SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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 Section 240.14a-11(c) or
Section 240.14a-12
[ ] Confidential for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
National Technical Systems, Inc.
------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Ralph Clements, Harry Derbyshire
------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] 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 transaction 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: $250
--------------------------------------
2) Form, Schedule or Registration Statement No.: N/A
----------------
3) Filing Party: N/A
------------------------------------------------
4) Date Filed: N/A
--------------------------------------------------
Notes: Check numbers 104129 and 104130 were deposited on September 8, 1992
in the total amount of $250. This amount remains as available,
non-restricted fees.
Page 1 of 16 <PAGE>
NATIONAL TECHNICAL SYSTEMS, INC.
24007 Ventura Boulevard
Calabasas, California 91302
NOTICE OF ANNUAL MEETING
To the Shareholders:
Notice is hereby given that the annual meeting of shareholders of
National Technical Systems, Inc., a Delaware corporation, will be held at
the Company's Rye Canyon Test Facility, 25100 Rye Canyon Road, Building
#202, Valencia, California 91355, on Thursday, June 29, 1995 at 11:00 A.M.
for the following purposes:
1. To elect three directors for terms expiring in 1998;
2. To ratify Ernst & Young as auditors for the year ending
January 31, 1996; and
3. To transact such other business and to consider and take
action upon any and all matters that may properly come
before the meeting or any adjournment or adjournments
thereof. Management has no information of any such other
matters.
Pursuant to the provisions of the Company's Bylaws, the Board of
Directors has fixed the close of business on May 12, 1995 as the record
date for the determination of shareholders entitled to notice of and to
vote at the meeting or any adjournment thereof.
Financial information concerning the Company is contained in the
Annual Report for the fiscal year ended January 31, 1995, which accompanies
this Notice of Annual Meeting.
If you are unable to attend the meeting in person, please execute
the enclosed Proxy and return it in the enclosed self-addressed, stamped
envelope. If you later find that you can be present, you may, if you wish,
vote in person, or you may revoke your proxy or file a new proxy bearing a
later date with the Secretary at any time before the voting.
By Order of the Board of Directors
/s/ Harold Lipchik
Harold Lipchik
Secretary
Dated: May 30, 1995
Page 2 of 16 <PAGE>
NATIONAL TECHNICAL SYSTEMS, INC.
24007 Ventura Boulevard,
Calabasas, California 91302
_____________________
PROXY STATEMENT
_____________________
SOLICITATION
The accompanying Proxy is solicited by the Board of Directors for
use at the annual meeting of shareholders to be held on Thursday, June 29,
1995, or any adjournment thereof. A Proxy may be revoked by the person
giving it at any time before it is exercised, either by giving another
proxy bearing a later date or by notifying the Secretary of the Company in
writing of such revocation. The giving of the Proxy will not affect your
right to vote in person if you later should find it convenient to attend
the meeting. The Proxy will be voted in accordance with the specifications
made.
The Company will bear the entire cost of preparing, assembling,
printing, and mailing this Proxy Statement, the Proxy, and any additional
material which may be furnished to shareholders by the Company. Copies of
solicitation material may be furnished to brokerage houses, fiduciaries,
and custodians to forward to their principals, and the Company may
reimburse them for their expenses in so doing. The Company does not expect
to pay any commission or remuneration to any person for solicitation of
proxies.
This Proxy Statement and the Proxy are being mailed to
shareholders on or about May 30, 1995.
Solicitation may be made by mail, personal interview, telephone,
and telegraph by officers and regular employees of the Company.
The close of business on May 12, 1995, has been fixed as the
record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting.
The outstanding voting securities of the Company at May 12, 1995,
consisted of 6,650,777 shares of $.01 par value Common Stock. Each share
is entitled to one vote. Cumulative voting is not permitted for the
election of directors or otherwise.
The presence in person or by proxy of the holders of a majority
of the shares entitled to vote, will constitute a quorum for the
transaction of business at the Annual Meeting.
A plurality of the votes cast in person or by proxy and entitled
to vote at the Annual Meeting is required for the election of directors.
The affirmative vote of the holders of shares of Common Stock representing
a majority of votes is required for ratification of Ernst & Young as
auditors for the year ending January 31, 1996 and the approval of such
other matters as may properly come before the Annual Meeting.
