<PAGE>
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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
International Remote Imaging 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):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
9162 Eton Avenue
Chatsworth, California 91311
April 29, 1996
Dear IRIS Stockholder:
1995 was another banner year for IRIS. We set new annual revenue and
earnings records for the sixth year in a row. Our stock price increased fifty
percent during the year. The FDA submission for The White IRIS-Registered
Trademark-, our new leukocyte differential analyzer, was made in July. We were
very pleased with its comparative analytical performance in an extensive trial
carried out locally at Harbor-UCLA Medical Center. Thus, we anxiously await
clearance of this exciting new application of our slideless microscopy and real-
time imaging technology. Also, we began the aggressive implementation of a bold
new strategy to enlarge our urinalysis franchise into laboratories of all sizes,
making three acquisitions -- the Biovation specific gravity instrument line in
March of 1995, StatSpin Technologies in February of this year, and the Cen-
Slide-Registered Trademark- and FlowStar-Registered Trademark- urinalysis
products from UroHealth Sciences in March of this year. And we have been
engaged by Poly U/A Systems, Inc. to develop four potential new products for the
urinalysis market in a joint development program similar to the recently
completed program with LDA Systems, Inc. These and other exciting topics are
described in more detail below.
But first, here are some highlights of our performance for 1995. Revenues
totaling $13.2 million were up 20 percent from the prior year, consistent with
our longer term growth trend. We earned $2.1 million after two one-time noncash
adjustments. This was a 42 percent improvement over the $1.47 million we earned
in 1994. Our first adjustment was a one-time, non-cash charge of $2.9 million
against earnings for the acquisition of LDA Systems. The other was the
recognition of a $3.6 million tax benefit reflecting the increased rate at which
IRIS is utilizing its net operating loss carry-forward. The reason for these
adjustments is explained in more detail in our annual report on Form 10-K which
accompanies my letter.
In comparison to the 1994 Northridge earthquake and the brutal winter of
1994, mother nature was much kinder throughout 1995. Also, the uncertainties of
federal healthcare legislation seem behind us for the present. Therefore, our
attention, once again, was fully focused on the two main economic forces in our
marketplace -- efficiency and effectiveness. Fortunately, our products provide
outstanding labor savings and are more accurate and faster than traditional
methods, important qualities that satisfy the needs of both of these market
forces.
Our 1995 accomplishments go far beyond traditional performance measures.
One of the most remarkable accomplishments during 1995 was the simultaneous
introduction of two enhanced versions of The Yellow IRIS-Registered Trademark-
urinalysis workstation at the Clinical Laboratory Exposition held in conjunction
with the annual meetings of the American Association for Clinical Chemistry and
the American Society of Clinical Laboratory Scientists in Anaheim in July. Our
new Model 300 and Model 500 versions replace our earlier and long established
Models 250 and 450, respectively. Each new model offers dramatic improvements
over its respective predecessor. We are pleased that a company the size of IRIS
can introduce such improvements in two major laboratory instruments in the same
year. Many larger companies find it difficult to launch even one. Both of
these new models have been well received in the marketplace and should provide
the bulk of our new workstation sales throughout 1996. IRIS remains the leader
in automated microscopic urinalysis with its workstations now used in more than
75 percent of all U.S. medical schools, not to mention many other leading
hospitals nationwide. With the introduction of these new enhanced models, and
the prestigious testimonial base we have established, we aim to extend our
leadership as we expand into other segments of our marketplace.
Following fast behind these workstation enhancements is our new IRIS/BMC
Model 900UDx-TM- urine pathology system, a high-capacity system especially
designed for commercial reference and large hospital laboratories. This system
is the result of an intensive joint development program with Boehringer
Mannheim. The 900UDx is the industry's first fully-automated walkaway system
for performing complete chemical and microscopic profiles and offers the
fastest, most accurate, most cost-effective routine urinalysis possible today.
The system was unveiled at the Clinical Laboratory Management Association
meeting in Minneapolis last August, and received FDA clearance in March of this
year. The 900UDx will be manufactured by IRIS in Chatsworth and distributed by
IRIS in North America and by Boehringer Mannheim in the rest of the world. IRIS
expects to commence sales of the 900UDx in May.
<PAGE>
And then we come to our leukocyte differential analyzer -- The White IRIS-
Registered Trademark-. Whereas the 900UDx was developed in less than two years,
The White IRIS-Registered Trademark-, required more time because of its
revolutionary new concept and advanced application in hematology. Although our
1995 clinical trial at Harbor-UCLA Medical Center produced enough data for FDA
submission last July, the FDA has, on four separate occasions, asked a number of
questions requiring further clarification. Each time we believe we responded
satisfactorily, and we are hopeful that the FDA will grant clearance of this
exciting product soon. Pending its clearance, we plan to launch The White IRIS-
Registered Trademark- later this year.
We obtained all rights to The White IRIS-Registered Trademark- by our
acquisition of LDA Systems, Inc. (LDA) in June of 1995 for approximately 498,000
shares of IRIS common stock. LDA was formed in 1992 to enter into a joint
program with IRIS to complete development of The White IRIS-Registered
Trademark- leukocyte differential analyzer -- an instrument that we initially
developed during the course of two earlier Small Business Innovation Research
grants from one of the National Institutes of Health. This program also
generated six U.S. Patents and a number of other patent applications. Thus,
when these patents are included with others for the unique cytoprobe licensed
from Cytocolor, we have amassed a sizable multi-patent foundation for the
protection of our proprietary interests in this new area of opportunity for your
company.
We are a technology-rich company. IRIS ownership of U.S. patents now
totals 33, of which 16 were obtained from the several acquisitions we made since
our last report. In addition, we hold exclusive licenses to four U.S. patents
owned by Cytocolor dealing with the metachromatic cytoprobe used in The White
IRIS-Registered Trademark-. Two of our earlier patents are the subject of
litigation with Intelligent Medical Imaging, Inc. (IMI), an action described in
more detail in our accompanying annual report on Form 10-K. IRIS is vigorously
asserting its claims against IMI.
One of our strategic goals is to expand the sale of consumables among our
installed base of customers. Our distribution of CHEMSTRIP/IRIStrips-TM-,
obtained and sold by us through an exclusive arrangement with Boehringer
Mannheim, is a significant step in this direction. In little more than one
year, more than half of our existing customers have upgraded their workstations
with new CHEMSTRIP readers and are now purchasing CHEMSTRIP/IRIStrips-TM- from
us. The ruggedness and reliability of this new reader, designed especially for
our urinalysis workstations, has also solved the most frequent failure problem
we were experiencing among our many users of systems equipped with the old
reader.
Now that we have solidified our leadership in automated urinalysis among
leading hospitals nationwide, we have a new and exciting strategic goal. We
want to enlarge our urinalysis franchise to reach all laboratories in the
marketplace, even those outside of the current IRIS installed base, with cost-
effective, quality-improving products. Our purchase of the Biovation specific
gravity instrument, its controls and other consumables and their manufacture and
distribution was the first step in this expansion. These products have
generated significant sales and profits for us since their acquisition in March
of 1995 for $850,000 in cash.
More recently, in February of 1996, we acquired StatSpin Technologies, a
privately-owned manufacturer of small centrifuges and disposable devices used in
urinalysis, body fluid analysis, hematology and a variety of other specific
clinical laboratory applications. StatSpin fits well with our strategic plans
to bring cost-effective, quality-improving urinalysis products to laboratories
of all sizes. StatSpin distributes its products through the Curtin Matheson
Scientific Division of Fisher Scientific and a number of leading distributors to
the physician's office and veterinary laboratories markets. These distribution
channels are important in our plans to bring urinalysis products to the entire
laboratory market. Dr. Thomas F. Kelley, StatSpin founder and former chief
executive, will be the General Manager of this Norwood, MA-based operation and
also has been named an IRIS Vice President and member of our Board of Directors.
The acquisition, which qualified as a pooling-of-interests, involved the
issuance of approximately 340,000 shares of IRIS common stock and the assumption
of options and warrants to purchase another 126,000 shares of IRIS common stock.
StatSpin had sales of $3.1 million and earnings of $0.25 million during calendar
1995.
And lastly, we acquired the Cen-Slide-Registered Trademark- and FlowStar-
Registered Trademark- disposable urinalysis devices, products which increase
productivity, bring standardization and decrease biohazard exposure for routine
urinalysis in the non-automated laboratory setting, from UroHealth Systems,
Inc., in March of 1996, for $850,000 in cash and assumed liabilities. These
products generated UroHealth sales of approximately $550,000 during 1995. We
plan to market them through our newly acquired StatSpin subsidiary using their
established distribution channels. This is yet another step in the expansion of
our market franchise.
<PAGE>
In November of 1995, Poly U/A Systems, Inc. (PSI) completed a $2.6 million
private offering to accredited investors of units comprised of PSI common stock
and IRIS warrants. Each unit consisted of 2,000 shares of callable PSI common
stock and 4,000 warrants, each warrant exercisable beginning September 29, 1996
for one share of IRIS common stock at $6.50 per share. The initial offering of
120 units at $20,000 per unit was oversubscribed as 128 units were actually
sold. Pursuing new product development this way, as we did with LDA, has
enabled us to carry out significant research and development with minimal risk
to IRIS and without interrupting the trend in our quarter-to-quarter earnings
growth.
