<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
FORE SYSTEMS, 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: -----------------------------
<PAGE> 2
July 1, 1997
DEAR STOCKHOLDER:
You are cordially invited to attend the 1997
Annual Meeting of Stockholders of FORE Systems, Inc.
(the "Company") to be held on Thursday, July 31,
1997, at 9:30 a.m., at the Company's headquarters
located at 1000 FORE Drive, Warrendale, Pennsylvania
15086-7502. Your Board of Directors and management
look forward to greeting those stockholders able to
attend.
This year you will be asked to elect two Class
I directors and ratify the selection of Price
Waterhouse LLP as independent accountants. We urge
you to read carefully the accompanying Proxy
Statement which describes these proposals. Your
Board of Directors recommends that you vote FOR
these proposals.
Whether or not you plan to attend, you can
ensure that your shares are represented and voted at
the Annual Meeting by promptly completing, signing,
dating and returning the enclosed proxy card in the
envelope provided.
Thank you for your cooperation and continued
support.
Sincerely,
LOGO
Eric C. Cooper
Chairman and
Chief Executive Officer
LOGO
<PAGE> 3
FORE SYSTEMS, INC.
1000 FORE DRIVE
WARRENDALE, PENNSYLVANIA 15086-7502
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JULY 31, 1997
------------------------
The Annual Meeting of Stockholders (the "Annual Meeting") of FORE Systems,
Inc., a Delaware corporation (the "Company"), will be held on Thursday, July 31,
1997, at 9:30 a.m., local time, at the Company's headquarters located at 1000
FORE Drive, Warrendale, Pennsylvania 15086-7502, for the following purposes:
1. To elect two Class I directors to serve for a term of three years
and until their respective successors are duly elected and qualified;
2. To ratify the selection of Price Waterhouse LLP, independent
accountants, to audit the books and accounts of the Company for the year
ending March 31, 1998; and
3. To transact such other business as may properly come before the
Annual Meeting and any and all adjournments and postponements thereof.
The Board of Directors has fixed the close of business on June 13, 1997 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournment or postponement thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying Proxy Statement for further information
with respect to the business to be transacted at the Annual Meeting.
A complete list of the stockholders entitled to vote at the Annual Meeting
will be available during ordinary business hours for examination by any
stockholder, for any purpose germane to the Annual Meeting, for a period of at
least ten days prior to the Annual Meeting, at the offices of the Company, 1000
FORE Drive, Warrendale, Pennsylvania 15086-7502.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOU ARE CORDIALLY
INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. THE RETURN OF THE ENCLOSED PROXY
CARD WILL NOT AFFECT YOUR RIGHT TO REVOKE YOUR PROXY OR TO VOTE IN PERSON IF YOU
DO ATTEND THE ANNUAL MEETING.
By Order of the Board of
Directors,
ROBERT D. SANSOM
Secretary
Warrendale, Pennsylvania
July 1, 1997
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES
YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE IT,
SIGN IT AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING YOUR PROXY PROMPTLY.
<PAGE> 4
FORE SYSTEMS, INC.
1000 FORE DRIVE
WARRENDALE, PENNSYLVANIA 15086-7502
------------------------
PROXY STATEMENT
------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors ("Board") of FORE Systems, Inc., a Delaware
corporation (the "Company"), for use at the Company's 1997 Annual Meeting of
Stockholders (together with any and all adjournments and postponements thereof,
the "Annual Meeting") to be held on Thursday, July 31, 1997, at 9:30 a.m., local
time, at the Company's headquarters located at 1000 FORE Drive, Warrendale,
Pennsylvania 15086-7502, for the purposes set forth in the accompanying Notice
of Annual Meeting of Stockholders (the "Notice"). This Proxy Statement, together
with the accompanying Notice and the enclosed proxy card, are first being sent
to stockholders on or about July 1, 1997.
RECORD DATE; VOTING SECURITIES; VOTING AND PROXIES
The Board has fixed the close of business on June 13, 1997 as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Annual Meeting (the "Record Date"). On the Record Date, there were
98,428,371 shares of Common Stock of the Company, par value $.01 per share
("Common Stock"), outstanding and entitled to vote. Each share of Common Stock
is entitled to one vote per share on each matter properly brought before the
Annual Meeting. Abstentions may be specified as to all proposals to be brought
before the Annual Meeting other than the election of directors.
Shares can be voted at the Annual Meeting only if the stockholder is
present in person or is represented by proxy. If the enclosed proxy card is
properly executed and returned prior to voting at the Annual Meeting, the shares
represented thereby will be voted in accordance with the instructions marked
thereon. In the absence of instructions, shares represented by executed proxies
will be voted as recommended by the Board. Brokers, banks and other nominee
holders will be requested to obtain voting instructions of beneficial owners of
stock registered in their names, and shares represented by a duly completed
proxy submitted by such a nominee holder on behalf of a beneficial owner will be
voted to the extent instructed by the nominee holder on the proxy card. Rules
applicable to nominee holders may preclude them from voting shares held by them
in nominee capacity on certain kinds of proposals unless they receive voting
instructions from the beneficial owners of the shares (the failure to vote in
such circumstances is referred to as a "broker non-vote").
