 and 1994.
<PAGE>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
---------------------- ------------
AWARDS
SECURITIES ALL OTHER
NAME AND UNDERLYING COMPENSATION $(2)
PRINCIPAL POSITION YEAR SALARY $(1) BONUS $(1) OPTIONS (#)
- - ------------------ ---- ----------- ---------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Frank Castellana............. 1996 $333,320 $87,316 -- $6,000
Chairman and Executive 1995 330,000 70,417 -- 6,000
Vice-President 1994 312,000 75,133 -- 6,000
Joseph Castellana............ 1996 369,309 106,376 -- 6,000
Vice-Chairman and 1995 330,000 70,417 -- 6,000
Executive Vice-President 1994 330,000 75,133 -- 6,000
Peter Castellana, Jr......... 1996 591,347 170,285 -- 6,000
President and CEO 1995 575,000 124,583 -- 6,000
1994 390,000 75,133 -- 6,000
Michael Castellana........... 1996 284,550 82,214 -- 6,000
Senior Vice-President 1995 275,000 59,383 -- 6,000
1994 280,559 69,999 -- 6,000
Robert C. Ludlow............. 1996 154,659 25,249 -- 6,000
Senior Vice-President 1995 151,250 16,250 3,000 6,000
and CFO 1994 93,500 15,818 -- N/A
- - ------------------------------
</TABLE>
(1) Amounts shown include cash compensation earned by the named executive
officers during each respective year covered, including amounts deferred, if
any, at the election of those officers. Bonuses are shown for the year in which
they were earned.
(2) Amounts shown represent the Company's contributions to its Profit
Sharing Plan.
OPTION GRANTS IN LAST FISCAL YEAR
No options or stock appreciation rights ("SARS") were issued to the
named executive officers during the Company's 1996 fiscal year.
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises by each of
the named executive officers during the past fiscal year, and the value of such
officers unexercised options at January 3, 1997, the last day of the Company's
fiscal year. No SARS were outstanding during this period.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
SHARES ACQUIRED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
VALUE AT FISCAL YEAR END #(1)(3) AT FISCAL YEAR END $(2)
NAME ON EXERCISE REALIZED Exercisable Unexercised Exercisable Unexercisable
- - ---- ----------- -------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Ludlow -0- -0- 600 2,400 2,625 10,500
</TABLE>
(1) All options were granted under the 1995 Stock Option Plan for Employees. All
options are fully exercisable five years after grant (with 20% becoming
exercisable each year on the first through fifth anniversaries of the date of
grant). The exercise price may be paid in cash, by the surrender of currently
owned Common Stock (valued at 100% of market price) or by the delivery to the
Company of a copy of irrevocable instructions to a stockbroker to sell shares of
Common Stock to be acquired upon exercise of the option and to deliver promptly
to the Company an amount sufficient to pay such purchase price or by any
combination of the methods of payment described above.
(2) Amounts in the column represent closing market price of the Company's Common
Stock on January 3, 1997 ($10.375), minus the exercise price of the option with
respect to all of the shares underlying the option. All options were granted at
100% of market price on the date of grant. The term in-the-money refers to
options having an exercise price less than the relevant market price.
(3) Robert C. Ludlow exercised his option to purchase 600 shares of the
Company's Common Stock and forfeited his options to purchase an additional 2,400
shares of Common Stock upon his resignation from Western Beef on March 5, 1997.
Compensation Committee Interlocks And Insider Participation
The Compensation Committee establishes executive compensation. Director
of the Company, Stephen R. Bokser is President and Chief Executive Officer of
White Rose Food. It is anticipated that Mr. Bokser will hold such position after
being appointed a member of the Compensation Committee. During 1996, 1995 and
1994, the Company purchased various food products in the amounts of $27,423,000,
$21,954,000 and $20,206,000 from White Rose Food. As of January 3, 1997 and
December 29, 1995, the Company had trade payables of $797,000 and $1,117,000
respectively, due to White Rose Food.
The Company has retained the law firm of Hofheimer, Gartlir & Gross,
LLP to represent it in certain matters. Mr. Richard G. Klein, a Director of the
Company and a member of the Compensation Committee, is a partner in such law
firm. Payments for services rendered by Mr. Klein's law firm to the Company were
not material to either such law firm or the Company and were consistent with
fees charged by other law firms for similar services.
