SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. _____)
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[ ] Preliminary Proxy Statement [ ] Confidential, For Use
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[ ] Definitive Additional Materials Only (as permitted
[ ] Soliciting Material Pursuant to by Rule 14a-6(e)(2)
Rule 14a-11(c) or Rule 14a-12
99 Cents Only Stores
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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99 CENTS ONLY STORES
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1997
To the Shareholders:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders
(the "Meeting") of 99 Cents Only Stores (the "Company") will be held at the
Company's offices located at 4000 Union Pacific Avenue, City of Commerce,
California at 10:00 a.m. on Tuesday, May 20, 1997 for the following
purposes:
1. To elect eight directors of the Company, each to serve until the next
Annual Meeting of Shareholders and until his or her successor is
elected;
2. To transact such other business as may properly come before the
Meeting and any adjournment(s) thereof.
Only shareholders of record of the Company at the close of business on
March 31, 1997 are entitled to notice of and to vote at the Meeting and
adjournments or postponements thereof.
All shareholders are cordially invited to attend the Meeting in
person. However, to ensure your representation at the Meeting, you are
urged to mark, sign and return the enclosed Proxy as promptly as possible
in the postage pre-paid envelope enclosed for that purpose. Any
shareholder attending the Meeting may vote in person, even though he or she
has returned a Proxy.
The right to vote your shares of Common Stock at the Annual Meeting is
an important one. We urge you to cast your vote. You should vote in
person or by proxy regardless of the number of shares of Common Stock you
hold. We would like to see at least 99% of the Common Stock represented in
person or by proxy at the Annual Meeting.
By Order of the Board of Directors,
Eric Schiffer
Assistant Corporate Secretary
City of Commerce, California
April 5, 1997
TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND
RETURN IT IN THE ENCLOSED ENVELOPE. IF YOU RECEIVE MORE THAN ONE PROXY
CARD BECAUSE YOU OWN SHARES REGISTERED IN DIFFERENT NAMES OR AT DIFFERENT
ADDRESSES, EACH CARD SHOULD BE COMPLETED AND RETURNED.
99 CENTS ONLY STORES
4000 UNION PACIFIC AVENUE
CITY OF COMMERCE, CALIFORNIA 90023
(213) 980-8145
____________________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, MAY 20, 1997
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of Proxies by the Board of Directors (the "Board") of 99 Cents Only Stores,
a California corporation (the "Company" or "99 Cents Only Stores"), for use
at the 1997 Annual Meeting of Shareholders (the "Meeting") to be held at
the Company's offices at 4000 Union Pacific Avenue, City of Commerce,
California, on Tuesday, May 20, 1997, commencing at 10:00 a.m. (with pre-
meeting activities at 8:00 a.m.), and at all postponements and adjournments
thereof.
It is anticipated that this Proxy Statement and the accompanying Proxy
will be mailed to shareholders on or about April 5, 1997.
At the Meeting, the shareholders of the Company will vote upon (i) the
election of eight directors for a term of one year; and (ii) such other
matters as may properly come before the Meeting and any and all
adjournments and postponements thereof.
A Proxy for use at the Meeting is enclosed. Any shareholder who
executes and delivers such Proxy has the right to revoke it at any time
before it is exercised by delivering to the Secretary of the Company an
instrument revoking it or a duly executed proxy bearing a later date, or by
attending the Meeting and voting in person. Subject to such revocation,
all shares represented by a properly executed Proxy received in time for
the Meeting will be voted by the Proxy holders in accordance with the
instructions on the Proxy. If no instruction is specified with respect to
a matter to be acted upon, the shares represented by the Proxy will be
voted (i) in favor of the election of the nominees for director set forth
herein, and (ii) if any other business is properly presented at the
Meeting, in accordance with the recommendations of the Board of Directors.
The expenses of preparing, assembling, printing and mailing this Proxy
Statement and the materials used in the solicitation of Proxies will be
borne by the Company. It is contemplated that the Proxies will be
solicited through the mails, but officers, directors and regular employees
of the Company may solicit Proxies personally. Although there is no formal
agreement to do so, the Company may reimburse banks, brokerage houses and
other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding the Proxy materials to shareholders whose stock in the Company
is held of record by such entities. In addition, the Company may use the
services of individuals or companies it does not regularly employ in
connection with the solicitation of Proxies if management determines it
advisable.