The Board knows of no matters which are to be brought before the Annual
Meeting other than those set forth in the accompanying Notice. If any other
matters properly come before the Annual Meeting, the persons named in the
enclosed proxy card, or their duly appointed substitutes acting at the Annual
Meeting, will be authorized to vote or otherwise act thereon in accordance with
their judgment on such matters.
Any proxy may be revoked at any time prior to its exercise by attending the
Annual Meeting and voting in person, by notifying the Secretary of the Company
of such revocation in writing or by delivering a duly executed proxy bearing a
later date, provided that such notice or proxy is actually received by the
Company prior to the taking of any vote at the Annual Meeting.
The cost of solicitation of proxies for use at the Annual Meeting will be
borne by the Company. Solicitations will be made primarily by mail or by
facsimile, but regular employees of the Company may solicit proxies personally
or by telephone. In addition, the Company has retained D. F. King & Co., Inc.,
at an estimated cost of $5,000, to assist in the solicitation of proxies from
brokers, nominees, institutions and individuals on behalf of the Company.
Arrangements will also be made with custodians, nominees and
<PAGE> 5
fiduciaries for forwarding of proxy solicitation materials to beneficial owners
of shares held of record by such custodians, nominees and fiduciaries, and the
Company will reimburse such custodians, nominees and fiduciaries for reasonable
expenses incurred in connection therewith.
QUORUM; VOTES REQUIRED
The presence at the Annual Meeting, in person or by proxy, of shares of
Common Stock representing at least a majority of the total number of shares of
Common Stock entitled to vote on the Record Date will constitute a quorum for
purposes of the Annual Meeting. Shares represented by duly completed proxies
submitted by nominee holders on behalf of beneficial owners will be counted as
present for purposes of determining the existence of a quorum (even if some such
proxies reflect broker non-votes). In addition, abstentions will be counted as
present for purposes of determining the existence of a quorum.
Under applicable Delaware law, directors are to be elected by a plurality
of the votes of the shares of Common Stock present in person or represented by
proxy at the Annual Meeting. Accordingly, and in accordance with the Company's
Second Amended and Restated By-Laws, the two nominees for election as directors
who receive the highest number of votes actually cast will be elected. Broker
non-votes will be treated as shares that neither are capable of being voted nor
have been voted and, accordingly, will have no effect on the outcome of the
election of directors.
The proposal to ratify the selection of Price Waterhouse LLP to audit the
books and accounts of the Company for the year ending March 31, 1998 requires
the affirmative vote of a majority of the shares present and entitled to vote at
the Annual Meeting. Abstentions will be counted as shares present at the Annual
Meeting and will, thus, increase the minimum number of affirmative votes
necessary to approve this proposal. Because they will not be recorded as votes
in favor of such proposal, however, abstentions will have the effect of votes
against such proposal. Broker non-votes with respect to this proposal will be
treated as shares not capable of being voted on this proposal; accordingly,
broker non-votes will have no effect either on the minimum number of affirmative
votes necessary to approve such proposal or on the outcome of voting on such
proposal.
ELECTION OF DIRECTORS
The Amended and Restated Certificate of Incorporation, as amended, and the
Second Amended and Restated By-Laws of the Company provide that the number of
directors (which is to be not less than three) is to be determined from time to
time by resolution of the Board. The Board is currently comprised of five
persons.
Pursuant to the Company's Amended and Restated Certificate of
Incorporation, as amended, the members of the Board are divided into three
classes, designated Class I, Class II and Class III. Each class is to consist,
as nearly as may be possible, of one-third of the total number of members of the
Board. The term of the Class I directors expires at the Annual Meeting. The
terms of the Class II and Class III directors will expire at the 1998 and 1999
Annual Meetings of Stockholders, respectively. At each Annual Meeting, the
directors elected to succeed those whose terms expire are of the same class as
the directors they succeed and are elected for a term to expire at the third
Annual Meeting of Stockholders after their election and until their successors
are duly elected and qualified. A director of any class who is elected to fill a
vacancy resulting from an increase in the number of directors holds office for
the remaining term of the class to which he is elected and a director who is
elected to fill a vacancy arising in any other manner holds office for the
remaining term of his predecessor.
The two incumbent Class I directors are nominees for election this year for
a three-year term expiring at the 2000 Annual Meeting of Stockholders. In the
election, the two persons who receive the highest number of votes actually cast
will be elected. The proxies named in the proxy card intend to vote for the
election of the two Class I nominees listed below unless otherwise instructed.
If a holder does not wish his or her shares to be voted for a particular
nominee, the holder must identify the exception in the appropriate space
provided on the proxy card, in which event the shares will be voted for the
other listed nominee. If any nominee becomes
2
<PAGE> 6
unable to serve, the proxies may vote for another person designated by the Board
or the Board may reduce the number of directors. The Company has no reason to
believe that any nominee will be unable to serve.
Set forth below is certain information with regard to both of the nominees
for election as Class I directors and each continuing Class II and Class III
director.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------------------------ ------------------------------------------------------------
<S> <C>
Eric C. Cooper, Ph.D.......... Dr. Cooper is a co-founder of the Company and has served as
Age 38 Chairman and Chief Executive Officer and as a director since
April 1990. Dr. Cooper served as President from April 1990
until December 1994. Prior to co-founding the Company, Dr.
Cooper was a faculty member at Carnegie Mellon University.
