SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
|X| Definitive Additional Materials
|_| 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, 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:
--------------------------------------------------------------------
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 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 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 Letterhead]
December 4, 2000
Dear Fellow Detection Systems Shareholder:
With our 2000 Annual Meeting of Shareholders due to be held on December
19, I am writing to seek your support for a slate of director nominees who are
pledged to sell Detection Systems for the highest possible price. In this
election contest, every vote will count; each proxy card voted for the Ultrak
Nominees will send a signal to management that the Company must be sold. Since
time is short, I urge you to sign, date and return the enclosed BLUE proxy card
today. If you have already voted management's white proxy card, you can revoke
that vote by signing and dating the enclosed BLUE proxy card solicited by
Ultrak.
Management's Recent Discussions
Recently, management wrote that they 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." Beyond this,
shareholders have been left in the dark. What we do know is that management has
rejected a $14 per share cash offer as being inadequate, yet rejected that offer
without seeking to improve on the offered price.
Nonetheless, we may yet see an announcement, before the Annual Meeting,
that management has entered into an agreement to sell the Company at an
attractive price. If that does occur -- and if the buyer is capable and the
contract is not subject to unusual conditions (especially conditions that could
be within the control of management) -- all shareholders will be benefited.
However, even if management produces an agreement for the sale of the Company,
we still think it's essential that shareholders vote for the Ultrak Nominees on
the BLUE proxy card.
The Ultrak Nominees Will Follow Through
All along, the Ultrak Nominees have been pledged to seek a sale of the
Company. If management succeeds in signing a transaction at an attractive price,
the Ultrak Nominees will follow through to make sure the transaction closes.
Management has been resisting a sale of the Company for some time, and recently
rejected a $14 offer without trying to increase the price. Even if a transaction
is signed, can we be sure that management will follow through and make sure the
transaction actually closes if the Ultrak Nominees are defeated?
On the other hand, management may not have a sale transaction to announce
before the Annual Meeting. In that case, if the Ultrak Nominees are defeated,
what kind of assurance will there be that management will try to sell the
Company -- especially given that management has said it is exploring
possibilities that fall well short of a sale? Ultrak believes that management is
finally starting to appear interested in a sale of the Company as a direct
result of the pressure Ultrak has put on management through this proxy contest.
If the Ultrak Nominees are defeated and that pressure is removed, what will
happen?
<PAGE>
EITHER WAY -- WHETHER OR NOT MANAGEMENT SIGNS AN AGREEMENT TO SELL THE
COMPANY -- IF YOU BELIEVE THE COMPANY SHOULD BE SOLD, WE URGE YOU TO VOTE NOW
FOR THE ULTRAK NOMINEES BY SIGNING AND DATING THE ENCLOSED BLUE PROXY CARD AND
RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Management's Lucrative Payouts
Management's recent proxy statement has revealed that the retirement
benefits payable by Detection Systems to Karl Kostusiak and David Lederer, its
top two officers, are substantially higher than Ultrak had previously believed.
In calculating the golden parachute payments, we were forced to make certain
assumptions, and in doing so conservatively estimated that these retirement
benefits would total approximately $2.3 million. Management discloses in its
proxy statement, however, that the number is $4.8 million.
In addition, when the Company and Messrs. Kostusiak and Lederer amended
their golden parachute agreements to cap payments at 5% of the Company's market
value, they excluded from this cap all of these retirement payments. Thus, as of
the day before the amended golden parachute agreements were signed, and based on
calculations included in Ultrak's August 15, 2000 proxy materials, full golden
parachute payments to Messrs. Kostusiak and Lederer -- including the lucrative
retirement benefits -- would have been $10.4 million under the old golden
parachute agreements and $7.7 million under the amended agreements. If the
Company were to be sold for $14 per share, these payments would aggregate
approximately $9.5 million for these two top officers after application of the
cap.
Please do not vote management's white proxy card even as a protest vote
against management. If you have already voted management's white proxy card, you
can revoke that vote by signing and dating the enclosed BLUE proxy card
solicited by Ultrak.
In closing, I am reminded once again by Ultrak's lawyers that I must let
you know that there can be no assurance that Ultrak's nominees, if they are
elected, will be able to cause a sale of the Company or, if they do cause a sale
of the Company, as to the price at which the Company may be sold. Nonetheless,
rest assured that the Ultrak Nominees are committed to doing their level best to
sell Detection Systems as quickly as practicable.
Sincerely yours,
George K. Broady
Chairman of the Board and Chief Executive Officer
Ultrak, Inc.
--------------------------------------------------------------------------------
If you have any questions about the upcoming election of directors or Ultrak's
goals in supporting the Ultrak Nominees, I encourage you to call me at (972)
353-6650 or to email me at [email protected] with a number where you may
be reached.
You may also contact our proxy firm, Georgeson Shareholder Communications Inc.,
at (800) 223-2064.
--------------------------------------------------------------------------------
