<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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Spacelabs Medical, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which 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
[SPACELABS LOGO]
Dear Stockholder: March 25, 1997
You are cordially invited to attend the 1997 Annual General Meeting of
Stockholders of Spacelabs Medical, Inc. at 10:00 a.m. on Thursday, May 8, 1997,
at the Bellevue Club, 11200 S.E. 6th Street, Bellevue, Washington.
The accompanying Notice of 1997 Annual General Meeting of Stockholders and
the Proxy Statement describe the matters to be presented at the meeting.
Whether or not you plan to attend the meeting, we hope you will have your
stock represented by completing, signing, dating, and returning your proxy card
in the enclosed postage-paid envelope as soon as possible. Your stock will be
voted in accordance with the instructions you have given in your proxy.
Sincerely,
/s/ Carl A. Lombardi
Carl A. Lombardi
Chairman of the Board
and Chief Executive Officer
IMPORTANT
A Proxy Statement and proxy card are enclosed. All stockholders are urged to
complete and mail the proxy card promptly. The enclosed envelope for return of
the proxy card requires no postage. Any stockholder attending the meeting may
personally vote on all matters that are considered, in which event the signed
proxy will be revoked.
IT IS IMPORTANT THAT YOUR STOCK BE VOTED.
<PAGE> 3
[SPACELABS LOGO]
------------------------
NOTICE OF ANNUAL GENERAL MEETING OF STOCKHOLDERS
MAY 8, 1997
------------------------
To the Stockholder:
The 1997 Annual General Meeting of Stockholders of Spacelabs Medical, Inc.
will be held at the Bellevue Club, 11200 S.E. 6th Street, Bellevue, Washington
on Thursday, May 8, 1997 at 10:00 a.m. for the following purposes:
(1) To elect seven directors to hold office until the next Annual General
Meeting of Stockholders and until their respective successors are elected and
qualified;
(2) To ratify the appointment of KPMG Peat Marwick LLP as auditors for
Spacelabs Medical, Inc. for 1997; and
(3) To transact such other business as may properly come before the meeting
and any adjournment or postponement thereof.
Nominees for directors are named in the enclosed Proxy Statement.
March 10, 1997 has been set as the record date for the meeting. Only
stockholders of record at the close of business on that date will be entitled to
notice of and to vote at the meeting.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON, BUT EVEN IF
YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PAID ENVELOPE PROVIDED TO ENSURE YOUR REPRESENTATION. STOCKHOLDERS
ATTENDING THE MEETING MAY VOTE IN PERSON EVEN IF THEY HAVE PREVIOUSLY SENT IN A
PROXY.
By Order of the Board of Directors
/s/ Eugene V. DeFelice
Eugene V. DeFelice
Secretary
Redmond, Washington
March 25, 1997
THE 1996 ANNUAL REPORT OF SPACELABS MEDICAL, INC.
ACCOMPANIES THIS PROXY STATEMENT.
<PAGE> 4
1997 PROXY STATEMENT
GENERAL
The enclosed proxy is solicited by the Board of Directors of Spacelabs
Medical, Inc. ("Spacelabs Medical" or the "Company") for use at the 1997 Annual
General Meeting of Stockholders to be held at 10:00 a.m. on Thursday, May 8,
1997, at the Bellevue Club, 11200 S.E. 6th Street, Bellevue, Washington, 98004,
and at any adjournment or postponement thereof (the "Meeting"). Only holders of
record of Spacelabs Medical's Common Stock, par value $0.01 per share (the
"Common Stock"), at the close of business on March 10, 1997 will be entitled to
notice of and to vote at the Meeting. On that date, Spacelabs Medical had
9,557,845 shares of Common Stock outstanding. Each share of Common Stock
outstanding on the record date is entitled to one vote.
The address of Spacelabs Medical's principal executive offices is 15220
N.E. 40th Street, Redmond, Washington 98052.
This Proxy Statement and the accompanying proxy are being mailed to the
stockholders of Spacelabs Medical on or about March 25, 1997.
VOTING
Shares of Common Stock for which proxies are properly executed and returned
will be voted at the Meeting in accordance with the directions noted thereon or,
in the absence of directions to the contrary, will be voted (i) "FOR" the
election of the seven nominees for the Board of Directors named on the following
pages, provided that if any one or more of such nominees should become
unavailable for election for any reason, such shares will be voted for the
election of such substitute nominee or nominees as the Board of Directors may
propose, and (ii) "FOR" the ratification of the appointment of KPMG Peat Marwick
LLP as auditors for Spacelabs Medical for 1997. Under Delaware law, Spacelabs
Medical's Certificate of Incorporation, and Spacelabs Medical's By-Laws, the
presence at the Meeting, in person or by duly authorized proxy, of the holders
of one-third of the outstanding shares of Common Stock entitled to vote
constitutes a quorum for the transaction of business. The seven nominees for the
Board of Directors who receive the greatest number of votes cast for the
election of directors by the shares present in person or represented by proxy at
the Meeting and entitled to vote shall be elected directors. The affirmative
vote of a majority of shares entitled to vote and present in person or by proxy
at the Meeting is required for approval of any other matters submitted to a vote
of the shareholders. In the election of directors, an abstention or broker
non-vote will have no effect on the outcome. In the case of any other matter,
abstention from voting will have the practical effect of voting against such
matter. Broker non-votes will be included in determining the presence of a
quorum at the Meeting, but will have no effect on the outcome of any matters,
other than to reduce the number of "FOR" votes necessary to approve such
matters.
REVOCATION
Any stockholder giving a proxy may revoke it at any time before it is voted
by delivering to the Secretary of Spacelabs Medical a written notice of
revocation or a duly executed proxy bearing a later date, or by attending the
Meeting and electing to vote in person.
PROPOSAL 1: ELECTION OF DIRECTORS
In accordance with Spacelabs Medical's By-Laws, the Board of Directors has
fixed the number of directors constituting the Board at seven. It is proposed
that seven directors be elected, each to hold office for a term of one year and
until his successor shall have been elected and qualified. It is intended that
votes will be cast pursuant to the accompanying proxy for the election of the
nominees named below, each of whom is currently a director of Spacelabs Medical.
If any nominee should become unavailable for any reason, it is intended that
votes will be cast for a substitute nominee designated by the Board of
Directors. The Board of Directors has no reason to believe that the nominees
named will be unable to serve if elected. The seven
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nominees who receive the greatest number of votes cast by stockholders present
in person or by proxy and certified to vote at the Meeting, a quorum being
present, shall be elected directors.