VOTING PROCEDURES
It is the policy of the Company that proxy cards, ballots, and voting
tabulations that identify shareholders be kept confidential from the
Company unless such disclosure is: (i) necessary to meet applicable legal
requirements or to assert or defend claims by or against the Company; (ii)
expressly requested by a shareholder (and then disclosure shall be limited
to that particular shareholder's vote); or (iii) made during a contested
proxy solicitation. The tabulators and inspectors of the election, who are
appointed by the Company's Board, are independent of the Company and are
not Company associates.
The close of business on March 31, 1997 has been fixed as the record
date for the determination of shareholders entitled to notice of and to
vote at the Meeting and any postponements or adjournments thereof. At the
record date, 14,816,635 shares of the Company's Common Stock, par value
$.001 per share (the "Common Stock"), were outstanding. The Common Stock
is the only outstanding class of securities entitled to vote at the
Meeting. At the record date, the Company had approximately 3,100
shareholders of record. A shareholder is entitled to cast one vote for
each share of Common Stock held on the record date on all matters to be
considered at the Meeting. Abstentions and shares held by brokers that are
prohibited from exercising discretionary authority will be counted as
present for the purposes of determining if a quorum is present.
Directors are elected by the affirmative vote of the majority of the
votes cast. Shareholders may not cumulate their votes. The eight
candidates receiving the highest number of votes will be elected. In
tabulating the votes, broker non-votes will be disregarded and have no
effect on the outcome of the vote.
ELECTION OF DIRECTORS
In accordance with the Bylaws of the Company, 99 Cents Only Stores'
directors are elected at each Annual Meeting of Shareholders and hold
office until the next election of directors and until their successors are
duly elected. The Bylaws of the Company provide that the Board of
Directors shall consist of no fewer than seven and no more 11 members as
determined from time to time by the Board of Directors. Directors may be
removed only with cause by the vote of a majority of the shareholders then
entitled to vote.
Unless otherwise instructed, the Proxy holders will vote the Proxies
received for the nominees named below. If any nominee is unable or
unwilling to serve as a director at the time of the Meeting or any
adjournment thereof, the Proxies will be voted for such other nominee(s) as
shall be designated by the current Board of Directors to fill any vacancy.
The Company has no reason to believe that such nominees will be unable or
unwilling to serve if elected as directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE NOMINEES LISTED BELOW.
The Board of Directors proposes the election of the following nominees
as directors:
David Gold
Howard Gold
Eric Schiffer
Jeff Gold
William O. Christy
Marvin Holen
Ben Schwartz
Lawrence Glascott
If elected, each nominee is expected to serve until the 1998 Annual
Meeting of Shareholders. The affirmative vote of a majority of the shares
present in person or represented by Proxy at the Meeting and voting on the
election of the directors is required for the election of the above-named
nominees.
MANAGEMENT
INFORMATION WITH RESPECT TO NOMINEES AND EXECUTIVE OFFICERS.
The following table sets forth certain information with respect to the
nominees and the executive officers of the Company as of March 31, 1997.
NAME AGE POSITION
- ---- --- --------
NOMINEES:
David Gold 64 President, Chief Executive
Officer and Director
Howard Gold 37 Senior Vice President of
Distribution and Director
Eric Schiffer 36 Senior Vice President Finance
and Operations, Treasurer and
Director
Jeff Gold 29 Senior Vice President of Real
Estate and Information
Systems and Director
William O. Christy 65 Director
Marvin Holen 67 Director
Ben Schwartz 79 Director
Lawrence Glascott 62 Director
OTHER EXECUTIVE OFFICERS:
Helen Pipkin 54 Senior Vice President of
Wholesale Operations
The executive officers of the Company are appointed by and serve at
the discretion of the Board of Directors. David Gold is the father of
Howard Gold and Jeff Gold and the father-in-law of Eric Schiffer.
DAVID GOLD has been a director, President and Chief Executive Officer
of the Company since the founding of the Company in 1965. Mr. Gold has
over 40 years of retail experience and 20 years of wholesale experience.
HOWARD GOLD has been a director of the Company since 1991. He joined
the Company in 1982 and has served in various managerial capacities. He
currently serves as Senior Vice President of Distribution. Mr. Gold
received his B.S. degree from the University of California at Los Angeles
in 1984.
ERIC SCHIFFER has been a director of the Company since 1991. He joined
the Company in 1992 and served in various managerial capacities. He
currently serves as Senior Vice President Finance and Operations and
Treasurer. Prior to joining the Company, from 1987 to 1992, he was employed
by Oxford Partners, a venture capital firm. Mr. Schiffer received his
B.S.E. degree from Duke University in 1983 and his M.B.A. from Harvard
Business School in 1987.
