<PAGE>
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
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NOVAMETRIX MEDICAL SYSTEMS INC.
...............................................................................
(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):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $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.*
4) Proposed maximum aggregate value of transaction:
*Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] 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:
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2) Form, schedule or registration statement no.:
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4) Date Filed:
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<PAGE>
NOVAMETRIX
MEDICAL SYSTEMS INC.
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August 21, 1996
Dear Stockholder:
You may have received a mailing from a group calling itself the "13D
Shareholders Group Regarding Novametrix Medical Systems Inc." or the "Novametrix
13D Shareholder Group." That group is not affiliated with your Board of
Directors or the management of Novametrix and we do not endorse their views.
That group is soliciting your vote to replace two of your current board members
with their own hand picked nominees and have stated their intention to derail
the Company's definitive merger agreement to acquire Andros Inc., even before
having received the financial information relevant to an informed decision
regarding the merger.
The disruption caused by their campaign, which will result in additional expense
to your Company and distract management from day to day operations, is
particularly unfortunate now. We urge you not to take any action until you have
received and carefully considered the recommendations your Board of Directors
will be sending you shortly.
We are curious about the motives of the 13D Group since the Board of Directors
has presided over a remarkable recovery by the Company during the past five
years, reducing debt from approximately $24 million to approximately $5 million
and increasing stockholders' equity from less than $100,000 to more than $12
million, while the stock price rose from less than $1.00 per share to
approximately $6.00 per share. A price of $6.00 per share represents a price/
earnings ratio of approximately 36 times earnings per share for fiscal 1996
(calculated on a fully taxed basis) while the average P/E ratio for our industry
is 22 times earnings.
The 13D Group claims that they were "rebuffed by the Board of Directors." The
truth is that the Chairman of the Board, along with other Directors, through
numerous phone calls, correspondence and personal visits attempted to understand
the concerns of the group. We attempted to strike a compromise which might have
benefited ALL the stockholders. The Board of Directors was rebuffed in all
attempts at conciliation.
The 13D Group claims that the Board of Directors has no regard for the
stockholders' interests and that the Directors do not own stock in the Company
themselves. In fact, all of your Directors are stockholders, some are very
substantial stockholders. We absolutely want to drive stockholder value.
The 13D Group claims that the reconfiguration of the Board of Directors this
spring to equalize the number of Directors in each of the three classes of
Directors was contrary to the Certificate of Incorporation and By-laws of
Novametrix and the securities laws. In fact, the Board was reconfigured in order
to eliminate the unequal distribution of Directors among classes, which had
resulted from prior Director resignations, so as to conform to the requirements
of the Company's Certificate of Incorporation, which calls for three classes of
Directors which are equal in size. This Board action, which was taken in
accordance with our By-laws and applicable law, preceded any indication by the
13D Group that they were considering nominating a slate of Directors.
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1 BARNES INDUSTRIAL PARK ROAD * P.O. BOX 690 * WALLINGFORD, CT 06492
USA * 203-265-7701 * FAX 203-284-0753
<PAGE>
In addition to ensuring the Company is well managed and positioned to experience
substantial growth, the Board of Directors recently directed management to
engage an investment banker with the purpose of enhancing stockholder value. As
a result, over three months ago the Company engaged the investment banking firm
of Tucker Anthony Incorporated to:
* Review business plans, assess strategies for growth and acquisition,
present financial options and assist in the development and modeling
of projections:
* Assist the Company in the development of an overall financial
strategy to address the Company's plans to grow/maximize the value of
the Company.
* Assist in the development of a plan to broaden investor awareness of
the Company, which will include strategies to expand the number of
market makers and institutional ownership.
Tucker Anthony has since assisted the Company in its due diligence review of
Andros Inc., assisted the Company in the structuring of the transaction with
Andros and provided a Fairness Opinion to the Board of Directors with respect to
the transaction. These efforts culminated in the announcement on Tuesday, July
30 of the definitive agreement signed by the Company to acquire Andros Inc. The
Board believes this acquisition will substantially increase stockholder value.
Some of the Company's management soon will begin a period of visits and
correspondence with analysts, institutional buyers and retail brokers. Our goal
is to attract additional institutional sponsorship and analyst coverage. We
believe that the significantly larger size, critical mass and profitability of
the Company after the Andros merger, in addition to the expanded market
capitalization, will help further these goals.
Included herein is a copy of our most recent press release announcing the
Company's 1st Quarter earnings. These results and actions demonstrate that your
Board of Directors and management have both the commitment and the ability to
lead your Company to maximize value for ALL stockholders.
We anticipate sending you definitive proxy materials in September, after review
by the SEC, which will detail the benefits of the proposed Andros Inc. merger
and your Board's reasons for unanimously opposing the 13D Shareholders Group
solicitation.