NOMINEES FOR THE BOARD OF DIRECTORS
GILBERT W. ANDERSON. Mr. Anderson (age 68) has served as a director of
Spacelabs Medical since July 28, 1995. Mr. Anderson is the former President,
Chief Executive Officer and director of Physio-Control Corporation, a
manufacturer of medical equipment. Mr. Anderson joined Physio-Control in 1976,
was appointed its President and Chief Executive Officer and a director in 1985,
and retired in 1991. Mr. Anderson is a member of the Boards of Directors of
Esterline Technologies and Key Trust Company of the Northwest. He serves on the
Advisory Board of the University of Washington Schools of Business and Business
Administration and is President of the Seattle Public Library Foundation. He is
also past Chairman of the United Way of King County.
Principal Occupation: Retired President, Chief Executive Officer and
director of Physio-Control Corporation
THOMAS J. DUDLEY, D.B.A. Dr. Dudley (age 65) has served as a director,
Chairman of the Audit Committee and member of the Executive Committee and the
Compensation Committee of Spacelabs Medical since June 26, 1992. Dr. Dudley has
been a Professor of Quantitative Methods, The George L. Graziadio School of
Business and Management, Pepperdine University, since 1968. Dr. Dudley has also
owned and operated Thomas J. Dudley & Associates, a company that provides
management consulting services for strategic planning and implementation to
small- and medium-sized companies, since 1968. Dr. Dudley holds a Doctorate in
Business Administration from the University of Southern California. He also has
a Master's degree in Business Administration and a Bachelor's degree in Liberal
Arts and Sciences from the University of Michigan. Dr. Dudley is a member of
INFORMS, the World's Futures Society, and the Accreditation Committee of the
Association of Independent Colleges and Schools. He is also an advisor to the
American-China Association for Science and Technology Exchange. He is a member
of the Board of Directors of the Los Angeles branch of Recording for the Blind
and Dyslexic, a nonprofit organization. Dr. Dudley is a recipient of the
Harriett and Charles Luckman Distinguished Teaching Fellow Award.
Principal Occupation: Professor of Quantitative Methods,
The George L. Graziadio School of Business and Management, Pepperdine University
HARVEY FEIGENBAUM, M.D. Dr. Feigenbaum (age 63) has served as a director
and member of the Audit Committee of Spacelabs Medical since June 26, 1992. Dr.
Feigenbaum has been a Distinguished Professor of Medicine at the Indiana
University Medical Center since 1980 and joined its faculty in 1962. He was
elected Phi Beta Kappa and received a Bachelor of Arts degree summa cum laude
from Indiana University in 1955, an M.D. degree from the Indiana School of
Medicine in 1958 and his Cardiovascular Subspecialty, American Board of Internal
Medicine, in 1969. Dr. Feigenbaum is a member of the Board of Directors of
Advanced Technology Laboratories, Inc. ("ATL"). Dr. Feigenbaum is a fellow of
the American College of Physicians, the American College of Cardiology and the
Council on Clinical Cardiology of the American Heart Association, as well as a
member of the Editorial Boards of the American Heart Journal, the American
Journal of Cardiology, and CIRCULATION. He is editor of the Journal of the
American Society of Echocardiography.
Principal Occupation: Distinguished Professor of Medicine,
Indiana University Medical Center
DENNIS C. FILL. Mr. Fill (age 67) has served as a director of Spacelabs
Medical since June 26, 1992 and as a member of the Audit Committee since
February 17, 1995. Mr. Fill has served as a director, Chairman of the Board and
Chief Executive Officer of ATL since November 11, 1986. From 1978 through
mid-December 1986, he served as a member of the Board of Directors of Squibb
Corporation and as its President and Chief Operating Officer. Mr. Fill was also
a member of Squibb's Executive Committee and Finance Committee. Mr. Fill
attended Ealing College, the Institute of Export and Borough Polytechnic. He
also served in the
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Royal Air Force. Mr. Fill is a member of the Boards of Directors of Beckman
Instruments, Inc. and Morton International, Inc.
Principal Occupation: Chairman of the Board and Chief Executive
Officer, Advanced Technology Laboratories, Inc.
CARL A. LOMBARDI. Mr. Lombardi (age 53) has served as a director, Chairman
of the Board and Chief Executive Officer of Spacelabs Medical since June 26,
1992. Mr. Lombardi joined Spacelabs Medical in 1967 as a project engineer in the
research and development group. He served in various managerial positions with
Spacelabs Medical before being appointed Vice President of Operations in 1977.
In 1980, he was named Executive Vice President of Spacelabs Medical and General
Manager of the Products Division. He has served as President of Spacelabs
Medical since 1981. Mr. Lombardi was named Group Vice President of Squibb
Medical Systems in 1982 with responsibility for the patient monitoring group of
companies. Mr. Lombardi was Group Vice President of Westmark International
Incorporated ("Westmark"), from January 1987 through August 1990 and Executive
Vice President of Westmark from August 1990 through June 1992. Mr. Lombardi
holds a Master of Business Administration degree from Pepperdine University. He
also has a Master of Science degree in Systems Engineering from West Coast
University and a Bachelor's degree in Electrical Engineering from Pacific State
University. He also serves on the Regional Council of the Scribner Kidney
Research Center and the Board of Trustees of the Northwest Kidney Center.
Principal Occupation: Chairman of the Board, Chief Executive Officer
and President of Spacelabs Medical, Inc.
PHILLIP M. NUDELMAN, PH.D. Dr. Nudelman (age 61) has served as a director
and member of the Compensation Committee of Spacelabs Medical since June 26,
1992. Dr. Nudelman has served as Chief Executive Officer and President of Group
Health Cooperative of Puget Sound ("Group Health") since February 1991. Dr.
Nudelman joined Group Health in 1973 as Director of Professional Services and
has held positions of increasing responsibility since then. Dr. Nudelman
received his Bachelor of Science degree in Microbiology, Zoology and Pharmacy
from the University of Washington, and holds Master of Business Administration
and Doctor of Philosophy degrees in Health Systems Management from Pacific
Western University. Dr. Nudelman is a member of the Board and Chair-elect of the
American Association of Health Plans. Dr. Nudelman serves on the Boards of
Directors of the United Way, Pacific Science Center, Woodland Park Zoo, the
Association for Washington Business, ATL, Cell Therapeutics, Inc., Intensiva
Inc. and the Foundation for Health Care Quality.
Principal Occupation: Chief Executive Officer and President
of Group Health Cooperative of Puget Sound
HARRY WOOLF, PH.D. Dr. Woolf (age 73) has served as a director and
Chairman of the Compensation Committee of Spacelabs Medical since June 26, 1992.
Dr. Woolf recently completed an 11-year appointment as Director of The Institute
for Advanced Study, Princeton, New Jersey, and is currently a Professor Emeritus
at the Institute. Dr. Woolf received his Bachelor of Science and Master of Arts
degrees from the University of Chicago and his Doctor of Philosophy degree from
Cornell University. He has also received honorary doctorates from Whitman
College, American University, Johns Hopkins University and St. Lawrence
University. Dr. Woolf has been honored by election to the Academie
Internationale d'Histoire des Sciences, the American Philosophical Society,
Sigma Xi, Phi Beta Kappa and the American Academy of Arts and Sciences. Dr.
