SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by 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 Materials Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
FFP Marketing Company, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
FFP Marketing Company, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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.
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:___________________________________________________________
FFP Marketing Company, Inc.
2801 Glenda Avenue
Fort Worth, TX 76117
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 22, 1999
TO OUR SHAREHOLDERS:
On behalf of the Board of Directors, you are cordially invited to attend
the Annual Meeting of Shareholders of FFP Marketing Company, Inc. (the
"Company") to be held at the Company's offices, 2801 Glenda Avenue, Fort Worth,
Texas, at 10:00 a.m. on December 22, 1999 for the following purposes:
1. To elect two directors to hold office until the Annual Meeting of
Shareholders to be held in 2002, or until their successors are duly elected
and qualified.
2. The transaction of any and all other business properly presented at the
meeting.
Holders of record of the Company's common stock at the close of business on
December 6, 1999, will be entitled to notice of, and to vote at, the annual
meeting. The stock transfer books will not be closed. A list of shareholders
entitled to vote at the annual meeting will be available for examination at the
offices of the Company for ten days prior to the annual meeting.
You are cordially invited to attend the annual meeting. Whether or not you
expect to attend the annual meeting in person, however, we urge you to mark,
sign, date, and mail the enclosed form of proxy promptly so that your shares of
common stock may be represented and voted according to your wishes and in order
that the presence of a quorum may be assured at the annual meeting. Your proxy
will be returned to you if you are present at the annual meeting and request its
return in the manner provided for revocation of proxies on the initial page of
the enclosed proxy statement.
By Order of the Board of Directors,
CRAIG T. SCOTT
Secretary
Fort Worth, Texas
December 10, 1999
FFP Marketing Company, Inc.
2801 Glenda Avenue
Fort Worth, Texas 76117
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF SHAREHOLDERS
December 22, 1999
____________________________
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed form of proxy is solicited by the Board of Directors of FFP
Marketing Company, Inc. (the "Company"). Your proxy will be used at the Annual
Meeting of Shareholders to be held at the time and place and for the purposes in
the accompanying Notice of Annual Meeting of Shareholders. When proxies in the
accompanying form are properly executed and received, the shares represented by
the proxies will be voted at the annual meeting according to the directions
noted on the proxy. If no direction is indicated, those shares will be voted for
---
the election of directors and in the discretion of the named proxies with
respect to any other matter that may come before the meeting.
Our offices are located at, and our mailing address is, 2801 Glenda Avenue,
Fort Worth, Texas 76117.
Management does not intend to present any business at the annual meeting
for a vote other than the matters in the notice and has no information that
others will do so. If other matters requiring a vote of the shareholders are
properly presented at the annual meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the shares represented by the
proxies held by them according to their judgment on those matters.
This proxy statement and accompanying form of proxy are being mailed on or
about December 10, 1999. Our Annual Report for the year ended December 27, 1998
is enclosed, but does not form any part of the materials for solicitation of
proxies.
You may revoke your proxy at any time prior to the voting of the proxy by
(1) giving written notice of revocation to the Secretary of the Company at our
principal executive offices; (2) executing and delivering a later-dated proxy;
or (3) by attending the annual meeting and voting in person. However, no
revocation shall be effective until we receive your revocation at or before the
annual meeting. A revocation will not affect a vote on any matters taken prior
to its receipt. Merely attending the annual meeting will not of itself revoke
your proxy.
In addition, our directors, officers, and regular employees may solicit the
return of proxies, either by mail, telephone, telegraph, or through personal
contact. The directors, officers, and employees will not receive additional
compensation for their solicitation efforts, but will be reimbursed for out-of-
pocket expenses. Brokerage houses and other custodians, nominees, and
fiduciaries will, in connection with shares of common stock registered in their
names, be requested to forward solicitation material to the beneficial owners of
those shares of common stock.
We will pay the cost of preparing, printing, assembling, and mailing the
annual report, the notice, this proxy statement, and the enclosed form of proxy,
as well as the cost of forwarding solicitation materials to the beneficial
owners of shares of common stock and other costs of solicitation.
1
VOTING SECURITIES OUTSTANDING; QUORUM
The record date for determining the shareholders entitled to notice of, and
vote at, the annual meeting was the close of business on December 6, 1999. At
the close of business on the record date there were 3,818,747 shares of common
stock issued and outstanding, each of which is entitled to one vote on all
matters properly presented at the annual meeting. Shareholders have no
cumulative voting rights in the election of Directors.
The presence in person or by proxy of the holders of a majority of the
issued and outstanding shares of common stock entitled to vote on the record
date is necessary to constitute a quorum at the annual meeting. Abstentions and
broker non-votes are treated as present at the annual meeting and are counted in
determining a quorum. If a quorum is not present, the shareholders entitled to
vote who are present in person or represented by proxy at the annual meeting
have the power to adjourn the meeting from time to time without notice until a
quorum is present or represented. It is the intention of the persons named in
the accompanying form of proxy to vote the shares represented by the proxies
held by them for an adjournment. At any adjourned meeting at which a quorum is
present, any business may be transacted that might have been transacted at the
annual meeting as originally notified.
Assuming the presence of a quorum, the affirmative vote of the holders of a
plurality of the shares of common stock represented and voting at the annual
meeting is required for the election of Directors and the transaction of any and
all other business properly presented at the annual meeting or any adjournment.
Broker non-votes will have no effect on the outcome of the election of
Directors. With regard to the election of Directors, votes may be cast in favor
of or withheld from each nominee. Votes that are withheld will be excluded
entirely from the vote and will have no effect.
