<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Industrial Scientific Corporation
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO]
ANNUAL MEETING -- JUNE 11, 1997
May 5, 1997
Dear Shareholder:
You are invited to attend the Company's Annual Meeting of shareholders on
Wednesday, June 11, 1997, at 10:00 a.m. in the Company's headquarters
building, 1001 Oakdale Road, Oakdale, Pennsylvania. The building is located at
the Hankey Farms Exit off Route 22/30 West from the Parkway, between downtown
Pittsburgh and the International Airport. It is approximately five miles from
the town of Oakdale.
The enclosed Notice of Annual Meeting and Proxy Statement describe the
various matters to be acted upon during the meeting. Whether or not you plan
to attend the Annual Meeting, you are urged to sign, date and mail the
enclosed Proxy Card as soon as possible in the postage-paid envelope.
Regardless of the number of shares of stock in your holding, it is important
that your shares be represented. If you attend the Annual Meeting, you may
withdraw your proxy and vote in person.
Admission to the meeting will be by Admission Card. If you plan to attend,
please check the box that indicates you plan to attend the meeting before
mailing the Proxy Card. This will enable us to expedite your admittance and
help with the meeting preparations. If your shares are not registered in your
own name and you would like to attend the Annual Meeting, please ask the
broker, trust, bank or other nominee that holds your shares to provide you
with evidence of your share ownership. This will enable you to gain admission
to the meeting.
The Annual Meeting gives us an opportunity to review results, get acquainted
and present other material that may give you more knowledge about the Company.
Your interest in Industrial Scientific Corporation is greatly appreciated. On
behalf of the Directors, Management and Employees, I hope you will be able to
join us on Wednesday, June 11.
Sincerely,
/s/ Kenton E. McElhattan
Kenton E. McElhattan
Chairman of the
Board of Directors
<PAGE>
INDUSTRIAL SCIENTIFIC CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 11, 1997
The 1997 Annual Meeting of the shareholders of Industrial Scientific
Corporation, a Pennsylvania corporation (the "Company'), will be held at the
Company headquarters, Oakdale, Pennsylvania, on Wednesday, June 11, 1997, at
10:00 a.m., Eastern daylight time, for the following purposes:
1. To amend the Company's Articles of Incorporation to remove the
classification of the Board of Directors;
2. To elect five Directors of the Company, each to serve until the
Company's next annual meeting if Proposal 1 above is approved, or to
elect two Directors for a three-year term to expire at the 2000 Annual
Meeting of Shareholders if Proposal 1 above is not approved; and
3. To transact such other business as may properly be brought before
the meeting.
The Board of Directors has fixed the close of business on April 28, 1997, as
the record date for determining shareholders entitled to notice of and to vote
at the Annual Meeting.
A copy of the Company's Annual Report for the year ended January 25, 1997,
is being mailed herewith to each shareholder.
Please sign, date and return the enclosed Proxy Card in the postage-paid and
addressed envelope provided. If you plan to attend, please check the Proxy
Card in the space provided. This will assist us with meeting preparations and
will enable us to expedite your admittance. If your shares are not registered
in your own name and you would like to attend the meeting, please ask the
broker, trust, bank or other nominee which holds your shares to provide you
with evidence of your share ownership, which will enable you to gain admission
to the meeting.
By Order of the Board of Directors
/s/ Patricia L. Gerney
Patricia L. Gerney, Secretary
1001 Oakdale Road
Oakdale, PA 15071
May 5, 1997
<PAGE>
PROXY STATEMENT
This proxy statement is being mailed to the shareholders of Industrial
Scientific Corporation, a Pennsylvania corporation (the "Company"), on or
about May 5, 1997, in connection with the solicitation by the Board of
Directors of the Company (sometimes referred to herein as the "Board") of
proxies to be voted at the Annual Meeting of shareholders to be held at 10:00
a.m., Eastern daylight time, on Wednesday, June 11, 1997, at the Company
headquarters, Oakdale, Pennsylvania, and any adjournments thereof. Proxies are
revocable until exercised, but under Pennsylvania law such revocation is not
effective until notice thereof has been given to the Secretary of the Company
at its principal executive office, 1001 Oakdale Road, Oakdale, Pennsylvania
15071, or at the 1997 Annual Meeting. A copy of the Company's Annual Report to
shareholders for the year ended January 25, 1997, is being furnished with this
proxy statement.