Woolf is a member of the Boards of Directors of ATL, Family Health
International, Reed College, Research America, and Dibner Institute of the
History of Science at MIT.
Principal Occupation: Professor Emeritus, The Institute for Advanced Study
The Board of Directors met four times in 1996. All directors attended at
least 75% of the meetings of the Board of Directors and its Committees on which
they serve.
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COMMITTEES OF THE BOARD OF DIRECTORS
Spacelabs Medical has established standing committees of its Board of
Directors, including an Audit, a Compensation and an Executive Committee. Each
of these Committees is responsible to the full Board of Directors and its
activities are therefore subject to Board approval. The functions performed by
these Committees are summarized below:
Audit Committee. The Audit Committee reviews the accounting principles,
internal accounting controls, audit plan and results of Spacelabs Medical in
order to safeguard Spacelabs Medical's assets and to provide for the reliability
of its financial records. The members of this Committee are Dr. Dudley
(Chairman), Dr. Feigenbaum and Mr. Fill. The Audit Committee met four times in
1996.
Compensation Committee. The Compensation Committee establishes salaries,
incentives and other forms of compensation for directors, officers and other
executives of Spacelabs Medical. This Committee also administers Spacelabs
Medical's various incentive compensation and benefit plans and recommends the
establishment of policies relating to such plans. The members of this Committee
are Dr. Woolf (Chairman) and Drs. Dudley and Nudelman. The Compensation
Committee met four times in 1996.
Executive Committee. The Executive Committee has authority, subject to
limitations prescribed by the Board of Directors, to exercise, during the
intervals between meetings of the Board of Directors, the powers of the full
Board, and is also available, on a standby basis, for use in an emergency or
when scheduling makes it impractical to bring the full Board together for a
meeting. The members of this Committee are Mr. Lombardi (Chairman) and Dr.
Dudley. The Executive Committee did not meet in 1996.
DIRECTOR COMPENSATION
Directors who are employees of Spacelabs Medical do not receive any fees
for their services as directors. Directors who are not employees of Spacelabs
Medical are paid an annual retainer of $15,000 for serving on the Board of
Directors and receive an additional $500 for attending each meeting of the Board
of Directors plus $500 for attending each meeting of a committee of the Board of
which they are a member. A nonemployee director serving as a committee chairman
receives an additional $1,000 per annum.
Under the Spacelabs Medical, Inc. Stock Option and Deferral Plan for
Nonemployee Directors (the "Director Plan"), each director who is neither an
officer nor an employee of Spacelabs Medical is eligible to receive an annual
automatic grant of an option to purchase 2,000 shares of Common Stock on the
fifth business day following the date of each Annual General Meeting of
Stockholders. Each new nonemployee director is also eligible to receive an
initial automatic grant of an option to purchase up to 1,500 shares of Common
Stock upon the director's initial election or appointment to the Board. The
options have an exercise price equal to the fair market value of the Common
Stock on the date of grant and expire on the earlier of 10 years from the date
of grant and one year after a director's termination of service as a director or
three years after a director's mandatory retirement. Each option vests on the
director's continued service as a director until the date of the first Annual
General Meeting of Stockholders after the date of grant. The Director Plan also
permits nonemployee directors to defer payment of all or a part of their cash
retainers and/or Board Committee chairmanship fees into "Stock Units."
The Company also has a Cash Deferred Compensation Plan for Nonemployee
Directors. Participating directors may elect to defer all or a portion of their
cash compensation for service as directors into an interest-bearing cash
account.
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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock
as of February 7, 1997, by (i) each stockholder known by the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, (ii) each
director, (iii) certain executive officers, and (iv) all directors and executive
officers as a group. Each of the named persons and members of the group has sole
voting and investment power with respect to the shares shown, except as stated
below.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
- ------------------------------------------------------------ -------------------- -----------
<S> <C> <C>
Trimark Financial Corporation............................... 964,900(1) 9.89%
One First Canadian Place
Suite 5600, P.O. Box 487
Toronto, ON M5X 1E5
Oppenheimer Group, Inc...................................... 662,500(2) 6.79%
Oppenheimer Tower,
World Financial Center
New York, NY 10281
Bluewater Investment Management, Inc. ...................... 660,300 6.77%
Suite 1502, Box 63
150 King Street West
Toronto, ON M5H 1J9
Sanford C. Bernstein & Co., Inc............................. 572,526(3) 5.87%
One State Street Plaza
New York, NY 10004
Gilbert W. Anderson......................................... 2,500(4) *
Thomas J. Dudley............................................ 8,000(5) *
Harvey Feigenbaum........................................... 8,463(6) *
Dennis C. Fill.............................................. 108,465(7) 1.11%
Carl A. Lombardi............................................ 407,205(8)(9) 4.18%
Phillip M. Nudelman......................................... 8,100(10) *
Harry Woolf................................................. 11,500(11) *
Dennis Larsen............................................... 47,507(9)(12) *
James A. Richman............................................ 31,941(9)(13) *
T. Randy Miskimon........................................... 48,143(9)(14) *
Emil Soika.................................................. 11,250(15) *
All directors and executive officers as a group (12
persons).................................................. 739,973(16) 7.59%
</TABLE>
- ---------------
* Represents holdings of less than 1%.
(1) Sole power to vote and dispose of 964,900 shares.
(2) Sole power to vote and dispose of 662,500 shares.
(3) Shared power to vote 6,900 shares with Sanford C. Bernstein & Co., Inc
clients who have appointed an independent voting agent with instructions to
vote shares in the same manner as Sanford C. Bernstein & Co., Inc. Sole
power to vote 496,000 shares and to dispose of 572,526 shares.
(4) Includes options to purchase 1,500 shares exercisable within 60 days of
February 7, 1997.
(5) Represents options to purchase 8,000 shares exercisable within 60 days of
February 7, 1997.
(6) Includes 163 shares that are owned by Dr. Feigenbaum's wife and options to
purchase 8,000 shares exercisable within 60 days of February 7, 1997.
(7) Represents 5,465 shares that are held by the trustee of the ATL Incentive
Savings and Stock Ownership Plan as of December 31, 1996 and options to
purchase 103,000 shares exercisable within 60 days of February 7, 1997.
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(8) Includes options to purchase 342,750 shares exercisable within 60 days of
February 7, 1997.
(9) Includes 2,155, 1,007, 643 and 1,160 shares held by the 401(k) trustee, as
of December 31, 1996, for Messrs. Lombardi, Larsen, Miskimon and Richman,
respectively.
(10) Includes options to purchase 8,000 shares exercisable within 60 days of
February 7, 1997.
(11) Includes options to purchase 8,000 shares exercisable within 60 days of
February 7, 1997.
