<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.)
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only as permitted by
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-111(c) or Rule 14a-12
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)(1) 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:
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(SPACELABS LOGO)
Dear Stockholder: March 23, 2000
You are cordially invited to attend the 2000 Annual General Meeting of
Stockholders of Spacelabs Medical, Inc. at 10:00 a.m. on Tuesday, May 2, 2000,
at the Bellevue Club, 11200 SE 6th Street, Bellevue, Washington.
The accompanying Notice of 2000 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 in person, please read the proxy
statement and vote your shares. To make it easier for you to vote, this year we
are introducing Internet and telephone voting. The instructions attached to your
proxy card describe how to use these convenient new services. Of course, if you
prefer, you can vote by mail by completing your proxy card and returning it in
the enclosed postage-paid envelope.
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
follow the instructions attached to the proxy card and vote via Internet or
telephone, or 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.
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(SPACELABS LOGO)
NOTICE OF ANNUAL GENERAL MEETING OF STOCKHOLDERS
MAY 2, 2000
------------------------
To the Stockholder:
The 2000 Annual General Meeting of Stockholders of Spacelabs Medical, Inc.
will be held at the Bellevue Club, 11200 SE 6th Street, Bellevue, Washington on
Tuesday, May 2, 2000, at 10:00 a.m. for the following purposes:
(1) To elect six 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 LLP as auditors for Spacelabs
Medical, Inc. for 2000; and
(3) To transact such other business as may properly come before the
meeting and any adjournment and postponement thereof.
Nominees for directors are named in the enclosed Proxy Statement.
March 6, 2000 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.
To make it easier for you to vote, this year we are introducing Internet
and telephone voting. The instructions attached to your proxy card describe how
to use these convenient new services. Of course, if you prefer, you can vote by
mail by completing your proxy card and returning it in the enclosed postage-paid
envelope.
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 VOTE AS SOON AS
POSSIBLE BY INTERNET OR TELEPHONE, OR 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 GIVEN A PROXY.
By Order of the Board of Directors
/s/ EUGENE V. DEFELICE
Eugene V. DeFelice
Secretary
Redmond, Washington
March 23, 2000
THE 1999 ANNUAL REPORT OF SPACELABS MEDICAL, INC.
ACCOMPANIES THIS PROXY STATEMENT.
<PAGE> 4
2000 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 2000 Annual
General Meeting of Stockholders to be held at 10:00 a.m. on Tuesday, May 2,
2000, at the Bellevue Club, 11200 SE 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 6, 2000 will be entitled to
notice of and to vote at the Meeting. On that date, Spacelabs Medical had
9,510,783 shares of Common Stock issued and 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 NE
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 23, 2000.
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 six 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 LLP as
auditors for Spacelabs Medical for 2000. 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 six 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 six. It is proposed that
six 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, all of whom are currently directors 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 six nominees who receive the
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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
THOMAS J. DUDLEY, D.B.A. Dr. Dudley (age 68) 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 Decision and Information Systems, 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. Dr. Dudley is listed in Who's Who Among America's Teachers for
1998 -- the best teachers in America selected by the best students in America.
Principal Occupation: Distinguished Professor of Decision and Information
Systems, The George L. Graziadio School of Business and Management, Pepperdine
University
HARVEY FEIGENBAUM, M.D. Dr. Feigenbaum (age 66) 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 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
CARL A. LOMBARDI. Mr. Lombardi (age 56) 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 in the research and
development group. He served in various executive positions with Spacelabs
Medical before being appointed President in 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 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 States 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.
ANDREW R. NARA, M.D., PH.D. Dr. Nara (age 53) has served as a member of the
Board since 1998. Dr. Nara has been an Associate Professor of Medicine at Case
Western Reserve University School of Medicine since 1990 and joined its faculty
in 1979. He received a bachelor of science degree in 1969 from the University of
Toledo, and a combined M.D., Ph.D. degree in biomedical engineering in 1976 from
Case Western Reserve University. He has been certified by the American Board of
Internal Medicine since 1981
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and received a subspecialty in adult cardiovascular disease in 1983. Dr. Nara is
a Fellow of the American College of Cardiology, American Heart Association and
American College of Chest Physicians.
Principal Occupation: Associate Professor of Medicine
Case Western Reserve University School of Medicine
PHILLIP M. NUDELMAN, PH.D. Dr. Nudelman (age 64) has served as a director
since June 26, 1992. He is also the Chairman of the Compensation Committee. Dr.