Page 3 of 16 <PAGE>
Abstention and broker non-votes have the same effect as votes
against proposals presented to shareholders other than the election of
directors. They have no effect on the election of directors. A broker
non-vote occurs when a nominee holding shares for a beneficial owner votes
on one proposal, but does not vote on another proposal because the nominee
does not have discretionary voting power and has not received instructions
from the beneficial owner.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following tabulation indicates as of May 12, 1995, those
persons known to the Company to be beneficial owners of five percent or
more of the Company's Common Stock.
Name and Address of Number of Shares Percent
Beneficial Owner Beneficially Owned<F1> of Class
- - - ------------------- ---------------------- --------
Aaron Cohen.................... 1,124,771 16.9%
P.O. Box 1960
Fontana, California 92334
Jack Lin....................... 1,120,718<F2> 16.8%
24007 Ventura Boulevard
Calabasas, California 91302
Arthur Edelstein............... 345,534 5.2%
24007 Ventura Boulevard
Calabasas, California 91302
Luis A. and Jacqueline E.
Hernandez<F3>................. 330,400 5.0%
3069 Misty Harbor
Las Vegas, Nevada 89117
[FN]
<F1> Includes shares covered by options that are exercisable within 60 days
as follows: Edelstein, 27,659 and Cohen 5,000, and shares in the
National Technical Systems Employee Stock Ownership Plan, as follows:
Lin 6,437 and Edelstein 4,662.
<F2> Pursuant to an Interlocutory Judgment of Dissolution of Marriage
between Jack Lin and Lilyan P. Lin dated August 9, 1978, Mr. Lin has
Ms. Lin's Proxy to vote all shares of the Company owned by the latter,
so long as certain conditions set forth in the Judgment continue to be
met by Mr. Lin. Mr. Lin and Ms. Lin also have cross rights of first
refusal to purchase the other's shares when proposed to be sold in a
private transaction. Mr. Lin's 1,120,718 shares includes Mrs. Lin's
77,042 shares of the Common Stock of the Company.
Page 4 of 16 <PAGE>
<F3> This information is based on a Schedule 13D filed with the Securities
and Exchange Commission on or about July 13, 1994.
To the knowledge of management, no other person owns beneficially
as much as 5% of the outstanding stock of the Company. The tabulation
under "Nomination and Election of Directors" indicates the number of shares
owned beneficially by each nominee as of the record date. The directors
and executive officers of the Company, as a group (10 persons), owned
beneficially (including shares owned by Lilyan P. Lin and subject to
Mr. Lin's proxy) as of the record date a total of 1,782,143 shares, or
26.8% of the outstanding stock.
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of nine
members, who are divided into three classes. Directors are elected for
terms of three years. At the Annual Meeting, the term of office of the
Class I directors will expire and three directors will be elected to serve
for a term of three years and until their respective successors are
elected.
The Board intends to cause the nomination of the three persons
named below for election as directors. The directors will be elected by
the holders of the Common Stock. The persons named as proxy holders in the
accompanying form of proxy have advised the Company that they intend at the
Annual Meeting to vote the shares covered by proxies held by them for the
election of the nominees named below. If any or all of such nominees
should for any reason become unable to serve or for good cause will not
serve, the persons named in the accompanying form of proxy may vote for the
election of such substitute nominees, and for such lawful term or terms, as
the Board may propose. The accompanying form of proxy contains a discre-
tionary grant of authority with respect to this matter. The Board of
Directors has no reason to believe the nominees named, or any of them, will
be unable to serve if elected.
No arrangement or understanding exists between any of the
nominees and any other person or persons pursuant to which any nominee was
or is to be selected as a director or nominee.
