DEF 14A: Definitive proxy statements
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R&B, INC.
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(Name of Registrant as Specified in Its Charter)
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R&B, Inc.
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Notice of Annual Meeting of Shareholders
May 19, 2005
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Dear Shareholder:
The Annual Meeting of Shareholders of R&B, Inc. (the "Company"), a
Pennsylvania corporation, has been called and will be held at the law offices of
Blank Rome LLP, One Logan Square, Philadelphia, Pennsylvania 19103 on Thursday
May 19, 2005 at 8:30 a.m., Eastern Daylight Savings Time, to consider and act
upon the following matters:
I. Election of six directors for the ensuing year.
II. Any other business as may lawfully come before the Annual Meeting.
The Board of Directors has fixed the close of business on March 31,
2005, as the record date for determining the Shareholders of the Company
entitled to notice of and to vote at such meeting and any adjournment thereof.
Whether or not you intend to be present at the Annual Meeting, please
date, sign and mail the enclosed proxy card in the envelope provided or, if
available, use Internet or telephone voting. Use of Internet or telephone voting
will save the Company money. Instructions for using the internet or telephone
voting, if available, are included on the enclosed proxy card. You are cordially
invited to attend the Annual Meeting and your proxy will not be used if you are
present and prefer to vote in person.
By Order of the Board of Directors
/s/ Barry D. Myers
BARRY D. MYERS
Senior Vice President, General Counsel
and Assistant Secretary
Colmar, Pennsylvania
April 18, 2005
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED AND PROMPTLY RETURNED.
IF AVAILABLE, PLEASE USE INTERNET OR TELEPHONE VOTING WHICH WILL SAVE YOUR
COMPANY MONEY.
R&B, Inc.
3400 East Walnut Street
Colmar, Pennsylvania 18915
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Proxy Statement
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This Proxy Statement and accompanying proxy card are for the
solicitation of proxies by the Board of Directors (the "Board") of R&B, Inc., a
Pennsylvania corporation (the "Company"), for its use at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held on Thursday May
19, 2005 at 8:30 a.m., Eastern Daylight Savings Time, and any adjournments of
the Annual Meeting. The Annual Meeting will be held at the law offices of Blank
Rome LLP, One Logan Square, Philadelphia, Pennsylvania 19103. This Proxy
Statement and proxy card are being mailed to shareholders of the Company on or
about April 18, 2005.
At the Annual Meeting, the holders of record on March 31, 2005 (the
"Shareholders") of the Company's Common Stock, par value $.01, will act upon the
following matters:
I. Election of six directors for the ensuing year.
II. Any other business as may properly come before the Annual Meeting.
All proxies which are validly completed, signed and returned to the
Company prior to the Annual Meeting will be voted in the manner designated.
Proxies may be revoked at any time prior to being voted by written notice to the
Secretary or by attending the Annual Meeting and voting in person. If no
instructions are given, the persons named in the proxy solicited by the Board
intend to vote in favor of the election of the nominees named herein. If any
other matters properly come before the Annual Meeting, the persons named in the
accompanying proxy card will vote on these matters in accordance with their best
judgment.
The Board has fixed the close of business on March 31, 2005 as the
record date (the "Record Date") for the determination of shareholders entitled
to receive notice and to vote at the Annual Meeting and any adjournments of the
Annual Meeting. As of the close of business on the Record Date, there were
17,923,648 shares of Common Stock, issued and outstanding, each of which is
entitled to one vote.
The election of directors will be determined by a plurality vote and the
six nominees receiving the most "for" votes will be elected. Approval of any
other proposal will require the affirmative vote of a majority of the shares
cast on the proposal. An abstention, withholding of authority to vote or broker
non-votes will not have the same legal effect as an "against" vote and will not
be counted in determining the votes for any nominee or whether any proposal has
received the required shareholder vote.
Election of Directors
The Bylaws of the Company provide that the business of the Company shall
be managed by or under the direction of a Board of Directors of not less than
two nor more than seven directors, which number shall be fixed from time to time
by the Board of Directors. Each director shall be elected at the Annual Meeting
of Shareholders for a term that expires at the next regular shareholder's
meeting and shall hold office for the term for which he was elected and until a
successor is elected and has qualified. The Board of Directors has fixed the
number of directors to be elected for the ensuing year at six and has
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nominated the six persons named below for election as directors. Proxies
solicited by the Board of Directors will, unless otherwise directed, be voted to
elect the six nominees named below to constitute the entire Board of Directors.
