<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
WESTERN BEEF, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
WESTERN BEEF, INC.
47-05 METROPOLITAN AVENUE
RIDGEWOOD, N.Y. 11385
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 7, 1998
To the Stockholders of Western Beef, Inc.:
The Annual Meeting of the Stockholders of Western Beef, Inc., (the
"Company") will be held at 1177 Avenue of the Americas, 29th floor, New York,
N.Y. 10036, on August 7, 1998 at 10:00 a.m., New York time, for the following
purposes:
1. To elect four directors to hold office until the next Annual Meeting;
2. To consider and vote for the selection of PricewaterhouseCoopers LLP
as independent auditors for Western Beef, Inc. for the fiscal year
ending January 1, 1999.
3. To transact such other business as may properly come before the
meeting.
Only stockholders of record as of the close of business on June 18, 1998
will be entitled to notice of and to vote at the meeting and any adjournments or
postponements thereof. A complete list of stockholders entitled to vote will be
available for inspection by stockholders at the executive offices of the Company
at least ten days before the date of the meeting.
The Company's Annual Report for the fiscal year ended january 2, 1998;
including financial statements is also enclosed
By order of the Board of Directors,
Peter R. Admirand,
Secretary
Dated: June 19, 1998
Ridgewood, New York
IMPORTANT - please sign the enclosed proxy and mail it promptly in the prepaid
return envelope provided, particularly if you do not expect to attend the
meeting in person.
<PAGE>
WESTERN BEEF, INC.
47-05 METROPOLITAN AVENUE
RIDGEWOOD, N.Y. 11385
-------------------------
PROXY STATEMENT
-------------------------
Proxies
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Western Beef, Inc. (the "Company") to be used at
the Annual Meeting of Stockholders of the Company (the "Meeting") to be held on
August 7, 1998 at 10:00 a.m., New York Time, 1177 Avenue of the Americas, 29th
floor, New York, N.Y. 10036, for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders. If the enclosed form of proxy is
executed and returned, it nevertheless may be revoked at any time before it is
exercised in person at the Meeting, by written notice or by a duly executed
proxy, bearing a later date, sent to the Secretary of the Company. The Company
anticipates mailing this proxy statement and the accompanying proxy to
stockholders on or about July 3, 1998.
Solicitation of Proxies
This solicitation of proxies is being made by the Board of Directors of the
Company and the expenses thereof will be borne by the Company. The principal
solicitation is being made by mail. However, arrangements have been made with
brokerage houses and other custodians, nominees and fiduciaries to forward proxy
material to the beneficial owners of the Company's common stock, par value $.05
per share (the "Common Stock"), and such persons will be reimbursed for their
reasonable expenses.
Outstanding Voting Stock
As of June 18, 1998, there were 5,475,153 shares of common stock
outstanding. Each share of common stock is entitled to one vote. Only holders of
record of common stock as of the close of business on June 18, 1998 will be
entitled to vote at the Meeting. All questions will be determined by a majority
vote of those present and voting in person or by proxy.
Quorum and Voting Requirements
The Company's By-Laws provide that the holders of a majority of the
outstanding shares of stock shall constitute a quorum at a meeting of
stockholders for the transaction of any business. The stockholders present may
adjourn the meeting despite the absence of a quorum. Each share of Common Stock
shall entitle the holder thereof to one vote. For the election of directors, a
plurality of the votes cast shall elect. Any other action shall be authorized by
a majority of the votes cast except where the General Corporation Law of the
State of Delaware (the "General Corporation Law") prescribes a different
percentage of votes and/or a different exercise of voting power. For the
election of directors, voting need not be by ballot. Voting by ballot shall not
be required for any other corporate action, except as otherwise provided by the
General Corporation Law.
Abstentions will be counted as present for purposes of determining a
quorum, but as shares which have not voted. In instances where brokers are
prohibited from exercising discretionary authority for beneficial owners who
have not returned proxies to the brokers (so-called "broker non-votes"), those
shares will be counted for the purpose of determining whether a quorum is
present but will not be included in the vote totals for any matter as to which
discretionary authority is prohibited and, therefore, will have no effect on
such votes.
