SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
REHABILICARE 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] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
REHABILICARE INC.
1811 OLD HIGHWAY 8
NEW BRIGHTON, MN 55112-3493
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 25, 1997
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TO SHAREHOLDERS OF REHABILICARE INC.:
Notice is hereby given that the Annual Meeting of Shareholders of Rehabilicare
Inc. (the "Company") will be held on Tuesday, February 25, 1997 at the Marriott
City Center, 30 South Seventh Street, Minneapolis, Minnesota 55402 at 3:30 p.m.
CST for the following purposes:
1. To elect a Board of six directors to serve for the ensuing year and
until their successors are elected;
2. To approve an amendment to the 1988 Restated Stock Option Plan to
increase the number of shares of the Company's common stock
available for issuance thereunder by 100,000 shares;
3. To consider and act upon any other matters that may properly come
before the meeting or any adjournment thereof.
Only holders of record of Rehabilicare common stock at the close of business on
January 17, 1997 will be entitled to receive notice of and to vote at the
meeting or any adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO BE
PERSONALLY PRESENT AT THE MEETING, HOWEVER, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU LATER
DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS EXERCISED.
BY ORDER OF THE BOARD OF DIRECTORS
William R. Hibbs
SECRETARY
Dated: January 21, 1997
REHABILICARE INC.
1811 OLD HIGHWAY 8
NEW BRIGHTON, MN 55112-3493
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 25, 1997
------------------------
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by the Board of Directors of Rehabilicare Inc. (the "Company")
for use at the Annual Meeting of Shareholders to be held on February 25, 1997 at
3:30 p.m. CST at the Marriott City Center, 30 South Seventh Street, Minneapolis,
MN 55402, and at any adjournment thereof, for the purposes set forth in the
Notice of Annual Meeting of Shareholders. Shares of the Company's common stock,
$.10 par value (the "Common Stock"), represented by proxies in the form
solicited will be voted in the manner directed by shareholders. If no direction
is made, the proxy will be voted for the election of the nominees for director
named in this Proxy Statement and for the other proposal discussed herein.
Proxies may be revoked at any time before being exercised by delivery to the
Secretary of the Company of a written notice of termination of the proxy's
authority or a duly executed proxy bearing a later date. This Proxy Statement
and the form of proxy enclosed are being mailed to shareholders commencing on or
about January 21, 1997.
Only the holders of the Company's Common Stock whose names appear of record on
the Company's books at the close of business on January 17, 1997 will be
entitled to vote at the Annual Meeting. At the close of business on January 17,
1997 a total of 4,696,253 shares of Common Stock were outstanding, each share
being entitled to one vote.
Shares voted as abstentions on any matter or a "withhold vote for" as to
directors will be counted as shares that are present and entitled to vote for
the purposes of determining the presence of a quorum at the meeting and as
unvoted, although present and entitled to vote, for purposes of determining the
approval of each matter as to which the shareholder has abstained. If a broker
submits a proxy that indicates the broker does not have discretionary authority
as to certain shares to vote on one or more matters, those shares will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the meeting, but will not be considered
as present and entitled to vote with respect to such matters.
Expenses in connection with the solicitation of proxies will be paid by the
Company. Proxies are being solicited primarily by mail but, in addition,
officers and regular employees of the Company who will receive no extra
compensation for their services may solicit proxies by telephone, telecopy or in
person.
As far as the management of the Company is aware, no matters other than those
described in this Proxy Statement will be acted upon at the Annual Meeting. In
the event that other matters properly come before the Annual Meeting calling for
a vote of the shareholders, the persons named as proxies in the enclosed form of
proxy will vote in accordance with their best judgment on such other matters.
