<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 11-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER 0-20083
-------------------
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
SPACELABS MEDICAL, INC. INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
SPACELABS MEDICAL, INC.
15220 N.E. 40TH STREET
P.O. BOX 97013
REDMOND, WASHINGTON 98073-9713
Page 1 of 22 sequentially numbered pages
================================================================================
<PAGE> 2
[KPMG LOGO]
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND
STOCK OWNERSHIP PLAN
Financial Statements and Schedules
December 31, 1995 and 1994
(With Independent Auditors' Report Thereon)
<PAGE> 3
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
================================================================================
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditors' Report 1
Statements of Assets Available for Plan Benefits, December 31, 1995 and 1994 2
Statements of Changes in Assets Available for Plan Benefits, Years ended
December 31, 1995 and 1994 3
Notes to Financial Statements, December 31, 1995 and 1994 4-13
Schedule 1--Line 27(a)--Schedule of Assets Held for Investment Purposes,
December 31, 1995 14
Schedule 2--Line 27(d)--Schedule of Reportable Transactions,Year ended
December 31, 1995 15
</TABLE>
<PAGE> 4
[KPMG LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
================================================================================
The Benefits Committee
SpaceLabs Medical, Inc.
Incentive Savings and Stock Ownership Plan:
We have audited the accompanying statements of assets available for plan
benefits of SpaceLabs Medical, Inc. Incentive Savings and Stock Ownership Plan
(Plan) as of December 31, 1995 and 1994 and the related statements of changes in
assets available for plan benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets available for plan benefits of the Plan as of
December 31, 1995 and 1994, and the changes in assets available for plan
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary Schedules 1 and 2 are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
KPMG Peat Marwick LLP
Seattle, Washington
June 7, 1996
1
<PAGE> 5
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
STATEMENTS OF ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1995 and 1994
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Investments:
Investments, at fair value (note 5):
Cash and cash equivalents $ 64,284 9,024
Mutual funds 13,483,141 7,770,807
Common stocks 5,806,324 4,242,822
Investments, at contract value (note 5):
Insurance contracts 3,953,247 5,413,734
-----------------------
Total investments 23,306,996 17,436,387
Receivables:
Employees' contributions 1,171 198,002
Employer's contribution 68,282 70,650
- ------------------------------------------------------------------------------------------
Assets available for plan benefits (note 4) $23,376,449 17,705,039
==========================================================================================
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 6
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment income:
Interest and dividends $ 898,775 709,852
Net appreciation (depreciation) in fair value of investments
(note 5) 3,402,294 (436,915)
--------------------------
Net investment income 4,301,069 272,937
--------------------------
Contributions [note 1(c)]:
Employees 2,675,463 2,740,222
Employer 906,322 963,845
--------------------------
Total contributions 3,581,785 3,704,067
--------------------------
Total additions 7,882,854 3,977,004
Benefits paid to participants (2,211,444) (1,247,997)
--------------------------
Increase in assets available for plan benefits 5,671,410 2,729,007
Assets available for plan benefits at beginning of year 17,705,039 14,976,032
- ------------------------------------------------------------------------------------------------------
Assets available for plan benefits at end of year $ 23,376,449 17,705,039
======================================================================================================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 7
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
================================================================================
(1) PLAN DESCRIPTION
The following description of the SpaceLabs Medical, Inc. Incentive
Savings and Stock Ownership Plan (Plan) provides only general information
and shall not serve as the basis for any rights or benefits under the
Plan. Participants should refer to the Plan document for a more complete
description of the Plan and benefit information.
(a) GENERAL
The Plan is a defined contribution plan covering all full-time, U.S.
resident employees of SpaceLabs Medical, Inc. (Sponsor or Company)
who have one year of service and part-time employees who have
completed one year of service and have worked 1,000 hours. The Plan
is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
(b) ADMINISTRATION
The plan administrator is SpaceLabs Medical, Inc., which appointed a
Benefits Committee to administer the Plan.