Daniel M. Healy, a former Director of the Company who resigned from the
Board of Directors on April 1, 1996, is Executive Vice-President and the Chief
Financial Officer of North Fork Bancorporation, Inc. (the "Bank") and held such
positions while he was a Director of the Company and a member of the
Compensation Committee. During 1995 and 1994, the Company had credit facilities
with the bank that permitted borrowings of up to $3,000,000. As of December
29,1995 and December 30, 1994, the Company was indebted to the Bank in the
amounts of $360,677 and $0, respectively. The Company believes that all Bank
terms and fees are at customary rates.
<PAGE>
COMPENSATION Of DIRECTORS
Compensation Of Non-Employee Directors
Pursuant to the Company's compensation policy, each non-employee
director shall receive a $5,000 annual retainer to be paid in quarterly
installments of $1,250; a deferred compensation payment of $5,000 for each full
year that such person serves as a member of the Board; and an annual grant of
Options to purchase 5,000 shares of the Company's Common Stock at a price equal
to the fair market value of the Common Stock on the date of grant. The Options
shall be automatically granted on the date of the Company's Annual Meeting of
Stockholders without further action by the Board of Directors. Such Options
shall vest and become exercisable one year from the date such Option is granted.
Each non-employee director shall also receive a payment of $1,000 for each
meeting of the Board that such member attends to cover travel and related
expenses.
In addition, all members of the Board are indemnified by a standard
Directors and Officers liability policy in a manner consistent with the
requirements of Delaware law. Pursuant to the Certificate of Incorporation of
the Company, the Company indemnifies all members of the Board to the fullest
extent possible under the General Corporation Law.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth beneficial ownership (determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") of the Company's Common Stock (being the Company's only
voting securities) by each Director, each named executive officer designated in
the section of this Proxy Statement captioned "Executive Compensation", all
Directors and named executive officers as a group, and each person (including
any "group" as that term is used in Section 13(d)(3) of the Exchange Act), known
by the Company to own more than 5% of the Common Stock as of March 14, 1997. The
Company has been advised that except as otherwise indicated in the notes to such
table, all those listed have the sole power to vote and dispose of the number of
shares set forth opposite their respective names, and their respective addresses
are in care of the Company:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED % OF CLASS
------------------------ ------------------ ----------
<S> <C> <C>
PSL Foods, Inc. (1) 1,690,007 30.9
Camile Magliocco (2)(3) 446,126 8.2
Joseph Castellana (2)(4)(5) 486,138 8.9
Frank Castellana (2)(4)(6) 453,529 8.3
Peter Castellana (2)(4)(7) 446,126 8.2
Michael Castellana (2)(4)(8) 406,114 7.4
Stephen R. Bokser (4) 10,000 *
Richard G. Klein (4) 5,000 *
Arnold B. Becker (4) 10,000 *
Robert C. Ludlow (4)(9) 600 *
All directors and executive officers as a
group (nine persons) (10) 3,507,114 64.2
</TABLE>
- - ------------
* Less than 1% of the outstanding Common Stock
(1) PSL Foods, Inc. is owned in equal proportions by the individuals named in
note (2) below.
(2) Frank Castellana, Joseph Castellana, Peter Castellana, Jr., Michael
Castellana and Camile Magliocco are siblings.
(3) Includes 32,818 shares owned by the minor children of Camile Magliocco.
<PAGE>
(4) Member of the Company's Board of Directors and/or a named executive
officer of the Company. Includes options to purchase 10,000, 5,000 and
10,000 shares of Common Stock for Messrs. Bokser, Klein and Becker,
respectively.
(5) Includes 38,968 shares owned by the wife and minor children of Joseph
Castellana.
(6) Includes 17,528 shares owned by the wife and minor children of Frank
Castellana.
(7) Includes 158,048 shares owned by the wife and minor children of Peter
Castellana, Jr.
(8) Includes 22,234 shares owned by the wife and minor children of Michael
Castellana.
(9) Mr. Ludlow resigned from the Company as of March 5, 1997.
