<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[ ]
Filed by a Party other than the Registrant[X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to ss. 240.14a-11(c) or
ss. 240.14a-12
Detection Systems, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Ultrak, Inc.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------
<PAGE>
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:
------------------------------------------------------------------
[ ] 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>
Ultrak Announces Third Quarter Results
Investment Bank to Be Selected to Facilitate Review of
Strategic Alternatives Including Sale of the Company
LEWISVILLE, Texas, Nov. 13 -- Ultrak, Inc. (Nasdaq: ULTK - news) today announced
sales of $47,265,151 for the third quarter ended September 30, 2000, compared to
$51,281,007 in the same period last year. Third quarter revenues reflect the
absence of Intervision (UK) which was sold last quarter, as well as the sharp
drop in the Euro. Adjusting for these items, revenues were up slightly year over
year. The Company's forward works list of new projects is now growing steadily
and response to its new products at the two largest security shows, recently
held in the U.S. and Europe, were the best Ultrak has experienced.
Gross profit margins were 29.7% compared to 30.9% in the previous quarter and
32.9% in the third quarter of 1999. This decline in gross profit is primarily
driven by slower system sales and the adverse impact of the weaker Euro. Even
though new systems started to ship, the sales levels are in the infancy of their
launch and did not have a material impact. At the same time, the drop in the
Euro hurt a great deal since many of Ultrak's product purchases are denominated
in U.S. dollars.
Operating loss for the third quarter of 2000 was ($2,278,459) before special
charges of ($1,361,241) compared to profits of $1,397,824 in the third quarter
of 1999 and $675,604 in the second quarter of this year. The greatest
contributor to the loss was in Europe. Operations before income taxes resulted
in a loss of ($4,589,760) compared to $1,536,421 in the same period last year
and a $138,332 in the second quarter of this year. Basic and diluted earnings
(loss) per share from continuing operations for the third quarter of 2000 were
($0.33) on 11,709,514 weighted average shares outstanding, compared to $0.07 on
12,226,365 weighted average shares in the third quarter of 1999 and $0.00 in the
second quarter of this year.
The special charges of $1,361,241 were split between costs associated with the
severance of management personnel and legal fees incurred with respect to the
Detection Systems proxy contest.
Cutting Costs and Regaining Profitability
Aggressive steps to cut operating costs are underway. Ultrak plans to reduce
costs (excluding depreciation and amortization) by 13% in 2001 compared to this
year. Most of the reductions will be made before year-end. Capital expenditures
will be much less than depreciation and amortization charges next year, thus
generating cash in excess of earnings. Inventory levels will be further reduced.
The new management team is streamlining and consolidating operations at every
level. However, in an effort to capitalize on a strong product line, outside
sales positions are being increased, an outbound telemarketing sales program is
being established and product management is being strengthened.
A new five-year plan is being developed that begins with establishing a new base
line of profitable operations at current revenue levels and then building from
there. Management believes this is a strong and achievable plan and is valid
whether the Company is acquired or
<PAGE>
remains independent. "As you might suppose, companies we are talking with are
very interested in this plan," stated George Broady, Chairman and CEO of Ultrak,
Inc.
Detection Systems Inc. Shareholdings
Ultrak currently owns 21% of publicly traded Detection Systems Inc. (Nasdaq:
DETC - news) and is by far the largest single shareholder. Despite this fact,
Detection Systems denied Ultrak's request for a board seat and, as a result,
Ultrak was unable to express its views of what might be in the best interest of
all shareholders. Two members of management had extraordinarily rich golden
parachutes in relation to the size of DETC, which would reduce the value of the
company's shares in the event of a change in control of sale of DETC. Ultrak has
filed a lawsuit challenging this and, on the eve of oral arguments before a
court, the golden parachutes were amended by Detection Systems.
Ultrak has continually tried to realize the enterprise value of the stock it
holds through the sale of Detection Systems. Such a sale would greatly increase
Ultrak's liquidity. (Based on an initial offering price from Robert Bosch GmbH,
a private German company with revenues in excess of $30 billion, Ultrak would
receive over $18 million.)
Ultrak believes that other shareholders of Detection Systems agree that DETC
should be sold and is currently engaged in a proxy contest to put three new
directors on the board of DETC who are committed to maximizing shareholder value
by selling DETC (there can be no assurance that, if elected, the new directors
will be able to cause the sale of DETC or as to the price at which DETC might be
sold). The meeting date to elect the new board is December 19, 2000. Ultrak is
encouraged by the many calls and letters from other DETC shareholders supporting
its position.