The Plan's investments are held by in trust by Wachovia Employee
Benefit Trust Services (Trustee). Prior to January 1, 1995, Plan
investments were held by First Interstate Bank of Washington.
(c) CONTRIBUTIONS
Participants may elect to contribute from 2% to 16% of compensation,
as defined, to the Plan subject to a pretax limit of $9,240 in 1995
and 1994. Contributions and earnings are credited to separate
accounts maintained for each participant. Employer matching
contributions are made by the Sponsor at 50% of before- and
after-tax contributions up to 6% of earnings. For purposes of the
Plan financial statements "employer contributions" consist of the
employer matching contributions and "employees contributions"
consist of before- and after-tax contributions and rollover
contributions.
All employer matching contributions are made directly in the
Company's common stock and invested in the Common Stock Fund for the
benefit of the participants unless the participants are 55 years of
age or older, at which time participants may elect to have employer
matching contributions allocated in the same manner as their
contributions. Employer stock contributions were valued at $855,003
and $920,927 in 1995 and 1994, respectively. Forfeitures of employer
matching contributions are used to reduce future employer
contributions.
(Continued)
4
<PAGE> 8
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
The Plan offers the following investment options: The Fixed Income
Fund, the Balanced Fund, the Diversified Equity Fund, the Global
Fund, the Aggressive Growth Fund; and common stock represented by
the Company Stock Fund and the ATL Stock Fund; however, the ATL
Stock Fund is not available for new contributions.
The Fixed Income Fund is a portfolio of Guaranteed Investment
Contracts plus the Dreyfus and Invesco ITC Stable Value Funds which
are collective investment funds investing primarily in guaranteed
investment contracts and other similar instruments to achieve high
current income and stability of principal. The Balanced Fund invests
in the Phoenix Balanced Fund which holds equity and fixed income
securities seeking reasonable income, long-term capital growth and
conservation of capital. The Diversified Equity Fund is a portfolio
of large capitalization common stock investments managed by the
Vanguard Group and held in the Windsor II Fund. The Global Fund
invests primarily in equity securities on a worldwide basis and
seeks long-term capital growth through the Scudder Global Fund. The
Aggressive Growth Fund seeks long-term capital appreciation through
the Alger Defined Contribution Small Cap Portfolio, by investing in
equity securities of companies with total market capitalization of
less than $1 billion. The Company Stock Fund is a portfolio of
common stock of SpaceLabs Medical, Inc., the Sponsor of the Plan.
The ATL Stock Fund is a portfolio of common stock of Advanced
Technology Laboratories, Inc.
(d) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions, the participant's share of the Company's
contributions, and an allocation of plan earnings. Allocations are
based on participant earnings or account balances, as defined. The
benefit to which a participant is entitled is the vested balance of
the participant's account.
The current value of each participant's account is determined based
on the carrying values of the funds and is computed monthly.
(Continued)
5
<PAGE> 9
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
(e) PAYMENT OF BENEFITS
Participants are eligible to receive distributions, to the extent
vested, upon retirement, upon becoming disabled, upon termination of
employment, or upon request for withdrawal prior to termination
subject to certain restrictions. A participant's beneficiary is
eligible to receive a distribution of the balance of the
participant's account upon the death of the participant.
Distributions are made in cash or, if a participant elects, in the
form of Company and/or Advanced Technology Laboratories, Inc. common
shares plus cash for any fractional share.
(f) VESTING
Participants are fully vested at all times in their contributions
and earnings thereon. Participants vest in employer matching
contributions and earnings thereon as follows:
<TABLE>
<CAPTION>
Percent
Years of service vested
---------------- ------
<S> <C>
After one year 20%
After two years 40
After three years 60
After four years 80
After five years 100
</TABLE>
Participants become immediately vested in employer matching
contributions upon termination of employment due to retirement,
death or total and permanent disability.
(g) TERMINATION
Although it has not expressed any intent to do so, the Sponsor has
the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA.
In the event of Plan termination, participants will become fully
vested.