(12) Includes options to purchase 44,500 shares exercisable within 60 days of
February 7, 1997.
(13) Includes options to purchase 27,500 shares exercisable within 60 days of
February 7, 1997.
(14) Includes options to purchase 45,000 shares exercisable within 60 days of
February 7, 1997.
(15) Includes options to purchase 6,250 shares exercisable within 60 days of
February 7, 1997.
(16) Includes options to purchase 645,500 shares exercisable within 60 days of
February 7, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of Forms 3, 4 and 5 and any amendment thereto
furnished to it pursuant to Section 16 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), all such Forms were filed on a timely basis.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee, which is comprised of three nonemployee
directors, implements and endorses the goals of the Company's compensation
program, which reflect two guiding principles: (i) provide compensation and
benefits that allow the Company to maintain competitive compensation to attract
and retain executive officers with the skills critical to the Company's
long-term success and (ii) reward performance in attaining business objectives
and maximizing stockholder value.
The Compensation Committee works with an outside compensation consulting
firm which advises the Compensation Committee on all elements of executive
officer compensation. The Compensation Committee examines survey data for
executives with similar responsibilities in other medical equipment companies of
similar size. The surveyed companies overlap substantially with companies
included in the peer group index shown in the stock price performance graph.
Compensation decisions are usually made in February of each year based on prior
year performance.
Base Salary. Individual base salaries reflect primarily historical
practice, internal position relationships, individual performance and
contribution and relative external market pay. No specific weight is assigned to
these factors. The Chief Executive Officer is responsible for setting all
salaries up to $150,000; all salaries over $150,000 are established by the
Compensation Committee, with strong consideration given to the recommendation of
the Chief Executive Officer. The Company believes that the relative salaries of
senior management should reflect individual contribution and performance. The
base salaries for the four most highly compensated executive officers (other
than the Chief Executive Officer) are generally at or below the median for
comparable companies, which is the level targeted by the Compensation Committee.
The Compensation Committee bases Mr. Lombardi's base salary on (in order of
importance): (i) individual performance, (ii) position of his salary in relation
to survey information, (iii) experience, and (iv) the Company's budget. In 1996,
the Committee moderately increased Mr. Lombardi's base salary to $400,000, and
continued to place greater emphasis on the achievement of certain strategic
performance objectives, which are reflected in the incentive portion of Mr.
Lombardi's compensation package. The Chief Executive Officer's base salary
approximates the median for comparable companies.
Annual Incentive Compensation. The Management Incentive Compensation Plan
(the "MIC Plan") is a plan approved by stockholders under which cash or
stock-based awards may be granted to officers and other key employees of the
Company to reward personal contributions to the Company's success. The MIC Plan
incentive awards for officers and other key employees are awarded by the
Compensation Committee based on
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the recommendation of the Chief Executive Officer. For 1996, the funding target
was 30% of base salary. The total amount of the MIC Plan award pool is
established based on the Company's net income performance, emphasizing the
quality of earnings based on the return of capital employed. The amount of any
award to an individual depends on performance by the individual against
individually assigned goals and objectives. Attainment of these goals is based
on both quantitative performance goals that vary among executives and reflect
their areas of responsibility and the subjective assessment of the Chief
Executive Officer.
In 1996, the Company did not attain the target established for incentive
awards under the MIC Plan. In lieu of cash bonuses, the Chief Executive Officer
recommended restricted stock awards to certain executive officers based on their
extraordinary contributions to the Company in 1996. The restricted stock grants
provide that restrictions on the sale of the stock lapse as to 25% of the shares
annually, beginning on the first anniversary of the grant. The bonuses awarded
to the named executive officers (other than the Chief Executive Officer), when
combined with their salaries, generally resulted in compensation that is below
the median for total annual compensation for comparable companies.
The incentive award plan adopted for Mr. Lombardi for 1996 focuses on
maintaining Company profitability while achieving key operational and strategic
objectives and consists of two components. The net income threshold of the first
component of Mr. Lombardi's incentive award was not met. The second component of
the incentive award plan targets 40% of base salary and is based on performance
against strategic goals and objectives for the year. In 1996, in lieu of a cash
bonus, Mr. Lombardi received an incentive award of 4,000 shares of restricted
stock. The award was determined by considering overall Company performance,
progress towards strategic objectives, and economic conditions. In addition, the
Compensation Committee desired to increase Mr. Lombardi's stock ownership. The
restricted stock grant provides that restrictions on the sale of the stock lapse
as to 25% of the shares annually, beginning on the first anniversary of the
grant. Mr. Lombardi's total annual pay, consisting of salary and bonus, is below
the median for comparable companies.
Long-Term Compensation. The Spacelabs Medical, Inc. 1992 Option, Stock
Appreciation Right, Restricted Stock, Stock Grant and Performance Unit Plan (the
"1992 Plan") is the Company's primary long-term incentive plan. The objectives
of the stock option program are to align the interests of management and
stockholders by creating a direct link between a portion of management's
compensation and stockholder return. Stock options are granted at an option
price equal to the fair market value of the Common Stock on the date of grant,
have 10-year terms and become exercisable in four equal annual installments
beginning on the first anniversary of the date of grant. In 1996, the Committee
granted incentive stock options up to the Internal Revenue Service limit in
annual vesting value. The Committee believes that incentive stock options
increase share ownership by encouraging the retention of exercised shares.
Generally, the number of stock options awarded increases in relation to the
level of responsibility in the Company. Within that context, the number of
options awarded annually is based primarily on the assessment of the Chief
Executive Officer of that individual's contribution to the Company. The number
of options awarded to that individual in past years is also considered, as is
the competitive practice of comparable companies. The level of long-term
compensation awarded by the Company to the named executive officers (other than
the Chief Executive Officer) is below the median for comparable companies but
has increased over prior years. In 1996, Mr. Lombardi was awarded options to
purchase 75,000 shares of Common Stock as part of an ongoing effort to increase
his share ownership and reward performance. Mr. Lombardi's option award is in
the median range for companies of comparable size, which is the intended target.
Officer stock ownership guidelines were adopted by the Compensation Committee in
1995 as part of a general effort to increase stock ownership by officers as a
group.
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<PAGE> 11
POLICY WITH RESPECT TO SECTION 162(M) LIMITATIONS
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a tax deduction to public companies for
compensation in excess of $1 million paid to each of a company's four most
highly compensated executive officers and its chief executive officer.
Qualifying performance-based compensation is not subject to the deduction limit
if certain requirements are met. Based on proposed regulations, any taxable
compensation derived from the exercise of stock options awarded under the 1992
Plan should qualify as performance-based compensation and therefore will be
fully deductible as compensation payments. The Compensation Committee has
decided not to qualify the MIC Plan, since to do so would limit the Committee's
flexibility in the administration of the plan. The Compensation Committee does
not believe that there will be any nondeductible compensation for the five
executive officers in question in 1997.
