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. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
TSI INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(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:
TSI INCORPORATED
-------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
TSI INCORPORATED
-------------------------------------
To the Stockholders of TSI Incorporated:
PLEASE TAKE NOTICE that the Annual Meeting of stockholders of TSI Incorporated
will be held on Thursday, July 17, 1997, at 3:30 p.m., Central Daylight Time, at
the Minneapolis Marriott City Center, Minneapolis, Minnesota for the following
purposes:
I. To elect three directors of the Company.
II. To consider and act upon the matter of ratifying the appointment of
KPMG Peat Marwick LLP as the independent auditors of the Company for
the fiscal year ending March 31, 1998.
III. To transact such other business as may properly come before the
meeting.
Accompanying this Notice are a Proxy, Proxy Statement and a copy of the
Company's Annual Report for the fiscal year ended March 31, 1997. Whether or not
you expect to be present at the meeting, please sign and date the Proxy and
return it in the enclosed envelope provided for that purpose. The Proxy may be
revoked at any time prior to the time that it is voted. Only stockholders of
record at the close of business on June 2, 1997, will be entitled to vote at the
meeting.
By Order of the Board of Directors
Laura J. Cochrane
Secretary
June 20, 1997
TSI INCORPORATED
500 CARDIGAN ROAD
SHOREVIEW, MINNESOTA 55126
ANNUAL MEETING OF STOCKHOLDERS
JULY 17, 1997
--------------------------------
PROXY STATEMENT
--------------------------------
GENERAL
The Annual Meeting of stockholders of TSI Incorporated (the "Company") will be
held on Thursday, July 17, 1997 at 3:30 p.m., Central Daylight Time, at the
Minneapolis Marriott City Center, Minneapolis, Minnesota, for the purposes set
forth in the Notice of Annual Meeting of Stockholders.
The enclosed Proxy is solicited by the Board of Directors of the Company. Such
solicitation is being made by mail, and may also be made by directors, officers,
and regular employees of the Company personally or by telephone. Any Proxy given
pursuant to such solicitation may be revoked by the stockholder at any time
prior to the voting thereof by so notifying the Company in writing at the above
address, attention: Lowell D. Nystrom, Vice President and Treasurer, or by
appearing in person at the meeting. Shares represented by Proxies will be voted
as specified in such Proxies, and if no choice is specified, will be voted (1)
in favor of the Board of Directors' nominees named in this Proxy Statement and
(2) in favor of ratifying the appointment of KPMG Peat Marwick LLP as the
independent auditors of the Company for the current fiscal year. Abstentions
will be treated as shares present for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the approval of a matter
submitted to the stockholders for a vote. If a broker indicates on a Proxy that
it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares shall not be considered as present and entitled
to vote with respect to that matter.
Common Stock, $.10 par value ("Common Stock"), of which there were 11,487,325
shares outstanding on the record date, constitutes the only class of outstanding
voting securities issued by the Company. Each stockholder will be entitled to
cast one vote in person or by proxy for each share of Common Stock held by the
stockholder. Only stockholders of record at the close of business on June 2,
1997, will be entitled to vote at the meeting.
All of the expenses involved in preparing, assembling and mailing this Proxy
Statement and the material enclosed herewith will be paid by the Company. The
Company may reimburse banks, brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to beneficial owners of stock. This Proxy Statement and accompanying form of
Proxy are being mailed to stockholders on or about June 20, 1997.
ELECTION OF DIRECTORS
The Company's Articles of Incorporation establish the maximum number of
directors at nine and provide that the exact number of directors shall be
established by resolution by a majority of the entire Board of Directors. The
Board of Directors has adopted a resolution establishing the number of directors
at nine. There are presently nine directors serving on the Company's Board of
Directors.
All directors of the Company serve for a term of three years or until their
successors are elected and qualified. The three-year terms are staggered. The
terms of office of John F. Carlson, Lowell D. Nystrom, and James E. Doubles
expire upon election of directors at the 1999 Annual Meeting of Stockholders;
the terms of office of Leroy M. Fingerson, Joseph C. Levesque, and Donald M.