ELECTION OF DIRECTORS
Two persons are to be elected to the Board of Directors at the annual
meeting, and the six remaining Directors will continue in office for the terms
specified below. The persons named in the enclosed proxy intend to vote for the
election of the nominees listed below, unless instructions to the contrary are
given in the proxy. The nominees have indicated that they are able and willing
to serve as Directors. However, if some unexpected occurrence should require the
substitution of some other person for a nominee, the person voting the proxies
will vote for a nominee that the Company may select.
The following table lists the name and age of the two nominees and of each
of the six Directors whose terms of office will continue after the annual
meeting, the annual meeting at which their respective terms of office will
expire and the year in which each Director was first elected as a Director of
the Company:
Director
Nominee Directors Age Term Expires Since
----------------- --- ------------ --------
John D. Harvison 43 Annual meeting of shareholders to be held in 2002 1997
J.D. St. Clair 64 Annual meeting of shareholders to be held in 2002 1997
Continuing Directors
--------------------
John H. Harvison 65 Annual meeting of shareholders to be held in 2001 1997
Garland R. McDonald 62 Annual meeting of shareholders to be held in 2001 1997
E. Michael Gregory 48 Annual meeting of shareholders to be held in 2001 1997
Michael Triantafellou 46 Annual meeting of shareholders to be held in 2000 1997
John W. Hughes 57 Annual meeting of shareholders to be held in 2000 1997
Robert J. Byrnes 58 Annual meeting of shareholders to be held in 2000 1997
2
Business History of Nominees
John D. Harvison has served as a Director of the Company and the general
partner of FFP Partners, L.P., the Company's predecessor, since April 1995. Mr.
Harvison has been Vice President of Dynamic Production, Inc., an independent oil
and gas exploration and production company since 1977. He previously served as
Operations Manager for Dynamic from 1977 to 1987. He also serves as an officer
of various other companies that are affiliated with Dynamic that are involved in
real estate management and various other investment activities. Mr. Harvison is
the son of John H. Harvison, the Chairman of the Board of the Company.
J.D. St. Clair has been Vice President - Fuel Supply and Distribution and a
Director of the Company and the general partner of its predecessor since May
1987. Mr. St. Clair is a founder and an executive officer of several of the
companies from which the Company acquired its initial retail outlets. He has
been involved in the retail gasoline marketing and convenience store business
since 1971. Mr. St. Clair performed operations research and system analysis for
Bell Helicopter, Inc., from 1967 to 1971, for NASA from 1962 to 1967 and for
Western Electric Company from 1957 to 1962. Mr. St. Clair is also a director of
FFP Real Estate Trust, the general partner of FFP Partners.
Business History of Continuing Directors
John H. Harvison has been Chairman of the Board and Chief Executive Officer
of the Company and the general partner of its predecessor since the predecessor
began operations in May 1987. Mr. Harvison is a founder and an executive officer
of each of the companies from which the Company's initial base of retail outlets
was acquired and has been active in the retail gasoline business since 1958 and
in the convenience store business since 1973. In addition, he has been involved
in oil and gas exploration and production, the ownership and management of an
oil refinery and other personal investments. In January 1995, Mr. Harvison
consented to the entry of a cease and desist order by the United States Office
of Thrift Supervision that, among other things, prohibits him from participating
in any manner in the conduct of the affairs of federally insured depository
institutions. This Order was issued in connection with Mr. Harvison's ownership
in a federal savings bank and transactions between him and companies in which he
had an ownership interest and that institution. In consenting to the issuance of
the Order, Mr. Harvison did not admit any of the allegations against him and
consented to the issuance of the Order solely to avoid the cost and distraction
that would be caused by prolonged litigation to contest the positions taken by
the Office of Thrift Supervision. Mr. Harvison is also a Director of FFP Real
Estate Trust, the general partner of FFP Partners. Mr. Harvison is the father of
John D. Harvison, who is also a Director of the Company.
Garland R. McDonald is employed by the Company to oversee and direct a
variety of special projects. He has served as a Director of the Company and the
general partner of its predecessor since January 1990 and had previously served
as a Director of the general partner of the Company's predecessor from May 1987
through May 1989. He also served as a Vice President of the general partner of
the Company's predecessor from May 1987 to October 1987. Mr. McDonald is a
founder and the Chief Executive Officer of Hi-Lo Distributors, Inc., and Gas-Go,
Inc., two of the companies from which the Company initially acquired its retail
outlets. He has been actively involved in the convenience store and retail
gasoline businesses since 1967.
E. Michael Gregory has been a Director of the Company and the general
partner of its predecessor since September 1995. Mr. Gregory is the founder and
President of Gregory Consulting, Inc., an engineering and consulting firm that
is involved in the development of products related to the distribution and
storage of petroleum products and of computer software for a variety of
purposes, including work on such products and software for the Company. Prior to
founding Gregory Consulting in 1988, Mr. Gregory was the Chief Electronic
Engineer for Tidel Systems, a division of The Southland Corporation, where he
was responsible for new product concept development and was involved in projects
involving the monitoring of fuel levels in underground storage tanks. He is a
Registered Professional Engineer in Texas.
Michael Triantafellou has been Vice President - Retail Operations and a
Director of the Company and the general partner of its predecessor since
February 1997. He had served as Director of Truck Stops and Food Service
Operations for the general partner of the Company's predecessor since January
1994. Mr. Triantafellou has been engaged in the truck stop and food service
industries since 1976, having held various middle and upper management
3
positions in the truck stop businesses of Truckstops of America from 1975 to
1980; Bar-B Management from 1980 to 1985; Greyhound-Dial Corp. from 1985 to 1993
and Knox Oil of Texas from 1993 to 1994. Mr. Triantafellou is a graduate of the
Wharton School of the University of Pennsylvania.
