<PAGE> 1
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
NATURAL ALTERNATIVES INTERNATIONAL, 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:
Limited Partnership Interests
(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> 2
NATURAL ALTERNATIVES INTERNATIONAL, INC.
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 8, 2001
An Annual Meeting of Stockholders of Natural Alternatives International,
Inc., a Delaware corporation (the "Company"), will be held at the Olympic Resort
Hotel and Spa, 6111 El Camino Real, Carlsbad, California 92009 on Monday,
January 8, 2001 at 1:00 p.m., local time, for the following purposes:
1. Election of two (2) directors of the Company in Class I to serve
until the next Annual Meeting of Stockholders held to elect directors in Class I
(and until the election and qualification of their successors).
2. Confirmation of KPMG LLP as the Company's independent auditors for
the fiscal year ending June 30, 2001.
3. Transaction of such other business as may properly come before the
Annual Meeting of Stockholders or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on November 27,
2000 as the record date for determination of stockholders entitled to notice of
and to vote at the Annual Meeting of Stockholders or any adjournment or
postponement thereof.
By Order of the Board of Directors
/s/ MARK A. LEDOUX
Mark A. LeDoux
Chief Executive Officer and President
San Marcos, California
November 30, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING OF
STOCKHOLDERS IN PERSON. REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ACCOMPANYING ENVELOPE, POSTAGE FOR WHICH HAS BEEN PROVIDED IF MAILED IN THE
UNITED STATES. THE PROMPT RETURN OF PROXIES WILL ENSURE A QUORUM AND SAVE THE
COMPANY THE EXPENSE OF FURTHER SOLICITATION. ANY STOCKHOLDER RETURNING THE
ENCLOSED PROXY MAY REVOKE IT PRIOR TO ITS EXERCISE BY VOTING IN PERSON AT THE
MEETING OR BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A
DULY EXECUTED PROXY BEARING A LATER DATE.
<PAGE> 3
NATURAL ALTERNATIVES INTERNATIONAL, INC.
1185 Linda Vista Drive
San Marcos, California 92069
------------
PROXY STATEMENT
------------
GENERAL INFORMATION
The enclosed Proxy is solicited on behalf of the Board of Directors of
Natural Alternatives International, Inc., a Delaware corporation (the
"Company"), for use at the meeting of Stockholders ("Annual Meeting") to be held
on January 8, 2001, at 1:00 p.m., local time, or at any adjournment or
postponement thereof. The Annual Meeting will be held at the Olympic Resort
Hotel and Spa, 6111 El Camino Real, Carlsbad, California 92009. This Proxy
Statement and the accompanying Proxy and annual report are first being mailed to
stockholders on or about November 30, 2000.
INFORMATION CONCERNING SOLICITATION AND VOTING
SOLICITATION
The Company is soliciting the enclosed Proxy and will bear the entire
cost of the solicitation of Proxies, including the preparation, assembly,
printing and mailing of this Proxy Statement, the Proxy and any additional
material furnished to stockholders. Copies of solicitation material will be
furnished to brokerage houses, fiduciaries and custodians holding shares in
their names that are beneficially owned by others to forward to such beneficial
owners. In addition, the Company may reimburse such persons for their cost of
forwarding the solicitation material to such beneficial owners. The Company has
retained Chase Mellon Shareholder Services to assist in the solicitation of
Proxies. The solicitation of Proxies by mail may be supplemented by telephone,
telegram and/or personal solicitation by directors, officers, employees or
agents of the Company. No additional compensation will be paid for any such
services. Except as described above, the Company does not intend to solicit
Proxies other than by mail.
VOTING RIGHTS AND OUTSTANDING SHARES
Only stockholders of record at the close of business on November 27,
2000 will be entitled to vote at the Annual Meeting. On November 27, 2000, there
were approximately 6,024,380 shares of Common Stock issued and outstanding. The
Company is incorporated in Delaware and is not required by Delaware corporation
law or its Certificate of Incorporation to permit cumulative voting in the
election of directors.
Each share of Common Stock will have one vote on each matter properly
presented and submitted to a vote at the Annual Meeting. An affirmative vote of
a majority of the shares represented at the Annual Meeting and entitled to vote
thereon (where the holders of a majority of the shares entitled to vote are
present in person or by Proxy) will be necessary to approve each matter, except
for the election of directors, who are elected by a plurality of the votes of
the shares present in person or by Proxy. There are no rights which will accrue
to stockholders dissenting in any matter known to the Company to be raised at
the Annual Meeting. Abstentions with respect to any matter are treated as shares
present or represented and entitled to vote on that matter and thus have the
same effect as negative votes. If shares are not voted by the broker who is the
record holder of the shares, or if shares are not voted in other circumstances
in which Proxy authority is defective or has been withheld with respect to any
matter, these non-voted shares are not deemed to be present or represented for
purposes of determining whether stockholder approval of that matter has been
obtained.
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<PAGE> 4
REVOCABILITY OF PROXIES
When the enclosed Proxy is properly executed and returned, the shares it
represents will be voted at the Annual Meeting in accordance with any directions
noted thereon, and if no such directions are indicated, the shares it represents
will be voted in favor of the proposals set forth in the notice attached hereto.
Any person giving a Proxy in the form accompanying this statement has the power
to revoke it any time before its exercise by filing with the Secretary of the
Company at the Company's principal executive office, 1185 Linda Vista Drive, San
Marcos, California 92069, an instrument of revocation or a duly executed Proxy
bearing a later date, or by attending the Annual Meeting and voting in person.