Nudelman has served as Chief Executive Officer and President of Group Health
Cooperative of Puget Sound ("Group Health") since February 1991 and now serves
as Chairman of Kaiser/Group Health. 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 a master of business administration degree and a doctor of philosophy
degree in health systems management from Pacific Western University. He serves
as a member of the Board and is Chair of the American Association of Health
Plans. He currently serves on the Boards of Directors of Pacific Science Center,
United Way, Association for Washington Business, Cell Therapeutics, Inc. and
Franklin Health, Inc. Dr. Nudelman also serves on the Board and is Chair of the
Woodland Park Zoological Society.
Principal Occupation: Chairman, Kaiser/Group Health
PETER H. VAN OPPEN. Mr. van Oppen (age 47) has served as Chairman of the
Board and Chief Executive Officer of Advanced Digital Information Corporation
("ADIC") since its acquisition by Interpoint in 1994, and served as President
from 1994 to 1997. He has served as a Director of ADIC since 1986. He served as
Chairman of the Board of Interpoint from 1995 until its acquisition by Crane Co.
in October 1996. He also served as President and Chief Executive Officer of
Interpoint from 1987 to 1989, and as Executive Vice President for Finance and
Operations of Interpoint from 1985 to 1987. Prior to 1985, Mr. van Oppen worked
as a Consulting Manager at Price Waterhouse LLP and at Bain & Company in Boston
and London. He has additional experience in medical electronics and venture
capital. Mr. van Oppen also serves as a Director of Seattle FilmWorks, Inc. and
Key Technology, Inc. He holds a bachelor of arts degree from Whitman College and
a master of business administration degree from Harvard Business School, where
he was a Baker Scholar.
Principal Occupation: Chairman of the Board and
Chief Executive Officer of Advanced Digital Information Corporation
The Board of Directors met five times in 1999. All directors attended at
least 75% of the meetings of the Board of Directors and its Committees on which
they serve.
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 financial results of Spacelabs
Medical 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. Anderson, a current director. The
Audit Committee met four times in 1999.
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. Nudelman (Chairman) and Drs. Dudley and Nara. In connection with the
establishment of the Company's compensation program for its Directors, Officers
and other executives, the Company is regularly assisted by its
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independent compensation consultant, Frederic W. Cook & Co., Inc. The
Compensation Committee met four times in 1999.
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 1999.
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. They also receive an additional $1,000 for attending each meeting of
the Board of Directors plus $1,000 for attending each meeting of a committee of
the Board of which they are a member, except in the case of telephonic meetings
in which case a nonemployee director receives $500. 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 4,000 shares of Common Stock. Each new
nonemployee director is also eligible to receive an initial automatic grant of
an option to purchase up to 5,000 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 is immediately fully vested. 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.
DIRECTOR STOCK OWNERSHIP GUIDELINES
In October 1998, the Company established guidelines for all nonemployee
directors with respect to the real ownership of Spacelabs Medical securities by
such directors. Under these guidelines, directors are expected to own shares of
the Company's Common Stock in an amount equal to at least four (4) times the
annual retainer paid to any such director. This ownership threshold commences on
the later of five (5) years from (i) the date on which the guidelines shall have
been adopted by the Company and (ii) a director's election to the Board.
OFFICER STOCK OWNERSHIP GUIDELINES
The Company currently has stock ownership guidelines for all officers of
Spacelabs Medical. Under these guidelines, officers are required to own shares
of Spacelabs Medical having a market value equal to 100% of the officer's salary
(150% for Chief Financial Officer and Senior Vice Presidents; 200% for Chief
Executive Officer). Officers must comply with this guideline within five years
from the later of: February 1995, or from the date on which an individual
becomes an officer. Ownership is defined as all shares owned regardless of how
required.
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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 4, 2000, 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) the named executive officers and (iv) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP OUTSTANDING
---------------------- -------------------- -----------
<S> <C> <C>
Dimensional Fund Advisors................................... 697,500(2) 7.35%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Heartland Advisors.......................................... 789,500(3) 8.31%
789 North Water Street
Milwaukee, WI 53202
Mellon Financial Corporation................................ 680,901(4) 7.17%
One Mellon Center
500 Grant Street
Pittsburgh, PA 15258-0001
Tweedy, Browne Company LLC.................................. 841,040(5) 8.86%
and TBK Partners, L.P.