The funds raised by PSI will be used to pursue development of several new
products to further enhance the automation of urinalysis. These products are
expected to have dual potential as both stand-alone products and enhancements to
our flagship line of IRIS urinalysis workstations. IRIS and PSI are targeting
1997 for release of the first product from this program.
On January 1, 1996 we strengthened the operational side of our business
with the appointment of Jeffrey S. Williams as IRIS Executive Vice President and
Chief Operating Officer. Jeff joins us after serving as Vice President for
Global Urinalysis with Boehringer Mannheim. His biographical sketch appears in
the proxy statement. He brings extensive worldwide urinalysis business
experience that, obviously, is both pertinent and timely to our goals. Jeff and
I were the principal architects of our strategic alliance with Boehringer
Mannheim and have worked closely together on opposite sides of the table for
several years. I am delighted to have him aboard in this newly created role,
one which now allows me more time to pursue many more longer-term strategic
initiatives we have identified. Some of the activities described in this letter
illustrate the direction these efforts are taking us.
This year's Proxy Statement contains only three proposals. The first
proposal is for the re-election of Dr. Thomas F. Kelley and me for three-year
terms. Dr. Kelley was appointed to the Board of Directors in March of 1996
following the StatSpin acquisition. As his biographical sketch in our proxy
statement shows, he brings useful and pertinent experience to our Board. As for
me, it has been my pleasure to serve as a director and Chairman of the Board
since 1980. The second proposal is for ratification of the reappointment of
Coopers & Lybrand L.L.P. as our independent auditors. IRIS has a long-
established relationship with this firm. The last proposal is for the approval
of an amendment to the 1994 stock option plan. The amendment is to change the
formula for the award of options to non-employee Directors. Your management
endorses and asks your support of all three proposals. We hope you agree with
our recommendations, but even if you do not, please cast your vote. If you are
a registered stockholder, complete and return your Proxy Card promptly. If your
shares are held in a street name, please instruct your broker on how to cast
your vote and urge a prompt response. Your vote is important to us.
This year, as last year, our Annual Meeting of Stockholders will be
held at the Chatsworth Hotel. The hotel is located at 9777 Topanga Canyon
Boulevard, Chatsworth, California, approximately one mile north and one mile
west of the IRIS facilities. The meeting is on Thursday, June 20, 1996, and
will begin at 4:00 p.m. local time. Our four directors and IRIS management
welcome your presence and participation at the meeting and are looking forward
to seeing you there.
Sincerely,
/s/ Fred H. Deindoerfer
FRED H. DEINDOERFER
Chairman of the Board and President
THE ANNUAL MEETING IS ON JUNE 20, 1996. PLEASE RETURN YOUR PROXY IN TIME.
<PAGE>
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
9162 Eton Avenue
Chatsworth, California 91311
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 20, 1996
To the Stockholders of INTERNATIONAL REMOTE IMAGING SYSTEMS, INC:
The Annual Meeting of Stockholders of International Remote Imaging Systems,
Inc. ("IRIS") will be held at the Chatsworth Hotel at 9777 Topanga Canyon
Boulevard, Chatsworth, California, on June 20, 1996 at 4:00 p.m. local time for
the following purposes:
1. To elect two Class 3 Directors to hold office until the 1999 annual
meeting or until their successors are elected and qualified.
2. To ratify the appointment of the accounting firm of Coopers & Lybrand
L.L.P. as independent auditors of IRIS for the present year.
3. To act upon a proposal to amend the formula for stock option awards to
non-employee directors under the 1994 Stock Option Plan by (i) increasing the
size of the stock options awarded annually to continuing and reelected non-
employee directors from 4,000 shares of IRIS Common Stock to 5,000 shares of
IRIS Common Stock (10,000 shares of IRIS Common Stock in 1996) and
(ii) increasing the limit on the aggregate number of shares of IRIS Common Stock
for which an individual non-employee director may hold outstanding and
unexercised stock options from 20,000 shares of IRIS Common Stock to 25,000
shares of IRIS Common Stock.
4. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 26, 1996 as
the record date for determination of stockholders entitled to notice of, and to
vote at, said meeting and any adjournments or postponements thereof.
All stockholders are cordially invited to attend the meeting in person. In
any event, please mark, date, sign and return the enclosed proxy. My annual
message to IRIS Stockholders and the Company's official proxy statement are
attached to this notice.
/s/ Fred H. Deindoerfer
FRED H. DEINDOERFER
Chairman of the Board and President
April 29, 1996
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING OF STOCKHOLDERS, PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY THE
ENCLOSED PROXY IN THE STAMPED RETURN ENVELOPE PROVIDED. YOUR PROMPT RETURN OF
THE PROXY WILL HELP IRIS AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION TO
ASSURE A QUORUM AT THE MEETING.
THE ANNUAL MEETING IS ON JUNE 20, 1996. PLEASE RETURN YOUR PROXY IN TIME.
<PAGE>
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
9162 Eton Avenue
Chatsworth, California 91311
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 20, 1996
GENERAL INFORMATION AND VOTING RIGHTS
This proxy statement (the "Proxy Statement") and the enclosed proxy are
furnished in connection with the solicitation of proxies by the Board of
Directors of International Remote Imaging Systems, Inc., a Delaware corporation
("IRIS" or the "Company"), for use at the Annual Meeting of IRIS Stockholders
(the "Annual Meeting") to be held at the Chatsworth Hotel at 9777 Topanga Canyon
Boulevard, Chatsworth, California on Thursday, June 20, 1996 at 4:00 p.m. local
time and any adjournments or postponements thereof. Enclosed with this Proxy
Statement is a copy of the IRIS Annual Report on Form 10-K (without exhibits)
for the fiscal year ended December 31, 1995. However, it is not intended that
the Annual Report be a part of this Proxy Statement or a solicitation of
proxies. IRIS anticipates that the Proxy Statement and enclosed proxy will
first be mailed or given to its stockholders on or about May 1, 1996.
A proxy may be revoked by filing with the Secretary of IRIS a written notice
of revocation or a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. Attendance in person at the Annual Meeting
does not itself revoke an otherwise valid proxy; however, any stockholder who
attends such meeting may orally revoke his proxy at the Annual Meeting and vote
in person. All properly executed proxies received prior to or at the Annual
Meeting, and not revoked, will be voted at the Annual Meeting with the
instructions indicated on such proxies. If no instructions are indicated, such
proxies will be voted FOR the election of the nominees as the Class 3 Directors
and FOR Proposals 2 and 3. In addition, the proxy holders will vote in their
sole discretion upon such other business as may properly come before the meeting
and any adjournments or postponements thereof.
The cost of this solicitation of proxies will be borne by IRIS. Directors,
officers and regular employees of IRIS may solicit proxies in person, by
telephone, by mail or by other means of communication, but such persons will not
be specially compensated for such services. IRIS may also reimburse brokers,
banks, custodians, nominees and other fiduciaries for their reasonable charges
and expenses in forwarding proxy materials to beneficial owners.
Only stockholders of record at the close of business on April 26, 1996, will
be entitled to vote at the Annual Meeting. On that date, there were 6,306,661
shares of Common Stock outstanding. Each stockholder of record is entitled to
one vote on all matters to come before the meeting for each share of Common
Stock held.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of IRIS are as follows:
Name Age Position
- --------------------------------------------------------------------------------
Fred H. Deindoerfer 66 Chairman of the Board of Directors, President,
Chief Executive Officer, and Chief Financial
Officer
John A. O'Malley 62 Director
Steven M. Besbeck 48 Director
Thomas F. Kelley 63 Director, Vice President, and General Manager of
StatSpin
Jeffrey S. Williams 30 Executive Vice President and Chief Operating
Officer
Achille M. Bigliardi 53 Vice President, Sales and Service
Alan E. Koontz 43 Vice President, Marketing and New Business
Development
Jimmie R. Kyle 45 Vice President, Manufacturing and Product
Reliability
Harvey L. Kasdan 55 Vice President, Research and Development
E. Eduardo Benmaor 47 Secretary, Controller, and Principal Accounting
Officer
<PAGE>
The Board of Directors is divided into three classes with the directors in
each class holding office for staggered terms of three years each or until their
successors have been duly elected and qualified. Officers serve at the
discretion of the Board of Directors. There are no familial relationships among
the directors and executive officers of IRIS.
Dr. Fred H. Deindoerfer, an IRIS founder, was elected a director of IRIS in
1980, became Chairman of the Board of Directors, President and Chief Executive
Officer later that year, and has served continuously in these capacities since
then. In addition, he was appointed Chief Financial Officer in 1991. Prior to
his employment with IRIS, Dr. Deindoerfer served as Executive Vice President of
International Diagnostic Technology, a California corporation he co-founded, and
which was acquired by Boehringer Ingelheim, a German-based multinational health
care conglomerate, and as an international group Vice President of American
Hospital Supply Corporation and earlier as Vice President of this corporation's
McGaw Laboratories Division. He holds a B.S. from the University of Illinois,
an M.S. from Columbia University and a Ph.D. from the University of
Pennsylvania, all in Chemical Engineering. Dr. Deindoerfer also is President of
Poly U/A Systems, Inc.