STOCKHOLDER PROPOSALS
Under Regulation Section 240.14a-5 adopted pursuant to Section 14(a) of
the Securities Exchange Act of 1934, stockholders who intend to submit proposals
at the 2001 Annual Meeting must submit such proposals to the Company no later
than August 3, 2001 in order for them to be included in the Proxy Statement and
the form of Proxy to be distributed by the Board in connection with that
meeting. If the 2001 Annual Meeting is held on a date which is not within 30
days of January 8, 2001, then such proposals must be submitted a reasonable time
before the Company begins to print and mail its proxy materials. If a
stockholder wishes to have a proposal considered at the 2001 Annual Meeting but
does not utilize the process set forth in Regulation Section 240.14a-8, the
Company's bylaws control the timely filing of such proposals. Under the
Company's bylaws, a stockholder proposal is not timely unless delivered to or
mailed to the Secretary of the Company and received at the executive offices of
the Company not less than thirty (30) days nor more than sixty (60) days prior
to the meeting as originally scheduled. In the event less than forty (40) days
notice or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be made timely must be received by
the Company not later than the close of business on the tenth day following the
day on which notice of the date of the annual meeting was made or publicly
disclosed. It is recommended that stockholders submitting proposals or notices
of proposals direct them to the Secretary and to the Chief Financial Officer of
the Company and utilize Certified Mail-Return Receipt Requested. Stockholders'
proposals should be submitted to Natural Alternatives International, Inc., 1185
Linda Vista Drive, Suite D, San Marcos, CA 92069, Attn: Chief Financial Officer.
PROPOSAL 1
ELECTION OF CLASS I DIRECTORS
Directors of the Company are elected to serve three-year terms. Each of
the two Class I directors to be elected at the Annual Meeting of stockholders
held for the purpose of election of Class I directors; and until his successor
is elected and has qualified, or earlier upon his death, resignation or removal.
The nominees for Class I director, Mark A. LeDoux and Joe E. Davis, are
currently members of the Company's Board of Directors (the "Board") in Class I.
Mr. LeDoux was elected a Class I director at the meeting of stockholders held on
December 12, 1997. Mr. Davis was appointed a Class I director on February 10,
2000, to fill a vacancy on the Board. The Class II directors on the Board, Marie
A. LeDoux and Lee G. Weldon, are serving terms that will expire at the next
meeting of stockholders held to elect Class II directors during fiscal 2002. The
sole Class III director on the Board, J. Scott Schmidt, is serving a term that
will expire at the next meeting of stockholders held to elect Class III
directors during fiscal 2003.
Unless authority to do so is otherwise withheld, it is intended the
shares represented by the enclosed Proxy will be voted for the election of Mark
A. LeDoux and Joe E. Davis as Class I directors. The nominees for election have
agreed to serve if elected. In the event either nominee becomes unavailable or
refuses to serve as a director (an event that is not anticipated), the shares
represented by the enclosed
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<PAGE> 5
Proxy will be voted for the election of the remaining nominee and such other
nominee as the Board may select.
INFORMATION ABOUT NOMINEES AND DIRECTORS
Set forth below is information regarding the two nominees for election
as a director in Class I and the continuing directors in Class II and Class III,
including information furnished by them as to their principal occupations at
present and for the last five years, certain directorships held by each, their
age as of November 30, 2000, and the year in which each became a director of the
Company. Except for Marie A. LeDoux and Mark A. LeDoux, who are mother and son,
respectively, there are no family relationships among any of the directors or
executive officers of the Company.
NAME AGE
CLASS I
Mark A. LeDoux.............................................................46
Mr. LeDoux is Chief Executive Officer, President, Assistant Treasurer
and a Director of the Company. He was a director, the President and Chief
Executive Officer of Natural Alternatives, Inc., the predecessor corporation,
from its formation in 1981 until the 1986 merger into the Company. Mr. LeDoux
has been a director and Chief Executive Officer of the Company since the August
1986 merger of the predecessor corporation into the Company, which continued the
business and operations of Natural Alternatives, Inc. He was appointed President
of the Company in January, 1999, an office he previously held from August 1986
to December 1996. From 1976 to 1980, Mr. LeDoux held the position of Executive
Vice President and Chief Operating Officer of Kovac Laboratories, a company
which was engaged in the business of manufacturing nutritional supplements. He
attended the University of Oklahoma and graduated Cum Laude with a Bachelor of
Arts and Letters in 1975. Mr. LeDoux graduated from Western State University,
College of Law in 1979, receiving a Juris Doctorate Doctor degree. Mr. LeDoux is
the son of Marie A. LeDoux, who is the Secretary and Chairperson of the Board of
Directors.
Joe E. Davis...............................................................65
Mr. Davis was appointed a director of the Company in February 2000. Mr.
Davis has been a private investor for over ten years, and currently serves as a
director of several public and privately held corporations, including BMC
Industries, Inc., Wilshire Technologies, Inc., and Freymiller Trucking, Inc. Mr.
Davis previously served as Chairman of the Board of Linear Corporation from 1987
to 1988, and as President and Chief Executive Officer of BMC Industries, Inc.
during 1985. From 1974 to 1982 Mr. Davis held the position of President and
Chief Executive Officer of National Health Enterprises, Inc. Mr. Davis graduated
from the University of Texas with a B.S. in chemistry and has an M.B.A. from the
Harvard Graduate School of Business Administration.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE CLASS I NOMINEES LISTED
ABOVE.
3
<PAGE> 6
CLASS II
Marie A. LeDoux............................................................84
Mrs. LeDoux is the Secretary of the Company and Chairperson of its Board
of Directors. She has been a director of the Company since August 1986, and has
also been Chairperson and Secretary since that time. Mrs. LeDoux was also the
Chairperson of the Company's predecessor from its formation until 1986. She has
forty years of experience in the area of nutrition. In 1978, Mrs. LeDoux was
awarded an Honorary Fellowship in the International Academy of Preventive
Medicine. In 1981, she received an Honorary Ph.D. in Humanities from the
Heritage Institute. Mrs. LeDoux is the mother of Mark A. LeDoux, who is the
Chief Executive Officer, President, Assistant Treasurer, and a Director of the
Company. For the last eighteen years, Mrs. LeDoux has been the President of Play
N Talk International, a company which is in the business of preparing
instructional materials for children's reading programs.
Lee G. Weldon..............................................................61
Mr. Weldon has been a director of the Company since June of 1992. He was
the Chairman and Chief Executive Officer of Kal Healthway, Inc., a food
supplement distributor, from 1978 to 1995. Mr. Weldon graduated from UCLA and
obtained a Bachelor of Science in Business Administration in 1963. Mr. Weldon
became a member of Young President's Organization ("YPO") in 1982, and since
1990 he has been a graduate member of YPO.