John W. Hughes has been a director of the Company and the general partner
of its predecessor since May 1987. Mr. Hughes is an attorney with the law firm
of Garrison & Hughes, L.L.P., in Fort Worth, Texas. From 1991 to 1995 he was an
attorney with the firm of Simon, Anisman, Doby & Wilson, P.C., in Fort Worth,
Texas. Since 1963, Mr. Hughes has been a partner of Hughes Enterprises, which
invests in venture capital opportunities, real estate, and oil and gas.
Robert J. Byrnes has been the President of the Company and the general
partner of its predecessor since April 1989 and has been a Director of the
Company and the general partner of its predecessor since May 1987. From May 1987
to April 1989, Mr. Byrnes served as Vice President - Truck Stop Operations for
the general partner of the Company's predecessor. Since 1985, Mr. Byrnes has
been the President of Swifty Distributors, Inc., one of the companies from which
the Company acquired its initial retail outlets. From 1975 through 1984, Mr.
Byrnes was President of Independent Enterprises, Inc., which owned and operated
convenience stores and a truck stop. During that period, he was also President
of Enterprise Distributing, Inc., a wholesaler of motor fuels. Prior to 1975,
Mr. Byrnes was President of Foremost Petroleum Corporation, which is now a
subsidiary of Citgo Petroleum Corporation, and was a distribution manager for
ARCO Oil & Gas Company. He is currently a director of Plaid Pantries, Inc., an
operator of convenience stores headquartered in Beaverton, Oregon.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during its fiscal year ended
December 27, 1998. Directors during that time attended at least 75% of the total
number of meetings of the Board of Directors and the committees of which they
were members.
The Board's Audit Committee, composed of Messrs. John W. Hughes, and E.
Michael Gregory in 1998, recommends to the Board the firm to be employed as the
Company's independent auditors and consults with, and reviews the report of, the
Company's independent auditors and the Company's financial staff. The Audit
Committee held no meetings in 1998.
The Compensation Committee is composed of Messrs. John H. Harvison, Robert
F. Byrnes, and John W. Hughes. The Compensation Committee recommends to the
Board of Directors the compensation to be paid to the Company's officers.
Company does not have a standing nominating committee.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table gives information regarding the beneficial ownership of
the Company's common stock as of December 6, 1999 by (1) each person known by
the Company to own beneficially five percent or more of the outstanding common
stock; (2) each of the Company's directors; (3) each of the executive officers
named in the Summary Compensation Table below; and (4) all directors and
executive officers of the Company as a group. Unless otherwise noted, the
address of each person listed below is 2801 Glenda Avenue, Fort Worth, Texas
76117.
Shares Beneficially
Owned
-----
Percent
Name and Address of Beneficial Owner Number(1) of Class (2)
--------- ------------
John H. Harvison.................................................... 1,585,153 (3) 41.1%
John D. Harvison.................................................... 1,570,153 (4) 40.9%
Randall W. Harvison................................................. 1,469,943 (5) 38.5%
7HBF, Ltd........................................................... 699,333 (6) 18.3%
HBF Financial, Ltd.................................................. 738,443 (7) 19.3%
Garland R. McDonald................................................. 332,877 (8) 8.7%
Robert J. Byrnes.................................................... 127,043 (9) 3.3%
J. D. St. Clair..................................................... 193,627 (10) 5.0%
Michael Triantafellou............................................... 13,334 (11) *
John W. Hughes...................................................... 0 (12) *
E. Michael Gregory.................................................. 25,000 (13) *
Astor Capital Partners, L.P......................................... 230,800 (14) 6.0%
All directors and executive officers as a group
(9 persons).................................................... 1,781,987 46.7%
___________________
* Represents less than 1% of the Company's outstanding common stock.
(1) Beneficial ownership as reported in the above table has been
determined according to Rule 13d-3 under the Securities Exchange Act of
1934, as amended. The individuals and entities named in the table have sole
voting and investment power with respect to all shares shown as
beneficially owned by them, except as noted below and subject to community
property laws.
(2) Percentages indicated are based on 3,818,747 shares of common
stock issued and outstanding on the record date, except for the percentages
of those parties that are based on presently exercisable options as
indicated in the following footnotes. In underlying those options the case
of parties holding presently exercisable options, the percentage ownership
is calculated on the assumption that the shares underlying those options
are presently held or purchasable within the next 60 days are outstanding
for the purpose of computing the percentage ownership of that individual
but not for the purpose of computing the percentage ownership of any other
person or group shown in the table.
(3) Includes 40,000 shares of common stock issuable upon the exercise
of options within 60 days; 699,333 shares of common stock beneficially
owned by 7HBF, Ltd., a Texas limited partnership of which John H. Harvison
and members of his family are partners; 738,443 shares of common stock
beneficially owned by HBF Financial, Ltd., a Texas limited liability
company that is 98%-owned by trusts for the benefit of the children of John
H. Harvison and 2%-owned by one of his sisters and 32,167 shares of common
stock owned by a company of which John H. Harvison is an officer and
director. 7HBF, Ltd., may be deemed to share beneficial ownership of
144,417 shares of common stock with Garland R. McDonald; 49,750 shares of
common stock with Garland R. McDonald and Barbara J. Smith, who is John H.
Harvison's sister; 83,417 shares of common stock with J. D. St. Clair and
16,833 shares of common stock with Robert J. Byrnes. The beneficial
ownership of 175,000 shares of common stock included in the foregoing
shares owned by 7HBF, Ltd. is in dispute based on the prior ownership of
Economy Oil Company, the record holder of the shares.
5
Following a trial court decision in favor of Economy Oil, the case is now
on appeal to the Second Court of Appeals in the State of Texas.
Several affiliated companies owned by John H. Harvison, members of his
family and certain other officers of the Company hold sole voting and
investment power with respect to 928,110 shares of common stock of the
Company, which have been pledged as security to Southwest Securities
Incorporated in connection with margin loans, the current balances of which
total approximately $800,000. The loan documents prohibit such companies
from selling, transferring or encumbering those shares without the consent
of Southwest Securities, other than those shares that may be sold to
satisfy the loan and other obligations to Southwest Securities. Southwest
Securities also holds the right to sell the shares if minimum requirements
of the margin account are not maintained.
