NEWS RELEASE
DETECTION SYSTEMS, INC.
130 Perinton Parkway, Fairport, NY 14450
FOR IMMEDIATE RELEASE August 14, 2000
DETECTION SYSTEMS REPORTS RESULTS FOR THE FIRST QUARTER OF FISCAL 2001
Fairport, N.Y.-- Detection Systems, Inc., (Nasdaq: DETC) today reported
results for its fiscal 2001 first quarter, which ended June 30, 2000. Net
sales for fiscal 2001's first quarter were $33.8 million, as compared to
$34.8 million for fiscal 2000. Net income for the quarter was $678,000,
or $0.10 per diluted share, compared to $1.4 million, or $0.21 per diluted
share a year ago. Excluding the impact of foreign currency losses, net
income for the first quarter was $876,000, or $0.13 per diluted share.
Gross margin reached 42.4% during the quarter as compared to 39.7% last
year. The increase in gross margin reflects the continued effect of
manufacturing efficiency gains.
Operating income for the quarter was $1.7 million compared to $2.5 million
a year ago. Operating income was impacted by an increase in research and
development costs for new technology and expenses related to the recent
opening of distribution offices in Argentina and Spain. Operating
expenses also increased from the addition of Caetec S.r.l., the Company's
Italian-based fire control technology subsidiary, which was acquired in
the second quarter of fiscal 2000.
As part of its continuing share repurchase program, Detection Systems
purchased $530,000 of its common stock during the first quarter. The
Company has repurchased $1.3 million, or 142,500 shares, of its common
stock since the program's inception in August 1999.
Despite a significant devaluation of foreign currencies, international
sales were consistent with the prior year. Sales in the Asia-Pacific
market were $5.6 million compared to $5.7 million last year. European
operations reported quarterly sales of $8.0 million compared to $7.9
million last year. Sales in the North American market were $20.2 million
for the first quarter compared to $21.2 million a year ago.
Karl Kostusiak, Chairman and CEO of Detection Systems, commented, "While
this quarter had its challenges, our long-term outlook has never been
stronger. Our gross margin continued to improve, reflecting the many
efficiencies we have made in our manufacturing processes. Our quarterly
results were affected by a planned increase in research and development
and higher market development costs. We firmly believe that these
investments are necessary to maintain our technology leadership position
and are integral to our long-term growth strategy.
"Although we will continue to monitor the effects of industry
consolidation on our revenues during the next few quarters, we believe
that it will ultimately work in our favor. Many companies in the trade
have expressed to us their concern about being too dependent on a single
vendor and their desire to diversify their supply sources. Consequently,
they are increasingly turning to us. We believe that we are uniquely
positioned to capitalize on this opportunity because of our technology
leadership, broad product offerings, reputation for quality, and
international distribution capabilities."
Mr. Kostusiak continued, "Our enthusiastic outlook is supported by recent
commitments from ADT Security Services (a unit of Tyco International
Ltd.), SecurityLink (a unit of SBC Communications, Inc.) and Motorola, to
add our leading technologies to their product offerings. ADT will be
adding our new NetCom technology and our Security Escort(R) system to their
product offerings for certain applications. In connection with this,
Security Escort's capabilities will be further enhanced for use in
assisted living facility applications. SecurityLink has added NetCom,
Security Escort and our line of fire control and communication equipment
to the many products they currently purchase from us. Motorola has added
our Security Escort system for use in their Caribbean region. These
technologies are also available through many other dealers, including AFA
Protection, Checkpoint Security, Diebold, Greater Alarm, Honeywell,
Simplex, Vector Security, and members of Security Network of America.
"Regarding our new product initiatives, NetCom, which provides the
capability for signaling, monitoring, and programming functions over
local-area and wide-area networks, or the Internet, continues to generate
tremendous interest in the marketplace," said Mr. Kostusiak. "We have a
number of nationally recognized retailers and financial institutions that
are evaluating this product for installation by our dealers. This offers
significant sales growth opportunities over the next several years. Our
other initiatives, such as in-building wireless systems, closed circuit
television products, commercial fire products, and our new, intelligent
detectors, are also progressing well. The promise shown through these new
products is not limited to the U.S. market. We see similar potential with
major companies in international markets. These opportunities give us
added confidence in our long-term growth prospects," concluded Mr.
Kostusiak.
The Company also announced that it has retained the investment banking
firm of FleetBoston Robertson Stephens to explore a wide range of
strategic alternatives designed to enhance shareholder value.
Detection Systems is a leading supplier of equipment to the electronic
protection industry, with facilities in New York, California, Argentina,
Australia, Belgium, China, France, Hong Kong, Hungary, Italy, New Zealand,
Norway, Spain, Sweden and the United Kingdom. The Company designs,
manufactures and markets electronic detection, control and communication
equipment for security, fire protection, access control, and closed
circuit television applications.
FINANCIAL RESULTS
-----------------------------------------------------------------
SUMMARY CONSOLIDATED FINANCIAL DATA
-----------------------------------------------------------------
-----------------------------------------------------------------
(in thousands, except per share data)
-----------------------------------------------------------------
Three Months Ended
June 30,
(unaudited)
2000 1999
--------------------
Net sales $ 33,842 $ 34,766
Costs and expenses
Production 19,507 20,964
Research and development 2,800 2,293
Marketing, admin. & general 9,851 9,059
-------- --------
Operating income 1,684 2,450
Net interest expense (271) (220)
Foreign exchange gain (loss) (318) 8
Other income (expense) (5) 32
-------- --------
Income before taxes 1,090 2,270
Provision for taxes 412 849
======== ========
Net income $ 678 $ 1,421
======== ========
Earnings per share
Basic $ 0.11 $ 0.22
Diluted $ 0.10 $ 0.21
Weighted average shares
outstanding (basic) 6,369 6,336
Weighted average shares
outstanding (diluted) 6,778 6,818
----------------------------------------------------------------
SELECTED BALANCE SHEET DATA (in thousands)
----------------------------------------------------------------
(unaudited)
6/30/00 3/31/00
---------- ----------
Assets
Cash and cash equivalents $ 3,254 $ 7,799
Accounts receivable, net 23,032 22,505
Inventories, net 37,014 32,594
Other current assets 5,233 5,822
---------- ----------
Total current assets 68,533 68,720
Total assets $ 95,442 $ 95,618
========== ==========
Current liabilities 17,949 17,591
Long-term debt 16,074 16,583
Total liabilities 36,917 37,154
Shareholders' equity 58,525 58,464
Total liabilities and $ 95,442 $ 95,618
shareholders' equity
========== ==========
for additional information, contact:
DETECTION SYSTEMS, INC. Investor Relations Counsel:
Frank J. Ryan, Vice President - OR - SM Berger & Company
Christopher P. Gerace, Vice President Steve Warcholak
(716) 223-4060 Website: www.dsworld.com (216) 464-6400
----------------------------------------------------------------------------
This release 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 from
management's current expectations. Information concerning factors that
could cause actual results to differ materially from management's current
expectations are set forth on pages 9 - 13 of the Company's 2000 Annual
Report on Form 10-K.
----------------------------------------------------------------------------