(Continued)
6
<PAGE> 10
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the
accrual basis of accounting.
(b) VALUATION OF INVESTMENTS
With the exception of contracts with insurance companies, all
investments of the Plan are stated at fair value, as determined by
closing market prices for securities. Contracts with insurance
companies are valued at the face value of the contract. Purchases
and sales are recorded on a trade-date basis.
The Plan presents in the statement of changes in assets, the net
appreciation in the fair value of its investments which consists of
the realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
(c) CASH AND CASH EQUIVALENTS
The Plan considers all highly liquid investments with a maturity of
three months or less at the date of purchase to be cash equivalents.
(d) EXPENSES
Administrative expenses of the Plan are paid by the Sponsor.
(e) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of changes in net assets during the reporting period.
Actual results could differ from those estimates.
(3) TAX STATUS
The Plan was notified in September 1995 by the Internal Revenue Service
(IRS) that it is qualified under section 401(a) of the Internal Revenue
Code (IRC). Subsequent to this notification, there was an amendment to
the Plan. The plan administrator believes the Plan is currently designed
and being operated in compliance with the applicable requirements of the
IRC and the related trust is tax exempt.
(Continued)
7
<PAGE> 11
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
(4) RECONCILIATION TO FORM 5500
Net assets reported in accordance with IRS Form 5500 differ from the
financial statements in that the Form 5500 includes a liability
attributable to terminated participants of $200,551 and $122,331 at
December 31, 1995 and 1994, respectively. Changes in net assets in the
Form 5500 differ from the financial statement by an amount equal to the
change in the liability for terminated participants from the beginning of
the year to the end. Such difference was an increase in the liability of
$78,220 in 1995 and a decrease in the liability of $45,437 in 1994.
(5) INVESTMENTS
The following table presents the assets held for investment purposes at
December 31:
<TABLE>
<CAPTION>
1995 1994
--------------------------- -------------------------
PRINCIPAL Principal
AMOUNT OR INVEST- amount or Invest-
NUMBER MENT number ment
OF SHARES VALUE of shares value
--------------------------- -------------------------
<S> <C> <C> <C> <C>
Investments at fair value:
Cash and cash equivalents:
Wachovia Bank DTF Short-Term Investment Fund 64,284 $ 64,284 -- $ --
First Interstate Bank of Washington Employee
Benefit Cash Management Portfolio -- -- 9,024 9,024
-------------------------------------------------------
Total cash and cash equivalents 64,284 64,284 9,024 9,024
-------------------------------------------------------
Mutual funds:
Vanguard Group Windsor II Fund 332,167 6,862,578 308,196 4,875,707
Dreyfus Stable Value Fund 858,562 858,562 638,687 638,687
Scudder Global Stock Fund 65,158 1,759,926 57,721 1,346,675
Alger Defined Contribution Small Cap Fund 106,680 1,863,691 58,976 643,462
Phoenix Balanced Fund 29,344 492,973 17,954 266,276
Invesco ITC Stable Value Fund 1,645,411 1,645,411 -- --
-------------------------------------------------------
Total mutual funds 3,037,322 13,483,141 1,081,534 7,770,807
-------------------------------------------------------
Common stock:
SpaceLabs Medical, Inc. 175,073 5,033,349 153,989 3,580,244
Advanced Technology Laboratories, Inc. 31,550 772,975 35,815 662,578
-------------------------------------------------------
Total common stock 206,623 5,806,324 189,804 4,242,822
-------------------------------------------------------
</TABLE>
(Continued)
8
<PAGE> 12
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
<TABLE>
<CAPTION>
1995 1994
--------------------------- --------------------------
PRINCIPAL Principal
AMOUNT OR INVEST- amount or Invest-
NUMBER MENT number ment
OF SHARES VALUE of shares value
-------------------------- ---------------------------
<S> <C> <C> <C> <C>
Investments at contract value:
Insurance contracts:
Principal Mutual Life Insurance Company,
Guaranteed Investment Contract Policy No.