WE STRONGLY URGE YOU NOT TO SIGN OR RETURN ANY PROXY CARDS YOU RECEIVE FROM THE
13D SHAREHOLDERS GROUP UNTIL YOU HAVE HAD THE OPPORTUNITY TO REVIEW AND
CAREFULLY CONSIDER THE COMPANY'S PROXY MATERIALS.
On behalf of the Board of Directors, I thank you for your continued interest and
support.
Sincerely yours,
William J. Lacourciere
President and Chief Executive Officer
Under applicable regulations of the Securities and Exchange Commission, the
Company and the current Directors may be deemed to be "participants" in the
Company's solicitation efforts at the upcoming Annual Meeting. The current
Directors beneficially own, collectively in the aggregate, including shares that
may be acquired under currently exercisable warrants and options, approximately
9.3% of the outstanding common stock of the Company.
<PAGE>
NOVAMETRIX
MEDICAL SYSTEMS INC.
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FOR IMMEDIATE RELEASE
AUGUST 19, 1996
NOVAMETRIX ANNOUNCES 1ST QUARTER EARNINGS
WALLINGFORD, CT., August 19, 1996 -- NOVAMETRIX MEDICAL SYSTEMS INC. (NASDAQ:
NMTX) today announced an increase in revenue and earnings for the first quarter
of Fiscal 1997 ended July 28, 1996.
Net income for the quarter ended July 28, 1996 increased to $648,000 or $0.08
per share on revenue of $6,422,000 compared to net income of $388,000 or $0.05
per share on revenue of $6,080,000 reported for the first quarter of the prior
fiscal year ended July 30, 1995. Net income for the first quarter of Fiscal 1997
reflects a net income tax benefit of $115,000 or $0.01 per share attributable to
a reduction in the differed tax asset valuation allowance. Without this tax
benefit, net income increased by 37% compared to net income reported for the
first quarter of fiscal 1996.
William J. Lacourciere, Chairman of the Board, President and Chief Executive
Officer, commenting on the results stated, "We are very pleased to report a net
income increase of 37% as revenues grew by 6%. In addition to the 1st quarter's
substantial improvement in earnings, the last several months have been marked by
a number of significant events for the Company. FDA approval to market a product
embodying a new concept in respiratory monitoring was received in June. In July
a new OEM Agreement for capnography products was signed with Johnson and Johnson
and the Company was certified by the British Standards Institute (BSI) as an
approved ISO 9001 facility for the design, development and manufacture of
medical products.
Also in July, a definitive agreement to acquire all the shares of Andros, Inc.,
a West Coast based manufacturer of medical and environmental products which
incorporate technology similar to that utilized by Novametrix was announced. The
merger, if approved by Novametrix shareholders, should offer many opportunities
for new product development, manufacturing economies, sales and marketing
efficiencies and should nearly triple revenues."
He continued, "On August 17th the Company completed its relocation to a larger
facility which will provide better and more efficient manufacturing, research
and development space and accommodate the Company's plans for future growth."
This press release contains forward looking information about the combined
company's projected revenues and combined operations. The combined company's
ability to achieve its projected results is dependent on a variety of factors,
many of which are outside management's control. Some of the most significant
factors, alone or in combination, would be the failure to integrate the
businesses of Novametrix and Andros successfully, and unanticipated slowdown in
the health care, automotive or environmental industries (as a result of cost
containment measures, changes in government regulation or other factors),
unanticipated technological developments which affect the competitiveness of the
combined company's products, or the unanticipated loss of business. Accordingly
there can be no assurance that the combined company will achieve its projected
operating results.
Novametrix is a designer, developer, manufacturer and marketer of medical
electronic instruments and sensors which non-invasively and continuously assess
a critically ill patient's oxygen, carbon dioxide and respiratory mechanics.
Novametrix' products are used in operating rooms, intensive care units,
respiratory care departments, emergency rooms and inter-and intra-hospital
patient transport.
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1 BARNES INDUSTRIAL PARK ROAD * P.O. BOX 690 * WALLINGFORD, CT 06492
USA * 203-265-7701 * FAX 203-284-0753
<PAGE>
NOVAMETRIX MEDICAL SYSTEMS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(000'S)
<TABLE>
<CAPTION>
QUARTER ENDED
<S> <C> <C>
7/28/96 7/30/95
------- -------
Revenue............................................. $6,422 $6,080
Cost and Expenses:
Cost of products sold.......................... 2,738 2,590
Research and product development............... 799 685
Selling, general and administrative............ 2,278 2,312
Interest....................................... 52 75
Other.......................................... 7 22
------- -------
5,874 5,684
INCOME BEFORE INCOME TAXES.......................... 548 396
Income taxes........................................ (100) 8
------- -------
NET INCOME.......................................... $648 $388
------- -------
------- -------
Net Income Per Common Share
Primary and Fully Diluted...................... $0.08 $0.05
Weighted Average Shares of
Common Stock Outstanding
Primary and Fully Diluted...................... 8,161,052 8,096,077
</TABLE>