Respectfully submitted,
Harry Woolf (Chairman)
Thomas J. Dudley
Phillip M. Nudelman
Compensation Committee Members
EXECUTIVE COMPENSATION
The following table provides information for the past three fiscal years
concerning the annual and long-term compensation received by those persons who
were, in 1996, the Company's Chief Executive Officer and the five other most
highly compensated executive officers of the Company (the "named executive
officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-------------------------------
ANNUAL COMPENSATION OTHER ANNUAL LONG-TERM ALL OTHER
---------------------------- COMPENSATION RESTRICTED STOCK INCENTIVE COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) STOCK(2) OPTIONS PAYOUTS (3)
- --------------------------- ---- -------- -------- ------------ ---------- ------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Carl A. Lombardi 1996 $400,000 -- -- $ 87,960 75,000 -- $ 5,940
Chief Executive Officer, 1995 $385,000 $200,000 -- $ 27,240 65,000 -- $ 6,060
Chairman of the Board and 1994 $385,000 $300,000 -- -- 60,000 -- $ 5,996
President
Dennis Larsen 1996 $150,000 -- -- $ 43,980 8,000 -- $ 5,250
Vice President and General 1995 $150,000 $ 20,000 -- $ 27,240 10,000 -- $ 4,660
Manager, Supplies Products 1994 $150,000 $ 40,000 -- -- 10,000 -- $ 5,291
Edward Larsen(4) 1996 $138,600 -- -- -- 10,000 -- $ 997
Former Vice President, 1995 $160,000 $ 20,000 -- -- 10,000 -- $ 1,440
Planning and 1994 $150,000 $ 40,000 -- -- 10,000 -- $ 1,440
Administration
James A. Richman 1996 $135,000 -- -- $ 54,975 10,000 -- $ 5,456
Vice President and 1995 $125,000 $ 20,000 -- $ 51,980 8,000 -- $ 4,211
Corporate Controller, 1994 $115,000 $ 25,000 -- -- 8,000 -- $ 3,974
Acting Chief Financial
Officer
T. Randy Miskimon 1996 $150,000 $ 15,000 $ 39,376 $ 43,980 10,000 -- $ 4,037
Vice President, 1995 $138,000 $ 20,000 $ 26,856 $ 27,240 10,000 -- $ 4,620
International 1994 $125,000 $ 30,000 $ 9,195 -- 10,000 -- $ 3,310
Emil H. Soika 1996 $200,000 -- -- -- 10,000 -- $ 2,250
Vice President Ambulatory 1995 $ 14,600 -- -- $131,500 15,000 -- $ 164
Healthcare
</TABLE>
- ---------------
(1) Represents sales commissions paid to Mr. Miskimon in each of the years
shown.
(2) Restricted stock is valued at the closing price quoted on the Nasdaq
National Market (the "Nasdaq/ NM") on the date of grant. At December 27,
1996, Messrs. Lombardi, D. Larsen, E. Larsen, Miskimon, Richman and Soika
held 3,500, 1,500, 0, 1,500, 2,050 and 3,750 shares of restricted stock,
respectively, with a value at that date of $73,500, $31,500, $0, $31,500,
$43,050 and $78,750, respectively.
8
<PAGE> 12
(3) Includes Spacelabs Medical's contribution to Spacelabs Medical's ISSO 401(k)
Plan during 1996 for Messrs. Lombardi, D. Larsen, E. Larsen, Miskimon,
Richman and Soika of $4,500, $4,500, $0, $4,016, $3,167 and $0,
respectively, and group term life insurance premiums paid by Spacelabs
Medical for the same individuals of $1,440, $750, $997, $1,440, $870 and
$2,250, respectively.
(4) Amounts shown reflect compensation paid to Mr. Larsen in 1996 prior to his
departure from the Company.
1996 OPTION GRANTS AND EXERCISES
The following table provides information on option grants in fiscal year
1996 to the named executive officers.
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL RATES OF
TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------------------
NAME GRANTED(1) FISCAL YEAR PER SHARE(2) DATE 0% 5% 10%
- -------------------------- ---------- ------------- ------------ ---------- --- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Carl A. Lombardi.......... 75,000 18.5% $27.38 2/23/06 $0 $ 1,291,875 $ 3,273,375
Dennis Larsen............. 8,000 2.0% $27.38 2/23/06 $0 $ 137,800 $ 349,160
Edward Larsen(4).......... 10,000 2.5% $27.38 2/23/06 $0 $ 172,250 $ 436,450
T. Randy Miskimon......... 10,000 2.5% $27.38 2/23/06 $0 $ 172,250 $ 436,450
James A. Richman.......... 10,000 2.5% $27.38 2/23/06 $0 $ 172,250 $ 436,450
Emil H. Soika............. 10,000 2.5% $27.38 2/23/06 $0 $ 172,250 $ 436,450
All stockholders.......... N/A N/A N/A N/A $0 $179,490,253 $454,795,477
</TABLE>
- ---------------
(1) Each option shown was granted on February 23, 1996, and becomes exercisable
in four equal annual installments beginning on the first anniversary of the
date of grant. The Compensation Committee administers the 1992 Plan, and has
the authority to accelerate exercisability before the originally designated
exercise date(s). In addition, a Change of Control, as defined under
"Compensation -- Agreement With Chief Executive Officer; Change of Control
Arrangements," will make each outstanding option automatically exercisable
in full for the total remaining number of shares covered. The exercise price
may be paid by delivering already-owned shares, and tax withholding
obligations relating to exercise may be paid by offsetting the underlying
shares, subject to certain conditions.
(2) The exercise price is the average of the high and low sales prices quoted on
the Nasdaq/NM for the stock on the date of grant.
(3) The actual value, if any, that a named executive officer or any other
individual may realize will depend on the excess of the stock price over the
exercise price on the date the option is exercised. The stock price at an
assumed 5% compounded growth rate over a 10-year period would be $44.60 per
share, yielding a potential realizable value of $17.22 per share; the stock
price at an assumed 10% compounded growth rate would be $71.02 per share,
yielding a potential realizable value of $43.64 per share. For "all
stockholders," the gain is calculated from $27.38, the average of the high
and low sales prices quoted on the Nasdaq/NM on February 23, 1996, based on
the outstanding shares of Common Stock on that date. These amounts are not
intended to forecast possible future appreciation, if any, in the market
price of the Common Stock, therefore, there can be no assurance that the
actual value realized by a named executive officer or all stockholders will
approximate the potential realizable values set forth in the table.
(4) Options granted to Mr. Larsen in 1996 were forfeited upon his departure from
the Company.
9
<PAGE> 13
No options were exercised in 1996. The following table provides information
on the value of the named executive officers' unexercised options at December
27, 1996.