1
<PAGE>
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 (the Company's
only voting security) 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 the 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 June 18, 1998. 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 8.1
Joseph Castellana (2)(4)(5)....................... 476,586 8.7
Frank Castellana (2)(4)(6)....................... 453,529 8.3
Peter Castellana, Jr. (2)(4)(7).................. 446,126 8.1
Michael Castellana (2)(4)(8)...................... 415,666 7.6
Stephen R. Bokser (4)............................. 10,000 *
Arnold B. Becker (4).............................. 10,000 *
Chris Darrow (4).................................. --- *
All directors and executive officers as a
group (eight persons) (9)......................... 3,502,314 64.0
</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.
(4) Member of the Company's Board of Directors and/or a named executive
officer of the Company. Includes options to purchase 10,000 shares of
Common Stock each for Messrs. Bokser and Becker.
(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 29,398 shares owned by the wife and minor children of Michael
Castellana.
(9) Includes shares owned by PSL Foods, Inc. Also includes options to
purchase 20,400 shares of Common Stock held by certain Directors and
Executive Officers.
2
<PAGE>
PROPOSAL NO 1: ELECTION OF DIRECTORS
Four directors are to be elected to hold office until the next Annual
Meeting of Stockholders and until their successors have been duly executed and
qualified. The Board of Directors intends to present for action at the Meeting
the election of Messrs. Peter Castellana, Jr., Joseph Castellana, Arnold B.
Becker and Stephen R. Bokser to serve as directors until the 1999 Annual Meeting
of Stockholders and their successors have been elected and qualified. All of
these persons were elected as Directors of the Company at the last Annual
Meeting of Stockholders.
The enclosed proxy will be voted for the election of such nominees. It is
not anticipated that any of these nominees will become unavailable for any
reason. But, if that should occur before the Meeting, the appointees named in
the proxy reserve the right in the exercise of their sole discretion to
substitute and to vote for any other person of their choice as a nominee in
place of such nominee or to vote for such lesser number of Directors as may be
prescribed by the Board of Directors in accordance with the Company's
Certificate of Incorporation and By-Laws.
In accordance with Securities and Exchange Commission ("SEC") regulations,
the enclosed proxy card provides stockholders with an opportunity to grant to,
or withhold from, the appointees named therein, the authority to vote for the
election of any director nominee.
Approval of the nominees for Director requires the affirmative vote of a
plurality of the votes of the outstanding shares of Common Stock cast at the
Meeting. The Board of Directors recommends that stockholders vote for the
election of the nominees listed below.
Set forth below is information with respect to the directors and executive
officers of the Company.
<TABLE>
<CAPTION>
DIRECTORS AGE PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- ------------------------- -- -------------------------------------------------
<S> <C> <C>
Peter Castellana, Jr. (1) 38 President and Chief Executive Officer of the
Company since March 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.
Joseph Castellana (1) 40 Executive Vice-President-Retail Operations
and 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; Vice-Chairman
from 1995 until 1997.
Stephen R. Bokser 55 President and Chief Executive Officer of
White Rose Food, a wholesale 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 63 President of The Arnold Becker Group, Inc.,
provider of management 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.
</TABLE>
3
<PAGE>
NON-DIRECTOR EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
AGE
---
<S> <C> <C>
Frank Castellana (1) 42 Executive Vice-President-Planning and
Development since February 1997; prior to
that, Chairman and Executive
Vice-President-Wholesale Operations of the
Company from March 1995 to 1997; prior to
that, President of the Company for more than
the past five years.
Michael Castellana (1) 34 Senior Vice-President-Retail Operations of
the Company since March 1995; prior to that,
General Manager-Produce Division of the
Company for more than the past five years.