A copy of the Company's Annual Report for the year ending June 30, 1996, if not
already received by separate mailing, is being furnished to each shareholder
with this Proxy Statement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 17, 1997, certain information with
respect to beneficial ownership of the Company's Common Stock as to (i) each
person or entity known by the Company to own beneficially more than 5% of the
Company's Common Stock; (ii) each director of the Company; (iii) each executive
officer of the Company named in the Summary Compensation Table; and (iv) all
executive officers and directors as a group. Except as indicated by footnote,
the persons named in the table below have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED (1) PERCENT OWNED
------------------------- -------------------------
<S> <C> <C>
First Bank System, Inc. 662,450(2) 14.1%
601 Second Avenue South
Minneapolis, MN 55402
Heartland Advisors, Inc. 513,000(3) 10.9%
790 North Milwaukee Street
Milwaukee, WI 53202
Robert K. Anderson 360,660 7.7%
8070 No. Coconino
Paradise Valley, AZ 85253
Robert E. Buuck 272,500(4) 5.8%
Opus Center, Suite 421
9900 Bren Road East
Minneapolis, MN 55343
Robert C. Wingrove 200,684 4.2%
David B. Kaysen 140,729 2.9%
William R. Hibbs 78,999 1.7%
Donn O. Berkeland 22,500 *
John H. P. Maley 2,000 *
Richard E. Jahnke 2,000 *
All Directors and Officers 500,427 10.1%
as a group (8 persons)
- -------------------
* Less than 1%
</TABLE>
(1) Includes for Mr. Wingrove, Mr. Kaysen, Mr. Hibbs, Mr. Berkeland, Mr. Maley,
Mr. Jahnke and all directors and officers as a group, 73,000 shares, 130,000
shares, 12,500 shares, 12,500 shares, 2,000 shares, 2,000 shares and 281,000
shares, respectively, which can be purchased by exercise of options which
become exercisable within 60 days
(2) Includes 3,750 shares for which First Bank System, Inc. has shared
dispositive power
(3) Heartland Advisors, Inc. has sole voting power for 498,000 of these shares
(4) Includes 187,500 shares held by the Buuck Family Partnership of which Mr.
Buuck is the trustee
ELECTION OF DIRECTORS
The Board of Directors has determined that six directors shall be elected for
the coming year. Each director shall be elected at the Annual Meeting for a term
of one year and until his successor is elected and qualified. The Board of
Directors recommends that the shareholders elect the nominees named below as
directors of the Company for the ensuing year. It is intended that the persons
named as proxies in the enclosed form of proxy will vote the proxies received by
them for the election as directors of the nominees named below, unless otherwise
directed. Each nominee has indicated a willingness to serve, but in case any
nominee is not a candidate at the meeting, for reasons not known to the Company,
the proxies named in the enclosed form of proxy may vote for a substitute
nominee at their discretion. Information regarding the nominees is set forth
below:
<TABLE>
<CAPTION>
Principal occupation and business
Name Age Director since experience for past five years
- ------------------------- --------- ------------------- ----------------------------------------------------
<S> <C> <C> <C>
Robert C. Wingrove 64 June 1972 Chairman of the Board of the Company since 1984;
Chief Technical Officer of the Company since 1990
William R. Hibbs 53 August 1989 Partner with the Dorsey & Whitney law firm
(counsel to the Company) since 1974
David B. Kaysen 47 March 1992 President and Chief Executive Officer of the
Company since March 1992; from November 1990 to
March 1992, Vice President of Emeritus Corp. (a
software manufacturer marketing to the nursing
home industry)
Donn O. Berkeland 38 June 1992 Founder, President and Chief Executive Officer of
Two Rivers Center, Inc. (an out-patient physical
therapy and sports medicine clinic located in Coon
Rapids, Minnesota) since 1981
John H. P. Maley 61 December 1996 Chairman of Magister Corporation (a developer and
marketer of consumer healthcare products) since
July 1995; from March 1976 to December 1994,
Chairman and CEO of Chattanooga Group (a
manufacturer of physical therapy products)
Richard E. Jahnke 48 January 1997 President and Chief Operating Officer of CNS, Inc.
(a manufacturer of consumer products, including
the Breathe Right(R)nasal strip) since 1993; from
1991 to 1993, Executive Vice President and Chief
Operating Officer of Lemna Corporation (a
manufacturer of waste water treatment systems)
</TABLE>
Robert K. Anderson resigned as a Director effective March 1, 1996, having served
since December 1981. Anthony R. Gette resigned as a Director effective October
8, 1996, having served since November 1987.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK
REPRESENTED AT THE MEETING IS REQUIRED FOR THE ELECTION OF EACH DIRECTOR. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE.
MEETINGS OF THE BOARD AND CERTAIN COMMITTEES
During fiscal 1996, the Board of Directors maintained an Audit Committee,
comprised of Messrs. Gette and Hibbs, and a Compensation Committee, comprised of
Messrs. Gette, Berkeland and Hibbs. Each of these committees met once during the
fiscal year. The Audit Committee reviews and makes recommendations to the Board
of Directors with respect to designated matters. The Compensation Committee
considers and makes recommendations with respect to compensation of officers of
the Company (including salaries and incentive compensation). There is no
standing nominating committee.
During the fiscal year ended June 30, 1996, the Board of Directors held four
meetings. Each incumbent Director attended at least 75% of all meetings of the
Board while he was serving on the Board and all meetings of any committee of the
Board on which he served.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
Name Age Position
--------------------------- -------------- -------------------------------------------
<S> <C> <C>
Robert C. Wingrove 64 Chief Technical Officer
David B. Kaysen 47 Chief Executive Officer
William J. Sweeney 53 Vice President of Sales and Marketing
W. Glen Winchell 50 Vice President of Finance and Chief
Financial Officer
</TABLE>
See the biographical information on Messrs. Wingrove and Kaysen under Directors.