CLASS III
J. Scott Schmidt...........................................................63
Mr. Schmidt became a director of the Company in January 1999. Mr.
Schmidt is currently a Group Publisher with 101 Communications LLP. From 1995
until he accepted his current position earlier this year, Mr. Schmidt was a
Management Consultant specializing in communications, marketing, and mergers and
acquisitions. Mr. Schmidt was Chief Executive Officer of Thompson Newspapers
Corporation between from 1992 to 1994. From 1991 to 1992 Mr. Schmidt was the
President, Publisher and Partner of American Collegiate Network, Inc., which was
the publisher of the National College Newspaper. Mr. Schmidt was President and
Chief Executive Officer of Hilton/Schmidt, Inc., which specialized in consulting
for media companies in the areas of editorial, sales, marketing and
acquisitions, prior thereto. Mr. Schmidt previously spent 27 years with Tribune
Company of Chicago, eventually serving as Vice President/News and Information
for the entire corporation. Mr. Schmidt attended Bradley University and
Northwestern University.
BOARD COMMITTEES, MEETINGS AND COMPENSATION
During the fiscal year ended June 30, 2000, the Board held six (6)
regular meetings and one (1) special meeting. All directors then in office
attended at least 75% of the aggregate number of meetings of the Board and of
the Committees on which such directors served during the fiscal year ended June
30, 2000.
All members of the Board hold office until the next meeting of
stockholders held for the purpose of election of the directors in their class
held on or about the expiration of their respective terms of office and the
election and qualification of their successors. All directors who are not also
employees or officers of the Company receive a minimum annual fee of $5,000,
payable in arrears, for service during the prior year on the date of the meeting
of stockholders held to elect Directors of their Class, plus a fee of $1,000
4
<PAGE> 7
for each Board and Committee meeting personally attended. Upon first becoming a
member of the Board of Directors, each outside director receives a nonqualified
stock option to purchase 10,000 common shares. Thereafter, each outside director
receives an additional nonqualified stock option covering 10,000 common shares
each year he or she continues serving on the Board of Directors of the Company.
Executive officers serve at the discretion of the Board. The Board has an Audit
Committee and a Human Resources Committee but does not have a Nominating
Committee. The Human Resources Committee functions as the compensation
committee.
The Audit Committee is composed of independent directors. The Audit
Committee functions pursuant to a written charter which was adopted by the Board
during the past year and is attached hereto as Appendix 1. The Audit Committee
recommends a firm of certified public accountants to be appointed by the Board,
subject to ratification by the stockholders, as independent auditors to audit
the Company's financial statements and to perform services related to the audit.
The Audit Committee also has the responsibility to review the scope and results
of the audit with the independent auditors, review with management and the
independent auditors the Company's interim and year-end operating results,
consider the adequacy of the internal accounting and control procedures of the
Company, review any non-audit services to be performed by the independent
auditors and consider the effect of such performance on the independence of the
auditors. The Audit Committee currently consists of directors Davis, Weldon and
Schmidt. Mr. Davis was appointed to the Audit Committee by the Board of
Directors of the Company on February 10, 2000, and has served since that date.
During fiscal 2000, the Audit Committee met three times.
The Human Resources Committee establishes and recommends to the Board
rates of salary, bonuses, retirement and other compensation for all directors
and officers of the Company and for such other personnel it determines advisable
or as the Board may designate. The Human Resources Committee currently consists
of directors Weldon and Schmidt. Messrs. Weldon and Schmidt are not officers or
employees of the Company or any of its subsidiaries. During fiscal 2000, the
Human Resources Committee met four times.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Subject to stockholder approval at the Annual Meeting, the Board has
selected KPMG LLP to continue as the Company's independent auditors for the
fiscal year ending June 30, 2001. A representative of KPMG LLP is expected to be
present at the Annual Meeting.
Stockholder ratification of the selection of KPMG LLP as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of KPMG LLP to the stockholders
for ratification as a matter of good corporate practice. If the stockholders
fail to ratify the selection, the Board will reconsider whether or not to retain
that firm. Even if the selection is ratified, the Board in its discretion may
direct the appointment of a different independent accounting firm at any time
during the year if the Board determines that such a change would be in the best
interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares
represented and voting at the meeting will be required to ratify the selection
of KPMG LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
5
<PAGE> 8
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name Position Age First Year of Service
---- -------- --- ---------------------
<S> <C> <C> <C>
Mark A. LeDoux(1) President, Chief Executive Officer, Assistant 46 1986
Treasurer and Director
Peter C. Wulff(2) Chief Financial Officer and Treasurer 41 1999
David E. Lough(3) Executive Vice President 55 1998
Douglas E. Vice President of Marketing 40 1998
Flaker(4)
John A. Wise(5) Vice President of Science and Technology 60 1987
</TABLE>
(1) MARK A. LEDOUX. Information concerning Mr. LeDoux's background and
experience is set forth at page 2 above.
(2) PETER C. WULFF joined the Company as Chief Financial Officer and Treasurer
in November 1999. Prior to joining the Company, Mr. Wulff served as Vice
President of Finance, and Corporate Secretary of Epimmune, Inc., a biotechnology
company, from 1998 to 1999, and served as Assistant Treasurer with Ligand
Pharmaceuticals Incorporated during his employment from 1993 to 1998. From 1985
to 1993, Mr. Wulff held positions of increasing management responsibility in
finance and accounting with ALARIS Medical Inc. (formerly Advanced Medical
Inc./IMED Corporation), an international manufacturer and distributor of
intravenous infusion therapy products and related disposables. Mr. Wulff earned
a B.A. in Economics and Germanic Languages in 1981 and an M.B.A. in Finance in
1983, both from Indiana University.