Dr. Cooper received his Ph.D. in Computer Science from the
University of California at Berkeley in 1985.
Onat Menzilcioglu, Ph.D....... Dr. Menzilcioglu is a co-founder of the Company and has
Age 38 served as a director since April 1990. Dr. Menzilcioglu
served as Vice President, Engineering from June 1990
until December 1994 and has served as President since
December 1994. Prior to co-founding the Company,
Dr. Menzilcioglu was a member of the Computer Science
research faculty of Carnegie Mellon University where
he received his Ph.D. in Computer Engineering in 1988.
</TABLE>
DIRECTORS CONTINUING AS CLASS II DIRECTORS
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------------------------ ------------------------------------------------------------
<S> <C>
Daniel W. McGlaughlin......... Mr. McGlaughlin has served as a director since March 1997.
Age 60 He has served as President and Chief Executive Officer of
Equifax, Inc. (an information services company) since
January 1996. He was elected to the Equifax Board of
Directors in October 1990 and served as Equifax's Senior
Vice President, Information Technology from August 1989 to
January 1991 when he was named Executive Vice President. Mr.
McGlaughlin is also a director of American Business
Products, Inc. (a manufacturer and distributor of specialty
custom-printed information products and services).
Robert D. Sansom, Ph.D........ Dr. Sansom is a co-founder of the Company and has served as
Age 37 a director from April 1990 to December 1992 and since February
1994 and as Vice President, Architecture (a non-officer
position) since April 1997. Dr. Sansom served as Executive
Vice President from the Company's inception in April 1990 to
December 1993, has served as Secretary since 1992 and served
as Vice President, Engineering from December 1993 to April
1997. Prior to co-founding the Company, Dr. Sansom was a
member of the Computer Science research faculty at Carnegie
Mellon University where he received his Ph.D. in Computer
Science in 1988.
</TABLE>
3
<PAGE> 7
DIRECTOR CONTINUING AS A CLASS III DIRECTOR(1)
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- ------------------------------ ------------------------------------------------------------
<S> <C>
John C. Baker................. Mr. Baker has served as a director since December 1992. He
Age 47 founded Baker Capital Corporation (a private equity investment
firm) in September 1995, where he continues to serve as its
President. Until August 1995, he had been a Senior Vice
President of Patricof & Co. Ventures, Inc. (a multi-national
venture capital firm) for more than five years. Mr. Baker is
a director of Intermedia Communications Inc. (a provider of
competitive telecom services), Xpedite Systems, Inc. (a
provider of enhanced facsimile services) and Resource
Bancshares Mortgage Group, Inc. (a correspondent mortgage
bank).
</TABLE>
VOTES REQUIRED
The Class I directors will be elected by a plurality of the votes of shares
present and entitled to vote. Accordingly, the two nominees for election as
directors who receive the highest number of votes actually cast will be elected.
Broker non-votes will be treated as shares that neither are capable of being
voted nor have been voted and, accordingly, will have no effect on the outcome
of the election of directors.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEES FOR
ELECTION AS CLASS I DIRECTORS.
BOARD OF DIRECTORS AND COMMITTEES
The Board met five times during the fiscal year ended March 31, 1997. The
Board has an Executive Committee, an Audit Committee and a Compensation
Committee. The Board does not have a standing Nominating Committee.
The Executive Committee is authorized, subject to Delaware law, to exercise
the power and authority of the Board in the management of the business and
affairs of the Company between meetings of the full Board. The members of the
Executive Committee are Dr. Cooper (Chairman), Dr. Menzilcioglu and Dr.
Sansom.(2)
The Audit Committee is responsible for nominating the Company's independent
accountants for approval by the Board, reviewing the scope, results and costs of
the audit with the Company's independent accountants and reviewing the financial
statements of the Company and the audit function to ensure compliance with
requirements of regulatory agencies and appropriate disclosure of necessary
information to the stockholders of the Company. The members of the Audit
Committee are Messrs. Baker and McGlaughlin.(3) The Audit Committee met four
times during the fiscal year ended March 31, 1997.
The Compensation Committee is responsible for administering compensation
levels of the Company's executive officers, for administering the Company's
Incentive Stock Option and Nonqualified Stock Option Plan ("1992 Stock Option
Plan"), its 1994 Stock Option Plan, its 1995 Stock Incentive Plan, its 1996
Stock Option Plan, its 1994 Employee Stock Purchase Plan, the ALANTEC
Corporation Second Amended and Restated 1991 Stock Option Plan ("ALANTEC 1991
Stock Option Plan") and the ALANTEC Corporation 1994 Stock Option Plan ("ALANTEC
1994 Stock Option Plan") and for recommending other compensation decisions to
the Board. The members of the Compensation Committee are Messrs. Baker and
McGlaughlin.(4) The Compensation Committee held five meetings during the fiscal
year ended March 31, 1997.
- ---------------
1 Mr. Francois J. Bitz resigned as a director of the Company effective as of
June 5, 1997.
2 Mr. Bitz served as a member of the Executive Committee until the effective
date of his resignation from the Board.
3 Mr. Thomas J. Crotty served as a member of the Audit Committee until March
12, 1997, the effective date of his resignation from the Board.
4 Mr. Crotty served as a member of the Compensation Committee until the
effective date of his resignation from the Board.