The Board of Directors has fixed the close of business on April 28, 1997, as
the record date (the "Record Date") for determining shareholders entitled to
vote at the meeting.
On the Record Date the Company had outstanding 3,375,087 shares of Common
Stock, par value $.01 per share (the "Common Stock"). Each holder of record of
Common Stock at the close of business on the Record Date is entitled to one
vote for each share held.
VOTE REQUIRED
The Articles of Incorporation of the Company require the affirmative vote of
a majority of the votes cast by all shareholders entitled to vote in order to
approve the amendment to the Articles of Incorporation that will eliminate the
classification of the Board of Directors. Directors are elected by a plurality
of the votes cast by the shareholders.
Abstentions and broker non-votes have no effect on the election of Directors
or on the proposal to amend the Company's Articles of Incorporation. Broker
non-votes as to any matter are shares held by brokers and other nominees which
are voted at the meeting on matters as to which the nominee has discretionary
authority, but which are not voted on the matter in question because the
nominee does not have discretionary voting authority as to such matter.
PROPOSAL NUMBER 1:
AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION
On April 9, 1997, the Board of Directors unanimously approved an amendment
to the Company's Amended and Restated Articles of Incorporation (the
"Amendment") removing the classification of the Board of Directors and
authorized the submission of the Amendment to the Company's shareholders for
their consideration and approval.
Article 6 of the Articles of Incorporation currently provides for
classification of the Directors into three classes, each to be elected to a
three-year term. The Amendment eliminates the provisions of Article 6 relating
to the election of Directors on a classified basis. If the Amendment is
approved, each Director will be elected for a one-year term that expires upon
the election and qualification of such Director's successor at the next
succeeding annual meeting of the shareholders or at such Director's earlier
death, resignation or removal.
In connection with the Company's initial public offering in 1993, the
classified board provision was included in its Articles of Incorporation in an
attempt to provide for a certain continuity and stability in both the
composition of and long-range policies formulated by the Board of Directors.
In addition, the classification of the Board of Directors was viewed as
serving an anti-takeover function.
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While the Board of Directors has not determined that these benefits are not
valid, it believes that it is more important that the Board of Directors be
responsive to and representative of the current views of the shareholders and
that this can more easily be ensured by having the shareholders elect the full
Board of Directors at each annual meeting of shareholders.
If the Amendment is approved, each Director elected at the Annual Meeting of
shareholders will serve until the next annual meeting. Vacancies on the Board
of Directors which occur during the year may be filled by the Board of
Directors, and each person so selected shall hold office until the next Annual
Meeting of shareholders and until said Director's successor has been selected
and qualified or until said Director's earlier death, resignation or removal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL
NUMBER 1, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY
INSTRUCTIONS ARE INDICATED THEREON.
ELECTIONS OF DIRECTORS
The Board of Directors, acting pursuant to the Bylaws of the Company, has
determined that the number of directors constituting the full Board of
Directors shall be five at the present time.
If the proposed Amendment to the Company's Articles of Incorporation is
adopted, the Board of Directors of the Company has nominated five persons for
election as Directors to serve until the next annual meeting of shareholders
and their successors are elected and qualified.
In the event the proposed Amendment is not adopted, the Company's Articles
of Incorporation currently require that the Board of Directors be divided into
three classes as nearly equal in size as possible serving staggered terms of
three years each. As the terms of directors Kent D. McElhattan and James D.
Morton will expire at the 1997 Annual Meeting, the Board of Directors has
nominated them for reelection if the proposed Amendment is not adopted.
