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 1, 1999
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 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 $5.9375 average of the closing bid and asked prices
reported by NASDAQ/NMS on April 16, 1999 was $9,185,983.
As of April 16, 1999, the registrant had issued and outstanding 5,475,153 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
PRINCIPAL OCCUPATION DURING THE PAST
DIRECTORS AGE FIVE YEARS
Peter Castellana, Jr. (1) 39 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) 41 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 56 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 64 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) 43 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) 35 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 (2) 42 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 than the past five years.
Peter R. Admirand 59 Controller-Retail Operations, for more
than the past five years; Secretary of
the Company since March 1995.
- ----------
(1) Joseph Castellana, Peter Castellana, Jr., Frank Castellana and Michael
Castellana are siblings.
(2) Mr. Darrow resigned from the Company on February 13, 1999.
2
<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 1, 1999, all filing requirements applicable to its officers, directors
and ten percent stockholders were complied with, subject to the exceptions set
forth below:
Chris Darrow, Chief Financial Officer of the Company, did not file a Statement
of Beneficial Ownership of Securities on Form 4 in connection with the grant of
an Employee Stock Option on July 9, 1998. Mr. Darrow filed an Annual Statement
of Changes in Beneficial Ownership on Form 5 disclosing this event on April 26,
1999.
Mr. 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
July 9, 1998. Mr. Admirand filed an Annual Statement of Changes in Beneficial
ownership on Form 5 disclosing this event on April 26, 1999.
3
<PAGE>
ITEM 11. 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 1998,
1997 and 1996.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
-------------------------------
Annual Compensation Securities
----------------------- Underlying All Other
Name & Principal Position Year Salary (1) Bonus(1) Options (#) Compensation (2)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Peter Castellana, Jr ...... 1998 $602,094 $106,203 -- $ 6,000
President and CEO 1997 613,673 98,735 -- 6,000
1996 591,347 170,285 -- 6,000
Frank Castellana .......... 1998 168,493 21,025 -- 6,000
Executive Vice-President 1997 182,308 15,925 -- 6,000
1996 333,320 87,316 -- 6,000
Joseph Castellana ......... 1998 387,308 72,920 -- 6,000
Executive Vice-President 1997 387,308 63,700 -- 6,000
1996 369,309 106,376 -- 6,000
Michael Castellana ........ 1998 287,958 58,762 -- 6,000
Senior Vice-President 1997 293,496 56,056 -- 6,000
1996 284,550 82,214 -- 6,000
Chris Darrow .............. 1998 118,437 21,025 3,000 5,578
Chief Financial Officer 1997 103,365 12,209 3,000 --
1996 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.
4
<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
NAME Underlining Options to All Employees Exercise Price Expiration Grant Date
Granted (1) in 1998 Fiscal Year Per Share(2) Date Present Value (3)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Chris Darrow 3,000 10.15% $8.25 July, 2008 $11,430
</TABLE>
(1) The option reflected in the table is a nonqualified stock option under the
Internal Revenue Code and was granted on July 9, 1998. 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.
5
<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 1, 1999, 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
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>
Chris Darrow -0- -0- 600 5,400 -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.
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 1998, 1997 and 1996, the
Company purchased various food products in the amounts of $46,287,000,
$37,111,000 and $24,423,000 from White Rose Food. As of January 1, 1999 and
January 2, 1998 the Company had trade payables of $3,765,000 and $1,997,000
respectively, due to White Rose Food.
6
<PAGE>
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 Delaware General Corporation Law.
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 18,
1999. 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:
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED % OF CLASS
- ------------------------ ------------------ ----------
PSL Foods, Inc. (1) 1,690,007 30.9
Camile Castellana (2)(3) 446,126 8.1
Joseph Castellana (2)(4)(5) 447,216 8.2
Frank Castellana (2)(4)(6) 453,529 8.3
Peter Castellana, Jr (2)(4)(7) 446,126 8.1
Michael Castellana (2)(4)(8) 445,036 8.1
Fidelity Management and Research 423,400 7.7
Stephen R. Bokser (4) 10,000 *
Arnold B. Becker (4) 10,000 *
Chris Darrow (4) -- *
All directors and executive officers as 3,926,714 71.7
a group (ten persons) (9)
- ----------
* Less than 1% of the outstanding Common Stock
7
<PAGE>
(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 Castellana are siblings and are referred to herein
as "the Principal Stockholders."
(3) Includes 32,818 shares owned by the minor children of Camile Castellana.
(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 179,164 shares owned by the wife and minor children of Peter
Castellana, Jr.
(8) Includes 52,894 shares owned by the wife and minor children of Michael
Castellana.
(9) Includes shares owned by PSL Foods, Inc. Also includes options to purchase
21,400 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 1998, 1997 and 1996
rent expense, relating to these leases was $3,004,000, $2,829,000 and $2,737,000
respectively. The Company made capital expenditures of approximately $436,000,
$2,022,000 and $725,000 during 1998, 1997 and 1996, respectively, at leaseholds
owned by affiliates of the Principal Stockholders.
8
<PAGE>
The average square foot rental for property leased from the Principal
Stockholders is $3.91 per square foot as compared with an average square foot
rental of $3.93 for property leased from third party landlords.
The Company had sales to affiliates controlled by the Company's Principal
Stockholders for 1998, 1997 and 1996 of $561,000, $894,000, and $335,000
respectively.
During 1998, 1997 and 1996 the Company purchased various food products in
the amounts of $46,287,000, $37,111,000 and $27,423,000 respectively, from White
Rose Food, of which Stephen R. Bokser, a Director of the Company, is an officer.
As of January 1, 1999 and January 2, 1998 the Company had trade payables of
$3,765,000 and $1,997,000 respectively, due to White Rose Food.
9
<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/ Peter Castellana, Jr.,
----------------------------------------
Peter Castellana, Jr.,
President,
Date: April 30, 1999
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Peter Castellana, Jr. President, Chief Executive Officer April 30, 1999
- ------------------------ and Director
Peter Castellana, Jr.
/s/ Chris Darrow Chief Financial Officer April 30, 1999
- ------------------------
Chris Darrow
/s/ Joseph Castellana Director April 30, 1999
- ------------------------
Joseph Castellana
/s/ Stephen R.Bokser Director April 30, 1999
- ------------------------
Stephen R. Bokser
/s/ Arnold B. Becker Director April 30, 1999
- ------------------------
Arnold B. Becker