Sullivan expire upon the election of directors at the 1998 Annual Meeting of
Stockholders; and the terms of office of Frank D. Dorman, Kenneth J. Roering and
Lawrence J. Whalen expire upon the election of directors at the 1997 Annual
Meeting of Stockholders scheduled for July 17, 1997.
The Board of Directors recommends that Messrs. Dorman, Roering and Whalen be
re-elected to serve as directors of the Company, each for a term expiring at the
Annual Meeting of stockholders in 2000. Unless otherwise specified, proxies
solicited by the Board of Directors will be voted FOR the election of Messrs.
Dorman, Roering, and Whalen.
The election of each nominee requires the affirmative vote of the stockholders
holding at least a majority of Common Stock voting in person or by proxy at the
Annual Meeting. Although the Board of Directors has no reason to believe that
Mr. Dorman, Mr. Roering, or Mr. Whalen will be unable to serve as a director, if
that contingency should occur, it is intended that the shares represented by the
proxies will be voted, in the absence of contrary indication, for any substitute
nominee designated by the Board of Directors, unless the Board determines to
reduce its size appropriately.
<TABLE>
<CAPTION>
NAME, AGE,
AND POSITIONS DIRECTOR PRINCIPAL OCCUPATION AND TERM OF
WITH THE COMPANY SINCE CERTAIN OTHER DIRECTORSHIPS DIRECTOR*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John F. Carlson--58, 1987 Chairman, Excorp Medical, Inc., a company developing 1999
Director bioartificial liver. Mr. Carlson was Chairman and CEO of
Cray Research, Inc. from 1993 to May 1995, and an officer
and director of Cray Research, Inc., for more than five
years through May 1995.
James E. Doubles--56, 1990 President and Chief Operating Officer of the Company since 1999
President, Chief Operating July 1992; Executive Vice President and Chief Operating
Officer and a Director Officer of the Company from April 1989 until July 1992.
Frank D. Dorman--62, 1961 Part-time employee of the Company and 2000
part-time employee and a Consultant--Biomedicus-Medtronics for more than five years.
Director Prior to February 1997, Mr. Dorman was a part-time Scientist
at the University of Minnesota for more than five years.
Leroy M. Fingerson--64, 1961 Chief Executive Officer of the Company since 1961 and 1998
Chairman, Chief Executive Chairman of the Company since 1986. President of the Company
Officer and a Director from 1961 to July 1992.
Joseph C. Levesque--52, 1997 Chairman, President and Chief Executive Officer of Aetrium 1998
Director Incorporated for more than five years. Aetrium Inc. is a
manufacturer of electro-mechanical devices for automatic
testing and handling processes in semiconductor
manufacturing. Mr. Levesque is a director of Arden
Industrial Products, Inc.
Lowell D. Nystrom--61, Vice 1961 Vice President, Treasurer and Chief Financial Officer of the 1999
President, Chief Financial Company since 1961.
Officer, Treasurer and a
Director
Kenneth J. Roering--55, 1987 Paul S. Gerot Chair in Marketing, Professor of Marketing in 2000
Director the Carlson School of Management at the University of
Minnesota for more than five years. Mr. Roering is a
director of Arctic Cat, Inc., Sheldahl Inc., and Transport
Corporation of America.
Donald M. Sullivan--61, 1977 President and Chief Executive Officer of MTS Systems 1998
Director Corporation, a manufacturer of factory automation and
testing equipment. Mr. Sullivan has been an officer of MTS
Systems Corporation for more than five years. Mr. Sullivan
is a director of MTS Systems Corporation and ADC
Telecommunications, Inc.
Lawrence J. Whalen--62, 1983 Principal, Lawrence Whalen Associates, Management Consultant 2000
Director specializing in medical products and high technology
businesses. Mr. Whalen was Chief Executive Officer of
Minneapolis Children's Medical Center, a tertiary care
pediatric hospital, from March 1992 to June 1994.
