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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 permitted by
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/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-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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[ULTRAK LETTERHEAD]
August 16, 2000
Dear Fellow Detection Systems Shareholder:
As Detection Systems, Inc.'s largest shareholder--with 21% of its common
stock--WE ARE WRITING TO EXPRESS OUR SERIOUS CONCERN ABOUT THE FUTURE OF THE
COMPANY. For more than a year we have tried to engage management in discussions
that could lead to a substantial increase in value for all Detection Systems
shareholders. But management has been unresponsive to our efforts, and now we're
forced to bring our concerns directly to you, our fellow owners of the Company.
In a letter dated July 7, 2000, the incumbent management of Detection
Systems' announced that the Company's 2000 Annual Meeting of Stockholders will
be delayed because management was talking with financial advisors "to more fully
explore the Company's strategic alternatives for resolving this proxy contest."
More than a month later, on August 14, 2000, all management was willing or able
to report to shareholders was that they have "retained the investment banking
firm of FleetBoston Robertson Stephens to explore a wide range of strategic
alternatives designed to enhance shareholder value." Talk is cheap!
As discussed in the accompanying proxy statement, we have nominated three
candidates for election as directors at the upcoming Annual Meeting. At that
meeting, five directors are to be elected, so our nominees would constitute a
majority of the Detection Systems board of directors if elected. Our nominees
are independent of Ultrak, and are committed to hiring an investment banking
firm to actively explore a sale of Detection Systems or any alternative that
might produce even greater shareholder value.
Despite the Company's apparent recent conversion to the program that Ultrak
has long advocated, Ultrak believes that its fellow Detection Systems
shareholders will be better served by electing the Ultrak Nominees than by
re-electing a board that has for so long resisted these steps. Moreover, we are
concerned that management's interests are not properly aligned with shareholder
interests.
- For instance, Detection Systems' board of directors has awarded to Karl H.
Kostusiak and David B. Lederer, the Company's top two officers who are
also Detection Systems' directors, golden parachute agreements that are
extraordinarily expensive in relation to the size of the Company. (Details
of these agreements are included in Ultrak's August 15, 2000 proxy
statement, which accompanies this letter.)
- If there is a "change in control" of Detection Systems--WHICH INCLUDES THE
REPLACEMENT OF ONLY TWO OF THE FIVE DIRECTORS WITH INDIVIDUALS NOT BLESSED
BY THE BOARD--these golden parachutes allow Messrs. Kostusiak and Lederer
to quit and to receive extraordinary payments, estimated at $7.9 million,
or 13% of Detection Systems' total current market value and 228% of
Detection Systems' actual net income for fiscal year 2000.
- Ultrak, on the other hand, as a holder of 21% of the Company's stock, has
brought a derivative suit in federal court to invalidate these golden
parachutes on the basis that these payments are so significant in amount
as to constitute a breach of the directors' fiduciary duties to the
Company.
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WE NEED YOUR SUPPORT TO ELECT DIRECTORS WHO ARE COMMITTED TO MAXIMIZING
SHAREHOLDER VALUE. IF ELECTED, OUR NOMINEES WILL SEEK TO CAUSE THE BOARD OF
DIRECTORS OF DETECTION SYSTEMS TO RETAIN AN INVESTMENT BANKING FIRM, WHICH WOULD
BE CHARGED WITH IMPLEMENTING A SALE OF THE COMPANY OR ANY STRATEGIC ALTERNATIVE
THAT WOULD PROVIDE GREATER VALUE TO SHAREHOLDERS.
If you have any questions, please call us at the number below or our proxy
firm, Georgeson Shareholder Communications Inc., at (800) 223-2064.
Sincerely yours,
George K. Broady
Chairman of the Board and Chief
Executive Officer
Ultrak, Inc.
(972) 353-6500
BECAUSE THE COMPANY HAS NOT YET SET THE RECORD DATE FOR THE 2000
ANNUAL MEETING OF STOCKHOLDERS, WE HAVE NOT INCLUDED OUR BLUE PROXY
CARD IN THIS MAILING. ONCE THE RECORD DATE HAS BEEN SET, WE WILL
MAIL OUR PROXY STATEMENT AND PROXY CARDS TO HOLDERS AS OF THE RECORD
DATE.
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