The names of the nominees for Class II director and the Class I
and Class III directors who will continue in office after the Annual
Meeting until the expiration of their respective terms, together with
certain information regarding them, including the amount of Common Stock
beneficially owned by them, are as follows:
Page 5 of 16 <PAGE>
<TABLE>
<CAPTION>
Common Stock of
the Company
Year Beneficially
Term owned as of
Director Will May 12, 1995 Percent
Name Age Position or Office Since Expire <F1><F2> of Class
- - - ---- --- ------------------ -------- ------ -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Nominees for
Class II Directors
- - - ------------------
Ralph Clements 62 President of 1975 1998 1,134 <F**>
Clements and <F*>
Associates; Director
Harry Derbyshire 69 Chairman of the 1983 1998 0 <F**>
Board of J.C. Carter <F*>
Company, Inc.;
Director
Arthur Edelstein 57 Executive Vice 1980 1998 345,534 5.2%
President of the <F*>
Company; Director
Directors Continuing
in Office
- - - --------------------
Class I Directors
- - - -----------------
Richard Short 52 Senior Vice 1988 1997 90,383 1.4%
President of the
Company; Director
William Traw 56 Senior Vice 1988 1997 51,308 <F**>
President of the
Company; Director
William McGinnis 37 Vice President of 1994 1997 13,218 <F**>
the Company
Class III Directors
- - - -------------------
Aloysius Casey 63 Chairman of the 1988 1996 18,036 <F**>
Board of the Company
Jack Lin 62 President and Chief 1975 1996 1,120,718 16.8%
Executive Officer of <F3><F4>
the Company;
Director
Robert Lin 37 Founder and 1988 1996 103,952 1.6%
President of the
Trilin Group, Inc.;
Director
</TABLE>
Page 6 of 16 <PAGE>
[FN]
<F*> If elected at the annual meeting
<F**> Less than 1%
<F1> Includes shares covered by options exercisable within 60 days, as
follows: Clements 625; R. Lin, 9,895; Edelstein, 27,659; Short,
33,482; Traw 11,923; McGinnis, 13,218; and J. Lin, 12,500.
<F2> Includes shares in the National Technical Systems Employee Stock
Ownership Plan, as follows: J. Lin, 6,437, Traw, 3,045;
Edelstein, 4,662; Short, 2,905; and McGinnis, 1,803.
<F3> Does not include 11,238 shares owned by Mr. J. Lin's family other
than shares owned by R. Lin. Mr. Lin disclaims any beneficial
interest in shares owned by his respective family members.
<F4> Includes 77,042 shares owned by Mr. J. Lin's former wife, the
voting rights of which are subject to Mr. Lin's proxy. See
"Security Ownership of Certain Beneficial Owners."
Mr. Clements has been President of Clements and Associates, a
Sherman Oaks, California management consulting firm, for more than five
years.
Mr. Derbyshire has since January 1987 been Chairman of the Board
of J. C. Carter Company, Inc., a manufacturer of aerospace products. Prior
to his retirement in 1985, Mr. Derbyshire was Executive Vice President,
Chief Financial Officer and a director of Whittaker Corporation, a Los
Angeles, California diversified health sciences company with additional
business activities in the metals, marine, technology and chemical fields.
Mr. Derbyshire is also a director of Western Waste Industries, a waste
management services company.
Mr. Edelstein is Executive Vice President of the Company and has
been associated with the Company and it predecessors continuously since
1961.
Mr. Short is a Senior Vice President of the Company and has been
associated with the Company and its predecessors continuously since 1961.
Mr. Traw is a Senior Vice President of the Company and has been
associated with the Company and its predecessors continuously since 1963.
Mr. McGinnis is a Vice President of Company and has been
associated with the Company since 1980.
General Casey retired from the United States Air Force on July 1,
1988 after a 34-year career. At the time of his retirement he was the
Commander of the Space Division, Air Force Systems Command, Los Angeles Air
Force Base, California.
Page 7 of 16 <PAGE>
Mr. Jack Lin is a founder and President of the Company and has
been associated with the Company and its predecessors continuously since
1961.
Mr. Robert I. Lin is a founder and President, of Trilin Group,
Inc., a privately-owned manufacturer and distributor of products for the
advertising specialty and premium markets. Robert Lin is the son of Jack
Lin.
The Board of Directors of the Company held four regular and
special meetings during the last fiscal year. No Director attended fewer
than 75% of the meetings of the Board or of the Committees of which he was
a member.
The Company's Board of Directors has an Audit Committee which
consists of Messrs. Casey, Clements and Derbyshire. The function of the
Audit Committee is to meet with the independent certified public
accountants engaged by the Company to review (a) the scope and findings of
the annual audit, (b) accounting policies and procedures and the Company's
financial reports, and (c) the internal controls employed by the Company.
The Audit Committee held two meetings during the year.
The Compensation Committee of the Board of Directors considers
and makes recommendations to the Board of Directors on salaries, bonuses,
stock options and other forms of compensation for the Company's executive
officers. The Compensation Committee, which consists of Messrs. Clements
and Derbyshire, met twice during the year.
