<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 15, 1995
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ANDROS INCORPORATED
______________________________________________________________
(Name of Registrant as Specified in its Charter)
ANDROS INCORPORATED
______________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(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:
___________________________________________________________________________
5) Amount of filing fee:
___________________________________________________________________________
[ ] 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> 2
ANDROS INCORPORATED
2332 FOURTH STREET
BERKELEY, CALIFORNIA 94710
NOTICE OF MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 21, 1995
TO THE STOCKHOLDERS OF ANDROS INCORPORATED:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ANDROS
INCORPORATED, a Delaware corporation (the "Company"), will be held on Friday,
July 21, 1995, at 9:30 a.m. at The Claremont Hotel, Ashby and Domingo Avenues,
Oakland, California 94618 for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on June 8, 1995 as the
record date for the determination of stockholders entitled to notice of and to
vote at this Annual Meeting and at any adjournment or postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
DANE NELSON
President and Chief Executive Officer
Berkeley, California
June 15, 1995
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK
OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST BRING TO THE
MEETING A LETTER FROM THE BROKER, BANK OR OTHER NOMINEE CONFIRMING YOUR
BENEFICIAL OWNERSHIP OF THE SHARES. ADDITIONALLY, IN ORDER TO VOTE AT THE
MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE> 3
ANDROS INCORPORATED
2332 FOURTH STREET
BERKELEY, CALIFORNIA 94710
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of Andros
Incorporated, a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders to be held on Friday, July 21, 1995, at 9:30 a.m. (the
"Annual Meeting"), or at any adjournment or postponement thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting.
The Annual Meeting will be held at The Claremont Hotel, Ashby and Domingo
Avenues, Oakland, California 94618. The Company intends to mail this proxy
statement and accompanying proxy card on or about June 15, 1995 to all
stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on June 8,
1995 will be entitled to notice of and to vote at the Meeting. At the close of
business on June 8, 1995, the Company had outstanding and entitled to vote
4,567,191 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Meeting.
1.
<PAGE> 4
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. All shares voted on any matter will be
counted for purposes of determining a quorum. Abstentions will be counted
towards the tabulation of votes cast on proposals presented to the stockholders
and will have the same effect as negative votes. Broker non-votes are not
counted for any purpose in determining whether a particular matter has been
approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 2332
Fourth Street, Berkeley, California 94710, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
2.
<PAGE> 5
PROPOSAL 1
ELECTION OF DIRECTORS
In May 1995, the Board of Directors approved an amendment to the Company's
By-Laws, decreasing the number of authorized Board positions to five, effective
upon the election of directors at the Annual Meeting. There are five nominees
to the Board of Directors. Each director to be elected will hold office until
the next annual meeting of stockholders and until his successor is elected and
has qualified, or until such director's earlier death, resignation or removal.
Each nominee listed below is currently a director of the Company elected by the
stockholders.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the five nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for
election has agreed to serve if elected, and management has no reason to
believe that any nominee will be unable to serve.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote.
MANAGEMENT RECOMMENDS A VOTE
IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
Set forth below are the names of the nominees, their principal occupations
and their ages as of April 30, 1995, and certain other information about them.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
---- -------------------- --- -----
<S> <C> <C> <C>
Dane Nelson President and Chief Executive Officer 43 1991
John M. Huneke Private Investor 65 1968
Eugene Kleiner Private Investor 71 1972
Karl H. Schimmer, M.D. Private Investor 73 1975
Robert C. Wilson Private Consultant and Adviser to the 75 1992
President
</TABLE>
3.
<PAGE> 6
MR. NELSON has been President, Chief Executive Officer and a director
of the Company since September 1991. From May 1990 to September 1991, he was
Vice President, Operations. Prior to joining Andros, Mr. Nelson served as
President of Nelken Supplies Solutions, a retail computer and office supplies
company, from March 1989 through May 1990. From 1988 through March 1989, Mr.
Nelson served as Operations Manager of the Supply Division of Convergent
Technologies, a computer manufacturer.