(4) Includes 25,000 shares of common stock issuable upon the exercise
of options within 60 days; 699,333 shares of common stock beneficially
owned by 7HBF, Ltd.; 738,443 shares of common stock beneficially owned by
HBF Financial, Ltd.; 32,167 shares of common stock owned by a company, one-
third of which is owned by trusts for the benefit of John D. Harvison and
his siblings and 75,210 shares of common stock owned by a company of which
John D. Harvison is a director.
(5) Includes 699,333 shares of common stock beneficially owned by
7HBF, Ltd. of which Randall W. Harvison and members of his family are
partners; 738,443 shares of common stock beneficially owned by HBF
Financial, Ltd., which is 98%-owned by trusts for the benefit of the
siblings of Randall W. Harvison, and 32,167 shares of common stock owned by
a company, one-third of which is owned by trusts for the benefit of Randall
W. Harvison and his siblings.
(6) Includes 699,333 shares of common stock owned by nine companies
that are owned or controlled by 7HBF, Ltd.
(7) Includes 738,443 shares of common stock owned by a company that
is owned by HBF Financial, Ltd. In addition, HBF Financial, Ltd., owns 31%
of the general partner of 7HBF, Ltd.
(8) Includes 25,000 shares of common stock issuable upon the exercise
of options within 60 days; 194,167 shares of common stock held by two
companies of which Mr. McDonald is a director, executive officer, and a 50%
owner and 38,500 shares of common stock held by an Individual Retirement
Account for the benefit of Mr. McDonald. Mr. McDonald may be deemed to
share beneficial ownership of 144,417 shares of common stock with 7HBF,
Ltd., and of 49,750 shares of common stock with 7HBF, Ltd. and Barbara J.
Smith. The address for Mr. McDonald is 10865 Ferry Oak Road, Oil City,
Louisiana 71061.
(9) Includes 35,000 shares of common stock issuable upon the exercise
of options within 60 days and 16,833 shares of common stock held by a
company of which Mr. Byrnes is a director, executive officer, and 50%
owner. Mr. Byrnes may be deemed to share beneficial ownership of 16,833
shares of common stock with 7HBF Financial, Ltd.
(10) Includes 30,000 shares of common stock issuable upon the exercise
of options within 60 days; 5,000 shares of common stock held directly and
83,417 shares of common stock held by a company of which Mr. St. Clair is a
director, executive officer and a one-third owner. Mr. St. Clair may be
deemed to share beneficial ownership of the 83,417 shares of common stock
with 7HBF Financial, Ltd.
(11) Includes 13,334 shares of common stock issuable upon the exercise
of options within 60 days.
(12) The address of Mr. Hughes is 1410 Bank One Building, 500
Throckmorton Street, Fort Worth, Texas 76102.
(13) Includes 25,000 shares of common stock issuable upon the exercise
of options within 60 days. The address of Mr. Gregory is 101 N Greenville
Avenue, Allen, Texas 75002.
(14) The address of Astor Capital Partners, L.P. is 6600 SW 92nd
Avenue, Portland, Oregon 97223.
EXECUTIVE OFFICER
The following is information regarding the name, age, current position and
term of office of the Company's executive officer who is not a director of the
Company.
Craig T. Scott, age 53, has served as Chief Financial Officer, Vice-
President - Finance, General Counsel, Secretary, and Treasurer of the Company
since October 1998. He also serves in a similar capacity for FFP Real Estate
Trust, the general partner of FFP Partners. From October 1996 until September
1998, Mr. Scott engaged in private law practice in Dallas and McKinney, Texas.
He was previously employed by Box Energy Corporation from 1981 until October
1996 and served as its Executive Vice President from July 1993 until October
1996. Mr. Scott previously practiced law for seven years with large law firms in
Dallas, Texas, practiced law in McKinney,
6
Texas for four years and was the president and co-owner of an oil and gas
exploration company for two years. Mr. Scott was previously employed for six
years by Arthur Andersen & Co., an international public accounting firm. He is a
member of the American Institute of Certified Public Accountants, the Texas
Society of CPAs, and the State Bar of Texas.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company and its
predecessor for the 1998, 1997 and 1996 fiscal years to the Chief Executive
Officer and each of up to four other most highly compensated officers whose
salary and bonus in 1998 exceeded $100,000. The Company did not begin operations
until December 29, 1997, and did not pay any salaries prior to 1998. Persons
previously employed by FFP Partners and its general partner became employees of
the Company on that date following the December 1997 restructuring of FFP
Partners. The information presented in the table below for 1997 and 1996
reflects the compensation paid to the named executive officers by FFP Partners
instead of the Company.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------------- ------------
Other Securities LTIP All
Name and Principal Annual Underlying Payouts Other
- ------------------ -------
Position Year Salary($) Bonus ($) Compensation ($)(1) Options/SARs (#)(2) ($) Compensation($)
-------- ---- --------- --------- ------------------- ------------------- --- ---------------
John H. Harvison 1998 $ 135,000 $ 0 $ 0 0 $ 0 $ 0
Chairman and Chief 1997 135,000 0 0 40,000 0 0
Executive Officer 1996 137,597 0 0 0 0
Robert J. Byrnes 1998 135,000 0 0 0 0 0
President and Chief 1997 135,000 0 0 35,000 0
Operating Officer 1996 137,597 0 0 0 0
Michael Triantafellou 1998 90,000 25,000 0 0 0 0
Vice President - Retail 1997 87,172 0 0 20,000 0
Operations 1996 72,995 0 0 0 0
________________
(1) Other annual compensation includes perquisites and other personal
benefits only if value is greater than the lesser of $50,000 or 10% of
reported salary and bonus.