4
<PAGE> 8
No director attended fewer than 75% of the total number of meetings of the
Board and the meetings of any committee of the Board on which he served during
the fiscal year ended March 31, 1997.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board has selected Price Waterhouse LLP to serve as the Company's
independent accountants for the year ending March 31, 1998. A representative of
Price Waterhouse LLP will be present at the Annual Meeting and will have the
opportunity to make a statement, if such person desires to do so, and to respond
to appropriate questions.
The proposal to ratify the selection of Price Waterhouse LLP will be
approved by the stockholders if it receives the affirmative vote of a majority
of the shares present and entitled to vote on the proposal. If a proxy card is
specifically marked as abstaining from voting on the proposal to approve the
ratification of the selection of Price Waterhouse LLP as independent
accountants, the abstention will have the effect of a vote against the proposal,
even though the shares represented thereby will not be counted as having been
voted against the proposal. Broker non-votes will be treated as shares not
capable of being voted on the proposal and, accordingly, will have no effect on
the outcome of voting on the proposal.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF
PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS.
5
<PAGE> 9
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth information regarding compensation of the
Chief Executive Officer and the five most highly compensated executive officers
of the Company other than the Chief Executive Officer (the "Named Executive
Officers") of the Company for the fiscal years ended March 31, 1997, 1996 and
1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ------------
OTHER ANNUAL STOCK OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS(#) COMPENSATION($)
- ------------------------------ ------- ------- ------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Eric C. Cooper................ 1997 300,000 -- -- 502,000 (1) 12,000 (2)
Chairman and Chief 1996 165,263 90,894 -- -- 6,611 (2)
Executive Officer 1995 132,500 62,937 -- -- 5,300 (2)
Onat Menzilcioglu............. 1997 270,000 -- -- 452,000 (1) 10,800 (2)
President 1996 145,000 79,750 -- -- 5,800 (2)
1995 106,000 50,350 -- -- 4,240 (2)
Francois J. Bitz.............. 1997 170,000 -- -- 302,000 (1) 6,800 (2)
Vice President, Engineering 1996 117,621 64,692 -- -- 4,705 (2)
1995 106,000 50,350 -- -- 4,240 (2)
Robert D. Sansom.............. 1997 170,000 -- -- 302,000 (1) 6,800 (2)
Vice President, Engineering 1996 117,621 64,692 -- -- 4,705 (2)
1995 106,000 50,350 -- -- 4,240 (2)
Thomas J. Gill................ 1997 200,000 -- -- 100,000 (1) 8,000 (2)
Chief Operating Officer, 1996 111,073 61,090 -- -- 4,443 (2)
Chief Financial Officer and 1995 95,400 45,315 -- -- 3,816 (2)
Treasurer
Michael I. Green.............. 1997 200,000 -- -- 100,000 (1) 8,000 (2)
Vice President, Worldwide 1996 140,288 70,421 -- -- 5,122 (2)
Sales 1995 106,000 50,350 -- -- 4,240 (2)
</TABLE>
- ---------
(1) On May 6, 1996, the Board declared a two-for-one Common Stock split effected
in the form of a Common Stock dividend paid on June 3, 1996 to stockholders
of record on May 20, 1996 ("Stock Dividend"). Common Stock share data
presented in this table has been retroactively adjusted to give effect to
the Stock Dividend.
(2) Consists of a discretionary contribution by the Company under the Company's
401(k) plan.
6
<PAGE> 10
SUBSEQUENT EVENT
On April 1, 1997, each of Mr. Bitz and Dr. Sansom resigned his position as
Vice President, Engineering. Mr. Bitz was named to the non-officer position of
Vice President, Advanced Product Development. In this position, Mr. Bitz will be
responsible for conducting research and development activities for the Company
with regard to the hardware components of Asynchronous Transfer Mode ("ATM")
computer networking equipment. Dr. Sansom was named to the non-officer position
of Vice President, Architecture. In this position, Dr. Sansom will be
responsible for conducting research and development activities for the Company
with regard to the software components of ATM computer networking equipment.
STOCK OPTION GRANTS
The following table sets forth certain information with respect to the
individual grants of stock options made to the Named Executive Officers during
the fiscal year ended March 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- -------------------------------------------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES
NUMBER OF TOTAL STOCK OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM (5)
STOCK OPTIONS EMPLOYEES EXERCISE PRICE EXPIRATION ------------------------
NAME GRANTED (#)(1) IN FISCAL YEAR ($/SHARE)(4) DATE 5%($) 10%($)
- ------------------------- -------------- -------------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Eric C. Cooper........... 500,000 (2) 7.70 33.3750 4/18/2006 10,494,500 26,595,500
2,000 (3) 0.03 33.6250 8/15/2006 42,292 107,178
Onat Menzilcioglu........ 450,000 (2) 6.93 33.3750 4/18/2006 9,445,050 23,935,950
2,000 (3) 0.03 33.6250 8/15/2006 42,292 107,178
Francois J. Bitz......... 300,000 (2) 4.62 33.3750 4/18/2006 6,296,700 15,957,300
2,000 (3) 0.03 33.6250 8/15/2006 42,292 107,178
Robert D. Sansom......... 300,000 (2) 4.62 33.3750 4/18/2006 6,296,700 15,957,300
2,000 (3) 0.03 33.6250 8/15/2006 42,292 107,178
Thomas J. Gill........... 100,000 (2) 1.54 33.3750 4/18/2006 2,098,900 5,319,100
Michael I. Green......... 100,000 (2) 1.54 33.3750 4/18/2006 2,098,900 5,319,100
</TABLE>
- ---------
(1) Common Stock share data presented in this table has been retroactively
adjusted to give effect to the Stock Dividend.