(3) DAVID E. LOUGH joined the Company as Executive Vice President in December
1998. Mr. Lough is an industry executive with more than 25 years of experience
in the nutritional and consumer product business. Mr. Lough was employed by
Shaklee Corporation from 1975 to 1986 and from 1996 to 1998, serving as Vice
President, International the latter two years. From 1992 to 1995, he was the
Vice President of International Business with Nature's Sunshine, Inc. Mr. Lough
attended Michigan State University and received a B.S. in Packaging Engineering
and Marketing in 1967. He earned his M.B.A. in Marketing from Santa Clara
University in 1971.
(4) DOUGLAS E. FLAKER joined the Company as Vice President of Marketing in
December 1998. Mr. Flaker has more than 15 years of experience in marketing,
sales management and product development. Mr. Flaker was a Vice President with
Boston-based Fidelity Investments from 1994 to 1998. From 1985 to 1994, he was a
Vice President and Portfolio Manager with Summit Bancorporation in Princeton,
New Jersey. Mr. Flaker attended the Peabody Conservatory of Music at Johns
Hopkins University and graduated from the Stonier Graduate School of Banking at
the University of Delaware in 1993.
(5) JOHN A. WISE joined the Company as the Director of Science and Technology in
1987 and was appointed Vice President of Science and Technology in fiscal 1999.
From 1982 to 1986, Dr. Wise was Executive Vice President of Research and
Development for United Sciences of America, Inc. Dr. Wise received a B.S. in
Preventative Medicine and a B.A. in Zoology from the University of Washington in
1963, and an M.S. in Microbiology from the University of Minnesota in 1967. He
received his Ph.D. in Microbiology from Oregon State University in 1970.
6
<PAGE> 9
SUMMARY OF CASH AND OTHER COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation for services rendered in all
capacities to the Company during the fiscal years ending June 30, 1998, 1999,
and 2000, by each of the named executive officers:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
All Other
Name Year Salary Bonus Other(1) Compensation(2)
---- ---- -------- ----- -------- ---------------
<S> <C> <C> <C> <C> <C>
Mark A. LeDoux 2000 $253,662 $ -- $ 17,010 $28,779
1999 $229,360 $609 $345,781 $27,756
1998 $208,000 $304 $ 40,270 $27,842
Peter C. Wulff 2000 $100,962 -- -- $ 2,810
1999 -- -- -- --
1998 -- -- -- --
David E. Lough 2000 $150,000 -- $ 66,586 $15,546
1999 $ 75,000 -- $ 9,246 $ 2,739
1998 -- -- -- --
Douglas E. Flaker 2000 $111,077 -- $ 15,941 $18,693
1999 $ 50,000 -- $ 9,339 $ 2,588
1998 -- -- -- --
John A. Wise 2000 $143,385 -- $ 19,139 $17,263
1999 $110,000 $629 $ 46,905 $21,433
1998 -- -- -- --
</TABLE>
(1) Amounts listed for named executive do not exceed the lesser of $50,000,
or 10% of salary and bonus combined, except as set forth in the
following table.
(2) See following table.
7
<PAGE> 10
OTHER COMPENSATION TABLE
<TABLE>
<CAPTION>
Mark Peter David Douglas John
A. C. E. E. A.
LeDoux Wulff Lough Flaker Wise
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Other Annual Compensation 2000
Gain from exercise and sale of stock options $ -- $ -- $ -- $ -- $ --
Personal Transportation 15,000 -- 15,000 15,000 15,000
Other Personal Expenses 2,010 -- 51,586 941 4,139
-------- ------ ------- ------- -------
Totals $ 17,010 $ -- $66,586 $15,941 $19,139
Other Annual Compensation 1999
Gain from exercise and sale of stock options $325,030 $ -- $ -- $ -- $26,353
Personal Transportation 18,000 -- 9,000 9,000 18,000
Other Personal Expenses 2,751 -- 246 339 2,552
-------- ------ ------- ------- -------
Totals $345,781 $ -- $ 9,246 $ 9,339 $46,905
Other Annual Compensation 1998
Gain from exercise and sale of stock options $ -- $ -- $ -- $ -- $ --
Personal Transportation 18,000 -- -- -- --
Other Personal Expenses 22,270 -- -- -- --
-------- ------ ------- ------- -------
Totals $ 40,270 $ -- $ -- $ -- $ --
All Other Compensation 2000
401(k) Employer Contributions $ 7,800 $ -- $ 2,896 $ 2,290 $ 4,770
Life Insurance and Disability Premiums 5,507 270 1,025 646 4,139
Medical, Dental, and Vision 15,472 2,540 11,625 15,757 8,354
-------- ------ ------- ------- -------
Totals $ 28,779 $2,810 $15,546 $18,693 $17,263
All Other Compensation 1999
401(k) Employer Contributions $ 8,075 $ -- $ -- $ -- $ 6,400
Life Insurance and Disability Premiums 4,972 -- 268 117 3,452
Medical, Dental, and Vision 14,709 -- 2,471 2,471 11,581
-------- ------ ------- ------- -------
Totals $ 27,756 $ -- $ 2,739 $ 2,588 $21,433
All Other Compensation 1998
401(k) Employer Contributions $ 5,675 $ -- $ -- $ -- $ --
Life Insurance and Disability Premiums 4,621 -- -- -- --
Medical, Dental, and Vision 15,046 -- -- -- --
Board of Director Meetings 2,500 -- -- -- --
-------- ------ ------- ------- -------
Totals $ 27,842 $ -- $ -- $ -- $ --
</TABLE>
STOCK OPTION GRANTS
The following table contains information concerning the stock option
grants to the Company's named executive officers that were made for the fiscal
year ended June 30, 2000:
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<PAGE> 11
STOCK OPTION GRANTS IN FISCAL 2000
<TABLE>
<CAPTION>
Percent of Potential Realizable Value
Number of Securities Total Options at Assumed Annual Rate of Stock Price
Underlying Granted to Exercise or Appreciation for
Options Employees in Base Price Expire Option Term (2)
Granted (#) Fiscal Year ($/Share)(1) Date 5 % 10%
-------------------- ------------- ----------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Peter C. Wulff 30,000 16.62% $3.19 Dec. 5, 2004 $26,440 $58,426
</TABLE>
(1) The options granted to Mr. Wulff were granted under the Company's 1992
Incentive Plan on December 6, 1999,at the fair market value price on
that date of $3.19. The following restrictions apply to the options
granted: (a) the recipient must be employed with the Company on a full
time basis on the date of exercise; (b) the recipient may not be in
default of any condition of any written employment agreement; and (b)
one-third of the options granted are exercisable on each of the three
(3) anniversaries of the date of grant of the option.