(2) No options were granted to Named Executive Officers in 1998 or 1996.
Non-qualified unit options were granted by FFP Partners pursuant to its
Nonqualified Unit Option Plan to Mr. Harvison (40,000 units granted in
1992), Mr. Byrnes (35,000 units granted in 1992) and Mr. Triantafellou
(6,666 in 1994 and 20,000 in 1997). The exercise price of the unit options
under the plan equaled the fair market value of the underlying units on the
date of grant. Upon the restructuring of FFP Partners in December 1997, the
unit options were divided into separate options to purchase a like number
of units of FFP Partners and shares of the Company's common stock. The
exercise price for the then existing unit options of FFP Partners was
divided between the two entities' options in proportion to the closing
prices on the American Stock Exchange of the Class A Units of FFP Partners
and shares of the common stock of the Company. The options vest one-third
on each of the first three anniversary dates of the grant. In the event of
a change of control of the Company, any unexercisable portion of the
options will become immediately exercisable.
7
Aggregated Stock Option/SAR Exercises During 1998 and Stock Option/SAR Values as
of December 27, 1998
The following table discloses options to purchase securities of the Company
held by each of the named executive officers and the potential realizable values
for the options at the end of fiscal year 1998. None of the named executive
officers exercised any options during fiscal year 1998 and the Company has not
granted SARs:
Aggregate Option/SAR Exercises in Last Fiscal Year
And FY-End Option/SAR Values
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs
Options/SARs at Fiscal at Fiscal Year End
------------------
Year End (#)(1) ($)(1)(2)
---------------------- ---------
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
---- ------------ ------------ ------------- -------------
John H. Harvison 0 $ 0 40,000 / 0 $138,448 / $0
Robert J. Byrnes 0 $ 0 35,000 / 0 $121,142 / $0
Michael Triantafellou 13,332 $ 42,623 0 / 13,334 $ 0 / $41,074
____________
(1) Amounts under the headings entitled "Exercisable" reflect vested
options as of December 27, 1998 and the amounts under the headings entitled
"Unexercisable" reflect options that have not vested as of December 27, 1998.
(2) Dollar values are calculated by determining the pre-tax difference
between the fair market value of the common stock underlying the options at
exercise or at year end, whichever is applicable, and the exercise price of the
options.
Compensation of Directors
Each Director who is not an officer or employee of the Company receives an
annual retainer of $4,000 plus $1,000 for each Board meeting, or committee
meeting not held in conjunction with a Board meeting, which he attends and $500
for each telephone meeting in which he participates. Each director is also
reimbursed for expenses related to attending Board meetings.
Directors who are officers or employees of the Company receive no
additional compensation for attending Board or committee meetings.
Employment Agreements
The Company has employment agreements with Messrs. Harvison, Byrnes, Scott,
St. Clair, and Triantafellou that provide that if the employment of any such
officer is terminated for any reason other than the commission of an act of
fraud or dishonesty with respect to the Company or for the intentional neglect
or nonperformance of his duties, that officer is to receive an amount equal to
twice his then current annual salary plus a continuation of certain benefits
provided by the Company for a period of two years.
8
COMPENSATION COMMITTEE REPORT REGARDING EXECUTIVE COMPENSATION
During 1998, the Compensation Committee consisted of John H. Harvison (who
served as chairman of the Compensation Committee), Robert J. Byrnes and John W.
Hughes.
The Compensation Committee is responsible for establishing the level of
compensation of the executive officers of the Company. The compensation review
and evaluation is conducted by reviewing the overall performance of each
individual and comparing the overall performance of the Company with others in
its industry, as well as considering general economic and competitive
conditions. The financial performance of the Company on a yearly basis and as
compared with the Company's peer group (see "Comparative Total Returns," below)
and the industry as a whole, the Company's stock price and market share, and the
individual performance of each of the executive officers, are among the factors
reviewed. No particular weight is assigned to one factor over another.
Our fundamental policy is to offer the Company's executive officers
competitive compensation opportunities based upon their personal performance,
the financial performance of the Company and their contribution to that
performance. It is the Company's objective to make a substantial portion of each
officer's compensation contingent upon the Company's performances as well as
upon his or her own level of performance. Accordingly, each executive officer's
compensation package is comprised of three elements: (1) base salary, which
reflects individual performance and is designed primarily to be competitive with
salary levels of similarly sized companies; (2) annual variable performance
awards payable in cash and tied to the Company's achievement of performance
goals; and (3) long-term stock-based incentive awards, which strengthen the
mutuality of interests between the executive officers and the Company's
shareholders. Generally, as an officer's level of responsibility increases, a
greater portion of his or her total compensation will be dependent upon the
Company's performance and stock price appreciation, rather than the base salary.
The Compensation Committee has in the past, and may continue in the future
to approve salaries above the agreed-upon base salaries based upon the factors
listed above. Bonuses for the Company's executive officers are determined by the
Compensation Committee on a case-by-case basis.
During 1998, all of the Company's executive officers, including the Chief
Executive Officer, received salaries equal to their 1997 salary, except Michael
Triantafellou, who received a 3% increase in base salary. In comparison to the
salary levels of the officers of companies within the Company's peer group, the
salaries, bonuses, and other forms of compensation of the Company's officers are
below average. Mr. Triantafellou received a $25,000 bonus in 1998 in
consideration of his job performance in supervising the Company's retail
operations and in response to the competitive job market.
In 1998, the Compensation Committee took note of the successful completion
of the Company's corporate restructuring in December 1997, its acquisition of 94
additional convenience stores, the successful refinancing of bank debt in June
1998, and the improvement in sales and the stock price of the Company in 1998.