(2) Granted on April 18, 1996, vesting as to 25% of the option grant on the
first anniversary thereof and at the end of each quarter thereafter as to an
additional 6.25% of such option grant.
(3) Granted on August 15, 1996 to members of the Board as an annual stock option
award; vests as to 100% on the grant date.
(4) Exercise price data presented in this table has been retroactively adjusted
to give effect to the Stock Dividend.
(5) Amounts represent potential gains at the assumed rates of appreciation if
the options are exercised at the end of the option term. The assumed 5% and
10% rates of stock price appreciation are provided in accordance with the
Rules of the Securities and Exchange Commission (the "Commission") and do
not represent the Company's estimate or projection of future stock price
appreciation.
7
<PAGE> 11
STOCK OPTION EXERCISES/FISCAL YEAR-END STOCK OPTION VALUES
The following table sets forth certain information with respect to the
exercise of options by the Named Executive Officers during the fiscal year ended
March 31, 1997 and the value of options held at that date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END(#)(1) FISCAL YEAR-END($)(1)(3)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE(#)(1) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Gill......... 70,000 2,275,050 168,750 156,250 2,387,813 773,438
Michael I. Green....... 172,500 4,821,062 131,250 171,250 1,871,484 979,453
</TABLE>
- ---------
(1) Common Stock share data presented in this table has been retroactively
adjusted to give effect to the Stock Dividend.
(2) Based upon the market price of the purchased shares on the exercise date
less the option exercise price per share paid for such shares.
(3) Represents the difference between the closing price of the Common Stock as
reported on the Nasdaq National Market on March 31, 1997 ($15.00) and the
exercise price of the options, multiplied by the number of shares of Common
Stock issuable upon exercise of the options.
ARRANGEMENTS REGARDING TERMINATION OF EMPLOYMENT
The Company has entered into non-competition agreements with Dr. Cooper,
Dr. Menzilcioglu, Mr. Bitz and Dr. Sansom. Pursuant to the terms of each
agreement, if the employment of a party is terminated for any reason, the
Company may exercise an option to prevent him from engaging in any business
involving the development, production, testing, sale or servicing of local area
ATM networking products in North America for a period of one year after his
termination. If the Company exercises such option, it must pay the terminated
party twelve monthly payments, each equal to his monthly salary at the time of
termination. Each of such non-competition agreements expires on December 21,
1997.
On April 18, 1996, the Board adopted the FORE Systems, Inc. Change in
Control Separation Plan ("Change in Control Separation Plan") wherein each Named
Executive Officer is eligible to receive from the Company certain separation
benefits if a change in control occurs and if, within two years thereafter, the
Named Executive Officer's employment with the Company is terminated either by
action of the Company without cause or by the Named Executive Officer's
resignation from employment for good reason as defined in the Change in Control
Separation Plan. Such separation benefits include payment of one year of base
salary and bonus plus a prorated bonus payment for that portion of the year of
termination for which the Named Executive Officer was employed, provision of
welfare benefits for the Named Executive Officer and his family for three years
and acceleration of vesting of stock options that would have vested within
eighteen months after the date of the Named Executive Officer's termination of
employment.
A "change in control" is deemed to occur under the Change in Control
Separation Plan upon any of the following events: (i) an individual, entity or
group (as specified in the Change in Control Separation Plan) acquires, other
than from the Company, beneficial ownership of 30% or more of the then
outstanding shares of Common Stock or voting power of the Company's then
outstanding securities; (ii) individuals (a) who, as of the effective date of
the Change in Control Separation Plan, constitute the Board (the "Incumbent
Board") or (b) whose nomination or election to the Board is approved by a
majority of the directors then comprising the Incumbent Board, cease to
constitute at least a majority of the Board; (iii) a reorganization, merger or
consolidation of the Company (a "Business Combination") other than one in which
the beneficial owners of
8
<PAGE> 12
the Company's Common Stock or voting securities own more than 50% of the shares
of Common Stock or voting securities of the surviving or resulting entity in
substantially the same proportion as their ownership of the Company's Common
Stock or voting securities immediately prior to the Business Combination; or
(iv) (a) the consummation of a complete liquidation or dissolution of the
Company or (b) the disposition of all or substantially all of the assets of the
Company other than to a corporation of which the beneficial owners of the
Company's Common Stock or voting securities immediately prior to such
disposition own more than 50% of the shares of Common Stock or voting securities
in substantially the same proportion as their ownership of the Company's Common
Stock or voting securities immediately prior to such disposition.
COMPENSATION OF DIRECTORS
During the fiscal year ended March 31, 1997, with the exception of Mr.
McGlaughlin, directors did not receive compensation for serving as members of
the Board or committees thereof. Mr. McGlaughlin's yearly compensation for
service on the Board and the committees to which he has been elected was
established at $30,000 for the fiscal year ended March 31, 1997. This annual
compensation was payable on a pro rata basis for Mr. McGlaughlin's service from
the date of his election to the Board on March 12, 1997 through the remainder of
the fiscal year ended March 31, 1997. Directors are reimbursed for travel and
other expenses relating to attendance at meetings of the Board or committees
thereof.