All of the nominees are current directors of the Company. Each nominee
has indicated a willingness to serve as a director for the ensuing year, but in
case any nominee is not a candidate at the meeting for any reason, the proxy
holders named in the enclosed form of Proxy may vote for a substitute nominee in
their discretion.
The following table sets forth certain information as to each nominee
for the office of director:
Name Age Position
Richard N. Berman 48 Chairman of the Board of Directors,
President and Chief Executive Officer
Steven L. Berman 45 Executive Vice President,
Secretary-Treasurer, and Director
George L. Bernstein 73 Director
John F. Creamer, Jr. 74 Director
Paul R. Lederer 65 Director
Edgar W. Levin 72 Director
Richard N. Berman has been Chairman of the Board of Directors, President
and Chief Executive Officer of the Company since its inception in October 1978.
Steven L. Berman has been Executive Vice President, Secretary-Treasurer
and a Director of the Company since its inception.
George L. Bernstein has served as a Director since 1991. Mr Bernstein is
currently President of GLB Consulting, a management consulting firm. He was
Chief Financial Officer of Howard Fischer Associates International, Inc., an
executive search firm, from 1994 to 2002. Previously he was Chief Operating
Officer of Dilworth, Paxson, Kalish & Kauffman, a law firm in Philadelphia,
Pennsylvania that he joined in 1991.
John F. Creamer, Jr. has served as a Director since 1995. Mr. Creamer is
currently President of Distribution Marketing Services, Inc., a marketing
consulting firm for the automotive aftermarket located in Phoenix, Arizona. He
is a former director and former vice chairman of the Board of Directors of
Echlin Corporation, and past president of the Automotive Warehouse Distributors
Association (AWDA).
Paul R. Lederer has served as a Director since 1998. Mr. Lederer is past
Executive Vice President of Federal-Mogul Corporation, a global manufacturer of
a broad range of non-discretionary parts primarily for automobiles, light
trucks, heavy trucks, and farm and construction vehicles. Prior to joining
Federal-Mogul, Mr. Lederer was President and Chief Operating Officer of Fel-Pro
Incorporated, a private manufacturer of gaskets and related products for the
internal combustion engine, which was acquired by Federal-Mogul in 1998. Before
joining Fel-Pro, he was a consultant to several automotive parts companies. Mr.
Lederer is currently a director of O'Reilly Automotive, an automotive parts
retailer, TransPro, Inc., an automotive parts company and Maximus, Inc., a
provider of program management and consultive services to state and local
governments.
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Edgar Levin has served as a Director since 1991. Mr. Levin is currently
President of Ed Levin Associates, a management consulting firm. Prior thereto,
from 1984 to 1988, he was Senior Vice President of Paramount Communications,Inc.
(Gulf & Western, Inc.), a media and entertainment company.
None of the above nominees, except for Richard and Steven Berman who are
brothers, are related to any other nominee or to any executive officer of the
Company.
Board and Committees
During the fiscal year ended December 25, 2004 the Board held five
meetings; each director has attended at least 75% of the meetings of the Board
and Committees of which they were a member. The Board has determined that all of
the non-management directors are independent as defined under the standards of
NASDAQ. The Company's Corporate Governance information is available at
www.rbinc.com. Shareholders and other interested parties who wish to communicate
with the non-management directors of the Company should send their
correspondence to: R&B Non-Management Directors, 3400 East Walnut Street,
Colmar, Pennsylvania 18915.
The Executive Committee has general authority over the supervision and
direction of the finances and business of the Company and has the power and
authority of the Board in the management of the business and affairs of the
Company between meetings of the Board. Currently Richard Berman and Steven
Berman serve on the Executive Committee. The Executive Committee did not hold
any meetings during the fiscal year ended December 25, 2004.
The Audit Committee is responsible for reviewing reports of the
Company's financial results, audits and internal controls. The Committee selects
the Company's independent public accountants and reviews their procedures for
ensuring their independence with respect to the services performed for the
Company. The Audit Committee is composed of non- management directors.
Currently, George Bernstein, John Creamer, Paul Lederer and Edgar Levin serve on
the Audit Committee. Members of the Audit Committee, in the opinion of the
Board, are independent as defined under the standards of NASDAQ. The Board has
determined that Mr. Bernstein qualifies as an Audit Committee Financial Expert
as defined by the rules of the Securities and Exchange Commission. The Audit
Committee held four meetings in the fiscal year ended December 25, 2004. The
Board has adopted a written charter for the committee which is available at
www.rbinc.com.