JEFF GOLD had been a director of the Company since 1991. He joined the
Company in 1984 and has served in various managerial capacities since 1989.
He currently serves as Senior Vice President of Real Estate and Information
Systems. Mr. Gold received his B.A. degree from the University of
California at Berkeley in 1989.
WILLIAM O. CHRISTY had been a director of the Company since 1992. He
was President and Chief Executive Officer of Certified Grocers of
California from 1977 to 1990 where he spent the majority of his career. He
has served on numerous trade association boards including the executive
committee of the National Grocers Association Board and Chairman of the
Merchant and Manufacturer Association Board.
MARVIN L. HOLEN has been a director of the Company since 1991. He is
an attorney and in 1960 founded the law firm of Van Petten & Holen. He
served on the Board of the Southern Californian Rapid Transit District from
1976 to 1993 (six of those years as the Board's President). He also served
on the Board of Trustees of California Blue Shield from 1972 to 1978, on
the Board of United California Savings Bank from 1992 to 1994 and on
several other corporate, financial institution and philanthropic boards of
directors.
BEN SCHWARTZ has been a director of the Company since 1993. He was
Chairman of Foods Company Markets, a supermarket chain, from 1980 until it
was acquired in 1987 by Boys Markets. Prior thereto, he served for many
years as its president. He has also served on the Board of Directors of
Certified Grocers of California including four years as Chairman.
Additionally, Mr. Schwartz sits on a number of industry trade boards,
including the Food Marketing Institute (FMI).
LAWRENCE GLASCOTT has been a director of the Company since October,
1996. He was the former Vice President - Finance of Waste Management
International. Prior thereto, Mr. Glascott was a partner at Arthur Andersen
LLP and was the Arthur Andersen LLP partner in charge of the 99 Cents Only
Stores account for six years. Additionally, Mr. Glascott was in charge of
the Los Angeles based Arthur Andersen LLP Enterprise Group practice for
over 15 years.
HELEN PIPKIN joined the Company in 1991 and serves as Senior Vice
President of Wholesale Operations. Prior to joining the Company, from 1985
through 1991, Ms. Pipkin served as Controller and Manager of Wholesale and
Import Operations of Cobra Associated International, a wholesaler of
variety merchandise. She was an owner, Vice President and Controller of
Markell Imports.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held a total of eight meetings during the
fiscal year ended December 31, 1996. The Board of Directors has an Audit
Committee and a Compensation Committee. During the fiscal year ended
December 31, 1996, each director during the term of his tenure, attended
all meetings of the Board of Directors held. Each director also attended
all meetings of the committees of the Board of Directors on which he
served.
The Audit Committee met two times and the Compensation Committee met
one time during the fiscal year ended December 31, 1996. The Audit
Committee's functions include recommending to the Board of Directors the
engagement of the Company's independent accountants, discussing the scope
and results of the audit with the accountants, discussing the Company's
financial accounting and reporting principles and the adequacy of the
internal audits with management and reviewing and evaluating the Company's
accounting policies and internal accounting controls. The Compensation
Committee reviews and approves the compensation of officers and key
employees, including the granting of awards under the Company's stock
incentive plan. See "Report of the Compensation Committee on Executive
Compensation" attached to this Proxy Statement as Exhibit "A." Currently,
the members of the Audit Committee are Messrs. Glascott, Christy and
Schwartz and the members of the Compensation Committee are Messrs. Christy,
Holen and Glascott. The Company does not have a standing nominating
committee.
COMPENSATION OF DIRECTORS
Each Director who is not an officer of or otherwise employed by the
Company (an "Outside Director") receives an automatic annual grant of a non-
qualified option to purchase 3,000 shares of Common Stock with a per share
exercise price equal to the fair market value of a share of the Company's
Common Stock on the date of grant. In addition, each Outside Director is
entitled to receive $1,000 per month, plus $500 for each board meeting
attended plus $150 for each committee meeting attended on a day when no
board meeting is held, or $250 for each committee meeting attended as
committee chairperson.