Pursuant to the Company's 1996 Stock Option Plan, each person who is a
director immediately preceding each annual meeting of the stockholders of the
Company receives a nonqualified option to purchase 2,000 shares of Common Stock.
Each such award is immediately exercisable in full. In addition, pursuant to the
1996 Stock Option Plan, Mr. McGlaughlin was granted an option to purchase 10,000
shares of Common Stock upon his election to the Board in March 1997. Such option
grant vests in three annual installments of 3,334, 3,333 and 3,333 shares,
beginning on the first anniversary of the date of grant, provided that the
optionee continues to serve as a member of the Board on each such anniversary
date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Baker and Crotty served as members of the Compensation Committee
from April 1, 1996 through March 12, 1997, the effective date of Mr. Crotty's
resignation from the Board. Thereafter, Messrs. Baker and McGlaughlin served as
members of the Compensation Committee for the remainder of the fiscal year ended
March 31, 1997.
9
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of May 30, 1997 held (i) by each
person who is known by the Company to have been the beneficial owner of more
than five percent of the Company's Common Stock on such date, (ii) by each
director and Named Executive Officer of the Company and (iii) by all directors
and executive officers of the Company as a group (based on 98,312,974 shares of
Common Stock outstanding as of such date).
<TABLE>
<CAPTION>
SHARES OWNED BENEFICIALLY
-----------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ---------------------------------------------------------- --------- -------
<S> <C> <C> <C>
Eric C. Cooper............................................ 3,370,526 (1)(2) 3.4
Onat Menzilcioglu......................................... 3,216,231 (3)(4) 3.3
Francois J. Bitz.......................................... 3,536,950 (5)(16) 3.6
Robert D. Sansom.......................................... 3,645,186 (6)(7)(16) 3.7
John C. Baker............................................. 97,000 (8) *
Daniel W. McGlaughlin..................................... 2,000 *
Thomas J. Gill............................................ 247,950 (9)(10) *
Michael I. Green.......................................... 431,831 (11)(12) *
Pilgrim Baxter & Associates, Ltd.,........................ 5,419,300 (13) 5.5
Harold J. Baxter and Gary L. Pilgrim
1255 Drummers Lane, Suite 300
Wayne, Pennsylvania 19087-1590
Chancellor LGT Asset Management, Inc.,.................... 5,843,350 (14) 5.9
Chancellor LGT Trust Company and
LGT Asset Management, Inc.
1166 Avenue of the Americas
New York, New York 10036
All directors and executive officers as a group (8 14,547,674 (15)(16) 14.8
persons)................................................
</TABLE>
- ---------
* Less than 1%
(1) Includes 548,420 shares owned by Dr. Cooper's spouse and 258,140 shares
owned by trusts of which Dr. Cooper's spouse is trustee and his children
are beneficiaries. Dr. Cooper disclaims beneficial ownership of all such
shares.
(2) Includes 158,250 shares which could be acquired pursuant to the exercise of
stock options exercisable within 60 days of May 30, 1997.
(3) Includes 40,000 shares owned by Dr. Menzilcioglu's spouse. Dr. Menzilcioglu
disclaims beneficial ownership of all such shares.
(4) Includes 142,625 shares which could be acquired pursuant to the exercise of
stock options exercisable within 60 days of May 30, 1997.
(5) Includes 95,750 shares which could be acquired pursuant to the exercise of
stock options exercisable within 60 days of May 30, 1997.
(6) Includes 599,430 shares owned by Dr. Sansom's spouse. Dr. Sansom disclaims
beneficial ownership of all such shares.
(7) Includes 95,750 shares which could be acquired pursuant to the exercise of
stock options exercisable within 60 days of May 30, 1997.
10
<PAGE> 14
(8) Includes 2,000 shares which could be acquired pursuant to the exercise of
stock options exercisable within 60 days of May 30, 1997.
(9) Includes 1,200 shares owned by Mr. Gill's children. Mr. Gill disclaims
beneficial ownership of all such shares.
(10) Includes 218,750 shares which could be acquired pursuant to the exercise of
stock options exercisable within 60 days of May 30, 1997.
(11) Includes 20,000 shares owned by Mr. Green's spouse, 200 shares owned by Mr.
Green's spouse as custodian for his grandson and 3,900 shares owned by Mr.
Green as custodian for his children. Mr. Green disclaims beneficial
ownership of all such shares.
(12) Includes 205,625 shares which could be acquired pursuant to the exercise of
stock options exercisable within 60 days of May 30, 1997.
(13) Based on information contained in a Schedule 13G filed by Pilgrim Baxter &
Associates, Ltd. with the Commission on or about March 12, 1997.
(14) Based on information contained in Amendment No. 1 to a Schedule 13G filed
by Chancellor LGT Asset Management, Inc., Chancellor LGT Trust Company and
LGT Asset Management, Inc. with the Commission on or about February 7,
1997. Chancellor LGT Asset Management, Inc. and Chancellor LGT Trust
Company are investment advisers and providers of investment management
services to investment companies and institutional investors. LGT Asset
Management, Inc. is the holding company for Chancellor LGT Asset
Management, Inc.