The Compensation Committee also noted the fact that Chief Executive Officer has
not received a salary increase or bonus in several years. However, the
Compensation Committee did not recommend a salary increase, bonus or other
increase in the compensation of 1998 for the Chief Executive Officer.
MEMBERS OF THE COMPENSATION COMMITTEE
John H. Harvison
Robert J. Byrnes
John W. Hughes
9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, John H. Harvison served as Chairman of the Board and Chief
Executive Officer of the Company and its subsidiaries, and Mr. Byrnes served as
President and Chief Operating Officer of the Company and its subsidiaries. See
"Certain Relationships and Related Transactions," below, for information
regarding disclosures pursuant to Item 404 of Commission Regulation S-K. John H.
Harvison, John D. Harvison, Robert J. Byrnes, and J.D. St. Clair each also
served as executive officers, Directors, and/or compensation committee members
of several affiliated corporations, in which others of these individuals also
serve in one or more of these capacities.
COMPARATIVE TOTAL RETURNS
Performance Graph
The following performance graph shows the changes from the inception of
trading of the Company's Common Stock on January 14, 1997 to December 27, 1998
in the value of $100 invested in: (1) the Company's common stock; (2) the
Russell 2000 Index; and (3) the common stock of a peer group of issuers. The
issuers in the peer group are all publicly traded companies included in Standard
Industrial Classification "Retail-Convenience Stores," whose businesses, taken
as a whole, resemble the Company's activities. The issuers in the peer group
are: Casey's General Stores, Inc., Crown Central Petroleum Corporation, Dairy
Mart Convenience Stores, Inc., Getty Petroleum Marketing Inc., Marsh
Supermarkets, Inc. and Uni-Marts, Inc.
10
COMPARISON OF 12 MONTH CUMULATIVE TOTAL RETURN*
AMONG FFP MARKETING COMPANY, INC.
THE RUSSELL 2000 INDEX AND A PEER GROUP
[GRAPH APPEARS HERE]
* $100 INVESTED ON 1/14/98 IN STOCK OR ON 12/31/97
IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
This graph above was plotted using the following data:
CUMULATIVE TOTAL RETURN
-------------------------------------------------
1/14/98 12/31/98
FFP MARKETING COMPANY, INC. 100 248
PEER GROUP 100 77
RUSSELL 2000 100 99
11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases buildings or land and buildings for some of its retail
outlets from FFP Partners. John H. Harvison, Chairman and Chief Executive
Officer of the Company, and Craig T. Scott, Vice President - Finance, Chief
Financial Officer, Secretary, Treasurer, and General Counsel of the Company,
hold similar positions with the general partner of FFP Partners. Furthermore,
companies owned directly or indirectly by Mr. Harvison and members of his
immediate family and/or certain other executive officers of the Company hold
corresponding ownership interests in FFP Partners or its subsidiaries. The
leases on these properties were entered into in conjunction with the
restructuring of FFP Partners that was completed in December 1997, in which the
non-real estate assets and businesses of FFP Partners were transferred to the
Company, while the real estate used in the retail operations was retained by FFP
Partners. The lease rates for the locations were established based on knowledge
of the properties by the management of FFP Partners and the Company and their
general experience in acting as lessor and lessee for similar properties. The
management of the Company believes that the lease rates are comparable to leases
that could be entered into with unrelated third parties. However, the Company
did not engage any third party advisors or refer to any third party surveys or
analyses of rental rates in making this determination. The Company paid
$2,628,000 in rent to FFP Partners during fiscal 1998.
The Company leases land or land and buildings for some of its retail
outlets and some administrative and executive office facilities from various
entities directly or indirectly owned by John H. Harvison, John D. Harvison, and
members of their immediate families and Messrs. Byrnes, St. Clair, and McDonald.
Messrs. Harvison, Byrnes, St. Clair and McDonald are officers and/or directors
of the Company. During fiscal 1998, the Company paid $959,000 to these entities
with respect to these leases. The Company believes the leases with these
affiliates are on terms that are currently more favorable to the Company than
terms that could have been obtained from unaffiliated third parties for similar
properties.
In the December 1997 restructuring, FFP Real Estate Trust, the general
partner of FFP Partners, and the Company entered into a reimbursement agreement
under which FFP Real Estate Trust reimburses the Company for all direct and
indirect costs, which are principally officers' compensation and other general
and administrative costs paid by the Company that are allocated to FFP Real
Estate Trust. The amount of the reimbursement is determined by the officers
based upon the amount of time that management and other personnel spend on
activities of FFP Real Estate Trust as compared to the amount of time they spend
on activities of the Company. Since FFP Real Estate Trust's only activity after
the restructuring is to serve as the general partner of FFP Partners, all of FFP
Real Estate Trust's costs and expenses are borne by FFP Partners. Costs
reimbursed by FFP Real Estate Trust in 1998 were $200,000.
Effective June 1998, the Company, the Company's primary bank lender and FFP
Partners reached an agreement to restructure the revolving credit facility and
term loan due to the lender. In connection with the restructuring of FFP
Partners in December 1997, both the Company and FFP Partners retained the
liability for this debt as both entities were primary obligors on the loans.
According to the June 1998 agreement, the lender made a loan to the Company, the
Company made a loan to FFP Partners, and FFP Partners repaid the balance of its
debt to the lender, all of which was done effective June 28, 1998. This
transaction included the execution of a promissory note by FFP Partners payable
to the Company in the amount of $14,773,000, the then current balance on the
debt due to the lender, which was recorded by the Company as a note receivable
from an affiliate. FFP Partners was released by the lender from all obligations
under the Loan and Security Agreement. As a result of the June 1998 transaction,
joint liability no longer exists with FFP Partners on the debt obligations to
the lender, and the 1997 reduction of $15,938,000 to the Company's stockholders'
equity for such liability was removed. At December 27, 1998, the Company was
indebted to the lender in the amount of $9,169,000 and held a promissory note
from FFP Partners with an unpaid balance of $14,201,000.