Dr. John A. O'Malley has served as a director of IRIS since 1988. He is
president of Second Opinion, a consulting firm serving the health care
diagnostic and biotechnology industry and a member of the Office of the
President of Litmus Concepts, Inc., a developer of point-of-care diagnostic
tests for the women's health care market. Previously he was the worldwide
director of chemical manufacturing operations for the Milligen/Biosearch
Division of Millipore Corporation, a manufacturer of DNA and peptide sequencers
sold to the biotechnology market. Millipore Corporation acquired this division
from New Brunswick Scientific where Dr. O'Malley had been Vice President and
General Manager of this division. Previously, he was President of Primary
Diagnostic Systems, a company he co-founded to develop a test kit for the early
diagnosis of breast cancer, and before then President of Smith Kline
Instruments, a manufacturer of medical diagnostic reagents for instruments
commonly used in the clinical laboratories of hospitals. Dr. O'Malley received
his B.S. degree in Chemistry from Rutgers, the State University of N.J. and his
Ph.D. degree in Physical Chemistry from the University of Pennsylvania. He also
serves as Chairman of the Board of Directors, Executive Vice President and
General Manager of Poly U/A Systems, Inc.
Steven M. Besbeck has served as a director of IRIS since October of 1990. He
is President of Creative Computer Applications, Inc. (CCA), a position he has
held since 1983, as well as one of its directors since 1980. CCA designs,
develops, services and markets laboratory information systems for clinical
laboratories. Prior to his involvement with CCA, Mr. Besbeck was a director,
the President and Chief Executive Officer of American Cytogenetics, Inc., a
specialty clinical laboratory, at various times over an eight-year period.
Mr. Besbeck holds a B.S. in finance from California State University, Long
Beach.
Dr. Thomas F. Kelley was appointed as a director of IRIS in March of 1996. He
is an IRIS Vice President and General Manager of its recently acquired StatSpin
Technologies (StatSpin) subsidiary. From 1982 to the time of its acquisition by
IRIS, he was President and Chairman of the Board of StatSpin. Prior to his
founding of StatSpin, Dr. Kelley was employed by Instrumentation Laboratory,
Inc., lastly as its Director of Market Development and for the previous six
years as its Director of Applied Research, in addition to other earlier
management roles. He has been widely heard as an invited speaker at national
and international conferences on biotechnology and clinical laboratory
instrumentation. Dr. Kelley received his A.B. and M.A. degrees in Biology from
Boston University in 1954 and 1955 and his Ph.D. in Biochemistry from Brown
University in 1959. He also serves as a director of BioNostics, Inc., an Acton,
MA-based OEM and private-label manufacturer of reagents, controls and
calibrators.
Jeffrey S. Williams joined IRIS as Executive Vice President and Chief
Operating Officer in January of 1996. He was Vice President of Global
Urinalysis for Boehringer Mannheim GmbH, based in Mannheim, Germany. Prior to
his global role at Boehringer Mannheim's world headquarters, he was Director of
North American Urinalysis at its Indianapolis-based U.S. affiliate. He also
held earlier marketing and sales roles with the University of Michigan and
Organon Pharmaceuticals. Mr. Williams holds an M.B.A. from the University of
Michigan in Marketing and Corporate Strategy, and received his B.S. in Biology
from Alma College.
Achille M. Bigliardi joined IRIS in 1991 as Western Regional Sales Manager and
was promoted to Director of Sales in 1993 and to Vice President, Sales and
Service in 1994. From 1982 until joining IRIS, Mr. Bigliardi served as
Executive Vice President, General Manager of Sclavo Inc., a European-based
multinational medical diagnostics company, and President and co-founder of Aktis
Corporation prior to its acquisition by Sclavo. Previously, Mr. Bigliardi
served as Vice President and Director of Marketing of SSI, Inc., a clinical
laboratory instrumentation company, and before then served as Director of Sales
of International Diagnostic Technology, an immunodiagnostics company. Mr.
Bigliardi earned his B.S. and M.S. degrees in Electrical Engineering from the
University of Michigan.
2
<PAGE>
Dr. Alan E. Koontz joined IRIS in 1994 as Vice President, Marketing and
Business Development. He previously was Vice President, Marketing and Sales, of
Axxiom Chromatography, Inc., a manufacturer of analytical laboratory software
products. Dr. Koontz also directed urinalysis and clinical chemistry marketing
at Behring Diagnostics. He holds a B.S. in Chemistry from Stanford University
and a Ph.D. in Biochemistry from the University of California.
Jimmie R. Kyle joined IRIS in 1983 in a service capacity and was promoted to
Vice President of Manufacturing and Product Reliability in June 1994. Prior to
1994, Mr. Kyle served IRIS in various capacities, including National Service
Manager, Director of Quality and Director of Manufacturing. After graduating
from the University of Arkansas in 1974, Mr. Kyle served as a Biomedical
Engineer with the Veterans Administration until joining IRIS.
Dr. Harvey L. Kasdan joined IRIS in 1982 as Manager of Systems Engineering and
was promoted to Vice President of Research and Development in 1987. He has also
served as Director of Product Development, Director of the IRIS DNA Systems
Project, and Director of Research and Development. Prior to joining IRIS, Dr.
Kasdan served as Vice President at Recognition Systems, Inc., from 1971 to 1982.
From 1967 to 1971, Dr. Kasdan served as a Senior Engineering Specialist with
Litton Industries. Dr. Kasdan earned his B.S. and an M.S. in Electrical
Engineering from MIT and his Ph.D in Engineering from UCLA.
E. Eduardo Benmaor joined IRIS in 1988 as Director of Accounting and became
Secretary, Controller and Principal Accounting Officer in 1991. Prior to
joining IRIS, Mr. Benmaor served for several years in various accounting and
management positions, including Assistant Regional Controller for the In-Flite
Division of the Marriott Corporation. He is a graduate of California State
University at Northridge, holding a B.S. in Accounting. Mr. Benmaor also is
Vice President, Secretary and Treasurer of Poly U/A Systems, Inc.
Under Section 16(a) of the Securities Exchange Act of 1934, officers,
directors, and shareholders beneficially owning more than 10% of IRIS common
stock ("Ten Percent Shareholders") are required to file reports, and changes in
ownership of IRIS common stock with the Securities and Exchange Commission and
IRIS. Based solely on a review of reports it received, IRIS believes that all
such persons complied with all applicable filing requirements under Section
16(a) during the year ended December 31, 1995, except (i) Mr. Benmaor who
reported late one transaction involving 2,000 shares of IRIS Common Stock, (ii)
Mr. Besbeck who reported late one transaction involving 15,000 shares of IRIS
Common Stock, and (iii) Corange International Limited which filed late its Form
3 and Form 4 in connection with its becoming a Ten Percent Shareholder.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1996, information as to the
beneficial ownership of the IRIS Common Stock by (i) each director, (ii) the
Chief Executive Officer, (iii) each Named Officer (as hereinafter defined), (iv)
all directors and executive officers as a group, and (v) each person known by
IRIS to beneficially own more than 5% of the outstanding IRIS Common Stock:
<TABLE>
<CAPTION>
Number of Shares of Common Percent Outstanding
Name of Beneficial Owner Stock Beneficially Owned (1)(2)(3) Common Stock
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Fred H. Deindoerfer 410,687 6.4
John A. O'Malley 31,518 (4)
Steven M. Besbeck 16,228 (4)
Thomas F. Kelley 106,601 1.7
Achille M. Bigliardi 53,067 (4)
Harvey L. Kasdan 100,943 1.6
Corange International Limited 719,571 11.0
TOA Medical Electronics, Inc. 331,852 5.3
All officers and directors as a group (10 persons) 705,541 10.7
</TABLE>
- -------------------
(1) Includes options and warrants exercisable on or within 60 days of March 31,
1996 as follows: Dr. Deindoerfer, 84,667 shares; Dr. Kasdan, 54,400
shares; Mr. Bigliardi, 33,467 shares; Mr. Kyle, 22,017 shares; Mr. Benmaor,
21,999 shares; Dr. Koontz, 21,667 shares; Dr. O'Malley, 17,000 shares; Mr.
Besbeck, 14,000 shares; and Dr. Kelley, 5,045 shares.
(2) Includes shares owned by family members or trusts to which the following
individuals disclaim beneficial ownership: Dr. Deindoerfer, 51,340 shares.
(3) Includes warrants to purchase 250,000 shares of IRIS Common Stock.
(4) Less than 1%.
3
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation of the
Chief Executive Officer of IRIS and the four other most highly compensated
individuals serving as executive officers at December 31, 1995 whose total
annual salary and bonus exceeded $100,000 during 1995 (the "Named Officers").
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------ ------------
Other Annual All Other
Compensation Option Compensation
Name and Principal Position Year(1) Salary($) Bonus($) ($)(2) Awards (#) ($) (3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fred H. Deindoerfer 1995 157,000 86,350 22,473 50,000 1,500
President, Chief Executive 1994 150,000 78,700 21,600 40,000 1,500
Officer, Chief Financial 1993 144,000 53,818 21,600 24,000 625
Officer and Chairman of
the Board of Directors
Achille M. Bigliardi 1995 96,000 35,575 23,190 12,000 --
Vice President, Sales and 1994 90,000 19,006 5,900 13,400 --
Service
Harvey L. Kasdan 1995 92,000 28,085 16,111 0 --
Vice President, Research 1994 88,000 15,424 13,198 20,000 --
and Development 1993 85,000 19,534 12,750 8,000 --
Alan E. Koontz 1995 90,000 19,752 -- 20,000 --
Vice President, Marketing 1994 85,000 13,226 -- 20,000 --
and New Business
Development
</TABLE>
- -------------------
(1) Years represent fiscal years. Information is provided only for those
fiscal years in which the individual served as an executive officer.