Proxies are solicited in favor of these nominees and will be voted for them
unless otherwise specified. If a nominee becomes unable or unwilling to serve
as a Director, it is intended that the proxies will be voted for the election
of such other person, if any, as shall be designated by the Board of
Directors.
NOMINEES FOR DIRECTOR
Set forth below is certain information, including business experience during
the past five years, concerning each of the nominees for Director. Each of the
nominees has agreed to serve if elected.
Kenton E. McElhattan, age 74, has been a Director and Chairman of the Board
of the Company since January 1985. Prior to 1985, he was the Chief Executive
Officer of National Mine Service Company. Kenton E. McElhattan is the father
of Kent D. McElhattan.
Kent D. McElhattan, age 48, has been a Director, President and Chief
Executive Officer of the Company since January 1985. Prior to 1985, he was
Vice President and General Manager of the Industrial Safety Division of
National Mine Service Company, the predecessor to the Company.
Herbert F. Gerhard, age 67, has been a Director of the Company since 1985.
He retired in May 1995 as President and Chief Executive Officer of National
Mine Service Company. He had served in this position since 1985.
James D. Morton, age 69, has been a Director of the Company since 1985. Mr.
Morton has been a shareholder in the law firm of Buchanan Ingersoll
Professional Corporation since 1980.
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Donald J. McGraw, age 53, has been a Director of the Company since 1995. Dr.
McGraw currently serves as Medical Director, Occupational and Environmental
Medicine, and attending physician at Shadyside Hospital in Pittsburgh, PA. He
is also Associate Professor of Occupational and Environmental Medicine, and
Clinical Instructor, Internal Medicine at the University of Pittsburgh School
of Medicine and Public Health, and a member of the Attending Staff. Dr. McGraw
serves as a director for numerous medical and health-related organizations.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THE ABOVE-NAMED NOMINEES. IN THE EVENT PROPOSAL NUMBER 1
ABOVE IS APPROVED BY THE SHAREHOLDERS, PROXIES SOLICITED HEREBY WILL BE VOTED
FOR ALL FIVE NOMINEES UNLESS THE SHAREHOLDERS SPECIFY OTHERWISE IN THEIR
PROXIES. IN THE EVENT PROPOSAL NUMBER 1 ABOVE IS NOT APPROVED BY THE
SHAREHOLDERS, PROXIES SOLICITED HEREBY WILL BE VOTED FOR MESSRS. KENT D.
MCELHATTAN AND JAMES D. MORTON UNLESS THE SHAREHOLDERS SPECIFY OTHERWISE IN
THEIR PROXIES.
ACTIVITIES AND FUNCTIONS OF THE BOARD OF DIRECTORS
During fiscal year 1996 the Board of the Company held four meetings. Each of
the Directors attended all of the meetings of the Board and of committees of
the Board on which he served.
The members of the Audit Committee are Messrs. Kenton E. McElhattan,
Chairman, Herbert F. Gerhard, James D. Morton and Donald J. McGraw. The Audit
Committee's duties include recommending to the Board of Directors the
selection of independent accountants to audit the Company's financial records,
reviewing the overall approach followed by the independent auditors and such
further actions as it deems necessary to insure the integrity of the Company's
published financial statements. The Audit Committee held two meetings during
fiscal year 1996.
The members of the Compensation Committee are Directors James D. Morton,
Chairman, Kenton E. McElhattan, Herbert F. Gerhard and Donald J. McGraw. The
committee's duties are (1) to provide overall guidance for officer
compensation policies; (2) to establish guidelines for the Key Managers
Incentive Plan; and (3) to administer the Company's 1993 Stock Option Plan.
The Compensation Committee held two meetings during fiscal year 1996. Action
was also taken by unanimous consent.
The Company does not have a standing nominating committee. The full Board of
Directors is responsible for the evaluation and recommendation of qualified
nominees, as well as other matters pertaining to Board composition and size.