The interest rate and repayment terms of FFP Partners' note to the Company
mirror the terms of the Company's debt to the lender, including a maturity date
of November 2000. The revised agreement with the lender required that the loan
be secured by real estate owned by FFP Partners, which was pledged to the
Company and then
12
also pledged by the Company to the lender as additional collateral on the
Company's debt to the lender. FFP Partners makes monthly principal payments to
the Company of $95,000 plus accrued interest on the unpaid balance at a rate
equal to the bank's prime rate. This debt was repaid in full in October 1999.
All proceeds received by the Company from its loan to FFP Partners were required
to be applied to the balance of the Company's debt to the lender. This debt was
repaid in full in June 1999.
John H. Harvison owns 50% of Product Supply Services, Inc., which provides
consulting services and acts as an agent for the Company in connection with the
procurement of motor fuel for sale by the Company. Product Supply provides these
services to the Company under an agreement providing that the Company will pay
Product Supply $5,000 per month, supply it with office space and support
services such as telephone and clerical assistance, and pay its reasonable out-
of-pocket costs in providing the services. The agreement may be canceled either
by the Company or Product Supply upon 60 days' written notice. During fiscal
year 1998, the Company paid $68,000 to Product Supply for its services and out-
of-pocket costs.
E. Michael Gregory, a director of the Company, is the owner and president
of Gregory Consulting, Inc., which provides engineering, consulting, and other
similar services to the Company. During fiscal year 1998, the Company paid
Gregory Consulting $265,000 for those services.
The Company is not licensed to sell alcoholic beverages in the State of
Texas. Consequently, the Company has entered into agreements with Nu-Way
Beverage Company, a company wholly owned by John H. Harvison, under which Nu-Way
Beverage sells alcoholic beverages at the Company's Texas outlets. Under this
agreement, the Company receives rent and a management fee relative to the sale
of alcoholic beverages and loans funds to Nu-Way Beverage to pay for its
alcoholic beverage purchases. The Company receives interest on those funds at
1/2% above the prime rate charged by a major commercial bank, and the loan is
secured by the alcoholic beverage inventory located in the Company's Texas
outlets. During 1998, the highest balance due under this loan was $780,000 and
the balance at the end of the fiscal year was $780,000. During 1998, Nu-Way
Beverage sold $12,143,000 of alcoholic beverages at the Company's Texas outlets.
After deducting cost of sales and other expenses related to these sales,
including $2,117,000 of rent, management fees, and interest paid to the Company,
Nu-Way Beverage earned $121,000 in fiscal 1998 from selling alcoholic beverages
at the Company's outlets.
In June 1994, the Company settled a lawsuit that it had filed against Nu-
Way Oil Company and Nu-Way Distributing Company, referred to as the "Nu-Way
Companies," both of which are controlled by John H. Harvison and members of his
immediate family, and a related suit that the Nu-Way Companies had filed against
the Company. Under the settlement, all claims in both of the lawsuits were
dismissed and the Company received cash, a promissory note from an affiliated
company, secured by first and second liens on real estate, and title to a
convenience store that was being leased by the Company from an affiliate. The
Company estimated the assets it received had an aggregate value of $485,000. The
affiliated companies received approximately $65,000 in cash (held in the
Registry of the Court), and 30,000 Class B Units of FFP Partners owned by an
affiliate that were being held by an escrow agent. This agreement was approved
by the disinterested directors of the general partner of FFP Partners. The note
received by the Company in connection with this settlement is payable over five
years, with interest at 9.5%. The highest balance outstanding during 1998 under
the note was $44,000, and the balance outstanding at year end 1998 was $15,000.
The Company purchases goods and services, including automobiles, office
supplies, computer software and consulting services, and fuel supply consulting
and procurement services, from certain entities affiliated with John H.
Harvison, members of his immediate family and certain of their affiliates. The
Company paid $563,000 for these products and services in fiscal 1998. Management
believes that these costs were substantially similar to that which could be
obtained from unrelated parties for similar goods and services.
In 1980 and 1982, entities affiliated with John H. Harvison, members of his
immediate family and their affiliates granted to E-Z Serve, Inc., the right to
sell motor fuel at retail for a period of 10 years at outlets owned, leased or
controlled, directly or indirectly, by these affiliated entities. All rights to
commissions under these agreements and the right to sell motor fuel at wholesale
to E-Z Serve at such locations were assigned to FFP Partners
13
on May 21, 1987, in connection with the acquisition of its initial base of
retail operations. Upon the expiration or termination of those agreements in
1990, FFP Partners entered into agreements with Thrift Financial Co., a company
owned and controlled by members of John H. Harvison's immediate family, granting
to FFP Partners the exclusive right to sell motor fuel at certain retail
locations. The agreements were then assigned by FFP Partners to the Company in
the December 1997 restructuring of FFP Partners. The terms of these agreements
are comparable to other agreements that the Company has with unrelated parties.
During fiscal 1998, the Company paid Thrift Financial $318,000 under these
agreements.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who own more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and changes of ownership with the SEC. Officers, directors and 10% shareholders
of the Company are required by these regulations to furnish the Company with
copies of all Section 16(a) forms filed by them.
Based solely on a review of copies of the forms received, the Company
believes that, during the last fiscal year, all filing requirements under
Section 16(a) that apply to its officers, directors and 10% shareholders were
timely, except as follows: Michael Triantafellou filed a late Form 4 reflecting
his exercise of options for 13,332 shares of common stock on November 30, 1998,
and Craig Scott filed a late Form 3 reflecting that he had become subject to
such reporting rules.