(2) Represents the dollar value of the difference between the price paid for
IRIS Common Stock purchased under the IRIS Key Employee Stock Purchase
Program and the fair market value of such shares on the date of purchase.
Excludes perquisites and other personal benefits, securities or property,
which did not in any year exceed the lesser of $50,000 or 10% of the total
annual salary and bonus reported for the Named Officer for such year.
(3) Represents premiums paid by the Company for term life insurance for the
benefit of the named executives in excess of amounts available under the
Company's group plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth grants of stock options during the fiscal year
ended December 31, 1995 to the Named Officers. No stock appreciation rights
were granted during such fiscal year.
<TABLE>
<CAPTION>
Individual Grant
- --------------------------------------------------------------------------------
Percentage of Potential Realizable Value at Assumed
Total Options Annual Percentage Rates of Stock Price
Granted to Exercise or Appreciation Per Option Term ($)(3)
Options Employees in Base Price Expiration ------------------------------------------
Name Granted (#)(1) Fiscal Year ($/Sh)(2) Date
0 5 10
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fred H. Deindoerfer 50,000 23.8 6.06 12/16/05 $53,250 $277,000 $621,000
Achille M. Bigliardi 2,000 0.9 4.25 01/29/05 5,750 15,100 29,100
10,000 4.8 6.22 10/15/05 10,300 55,800 125,800
Alan E. Koontz 20,000 9.5 4.25 01/29/05 60,000 151,000 291,000
</TABLE>
- -------------------
(1) These options are exercisable in cumulative one-third installments
commencing one year from date of grant, with full vesting occurring on the
third anniversary date.
(2) All options were granted at 85% of market value at the date of grant.
(3) The potential realizable value of the options granted in 1995 to each of
these executive officers was calculated by multiplying those options by the
difference of (a) the assumed market price of IRIS Common Stock on the
tenth anniversary of the option grant date if the market price of IRIS
Common Stock were to increase 0%, 5% or 10% in each year of the option's
10-year term less (b) the option exercise price. The 0%, 5% and 10%
appreciation rates are mandated by the Securities and Exchange Commission
and no representation is made that the IRIS Common Stock will appreciate at
these assumed rates or at all.
4
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
The following table sets forth information with respect to the exercise of
stock options during the fiscal year ended December 31, 1995 and the final year-
end value of unexercised options. None of the Named Officers exercised stock
appreciation rights during the fiscal year ended December 31, 1995 or held any
such rights at the end of such fiscal year.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End (#) at Fiscal Year-End ($)(1)
Shares Acquired Value
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fred H. Deindoerfer 0 0 84,667 / 69,333 255,335 / 383,665
Achille M. Bigliardi 0 0 33,467 / 31,533 130,661 / 122,023
Harvey L. Kasdan 0 0 29,733 / 45,267 95,805 / 126,533
Alan E. Koontz 0 0 21,667 / 23,333 84,135 / 103,415
</TABLE>
- -------------------
(1) Represents the difference between the closing price of the IRIS Common
Stock on December 31, 1995 and the exercise price of the options.
STOCK OPTION PLANS
As of December 31, 1995, IRIS had two stock option plans -- the 1986 Plan
and the 1994 Plan -- under which IRIS may grant non-qualified stock options,
incentive stock options and stock appreciation rights. Options remained
outstanding under the 1980, 1982 and 1983 Plans, although pursuant to their
terms no new options may be granted thereunder. The Plans are each administered
by the Compensation Committee of the Board of Directors, which is composed
entirely of non-employee directors (the "Committee"). The Committee determines
who may participate in the Plans and the number, kind, exercise price and terms
of each option to be granted to each participant. Employees and other persons
eligible to participate in the Plans are those who, in the opinion of the
Committee, have contributed or may contribute substantially to the progress of
IRIS. There is no maximum number of stock options that may be granted to any
one person under the Plans, except that no employee may hold incentive stock
options which may become exercisable for the first time in any one calendar year
covering in the aggregate shares with a fair market value in excess of $100,000.
If any option granted under any Plan expires or terminates without having been
exercised in full, the unpurchased shares subject to that option will again be
available for options to be granted under such Plan.
Non-employee directors are eligible for grants of options in accordance with
the following formula. Non-employee directors who are elected to the Board of
Directors for the first time will each receive on the date of their election, an
option to purchase 8,000 shares of Common Stock. Each non-employee director
will receive an option to purchase an additional 4,000 shares of Common Stock on
the date of each annual meeting of the IRIS stockholders if his term has not
expired or he is re-elected at such annual meeting; provided, however, that the
aggregate number of shares of Common Stock subject to outstanding and
unexercised options under all of the IRIS stock option plans may not exceed
20,000 in the case of any individual non-employee director. A non-employee
director who has reached such limit may continue to receive options under the
this formula by exercising or voluntarily surrendering the appropriate number of
previously granted and outstanding options. Options granted to non-employee
directors vest 1/2 each year commencing with the first anniversary of the date
of grant. The exercise price of options granted to non-employee directors is
the fair market value of the Common Stock on the date of grant. The term of
each option granted to a non-employee director is ten years from the date of
grant. If Propoposal 2 is approved, the formula for awards to non-employee
directors will be amended by (i) increasing the size of the stock options
awarded annually to reelected and continuing non-employee directors from 4,000
shares of IRIS Common Stock to 5,000 shares of IRIS Common Stock (10,000 shares
of IRIS Common Stock in 1996) and (ii) increasing the limit on the aggregate
number of shares of IRIS Common Stock for which an individual non-employee
director may hold outstanding and unexercised stock options from 20,000 shares
of IRIS Common Stock to 25,000 shares of IRIS Common Stock.
The exercise price of all other options granted pursuant to the Plans is
determined by the Committee, but the exercise price of an incentive stock option
may not be less than the fair market value of the shares on the date the options
are granted. Payment for the shares upon exercise of the options may be made
solely in cash or, if the Committee permits, IRIS Common Stock already owned by
the optionee, which stock will be valued at its fair market value as of the
close of the business day immediately preceding the date of exercise.
5
<PAGE>
The Committee determines the term of each option, but no option may have a
term of more than ten years. In the case of an employee owning over 10 percent
of the voting stock of the Company, the term of an incentive stock option cannot
exceed five years. Each option will be exercisable in such installments as the
Committee may determine. The options, and the shares issued pursuant thereto,
will be subject to such other restrictions as the Committee may determine.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, which is composed
entirely of independent outside directors, is responsible for making
recommendations to the Board regarding the annual salaries and other
compensation of the officers of the Company, providing assistance and
recommendations with respect to the compensation policies and practices of the
Company and administering the Company's stock option plans. During 1995, the
Company's Compensation Committee consisted of Mr. Steven M. Besbeck and Dr. John
A. O'Malley, Chairman, who are non-employee directors.
COMPENSATION PHILOSOPHY
In order to attract and retain well-qualified executives, which the
Compensation Committee believes is crucial to the Company's success, the
Compensation Committee's general approach to compensating executives is to pay
cash salaries which are commensurate with the executive's experience and
expertise and, where relevant, are competitive with median salaries paid to
executives in the Company's main industry. To reward executives for their
contributions to the achievement of Company-wide performance goals, incentive
bonus payouts are established at a level designed to ensure that when such
payouts are added to a participant's base salary, the resultant compensation for
above average performance will exceed the average compensation level of
comparable companies. In addition, to align its executives compensation with
the Company's business strategies, values and management initiatives, both short
and long term, executive officers are provided with long-term performance
incentives. It is the Company's policy to encourage share ownership through the
grant of stock option awards and stock purchases under the Key Employee Stock
Purchase Plan.
In addition to the specific factors described below, in setting 1995
compensation levels the Committee considered how the total annual compensation
levels of the Company's executive officers (including the value and amount of
options held by such officers) compared to the compensation levels of executive
officers at other publicy-traded companies. Specifically, the Committee
Chairman made recommendations to the Committee based on a review of compensation
levels of executive officers from a variety of sources, including various proxy
statements, publications such as "The 1995 Report on Executive Compensation" by
Top Five Data Services, and compensation surveys reported in business journals
such as the "Medical Device & Diagnostic Industry Magazine." This review was
shared and discussed with the full Committee. The Committee believes that the
salary of the Company's executive officers do not exceed what the Committee
believes to be the median of comparable executives of such other companies.
COMPENSATION ELEMENTS
The compensation package of the Company's executive officers consists of base
annual salary, performance-based bonuses and stock options. Furthermore, the
executive officers are eligible to participate in certain of the Company's
employee benefit plans.
BASE SALARIES. Base salaries are targeted at average competitive levels of
comparable companies, with actual base salaries determined based on an
assessment of individual performance and contributions.
MANAGEMENT INCENTIVE BONUS PLAN (MIBP). The MIBP has been established to
reward participants for their contributions to the achievement of Company-wide
performance goals. All executive officers of the Company and certain other key
employees, as determined by the Compensation Committee, participate in the MIBP.
MIBP payouts are established at a level designed to ensure that when such
payouts are added to a participant's Base Salary, the resultant compensation for
above average performance will exceed the average compensation level of
comparable companies. No awards are made to MIBP participants unless the
Company achieves a significant improvement in operating income.