MR. HUNEKE is a founder of the Company and has been a director of
Andros since its inception in 1968. Between 1973 and 1987, he was employed in
various capacities by companies comprising the Bechtel Group, including Bechtel
Investments and Bechtel National, Inc. Since 1987, he has been a private
investor.
MR. KLEINER has been a director of Andros since 1972 and has served as
Chairman of the Board since January 1993. He was a founding partner of Kleiner
Perkins Caufield & Byers, a venture capital firm. Since 1987, Mr. Kleiner has
been a private investor. Mr. Kleiner is currently a director of Resound
Corporation and a trustee of Polytechnic University in New York.
DR. SCHIMMER has been a director and a medical device consultant to
Andros since 1975. From 1959 until his retirement in 1981, he was a member of
the staff, Department of Anesthesiology, St. Francis Memorial Hospital in San
Francisco. Since 1981, he has been a private investor.
MR. WILSON has been a director of Andros since December 1992 and has
served as an adviser to the President of the Company since November 1992. He
is currently also a director of Storage Technology Corporation, Resound
Corporation, Syquest Technology, Inc., Giga-Tronics Incorporated, and Photonics
Corporation. From 1974 until his retirement in 1980, Mr. Wilson served as
Chief Executive Officer of Memorex.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of eight meetings
during the fiscal year ended July 31, 1994. The Board of Directors has a
Compensation Committee and an Audit Committee. There is no nominating
committee or committee performing a similar function.
The Compensation Committee, currently consisting of Mr. Moshe Alafi
(currently a director of the Company), Mr. Huneke, Mr. Kleiner and Dr.
Schimmer, considers matters concerning compensation of employees, including
officers. It also has the authority to select optionees for the Company's
employee stock option plan and determine the number of shares covered by
options granted under that plan. The Compensation Committee held seven
meetings during fiscal 1994.
4.
<PAGE> 7
The Audit Committee reviews, acts on and reports to the Board of
Directors with respect to various auditing and accounting matters, including
the scope and results of the audit procedures and the internal accounting
controls and procedures of the Company. The Audit Committee held one meeting
during fiscal 1994. The members of the Audit Committee are Mr. Huneke and Mr.
Kleiner.
Each director attended at least 75% of the aggregate of the meetings
of (i) the Board of Directors and (ii) all committees on which each such
director served, held during the period when he was a director or committee
member, respectively.
5.
<PAGE> 8
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of the Company's Common Stock as of April 30, 1995 by: (i) each
director; (ii) each Named Executive Officer (as defined below); (iii) all
executive officers and directors of the Company as a group; and (iv) all those
known by the Company to be beneficial owners of more than five percent of its
Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
-----------------------------------------------------
NUMBER OF
NAME OF BENEFICIAL OWNER SHARES OWNED PERCENT OF TOTAL
------------------------ ---------------------- ------------------------
<S> <C> <C>
Neuberger & Berman(2) . . . . . . . . . . 564,200 12.4%
605 Third Avenue
New York, NY 10158
Dane Nelson(3) . . . . . . . . . . . . . . 150,000 3.2%
Moshe Alafi(3) . . . . . . . . . . . . . . 83,900 1.8%
Eugene Kleiner(3). . . . . . . . . . . . . 35,905 *
Karl H. Schimmer, M.D.(3)(4) . . . . . . . 85,845 1.9%
Robert C. Wilson(3). . . . . . . . . . . . 44,785 1.0%
Lee R. Carlson, Ph.D.(3)(5). . . . . . . . 55,000 1.2%
Edward A. McClatchie, Ph.D.(3) . . . . . . 100,109 2.2%
Robert L. Turner(3). . . . . . . . . . . . 61,000 1.3%
All executive officers and directors as a
group (12 persons)(3) . . . . . . . . . . 747,476 14.6%
</TABLE>
__________________________________
* Less than 1%.