52 Vanderbilt Avenue
New York, NY 10017
Wellington Management Company............................... 581,100(6) 6.12%
75 State Street
Boston, MA 02109
Gilbert W. Anderson......................................... 13,500(7) *
Thomas J. Dudley............................................ 14,000(8) *
Harvey Feigenbaum........................................... 12,463(9) *
Carl A. Lombardi............................................ 821,973(10)(11) 8.10%
Andrew R. Nara.............................................. 14,500(12) *
Phillip M. Nudelman......................................... 12,100(13) *
Peter H. van Oppen.......................................... 21,500(14) *
Eugene V. DeFelice.......................................... 59,278(11)(15) *
Timothy R. Miskimon......................................... 121,915(11)(16) 1.27%
James A. Richman............................................ 89,595(11)(17) *
James E. Roop............................................... 13,618(11)(18) *
Michael Stringer............................................ 28,006(11)(19) *
All directors and executive officers as a group (13
persons).................................................. 1,235,416(20) 11.79%
</TABLE>
- ---------------
* Represents holdings of less than 1%.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission and includes shares over which the
indicated beneficial owner exercises voting and/or investment power. Shares
of Common Stock subject to options currently exercisable, or exercisable
within 60 days, are deemed outstanding for computing the percentage
ownership of the person holding the options but are not deemed outstanding
for computing the percentage ownership of any other person. Except as
indicated, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 697,500 shares, all of
which are held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company (the "Fund"), or in series of the
DFA Investment Trust Company, a Delaware business trust (the "Trust"), or
the DFA Group Trust and DFA Participation Group Trust, investment vehicles
for qualified employee benefit plans, for all of
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which Dimensional serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares. Dimensional has sole power to vote
697,500.
(3) Heartland Advisors has sole power to vote 271,900 shares and to dispose of
789,500 shares.
(4) Mellon Financial Corporation ("Mellon") has the sole power to vote 575,001
shares and to dispose of 621,401 shares. Mellon also has shared power to
dispose of 59,500 shares with Boston Group Holdings, Inc. and the Boston
Company, Inc., both of which are subsidiaries of Mellon.
(5) The members of each of Tweedy, Browne Company LLC ("TBC") and TBK Partners,
L.P. ("TBK") may, by reason of such membership, be deemed to be the
beneficial owner of 841,040 shares in the aggregate. TBC has sole power to
vote 714,447 shares and TBK has sole power to vote 86,200. TBC does not
have sole dispositive power with respect to any of its shares. TBC shares
dispositive power over 754,840 shares, while TBK has sole dispositive power
with respect to all of its shares. Each of TBC and TBK disclaims beneficial
ownership of all such shares. Information is based on Schedule 13D filed by
TBC and TBK on August 16, 1999.
(6) Wellington Management Company has shared power to vote 254,900 shares and
the shared power to dispose of 581,100 shares.
(7) Includes options to purchase 11,500 shares exercisable within 60 days of
February 4, 2000.
(8) Includes options to purchase 12,000 shares exercisable within 60 days of
February 4, 2000.
(9) Includes 163 shares that are owned by Dr. Feigenbaum's wife and options to
purchase 12,000 shares exercisable within 60 days of February 4, 2000.
(10) Includes options to purchase 646,188 shares exercisable within 60 days of
February 4, 2000.
(11) Includes 5,485, 2,753, 1,814, 1,170, 504 and 118 shares held by the 401(k)
trustee, as of February 4, 2000, for Messrs. Lombardi, DeFelice, Richman,
Miskimon, Stringer and Roop respectively.
(12) Represents options to purchase 14,500 shares exercisable within 60 days of
February 4, 2000.
(13) Includes options to purchase 12,000 shares exercisable within 60 days of
February 4, 2000.
(14) Includes options to purchase 6,500 shares exercisable within 60 days of
February 4, 2000.
(15) Includes options to purchase 40,500 shares exercisable within 60 days of
February 4, 2000.
(16) Includes options to purchase 114,000 shares exercisable within 60 days of
February 4, 2000.
(17) Includes options to purchase 79,000 shares exercisable within 60 days of
February 4, 2000.
(18) Includes options to purchase 11,500 shares exercisable within 60 days of
February 4, 2000.
(19) Includes options to purchase 25,002 shares exercisable within 60 days of
February 4, 2000.
(20) Includes options to purchase 987,190 shares exercisable within 60 days of
February 4, 2000 and 14,312 shares held by the 401(k) trustee, as of
February 4, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of Forms 3, 4 and 5 and any amendments
thereto furnished to the Company 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 consists of three non-employee directors,
implements and endorses the goals of the Company's executive compensation
program, which reflect three guiding principles: (i) to provide compensation and
benefits that allow the Company to maintain competitive compensation to attract
and retain executives with the skills critical to the Company's long-term
success, (ii) to reward performance in attaining business objectives and
maximizing stockholder value and (iii) to encourage Company stock ownership
through officer ownership guidelines that are monitored by the Committee on an
ongoing basis.