The Compensation and Nominating Committee is responsible for
administering and approving all elements of compensation for elected corporate
officers and certain other senior management positions. It also approves, by
direct action or through delegation, participation in and all awards, grants and
related actions under the R&B Incentive Stock Plan, the Employee Stock Purchase
Plan and the 401(k) Retirement Plan. The committee is also responsible for
recommending qualified candidates to the Board for election as directors of the
Company, including the slate of directors that the Board proposes for election
by shareholders at the Annual Meeting. Currently George Bernstein, John Creamer,
Paul Lederer and Edgar Levin serve on the Compensation and Nominating Committee.
Members of the Compensation and Nominating Committee, in the opinion of the
Board, are independent as defined under the standards of NASDAQ. The
Compensation and Nominating Committee held one meeting during fiscal year ended
December 25, 2004. The Board has adopted a written charter for the committee
which is available at www.rbinc.com.
Each director of the Company, who is not also an employee of the
Company, receives an annual retainer of $26,000 plus $1,500 for attendance at
each meeting of the Board and $1,000 for any Committee meetings. The Chairman of
the Audit Committee receives an additional $1,350 for each meeting, with the
chairman of all other committees receiving an additional $500 for each meeting.
Directors are also eligible for participation in the Incentive Stock Plan.
The Board Recommends a Vote "For" the Election of the Directors.
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Executive Compensation and Transactions
The following table sets forth certain information regarding the annual
and long-term compensation for the fiscal years ended December 25, 2004,
December 27, 2003 and December 28, 2002, to the Chief Executive Officer and to
the four most highly compensated executive officers of the Company serving on
December 25, 2004.
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(1) Annual bonuses received are reported in the year earned, whether paid in
that year or in the following year. The 2004 bonus was paid one half on February
25, 2005 with the remaining balance to be paid in four equal payments every
three months beginning on June 15, 2005. The executive must be employed on the
scheduled date of payment to receive that portion of the bonus.
(2) The Company provides certain perquisites and other personal benefits to its
executive officers which are not included in the table since the total to each
of the individuals named above did not exceed the lesser of $50,000 or 10% of
their respective cash compensation.
(3) Adjusted to reflect the two-for-one stock split (in the form of a stock
dividend) in March 2005.
(4) "All Other Compensation" includes the estimated
contribution to the Company's 401(k) Plan on behalf of each of the named
executives.
(5) Mr. Beretta was hired in January 2004.
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Incentive Stock Plan
The Board of Directors has adopted, and the Company's shareholders have
approved, an Incentive Stock Plan (the "Plan"), the purpose of which is to
recognize the contributions made to the Company by its employees, consultants,
advisors and members of its Board of Directors, to provide these individuals
with additional incentives to devote themselves to the Company's future success
and to improve the Company's ability to attract, retain and motivate individuals
upon whom the Company's sustained growth and financial success depend.
The Plan is administered by the Board of Directors, or by a committee
designated by the Board of Directors. The aggregate maximum number of shares of
Common Stock available for awards under the Plan is 1,172,500 shares (subject to
adjustments to reflect changes in the Company's capitalization). Awards under
the plan may be made to all employees, consultants, advisors and directors of
the Company, although no director may receive awards for more than 10% of the
shares reserved for issuance under the Plan.
Options granted under the Plan may be either incentive stock options
("ISOs") or non-incentive stock options ("NSOs") (together, the "Options"). ISOs
are intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Unless the Option is specifically designated at the time of grant as an ISO,
Options under the Plan will be NSOs.
The exercise price of the ISOs will be at least 100% of the fair market
value of the shares of Common Stock on the date the Option is granted, or, at
least 110% of the fair market value of the shares of Common stock on the date
the Option is granted if the recipient owns, directly or by attribution under
Section 425(d) of the Code, shares possessing more than 10% of the total
combined voting power of all classes of stock of the Company. The option price
for NSO will be set at the discretion of the Board of Directors, and may be less
than, greater than or equal to the fair market value of a share on the date of
the grant. The maximum term of an Option granted under the Plan shall not exceed
(i) ten years from the date of grant, or (ii) in the case of an ISO, five years
from the date of grant if the recipient on the date of grant owns, directly or
by attribution under Section 425(d) of the Code, shares possessing more than 10%
of the total combined voting power of all classes of stock of the Company or any
subsidiary.