(1) This table is based upon information supplied by officers, directors
and principal stockholders and Schedules 13D and 13G filed with the
Securities and Exchange Commission (the "Commission"). Unless
otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, each of the stockholders
named in this table has sole voting and investment power with respect
to the shares indicated as beneficially owned. Applicable percentages
are based on 4,541,954 shares outstanding on April 30, 1995, adjusted
as required by rules promulgated by the Commission.
(2) Based on a Schedule 13G filed with the SEC on February 10, 1995 and
information obtained from Neuberger & Berman ("N&B"), N&B may be
deemed to be a beneficial owner of these shares because it shares
dispositive power with respect to the securities. The Schedule 13G
states that N&B
6.
<PAGE> 9
disclaims any economic interest in such securities and that portfolio
clients of N&B have the sole right to receive and the power to direct
the receipt of dividends from or proceeds from the sale of such
securities and that no client has an interest that relates to 5% or
more of this security. Of the shares set forth above, N&B has shared
dispositive power with respect to all 564,200 shares, sole voting
power with respect to 327,200 shares and shared voting power with
respect to 85,000 shares. Partners of N&B own 2,000 shares. Partners
own these shares in their own personal securities accounts. N&B
disclaims beneficial ownership of these shares because these shares
were purchased with each partners' personal funds and each partner has
exclusive dispositive and voting power over the shares held in their
respective accounts.
(3) Includes shares that certain executive officers and directors of the
Company have the right to acquire within 60 days after the date of
this table pursuant to outstanding options, subject to the Company's
right to repurchase all or a portion of the unvested shares, as
follows: Dane Nelson, 150,000 shares; Moshe Alafi, 30,000 shares;
John M. Huneke, 30,000 shares; Eugene Kleiner, 30,000 shares; Karl H.
Schimmer, M.D., 25,000 shares; Robert C. Wilson, 50,000 shares; Lee R.
Carlson, Ph.D., 54,000 shares; Edward A. McClatchie, Ph.D., 90,500
shares; Robert L. Turner, 60,000 shares; and all directors and
executive officers as a whole (12 persons), 594,632 shares.
(4) Does not include 13,275 shares beneficially owned by the
Anesthesiologist Medical Group of San Francisco Inc. Profit Sharing
and Pension Trust, of which Dr. Schimmer is a beneficiary but does not
have or share investment or voting control.
(5) Does not include 600 shares held by Dr. Carlson's son, with respect to
which Dr. Carlson disclaims beneficial ownership.
COMPLIANCE WITH THE REPORTING REQUIREMENTS OF SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during fiscal 1994, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with, except that one report, covering one transaction,
was filed late by each of Mr. Wilson and Dr. McClatchie.
7.
<PAGE> 10
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each non-employee director of the Company received an annual fee of
$10,500 in fiscal 1994, a fee of $750 for the first meeting of the Board of
Directors and for the meeting of the Audit Committee, if such director was a
member thereof, a fee of $1,000 for each of the other seven meetings of the
Board of Directors attended in person (except that Mr. Kleiner received a fee
of $1,500 for each of such meetings), and a fee of $500 for each meeting of the
Board of Directors in which a director participated by telephone (including any
committee meeting). In fiscal 1994, the total compensation paid to
non-employee directors was $74,500.
Non-employee directors are granted options pursuant to the 1991 Stock
Option Plan (the "Plan") under the Automatic Grant Program (the "Automatic
Program"). Under the Automatic Program, each individual who was serving as a
non-employee Board member on October 4, 1991, was automatically granted on such
date a non-statutory stock option to purchase 25,000 shares of Common Stock at
an exercise price of $8.00 per share, the fair market value of the Common Stock
at date of grant. The Automatic Program also provides for an automatic grant
of an option to purchase 25,000 shares of Common Stock to each individual who
becomes a new non-employee Board member after October 4, 1991. Each option
granted under the Automatic Program has a ten year term, becomes exercisable
for 15,000 shares upon completion of one year of Board service (measured from
the date of grant) and for an additional 5,000 shares upon completion of each
of the next two years of Board service thereafter, and provides for an exercise
price equal to 100% of the fair market value per share of the Company's Common
Stock on the date of grant. Options granted under the Automatic Program are
intended by the Company not to qualify as incentive stock options under the
Internal Revenue Code of 1986, as amended (the "Code").