STOCK OPTION PLANS. The stock option plans offered by the Company have been
established to provide employees of the Company with an opportunity to share,
along with stockholders of the Company, in the long term performance of the
Company. Periodic grants of stock options are generally made to all eligible
employees, with additional grants being made to certain employees upon
commencement of employment and occasionally, following a significant change in
job responsibility, scope or title or a particularly noteworthy achievement.
Stock options
6
<PAGE>
granted under the various stock option plans generally have a three-year vesting
schedule and generally expire ten years from the date of grant. The exercise
price of options granted under the stock option plans are generally granted at
85% of fair market value of the underlying stock on the date of grant.
Guidelines for the number of stock options for each participant in the
periodic grant program generally are determined by a procedure established by
the Compensation Committee based upon several factors including the salary, the
performance of each participant, and the approximate market price of the stock
at the time of grant. The size of the grants, as developed under the procedure,
are targeted to be at competitive levels.
EMPLOYEE STOCK PURCHASE PROGRAM. IRIS maintains a Key Employee Stock Purchase
Plan designed to allow IRIS employees who qualify as sophisticated purchasers to
buy its shares at 50% of the then current market price, provided that the
employee agrees to hold the shares purchased for a minimum of 2 years. Payment
may be made at the option of the employee either by payroll deduction or by lump
sum payment, but in no event may it exceed more than 15% of the employee's
salary during any year. IRIS has the right to repurchase stock sold under the
Plan at the price per share purchased if the employee voluntarily terminates
his/her employment (other than by death), or is terminated for cause, during the
2-year holding period. However, in the event that IRIS is sold or liquidated or
there is a change in control, the option to repurchase stock from the employees
and the 2-year holding period requirement automatically terminate.
COMPENSATION OF PRESIDENT/CEO
The Compensation Committee believes it is the best interest of the Company
that the bonus plan for the President/CEO be independent of the MIBP for other
executive officers. In 1994, the Compensation Committee established a
President/CEO bonus plan based on 1) the achievement of preset goals for
improving operating income, 2) the achievement of preset goals for improving
annually the market value of the Company, and 3) the achievement of
extraordinary accomplishments (not directly affecting operating earnings or
stock value) as defined by the Board of Directors.
A percentage of the President/CEO salary is determined based on operating
income. Then, a factor EQUAL to the ratio of the previous year's stock value to
the bonus year's stock value MINUS the ratio of the previous year's healthcare
segment stock value to the bonus year's healthcare setment stock value, as
calculated from the average of the last ten days of each year as reported in the
Advest Healthcare Review is applied to the percentage determined by operating
income improvement. This percentage times the President/CEO's salary will be
the portion of the bonus attributable to stock performance. This percentage may
be positive or negative. Finally for each significant event judged to be
extraordinary by the Compensation Committee, the cumulative percentage from
operating income and stock performance improvements shall be multiplied by a
factor determined by the Compensation Committee.
Dr. Deindoerfer's Base Salary, MIBP payout and grants of stock options for
1995 were determined in accordance with the criteria described above. Dr.
Deindoerfer's Base Salary of $157,000 reflects the Board's assessment of his
very favorable performance. The actual MIBP award for Dr. Deindoerfer for 1995
was $86,350 or 55% of Base Salary. Payments made to Dr. Deindoerfer as a
participant in the MIBP for this period reflect both the Company's level of
achievement of the operating performance goals and Dr. Deindoerfer's level of
achievement of his individual performance objectives, which included the
increase in market value of the Company and obtainment of full funding for Poly
U/A Systems. The periodic stock option grant to Dr. Deindoerfer in December,
1995 of options to purchase 50,000 shares of Common Stock of the Company at 85%
of fair market value on the date of grant, or $6.06 per share, also reflects the
Board's assessment of the substantial contributions made by Dr. Deindoerfer to
the growth and performance of the Company during the year.
COMPENSATION OF OTHER EXECUTIVE OFFICERS
The Compensation Committee annually establishes and administers goals for the
MIBP based primarily on the achievement of preset goals for improving operating
income and secondarily on the achievement of certain other predefiined
accomplishments consistent with important strategic goals the Board of Directors
may, from time to time, deem desirable. The Compensation Committee determines
the relationship between the bonus pool and 1) the projected operating income
based on the Company's profit plan, and 2) the Committee's assessment of the
management challenge the profit plan provides relative to the business
environment in which it is to be accomplished. The bonus pool amount for
distribution in any year is limited to no more than the product of 1) the
planned percentage improvement during the year for which the performance bonus
is considered, and 2) the actual operating income achieved.
7
<PAGE>
Three factors are taken into account to determine the individual bonus of
executive officers. They include 1) the participant's salary multiplied by his
or her level of bonus participation (100% for Executive Officers), the
individual participant's estimated contribution relative to overall operating
income improvement, and 3) the individual participant's achievement of certain
other predefined performance accomplishments that he or she may have been
assigned. Distribution is made by the Compensation Committee based primarily
upon recommendations from the President/CEO.
The 1995 base salary, MIBP payout and grants of stock options for executive
officers other than the CEO/ President were determined in accordance with the
criteria described above. The annual MIBP awards to such executive officers for
1995 reflect the Company's level of achievement of operating performance goals
and the executive officer's individual contribution to the improvement in
operating income. The Compensation Committee also considered individual
contributions unrelated to 1995 earnings but which are likely to contribute in a
significant way to the achievement of future strategic objectives. The stock
option grants in 1995 to executive officers were made at 85% of fair market
value on the date of grant and reflect the Board's assessment of their
contributions to the growth and performance of the Company during the year.
COMPENSATION COMMITTEE
Dr. John A. O'Malley (Chairman)
Mr. Steven M. Besbeck
COMPENSATION OF DIRECTORS
Under the IRIS standard compensation arrangement with its directors, each non-
employee director receives a $1,000 per month retainer for consulting services
provided to IRIS, which includes normal, routine services as a Board member
(estimated at one to one-and-one-half days per month). With the prior approval
of the President of IRIS, additional consulting time is compensated at the rate
of $1,000 per day. During 1995, Dr. O'Malley and Mr. Besbeck, IRIS outside
directors, were each paid $12,000 by IRIS for their services. Non-employee
directors are also annually awarded stock options for 4,000 shares of IRIS
Common Stock. See "Executive Compensation -- Stock Option Plans."
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The IRIS Board of Directors held 9 meetings during 1994. All of the incumbent
directors attended all of the meetings of the Board of Directors and Committees
of the Board on which they served during 1995.
During 1995, the IRIS Board of Directors had two committees: an Audit
Committee and a Compensation Committee. The IRIS Audit Committee currently
consists of Dr. O'Malley and Mr. Besbeck. It held 1 meeting during 1995. The
functions of the Audit Committee are to recommend to the Board of Directors
selection of independent accountants and to review the scope and results of the
year-end audit with Management and the auditors. The IRIS Compensation
Committee currently consists of Dr. O'Malley and Mr. Besbeck. It held 6
meetings during 1995. The Compensation Committee makes recommendations
concerning compensation plans and salaries of officers and other key personnel,
administers the IRIS Stock Option Plans and performs such other duties as may be
assigned to it by the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONS
No member of the Compensation Committee has a relationship that would
constitute an interlocking relationship with executive officers or directors of
another entity. During 1995, Dr. O'Malley and Mr. Besbeck received 6,183 and
1,288 shares of IRIS Common Stock, respectively, in connection with the purchase
of their shares of LDA Systems by IRIS, and Dr. O'Malley purchased 1 Unit in the
offering by PSI. See "Certain Relationships and Related Transactions."
8
<PAGE>
FIVE YEAR STOCK PRICE PERFORMANCE COMPARISON
The following graph and table compare the cumulative total return on IRIS
Common Stock with the cumulative total return (including reinvested dividends)
of the Dow Jones Advanced Medical Devices Index for United States Owned
Companies (DJAMD), the Standard & Poor's 500 Index (S&P 500) and the Russell
2000 Index (R2000) for the five years ending December 31, 1995, assuming that
the relative value of IRIS Common Stock and each index was $100 on December 31,
1990. Amounts below have been rounded to the nearest dollar.
[GRAPH]
<TABLE>
<CAPTION>
IRIS and
Selected
Indices Calendar Year Ending December 31, 1995
--------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
IRIS $100.0 $96.3 $169.5 $184.7 $258.6 $387.9
DJAMD (1) 96.3 82.8 65.0 82.1 134.0
R2000 100.0 143.6 167.2 195.6 189.4 239.0
S&P 500 100.0 130.3 140.3 154.3 156.4 215.0
</TABLE>
- -------------------
(1) DJAMD Index did not exist in 1990; 1991 parity used.
9
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STRATEGIC ALLIANCE WITH BOEHRINGER MANNHEIM
During 1994, IRIS began a strategic alliance with Boehringer Mannheim
Corporation ("BMC"), an Indianapolis-based manufacturer of diagnostic products,
and Boehringer Mannheim GmbH ("BMG"), BMC's German affiliate and a world leader
in clinical chemistry. BMC and BMG are wholly-owned subsidiaries of Corange
Limited ("Corange"), which, through its wholly-owned subsidiary Corange
International Limited, beneficially owned 719,571 shares of IRIS Common Stock at
March 31, 1996. See "Security Ownership of Certain Beneficial Owners and
Management." The paragraphs below describe various transactions during 1995
between IRIS and either BMC, BMG or Corange.