AGGREGATED OPTION EXERCISES IN 1996 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Carl A. Lombardi.............................. 280,250 166,250 $527,970 $ 31,250
Dennis Larsen................................. 35,000 23,000 $ 18,750 $ 6,250
Edward Larsen................................. 31,250 0 $ 9,375 $ 0
T. Randy Miskimon............................. 35,000 25,000 $ 18,750 $ 6,250
James A. Richman.............................. 19,750 21,250 $ 9,375 $ 3,125
Emil H. Soika................................. 3,750 21,250 $ 0 $ 0
</TABLE>
- ---------------
(1) The value of the options on December 27, 1996 is based on the closing price
of a share of Common Stock as reported on the Nasdaq/NM on December 27, 1996
($21.00).
10
<PAGE> 14
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total return on the
Common Stock during the period beginning on July 2, 1992 and ending on December
27, 1996 with the cumulative total return on the Total Return Index for the
Nasdaq Stock Market (U.S. Companies) (the "Nasdaq Index") and the Media General
Medical Instruments and Supply Index (the "Media General Index"). The graph also
shows the cumulative total return of the Investor's Business Daily Medical
Instruments Industry Index (the "Medical Instruments Index") for the period
beginning July 2, 1992 and ending on December 29, 1995. The Medical Instruments
Index is no longer available from Investors' Business Daily, the sole source of
the data. The Company is not able to recreate the Medical Instruments Index
because the identity of the companies comprising the index is proprietary
information. The comparison assumes $100 was invested on July 2, 1992 in Common
Stock and in each of the foregoing indices and assumes reinvestment of
dividends. The stock price performance shown on the graph is not necessarily
indicative of future price performance.
<TABLE>
<CAPTION>
Measurement Period Spacelabs Media General Medical Instruments
(Fiscal Year Covered) Medical, Inc. Nasdaq Index Index Index
<S> <C> <C> <C> <C>
7/2/92 100 100 100 100
12/24/92 119 119 110 99
12/31/93 102 139 93 70
12/30/94 98 136 102 84
12/29/95 121 192 165 247
12/27/96 88 237 173
</TABLE>
11
<PAGE> 15
RETIREMENT PLAN
Spacelabs Medical's Retirement Plan, a defined benefit plan, covers all
employees on the active, regular payroll of Spacelabs Medical or its U.S.
subsidiaries. The Retirement Plan provides that, upon retirement, a participant
will receive a monthly benefit equal to 1% of the participant's highest
consecutive 60-month average earnings (as defined in the plan, including base
salary and, subject to certain limits, bonuses and commissions), multiplied by
the participant's years of credited service with Spacelabs Medical and its
subsidiaries (including employment with Spacelabs Medical's former parent,
Westmark), reduced as described below. A participant is vested upon completing
five years of service.
The following table sets forth the estimated annual benefits payable upon
retirement to Retirement Plan participants.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 18,750 $ 25,000 $ 31,250 $ 37,500 $ 43,750
150,000 22,500 30,000 37,500 45,000 52,500
175,000 26,250 35,000 43,750 52,500 61,250
200,000 30,000 40,000 50,000 60,000 70,000
225,000 33,750 45,000 56,250 67,500 78,750
250,000 37,500 50,000 62,500 75,000 87,500
300,000 45,000 60,000 75,000 90,000 105,000
400,000 60,000 80,000 100,000 120,000 140,000
450,000 67,500 90,000 112,500 135,000 157,500
500,000 75,000 100,000 125,000 150,000 175,000
600,000 90,000 120,000 150,000 180,000 210,000
700,000 105,000 140,000 175,000 210,000 245,000
</TABLE>
The named executive officers participate in the same manner as other
eligible Spacelabs Medical employees. The compensation covered by the Retirement
Plan corresponds to the salary and bonus, not in excess of 50% of base salary,
disclosed for the named executive officers. The credited years of service for
Messrs. Lombardi, Larsen, Miskimon, Richman and Soika as of December 27, 1996
are 29.69, 12.08, 14.46, 12.52 and 1.08 years, respectively.
Certain federal legislation generally limits the amount of annual pension
that may be paid from a federal income tax qualified plan to varying amounts
($125,000 for 1997) and the amount of annual earnings that may be taken into
account for purposes of calculating benefits under a federal income tax
qualified plan ($160,000 for 1997). The actual amounts paid under the Retirement
Plan will be limited to comply with such legislation.
Spacelabs Medical also has established a Supplemental Benefit Plan, which
is not qualified for federal income tax purposes and which covers any employee
whose benefit under the Retirement Plan is limited by the federal legislation
described above. The benefit under the Supplemental Benefit Plan consists of the
amount by which the benefit to which the participant is otherwise entitled under
the Retirement Plan is reduced to comply with the limits on annual earnings or
the amount of annual pension that may be paid. Mr. Lombardi's benefits as
disclosed in the preceding table may be actuarially reduced if he elects to
receive periodic payments prior to age 65 from an annuity purchased by the
Company to discharge a portion of its retirement benefit liability under the
Supplemental Benefit Plan.
AGREEMENT WITH CHIEF EXECUTIVE OFFICER; CHANGE OF CONTROL ARRANGEMENTS
Spacelabs Medical has entered into a change of control agreement with Mr.
Lombardi that provides for continued employment terms equivalent to those
immediately prior to a Change of Control (as defined below)
12
<PAGE> 16
for the three years following a Change of Control. An immediate payment of a
lump sum equal to three years' salary and bonus is triggered if, following a
Change of Control, employment is terminated by the employee for "good cause," by
the employer "without cause" or by the employee during the 30-day window period
one year after the Change of Control. A Change of Control, with or without
termination of employment, also triggers an acceleration of vesting of
restricted stock and stock options and the payment of the "spread" between the
exercise price of options and the fair market value of the underlying Common
Stock.
In very general terms, a Change of Control would be a substantial change in
Spacelabs Medical's Board of Directors or in the ownership of the Company
without either the acquiescence of the then-current Board or continuing majority
ownership by stockholders of Spacelabs Medical. More particularly, a Change of
Control as defined in the agreement is: (i) a change in the Board of Directors
such that a majority of the seats on the Board are occupied by individuals who
are neither nominated by a majority of the Incumbent Directors (as defined
below) of Spacelabs Medical then in office nor appointed by directors so
nominated; (ii) the acquisition by any person (other than Spacelabs Medical or a
Spacelabs Medical employee benefit plan) of, in the case of transactions not
approved by a majority of the directors of Spacelabs Medical who were either
nominated by a majority of the directors of Spacelabs Medical then in office or
appointed by directors so nominated ("Incumbent Directors"), 20% or more of the
combined general voting power of the Common Stock and any other voting
securities of Spacelabs Medical and, in the case of other transactions, 33% or
more of such combined voting power; or (iii) the approval by the stockholders of
Spacelabs Medical of a complete liquidation or dissolution of Spacelabs Medical
or a merger, consolidation or sale of substantially all the assets of Spacelabs
Medical (collectively, a "Business Combination"), other than a Business
Combination in which all or substantially all the stockholders of Spacelabs
Medical receive 60% or more of the stock of the corporation resulting from the
Business Combination in substantially the same proportions as their ownership
before the Business Combination, no holder has more than 20% of the combined
voting power of the capital stock of the resulting corporation and at least a
majority of the board of directors of the resulting corporation are Incumbent
Directors.