During fiscal 1994, no options were granted under the Automatic
Program. During fiscal 1994, all four non-employee directors exercised options
(granted under the Company's former Stock Option Plan for Directors, which was
consolidated with the Company's other stock option plans into the Plan in
October 1991) to purchase an aggregate of 42,500 shares of Common Stock at an
exercise price of $9.13 per share (and with a net value realized equal to the
excess of fair market value at the date of exercise over the exercise price) as
follows: Mr. Alafi, 15,000 shares ($127,425), Mr. Huneke, 7,500 shares
($59,650); Mr. Kleiner, 15,000 shares ($125,300); Dr. Schimmer, 5,000 shares
($53,100). The aggregate value realized on such exercises was $365,475.
8.
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table sets forth, for fiscal 1994, 1993 and 1992,
certain compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer and its other four most highly compensated executive officers
at July 31, 1994 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation(1) Awards(2)
------------------- ------
Name and Securities
Principal Fiscal Underlying All Other
Position Year Salary(3) Bonus Options(4) Compensation(5)
-------- ---- ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Dane Nelson 1994 $221,742 --- 30,000 $9,117
President and 1993 $172,723 --- 35,000 ---
Chief Executive Officer 1992 $113,156 --- 75,000
Edward A. McClatchie, Ph.D. 1994 $181,550 --- --- $4,622
Senior Vice President, 1993 $167,903 $13,078(6 20,000 $5,960
Sales and Corporate 1992 $117,180 --- 60,000
Development ---
John W. Locke III(7) 1994 $120,985 --- 15,000 $4,781
Executive Vice President, 1993 $104,826 --- 25,000 $5,721
Chief Financial Officer, 1992 $44,233 --- 30,000
Secretary and Treasurer
Lee R. Carlson, Ph.D. 1994 $117,533 --- 5,000 $4,125
Vice President, 1993 $98,547 --- 30,000 $4,049
Engineering 1992 $94,488 --- 17,000
Robert Turner 1994 $115,280 --- 10,000 $2,965
Vice President, 1993 $104,826 --- 20,000 $4,854
Marketing 1992 $42,310 --- 30,000
</TABLE>
__________________________________
(1) As permitted by rules promulgated by the Commission, (i) no amounts
are shown for "Other Annual Compensation" for fiscal 1992 and (ii)
with respect to fiscal 1993 and fiscal 1994, no amounts are shown for
9.
<PAGE> 12
"perquisites," as such amounts for each Named Executive Officer do not
exceed the lesser of 10% of such executive's salary plus bonus and
$50,000.
(2) To date, the Company has not granted any awards of restricted stock.
The Company does not have any long-term incentive plans.
(3) Includes amounts earned but deferred at the election of the Named
Executive Officer pursuant to the Company's Savings and Investment
Plan, which is a qualified plan under Section 401(k) of the Code.
(4) To date, the Company has not granted any stock appreciation rights
(SARs) under the Plan, although the Company has granted limited stock
appreciation rights in tandem with outstanding options held by
officers and directors of the Company.
(5) Amounts shown consist of the Company's matching payments under its
Savings and Investment Plan. As permitted by rules promulgated by the
Commission, no amounts are shown for "All Other Compensation" for
fiscal 1992.
(6) Represents the amount received in payment of unused accrued vacation
time calculated at the base salary rate.
(7) In October 1994, Mr. Locke ceased to be an executive officer of the
Company. Mr. Locke passed away in February 1995.
10.
<PAGE> 13
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under the
Discretionary Grant Program of the Plan (the "Discretionary Program"). As of
September 1, 1994, options to purchase a total of 2,050,000 shares had been
granted under the Plan and options to purchase 307,313 shares remained
available for grant thereunder.