The Yellow IRIS-Registered Trademark- features a CHEMSTRIP-Registered
Trademark- urine test strip reader and CHEMSTRIP/IRIStrip-TM- urine test strips,
both designed and manufactured by BMC especially for The Yellow IRIS-Registered
Trademark-. IRIS is the exclusive distributor of the CHEMSTRIP/IRIStrip-TM-
urine test strips which are currently used by more than sixty percent of IRIS
customers. As part of this arrangement, BMC has agreed to spend at least
$150,000 annually to promote the advantages of using microscopy in combination
with urine test strips.
In July 1995, IRIS nd BMG unveiled a prototype of the new IRIS/BMC 900UDx-TM-
Urine Pathology System, a high-capacity, automated urinalysis system for
reference laboratories based on the proprietary technology of both companies.
The 900UDx-TM- is being jointly developed by IRIS and BMG. The 900UDx-TM- will
be manufactured by IRIS in its Chatsworth, California facility and marketed by
IRIS in North America and by BMG overseas.
In June 1995, IRIS purchased all of the shares of LDA Systems, Inc. held by
Corange for 220,842 shares of IRIS Common Stock. See "Purchase of LDA Systems"
below.
PURCHASE OF LDA SYSTEMS
IRIS completed the acquisition of LDA Systems, Inc. (LDA) in June 1995 for
approximately 498,000 shares of IRIS Common Stock and thereby reacquired all
rights to The White IRIS-Registered Trademark- leukocyte differential analyzer.
The White IRIS-Registered Trademark- is a major new product which IRIS was
developing jointly with LDA. IRIS is currently awaiting FDA clearance to market
The White IRIS-Registered Trademark-. In exchange for their shares of LDA
common stock, IRIS issued shares of IRIS Common Stock to Corange and certain
IRIS directors and officers as follows: Corange, 220,842 shares; Dr.
Deindoerfer, 8,708 shares; Dr. O'Malley, 6,183 shares; Dr. Kasdan, 3,091 shares;
Mr. Besbeck, 1,288 shares; Mr. Kyle, 772 shares; and Mr. Benmaor, 515 shares.
JOINT DEVELOPMENT PROJECT WITH POLY U/A SYSTEMS
Pursuant to a Research and Development Agreement with Poly U/A Systems, Inc.
(PSI), PSI is funding all research and development costs related to four
potential urinalysis products in excess of a $15,000 per month commitment from
IRIS. Dr. Deindoerfer serves as President and Mr. Benmaor serves as Vice
President, Secretary and Treasurer of PSI pursuant to an Administrative Services
Agreement between IRIS and PSI, but they do not receive any additional
compensation for services rendered to PSI. Dr. O'Malley is a director and the
Executive Vice President and General Manager of PSI and receives an annual
retainer of $5,000 and an annual salary of approximately $17,000 from PSI for
his services. PSI raised net proceeds of approximately $2.0 million for this
project through an offering of 128 units at a price of $20,000 per unit. Each
unit consisted of 2,000 shares of PSI Callable Common Stock and a warrant to
purchase 4,000 shares of IRIS Common Stock for $6.50 per share. Certain
directors and officers of IRIS purchased units in this offering and, as a
result, own shares of PSI Common Stock as follows: Dr. O'Malley, 2,000 shares;
Dr. Deindoerfer, 2,000 shares; Dr. Kasdan, 2,000 shares; Mr. Kyle, 500 shares;
Mr. Bigliardi, 2,000 shares; and Mr. Benmaor, 500 shares. Each of these
individuals owns less than 1% of the total number of outstanding shares of PSI,
and collectively they own 3.5% of the total number of outstanding shares of PSI.
AGREEMENT WITH TOA MEDICAL ELECTRONICS
As part of a 1988 agreement, IRIS granted TOA Medical Electronics Co., Ltd.
(TOA), a Japanese company, the right to market urine sediment analyzers using
pre-1989 IRIS technology. In exchange, TOA agreed to pay IRIS royalties on
sales of such analyzers and granted IRIS the exclusive right to distribute in
North America any urine sediment analyzer made by TOA. In late 1990, TOA
introduced a urine sediment analyzer, the UA-1000, and in mid-1993 introduced an
improved model, the UA-2000, both into the Japanese market. Despite the fact
that the UA-2000 performs only the urine sediment analysis portion of a complete
urinalysis, as limited by the agreement, it
10
<PAGE>
is currently priced comparably to The Yellow IRIS-Registered Trademark- which is
more versatile. TOA paid IRIS royalties of $98,000 under this agreement in
1995.
More recently, IRIS learned that TOA is showing a new urine sediment analyzer
based on TOA's particle counting technology, the UF-100, to selected prospects
in the U.S. IRIS subsequently asserted its rights under the 1988 agreement to
distribute the UF-100 in North America. TOA disputes the right of IRIS to
distribute this product, and IRIS and TOA are currently arbitrating the issue.
----------------------------------------------------------
PROPOSAL 1
ELECTION OF THE CLASS 3 DIRECTORS
The Board of Directors is divided equally into three classes -- Class 1, Class
2 and Class 3. The directors in each class hold office for staggered terms of
three years each. Last year, Dr. O'Malley, the Class 2 Director, was re-elected
to hold office until 1998. On March 17, 1996, the Board of Directors amended
Section 2(a) of Article III of the IRIS Bylaws to increase the authorized number
of directors from three to four and appointed Thomas F. Kelley as a Class 3
Director to fill the vacancy created by such increase. As a result, Classes 1
and 2 continue to consist of one director but Class 3 now consists of two
directors.
At the Annual Meeting this year or any adjournments or postponements thereof,
two Class 3 Directors will be elected to serve until their successors are duly
elected and qualified. The nominees for election as the Class 3 Directors are
Fred H. Deindoerfer and Thomas F. Kelley. The Stockholders elected Dr.
Deindoerfer as a Class 3 Director at the 1993 annual meeting, and he is
presently serving IRIS in that capacity. The Class 3 Directors will serve until
the 1999 annual meeting or until their successors are elected and qualified.
The accompanying proxy grants to the holder the power to vote the proxy for
substitute nominees in the event that Dr. Deindoerfer or Dr. Kelley become
unavailable to serve as a Class 3 Director. Management presently has no
knowledge that Dr. Deindoerfer or Dr. Kelley will refuse or be unable to serve
as Class 3 Directors for their prescribed term.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" DR. DEINDOERFER AND DR. KELLEY.
VOTES REQUIRED. Under Delaware law, directors are to be elected by a plurality
of the votes of the shares present in person or represented by proxy at the
meeting and entitled to vote on the election of directors. Therefore, unless
additional persons are nominated, abstentions and broker non-votes will not have
an adverse effect on the election of Dr. Deindoerfer or Dr. Kelley as Class 3
Directors.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon a recommendation of its Audit Committee, has
reappointed the accounting firm of Coopers & Lybrand L.L.P. as independent
auditors of the Company for the fiscal year ending December 31, 1996, subject to
ratification of the stockholders at the meeting. Coopers & Lybrand L.L.P. has
no financial interest of any kind in the Company except the professional
relationship between auditor and client. A representative of Coopers & Lybrand
is expected to attend the meeting, will be afforded an opportunity to make a
statement if he or she desires to do so, and will be available to respond to
appropriate questions by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE APPOINTMENT.
VOTES REQUIRED. The affirmative vote of stockholders holding a majority of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the proposal is required for ratification of the proposal under Delaware
law. For this purpose, abstentions will increase the number of votes in favor
of the proposal required for approval and thus will have the effect of a vote
against the proposal. However, broker non-votes, like shares not represented at
the meeting, will neither be counted in favor of or against the proposal, nor
increase or decrease the number of votes required for approval, and thus will
have no effect on the outcome of the proposal.
11
<PAGE>
PROPOSAL 3
AMENDMENT OF FORMULA FOR STOCK OPTION AWARDS
TO NON-EMPLOYEE DIRECTORS UNDER THE 1994 STOCK OPTION PLAN
IRIS believes that, over the years, its stock option plans have made a
significant contribution to its ability to attract and retain highly competent
individuals on whose judgment, initiative, leadership and continued efforts the
growth and profitability of IRIS depend. Consistent with that view, the IRIS
1994 Stock Option Plan (the "1994 Plan") automatically awards non-employee
directors (i) a nonqualified option to purchase 8,000 shares of IRIS Common
Stock upon their initial election to the Board of Directors and (ii) a
nonqualified option to purchase an additional 4,000 shares of IRIS Common Stock
on the date of each annual meeting of the IRIS stockholders if his term has not
expired or he is re-elected at such annual meeting. The aggregate number of
shares of Common Stock subject to outstanding and unexercised options under all
of the IRIS stock option plans may not exceed 20,000 in the case of any
individual non-employee director. The Company proposes to amend the formula for
awards to non-employee directors by (a) increasing the size of the stock options
awarded annually to reelected and continuing non-employee directors from 4,000
shares of IRIS Common Stock to 5,000 shares of IRIS Common Stock (10,000 shares
of IRIS Common Stock for 1996) and (b) increasing the limit on the aggregate
number of shares of IRIS Common Stock for which an individual non-employee
director may hold outstanding and unexercised stock options from 20,000 shares
of IRIS Common Stock to 25,000 shares of IRIS Common Stock. The Company
believes that these increases are necessary to maintain a competitive
compensation package for its non-employee directors.