The Stock Option Committee, which consists of Messrs. Casey and
Derbyshire, met twice during the year.
The Nominating Committee which consists of Messrs. Derbyshire and
J. Lin selects nominees for election to the Board of Directors. The
Nominating Committee met once during the year.
Directors, other than employee-directors who receive no
additional compensation for serving on the Board, receive an annual
retainer of $10,000. In his capacity as Chairman of the Board, Mr. Casey
is paid an annual fee of $36,000. Directors also are reimbursed for
expenses which they reasonably incur in the performance of their duties as
directors of the Company. During the fiscal year ended January 31, 1995, a
total of $4,800 was paid to General Casey for consulting services.
STOCK OPTIONS AND PENSION PLANS
The Company has a 1981 employee incentive stock option plan
("1981 Plan"), a 1982 non-qualified stock option plan ("1982 Plan"), a 1988
stock option plan (the "1988 Plan") and a 1994 stock option plan (the "1994
Plan"). The 1981, 1982 and 1988 Plans have expired and no new options may
be granted thereunder. As of January 31, 1995, there were outstanding
options covering 33,253 shares in the 1981 Plan, 4,041 shares in the 1992
Plan, 239,509 in the 1988 Plan and 256,063 shares in the 1994 Plan, which
were unexercised.
Page 8 of 16 <PAGE>
Outstanding options under all plans are exercisable at 100% or
more of fair market (as determined by the Board of Directors) on the date
of grant. The options are contingent upon continued employment and are
exercisable, unless otherwise specified, on a cumulative basis of one-
fourth (or more for the 1982 Plan) of the total shares each year,
commencing one year from the date of grant. Options expire five to seven
years from the date of grant. At January 31, 1995, outstanding options
under all four plans represented 532,866 shares and reflected an average
price per share of $2.29 (range from $1.00 to $4.125), of which 223,183
were exercisable. During the year ended January 31, 1995, options
representing 76,484 shares were exercised under these plans at an average
price of $1.15 (range from $1.00 to $1.16) per share.
The Company has an employee stock ownership plan covering all
employees. Contributions by the Company are at the discretion of the Board
of Directors. The Company did not make a contribution in 1995, 1994 or
1993.
EXECUTIVE OFFICERS OF THE COMPANY
The only officer of the Company who is not a director is
Mr. Lloyd Blonder who is Senior Vice President and Chief Financial Officer.
Mr. Blonder is 55 years of age and has been associated with the Company
since 1983.
EXECUTIVE COMPENSATION
The following information is furnished with respect to the Chief
Executive Officer and the other most highly compensated executive officers
of the Company whose aggregate direct remuneration from the Company during
the fiscal year ended January 31, 1995 exceeded $100,000.
Page 9 of 16 <PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards
--------------------- ----------------------
All
Other Annual Other
Name and Compensation Restricted Compen-
Principal Annual ($) Stock Awards Options/ sation
Position Year Salary ($) Bonus ($) <F1><F2><F3> ($) SARs (#) ($)
- - - ------------- ------ ---------- --------- ------------ ----------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Jack Lin 1995 289,170 0 0 0 0 0
President and Chief 1994 261,564 8,000 12,115 0 0 0
Executive Officer 1993 228,173 0 33,317 0 0 0
Arthur Edelstein 1995 160,429 0 0 0 0 0
Executive Vice 1994 166,417 4,500 0 0 0 0
President 1993 147,964 0 0 0 0 0
Richard Short 1995 110,000 0 0 0 0 0
Senior Vice President 1994 108,010 4,500 0 0 0 0
1993 93,004 0 0 0 0 0
William Traw 1995 110,000 0 0 0 0 0
Senior Vice President 1994 103,858 4,500 0 0 0 0
1993 86,515 0 0 0 0 0
Lloyd Blonder 1995 105,000 0 0 0 0 0
Senior Vice President 1994 102,688 4,500 0 0 0 0
and Chief Financial 1993 86,515 0 0 0 0 0
Officer
</TABLE>
[FN]
<F1> Fair market value of 10,202 shares of restricted National Technical
Systems, Inc. common stock at a value of $12,115 taken in lieu of
cash compensation.
<F2> Fair market value of 27,827 shares of restricted National Technical
Systems, Inc. common stock at a value of $33,317 taken in lieu of
cash compensation.