CERTAIN RELATIONSHIPS
The Company was treated as an S corporation from its inception through
April 30, 1996. David Gold, Chief Executive Officer and President of the
Company, Sherry Gold, David Gold's wife, Howard Gold, Senior Vice President
of Distribution and Director, Karen Schiffer, daughter of David Gold and
wife of Eric Schiffer, an officer and director, and Jeff Gold, Senior Vice
President of Real Estate and Information Systems and Director
(collectively, the "Pre-Offering Shareholders"), owned all of the
outstanding Common Stock prior to the Company's initial public offering of
its Common Stock completed in May 1996. Eric Schiffer, Senior Vice
President Finance and Operations, Treasurer and Director, is the beneficial
owner of certain of these shares. For 1993, 1994 and 1995, the Company
made aggregate S corporation distributions to its shareholders of $10.2
million, $5.6 million and $11.2 million, respectively. In January and
April 1996, the Company made additional cash distributions to the Pre-
Offering Shareholders in an aggregate amount of $5.0 million. In March
1996 and April 1996, the Company distributed dividends aggregating $35.5
million to the Pre-Offering Shareholders in the form of notes. Further, in
May 1996, the Company declared a dividend payable in the aggregate amount
of $4.4 million in connection with the termination of the Company's S
corporation status. These notes and dividends were paid in May 1996.
The Company and the Pre-Offering Shareholders have entered into a tax
indemnification agreement (the "Tax Agreement") relating to their
respective income tax liabilities. The Tax Agreement generally provides
that if an adjustment is made to the taxable income of the Company for a
year in which it was treated as an S corporation, the Company will
indemnify the Pre-Offering Shareholders and the Pre-Offering Shareholders
will indemnify the Company against any increase in the indemnified party's
income tax liability (including interest and penalties and related costs
and expenses), with respect to any tax year to the extent such increase
results in a related decrease in the income tax liability of the
indemnifying party for that year. The Company will also indemnify the Pre-
Offering Shareholders for all taxes imposed upon them as the result of
their receipt of an indemnification payment under the Tax Agreement. Any
payment made by the Company to the Pre-Offering Shareholders pursuant to
the Tax Agreement may be considered by the Internal Revenue Service or
state taxing authorities to be non-deductible by the Company for income tax
purposes.
As of March 31, 1997, the Company leased 13 of its 45 store locations
and a parking lot associated with one of these stores from the Pre-Offering
Shareholders or their affiliates. David Gold and his wife Sherry Gold own
one store location through a partnership in which they hold a 75% interest.
Nine store locations are owned by HKJ Gold., Inc., a California
corporation, the shareholders of which are Howard Gold, Karen Schiffer and
Jeff Gold, the three children of David and Sherry Gold. Included in the
nine stores is a site currently leased by the Company which was purchased
by HKJ Gold, Inc. on March 21, 1997. Howard Gold and Jeff Gold are also
officers and directors of the Company. David Gold, Sherry Gold, Howard
Gold, Karen Schiffer and Jeff Gold, together, through a partnership (Au
Zone Investments #2, L.P., a California limited partnership), also
indirectly own three store locations and a parking lot rented to one store
location. The Company has entered into a lease for one additional store
scheduled to open in 1997. Howard Gold, Jeff Gold, Karen Schiffer and Eric
Schiffer, who is also an officer of the Company, together are the landlord
of this property. Annual rental expense for the facilities owned by the Pre-
Offering Shareholders or their affiliates was approximately $1.5 million,
$1.6 million and $1.8 million in 1994, 1995 and 1996, respectively. The
Company believes that these leases and contracts are no less favorable to
the Company than those an unrelated party would have provided after arm's-
length negotiations. In the future, the Company does not intend to enter
into real estate transactions with the Pre-Offering Shareholders or their
affiliates, except with respect to the renewal or modification of existing
leases and occasions where such transactions are determined to be in the
best interests of the Company. The Pre-Offering Shareholders have agreed
that neither they nor their affiliates will pursue any future real estate
opportunity that could be utilized by the Company as a store or warehouse
location unless it is unanimously rejected by the Outside Directors.
Moreover, all future real estate transactions between the Company and the
Pre-Offering Shareholders or their affiliates will require the unanimous
approval of the Outside Directors and a determination by the Outside
Directors that such transactions are the equivalent of negotiated arm's-
length transaction with a third party. There can be no guarantee that the
Company and the Pre-Offering Shareholders or their affiliates will be able
to agree on renewal terms for the properties currently leased by the
Company from the Pre-Offering Shareholders, or, if such terms are agreed
to, that the Outside Directors will approve such terms.
The Company pays the premium on a "split-dollar" life insurance
agreement with David Gold and Sherry Gold. See "Executive Compensation."