Chris Darrow 41 Chief Financial Officer of the Company since
March 1997; prior to that, Vice-President
and Controller of Waldbaum, Inc., a
subsidiary of The Great Atlantic & Pacific
Tea Co., for more than the past five years.
Peter R. Admirand 58 Controller-Retail Operations for more than
the past five years; Secretary of the
Company since March 1995.
</TABLE>
- ------------------
(1) Peter Castellana, Jr., Joseph Castellana, Frank Castellana and Michael
Castellana are siblings.
Board of Directors Meetings and Committees
The Board of Directors held two meetings during fiscal 1997 with every
director attending each of the meetings held during his term as Director, and
acted by unanimous written consent on eight occasions. The Board of Directors
has a Compensation and Benefits Committee (the "Compensation Committee")
consisting of Arnold B. Becker and Stephen R. Bokser (since July 11, 1997) and
an Audit Committee, consisting of Stephen R. Bokser and Arnold B. Becker (since
July 11, 1997). Richard G. Klein was a member of the Compensation and Audit
Committees until his resignation from the Company's Board of Directors,
effective July 11, 1997. In 1997 non-employee directors received a fee of $1,250
for each of the two meetings they attended and reimbursement for reasonable
travel and related expenses for each meeting they attended. The Compensation
Committee did not meet in fiscal 1997. The Audit Committee acted by unanimous
written consent on one occasion in fiscal 1997.
Compensation of Non-Employee Directors
Pursuant to the Company's compensation policy, each non-employee director
will be compensated as follows:
1. Each non-employee member of the Board (each, a "Member") will be paid a
fee of $1,250 dollars for each Board meeting attended by such Member. Members
are not paid an annual retainer in addition to such fees.
2. A one-time 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 when the non-employee director is first elected to the
Company's Board of Directors. Such options shall vest and become exercisable in
20% increments on the first, second, third, fourth and fifth anniversaries of
the date of grant.
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 the General Corporation 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 Delaware General Corporation
Law.
4
<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 to the
Company through the date hereof, or written representations that no reports were
required to be filed, the Company believes that during the fiscal year ended
January 2, 1998, all filing requirements applicable to its officers, directors
and ten percent stockholders were complied with, subject to the exemptions set
forth below:
Chris Darrow, Chief Financial Officer of the Company, did not make a timely
filing of his Initial Statement of Beneficial Ownership of Securities on Form 3
in connection with his appointment, dated as of March 3, 1997. Mr. Darrow
subsequently filed the Initial Statement of Beneficial Ownership of Securities
on Form 3 disclosing this event on April 23, 1997.
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 1997,
1996 and 1995.
Summary COMPENSATION Table
Annual Compensation
<TABLE>
<CAPTION>
Long-term
Compensation Awards
-------------------------------
Annual Compensation Securities
----------------------- Underlying All Other
Name and Principal Position Year Salary (1) Bonus (1) Options (#) Compensation (2)
- --------------------------- ---- ---------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Peter Castellana, Jr. ...............1997 $613,673 $ 98,735 --- $6,000
President and CEO....................1996 591,347 170,285 --- 6,000
1995 575,000 124,583 --- 6,000
Frank Castellana......................1997 182,308 15,925 --- 6,000
Executive Vice-President.............1996 333,320 87,316 --- 6,000
1995 330,000 70,417 --- 6,000
Joseph Castellana.....................1997 387,308 63,700 --- 6,000
Executive Vice-President.............1996 369,359 106,376 --- 6,000
1995 330,000 70,417 --- 6,000
Michael Castellana....................1997 293,496 56,056 --- 6,000
Senior Vice-President................1996 284,550 82,214 --- 6,000
1995 275,000 59,383 --- 6,000
Chris Darrow..........................1997 103,365 12,209 3,000 ---
Chief Financial Officer............1996 N/A N/A --- ---
1995 N/A 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 on behalf of the named executives.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Stock Options
The following table sets forth information concerning the grant of stock
options under the Company's 1995 Stock Option Plan for Employees.