- --------------------
* Assuming the Reelection or Election of the Board's Nominees
</TABLE>
John F. Carlson and Lawrence J. Whalen are members of the Board of Directors'
Audit Committee. Donald M. Sullivan is an alternate member of the Audit
Committee. During fiscal 1997, this Committee met two times. The functions of
the Audit Committee include recommending to the Board of Directors, subject to
stockholder approval, the independent auditors; reviewing the results of the
annual audit; reviewing the adequacy of accounting and financial controls; and
instructing the auditors, as deemed appropriate, to undertake special
assignments.
John F. Carlson, Kenneth J. Roering, Donald M. Sullivan and Lawrence J. Whalen
are members of the Committee of Outside Directors. During fiscal 1997, this
Committee met two times. Mr. Joseph C. Levesque became a member of this
Committee at the time of his election to the Board of Directors on May 30, 1997.
The Committee of Outside Directors reviews and recommends to the Board of
Directors salaries and incentive compensation plans for senior management. The
Company's Stock Option Plan of 1992 in which employee directors participate is
also administered by the Committee of Outside Directors.
During fiscal 1997, the Board of Directors of the Company met five times. During
this period all directors attended 75% or more of the aggregate of the total
number of meetings of the Board of Directors and all committees of the Board of
Directors on which they served. The Board of Directors does not have a
nominating committee.
EXECUTIVE COMPENSATION
The following table shows, on an accrual basis, the aggregate compensation
received from the Company and its subsidiaries for the fiscal years ended March
31, 1997, 1996, and 1995, by each person who was an executive officer of the
Company (a total of three people) and whose total remuneration for fiscal 1997
exceeded $100,000:
<TABLE>
<CAPTION>
TABLE OF SUMMARY COMPENSATION(1)
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
---------------- ----------------
Awards
----------------
Number of Shares
Name and Underlying Stock All Other
Principal Position Year Salary ($) Options Granted Compensation($)(2)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Leroy M. Fingerson, 1997 220,535 15,585 10,420
Chairman & CEO 1996 208,549 7,356 9,867
1995 198,009 5,088 9,814
James E. Doubles, 1997 192,980 13,736 10,237
President & COO 1996 179,635 18,414 9,683
1995 171,591 4,436 9,750
Lowell D. Nystrom, Vice 1997 170,480 11,973 10,048
President & CFO 1996 161,075 5,754 9,423
1995 154,234 3,980 9,448
- ------------------
1 No other annual compensation was paid, no restricted stock was awarded
and no payouts were made under any long term incentive compensation
plan.
2 During fiscal 1997, the Company maintained a 401(k) profit sharing plan
(the TSI Incorporated Employee Retirement and Profit Sharing Plan) for
which substantially all regular employees of the Company and certain of
its subsidiaries who have been employed for at least one year are
eligible. Employees may make salary reduction contributions to the plan
in accordance with Section 401(k) of the Internal Revenue Code. For
fiscal 1997, the Company matched 50 percent of such contributions up to
three percent of such employee's compensation and 25 percent of such
contributions over three percent but not greater than six percent of
such employee's compensation. In addition, the Company makes annual
profit-sharing contributions to the plan as determined by the Board of
Directors of the Company. For fiscal 1997, the Company made a
profit-sharing (retirement) contribution equal to four percent of
compensation paid to all eligible employees. In total, for fiscal 1997,
the Company contributed $1,071,000 to the TSI Incorporated Employee
Retirement and Profit Sharing Plan, of which $700,000 was contributed
as the four percent of eligible compensation and $371,000 was
contributed as matching funds for salary reduction contributions by
employees. For fiscal 1997, the Company's profit-sharing and matching
contributions to the plan for Dr. Fingerson, Mr. Doubles and Mr.
Nystrom, were $10,420, $10,237, and $10,048, respectively.
(The Company also made payments of $1,024,000 for fiscal 1997 under the
TSI Cash Bonus Program based on a formula adopted by the Board of
Directors which specifies an amount equal to 15 percent of the pretax
operating earnings above 12 percent of non-cash assets employed, paid
to all eligible employees except executive officers and division
managers who are eligible to participate in the Management Performance
Stock Option Plan.)