The following tables show for fiscal 1994 certain information
regarding options granted to, exercised and held at year end by the Named
Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Individual Grants Appreciation for Option Term(1)
------------------------------------------------------------------- -------------------------------------
Number of Options % of Total
Securities Granted to Exercise Market
Underlying Employees in Price Price Expira-
Options Fiscal Per on Date tion
Name Granted(2) Year(3),(4) Share of Grant Date 0% 5% 10%
---- ------- ---- ----- -------- ---- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mr. Nelson 30,000 19.6% $13.60 $16.00 12/06/03 $72,000 $373,869 $836,996
Dr. McClatchie --- --- --- --- --- --- --- ---
Mr. Locke 15,000 9.8% $13.60 $16.00 12/06/03 $36,000 $186,935 $418,498
Dr. Carlson 5,000 3.3% $13.60 $16.00 12/06/03 $12,000 $62,312 $139,499
Mr. Turner 10,000 6.5% $13.60 $16.00 12/06/03 $24,000 $124,623 $278,999
</TABLE>
__________________________________
(1) The potential realizable value is based on the term of the option at
the date of the grant (ten years). It is calculated by assuming that
the stock price on the date of grant appreciates at the indicated
annual rate, compounded annually for the entire term, and that the
option is exercised and sold on the last day of the option term at the
appreciated stock price. These amounts represent certain assumed
rates of appreciation only in accordance with the rules of the SEC and
do not reflect the Company's estimate of future stock price
performance. Actual gains, if any, are dependent on the actual future
performance of the Company's Common Stock.
(2) The terms of options granted to the Named Executive Officers are
generally consistent with those of options granted to other employees
under the Discretionary
11.
<PAGE> 14
Program. Options granted under the Discretionary Program may be
either incentive or non-statutory stock options. The exercise price
of non-statutory options must be at least 85% of fair market value on
the date of grant and the exercise price of incentive stock options
must be at least 100%. In the event of certain changes in control of
the Company, vesting of outstanding options will automatically
accelerate, and the options will expire if not exercised prior to the
consummation of such corporate transaction. Certain limited stock
appreciation rights are granted to officers and directors of the
Company in tandem with their outstanding options. Any option with
such a limited stock appreciation right in effect for at least six
months will automatically be canceled upon the occurrence of certain
hostile takeovers, and the optionee will in return be entitled to a
cash distribution from the Company in an amount equal to the excess of
(i) the takeover price of the shares of Common Stock at the time
subject to the canceled option (whether or not the option is otherwise
at the time exercisable for such shares) over (ii) the aggregate
exercise price payable for such shares. The Plan contains provisions
permitting the Committee to reprice outstanding options. Options
generally vest in equal daily installments over a four year period.
(3) Based on options to purchase 153,000 shares of Common Stock granted to
employees, including executive officers, in fiscal 1994.
(4) The exercise price is equal to 85% of the fair market value of the
Company's Common Stock on the date of grant ($16.00), based on the
closing sales price reported on the Nasdaq National Market.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End at Fiscal Year-End
Shares Acquired On Exercisable/ Exercisable/
Name Exercise Value Realized(1) Unexercisable(2)(3) Unexercisable(2),(4)
---- ------------------ -------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Mr. Nelson --- --- 75,959/74,041 $595,300/$304,400
Dr. McClatchie 3,862 $40,051 57,537/32,963 $474,070/$175,092
Mr. Locke 25,000 $138,595 1,956/43,044 $7,157/$153,548
Dr. Carlson --- --- 21,000/33,000 $122,643/$111,227
Mr. Turner --- --- 24,851/35,149 $121,098/$131,502
</TABLE>
__________________________________
(1) Represents the fair market value of the Company's Common Stock on the
date of exercise (based on the closing sales price reported on the
Nasdaq National Market or the actual sales price if the shares were
sold by the optionee) less the exercise price, and does not
necessarily imply that the shares were sold by the optionee.
