<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 section 240.14a-11(c) or
section 240.14a-12
Detection Systems, Inc.
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(Name of Registrant as Specified In Its Charter)
Ultrak, Inc.
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(Name of Person(s) Filing Proxy Statement)
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<PAGE>
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ULTRAK
FOR IMMEDIATE RELEASE
For more information, please contact:
Arianne Wiese
Ultrak, Inc.
972-353-6651
[email protected]
Ultrak Announces Second Quarter Results
and Fills the Position of President
Lewisville, Texas - July 31, 2000 - Ultrak, Inc. (Nasdaq: ULTK) today announced
sales of $53,918,600 for the second quarter ended June 30, 2000, an 3% increase
compared to $52,323,827 in the same period last year and also a 3% increase
compared to sales in the first quarter of this year. Gross profit margins were
30.9% compared to 32.7% in the second quarter of 1999 and 31% in the first
quarter of this year. Operating profits were $675,604 compared to a loss of
$1,583,893 (after special charges of $3,125,000) in the second quarter of 1999
and $149,575 in the first quarter of this year. Net income for the second
quarter was $69,166 compared to a loss of $735,914 the previous year. This
resulted in basic earnings per share of $0.00 in the second quarter of 2000,
compared with a loss ($0.07) on 11,712,028 weighted average shares outstanding
in the second quarter of 1999.
Sales for standard products were up across all business segments. However, as in
the first quarter of 2000, revenue growth was negatively impacted by the decline
of the Euro. As forecast earlier this year, revenue growth was also affected by
the fact that our new systems platforms are in the early period of their launch.
Customer evaluations, both here and abroad, of these systems are positive and
very encouraging.
Late last week, Ultrak announced an alliance with Protection One, one of the
leading security alarm companies in the United States. Protection One will
feature Ultrak CCTV and access control products. "The Company's relationship
with Diebold continues to strengthen and the opportunity for much increased
business through them in the future is very promising, stated George Broady,
Chairman and CEO of Ultrak, Inc.
As expected, gross profit margins were negatively affected by the fact that
systems sales are low because our new platforms are in the early stages of
release. "This new business will pick up steadily as the year progresses and we
expect gross profit margins to improve as this happens. We believe we have major
winners that offer real added value to our customers," said George Broady. The
systems products the Company is referring to include SafeNet(TM) series
integrated access control hardware, the Eurocorder(TM) II digital recording
system, and Ultrak's automated vault protection system, PassVault(TM), for
banking applications.
SecurityandMore.com, Ultrak's consumer/do it yourself e-commerce website
continues to exhibit strong potential. New products are being added to the site
on a regular basis and the site is being enhanced. Ultrak is currently in the
process of seeking a private placement to raise capital for SecurityandMore.com
to expand its business more rapidly.
<PAGE>
President's Position Filled
Ultrak is pleased to announce that Peter Beare has been elected President and
Chief Operating Officer of the Company. The role of President had been vacant
since March of 1999. Peter joined Ultrak in May of this year as Vice President,
Technology and Operations. "In the two months Peter has been with us, he has
already made a significant impact. Peter brings a rich technical and engineering
background, coupled with a clear strategic vision. He has particularly strong
people skills and is a natural leader. Peter understands business, serving
customers and making money. His industry knowledge, experience and high energy
level make Peter a great choice to be our President. We are indeed fortunate to
have him," stated George Broady.
Peter Beare brings to Ultrak a wide range of technical and business management
skills and experience in the CCTV security, fire detection, and high-speed
satellite communications industries. His most recent work experience includes
Managing Director of Baxall Ltd., a manufacturing division of Norbain, the UK's
largest supplier and manufacturer of CCTV equipment. Prior to that, Beare was a
management consultant specializing in communications networks. He holds a number
of patents and his product designs have won various awards in technology
innovation.
Ted Wlazlowski, former Executive Vice President, will be leaving the Company
following an orderly transition over the next two to three months. "We
appreciate Ted's hard work and commitment to Ultrak," said Broady.
New Managing Director in Europe
Another key employment change was the appointment, in July, of Frank Kirk as the
new Managing Director of Europe. Kirk, a UK native, has over 25 years of
business experience spanning a career with N.C.R, the Xerox Corporation and his
own group of companies. Although he spent some time in the U.S. and Australia,
most of his career has been spent in continental Europe and the U.K. After the
sale of his own companies some five years ago, Kirk has assisted various
security technology companies in the areas of finance and marketing. He will be
reside in Belgium and working from the new Ultrak European Headquarters in
Antwerp.
Detection Systems Update
Lastly, Ultrak has filed a proxy solicitation with the SEC to elect three new
directors of Detection Systems (Nasdaq: DETC), a company Ultrak owns 21% of and
is its largest shareholder. Detection Systems annual meeting is normally held in
August, but this year the Company has not yet set a date. Ultrak is anxious to
maximize value for the shareholders of Detection Systems. If its proposed board
is elected, Ultrak will retain an investment banking firm to review all
strategic alternatives, including a possible sale of Detection Systems. As
reasons for this solicitation, Ultrak stated, among other things in its proxy
filing, Detection Systems' extraordinarily lucrative golden parachutes for
management and management's refusal to entertain fair offers for the Company.
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 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 10-Q for the
quarter ended March 31, 2000.