</TABLE>
<TABLE>
<CAPTION>
TABLE OF OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants For Option Term(4)
- ----------------------------------------------------------------------------- --------------------------
Number of % of Total
Shares Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted Fiscal Year ($/Sh)(3) Date 5%($) 10%($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Leroy M. 2,650(1) 1.8 10.000 Jan. 26, 2004 10,788 25,141
Fingerson 12,935(2) 8.6 9.688 Apr 2, 2004 51,013 118,882
James E. Doubles 2,243(1) 1.5 10.000 Jan. 26, 2004 9,131 21,280
11,493(2) 7.7 9.688 Apr 2, 2004 45,326 105,629
Lowell D. Nystrom 1,854(1) 1.2 10.000 Jan. 26, 2004 7,548 17,589
10,119(2) 6.8 9.688 Apr 2, 2004 39,907 93,001
- -------------------
1 Options were granted under the Stock Option Plan of 1992 with an
exercise price equal to the market price on the date of grant and
become exercisable in 33 1/3 percent annual installments commencing one
year from the date of grant.
2 Referenced options are grants of Management Performance Options which
are made after the Company's financial results for the fiscal year are
available, but relate to performance in the fiscal year to which this
table relates and are, therefore, disclosed herein. Such options are
immediately exercisable and were granted pursuant to the Management
Performance Option Plan under the Stock Option Plan of 1992.
3 The number, kind, and price of the shares subject to each outstanding
option will be proportionately and appropriately adjusted in the event
of any stock dividend, stock split, recapitalization, reclassification,
or similar change in the Company's outstanding securities.
4 Based on actual option term and annual compounding.
</TABLE>
<TABLE>
<CAPTION>
TABLE OF OPTION EXERCISES AND YEAR-END VALUE
Aggregated Options Exercised in Last Fiscal Year and Year-End Option Value(1)
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at Fiscal Year End(1) at Fiscal Year End(2)
----------------------------- --------------------------
Shares
Acquired Value Exercisable Unexercisable Exercisable Unexercisable
Name on Exercise(#) Realized($) (#) (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Leroy M. Fingerson 0 0 41,836 2,650 198,600 0
James E. Doubles 18,000 105,750 24,784 10,243 93,742 10,500
Lowell D. Nystrom 0 0 36,646 1,854 176,506 0
- -------------------
1 Does not include Management Performance Options granted as of April 2,
1997, to the named executives based on their performance during fiscal
1997.
2 Represents the difference between the midpoint between the high and low
reported trades on the NASDAQ National Market System of the Company's
Common Stock on March 31, 1997, ($9.6875), and the exercise price of
the options.
</TABLE>
EMPLOYEE STOCK PURCHASE PLAN
The Company's Employee Stock Purchase Plan of 1994 provides for the offering of
Common Stock of the Company to employees of the Company and certain of its
subsidiaries under the Plan at a price lower than current market price (not less
than 85 percent of the lesser of the fair market value of the Company's Common
Stock on the date the option is granted or on the date the option is exercised),
and provides for purchase of such shares through payroll deduction. During
fiscal 1997, stock options for an aggregate of 82,934 shares of Common Stock of
the Company were granted under this plan. During fiscal 1997, Mr. Doubles was
the only executive officer who participated in the plan. Mr. Doubles was granted
a stock option for 2,500 shares that has not yet been exercised.
DIRECTOR COMPENSATION
Each director who is not also an employee of the Company currently receives cash
compensation at a rate of $12,000 per year for serving on the Board. Under the
Company's Stock Option Plan of 1992, directors who are not employees of the
Company annually receive a non-statutory option, granted on the date of the
Company's annual meeting, to purchase 1,500 shares of Common Stock at the fair
market value at the date of the Company's Annual Meeting. On July 17, 1997,
outside directors, Messrs. Sullivan, Whalen, Carlson, and Roering, were each
granted options to purchase 1,500 shares of Common Stock at an exercise price of
$16.00 per share, which, subsequent to the 2-for-1 stock split effective August
17, 1996, became 3,000 shares each at an exercise price of $8.00 per share. On
May 30, 1997, the date of his election to the Company's Board of Directors,
Outside director, Mr. Levesque, was granted a 1,500 share option at an exercise
price of $9.00 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no compensation committee interlocks with other companies within the
meaning of the SEC proxy rules and none of the members of the Committee of
Outside Directors has been an officer or employee of the Company or its
subsidiaries.