As of December 25, 2004 options, net of cancellations, have been
granted to approximately 70 persons to purchase up to an aggregate of 461,300
shares of common stock (295,367 shares are presently exercisable) at prices
ranging from $1.00 to $19.46 and 538,629 shares have been exercised.
Option Grants in 2004
The following table contains information about the stock options granted
in 2004 to the executive officers named in the Summary Compensation Table. No
stock appreciation rights were granted in 2004. The table has been adjusted to
reflect the Company's two-for-one stock split in March 2005.
(1) These amounts represent assumed rates of appreciation for the market value
of the Company's stock from the date of grant until the end of the option period
at rates arbitrarily set by the Securities and Exchange Commission. They are not
intended
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to forecast possible future appreciation in the Company's stock and any actual
gains on exercise of options are dependent on the future performance of the
Company's stock.
Aggregated Option Exercises in 2004 and Year-End Option Values
The following table shows information with respect to the exercise of
stock options during 2004 by each of the named executive officers and the value
of the exercisable options on December 25, 2004. The table has been adjusted to
reflect the Company's two-for-one stock split in March 2005.
(1) The "Value of Unexercised In-the-Money Options at Year-End" is equal to the
difference between the option exercise price and the Common Stock's December 25,
2004 closing price of $12.325 per share as reported on the NASDAQ National
Market System.
Employee Stock Purchase Plan
The Board of Directors has adopted, and the Company's shareholders have
approved, the 1992 Employee Stock Purchase Plan (the "1992 Plan") the purpose of
which is to advance the interests of the Company, its shareholders and employees
by encouraging its employees to acquire a vested interest in the growth and
earnings of the Company.
Under the 1992 Plan, a committee appointed by the Board consisting
initially of a minimum of two and a maximum of seven members of the Board will
administer the 1992 Plan (the "Committee"). The aggregate maximum number of
shares of Common Stock available for grants under the 1992 Plan is 300,000
shares, (with suitable adjustments to reflect changes in the Company's
capitalization). Grants under the 1992 Plan may be made to all employees of the
Company, although no employee may receive such a grant if immediately after the
grant he would own more than 5% of the Company's Common Stock or which, at the
date the option is granted, would permit such person's rights to purchase stock
under the 1992 Plan and all other employee stock purchase or option plans of the
Company, or its parent or subsidiaries, if any, to accrue at a rate exceeding
$25,000 of the fair market value of such stock (determined at the time such
option is granted) for each year such option is outstanding.
If the Committee decides to issue options pursuant to the 1992 Plan,
options must be granted to all employees of the Company who have been employed
for at least ninety days, other than those employees whose customary employment
is 20 hours or less per week and those employees whose customary employment is
for not more than five months in any calendar year. All options will expire on
the last day of the fiscal year during which the option was granted. The option
price will equal 85% of the fair market value of the shares on the date of
exercise.
The 1992 Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code. Under the Code, an employee
who is granted an option under the 1992 Plan will not realize income at either
the time of grant of the option, or upon exercise of the option. If an employee
disposes of shares acquired upon exercise of an option after two years from the
date of grant of such option and after one year from the date of exercise of
such option, the employee will be required to include in income, as compensation
for the year in which such disposition occurs, an amount equal to the lesser of
(i) the excess of the fair market value of such shares at the time of
disposition over the exercise price or (ii) the excess of the fair market value
of such shares at the time the option was granted over the exercise price. The
employee's basis in the
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shares disposed of will be increased by an amount equal to the amount so
includible in his or her income as compensation, and any gain or loss computed
with reference to such adjusted basis which is recognized at the time of
disposition will be long-term capital gain or loss. In such event, the Company
(or the subsidiary by which the employee is employed) will not be entitled to
any deduction from income.
If any employee disposes of the shares purchased under the 1992 Plan
within such two year and one year period, the employee will be required to
include in income, as compensation for the year in which such disposition
occurs, an amount equal to the excess of the fair market value of such shares on
the date of purchase over the exercise price. The employee's basis in such
shares disposed of will be increased by an amount equal to the amount includible
in his or her income as compensation, and any gain or loss computed with
reference to such adjusted basis which is recognized at the time of disposition
will be capital gain or loss, either short-term or long-term, depending on the
holding period for such shares. In the event of a disposition within such two
year or one year period, the Company (or the subsidiary by which the employee is
employed) will be entitled to a deduction from income equal to the amount the
employee is required to include in income as compensation as a result of such
disposition.