William J. Sweeney started with the Company as Vice President of Sales and
Marketing in April 1996. From June 1993 to April 1996, he was employed by CIRCON
Corporation and Surgitek, Inc., a company acquired by CIRCON Corporation, both
manufacturers of surgical products, most recently as Corporate Business
Development Manger. From May 1992 to May 1993, he was Director of Sales for
Applied Medical Resources, a distributor of vascular, urology and surgical
products. From June 1990 to May 1992, he was Director of Sales for Mentor
Corporation, a manufacturer of urology products.
W. Glen Winchell started with the Company as Vice President of Finance and Chief
Financial Officer in September 1993. From December 1990 to September 1993, he
was self-employed as a financial consultant and owner/operator of several small
retail businesses. From October 1988 to December 1990, he was Chairman and Chief
Executive Officer of Braxton Industries, Inc., a provider of waste management
and alternative fuel production services.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive officers
and directors and persons who beneficially own more than ten percent (10%) of
the Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, directors and greater than ten percent (10%) beneficial
owners are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
William J. Sweeney, the Company's new Vice President of Sales and Marketing,
filed late his initial report of beneficial ownership (which reported no
ownership of securities). The Company believes that, except with respect to the
foregoing report, its executive officers and directors complied with all
applicable Section 16(a) filing requirements during and with respect to the
fiscal year ended June 30, 1996.
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation awarded to or
earned by the Chief Executive Officer of the Company and each executive officer
of the Company who earned salary and bonus in excess of $100,000 during the
fiscal year ended June 30, 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation (1)
-----------------------
Options
Name and Long-Term All Other
Principal Position Year Salary Bonus Compensation(1) Compensation(2)
------------------ ---- ------ ----- --------------- ---------------
<S> <C> <C> <C> <C> <C>
David B. Kaysen 1996 $ 149,531 $ - 15,000 $ 904
CHIEF EXECUTIVE 1995 141,659 - 15,000 420
OFFICER 1994 121,950 15,400 15,000 500
Robert C. Wingrove 1996 $115,500 $ - 10,000 $ 842
CHIEF TECHNICAL 1995 115,500 - 15,000 524
OFFICER 1994 110,500 13,000 10,000 500
</TABLE>
- ----------
(1) The Company did not pay other annual compensation, nor did it award any
restricted stock or make long-term incentive payments, to such executives
(2) Represents, for both Mr. Kaysen and Mr. Wingrove, Company contributions to a
401(k) plan
The following table sets forth information relating to options granted during
the twelve months ended June 30, 1996 to the executive officers listed in the
Summary Compensation Table:
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1996
Number of % of Total Options
Shares Granted to
Underlying Employees in Expiration
Name Options Fiscal Year Exercise Price Date
- -------------------------- ---------------- -------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Mr. Kaysen 15,000 17.2% $3.00 9/13/00
Mr. Wingrove 10,000 11.4% $3.00 9/13/00
</TABLE>
The following table summarizes the value of options held at the end of fiscal
1996 by the executive officers named in the Summary Compensation Table. Neither
of the executive officers named in the Summary Compensation Table exercised any
options during fiscal 1996.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN FISCAL 1996 AND FISCAL YEAR-END OPTION VALUE
Number of Unexercised Options at End of Value of Unexercised In-the-Money
Fiscal 1996 Options at End of Fiscal 1996(1)
- -------------------------- ----------------------------------------- -----------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- ---------------- -------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Mr. Kaysen 118,000 27,000 $270,125 $42,375
Mr. Wingrove 94,000 21,000 $199,750 $34,625
</TABLE>
- ---------------
(1) Represents the difference between $4.00 (the last sales price at 6/28/96)
and the exercise price multiplied by the number of shares.
COMPENSATION OF DIRECTORS
Directors who are not also officers or employees of the Company receive fees of
$1,000 per quarter; an option to purchase 2,500 shares of the Company's common
stock under its 1988 Restated Stock Option Plan on July 1 of each year; and are
reimbursed for their expenses in attending board meetings.
LONG-TERM PLAN INCENTIVE AWARDS
Other than its 1988 Restated Stock Option Plan and 1993 Employee Stock Purchase
Plan, the Company does not maintain any long-term incentive plan.
PROPOSAL TO APPROVE AMENDMENT TO 1988 RESTATED STOCK OPTION PLAN
On December 31,1996 the Company's Board of Directors approved, subject to
shareholder approval, an amendment to the Company's 1988 Restated Stock Option
Plan (the "Plan") that will increase the number of shares reserved for issuance
under options granted thereunder by 100,000 shares.