Under a collateral assignment agreement, the premiums paid by the Company
will be reimbursed to the Company out of death benefit proceeds at the
death of both shareholders. The Company has recorded a receivable of
$165,000 from an affiliated entity in its balance sheets as of December 31,
1996 for the present value, not to exceed the cash surrender value of the
policy, based on mortality table, of the premiums paid through December 31,
1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has no interlocking relationships involving any of the
members of its Compensation Committee which would be required by the
Securities and Exchange Commission (the "Commission") to be reported in
this Proxy Statement, and no officer employee of the Company serves on its
Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE
The Report of the Compensation Committee of the Board of Directors of
the Company, describing the compensation policies and the compensation
philosophy of the Company's executive compensation policy and certain
determinations with respect to bonuses and stock option grants for the year
ended December 31, 1996, is attached to this Proxy Statement as Exhibit
"A."
STOCK OPTION PLAN
In March 1996, the Company and the Pre-Offering Shareholders adopted
the Company's 1996 Stock Option Plan (the "Stock Option Plan"), which
provides for the issuance of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended and non-
qualified stock options to purchase an aggregate of up to 1,000,000 shares
of the Common Stock of the Company. Of these, approximately 500,000 shares
are reserved for issuance upon exercise of options previously granted under
the Stock Option Plan. The Stock Option Plan permits the grant of options
to officers, employees, directors and consultants of the Company.
The Stock Option Plan is administered by the Compensation Committee.
Each option is evidenced by written agreement in a form approved by the
Compensation Committee. No options granted under the Stock Option Plan are
transferable by the optionee other than by will or by the laws of descent
and distribution, and each option is exercisable, during the lifetime of
the optionee, only by the optionee.
Under the Stock Option Plan, the exercise price of an incentive stock
option must be at least equal to 100% of the fair market value of the
Common Stock on the date of grant (110% of the fair market value in the
case of options granted to an employee who holds more than ten percent (a
"Ten Percent Holder") of the voting power of Company's capital stock on the
date of grant). The exercise price of a non-qualified stock option must be
not less than the par value of a share of the Common Stock on the date of
grant. The term of an incentive or non-qualified stock option is not to
exceed ten years (five years in the case of an incentive stock option
granted to a Ten Percent Holder). The Committee has the discretion to
determine the vesting schedule and the period required for full
exercisability of stock options. However, in no event can the Compensation
Committee shorten such period to less than six months. Upon exercise of any
option granted under the Stock Option Plan, the exercise price may be paid
in cash, and/or such other form of payment as may be permitted under the
applicable option agreement, including, without limitation, previously
owned shares of Common Stock.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of March 31, 1997, certain
information relating to the ownership of the Company's Common Stock by (i)
each person known by the Company to be the beneficial owner of more than 5%
of the outstanding shares of the Common Stock, (ii) each of the Company's
directors, (iii) the Chief Executive Officer and each of the other persons
who during the year ended December 31, 1996 were among the four most highly
compensated officers of the Company (collectively, the "Named Executive
Officers") and (iv) all of the Company's executive officers and directors
as a group. Except as may be indicated in the footnotes to the table and
subject to applicable community property laws, each of such persons has the
sole voting and investment power with respect to the shares owned.
Beneficial ownership has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act').
Under this Rule, certain shares may be deemed to be beneficially owned by
more than one person (such as where persons share voting power or
investment power). In addition, shares are deemed to be beneficially owned
by a person if the person has the right to acquire the shares (for example,
upon exercise of an option) within 60 days of the date as of which the
information is provided. In computing the percentage ownership of any
person, the amount of shares outstanding is deemed to include the amount of
shares beneficially owned by such person (and only such person) by reason
of these acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in the following table does not necessarily
reflect the person's actual voting power at any particular date. The
address of each individual listed is in care of the Company, 4000 Union
Pacific Avenue, City of Commerce, California 90023.
NUMBER OF SHARES PERCENT OF CLASS
---------------- ----------------
David Gold (1) (6) 6,950,393 49.0 %
Sherry Gold (2) (6) 6,950,393 49.0
Howard Gold (3) (6) 4,272,529 30.1
Jeff Gold (4) (6) 4,272,529 30.1
Eric and Karen Schiffer (5) (6) 4,275,529 30.1
Au Zone Investments #3, LLC (6) 3,276,615 23.1
William O. Christy (7) 2,500 --
Marvin Holen (8) 6,000 --
Ben Schwartz (9) 16,000 --
Lawrence Glascott 500 --
Helen Pipkin (10) 6,000 --
All of the Company's executive
officers and directors as a group 9,960,635 67.2 %
(11 persons) (6) (11)
(1) Includes 1,836,889 shares owned by Sherry Gold, David Gold's spouse,
and 3,276,615 shares controlled through Au Zone Investments #3, LLC, a
California limited liability company ("Au Zone").