IRIS has maintained a small, working Board of Directors and subscribes to the
belief that a small number of competent directors can be both effective and
efficient in the discharge of its duties. However, as IRIS gros, the demands on
the time and involvement of its Directors also increases. In order to reward
the efforts of its Directors commensurate with their enhanced duties, IRIS
believes that the adjustment it is recommending in both justifiable and
desirable if it wishes to continue to obtain the unselfish participation of its
Directors in all of their responsible matters.
DESCRIPTION OF THE 1994 PLAN
The following is a brief summary of the material features of the 1994 Plan.
SHARES SUBJECT TO THE 1994 PLAN. IRIS may issue up to an aggregate of 700,000
shares of Common Stock under the 1994 Plan. The aggregate market value of
700,000 shares of IRIS Common Stock on March 31, 1996 was $4,725,000 based on
the closing price of the IRIS Common Stock on such date as reported by the
American Stock Exchange. If any option granted under the 1994 Plan shall expire
or terminate for any reason without having been exercised in full, the
unpurchased shares subject to such option will thereafter be available for
future grants under the 1994 Plan. The Plan provides for appropriate adjustment
of shares available under the 1994 Plan in the event of any change in the number
of outstanding shares of Common Stock of IRIS resulting from reorganizations,
recapitalizations, reclassifications, stock dividends, stock splits or other
similar events.
TYPES OF AWARDS. IRIS may award two types of options under the 1994 Plan: (i)
options intended to qualify as incentive stock options under Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) nonqualified
stock options. In conjunction with any stock option, IRIS may also award stock
appreciation rights entitling the option holder to exercise an option by taking
any appreciation over the option exercise price in stock or, with the approval
of the Compensation Committee, in cash.
ADMINISTRATION. The 1994 Plan is administered by the Compensation Committee,
which is composed of two or more disinterested directors appointed by the Board
of Directors. Except for options granted to non-employee directors pursuant to
a formula (which is described below under "Grants to Non-employee Directors"),
the Compensation Committee has the authority (i) to construe and interpret the
1994 Plan, (ii) to define the terms used therein, (iii) to prescribe, amend and
rescind rules and regulations relating to the 1994 Plan, (iv) to determine the
individuals to whom and the time or times at which options shall be granted,
whether such options will be incentive stock options or non-qualified stock
options, whether to include stock appreciation rights, the number of shares to
be subject to each option, the option price, the number of installments, if any,
in which each option may be exercised, and the duration of each option, (v) to
approve and determine the duration of leaves of absence which may be granted to
participants without constituting a termination of their employment for the
purposes of the 1994 Plan, (vi) to amend the terms of any outstanding option,
with consent of the option holder, and (vii) to make all other determinations
necessary or advisable for the administration of the 1994 Plan.
12
<PAGE>
ELIGIBILITY AND PARTICIPATION. All key employees, directors, consultants and
advisors of IRIS or any of its subsidiaries are eligible for selection to
participate in the 1994 Plan. However, non-employee directors are only eligible
to participate in the 1994 Plan under the formula described below under "Grants
to Non-employee Directors." All full-time employees (which presently total 61
people) and both non-employee directors would currently be eligible to
participate under the 1994 Plan. Incentive stock options may only be granted to
employees of IRIS or a subsidiary of IRIS.
An individual who has been granted an option may, if such individual is
otherwise eligible, be granted an additional option or options if the
Compensation Committee shall so determine, subject to the other provisions of
the 1994 Plan.
DURATION OF OPTIONS. Except for options granted to non-employee directors,
each option expires 10 years from the date of grant unless an earlier date is
specified by the Compensation Committee, and any incentive stock option granted
to an employee who owns more than 10% of the voting stock of IRIS must expire
within five years from the date of the grant. Nonqualified stock options
granted to non-employee directors may be exercised for a period of ten years
after the date of grant.
DURATION AND AMENDMENT OF THE 1994 PLAN. Unless terminated earlier by the
Compensation Committee, no options may be granted more than ten years after
March 20, 1994 (the date of adoption by the Board of Directors), and the 1994
Plan automatically terminates after such date at such time as all previously
granted options have expired or been fully exercised. Subject to certain
restrictions with respect to nonqualified stock options granted to non-employee
directors described below, the Compensation Committee may amend or suspend the
1994 Plan at any time; provided that amendments which (i) increase the maximum
number of shares available for grant under the 1994 Plan, (ii) change the
minimum exercise price or increase the maximum term of an incentive stock
option, (iii) permit the granting of options to persons other than key
employees, directors, consultants or advisors of IRIS or (iv) materially
increase the benefits accruing to participants under the 1994 Plan are subject
to stockholder approval.
EXERCISE PRICE. In the case of incentive stock options, the exercise price
must be at least equal to the fair market value of the stock on the date the
option is granted. In addition, grants of incentive stock options to employees
owning over 10% of the voting stock of IRIS must be at an exercise price of not
less than 110% of the fair market value on the date of the grant. The exercise
price of nonqualified stock options is determined by the Compensation Committee
in its discretion. Upon the exercise of any option, the purchase price must be
paid in full either in cash or in IRIS Common Stock valued at market value
(unless the Compensation Committee permits exercise with a promissory note or a
"cashless exercise"). The aggregate fair market value (determined at the time
the options are granted) of the shares covered by incentive stock options
granted to any one employee under the 1994 Plan (or any other incentive stock
option plan of IRIS) which may become exercisable for the first time in any one
calendar year may not exceed $100,000
STOCK APPRECIATION RIGHTS. Any stock option may be coupled with a stock
appreciation right at the time of the grant of the option, or a stock
appreciation right may be granted to any person at any time after granting an
option to such person prior to the end of the term of such associated option. A
stock appreciation right shall entitle the option holder to surrender to IRIS
unexercised the option to which it is related, or any portion thereof, and to
receive from IRIS in exchange therefore (a) that number of shares having an
aggregate value equal to the excess of the fair market value of the shares
subject to the option, or portion thereof which is so surrendered, over the
exercise price thereof, or (b) subject to approval by the Compensation
Committee, cash equal to the aggregate fair market value of that part or all of
the shares IRIS would otherwise be obligated to deliver. However, in no event
shall cash be payable to an officer or director of IRIS upon exercise of a stock
appreciation right (i) if the stock appreciation right was exercised during the
first six months of its term; and, (ii) unless the stock appreciation right was
exercised during a period of ten business days beginning with the third business
day after the release to the public of a quarterly or annual summary statement
of IRIS' sales and earnings. A stock appreciation right shall be exercisable
only for such period as the Compensation Committee may determine (which period
may expire prior to the expiration date of the option).
BASIC TERMS. Options granted under the 1994 Plan may only be exercised by the
optionee and are non-transferable, except by will or the laws of descent and
distribution or, in the case of nonqualified stock options, pursuant to a
qualified domestic relations order. Except for nonqualified stock options
granted to non-employee directors as described below, options vest 1/3 each year
commencing on the first anniversary of the date of the grant unless otherwise
specified by the Compensation Committee, but not within six months of the date
of grant, except in cases of death or disability of the optionee or dissolution,
liquidation, reorganization, merger or
13
<PAGE>
consolidation of IRIS. To the extent that an option is not exercised when it
becomes exercisable, the option shall continue to be exercisable until the
option terminates or expires. No incentive stock option is exercisable for more
than three months after termination of the employment of the optionee except
that, if such termination is due to death or disability of the employee, then it
is exercisable for no more than one year after such employee's death or
disability. Except for options granted to the non-employee directors,
nonqualified stock options terminate in accordance with the terms of the
relevant stock option agreement, as determined by the Compensation Committee,
or, if not so specified in the option agreement, it will have the same effect as
specified above for an incentive stock option.
GRANTS TO NON-EMPLOYEE DIRECTORS. Non-employee directors are eligible for
grants of options under the 1994 Plan only in accordance with the following
formula. Non-employee directors who are elected to the Board of Directors for
the first time will each receive on the date of their election, an option to
purchase 8,000 shares of Common Stock. Each non-employee director will receive
an option to purchase an additional 4,000 shares of Common Stock on the date of
each annual meeting of the IRIS stockholders if his term has not expired or he
is re-elected at such annual meeting; provided, however, that the aggregate
number of shares of Common Stock subject to outstanding and unexercised options
under all of the IRIS stock option plans may not exceed 20,000 in the case of
any individual non-employee director. A non-employee director who has reached
such limit may continue to receive options under the this formula by exercising
or voluntarily surrendering the appropriate number of previously granted and
outstanding options. Options granted to non-employee directors vest 1/2 each
year commencing with the first anniversary of the date of grant. The price of
each option granted to a non-employee director shall be equal to the fair market
value of the Common Stock on the date of grant. The term of each option granted
to a non-employee director shall be ten years from the date of grant. Pursuant
to Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act of
1934, as amended, the provisions of the 1994 Plan with respect to the preceding
formula may not be amended more than once every six months, other than to
comport with changes under the Code or ERISA, or the rules thereunder. The
subject amendment is the first change with respect to the preceding formula that
has been proposed.