REPORT OF THE COMMITTEE OF OUTSIDE DIRECTORS
The Committee of Outside Directors recommends to the Board the salary levels,
benefit programs and incentive compensation plans of all executive officers.
Committee members consist of the five outside board members.
To maintain a consistent philosophy of compensation throughout the Company,
almost all compensation programs apply to all employees of the Company. This is
based on the philosophy that Company success is based on the coordinated efforts
of all employees. As explained below, the only difference for executive officers
is that they do not participate in the profit sharing bonus. Instead, they have
a performance stock option program that provides rewards based on growth and
profitability.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with business
objectives and performance, and to enable the Company to attract, retain, and
reward employees who contribute to the long term success of the Company. The
Company's compensation program for executive officers is based on the same three
principles applicable to compensation decisions for all employees of the
Company:
THE COMPANY PAYS COMPETITIVELY.
The Company is committed to providing a pay program that helps attract and
retain the best people in the industry. To ensure that pay is competitive,
the Company regularly compares its pay practices with those of other
comparable companies and sets its pay parameters based on this review.
THE COMPANY PAYS FOR PERFORMANCE.
The performance based stock option program rewards executive officers based
on corporate growth and profitability. In addition to comparing salaries
with those of other comparable companies, salary levels are established by
considering corporate performance and individual factors that take into
account management effectiveness in areas not directly related to financial
performance.
THE COMPANY STRIVES FOR FAIRNESS IN THE ADMINISTRATION OF PAY.
The Company applies its compensation philosophy worldwide. The Company
strives to achieve a balance of the compensation paid to a particular
executive and the compensation paid to other executives both inside the
Company and at comparable companies.
COMPENSATION VEHICLES
The Company's compensation program includes cash and equity-based compensation.
It has permitted the Company to successfully attract and retain key employees,
the result being the ability to provide useful products and services to our
customers, to enhance stockholder value, to motivate technical innovation, to
foster teamwork, and to adequately reward employees.
LIMITS ON DEDUCTIBLE COMPENSATION PAYABLE TO EXECUTIVE OFFICERS
The Omnibus Reconciliation Act of 1993 added Section 162(m) to the Internal
Revenue Code of 1986, as amended (the "Code") limiting corporate deductions to
$1,000,000 for certain compensation paid to the chief executive officer and each
of the four other most highly compensated executives of publicly held companies.
The Company does not believe it will pay "compensation" within the meaning of
Section 162(m) to such executive officers in excess of $1,000,000 in the
foreseeable future. Therefore, the Company does not have a policy at this time
regarding qualifying compensation paid to its executive officers for
deductibility under Section 162(m), but will formulate a policy if compensation
levels ever approach $1,000,000.
CASH BASED COMPENSATION
SALARY
The Company sets base salary for all employees, including executive
officers, by considering the responsibilities of each position and
reviewing performance. Salaries are surveyed and compared with the
mid-ranges of the aggregate of base salary and annual bonus for competitive
positions in the market.
PROFIT SHARING/RETIREMENT
The Company provides an annual retirement contribution of four percent of
credited compensation for all employees, including executive officers, or
100 percent of the Company's pre-tax income for the fiscal year, whichever
is less. In addition, the Company provides matching contributions of 50
percent of employee salary reduction contributions up to three percent of
such employee's compensation and 25 percent of such contributions over
three percent but not greater than six percent of such employee's
compensation.
EQUITY-BASED COMPENSATION
INCENTIVE STOCK OPTION PROGRAM
Approximately 15 percent of the Company's employees, including executive
officers, have incentive stock options, the number depending on
responsibility level and years of service. This program grants options each
year totaling about one percent of the outstanding stock.
MANAGEMENT PERFORMANCE STOCK OPTION PROGRAM
Executive officers participate in a Management Performance Stock Option
program. The number of shares available is based on the size of the Company
and the return on equity.