(2) Includes 1,836,889 shares owned by David Gold, Sherry Gold's spouse,
and 3,276,615 shares controlled through Au Zone.
(3) Includes 3,276,615 shares controlled through Au Zone and 3,000 shares
of Common Stock reserved for issuance upon exercise of stock options
which are or will become exercisable on or before May 30, 1997.
(4) Includes 3,276,615 shares controlled through Au Zone and 3,000 shares
of Common Stock reserved for issuance upon exercise of stock options
which are or will become exercisable on or before May 30, 1997.
(5) Includes 3,276,615 shares controlled through Au Zone and 6,000 shares
of Common Stock reserved for issuance upon exercise of stock options
which are or will become exercisable on or before May 30, 1997.
(6) Au Zone is the general partner of Au Zone Investments #2, L.P., a
California limited partnership (the "Partnership"). The Partnership
is the registered owner of 3,276,615 shares of Common Stock. The
limited partners of the Partnership are David Gold, Sherry Gold,
Howard Gold, Jeff Gold and Karen Schiffer. Each of the limited
partners of the Partnership owns a 20% interest in Au Zone.
(7) Includes 2,000 shares of Common Stock reserved for issuance upon
exercise of stock options which are or will become exercisable on or
before May 30, 1997.
(8) Includes 3,000 shares of Common Stock reserved for issuance upon
exercise of stock options which are or will become exercisable on or
before May 30, 1997.
(9) Includes 1,000 shares of Common Stock reserved for issuance upon
exercise of stock options which are or will become exercisable on or
before May 30, 1997
(10) Includes 5,000 shares of Common Stock reserved for issuance upon
exercise of stock options which are or will become exercisable on or
before May 30, 1997
(11) Includes (i) 1,836,889 shares owned by Sherry Gold, the spouse of
David Gold, (ii) 3,276,615 shares controlled through Au Zone and (iii)
23,000 shares of Common Stock reserved for issuance upon exercise of
stock options which are or will become exercisable on or before May
30, 1997.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, as to the Named Executive Officers,
information concerning all compensation paid for services to the Company in
all capacities during the last three fiscal years or accrued within the
current fiscal year.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------
LONG TERM
COMPENSATION
-------------
NAME AND FISCAL STOCK OPTION ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS (1) COMPENSATION(2)
- ------------------ ------ ------- ----- ------------ ----------------
David Gold, 1996 $175,000 - - $324,000
Chairman of the 1995 65,000 317,000
Board, President 1994 62,500 311,000
and Chief Executive
Officer
Helen Pipkin, 1996 125,000 $25,000 15,000 -
Senior Vice 1995 104,000 20,000
President Wholesale 1994 104,000 20,000
Operations
Jeff Gold 1996 120,000 - 9,000 -
Senior Vice 1995 52,000
President Real 1994 52,000
Estate and
Information Systems
-
Howard Gold 1996 120,000 - 9,000
Senior Vice 1995 52,000
President 1994 52,000
Distribution
Eric Schiffer 1996 120,000 - 9,000 -
Senior Vice 1995 52,000
President Finance 1994 52,000
and Operations,
Treasurer
______________
(1) All numbers reflect the number of shares of Common Stock subject to
options granted to the named officers during the fiscal year.
(2) Represents life insurance premiums on policies (one of which is "split
dollar" insuring the lives of David and Sherry Gold and automobile
insurance premiums on policies insuring David Gold's automobile. See
"Management -- Certain Transactions." Commencing May 23, 1996, the
Company
ceased paying David Gold's automobile insurance, which payments were
approximately $2,000 per year.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding grants of
stock options made during the fiscal year ended December 31, 1996 to the
Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANT
----------------
NUMBER OF PERCENT OF EXERCISE
SHARES TOTAL OPTIONS OR BASE
UNDERLYING GRANTED TO PRICE POTENTIAL REALIZABLE
OPTIONS EMPLOYEES IN PER EXPIRATION VALUE AT ASSUMED
NAME GRANTED (2) FISCAL YEAR (3) SHARE DATE ANNUAL RATES OF STOCK
---- ----------- --------------- ----- ---- PRICE APPRECIATION FOR
OPTION TERM (1)
----------------------
5% 10%
-- ---
David Gold - - - - - -
Helen Pipkin 15,000 3.3% $10.99 5/1/06 $ 103,672 $ 262,728
Jeff Gold 9,000 2.0 10.99 5/1/01 62,203 157,636
Howard Gold 9,000 2.0 10.99 5/1/01 62,203 157,636
Eric Schiffer 9,000 2.0 10.99 5/1/01 62,203 157,636
_________________
(1) The potential realizable value is based on the assumption that the common
Stock of the Company appreciates at the annual rate shown (compounded
annually) from the date of grant until the expiration of the option term.