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An outside compensation consulting firm advises the Committee on all
elements of executive officer compensation. The Committee examines survey data
for positions with similar responsibilities in other medical equipment companies
of similar size. The surveyed companies overlap significantly with companies
included in the peer group index shown in the stock price performance graph.
Total compensation for executive officers is targeted by the Committee at the
median for comparable companies, as is the mix of pay elements, which include
base salaries, annual incentives and long-term incentives in the form of stock
options.
Base Salaries. Individual base salaries reflect historical practice,
internal position relationships, individual performance and relative external
market pay. No specific weight is assigned to these factors. Spacelabs Medical's
Chief Executive Officer is responsible for setting salaries up to $150,000;
salaries over $150,000 are established by the Committee, with strong
consideration given to the recommendation of the Chief Executive Officer. Base
salaries are targeted at the median competitive level. In the case of all
executive officers who were employed at the end of 1999, including the Chief
Executive Officer, salary levels were in the approximate competitive median
range.
Annual Incentives. The Management Incentive Compensation Plan (the "MIC
Plan") is a shareholder approved plan under which annual cash or stock-based
awards may be made to executive officers and other key employees. 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 on
capital employed. The amount of any individual award depends on performance by
the individual against assigned goals. These goals are both quantitative and
subjective, and vary reflecting areas of responsibility, with no specific weight
assigned to any particular goal.
In 1999, the Company exceeded the profitability threshold established for
regular incentive awards under the MIC Plan but did not attain its profit
targets. However, the Committee made awards, based on a recommendation of the
Chief Executive Officer, to certain individuals at up to target levels to
recognize individual contributions related to returning the Company to sustained
profitability and growth, and certain additional grants regarding the Company's
successful launch of the lifeclinic.com Internet initiative and strategic
contributions. A portion of the awards was paid in restricted stock for
employment retention and stock ownership.
Long-Term Incentives. 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. Annual grants of
stock options are made to executive officers and other key employees under the
plan.
Regular annual stock option grants based on median competitive grant
guidelines, and adjusted for individual performance and contributions, were made
to executive officers in February 1999. These grants had five-year option terms,
and the adjustments for individual performance and contributions were determined
discretionarily by the Committee based on recommendations made by the Chief
Executive Officer for grants other than his own.
Compensation of the Chief Executive Officer. There was no change in Mr.
Lombardi's base salary of $440,000, which approximates the competitive median
for comparable companies.
Mr. Lombardi's 1999 annual incentive plan had two components: one for
Company profitability and the other for strategic performance. He received no
annual incentive award for the profitability component because the earnings
threshold established by the Committee for him at the beginning of 1999 was not
met, notwithstanding the fact that the Company returned to profitability in 1999
under Mr. Lombardi's stewardship. With regard to the strategic component of his
annual incentive plan, the Committee set two objectives for him at the start of
1999. They were: (1) operating profit improvement and (2) revenue growth
including backlog improvement. The Committee believes that satisfactory progress
was made on both of these objectives during the year. However, the Committee had
also stipulated a threshold for the strategic component at the beginning of the
year. This threshold was that before Mr. Lombardi could earn any award for
strategic performance, the Company had to achieve a specified total shareholder
return for 1999. The threshold total
7
<PAGE> 11
shareholder return was not exceeded and correspondingly no award was made to Mr.
Lombardi for strategic performance.
Mr. Lombardi received an annual stock option grant in February 1999 of
93,750 options with a 5 year term. This grant approximated the median
competitive range of grant values for comparable companies.
Policy with respect to Section 162(m) Limitations. Section 162(m) of the
Internal Revenue Code of 1986, as amended, 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. 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 such plan. The Compensation
Committee does not believe that there will be any nondeductible compensation for
its executive officers in 2000.