The intent of this program is to provide executive officers with a
consistent long-term incentive program where the reward depends both on the
performance of the Company for the current year (number of shares) and the
future performance of the Company (growth in value of shares). Under this
plan the number of shares available for executive officers depends on the
total sales level of the Company and the performance of the company in
achieving return on equity for each fiscal year, based on a formula adopted
by the Board of Directors. Granting of option shares begins at a level of
10 percent return on equity and reaches a maximum at 22 percent return on
equity. For fiscal 1997, at a total sales level of $80.2 million, a maximum
of 45,424 shares would have been available to grant to executive officers.
Because performance under this plan was at 88.5 percent of maximum
potential, the option shares granted to executive officers was 40,188
shares.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
At a given date each year all employees who own less than five percent of
the Company's outstanding stock can set aside a certain percentage of their
salary for purchase of Company stock under a qualified Employee Stock
Purchase Plan. Twelve months later, the employee can use the money set
aside to purchase Company stock at 15 percent less than the market price at
the beginning of the year or at the end of the year, whichever is less.
Only one of the three executive officers was eligible to participate in
this plan in fiscal 1997.
RATIONALE FOR CEO COMPENSATION
Dr. Leroy M. Fingerson has been CEO of the Company since its founding in 1961.
Dr. Fingerson has substantial holdings in Company stock, aligning his interests
very closely with those of the stockholders. His base compensation is determined
using comparisons to industry data and he participates in exactly the same plans
as other key executives. The committee reviews the mid-ranges of executive
compensation survey data, current and historical Company performance and
establishes a base salary that is considered fair and equitable. His
participation in the Management Performance Stock Option Program provides
incentive compensation tied to Company performance that emphasizes long-term
growth of stockholder value. For fiscal 1997, Dr. Fingerson was granted stock
options for 12,935 shares of Company stock under this plan. A maximum of 14,620
shares could have been granted to him if performance had reached 100 percent
under this plan.
COMMITTEE OF OUTSIDE DIRECTORS
Kenneth J. Roering, Chair
John F. Carlson
Joseph C. Levesque
Donald M. Sullivan
Lawrence J. Whalen
STOCK PRICE PERFORMANCE GRAPH
Set forth on page nine is a line graph comparing the yearly percentage change in
the cumulative total stockholder's return on the Company's Common Stock with the
cumulative total return on the NASDAQ Stock Market (U.S.) and a Peer Group Index
for the period of five fiscal years starting April 1, 1992 and ending March 31,
1997. The Peer Group Index includes all the NASDAQ U.S. companies referenced
under the three digit SIC code number 382, Laboratory and Analytical
Instruments. A total of 110 companies fell into this category during the five
year period ended March 31, 1997, with 87 of these companies still active on
March 31, 1997. This Peer Group Index was selected by the Company because it
includes many similar companies engaged in comparable markets. Calculations and
preparation of index data were done for the Company by the Center for Research
in Securities Prices (CRSP) at the University of Chicago, using market value
weighted stock prices and assuming dividend reinvestments over the five year
period, as required by the Securities and Exchange Commission. The graph also
shows the appropriate broad market index, which is the NASDAQ Stock Market
(U.S.), as prepared by CRSP.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
Performance Graph for
TSI Incorporated
[PLOT POINTS GRAPH]
CRSP Total Returns Index for: 03/31/92 03/31/93 03/31/94 03/31/95 03/29/96 03/31/97
- ----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
TSI Incorporated 100.0 91.5 129.2 143.2 281.8 304.3
Nasdaq Stock Market (US Companies) 100.0 115.0 124.1 138.0 187.4 208.5
NASDAQ Stocks (SIC 3820-3829 US Companies) 100.0 92.8 104.3 127.9 166.1 215.6
Lab Apparatus & Analyt, Opt, Measuring, & Controlling Instr
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 03/31/92.
</TABLE>
PRINCIPAL STOCKHOLDERS
Information as to the name and holdings of each person known by the Company to
be the beneficial owner of more than five percent of its Common Stock as of June
2, 1997, each director of the Company, each of the Company's executive officers
named in the Summary Compensation table in the Proxy Statement, and all
executive officers and directors of the Company as a group, is set forth below.