(2) The potential realizable value of each grant of options has been
calculated, pursuant to the regulations promulgated by the Securities
and Exchange Commission (the "SEC"), assuming the market price of the
Common Stock appreciates in value from the date of grant to the end of
the option term at the annualized rates of 5% and 10%, respectively.
These numbers are calculated based on the requirements promulgated by
the SEC and do not reflect the Company's estimates of future stock price
growth. Unless the market price of the Common Stock does in fact
appreciate in excess of the exercise price of the option over the option
term, no value will be realized from option grants made to the executive
officers.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning option exercises
and option holdings under the 1992 Incentive Plan, the 1992 Nonqualified Stock
Option Plan and the 1994 Nonqualified Stock Option Plan, and the 1999 Incentive
Plan for the year ended June 30, 2000, with respect to the Company's named
executive officers:
AGGREGATED OPTION EXERCISES IN FISCAL 2000 AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Securities Underlying Unexercised In-the-Money
Shares Options Options at Fiscal
Acquired on Value at Fiscal Year-End (#) Year-End ($)(1)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ------------ --------------------------------- -------------------------
<S> <C> <C> <C> <C>
1992 PLAN
Mark A. LeDoux - $- 30,000 / -- $- / $-
Peter C. Wulff - $- -- / 30,000 $- / $-
David E. Lough - $- 10,000 / 20,000 $- / $-
Douglas E. Flaker - $- 6,667 / 13,333 $- / $-
John A. Wise - $- 45,000 / -- $- / $-
</TABLE>
(1) The closing price of the Company's common stock at June 30, 2000, as quoted
on the National Market System of the Nasdaq Stock Market, was $1.8125 per
share of common stock.
DEFINED BENEFIT PENSION PLAN
The Company sponsors a defined benefit pension plan (the "Plan"), which
provides retirement benefits to employees based generally on years of service
and compensation during the last five years before retirement. Effective June
21, 1999, the Company adopted an amendment to freeze benefit accruals of the
participants of the Plan. The Company's policy is to fund the net pension cost
accrued. However, the Company would not contribute an amount less than the
minimum funding requirements of the Employee Retirement Income Security Act of
1974 or more than the maximum tax-deductible amount.
9
<PAGE> 12
EMPLOYMENT AGREEMENTS
During 2000, the Company had employment agreements with Mark A. LeDoux,
Peter C. Wulff, David E. Lough, Douglas E. Flaker and John A. Wise. Marie A.
LeDoux acts as Secretary of the Company, and is not subject to a written
employment agreement. In her capacity as Secretary of the Company, Mrs. LeDoux
received compensation in the amount of $12,000 per year during fiscal 2000.
The employment agreements for Messrs. LeDoux, Wulff, Lough, Flaker and
Wise each have a term ending September 30, 2000. Pursuant to such agreements,
each executive officer remains employed by the Company following September 30,
2000, with the salary and benefits prescribed in his employment agreement. The
Company intends to execute new employment agreements with each executive officer
during the second quarter of fiscal year 2001.
Mr. LeDoux's employment agreement provided for an annual salary of
$260,000 and automobile expense reimbursement of $1,500 per month. In the event
Mr. LeDoux's employment is terminated without cause, he would be entitled to
severance pay equal to one (1) year's compensation. During May 2000, Mr. LeDoux
voluntarily reduced his annual salary by $80,000 to $180,000 per annum and
agreed to eliminate his monthly automobile reimbursement of $1,500 per month.
Mr. Wulff's agreement provided for an annual salary of $150,000. In the
event Mr. Wulff's employment is terminated without cause, he would be entitled
to severance pay of between two (2) and twelve (12) months' compensation,
depending upon the length of time elapsed since commencement of his employment.
Mr. Lough's agreement provided for an annual salary of $150,000, and
automobile expense reimbursement of $1,500 per month. Mr. Lough agreed to
eliminate the monthly automobile reimbursement in May 2000. In the event Mr.
Lough's employment is terminated without cause, he would be entitled to
severance pay of between two (2) and twelve (12) months' compensation, depending
upon the length of time elapsed since commencement of his employment.
Mr. Flaker's employment agreement provided for an annual salary of
$115,000, and automobile expense reimbursement of $1,500 per month. Mr. Flaker
agreed to eliminate the monthly automobile reimbursement in May 2000. In the
event Mr. Flaker's employment is terminated without cause, he would be entitled
to severance pay of between two (2) and twelve (12) months' compensation,
depending upon the length of time elapsed since commencement of his employment.
Dr. Wise's agreement provided for an annual salary of $140,000, and
automobile expense reimbursement of $1,500 per month. Dr. Wise agreed to
eliminate the monthly automobile reimbursement in May 2000. In the event Dr.
Wise's employment is terminated without cause, he would be entitled to severance
pay of between two (2) and twelve (12) months' compensation, depending upon the
length of time elapsed since commencement of his employment.
10
<PAGE> 13
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors has reviewed and discussed
the Company's audited financial statements for the fiscal year ended June 30,
2000, with management and has received the written disclosures and the letter
from KMPG LLP, the Company's independent auditors, required by Independent
Standards Board Standard No. 1 (Independent Discussions with Audit Committee).
The Audit Committee has discussed with the independent auditors the Company's
audited financial statements for the fiscal year ended June 30, 2000, the
quality of the Company's accounting principles and underlying estimates in its
financial statements and the auditor's independence as required by Statement on
Auditing Standards No. 61 of the Auditing Standards Board of the American
Institute of Certified Public Accountants.
Based on these discussions with KPMG LLP the Audit Committee members
recommended unanimously to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2000.
The members of the Audit Committee are Joe E. Davis, J. Scott Schmidt
and Lee G. Weldon.