4-7799, 4.85%, 1/2 due July 1, 1996 and the
remainder due January 1, 1997 1,467,037 $ 1,467,037 1,399,297 $ 1,399,297
Metropolitan Life Insurance Company, Guaranteed
Investment Contract Policy No. GA-13191,
6.80%, due March 31, 1996 1,195,407 1,195,407 1,119,295 1,119,295
New York Life Insurance Company, Guaranteed
Investment Contract No. GA-06633, 8.10%, due
March 31, 1995 -- -- 1,693,164 1,693,164
Provident Life and Accident Insurance Company,
Guaranteed Investment Contract, Policy No
627-05297, 7.39%, due July 1, 1996
1,290,803 1,290,803 1,201,978 1,201,978
--------------------------------------------------------
Total insurance contracts 3,953,247 3,953,247 5,413,734 5,413,734
========= ----------- ========= -----------
Total investments $23,306,996 $17,436,387
=========== ===========
</TABLE>
During the years ended December 31, 1995 and 1994, the Plan's investments
appreciated (depreciated) in value as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------------
<S> <C> <C>
Mutual funds $2,295,230 $(390,728)
Common stock 1,107,064 (46,187)
----------------------------
$3,402,294 $(436,915)
============================
</TABLE>
The fair value of the guaranteed investment contracts, determined using
available market information and appropriate valuation methodologies,
approximate their carrying value at December 31, 1995 and 1994.
(Continued)
9
<PAGE> 13
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
(6) ASSETS BY FUND
Assets available for plan benefits at December 31, 1995 and 1994 are
allocated by fund as follows:
<TABLE>
<CAPTION>
Fixed Diversified Aggressive Company ATL
Income Balanced Equity Global Growth Stock Stock
1995 Fund Fund Fund Fund Fund Fund Fund
---- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments:
Fair value:
Cash and cash equivalents $ 9,912 - 24,590 12,733 1,418 13,218 2,413
Mutual funds 2,503,973 492,973 6,862,578 1,759,926 1,863,691 - -
Common stocks - - - - - 5,033,349 772,975
Contract value - insurance contracts 3,953,247 - - - - - -
-------------------------------------------------------------------------------
6,467,132 492,973 6,887,168 1,772,659 1,865,109 5,046,567 775,388
Receivables:
Employees' contribution 774 168 (251) (395) (451) 1,326 -
Employer contribution - - - - - 68,282 -
-------------------------------------------------------------------------------
Assets available for plan benefits $6,467,906 493,141 6,886,917 1,772,264 1,864,658 5,116,175 775,388
===============================================================================
<CAPTION>
1995 Total
---- ----------
<S> <C>
Investments:
Fair value:
Cash and cash equivalents $ 64,284
Mutual funds 13,483,141
Common stocks 5,806,324
Contract value - insurance contracts 3,953,247
-----------
23,306,996
Receivables:
Employees' contribution 1,171
Employer contribution 68,282
-----------
Assets available for plan benefits $23,376,449
===========
</TABLE>
(Continued)
10
<PAGE> 14
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
<TABLE>
<CAPTION>
Fixed Diversified Aggressive Company
Income Balanced Equity Global Growth Fund Stock
1994 Fund Fund Fund Fund Fund Fund
---- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investments:
Fair value:
Cash and cash equivalents $ -- -- -- 8,614 -- 184
Mutual funds 638,687 266,276 4,875,707 1,346,675 643,462 --
Common stocks -- -- -- -- -- 3,580,244
Contract value - insurance contracts 5,413,734 -- -- -- -- --
-------------------------------------------------------------------------
6,052,421 266,276 4,875,707 1,355,289 643,462 3,580,428
Receivables:
Employees' contribution 57,287 10,982 58,308 30,951 25,121 15,353
Employer contribution -- -- -- -- -- 70,650
