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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 2, 1998
or
[X] 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 proceeding 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 $ 7.50 average of the closing bid and asked prices
reported by NASDAQ/NMS on April 21, 1998 was $ 11,603,348.
As of April 21, 1998, the registrant had issued and outstanding 5,475,153
shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE (None)
1
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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 AGE PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
<S> <C> <C>
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 Company from 1982 through
1993 and since 1995; Vice-Chairman from 1995
until 1997.
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.
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.
NON-DIRECTOR EXECUTIVE OFFICERS
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
that 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 that the past five years.
Chris Darrow 41 Chief Financial Officer of the Company since
March 1997; prior to that, Vice-President
and Controller of Waldbaums, Inc., a
subsidiary of The Great Atlantic & Pacific
Tea Co., for more that 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>
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(1) Joseph Castellana, Peter Castellana, Jr., Frank Castellana and Michael
Castellana are siblings.
2
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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 2, 1998, all filing requirements applicable to its officers, directors
and ten percent stockholders were complied with, subject to the exception set
forth below.
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.
ITEM 11. EXECUTIVE COMPENSATION
General
The following table sets forth information as to the compensation of
the hief 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.
3
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SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
AWARDS
SECURITIES ALL OTHER
NAME AND SALARY BONUS UNDERLYING COMPENSATIION
PRINCIPAL POSITION YEAR $(1) $(1) OPTIONS (#) $(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 177,463 15,925 -- 6,000
Executive Vice-President 1996 330,320 87,316 -- 6,000
1995 330,000 70,417 -- 6,000
Joseph Castellana 1997 387,308 63,700 -- 6,000
Executive Vice-President 1996 369,309 106,376 -- 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>
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(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.
4
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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
NAME Underlining Options to All Employees Exercise Price Expiration Grant Date
Granted (1) in 1997 Fiscal Year Per Share (2) Date Present Value (3)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Chris Darrow 3,000 9.29% $ 11.50 April 15, 2002 $12,360
</TABLE>
(1) The option reflected in the table is a nonqualified 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) Options may be exercised by the delivery to the Company at its
principal office or at such other address as may be established by the
Committee (Attention: Corporate Secretary) of written notice of the
number of shares of Common Stock with respect to which the Option is
being exercised accompanied by payment in full of the purchase price of
such shares. Unless otherwise determined by the Committee at the time
of grant, payment for such shares may be made (i) in cash, (ii) by
certified check or bank cashier's check payable to the order of the
Company in the amount of such purchase price, (iii) by delivery to the
Company of shares of Common Stock having a Fair Market Value equal to
such purchase price, (iv) at the discretion of the Committee, by
simultaneously exercising Options and selling the shares of Common
Stock acquired thereby, pursuant to a brokerage or similar arrangement
approved by the Committee, and using the proceeds as payment of such
purchase price, or (v) by any combination of the methods of payment
described in (i) through (iv) above.
(3) 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.
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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 SARS were outstanding during this period.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END (1) AT FISCAL YEAR-END
SHARES
NAME ACQUIRED VALUE
ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Chris Darrow -0- -0- -0- 3,000 -0- N/A
</TABLE>
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(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.
Compensation Committee Interlocks and Insider Participation
Compensation of the Company's executive officers currently is
administered by the Company's Board of Directors' Compensation Committee which
consists of Messrs. Arnold B. Becker and Stephen R. Bokser. Mr. Bokser, is
President and Chief Executive Officer of White Rose Food. During 1997, 1996 and
1995, the Company purchased various food products in the amounts of $37,111,000,
$24,423,000 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.
6
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COMPENSATION OF DIRECTORS
Compensation of Non-Employee Directors
Pursuant to the Company's compensation policy, each non-employee
director will receive:
1. A $5,000 annual retainer to be paid in Quarterly installments
of $1,250.
2. Reimbursement for reasonable out-of-pocket travel expenses that
each non-employee director incurs for each meeting of the Board
that such member attends to cover travel and related expenses.
3. 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 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.
DELAWARE
ITEM 12. 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 April 21,
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>
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* Less than 1% of the outstanding Common Stock
7
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(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.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
For more than a decade, the Company and 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.
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.
8
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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.
9
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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/Peter Castellana, Jr.,
Peter Castellana, Jr.,
President,
Date: May 1, 1998
<TABLE>
SIGNATURE TITLE DATE
- --------- ----- -----
<S> <C> <C>
/s/Peter Castellana, Jr. President, Chief Executive Officer May 1, 1998
- ------------------------ and Director
Peter Castellana, Jr.
/s/Chris Darrow Chief Financial Officer May 1, 1998
- ------------------------
Chris Darrow
/s/Joseph Castellana Director May 1, 1998
- ------------------------
Joseph Castellana
/s/Stephen R.Bokser Director May 1, 1998
- ------------------------
Stephen R. Bokser
/s/Arnold B. Becker Director May 1, 1998
- ------------------------
Arnold B. Becker
</TABLE>