(2) Reflects shares vested and unvested at fiscal year end. Options
granted under the Discretionary Program are immediately exercisable,
but are subject to the Company's right to repurchase unvested shares
on termination of employment.
(3) Includes both "in-the-money" and "out-of-the-money" options.
"In-the-money" options are options with exercise prices below the
market price of the Company's Common Stock at July 31, 1994.
(4) Represents fair market value of the Company's Common Stock at July 31,
1994 ($16.50), based on the closing sales price reported on the Nasdaq
National Market, less the exercise price.
12.
<PAGE> 15
COMPENSATION COMMITTEE REPORT(1)
The Compensation Committee (the "Committee") consists of Mr. Alafi,
Mr. Huneke, Mr. Kleiner and Dr. Schimmer, none of whom is an officer of the
Company. The Committee is responsible for the setting policies related to the
Company's executive compensation program and overseeing its administration. In
particular, the Committee is responsible for determining the levels and types
of compensation provided to the Company's executives. The Committee is also
responsible for administering the Company's 1991 Stock Option Plan and Employee
Stock Purchase Plan.
The objective of the Company's executive compensation program is to
attract, motivate and retain executive officers capable of leading the Company
to the fulfillment of its business objectives. To this end, the Committee
approaches its responsibilities with the philosophy that the Company should
provide executives with total compensation opportunities that are competitive
and that reward executive contributions to corporate and stockholder value.
The Committee articulates this philosophy through its administration of the
various components of the executive compensation program, including annual
compensation in the form of base salary, and long-term incentive compensation
in the form of stock option grants. There is currently no executive annual
bonus plan and, with the exception of an amount paid to one executive officer
during fiscal 1993 as reimbursement for unused vacation time, no bonuses have
been paid to any of the named executives during the last three fiscal years.
In making decisions regarding compensation, the Committee has
typically considered a mix of factors, including individual merit, corporate
performance (including revenues, profits and other corporate developments such
as acquisitions and restructurings), competitive pay practices and long-term
incentive value. The Committee does not assign relative weights to any one
factor and has not historically set specific individual or corporate
performance goals, but rather evaluates corporate performance and individual
executive achievement on a subjective basis.
The Committee sets executive salaries with reference to executive
salary levels at companies in the electronics industry that are comparable to
the Company in terms of annual revenues. Market salary levels are estimated
based on independent published reports of executive compensation in the
electronics industry. These survey reports reflect compensation payments at a
broad "sample of companies, including a significant number of privately owned
companies. The group of companies that participate in the surveys is not
identical to the companies that make up the industry index used in the
Comparison of Five Year Total Cumulative Return on Investment, which is
entirely made up of publicly- owned companies.
__________________________________
(1) This Section is not "soliciting material," is not deemed "filed" with
the Commission and is not to be incorporated by reference in any
filing of the Company under the Securities Act of 1933 (the "1933
Act") or the 1934 Act, whether made before or after the date hereof
and irrespective of any general incorporation language in any such
filing.
13.
<PAGE> 16
None of the named executives' salary rates was changed during fiscal
1994. The Committee believes that the adjustments made during fiscal 1993 for
fiscal 1994 (discussed in the report of this Committee in the Proxy Statement
for the 1993 Annual Meeting of Stockholders) were sufficient to maintain salary
levels at a competitive level through fiscal 1994. Specifically, we believe
that Mr. Nelson's salary was between the estimated market's 50th and 75th
percentiles throughout the year and that the other named executives' salaries
generally approximated the market median, although in one case a named
executive's salary may exceed the market median. With respect to base salary
determination for fiscal 1995, the Committee has engaged an independent
consultant to study executive salaries relative to market. Mr. Alafi did not
approve the decision with respect to the president's salary.
The Committee uses stock options grants to increase the recipient's
incentive to remain in the Company's employ and to maximize the value of the
Company's stock. By providing executives with an opportunity to increase their
ownership in the Company and to participate in appreciation of the Company's
stock price, stock options align executive interests with those of the
stockholders while helping ensure that the total executive compensation
opportunity is competitive. Further, because stock options generally become
exercisable over a multi-year period, they encourage executives to remain in
the long-term employ of the Company.