The Board of Directors may modify or amend the 1992 Plan in any way
which will not destroy the status of the 1992 Plan as a qualified employee stock
purchase plan as defined in Section 423 of the Code, but no such amendment or
modification may affect options granted under the 1992 Plan prior to the date of
such amendment or modification.
As of December 25, 2004, no options were outstanding but optionees had
exercised rights during 2004 to purchase 554 shares at prices ranging from
$14.03 to $22.47 for total net proceeds of $10,000.
401(k) Retirement Plan
On January 1, 1992, the Company adopted the amended and restated R&B,
Inc. 401(k) Retirement Plan and Trust (the "401(k) Plan"), a defined
contribution discretionary profit-sharing plan. The 401(k) Plan is administered
by the Company and is available to all employees once they have met certain age
and service requirements. Individual accounts are maintained for the cash
contributions made on behalf of each eligible employee and each eligible
employee has a choice of investment options from among a variety of mutual funds
and professionally managed accounts as to the contributions to his account.
There are two types of contributions to the 401(k) Plan: (1) an employee can
make a voluntary contribution of the employee's compensation which is deducted
by the Company from the employees normal compensation (legal limitations may
restrict the maximum voluntary contribution by an employee in any given year);
and (2) the Company may make discretionary contributions, in cash, common stock
or a combination thereof, which is allocated among the participants based on the
employee's annual compensation compared to the total annual compensation of all
eligible employees.
Benefits are payable at age 65 (normal retirement), total disability,
death, or upon early employment termination. There are vesting requirements for
the Company's contributions, but not for the employee's voluntary contributions.
The vesting schedule provides for twenty percent vesting each year after one
year of service, with one hundred percent vesting at six years or more.
For the fiscal year ended December 25, 2004, the Company contributed an
amount equal to four percent of each eligible employee's annual compensation
(with certain limitations to highly compensated employees). The Company's
contribution was funded two percent in cash and two percent in Company common
stock.
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Management Compensation Policy Committee Report on Executive Compensation
The current members of the Compensation and Nominating Committee are
George Bernstein, John Creamer, Paul Lederer and Edgar Levin.
This report is not deemed to be "soliciting material" or to be "filed"
with the Securities and Exchange Commission (the "SEC") or subject to the SEC's
proxy rules or to the liabilities of Section 18 of the Securities Exchange Act
of 1934 (the "1934 Act"), and the report shall not be deemed to be incorporated
by reference into any prior or subsequent filing by the Company under the
Securities Act of 1933 or the 1934 Act.
General
The Compensation and Nominating Committee is composed of four non-
management directors, Edgar W. Levin,Chairman, George L. Bernstein, John F.
Creamer and Paul R. Lederer. In the opinion of the Board, each are independent
as defined under the standards of NASDAQ. The committee is responsible for,
among other matters, setting and administering executive officer salaries,
bonuses and other employee benefits.
Policy
The Company's compensation philosophy reflects a commitment to
compensate executives competitively with other companies in the industry while
rewarding specific executives for achieving levels of operational excellence and
financial returns which insure positive short and long-term business performance
and continual growth in shareholder value. The Board of Directors believes that
the Company's overall compensation program must be competitive in order to
attract and retain the qualified individuals necessary to manage the Company and
address the significant challenges facing the Company and the industry.
Base Salary
The Committee establishes base salaries annually upon recommendation of
the Chief Executive Officer taking into consideration independent compensation
studies prepared periodically on behalf of the Committee. The Committee desires
that overall compensation reflect the performance of each individual executive
over time. Base salaries are set at levels subjectively determined by the
Committee to adequately reward and retain capable executives, including the
Chief Executive Officer, without targeting any specific quartile of the
compensation survey data for total compensation or any component of total
compensation. The Committee considers the importance of and skills required in a
particular executive position in establishing base salary.
Bonuses
The Committee has established a discretionary bonus plan for the Chief
Executive Officer and the Executive Vice President based upon the Company
meeting various annual financial targets. The bonuses to be awarded to all other
executive officers of the Company are based upon the Company meeting various
financial targets in addition to each such officer's contribution,
responsibility and performance during the year, and thus are both objective and
subjective in nature. In formulating its recommendation for the bonuses of such
other executive officers of the Company, the Committee considers, among other
things, the evaluation of the Chief Executive Officer with regard to the
contribution, responsibility and performance of the executive officer in
question and his views on the appropriate compensation level of such executive
officer.