Under the 1992 Plan and the Spacelabs Medical 1992 Adjustment Plan, upon a
Change of Control each outstanding option and stock appreciation right ("SAR")
will automatically become exercisable in full for the total remaining number of
shares covered thereby. In addition, during the 90-day period following a Change
of Control an optionee may choose to receive cash equal to the difference
between the exercise price of the option and the fair market value of a share of
Common Stock determined as described below for a limited SAR, in lieu of
exercising the option and paying the option price. Also, all restrictions on
shares of restricted stock will lapse upon a Change of Control and all amounts
otherwise deferred by Spacelabs Medical and any employee in connection with
performance units will be distributed.
A limited SAR may be exercised only during the 90 days immediately
following a Change of Control. For the purpose of determining the amount payable
upon exercise of a limited SAR, the fair market value of a share of Common Stock
will be equal to the higher of (y) the highest fair market value of the Common
Stock during the 90-day period ending on the date the limited SAR is exercised,
determined as in the case of an option, and (z) whichever of the following
applies:
(i) the highest per share price paid in any tender or exchange offer
that is in effect at any time during the 90 days preceding the exercise of
the limited SAR;
(ii) the fixed or formula price for the acquisition of shares of
Common Stock in a merger or similar agreement approved by the Spacelabs
Medical stockholders or Board of Directors, if such price is determinable
on the date of exercise; or
(iii) the highest price per share paid to any Spacelabs Medical
stockholder in a transaction or group of transactions giving rise to the
exercisability of the limited SAR.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF AUDITORS
Unless instructed to the contrary, it is intended that votes be cast
pursuant to the accompanying proxy for the ratification of the appointment of
KPMG Peat Marwick LLP as auditors for Spacelabs Medical for 1997.
13
<PAGE> 17
KPMG Peat Marwick LLP has audited the accounts of Spacelabs Medical for 1996.
Representatives of KPMG Peat Marwick LLP are expected to attend the Meeting and
will have an opportunity to make a statement and/or respond to appropriate
questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS AUDITORS FOR SPACELABS MEDICAL FOR 1997.
In the event that the ratification of the appointment of auditors is not
made by a majority of the shares entitled to vote thereon, the selection of
other auditors will be considered by the Board of Directors.
EXPENSES OF SOLICITATION
The accompanying proxy is solicited by and on behalf of the Board of
Directors, and the entire cost of such solicitation will be borne by Spacelabs
Medical. Corporate Investors Communications, Inc. will distribute proxy
materials to beneficial owners and may solicit proxies by personal interview,
mail, telephone and telegram, and will request brokerage houses and other
custodians, nominees and fiduciaries to forward soliciting material to the
beneficial owners of the Common Stock held on the record date by such persons.
The Company will pay Corporate Investors Communications, Inc. a fee of $4,000 to
cover its services and will reimburse Corporate Investors Communications, Inc.
for payments made to brokers and other nominees for their expenses in forwarding
solicitation materials. Solicitation may be by personal interview, telephone and
telegram by directors, officers and other employees of Spacelabs Medical without
special compensation.
OTHER MATTERS
Spacelabs Medical knows of no other matters that are likely to be brought
before the Meeting. If, however, other matters that are not now known or
determined come before the Meeting, the persons named in the enclosed proxy or
their substitutes will vote such proxy in accordance with their judgment.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders to be considered for inclusion in the Proxy
Statement and proxy for the Company's 1998 Annual General Meeting of
Stockholders must be received by the Secretary of Spacelabs Medical by November
24, 1997.
ANNUAL REPORT AND ANNUAL REPORT ON FORM 10-K
A copy of the Spacelabs Medical 1996 Annual Report and of the Annual Report
on Form 10-K for the year ended December 27, 1996 as filed with the Securities
and Exchange Commission are being mailed with this Proxy Statement to each
stockholder of record. Stockholders not receiving a copy of such Annual Reports
may obtain one without charge by writing or calling Mr. Clark Thompson, Director
Investor Relations, Spacelabs Medical, P.O. Box 97013, Redmond, Washington,
98073-9713, (206) 867-7345.
By Order of the Board of Directors
/s/ Eugene V. DeFelice
Eugene V. DeFelice
Secretary
Redmond, Washington
March 25, 1997
14
<PAGE> 18
PROXY
SPACELABS MEDICAL, INC.
INSTRUCTIONS FOR ANNUAL GENERAL MEETING OF STOCKHOLDERS, MAY 8, 1997
Shares of SpaceLabs Medical, Inc. Common Stock in which you have an interest
as a participant in the Advanced Technology Laboratories, Inc. Incentive Savings
and Stock Ownership Plan are held by Wells Fargo Bank, N.A., as Trustee of the
Plan, and will be voted by the Trustee at the Annual Meeting of Stockholders on
May 8, 1997, pursuant to instructions received from Plan participants. You may
participate in the voting, in proportion to your interest in such shares, by
using this form to instruct the Trustee how to vote the shares allocated to your
account.
IN ORDER FOR YOUR INSTRUCTIONS TO BE VOTED BY THE TRUSTEE, THIS FORM MUST BE
RECEIVED BY FIRST CHICAGO TRUST COMPANY OF NEW YORK NO LATER THAN CLOSE OF THE
BUSINESS DAY ON MAY 2, 1997.
If you do not indicate otherwise, these instructions will authorize the
Trustee to vote for the election of Directors and for the ratification of
auditors for 1997, as described in the SpaceLabs Medical, Inc. Proxy Statement
dated March 25, 1997. These instructions will also authorize the Trustee to vote
at its discretion on such other matters as may come before the meeting.
- --------------------------------------------------------------------------------
Wells Fargo Bank, N.A.
Trust Division, P.O. Box 21927
Seattle, WA 98111
INSTRUCTIONS TO TRUSTEE
THESE INSTRUCTIONS ARE BEING GIVEN IN CONJUNCTION WITH THE
BOARD OF DIRECTORS' SOLICITATION OF PROXIES FROM THE TRUSTEE
You are hereby authorized and instructed to vote at the Annual General Meeting
of Stockholders of SpaceLabs Medical, Inc. on May 8, 1997, and at any
adjournments thereof, either in person or by proxy, all of the shares of Common
Stock of SpaceLabs Medical, Inc., allocated to my account under the Advanced
Technology Laboratories, Inc. Incentive Savings and Stock Ownership Plan.