(15) Includes 918,750 shares which could be acquired pursuant to the exercise of
stock options exercisable within 60 days of May 30, 1997.
(16) Effective as of April 1, 1997, Mr. Bitz and Dr. Sansom ceased to be
executive officers of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee administers the Company's 1992 Stock Option
Plan, its 1994 Stock Option Plan, its 1995 Stock Incentive Plan, its 1996 Stock
Option Plan and its 1994 Employee Stock Purchase Plan, as well as the ALANTEC
1991 Stock Option Plan and the ALANTEC 1994 Stock Option Plan, which were
assumed by the Company pursuant to its acquisition of ALANTEC Corporation in
February 1996. The Compensation Committee also recommends to the Board salaries,
bonuses, benefits and other remuneration payable to the executive officers and
key employees of the Company. The members of the Compensation Committee are John
C. Baker and Daniel W. McGlaughlin, neither of whom is employed by the Company.
In the 1997 fiscal year, the Company had six executive officers, four of
whom (including the Chief Executive Officer) are founders of the Company and
were members of the Board. Each of the founders owns a significant percentage of
the Company's Common Stock and, therefore, each of them participates
proportionately in any increase in stockholder value. During the 1997 fiscal
year, the executive officers of the Company were each granted stock options to
provide an additional incentive to contribute to the future success of the
Company. These stock option grants represented initial grants for the founders
and replacement grants for the other two executive officers.
The Compensation Committee believes that the salaries paid to the Company's
executive officers (including the Chief Executive Officer) are generally lower
than salaries paid to the executive officers of other companies in the
networking industry. The Company's compensation philosophy has been to attempt
to align employees' interests with stockholders' interests through equity
ownership.
In April 1996, the Compensation Committee adopted a Senior Management Bonus
Plan for the 1997 fiscal year which would reward the Company's executive
officers with bonus payments if certain revenue and individual performance
objectives were achieved. Under the Senior Management Bonus Plan, no bonus pool
would be available unless specific revenue objectives were met for the fiscal
year. If these objectives were met,
11
<PAGE> 15
then, at the conclusion of the fiscal year, a bonus pool of 25% of each
executive officer's base salary would become available, and for each $1 million
by which the revenue objective was exceeded, an additional .75% of base salary
would become available, up to a maximum of 100% of base salary for each
executive officer. Because the Company did not meet the established revenue
objective for the 1997 fiscal year, no bonuses were paid to the Company's
executive officers under the Senior Management Bonus Plan.
The Company does not maintain benefit plans exclusively for its executive
officers, nor does it provide executive officers with other benefits that are
not generally available to all of the Company's employees.
The Compensation Committee has considered the potential impact of Section
162(m) of the Internal Revenue Code of 1986, as amended, which imposes a limit
on tax deductions for annual compensation in excess of $1,000,000 paid to its
chief executive officer and its four other most highly compensated executive
officers. The Committee does not believe that this limitation will apply to the
Company in the foreseeable future because the 1995 Stock Incentive Plan and the
1996 Stock Option Plan have been designed to qualify options awarded to
executive officers under these plans as "performance based" compensation that is
excluded from the calculation of the $1,000,000 limitation, and the Committee
does not expect the base salaries and bonuses of the Chief Executive Officer and
the other executive officers to exceed the $1,000,000 level.
JOHN C. BAKER DANIEL W. MCGLAUGHLIN
12
<PAGE> 16
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE MAY 23, 1994
The following graph shows the cumulative total stockholder return on the
Common Stock from May 23, 1994 (the last trading day before the date of the
Company's initial public offering) through March 31, 1997, as compared to the
returns of the Total Return Index for The Nasdaq Stock Market (US) and the
Nasdaq Computer Manufacturer Stocks Index. The graph assumes that $100 was
invested in the Common Stock of the Company and in the Total Return Index for
The Nasdaq Stock Market (US) and the Nasdaq Computer Manufacturer Stocks Index
as of May 23, 1994, and assumes reinvestment of dividends.
<TABLE>
<CAPTION>
TOTAL RETURN NASDAQ
INDEX FOR COMPUTER
MEASUREMENT PERIOD FORE SYSTEMS, THE NASDAQ STOCK MANUFACTURER
(FISCAL PERIOD COVERED) INC. MARKET (US) STOCKS INDEX
----------------------- ------------- --------------- -----------
<S> <C> <C> <C>
5/23/94 100.00 100.00 100.00
9/30/94 278.13 105.89 113.71
3/31/95 493.75 114.13 137.74
9/29/95 462.50 146.26 201.52
3/29/96 893.75 154.95 212.14
9/30/96 1034.38 173.56 263.31
3/31/97 375.00 172.23 232.44
</TABLE>
<TABLE>
<CAPTION>
5/23/94 9/30/94 3/31/95 9/29/95 3/29/96 9/30/96 3/31/97
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
FORE Systems, Inc. 100.00 278.13 493.75 462.50 893.75 1,034.38 375.00
Total Return Index for
The Nasdaq Stock Market (US) 100.00 105.89 114.13 146.26 154.95 173.56 172.23
Nasdaq Computer Manufacturer
Stocks Index 100.00 113.71 137.74 201.52 212.14 263.31 232.44
</TABLE>
13
<PAGE> 17
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 1998 ANNUAL MEETING
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended (the "Act"), stockholders may present proper proposals for inclusion in
the Company's proxy statement and for consideration at the next Annual Meeting
of Stockholders by submitting such proposals to the Company in a timely manner.