REPORT OF THE HUMAN RESOURCES COMMITTEE
The Human Resources Committee is a standing committee of the Board of
Directors of the Company and is composed entirely of outside directors. The
Human Resources Committee is responsible for adopting and evaluating the
effectiveness of Human Resources policies and programs for the Company and for
making recommendations regarding the appointment and compensation of the
Company's executive and other officers to the full Board of Directors of the
Company.
The following report is submitted by the Human Resources Committee
members with respect to the executive compensation policies established by the
Human Resources Committee and compensation paid or awarded to executive and
other officers for fiscal 2000.
COMPENSATION PHILOSOPHY AND OBJECTIVES
In adopting and evaluating the effectiveness of compensation programs
for executive officers, as well as other employees of the Company, the Human
Resources Committee is guided by three basic principles:
1. The Company must offer competitive salaries to be able to attract and
retain highly-qualified and experienced executives and other management
personnel.
2. Annual executive compensation in excess of base salaries should be
tied to the Company's performance.
3. The financial interest of the Company's senior executives should be
aligned with the financial interest of the stockholders, primarily through stock
option grants and other equity-based compensation programs which reward
executives for improvements in the long term value of the Company's Common
Stock.
11
<PAGE> 14
SALARIES AND EMPLOYEE BENEFIT PROGRAMS
In order to retain executives and other key employees, and attract
well-qualified executives when the need arises, the Company strives to offer
salaries, health care and other employee benefit programs to its employees
comparable to those offered by competing businesses. In establishing salaries
for executive officers, the Human Resources Committee reviews the historical
performance of the executives and available information regarding prevailing
salaries and compensation programs offered by businesses of similar size and
industry classification in the same geographical area.
The Committee believes the base salary and employee benefits of the
Company in fiscal 2000 were generally comparable to or lower than those offered
by comparable companies in and around San Diego County.
STOCK OPTIONS AND EQUITY-BASED PROGRAMS
In order to align the financial interest of senior executives and other
key employees with those of the stockholders, the Company grants stock options
to purchase Common Stock of the Company, restricted stock and stock units to its
senior executives and other key employees on a periodic basis. Grants of stock
options, restricted stock and stock units reward senior executives and other key
employees for performance, which results in increases in the market price of the
Company's Common Stock, which directly benefits all stockholders.
CHIEF EXECUTIVE OFFICER COMPENSATION PROGRAM
Mr. LeDoux, the Chief Executive Officer, is awarded a base salary and is
evaluated substantially in accordance with the foregoing policies. During fiscal
2000, Mr. LeDoux's base salary was initially $260,000. No incentive bonuses were
issued in fiscal 2000. In determining Mr. LeDoux's base salary for fiscal 2000,
the Human Resources Committee, in its discretion, made no change from the prior
period. In making the determination not to change Mr. LeDoux's base salary, the
committee considered the financial performance of the Company and the value of
its common shares on the Nasdaq Stock Market compared to prior periods as well
as Mr. LeDoux's role in implementing the Company's stated strategic goals in the
past twelve months, including but not limited to a reorganization of management,
reorganization of employee benefits and executive compensation plan, creation of
a new marketing program, implementation of a cost containment program, and
successful establishment of a foreign subsidiary. No specific weight was
assigned to these factors by the Human Resources Committee in determining the
amount of Mr. LeDoux's base salary.
In May, 2000 the Chief Executive Officer voluntarily reduced his annual
salary by $80,000 to $180,000 per annum and personal transportation allowances
were eliminated for all executive officers. The Human Resources Committee
anticipates it may restore these or similar benefits and review executive
compensation levels in the current fiscal year if the Company returns to
profitability.
The members of the Human Resources Committee are J. Scott Schmidt and Lee G.
Weldon.
HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There were no interlocks or other relationships among the Company's
executive officers and directors that are required to be disclosed under
applicable executive compensation disclosure regulations.
12
<PAGE> 15
The foregoing reports of the Audit Committee and the Human Resources
Committee, respectively, and the Stockholder Return Performance Graph here in
below are not "soliciting material", are not deemed filed with the SEC and shall
not be deemed incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any filing under the Securities Act of
1933 or under the Securities Exchange Act of 1934, except to the extent the
Company specifically incorporates this report by reference and shall not
otherwise be deemed filed under such Acts.
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following chart shows total shareholder return (change in stock price plus
reinvested dividends) of the Nasdaq CSRP Total Return Index ("NASDAQ US") for
the Nasdaq Stock market (U.S. Companies), the Nasdaq CSRP Pharmaceutical Index
("Nasdaq Pharmaceuticals") and for the Company for the period beginning June 30,
1995, and ending June 30, 2000. The comparisons in the graph are required by the
SEC and are not intended to forecast or be indicative of possible future
performance of the Company's Common Stock.
COMPARISON OF TOTAL CUMULATIVE RETURN ON INVESTMENT
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Natural Alternatives International, Inc. 100 152 122 320 55 29
NASDAQ US 100 128 156 206 296 437
Nasdaq Pharmaceuticals 100 146 150 153 214 481
</TABLE>
The total return on investment (including investment of dividends) assumes a
$100 investment on June 30, 1995 in each of the Company's Common Stock, the
securities comprising the Nasdaq CSRP
13
<PAGE> 16
Total Return Index for the Nasdaq Stock Market (U.S. Companies) Index and the
Nasdaq CSRP Pharmaceutical Index (all companies with the Standard Industry
Classification (SIC) code 283 (category description for "Drugs").