In Talks with Interested Parties and Choosing an Investment Banker
On November 1, 2000, it was announced that Ultrak was in talks with interested
parties regarding strategic alternatives, including the possible sale of the
Company. These talks are continuing and some due diligence has already taken
place. Ultrak is engaging an investment bank to facilitate the process and
provide additional protection for the interests of its shareholders. This
engagement should be completed shortly. To date, the interested parties have
been strategic buyers who would want to build on the established infrastructure,
thus offering continued excellent products and services for its customers and
fine career opportunities for its people as well. There can be no assurance any
transaction will be consummated.
Ultrak is a publicly-held corporation that designs, manufactures, markets and
services innovative electronic products and systems for the security and
surveillance, industrial and medical video, and professional audio markets. The
Company sells its products to distributors, dealers, system integrators,
retailers and mass-merchants (for resale). Headquartered in Lewisville (Dallas),
Texas, Ultrak has multiple facilities throughout the United States, Europe, Asia
and South Africa. Enterprise Security Solutions (ESS) from Ultrak set new
standards in quality, performance and value for large organizations interested
in protecting their assets and improving operating efficiency. Access control,
CCTV, alarm management, and public address functions are integrated and
optimized. Existing telecommunications and IT infrastructures are leveraged to
best advantage, security operations simplified and system life-cycle costs
reduced. And, in
<PAGE>
progressive organizations, ESS functions like remote video surveillance are
utilized to achieve improvements in operating efficiency and support the
bottom-line mission of the enterprise.
Except for the historical information contained herein, the matters discussed in
this news release are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements, including the timely development and acceptance
of new products, the impact of competitive products and pricing, and the other
risks detailed from time to time in the Company's SEC reports, including its
Annual Report on Form 10-K for the year ended December 31, 1999 and quarterly
reports on Form 10-Q for the quarters ended March 31, 2000, and June 30, 2000.
<TABLE>
ULTRAK, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS of OPERATIONS
<CAPTION>
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
Sept. 30, 2000 Sept. 30, 1999 Sept. 30, 2000 Sept. 30, 1999
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net sales $47,265,151 51,281,007 153,318,092 52,273,218
Cost of sales 33,240,800 34,411,019 106,437,978 102,380,523
Gross profit 14,024,351 16,869,988 46,880,114 49,892,695
Gross profit % 29.7% 32.9% 30.6% 32.8%
Other operating costs:
Marketing and sales 8,909,798 8,339,484 26,727,700 25,001,207
General and administrative 5,705,912 5,564,164 16,693,767 16,109,128
Depreciation and goodwill 1,687,100 1,568,516 4,911,927 4,457,409
amortization
Special charges (1,361,241) --- (1,361,241) 3,875,000
-----------------------------------------------------------------------------------
17,664,051 15,472,164 49,694,635 49,442,744
Operating profit (loss) (3,639,700) 1,397,824 (2,814,521) 449,951
Other (expense) income:
Interest expense, net (1,035,776) (710,641) (2,817,097) (2,141,309)
Equity in income of 230,000 450,000 554,000 1,300,000
Detection Systems, Inc.
Other, net (144,284) 399,238 (124,746) 1,229,977
-----------------------------------------------------------------------------------
(950,060) 138,597 (2,387,843) 388,668
<PAGE>
INCOME (LOSS) FROM OPERATIONS (4,589,760) 1,536,421 (5,202,364) 838,619
BEFORE INCOME TAXES
Income tax benefit (expense) 786,737 (660,661) 1,040,473 (360,606)
INCOME (LOSS) FROM CONTINUING (3,803,023) 875,760 (4,161,891) 478,013
OPERATIONS
NET INCOME (LOSS) (3,803,023) 875,760 (4,161,891) 478,013
Dividend requirements on (29,302) (29,302) (87,908) (87,908)
preferred stock
Net income (loss) allocable to $(3,832,325) 846,458 (4,249,799) 390,105
common stockholders
Net income (loss) per share:
Basic ($0.33) $0.07 ($0.36) $0.03
Diluted ($0.33) $0.07 ($0.36) $0.03
Number of common shares used
in computations:
Basic 11,709,514 11,646,944 11,676,559 11,672,288
Diluted 11,709,514 12,226,365 11,676,559 12,371,622
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