ULTRAK, INC. and SUBSIDIARIES
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30,2000 June 30,1999 June 30,2000 June 30,1999
----------------- ----------------- ----------------- ------------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net sales $ 53,918,600 52,323,827 106,052,941 100,992,211
Cost of sales 37,249,765 35,197,960 73,197,178 67,969,504
----------------- ----------------- ----------------- ------------------
Gross profit 16,668,835 17,125,867 32,855,763 33,022,707
Gross profit % 30.9% 32.7% 31.0% 32.7%
Other operating costs:
Marketing and sales 8,931,748 8,461,281 17,817,902 16,661,723
General and administrative 5,440,307 5,587,614 10,987,855 10,544,964
Depreciation and goodwill amortization 1,621,176 1,535,865 3,224,827 2,888,893
Special charges 3,125,000 3,875,000
- -
----------------- ----------------- ----------------- ------------------
----------------- ----------------- ----------------- ------------------
15,993,231 18,709,760 32,030,584 33,970,580
----------------- ----------------- ----------------- ------------------
Operating profit (loss) 825,179
675,604 (1,583,893) (947,873)
Other (expense) income:
Interest expense, net (924,825) (714,630) (1,781,321) (1,430,668)
Equity in income of Detection Systems, Inc. 324,000 450,000 324,000 850,000
Other, net 63,553 557,445 19,538 830,739
----------------- ----------------- ----------------- ------------------
----------------- ----------------- ----------------- ------------------
(537,272) 292,815 (1,437,783) 250,071
----------------- ----------------- ----------------- ------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE (1,291,078) (612,604)
INCOME TAXES 138,332 (697,802)
Income tax benefit (expense) (69,166) 555,164 300,055
253,736
----------------- ----------------- ----------------- ------------------
NET INCOME (LOSS)
69,166 (735,914) (358,868) (397,747)
Dividend requirements on
preferred stock (29,302) (29,302) (58,604) (58,604)
----------------- ----------------- ----------------- ------------------
Net income (loss) allocable to
common stockholders $ (417,472) (456,351)
39,864 (765,216)
================= ================= ================= ==================
Net income per share:
Basic $0.00 ($0.07) ($0.04) ($0.04)
================= ================= ================= ==================
Diluted $0.00 ($0.07) ($0.04) ($0.04)
================= ================= ================= ==================
Number of common shares used in computations:
Basic 11,701,262 11,712,028 11,659,817 11,684,997
================= ================= ================= ==================
Diluted 11,952,905 11,712,028 11,659,817 12,043,305
================= ================= ================= ==================
</TABLE>
(end)
Ultrak, Inc. ("Ultrak") and George K. Broady may be deemed to
be "participants" in Ultrak's solicitation of proxies from stockholders of
Detection Systems, Inc. ("DETC") for use at the annual meeting of DETC
stockholders to be held in 2000.
<PAGE>
Ultrak's address is 1301 Waters Ridge Drive, Lewisville, Texas
75057. Ultrak beneficially holds 1,335,100 shares of DETC's common stock, par
value $.05 per share (the "Common Stock"). Details concerning Ultrak's
transactions in shares of Common Stock within the last two years can be found in
Amendment No. 2 to Ultrak's preliminary proxy statement on Schedule 14A, filed
on August 4, 2000. Ultrak is not and has not within the past year been a party
to any contract, arrangement or understanding with any person with respect to
any securities of DETC. Neither Ultrak nor any of its associates has entered
into any transaction, or series of similar transactions, since the beginning of
DETC's last fiscal year, or any currently proposed transaction, or series of
similar transactions, to which DETC or any of its subsidiaries was or is to be a
party, in which any of the persons described in Item 404(a) of Regulation S-K
had, or will have, a direct or indirect material interest. Neither Ultrak nor
any of its associates have any arrangement or understanding with any person (1)
with respect to any future employment by DETC or its affiliates, or (2) with
respect to any future transactions to which DETC or any of its affiliates will
or may be a party.
Through his ownership of Ultrak's common and preferred stock,
Mr. Broady controls approximately 31% of the voting power of all outstanding
shares of Ultrak's capital stock. Mr. Broady's business address is 1301 Waters
Ridge Drive, Lewisville, Texas 75057, and his principal occupation is acting as
Chairman of the Board and Chief Executive Officer of Ultrak. Neither Mr. Broady
nor any of his associates (other than Ultrak) holds, nor within the past two
years has held, securities of DETC beneficially or of record. Mr. Broady is not
and has not within the past year been a party to any contract, arrangement or
understanding with any person with respect to any securities of DETC. Neither
Mr. Broady nor any of his associates has entered into any transaction, or series
of similar transactions, since the beginning of DETC's last fiscal year, or any
currently proposed transaction, or series of similar transactions, to which DETC
or any of its subsidiaries was or is to be a party, in which any of the persons
described in Item 404(a) of Regulation S-K had, or will have, a direct or
indirect material interest. Neither Mr. Broady nor any of his associates have
any arrangement or understanding with any person (1) with respect to any future
employment by DETC or its affiliates, or (2) with respect to any future
transactions to which DETC or any of its affiliates will or may be a party.
Investors and security holders are advised to read Ultrak's
preliminary proxy statement with respect to Ultrak's solicitation of proxies
because that document contains important information. Investors and security
holders may obtain a free copy of the proxy statement and other documents filed
by Ultrak with the SEC at the SEC's Internet web site at www.sec.gov. The proxy
statement and such other documents may also be obtained for free from Ultrak by
directing such request to Ultrak's proxy solicitor, Georgeson Shareholder
Communications Inc., at (800) 223-2064.