-------------------------------------------------------------------------
Assets available for plan benefits $6,109,708 277,258 4,934,015 1,386,240 668,583 3,666,431
=========================================================================
<CAPTION>
ATL
Stock
1994 Fund Total
---- ----------------------
Investments:
Fair value:
Cash and cash equivalents $ 226 9,024
Mutual funds -- 7,770,807
Common stocks 662,578 4,242,822
Contract value - insurance contracts -- 5,413,734
----------------------
662,804 17,436,387
Receivables:
Employees' contribution -- 198,002
Employer contribution -- 70,650
----------------------
Assets available for plan benefits $662,804 17,705,039
======================
</TABLE>
(Continued)
11
<PAGE> 15
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
(7) CHANGES IN ASSETS ALLOCATED BY FUND
Assets available for plan benefits at December 31, 1995 and 1994 and the
changes in assets available for plan benefits for the years then ended
are allocated by fund as follows:
<TABLE>
<CAPTION>
Fixed Diversified Aggressive Company ATL
Income Balanced Equity Global Growth Stock Stock
1995 Fund Fund Fund Fund Fund Fund Fund
---- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions $ 742,258 176,054 800,928 439,226 412,051 1,011,268 --
------------------------------------------------------------------------------------
Investment income:
Interest and dividends 392,238 37,197 399,816 68,643 187 638 56
Net appreciation in fair value of
investments -- 44,832 1,531,348 230,498 488,552 924,995 182,069
------------------------------------------------------------------------------------
Net investment income 392,238 82,029 1,931,164 299,141 488,739 925,633 182,125
------------------------------------------------------------------------------------
Net additions 1,134,496 258,083 2,732,092 738,367 900,790 1,936,901 182,125
Benefits paid to participants (643,480) (34,818) (677,868) (174,503) (193,578) (430,441) (56,756)
Interfund transfers (132,819) (7,379) (101,321) (177,844) 488,864 (56,718) (12,783)
------------------------------------------------------------------------------------
Increase in fund balances 358,197 215,886 1,952,903 386,020 1,196,076 1,449,742 112,586
Fund balances at beginning of year 6,109,708 277,258 4,934,015 1,386,240 668,583 3,666,431 662,804
------------------------------------------------------------------------------------
Fund balances at end of year $6,467,905 493,144 6,886,918 1,772,260 1,864,659 5,116,173 775,390
====================================================================================
<CAPTION>
1995 Total
---- -----------
<S> <C>
Contributions $ 3,581,785
-----------
Investment income:
Interest and dividends 898,775
Net appreciation in fair value of
investments 3,402,294
-----------
Net investment income 4,301,069
-----------
Net additions 7,882,854
Benefits paid to participants (2,211,444)
Interfund transfers --
-----------
Increase in fund balances 5,671,410
Fund balances at beginning of year 17,705,039
-----------
Fund balances at end of year $23,376,449
===========
</TABLE>
(Continued)
12
<PAGE> 16
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
<TABLE>
<CAPTION>
Fixed Diversified Aggressive Company ATL
Income Balanced Equity Global Growth Stock Stock
1994 Fund Fund Fund Fund Fund Fund Fund
---- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions $ 737,024 145,581 892,664 488,525 323,366 1,116,907 --
----------------------------------------------------------------------------------
Investment income (loss):
Interest and dividends 380,262 6,006 297,149 24,583 658 1,173 21
Net appreciation (depreciation) in fair