Except as indicated below, the Company believes that each of such persons or
their spouse has the sole voting and investment powers with respect to such
shares:
Name and Address Amount of Common Percent
Title of Class of Beneficial Owner Stock Beneficially Owned of Class
- -------------------------------------------------------------------------------
Common Stock First Bank System, Inc. 867,000 7.5
601 Second Ave. South
Minneapolis, MN 55402
Common Stock Leroy M. Fingerson 761,072(1) 6.6
500 Cardigan Road
Shoreview, MN 55126
Common Stock Lowell D. Nystrom 658,807(2) 5.7
500 Cardigan Road
Shoreview, MN 55126
Common Stock Frank D. Dorman 475,910(3) 4.1
301 Burntside Drive
Minneapolis, MN 55422
Common Stock James E. Doubles 88,184(4) 0.8
Common Stock Donald M. Sullivan 37,500(5) 0.3
Common Stock Kenneth J. Roering 30,750(5) 0.3
Common Stock Lawrence J. Whalen 28,500(5) 0.2
Common Stock John F. Carlson 24,000(5) 0.2
Common Stock Joseph C. Levesque 1,500(6) --
Common Stock All directors and 2,106,223(7) 18.1
executive officers as a
group (9 persons)
- ----------------
1 Includes 41,836 shares of Common Stock which Dr. Fingerson has the
right to acquire by the exercise of stock options he holds under the
Stock Option Plan of 1992.
2 Includes 36,646 shares of Common Stock which Mr. Nystrom has the right
to acquire by the exercise of stock options he holds under the Stock
Option Plan of 1992.
3 Includes 9,000 shares of Common Stock which Mr. Dorman has the right to
acquire by the exercise of stock options he holds under the Stock
Option Plan of 1992.
4 Includes 24,784 shares of Common Stock which Mr. Doubles has the right
to acquire by the exercise of stock options he holds under the Stock
Option Plan of 1988 and the Stock Option Plan of 1992.
5 Includes 10,500 shares of common stock that each outside director has
options to acquire under the Stock Option Plan of 1992.
6 Includes 1,500 shares of Common Stock which Mr. Levesque has the right
to acquire by the exercise of stock options he holds under the Stock
Option Plan of 1992.
7 Includes 155,766 shares of Common Stock subject to stock options which
are exercisable within 60 days of the date of this Proxy Statement.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are also required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended March 31, 1997 all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with.
AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP, who served as
independent auditors of the Company for the fiscal year ended March 31, 1997, as
independent auditors of the Company for the fiscal year ending March 31, 1998,
it being intended that such appointment would be presented for ratification to
the stockholders. In the event the stockholders do not ratify the appointment of
KPMG Peat Marwick LLP, the selection of other independent auditors will be
considered by the Board of Directors. The Board of Directors recommends that the
stockholders vote FOR ratification of the appointment of KPMG Peat Marwick LLP.
The affirmative vote of stockholders holding at least a majority of Common Stock
voting in person or by proxy at the Annual Meeting is necessary for approval.
Unless otherwise specified, proxies solicited by the Board of Directors will be
voted FOR ratification of the appointment of KPMG Peat Marwick LLP. A
representative of KPMG Peat Marwick LLP, who will have an opportunity to make a
statement if he or she so desires, will be present at the meeting and will be
available to respond to appropriate questions.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders of the Company intended to be presented at the
Company's next Annual Meeting of stockholders must be received by Lowell D.
Nystrom, Vice President of the Company, at the above address no later than
February 23, 1998, in order for any such proposals to be considered for
inclusion in the Company's Proxy Statement and form of Proxy relating to that
meeting.
OTHER MATTERS
The Board of Directors does not intend to bring before the meeting any business
other than as set forth in this Proxy Statement and has not been informed that
any other business is to be presented to the meeting. However, if any matters
other than those referred to above should properly come before the meeting, it
is the intention of the persons named in the enclosed Proxy to vote such Proxy
in accordance with their best judgment.
Please sign and return promptly the enclosed Proxy in the envelope provided. The
signing of a Proxy will not prevent your attending the meeting and voting in
person.
By Order of the Board of Directors
Laura J. Cochrane
Secretary
June 20, 1997