The Committee generally sets the exercise price of stock options equal
to 85% of the grant date fair market value of the Company's stock. This
practice is intended to increase the compensation value of the stock options,
and to strengthen the link that the stock options provide between the
recipient's long-term interests and those of the stockholders by providing the
executive with an immediate gain that: (i) is unrealizable until the options
vest, and (ii) changes in value when the price of the Company's stock changes,
whether the change is an increase or a decrease.
During fiscal 1994, the Committee approved option grants to Mr. Nelson
and selected other executives. Each of these options has an exercise price
equal to 85% of the fair market value of the Company's stock on the grant date,
and will vest over a four
14.
<PAGE> 17
year schedule. Mr. Nelson was granted stock options to purchase 30,000 shares.
The Committee determined the number of shares optioned to Mr. Nelson after
taking into account several factors, including the number of shares optioned to
other executive officers, the amount of stock currently owned by Mr. Nelson and
the number of shares subject to exercisable stock options currently held by Mr.
Nelson. The Committee determined the size of the option grant after giving
what we believe to have been fair consideration to each of these factors. We
did not assign relative weights to the factors. Mr. Alafi was not present at
the Committee meeting at which Mr. Nelson's options were granted and did not
approve such grant.
The Committee approved option grants to two of the non-CEO named
executives during fiscal 1994. The Committee determined the number of shares
optioned to the named executives based on consideration of the same factors as
were taken into account in the grant to Mr. Nelson as well as the
recommendations of Mr. Nelson.
In late December 1993, the Internal Revenue Service issued proposed
regulations limiting the deduction a publicly held corporation may take for
compensation paid to its CEO and its four other most highly compensated
employees. The IRS regulations limit the amount that a company may deduct to
$1 million dollars per person unless the compensation constitutes "performance
based" compensation, as defined by the Code. The statute containing this law
and the applicable Treasury regulations offer a number of transitional
exemptions to this deduction limit for pre-existing compensation plans,
arrangements and binding contracts.
The Compensation Committee believes that no Company executive's
compensation currently exceeds the $1 million limit. As a result, the
Committee has not yet formulated a policy for determining which forms of
compensation shall be designed to qualify as "performance-based compensation."
The Committee intends to continue to evaluate the effects of the statute and
Treasury regulations and to comply with Code Section 162(m) in the future to
the extent in keeping with the best interests of the Company.
Moshe Alafi
John M. Huneke
Eugene Kleiner
Karl H. Schimmer, M.D.
15.
<PAGE> 18
PERFORMANCE MEASUREMENT COMPARISON
The following chart shows total stockholder return of the CRSP Index
for Nasdaq Stock Market (US Companies) (the "Nasdaq Index"), the CRSP Index for
Nasdaq Electronic Components Stocks Index (the "Nasdaq Electronic Components
Stocks Index") and for the Company:(1)
Comparison of Five Year Total Cumulative Return on Investment(2),(3)
<TABLE>
<CAPTION>
CRSP INDEX
FOR NASDAQ CRSP INDEX FOR
MEASUREMENT PERIOD ANDROS STOCK MARKET NASDAQ ELECTRONIC
(FISCAL YEAR COVERED) INCORPORATED (US COMPANIES) COMPONENTS STOCKS
<S> <C> <C> <C>
07/28/89 100.0 100.0 100.0
07/27/90 132.3 99.6 117.5
07/26/91 85.5 114.2 125.2
07/24/92 190.3 133.1 150.8
07/23/93 200.0 165.2 249.3
07/29/94 212.9 170.1 285.2
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to 100.0 on 07/28/89.
__________________________________
(1) This Section is not "soliciting material," is not deemed "filed" with
the Commission and is not to be incorporated by reference in any
filing of the Company under the 1933 Act or the 1934 Act whether made
before or after the date hereof and irrespective of any general
incorporation language in any such filing.