The Plan was adopted by directors and shareholders in August 1988 and October
1988, respectively, and was amended by shareholders in November 1992 and
November 1994. The Plan, as amended, reserved a total of 825,000 shares of
Common Stock for issuance upon exercise of options granted thereunder. The Plan
is administered by a committee (the "Committee") of one or more directors of the
Company, none of whom are officers or employees of the Company. The Committee
may grant incentive stock options or stock options which do not qualify for
special tax treatment under the Plan. Each director who is not an employee is
automatically granted non-qualified stock options to purchase 2,500 shares of
the Company's Common Stock on July 1 of each year but is otherwise ineligible to
receive options under the Plan. The option price for all incentive stock options
and non-qualified stock options granted under the Plan is determined by the
Committee but may not be less than 100% of the fair market value of the Common
Stock at the date of grant. The option price for options granted to non-employee
directors under the 1988 Plan is fixed at 100% of the fair market value of the
Common Stock on the date of grant.
Under current provisions of the Internal Revenue Code of 1986, as amended, upon
the granting of either incentive or non-qualified stock options, no income will
be realized by the optionee and no deduction will be allowable to the Company.
At the time of exercise of an incentive stock option for cash, no income will be
recognized by the optionee although the spread between the option price and the
fair market value of the shares on the date of exercise will be a tax preference
item used in the calculation of an optionee's alternative minimum tax. At the
time of exercise of a non-qualified stock option for cash, the excess of the
fair market value of the shares acquired on the date of exercise over the
exercise price paid will be ordinary income to the optionee and deductible by
the Company (subject to the usual rules on ordinary and reasonable compensation
deductions).
The Company is proposing that the number of shares reserved for issuance under
the Plan be increased by 100,000 shares. Before the proposed amendment, a total
of 485,500 shares of Common Stock were reserved for issuance under the Plan. At
January 17, 1997 there remained 499,340 shares available for future grants under
the Plan. The Board believes that the Plan has been and will continue to be a
valuable tool in both providing incentive to employees to put forth their
maximum efforts for the advancement of the Company and in attracting new
employees. The Board does not believe the remaining shares reserved for issuance
under the Plan provide the Company with the flexibility necessary to accomplish
these objectives.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Company has selected Price Waterhouse LLP as its independent public
accountants for the year ending June 30, 1997. Representatives of Price
Waterhouse LLP are expected to be present at the Annual Meeting, will have an
opportunity to make a statement if they desire to do so and will be available to
respond to questions from shareholder.
The Board of Directors determined, effective January 13, 1997, to dismiss Arthur
Andersen LLP as the Company's independent public accountants. During the two
fiscal years preceding such dismissal, there were no disagreements with Arthur
Andersen LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if not resolved to
their satisfaction, would have caused them to make reference to the subject
matter of the disagreements in connection with their reports. No report of
Arthur Andersen LLP on the Company's financial statements for the two fiscal
years preceding such dismissal contained an adverse opinion or a disclaimer of
opinion or was qualified as to uncertainty, audit scope or accounting
principles.
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal by a shareholder to be presented at the next Annual Meeting must be
received at the Company's principal executive offices, 1811 Old Highway 8, New
Brighton, MN 55112-3493, no later than June 30, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
WILLIAM R. HIBBS
SECRETARY
Dated: January 21, 1997
REHABILICARE INC.
Proxy for the 1996 Annual Shareholders Meeting
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David B. Kaysen and W. Glen Winchell,
and each of them, with power to appoint a substitute, to vote all shares the
undersigned is entitled to vote at the Annual Meeting of Shareholders of
Rehabilicare Inc., to be held on February 25, 1997, and at all adjournments
thereof, as specified below on the matters referred to, and, in their
discretion, upon any other matters which may be brought before the meeting:
1. ELECTION OF DIRECTORS:
|_| FOR all nominees (EXCEPT |_| WITHHOLD AUTHORITY
AS MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES
TO WITHHOLD AUTHORITY FOR A SPECIFIC NOMINEE,
PLACE A LINE THROUGH HIS NAME BELOW:
Robert C. Wingrove, William R. Hibbs, David B. Kaysen,
Donn O. Berkeland, John H. P. Maley, Richard E. Jahnke
2. AMENDMENT TO 1988 RESTATED STOCK OPTION PLAN:
FOR |_| AGAINST |_| ABSTAIN |_|
3. TO VOTE WITH DISCRETIONARY AUTHORITY ON ANY OTHER MATTER THAT MAY PROPERLY
COME BEFORE THE MEETING.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made, this
Proxy will be voted for all directors named in Item 1 and for proposal set forth
in Item 2.
When shares are held by joint tenants both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: 1997
----------------------------------------
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Signature
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Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
