FURR'S/BISHOP'S, INCORPORATED
6901 Quaker Avenue
Lubbock, Texas 79493
DO NOT BE MISLED BY TEACHERS'LAST-MINUTE EFFORT TO SEIZE
CONTROL OF YOUR COMPANY!
YOUR BOARD BELIEVES THAT TEACHERS DOES NOT REPRESENT THE BEST
LONG-TERM INTEREST OF ALL THE STOCKHOLDERS.
May 15, 1998
To Furr's/Bishop's Stockholders:
Teachers Insurance and Annuity Association of America (Teachers) has
filed preliminary proxy materials with the SEC indicating they intend to make a
"Saturday Night Special," last-minute effort to seize control of your company at
the upcoming Annual Meeting scheduled for May 28, 1998.
Your Board believes that Teachers does not represent the best long-term
interests of ALL the stockholders. We also believe that their proxy materials
contain numerous wrong and misleading statements about the company, its Board
and management.
YOUR BOARD AND MANAGEMENT HAVE PUT IN PLACE A TURNAROUND STRATEGY THAT IS NOW
STARTING TO SHOW RESULTS.
NOW IS NOT THE TIME TO JEOPARDIZE THAT PLAN AND THE FUTURE VALUE OF YOUR
INVESTMENT BY TURNING OVER CONTROL OF YOUR BOARD TO TEACHERS' HAND PICKED SLATE.
We have developed and put in place a business plan designed to continue
the turnaround of operating performance at the company that started in the last
half of 1997 and to increase stockholder value. Our strategy to rebuild our
brand by improving operating standards, advertising effectiveness and comparable
store sales while maximizing profitability has already shown significant
results.
As part of the effort to rebuild the brand, we have begun a remodeling
program designed to communicate freshness, vitality and relevance in our
fiercely competitive marketplace. In a short space of time, the remodeling
program has demonstrated results by increasing sales at these stores by 10.5% in
the first quarter of 1998 vs. the first quarter of 1997.
Our program is producing solid results. Do not be misled by Teachers'
message of doom and gloom. Consider, instead, the reality:
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o Comparable store sales increased by 1.8% in the third quarter
of 1997, by .6% in the fourth quarter of 1997, by 2.6% in the
first quarter of 1998, and by 1.9% in April of 1998, over the
same periods in the prior year. As mentioned above, sales at
the remodeled units increased by 10.5% in the first quarter of
1998.
o Income before special charges and credits has also been
increasing dramatically, by $757,000 in the fourth quarter of
1997, an 89% increase, and by $1,264,000 in the first quarter
of 1998, an astonishing 166% increase.
WE HAVE BEGUN THE RETURN TO PROFITABILITY, WHICH WILL IMPROVE THE VALUE OF ALL
THE SHAREHOLDERS INVESTMENTS. DO NOT PUT THAT AT JEOPARDY BY TURNING OVER
CONTROL TO TEACHERS.
We believe that the first step to improved value for ALL the
shareholders is to restore the company to profitability. As a solidly profitable
company showing strong operating results, we will have more flexibility to bring
about increased shareholder value.
Early this year, we engaged a well-known and respected investment
banking firm to advise your company on ways to increase shareholder value. Based
on their advice, management has concluded that stability for the company and
adding a few more quarters of positive operating results is the key to
recognizing the full value of the company for ALL shareholders. Do not let
Teachers' individual motives derail the successful program management has put in
place to recognize this value for ALL stockholders.
DO NOT BE MISLED BY TEACHERS
BE GUIDED BY THE FACTS
Your Board is very concerned by Teachers' efforts to seize control of
your company in a lastminute solicitation containing many inaccuracies and
misstatements. As you consider your vote on these important matters, please
carefully consider the following:
o We contacted Teachers in December 1997 to request
recommendations for nominees for election as directors.
Teachers did not respond to this request until it made a
filing with the SEC on April 14, 1998. After this filing, the
Company met with Teachers in an attempt to address Teachers'
concerns, but Teachers was inflexible.
o The board of directors approved increasing its size from seven
to nine on February 26, 1998, well before becoming aware of
Teachers' Schedule 13D filing on March 6, 1998, indicating it
might seek proxies to elect candidates nominated by Teachers.
o Do you really believe that Teachers' handpicked list of
nominees will not be influenced by Teachers and will act
independently of Teachers in the best interest of ALL
shareholders?
o Senior management compensation arrangements are in line with
industry standards. Pay grades for senior management were
approved by the board in 1997, a board which included
Teachers' nominees, Mr. Osnos and Ms. Hopgood.
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o Contrary to Teachers' assertions, the company does not have
any "golden parachutes." Mr. Papit's employment agreement
includes a severance provision calling for a severance payment
of 18 months' salary. Again, contrary to Teachers' assertions,
severance is not payable in the event of termination for
cause.
o Teachers has made numerous unsubstantiated accusations and
claims but Teachers' proxy materials disclose no plan to
operate the Company and no plan to improve shareholder value.
o We believe Teachers wants to auction the Company in a fire
sale. Management believes that a fire sale is not the best way
to realize potential shareholder value, especially when the
operating results are improving so dramatically.
IF YOU RECEIVE A PROXY CARD FROM TEACHERS, DO NOT SIGN OR RETURN IT.
FURR'S/BISHOP'S, INCORPORATED
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