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 September 30, 2000, by (i) each
director and nominee for director; (ii) each of the Company's executive officers
named in the Summary Compensation Table; (iii) all executive officers and
directors of the Company as a group; and (iv) each person who is known by the
Company to beneficially own more than 5% of the Company's Common Stock. Except
as otherwise indicated in the footnotes and subject to applicable community
property laws, to the Company's knowledge, the persons named in the table have
sole voting and investment power with respect to all shares of common stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY PERCENT BENEFICIALLY
BENEFICIAL OWNER OWNED OWNED(1)
---------------- ------------------- --------------------
<S> <C> <C>
Marie A. LeDoux(1) 993,101 16.49%
Mark A. LeDoux(2) 283,317 4.70%
J. Scott Schmidt(3) 4,333 .07%
Lee G. Weldon(4) 44,333 .74%
Douglas E. Flaker(5) 16,567 .28%
David E. Lough(6) 33,622 .56%
John A. Wise(7) 74,259 1.23%
Peter C. Wulff 10,262 .17%
All directors and executive 1,459,794 24.23%
officers as a group (8 Persons)
</TABLE>
(1) Shares of Common Stock which were not outstanding but which could be
acquired upon exercise of an option within 60 days from September 30,
2000, are considered outstanding for the purpose of computing the
percentage of outstanding shares beneficially owned. However, such
shares are not considered to be outstanding for any other purpose.
(2) Includes 800 shares held in the name of Mr. LeDoux's wife, Julie LeDoux
and 8,000 shares held as custodian for his children and a niece. Also
includes 30,000 shares which Mr. LeDoux has the right to acquire upon
exercise of options exercisable within 60 days of September 30, 2000.
(3) Includes 3,333 shares which Mr. Schmidt has the right to acquire upon
exercise of options exercisable within 60 days of September 30, 2000.
(4) Includes 3,333 shares which Mr. Weldon has the right to acquire upon
exercise of options exercisable within 60 days of September 30, 2000.
(5) Includes 6,667 shares which Mr. Flaker has the right to acquire upon
exercise of options exercisable within 60 days of September 30, 2000.
(6) Includes 10,000 shares which Mr. Lough has the right to acquire upon
exercise of options exercisable within 60 days of September 30, 2000.
(7) Includes 45,000 shares which Dr. Wise has the right to acquire upon
exercise of options exercisable within 60 days of September 30, 2000.
There is no arrangement known by the Company, the operation of which may
at a subsequent date, result in a change of control of the Company.
14
<PAGE> 17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Chairperson of the Board and the Chief Executive Officer and
President of the Company are each presently indebted to the Company in an amount
in excess of $60,000. Pursuant to an agreement with the Chairperson of the
Board, the Company pays the annual premium of a life insurance policy on her
life. Each payment is in the form of a loan to the Chairperson of the Board. The
primary purpose of the insurance policy is to provide liquidity to pay estate
taxes and thereby avoid the potentially depressive market effect of the sale of
a substantial amount of Company stock for such purpose. The indebtedness is to
be repaid from the death benefit paid pursuant to the policy. This loan had a
balance (rounded to the nearest thousand) of $300,000 at June 30, 2000. The loan
to the Chief Executive Officer and President was made for personal purposes and
had a balance with accrued interest (rounded to the nearest thousand) of $67,000
at June 30, 2000.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and any persons holding more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the SEC. Executive officers, directors and greater than 10% stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. Specific due dates for these reports have been
established and the Company is required to identify in this Proxy Statement
those persons who failed to timely file these reports.
Based solely on its review of the copies of reporting forms received by
the Company, the Company believes that during the fiscal year ended June 30,
2000, all filing requirements under Section 16(a) were satisfied.
ANNUAL REPORTS
The Company's fiscal 2000 Annual Report, which includes audited
financial statements for the Company's fiscal years ended June 30, 2000, is
being mailed on or about November 30, 2000, with this Proxy Statement to
stockholders of record.
OTHER MATTERS
The Board knows of no other matters which will be brought before the
Annual Meeting. If any other matter is properly brought before the Annual
Meeting or any adjournment thereof, it is intended that the persons named in the
enclosed form of Proxy will vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ MARK A. LEDOUX
Mark A. LeDoux
Chief Executive Officer and President
A COPY OF THE FISCAL 2000 ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2000 IS AVAILABLE
WITHOUT CHARGE UPON WRITTEN REQUEST TO THE CHIEF FINANCIAL OFFICER, NATURAL
ALTERNATIVES INTERNATIONAL, INC., 1185 LINDA VISTA DRIVE, SAN MARCOS,
CALIFORNIA, 92069.
15
<PAGE> 18
APPENDIX 1
NATURAL ALTERNATIVES INTERNATIONAL, INC.
AUDIT COMMITTEE CHARTER
I. ORGANIZATION
This committee will be known as the Audit Committee. Only independent directors
will serve on the Audit Committee. An independent director is free of any
relationship that could influence his or her judgment as a committee member. An
independent director may not be associated with a major vendor to, or customer
of, the Company. When there is some doubt about independence, as when a member
of the committee has a short-term consulting contract with a major customer, the
director should excuse himself or herself from any decision that might be
influenced by that relationship. One member of the committee will be designated
as the chair and will be responsible for the overall activities of the Audit
Committee.
The primary purpose of the Audit Committee is to assist the board in fulfilling
its oversight responsibilities by reviewing the Company's financial reporting
process and information, its system of internal controls, and its internal and
external audit processes. The Committee will report to the full board on a
regular basis. The Committee is responsible for reviewing and recommending
matters to the board and has no authority to make final decisions.
II. TERMS OF APPOINTMENT
A. Composition - The Audit Committee will be composed of not less than
three but no more than five members of the board.
B. Appointment - Members will be selected by the board, taking into
account prior experience in matters to be considered by the
Committee, probable availability at times required for meetings, and
their individual independence and objectivity.
C. NASD Requirements - The committee's membership will meet the
requirements of the Audit Committee policy of the National
Association of Securities Dealers, Inc. ("NASD").
D. Independence - When considering relationships that might affect
independence, including possible affiliate status, the Board of
Directors will give appropriate consideration to guidelines issued
by the NASD, which were provided to assist boards of directors in
observing the spirit of the NASD policy.
E. Length of Appointment - Committee members will serve one-year terms
which may be renewed indefinitely at the discretion of the Board of
Directors of the Company.
F. Chair - The committee chair will be selected by the Board of
Directors and will serve annually for no more than four consecutive
terms.
G. Liability Indemnification - Committee members will be covered under
the Company's Directors and Officers liability insurance policy and
will be provided indemnification agreements from the Company.