Long-Term Incentives
Long-term incentives offered by the Company are based on incentive stock
options. Incentive stock options are awarded to the Chief Executive Officer and
the other executive officers by the Committee based upon the recommendation of
the Chief Executive Officer, taking into consideration the responsibility of
each executive officer, the financial performance
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of the Company and such other factors as it deems appropriate, consistent with
the Company's compensation policies. However, the Committee has not established
specific target awards governing the receipt, timing or size of option grants.
Thus, determinations with respect to the granting of stock options are
subjective in nature.
Chief Executive Officer Compensation
The compensation of Richard Berman, Chairman of the Board , Chief
Executive Officer and President, is determined as set forth above. Mr. Berman
received a base salary of $428,480 in 2004. The Committee granted Mr. Berman a
bonus for 2004 of $345,242.
Conclusion
The Committee is satisfied that the short-term and long-term
compensation paid to the executive officers of the Company create alignment with
the Company's strategic objectives and ensure that payouts are driven by Company
performance and employee contribution to the Company.
The foregoing report has been furnished by:
Edgar W. Levin, Chairman
George L. Bernstein
John F. Creamer
Paul R. Lederer
Compensation Committee Interlocks and Insider Transactions
Richard Berman and Steven Berman receive a salary set by the
Compensation and Nominating Committee of the Board of Directors and also serve
as directors. However, they do not participate in deliberations regarding their
own salary. Richard Berman and Steven Berman are partners in the Berman Real
Estate Partnership.
Leases of Real Property: The Company leases its Colmar, Pennsylvania facility
from a partnerships of which Richard Berman, Steven Berman, their father, Jordan
Berman, and their brothers, Marc Berman and Fred Berman, are partners. Under the
lease for the Pennsylvania property, the Company paid rent of $3.63 per square
foot ($1.2 million per year) in 2004. The rents payable on the Pennsylvania
property are adjusted on January 1 of each year to reflect annual changes in the
Consumer Price Index for All Urban Consumers - U.S. City Average, All Items. The
lease is "net" leases, under which the Company is responsible for all expenses
attributable to the leased properties (including maintenance and repair) and for
the conduct of its operations in compliance with all applicable laws and
regulations. The lease was extended and will expire on December 31, 2007. In the
opinion of management, the terms of this lease is no less favorable than those
which could have been obtained from an unaffiliated party.
Report of Audit Committee
The Audit Committee (the "Committee") oversees the Company's financial
reporting process on behalf of the Board of Directors. Management has primary
responsibility for the financial statements, reporting process and internal
controls. The committee monitors the disclosure and content of the Company's
financial statements, the quality of the accounting principles used, and the
independent audit process. It reviews the adequacy of the Company's internal
controls, and selects the Company's independent certified public accountants.
The Committee operates pursuant to a written charter that was adopted by the
Board of Directors, a copy of which is attached as Appendix A and is also
available at www.rbinc.com. (the "Charter").
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The Board of Directors has determined that all members of the Committee are
independent as defined under the standards of NASDAQ. The Board has determined
that Mr. Bernstein qualifies as an Audit Committee Financial Expert as defined
by the rules of the Securities and Exchange Commission.
In February 2005, the Audit Committee met with management and the
independent auditors to review and discuss the audited financial statements for
the year ended December 25, 2004. The Audit Committee also conducted discussions
with its independent auditors, KPMG LLP ("KPMG"), regarding the matters required
by the Statement on Auditing Standards No. 61. As required by Independence
Standards Board Standard No. 1, "Independence Discussion with Audit Committees,"
the Audit Committee has discussed with and received the required written
disclosures and a confirming letter from KPMG regarding its independence and has
discussed with KPMG its independence. The Audit Committee also considered the
non- audit services provided by KPMG set forth below in their review of KPMG's
independence. Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 25, 2004.
The foregoing report has been furnished by:
George L. Bernstein, Chairman
John F. Creamer, Jr.
Paul R. Lederer
Edgar W. Levin
Audit and Non-Audit Fees Paid To Independent Auditors
During the fiscal year ended December 25, 2004, the fees, billed or to
be billed, for the audit and review of the Company's consolidated financial
statements by KPMG LLP are estimated to be between $405,000 and $540,000. All
other fees paid or payable by the Company for services other than the
consolidated financial statement audit and review services performed by KPMG LLP
during fiscal year 2004 were $112,005 and related to tax preparation services
and other audit- related fees, including an employee benefit plan. KPMG LLP did
not perform any other professional services during fiscal year 2004.