Respectfully submitted,
Phillip M. Nudelman (Chairman)
Thomas J. Dudley
Andrew R. Nara
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 1999, the Company's Chief Executive Officer and the other most highly
compensated executive officers of the Company (the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- -------------------- -------
NAME AND OTHER ANNUAL RESTRICTED STOCK LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) STOCK(2) OPTIONS PAYOUTS COMPENSATION(3)
------------------ ---- -------- ------- --------------- ---------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Carl A. Lombardi 1999 $440,000 -- -- -- 93,750 -- $20,139
Chief Executive 1998 $440,000 -- -- $133,125 125,000 -- $20,785
Officer, 1997 $400,000 -- -- $ 87,000 185,000 -- $13,190
Chairman of the Board
and President
Eugene V. DeFelice 1999 $163,000 $30,000 -- $ 31,500 20,000 -- $13,352
Vice President, General 1998 $151,000 $30,000 -- $ 17,750 30,000 -- $13,903
Counsel and Secretary 1997 $137,000 $30,000 -- $ 21,750 25,000 -- $10,019
Timothy R. Miskimon 1999 $200,000 $30,000 -- $ 15,750 30,000 -- $ 4,392
Sr. Vice President, 1998 $197,000 $30,000 $ 1,846 $ 17,750 40,000 -- $10,336
International 1997 $150,000 $50,000 $ 11,636 $ 21,750 52,000 -- $ 4,055
James A. Richman 1999 $149,000 $20,000 -- $ 31,500 20,000 -- $10,322
Vice President and 1998 $147,000 $20,000 -- $ 17,750 30,000 -- $10,770
Corporate Controller 1997 $144,000 $20,000 -- $ 21,750 34,000 -- $ 9,576
James E. Roop 1999 $180,000 -- $ 38,000(5) $ 31,500 10,000 -- $ 2,349
Vice President 1998 $135,000 $10,000(6) $ 87,411(7) $ 17,750 46,000 -- $ 510
US Monitoring Sales(4) 1997 $ 91,000 -- $ 29,602 $ 21,750 5,000 -- --
Michael Stringer 1999 $175,000 -- $ 25,482 $ 15,750 20,000 -- $15,225
Vice President and 1998 $178,000 -- $ 24,988 $ 17,750 25,000 -- $12,284
General Manager of 1997 $ 27,000(8) $35,000 $ 2,082 -- 20,000 -- $ 249
Specialty Products
</TABLE>
- ---------------
(1) Represents sales commissions earned in each of the years shown.
(2) Recipients of Restricted Stock are recorded as shareholders of the Company
and, subject to the provisions of the 1992 Option, Stock Appreciation Right,
Restricted Stock, Stock Grant and Performance Unit Plan as Amended and
Restated on May 10, 1995, have all the rights of a stockholder with respect
to
8
<PAGE> 12
such shares and receive all dividends or other distributions made or paid
with respect to such shares. Restricted stock is valued at the closing price
quoted on the Nasdaq National Market (the "Nasdaq/ NM") on the date of
grant. At December 31, 1999, Messrs. Lombardi, DeFelice, Miskimon, Richman,
Roop and Stringer held 12,750, 2,875, 3,000, 3,250, 1,750 and 1,000 shares
of restricted stock, respectively, with a value at that date of $236,672,
$53,367, $55,688, $60,328, $32,484 and $18,563, respectively. The Company's
restricted stock vests at the rate of 25% per year, beginning on the first
anniversary of the date of grant.
(3) Includes Spacelabs Medical's contribution to Spacelabs Medical's ISSO 401(k)
Plan during 1999 for Messrs. Lombardi, DeFelice, Miskimon, Richman, Roop and
Stringer of $4,800, $4,800, $3,333, $3,333, $1,946 and $4,711 respectively;
group term life insurance premiums paid by Spacelabs Medical for the same
individuals of $1,800, $403, $1,059, $1,059, $403 and $1,763, respectively;
and the Company's matching contribution on salary deferrals pursuant to the
provisions of the Spacelabs Medical, Inc. Deferred Compensation Plan for Key
Employees for the same individuals of $13,539, $8,149, $0, $5,930, $0 and
$8,751, respectively.
(4) Mr. Roop began serving as Vice President, US Monitoring Sales, effective
November 11, 1998.
(5) Represents relocation bonus paid in 1999.
(6) Represents bonus paid in 1999.
(7) Includes $67,445 sales commissions paid in 1999.
(8) Mr. Stringer became an employee of the Company effective November 3, 1997
earning an initial salary of $175,000 per year.
1999 OPTION/SAR GRANTS AND EXERCISES
The following table provides information on option and stock appreciation
right grants in fiscal year 1999 to the named executive officers.