<TABLE>
<CAPTION>
Number of Percentage of Total
Securities Options Granted
Underlining Options to All Employees Exercise Price Expiration Grant Date
Name Granted (1) in 1997 Fiscal Year Per Share Date Present Value (2)
- ---- ------------------- -------------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Chris Darrow..................3,000 9.29 $11.50 April 15, 2007 $12,360
</TABLE>
(1) The option reflected in the table is a non-qualified stock-option
under the Internal Revenue Code and was granted on April 15, 1997. The
exercise price of the option was equal to 100% of the fair market value of
the Common Stock on the date of grant, as determined by the Committee. The
option granted vests in increments of 20% on the first, second, third, fourth
and fifth anniversaries of the date of grant; however, it may not be
exercisable after the expiration of ten (10) years from the date of grant.
(2) The option value presented is based on the Black-Scholes option-pricing
model adapted for use in valuing stock options. The actual value, if any, that
an optionee may realize upon exercise will depend on the excess of the market
price of the Common Stock over the option exercise price on the date the option
is exercised. There is no assurance that the actual value realized by an
optionee upon the exercise of an option will be at or near the value estimated
under the Black-Scholes model. The estimated value under the Black-Scholes model
is based on arbitrary assumptions as to variables such as interest rates and
stock price volatility.
6
<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 2, 1998, the last day of the Company's
fiscal year. No Stock Appreciation Rights were outstanding during this period.
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised Options in-the-money Options
Shares Acquired Value at Fiscal Year End (1) at Fiscal Year End
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Chris Darrow -0- -0- -0- 3,000 -0- N/A
</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.
Performance Graph
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company with that of the Dow Jones Equity Market Index, a
broad market index, and the Dow Jones Food Retailers and Wholesalers Index, an
index of operators of supermarkets, food-oriented convenience stores and other
food retailers, both issued by the Dow Jones Company. The comparison for each of
the periods assumes that $100 was invested on January 1, 1993, in each of the
Common Stock of the Company, the stocks included in the Dow Jones Equity Market
Index and the stocks included in the Dow Jones Food Retailers and Wholesalers
Index. These indices, which reflect formulas for dividend reinvestment and
weighing of individual stocks, do not necessarily reflect returns that could be
achieved by individual investors.
GRAPHIC
7
<PAGE>
Board of Directors Compensation Committee Report on Executive Compensation
Compensation of the Company's executive officers is determined by the
Compensation Committee, which consists of Messrs. Arnold B. Becker and Stephen
R. Bokser (since July 11, 1997). Richard M. Klein was a member of the
Compensation Committee until his resignation from the Board of Directors,
effective July 11, 1997. From time to time, the Compensation Committee consults
with William M. Mercer, Inc. for advice on compensation matters and information
on competitors' compensation practices. The Company compensation strategy
consists of base salary, annual bonus and long term compensation through stock
options.
Compensation of the executive officers of the Company for 1997, including
the Chief Executive Officer, was determined by the Compensation Committee upon
the recommendation of Peter Castellana, Jr. The base salaries for the Named
Executive Officers, including the Chief Executive Officer for 1997 remained
unchanged from the 1996 levels. Bonuses earned in 1997 by the Named Executive
Officers, including the Chief Executive Officer, were based on the Company's
earnings before income taxes ("EBIT"). EBIT targets and bonus percentages were
set by the Chief Executive Officer and bonus payments were approved by the
Compensation Committee. In connection with Mr. Darrow's commencement of
employment in 1997, the Compensation Committee awarded him stock options on
3,000 shares of Common Stock. Because compensation paid to executive officers
during 1997 did not exceed the tax deductibility limits of 162(m) of the
Internal Revenue Code, the Company currently has no policy with respect thereto.