The Board will give appropriate consideration to persons recommended by
shareholders in accordance with the Company's Bylaws.
Nominations for Directors at the Annual Meeting, other than those made by or
on behalf of the Board of Directors, must be submitted in writing and received
by the Chairman of the Board of Directors of the Company at least 60 days
prior to the anniversary date of the immediately preceding annual meeting
(April 11, 1998, in case of the 1997 Annual Meeting), and must comply with
certain other requirements as set forth in the Bylaws of the Company, a copy
of which may be obtained upon written request to the Secretary of the Company
at 1001 Oakdale Road, Oakdale, Pennsylvania 15071.
BENEFICIAL OWNERSHIP OF EQUITY SECURITIES
The following table sets forth information, as of April 15, 1997, concerning
the number of shares of Common Stock of the Company, including shares of
Common Stock as to which a right to acquire beneficial ownership exists (for
example, through the exercise of stock options, or various trust arrangements)
within the meaning of Rule 13d-3(d)(1) of the Securities Exchange Act, of: (i)
each shareholder known to the Company to
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be the beneficial owner of more than 5% of the outstanding shares of Common
Stock; (ii) each nominee and Director, (iii) all executive officers of the
Company named in the Summary Compensation Table on page 7 hereof (the "Named
Executive Officers") and (iv) all Directors and executive officers as a group.
NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED AS OF APRIL 15, 1997
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES OUTSTANDING
BENEFICIALLY COMMON STOCK
OWNED OWNED(1)
------------ ------------
<S> <C> <C>
Kenton E. McElhattan (2)............................. 1,459,360 43.2%
Florence L. McElhattan (3) .......................... 1,459,360 43.2%
Kent D. McElhattan (4)............................... 1,002,612 30.0%
James P. Hart (5).................................... 3,126 --
Garth F. Miller (6).................................. 2,922 --
Herbert F. Gerhard (7)............................... 1,500 --
James D. Morton (8).................................. 2,000 --
Donald J. McGraw (9)................................. 3,150 --
All Directors and Executive officers as a group (9
persons)............................................ 2,475,540 73.2%
</TABLE>
- --------
1. Percentages of less than 1 percent are omitted.
2. Includes 750,000 shares held by Mr. McElhattan's wife, Florence L.
McElhattan, and 14,400 shares held in the Industrial Scientific Corporation
Foundation, as to which beneficial ownership is disclaimed. Also includes
1,000 shares which would be outstanding upon the exercise of immediately
exercisable stock options.
3. Includes 709,360 shares beneficially owned by Mrs. McElhattan's husband,
Kenton E. McElhattan, as to which beneficial ownership is disclaimed.
4. Includes 1,000 shares owned by Mr. McElhattan's wife, 90,080 shares held by
various family trusts as to which Kent D. McElhattan serves as trustee,
14,400 shares held in the Industrial Scientific Corporation Foundation and
9,280 shares held by two of Mr. McElhattan's children, all as to which Mr.
McElhattan disclaims beneficial ownership. Also includes 2,352 shares which
would be outstanding upon the exercise of immediately exercisable stock
options.
5. Includes 450 shares owned by spouse as to which beneficial ownership is
disclaimed. Also includes 1,576 shares which would be outstanding upon the
exercise of immediately exercisable stock options.
6. Includes 1,200 shares owned by spouse as to which beneficial ownership is
disclaimed. Also includes 1,572 shares which would be outstanding upon the
exercise of immediately exercisable stock options.
7. Includes 500 shares owned by spouse as to which beneficial ownership is
disclaimed. Also includes 1,000 shares which would be outstanding upon the
exercise of immediately exercisable stock options.
8. Includes 1,000 shares which would be outstanding upon the exercise of
immediately exercisable stock options.