<F3> Does not include perquisites or personal benefits which are the
lesser of $50,000 or 10% of total annual salary and bonus reported
for the named Executive Officer.
Page 10 of 16 <PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the
"Compensation Committee") is composed of the two independent, non-employee
directors named below. See the description of the Compensation Committee
functions above.
COMPENSATION POLICIES. Policies governing the compensation of
the Company's executives are established and monitored by the Compensation
Committee. All decisions relating to the compensation of the Company's
executives during fiscal year 1995 were made by the Compensation Committee.
In administering its compensation program, the Compensation
Committee follows its belief that compensation should reflect the value
created for shareholders while supporting the Company's strategic goals.
In doing so, the compensation programs reflect the following themes:
1. The Company's compensation programs should be effective in
attracting, motivating, and retaining key executives;
2. There should be a correlation among the compensation awarded
to an executive between, the performance of the Company as a
whole, and the executive's individual performance;
3. The Company's compensation programs should provide the
executives with a financial interest in the Company similar
to the interests of the Company's shareholders; and
4. The Company's compensation program should strike an
appropriate balance between short and long term performance
objectives.
The Company's executives are compensated through a combination of
salary, performance bonuses, and grants of stock options under the Option
Plans. The annual salaries of the executives are reviewed from time to
time and adjustments are made where necessary in order for the salaries of
the Company's executives to be competitive with the salaries paid by
similar companies. Performance bonuses, where appropriate, are generally
determined after the end of the Company's fiscal year based on an
assessment of the Company's results and the level of an individual's
particular performance for that year. Stock option grants are considered
by the Stock Option Committee from time to time.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. Mr. Lin's compensation
is determined pursuant to the principles noted above. The Stock Option
Committee granted to Mr. Lin on June 30, 1994, a ten-year non-qualified
stock option to purchase 13,700 shares of the Company's Common Stock at an
exercise price of $2.50 per share and a ten-year incentive stock option to
purchase 36,300 shares at $2.75 per share. All of the options are
exercisable in 25% annual increments commencing June 30, 1995. The last
salary increase Mr. Lin received was in June 1993.
POLICY WITH RESPECT TO INTERNAL REVENUE CODE SECTION 162(M). In
1993, the Internal Revenue Code of 1986 (the "Code") was amended to add
Page 11 of 16 <PAGE>
Section 162(m). Section 162(m), and regulations proposed thereunder, place
a limit of $1,000,000 on the amount of compensation that may be deducted by
the Company in any year with respect to certain of the Company's most
highly compensation officers. Section 162(m) does not, however, disallow a
deduction for qualified "performance-based compensation" the material terms
of which are disclosed to and approved by shareholders. At the present
time, the Company's executive officer compensation levels are substantially
below the $1,000,000 pay limit and the Company believes that it will most
likely not be affected by the regulation in the near future. The Board of
Directors plans to review the final regulations when issued and, where
appropriate in light of specific compensation objectives, take necessary
actions in the future to minimize the loss of tax deductions related to
compensation.
COMPENSATION COMMITTEE
Ralph Clements
Harry Derbyshire
Page 12 of 16 <PAGE>
INFORMATION CONCERNING STOCK OPTIONS
The following tables set forth certain information at January 31,
1995 and for the fiscal year then ended with respect to stock options
granted to and exercised by the individuals named in the Summary
Compensation Table above. No stock appreciation rights have been granted
and no options have been granted at an option price below fair market value
on the date of the grant.
<TABLE>
OPTION GRANTS IN THE LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates
of Stock Appreciation
Individual Grants for the Option Term <Fa>
<CAPTION>
Number of % of total Exercise At 0% At 5% At 10%
Options/ Options/SAR's or Base Annual Annual Annual
SAR's Granted to all Price per Expiration Growth Growth Growth
Name of Executive Granted Employees Share Date Rate Rate Rate
- - - ----------------- -------- -------------- --------- ---------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Jack Lin 50,000<Fb> 19.45% $2.68 6/30/2004 - $84,319 $213,681
Arthur Edelstein 20,000<Fc> 7.78% $2.50 6/30/2004 - $31,445 $ 79,687
Richard Short 20,000<Fc> 7.78% $2.50 6/30/2004 - $31,445 $ 79,687
William Traw 20,000<Fd> 7.78% $2.50 10/12/2004 - $31,445 $ 79,687
Lloyd Blonder 20,000<Fd> 7.78% $2.50 10/12/2004 - $31,445 $ 79,687
</TABLE>
[FN]
<Fa> These amounts represent certain assumed rates of appreciation only.