These amounts are calculated pursuant to the applicable requirements
of the Securities and Exchange Commission and do not represent
a forecast of the future appreciation of the Company's Common Stock.
(2) All of the options set forth in this chart were granted for a term of
5 years.
(3) Options covering an aggregate of 449,375 shares were granted to
eligible employees during fiscal year ended December 31, 1996.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTIONS
The following table sets forth, for each of the Named Executive
Officers, certain information regarding the value of options held at
December 31, 1996. None of the Named Executive Officers exercised options
during the fiscal year ended December 31, 1996.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SHARES VALUE OF ALL
UNDERLYING UNEXERCISED UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END AT FISCAL YEAR-END (1)
-------- ----------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---- ------------- -------------
David Gold - -
Helen Pipkin 0/15,000 0/$80,775
Jeff Gold 0/9,000 0/48,465
Howard Gold 0/9,000 0/48,465
Eric Schiffer 0/9,000 0/48,465
_________________
(1) Based upon the last reported sale price of the Common Stock on the
NYSE on December 31, 1996 ($16.375) less the option exercise price.
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers, directors and persons who own more that ten percent of a
registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Commission. Executive
officers, directors, and greater-than-ten percent shareholders are required
by Commission regulations to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of the copies of such
forms received by it and written representations from certain reporting
persons that they have complied with the relevant filing requirements, the
Company believes that, during the year ended December 31, 1996, all
relevant Section 16(a) filing requirements were complied with.
STOCK PERFORMANCE GRAPH
The following graph sets forth the percentage change in cumulative
total shareholder return on the Company's common stock during the period
from the date of the Company's public registration of May 23, 1996 to
December 31, 1996, compared with the cumulative returns of the S&P 500
Index and the published retail industry index. Comparison assumes $100 was
invested on May 23, 1996, in 99 Cents Only Stores common stock and in each
of the foregoing indices. Past performance shown for 99 Cents Only Stores
common stock is not necessarily indicative of future performance.
COMPARISON OF CUMULATIVE RETURN
AMONG 99 CENTS ONLY STORES, THE S & P SMALLCAP 600 INDEX
AND THE RUSSELL 2000 INDEX
GRAPH DATA
- ----------
May 23, 1996 June-96 September-96 December-96
99 CENTS ONLY STORES 100 88 88 103
S&P SMALLCAP 600 INDEX 100 96 99 104
RUSSELL 2000 INDEX 100 92 96 101
[PERFORMANCE GRAPH APPEARS HERE]
PROPOSALS OF SHAREHOLDERS
A proper proposal submitted by a shareholder for presentation at the
Company's 1998 Annual Meeting and received at the Company's executive
officers no later than December 6, 1997, will be included in the Company's
Proxy Statement and form of Proxy relating to the 1998 Annual Meeting.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent certified public accountants, were
selected by the Board of Directors to serve as independent auditors of the
Company for the fiscal year ended December 31, 1996 and have been selected
by the Board of Directors to serve as independent auditors for the fiscal
year ending December 31, 1997. Representatives of Arthur Andersen LLP are
expected to be present at the Meeting, will have an opportunity to make a
statement if they desire to do so and will respond to appropriate questions
from shareholders.
OTHER MATTERS
The Board of Directors is not aware of any matter to be acted upon at
the Meeting other than described in this Proxy Statement. Unless otherwise
directed, all shares represented by the persons named in the accompanying
Proxy will be voted in favor of the proposals described in this Proxy
Statement. If any other matter properly comes before the Meeting, however,
the Proxy holders will vote thereon in accordance with their best judgment.
ANNUAL REPORT TO SHAREHOLDERS
This Proxy Statement is accompanied by or has been preceded by the
Annual Report of the Company for its fiscal year ended December 31, 1996.
The Annual Report is not incorporated into this Proxy Statement and is not
to be deemed a part of the soliciting material.
REPORT ON FORM 10-K
THE COMPANY UNDERTAKES, UPON WRITTEN REQUEST, TO PROVIDE, WITHOUT
CHARGE, TO EACH PERSON FROM WHOM THE ACCOMPANYING PROXY IS SOLICITED A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO, BUT EXCLUDING EXHIBITS THERETO.