9. Includes 1,000 shares which would be outstanding upon the exercise of
immediately exercisable stock options
4
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
James D. Morton, who is a member of the Board of Directors of the Company,
is a shareholder in the law firm of Buchanan Ingersoll Professional
Corporation, Pittsburgh, Pennsylvania, counsel to the Company.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following summary compensation table sets forth the compensation
awarded, accrued or paid for each of the Named Executive Officers as of
January 25, 1997, for services rendered in all capacities during the fiscal
year ended January 25, 1997, and for the previous two years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
----------------- --------------------
AWARDS
-------
STOCK ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) $(1)(2) # (3)($)
--------------------------- ---- -------- -------- ------- ------------
<S> <C> <C> <C> <C> <C>
Kent D. McElhattan............... 1996 $164,920 $258,655 N/A $19,140
Chief Executive Officer 1995 $160,000 $286,494 N/A $20,220
1994 $150,000 $274,769 N/A $28,918
James P. Hart.................... 1996 $119,035 $59,988 N/A $11,350
Chief Financial Officer 1995 $112,075 $58,500 N/A $11,326
1994 $103,700 $54,563 N/A $19,710
Garth F. Miller.................. 1996 $127,675 $63,651 N/A $11,685
Vice President of Sales and
Service 1995 $118,350 $61,755 N/A $11,895
1994 $105,880 $57,357 N/A $21,034
</TABLE>
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(1) Mr. McElhattan's bonus is calculated as a percentage of sales above the
Company's break-even sales level.
(2) Mr. Hart's and Mr. Miller's bonuses are calculated based upon the
Company's increase in gross sales over the prior fiscal year and return on
gross assets.
(3) Includes Company contributions under the Company's Profit Sharing Plan and
premiums on life insurance policies.
OPTION/SAR EXERCISES AND HOLDINGS
The following table presents information with respect to the Named Executive
Officers concerning the exercise of options and/or SARs during the fiscal year
ended January 25, 1997, and unexercised options held by such individuals as of
January 25, 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR
VALUE
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
VALUE REALIZED NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES (MARKET PRICE AT UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON EXERCISE DATE LESS OPTIONS AT FY-END (#) FY-END ($)
NAME EXERCISE (#) OPTION PRICE) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ ------------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Kent D. McElhattan...... 0 0 2,352/588 588/147
James P. Hart........... 0 0 1,576/394 394/98.50
Garth F. Miller......... 0 0 1,572/393 393/98.25
</TABLE>
5
<PAGE>
DIRECTORS' COMPENSATION
Directors who are not officers or employees of the Company receive, for all
services as Directors, remuneration of $5,000 per year plus $500 per meeting
for attendance at committee meetings and regular and special meetings of the
Board, and are reimbursed for their travel expenses for attendance at all such
meetings. Directors who serve as chairman of a committee of the Board receive
an additional $500 annually. In addition, each Director who is not an officer
or employee of the Company is granted options to purchase 1,000 shares of
Common Stock of the Company upon initial election or appointment to the Board.
Directors who are also officers or employees of the Company do not receive
directors' fees or any additional remuneration for so serving.
Mr. Kenton E. McElhattan as Chairman of the Board of Directors received an
annual fee of $96,000 and is provided the use of a Company car.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
OVERALL POLICY
The Compensation Committee of the Board (the "Committee") was established in
May 1993. The Committee is composed entirely of nonemployee directors. It is
responsible for oversight and administration of executive compensation. Its
duties include performing an annual review of the Company's compensation
program. In so doing, the Committee is to take into account achievement of
corporate and individual objectives, and the overall effectiveness of the
program.
ANNUAL COMPENSATION
The Committee reviews and approves base salary levels for each officer by
evaluating the Company and individual performance with input from the Chief
Executive Officer. Historically, the Company has relied upon a Business Plan
submitted by the Chief Executive Officer and the Board of Directors'
collective knowledge of the industry, business of the company and functions
that executives perform in making compensation decisions. In 1996, the base
salary levels for Named Executive Officers, other than the Chief Executive
Officer, were determined by adjusting their 1995 salaries in accordance with
this procedure. Base salary increases were awarded to recognize individual
initiatives and contributions toward the Company's overall strong revenue
levels during fiscal year 1995.
