SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
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|_| Preliminary Proxy Statement |_| Confidential, for Use of
the Commission Only (as
|_| Definitive Proxy Statement permitted by Rule 14a-6(e)
(2))
|X| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-12
DETECTION SYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
N/A
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As filed with the Commission on November 20, 2000
DETECTION SYSTEMS, INC.
130 Perinton Parkway
Fairport, New York 14450
November 20, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of
shareholders of Detection Systems, Inc. to be held on December 19, at 2:00
p.m. Eastern Time at the Company's offices, located at 130 Perinton
Parkway, Fairport, New York 14450. The enclosed notice of meeting and proxy
statement describe the items to be considered and voted on at the annual
meeting.
Your Board and management want to enhance value for all shareholders
and allow you to participate in the Company's growth from its investments.
Since fiscal 1995, our sales have quadrupled and we have established
operations in 14 countries. We have recently received national account
commitments to use our award-winning network products as well as
commitments to promote our Security Escort system. We have also received
excellent reception for our new CCTV, fire and security protection
products.
In connection with our objective of enhancing value for all
shareholders, we have entered into discussions with a limited number of
parties regarding their strategic interest in the Company, which may
include a joint venture arrangement, leveraged buyout, licensing agreement,
minority investment or potential sale of the Company. Our goal is to
enhance value for all shareholders, but we cannot guarantee that our
nominees will be able to effect an immediate strategic transaction -
neither can Ultrak, a dissident shareholder (and competitor) which is
waging a disruptive and expensive proxy contest to take control of your
Board. For reasons further explained below and in the enclosed proxy
statement, we strongly oppose Ultrak's actions.
You may have received proxy materials from George Broady of Ultrak
claiming to give you certain facts and to "set the record straight" about
the proxy contest. We believe Mr. Broady has not set the record straight,
and ask you to consider the following:
-Mr. Broady believes that the Company should be sold immediately.
We are concerned that Ultrak's nominees would approve a sale, even if
the price is less than fair value. This concern is based on Ultrak's
failure to address the issue of fair value and a statement by Mr.
Broady that he wants the Company immediately sold due to Ultrak's
cash needs. Ultrak recently held a meeting with a small group of the
Company's shareholders in Rochester. Mr. Broady was asked whether his
nominees would sell the Company for as little as $8 per share if that
were the highest price immediately available; he responded that it
would be up to his nominees. Although Ultrak's nominees would have
fiduciary duties to all shareholders, due to their lack of experience
we believe they might be influenced by Ultrak's views as to value and
urgent need for cash. How low would Ultrak and its nominees be
willing to go?
-Mr. Broady states that he is not interested in acquiring your Company.
This is contrary to what Mr. Broady has repeatedly told me in the
past. If Ultrak's nominees are elected and do not immediately sell
the Company, they could establish close ties between Detection
Systems and Ultrak, which we believe would hurt our employee and
customer relationships. Our belief is based upon feedback we have
received from some customers representing at least $4.9 million in
sales in fiscal 2000 and employees at all levels.
-Mr. Broady stated that the concerns we have raised about the
qualifications of his nominees are not important. We disagree.
We believe that the nominees' qualifications are extremely important,
because, if elected, they will direct the Company's operations.
Compare his nominees to ours.
Ultrak's nominees were hand-picked by Mr. Broady and do not have any
industry experience or financial investment in the Company. At
Ultrak's recent meeting of Detection Systems shareholders, Mr. Broady
said his nominees were too busy to even attend! What qualifies them
to be on your Board?
In contrast, your Board's nominees are highly qualified due to their:
(i) significant Company and industry experience; (ii) first-hand,
working knowledge of the Company's strategy, operations and
technology; (iii) personal stake in enhancing shareholder value
(because of their investment in the Company); and (iv) positive
financial track record.
-Mr. Broady says that Detection Systems has been "stiff-arming" Bosch. We
disagree.
We have held numerous discussions with Bosch since 1997. Bosch's
representatives have visited our headquarters and production
facilities. The Board utilized financial advisers in its evaluation
of Bosch's acquisition proposal. After a thorough evaluation
described in detail in the enclosed proxy statement, the Board
determined that the offer was against the best interests of all
shareholders.
Your Board asks you to consider the facts and our qualifications.
Based upon them, we recommend that you vote on the WHITE proxy card FOR the
election of your Board's nominees as directors and FOR the ratification of
the appointment of independent auditors.
We urge you to read the enclosed proxy statement in its entirety for
a more complete description of Ultrak's proxy contest and the reasons you
should vote in favor of your Board's nominees.
Whether or not you plan to attend the annual meeting, it is important
that your shares are represented and voted. You are requested to sign, date
and mail the enclosed WHITE proxy card promptly. Returning a signed and
dated WHITE proxy card will not prevent you from voting in person at the
Annual Meeting, should you later decide to do so.
If you have any questions or need assistance in voting your shares,
please contact our proxy solicitors, MacKenzie Partners, toll-free at
(800) 322-2885.
Your continued interest and participation in the affairs of the
Company are most appreciated.
Sincerely,
/s/ Karl H. Kostusiak
Karl H. Kostusiak
Chairman and CEO
FORWARD-LOOKING STATEMENTS
This letter contains forward-looking information which involves
expressions of management's current expectations. All forward-looking
information is subject to various risks and uncertainties that may be
beyond the Company's control and may cause results to differ materially
from management's current expectations. Information concerning factors that
could cause actual results to differ materially from management's current
expectations are set forth in the section entitled "Risk Factors" in the
Company's 2000 Annual Report on Form 10-K, as amended.
VOTE YOUR WHITE PROXY TODAY!
If you have any questions or need assistance voting your shares, please
contact:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
[email protected]
(212) 929-5500 (call collect)
or
Toll-Free (800) 322-2885.