In order to be so included for the 1998 Annual Meeting, stockholder proposals
must be received by the Company at its offices at 1000 FORE Drive, Warrendale,
Pennsylvania 15086-7502 no later than March 2, 1998, and must otherwise comply
with the requirements of Rule 14a-8.
The Company's Second Amended and Restated By-Laws provide that advance
notice of stockholder-proposed business to be brought before an Annual Meeting
of Stockholders and of nominations for election as directors must be given to
the Secretary of the Company not less than 60 days in advance of the date of the
Annual Meeting. To propose business for an Annual Meeting, a stockholder must
specify in writing the business desired to be brought before the Annual Meeting
and the reasons for conducting such business at the Annual Meeting, the
proposing stockholder's name and address, the class and number of shares
beneficially owned by the stockholder and any material interest of the
stockholder in such business. The Company's Second Amended and Restated By-Laws
also provide that a stockholder may request that persons be nominated for
election as directors by submitting such request, together with the written
consent of the persons proposed to be nominated, to the Secretary of the Company
not less than 60 days prior to the date of the Annual Meeting. To be in proper
form, the nominating stockholder must set forth in writing, as to each proposed
nominee, the nominee's age, business address, residence address, principal
occupation or employment, number of shares of Common Stock of the Company
beneficially owned by such person and such other information related to such
person as is required to be disclosed by applicable law, and, as to the
stockholder submitting the request, such stockholder's name and address as they
appear on the Company's books and the number of shares of Common Stock of the
Company owned beneficially by such person. The Company may require any proposed
nominee to furnish such other information as may reasonably be required by the
Company to determine the eligibility of such proposed nominee to serve as a
director of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Act, the Company's directors, officers and
persons who are directly or indirectly the beneficial owners of more than 10% of
the Common Stock of the Company are required to file with the Commission, within
specified monthly and annual due dates, a statement of their initial beneficial
ownership and all subsequent changes in ownership of Common Stock. Rules of the
Commission require such persons to furnish the Company with copies of all
Section 16(a) forms they file. Based solely upon a review of such forms, the
Company believes that, during fiscal 1997, except for Michael I. Green who filed
one late report on Form 5 relating to two gifts to members of his family, all
such persons complied with all applicable filing requirements.
FORM 10-K
STOCKHOLDERS MAY OBTAIN A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 1997, AS FILED WITH THE
COMMISSION, WITHOUT CHARGE, BY WRITING TO OR CALLING: INVESTOR RELATIONS, FORE
SYSTEMS, INC., 1000 FORE DRIVE, WARRENDALE, PENNSYLVANIA 15086-7502, (412)
742-4444.
14
<PAGE> 18
PROXY
FORE SYSTEMS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
JULY 31, 1997
The undersigned stockholder of FORE Systems, Inc. (the "Company")
hereby appoints Eric C. Cooper and Onat Menzilcioglu, and each of them, as the
attorneys and proxies of the undersigned, with full power of substitution, to
vote all shares of Common Stock, par value $.01 per share, of the Company which
the undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company, to be held at the Company's
headquarters located at 1000 FORE Drive, Warrendale, Pennsylvania 15086-7502 on
Thursday, July 31, 1997, commencing at 9:30 a.m., local time, and at any
adjournment or postponement thereof, as follows:
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
FOLD AND DETACH HERE
<PAGE> 19
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS CLASS I
DIRECTORS OF BOTH NOMINEES LISTED AND FOR PROPOSAL 2.
<TABLE>
<S> <C> <C>
PROPOSAL 1. Election of Class I Directors PROPOSAL 2. To ratify the selection of Price In their discretion, the proxy
Waterhouse LLP, independent holders are authorized to vote
FOR accountants, to audit the books upon such other matters as may
Both Nominees WITHHOLD and accounts of the Company for properly come before the meeting.
Listed (except those AUTHORITY the year ending March 31, 1998.
for whom authority to Vote for
is being withheld) Both Nominees FOR AGAINST ABSTAIN
[ ] [ ] [ ]
[ ] [ ]
NOMINEES: Eric C. Cooper and Onat Menzilcioglu
(To withhold authority to vote for either nominee,
write the name of the nominee below.)
__________________________________________________
</TABLE>
UNLESS OTHERWISE SPECIFIED, THE SHARES OF COMMON STOCK REPRESENTED
HEREBY WILL BE VOTED "FOR" THE ELECTION AS CLASS I DIRECTORS
OF BOTH NOMINEES LISTED AND "FOR" PROPOSAL 2.
Dated: __________________________________________________, 1997
_______________________________________________________________
Signature of Stockholder
_______________________________________________________________
Signature of Stockholder
NOTE: Please sign this proxy exactly as name(s) appear on your stock
certificate. When signing as attorney-in-fact, executor, administrator,
trustee or guardian, please add your title as such, and if signing as a
corporation, please sign with full corporate name by a duly authorized
officer or officers and affix the corporate seal. Where stock is issued
in the name of two (2) or more persons, all such persons should sign.
IMPORTANT: PLEASE SIGN, DATE AND RETURN PROMPTLY.
FOLD AND DETACH HERE