Executive officers are also eligible for annual variable compensation
awards. The awards are based solely on the achievement by the Company of pre-
established performance goals. In 1996, annual bonuses for the Named Executive
Officers were based upon the Company's increase in gross sales and return on
gross assets.
STOCK OPTION PLAN
In May of 1993, the Company adopted its 1993 Stock Option Plan (the "Stock
Option Plan"). The Stock Option Plan permits the grant of incentive stock
options and nonstatutory options. The option price for stock options granted
under the Stock Option Plan may not be less than 100% of the market price on
the date of the grant. Because stock options are not discounted below the
market price, the options provide senior executives the opportunity for only
appreciation in stock price. In connection with the Company's initial public
offering, incentive stock options were issued to all permanent full-time
employees at the initial public offering price. The option grants reflect the
Committee's desire to reward its employees for the success of the Company, to
encourage the Named Executive Officers to remain in the employ of the Company,
and to align their interests with the interests of the Company's shareholders
following the initial public offering. The determination of the
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<PAGE>
number of options awarded was based on the subjective recommendations of
management and the Company's Board of Directors and the judgment of the
Committee as to what was appropriate under the circumstances. Since the
initial public offering, the Committee has granted incentive stock options to
all newly hired full-time employees hired on the first date of their
employment with the Company. No options were granted to any of the Named
Executive Officers in fiscal year 1996.
1996 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The 1996 base salary for the Chief Executive Officer was increased in the
same proportion as the other Named Executive Officers in recognition of the
CEO's contributions to the Company's overall strong revenue levels during
fiscal year 1995 and for leading the Company in its attainment of certain pre-
established goals. The Chief Executive Officer has an Incentive Plan that is
calculated based upon a percentage of sales increase above the break-even
sales level. No changes were made in 1996 to the Incentive Plan for the
President and CEO.
Respectfully submitted by the Compensation Committee of the Board of
Directors.
James D. Morton, Chairman
Herbert F. Gerhard
Donald J. McGraw
Kenton E. McElhattan
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee members are Kenton E. McElhattan, Herbert F.
Gerhard, James D. Morton and Donald J. McGraw. Mr. McElhattan is a former
officer of the Company. Mr. Morton is a shareholder of the law firm of
Buchanan Ingersoll Professional Corporation, which serves as counsel to the
Company.
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COMPANY PERFORMANCE
In accordance with requirements of the Securities and Exchange Commission,
the following line graph presents a comparison of the shareholder returns
(including reinvestment of dividends) with the NASDAQ Market Index and a
market capitalization weighted index of peer companies for a period from June
30, 1993, (the date Company's Common Stock began to publicly trade) to January
25, 1997. The peer company group consists of the following companies:
Safetytek Corp.; Vallen Corporation; Mine Safety Appliance Company;
International Sensor Tech Inc.; and Sentex Sensing Technologies.
COMPARISON OF 43 MONTH CUMULATIVE TOTAL RETURN*
AMONG INDUSTRIAL SCIENTIFIC CORPORATION, THE NASDAQ STOCK MARKET-US INDEX AND
A PEER GROUP
<TABLE>
<CAPTION>
NASDAQ
Measurement period Industrial Scientific Stock Market Peer
(Fiscal year Covered) Corporation U.S. Index Group
<S> <C> <C> <C>
Measurement PT - 6/30/93 $100 $100 $100
FYE 1/31/94 168 114 102
FYE 1/31/95 111 109 100
FYE 1/31/96 95 154 124
FYE 1/31/97 91 201 138
</TABLE>
* $100 INVESTED ON 6/30/93 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS.