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Beneficial Ownership of Common Stock
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 31, 2005 by (i) each director and nominee, (ii) each
person known by the Company to be the beneficial owner of five percent or more
of the Common Stock, (iii) each executive officer named in the summary
compensation table below, and (iv) all directors and executive officers as a
group.
Name of Beneficial Owner Amount and Nature of Percentage of
or Identity of Group Beneficial Ownership (1) Outstanding Shares
--------------------- ------------------------ -------------------
Steven L. Berman (2)(3)(4) 2,394,958 13.4%
Richard N. Berman (2)(3)(4) 2,212,138 12.3%
Jordan S. Berman (2)(5) 1,264,576 7.1%
T Rowe Price Associates, Inc.(6) 1,116,000 6.2%
Bank of America Corporation (7) 1,050,252 6.9%
Royce & Associates, LLC (8) 1,000,600 5.6%
Dimensional Fund Advisors, Inc.(9) 968,000 5.4%
Fred B. Berman (2)(10) 795,422 4.4%
Marc H. Berman (2)(10) 787,134 4.4%
Mathias J. Barton 145,880 *
Barry D. Myers 127,445 *
Edgar W. Levin 66,000 *
George L. Bernstein 58,000 *
Paul R. Lederer 54,000 *
John F. Creamer, Jr. 30,400 *
Joseph M. Beretta 0 *
Executive officers and directors
as a group (10 persons) 5,147,380 28.7%
- ------------------------
* Less than 1%
(1) The securities "beneficially owned" by a person are determined in accordance
with the definition of "beneficial ownership" set forth in the regulations of
the Securities and Exchange Commission (the "Commission") and accordingly, may
include securities owned by or for, among others, the spouse, children or
certain other relatives of such person as well as other securities as to which
the person has or shares voting or investment power or has the right to acquire
within 60 days of March 31, 2005. The same shares may be beneficially owned by
more than one person. Beneficial ownership may be disclaimed as to certain of
the securities. Fractional shares are rounded to the closest whole number. (2)
Pursuant to an agreement among Richard Berman and Steven Berman, their father
Jordan Berman, and their brothers, Fred Berman and Marc Berman, each of them has
granted the others rights of first refusal, exercisable on a pro rata basis or
in such other proportions as the exercising shareholders may agree, to purchase
shares of Common Stock of the Company which any of them, or upon their deaths
their respective estates, proposes to sell to third parties. The Company has
agreed with these shareholders that, upon their deaths, to the extent that any
of their shares are not purchased by any of these surviving shareholders and may
not be sold without registration under the 1933 Act, the Company will use its
best efforts to cause those shares to be registered under the 1933 Act. The
expenses of any such registration will be borne by the estate of the deceased
shareholder.
(3) Does not reflect 915,994 shares of common stock held by the R&B, Inc. 401(k)
Retirement Plan for which Richard Berman and Steven Berman are trustees. (4)
Address of this shareholder is c/o R&B, Inc. P.O. Box 1800, Colmar, Pennsylvania
18915. (5) Address of this shareholder is P.O. Box 474, Springhouse,
Pennsylvania 19477.
(6) Based upon a Schedule 13G filed February 14, 2005 by T. Rowe Price
Associates, Inc. ("T. Rowe Price"). The principal address of T. Rowe Price is
100 E. Pratt Street, Baltimore, MD, 21202.
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(7) Based upon a Schedule 13G filed on February 11, 2005 by Bank of America
Corporation ("Bank of America"). The principal address of Bank of America is
Bank of America Corporate Center 100 N. Tryon St., Charlotte N.C. 28255.. (8)
Based upon a Schedule 13G filed on February 2, 2005 by Royce & Associates, LLC
("Royce"). The principal address of Royce is 1414 Avenue of the Americas, New
York, NY 10019.
(9) Based upon a Schedule 13G filed on February 9, 2005 by Dimensional Fund
Advisors, Inc. ("Dimensional"). The principal address of Dimensional is 1299
Ocean Avenue, 11th Floor, Santa Monica, California 90401 (10) Address of this
shareholder is c/o Service Champ, LP 180 New Britain Blvd., Chalfont,
Pennsylvania 18914.
Filing Disclosure
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
the rules thereunder require the Company's officers and directors and persons
who own more than 10% of the Company's common stock to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and the
National Association of Securities Dealers and to furnish the Company copies.