value of investments -- (13,405) (354,297) (76,811) 53,785 (101,481) 55,294
----------------------------------------------------------------------------------
Net investment income (loss) 380,262 (7,399) (57,148) (52,228) 54,443 (100,308) 55,315
----------------------------------------------------------------------------------
Net additions 1,117,286 138,182 835,516 436,297 377,809 1,016,599 55,315
Benefits paid to participants (456,502) (10,108) (478,214) (48,893) (18,527) (202,896) (32,857)
Interfund transfers (513,499) 149,184 (349,368) 457,494 309,301 90,375 (143,487)
----------------------------------------------------------------------------------
Increase (decrease) in fund
balances 147,285 277,258 7,934 844,898 668,583 904,078 (121,029)
Fund balances at beginning of year 5,962,423 -- 4,926,081 541,342 -- 2,762,353 783,833
----------------------------------------------------------------------------------
Fund balances at end of year $6,109,708 277,258 4,934,015 1,386,240 668,583 3,666,431 662,804
==================================================================================
<CAPTION>
1994 Total
---- -----------
<S> <C>
Contributions $ 3,704,067
-----------
Investment income (loss):
Interest and dividends 709,852
Net appreciation (depreciation) in fair
value of investments (436,915)
-----------
Net investment income (loss) 272,937
-----------
Net additions 3,977,004
Benefits paid to participants (1,247,997)
Interfund transfers --
-----------
Increase (decrease) in fund 2,729,007
balances
Fund balances at beginning of year 14,976,032
-----------
Fund balances at end of year $17,705,039
===========
</TABLE>
13
<PAGE> 17
SCHEDULE 1
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
LINE 27(a)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1995
<TABLE>
<CAPTION>
================================================================================================================
Description of investment, including
Identity of issue, borrower, maturity date, rate of interest, Current
lessor, or similar party collateral, par or maturity value Cost value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and cash equivalents -
* Wachjovia Bank DTF Short-Term
Investment Fund Short-Term Investment Portfolio $ 74,711 74,711
Mutual funds:
Vanguard Group Windsor II
Fund Diversified Equity Fund 5,183,710 6,862,578
Dreyfus Stable Value Fund Collective Investment Fund 858,562 858,562
Scudder Global Stock Fund Worldwide Equity Fund 1,616,728 1,759,926
Alger Defined Contribution
Small Cap Fund Small Capitalization Equity Fund 1,348,529 1,863,691
Phoenix Balanced Fund Equity and Fixed Income Fund 465,824 492,973
Invesco ITC Stable Value Fund Collective Investment Fund 1,645,411 1,645,411
Common stock:
* SpaceLabs Medical, Inc. Common stock 3,816,509 5,033,349
Advanced Technology
Laboratories, Inc. Common stock 433,418 772,975
Insurance contracts:
Principal Mutual Life Insurance Guaranteed Investment Contract
Company Policy No. 4-7799, 4.85%,
1/2 due July 1, 1996 and
remainder due January 1, 1997 1,467,036 1,467,036
Metropolitan Life Insurance Company Guaranteed Investment Contract
Policy No. GA-13191, 6.80%,
due March 31, 1996 1,195,407 1,195,407
Providence Life and Accident Guaranteed Investment Contract,
Insurance Company Policy No. 627-05297,
7.39%, due July 1, 1996 1,290,803 1,290,803
================================================================================================================
</TABLE>
* Wachovia Employee Benefit Trust Services, the trustee of the Plan, and
SpaceLabs Medical, Inc., the Plan Sponsor, are parties in interest, as
defined by section 3(14) of ERISA.