(2) The total return on investment (change in year end stock price plus
reinvested dividends) for the Company, the Nasdaq Index and the
Nasdaq Electronic Components Stocks Index, based on July 30, 1989 =
100.
(3) Represents monthly index levels derived from compounded daily returns
including reinvested dividends.
16.
<PAGE> 19
CERTAIN TRANSACTIONS
The Company has entered into indemnity agreements with certain
officers and directors that provide, among other things, that the Company will
indemnify such officers or directors, under the circumstances and to the extent
provided for therein, for expenses, damages, judgments, fines and settlements
he or she may be required to pay in actions or proceedings to which he is or
may be made a party by reason of his position as a director, officer or other
agent of the Company, and otherwise to the full extent permitted under Delaware
law and the Company's By-Laws.
In December 1993, Scitec Corporation (a wholly-owned subsidiary of the
Company) entered into a three-year employment agreement with its President,
Lawrence T. Lynott, providing for an annual base salary of $100,000, subject to
increase in accordance with the policies of the Company. Pursuant to this
agreement, if Scitec Corporation terminates Mr. Lynott's employment without
cause prior to the expiration of the agreement and Mr. Lynott executes a
general release, Scitec will be obligated to pay Mr. Lynott his salary then in
effect, and Mr. Lynott's benefits, including stock vesting, will continue, to
the extent permitted under the terms of such benefits, until December 28, 1996.
OTHER MATTERS
The Board of Directors knows of no other matters that will be
presented for consideration at the Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
STOCKHOLDER PROPOSALS
The Company currently expects that its next Annual Meeting of
Stockholders will be held in March 1996, and that the Proxy Statement for such
meeting will be mailed to record stockholders approximately six weeks prior to
such date. Proposals of stockholders that are intended to be presented at the
Company's next Annual Meeting of Stockholders must be received no later than
October 4, 1995 in order to be included in the proxy statement and proxy
relating to that meeting.
By Order of the Board of Directors
Dane Nelson
President and Chief Executive Officer
June 15, 1995
17.
<PAGE> 20
[FORM OF PROXY CARD -- FRONT SIDE]
PROXY
ANDROS INCORPORATED
2332 FOURTH STREET
BERKELEY, CALIFORNIA 94710
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 21, 1995
The undersigned hereby appoints Dane Nelson and William W. Weiss, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Andros Incorporated which
the undersigned may be entitled to vote at the Annual Meeting of Stockholders
of Andros Incorporated to be held at the Claremont Hotel, Ashby and Domingo
Avenues, Oakland, California 94618, on Friday, July 21, 1995 at 9:30 a.m. and
at any and all continuations and adjournments thereof, with all powers that the
undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY
STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN
ACCORDANCE THEREWITH.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE
SIDE
1.
<PAGE> 21
[FORM OF PROXY CARD - BACK SIDE]
[X] Please mark
votes as in
this example.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR
DIRECTOR LISTED BELOW.
1. To elect directors to hold office until the
next Annual Meeting of Stockholders and
until their successors are elected.
NOMINEES: Dane Nelson, John M. Huneke, Eugene
Kleiner, Karl H. Schimmer, M.D. and Robert C.
Wilson.
<TABLE>
<S> <C> <C>
MARK HERE
FOR [ ] WITHHELD [ ] FOR ADDRESS
CHANGE AND
NOTE AT LEFT [ ]
[ ]
------------------------------------------------
For all nominees except as noted above Please sign exactly as your name appears hereon. If
the stock is registered in the names of two or more
persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-
in-fact should add their titles. If signer is a
corporation, please give full corporate name and
have a duly authorized officer sign, stating title.
If signer is a partnership, please sign in
partnership name by authorized person.
</TABLE>
<TABLE>
<S> <C>
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN
THE ENCLOSED RETURN ENVELOPE WHICH IS POSTAGE Signature:
PREPAID IF MAILED IN THE UNITED STATES. --------------------------------------------
Date:
-------------------------------------------------
</TABLE>
2.