AUDITORS
KPMG LLP served as the Company's auditors for the fiscal year ended
December 27, 1998. The Company's Audit Committee has not made a recommendation
to the Board of Directors concerning the auditor for the 1999 fiscal year. A
representative of KPMG LLP will not be available at the annual meeting.
REQUIREMENTS, INCLUDING DEADLINES, FOR
SUBMISSION OF PROXY PROPOSALS, NOMINATION OF DIRECTORS
AND OTHER BUSINESS OF SHAREHOLDERS
Proposals for 2000 Annual Meeting
Under the rules of the SEC, any proposals of holders of common stock of the
Company intended to be included in the proxy statement and form of proxy for the
Annual Meeting of Shareholders of the Company to be held in 2000 must be
received by the Company, addressed to Craig T. Scott, Secretary, 2801 Glenda
Avenue, Fort Worth, Texas 76117, no later than December 31, 1999, in order to be
included in the Company's proxy statement and form of proxy relating to that
meeting, which is tentatively scheduled for May 2000.
Under the Company's Bylaws, and as permitted by the rules of the SEC,
certain procedures are provided, which a shareholder must follow to nominate
persons for election as Directors or to introduce an item of business at an
annual meeting of shareholders. These procedures provide that nominations for
Director nominees and/or an item of business to be introduced at an annual
meeting of shareholders must be submitted in writing to the Secretary of the
Company at 2801 Glenda Avenue, Fort Worth, Texas 76117 between 70 and 90 days in
advance of the prior year's annual meeting if the later meeting is being held
within 30 days preceding or 60 days after the anniversary date of the prior
year's meeting. If the subsequent year's meeting is being held more than 30 days
preceding or 60 days after the anniversary date of the prior year's meeting, the
nominations or items of business from shareholders must be received by the
Secretary of the Company between 70 and 90 days in advance of the meeting or by
the tenth day following the date of the public disclosure of the date of the
meeting.
14
For any special meeting, the nomination or item of business must be
received between 70 and 90 days in advance of the meeting and no later than the
tenth day following the date of public disclosure of the date of the meeting.
Our 2000 Annual Meeting is expected to be held in May 2000. Assuming that
it is held on schedule, we must receive notice of your intention to introduce a
nomination or other item of business at that meeting between February 1 and
March 31, 2000. If we do not receive notice within those dates, or if we meet
other requirements of the SEC rules, the persons named as proxies in the proxy
materials relating to that meeting will use their discretion in voting the
proxies when these matters are raised at the meeting.
The notice from the shareholder must include: (1) as to each person whom
the shareholder proposes to nominate for election or reelection as a Director,
all information relating to the person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required
pursuant to Regulation 14A under the Exchange Act, including the person's
written consent to being named in the proxy statement as a nominee and to
serving as a Director if elected; (2) as to any other business that the
shareholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
the business at the meeting and any material interest in the business of the
shareholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (3) as to the shareholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (a) the name and
address of the shareholder, as they appear on the Company's share transfer
books, and the name and address of the beneficial owner; (b) the class or series
and number of shares of beneficial interest of the Company which are owned
beneficially and of record by the shareholder and the beneficial owner; and (c)
the date or dates upon which the shareholder acquired ownership of the shares. A
nomination must contain the following information about the nominee: name; age;
business and residence addresses; principal occupation or employment; the number
of shares of common stock held by the nominee; the information that would be
required under the rules of the SEC in a proxy statement soliciting proxies for
the election of the nominee as a Director and a signed consent of the nominee to
serve as a Director of the Company, if elected.
At the time this proxy statement was published, the Board of Directors knew
of no other business to be brought before the 1998 annual meeting. If, however,
any other business should properly come before the annual meeting, the persons
named in the accompanying proxy will vote the proxy in their discretion as they
may deem appropriate, unless they are directed by the proxy to do otherwise. The
chairman of the meeting may refuse to allow the transaction of any business not
presented beforehand, or to acknowledge the nomination of any person not made in
compliance with the procedures outlined above.
With respect to business to be brought before the annual meeting, the
Company has not received any notices from shareholders that the Company is
required to include in this proxy statement.
By Order of the Board of Directors,
CRAIG T. SCOTT
Secretary
Fort Worth, Texas
December 10, 1999
15
P
R
O FFP MARKETING COMPANY, INC.
X 2801 GLENDA AVENUE
Y FORT WORTH, TEXAS 76117
This proxy is solicited on behalf of the Board of Directors of FFP Marketing
Company, Inc.
The undersigned hereby appoints John H. Harvison and Robert J. Byrnes,
and each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and vote, as designated below, all of the
shares of common stock of FFP Marketing Company, Inc., held of record by the
undersigned on December 6, 1999, at the Annual Meeting of Shareholders to be
held on December 22, 1999, or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is given, this proxy will
be voted FOR the election of the nominees listed and at the discretion of the
Proxies with respect to any other matter that is properly brought before the
meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
-----------------
SEE REVERSE SIDE
-----------------
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FOLD AND DETACH HERE
Please mark
your vote as [X]
indicated in
this example
1. Election of Directors
FOR all nominees
listed to the right
(except as marked
to the contrary)
[ ]
WITHHOLD Nominees: John D. Harvison, J.D. St. Clair
AUTHORITY
to vote for all nominees (Instruction: To withhold authority to vote for
listed to the right any individual nominee, write that nominee's
[ ] name on the space provided below.)
------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as properly may come before the Annual Meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
Dated _____________________________, 1999
___
| Signature _______________________________
|
Signature _______________________________
Please sign exactly as name appears at left. When shares are held by
joint tenants, both should sign, or if one signs he should attach the
evidence of his authority. When signing as attorney, administrator,
agent, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by President or other
authorized officer. If a partnership, please sign full partnership
name by authorized person.
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FOLD AND DETACH HERE