(10) Includes shares owned by PSL Foods, Inc. also includes options to
purchase 25,200 shares of Common Stock held by certain Directors and
Executive Officers
ITEM 13. Certain Relationships and Related Transactions
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For more than a decade, the Company and the members of the Castellana
family (collectively, the "Principal Stockholders") have had continuing
relationships simultaneously as lessors and lessees, suppliers and customers and
debtors and creditors. They have also shared certain management personnel and
certain administrative functions, such as insurance, advertising and payrolls,
and have attempted to allocate the common costs fairly. In October 1992 the
parties consummated, an Agreement of Combination ("the Combination") pursuant to
which (1) the Company and the food business of the Principal Stockholders were
combined under a publicly traded successor Delaware corporation, (2) the
3,566,796 shares of the Company's then outstanding Common Stock were converted,
on a share-for-share basis, into Common Stock of such successor corporation and
(3) the Principal Stockholders became beneficial owners of an additional
1,400,000 shares of Common Stock, giving them beneficial ownership of
approximately 72% of such Common Stock (compared to their former beneficial
ownership of approximately 62%).
The Principal Stockholders, as lessors, amended the leases of the
Company's food stores transferred to the Company, so that as of the closing of
the Combination the rentals thereunder did not exceed fair market value as
determined by independent appraisal. In addition, Management and the Principal
Stockholders agreed to obtain independent appraisals of rentals under all other
Company leases in which the Principal Stockholders have an interest as landlord
or tenant (other than one store rental which was fixed on a formula basis), and
to make any necessary revisions so that, in the aggregate, such rentals do not
exceed fair market value. All such revisions were made effective as of January
4, 1992. It now is the Company's policy to obtain independent appraisals in
connection with new leases entered into with the Principal Stockholders.
In March 1997, certain subsidiaries of the Company entered into new
leases with affiliates of the Principal Stockholders for two locations where the
Company currently operates retail food stores. These leases increased the rent
paid under the prior leases and also increased the terms of such leases. Prior
to entering into the leases, the Company obtained independent appraisals of the
values of the leases. The Board of Directors of the Company, including the
independent Directors, unanimously approved these transactions.
The Company leases land, various retail food stores and warehouse
storage and office space, from affiliates of the Principal Stockholders under
various leases which expire through June 2015. Rent expense relating to these
leases was $2,737,000 for 1996, $2,772,000 for 1995 and $2,783,000 for 1994.
During the years ended January 3, 1997 and December 29, 1995, the Company made
capital expenditures of approximately $725,000 and $374,000, respectively, at
leaseholds owned by affiliates of the Principal Stockholders.
The average square foot rental for property from the Principal
Stockholders is $4.02 per square foot as compared with an average square foot
rental of $5.01 for property leased from third party landlords.
<PAGE>
As of January 3, 1997, December 29, 1995 and December 30, 1994, the
Company had advances due from the Principal Stockholders and affiliated entities
of approximately $0, $12,000 and $418,000, respectively. These advances were
unsecured and non-interest bearing and were repaid in full.
The Company had sales to affiliates controlled by the Company's
Principal Stockholders for 1996, 1995 and 1994 of $85,000, $528,000 and
$4,333,000 respectively. In 1995, the Company acquired one of these affiliates
which owed the Company approximately $52,000 at December 29, 1995. No
compensation was paid by the Company for the acquisition of this affiliate.
During 1996, 1995 and 1994, the Company purchased various food products
in the amounts of $27,423,000, $21,954,000 and $20,206,000 respectively, from
White Rose Food, of which Stephen R. Bokser, a Director of the Company, is an
officer. As of January 3, 1997 and December 29, 1995 the Company had trade
payables of $797,000 and $1,117,000, respectively, due to the affiliate.
The Company has retained the law firm of Hofheimer, Gartlir & Gross,
LLP to represent the Company in certain matters. Richard G. Klein, a Director of
the Company and a member of the Compensation Committee until the expiration of
his term and the election and qualification of his successor, is a partner of
such firm. Payments for services rendered by Mr. Klein's law firm to the Company
were not material to either such law firm or the Company and were in line with
fees charged by other law firms for similar services.
Daniel M. Healy, a former Director of the Company who resigned from the
Board of Directors on April 1, 1996, is Executive Vice-President and the Chief
Financial Officer of North Fork Bank corporation, Inc. (the "Bank") and held
such positions while he was a Director of the Company and a member of the
Compensation Committee. During 1995 and 1994, the Company had credit facilities
with the bank that permitted borrowings of up to $3,000,000. As of December 29,
1995 and December 30, 1994, the Company was indebted to the Bank in the amounts
of $360,677 and $0, respectively. The Company believes that all Bank terms and
fees are at customary rates.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WESTERN BEEF, INC.
By: /s/ Chris Darrow
Name: Chris Darrow
Title: Chief Financial Officer
Date: May 2, 1997