Actual gains, if any on stock option exercises or stock holdings are
dependent on the future performance of the stock and overall market
conditions. There can be no assurance that the amounts reflected in
this table will be achieved.
<Fb> Includes 13,700 non-qualified options at $ 2.50 per share and 36,300
incentive stock options at $2.75 per share. All options become
exercisable at the rate of 25% per year starting 6/30/95.
<Fc> Incentive stock options: all options become exercisable at the rate of
25% per year starting 6/30/95.
<Fd> Incentive Stock options: all options become exercisable at the rate of
25% per year starting 10/12/95.
Page 13 of 16 <PAGE>
The following table sets forth information concerning the
exercise of stock options during the fiscal year ended January 31, 1995 by
each of the named executive officers and the fiscal year end spread on
unexercised "in-the-money" options.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<CAPTION>
Number of
Unexercised Value of
In-the-Money Unexercised In-the-
Shares Value Options/SARs at Money Options/SARs
Acquired on Realized FY-End(#) at FY-End ($)<F2>
Name Exercise(#) ($) <F1> Exercisable Unexercisable Exercisable Unexercisable
- - - --------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jack Lin - - 12,500 37,500 - -
Art Edelstein - - 27,659 15,000 $30,631 -
Richard Short - - 33,482 17,500 $38,097 3,281
William Traw 16,084 $ 35,696 11,923 22,500 $15,908 3,281
Lloyd Blonder 18,296 $ 37,846 3,500 23,500 $ 4,594 4,594
</TABLE>
[FN]
<F1> Market Value of underlying securities at exercise date, minus the
exercise or base price of "in-the-money" options/SARs. "Value
Realized" is on a pre-tax basis.
<F2> Represents the difference between the closing price of the Company's
Stock on January 31, 1995 and the exercise price of the options.
Page 14 of 16 <PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative
total returns on investment for the Company, the Russell 2000 Index and the
S&P High Tech Composite Index. The stock price performance shown on the
graph below is not necessarily indicative of future price performance.
Cumulative Total Return
-------------------------------------------
1/90 1/91 1/92 1/93 1/94 1/95
-------------------------------------------
National Technical Sys Inc 100 65 65 90 189 146
Russell 2000 100 96 139 158 187 176
S & P High Tech Composite 100 115 123 128 158 176
Page 15 of 16 <PAGE>
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
The Company's officers, directors and consultants are required to
file initial reports of ownership and reports of change in ownership with
the Securities and Exchange Commission. Officers and directors are
required by Commission regulations to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on information provided to the Company by individual
officers, directors and consultants, the Company believes that during
fiscal 1995 all filing requirements applicable to officers and directors
have been complied with, except that a late report was filed by Mr. Cohen
upon his gift to a charitable institution of 1,000 shares of the Common
Stock of the Company.
CERTAIN TRANSACTIONS
During the fiscal year ended January 31, 1995, Aaron Cohen,
beneficial owner of 1,124,771 shares or 17.0% of the Common Stock, was paid
consulting fees by the Company in the amount of $110,065 in cash, of which
$72,853 was for services rendered to S&W Technical Services, a wholly owned
subsidiary of the Company, and $37,212 was paid for consulting services to
the Company.
RATIFICATION OF AUDITORS
The Board of Directors has selected Ernst & Young as auditors for
the Company for the year ending January 31, 1996. That firm became
auditors for the Company during the fiscal year ended January 31, 1990.
The Board recommends ratification of this action.
Representatives of Ernst & Young are expected to be present at
the meeting and will be given the opportunity to make a statement if they
desire to do so. It is also expected that they will be available to
respond to appropriate questions from shareholders at the meeting.
OTHER MATTERS
Management is not aware of any other matters to be presented for
action at the meeting or any adjournment thereof. However, if any matters
come before the meeting, it is intended that shares represented by Proxy
will be voted in accordance with the judgment of the persons voting them.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any proposals of shareholders intended to be presented at the
next annual meeting (to be held in June 1996) must be received by the
Company at its principal executive office located at 24007 Ventura
Boulevard, Calabasas, California 91302, not later than February 1, 1996.
Page 16 of 16 <PAGE>