FEDERAL INCOME TAX CONSEQUENCES OF NONQUALIFIED STOCK OPTIONS. Under current
federal income tax law, the grant of a nonqualified stock option has no tax
effect on IRIS or the optionee to whom it is granted. If the shares received on
exercise of an option are not subject to restrictions on transfer or risk of
forfeiture imposed by the Compensation Committee, the exercise of a nonqualified
stock option will result in ordinary income to the optionee equal to the excess
of the fair market value of the shares at the time of exercise over the option
price. The amount taxed to the optionee as ordinary income is treated as earned
income. The optionee's tax basis in the shares will be equal to the aggregate
exercise price paid by the optionee plus the amount of taxable income recognized
upon the exercise of the option. Upon any subsequent disposition of the shares,
any further gain or loss recognized by the optionee will be treated as capital
gain or loss and will be long-term capital gain or loss if the shares are held
for more than one year after exercise. The Company will normally be allowed, at
the time of recognition of ordinary income by the optionee upon exercise, to
take a deduction for federal income tax purposes in an amount equal to such
recognized income.
FEDERAL INCOME TAX CONSEQUENCES OF INCENTIVE STOCK OPTIONS. The federal
income tax consequences associated with incentive stock options are generally
more favorable to the optionee and less favorable to the employer than those
associated with stock options which are not incentive stock options. Under
current federal income tax law, the grant of an incentive stock option does not
result in income to the optionee or in a deduction for IRIS at the time of the
grant. The exercise of an incentive stock option will not result in income for
the optionee if the optionee (a) does not dispose of the shares within two years
after the date of grant nor within one year after exercise, and (b) is an
employee of IRIS or any of its subsidiaries from the date of grant until three
months before the exercise date. If these requirements are met, the basis of
the shares upon later disposition would be the option price. Any gain will be
taxed to the optionee as long-term capital gain and IRIS will not be entitled to
a deduction. The excess of the market value on the exercise date over the
option price is an item of tax preference, potentially subject to the
alternative minimum tax. If the optionee disposes of the shares prior to the
expiration of either of the holding periods described above, the optionee would
have compensation taxable as ordinary income, and IRIS would be entitled to a
deduction equal to the lesser of the fair market value of the shares on the
exercise date minus the option price or the amount realized on disposition minus
the option price. If the price realized in any such premature sale of the
shares exceeds the fair market value of the shares on the exercise date, the
excess will be treated as long-term or short-term capital gain depending on the
optionee's holding period for the shares.
14
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF STOCK APPRECIATION RIGHTS. No tax will
occur by reason of the grant of a stock appreciation right. However, any cash
and the fair market value of any shares received constitute taxable income to
the recipient upon the date of exercise except to the extent the shares received
are restricted as to transfer and subject to certain risks of forfeiture and no
effective election is made to be taxed at that time. If such transfer
restrictions and forfeiture risks exist and no effective election is made, the
recipient will recognize ordinary income equal to the fair market value of the
shares when the transfer restrictions or forfeiture risks lapse. IRIS will
generally be allowed an equal deduction at the time the recipient recognizes
incomes. Any subsequent disposition of the shares received will generate
capital gain or loss if the sale price is different from the amount of taxable
income recognized with respect to such shares as described above.
PROPOSED AMENDMENT
If this proposal is approved, the second paragraph of Section 5 of the 1994
Plan would be amended to read in its entirety as follows:
During the term of the Plan, a Non-Employee Director shall be
granted a nonqualified stock option to purchase 5,000 shares
of Common Stock, subject to adjustment pursuant to Section 16,
on the date of each annual meeting of the Company's
stockholders (10,000 shares of Common Stock in the case of the
1996 Annual Meeting) if his term has not expired or he is
re-elected at such annual meeting; PROVIDED, HOWEVER, that the
aggregate number of shares of IRIS Common Stock subject to
outstanding and unexercised options under all of the IRIS stock
option plans shall not exceed 25,000 with respect to any
individual non-employee director. A non-employee director may
comply with such limit and continue to receive options under
this Section 5 by voluntarily surrendering previously granted
and unexercised options.
PLAN BENEFITS
Pursuant to the formula awards for non-employee directors under the 1994 Plan,
each of Messrs. O'Malley and Besbeck are granted nonqualified stock options to
purchase 4,000 shares of Common Stock on the date of each annual meeting of the
IRIS stockholders unless their terms have expired and they are not re-elected.
Subject to approval of the proposed amendment, this year's grant would be
increased to 10,000 shares and, thereafter, would be increased to 5,000 shares
annually.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1994 PLAN.
VOTES REQUIRED. The affirmative vote of stockholders holding a majority of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the proposal is required under Delaware law and the terms of the 1994
Plan and for the 1994 Plan to qualify for the Rule 16b-3 exemption promulgated
under Section 16(b) of the 1934 Act, relating to the disgorgement of short-swing
profits realized by officers, directors or beneficial owners of 10% of the
Common Stock of IRIS. For this purpose, abstentions will increase the number of
votes in favor of the proposal required for approval and thus will have the
effect of a vote against the proposal. However, broker non-votes, like shares
not represented at the meeting, will neither be counted in favor of or against
the proposal, nor increase or decrease the number of votes required for
approval, and thus will have no effect on the outcome of the proposal.
OTHER
IRIS does not know of any other business to be presented to the meeting and
does not intend to bring any other matters before the meeting. However, if any
other matters properly come before the meeting, the persons named in the
accompanying proxy are empowered, in the absence of contrary instructions, to
vote according to their best judgment.
--------------------------------------------------
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
If a stockholder wishes to present a proposal at the next annual meeting of
stockholders, such a proposal must be received by IRIS at its principal
executive offices prior to February 20, 1997.
15
<PAGE>
ANNUAL REPORT
In lieu of an Annual Report to Stockholders, IRIS is delivering with this
Proxy Statement a copy of its Annual Report on Form 10-K (without exhibits) for
the fiscal year ended December 31, 1995. However, it is not intended that the
Annual Report on Form 10-K be a part of this Proxy Statement or a solicitation
of proxies.
By Order of the Board of Directors
/s/Fred H. Deindoerfer
FRED H. DEINDOERFER
Chairman of the Board and President
Chatsworth, California
April 29, 1996
PLEASE PROMPTLY VOTE, DATE, SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING. A RETURN ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES. PROMPT
RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED. AT ANY TIME
BEFORE A VOTE YOU MAY REVOKE YOUR PROXY BY (1) A LATER PROXY OR A WRITTEN NOTICE
OF REVOCATION DELIVERED TO THE INSPECTOR OF ELECTIONS OR (2) ADVISING THE
INSPECTOR OF ELECTIONS AT THE MEETING THAT YOU ELECT TO VOTE IN PERSON.
ATTENDANCE AT THE MEETING WILL NOT IN AND OF ITSELF REVOKE A PROXY.
THE ANNUAL MEETING IS ON JUNE 20, 1996. PLEASE RETURN YOUR PROXY IN TIME.
<PAGE>
P R O X Y
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
9162 ELTON AVENUE
CHATSWORTH, CALIFORNIA 91311
ANNUAL MEETING OF STOCKHOLDERS
JUNE 20, 1996
The undersigned stockholder(s) of International Remote Imaging Systems, Inc.
(the "Company"), hereby appoints Fred H. Deindoerfer and E. Eduardo Benmaor, and
each of them, with full power of substitution to each, true and lawful
attorneys, agents and proxyholders of the undersigned, and hereby authorizes
them to represent and vote, as specified herein, all the shares of Common Stock
of the Company registered in the name of the undersigned at the Annual Meeting
of Stockholders, to be held at the Chatsworth Hotel, 9777 Topanga Canyon
Boulevard, Chatsworth, California, on Thursday, June 20, 1996, at 4:00 p.m.
local time and at any and all adjournments or postponements thereof.
1. Election of two Class 3 Directors:
/ / FOR Fred H. Deindoerfer and Thomas F. Kelley / / WITHHOLD AUTHORITY to
(except as withheld in the space provided below) vote for any of the
nominees
INSTRUCTIONS: To withhold authority to vote for one of the nominees, write the
name of the nominee on the following line:
________________________________________________________________________________
2. Ratification of appointment of the accounting firm of Coopers & Lybrand
L.L.P. as independent auditors of the Company for fiscal year 1996.
/ / FOR / / AGAINST / / ABSTAIN
3. Approval of the proposal to amend the formula for stock option awards to
non-employee directors under the 1994 Stock Option Plan by (i) increasing
the size of the stock options awarded annually to continuing and reelected
non-employee directors from 4,000 shares of IRIS Common Stock to 5,000
shares of IRIS Common Stock (10,000 shares of IRIS Common Stock in 1996) and
(iii) increasing the limit on the aggregate number of shares of IRIS Common
Stock for which an individual non-employee director may hold outstanding and
unexercised stock options from 20,000 shares of IRIS Common Stock to 25,000
shares of IRIS common Stock.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 2 AND 3.
(Please date and sign on reverse side)
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
4. In their discretion, the proxyholders are authorized to vote upon such other
business as may properly come before the meeting, or any adjournments or
postponements thereof.
This proxy will be voted as specified herein. If no specification is
made, it will be voted FOR the election of the two nominees as Class 3
Directors and FOR items 2 and 3.
____________________________
Signature Date
____________________________
Signature Date
NOTE: Please date and sign
exactly as your name appears
to the left. If stock is
registered in the name of two
or more persons, each should
sign. Executors,
administrators, trustees,
guardians, attorneys, and
corporate officers should show
their full titles. If a
partnership, please sign in
the partnership name by an
authorized partner.
PLEASE COMPLETE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE IN TIME FOR THE
MEETING ON JUNE 20, 1996.