14
<PAGE> 18
SCHEDULE 2
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
LINE 27(d) -- SCHEDULE OF REPORTABLE TRANSACTIONS(1)
Year ended December 31, 1995
================================================================================
<TABLE>
<CAPTION>
Purchase Selling Cost of
Identity of party involved Description of asset price price asset
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
*Wachovia Employee Benefit Trust Services Wachovia Bank DTF Short-Term Investment Fund $1,793,993 - 1,793,993
*Wachovia Employee Benefit Trust Services Wachovia Bank DTF Short-Term Investment Fund - 1,734,945 1,734,945
Invesco ITC Stable Value Fund Collective Investment Fund 1,734,945 - 1,734,945
New York Life Insurance Company Guaranteed Investment Contract Policy No. - 1,714,616 1,714,616
GA-06633, 8.10%, due March 31, 1995
Alger Defined Contribution Small Cap Fund Small Capitalization Equity Fund 809,278 - 809,278
Alger Defined Contribution Small Cap Fund Small Capitalization Equity Fund - 72,466 50,298
*Wachovia Employee Benefit Trust Services Wachovia Bank DTF Short-Term Investment Fund 4,854,444 - 4,854,444
*Wachovia Employee Benefit Trust Services Wachovia Bank DTF Short-Term Investment Fund - 4,779,733 4,779,733
Invesco ITC Stable Value Fund Collective Investment Fund 2,026,389 - 2,026,389
Invesco ITC Stable Value Fund Collective Investment Fund - 380,979 380,979
*SpaceLabs Medical, Inc. Common Stock 1,081,848 - 1,081,848
*SpaceLabs Medical, Inc. Common Stock - 572,678 482,122
Vanguard Group Windsor II Fund Diversified Equity Fund 971,164 - 971,164
==============================================================================================================================
<CAPTION>
Current
value of
assets on Net
transaction gain
Identity of party involved date (loss)
- -------------------------------------------------------------------
<S> <C> <C>
*Wachovia Employee Benefit Trust Services 1,793,993 -
*Wachovia Employee Benefit Trust Services 1,734,945 -
Invesco ITC Stable Value Fund 1,734,945 -
New York Life Insurance Company 1,714,616 -
Alger Defined Contribution Small Cap Fund 809,278 -
Alger Defined Contribution Small Cap Fund 72,466 22,168
*Wachovia Employee Benefit Trust Services 4,854,444 -
*Wachovia Employee Benefit Trust Services 4,779,733 -
Invesco ITC Stable Value Fund 2,026,389 -
Invesco ITC Stable Value Fund 380,979 -
*SpaceLabs Medical, Inc. 1,081,848 -
*SpaceLabs Medical, Inc. 572,678 90,556
Vanguard Group Windsor II Fund 971,164 -
==================================================================
</TABLE>
* Wachovia Employee Benefit Trust Services and SpaceLabs Medical, Inc. are
parties in interest, as defined by section 3(14) of ERISA.
(1) Reportable transactions as defined in the Department of Labor's reporting
regulations consist of (a) a single transaction in excess of 5% of the
current value of Plan assets, (b) a series of transactions with or in
conjunction with the same person, involving property other than
securities, which amount in the aggregate to more than 5% of the current
value of Plan assets, (c) a series of transactions with respect to
securities of the same issue which amount in the aggregate to more than 5%
of the current value of total Plan assets and (d) any transaction with
respect to securities with or in conjunction with a person if a prior or
subsequent single transaction has occurred with respect to securities with
or in conjunction with that same person in an amount in excess of 5% of
the current value of Plan assets. The current value of Plan assets, to
apply the definition of reportable transactions, is determined at the
beginning of the Plan year.
15
<PAGE> 19
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities and Exchange Act of
1934, the Benefits Committee have duly caused this annual report to be signed on
behalf by the undersigned hereunto duly authorized.
SPACELABS MEDICAL, INC.
INCENTIVE SAVINGS AND
STOCK OWNERSHIP PLAN
Date: June 21, 1996 By: /s/ James A. Richman
-------------------------- -------------------------------
James A. Richman
Vice President and
Corporate Controller
<PAGE> 20
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- -------------------------------------- --------------
<S> <C> <C>
23 Consent of KPMG Peat Marwick LLP
</TABLE>
<PAGE> 1
Exhibit No. 23
<PAGE> 2
[KPMG LETTERHEAD]
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
The Board of Directors
SpaceLabs Medical, Inc.:
We consent to incorporation by reference in the registration statement (No.
33-50296) on Form S-8 of SpaceLabs Medical, Inc., of our report dated June 5,
1996, relating to the statements of assets available for plan benefits of
SpaceLabs Medical, Inc. Incentive Savings and Stock Ownership Plan as of
December 31, 1995 and 1994, and the related statements of changes in assets
available for plan benefits for the years ended December 31, 1995 and 1994 and
the related supplementary schedules for the year ended December 31, 1995, which
report appears in the December 31, 1995 annual report on Form 11-K of SpaceLabs
Medical, Inc. Incentive Savings and Stock Ownership Plan.
KPMG Peat Marwick LLP
Seattle, Washington
June 19, 1996