Based on its review of the copies of such forms received by it, or
written representation from certain reporting persons, the Company believes
that, during the last fiscal year all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with.
Shareholder Return Performance Presentation
Set forth below is a line graph comparing, for the period from December
25, 1999 to December 25, 2004, the cumulative total shareholder return on the
Company's Common Stock with the cumulative total shareholder return on the
NASDAQ Market Index and the Automotive Parts and Accessories Peer Group index.
The graph assumes $100 invested on December 25, 1999 in the Company's Common
Stock and each of the indices, and that the dividends were reinvested when and
as paid. In calculating the cumulative total shareholder return of the peer
group index, the shareholder returns of the companies included are weighted
according to the stock market capitalization of such companies.
Comparison of Total Return
R&B, Inc. Common, NASDAQ Market Index and
Automotive Parts & Accessories Peer Group Index*
MEASUREMENT NASDAQ
PERIOD R&B, INC. TOTAL RETURN AP&A PEER GROUP
12/25/99 100.00 100.00 100.00
12/30/00 35.33 62.85 80.45
12/29/01 148.27 50.10 101.53
12/28/02 215.25 34.95 90.54
12/27/03 321.49 52.55 133.71
12/25/04 525.87 56.97 137.62
- ---------------
* Automotive Parts & Accessories Peer Group is comprised of 66 public companies
and the information was furnished by CenterPoint Data, Inc. (formerly Media
General Financial Services).
Shareholder Proposals
Proposals by shareholders to be presented at the Company's meeting to be
held in 2006 must be received by the Company no later than December 24, 2005 in
order to be considered for inclusion in the Company's proxy statement and form
of proxy for that meeting.
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Annual Report
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended December 25, 2004 is being furnished concurrently with this Proxy
Statement to all persons who were Shareholders on the Record Date. The Annual
Report should not be regarded as proxy soliciting material.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED December 25, 2004 CAN BE OBTAINED WITHOUT CHARGE BY WRITING TO R&B, INC.
3400 EAST WALNUT STREET, COLMAR, PENNSYLVANIA 18915, ATT: BARRY D. MYERS,
ASSISTANT SECRETARY.
Solicitation of Proxies
All expenses incurred in connection with the solicitation of the
enclosed proxy card will be paid by the Company. In addition to solicitation by
mail, officers, directors and regular employees of the Company, who will receive
no additional compensation for their services, may solicit proxies by mail,
telephone, telegraph or personal call if proxies are not received in a timely
fashion. The Company has requested that brokers and nominees who hold stock in
their names furnish this proxy material to their customers; the Company will
reimburse these brokers and nominees for their out-of-pocket and reasonable
expenses.
Although it is not anticipated, the Company reserves the right to retain
a professional firm of proxy solicitors to assist in solicitation of proxies.
The Company estimates that it would be required to pay such firm fees ranging
from $5,000 to $10,000 plus out-of-pocket expenses.
Independent Public Accountants
The accounting firm of KPMG LLP acted as the Company's independent
public accountants for the fiscal year ended December 25, 2004 and has been
selected by the Audit Committee of the Board of Directors to serve as the
Company's independent public accountants for the fiscal year ending December 24,
2005. A representative of KPMG LLP is expected to be present at the Annual
Meeting and to have the opportunity to make a statement, if he desires to do so,
and is expected to be available to respond to appropriate questions.
Other Matters
As of the date of this Proxy Statement, no other matter is known which
will be brought before the Annual Meeting. However, the enclosed proxy confers
discretionary authority to vote with respect to any and all of the following
matters that may come before the meeting: (i) matters that the Company's Board
of Directors does not know, 45 days before the meeting, are to be presented for
approval at the meeting (ii) approval of the minutes of a prior meeting of
shareholders, if such approval does not constitute ratification of the action at
the meeting; (iii) the election of any person to any office for which a bona
fide nominee is unable to serve or for good cause will not serve; (iv) any
proposal omitted from this Proxy Statement and the form of proxy pursuant to
Rule 14a-8 under the Exchange Act, as amended; and (v) matters incidental to the
conduct of the meeting. If any such matters come before the meeting, the proxy
agents named in the accompanying proxy card will vote in accordance with their
best judgment and discretion.
By Order of the Board of Directors
/s/ Barry D. Myers
BARRY D. MYERS
Senior Vice President, General Counsel and
Assistant Secretary
Colmar, Pennsylvania
April 18, 2005
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