REQUESTS SHOULD BE ADDRESSED TO 99 CENTS ONLY STORES, 4000 UNION PACIFIC
AVENUE, CITY OF COMMERCE, CALIFORNIA 90023, ATTN: CHIEF FINANCIAL OFFICER.
Dated: April 5, 1997
ON BEHALF OF THE BOARD OF DIRECTORS
Eric Schiffer
Assistant Corporate Secretary
EXHIBIT "A"
REPORT OF THE COMPENSATION COMMITTEE
IN EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors had furnished the
following report on employee compensation. Such report shall not be deemed
to be incorporated by reference by any general statement incorporated by
reference this Proxy Statement into any filing under the Securities Act of
1993 as amended or under the Securities Exchange Act of 1934, as amended
except to the extent that 99 Cents Only Stores specifically incorporates
the report by reference, and shall not otherwise be deemed solicitation
material or be deemed filed under such Acts.
The Compensation Committee of the Board of Directors is responsible
for the review and administration of the Company's various compensation
plans, including base salaries for officers, the Company's stock option
plan, and annual bonus plan.
The Company's executive compensation structure is designed to provide
a base salary at the mid-range of salaries of comparable companies plus a
performance based bonus comprising a significant portion of overall
compensation so as to allow executives to earn total compensation at a
competitive range if warranted by performance. The Company also provides
long-term compensation in the form of non-qualified stock options.
The performance measure which generates the executive bonus pool is
derived from the Company's annual performance against plan. The annual plan
each year is developed on the basis of overall financial guidelines set by
senior management. Utilizing these guidelines, sales and operating income
goals are set and comprise the overall Company annual budget goals after
administrative and support costs are factored added to the plan. The Board
of Directors formally reviews and approves the actual results as compared
to the annual plan after any suggested changes have been incorporated.
From the annual performance, a bonus performance matrix is developed
with two variables consisting of the store sales increases over previous
year sales and operating income goals. On the basis of the Company's
performance in these two areas on the matrix, a bonus pool for employees
eligible for participation in the pool. The individual bonus targets for
executives range from 0% to 25% of their base salary depending on the level
of responsibly.
With respect to other employees, including the Named Officers, the
bonus pool is funded by the Company performance matrix, but payout from the
pool is based upon individual performance goals. These goals vary depending
on the responsibilities of the individual. Payout is made on the basis of
an assessment of the achievements of each individual during the year with
respect to the individual goals and overall individual performance. As
indicated above, target bonus for this group ranges from 0% to 25% of base
compensation.
Base of all officers are evaluated annually based upon compensation
for similar positions in competitive companies, but also on the basis of
financial and strategic goals of the Company as well as Company
performance. Comparative salary data is reviewed for both other peer
companies throughout the country as well as other companies in the region
so as to maintain a competitive salary package. Compensation paid for
comparable positions in companies is included in the survey along with
industry data available through other sources. On the basis of these
surveys and other information available to it, the Company believes that
its salaries are fair.
William O. Christy
Marvin L. Holen
Lawrence Glascott
January 28, 1997
99 ONLY STORES
4000 UNION PACIFIC AVENUE
CITY OF COMMERCE, CA 90023
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Eric Schiffer or Andrew
Farina, with full power of substitution, the proxy of the undersigned, to
attend the 1997 Annual Meeting of Stockholders of 99 CENTS ONLY STORES (the
"Company") to be held at the Company's offices on May 20, 1997 at 10:00
A.M. local time, and all adjournments thereof, to vote all shares of Common
Stock of the Company which the undersigned may be entitled to vote upon the
following matters:
(Please Sign and Date on the Reverse Side)
[X]Please mark your
votes as in this
example.
FOR WITHHELD Nominees: David Gold The undersigned hereby revokes
1. Election of [ ] [ ] Howard Gold any other proxy to vote at such
directors Jeff Gold Meeting and hereby ratifies and
Eric Schiffer confirms all that said proxies,
William O. Christy and each of them, may lawfully
Marvin Holen do by virtue hereof. With
Ben Schwartz respect to matters not known at
Lawrence Glascott the time of solicitation hereof,
said proxies are authorized to
vote in accordance with their
best judgment.
For, except vote withheld from the following nominee(s)
- ----------------------------------------------------------
The Board of Directors recommends a vote FOR the nominees
SIGNATURE(S) DATE
----------------------------- -----------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
please give full title as such. I hereby revoke all proxies heretofore
given by me to vote at said meeting or any adjournment thereof.