8
<PAGE>
AUDITORS
The Board of Directors of the Company, following the recommendation of the
Audit Committee, has selected Coopers & Lybrand L.L.P. as the independent
certified public accountants to examine the financial statements of the
Company and its subsidiaries for fiscal year 1997. One or more representatives
of Coopers & Lybrand L.L.P. will be present at the 1997 Annual Meeting with
the opportunity to make a statement if they desire to do so. It is expected
that such representatives will be available to respond to appropriate
questions.
PROPOSALS OF SECURITY HOLDERS FOR CONSIDERATION AT THE 1998 ANNUAL MEETING OF
SHAREHOLDERS
Shareholder proposals for the 1998 Annual Meeting of the shareholders of the
Company must be submitted to the Company, in care of the Secretary, 1001
Oakdale Road, Oakdale, Pennsylvania 15701, on or before January 3, 1998, in
order to be considered for inclusion in the 1998 proxy statement.
PROXY SOLICITATION
The expenses of soliciting proxies will be paid by the Company, which will
also reimburse banks, brokerage houses and other persons holding stock in
their names, or in the names of nominees, for their expenses in sending proxy
material to principals and obtaining their proxies. Some of the officers and
other regular employees of the Company may solicit proxies personally, by
telephone and by mail if deemed appropriate.
OTHER BUSINESS
As far as is known, no matters other than the matters hereinabove mentioned
will come before the 1997 Annual Meeting. However, if any other matters should
properly come before the 1997 Annual Meeting, it is the intention of the
persons named in the enclosed proxy to vote in accordance with their judgment
for the best interests of the Company.
9
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Industrial Scientific Corporation
1001 Oakdale Road
Oakdale, PA 15071
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF THE SHAREHOLDERS, JUNE 11, 1997
The undersigned hereby appoints James P. Hart and Patricia L. Gerney, and
each or any of them, attorneys and proxies with full power of substitution, to
represent the undersigned and to vote all shares of Industrial Scientific
Corporation (the "Company") which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Company to be held at 1001 Oakdale Road,
Oakdale, Pennsylvania on Wednesday, June 11, 1997, at 10:00 a.m., or at any
adjournments or postponements thereof. The above named proxies are hereby
instructed to vote as shown on the reverse side of this card.
(CONTINUED ON REVERSE SIDE)
<PAGE>
1. Approval of a proposed amendment to the Articles of Incorporation of the
Company (the "Amendment") that will eliminate the classification of the
Board of Directors so that all directors will serve until the next annual
meeting of the shareholders; and
[_] FOR [_] AGAINST [_] ABSTAIN
2. If the Amendment is approved by the shareholders, to elect 5 directors to
serve on the Company's Board of Directors until the next annual meeting and
their successors are duly elected and qualified, or if the Amendment is not
so approved, to elect 2 directors of the Company to serve for 3 year terms,
or in each case until their successors are duly elected and qualified; and
[_] FOR ALL NOMINEES LISTED (EXCEPT AS MARKED TO THE CONTRARY)
[_] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED
NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Kenton E. McElhattan; Kent D. McElhattan;* Herbert F. Gerhard; James D.
Morton;* and Donald J. McGraw.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
This Proxy, when properly executed, will be voted in the manner directed by
the undersigned. If no direction is made, this Proxy will be voted FOR the
Amendment to the Articles of Incorporation and FOR all director nominees.
PLEASE MARK, DATE AND SIGN THIS PROXY BELOW AND RETURN PROMPTLY USING THE
ENCLOSED ENVELOPE.
Dated: , 1997
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Signature
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Signature
NOTE: Please sign exactly as name appears
above. When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. If a corporation,
please sign in full corporation name by
president or other authorized officer. If a
partnership, please sign in partnership name
by authorized person.
If you plan to attend the Annual Meeting, please indicate by checking
this box. [_]
Please mark your votes as indicated in this example. [X]
- -------------------
* If the Amendment is not approved, Messrs. Kent D. McElhattan and James D.
Morton have been nominated to the Class of the Board of Directors whose
term expires at the 2000 Annual Meeting of the Shareholders.