THESE INSTRUCTIONS ARE CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
<PAGE> 19
[X] PLEASE MARK YOUR 6110
VOTES AS IN THIS
EXAMPLE.
THE INTEREST IN SHARES SUBJECT TO THESE INSTRUCTIONS WILL BE VOTED AS DIRECTED
BY THE PLAN PARTICIPANT. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED
INSTRUCTIONS ARE RETURNED, SUCH INTEREST WILL BE VOTED "FOR" AUTHORITY ON ITEMS
1 AND 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" AUTHORITY ON ITEMS 1 AND 2.
1. ELECTION OF DIRECTORS FOR [ ] WITHHELD [ ]
FOR ALL EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
Authority to vote "FOR" the following nominees:
Gilbert W. Anderson, Thomas J. Dudley, D.B.A., Harvey Feigenbaum, M.D.,
Dennis C. Fill, Carl A. Lombardi, Phillip M. Nudelman, Ph.D., Harry Woolf,
Ph.D.
2. RATIFICATION OF AUDITORS
Authority to vote "FOR" ratification of KPMG Peat Marwick LLP, as auditors
for the year ending December 26,1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PARTICIPANT____________________________________________ DATE____________________
Please date and sign exactly as your name appears above, and return in the
enclosed envelope to First Chicago Trust Company of New York, who will tabulate
and report your instruction to the Plan's Trustee for voting.
<PAGE> 20
PROXY
SPACELABS MEDICAL, INC.
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON MAY 8, 1997
The undersigned hereby constitutes and appoints Carl A. Lombardi and James A.
Richman, and each of them, his true and lawful agents and proxies with full
power of substitution in each, to represent the undersigned at the Annual
Meeting of Stockholders of SPACELABS MEDICAL, INC. to be held on May 8, 1997 at
10:00 AM, local time, at the Bellevue Club, Bellevue, Washington, and at any
adjournments thereof, on all matters coming before such meeting.
You are encouraged to specify your choices by marking the appropriate boxes. SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The Proxy(ies) cannot vote your
shares unless you sign and return this card.
(Change of Address/Comments)
- ----------------------------------
- ----------------------------------
- ----------------------------------
- ----------------------------------
SEE REVERSE SIDE
<PAGE> 21
[X] PLEASE MARK YOUR 5020
VOTES AS IN THIS
EXAMPLE.
THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF DIRECTORS AND FOR
PROPOSAL 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 and 2
1. ELECTION OF DIRECTORS FOR [ ] WITHHELD [ ]
For all except vote withheld from the following nominee(s):
Nominees for Director:
Gilbert W. Anderson, Thomas J. Dudley, D.B.A., Harvey Feigenbaum, M.D.,
Dennis C. Fill, Carl A. Lombardi, Phillip M. Nudelman, Ph.D., Harry Woolf,
Ph.D.
2. RATIFICATION OF AUDITORS
Approval of KPMG Peat Marwick LLP, independent certified public accountants
to audit the accounts and records of SpaceLabs Medical, Inc. for the fiscal
year ending December 26,1997.
3. In their discretion, upon such other matters as may properly come before the
meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
CHANGE OF ADDRESS/COMMENTS ON REVERSE SIDE
Please sign name(s) exactly as printed hereon. Joint owners should each
sign. If signing as attorney, administrator, executor, guardian or trustee,
give full title as such.
-----------------------------------
-----------------------------------
SIGNATURE(S) DATE
<PAGE> 22
PROXY
SPACELABS MEDICAL, INC.
INSTRUCTIONS FOR ANNUAL GENERAL MEETING OF STOCKHOLDERS, MAY 8, 1997
Shares of SpaceLabs Medical, Inc. Common Stock in which you have an
interest as a participant in the SpaceLabs Medical, Inc. Incentive Savings and
Stock Ownership Plan are held by U.S. Bank of Washington, N.A., as Trustee of
the Plan, and will be voted by the Trustee at the Annual Meeting of Stockholders
on May 8, 1997, pursuant to instructions received from Plan participants. You
may participate in the voting, in proportion to your interest in such shares, by
using this form to instruct the Trustee how to vote the shares allocated to your
account.
IN ORDER FOR YOUR INSTRUCTIONS TO BE VOTED BY THE TRUSTEE, THIS
FORM MUST BE RECEIVED BY FIRST CHICAGO TRUST COMPANY OF NEW
YORK NO LATER THAN CLOSE OF THE BUSINESS DAY ON MAY 2, 1997.
If you do not indicate otherwise, these instructions will authorize the
Trustee to vote for the election of Directors and for the ratification of
auditors for 1997, as described in the SpaceLabs Medical, Inc. Proxy Statement
dated March 25, 1997. These instructions will also authorize the Trustee to vote
at its discretion on such other matters as may come before the meeting.
- --------------------------------------------------------------------------------
U.S. Bank of Washington, N.A.
P.O. Box 720
Seattle, WA 98111
INSTRUCTIONS TO TRUSTEE
THESE INSTRUCTIONS ARE BEING GIVEN IN CONJUNCTION WITH THE
BOARD OF DIRECTORS' SOLICITATION OF PROXIES FROM THE TRUSTEE
You are hereby authorized and instructed to vote at the Annual General Meeting
of Stockholders of SpaceLabs Medical, Inc. on May 8, 1997, and at any
adjournments thereof, either in person or by proxy, all of the shares of Common
Stock of SpaceLabs Medical, Inc., allocated to my account under the SpaceLabs
Medical, Inc. Incentive Savings and Stock Ownership Plan.
THESE INSTRUCTIONS ARE CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
<PAGE> 23
[X] PLEASE MARK YOUR 6018
VOTES AS IN THIS EXAMPLE
THE INTEREST IN SHARES SUBJECT TO THESE INSTRUCTIONS WILL BE VOTED AS DIRECTED
BY THE PLAN PARTICIPANT. If no direction is given when the duly executed
instructions are returned, such interest will be voted "FOR" authority on items
1 and 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" AUTHORITY ON ITEMS 1 AND 2:
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FOR WITHHELD 2. RATIFICATION FOR AGAINST ABSTAIN
1. ELECTION OF Authority to vote "FOR" the following OF AUDITORS
DIRECTORS / / / / nominees: Gilbert W. Anderson, Authority to vote / / / / / /
Thomas J. Dudley, D.B.A., "FOR" ratification
For all except vote withheld from Harvey Feigenbaum, M.D., Dennis C. Fill, of KPMG Peat Marwick
the following nominee(s): Carl A. Lombardi, Phillip M. Nudelman, Ph.D., LLP, as auditors for
Harry Woolf, Ph.D. the year ending
December 26, 1997.
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PARTICIPANT___________________________________DATE________________
Please date and sign exactly as your name appears above, and return in the
enclosed envelope to First Chicago Trust Company of New York, who will tabulate
and report your instruction to the Plan's Trustee for voting.