OPTION/SAR GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT
PERCENT OF ASSUMED ANNUAL RATES OF
TOTAL OPTIONS STOCK PRICE APPRECIATION
GRANTED TO EXERCISE OR FOR OPTION/SAR TERM(3)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION --------------------------
NAME GRANTED(1) IN FISCAL YEAR PER SHARE(2) DATE 5% 10%
---- ---------- -------------- ------------ ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Carl A. Lombardi................ 93,750 18.7% 17.81 2/26/04 $461,603 $1,019,738
Eugene V. DeFelice.............. 20,000 4.0% 17.81 2/26/04 $ 98,475 $ 217,544
Timothy R. Miskimon............. 30,000 6.0% 17.81 2/26/04 $147,713 $ 326,316
James A. Richman................ 20,000 4.0% 17.81 2/26/04 $ 98,475 $ 217,544
James E. Roop................... 10,000 2.0% 17.81 2/26/04 $ 49,238 $ 108,772
Michael Stringer................ 20,000 4.0% 17.81 2/26/04 $ 98,475 $ 217,544
</TABLE>
- ---------------
(1) Options become exercisable in four equal annual installments beginning on
the first anniversary date of the 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 -- Change of Control Arrangements
with Messrs. Lombardi, Richman and DeFelice," 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 or base price per share represents 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 market price of the
stock over the exercise price on the date the option is exercised.
9
<PAGE> 13
With respect to stock options, the realizable values presented above are
based upon assumed compounded growth rates of 5% and 10% over the five-year
term of the option. For example, at an assumed 5% compounded growth rate
over a five-year period, a share of stock originally valued at $17.81 on the
grant date would grow to $22.73 per share, yielding a potential realizable
value of $4.92 per share; at an assumed 10% compounded growth rate, the same
share of stock would appreciate in value to $28.68 per share, yielding a
potential realizable value of $10.87 per share. These amounts are not
intended to forecast possible future appreciation, if any, in the market
price for 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.
No options were exercised in 1999. The following table provides information
on the value of the named executive officers' unexercised options at December
31, 1999.
AGGREGATED OPTION EXERCISES IN 1999 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS/SAR'S OPTIONS AT FISCAL
AT FISCAL YEAR-END YEAR-END(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carl A. Lombardi.............. -- -- 551,500 298,750 $324,001 $70,547
Eugene V. DeFelice............ -- -- 26,000 57,000 $ 4,531 $28,644
Timothy R. Miskimon........... -- -- 93,500 88,500 $ 5,156 $36,169
James A. Richman.............. -- -- 63,000 62,000 $ 4,844 $28,644
James E. Roop................. -- -- 9,000 37,000 $ 26,563 $87,213
Michael Stringer.............. -- -- 16,252 48,748 $ 4,531 $28,644
</TABLE>
- ---------------
(1) Stock options and stock appreciation rights are valued based upon the
closing price of a share of Common Stock as reported on the NASDAQ/NM on
December 31, 1999 ($18.56).
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 December 30, 1994 and ending on
December 31, 1999 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
comparison assumes $100 was invested on December 30, 1994 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.
COMPARISON OF CUMULATIVE SHAREHOLDER RETURN
FOR SPACELABS MEDICAL, INC.,
THE NASDAQ MARKET INDEX AND MEDIA GENERAL INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
12/30/94 12/29/95 12/27/96 12/26/97 12/31/98 12/31/99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Spacelabs Medical,
Inc. $100 $124 $ 90 $ 81 $ 99 $ 80
- --------------------------------------------------------------------------------
Nasdaq Index $100 $130 $161 $197 $278 $490
- --------------------------------------------------------------------------------
Media General Index $100 $164 $174 $199 $258 $245
- --------------------------------------------------------------------------------
</TABLE>
RETIREMENT PLAN
Spacelabs Medical's Retirement Plan, a defined benefit plan, covers the
majority of employees on the active, regular payroll of Spacelabs Medical and
its US subsidiaries. Employees of Spacelabs Burdick do not participate in the
Retirement Plan. 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, reduced as described below. A participant is vested upon
completing five years of service.
11
<PAGE> 15
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 compensation covered by the Retirement Plan corresponds to the salary
and bonus, not in excess of 50% of base salary, disclosed for the following
named executive officers. The credited years of service for Messrs. Lombardi,
DeFelice, Miskimon, Richman, Roop and Stringer as of December 31, 1999 are
32.71, 3.90, 17.46, 15.51, 3.67 and 2.16, 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
($135,000 for 2000) and the amount of annual earnings that may be taken into
account for purposes of calculating benefits under a federal income tax
qualified plan ($170,000 for 2000). 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.