Compensation Committee
Arnold B. Becker
Stephen R. Bokser
Compensation Committee Interlocks and Insider Participation
As indicated above, the Compensation Committee establishes executive
compensation. Director of the Company, Stephen R. Bokser is President and Chief
Executive Officer of White Rose Food and it is anticipated that Mr. Bokser will
continue to hold such position during his tenure as a member of the Compensation
Committee. During 1997, 1996 and 1995 the Company purchased various food
products in the amounts of $37,111,000, $27,423,000, and $21,954,000 from White
Rose Food. As of January 2, 1998 and January 3, 1997, the Company had trade
payables of $1,997,000 and $797,000 respectively, due to White Rose Food.
The Company has retained the law firm of Hofheimer, Gartlir & Gross, LLP to
represent the Company in certain matters. Mr. Richard G. Klein, a Director of
the Company and a member of the Compensation Committee, until his resignation
from the Company's Board of Directors on July 11, 1997, is a partner in said law
firm. Payments for services rendered by Mr. Klein's law firm to the Company were
not material to the Company and were consistent with fees charged by other law
firms for similar services.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
For more than a decade, the Company and 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
the Company and the food business of the Principal Stockholders were combined
under a publicly traded successor Delaware corporation. Since the consummation
of the Combination, the Principal Stockholders have held in excess of 70% of the
outstanding Common Stock of the Company.
8
<PAGE>
The Company leases certain retail food stores, office and warehouse
facilities from the Principal Stockholders. Concurrent with the Combination,
independent appraisals were obtained of the rentals under all then existing
Company leases in which the Principal Stockholders had an interest as landlord
or tenant (other than one food store lease which was fixed on a formula basis).
Any necessary revisions to the leases were made so that in the aggregate, such
rentals did not exceed fair market value. The Company and the Principal
Stockholders agreed that any future leases from such affiliates would be based
on fair market value as established by independent appraisal. All Company leases
in which the Principal Stockholders had an interest have been amended
periodically, so that the rentals thereunder do not exceed fair market value.
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 January 2017. For fiscal years 1997, 1996 and 1995
rent expense, relating to these leases was $2,829,000, $2,737,000 and $2,772,000
respectively. The Company made capital expenditures of approximately $2,022,000,
$725,000 and $374,000 during 1997, 1996 and 1995, respectively, at leaseholds
owned by affiliates of the Principal Stockholders.
In January 1997, a subsidiary of the Company entered into a new lease for a
piece of property owned by the Principal Stockholders. Prior to entering into
this lease, the Company obtained an independent appraisal of the value of this
lease. In March 1998, the Company opened its first outlet-type food store
operating under the name "Junior's Food Outlet" at this location.
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 average square foot rental for property leased from the Principal
Stockholders is $ 3.97 per square foot as compared with an average square foot
rental of $ 4.09 for property leased from third party landlords.
As of January 2, 1998, January 3, 1997 and December 29, 1995, the Company
had advances due from the Principal Stockholders and affiliated entities of
approximately $0, $0 and $12,000 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 1997, 1996 and 1995 of $ 894,000, $ 335,000 and $ 528,000
respectively.
During 1997, 1996 and 1995 the Company purchased various food products in
the amounts of $37,111,000, $27,423,000 and $21,954,000 respectively, from White
Rose Food, of which Stephen R. Bokser, a Director of the Company, is an officer.
As of January 2, 1998 and January 3, 1997 the Company had trade payables of
$1,997,000 and $797,000 respectively, due to White Rose Food.
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 his resignation from
the Company's Board of Directors on July 11, 1997 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.
9
<PAGE>
PROPOSAL NO.2: ELECTION OF INDEPENDENT AUDITORS
In the absence of contrary direction, the proxies will be voted for the
selection of PricewaterhouseCoopers LLP as independent auditors to audit the
books and accounts of Western Beef, Inc. at the end of the 1998 fiscal year. The
Board of Directors recommends that stockholders vote in favor of the selection
of PricewaterhouseCoopers LLP.
Approval of the selection of PricewaterhouseCoopers LLP as independent
auditors requires the affirmative vote of a majority of the votes of the
outstanding shares of Common Stock cast at the meeting.