H. Compensation - Committee members will be compensated pursuant to the
director compensation policy of the Board of Directors in effect
from time to time.
1
<PAGE> 19
I. Expenses - The Company will reimburse out of pocket expenses
incurred by committee members in the performance of their duties.
III. MEETINGS
The Audit Committee meetings will be determined at the beginning of each fiscal
year and will consist of no less than three regularly scheduled meetings per
year:
A. There will be a pre-audit meeting held during the Company's third
quarter during which the committee will approve the external audit
scope and audit fee as well as the Internal Audit department
preliminary plan for the next fiscal year.
B. A second meeting will be held after the independent accountants have
completed their audit procedures but before the Company announces
its annual earnings. During this meeting the Company's financial
results for the last fiscal year will be presented along with the
findings and recommendations of the independent accountants. In
addition, the committee will meet in executive session (i.e.,
excluding management) with the independent accountants to provide a
forum for the committee to discuss the independent accountants'
evaluation of the Company's financial practices and personnel and
the cooperation that the independent accountants receive during the
course of their audit.
C. There will be a mid-fiscal year meeting to review status of the
audit plan and corrective actions on prior audits.
D. Other meetings may be held when and if determined necessary by the
Audit Committee Chair.
IV. RESPONSIBILITIES
Principal responsibilities of the audit committee include the following:
A. Select the independent accountants for Company audits and recommend
their selection to the Board of Directors for approval. The
committee will instruct the independent accountants that the Board
of Directors is the client, in its capacity as shareholders'
representative. The committee will expect the independent
accountants to provide them with the following:
Independent judgments about the appropriateness of the Company's
current or proposed accounting principles and whether current or
proposed financial disclosures are clear;
Views on whether the accounting principles chosen by management
are conservative, moderate or aggressive as they relate to
income, asset and liability recognition, and whether these
accounting principles are commonly used;
Reasons why accounting principles and disclosure practices used
for new transactions or events are appropriate;
Reasons for accepting or questioning significant estimates made
by management;
Views on how selected accounting principles and disclosure
practices affect shareholder and public attitudes about the
Company;
2
<PAGE> 20
Observations about the adequacy of the Company's internal
controls, including computerized information system controls and
security.
B. Inform the board to the best of their knowledge whether or not (i)
the scope and quality of the independent audit of the Company
appears to meet the standards of the public accounting profession;
(ii) the annual and interim financial reports of the Company fairly
present its financial position and operating results; and (iii) the
internal controls provide adequate safeguards of the Company's
assets and proper recording of its transactions.
C. Report to the board on matters such as conflicts of interest,
insider stock transactions and any questionable business practices
to the best of their knowledge.
D. Authorize investigations of alleged improprieties, including
retention of outside counsel or other professional consultants as
needed.
E. Review with the Company's counsel legal compliance matters including
corporate securities policy, and report any significant developments
to the Board of Directors.
F. Review the internal audit function of the Company including the
independence of the function, the ability of the function to raise
issues to the appropriate level of authority, the proposed audit
plans for the coming year, and the coordination of such plans with
the independent accountants. Review and discuss internal audit
reports during regularly scheduled meetings.
G. Provide informed, vigilant and effective oversight of the financial
reporting process and the Company's internal controls, both
quarterly and annually. Specifically, the Committee will expect
financial management and the independent auditors to analyze
significant financial reporting issues and practices on a timely
basis and discuss with the Audit Committee:
Qualitative judgments about whether current or proposed
accounting principles and disclosures are appropriate, not just
acceptable;
The aggressiveness or conservatism of accounting principles and
financial estimates used by the Company.
H. Review annually the program management establishes to monitor
compliance with the Company's Code of Business Conduct.
I. Review and assess annually the adequacy of the Committee's charter.
J. Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Committee or the board
deems necessary or appropriate.
V. MANAGEMENT RESPONSIBILITIES
In performing its duties, the Audit Committee will rely upon and expect
management to:
Report to the Committee promptly and completely on all material
matters that affect the Committee's ability to properly perform
its duties;
Respond quickly and appropriately to any requests for
information, meetings or other actions;
3
<PAGE> 21
Inform the Committee voluntarily of any material disagreements
with the Company's outside auditors or if it seeks a second
opinion to theirs on a significant accounting issue.
VI. AUDIT COMMITTEE ACCESS
The Company's internal and external auditors will have free and unrestricted
access to the members of the Audit Committee. In addition, the Committee should
meet in executive session with the internal and external auditors as a regular
part of the Committee's meeting agenda.
4
<PAGE> 22
NATURAL ALTERNATIVES INTERNATIONAL, INC.
A DELAWARE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 8, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mark A. LeDoux and Peter C. Wulff as
proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and vote, as designated on the reverse hereof, all of the
shares of Common Stock of Natural Alternatives International, Inc., held of
record by the undersigned on November 27, 2000, at the Annual Meeting of
Stockholders to be held on January 8, 2001, or any adjournment thereof.
(Please date and sign on the other side)
FOLD AND DETACH HERE
<PAGE> 23
The Board of Directors recommends a vote FOR the election of the two nominees
for Class I Director
1. ELECTION OF CLASS I DIRECTORS
FOR NOMINEE WITHHOLD AUTHORITY
LISTED BELOW TO VOTE FOR NOMINEE LISTED BELOW
[ ] [ ]
Nominee: Mark A. LeDoux
FOR NOMINEE WITHHOLD AUTHORITY
LISTED BELOW TO VOTE FOR NOMINEE LISTED BELOW
[ ] [ ]
Nominee: Joe E. Davis
2. To ratify the appointment of KPMG LLP as the Company's independent auditors:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, upon such other business as may properly come before
the meeting:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
Dated: ______________________, _____
____________________________________________
SIGNATURE OF STOCKHOLDER
____________________________________________
SIGNATURE OF JOINT STOCKHOLDER
NOTE: If signing as attorney, executor, administrator, trustee or guardian,
please give full title as such, and, if signing for a corporation, give
your title. When shares are in the names of more than one person, each
should sign.