CHANGE OF CONTROL ARRANGEMENTS WITH MESSRS. LOMBARDI, RICHMAN AND DEFELICE
The Corporation has entered into change of control severance agreements
with Carl A. Lombardi, Chief Executive Officer and President; James A. Richman,
Vice President and Corporate Controller and Eugene DeFelice, Vice President,
General Counsel and Secretary (each an "executive officer"). Each agreement
provides that the executive officer will remain employed by the Company for
three years following a change in control of the Corporation and that the
Company will provide the executive officer with similar salary and benefits
during this period as were offered prior to the change of control. If, however,
during the three year post-change of control period, the executive officer's
employment is terminated by the Corporation without cause or by the executive
officer for good reason, the executive officer will receive severance benefits,
including (i) a lump sum payment of the executive officer's accrued salary,
bonus and deferred compensation through the date of termination; (ii) a lump sum
payment of two times (three times in the case of Mr. Lombardi) the executive
officer's annual base salary and bonus; (iii) a lump sum payment equal to the
amount the executive officer would have received under any of the Company's
retirement plans if his employment had continued for the remainder of the three
year post-change of control period; (iv) continued benefits for the executive
officer and his family under the Corporation's retirement and benefit plans for
the remainder of the three year post-
12
<PAGE> 16
change of control period or such longer period as any plan or program may
provide; and (v) a payment to reimburse the executive officer for any excise
taxes on severance benefits that are considered excess parachute payments under
the Internal Revenue Code. Each agreement requires the executive officer not to
use or disclose any of the Corporation's confidential business information. Each
agreement has an initial term of three years, and is automatically renewed on
each anniversary of its execution for an additional year.
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 (a) 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 (b) whichever of the following
applies:
(i) the highest price per share 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 LLP as auditors for Spacelabs Medical for 2000. KPMG LLP has audited the
accounts of Spacelabs Medical for 1999. Representatives of KPMG 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 LLP AS AUDITORS FOR SPACELABS MEDICAL FOR 2000.
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 $4,500 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.
13
<PAGE> 17
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 2001 Annual General Meeting of
Stockholders must be received by the Secretary of Spacelabs Medical by November
24, 2000.
ANNUAL REPORT AND ANNUAL REPORT ON FORM 10-K
A copy of the Spacelabs Medical 1999 Annual Report and of the Annual Report
on Form 10-K for the year ended December 31, 1999 as filed with the Securities
and Exchange Commission is 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, Vice
President, Investor Relations, Spacelabs Medical, Inc., P.O. Box 97013, Redmond,
Washington, 98073-9713, (425) 867-7345.
By Order of the Board of Directors
/s/ Eugene V. DeFelice
------------------
Eugene V. DeFelice
Secretary
Redmond, Washington
March 23, 2000
14
<PAGE> 18
[X] Please mark your |
votes as in this | 5020
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] Nominees for Directors: 2. RATIFICATION OF AUDITORS [ ] [ ] [ ]
Directors 01 Thomas J. Dudley, D.B.A., Approval of KPMG LLP, independent
02 Harvey Feigenbaum, M.D., certified public accountants to
For all except vote withheld 03 Carl A. Lombardi, audit the accountants and records
from the following nominee(s): 04 Andrew R. Nara, M.D., Ph.D., of Spacelabs Medical, Inc. for the
05 Phillip M. Nudelman, Ph.D., the fiscal year ending
06 Peter H. van Oppen December 31, 2000.
______________________________
3. In their discretion, upon such other
matters as may properly come before
the meeting.
</TABLE>
- --------------------------------------------------------------------------------
1. CHANGE OF ADDRESS [ ]
2. COMMENTS ON REVERSE SIDE [ ]
PARTICIPANT_______________________________________________ DATE___________
Please sign names exactly as printed hereon. Joint owners should each sign. If
signing as attorney, administrator, executor, guardian or trustee, give full
title as such.
- --------------------------------------------------------------------------------
[] FOLD AND DETACH HERE []
[SPACELABS MEDICAL LOGO]
PROXY VOTING INSTRUCTION CARD
Your vote is important. Casting your vote in one of the three ways described on
this instruction card votes all common shares of Spacelabs Medical, Inc. that
you are entitled to vote.
Please consider the issues discussed in the proxy statement and cast your vote
by:
[COMPUTER IMAGE] o Accessing the World Wide Web site
http://www.eproxyvote.com/slmd to vote via the
Internet. You can also register at this site to
access future proxy materials electronically.
[TELEPHONE IMAGE] o Using a touch-tone telephone to vote by phone toll
free from the U.S. or Canada. Simply dial
1-877-779-8683 and follow the instructions. When you
are finished voting, your vote will be confirmed and
the call will end.