It is expected that representatives of PricewaterhouseCoopers LLP will be
present at the Meeting and will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions.
Effective as of September 15, 1997, the Company, its Board of Directors and
the Audit Committee of the Company's Board of Directors determined to terminate
the relationship of BDO Seidman, LLP (the "Former Auditor") as the Company's
independent auditor. The Former Auditor's report on the financial statements of
the Company for either of the past two fiscal years did not contain an adverse
opinion or a disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the Company's two most recent fiscal years and the interim period
preceding the termination of the Company's relationship with the Former Auditor,
there were no disagreements with the Former Auditor on a matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreement(s), if not resolved to the satisfaction of the
Former Auditor, would have caused it to make reference to the subject matter of
the disagreement(s) in connection with its report.
Price Waterhouse LLP (predecessor firm to PricewaterhouseCoopers LLP) was
engaged as the Company's independent auditor on September 15, 1997.
STOCKHOLDER PROPOSAL AND NOMINATIONS FOR DIRECTORS
FOR THE 1999 ANNUAL MEETING
Stockholder proposals intended for inclusion in the proxy material for the
1999 Annual Meeting and nominations for Directors to be elected at the 1999
Annual Meeting must be received by the Secretary of the Company at the Company's
offices at 47-05 Metropolitan Avenue, Ridgewood, New York 11385, no later than
March 15, 1999, in order for such proposals and nominations to be included in
the proxy material for the 1999 Annual Meeting, which is currently expected to
be held in June 1999.
10
<PAGE>
ADDITIONAL INFORMATION AND OTHER MATTERS
A copy of the Company's Form 10-K including financial statements and
financial statement schedules, as filed with the Securities and Exchange
Commission may be obtained free of charge by writing to Secretary, Western Beef,
Inc. 47-05 Metropolitan Avenue, Ridgewood, New York 11385.
Management is not aware of any matters to be presented for action at the
meeting other than the matters mentioned above, and does not intend to bring any
other matters before the meeting. However, if any other matters should come
before the meeting, it is intended that the holders of the proxies will vote
them in their discretion.
By order of the Board of Directors
/s/ Peter R. Admirand
------------------------------------------
Peter R. Admirand
Secretary
Date: June 19, 1998
11
<PAGE>
PROXY WESTERN BEEF, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 7, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints JOSEPH CASTELLANA and STEPHEN R. BOKSER, or
either one of them, attorneys with full power of substitution and revocation
to each, for and in the name of the undersigned, with all the powers the
undersigned would possess if personally present, to vote the Common Stock of
the undersigned in Western Beef, Inc., at the Annual Meeting of Stockholders
to be held August 7, 1998, and at any adjournment thereof, for the following
matters.
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as
indicated in /X/
this example.
WESTERN BEEF'S Board of Directors recommends a vote FOR Items 1 and 2.
<TABLE>
<CAPTION>
FOR ALL
nominees WITHHOLD INSTRUCTION: To withhold authority to vote for any
(except as AUTHORITY Individual nominee, strike a line
marked to to vote for through that nominee's name.
the contrary) all nominees
------------- ------------
<S> <C>
ITEM 1. Election of Directors NOMINEES: PETER CASTELLANA, JR., JOSEPH
CASTELLANA, STEPHEN R. BOKSER
and ARNOLD B. BECKER
I plan to attend the meeting.
FOR AGAINST ABSTAIN
ITEM 2. Ratification of independent
Auditors / / / / / /
ITEM 3. In their discretion, the proxies are authorized to vote upon such
other matters as may properly come before the meeting.
Date: , 1998
-------------------------
Signature:
--------------------------
Signature:
--------------------------
Please mark the date and sign as your name appears hereon and return
in the enclosed envelope. If acting as executor, administrator, trustee,
etc., you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name by duly authorized officer. If shares
are held jointly, each stockholder named should sign.
</TABLE>
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD
YOUR VOTES
FOLD AND DETACH HERE