[LETTER IMAGE] o Completing, dating, signing and mailing the proxy
card in the postage-paid envelope included with the
proxy statement or sending it to Spacelabs Medical,
Inc., c/o First Chicago Trust Company, a division of
EquiServe, P.O. Box 8038, Edison, New Jersey
08818-9335.
You can vote by phone or via the Internet anytime prior to May 2, 2000. You will
need the control number printed at the top of this instruction card to vote by
phone or via the Internet. If you do so, you do not need to mail in your proxy
card.
- --------------------------------------------------------------------------------
<PAGE> 19
PROXY
SPACELABS MEDICAL, INC.
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON MAY 2, 2000
The undersigned hereby constitutes and appoints Carl A. Lombardi and Eugene V.
DeFelice, 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 2, 2000 at
10:00 a.m., 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 (Change of Address/Comments)
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. _____________________________________
------------
SEE REVERSE
SIDE
------------
- --------------------------------------------------------------------------------
[] FOLD AND DETACH HERE[]
SPACELABS MEDICAL, INC.
2000 ANNUAL MEETING OF SHAREHOLDERS
DATE: MAY 2, 2000
TIME: 10:00 A.M. (LOCAL TIME)
PLACE: BELLEVUE CLUB
11200 SE 6th STREET
BELLEVUE, WASHINGTON 98004
- --------------------------------------------------------------------------------
<PAGE> 20
[X] Please mark your |
votes as in this | 6018
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] Authority to vote "FOR" 2. RATIFICATION OF AUDITORS [ ] [ ] [ ]
Directors the following nominees: Authority to vote "FOR"
01 Thomas J. Dudley, D.B.A., ratification of KPMG LLP,
02 Harvey Feigenbaum, M.D., as auditors for the fiscal
For all except vote withheld 03 Carl A. Lombardi, year ending December 31, 2000.
from the following nominee(s): 04 Andrew R. Nara, M.D., Ph.D.,
05 Phillip M. Nudelman, Ph.D.,
______________________________ 06 Peter H. van Oppen
</TABLE>
- --------------------------------------------------------------------------------
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 evaluate
and report your instruction to the Plan's Trustee for voting.
- --------------------------------------------------------------------------------
[] FOLD AND DETACH HERE []
[SPACELABS MEDICAL LOGO]
VOTING INSTRUCTION CARD
Your vote is important. Casting your vote in one of the three ways described on
this instruction card votes all common shares of Spacelabs Medical, Inc. that
you are entitled to vote and gives voting instructions for any common shares
held on your behalf in the Spacelabs Medical, Inc., Incentive Savings and Stock
Ownership Plan.
Please consider the issues discussed in the proxy statement and cast your vote
by:
[COMPUTER IMAGE] o Accessing the World Wide Web site
http://www.eproxyvote.com/slmd1 vote via the
Internet. You can also register at this site to
access future proxy materials electronically.
[TELEPHONE IMAGE] o Using a touch-tone telephone to vote by phone toll
free from the U.S. or Canada. Simply dial
1-877-779-8683 and follow the instructions. When you
are finished voting, your vote will be confirmed and
the call will end.
[LETTER IMAGE] o Completing, dating, signing and mailing the proxy
card in the postage-paid envelope included with the
proxy statement or sending it to Spacelabs Medical,
Inc., c/o First Chicago Trust Company, a division of
EquiServe, P.O. Box 8038, Edison, New Jersey
08818-9335.
You can vote by phone or via the Internet anytime prior to April 28, 2000. You
will need the control number printed at the top of this instruction card to vote
by phone or via the Internet. If you do so, you do not need to mail in your
proxy card.
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<PAGE> 21
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PROXY
SPACELABS MEDICAL, INC.
INSTRUCTIONS FOR ANNUAL GENERAL MEETING OF STOCKHOLDERS, MAY 2, 2000
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 2, 2000, pursuant to instructions received for 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, A DIVISION OF EQUISERVE, NO
LATER THAN CLOSE OF THE BUSINESS DAY ON April 27, 2000.
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 2000, as described in the Spacelabs Medical, Inc. Proxy Statement
dated March 23, 2000. These instructions will also authorize the Trustee to vote
at its discretion on such other matters as may come before the meeting.
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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 2, 2000, 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
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[] FOLD AND DETACH HERE []
SPACELABS MEDICAL, INC.
2000 ANNUAL MEETING OF SHAREHOLDERS
DATE: MAY 2, 2000
TIME: 10:00 A.M. (LOCAL TIME)
PLACE: BELLEVUE CLUB
11200 SE 6th STREET
BELLEVUE,WASHINGTON 98004
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